Office of the City Clerk - Record #: F2014-26

• Record #: F2014-26
• Type: Communication
• Status: Placed on File
• Intro date: 4/2/2014
• Final action: 4/2/2014
• Title: Notification of sale regarding General Obligation Project and Refunding Bonds, Series 2014A and Series 2014B, associated amendment regarding commercial paper debt and amendment of Municipal Code Section 2-32-031 regarding debt management policies
• Sponsors: Dept./Agency

Date	Journal Page Number	Action By	Action	Result
4/2/2014	76575	City Council	Placed on File

Department of Finance city of chicago
March 24 ,2014


Susana Mendoza City Clerk
121 North LaSalle Street Room 107
Chicago, Illinois 60602

RE: City of Chicago, Illinois
General Obligation Bonds Project and Refunding Bonds
Series 2014 A $432,630,000 and General Obligation Bonds Project and Refunding Bonds Series 2014B $450,790,000

Dear Ms. Mendoza:

Attached is the Notification of Sale which is required to be filed with your office pursuant to Section 1 lof the ordinance authorizing of the issuance of General Obligation and Refunding Bonds and Associated Amendment regarding Commercial Paper Debt and Amendment of Municipal Code Section 2-32-031 regarding Debt Management Policies, which was passed by the City Council on February 5, 2014.


Please direct this filing to the City Council.




Very Truly Yours,

Chief Financial Officer






121 NORTH LASALLE STREET. ROOM 700, CHICAGO, ILLINOIS 60602

Bond Purchase Agreement
$883,420,000 CITY OF CHICAGO
$432,630,000 General Obligation Bonds, Project and Refunding Series 2014A
$450,790,000 General Obligation Bonds, Taxable Project and Refunding Series
2014B
March 13,2014

City of Chicago Office of the City Comptroller 121 North LaSalle Street, 7th Floor Chicago, Illinois 60602 Attention: Chief Financial Officer

Ladies and Gentlemen:
The undersigned, Wells Fargo Bank, National Association (the "Representative"), on behalf of itself and the other underwriters listed below (collectively, the "Underwriters"), hereby offers to enter into this Bond Purchase Agreement (the "Agreement") with the City of Chicago (the "City"), for the purchase by the Underwriters, and sale by the City, of all but not less than all of the City's General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds") and the City's General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Series 2014B Bonds" and, together with the Series 2014A Bonds, the "Bonds"). This offer is made subject to the acceptance by the City, evidenced by the signature of a duly authorized officer of the City in the space provided below, on or before 5:00 P.M., Chicago time on the date hereof, and upon such acceptance this Agreement shall be in full force and effect in accordance with its terms and shall be binding on the City and the Underwriters.
The Representative is authorized, and hereby represents and warrants that it is authorized, to act as Representative of the Underwriters and to execute this Agreement and has full authority to take such action as it may deem advisable with respect to all matters pertaining to this Agreement. Each Underwriter hereby severally represents to the City that it is registered and in good standing under the Securities Exchange Act of 1934, as amended (the "1934 Act"), as a municipal securities dealer.
The primary role of the Underwriters is to purchase the Bonds, for resale to investors, in an arm's-length commercial transaction between the City and the Underwriters. The Underwriters have financial and other interests that differ from those of the City.
Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Preliminary Official Statement, as defined herein.

Agreement to Sell and Purchase,
Upon the terms and conditions and based upon the representations, warranties and covenants herein set forth, the Underwriters, jointly and severally, hereby agree to purchase from the City and the City hereby agrees to sell to the Underwriters: the Series 2014A Bonds at a price equal to $435,549,851.04 (which represents the aggregate principal amount of the Series 2014A Bonds less an Underwriters' discount of $2,287,917.51 and plus a net re-offering premium of $5,207,768.55), and the Series 2014B Bonds at a price equal to $448,135,142.01 (which represents the aggregate principal amount of the Series 2014B Bonds less an Underwriters' discount of $2,654,857.99).
It shall be a condition to the City's obligation to sell and deliver the Bonds that all the Bonds be purchased and paid for by the Underwriters at the Closing (as defined in Section 7 hereof) and a condition to the Underwriters' obligation to purchase and pay for the Bonds that all Bonds be issued, sold and delivered by the City at the Closing.
2. The Ordinance. The Bonds are authorized by an ordinance of the City
adopted by the City Council of the City (the "City Council") on February 5, 2014 (the
"Ordinance"), and will be issued and secured as provided thereunder. The Bonds will
mature, bear interest and have such other terms and conditions as are set forth on Schedule I
hereto.
3. -. The Preliminary Official Statement. Attached hereto as Exhibit A is a copy
of the Preliminary Official Statement of the City, dated March 3, 2014, relating to the Bonds
(the "Preliminary Official Statement"). For purposes of Rule 15c2-12 ("Rule 15c2-12")
adopted by the Securities and Exchange Commission (the "SEC") under the 1934 Act, the
Preliminary Official Statement is "deemed final" by the City as of its date except for the
omission of such information as is permitted by Rule 15c2-12(b)(1).
Public Offering Price. The Underwriters have agreed to make a bona fide public offering of the Bonds at the initial offering prices set forth on Schedule I. The Representative will provide the City and Co-Bond Counsel (as defined herein) with a closing certificate confirming the reoffering yields and prices of the Series 2014A Bonds and the Underwriters acknowledge that the City and Co-Bond Counsel will rely on such certificate to establish the yield on the Series 2014A Bonds and that such reliance is material to the City in entering into this Agreement and in connection with the delivery of the Bonds.
The Official Statement.
(a) The City shall provide, or cause to be provided, at its expense, to the Underwriters no later than the earlier of (i) seven (7) business days after the date of this Agreement or (ii) the Closing, three copies of the Official Statement of the City, dated the date hereof, relating to the Bonds (the "Official Statement"), signed on behalf of the City by the Mayor or the Chief Financial Officer and the Official Statement so delivered shall be "final" for purposes of Rule 15c2-12. Such delivery of the Official Statement shall occur in sufficient time to accompany any confirmation that requests payment from any customer and in sufficient quantity to comply with the rules of the SEC and the Municipal Securities

|1010|
I
Rulemaking Board (the "MSRB").
(b) If on or prior to the Closing or within twenty-five (25) days after the "end of the underwriting period" (as hereinafter defined) any event known to the City relating to or affecting the City, the Ordinance or the Bonds, shall occur which would cause any statement of a material fact contained in the Official Statement to be materially incorrect or materially incomplete, the City will promptly notify the Representative in writing of the circumstances and details of such event. If, as a result of such event, it is necessary, in the joint opinion of the City and the Representative to amend or supplement the Official Statement by stating or restating any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, the City will forthwith prepare and furnish to the Underwriters a reasonable number of copies of an amendment of or a supplement to such Official Statement in form and substance satisfactory to the City and the Representative, at the City's sole cost and expense, which will so amend or. supplement such Official Statement so that, as amended or supplemented, the Official Statement will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. For purposes of this Agreement, the term "end of the underwriting period" shall mean the later of the date of Closing or the date on which an Underwriter no longer retains an unsold balance of the Bonds for sale to the public. The Underwriters agree that the date on which the end of the underwriting period shall occur shall be the date of the Closing, unless the Underwriters otherwise notify the City in writing prior to twenty-five (25) days after the date of the Closing that, to the best of their knowledge, the Underwriters retain for sale to the public an unsold balance of the Bonds, in which case the end of the underwriting period shall be extended for additional periods of thirty (30) days each upon receipt of additional written notification from the Underwriters that, to the best of their knowledge, there exists an unsold balance of the Bonds, but in no event shall the end of the underwriting period be extended longer than sixty (60) days after the date of Closing.
The Official Statement shall be provided for distribution, at the expense of the City, in such quantity as may be requested by the Underwriters as set forth above in order to permit the Underwriters to comply with Rule 15c2-12, and the applicable rules of the MSRB, with respect to distribution of the Official Statement. The City shall prepare the Official Statement, including any amendments thereto, in word-searchable PDF format as described in the MSRB Rule G-32 and shall provide the electronic copy of the word-searchable PDF format of the Official Statement to the Underwriters no later than one (1) business day prior to March 24, 2014, to enable the Underwriters to comply with MSRB Rule G-32.
The City further agrees to provide the Underwriters with any advance refunding documents (as defined in MSRB Rule G-32) in a word-searchable PDF format as described in the MSRB's Rule G-32 and shall provide such electronic copy of the word-searchable PDF format of the advance refunding documents to the Underwriters no later than four (4) business days after March 24, 2014, to enable the Underwriter(s) to comply with MSRB Rule G-32.


|1010|
(c) At or prior to the Closing, the Representative shall file, or cause to be filed, the Official Statement with the MSRB in compliance with the rules of the SEC and the MSRB. Promptly after the date after which the Underwriters are no longer obligated under Rule 15c2- 12(b)(4) to deliver to potential customers the Official Statement, the Representative shall notify the City of such date.
6. Representations, Warranties and Covenants of the City. The City represents and warrants to the Underwriters as of the date hereof that:
The City is a municipal corporation and home rule unit of local government, existing under the Constitution and laws of the State of Illinois (the "State").
The City Council has: (i) duly adopted the Ordinance, which remains in full force and effect; (ii) duly authorized the use of the Preliminary Official Statement prior to the date hereof in connection with the public offering and sale of the Bonds and duly authorized the execution, delivery and distribution of the Official Statement in connection with the public offering and sale of the Bonds; and (iii) duly authorized and approved the execution and delivery of the Bonds, the escrow agreements to be executed and delivered by the City (collectively referred to herein as the "Escrow Agreements") in connection with the refunding of the general obligation bonds of the City identified in Appendix G to the Official Statement (the "Refunded Bonds"), this Agreement and a continuing disclosure undertaking pursuant to the provisions of Section (b)(5) of Rule 15c2-12 (the "Undertaking").
With the exception of the disclosure described in the Preliminary Official Statement in the section titled "SECONDARY MARKET DISCLOSURE - Corrective Action Related to Certain Bond Disclosure Requirements", the City has not failed during the previous five years to comply in all material respects with any previous undertakings in a written continuing disclosure contract or agreement under Rule 15c2-12.
The City has full legal right, power and authority to: (i) adopt the Ordinance; (ii) execute and deliver this Agreement, the Escrow Agreements, the Undertaking and the Official Statement; (iii) issue, sell and deliver the Bonds to the Underwriters pursuant to the Ordinance and as provided in this Agreement; and (iv) pay for the Bonds from the sources pledged under the Ordinance for their payment.
The adoption of the Ordinance and compliance with the provisions thereof do not, and the execution and delivery of this Agreement, the Escrow Agreements, the Undertaking and the Official Statement will not, in any material manner, violate any applicable law or administrative regulation of the State or any department, division, agency or instrumentality thereof or of the United States of America (the "United States") or of any department, division, agency or instrumentality thereof, or any applicable judgment or decree to which the City is subject, or conflict with, in a material manner, or constitute a material breach of, or a material default under, any ordinance, agreement or other instrument to which the City is a party or is otherwise bound.
(f) All approvals, consents and orders of, and filings (except, if any, under

|1010|
applicable state "blue sky" laws) with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to the performance by the City of its obligations under this Agreement, the Escrow Agreements, the Undertaking, the Ordinance and the Bonds have been obtained or made.
The financial statements of the City contained in the Official Statement fairly present the financial position and results of operations of the City as of the date and for the periods therein set forth and the City has no reason to believe that such financial statements have not been prepared in accordance with generally accepted accounting principles as applied to governmental units, consistently applied except as otherwise noted therein.
The Official Statement (excluding any description of The Depository Trust Company ("DTC"), information under the captions "THE BONDS - Book-Entry System," "BOND LNSURANCE", "RATINGS," "CERTAIN VERIFICATIONS," "UNDERWRITING," and "TAX MATTERS," APPENDIX D — "ECONOMIC, DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION (with respect to the information under the headings "— Economy," "— Percentage of Total Non-Farm Employment by Major Industry Sector" and "and "— Housing Market," and information relating to population, per capita personal income and employment, and unemployment rate with respect to the United States, the State of Illinois, Cook County and the Chicago MSA), Tables 1-10 included in APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS," APPENDIX F — "FORMS OF OPINIONS OF CO-BOND COUNSEL," any information in or omitted from the Official Statement relating to the Insurer and the Policy (both hereinafter defined), and information furnished by the Underwriters for use in the Official Statement) as of its date does not, and at the Closing will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect.
(i) Information in the Third Party Sourced Retirement Fund Tables is sourced
from documents published by the Retirement Funds and the City takes no responsibility
for the accuracy and completeness of such information; however, nothing has come to the
attention of the City which would lead the City to believe that the Third Party Sourced
Retirement Fund Tables are not true and correct in all material respects;
(j) The Ordinance, this Agreement, the Escrow Agreements, and the Undertaking, when duly executed and delivered by the parties thereto, as appropriate, will constitute legal, valid and binding obligations of the City enforceable in accordance with their terms (except to the extent that enforceability may be limited by bankruptcy, insolvency and other laws affecting creditors' rights or remedies and the availability of equitable remedies generally).
(k) When delivered to the Representative, and paid for by the Underwriters at the Closing in accordance with the provisions of this Agreement, the Bonds will be duly authorized, executed and delivered and will constitute legal, valid and binding obligations of the'City enforceable in accordance with their terms (except to the extent that enforceability may be limited by bankruptcy, insolvency and other laws affecting creditors' rights or

|1010|
remedies and the availability of equitable remedies generally).
(1) Except as disclosed in the Official Statement, there is no action, suit or proceeding, at law or in equity, or before or by a court, public board or body, pending or, to the City's knowledge, threatened, against the City wherein an unfavorable decision, ruling or finding would materially adversely affect (i) the validity or enforceability of the Bonds, the Ordinance, this Agreement, the Escrow Agreements, or the Undertaking or (ii) the excludability from federal income taxation of the interest on the Series 2014A Bonds under the Internal Revenue Code of 1986, as amended (the "Code").
(m) The City has not taken, or omitted taking, and will not take or omit to take, any action, which action or omission would adversely affect the excludability from federal income taxation of the interest on the Series 2014A Bonds under the Code.
(n) Any certificate signed by any Authorized Officer of the City and delivered to the Representative at the Closing in connection with the issuance or sale of the Bonds shall be deemed to be a representation and warranty by the City to the Underwriters as to the statements made therein as of the date so delivered.
(o) The City will make available such information, execute such instruments and take such other action in cooperation with the Underwriters as the Representative may reasonably request to qualify the Bonds for offering and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate in writing; provided, however, that nothing in this Section 6(n) shall require the City to consent to general service of process in any state or jurisdiction other than the State.
(p) The City will apply the proceeds of the Bonds in accordance with the Ordinance.
(q) The City acknowledges and agrees that: (i) the transaction contemplated by this Agreement is an arm's length, commercial transaction between the City and the Underwriters in which the Underwriters are acting solely as a principal and not acting as a municipal advisor, financial advisor or fiduciary to the City; (ii) the Underwriters have not assumed any advisory or fiduciary responsibility to the City with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether any Underwriter has provided other services or is currently providing other services to the City on other matters); (iii) the Underwriters have financial and other interests that differ from those of the City; and (iv) the City has consulted its own legal, account, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate.
7. Closing. Subject to the conditions set forth in this Agreement, the closing (the "Closing") of the sale of the Bonds by the City and the purchase of the Bonds by the Underwriters, shall take place at approximately 9:00 am., Chicago time, on March 24, 2014, at the offices of Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, Illinois (or at such other time, date and place as the City and the Representative mutually agree).

|1010|
At the Closing, the City shall deliver or cause to be delivered to DTC, as securities depository, for the account of the Underwriters one fully registered certificate for each series, interest rate and maturity of the Bonds in the aggregate principal amount thereof, registered in the name of Cede & Co., as nominee for DTC.
Upon delivery of the Bonds to the Representative at the Closing, the City will deliver to the Representative the closing documents as set forth in Section 10 hereof.
The Representative will accept delivery of the Bonds and pay the purchase price therefor at the Closing by delivering federal funds checks or making federal funds wire transfers or otherwise confirming deposits of same day funds, as the City shall direct, to the City's account at a bank specified by the City, in an aggregate amount equal to the purchase price of the Bonds pursuant to Section 1 hereof.

Reliance and Further Conditions of the Underwriters. The Underwriters have entered into this Agreement in reliance upon the representations, warranties and agreements of the City herein and the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriters' obligations under this Agreement are and shall be subject to the following further condition that at the time of the Closing, the Ordinance, the Undertaking, the Escrow Agreements, and this Agreement shall be in full force and effect and the Ordinance and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to with respect to the Official Statement pursuant to Section 5 hereof, and the City shall have duly adopted and there shall be in full force and effect such ordinances as, in the opinion of Chapman and Cutler LLP, Chicago, Illinois and Sanchez Daniels & Hoffman LLP, Chicago, Illinois, as co-bond counsel ("Co-Bond Counsel") shall be necessary in connection with the transactions contemplated hereby and thereby.
Termination of Agreement.
(a) The Underwriters shall have the right to cancel their obligations to purchase the Bonds and have the further right to terminate this Agreement, without liability therefor, by written notice to the City from the Representative, if, between the date hereof and the Closing:
(i) legislation shall be introduced in or enacted by the Congress of the
United States or adopted by either House thereof or shall have been introduced and favorably reported for passage to either House by any committee of such House to which such legislation had been referred for consideration, or a decision shall have been rendered by or adopted by either House or a decision by a court of the United States or the United States Tax Court or an order, ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service, with respect to federal income taxation upon interest received on obligations of the general character of the Series 2014A Bonds which, in the Representative's reasonable opinion, does materially adversely affect the market price or marketability of the Series 2014A Bonds, or

|1010|
legislation shall have been enacted by the Congress of the United States to become effective on or prior to the Closing, or a decision of a court of the United States shall be rendered, or a stop order, ruling, regulation or proposed regulation by or on behalf of the SEC or other agency having jurisdiction over the subject matter shall be issued or made, to the effect that the issuance, sale and delivery of the Bonds, or any similar obligations of any similar public body of the general character of the City, is in violation of, or has the effect of requiring the contemplated offering, sale and distribution of the Bonds to be registered under the Securities Act of 1933, as amended, or the enactment of the Ordinance or any ordinance of similar character is in violation of the Trust Indenture Act of 1939, as amended, or with the purpose or effect of otherwise prohibiting the issuance, sale or delivery of the Bonds as contemplated hereby or by the Official Statement or of obligations of the general character of the Bonds which, in the Representative's reasonable opinion, does materially adversely affect the market price or marketability of the Bonds, or
there shall have occurred any event which in the Representative's reasonable opinion, after consultation with its legal counsel, makes the Official Statement either (A) contain an untrue statement of a material fact or (B) omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in any material respect, and the City fails to prepare or furnish or fails to cause to be prepared or furnished to the Underwriters an amendment or supplement to the Official Statement, pursuant to Section 5 hereof, which will amend or supplement the Official Statement so that, as amended or supplemented, the Official Statement will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in a material respect, or
there shall be in force a general suspension of trading on The New York Stock Exchange, Inc., or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on The New York Stock Exchange, Inc., whether by virtue of a determination by that Exchange or by order of the SEC or any other governmental authority having jurisdiction, or
(v) a general banking moratorium shall have been declared by either
federal, State or New York authorities having jurisdiction and be in force, or.
any legislation, ordinance, rule or regulation shall be enacted by the City or State, or any department or agency thereof, or a decision by any court of competent jurisdiction within the State shall be rendered which, in (he reasonable opinion of the Representative, would have a material adverse effect on the market price or marketability of the Bonds, or
a war involving the United States, an outbreak or escalation of or adverse development in hostilities or terrorist activities or other national or

|1010|
international calamity or crisis shall have occurred which, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds, or
(viii) there shall be any proceeding or threatened proceeding by the SEC
against the City and such proceeding or threatened proceeding, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds.
(b) If the City shall be unable to satisfy the conditions contained in this Agreement or if the Underwriters' obligations shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the City nor the Underwriters shall have any further obligations hereunder.

10. Closing Conditions.
(a) The Underwriters' obligations to purchase, to accept delivery of and to pay for the Bonds at the Closing shall be conditioned upon the City's performance of its obligations under Sections 6, 7 and 8 hereof and the Underwriters' receipt of the following documents:
three copies of the Official Statement manually executed by the Chief Financial Officer;
the approving opinions, dated the date of the Closing, of Co-Bond Counsel to the City, substantially in the form attached to the Official Statement as Appendix F;

the opinions, dated the date of the Closing and addressed to the Representative on behalf of the Underwriters and to the City, of Co-Bond Counsel, substantially in the form attached hereto as Exhibit B-1;
a letter dated the date of the closing and addressed to the Representative on behalf of the Underwriters and to the City, of Co-Bond Counsel, substantially in the form attached hereto as Exhibit B-2;
(v) a letter dated the date of the closing and addressed to the City of
Chapman and Cutler LLP, Special Disclosure Counsel to the City in connection
with certain pension matters described in the Official Statement, substantially in
the form attached hereto as Exhibit B-3, which letter shall also either be addressed
to or accompanied by a reliance letter to the Representative on behalf of the
Underwriters;
(vi) an opinion, dated the date of the Closing and addressed to the
Representative on behalf of the Underwriters, of the Corporation Counsel of the
City, substantially in the form attached hereto as Exhibit C;

(vii) an opinion or opinions, dated the date of the Closing and addressed

|10 10|
to the Representative on behalf of the Underwaters, of Peck, Shaffer & Williams, a division of Dinsmore & Shohl LLP, Chicago, Illinois, as counsel for the Underwriters ("Underwriters' Counsel"), in form and substance satisfactory to the Representative;
(viii) an opinion or opinions, dated the date of the Closing and addressed
to the Representative on behalf of the Underwriters, of Duane Morris LLP, Chicago, Illinois, and Shanahan & Shanahan LLP, Chicago, Illinois, Co-Disclosure Counsel to the City, substantially in the form attached hereto as Exhibit D;
(ix) a certificate, dated the date of the Closing, signed by the Chief
Financial Officer, to the effect that (A) the representations and warranties of the
City herein are correct in all material respects as of the date of the Closing; and
(B) there has been no material adverse change in the financial condition of the
City since December 31, 2012, as reflected in Appendix C to the Official
Statement, except as set forth in the Official Statement;
(x) a certificate of Amalgamated Bank of Chicago, Chicago, Illinois,
as bond registrar and paying agent ("Bond Registrar"), to the effect that the Bond
Registrar has full legal right, power and authority to act as the Bond Registrar
under the Ordinance;
a certificate, dated the date of the Closing, signed by the Representative, in form and substance satisfactory to the City and Co-Bond' Counsel;
an executed copy of the Undertaking substantially in the form summarized in the Official Statement under the heading "SECONDARY MARKET DISCLOSURE";
a copy of an agreement between the City and DTC relating to the safekeeping and book-entry form of the Bonds;
a copy, duly certified by the City Clerk of the City, of the Ordinance, as passed by the City Council and approved by the Mayor;
evidence satisfactory to the Representative that the Bonds have ratings of "Baal (Negative Outlook)" by Moody's Investors Service, Inc., "A+" (Negative Outlook) by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and "A-" (Negative Outlook) by Fitch;
evidence satisfactory to the Representative that the Bonds maturing on January 1, 2031 (the "Insured Bonds"), have ratings of at least "A2 (Stable Outlook)" from Moody's Investors Service, Inc., and "AA- (Stable Outlook)" from Standard & Poor's, a division of The McGraw-Hill Companies, Inc., all based upon the Municipal Bond Insurance Policy (the "Policy") issued by Assured Guaranty Corp., New York, New York (the "Insurer");

10

the Policy of the Insurer insuring payment of the Insured Bonds in the form of the specimen policy attached as Appendix H to the Official Statement which Policy shall be in full force and effect as of the Closing and non-cancelable;
a certificate from the Insurer and an opinion from counsel to the Insurer addressed to the City and to the Representative, both dated the date of Closing, in form and substance satisfactory to the City and to the Representative, with respect to the valid issuance and effectiveness of the Policy and to the accuracy and completeness of the Official Statement as to the Insurer and the Policy;
an executed copy of each of the Escrow Agreements;
(xx) a certificate from each escrow agent (collectively, the "Escrow
Agents") to the effect that such Escrow Agent has full legal right, power and
authority to act as Escrow Agent under the related Escrow Agreement;
a verification report of Robert Thomas, CPA, LLC, dated the date of the closing, as to the accuracy of certain calculations with respect to the Bonds and the Refunded Bonds; and
such additional closing certificates and agreements related to the Series 2014A Bonds, including such tax certifications and agreements relating to the Bonds, as Co-Bond Counsel shall reasonably determine to be necessary to deliver their opinions as provided hereinabove.
(b) All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement will be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Representative, in its reasonable judgment. Payment for the Bonds and acceptance of the Bonds by the Underwriters shall constitute acknowledgment by the Underwriters of the City's full performance hereunder.
11. Expenses. The Underwriters shall be under no obligation to pay, and the City shall pay, any and all expenses incident to the performance of the City's obligations hereunder, including but not limited to: (a) the cost of the preparation and printing or other reproduction of the Ordinance, the Preliminary Official Statement and the Official Statement, as well as the cost of shipping the Official Statement; (b) the cost of the preparation and printing of the Bonds; (c) the fees and disbursements of Co-Bond Counsel and Co-Disclosure Counsel; (d) the fees and disbursements of any experts or consultants retained by the City; (e) the fees of the Escrow Agents, DTC and the Bond Registrar; (f) the fees for the municipal bond ratings on the Bonds; and (g) the premium for the Policy. The Underwriters will pay the expenses incurred by them or any of them in connection with their public offering and distribution of the Bonds, including, but not limited to, the CUSIP Service Bureau charges, the fees and expenses of Underwriters' Counsel and advertising expenses directly incurred by the Underwriters.


11

The City shall pay for any expenses (included in the expense component of the Underwriters' discount) incurred by the Underwriters on behalf of the City in connection with the marketing, issuance and delivery of the Bonds, including, but not limited to, meals, transportation, lodging, and entertainment of the City's employees and representatives.
Notices. Any notice or other communication to be given to the City under this Agreement shall be given by delivering the same in writing at the address set forth above, and any such notice or other communication to be given to the Underwriters shall be given by delivering the same in writing to the Representative at the following address:
Wells Fargo Bank, National Association 10 South Wacker Drive, Floor 15 Chicago, Illinois 60606 Attention: Lawrence J. Richardson
No Third Party Beneficiaries. Survival, Etc. This Agreement is made solely for the benefit of the City and the Underwriters (including the successors or assigns of any Underwriter), and no other person, partnership, association or corporation including any purchaser of the Bonds shall acquire or have any right hereunder or by virtue hereof. All of the representations and agreements by the City in this Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriters and shall survive the delivery of and payment for the Bonds.
Governing Law. The rights and obligations of me parties to this Agreement shall be governed by, construed and enforced in accordance with the laws of the State, without giving effect to the conflict of laws provisions thereof.
Representations and Warranties of the Underwriters. The Underwriters represent and warrant that:
(a) They have heretofore authorized the Representative to execute any
document on behalf of or exercise any authority of and otherwise to act for, the
Underwriters in all matters under or pertaining to this Agreement. Each Underwriter has
warranted and confirmed to the Representative, and the Representative warrants and
confirms to the City that: (i) it is duly registered under the 1934 Act, as a broker/dealer or
municipal securities dealer and has duly paid the fee prescribed by MSRB Rule A-12 or
is exempt from such requirements, (ii) it "is (a) a member in good standing of the
Financial Industry Regulatory Authority ("FINRA") or (b) otherwise eligible under
FINRA rules to receive underwriting discounts and concessions available to such
members with respect to underwriters of municipal securities, and (iii) it has complied
with the dealer registration requirements, if any, of the various jurisdictions in which it
offers Bonds for sale. The Underwriters represent, warrant and covenant that they are and
will be in compliance with all applicable laws, rules and regulations in connection with
the offering, issuance and sale of the Bonds.
(b) To the knowledge of the Underwriters, no person holding office of the


12

City, either by election or appointment, is in any manner financially interested, either directly in the officer's own name or indirectly in the name of any other person, association, trust or corporation, in any contract being entered into or the performance of any work to be carried out in connection with the issuance and sale of the Bonds upon which said officer may be called upon to act or vote.
Each Underwriter severally represents to the City that neither the Underwriter, nor any Affiliate thereof is listed on any of the following lists maintained by the Office of Foreign Assets Control of the United States Department of the Treasury, the Bureau of Industry and Security of the United States Department of Commerce, the United States Department of State or their successors, or on any other list of persons or entities with which the City may not do business under any applicable law, rule, regulation, order or judgment: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List, the List of Statutorily Debarred Parties and the Excluded Parties List. Such representation shall be provided to the City in the form attached hereto as Exhibit E.
For purposes of this representation, "Affiliate," when used to indicate a relationship with a specified person or entity, means a person or entity that, directly or indirectly, through one or more intermediaries,, controls, is controlled by or is under common control with such specified person or entity, and a person or entity shall be deemed to be controlled by another person or entity, if controlled in any manner whatsoever that results in control in fact by that other person or entity (or that other person or entity and any persons or entities with whom that other person or entity is acting jointly or in concert), whether directly or indirectly and whether through share ownership, a trust, a contact or otherwise.
The Underwriters may enter into distribution agreements with certain financial institutions for the retail distribution of municipal securities, including the Bonds, at the initial public offering price. In accordance with such arrangements, the Underwriters may share a portion of its underwriting compensation.

Approval. The approval of the Underwriters when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing signed by the Representative and delivered to the City.
Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties and their successors and assigns, and will not confer any rights upon any other person. The terms "successors" and "assigns" shall not include any purchaser of any Bond or Bonds from the Underwriters merely because of such purchase.
Enforceability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions, because it conflicts with any provisions of any constitution, statute, rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstances, or of rendering any other


13
provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever.
Counterparts. This Agreement may be executed in several counterparts, each of which shall be regarded as the original and all of which shall constitute one and the same document.
Business Relationships with City Elected Officials. Each Underwriter understands and agrees that it is required to and will comply with the provisions of Chapter 2-56 and 2-156 of the Municipal Code of Chicago (the "Municipal Code"). Pursuant to Section 2-156-030(b) of the Municipal Code, it is illegal for any elected official of the City, or any person acting at the direction of such official, to contact, either orally or in writing, any other City official or employee with respect to any matter involving any person with whom the elected official has a business relationship, or to participate in any discussion in any City Council committee hearing or in any City Council meeting or to vote on any matter involving the person with whom an elected official has a business relationship. Violation of Section 2-156-030(b) of the Municipal Code by any elected official with respect to this Agreement shall be grounds for termination of this Agreement. The term "business relationship" shall be defined as set forth in Section 2-156-080 of the Municipal Code.
Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters covered hereby, and supersedes all prior agreements and understandings between the parties. This Agreement shall only be amended, supplemented or modified in a writing signed by both of the parties hereto.



























14
IN WITNESS WHEREOF, the parties hereto have caused this Bond Purchase Agreement in connection with the City of Chicago General Obligation Bonds, Project and Refunding Series 2014A, and the CiW of Chicago General Obligation Bonds, Taxable Project and Refunding Series 2014B, to be executed by their duly authorized representatives as of the date first above written.

Very truly yours,

THE UNDERWRITERS

Wells Fargo Bank, National Association
BMO Capital Markets GKST, Inc.
Cabrera Capital Markets, LLC
Loop Capital Markets LLC
William Blair & Company
Blaylock, Beal, Van LLC
Estrada Hinojosa & Company, Inc.
George K. Bauin & Company
Goldman Sachs & Co.
fvlischler Financial Group, Inc.
North South Capital LLC
Ramirez & Co., Inc.
The Williams Capital Group, L.P.

By: WELLS FARGO BANK, NATIONAL ASSOCIATION
As Representative


Schedule I
Terms Of Bonds
Aggregate Principal Amount: $883,420,000
Dated: Date of Issuance (Expected to be March 24, 2014)
Maturities, Principal Amounts, Interest Rates, Prices and CUSIP Numbers: $432,630,000 General Obligation Bonds, Project and Refunding Scries 2014A
Maturity Interest
(January 1) Principal Amount Rate
$ 2,735,000 4.00%
2,850,000 4.00%
3,700,000 4.00%
4,950,000 5.00%
5,075.000 5.00%
4,920,000 5.00%
2024 625,000 4.00%
4,500,000 5.00%
5,000,000 5.00%
4,000,000 5.00%
10,675,000 5.00%
23,055,000 5.25%
30,270,000 5.25%
3,710,000 5.00%

36,950,000 5.25%
15,425,000* 5.25%
42,615,000 5.25%
44,875,000 5.25%
49,700,000 5.00%
69,000,000 5.00%
68,000,000 5.00%
Price
108.935 109.338 108.289 112.361 110.911 109.262 100.397 108.436 106.598 104.716 103.351 104.580 103.706 100.000 102.918 103.864 101.673 101.134 98.511 98.217 97.658
CUSIP
167486SE0
167486SF7
167486SG5
167486SH3
167486SJ9
167486SK6
167486SL4
167486TA7
167486SM2
167486SN0
167486SP5
167486SW0
167486SQ3
167486SR1
167486SZ3
167486SY6
167486SS9.
167486ST7
167486SU4
167486SV2
167486SX8
Insured Bonds

$450,790,000 General Obligation Bonds, Taxable Project and Refunding Series
2014B

Maturity Interest
(January I) Principal Amount Rate Price CUSP?
2044 450,790,000 6.314% 100.000 167486SD2

4. Redemption.
The Bonds are subject to both optional and mandatory redemption prior to maturity, as described below. The Bonds shall be redeemed only in principal amounts of $5,000 and integral multiples thereof.

Optional Redemption. The Series 2014A Bonds maturing on and after January 1, 2025, are subject to redemption prior to maturity at the option of the City, in whole or in part, on any date on or after January 1, 2024, and if less than all of the outstanding Series 2014A Bonds, a single maturity and interest rate are to be redeemed, the Series 2014A Bonds called shall be called by lot, at a redemption price equal to the principal amount of the Series 2014A Bonds being redeemed plus accrued interest to the date fixed for redemption.
The City is authorized to sell or waive any right the City may have to call any of the Series 2014A Bonds for optional redemption, in whole or in part; provided, that such sale or waiver will not adversely affect the excludability of interest on the Series 2014A Bonds from gross income for federal income tax purposes.
Optional Redemption of the Series 2014B Bonds with Make Whole Payment. The Series 2014B Bonds shall be subject to redemption prior to maturity at the option of the City, in whole or in part, on any Business Day (as defined below) at a redemption price equal to the greater of: (A) the principal amount of Bonds to be redeemed, or (B) the sum of the present values of the remaining scheduled payments of principal and interest on such Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date such Bonds are to be redeemed, discounted to the date of redemption of such Bonds to be redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (defined below) plus 40 basis points plus accrued interest on such Bonds being redeemed to the date fixed for redemption.

The make whole optional redemption price of the Series 2014B Bonds to be redeemed will be calculated by an independent accounting firm, investment banking firm or financial advisor (the "Calculation Agent") retained by the City at the City's expense. The Bond Registrar and the City may rely on the Calculation Agent's determination of the make whole optional redemption price and will not be liable for such reliance. An authorized officer of the City shall confirm and transmit the redemption price as so calculated on such dates and to such parties as shall be necessary to effectuate such redemption.
The "Treasury Rate" is, as of any redemption date, the yield to maturity as of such redemption date of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available four Business Days (as defined below) prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the maturity date of the Series 2014B Bonds to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year will be used. "Business Day" means any day other than a day on which banks in New York, New York, Chicago, Illinois, or the city in which the Bond Registrar maintains its designated office are required or authorized to close. The Treasury Rate will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the City at the City's expense.

The City is authorized to sell or waive any right the City may have to call the Series 2014B Bonds for optional redemption.
Mandatory Redemption of the Bonds. The Series 2014B Bonds due January 1, 2044, are subject to mandatory redemption prior to maturity, at par and accrued interest to the date fixed for redemption, on January 1 of the following years and in the following principal amounts:
Year 2037 2038 2039 2040 2041 2042 2043 2044
Principal Amount
$ 37,770,000 50,625,000 57,670,000 28,255,000 32,255,000 34,300,000 101,745,000 108,170,000*

* Final Maturity
Exhibit A Preliminary Official Statement
Exhibit B-1 Supplemental Opinion of Co-Bond Counsel




March 24,2014
Wells Fargo Bank, National Association
Chicago, Illinois as Representative of the Underwriters named in the Bond Purchase Agreement described below
City of Chicago
121 North LaSalle Street, 7th Floor Chicago, Illinois 60602

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series
2014A
$450,790,000 General Obligation Bonds,
Taxable Project and Refunding Series 2014B

Ladies and Gentlemen:

This opinion is being delivered to you in connection with the authorization and sale of the above-referenced obligations (collectively, the "Bonds"). The Bonds have been delivered this date to the underwriters named in the Bond Purchase Agreement dated March 13, 2014 (the "Purchase Agreement"), between the City of Chicago (the "City"), and the Underwriters named in the Purchase Agreement acting through the Representative (as defined in the Purchase Agreement), relating to the sale and purchase of the Bonds. Terms used and not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

Based upon our examination of a certified copy of a record of the proceedings of the City Council of the City (the "City Council") related to the issuance of the Bonds, we are of the opinion that:

1. Pursuant to an ordinance adopted by the City Council on the 5th day of February, 2014, authorizing the issuance of the Bonds (as supplemented by a Notification of Sale, the "Bond Ordinance"), the City has duly authorized, executed and delivered the Purchase Agreement and the Undertaking (together with the Purchase Agreement, the "Czfy Documents"), and, assuming the due authorization, execution, delivery and the binding effect on the other parties

thereto, each of the City Documents constitutes a legal, valid and binding obligation of the City, enforceable against the City in accordance with its respective terms, except that the enforceability of the City Documents may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

2. Based upon our examination of such documents and questions of law as we have deemed relevant in connection with the offering and sale of the Bonds under the circumstances described in the Official Statement, we are of the opinion that, under existing law, the Bonds are not required to be registered under the Securities Act of 1933, as amended, and the Bond Ordinance is not required to be qualified under the Trust Indenture Act of 1939, as amended.

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

This opinion is furnished by us as Co-Bond Counsel to the City. No attorney-client relationship has existed or exists between our firm and the Underwriters in connection with the Bonds or by virtue of this opinion. This opinion is solely for the benefit of the Underwriters and the City and may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent.

Very truly yours,
Exhibit B-2 Letter of Co-Bond Counsel


March 24,2014
City of Chicago
121 North LaSalle Street, 7th Floor Chicago, Illinois 60602


Wells Fargo Bank, National Association Chicago, Illinois
as Representative of the Underwriters
named in the Bond Purchase Agreement
described below

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series
2014A
$450,790,000 General Obligation Bonds,
Taxable Project and Refunding Series 2014B

Ladies and Gentlemen:

We have acted as Co-Bond Counsel in connection with the sale and issuance by the City of Chicago (the "City") of the above-referenced obligations (collectively, the "Bonds"). We have rendered our separate opinions, dated the date hereof, as to the validity, enforceability and tax status of interest on the Bonds. The Bonds have been delivered this date to the underwriters named in the Bond Purchase Agreement dated March 13, 2014, between the City and such underwriters (the "Underwriters"), relating to the sale and purchase of the Bonds.

We have not been engaged nor have we undertaken to review or verify the accuracy, completeness or sufficiency of the information contained in or appended to the Official Statement dated March 13, 2014 (the "Official Statement") or other offering material relating to the Bonds, except that in our capacity as Co-Bond Counsel in connection with the issuance of the Bonds we have reviewed the information contained in the Official Statement under the captions: "The Bonds" (except for the information relating to The Depository Trust Company and its book-entry system and operations) and "Security FOR the Bonds" (except for any information contained (i) in Appendix B referenced under such caption and (ii) under the subcaption "Bankruptcy") solely to determine whether such information and summaries conform to the Bonds and the ordinance adopted by the City Council of the City on the 5th day of February, 2014, authorizing the issuance of the Bonds (as supplemented by the Notification of Sale delivered by the Chief Financial Officer of the City, the "Bond Ordinance"). The




11
purpose of our professional engagement was not to establish or confirm factual matters in the Official Statement, and we have not undertaken any obligation to verify independently any of the factual matters set forth under these captions and reviewed by us. Subject to the foregoing, the summary descriptions in the Official Statement under such captions excepting those matters set forth above, as of the date of the Official Statement and as of the date hereof, insofar as such descriptions purport to describe or summarize certain provisions of the Bonds and the Bond Ordinance, are accurate summaries of such provisions in all material respects. Further, we confirm the opinions attributed to us in the Official Statement and consent to the references to such opinions contained therein, s In addition, the information in the Official Statement under the caption "Tax Matters" purporting to describe or summarize our opinions concerning certain federal tax matters relating to the Bonds has been reviewed by us and is an accurate summary in all material respects. Except as specifically described in this paragraph, we express no opinion herein with respect to and have not undertaken to determine independently the accuracy, fairness or completeness of any statements contained, appended or incorporated by reference in the Official Statement.

By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not a legal opinion but is rather in the nature of observations based on certain limited activities performed by specific lawyers in our firm in our role as Co-Bond Counsel to the City; (ii) the scope of those activities performed by us for purposes of delivering this letter was inherently limited and does not purport to encompass all activities necessary for compliance with applicable securities laws; (iii) those activities performed by us rely on third party representations, warranties, certifications, statements and opinions, including and primarily, representations, warranties and certifications made by the City, and are otherwise subject to the conditions set forth herein; (iv) we have not been engaged to act, and have not acted, as counsel to the Underwriters for any purpose in connection with the issuance of the Bonds; (v) no attorney-client relationship exists or has at any time existed between us and the Underwriters in connection with the Bonds or by virtue of this letter; and (vi) this letter is based upon our review of proceedings and other documents undertaken as part of our engagement with the City, and in order to deliver this letter we neither undertook any duties or responsibilities to the Underwriters nor conducted any activities in addition to those undertaken or conducted for the benefit of, and requested by, the City. Consequently, we make no representation that our review has been adequate for the Underwriters' purposes.

This letter is given as of the date hereof and we assume no obligation to revise or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention. This letter is furnished by us as Co-Bond Counsel to the City. No attorney-client relationship has existed or exists between our firm and the Underwriters in connection with the Bonds or by virtue of this letter. This letter is solely for the benefit of the Underwriters and the City and may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent.

Exhibit B-3 Letters of Special Disclosure Counsel


March 24,2014


City of Chicago
121 North LaSalle Street, 7th Floor Chicago, Illinois 60602

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series 2014A $450,790,000 General Obligation Bonds,Taxable Project and Refunding Series 2014B (collectively, the "Bonds")

Ladies and Gentlemen:
We have acted as special disclosure counsel to you, the City of Chicago (the "City"), solely in connection with the information contained in Appendix E — "Retirement Funds and Other Post-Employment Benefits" (the "Pension Section") of the Official Statement dated March 13, 2014 (the "Official Statement") relating to the Bonds issued by the City on this date.

In accordance with our understanding with the City, we have reviewed the Pension Section, certificates of officers of the City and other appropriate persons, and such other records, reports, opinions and documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the conclusion hereinafter expressed. As to facts material to the views expressed herein, we have, with your consent, relied upon oral or written statements or representations of officers or other representatives or agents of or consultants to the City and of or to the Municipal Employees' Annuity and Benefit Fund of Chicago, the Policemen's Annuity and Benefit Fund of Chicago, the Firemen's Annuity and Benefit Fund of Chicago, and the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago (collectively, the "Retirement Funds"), including the representations and warranties of the City in the Contract of Purchase dated March 13, 2014, between the City and Wells Fargo Bank, National Association, on behalf of itself and the other underwriters named therein (collectively, the "Underwriters"). We have not independently verified such matters. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement.

In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, reports, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein, including, without limitation, any representations and legal conclusions regarding the due authorization, issuance, delivery", validity and enforceability of the Bonds, the tax treatment of interest on the Bonds for federal income tax purposes, and the application of Bond proceeds in accordance with the authorization therefor). We have assumed that all records, reports, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine.

We are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Pension Section and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the City, to assist you in discharging your responsibility with respect to the Pension Section, we participated in conferences and correspondence with representatives of the City, the City's attorneys, the Underwriters, co-counsel to the Underwriters, and other persons involved in the preparation of information for the Pension Section, during which the contents of the Pension Section and related matters were discussed and revised. The purpose of our professional engagement was not to establish or confirm factual matters set forth in the Pension Section, and we have not undertaken any obligation to verify independently any of the factual matters set forth therein. Moreover, many of the determinations required to be made in the preparation of the Pension Section involve matters of a non-legal nature. Based on our participation in the above-mentioned conferences and correspondence, and in reliance thereon and on our limited review of the records, reports, documents, certificates, statements, representations, warranties, opinions and matters mentioned above, without independent verification, we advise you as a matter of fact and not opinion that, during our engagement as disclosure counsel to the City in connection with the Pension Section, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such limited role which caused us to believe that the Pension Section (apart from the financial statements or other financial, operating, numerical, accounting or statistical data or forecasts, estimates, projections, assumptions or expressions of opinion, or matters of litigation contained or incorporated therein, as to which we do not express any conclusion or belief) contained as of its date or contains as of the date hereof any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No responsibility is undertaken or statement rendered herein with respect to any other portions of the Official Statement or any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Official Statement.

By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not a legal opinion but is rather in the nature of negative observations based on certain limited activities performed by specific lawyers in our firm during our



i I
engagement to the City as disclosure counsel in connection with the Pension Section; (ii) the scope of those activities performed by us for purposes of delivering this letter was inherently limited and does not purport to encompass all "activities necessary for compliance with applicable securities laws; and (iii) those activities performed by us rely on third party representations, warranties, certifications, statements and opinions, including and primarily, representations, warranties and certifications made by the City, and are otherwise subject to the conditions set forth herein.
We express herein no opinion or belief with respect to the validity of the Bonds or the taxation thereof or of the interest thereon, and our expression of belief with respect to the Pension Section assumes the validity of the Bonds and the tax treatment of the interest payable thereon for federal income tax purposes, all as set forth in the opinions of Co-Bond Counsel.

This letter is furnished by us in our limited capacity as disclosure counsel to the City in connection with the Pension Section. This letter may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent. This letter is given as of the date hereof and we assume no obligation to revise or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention.

Respectfully submitted,
March 24,2014


Wells Fargo Bank, National Association, as Representative of the Underwriters named in the Contract of Purchase described below

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series 2014A $450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B (collectively, the "Bonds")

Ladies and Gentlemen:
We have acted as special disclosure counsel to the City of Chicago (the "City"), solely in connection with the information contained in Appendix E — "Retirement Funds and Other Post-Employment Benefits" (the "Pension Section") of the Official Statement dated March 13, 2014 (the "Official Statement") relating to the Bonds issued by the City on this date.

In accordance with our understanding with the City, we have reviewed the Pension Section, certificates of officers of the City and other appropriate persons, and such other records, reports, opinions and documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the conclusion hereinafter expressed. As to facts material to the views expressed herein, we have, with your consent, relied upon oral or written statements or representations of officers or other representatives or agents of or consultants to the City and of or to the Municipal Employees' Annuity and-Benefit Fund of Chicago, the Policemen's Annuity and Benefit Fund of Chicago, the Firemen's Annuity and Benefit Fund of Chicago, and the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago (collectively, the "Retirement Funds"), including the representations and warranties of the City in the Contract of Purchase dated March 13, 2014 between the City and Wells Fargo Bank, National Association, on behalf of itself and the other underwriters named therein (collectively, the "Underwriters"). We have not independently verified such matters. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement.

In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity,

accuracy and sufficiency of the records, reports, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein). We have assumed that all records, reports, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine.

We are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Pension Section and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the City, to assist it in discharging its responsibility with respect to the Pension Section, we participated in conferences and correspondence with your representatives, representatives of the City, the City's attorneys, co-counsel to the Underwriters, and other persons involved in the preparation of information for the Pension Section, during which the contents of the Pension Section and related matters were discussed and revised. The purpose of our professional engagement was not to establish or confirm factual matters set forth in the Pension Section, and we have not undertaken any obligation to verify independently any of the factual matters set forth therein. Moreover, many of the determinations required to be made in the preparation of the Pension Section involve matters of a non-legal nature. Based on our participation in the above-mentioned conferences and correspondence, and in reliance thereon and on our limited review of the records, reports, documents, certificates, statements, representations, warranties, opinions and matters mentioned above, without independent verification, we advise you as a matter of fact and not opinion that, during our engagement as disclosure counsel to the City in connection with the Pension Section, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such limited role which caused us to believe that the Pension Section (apart from the financial statements or other financial, operating, numerical, accounting or statistical data or forecasts, estimates, projections, assumptions or expressions of opinion, or matters of litigation contained or incorporated therein, as to which we do not express any conclusion or belief) contained as of its date or contains as of the date hereof any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No responsibility is undertaken or statement rendered herein with respect to any other portions of the Official Statement or any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Official Statement.

By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not a legal opinion but is rather in the nature of negative observations based on certain limited activities performed by specific lawyers in our firm during our engagement to the City as disclosure counsel in connection with the Pension Section; (ii) the scope of those activities performed by us for purposes of delivering this letter was inherently limited and does not purport to encompass all activities necessary for compliance with applicable securities laws; (iii) those activities performed by us rely on third party representations, warranties, certifications, statements and opinions, including and primarily, representations, warranties and certifications made by the City, and are

otherwise subject to the conditions set forth herein; (iv) we have not been engaged to act, and have not acted, as your counsel for any purpose in connection with the issuance of the Bonds; (v) no attorney-client relationship exists or has at any time existed between us in connection with the Bonds or by virtue of this letter; and (vi) this letter is based upon our review of proceedings and other documents undertaken as part of our engagement with the City, and in order to deliver this letter we neither undertook any duties or responsibilities to you nor conducted any activities in addition to those undertaken or conducted for the benefit of, and requested by, the City. Consequently, we make no representation that our review has been adequate for your purposes.
We express herein no opinion or belief with respect to the validity of the Bonds or the taxation thereof or of the interest thereon, and our expression of belief with respect to the Pension Section assumes the validity of the Bonds and the tax treatment of the interest payable thereon for federal income tax purposes, all as set forth in the opinions of Co-Bond Counsel.

This letter is furnished by us in our limited capacity as disclosure counsel to the City in connection with the Pension Section and is solely for the benefit of the Underwriters. This letter may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent. This letter is given as of the date hereof and we assume no obligation to revise or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention.


Respectfully submitted,
Exhibit C
Opinion of Corporation Counsel of the City
March 24, 2014



Wells Fargo Bank, National Association as Representative of the Underwriters named in the Bond Purchase Agreement, dated March 13, 2014 between such Underwriters and the City of Chicago

Ladies and Gentlemen:

This opinion is given to you pursuant to Section 10(a)(v) of that certain contract dated March 13, 2014 (the "Bond Purchase Agreement") between the City of Chicago (the "City") and Wells Fargo Bank, National Association, as representative of a group of Underwriters, respecting the purchase of City of Chicago $432,630,000 General Obligation Bonds, Project and Refunding Series 2014A and $450,790,000 General Obligation Bonds Taxable Project and Refunding Series 2014B (collectively, the "Bonds") which are being issued pursuant to an ordinance adopted by the City Council of the City on February 5, 2014 (the "Ordinance"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Bond Purchase Agreement.

- In connection with the issuance of the Bonds, I have caused to be examined a certified copy of the record of proceedings of the City Council of the City pertaining to the issuance of the Bonds by the City, the Official Statement dated March 13, 2014, relating to the Bonds (the "Official Statement"), and executed counterparts, where applicable, of the following documents:
the Ordinance;
the Bond Purchase Agreement;
that certain Continuing Disclosure Undertaking dated the date hereof pursuant to the requirements of
Section
(b) (5) of Rule 15c-12 of the Securities and Exchange Commission (the "Undertaking"); and

(d) Escrow Agreements dated the date hereof between ' the City and Amalgamated Bank of Chicago (the "Escrow Agreement").

On the basis of such examination and review of such other information, records and documents as was deemed necessary or advisable, I am of the opinion that:
The City is a home rule unit of local government duly organized and existing under the Constitution and laws of the State of Illinois with full power and authority, among other things, to adopt the Ordinance, to authorize, issue and sell the Bonds, and to execute and deliver the Bond Purchase Agreement, the Escrow Agreements and the Undertaking.
The Bond Purchase Agreement, the Escrow Agreements and the Undertaking have been duly authorized, executed and delivered by, and the Ordinance has been duly adopted by, the City, and, assuming the due execution and delivery by the other parties thereto, as appropriate, such instruments constitute legal and valid obligations of the City in each case enforceable in accordance with their respective terms except as may be limited by bankruptcy, insolvency and other laws affecting creditors' rights or remedies and the availability of equitable remedies generally.
To my knowledge, compliance with the provisions of the Bonds, the Ordinance, the Bond Purchase Agreement, the Escrow Agreements and the Undertaking does not conflict in a material manner with, or constitute a material breach of or material default under, any applicable law, administrative regulation, court order or consent decree of the State of Illinois, or any department, division, agency or instrumentality thereof or of the United States of America or any ordinance, agreement or other instrument to which the City is a party or is otherwise subject.
To my knowledge, all approvals, consents and orders of and filings (except with respect to state "blue sky" or securities laws) with any governmental authority, board, agency or commission having jurisdiction which would constitute conditions precedent to the performance by the City of its obligations under the Ordinance, the Bond Purchase Agreement, the Escrow Agreements, the Undertaking and the Bonds have been obtained.
There is no litigation or proceeding pending, or to my knowledge, threatened, materially affecting the existence of the City or seeking to restrain or enjoin the issuance, sale or delivery of the Bonds, or contesting the validity or enforceability of the Bonds, the Ordinance, the Bond Purchase Agreement, the Escrow Agreements or the Undertaking, or the completeness or accuracy of the Official Statement, or the powers of the City or its authority with respect to the Bonds, the Ordinance, the Bond Purchase Agreement, the Escrow Agreements or the Undertaking.

Nothing has come to my attention which would lead me to believe that the Official Statement (excluding information under the caption "THE BONDS - Book-Entry

System," relating to The Depository Trust Company, "RATINGS," "CERTAIN VERIFICATIONS," "UNDERWRITING," and "TAX MATTERS," Appendices C and F, infonriation sourced in Appendices A, B, D, and E to sources other than the City or departments thereof, any information in or omitted from the Official Statement relating to DTC, any information in or omitted from the Official Statement relating to any information furnished by the Underwriters for use in the Official Statement, the financial statements and all other financial and statistical data contained in the Official Statement, including the Appendices thereto) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any. material respect.

No opinion is expressed as to any "blue sky" or other securities laws or as to the laws regarding taxation of any state or the United States of America, or any disclosure or compliance related thereto.

The statements contained herein are made in an official capacity and not personally and no personal responsibility shall derive from them. Further, the only opinions that are expressed are the opinions specifically set forth herein, and no opinion is implied or should be inferred as to any other matter or transaction.

No one other than you shall be entitled to rely on this opinion.

Very truly yours,



Stephen R. Patton Corporation Counsel
Exhibit D Opinion of Co-Disclosure Counsel


March 24, 2014



Wells Fargo Bank, National Association as Representative of the Underwriters named in the Bond Purchase Agreement, dated March 13, 2014, between such Underwriters and the City of Chicago
$432,630,000
General Obligation Bonds, Project and Refunding Series
2014A
$450,790,000
General Obligation Bonds, Taxable Project and Refunding Scries 2014B

Dear Ladies and Gentlemen:

We have acted as Co-Disclosure Counsel to the City of Chicago (the "City") in connection with the issuance of $883,420,000 aggregate original principal amount of the City's General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds") and the City's General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Series 2014B Bonds" and, together with the Series 2014 A Bonds, the "Bonds"). This opinion is being rendered at the request of Wells Fargo Bank, N.A., as Representative of the Underwriters (the "Underwriters") named in the Bond Purchase Agreement, dated March 13, 2014 (the "Bond Purchase Agreement") between the City and Wells Fargo Bank, National Association, as Representative of the Underwriters (the "Representative") pursuant to Section 10(a)(vii) of the Bond Purchase Agreement. Capitalized terms used and not otherwise defined herein have the meanings as defined in the Bond Purchase Agreement.
For purposes of rendering this opinion, we have examined originals or executed copies of: (i) the Bond Purchase Agreement, (ii) the Ordinance, (iii) the Undertaking, and (iv) the legal opinions, agreements and certificates delivered pursuant to Section 10(a) of the Bond Purchase Agreement (collectively, the "Documents"). We have also participated in the preparation of the Preliminary Official Statement dated March 3, 2014 (the " Preliminary Official Statement") and me Official Statement dated March 13, 2014 (the "Official Statement") relating to the issuance of the Bonds. In our examinations, we have assumed the legal capacity of natural persons, the genuineness of signatures on, and the authenticity of, all documents so examined, the conformity

to originals of all documents submitted to us as copies, and that all records and other information made available to us, and on which we have relied, are complete in all respects.
Based upon and subject to our examination as described above and subject to the qualifications set forth herein, we are of the opinion that:
No registration is required under the Securities Act of 1933, as amended, with respect to the issuance of the Bonds, and no ordinance or indenture in respect of the Bonds is required to be qualified under the Trust Indenture Act of 1939, as amended.
The Undertaking complies with the requirements of paragraph (b)(5) of Regulation §240.15c2-12 (Rule 15c2-12) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as in effect as of the date of the Closing.
The statements contained in the Official Statement under the captions "UNDERWRITING" and "SECONDARY MARKET DISCLOSURE" insofar as such statements purport to summarize certain provisions of or describe certain legal matters related to the Bond Purchase Agreement or the Undertaking, as the case may be, constitute a fair and accurate summary of such provisions or legal matters.
We are not expressing (and cannot express) any opinion or view with respect to the authorization, issuance, delivery or validity of the Bonds, the tax exemption of the Bonds or the interest paid on the Bonds. Because the purpose of our professional engagement was not to establish factual matters and because of the wholly or partially nonlegal character of many of the determinations involved in the preparation of the Official Statement, except as stated in paragraph 3 of this letter, we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of such statements. Without limiting the foregoing, we assume no responsibility for, .and have not independently verified, the accuracy, completeness or fairness of the financial statements, notes to financial statements, tables and other financial, economic, market and statistical data included or incorporated by reference in the Official Statement and the appendices to the Official Statement, and we have not reviewed the accounting, financial or statistical records from which such financial statements, schedules, appendices and data are derived. We note that we are not experts within the meaning of the Securities Act of 1933, as amended, with respect to such financial statements or schedules or the other financial, economic, market, or statistical data included or incorporated by reference therein. During the preparation of the Official Statement, however, we participated in conferences with you, Co-Bond Counsel, Underwriters' Counsel, Corporation Counsel for the City and officials, employees and agents of the City, at which conferences the contents of the Official Statement and related matters were discussed. On the basis of the foregoing, but without independent verification of factual matters, nothing has come to our attention which would lead us to believe that the Official Statement and the Appendices thereto contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or omits to state a material fact necessary to make the statements therein, at the time and in the light of the circumstances under which they are made, not false or misleading; provided that we express no view as to: (i) any financial or statistical information included in the Official Statement or the Appendices thereto,

(ii) any information included in Appendix B, Appendix C; Appendix D, Appendix E, Appendix F and Appendix G thereto, and (ii) the description of DTC in the Official Statement and the information included in the Official Statement under the caption "THE BONDS — Book-Entry System."
Our opinions and advice expressed herein are limited to the matters expressly stated herein and no opinion is implied or may be inferred beyond the matters expressly stated.
Our opinions and advice expressed herein are rendered as of the date hereof and are based on existing law which is subject to change. We do not undertake to advise you of any changes in the opinions and advice expressed herein from matters that may hereafter arise or be brought to our attention or to revise or supplement such opinions and advice should the present laws of any jurisdiction be changed by legislative action, judicial decision, or otherwise.
This opinion and advice are solely for the information of the addressees hereof and are not to be quoted in whole or in part or otherwise referred to (except- in a list of closing documents), nor are they to be filed with any governmental agency or other person, without our prior written consent. Other than the addressees hereof, no one is entitled to rely on this opinion and advice.

Very truly yours,
Exhibit E
Representation Letter
City of Chicago
Department of Finance
121 North LaSalle Street, 7th Floor
Chicago, Illinois 60602
Attn.: Deputy Comptroller of Financial Policy
Wells Fargo Bank, National Association as Representative of the Underwriters named in the Bond Purchase Agreement, dated March 13, 2014, between such Underwriters and the City of Chicago


Pursuant to the Bond Purchase Agreement dated March 13, 2014 (the "Purchase Agreement"), among the City of Chicago (the "City") and Wells Fargo Bank, National Association, as representative (the "Representative") of the underwriters named therein (each an "Underwriter") relating to the City's General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds"), and the General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Series 2014B Bonds" and, together with the Series 2014A Bonds, the "Bonds"), each of the undersigned Underwriters severally represents to the City that:
Neither the Underwriter, nor any Affiliate thereof is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce, the U.S. Department of State or their successors, or on any other list of persons or entities with which the City may not do business under any applicable law, rule, regulation, order or judgment: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List, the List of Statutorily Debarred Parties and the Excluded Parties List.
For purposes of this representation, "Affiliate," when used to indicate a relationship with a specified person or entity, means a person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified person or entity, and a person or entity shall be deemed to be controlled by another person or entity,, if controlled in any manner whatsoever that results in control in fact by that other person or entity (or that other person or entity and any persons or entities with whom that other person or entity is acting jointly or in concert), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise.
The undersigned Underwriters agree that in the event that any Underwriter or any of its Affiliates appears on any of the lists described in paragraph (1) above, at any time prior to the Closing (as defined in the Purchase Agreement) with respect to the Bonds, that Underwriter shall be deemed to have submitted to the Representative its Withdrawal From Agreement Among Underwriters.

IN WITNESS WHEREOF, the parties hereto have caused this Representation Letter in connection with the Bonds to be executed by their duly authorized representatives as of the date written below.
Dated: , 2014

WELLS FARGO BANK, NATIONAL BMO CAPITAL MARKETS GKST, INC. ASSOCIATION
By:
By: Its:
Its: Managing Director
CABRERA CAPITAL MARKETS, LLC

By:_
Its:
LOOP CAPITAL MARKETS LLC

By:
Its:

WILLIAM BLAIR & COMPANY

By:
Its:'
BLAYLOCK, BEAL. VAN LLC

By:
Its:

ESTRADA HLNOJOSA & COMPANY, INC

By:
Its:
GEORGE K. BAUM & COMPANY

By:
Its:

MISCHLER FINANCIAL GROUP, INC.
By: Its:
By: Its:

NORTH SOUTH CAPITAL LLC RAMIREZ & CO., INC.

By: By:
Its: Its:
THE WILLIAMS CAPITAL GROUP, L.P.
By:
Its:

State of Illinois )
) ss
County of Cook )
Notification of Sale $432,630,000
General Obligation Bonds, Project and Refunding Series 2014A

$450,790,000
General Obligation Bonds, Taxable Project and Refunding Series 2014B

Being Issued by the City of Chicago

To: The City Council of the City of Chicago

Please be advised that responsive to authority contained in an Ordinance (the "Ordinance") adopted by the City Council (the "City Council") of the City of Chicago (the "City") on February 5,2014, authorizing the issuance of up to $900,000,000 aggregate principal amount of general obligation bonds of the City, plus original issue discount, a Bond Purchase Agreement dated March 13, 2014 (the "Bond Purchase Agreement"), providing for the sale of $432,630,000 aggregate principal amount of General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds"), and $450,790,000 aggregate principal amount of General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Taxable Series 2014B Bonds" and together with the Series 2014A Bonds, the "Bonds"), was entered into by me as the Chief Financial Officer of the City, with the concurrence of the Chairman of the Committee on Finance of the City Council, and the purchasers thereof named below (the "Underwriters").

The Series 2014A Bonds were sold at a purchase price of $435,549,851.04 (representing the aggregate principal amount of the Series 2014A Bonds plus original issue premium of $5,207,768.55, less an underwriters' discount of $2,287,917.51); and the Taxable Series 2014B Bonds were sold at the purchase price of $448,135,142.01 (representing the aggregate principal amount of the Taxable Series 2014B Bonds less an underwriters' discount of $2,654,857.99). The aggregate purchase price for the Bonds is equal to $883,684,993.05 (which represents the aggregate principal amount of the Bonds plus an original issue premium of $5,207,768.55, less an aggregate underwriters' discount of $4,942,775.50). The Underwriters for the Bonds are Wells Fargo Bank, National Association, BMO Capital Markets GKST Inc., Cabrera Capital Markets, LLC, Loop Capital Markets LLC, William Blair & Company, L.L.C., Blaylock, Beal, Van LLC, Estrada Hinojosa & Company, Inc., George K. Baum & Company, Goldman Sachs & Co., Mischler Financial Group, Inc., North South Capital LLC, Ramirez & Co., Inc., and The Williams Capital Group, L.P. The compensation (including all fees) of $4,942,775.50 being paid to the Underwriters in connection with the sale of the Bonds represents less than 3% of the aggregate principal amount of the Bonds.


3547503.O1.16.doc 2205201
Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Ordinance.

The Series 2014A Bonds are being issued for the purpose of: (i) paying a portion of the costs of the Project; (ii) refunding certain Outstanding Indebtedness, (iii) funding capitalized interest on the Series 2014A Bonds through January 1, 2016; and (iv) paying the costs of issuance of the Series 2014A Bonds (including the Underwriters' discount).

The Taxable Series 2014B Bonds are being issued for the purpose of: (i) paying a portion of the costs of the Project; (ii) refunding certain Outstanding Indebtedness, (iii) funding capitalized interest on the Taxable Series 2014B Bonds through July 1, 2015; and (iv) paying the costs of issuance of the Taxable Series 2014B Bonds (including the Underwriters' discount).

Attached hereto as Exhibits 1 and 2, respectively, are executed copies of the Bond Purchase Agreement and the Official Statement dated March 13, 2014, as supplemented by the Supplement to the Official Statement dated March 18,2014.

Pursuant to Section 12 of the Ordinance, the undersigned hereby makes the following determinations: (a) the principal amount of the Bonds is $883,420,000 and the designation of the Bonds and principal amount of the Series 2014A Bonds and the Taxable Series 2014B Bonds are set forth in the first paragraph hereof, (b) the Bonds are issued as Current Interest Bonds in denominations of $5,000 or any integral multiple thereof, none of which are sold as Retail Bonds, (c) the Bonds mature and are subject to redemption as set forth in Schedules IA and IB attached hereto, (d) the principal amounts and interest rates on the Current Interest Bonds are set forth in Schedules IA and IB attached hereto, (e) a portion of the proceeds of the Series 2014A and Taxable Series 2014B Bonds have been used for the refunding of Outstanding Indebtedness described in Schedule IC, and, in connection therewith, none of the proceeds of the Bonds have been used for a payment under any Existing Interest Rate Exchange Agreement, (f) Assured Guaranty Corp., New York, New York, is issuing an insurance policy for the January 1, 2031 maturity of the Series 2014A Bonds, (g) the Bonds are issued in book-entry form; the book entry depository is The Depository Trust Company, (h) the sale price of the Bonds is as set forth in the second paragraph of this Notification of Sale, (i) the Underwriters of the Bonds and the ' compensation paid thereto are as set forth above, and (j) the Bond Registrar for the Bonds is Amalgamated Bank of Chicago, Chicago, Illinois and the refunding Escrow Agents are those described in Schedule IC.

Pursuant to Section 7 of the Bond Ordinance, the amount of taxes to be levied for the Bonds , in each year will be less than the levy of taxes specified in Section 7 of the Bond Ordinance and I have determined, pursuant to the Ordinance, to abate the excess levy of taxes not necessary for the purpose of payment of the principal of and interest on the Bonds, as specified, together with the annual tax levy requirements for the payment of the principal and interest on the Bonds, in the Notification of Tax Abatement filed concurrently with the City Clerk, a copy of which is attached hereto as Schedule II.





-2-

Pursuant to Sections 12 and 15 of the Ordinance, I have determined that the taxes levied for the years 2013 through 2053 for the payment of the Outstanding Indebtedness refunded with proceeds of the Bonds in the amounts shown in Schedule III, shall be abated as specified, pursuant to a certificate of reduction of taxes heretofore levied with respect to each series of the refunded Outstanding Indebtedness, to be filed within 30 days of the date of this Notification of Sale as provided in such certificate attached hereto as Schedule III.

I 1










































-4-
Exhibit 1 Bond Purchase Agreement
Bond Purchase Agreement
5883,420,000 CITY OF CHICAGO

vav «n nnn $450,790,000
$432,630,000 ' '
i riLi- . • tj j General Obligation Bonds,
General Obligation Bonds, _ UI „ . 4 j t> r j- e •
« j. j n c j- c • in,ii Taxable Project and Refunding Series
Project and Refunding Series 2014A 2014B

March 13, 2014

City of Chicago Office of the City Comptroller 121 North LaSalle Street, 7th Floor Chicago, Illinois 60602 Attention: Chief Financial Officer
Ladies and Gentlemen:
The undersigned, Wells Fargo Bank, National Association (the "Representative"), on behalf of itself and the other underwriters listed below (collectively, the "Underwriters"), hereby offers to enter into this Bond Purchase Agreement (the "Agreement") with the City of Chicago (the "City"), for the purchase by the Underwriters, and sale by the City, of all but not less than all of the City's General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds") and the City's General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Series 2014B Bonds" and, together with the Series 2014A Bonds, the "Bonds"). This offer is made subject to the acceptance by the City, evidenced by the signature of a duly authorized officer of the City in the space provided below, on or before 5:00 P.M., Chicago time on the date hereof, and upon such acceptance this Agreement shall be in full force and effect in accordance with its terms and shall be binding on the City and the Underwriters.
'The Representative is authorized, and hereby represents and warrants that it is authorized, to act as Representative of the Underwriters and to execute this Agreement and has full authority to take such action as it may deem advisable with respect to all matters pertaining to this Agreement. Each Underwriter hereby severally represents to the City that it is registered and in good sUmding under the Securities Exchange Act of 1934, as amended (the "1934 Act"), as a municipal securities dealer.

The primary role of the Underwriters is to purchase the Bonds, for resale to investors, in an arm's-length commercial transaction between the City and the Underwriters. The Underwriters have financial and other interests that differ from those of the City.
Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Preliminary Official Statement, as defined herein.

Agreement to Sell and Purchase.

Upon the terms and conditions and based upon the representations, warranties and covenants herein set forth, the Underwriters, jointly and severally, hereby agree to purchase from the City and the City hereby agrees to sell to the Underwriters: the Series 2014A Bonds at a price equal to $435,549,851.04 (which represents the aggregate principal amount of the Series 2014A Bonds less an Underwriters' discount of $2,287,917.51 and plus a net re-offering premium of $5,207,768.55), and the Series 2014B Bonds at a price equal to $448,135,142.01 (which represents the aggregate principal amount of the Series 2014B Bonds less an Underwriters' discount of $2,654,857.99).
It shall be a condition to the City's obligation to sell and deliver the Bonds that all the Bonds be purchased and paid for by the Underwriters at the Closing (as defined in Section 7 hereof) and a condition to the Underwriters' obligation to purchase and pay for the Bonds that all Bonds be issued, sold and delivered by the City at the Closing.
The Ordinance. The Bonds are authorized by an ordinance of the City adopted by the City Council of the City (the "City Council") on February 5, 2014 (the "Ordinance"), and will be issued and secured as provided thereunder. The Bonds will mature, bear interest and have such other terms and conditions as are set forth on Schedule I hereto.
The Preliminary Official Statement. Attached hereto as Exhibit A is a copy of the Preliminary Official Statement of the City, dated March 3, 2014, relating to the Bonds (the "PreljuTunary Official Statement"). For purposes of Rule 15c2-12 ("Rule 15c2-12") adopted by the Securities and Exchange Commission (the "SEC") under the 1934 Act, the Preliminary Official Statement is "deemed final" by the City as of its date except for the omission of such information as is perrnitted by Rule 15c2-12(b)(l).
Public Offering Price. The Underwriters have agreed to make a bona fide public offering of the Bonds at the initial offering prices set forth on Schedule I. The Representative will provide the City and Co-Bond Counsel (as defined herein) with a closing certificate confirming the reoffering yields and prices of the Series 2014A Bonds and the Underwriters acknowledge that the City and Co-Bond Counsel will rely on such certificate to establish the yield on the Series 2014A Bonds and that such reliance is material to the City in entering into this Agreement and in connection with the delivery of the Bonds.
The Official Statement.
(a) The City shall provide, or cause to be provided, at its expense, to the Underwriters no later than the earlier of (i) seven (7) business days after the date of this Agreement or (ii) the Closing, three copies of the Official Statement of the City, dated the date hereof, relating to the Bonds (the "Official Statement"), signed on behalf of the City by the Mayor or the Chief Financial Officer and the Official Statement so delivered shall be "final" for purposes of Rule 15c2-12. Such delivery of the Official Statement shall occur in sufficient time to accompany any confirmation that requests payment from any customer and in sufficient quantity to comply with the rules of the SEC and the Municipal Securities

|1010|j i
Rulemaking Board (the "MSRB").
(b) If on or prior to the Closing or within twenty-five (25) days after the "end of the underwriting period" (as hereinafter defined) any event known to the City relating to or affecting the City, the Ordinance or the Bonds, shall occur which would cause any statement of a material fact contained in the Official Statement to be materially incorrect or materially incomplete, the City will promptly notify the Representative in writing of the circumstances and details of such event. If, as a result of such event, it is necessary, in the joint opinion of the City and the Representative to amend or supplement the Official Statement by stating or restating any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, the City will forthwith prepare and furnish to the Underwriters a reasonable number of copies of an amendment of or a supplement to such Official Statement in form and substance satisfactory to the City and the Representative, at the City's sole cost and expense, which will so amend or supplement such Official Statement so that, as amended or supplemented, the Official Statement will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. For purposes of this Agreement, the term "end of the underwriting period" shall mean the later of the date of Closing or the date on which an Underwriter no longer retains an unsold balance of the Bonds for sale to the public. The Underwriters agree that the date on which the end of the underwriting period shall occur shall be the date of the Closing, unless the Underwriters otherwise notify the City in writing prior to twenty-five (25) days after the date of the Closing that, to the best of their knowledge, the Underwriters retain for sale to the public an unsold balance of the Bonds, in which case the end of the underwriting period shall be extended for additional periods of thirty (30) days each upon receipt of additional written notification from the Underwriters that, to the best of their knowledge, there exists an unsold balance of the Bonds, but in no event shall the end of the underwriting period be extended longer than sixty (60) days after the date of Closing.
The Official Statement shall be provided for distribution, at the expense of the City, in such quantity as may be requested by the Underwriters as set forth above in order to permit the Underwriters to comply with Rule 15c2-12, and the applicable rules of the MSRB, with respect to distribution of the Official Statement. The City shall prepare the Official Statement, including any amendments thereto, in word-searchable PDF format as described in the MSRB Rule G-32 and shall provide the electronic copy of the word-searchable PDF format of the Official Statement to the Underwriters no later than one (1) business day prior to March 24, 2014, to enable the Underwriters to comply with MSRB Rule G-32.
The City further agrees to provide the Underwriters with any advance refunding documents (as defined in MSRB Rule G-32) in a word-searchable PDF format as described in the MSRB's Rule G-32 and shall provide such electronic copy of the word-searchable PDF format of the advance refunding documents to the Underwriters no later than four (4) business days after March 24, 2014, to enable the Underwriter(s) to comply with MSRB Rule G-32.


|1010|(c) At or prior to the Closing, the Representative shall file, or cause to be filed, the Official Statement with the MSRB in compliance with the rules of the SEC and the MSRB. Promptly after the date after which the Underwriters are no longer obligated under Rule 15c2-12(b)(4) to deliver to potential customers the Official Statement, the Representative shall notify the City of such date.
6. Representations, Warranties and Covenants of the City. The City represents and warrants to the Underwriters as of the date hereof that:
The City is a municipal corporation and home rule unit of local government, existing under the Constitution and laws of the State of Illinois (the "State").
The City Council has: (i) duly adopted the Ordinance, which remains in full force and effect; (ii) duly authorized the use of the Preliminary Official Statement prior to the date hereof in connection with the public offering and sale of the Bonds and duly authorized the execution, delivery and distribution of the Official Statement in connection with the public offering and sale of the Bonds; and (iii) duly authorized and approved the execution and delivery of the Bonds, the escrow agreements to be executed and delivered by the City (collectively referred to herein as the "Escrow Agreements") in connection with the 'refunding of the general obligation bonds of the City identified in Appendix G to the Official Statement (the "Refunded Bonds"), this Agreement and a continuing disclosure undertaking pursuant to the provisions of Section (b)(5) of Rule 15c2-12 (the "Undertaking").
With the exception of the disclosure described in the Preliminary Official Statement in the section titled "SECONDARY MARKET DISCLOSURE - Corrective Action Related to Certain Bond Disclosure Requirements", the City has not failed during the previous five years to comply in all material respects with any previous undertakings in a written continuing disclosure contract or agreement under Rule 15c2-12.
The City has full legal right, power and authority to: (i) adopt the Ordinance; (ii) execute and deliver this Agreement, the Escrow Agreements, the Undertaking and the Official Statement; (iii) issue, sell and deliver the Bonds to the Underwriters pursuant to the Ordinance and as provided in this Agreement; and (iv) pay for the Bonds from the sources pledged under the Ordinance for their payment.
The adoption of the Ordinance and compliance with the provisions thereof do not, .and the execution and delivery of this Agreement, the Escrow Agreements, the Undertaking and the Official Statement will not, in any material manner, violate any applicable law or administrative regulation of the State or any department, division, agency or mstrumentality thereof or of the United States of America (the "Llnited States") or of any department, division, agency or instrumentality thereof, or any applicable judgment or decree to which the City is subject, or conflict with, in a material manner, or constitute a material breach of, or a material default under, any ordinance, agreement or other mstrument to which the City is a party or is otherwise bound.

(f) All approvals, consents and orders of, and filings (except, if any, under

|1010|applicable state "blue sky" laws) with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to the performance by the City of its obligations under this Agreement, the Escrow Agreements, the Undertaking, the Ordinance and the Bonds have been obtained or made.
The financial statements of the City contained in the Official Statement fairly present the financial position and results of operations of the City as of the date and for the periods therein set forth and the City has no reason to believe that such financial statements have not been prepared in accordance with generally accepted accounting principles as applied to governmental units, consistentiy applied except as otherwise noted therein.
The Official Statement (excluding any description of The Depository Trust Company ("DTC"), information under the captions "THE BONDS - Book-Entry System," "BOND INSURANCE", "RATINGS," "CERTAIN VERIFICATIONS," "UNDERWRITING," and "TAX MATTERS," APPENDIX D — "ECONOMIC, DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION (with respect to the information under the headings "— Economy," "— Percentage of Total Non-Farm Employment by Major Industry Sector" and "and "— Housing Market," and information relating to population, per capita personal income and employment, and unemployment rate with respect to the United States, the State of Illinois, Cook County and the Chicago MSA), Tables 1-10 included in APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS," APPENDIX F — "FORMS OF OPINIONS OF CO-BOND COUNSEL," any information in or omitted from the Official Statement relating to the Insurer and the Policy (both hereinafter defined), and information furnished by the Underwriters for use in the Official Statement) as of its date does not, and at the Closing will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect.
(i) Information in the Third Party Sourced Retirement Fund Tables is sourced
from documents published by the Retirement Funds and the City takes no responsibility
for the accuracy and completeness of such information; however, nothing has come to the
attention of the City which would lead the City to believe that the Third Party Sourced
Retirement Fund Tables are not true and correct in all material respects;
(j) The Ordinance, this Agreement, the Escrow Agreements, and the Undertaking, when duly executed and delivered by the parties thereto, as appropriate, will constitute legal, valid and binding obligations of the City enforceable in accordance with their terms (except to the extent that enforceability may be limited by bankruptcy, insolvency and other laws affecting creditors' rights or remedies and the availability of equitable remedies generally).
(k) When delivered to the Representative, and paid for by the Undeiwriters at the Closing in accordance with the provisions of tins Agreement, the Bonds will be duly authorized, executed and delivered and will constitute legal, valid and binding obligations of the City enforceable in accordance with their terms (except to the extent that enforceability may be limited by bankruptcy, insolvency and other laws affecting creditors' rights or

|1010|remedies and the availability of equitable remedies generally).
(1) Except as disclosed in the Official Statement, there is no action, suit or proceeding, at law or in equity, or before or by a court, public board or body, pending or, to the City's knowledge, threatened, against the City wherein an unfavorable decision, ruling or finding would materially adversely affect (i) the validity or enforceability of the Bonds, the Ordinance, this Agreement, the Escrow Agreements, or the Undertaking or (ii) the excludability from federal income taxation of the interest on the Series 2014A Bonds under the Internal Revenue Code of 1986, as amended (the "Code").
(m) The City has not taken, or omitted taking, and will not take or omit to take, any action, which action or omission would adversely affect the excludability from federal income taxation of the interest on the Series 2014A Bonds under the Code.
(n) Any certificate signed by any Authorized Officer of the City and delivered to the Representative at the Closing in connection with the issuance or sale of the Bonds shall be deemed to be a representation and warranty by the City to the Underwriters as to the statements made therein as of the date so delivered.
(o) The City will make available such information, execute such instruments and take such other action in cooperation with the Underwriters as the Representative may reasonably request to qualify the Bonds for offering and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate in writing; provided, however, that nothing in this Section 6(n) shall require the City to consent to general service of process in any state or jurisdiction other than the State.
(p) The City will apply the proceeds of the Bonds in accordance with the Ordinance.
(q) The City acknowledges and agrees that: (i) the transaction contemplated by this Agreement is an arm's length, commercial transaction between the City and the Underwriters in which the Underwriters are acting solely as a principal and not acting as a municipal advisor, financial advisor or fiduciary to the City; (ii) the Underwriters have not assumed any advisory or fiduciary responsibility to the City with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether any Underwriter has provided other services or is currently providing other services to the City on other matters); (iii) the Underwriters have financial and other interests that differ from those of the City; and (iv) the City has consulted its own legal, account, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate.
7. Closing. Subject to the conditions set forth in this Agreement, the closing (the "Closing") of the sale of the Bonds by the City and the purchase of the Bonds by the Underwriters, shall take place at approximately 9:00 a.m., Chicago time, on March 24, 2014, at the offices of Chapman and Cutler LLP, 111 W. Monroe Street, Chicago, Illinois (or at such other time, date and place as the City and the Representative mutually agree).

|1010|At the Closing, the City shall deliver or cause to be delivered to DTC, as securities depository, for the account of the Underwriters one fully registered certificate for each series, interest rate and maturity of the Bonds in the aggregate principal amount thereof, registered in the name of Cede & Co., as nominee for DTC.
Upon delivery of the Bonds to the Representative at the Closing, the City. will deliver to the Representative the closing documents as set forth in Section 10 hereof.
The Representative will accept delivery of the Bonds and pay the purchase price therefor at the Closing by delivering federal funds checks or making federal funds wire transfers or otherwise confirming deposits of same day funds, as the City shall direct, to the City's account at a bank specified by the City, in an aggregate amount equal to the purchase price of the Bonds pursuant to Section 1 hereof.

Reliance and Further Conditions of the Underwriters. The Underwriters have entered into this Agreement in reliance upon the representations, warranties and agreements of the City herein and the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriters' obligations under this Agreement are and shall be subject to the following further condition that at the time of the Closing, the Ordinance, the Undertaking, the Escrow Agreements, and this Agreement shall be in full force and effect and the Ordinance and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to with respect to the Official Statement pursuant to Section 5 hereof, and the City shall have duly adopted and there shall be in full force and effect such ordinances as, in the opinion of Chapman and Cutler LLP, Chicago, Illinois and Sanchez Daniels & Hoffman LLP, Chicago, Illinois, as co-bond counsel ("Co-Bond Counsel") shall be necessary in connection with the transactions contemplated hereby and thereby.
Termination of Agreement.
(a) The Underwriters shall have the right to cancel their obligations to purchase the Bonds and have the further right to terminate this Agreement, without liability therefor, by written notice to the City from the Representative, if, between the date hereof and the Closing:
(i) legislation shall be introduced in or enacted by the Congress of the United States or adopted by either House thereof or shall have been introduced and favorably reported for passage to either House by any committee of such House to which such legislation had been referred for consideration, or a decision shall have been rendered by or adopted by either House or a decision by a court of the United States or the United States Tax Court or an order, ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service, with respect to federal income taxation upon interest received on obligations of the general character of the Series 2014A Bonds which, in the Representative's reasonable opinion, does materially adversely affect the market price or marketability of the Series 2014A Bonds, or

|1010|legislation shall have been enacted by the Congress of the United States to become effective on or prior to the Closing, or a decision of a court of the United States shall be rendered, or a stop order, ruling, regulation or proposed regulation by or on behalf of the SEC or other agency having jurisdiction over the subject matter shall be issued or made, to the effect that the issuance, sale and delivery of the Bonds, or any similar obligations of any similar public body of the general character of the City, is in violation of, or has the effect of requiring the contemplated offering, sale and distribution of the Bonds to be registered under the Securities Act of 1933, as amended, or the enactment of the Ordinance or any ordinance of similar character is in violation of the Trust Indenture Act of 1939, as amended, or with the purpose or effect of otherwise prohibiting the issuance, sale or delivery of the Bonds as contemplated hereby or by the Official Statement or of obligations of the general character of the Bonds which, in the Representative's reasonable opinion, does materially adversely affect the market price or marketability of the Bonds, or
there shall have occurred any event which in the Representative's reasonable opinion, after consultation with its legal counsel, makes the Official Statement either (A) contain an untrue statement of a material fact or (B) omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in any material respect, and the City fails to prepare or furnish or fails to cause to be prepared or furnished to the Underwriters an amendment or supplement to the Official Statement, pursuant to Section 5 hereof, which will amend or supplement the Official Statement so that, as amended or supplemented, the Official Statement will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in a material respect, or
there shall be in force a general suspension of trading on The New York Stock Exchange, Inc., or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on The New York Stock Exchange, Inc., whether by virtue of a determination by that Exchange or by order of the SEC or any other governmental authority having jurisdiction, or
a general banking moratorium shall have been declared by either federal, State or New York authorities having jurisdiction and be in force, or
any legislation, ordinance, rule or regulation shall be enacted by the City or State, or any department or agency thereof, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the reasonable opinion of the Representative, would have a material adverse effect on the market price or marketability of the Bonds, or
a war involving the United States, an outbreak or escalation of or adverse development in hostilities or terrorist activities or other national or

|1010|international calamity or crisis shall have occurred which, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds, or
(viii) there shall be any proceeding or threatened proceeding by the SEC
against the City and such proceeding or threatened proceeding, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds.
(b) If the City, shall be unable to satisfy the conditions contained in this Agreement or if the Underwriters' obligations shall be terminated for any reason permitted by this Agreement, this Agreement shall tenninate and neither the City nor the Underwriters shall have any further obligations hereunder.
10. Closing Conditions.
(a) The Underwriters' obligations to purchase, to accept delivery of and to pay for the Bonds at the Closing shall be conditioned upon the City's performance of its obligations under Sections 6, 7 and 8 hereof and the Underwriters' receipt of the following documents:
three copies of the Official Statement manually executed by the Chief Financial Officer,
the approving opinions, dated the date of the Closing, of Co-Bond Counsel to the City, substantially in the form attached to the Official Statement as Appendix F;
the opinions, dated the date of the Closing and addressed to the Representative on behalf of the Underwriters and to the City, of Co-Bond Counsel, substantially in the form attached hereto as Exhibit B-1;
a letter dated the date of the closing and addressed to the Representative on behalf of the Underwriters and to the City, of Co-Bond Counsel, substantially in the form attached hereto as Exhibit B-2;
a letter dated the date of the closing and addressed to the City of Chapman and Cutler LLP, Special Disclosure Counsel to the City in connection with certain pension matters described in the Official Statement, substantially in the form attached hereto as Exhibit B-3, which letter shall also either be addressed to or accompanied by a reliance letter to the Representative on behalf of the Underwriters;
an opinion, dated the date of the Closing and addressed to the Representative on behalf of the Underwriters, of the Corporation Counsel of the City, substantially in the form attached hereto as Exhibit C;
(vii) an opinion or opinions, dated the date of the Closing and addressed

|10 10|to the Representative on behalf of the Underwriters, of Peck, Shaffer & Williams, a division of Dinsmore & Shohl LLP, Chicago, Illinois, as counsel for the Underwriters ("Underwriters' Counsel"), in form and substance satisfactory to the Representative;
(viii) . an opinion or opinions, dated the date of the Closing and addressed to the Representative on behalf of the Underwriters, of Duane Morris LLP, Chicago, Illinois, and Shanahan & Shanahan LLP, Chicago, Illinois, Co-Disclosure Counsel to the City, substantially in the form attached hereto as Exhibit
D;
(ix) a certificate, dated the date of the Closing, signed by' the Chief
Financial Officer, to the effect that (A) the representations and warranties of the
City herein are correct in all material respects as of the date of the Closing; and
(B) there has been no material adverse change in the financial condition of the
City since December 31, 2012, as reflected in Appendix C to the Official
Statement, except as set forth in the Official Statement;
(x) a certificate of Amalgamated Bank of Chicago, Chicago, Illinois,
as bond registrar and paying agent ("Bond Registrar"), to the effect that the Bond
Registrar has full legal right, power and authority to act as the Bond Registrar
under the Ordinance;
a certificate, dated the date of the Closing, signed by the Representative, in form and substance satisfactory to the City and Co-Bond Counsel;
an executed copy of the Undertaking substantially in the form summarized in the Official Statement under the heading "SECONDARY MARKET DISCLOSURE";
a copy of an agreement between the City and DTC relating to the safekeeping and book-entry form of the Bonds;
a copy, duly certified by the City Clerk of the City, of the Ordinance, as passed by the City Council and approved by the Mayor;
evidence satisfactory to the Representative that the Bonds have ratings of "Baal (Negative Outlook)" by Moody's Investors Service, Inc., "A+" (Negative Outlook) by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and "A-" (Negative Outlook) by Fitch;
evidence satisfactory to the Representative that the Bonds maturing on January 1, 2031 (the "Insured Bonds"), have ratings of at least "A2 (Stable Outlook)" from Moody's Investors Service, Inc., and "AA- (Stable Outlook)" from Standard & Poor's, a division of The McGraw-Hill Companies, Inc., all based upon the Municipal Bond Insurance Policy (the "Policy") issued by Assured Guaranty Corp., New York, New York (the "Insurer");

10
the Policy of the Insurer insuring payment of the Insured Bonds in the form of the specimen policy attached as Appendix H to the Official Statement which Policy shall be in full force and effect as of the Closing and non-cancelable;
a certificate from the Insurer and an opinion from counsel to the Insurer addressed to the City and to the Representative, both dated the date of Closing, in form and substance satisfactory to the City and to the Representative, with respect to the valid issuance and effectiveness of the Policy and to the accuracy and completeness of the Official Statement as to the Insurer and the Policy;
an executed copy of each of the Escrow Agreements;
(xx) a certificate from each escrow agent (collectively, the "Escrow
Agents") to the effect that such Escrow Agent has full legal right, power and
authority to act as Escrow Agent under the related Escrow Agreement;
a verification report of Robert Thomas, CPA, LLC, dated the date of the closing, as to the accuracy of certain calculations with respect to the Bonds and the Refunded Bonds; and
such additional closing certificates and agreements related to the Series 2014A Bonds, including such tax certifications and agreements relating to the Bonds, as Co-Bond Counsel shall reasonably deteirriine to be necessary to deliver their opinions as provided hereinabove.
(b) All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement will be deemed to be in compliance with the provisions hereof if,~but only if, they are in form and substance satisfactory to the Representative, in its reasonable judgment. Payment for the Bonds and acceptance of the Bonds by the Underwriters shall constitute acknowledgment by the Underwriters of the City's full performance hereunder.
11. Expenses. The Underwriters shall be under no obligation to pay, and the City shall pay, any and all expenses incident to the performance of the City's obligations hereunder, including but not limited to: (a) the cost of the preparation and printing or other reproduction of the Ordinance, the Preliminary Official Statement and the Official Statement, as well as the cost of shipping the Official Statement; (b) the cost of the preparation and printing of the Bonds; (c) the fees and disbursements of Co-Bond Counsel and Co-Disclosure Counsel; (d) the fees and disbursements of any experts or consultants retained by the City; (e) the fees of the Escrow Agents, DTC and the Bond Registrar; (f) the fees for the municipal bond ratings on the Bonds; and (g) the premium for the Policy. The Underwriters will pay the expenses incurred by them or any of them in connection with their public offering and distribution of the Bonds, including, but not limited to, the CUSIP Service Bureau charges, the fees and expenses of Underwriters' Counsel and advertising expenses directly incurred by the Underwriters.


11
i
The City shall pay for any expenses (included in the expense component of the Underwriters' discount) incurred by the Underwriters on behalf of the City in connection with the marketing, issuance and delivery of the Bonds, including, but not limited to, meals, transportation, lodging, and entertainment of the City's employees and representatives.
Notices. Any notice or other communication to be given to the City under this Agreement shall be given by delivering the same in writing at the address set forth above, and any such notice or other communication to be given to the Underwriters shall be ' given by delivering the same in writing to the Representative at the following address:
Wells Fargo Bank, National Association 10 South Wacker Drive, Floor 15 Chicago, Illinois 60606 Attention: Lawrence J. Richardson
No Third Party Beneficiaries, Survival, Etc. This Agreement is made solely for the benefit of the City and the Underwriters (including the successors or assigns of any Underwriter), and no other person, partnership, association or corporation including any purchaser of the Bonds shall acquire or have any right hereunder or by virtue hereof. All of the representations and agreements by the City in this Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriters and shall survive the deli very of and payment for the Bonds.
Governing Law. The rights and obligations of the parties to this Agreement shall be governed by, construed and enforced in accordance with the laws of the State, without giving effect to the conflict of laws provisions thereof.
Representations and Warranties of the Underwriters. The Underwriters represent and warrant that:
(a) They have heretofore authorized the Representative to execute any
document on behalf of or exercise any authority of and otherwise to act for, the
Underwriters in all matters under or pertaining to this Agreement. Each Underwriter has
warranted and confirmed to the Representative, and the Representative warrants and
confirms to the City that: (i) it is duly registered under the 1934 Act, as a broker/dealer or
municipal securities dealer and has duly paid the fee prescribed by MSRB Rule A-12 or
is exempt from such requirements, (ii) it is (a) a member in good standing of the
Financial Industry Regulatory Authority ("FINRA") or (b) otherwise eligible under
FINRA rules to receive underwriting discounts and concessions available to such
members with respect to underwriters of municipal securities, and (iii) it has complied
with the dealer registration requirements, if any, of the various jurisdictions in which it
offers Bonds for sale. The Underwriters represent, warrant and covenant that they are and
will be in compliance with all applicable laws, rules and regulations in connection with
the offering, issuance and sale of the Bonds.

(b) To the knowledge of the Underwriters, no person holding office of the


12
r
City, either by election or appointment, is in any manner financially interested, either directly in the officer's own name or indirectly in the name of any other person, association, trust or corporation, in any contract being entered into or the performance of any work to be carried out in connection with the issuance and sale of the Bonds upon which said officer may be called upon to act or vote.
Each Underwriter severally represents to the City that neither the Underwriter, nor any Affiliate thereof is listed on any of the following lists maintained by the Office of Foreign Assets Control of the United States Department of the Treasury, the Bureau of Industry and Security of the United States Department of Commerce, the United States Department of State or their successors, or on any other list of persons or entities with which the City may not do business under any applicable law, rule, regulation, order or judgment: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List, the List of Statutorily Debarred Parties and the Excluded Parties List. Such representation shall be provided to the City in the form attached hereto as Exhibit E.
For purposes of this representation, "Affiliate, " when used to indicate a relationship with a specified person or entity, means a person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified person or entity, and a person or entity shall be deemed to be controlled by another person or entity, if controlled in any manner whatsoever that results in control in fact by that other person or entity (or that other person or entity and any persons or entities with whom that other person or entity is acting jointly or in concert), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise.
The Underwriters may enter into distribution agreements with certain financial institutions for the retail distribution of municipal securities, including the Bonds, at the initial public offering price. In accordance with such arrangements, the Underwriters may share a portion of its underwriting compensation.

Approval. The approval of me Underwriters when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing signed by the Representative and delivered to the City. .
Successors and Assigns. This Agreement shall inure to the benefit of and be bmding upon the parties and their successors and assigns, and will not confer any rights upon any other person. The terms "successors" and "assigns" shall not include any purchaser of any Bond or Bonds from the Underwriters merely because of such purchase.
Enforceability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions, because it conflicts with any provisions of any constitution, statute, rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstances, or of rendering any other


13
' provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever.
Counterparts. This Agreement may be executed in several counterparts, each of which shall be regarded as the original and all of which shall constitute one and the same document.
Business Relationships with City Elected Officials. Each Underwriter understands and agrees that it is required to and will comply with the provisions of Chapter 2-56 and 2-156 of the Municipal Code of Chicago (the "Municipal Code"). Pursuant to Section 2-156-030(b) of the Municipal Code, it is illegal for any elected official of the City, or any person acting at the direction of such official, to contact, either orally or in writing, any other City official or employee with respect to any matter involving any person with whom the elected official has a business relationship, or to participate in any discussion in any City Council committee hearing or in any City Council meeting or to vote on any matter involving the person with whom an elected official has a business relationship. Violation of Section 2-156-030(b) of the Municipal Code by any elected official with respect to this Agreement shall be grounds for tennination of this Agreement. The term "business relationship" shall be defined as set forth in Section 2-156-080 of the Municipal Code.
Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters covered hereby, and supersedes all prior agreements and understandings between the parties. This Agreement shall only be amended, supplemented or modified in a writing signed by both of the parties hereto.



























14
IN WITNESS WHEREOF, the parties hereto have caused this Bond Purchase Agreement in connection with the City of Chicago General Obligation Bonds, Project and Refunding Series 2014A, and the City of Chicago General Obligation Bonds, Taxable Project and Refunding Series 2014B, to be executed by their duly authorized representatives as of the date first above written.
Very truly yours,
THE UNDERWRITERS
Wells Fargo Bank, National Association
BMO Capital Markets GKST, Inc.
Cabrera Capital Markets, LLC
Loop Capital Markets LLC
William Blair & Company
Blaylock, Beal, Van LLC
Estrada Hinojosa & Company, Inc.
George K. Baum & Company
Goldman Sachs & Co.
Mischler Financial Group, Inc.
North South Capital LLC
Ramirez & Co., Inc.
The Williams Capital Group, L.P.

By: WELLS FARGO BANK, NATIONAL ASSOCIATION
As Representative

Director
Accepted by the City:

CITY OF CHICAGO
Schedule I

Terms Of Bonds

1. Aggregate Principal Amount: $883,420,000

2. Dated: Date of Issuance (Expected to be March 24, 2014)
Maturities, Principal Amounts, Interest Rates, Prices and CUSIP Numbers: $432,630,000 General Obligation Bonds, Project and Refunding Series 2014A
Maturity (January 11
2018 2019 2020 2021 2022 2023 2024 2024 2025 2026 2027 2028 2029 2030 2030 2031 2032 2033 2034 2035 2036
Principal Amount
$ 2,735,000 2,850,000 3,700,000 4,950,000 5,075,000 4,920,000 625,000 4,500,000 5,000,000 4,000,000 10,675,000 23,055,000 30,270,000 3,710,000 36,950,000 15,425,000* 42,615,000 44,875,000 49,700,000 69,000,000 68,000,000
Interest Rate
4.00% 4.00% 4.00% 5.00% 5.00% 5.00% 4.00% 5.00% 5.00% 5.00% 5.00% 5.25% 5.25% 5.00% 5.25% 5.25% 5.25% 5.25% 5.00% 5.00% 5.00%
Price
108.935 109.338 108.289 112.361 110.911 109.262 100.397 108.436 106.598 104.716 103.351 104.580 103.706 100.000 102.918 103.864 101.673 101.134 98.511 98.217 97.658
cusrp
167486SE0
167486SF7
167486SG5
167486SH3
167486SJ9
167486SK6
167486SL4
167486TA7
167486SM2
167486SN0
167486SP5
167486SW0
167486SQ3
167486SR1
167486SZ3
167486SY6
167486SS9
167486ST7
167486SU4
167486SV2
167486SX8
* Insured Bonds

$450,790,000 General Obligation Bonds, Taxable Project and Refunding Series
2014B

Maturity Interest
(January 1) Principal Amount Rate Price CUSIP
2044 450,790,000 6.314% 100.000 167486SD2

4. Redemption.

The Bonds are subject to both optional and mandatory redemption prior to maturity, as described below. The Bonds shall be redeemed only in principal amounts of $5,000 and integral multiples thereof.

Optional Redemption. The Series 2014A Bonds maturing on and after January 1, 2025, are subject to redemption prior to maturity at the option of the City, in whole or in part, on any date on or after January 1, 2024, and if less than all of the outstanding Series 2014A Bonds, a single maturity and interest rate are to be redeemed, the Series 2014A Bonds called shall be called by lot, at a redemption price equal to the principal amount of the Series 2014A Bonds being redeemed plus accrued interest to the date fixed for redemption.
The City is authorized to sell or waive any right the City may have to call any of the Series 2014A Bonds for optional redemption, in whole or in part; provided, that such sale or waiver will not adversely affect the excludability of interest on the Series 2014A Bonds from gross income for federal income tax purposes.
Optional Redemption of the Series 2014B Bonds with Make Whole Payment. The Series 2014B Bonds shall be subject to redemption prior to maturity at the option of the City, in whole or in part, on any Business Day (as defined below) at a redemption price equal to the greater of: (A) the principal amount of Bonds to be redeemed, or (B) the sum of the present values of the remaining scheduled payments of principal and interest on such Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date such Bonds are to be redeemed, discounted to the date of redemption of such Bonds to be redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (defined below) plus 40 basis points plus accrued interest on such Bonds being redeemed to the date fixed for redemption.

The make whole optional redemption price of the Series 2014B Bonds to be redeemed will be calculated by an independent accounting firm, investment banking firm or financial advisor (the "Calculation Agent") retained by the City at the City's expense. The Bond Registrar and the City may rely on the Calculation Agent's detennination of the make whole optional redemption price and will not be liable for such reliance. An authorized officer of the City shall confirm and transmit the redemption price as so calculated on such dates and to such parties as shall be necessary to effectuate such redemption.
The "Treasury Rate" is, as of any redemption date, the yield to maturity as of such redemption date of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available four Business Days (as defined below) prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from die redemption date to the maturity date of the Series 2014B Bonds to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year will be used. "Business Day" means any day other than a day on which banks in New York, New York, Chicago, Illinois, or the city in which the Bond Registrar maintains its designated office are required or authorized to close. The Treasury Rate will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the City at the City's expense.

The City is authorized to sell or waive any right the City may have to call the Series 2014B Bonds for optional redemption.
Mandatory Redemption of the Bonds. The Series 2014B Bonds due January 1, 2044, are subject to mandatory redemption prior to maturity, at par and accrued interest to the date fixed for redemption, on January 1 of the following years and in the following principal amounts:
Year 2037 2038 2039 2040 2041 2042 2043 2044
Principal Amount
$ 37,770,000 50,625,000 57,670,000 28,255,000 32,255,000 34,300,000 101,745,000 108,170,000*

* Final Maturity
Exhibit A Preliminary Official Statement
Exhibit B-1 Supplemental Opinion of Co-Bond Counsel




March 24,2014
Wells Fargo Bank, National Association
Chicago, Illinois as Representative of the Underwriters named in the Bond Purchase Agreement described below
City of Chicago
121 North LaSalle Street, 7th Floor Chicago, Illinois 60602

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series
2014A
$450,790,000 General Obligation Bonds,
Taxable Project and Refunding Series 2014B

Ladies and Gentlemen:

This opinion is being delivered to you in connection with the authorization and sale of the above-referenced obligations (collectively, the "Bonds"). The Bonds have been delivered this date to the underwriters named in the Bond Purchase Agreement dated March 13, 2014 (the "Purchase Agreement"), between the City of Chicago (the "City"), and the Underwriters named in the Purchase Agreement acting through the Representative (as defined in the Purchase Agreement), relating to the sale and purchase of the Bonds. Terms used and not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

Based upon our examination of a certified copy of a record of the proceedings of the City Council of the City (the "City Council") related to the issuance of the Bonds, we are of the opinion that:

1. Pursuant to an ordinance adopted by the City Council on the 5th day of February, 2014, authorizing the issuance of the Bonds (as supplemented by a Notification of Sale, the "Bond Ordinance"), the City has duly authorized, executed and delivered the Purchase Agreement and the Undertaking (together with the Purchase Agreement, the "City Documents"), and, assuming the due authorization, execution, delivery and the binding effect on the other parties

thereto, each of the City Documents constitutes a legal, valid and binding obligation of the City, enforceable against the City in accordance with its respective terms, except that the enforceability of the City Documents may be. limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

2. Based upon our examination of such documents and questions of law as we have deemed relevant in connection with the offering and sale of the Bonds under the circumstances described in the Official Statement, we are of the opinion that, under existing law, the Bonds are not required to be registered under the Securities Act of 1933, as amended, and the Bond Ordinance is not required to be qualified under the Trust Indenture Act of 1939, as amended.

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

This opinion is furnished by us as Co-Bond Counsel to the City. No attorney-client relationship has existed or exists between our firm and the Underwriters in connection with the Bonds or by virtue of this opinion. This opinion is solely for the benefit of the Underwriters and the City and may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent.'

Very truly yours,
Exhibit B-2 Letter of Co-Bond Counsel


March 24,2014
City of Chicago
121 North LaSalle Street, 7th Floor Chicago, Illinois 60602


Wells Fargo Bank, National Association Chicago, Illinois
as Representative of the Underwriters
named in the Bond Purchase Agreement
described below

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series
2014A
$450,790,000 General Obligation Bonds,
Taxable Project and Refunding Series 2014B

Ladies and Gentlemen:
(
We have acted as Co-Bond Counsel in connection with the sale and issuance by the City of Chicago (the "City") of the above-referenced obligations (collectively, the "Bonds"). We have rendered our separate opinions, dated the date hereof, as to the validity, enforceability and tax status of interest on the Bonds. The Bonds have been delivered this date to the underwriters named in the Bond Purchase Agreement dated March 13, 2014, between the City and such underwriters (the "Underwriters"), relating to the sale and purchase of the Bonds.

We have not been engaged nor have we undertaken to review or verify the accuracy, completeness or sufficiency of the information contained in or appended to the Official Statement dated March 13, 2014 (the "Official Statement") or other offering material relating to the Bonds, except that in our capacity as Co-Bond Counsel in cormection with the issuance of the Bonds we have reviewed the information contained in the Official Statement under the captions: "The BONDS" (except for the information relating to The Depository Trust Company and its book-entry system and operations) and "SECURITY FOR THE BONDS" (except for any information contained (i) in Appendix B referenced under such caption and (ii) under the subcaption "Bankruptcy") solely to determine whether such information and summaries conform to the Bonds and the ordinance adopted by the City Council of the City on the 5th day of February, 2014, authorizing the issuance of the Bonds (as supplemented by the Notification of Sale delivered by the Chief Financial Officer of the City, the "Bond Ordinance"). The

purpose of our professional engagement was not to establish or confirm factual matters in the Official Statement, and we have not undertaken any obligation to verify independently any of the factual matters set forth under these captions and reviewed by us. Subject to the foregoing, the summary descriptions in the Official Statement under such captions excepting those matters set forth above, as of the date of the Official Statement and as of the date hereof, insofar as such descriptions purport to describe or summarize certain provisions of the Bonds and the Bond Ordinance, are accurate summaries of such provisions in all material respects. Further, we confirm the opinions attributed to us in the Official Statement and consent to the references to such opinions contained therein, s In addition, the information in the Official Statement under the caption "TAX MATTERS" purporting to describe or summarize our opinions concerning certain federal tax matters relating to the Bonds has been reviewed by us and is an accurate summary in all material respects. Except as specifically described in this paragraph, we express no opinion herein with respect to and have not undertaken to determine independently the accuracy, fairness or completeness of any statements contained, appended or incorporated by reference in the Official Statement.

By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not a legal opinion but is rather in the nature of observations based on certain limited activities performed by specific lawyers in our firm in our role as Co-Bond Counsel to the City; (ii) the scope of those activities performed by us for purposes of delivering this letter was inherentiy limited and does not purport to encompass all activities necessary for compliance with applicable securities laws; (iii) those activities performed by us rely on third party representations, warranties, certifications, statements and opinions, including and primarily, representations, warranties and certifications made by the City, and are otherwise subject to the conditions set forth herein; (iv) we have not been engaged to act, and have not acted, as counsel to the Underwriters for any purpose in connection with the issuance of the Bonds; (v) no attorney-client relationship exists or has at any time existed between us and the Underwriters in connection with the Bonds or by virtue of this letter; and (vi) this letter is based upon our review of proceedings and other documents undertaken as part of our engagement with the City, and in order to deliver this letter we neither undertook any duties or responsibilities to the Underwriters nor conducted any activities in addition to those undertaken or conducted for the benefit of, and requested by, the City. Consequently, we make no representation that our review has been adequate for the Underwriters' purposes.

This letter is given as of the date hereof and we assume no obligation to revise or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention. This letter is furnished by us as Co-Bond Counsel to the City. No attorney-client relationship has existed or exists between our firm and the Underwriters in connection with the Bonds or by virtue of this letter. This letter is solely for the benefit of the Underwriters and the City and may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent.

Very truly yours,
Exhibit B-3 Letters of Special Disclosure Counsel


March 24,2014


City of Chicago
121 North LaSalle Street, 7th Floor Chicago, Illinois 60602

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series 2014A $450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B (collectively, the "Bonds")

Ladies and Gentlemen:
We have acted as special disclosure counsel to you, the City of Chicago (the "City"), solely in connection with the information contained in Appendix E — "Retirement Funds and Other Post-Employment Benefits" (the "Pension Section") of the Official Statement dated March 13, 2014 (the "Official Statement") relating to the Bonds issued by the City on this date.

In accordance with our understanding with the City, we have reviewed the Pension Section, certificates of officers of the City and other appropriate persons, and such other records, reports, opinions and documents, and we have made such investigations of law, as we have deemed appropriate as a basis for the conclusion hereinafter expressed. As to facts material to the views expressed herein, we have, with your consent, relied upon oral or written statements or representations of officers or other representatives or agents of or consultants to the City and of or to the Municipal Employees' Annuity and Benefit Fund of Chicago, the Policemen's Annuity and Benefit Fund of Chicago, the Firemen's Annuity and Benefit Fund of Chicago, and the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago (collectively, the "Retirement Funds"), including the representations and warranties of the City in the Contract of Purchase dated March 13, 2014, between the City and Wells Fargo Bank, National Association, on behalf of itself and the other underwriters named therein (collectively, the "Underwriters"). We have not independently verified such matters. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement. N
t

i
In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, reports, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein, including, without limitation, any representations and legal conclusions regarding the due authorization, issuance, delivery, validity and enforceability of the Bonds, the tax treatment of interest on the Bonds for federal income tax purposes, and the application of Bond proceeds in accordance with the authorization therefor). We have assumed that all records, reports, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine.

We are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Pension Section and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the City, to assist you in discharging your responsibility with respect to the Pension Section, we participated in conferences and correspondence with representatives of the City, the City's attorneys, the Underwriters, co-counsel to the Underwriters, and other persons involved in the preparation of information for the Pension Section, during which the contents of the Pension Section and related matters were discussed and revised. The purpose of our professional engagement was not to establish or confirm factual matters set forth in the Pension Section, and we have not undertaken any obligation to verify independendy any of the factual matters set forth therein. Moreover, many of the determinations required to be made in the preparation of the Pension Section involve matters of a non-legal nature. Based on our participation in the above-mentioned conferences and correspondence, and in reliance thereon and on our limited review of the records, reports, documents, certificates, statements, representations, warranties, opinions and matters mentioned above, without independent verification, we advise you as a matter of fact and not opinion that, during our engagement as disclosure counsel to the City in connection with the Pension Section, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such limited role which caused us to believe that the Pension Section (apart from the financial statements or other financial, operating, numerical, accounting or statistical data or forecasts, estimates, projections, assumptions or expressions of opinion, or matters of litigation contained or incorporated therein, as to which we do not express any conclusion or belief) contained as of its date or contains as of the date hereof any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No responsibility is undertaken or statement rendered herein with respect to any other portions of the Official Statement or any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Official Statement.

By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not a legal opinion but is rather in the nature of negative observations based on certain limited activities performed by specific lawyers in our firm during our

engagement to the City as disclosure counsel in connection with the Pension Section; (ii) the scope of those activities performed by us for purposes of delivering this letter was inherently limited and does not purport to encompass all activities necessary for compliance with applicable securities laws; and (iii) those activities performed by us rely on third party representations, warranties, certifications, statements and opinions, including and primarily, representations, warranties and certifications made by the City, and are otherwise subject to the conditions set forth herein.
We express herein no opinion or belief with respect to the validity of the Bonds or the taxation thereof or of the interest thereon, and our expression of belief with respect to the Pension Section assumes the validity of the Bonds and the tax treatment of the interest payable thereon for federal income tax purposes, all as set forth in the opinions of Co-Bond Counsel.

This letter is furnished by us in our limited capacity as disclosure counsel to the City in connection with the Pension Section. This letter may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent. This letter is given as of the date hereof and we assume no obligation to revise or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention.

Respectfully submitted,
March 24,2014


Wells Fargo Bank, National Association, as Representative of the Underwriters named in the Contract of Purchase described below

Re: City of Chicago
$432,630,000 General Obligation Bonds, Project and Refunding Series 2014A $450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B (collectively, the "Bonds")

Ladies and Gentlemen:

We have acted as special disclosure counsel to the City of Chicago (the "City"), solely in connection with the information contained in Appendix E — "RETIREMENT Funds and Other Post-Employment Benefits" (the "Pension Section") of the Official Statement dated March 13,2014 (the "Official Statement") relating to the Bonds issued by the City on this date.

In accordance with our understanding with the City, we have reviewed the Pension Section, certificates of officers of the City and other appropriate persons, and such other records, reports, opinions and documents, and we have made such investigations of law, as we have deemed appropriate as a basis for >the conclusion hereinafter expressed. As to facts material to the views expressed herein, we have, with your consent, relied upon oral or written statements or representations of officers or other representatives or agents of or consultants to the City and of or to the Municipal Employees' Annuity and Benefit Fund of Chicago, the Policemen's Annuity and Benefit Fund of Chicago, the Firemen's Annuity and Benefit Fund of Chicago, and the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago (collectively, the "Retirement Funds"), including the representations and warranties of the City in the Contract of Purchase dated March 13, 2014 between the City and Wells Fargo Bank, National Association, on behalf of itself and the other underwriters named therein (collectively, the "Underwriters"). We have not independently verified such matters. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement.

In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity,

accuracy and sufficiency of the records, reports, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein). We have assumed that all records, reports, documents, certificates and opinions that we have reviewed, and the-signatures thereto, are genuine.

We are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Pension Section and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the City, to assist it in discharging its responsibility with respect to the Pension Section, we participated in conferences and correspondence with your representatives, representatives of the City, the City's attorneys, co-counsel to the Underwriters, and other persons involved in the preparation of information for the Pension Section, during which the contents of the Pension Section and related matters were discussed and revised. The purpose of our professional engagement was not to establish or confirm factual matters set forth in the Pension Section, and we have not undertaken any obligation to verify independently any of the factual matters set forth therein. Moreover, many of the determinations required to be made in the preparation of the Pension Section involve matters of a non-legal nature. Based on our participation in the above-mentioned conferences and correspondence, and in reliance thereon and on our limited review of the records, reports, documents, certificates, statements, representations, warranties, opinions and matters mentioned above, without independent verification, we advise you as a matter of fact and not opinion that, during our engagement as disclosure counsel to the City in connection with the Pension Section, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such limited role which caused us to believe that the Pension Section (apart from the financial statements or other financial, operating, numerical, accounting or statistical data or forecasts, estimates, projections, assumptions or expressions of opinion, or matters of litigation contained or incorporated therein, as to which we do not express any conclusion or belief) contained as of its date or contains as of the date hereof any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No responsibility is undertaken or statement rendered herein with respect to any other portions of the Official Statement or any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Official Statement.

By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not a legal opinion but is rather in the nature of negative observations based on certain limited activities performed by specific lawyers in our firm during our engagement to the City as disclosure counsel in connection with the Pension Section; (ii) the scope of those activities performed by us for purposes of delivering this letter was inherently limited and does not purport to encompass all activities necessary for compliance with applicable securities laws; (iii) those activities performed by us rely on third party representations, warranties, certifications, statements and opinions, including and primarily, representations, warranties and certifications made by the City, and are

otherwise subject to the conditions set forth herein; (iv) we have not been engaged to act, and have not acted, as your counsel for any purpose in connection with the issuance of the Bonds; (v) no attorney-client relationship exists or has at any time existed between us in connection with the Bonds or by virtue of this letter; and (vi) this letter is based upon our review of proceedings and other documents undertaken as part of our engagement with the City, and in order to deliver this letter we neither undertook any duties or responsibilities to you nor conducted any activities in addition to those undertaken or conducted for the benefit of, and requested by, the City. Consequentiy, we make no representation that our review has been adequate for your purposes.
We express herein no opinion or belief with respect to the validity of the Bonds or the taxation thereof or of the interest thereon, and our expression of belief with respect to the Pension Section assumes the validity of the Bonds and the tax treatment of the interest payable thereon for federal income tax purposes, all as set forth in the opinions of Co-Bond Counsel.

This letter is furnished by us in our limited capacity as disclosure counsel to the City in connection with the Pension Section and is solely for the benefit of the Underwriters. This letter may not be used, quoted, relied upon or otherwise referred to for any other purpose or by any other person (including any person purchasing any of the Bonds from the Underwriters) without our prior written consent. This letter is given as of the date hereof and we assume no obligation to revise or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention.


Respectfully submitted,
Exhibit C
Opinion of Corporation Counsel of the City
March 24, 2014



Wells Fargo Bank, National Association as Representative of the Underwriters named in the Bond Purchase Agreement, dated March 13, 2014 between such Underwriters and the City of Chicago

Ladies and Gentlemen:

This opinion is given to you pursuant to Section 10(a)(v) of that certain contract dated March 13, 2014 (the "Bond Purchase Agreement") between the City of Chicago (the "City") and Wells Fargo Bank, National Association, as representative of a group of Underwriters, respecting the purchase of City of Chicago $432,630,000 General Obligation Bonds, Project and Refunding Series 2014A and $450,790,000 General Obligation Bonds Taxable Project and Refunding Series 2014B (collectively, the "Bonds") which are being issued pursuant to an ordinance adopted by the City Council of the City on February 5, 2014 (the "Ordinance"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Bond Purchase Agreement.

In connection with the issuance of the Bonds, I have caused to be examined a certified copy of the record of proceedings of the City Council of the City pertaining to the issuance of the Bonds by the City, the Official Statement dated March 13, 2014, relating to the Bonds (the "Official Statement"), and executed counterparts, where applicable, of the following documents:
the Ordinance;
the Bond Purchase Agreement;
that certain Continuing Disclosure Undertaking dated the date hereof pursuant to the requirements of
Section
(b) (5) of Rule 15c-12 of the Securities and Exchange Commission (the "Undertaking"); and

(d) ¦ Escrow Agreements dated the date hereof between the City and Amalgamated Bank of Chicago (the "Escrow Agreement").

On the basis of such examination and review of such other information, records and documents as was deemed necessary or advisable, I am of the opinion that:
. The City is a home rule unit of local government duly organized and existing under the Constitution and laws of the State of Illinois with full power and authority, among other things, to adopt the Ordinance, to authorize, issue and sell the Bonds, and to execute and deliver the Bond Purchase Agreement, the Escrow Agreements and the Undertaking.
The Bond Purchase Agreement, the Escrow Agreements and the Undertaking have been duly authorized, executed and delivered by, and the Ordinance has been duly adopted by, the City, and, assuming the due execution and delivery by the other parties thereto, as appropriate, such instruments constitute legal and valid obligations of the City in each case enforceable in accordance with their respective terms except as may be limited by bankruptcy, insolvency and other laws affecting creditors' rights or remedies and the availability of equitable remedies generally.
To my knowledge, compliance with the provisions of the Bonds, the Ordinance, the Bond Purchase Agreement, the Escrow Agreements and the Undertaking does not conflict in a material manner with, or constitute a material breach of or material default under, any applicable law, administrative regulation, court order or consent decree of the State of Illinois, or any department, division, agency or instrumentality thereof or of the United States of America or any ordinance, agreement or other instrument to which the City is a party or is otherwise subject.
To my knowledge, all approvals, consents and orders of and filings (except with respect to state "blue sky" or securities laws) with any governmental authority, board, agency or commission having jurisdiction which would constitute conditions precedent to the performance by the City of its obligations under the Ordinance, the Bond Purchase Agreement, the Escrow Agreements, the Undertaking and the Bonds have been obtained.
There is no litigation or proceeding pending, or to my knowledge, threatened, materially affecting the existence of the City or seeking to restrain or enjoin the issuance, sale or delivery of the Bonds, or contesting the validity or enforceability of the Bonds, the Ordinance, the Bond Purchase Agreement, the Escrow Agreements or the Undertaking, or the completeness or accuracy of the Official Statement, or the powers of the City or its authority with respect to the Bonds, the Ordinance4, the Bond Purchase Agreement, the Escrow Agreements or the Undertaking.

Nothing has come to my attention which would lead me to believe that the Official Statement (excluding information under the caption "THE BONDS - Book-Entry

System" relating to The Depository Trust Company, "RATINGS," "CERTAIN VERIFICATIONS," "UNDERWRITING," and "TAX MATTERS," Appendices C and F, information sourced in Appendices A, B, D, and E to sources other than the City or departments thereof, any information in or omitted from the Official Statement relating to DTC, any information in or omitted from the Official Statement relating to any iriformation furnished by the Underwriters for use in the Official Statement, the financial statements and all other financial and statistical data contained in the Official Statement, including the Appendices thereto) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect.

No opinion is expressed as to any "blue sky" or other securities laws or as to the laws regarding taxation of any state or the United States of America, or any disclosure or compliance related thereto.

The statements contained herein are made in an official capacity and not personally and no personal responsibility shall derive from them. Further, the only opinions that are expressed are the opinions specifically set forth herein, and no opinion is implied or should be inferred as to any other matter or transaction.

No one other than you shall be entitled to rely on this opinion.

Very truly yours,



Stephen R. Patton Corporation Counsel
Exhibit D Opinion of Co-Disclosure Counsel


March 24, 2014



Wells Fargo Bank, National Association as Representative of the Underwriters named in the Bond Purchase Agreement, dated March 13, 2014, between such Underwriters and the City of Chicago
$432,630,000
General Obligation Bonds, Project and Refunding Series
2014A
$450,790,000
General Obligation Bonds, Taxable Project and Refunding Series 2014B

Dear Ladies and Gentlemen:

We have acted as Co-Disclosure Counsel to the City of Chicago (the "City") in connection with the issuance of $883,420,000 aggregate original principal amount of the City's General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds") and the City's General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Series 2014B Bonds" and, together with the Series 2014A Bonds, the "Bonds"). This opinion is being rendered at the request of Wells Fargo Bank, N.A., as Representative of the Underwriters (the "Underwriters") named in the Bond Purchase Agreement, dated March 13, 2014 (the "Bond Purchase Agreement") between the City and Wells Fargo Bank, National Association, as Representative of the Underwriters (the "Representative") pursuant to Section 10(a)(vii) of the Bond Purchase Agreement. Capitalized- terms used and not otherwise defined herein have the meanings as defined in the Bond Purchase Agreement.
For purposes of rendering this opinion, we have examined originals or executed copies of: (i) the Bond Purchase Agreement, (ii) the Ordinance, (iii) the Undertaking, and (iv) die legal opinions, agreements and certificates delivered pursuant to Section 10(a) of the Bond Purchase Agreement (collectively, the "Documents"). We have also participated in the preparation of the Preliminary Official Statement dated March 3, 2014 (the " Preliminary Official Statement") and the Official Statement dated March 13, 2014 (the "Official Statement") relating to the issuance of the Bonds. In our examinations, we have assumed the legal capacity of natural persons, the genuineness of signatures on, and the authenticity of, all documents so examined, the conformity

to originals of all documents submitted to us as copies, and that all records and other iriforrnation made available to us, and on which we have relied, are complete in all respects.
Based upon and subject to our examination as described above and subject to the qualifications set forth herein, we are of the opinion that:
No registration is required under the Securities Act of 1933, as amended, with respect to the issuance of the Bonds, and no ordinance or indenture in respect of the Bonds is required to be qualified under the Trust Indenture Act of 1939, as amended.
The Undeilaking complies with the requirements of paragraph (b)(5) of Regulation §240.15c2-12 (Rule 15c2-12) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as in effect as of the date of the Closing.
The statements contained in the Official Statement under the captions "UNDERWRITING" and "SECONDARY MARKET DISCLOSURE" insofar as such statements purport to summarize certain provisions of or describe certain legal matters related to the Bond Purchase Agreement or the Undertaking, as the case may be, constitute a fair and accurate summary of such provisions or legal matters.
We are not expressing (and cannot express) any opinion or view with respect to the authorization, issuance, delivery or validity of the Bonds, the tax exemption of the Bonds or the interest paid on the Bonds. Because the purpose of our professional engagement was not to establish factual matters and because of the wholly or partially nonlegal character of many of the determinations involved in the preparation of the Official Statement, except as stated in paragraph 3 of this letter, we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of such statements. Without limiting the foregoing, we assume no responsibility for, and have not independently verified, the accuracy, completeness or fairness of the financial statements, notes to financial statements, tables and other financial, economic, market and statistical data included or incorporated by reference in the Official Statement and the appendices to the Official Statement, and we have not reviewed the accounting, financial or statistical records from which such financial statements, schedules, appendices and data are derived. We note that we are not experts widiin the meaning of the Securities Act of 1933, as amended, with respect to such financial statements or schedules or the other financial, economic, market, or statistical data included or incorporated by reference therein. During the preparation of the Official Statement, however, we participated in conferences with you, Co-Bond Counsel, Underwriters' Counsel, Corporation Counsel for the City and officials, employees and agents of the City, at which conferences the contents of the Official Statement and related matters were discussed. On the basis of the foregoing, but without independent verification of factual matters, nothing has come to our attention which would lead us to believe that the Official Statement and the Appendices thereto contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or omits to state a material fact necessary to make the statements therein, at the time and in the light of the circumstances under which they are made, not false or misleading; provided that we express no view as to: (i) any financial or statistical information included in the Official Statement or the Appendices thereto,

(ii) any information included in Appendix B, Appendix C, Appendix D, Appendix E, Appendix F and Appendix G thereto, and (ii) the description of DTC in the Official Statement and the information included in the Official Statement under the caption "THE BONDS — Book-Entry System."
Our opinions and advice expressed herein are limited to the matters expressly stated herein and no opinion is implied or may be inferred beyond the matters expressly stated.
Our opinions and advice expressed herein are rendered as of the date hereof and are based on existing law which is subject to change. We do not undertake to advise you of any changes in the opinions and advice expressed herein from matters that may hereafter arise or be brought to our attention or to revise or supplement such opinions and advice should the present laws of any jurisdiction be changed by legislative action, judicial decision, or otherwise.
This opinion and advice are solely for the information of the addressees hereof and are not to be quoted in whole or in part or otherwise referred to (except in a list of closing documents), nor are they to be filed with any governmental agency or other person, without our prior written consent. Other than the addressees hereof, no one is entided to rely on this opinion and advice.

Very truly yours,
Exhibit E
Representation Letter
City of Chicago
Department of Finance
121 North LaSalle Street, 7th Floor
Chicago, Illinois 60602
Attn.: Deputy Comptroller of Financial Policy
Wells Fargo Bank, National Association as Representative of the Underwriters named in the Bond Purchase Agreement, dated March 13, 2014, between such Underwriters and the City of Chicago


Pursuant to the Bond Purchase Agreement dated March 13, 2014 (the "Purchase Agreement"), among the City of Chicago (the "City") and Wells Fargo Bank, National Association, as representative (the "Representative") of the underwriters named therein (each an "Underwriter") relating to the City's General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds"), and the General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Series 2014B Bonds" and, together with the Series 2014A Bonds, the "Bonds"), each of the undersigned Underwriters severally represents to the City that:
Neither the Underwriter, nor any Affiliate thereof is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce, the U.S. Department of State or their successors, or on any other list of persons or entities with which the City may not do business under any applicable law, rule, regulation, order or judgment: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List, the List of Statutorily Debarred Parties and the Excluded Parties List.
For purposes of this representation, "Affiliate," when used to indicate a relationship with a specified person or entity, means a person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified person or entity, and a person or entity shall be deemed to be controlled by another person or entity, if controlled in any manner whatsoever that results in control in fact by that other person or entity (or that other person or entity and any persons or entities with whom that other person or entity is acting jointly or in concert), whether directly or indirectly and whether through share ownership, a trust, a contract or otherwise.
The undersigned Underwriters agree that in the event that any Underwriter or any of its Affiliates appears on any of the lists described in paragraph (1) above, at any time prior to the Closing (as defined in the Purchase Agreement) with respect to the Bonds, that Underwriter shall be deemed to have submitted to the Representative its Withdrawal From Agreement Among Underwriters.

IN WITNESS WHEREOF, the parties hereto have caused this Representation Letter in connection with the Bonds to be executed by their duly authorized representatives as of the date written below.
Dated: , 2014
WELLS FARGO BANK, NATIONAL BMO CAPITAL MARKETS GKST, INC.
ASSOCIATION - ¦
By: 1
By: Its:
Its: Managing Director
CABRERA CAPITAL MARKETS, LLC

By:
Its:
LOOP CAPITAL MARKETS LLC

By:
Its: •

WILLIAM BLAIR & COMPANY

By:
Its:
BLAYLOCK, BEAL, VAN LLC

By:
Its:

ESTRADA HTNOJOSA & COMPANY, INC.

By:
Its:
GEORGE K. BAUM & COMPANY

By:
Its:

MISCHLER FINANCIAL GROUP, INC.
By: Its:
By: Its:

NORTH SOUTFI CAPITAL LLC RAMIREZ & CO., INC.

By: By:
Its: Its:

THE WILLIAMS CAPITAL GROUP, L.P.

By:
Its:

Exhibit 2

Official Statement Dated March 13,2014, as supplemented by the Supplement to the Official Statement Dated March 18,2014

























#
SUPPLEMENT DATED MARCH 18,2014 to
OFFICIAL STATEMENT DATED MARCH 13, 2014



$883,420,000 CITY OF CHICAGO
$432,630,000 General Obligation Bonds, Project and Refunding Series 20I4A
$450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B


This Supplement dated March 18, 201-1 (this "Supplement") supplements and amends the Official Statement dated March 13, 2014 (the "Official Statement") for the above captioned bonds. Capitalized terms used in this Supplement but not otherwise defined herein shall have the meanings set forth in the Official Statement.
The information set forth in this Supplement is provided only in respect of the $15,425,000 Series 2014A Bonds maturing on ( and only on) January 1, 2031 (the "Insured Bonds").
Assured Guaranty Municipal Corp.
On March 18, 2014, S&P published a Research Update report in which it upgraded AGM's financial strength rating to "AA" (stable outlook) from "AA-" (stable outlook). AGM can give no assurance as to any further ratings action that S&P may take. See "APPENDIX G — "BOND INSURANCE — Assured Guaranty Municipal Corp. — Current Financial Strength Ratings" in the Official Statement.
Ratings of Insured Bonds
The Insured Bonds are rated "AA" by S&P and "A2" by Moody's, contingent upon issuance of the Policy by AGM. See "RA TINGS" in the Official Statement.
This Supplement does not purport to be a complete statement or summary of the terms of the Insured Bonds. AGM or the Policy, and purchasers of the Insured Bonds should read the Official Statement, as supplemented and amended hereby, in its entirety.
NEW ISSUE-GLOBAL BOOK ENTRY

Subject to compliance by the City with certain covenants, in the respective opinions of Chapman and Cutter LLP, Chicago, Illinois, and Sanchez Daniels & Hoffman. LLP, Chicago, Illinois, Co-Bond Counsel, under prison I. law, intercut on the Series 2014A Bonds is excludable front gross income of lite owners thereoffor federal, income lax purposes and is not. included as an item, of lax preference in arm puling the federal alleriuilive minimum tax forimlividuals and corporations, but sveh interest is taken into account in coin put in// an a/ljiistnient. used in determining the federal alternative minimum tax for certain corporations. Interest on. the Taxable Series 2014B Bonds is includible in gross income of the owners thereof for federal income tax purposes. Interest on the Bond's is not. exempt fmm present Stale of Illinois income la:ces. See "TAX MATTERS" herein for a. more complete discussion.
$883,420,000 CITY OF CHICAGO
$432,630,000 $450,790,000
General Obligation Bonds, General Obligation Bonds,
Project and Refunding Series 2014A Taxable Project and Refunding Series 2014B
Dated: Date of Delivery Due: January 1, as shown on the inside front cover page
The General Obligation Bonds, Project ami Refunding Series 2014A (the "Scries 2014A Bonds") and the General Obligation Bonds, Taxable Project, and Refunding Series 2014B (the "Taxable Series 2014B Bonds" and together with the Series 2014A Bonds, the "Bonds") will be issuable as fully registered bonds and will be registered in Ihe name of Cede Interest on the Bonds will accrue from Ihe date of issuance and be payable on each January 1 and .Inly 1, commencing July 1, 2014. Principal of and interest on the Bonds will be paid by Amalgamated Bank of Chicago, Chicago, Illinois, as bond registrar and paying agent, to DTC, which in turn will remit such principal and interest, payments to its participants for subsequent disbursement to the beneficial owners of the Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments on the Bonds will be made lo such registered owner, and dishursal of such payments will be the responsibility of DTC and its participants. See "THE BONDS — Book-Entry System." i
The Bonds are direct, and general obligations of the City of Chicago (the "City") and all taxable properly in the City is subject lo the levy of taxes lo pay Ihe same without limitation ;is lo rate or amount The Cily has pledged its full faith and credit for the payment of the principal of and interest on the Bonds.
Proceeds of Ihe Bonds will be used as described herein. See "PLAN OF FINANCING."
The Bonds are subject lo redemption prior to maturity as described herein. See "THE BONDS — Redemption."
For maturities, principal amounts, interest rates, yields, prices and CUSIP numbers of the Bonds, see the inside front cover page.
The scheduled payment of principal of ;uid interest on the Scries 2014A Bonds maturing on (anil only on) January 1,2031 (t he "Insured Bonds"), when due will be guaranteed under an insurance policy (the "Policy") lobe issued concurrently with the delivery of the Insured Bonds by ASSURED GUARANTY MUNICIPAL CORP. ("AGM"). Sec APPENDIX G — "BOND INSURANCE."
Assured guaranty"
MUNICIPAL
77/c Bonds arc being offered when, as and if issued, and subject to the delivery of approwng leqal (/pinions by Chapman mid Cutler LLP and Sanchez Daniels & Hoffman. LLP, Co-Bond Counsel, and to certain, other conditions. Certain legal, matters will be passed on for the City by (i) its Corporation Counsel, (ii) in connection with llw prejiaratitm of this Official Statement, Dunne Morris LLP, Chicago, Illinois, and Shanahan & Shanahan LLP, Chicago, Illinois, Co-Disclosure Counsel to the City, and (iii) in connection with certain pension matters described in. this Official Statement, Chapman and. Cutler LLP, Chicago, Illinois, Special Disclosure Counsel. Certain legal matters will be. passed on for the Underwriters by Peck, Shaffer <& Williams, a division of Dinsniore & Shohl LLP, Chicago, Illinois, Underwriters' Counsel. It is Kir/iectal that the Bonds will be available for delivery through the facilities of DTC on or about. March 24, 2014.
Wells Fargo Securities
BMO Capital Markets Cabrera Capital Markets, LLC
Loop-Capital Markets LLC William Blair & Company
Blaylock Deal Van LLC Estrada Ilinojosa & Company, Inc.
George K. Baum & Company Goldman Sachs & Co.
Mischler Financial Group, Inc. North South Capital LLC
Ramirez & Co., Inc. The Williams Capital Group, L.P.
Catt-ci: March l.i, 2014

MATURITIES, AMOUNTS, INTEREST RATES, YIELDS, PRICES AND CUSIP NUMBERS

$432,630,000 General Obligation Bonds, Project and Refunding Series 20I4A
Maturity January I
2018 2019 2020 2021 2022 2023 2024 2024 2025 2026 2027 2028 2029 2030 2030 2031 2032 2033 2034 2035 2036
Principal Amount
S 2,735,000 2.850,000 3,700,000 4,950,000 5,075,000 4,920.000 625,000 4,500,000 5,000,000 4.000,000 10,675,000 23.055.000 30.270,000 3,710.000 36,950,000 15.425,000** 42,615,000 44,875,000 49,700,000 69,000,000 68,000.000
Interest Rate
4.00% 4.00 4.00 5 00 5 00 5 00
00
00 5 00 5.00 5.00 5.25 5.25 5.00 5 25 5 25 5 25 5 25 5.00 5 00 5.00
Yield
I 550%
940
450 2 970 3.390 3.750 3.950 3.950 4.170 4.400 4 570

660 4.770 5.000 4.870 4.750
030 5.100 5 120 5 140 5 180
Price*
935
338 108 289 112 361 110.911 109.262 100.397 108.436 106.598 104.716 103.351 104 580 103.706 100.000

918
864 101.673 101 134
98.511 98.217 97.658
CUSIP*
I67486SL0
1674X6SF7
167486SG5
167486SH3
1674X6SJ9
I67486SK.6
167486SL4
167486TA7
167486SM2
167486SN0
167486SP5
167486SW0
167486SQ3
167486SR1
167486SZ3
I67486SY6
I67486SS9
167486ST7
167486SU4
167486SV2
167486SX8
Price lo call dale of January 1, 2024.
The Scries 2014A Bonds due January I, 2031 are insured by Assured Guaranty Municipal Corp. APPENDIX G — "BOND INSURANCE."


$450,790,000 General Obligation Bonds, Taxable Project and Refunding Scries 20I4B

$450,790,000 6.314% Term Bonds due January I, 2044, Price 100.000% CUSIP*: 167486SD2








Copyright 2014, American Bankers Association CUSIP data herein are provided bv Standard & Poor's. CUSIP Service Bureau, a Division of I he McGraw-Hill Companies. Inc The CUSIP numbers listed are being provided solely for the convenience of the bondholders only at the lime of issuance of the Bonds and the City does not make any representation with respect lo such numbers or undertake any responsibility for their accuracy now or at any time m the future The CUSIP number for a specific maturity is subject to change alter the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in pari of such inatunty or as a result of the procurement of secondary market portfolio insurance or olher similar enhancement by investors that is applicable to all or a portion of certain mammies of the Bonds

CITY OF CHICAGO

MAYOR
Rahm Emanuel
CITY TREASURER
Stephanie D. Neely
CITY CLERK
Susana A. Mendoza
CITY COUNCIL COMMITTEE ON FINANCE
Edward M. Burke, Chairman
CHIEF FINANCIAL OFFICER
Lois A. Scott
CITY COMPTROLLER
Daniel J. Widawsky
BUDGET DIRECTOR
Alexandra Holt
CORPORATION COUNSEL
Stephen R. Patton, Esq.
CO-BOND COUNSEL
Chapman and Cutler LLP Chicago, Illinois
Sanchez Daniels & Hoffman LLP Chicago, Illinois
CO-DISCLOSURE COUNSEL Duane Morris LLP Chicago, Illinois
Shanahan & Shanahan LLP Chicago, Illinois
CO-FINANCIAL ADVISORS
Andrew Kalotay Associates. Inc. Columbia Capital Management LLC

[Tins Page Intentionally left Blank]































i
i
Certain information contained in, or incorporated by reference in, this Official Statement has been obtained by the City of Chicago (the "City") from The Depository Trust Company and other sources that are deemed reliable. No representation or warranty is made, however, as to the accuracy or completeness of such information by the Underwriters or the City. 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 under 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. This Official Statement is being used in connection with the sale of securities as referred to herein and may not be used, in whole or in part, for any other purpose. The delivery of this Official Statement at any time does not imply that information herein is correct as of any time subsequent to its date.
Assured Guaranty Municipal Corp. ("AGM") makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under APPENDIX G — "BOND INSURANCE/'
No dealer, broker, salesperson or any other person has been authorized by the City or the Underwriters to give any information or to make any representation other than as contained in this Official Statement in connection with the offering described herein and, if given or made, such other information or representation 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 any securities other than those described on the cover page, nor shall there be any offer to sell, solicitation of an offer to buy or sale of such securities in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the registered or beneficial owners of the Bonds.
This Official Statement, including the Appendices (except for certain information in (i) APPENDIX D — "ECONOMIC, DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION" and (ii) "Source Information" as defined and used in APPENDIX E, all of which is sourced to parties other than the City), contains certain opinions, estimates and forward-looking statements and information, including projections, that are based on the City's beliefs as well as assumptions made by and information currently available to the City. Such opinions, estimates, projections and forward-looking statements set forth in this Official Statement were not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, bul, in the view of the City, were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of the City's knowledge and belief, the expected course of action and the expected future financial performance of the City. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this Official Statement are cautioned not to place undue reliance on such opinions, statements or prospective financial information.
The prospective financial information set forth in this Official Statement, except for certain information sourced to parties other than the City, is solely the product of the City. Neither the City's independent auditors, nor any other independent auditors, have compiled, examined, or performed any procedures with respect to, or been consulted in connection with the preparation of, the prospective financial information contained herein. The City's independent auditors assume no responsibility for the content of the prospective financial information set forth in this Official Slatement, disclaim any association with such prospective financial information, and have not, nor have any other independent auditors, expressed any opinion or any other form of assurance on such information or its achievability.

References to web site addresses presented in this Official Statement are for informational purposes only and may be in the form of a hyperlink solely for the reader's convenience. Unless specified otherwise, such web sites and the information or links contained.therein are not incorporated into, and are not part of, the final official statement for purposes of, and as that term is defined in, SEC Rule I5c2-I2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE BOND ORDINANCE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS 'OF LAW OF THE STATES IN WHICH THE BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVERAJLLOT OR EFFECT TRANSACTIONS THAI' STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT O i l IERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED. MAY BE DISCONTINUED AT ANY TIME. THE PRICES AND OTHER TERMS RESPECTING THE OFFERING AND SALE OF THE BONDS MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS AFTER THE BONDS ARE RELEASED FOR SALE, AND THE BONDS MAY BE OFFERED AND SOLD AT PRICES OTHER THAN THE INITIAL OFFERJNG PRICES, INCLUDING SALES TO DEALERS WHO MAY SELL THE BONDS INTO INVESTMENT ACCOUNTS.
TABLE OF CONTENTS

Page
OFFICIAL STATEMENT SUMMARY i
INTRODUCTION I
THE CITY I
General I.
Government|910|Annual Budget Process|910|Corporate Fund|910|Use of Long-Term Reserves|910|Capital Improvements Program|910|Property Taxes 9
General Obligation Debt 11
Collective Bargaining Agreements 15
Retirement Funds and Other Post-Employment Benefits 15
City Investment Policy 17
PLAN OF FINANCING 17
General 17
Financing of the Project 17
Refunding and Restructuring 18
SOURCES AND USES OF FUNDS 19
THE BONDS '. 19
General 19
Payment of the Bonds 20
Redemption 20
Book-Entry System 24
Additional Information 26
Bonds Not Presented for Payment 26
Defeasance 26
Registration and Transfers 27
Registered Owner Treated as Absolute Owner 28
SECURITY FOR THE BONDS 28
General Obligation of the City 28
Property Tax Limit Considerations 28
Bankruptcy 29
Insured Bonds 29
Additional General Obligation Debt 29
LITIGATION 29
INDEPENDENT AUDITORS 31

RATINGS 31
CO-FINANCIAL ADVISORS 31
CERTAIN VERIFICATIONS 32
UNDERWRITING 32
TAX MATTERS 33
The Series 2014A Bonds 33
The Taxable Series 201413 Bonds 35
State and Local Considerations 36
APPROVAL OF LEGAL MATTERS 36
SECONDARY MARKET DISCLOSURE 36
Annual Financial Information Disclosure 37
Reportable Events Disclosure 38
Consequences ofFailure ofthe City to Provide Information 39
Amendment; Waiver 39
EMMA 39
Termination of Undertaking 40
Additional Information 40
Corrective Action Related to Certain Bond Disclosure Requirements 40
MISCELLANEOUS 41


APPENDIX A — REAL PROPERTY TAX SYSTEM AND LIMITS
APPENDIX B — FINANCIAL AND OTHER INFORMATION
APPENDIX C — CITY OF CHICAGO BASIC FINANCIAL STATEMENTS FOR
THE YEAR ENDED DECEMBER 31, 2012 APPENDIX D— ECONOMIC. DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION APPENDIX E — RETIREMENT FUNDS AND O THER POST-EMPLOYMENT BENEFITS APPENDIX F — FORMS OF OPINIONS OF CO-BOND COUNSEL APPENDIX G— BOND INSURANCE APPENDIX H — REFUNDED BONDS
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement.

THE ISSUER : City of Chicago (ihe "Cily"").
THE BONDS $883,42(1,000 Cily of Chicago General Obligation Bonds, consisting of
$432,630,000 General Obligation Bonds, Project and Refunding Series 20I4A (the "Scries 20I4A Bonds") and $450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 20I4B (the "Taxable Series 2014H Bonds" and together with ihe Series 2014A Bonds, the "Bonds'"). The Bonds will be dated the date of their delivery and mature in the principal amounts and on the dales as set forth on ihe inside cover of this Official Statement. See "THE BONDS."
PAYMENT OK INTERES T Interest on the Bonds will accrue from the date of issuance and be payable on
each January ' and July 1, commencing July I, 2014. The Bonds will bear interest at the rates per year as set forth on the inside cover of Ihis Official Statement. Interest on the Bonds is computed on ihe basis of a 360-day year consisting of twelve 30-day months. See "THE BONDS - General."
AUTHORITY TOR ISSUANCE The Bonds are being issued pursuant to the constitutional home rule powers of
the Cily. The Bonds are authorized by an ordinance adopted by the City Council of the City (the "City Council*') on February 5, 2014 (the "Bond Ordinance").
USE OT PROCEEDS The proceeds from the sale of the Bonds will be used to (i ) pay for a portion of
the costs of the Project (as defined herein), (ii) refund the Refunded Bonds (as defined herein), (iii) provide for the retirement or repayment of a portion of ihe City's outstanding general obligation commercial paper notes and borrowings under the City's general obligation lines of credit, (iv) fund capitalized interest on the Bonds, and (v) pay the costs of issuance of the Bonds (including the underwriters" discount). See "PLAN OF FINANCING" and "SOURCES AND USES OF FUNDS."
SECURITY TOR THE HONDS The Bonds arc direct and general obligations of the City and shall be payable, as
lo principal and interest, from any moneys, revenues, receipts, income, assets or funds of the City legally available for such purpose, including, but not limited to, the proceeds of a direct annual lax levied hy the Cily in the Bond Ordinance upon all taxable property located in the City sufficient to pay the principal of and interest on the Bonds. The City has pledged its full faith and credit lo the payment of the Bonds. Sec '"SECURITY FOR THE BONDS."
The scheduled payment of principal of and interest on ihe Series 2014A Bonds maturing on (and only on) January 1, 2031 (the "Insured Bonds'"), when due will be guaranteed under an insurance policy (the "Policy") to be issued concurrently with the deliver)' of the Insured Bonds by Assured Guaranty Municipal Corp- ("AGM"). APPENDIX G — "BOND INSURANCE."
REDEMPTION
Optional Redemption The Series 2014A Bonds maturing on and alter January 1, 2025 are subject to
redemption prior to maturity at the option ol the Cily, in whole or in part, on any dale on or after January 1, 2024. at a redemption price equal to the principal

amount of such Bonds being redeemed plus accrued interest lo ihe dale fixed for redemption.
See 'Tl Iii BONDS — Redemption — Optional Redemption of the Series 2014.4 Bonds."
The Taxable Series 2014B Bonds shall be subject to redemption prior lo maturity at the option of the City, in whole or in part, on any Business Day (as defined herein) at a redemption price equal lo the greater of: (A) the principal amount of such Bonds to be redeemed, or (IT) the sum of the present values of Ihe remaining scheduled payments of principal and interest on such Bonds to be redeemed, not including any portion of those payments of inlcrest accrued and unpaid as of the dale such Bonds are to be redeemed, discounted lo the dale of redemption of such Bonds to be redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (defined herein) plus 40 basis points plus accrued interest on such Bonds being redeemed to Ihe dale fixed for redemption.
See '"THE BONDS — Redemption — Optional Redemption of the Taxable Series 20I4H lionds with Make Whole Premium."
Mandatory Redemption The Taxable Series 20I4B Bonds are subject to mandatory redemption prior to
maturity, in each case at par and accrued interest to Ihe date fixed for redemption, on January 1 of the years 2037 through 2043.
See "THE BONDS — Redemption — Mandatory Redemption of the lionds.''
BOND REGISTRAR AND
FAYING AGENI' Amalgamated Bank of Chicago, Chicago. Illinois, as trustee.
TAX EXEMPTION Subject to compliance by the Cily with certain covenants, in the respective
opinions of Co-Bond Counsel, under present law, interest on the Scries 20I4A Bonds is excludable from gross income of ihe owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into accouni in computing an adjustment used in detennining the federal alternative minimum lax for certain corporations. Interest on ihe Taxable Series 20I4B Bonds is includible in gross income of the owners thereof for federal income lax purposes. Interest on the Bonds is not exempt from present State of Illinois income taxes. See "TAX MATTERS."
CO-BONDCOUNSE1 Chapman and Cutler LLP, Chicago, Illinois, and Sanchez Daniels & Hoffman
LLP, Chicago, Illinois.
RATINGS The Bonds are rated '"Baal"" (negative outlook) by Moody's Investors Service,
Inc., "A+" (negative outlook) by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and "A-" (negative outlook) by Pitch, Inc., based upon each rating agency's assessment of the creditworthiness of the City. The Insured Bonds are rated "AA-" by S&P and "A2" by Moody's, contingent upon issuance of the Policy by AGM. See "RATINGS" AND APPENDIX G — "BOND INSURANCE."






it

OFFICIAL STATEMENT


$883,420,000 CITY OF CHICAGO
$432,630,000 General Obligation Bonds, Project and Refunding Scries 20I4A
$450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B
INTRODUCTION
This Official Statement (including the cover page and Appendices hereto) is furnished by the City of Chicago (the "City"') to provide information with respect to the General Obligation Bonds, Project and Refunding Series 20I4A (the "Series 2014A Bonds") andthe General Obligation Bonds, Taxable Project and Refunding Scries 20I4B (the "Taxable Series 2014B Bonds" and together with the Series 2014A Bonds, the "Bonds").
The proceeds from the sale of the Bonds will be used to (i) pay for a portion of the costs of the Project (as defined herein), (ii) refund the Refunded Bonds (as defined herein), (iii) provide for the retirement or repayment of a portion of the City's outstanding general obligation commercial paper notes and borrowings under the City's general obligation lines of credit, (iv) fund capitalized interest on the Bonds, and (v) pay the costs of issuance of the Bonds (including the underwriters' discount). See "PLAN OF FINANCING" and "SOURCES AND USES OF FUNDS."
The Bonds are authorized by an ordinance adopted by the City Council of the City (the "Cily Council") on February 5, 2014 (the "Bond Ordinance").

THE CITY
Genera
The City was incorporated in 1837. The City is a municipal corporation and home rule unit of local government under the Illinois Constitulion of 1970 and as such, "may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt" except that it can "impose taxes upon or measured by income or earnings or upon occupation" only if authorized by statute.
The General Assembly of the State of Illinois (the "State") may, by a three-fifths vote of each house, limit the ability of a home rule municipality to levy taxes. The General Assembly may similarly limit the debt that the City may incur, except that the General Assembly does not have the power to limit the debt payable from property taxes to less than three percent of the assessed valuation of the taxable property in the City. To date, the General Assembly has not imposed limits on the City's ability to levy taxes under its home rule powers or to incur debt payable from real property taxes. See APPENDIX A — "REAL PROPERTY TAX SYSTEM AND LIMITS — Property Tax Limit Considerations — State of Illinois."

For certain economic and demographic and supplemental information concerning the City, sec APPENDIX D — "ECONOMIC. DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION."
Government
The Mayor and a 50-pcrson City Council govern the City. The City Clerk and the City Treasurer along with the Mayor are the only three citywide elected officials. Cilywide elected officials serve four-year terms. The City is divided into fifty legislative districts or wards. Each ward is represented by an alderman who is elected by their constituency to serve a four-year term. In addition to representing the interests of their ward residents, together the fifty aldermen comprise the City Council, which serves as the legislative branch of government of the City. The legislative powers of the City Council are granted by the state legislature and by home rule provisions of the Illinois Constitution.
Annual Budget Process
Pursuant to Executive Order No. 2011-7 issued by Mayor Emanuel, the City's Budget Director is directed to issue by July 31 of each year a long-term budget and financial analysis (the "Annual Financial Analysis") to provide the framework for the development of the City's annual operating and capital budgets for the following fiscal year. The Annual Financial Analysis is to be developed by the Budget Director with input from the Mayor's Economic, Budgetary, and Business Development Council; the Deputy Mayor; the Chief Financial Officer; the City Comptroller; City departments and sister agencies; elected officials; and other relevant parlies.
The Annual Financial Analysis includes a historical- analysis of the City's revenues and expenditures, a financial forecast and analyses of the City's reserves, capital program, debt and pensions. The City released its 2013 Annual Financial Analysis on July 31, 2013.
In developing an annual budget recommendation, the Budget Director considers the proposed annual budgets submitted by all the departments and agencies whose budgets will become part of the City's proposed budget for the following year. The final budget recommendation balances expenditures with forecasted available resources. The final budget recommendation is then submitted to City Council for consideration through the Cily Council's Committee on the Budget and Government Operations. The proposed budget may be changed by the City Council through amendments made as part of the City Council hearing and review process. The Committee on the Budget and Government Operations and then the full City Council vote on the budget and any amendments.
After the City Council has approved the proposed budget as the annual appropriation ordinance, it is forwarded lo the Mayor for approval. Should the Mayor veto the approved annual appropriation ordinance, the City Council, with a two-thirds vote, may override the veto. The City Council may also refuse to approve the final budget recommendation. In such a case, the appropriate process for passage of the City budget may have to be judicially determined. By law, the City must have a balanced budget approved by December 31 of the year preceding the budget year. The City Council and the Mayor approved the annual budget for 2014 on November 26,2013.
Corporate Fund
Overview. The Corporate Fund is the City's general operating fund and supports basic City operations and services. Public safety functions account for approximately two-thirds of Corporate Fund expenses each year, and infrastructure services such as waste disposal and street repair and maintenance account for an average of ten percent of annual Corporate Fund expenses. Regulatory, community services, development, and administrative functions account for the remainder of the Corporate Fund

|1010|
budget. Personnel-related expenditures make up the largest portion of the Corporate Fund budget, with salaries and wages and employee benefits making up more than three-quarters of Corporate Fund expenses each year. Non-personnel expenses, including motor fuel, utilities, and contractual services such as information technology costs and building rent and maintenance, make up the remainder of Corporate Fund expenses.
Corporate Fund revenue consists of local tax revenue, intergovernmental lax revenue, non-tax revenue and proceeds and transfers-in. Local tax revenue includes utility, transaction, transportation, recreation, and business taxes. Intergovernmental tax revenue includes the City's share of the State sales and use tax, income tax, personal property replacement tax, and municipal auto rental tax. Non-tax revenue includes charges for licenses and permits, fees and fines, proceeds from sales and leases, reimbursements and other revenue. Reimbursements and other revenue include internal service earnings transferred to the Corporate Fund for central services such as police, fire, streets and sanitation, and similar services provided to other City funds, including the City's aviation, water and sewer funds, and sister agencies. Proceeds and transfers-in denote the movement of resources into the Corporate Fund from other outside sources, including interest generated on the long- and mid-term reserves established in connection with the parking meter and Skyway concessions and revenue captured from expiring and terminated TIF districts and the equalized assessed value ("EAV") of new property in the city.
Between 2003 and 2007, an average of 67 percent of total Corporate Fund revenues was derived from local and intergovernmental tax revenues. Beginning in 2008, these revenues began to decline both in dollar amount and as a percentage of total revenues, decreasing to 59 percent in 2009. By 2011, local and intergovernmental taxes made up 57 percent of total Corporate Fund revenues. As these economically sensitive revenues declined, the City did not decrease expenditures enough to match these shrinking revenues, but instead increasingly utilized transfers into the Corporate Fund from outside sources. Between 2003 and 2007, such transfers constituted an average of 6 percent of Corporate Fund revenues each year and came largely from investment income on general obligation bond proceeds and other financing transactions. In 2005, the City began to use proceeds from the long-term lease of the Chicago Skyway to supplement its operating budget, and in 2009 proceeds from the long-term concession of the City's metered parking system (the "Metered Parking System") also began to subsidize the operating budget. In the period from 2009 through 2011, an average of $487 million each year, or 16 percent of Corporate Fund revenues, came from such transfers. See "— Use of Long-Term Reserves" below. |
In 2011 and 2012, the City began the process of aligning expenditures with revenues through efficiencies, targeted cuts, and select revenue enhancements. Since that time, the City has continued to reduce its structural deficit by improving management of Citywide costs and increasing select revenues. The City also began to rebuild its reserve funds by depositing $20 million in 2012 and $15 million in 2013 into its long-term reserves.
The City's current fiscal outlook shows both the progress that has been made towards bringing operating expenses in line with revenues, and the continuing pressure placed on City finances by growing wages, primarily due to labor contracts, and long-term obligations such as pension payments. Through the annual financial analysis, the City has projected an operating budget shortfall for the coming two years. Comprehensive pension reform could significantly impact these costs on the City's budget over, the coming years; however, such action must occur at the Slate level, as the City's pension funds are governed by State law.
The difference between revenues and expenditures anticipated by the City in its preliminary Corporate Fund budget estimates each year is commonly referred to as the "budget gap." The preliminary budget gap for 2014 was projected at S338.7 million, almost half of what was projected in 2011. The
decreasing size of the budget gap is the result of the recovering economy's impact on revenues, as well as the real and lasting changes made as part of the past two budgets, such as the introduction of managed competitions for City services, the transition to grid-based garbage collection, the review and renegotiation of major contractual costs, reforms that have reduced ihe Cily's healthcare costs and certain revenue increases. The 2014 budget gap was closed through expenditure reductions, revenue growth and increases, and the utilization of prior-year resources. A balanced budget for 2014 was passed in November 2013.
Selected Financial Information. The following table sets forth revenues and expenditures for the Corporate Fund on a historical basis for the years 2010-2012, as estimated for the year 2013, and as budgeted for 2014. The Corporate Fund is included in the City's General Fund for accounting purposes. The GeneraL Fund is comprised of the Corporate Fund (which is approximately 99.0 percent of the General Fund) and other non-major operating funds. See APPENDIX 13 — "FINANCIAL AND OTHER INFORMATION — SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES — General Fund" and APPENDIX C — "CITY OF CHICAGO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012." The financial information contained in the following table for the years 2010, 2011 and 2012 is based on the budgetary basis of accounting for the General Fund as reported in the City's audited basic financial statements for the years 2010, 2011 and 2012, respectively. The financial information contained in this section for the year 2013 is not audited and the numbers provided are preliminary estimates and subject to change. No data on revenues and expenditures is final until the City has completed its annual audit and finalized its basic financial statements, which is released by June 30 of each year for the prior year. The financial information contained in this section for the year 2014 reflects budgeted revenues and expenditures. This table should be read in conjunction with the financial information set forth in APPENDIX B — "FINANCIAL AND OTHER INFORMATION" and APPENDIX C - - "CITY OF CHICAGO BASIC FINANCIAL STATEMENTS FOR I HE YEAR ENDED DECEMBER 31, 2012 "
Corporate Fund Revenues and Expenditures 2010 — 2014
(Estimated/ Unaudited) 2013
$ 629.8 1,467.1 944.4 21.4
177.0
3,239.7
Budget 2014
$ 621.5 1.478.2 1,078.5 58.6 53.4
, 3,290.2
(Dollars in Millions)
2011
2012
Actual*
2010
$ 587.6 1,425.3 907.8 86.6 72.3 3,079.6 3.079.6 $ 0.0
$ 525.2 1,334.9 921.1 467.7
O0
3,248.9 3,069.4 $ 179.5
Revenues:
Intergovernmental Taxes % 553.X
Local Taxes 1,283.7
Non- fax Revenues 773.3
Proceeds & Trans fcrs I n 519.0
Prior Year Available Resources 0 0
3,161.8 '3,290.2
Total Revenues 3,129.8
% 77.9 $ 0.0
F.xpenditures 3,044.2
Revenues Over Expenditures S 85.6

Obtained from Inhibit 6 in the City of Chicago basic financial statements for the respective years The breakdown of revenues by category can be obtained from Schedule A-l of ihe City of Chicago Comprehensive Annual Financial Report (CAFR) for the respective vears
2012 Corporate Fund. Total Corporate Fund resources for 2012 were $3.08 billion, includes $72.3 million carried over from 201 1.


|1010|
Utility taxes came in 3 percent below budget in 2012, driven in large part by the unseasonably warm winter and spring and decreases in natural gas prices, which were down 31 percent from 2011. As a result, natural gas tax revenues were 15 percent below budgeted amounts. Telecommunications and electricity tax revenues were also below budgel, though electricity bounced back slightly given the unusually high temperatures during the summer.
Hotel tax revenues, in contrast, finished the year 14 percent above budget, as Chicago's tourism and convention business grew. Revenue per available room in the cily was up 10 percent from 2011, and hotel occupancy up 4 percent. Recreation tax revenues were slightly above budget, with strong liquor and non-alcoholic beverage sales offsetting the decline in cigarette tax revenues caused by decreased consumption attributable to the State's increase in its cigarette tax rate.
Sales tax revenues in 2012 were also strong at 7 percent above budget for the year. Despite declines in home values, real property transaction tax revenues finished the year 39 percent above budgeted levels, due to increasing home sales and large commercial transactions during the year.
¦ Income tax revenues were similarly strong in 2012, with collections up 10 percent from 2011 levels as unemployment dropped and corporate profits grew. In addition, the City received 13 monthly income tax distributions from the State, further increasing the City's 2012 income tax revenues above budget. Throughout 2011 and into the start of 2012, there was a substantial delay in income tax distributions to municipalities by the Slate. Because the final 2011 distribution was received after the City closed its 2011 books, that amount had to be accounted as 2012 revenue.
Non-tax revenues ended 2012 slightly below budget, as revenues from business license and permit issuances, as well as certain fines, were down from budgeted levels. The overall amount of non­tax revenue lo the Corporate Fund was also affected by the postponement to 2013 of the roll-out of the City's municipal marketing program.
Expenditures for 2012 were $3.08 billion, approximately $27 million less than 2012 budgeted expenditures. Salary and wage expenditures ended the year just above budget for the year; however, these increases were offset by greater than expected healthcare savings and reduced spending on contractual services such as rental of equipment, telecommunications contracts, IT maintenance and software licensing, and other professional services.
2013 Corporate Fund Estimates. Total Corporate Fund resources for 2013 are estimated to end the year at $3.24 billion, approximately 2 percent, or an estimated $77.9 million, above 2013 budgeted revenues. This includes $177 million carried over from prior years, which was included in the 2013 budget and is attributable in part to the effective controls, cuts, and initiatives implemented during the course of 201 1 and 2012.
These year-end estimates reflect increases in many of the City's economically sensitive and tourism-driven revenues, as well as the anticipated receipt of an additional monthly income tax distribution as the State catches up from delays in payments seen in recent years.
Utility tax revenues are expected to come in 4 percent above budget for the year as natural gas prices rebound from 2012 lows. Natural gas and electricity tax revenues were further impacted by increased usage with the extreme winter weather.
Real property transfer tax revenues are expected to come in approximately 47 percent above budget for the year as the commercial real estate market continues to perform well and the housing market shows significant improvement over 2012 in both sales and prices. Sales tax revenues are
|1010|
expected to outperform budget by approximately 3 percent for the year, as consumer confidence continued to improve in 2013.
Both corporate and individual income tax revenues are expected to end 2013 significantly above budget, due in part to an anticipated additional monthly distribution in back-payment from the State, coupled with the stabilizing economy and certain one-time collections associated with businesses and individuals selling assets or receiving dividends or bonuses in 2012 in anticipation of higher federal lax rales.
The City's non-tax revenues saw an increase in fee revenue from business licenses, building permits, and other licenses and permits, offset by a decline from budgeted expectations in revenues from lines, forfeitures, and penalties.
Corporate Fund expenditures are currently expected to end 2013 approximately even with budgeted amounts. This estimate reflects operational decisions, payroll trends, contract utilization, and market pricing for relevant commodities throughout the year.
2014 Corporate Fund Budget. The 2014 budget projects that Corporate Fund resources will total $3.29 billion, up slightly from the 2013 year-end estimate of $3.24 billion. For most major revenue sources, 2014 projections reflect the continuation of trends seen in 2013.
Overall utility tax revenues are projected to be down 3 percent from 2013 levels in 2014, budgeted at a total of $450.3 million, due in part to the anticipated continued decline in telecommunications tax revenue in line with changing consumer preferences and industry trends.
Hotel tax revenue projections anticipate continued growth in hotel occupancy, and are budgeted at $97.7 million in 2014. Overall recreation taxes are budgeted above 2013 levels in 2014, anticipating some growth in amusement and liquor tax revenues and accounting for the increase in the City cigarette tax rate that took effect at the start of 2014.
Sales tax revenue to the Corporate Fund is budgeted at $596.8 million in 2014, a 3 percent increase from 2013 year-end estimates, and other transaction tax revenues, including real property transfer taxes and personal property lease taxes, are expected in continue to increase in 2014, in line with the market and consumer confidence.
The City anticipates that monthly income tax collections will increase slightly in 2014 with the economy, but total 2014 budgeted income tax revenues are below 2013 levels, because of the one-time and prior-year payments expected in 2013, as discussed above.
Non-tax revenues are budgeted at $1.08 billion in 2014, an increase over anticipated 2013 non-tax revenues. Revenue from fines, forfeitures, and penalties is expected to increase in 2014 with the full implementation ofautomated speed enforcement in select locations near parks and schools throughout the city.
Budgeted expenditures grow slightly in 2014. balancing with budgeted resources at $3.29 billion. 2014 budgeted expenditures account for anticipated changes to salaries and wages governed by collective bargaining agreements, increased fuel expenses to accommodate the potential continued increase in gas prices, and costs associated with the coming year's election cycle and ihe first full year of citywide recycling.


|1010|
Use of Long-Term Reserves
The Chicago Skyway reserve funds were established in 2005 in the amount of $975 million from the proceeds received by the City in connection with the closing of the long-term concession and lease of the Skyway. The Metered Parking System reserve funds were established in 2009 in the amount of $1.15 billion from the proceeds received by the City in connection with the closing of the long-term concession of the Metered Parking System. Approximately $475 million of Ihe Skyway reserves and $425 million of the Metered Parking System reserves were initially designated for budgetary uses, leaving a long-term reserve of $500 million from the Skyway and, for the Metered Parking System, a $400 million long-term reserve and a $326 million budget stabilization fund. The $326 million budget stabilization fund was fully utilized for budgetary purposes by the end of 2010. Over the period from 2009 through 2011, the City also used $320 million from the Metered Parking System long-term reserve fund for budgetary purposes. The 2012 budget phased out the use of principal from the Metered Parking System long-term reserve to subsidize the City's operating budget. In addition, the City has begun to rebuild the Metered Parking System long-term reserve fund by depositing into it $20 million in 2012 and $15 million in 2013. The current ordinances applicable to the Skyway and Metered Parking System long-term reserves specify that only the interest earned on those reserves can be transferred to (he Corporate Fund.
Set forth in the table below is information about the City's long term reserves from 2009 through
2013.
Long-Term Reserves 2009 — 2013
($ in millions)
Metered Parking
Year Skyway System Total
$500 $380 $880
500 220 720
500 80 580
500 100 600
500 115 615

Capital Improvements Program
The City's capital improvement program funds the physical improvement or replacement of City-owned infrastructure and facilities with long useful lives, such as roads, buildings and green spaces. The following discussion of the City's capital improvement program does not include the City's water and sewer or aviation systems, which are separate self-supporting systems.
The City accounts for proceeds of debt used for the capital improvement program in the City's basic financial statements under Capital Projects Funds. Capital Projects Funds are comprised of the Community Development and Improvement Projects Fund and the Non Major Capital Projects Fund. Sec APPENDIX B — "FINANCIAL AND OTHER INFORMATION — SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES — Capital Projects Funds."
From 2003 to 2012, the City utilized proceeds from the issuance of general obligation bonds to fund $2.1 billion of its capital program. These bonds are utilized to support a wide variety of project types, including: (i) greening, such as streetscaping projects, green ways, medians, trees, fountains, community gardens, neighborhood parks, wetlands, and other natural areas; (ii) facilities, such as the improvement and construction of City buildings and operating facilities, police and fire stations, health
|1010|
clinics, senior centers, and libraries; (iii) infrastructure, such as the construction and maintenance of streets, viaducts, alleys, lighting, ramps, sidewalks, bridge improvements, traffic signals, bike lanes, and shoreline work; and (iv) aldermanic menu projects, which are selected by aldermen, each of whom is allotted $1.32 million of general obligation bond funding to be spent at their discretion on a specific menu of improvements in their respective wards. Over the past seven years, these funds have been used primarily for sidewalks, residential street resurfacing, street lighting, and curb and gutter replacement, with portions of these funds contributed lo the Chicago Park District ($13.5 million), Chicago Public Schools ($2.6 million), and the Chicago Transit Authority ($500,000).
The capital uses of general obligation bond funds over the period 2003 to 2012 is set forth in the table below.
Capital Uses of General Obligation Bond Funding 2003 — 2012
($ in millions)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Aid. Menu S71.4 $64.7 $61.2 $54.2 $85.9 $93.4 $94.4 $81.4 $102.0 $84.0
Greening 30.4 46.5 23.3 32.7 28.0 20.7 19.0 J5.7 5.8 4.2
Infrastructure 124.9 77.2 38.6 64.3 74.8 54.0 36.8 28.9 26.0 33.1
Facilities 169.5 9.4 41.6 47.4 47.3 14.9 35.8 40.0 24.9 12.7
Total $396.2 $197.8 $164.7 $198.7 $236.1 $283.0 $185.9 SI66.0 $158.7. $134.

The City's current capital improvement plan calls for improvements of $2.3 billion over the period 2013 through 2017. Funding for the City's capital improvement program comes from general obligation bond issuances, state and federal funding, tax increment financing, and private funding through public/private ventures.
In addition to traditional sources of funding for capital projects, the City is undertaking new initiatives to fund capital improvements, which include the Chicago Infrastructure Trust, accessing federal programs under the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA), and repaying from operating savings commercial paper issued to fund projects. The City is also emphasizing the use of current revenues for pay-as-you-go financing where practical.
















|1010|
The City's 2014 capital improvement program recommends investing approximately $629 million in capital improvements in 2014. The table below presents the anticipated sources of capital funding and the proposed uses of capital funding for 2014.
2014 Capital Improvements
($ in thousands)
CAPITAL FUNDING SOURCES: Federal
General Obligation lionds Tax Increment Financing Other TIFIA
Slate Funding Total
Amount
$238,238 133,492 111,635 53,256 48,000 36.311
$620,932
Percent
38.4%
21.5
18.0
8.6
7.7
5.8 100.0%

CAPITAL FUNDING USES: City Infrastructure Aldermanic Funds Greening & Streelscapes City Facilities Total
Amount
$436,325 84,000 75,233 25,374
$620,932
Percent
70.3% 13.5 12.1 4.1 100.0%
Property Taxes
Revenue from the City's property tax levy is used to pay the City's general obligation debt service obligations, contributions lo employee pension funds and library-related expenses. The City is one of several taxing districts reflected on a Chicago resident's property tax bill. The amount of property taxes collected by Cook County is divided among these districts, with the City allocated approximately 20 percent of the total bill. Cook County determines the amount that will be billed to an individual Chicago taxpayer based on the composite tax rate that results from dividing the districts' aggregate levy by the aggregate EAV, and then applying that rate to the EAV of the taxpayer's property. Changes in EAV do not affect the amount of the City's property tax revenue because the City's property taxes are levied at a flat dollar amount. For more information on real property assessment, tax levy and tax collection in Cook County, see APPENDIX A — "REAL PROPERTY TAX SYSTEM. AND LIMITS"
















|10 10|
Set forth in the table below are the uses of the property lax levies of the City for the years 2003 through 2012.
Property l ax Levy 2003 — 2012
($ in thousands)
Uses of Property Tax Levy
Tax Levy Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Retirement Fund Contributions
$291,838 299,258 324,068 342,256 334.700 345,936 351,234 350,733 348,666 349,666
General Obligation Debt Service
$417,344 411,096 333,759 336,508 352,039 373,874 368,533 369,014 370,934 370,517
Library Debt Service
$ 4,784 3.697 54,515 34,737 29,103 77,710 77,710 77,710 77,711 77,821
City Colleges Debt Service*
$ 5,729 5,729 5,729 5,729
33,509
36,632
36,632
36.632
36,637
36,632
Total Tax Levy for Fiscal Year
$719,695 719,780 718.071 719,230 749,351 834,152 834,109 834,089 833,948 834.636
* The Cily previously issued bonds on behalf of City Colleges
Over the past five years, the City has chosen to keep the aggregate property tax levy stable. The lop property tax payers in the City in 2012 based on 2012 EAV are shown below.



Rank I
2 3 4 5 6 7 8 9 10
Property
Willis Tower
AON Center
One Prudential Plaza
Blue Cross Blue Shield Tower
Water Tower Place
Chase Tower
The Franklin - AT&T Corp. Center Three First National Plaza 131 S. Dearborn .300 N. l.aSalle Total
2012 EAV ($ in thousands)
$ 3X6,266 255,347 234,964 205,275 201.246 200,708 192.9X5 187,449 184,596
179.X04
$2,228,640

%of Total EAV
0.59%
0.39
0.36
0.32
0.31
0.31
0.30
0.29
0.28
0.28
3.42%
As shown in the table, the top ten taxpayers account for less than 4% of the City's total tax base.
The 2014 budget provides a total appropriation of $595.1 million to service general obligation debt, $355.7 million of which will be funded with revenue from the City's property tax levy (but not including three other property tax levies used for debt service on three specified general obligation bond issues (the "Three Specified Bond Issues")). In 2013, general obligation debt service (excluding the Three Specified Bond Issues) was $531.1 million, $355.7 million of which was paid from revenue from the City's property tax levy.

The City Council adopted an ordinance on November 15, 2012 which authorized a property tax levy of $370.5 million (representing $355.7 million after losses in the collection of taxes) for the year 2013 to pay debt service payments on the City's outstanding general obligation bonds (except for the Three Specified Bond Issues), bach of the outstanding general obligation bond issues is secured by a separate, multi-year property tax levy established in the ordinance specifically authorizing that issue of general obligation bonds. The aggregate amount of the unabated property tax levies for the outstanding general obligation bond issues for the year 2013 equals approximately $485.0 million. The Bonds lo be issued for refunding purposes are expected to be issued in such amounts and with such repayment terms as will allow an abatement of the property taxes levied for the Refunded Bonds sufficient to cause the property tax levies for the remaining outstanding general obligation bonds for the year 2013 to be not greater than $370.5 million (representing $355.7 million after losses in the collection of taxes).
General Obligation Debt
Debt Service Funds. The City accounts for the payment of principal and interest and the redemption of its general obligation bond issues in its basic financial statements under Debt Service Funds. Debt Service Funds arc comprised of Ihe Bond. Note Redemption and Interest Fund and the Debt Service Fund - Special Taxing Areas for General Obligation and Tax Increment Financing. See APPENDIX B — "FINANCIAL AND OTHER INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES — Debt Service Funds."
General Obligation Bonds. General obligation bonds are generally issued annually by the City to pay for capital projects and equipment and, from time to time, refunding of outstanding general obligation bonds for interest cost savings, general obligation debt restructuring, settlements, judgments and certain retroactive employment and pension obligations.
For a significant portion of the City's general obligation bonds, an annual property tax levy has been established for each series of such bonds and pledged to the payment of debt service on such bonds. For certain other general obligation bonds issued by the City (which make up a small subset of the City's general obligation bonds), either (i) an annual property tax levy has been established for such bonds but such levy is annually abated if certain other specified revenues are available that year for payment of debt service on those bonds, or (ii) no annual property tax levy has been established for debt service on such bonds and payments of debt service on such bonds are appropriated from sources of revenue other than property taxes.
" Set forth below is the City's outstanding general obligation bonds for the years 2009 through
2013.
General Obligation Bonds* 2009 — 2013
(in millions)
Principal Amount ot Bonds
Paid from Property Secured by General Obligation
Year Tax Levy Alternate Revenues without Levy Total
$5,849 $53! $T08 $6,492
6.345 660 107 7.112
6.818 629 105 7.552
7.078 593 103 7.774
7.005 555 101 7,661

•See APPfcNDIX B — "FINANCIAL AND OTHER CITY INFORMATION — General Obligation Bonds Debt Service Schedule "


I 1
Vuriuble Rate Debt. The City has outstanding certain series of general obligation bonds that pay variable rates of interest. These issues are supported by letters of credit and/or liquidity facilities provided by banks for the payment of debt service or tender prices for the bonds. The City has not issued variable rate bonds since 2007.
Set forth in the table below is information about the City's bond liquidity and letter of credit facilities for the City's outstanding variable rate general obligation bond issues. A City general obligation debt rating below what is shown in the chart in the "Ratings Thresholds" column would constitute an event of default under the agreements with the related banks.
Bond Maturity Pate
01/01/34
01/01/34
01/01/34
01/01/42
01/01/42
01/01/42
01/01/40
01/01/40
01/01/37'
01/01/37
01/01/37
Bond Series
"2003 B-1 2003 B-2 2003 H-3 2007F 2007E 2t)07fi 2005 l)-l 2005 D-2 2002 B-3 2002 B-4 2002 B-5
Facility Expiration
09/17/14 09/17/14 09/17/14 12/31/14 12/31/14 12/31/14 01/12/15 01/12/15 10/02/15 10/02/15 10/02/15
Bond Liquidity and Letter of Credit Facilities
Bank
JPMorgan JPMorgan JPMorgan JPMorgan Barclays Barclays Bank of Montreal Northern Trust RUC Bank of New York Bank of New York

Ratings Thresholds
Filch Moody's S&V
BBB- Baa3 BBB-
I3BB- Baa3 I3BB-
BB13- Bail BBB-
BBB- Bna3 BBB-
* +
* *
BBB- Bau3 BBB-
BB13- Bua3 BBB-
BBB Baa2 BBB
BBB Baa2 BBB
BBB Baa2 BBB

* The agreements with Barclays provide that (i) if Ihe City's general obligation debt that is supported by property lax is rated by two or more rating agencies, if at any lime two or more rating agencies rale thai general obligation debt below BBB+ or below Baal for a period of 180 days, or (,11) if this debt is rated by only one rating agency and that raling agency rales this debt below BBB+ or below Baal for a period of 180 days, or (iii) any rating agency rales the unenhanced general obligation debt of the Cily supported by property lax below BBB or Baa.2, this would constitute an event of default under these agreements.
Interest Rate Exchange Agreements. The City is authorized to enter into interest rate exchange agreements with counterparties in connection with its general obligation bonds. Interest rate exchange agreements, or options to enter into such agreements, can provide the City with (i) an interest rate basis, cash How basis, or other basis different from that provided in the related City indebtedness for the payment of interest, or (ii) with respect to a future delivery of general obligation bonds, notes or commercial paper, one or more of a guaranteed interest rate, interest rate basis, cash flow basis, or purchase price. Interest rate exchange agreements can include, without limitation, agreements or contracts commonly known as interest rate exchange, swaps, including forward starting swaps, collar, caps, or derivative agreements, forward payment conversion agreements, interest rate locks, forward bond purchase agreements, bond warrant agreements, or bond purchase option agreements and also include agreements granting to the City or a counterparty an option lo enter into any of the foregoing and agreements or contracts providing for payments based on levels of or changes in interest rales, including a change in an interest rate index, to exchange cash flows or a series of payments, or to hedge payment, rate spread, or similar exposure.
The stated aggregate notional amount (net of offsetting transactions) under all interest rate exchange agreements related to certain City indebtedness cannot exceed the principal amount of the indebtedness to which such interest rate exchange agreements relate. An "offsetting transaction" is any transaction which is intended to hedge, modify or otherwise affect another outstanding transaction or its economic results. The offsetting transaction need not be based on the same index or rate option as the

12
related City indebtedness or the transaction being offset and need not be with the same counterparty as the transaction being offset. Examples of offsetting transactions include, without limitation, a floating to fixed rate interest rate swap being offset by a fixed to floating rate interest rate swap, and a fixed to floating rate interest rate swap being offset by a floating to fixed rate interest rate swap or an interest rate cap or floor or a floating to floating interest rate swap.
The City is a party to the following outstanding interest rate swaps in connection with the City's general obligation variable rate bonds.



Issue Name


Current Notional Amount

Type
Variable Rate General Obligation Bonds Interest Rate Swaps
City Receives Cily Pays

Counterparty (Backup Counterparty)



Effective Dale



I criniiialiiin Dale

total Mark-li>-Market (Unaudited)*
S200.000.000
General Obligation Series 2007 P.FG


$222,790,000
General Obligation Series 20O5D






General $192,765,000
Obligation
Series
2003 B











General S206.700.0OO
Obligation
Series
2002 B
Loop Financial (Deulsche bank) Morgan Stanley
Wells Fargo
Wells Fargo
Goldman Sachs
Loop Financial (Deutsche Bank) Rice Financial (Bank of New York Mellon) Loop Financial (HMO I lams) Deutsche Hank AG, NY
PNC
Wells Fargo


Jl' Morgan


PNC


PNC


Bank of New York Mellon

JP Morgan
Bank of America
Floating-lo-
Fixcd Floating-to-
Fixed Floating-lo-
Floaling I loaling-io-I- loaling
Floating-lo-
Fised Floaling-lo-
Fixed l-loaling-lo-Floating
Floaling-lo-Floating
l-'loating-to-Flnaling
Floatmg-to-Floanng
Floalmg-to-Fised

Floaling-to-Fixed

Fluating-to-Floaling

Floating-to-Floating

Flualing-lo-Floaiing

Floating-lo-
Fiscd Moaung-to-
Fi\ed
SIFMA SIFMA
72 5% or LIBOR
72 5% of LIUOR
SIFMA
SIFMA
72 5% of LIBOR
72 5% of LIBOR
72 5% of LIBOR
72 5% of LIBOR
66 91% of lOyrUSD-
ISDA Swap Rate 66 9|% of lOvrUSD-
ISDA Swap Rate 75% of LIBOR


75% of LIBOR


75% of LIBOR

70% of LIBOR 70%of LIBOR
3 998% 3 998% SIFMA SIFMA
4 104% 4 104% SIFMA
SIFMA SIFMA SIFMA
4 052%


4 052%


66 91% of lOyrUSD-
ISDA Swap Rate 66 91% of lOyr USD-IS DA Swap Rate 66 91% of lOyrUSD-
ISDA .Swap Rale
3 575?
3 575%
11/8/2007 11/8/2007 1/1/2014 1/1/2014
8/17/2005 8/17/2005 1/1/2014
1/1/2014 1/1/2014 1/1/2031
8/7/2003


8/7/2003


3/1/2014


3/1/2014


11/1/2014

10/3/2002 10/3/2002
1/2/2042 1/2/2042 1/1/2042 1/1/2042
1/2/20-10 I/2/2040 I/I/203I
I/I/203I 1/I/203I I/I/2040
1/1/2034


1/1/2034


1/1/2019


11/1/2014


1/1/2019

1/1/2037 1/1/2037
•AsofJanuaiy3],2014

The City entered into the interest rate swaps listed above as a means of limiting, reducing or managing the City's interest cost with respect to the related general obligation bonds, limiting interest-rate risk inherent in variable rate debt, or managing risks associated with existing interest rate swaps on the same general obligation bonds. The interest rate swaps may expose the City to certain market and credit risks. The City may terminate the interest rate swaps at any time at market value, or upon the occurrence of certain events. In addition, either the City or the counterparties may terminate the related interest rate swaps if the other party fails to perform under Ihe terms of such swaps. A counterparty may terminate its related interest rate swaps if the City's rating falls below "BBB+" (BBB for the swap relating to the Scries 2002B bonds) from Standard and Poor's Ratings Services or "Baal" (Baa2 for the swap relating to the Series 2002B bonds) from Moody's Investors Service, Inc. If the interest rate swaps are terminated, the related bonds would continue to bear interest at a variable rate (unless converted by the City lo a fixed interest rate), and the City could be liable for a termination payment if the swaps have a negative market value. The estimated aggregate mark-to-market valuation for all of the interest rate swaps listed in the table above is negative $173 million. This estimate is based on the information provided by each counterparty and has not been independently verified by the Cily.
In 2012, the City terminated its general obligation swap option with a notional amount of $318.7 million. The swap option allowed the counterparty to execute a fixed to floating rate swap at a certain date in the future, if certain market conditions existed. The City received an upfront payment of $13.4 million and made a termination payment of $4.9 million, for a net benefit of $8.5 million. Terminating the swap option eliminated the future related variable rale risk.
Short-Term Borrowing Program. In addition to long-term general obligation bonds, the City utilizes certain types of general obligation short-term debt, such as commercial paper and lines of credit borrowings (collectively, the "Short-Term Borrowing Program"). The Short-Term Borrowing Program authorizes the issuance of debt to address various operating, liquidity, and capital needs of the Cily. Debt issued under the Short-Term Borrowing Program are general obligations of the City but are not supported by a City property tax levy.
The following table shows the City's outstanding balances under the Short-Term Borrowing Program as of December 31 of the years 2009 through 2013.
Short-Term Borrowings 2009 — 2013
($ in thousands)
Year Principal Amount
$159,838
198,101
127.707
166,513
415.256
Under the Bond Ordinance, the City has increased the maximum aggregate principal amount of debt that can be outstanding under the Short-Term Borrowing Program from $500 million to $1 billion. Under its current arrangements with its credit providers, the City has the ability to issue up to $300 million of commercial paper and borrow up to $300 million under its lines of credit. In the future, the City may enter into further arrangements wilh credit providers and oblain up to S400 million of additional letter of credit or lines of credit borrowing capacity to reach the $1 billion authorized amount under the Short-Term Borrowing Program.



14

Set forth in the table below is information on the City's current general obligation commercial paper program and lines of credit. A City general obligation debt rating below what is shown in the chart in the "Ratings Thresholds" column would constitute an event of default under the agreements with the related banks.
General Obligation Commercial Paper and Lines of Credit

Facility
Commercial Paper Notes Commercial Paper Notes Line of Credit Line of Credit
Scrits or Year
2002A/B
2002C7D
2013
2014
Borrowing Authority
$ 200,000.000 S 100.000.000 S 200.000,000 $100,000,000
Expiration or
Termination
5/X/2015 5/8/2015 3/22/2016 2/20/2016

Bank
Wells Farm) BMO Harris Bank of America Morgan Stanley
Ratings Threshold's Kilch Moody's S&P
n/a Baa3 BI3B-
n/a Baa3 BBB-
BBB+ Baal BBB+
BBB Uaa2 BBB
A portion of the outstanding general obligation commercial paper notes (the "CP Notes") and borrowings under the general obligation line of credit with Bank of America (the "Line of Credit") will be retired or repaid with proceeds of the Bonds. See "SOURCES AND USES OF FUNDS." After giving effect to the issuance of the Bonds and the retirement and repayment of the CP Notes and the Line of Credit, the City will have borrowing capacity of approximately $199.7 million under its general obligation commercial paper program and $300.0 million under its general obligation lines of credit.
Collective Bargaining Agreements
The City has collective bargaining agreements with 46 unions representing approximately 90% of its 32,000 employees. Currently, the City is in negotiations with the following unions on successor collective bargaining agreements to replace agreements with expired terms: Fraternal Order of Police (representing approximately 10,800 police officers); Chicago Fire Fighters Union, Local 2 (approximately 4,600 employees); American Federation of State, County and Municipal Employees (approximately 3,400 employees); Illinois Nurses Association (approximately 75 employees); Policemen's Benevolent & Protective Association of Illinois, Unit I56C Captains (approximately 30 employees); and Teamsters Local 700/Shift Supervisors of the Security Communications Center (approximately 10 employees). While negotiations continue on successor agreements, the prior collective bargaining agreements remain in effect. The 2014 Corporate Fund budget includes funds for wage increases and anticipated wage increases with respect to successor agreements.
For the remaining City employees represented by other unions, the City has collective bargaining agreements currently in effect, which provide for annual wage increases. The 2014 Corporate Fund budget includes funds for wage increases for these employees scheduled to receive them for 2014.
Retirement Funds and Other Post-Employment Benefits
'I he City provides funding for four retirement funds (the "Retirement Funds"), which provide benefits upon retirement, death or disability to employees and beneficiaries. As described in APPENDIX E --"RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS — RETIREMENT FUNDS," the benefits provided to members of the Retirement Funds and the City's contributions to Ihe Retirement Funds are governed by the provisions of the Illinois Pension Code (the "Pension Code"), and the Retirement Funds' sources of funding come from the City's contributions, the employees'

15

contributions and investment income on the Retirement Funds' assets. The City's contributions and the employees' contributions are based upon what is established under the Pension Code and are not based on the actuarially recommended levels. For a description of the Retirement Funds, the manner of funding the Retirement Funds, their historical and projected unfunded status, and recent legislative changes affecting the Retirement Funds and other information, see APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS — RETIREMENT FUNDS/' The foregoing description is qualified in its entirety by reference to APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS — RETIREMENT FUNDS." which a prospective purchaser of the Bonds should read in its entirety.
The City allocates a portion of its contributions to Ihe Retirement Funds to its enterprise funds, including the C'ty's aviation, water and sewer funds, based upon the amount of services provided by City employees to the enterprises or functions related to or paid out of those funds. The funds account for their allocable share of the City's contributions to the Retirement Funds as operating and maintenance expenses. In 2012, the enterprise funds reimbursed the City $35.7 million for their allocable share of retirement benefits.
Future Pension Contributions. Under current State law, beginning in 2016 the City must make actuarially-based annual contributions to its significantly underfunded police and firemen's pension funds. Such contributions, which are made out of the City's Corporate Fund, must be in amounts necessary to achieve specified funding levels by 2040. The current estimate of the City's 2016 annual contribution for these two pension funds is over $885 million, which is an increase ofapproximately $584 million over the projected 2015 contribution for these funds. This amount is in addition to the annual contributions the City must make, in large part from the Corporate Fund, lo its municipal and laborers' funds, which are also significantly underfunded and face insolvency absent State legislative reforms in their funding and/or benefit levels. The City continues to pursue comprehensive pension reform at the State level to alleviate the substantial burden its annual pension contributions will likely have on the City's financial condition and its economy absent such reform. If the City fails to achieve such reform, then it will likely need to implement large property tax increases and/or significant reductions of City services. No assurance can be given that the City will be successful in achieving pension reform or that, if such reform is enacted, it will be upheld upon legal challenge. Even if such pension reform is enacted by the State and upheld upon legal challenge, the City will still likely face significant increases in its annual contributions to the pension funds. Sec "APPENDIX E — RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS." The foregoing description is qualified in its entirety by reference to "APPENDIX E — RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS," which a prospective purchaser of the Bonds should read in its entirety.
The City and the Retirement Funds share the cost of post-employment healthcare benefits available to certain former City employees participating in the Retirement Funds through a single-employer, defined benefit healthcare plan (the "Health Plan"), which is administered by the City. The Health Plan is funded on a pay-as-you-go basis and as such assets arc not accumulated or dedicated to funding the Health Plan. On May 15. 2013, the City announced changes to the funding of the Health Plan, including, but not limited to, the phase-out of the Health Plan by ihe beginning of 2017. The phase-out of the Health Plan is expected to save the City approximately $100 million annually beginning in 2017. Litigation is currently pending with regard to the continuation of the Health Plan. For a description of the post-employment healthcare benefits, the manner of funding such benefits, the funded status of the benefits and pending litigation with regard to the Health Plan, see APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS — OTHER POST-EMPLOYMENT BENEFITS." The foregoing description is qualified in its entirety by reference to APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS —


16

OTHER POST-EMPLOYMENT BENEFITS," which a prospective purchaser of the Bonds should read in its entirety.

City Investment Policy
The investment of City funds is governed by the Municipal Code of Chicago (the "Municipal Code"). Pursuant to the lVTunicipal Code, the City Treasurer has adopted a Statement of Investment Policy and Guidelines for the purpose of establishing written cash management and investment guidelines to be followed by the City Treasurer's office in the investment of City funds. See APPENDIX C --"BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012 - Notes (1) and (4)."

PLAN OF FINANCING
General
The proceeds from the sale of the Bonds will be used as described below. For additional information, see "SOURCES AND USES OF FUNDS."
Financing of the Project
A portion of the net proceeds of the Series 2014A Bonds and the Taxable Scries 2014B Bonds are expected to be used by Ihe City to finance the following projects (collectively, the "Project"): alley resurfacing; installation of residential speed bumps; residential street resurfacing; installation of guard rails and bollards; installation of alley aprons; sidewalk replacement; curb and gutter replacement; installation of cul-de-sacs; installation of traffic signals; installation of street lights; park improvements (including (i) installation of playgrounds, walking paths, field houses, playlots, security cameras, water spray feature, baseball fields and lights, (ii) creation of a community garden, (iii) repair of tennis court surfaces and fences, and (iv) bench removals); installation of temporary parking signage; removal of decorative baskets; installation of ramps and markings; power wash of underpasses; painting of pedways; tree planting; installation of planters and LED lights; installation of decorative planters; fencing repairs; installation of pedestrian countdown signals; bikeway lanes; hazardous right-of-way repair; work on storm water tunnels; maintenance and repair of City facilities (include roofing repair, property maintenance, HVAC systems maintenance, onsite equipment maintenance, replacement of carpeting, and in-house labor costs); blue cart acquisitions; acquisition of police prisoner transport vans; acquisition of lire department ambulances; public library programs; and the establishment of the Bloomingdale Trail.
The Bond Ordinance authorizes the City to use the Bond proceeds to finance one or more of the following (collectively, the "Authorized Uses"): (i) public right-of-way infrastructure improvements in City neighborhoods, including street and alley construction and improvements, lighting improvements, sidewalk improvements and replacement, and curb and gutter repairs and replacement; (ii) infrastructure improvements to enhance the development of economic activity, including industrial street construction and improvements, strectscaping, median landscaping, demolition of hazardous, vacant or dilapidated buildings that pose a threat to public safety and welfare, shoreline reconstruction, riverbank stabilization, residential and commercial infrastructure redevelopment and railroad viaduct clearance improvements; (iii) transportation improvements to Cily property and facilities and to property and facilities located within the City limits which are owned by other governmental entities, including street resurfacing, bridge and freight tunnel rehabilitation, traffic signal modernization, new traffic signal installation, intersection safety improvements and transit facility improvements; (iv) grants or loans to assist not-for-profit organizations or educational or cultural institutions, or to assist other municipal corporalions, units of local government, school districts, the Slate of Illinois or the United States of America; (v) cash Mow

17

needs of the City; (vi) the acquisition of personal property, including, but not limited to, computer hardware and software, vehicles or other capital items useful or necessary for City purposes; (vii) the duly authorized acquisition of improved and unimproved real property within the City for municipal, industrial, commercial or residential purposes, or any combination thereof, and the improvement, demolition and/or remediation of any such property; (viii) constructing, equipping, altering and repairing various municipal facilities including fire stations, police stations, libraries, senior and health centers and other municipal facilities; (ix) the enhancement of economic development within the City by making direct grants or loans to, or deposits to funds or accounts to secure the obligations of, not-for-profit or for-profit organizations doing business or seeking to do business in the City; (x) the funding of (A) judgments entered against the City, (B) certain settlements or other payments required to be made by the City as a condition to the resolution of litigation or threatened litigation or arbitration and (C) such escrow accounts or other reserves as shall be deemed necessary for any of said purposes; (xi) the payment of certain contributions lo the Policemen's Annuity and Benefit Fund of Chicago, the Firemen's Annuity and Benefit Fund of Chicago, the Municipal Employees' Annuity and Benefit Fund of Chicago and the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago; (xii) the provision of facilities, services and equipment to protect and enhance public safety, including, but not limited to. increased costs for police and fire protection services, emergency medical services, staffing at the City's emergency call center and other City facilities, and enhanced security measures at airports and other major City facilities; and (xiii) acquiring motor vehicles for a term of years or lease period.
One or more components of the Project described above may later be changed by the City to include financing of other Authorized Uses.
Proceeds of the Taxable Series 2014B Bonds in the amount of $198 million are expected to be used to fund legal judgments or settlements incurred by the Cily.
Refunding and Restructuring
A portion of the proceeds of the Series 20I4A Bonds and the Taxable Series 2014B Bonds will be used lo refund all or a portion of the principal of and interest on certain maturities of outstanding general obligation bonds of the City (the "Refunded Bonds"), retire the CP Notes and repay borrowings under the Line of Credit. See "SOURCES AND USES OF FUNDS." The Refunded Bonds are set forth in APPENDIX H — "REFUNDED BONDS."
Portions of the refunding will result in debt service savings to the City and extend the average maturity of the City's general obligation debt. See APPENDIX B — "FINANCIAL AND OTHER INFORMATION — Debt Service Schedule."
To provide for the payment and retirement of the Refunded Bonds, certain proceeds of the Series 2014A Bonds and the Taxable Series 2014B Bonds will be used to purchase securities constituting direct obligations of the United Stales of America (collectively, the "Government Obligations"). The principal of and interest on the Government Obligations, together with available cash deposits, will be sufficient (i) to pay when due the interest on the Refunded Bonds to their respective maturity or redemption dates, and (ii) to pay or redeem the Refunded Bonds on their respective maturity or redemption dates at their respective principal amounts or redemption prices.
The Government Obligations purchased wilh the proceeds of the Series 20I4A Bonds and the Taxable Series 20I4B Bonds, together with available cash deposits, will be held in escrow accounts with the respective paying agents for the Refunded Bonds or an escrow agent (collectively, the "Escrow Accounts"). Neither the cash on deposit, the maturing principal of the Government Obligations nor the


18

interest to be earned thereon will serve as security or be available for the payment of the principal of or the interest on the Bonds.
The mathematical computation of (i) the adequacy of maturing principal of and interest earnings on the Government Obligations together with initial cash deposits in the Escrow Accounts to provide for payments on the Refunded Bonds as described above and (ii) the actuarial yields on the Series 20I4A Bonds and the Government Obligations will be verified at the time of the delivery of the Bonds by Robert Thomas CPA, LLC, Shawnee Mission, Kansas, independent certified public accountants. See "CERTAIN VERIFICATIONS."
Proceeds of the Bonds used to retire the CP Notes will be held by the trustee for the CP Notes until the maturity date of the CP Notes. Proceeds of the Bonds used to repay a portion of the outstanding balances under the Line of Credit will be applied to such payment on the date of issuance of the Bonds.

SOURCES AND USES OF FUNDS
The following table sets forth the sources and uses of Bond proceeds.
Taxable Series 2014A Series 20I4B
Bonds Bonds Total
SOURCE OF FUNDS:
Principal Amount of the Bonds $432,630,000 $450,790,000 $883,420,000
Net Issue Premium 5.207,769 5,207.769
Total Sources of Funds $437,837.769 $450,790,000 $888.627,769
USES OF FUNDS:
Costs of Project $205,123,000 $125,800,000 $330,923,000
Refunding of Refunded Bonds 44,175,105 141,048.874 185,223,979
Retirement of Commercial Paper 98,467,000 53,224,054 151,691,054
Repayment of Line of Credit 50,000,000 95,385,946 145,385,946
Capitalized Interest 36,928,833 31,408,858 68,337,691
Costs of Issuance (including the
underwriters" discount and bond
insurance premium) 3,143,831 3,922.268 7,066.099
Total Uses of Funds $437.837.769 $450.790,000 $888,627.769

THE BONDS
General
Each series of Bonds will be dated the date of issuance, will mature on January I of the years and in the amounts set forth on the inside front cover page of this Official Statement, and will bear interest from the date of issuance. The Bonds will be issued only as fully registered bonds in denominations of $5,000 or any integral multiple thereof.
The Bonds will bear interest at the rates set forth on the inside front cover page of this Official Statement, on the basis of a 360-day year of twelve 30-day months. Interest on the Bonds will be payable on January I and July 1 of each year, commencing July 1, 2014, to the person in whose name the Bond is registered as of the 15th day of the month next preceding any such interest payment date. Each Bond will



19

bear interest from the later of its date of issuance or the most recent interest payment date to which interest has been paid until the principal amount of such Bond is paid.
Amalgamated Bank of Chicago, Chicago, Illinois (the "Bond Registrar"), will serve as bond registrar and paying agent for the Bonds. Principal of and interest on the Bonds will be payable in lawful money of the United States at the designated corporate trust office ofthe Bond Registrar.
The Bonds initially are registered through a book-entry only system operated by The Depository Trust Company, New York, New York ("DTC"). Details of payments of the Bonds when in the book-entry only system are described below under the subcaption "— Book-Entry System." Except as described under the subcaption "— Book-Entry System — General " below, beneficial owners of the Bonds will not receive or have the right to receive physical delivery of Ihe Bonds, and will not be or be considered to be the registered owners thereof. Accordingly, beneficial owners must rely upon (i) the procedures of DTC and, if such beneficial owner is not a DTC "Direct Participant" or "Indirect Participant" (as defined below), the Direct or Indirect Participant who will act on behalf of such beneficial owner to receive notices and payments of principal and interest or redemption price ofthe Bonds, and to exercise voting rights and (ii) the records of DTC and, if such beneficial owner is not a Direct or Indirect Participant,'such beneficial owner's Direct or Indirect Participant, to evidence its beneficial ownership of the Bonds. So long as DTC or its nominee is the registered owner of the Bonds, references herein to Bondholders or registered owners of such Bonds mean DTC or its nominee and do not mean the beneficial owners of such Bonds. The laws of some states may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and laws may impair the ability to transfer beneficial interests in a Bond.
Payment of the Bonds
Principal of each Bond and redemption premium, if any, will be payable in lawful money of the United States upon presentation and surrender of such Bond at the designated corporate trust office ofthe Bond Registrar.
*
Payment ofthe installments of interest on each Bond shall be made to the registered owner of such Bond as shown on the registration books of the City maintained by the Bond Registrar at the close of business on the 15th day ofthe month next preceding each interest payment date and shall be paid by check or draft ofthe Bond Registrar mailed to the address of such registered owner as it appears on such registration books or at such other address furnished in writing by such registered owner to the Bond Registrar or, at the option of any registered owner of SI ,000,000 or more in aggregate principal amount of the Bonds, by wire transfer of immediately available funds to such bank in the continental United Stales of America as such registered owner shall request in writing to the Bond Registrar.
Redemption
The Bonds are subject lo both optional and mandatory redemption prior to maturity, as described below. The Bonds shall be redeemed only in principal amounts of $5,000 and integral multiples thereof.
Optional Redemption of Series 2014A Bonds. The Series 20I4A Bonds maturing on and after January 1, 2025 are subject to redemption prior to maturity at the option ofthe City, in whole or in part, on any date on or after January I, 2024. and if less than all ofthe outstanding Bonds of a single series, maturity and interest rate are to be redeemed, the Bonds to be called shall be called from such maturities and interest rates as shall be determined by the Chief Financial Officer of Ihe City or the City Comptroller (each, an "Authorized Officer"), by lot in the manner hereinafter provided, at a redemption price equal to the principal amount ofthe Bonds being redeemed plus accrued interest to the date fixed for redemption.

20

The City is authorized to sell or waive any right the City may have to call any ofthe Bonds for optional redemption, in whole or in part; provided, that such sale or waiver will not adversely affect the excludability of interest on the Series 2014A Bonds from gross income for federal income tax purposes.
Optional Redemption of the Taxable Series 2014B Bonds with Make Whole Payment. The Taxable Series 2014B Bonds shall be subject to redemption prior to maturity at the option of the City, in whole or in part, and if in part from such maturities and interest rates as shall be determined by an Authorized Officer on any Business Day (as defined below) at a redemption price equal to the greater of: (A) the principal amount of such Bonds lo be redeemed, or (B) the sum of the present values of the remaining scheduled payments of principal and interest on such Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as ofthe date such Bonds are to be redeemed, discounted to the date of redemption of such Bonds to be redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (defined below) plus 40 basis points plus accrued interest on such Bonds being redeemed to the date fixed for redemption.
The make whole optional redemption price ofthe Taxable Series 2014B Bonds to be redeemed will be calculated by an independent accounting firm, investment banking firm or financial advisor (the ''Calculation Agent") retained by the City at the City's expense. The Bond Registrar and the City may rely on the Calculation Agent's determination ofthe make whole optional redemption price and will not be liable for such reliance. An Authorized Officer shall confirm and transmit the redemption price as so calculated on such dates and to such parlies as shall be necessary to effectuate such redemption.
The "Treasury Rate" is. as of any redemption date, the yield to maturity as of such redemption date of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent federal Reserve Statistical Release H.I5 (519) that has become publicly available four Business Days (as defined below) prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the maturity date of the Bonds of such series to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually,traded U.S. Treasury securities adjusted to a constant maturity of one year will be used. "Business Day" means any day other than a day on which banks in New York, New York, Chicago, Illinois, or the city in which the Bond Registrar maintains its designated office are required or authorized to close. The Treasury Rate will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the City at the City's expense.
The City is authorized lo sell or waive any right the City may have to call the Taxable Series 2014B Bonds for optional redemption.














21

Mandatory Redemption of the Taxable Series 20I4B Bonds. The Taxable Series 201413 Bonds are subject lo mandatory redemption prior to maturity, in each case at par and accrued interest to the date fixed for redemption, on January I ofthe following years and in the following principal amounts:
Taxable Scries 2UI4B Bonds
Year Principal Amount
S 37,770,000
50.625,000
57,670,000
28,255,000
32,255.000
34,300.000
101,745,000
108.170,000 (maturity)
Reduction of Mandator}' Redemption Amounts. In connection wilh any mandatory redemption of Bonds of a series as described above, the principal amounts of Bonds of such scries to be mandatorily redeemed in each year may be reduced through the earlier optional redemption thereof, wilh any partial optional redemptions of such Bonds of such series credited against future mandatory redemption requirements in such order ofthe mandatory redemption dates as an Authorized Officer may determine. In addition, on or prior to the 60th day preceding any mandatory redemption date of Bonds of a series, the Bond Registrar may, and if directed by an Authorized Officer shall, purchase Bonds of such series required to be retired on such mandatory redemption date at such prices as an Authorized Officer shall determine. Any such Bonds so purchased shall be cancelled and the principal amount thereof shall be credited against the payment required on such next mandatory redemption date with respect to such series of Bonds.
Selection of Bonds for Redemption. While the Series 20I4A Bonds are registered in the book-entry system and so long as DTC or a successor securities depository is the sole registered owner of the Bonds of such series, if less than all ofthe Bonds of such series, maturity and interest rate are to be redeemed prior to maturity, the particular Bonds or portions of such Bonds of such series will be selected by lot by DTC or such successor securities depository in such manner as DTC or such successor securities depository may determine. See "THE BONDS — Book-Entry System." If the Series 2014A Bonds are not registered in the book-entry system, the following procedures for the selection of the Bonds of such series shall apply. If fewer than all of the outstanding Bonds of such series, maturity and interest rate are to be optionally redeemed, the Bonds of such series, maturity and interest rate to be called shall be called from such maturities and within any maturity as may be determined by an Authorized Officer by lot. In the event ofthe redemption of less than all Bonds of such series of the same maturity and interest rale, the aggregate principal amount thereof to be redeemed shall be $5,000 or an integral multiple thereof, and the Bond Registrar shall assign lo each Bond of such series of such maturity and interest rate a distinctive number for each $5,000 principal amount of such Bond and shall select by lot from the numbers so assigned as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds of such series, maturity and interest rate to be redeemed shall be those to which were assigned numbers so selected; provided that only so much of the principal amount of each Bond of such series, maturity and interest rate shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. The Cily shall, at least 45 days prior to any optional redemption date (unless a shorter time period shall be satisfactory to the Bond Registrar), notify the Bond Registrar of such redemption date and ofthe principal amount of Bonds to be redeemed.
While the Taxable Series 20I4B Bonds are registered in the book-entry system and so long as DTC or a successor securities depository is the sole registered owner ofthe Bonds of such series, if less


22

than all ofthe Bonds of such series are to be redeemed prior lo maturity, the particular Bonds of such series or portions thereof to be redeemed will be selected on a pro-rata pass-through distribution of principal basis in accordance with DTC procedures, provided lhat, so long as the Taxable Series 20I4B Bonds are registered in the book-entry system, the selection for redemption of Ihe Bonds of such series will be made in accordance with the operational arrangements of DTC then in effect and. if the DTC operational arrangements do not allow for redemption on a pro-rata pass-through distribution of principal basis, the Taxable Series 20I4B Bonds subject to redemption will be selected for redemption, in accordance with DTC procedures, by lot.
It is the City's intent that the Taxable Scries 201413 Bonds redemption allocations made by DTC, the DTC Participants or such other intermediaries lhat may exist between the City and the Beneficial Owners be made on a pro-rata pass-through distribution of principal basis as described above. However, none of the City, the Underwriters or the Bond Registrar can provide any assurance that DTC, DTC's Participants or any other intermediary will allocate the redemption ofthe Bonds of such scries on such basis. If the DTC operational arrangements do not allow for the redemption ofthe Taxable Series 20I4B Bonds on a pro-rala pass-through distribution of principal basis as discussed above, then the Taxable Series 20I4B Bonds will be selected for redemption in accordance with DTC procedures, by lot.
If the Taxable Series 2014B Bonds are not registered in the book-entry system, any redemption of less than all of the Bonds of such series will be allocated by the Bond Registrar among the registered owners ofthe Bonds of such series on a pro-rata basis.
Notice of Redemption. Unless waived by any owner of Ihe Bonds to be redeemed, notice ofthe call for any redemption of such Bonds will be given by the Bond Registrar on behalf of the City by mailing the 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 registration books ofthe Bond Registrar or at such other address as is furnished in writing by such registered owner to the Bond Registrar but the failure to mail any such notice or any defect therein as lo any Bond shall not affect the validity of the proceedings for the redemption of any other Bond. Any notice of redemption mailed as described in this paragraph will be conclusively presumed to have been given whether or not actually received by the addressee. With respect to an optional redemption of any series of Bonds, such notice may state that said redemption is conditioned upon the receipt by the Bond Registrar on or prior to the dale fixed for redemption of moneys sufficient to pay the redemption price of Bonds of such scries. If such moneys are not so received, such redemption notice will be of no force and effect, the Cily will not redeem such Bonds and the Bond Registrar will give notice, in the same manner in which the notice of redemption was given, that such moneys were not so received and that such Bonds will not be redeemed. Unless the notice of redemption is made conditional as described above, on or prior to any redemption date, the City is required to deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions thereof of such series which are to be redeemed on that date.
Notice of redemption having been given as described above, the Bonds, or portions thereof, to be redeemed shall, on the redemption date, become due and payable at the redemption price specified in such notice, and from and after such dale (unless the Cily shall default in the payment of the redemption price or unless, in the event of a conditional notice as described above, the necessary moneys were not deposited) such Bonds, or portions thereof, shall cease to bear or accrue interest.

Book-Entry System
General
The following information concerning DTC has been furnished by DTC for use in this Official Statement and neither the City nor any Underwriter takes any responsibility for its accuracy or completeness.
DTC will act as securities depository for the Bonds. The 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 Bond certificate will be issued for each maturity of each scries of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC. the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "'banking organization" within the meaning of the New York Banking Law, a member ofthe 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 (the "Exchange Act"). DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and oilier securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direcl Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission (the ¦"Commission"). More information about DTC can be found at www.dtcc.com .
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn lo 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 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 interests in the Bonds, except in the event that use of the Book-Entry System for (he Bonds is discontinued.
To facilitate subsequent transfers, all 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 Bonds with DTC and their registration

24

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 Bonds; DTC's records reflect only the' identity ofthe Direct Participants to whose accounts such Bonds arc credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC lo 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 Bonds within an issue are being redeemed, DTC's usual practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. In accordance with DTC's procedures, the City has directed the Bond Registrar to notify DTC that in the event that less than all of the Taxable Series 2014B are redeemed any such redemption shall be on a pro-rata basis.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's rvlMl Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds and principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Bond Registrar, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Bond Registrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility ofthe City or Bond Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC. and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository.with respect to the Bonds at any time by giving reasonable notice to the City or Bond Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
Discontinued Use of Book-Entry System -'
The City may decide to discontinue use of the system of book entry only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.






25

Procedures May Change
Although DTC has agreed to these procedures in order to facilitate transfers of securities among DTC and its Participants, DTC is under no obligation to perform or continue to perform these procedures and these procedures may be discontinued and may be changed at any time by DTC.
The information in this section concerning DTC and the Book-Entry System has been obtained from sources that the City believes to be reliable, but neither the City nor any Underwriter takes any responsibility for the accuracy thereof.
Additional Information
For every transfer and exchange of the Bonds, DTC, the Bond Registrar and the Participants may charge the benelicial owner a sum sufficient to cover any tax, fee or other charge that may be imposed in relation thereto.
NEITHER THE CITY NOR THE BOND REGISTRAR WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANTS, OR TO THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE BONDS, OR TO ANY BENEFICIAL OWNER IN RESPECT OF THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT IN RESPECT OF THE PRINCIPAL OR INTEREST ON THE BONDS, OR ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN WITH RESPECT TO THE BONDS, INCLUDING ANY NOTICE OF REDEMPTION, THE SELECTION OF SPECIFIC BONDS FOR REDEMPTION, OR ANY OTHER ACTION TAKEN, BY DTC AS REGISTERED OWNER OF THE BONDS.
In reading this Official Statement it should be understood that while the Bonds are in the Book-Entry System, references in other sections of this Official Statement to registered owners should be read to include the person for which a Participant acquires an interest in the Bonds, but (a) all rights of ownership must be exercised through DTC and the Book-Entry System, and (b) notices that are to be given to registered owners will be given only to DTC.
Bonds Not Presented for Payment
If any Bond is not presented for payment when the principal amount thereof becomes due, either at maturity or at a date fixed for redemption thereof or otherwise, and if moneys sufficient to pay such Bond are held by the Bond Registrar for the benefit of the registered owner of such Bond, the Bond Registrar shall hold such moneys for the benefit of the registered owner of such Bond without liability to the registered owner for interest. The registered owner of such Bond thereafter shall be restricted exclusively to such funds for satisfaction of any claims relating to such Bond.
Defeasance
If payment or provision for payment is made, to or for the registered owners of all or a portion of the Bonds, and the principal of and interest due and to become due on any Bond at the times and in the manner stipulated therein, and there is paid or caused to be paid to the Bond Registrar or such bank or trust company as shall be designated by an Authorized Officer (such bank or trust company hereinafter referred to as a "Defeasance Escrow Agent"), all sums of money due and to become due according to the provisions ofthe Bond Ordinance, then the Bond Ordinance and the estate and rights granted by the Bond Ordinance shall cease, terminate and be void as to those Bonds or portions thereof except for purposes of registration, transfer and exchange of Bonds and any such payment from such moneys or obligations.


26.

Any Bond shall bo deemed lo be paid within the meaning of the Bond Ordinance when payment ofthe principal of any such Bond, plus interest thereon to the due date thereof (whether such due date be by reason of maturity or upon redemption as provided in the Bond Ordinance or otherwise), either (a) shall have been made or caused to have been made in accordance wilh the terms thereof, or (b) shall have been provided for by irrevocably depositing with the applicable Bond Registrar or a Defeasance Escrow Agent, in trust and exclusively for such payment, (I) moneys sufficient to make such payment or (2)(A) direct obligations of the United Stales of America; (B) obligations of agencies of the United States of America, the timely payment of principal of and interest on which are guaranteed by the United States of America; (C) obligations ofthe following agencies: Federal Home Loan Mortgage Corp. (FHLMC) debt obligations. Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives) debt obligations, Federal Home Loan Banks (FHL Banks) debt obligations, Fannie Mae debt obligations. Financing Corp. (FICO) debt obligations, Resolution Funding Corp. (REFCORP) debt obligations, and U.S. Agency for International Development (U.S. A.I.D.) Guaranteed notes; (D) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state ofthe United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at ihe option ofthe obligor prior to maturity or as to which irrevocable instructions have been given by the obligor lo call on the date specified in the notice; or (E) instruments evidencing an ownership interest in obligations described in the preceding clauses (A), (B) and (C), or (3) a combination of ihe investments described in clauses (I) and (2) above, such amounts so deposited being available or maturing as to principal and interest in such amounts and at such times, without consideration of any reinvestment thereof, as will insure the availability of sufficient moneys to make such payment (all as confirmed by a nationally recognized firm of independent public accountants). At such times as a Bond shall be deemed to be paid under the Bond Ordinance, it shall no longer be secured by or entitled lo the benefits of the Bond Ordinance, except for the purposes of registration, transfer and exchange of Bonds and any such payment from such moneys or obligations.
Registration and Transfers
The books for the registration and for the transfer of each series of Bonds will be kept at the designated corporate trust office of the Bond Registrar. See "THE BONDS — Book-Entry System" for a discussion of registration and transfer of the beneficial ownership interests in Bonds while they are in the Book-Entry System. The following provisions relate to the registration and transfer of Bonds when the Bonds are in certificated form.
Upon surrender for transfer of any Bond at the designated corporate trust office of the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by the registered owner or its attorney duly authorized in writing, the City shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the transferee or transferees one or more fully registered Bonds of the same series and maturity of authorized denominations, for a like principal amount. Any Bond or Bonds may be exchanged at said office ofthe Bond Registrar for a like aggregate principal amount of Bonds ofthe same series, interest rate and maturity of other authorized denominations.
No service charge shall be made for any transfer or exchange of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, except that no such payment may be required in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption.




27

The Bond Registrar shall not be required to transfer or exchange (a) any Bond after notice calling such Bond for redemption has been mailed, or (b) any Bond during a period of 15 days next preceding mailing of a notice of redemption of such Bond.
Registered Owner Treated as Absolute Owner
The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment ofthe principal of, redemption premium, if any, or interest on any Bond, as appropriate, shall be made only to or upon the order of the registered owner thereof or its legal representative. All such payments shall be valid and elTeclual to satisfy and discharge the liability upon such Bond to the extent ofthe sum or sums so paid.

SECURITY FOR THE BONDS
General Obligation of the City
The Bonds are direct and general obligations ofthe Cily and shall be payable, as to principal and interest, from any moneys, revenues, receipts, income, assets or funds of the City legally available for such purpose, including, but not limited to, the proceeds of a direct annual tax levied by the City in the Bond Ordinance upon all taxable properly located in the City sufficient to pay the principal of and interest on the Bonds. The City has pledged its full faith and credit to the payment of the Bonds. See APPENDIX B — "FINANCIAL AND OTHER CITY INFORMATION — Property Tax Supported Bonded Debt — Debt Service Schedule." In addition to the Bonds, the City has other direct and general obligations previously issued and outstanding under separate ordinances adopted by the City Council. See APPENDIX B — "FINANCIAL AND OTHER CITY INFORMATION — Property Tax Supported Bonded Debt — Computation of Direct and Overlapping Bonded Debt."
Under the Bond Ordinance, the City is obligated to appropriate amounts sufficient to pay principal of and interest on the Bonds for the years such amounts are due, and the City covenants in the Bond Ordinance to take timely action as required by law to carry out such obligation, but, if for any such year the City fails to do so, the Bond Ordinance constitutes a continuing appropriation of such amounts without any further action by the City.
If the taxes to be applied to the payment of the Bonds are not available in time to make any payments of principal of or interest on the Bonds when due, then the appropriate fiscal officers ofthe City are directed in the Bond Ordinance to make such payments from any other moneys, revenues, receipts, income, assets or funds of the City that are legally available for that purpose in advancement of the collection of such taxes.
Property Tax Limit Considerations
The City. In 1993, the City Council adopted an ordinance (the "City Tax Limitation Ordinance") limiting the City's aggregate property tax levy for any one year to an amount equal to the prior year's aggregate property tax levy (subject to certain adjustments) plus the lesser of five percent or the increase in the Consumer Price Index. The City Tax Limitation Ordinance also established a safe harbor amount for each year equal to a specified 1994 base amount increased annually by the lesser of five percent or the increase in the Consumer Price Index. See APPENDIX A — "REAL PROPERTY TAX SYSTEM AND LIMITS — Property Tax Limit Considerations — The City." Pursuant to the Bond Ordinance, the taxes levied by the City for the payment of principal and interest on the Bonds are not subject to the limitations contained in the City Tax Limitation Ordinance.


28

Slate of Illinois. The City continues to be excluded from property tax limits imposed by the State on non-home rule units of local government in Cook County and the five adjacent counties. The property tax limitations imposed by the State differ from those contained in the City Tax Limitation Ordinance. There can be no'assurance that legislation applying such property tax limitations to the City will not be enacted by the Illinois General Assembly. For additional information, see 'THE CITY" and APPENDIX A — "REAL PROPERTY TAX SYSTEM AND LIMITS — Property Tax Limit Considerations — State of Illinois."
Bankruptcy
Municipalities cannot file for protection under the U.S. Bankruptcy Code unless specifically authorized to be a debtor by state law or by a governmental officer or organization empowered by state law to authorize such entity to be a debtor in a bankruptcy proceeding. Illinois law does not currently permit municipalities to do so, except under the provisions ofthe Local Government Financial Planning and Supervision Act, 50 ILCS 320, applicable only to units of local government which have a population under 25.000. It is unlikely that the broad grant of powers lo home rule municipalities under the Illinois Constitution would satisfy the specific authorization required in order to permit the City to file for protection under the U.S. Bankruptcy Code.
Insured Bonds
The scheduled payment of principal of and interest on the Scries 20I4A Bonds maturing on (and only on) January I, 2031 (the "Insured Bonds"), when due will be guaranteed under an insurance policy to be issued concurrently with the delivery ofthe Insured Bonds by Assured Guaranty Municipal Corp. ("AGM"). See APPENDIX G — "BOND INSURANCE."
Additional General Obligation Debt
The City may issue from time to time notes and bonds and other obligations that are general obligations ofthe City and that are secured by the full faith and credit of the City, which may or may- not be subject to the provisions ofthe City Tax Limitation Ordinance.

LITIGATION
There is no litigation pending in any court or, to the knowledge of the City, threatened, questioning the corporate existence ofthe City, or which would restrain or enjoin the issuance or delivery of the Bonds, or which concerns the proceedings of the City taken in connection with the Bonds or the City's pledge of its full faith, credit and resources to the payment of the Bonds.
The City is a defendant in various pending and threatened individual and class action litigation relating principally to claims arising from contracts, personal injury, property damage, police conduct, discrimination, civil rights actions and other matters. The City believes that the ultimate resolution of these matters will not have a material adverse effect on the financial position of the City.
Property Tax Rate Objections: 2005-2010. The City's property tax levies for 2005 through 2010 varied between approximately $720 million and $835 million annually, excluding the School Building and Improvement Fund levy. See APPENDIX B — "FINANCIAL AND OTHER CITY INFORMATION—Property Tax Levies by Fund." Objections have been filed in the Circuit Court of Cook County (the "Circuit Court") to these levies, which objections remain pending. The City is unable to predict the outcome of the proceedings concerning the objections.


29

E2 Nightclub Litigation. The Cily was a defendant in 57 wrongful death and personal injury lawsuits arising out of a stampede of patrons at the E2 Nightclub on February 17, 2003. The sole remaining claim against the City in this litigation was that police officers blocked, locked, or jammed access to the entry-exit door, causing a stampede of patrons to pile up on the only stairway leading to the door. On April I I, 2012. the circuit court granted the City's motion for summary judgment and dismissed the sole remaining claim against the City with prejudice. I he City does not know whether the plaintiffs will appeal the issuance of summary judgment. If the plaintiffs do appeal, the City will vigorously defend the circuit court's judgment in the appellate court.
Parking Meters Litigation. On December 4, 2008, the City entered into the Chicago Metered Parking System Concession Agreement (the "Concession Agreement") with Chicago Parking Meters, LLC (the "Concessionaire"), whereby the Concessionaire paid the City approximately $1,151 billion, and the City granted the Concessionaire the right to operate the City's metered parking system, including the right to collect revenues derived from the metered parking spaces. The City Comptroller is a defendant in a case brought by the Independent Voters of Illinois Independent Precinct Organization ("IVI-IPO") and an individual plaintiff, arguing that certain provisions of the Concession Agreement are illegal or unconstitutional, and requesting an injunction against certain expenditures in connection with the Concession Agreement. The plaintiffs later added the Concessionaire as a defendant. The Circuit Court dismissed part of the case and granted summary judgment to the defendants on the rest; the plaintiffs have appealed. While the City cannot predict the outcome of this litigation, the City will continue to defend the case vigorously.
Automated Red-Light Ticketing Litigation. In July 2010, individual plaintiffs, seeking to maintain a class action, filed suit against the City and other defendants to challenge the City's use since 2003 of an automated red-light ticketing system. The plaintiffs allege, among other things, that the 2006 statute authorizing eight Illinois counties to enact red-light camera ordinances is unconstitutional local legislation and that the City lacks home-rule authority to enact a red-light camera ordinance and adjudicate violations administratively. The plaintiffs seek an injunction against the operation of the City's red-light ticketing system and restitution of fines paid. The Circuit Court granted the City's motion to dismiss the case; the Illinois Appellate Court affirmed. 'I he plaintiffs then sought and were granted review in the Illinois Supreme Court. It is not known when the case will be decided. The City will continue to defend this matter vigorously.
Parking Garages Arbitration Claim. On November 3, 2006, the City entered into the Chicago Downtown Public Parking System Concession and Lease Agreement (the "Garages Lease Agreement") with Chicago Loop Parking. LLC ("CLP"), by which CLP was granted a 99-year concession to operate the public parking garages commonly referred to as Millennium Park. Grant Park North, Grant Park South and East .Monroe (collectively the "CLP Garages"). The Garages Lease Agreement includes a provision by which certain events can require the City to compensate CLP. One of those events is the granting of a license for the operation of a public garage that was not in existence as of the date of the Garages Lease Agreement, within a certain distance from the CLP Garages. CLP has asserted a claim under this provision. Pursuant to the Garages Lease Agreement, the matter was referred to the American Arbitration Association for arbitration. The arbitration panel issued an award of approximately $59 million in favor of CLP. The City filed a petition in the Circuit Court to enter a judgment on the award, stay the judgment, and modify the judgment. The Circuit Court entered and stayed the judgment but dismissed the City's request for modification. The City has filed an appeal. The City is actively defending the case and cannot predict the outcome at this time.
Parking Garages Litigation. On February 13, 2013, IVI-IPO and an individual plaintiff filed a complaint challenging the facial validity of the Garages Lease Agreement. The plaintiffs allege that certain compensation provisions in the Garages Lease Agreement violate the legal prohibition against the

30

delegation, by a governmental entity, of its police powers lo a private party. On January 16, 2014, the Circuit Court granted the motions to dismiss that were filed by the City and CLP. It is not known whether the plaintiffs will appeal the ruling ofthe Circuit Court; if they do, the City will continue to defend this case vigorously.
HUD Certifications Litigation. This is a False Claims Act case in which Albert C. Manna (the "Relator'') has sued the City seeking to recover funds on behalf of the U.S. government. The Relator alleges that the City has an affirmative obligation to dismantle racial and ethnic segregation in housing under Title VI of the Civil Rights Act of 1964 and the Fair Housing Act and that the City has falsely claimed to do so in certifications made by the City to the U.S. Department of Housing and Urban Development ("HUD") as a condition of receiving federal funding through certain HUD-funded grant programs. The Relator seeks the return to the federal government of approximately $880 million in funds received by the City under these programs and asks the court to treble that amount, as allowed by statute. The City has moved to dismiss the complaint. The City is actively defending the case and cannot predict the outcome at this time.

INDEPENDENT AUDITORS
The basic financial statements ofthe City as of and for the year ended December 31, 2012, included in APPENDIX C to this Official Statement, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing in APPENDIX C.

RATINGS
The Bonds are rated "Baal" (negative outlook) by Moody's Investors Service, Inc., "A+" (negative outlook) by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and "A-" (negative outlook) by Fitch, Inc., based upon each rating agency's assessment of the creditworthiness of the City.
The Insured Bonds arc rated "AA-" by S&P and "A2" by Moody's, contingent upon issuance of the Policy by AGM. See APPENDIX G — "BOND INSURANCE."
A rating reflects only the view ofthe rating agency giving such rating. An explanation ofthe significance of such rating may be obtained from such organization. There is no assurance that any rating will continue for any given period of time or that any rating will not be revised downward or withdrawn entirely if, in the judgment ofthe rating agency, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the price at which the Bonds may be resold.

CO-FINANCIAL ADVISORS
The City has retained Andrew Kalotay Associates, Inc. and Columbia Capital Management LLC to act as co-financial advisors (the "Co-Financial Advisors") in connection with the issuance and sale of the Bonds. Under the terms of their engagement, the Co-Financial Advisors will deliver a letter to the Cily regarding the fairness of the purchase price paid by the Underwriters to the City for the Bonds. Under the terms of their engagement, the Co-Financial Advisors arc not obligated to undertake, and have not undertaken to make, an independent verification of, or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.




31

!
I
i i
CERTAIN VERIFICATIONS
Robert Thomas, CPA, LLC, Shawnee Mission, Kansas (the "Verifier"), upon delivery of the Bonds, will deliver to the City, Co-Bond Counsel and the Underwriters a report stating lhat the firm, at the request of the City and the Underwriters, has reviewed the mathematical accuracy of certain computations based on certain assumptions relating to (i) the sufficiency of the principal and interest received from the investment in Governmental Obligations, together with any initial cash deposit, to meet the timely payment ofthe applicable principal or redemption price of and interest on the Refunded Bonds, as described under "PLAN OF FINANCE" and (ii) the yields on the Series 20I4A Bonds and on the Government Obligations.
The Verifier will express no opinion on the attainability of any assumptions or Ihe tax-exempt status ofthe Series 20I4A Bonds. The computations verified by the Verifier are intended in part to support conclusions of the City and Co-Bond Counsel concerning the federal income tax status of the Scries 20I4A Bonds.

UNDERWRITING
The Underwriters have agreed, subject to certain conditions, to purchase the Series 20I4A Bonds at a price equal to $435,549,851 (which represents the aggregate principal amount ofthe Series 20I4A Bonds less an Underwriters' discount of $2,287,918 and plus a net offering premium of $5,207,769), and the Taxable Series 2014B Bonds at a price equal to $448,135,142 (which represents the aggregate principal amount ofthe Taxable Scries 20I4B Bonds less an Underwriters" discount of $2,654,858).
The obligation of the Underwriters to accept delivery of the Bonds is subject to various conditions set forth in a Bond Purchase Agreement between the Underwriters and the City. The Underwriters are obligated to purchase all of the Bonds if any ofthe Bonds are purchased.
Wells Fargo Securities is the trade name for certain securities-related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association.
Wells Fargo Bank, National Association ("WFBNA"), senior underwriter of the Bonds, has entered into an agreement (the "Distribution Agreement") with its affiliate. Wells Fargo Advisors, LLC ("WFA"), for the distribution of certain municipal securities offerings, including the Bonds. Pursuant to the Distribution Agreement, WFBNA will share a portion of its underwriting with respect to the Bonds with WFA. WFBNA also utilizes the distribution capabilities of its affiliates, Wells Fargo Securities, LLC ("WFSLLC") and Wells Fargo Institutional Securities. LLC ("WFIS"), for the distribution of municipal securities offerings, including the Bonds. In connection with utilizing the distribution capabilities of WFSLLC. WFBNA pays a portion of WFSLLC's expenses based on its municipal securities transactions. WFBNA, WFSLLC, WFIS, and WFA are each wholly-owned subsidiaries of Wells Fargo & Company. ,
BMO Capital Markets is the trade name for certain capital markets and investment banking services of Bank of Montreal and its subsidiaries, including BMO Capital Markets GKST Inc. which is a direct, wholly-owned subsidiary of BMO Financial Corp. which is itself a wholly-owned subsidiary of Bank of Montreal.
Loop Capital Markets LLC (""LCM") as entered into distribution agreements (each a "Distribution Agreement") with each of UBS Financial Services Inc. ("UBSFS") and Deutsche Bank Securities Inc. ("DBS") for the retail distribution of certain securities offerings at the original issue prices. Pursuant to

32

each Distribution Agreement, each of UBSFS and DBS will purchase Bonds from LCM at the original issue prices less a negotiated portion ofthe selling concession applicable to any Bonds that such lirm sells.
North South Capital has entered into an agreement with BMO Capital Markets GKST Inc. whereby BMO Capital Markets is compensated for the assumption ofthe underwriting and retention risk of Ihe Bonds in the form of a percentage of the overall commission (takedown) paid to North South Capital.
George K. Baum & Company and Pershing LLC. a subsidiary of The Bank of New York Mellon Corporation, have a distribution agreement enabling Pershing LLC to obtain and distribute certain municipal securities underwritten by or allocated to George K. Baum & Company. Under the distribution agreement, George K. Baum & Company will allocate a portion of received takedowns, fees or commissions to Pershing for bonds sold under the agreement.
Williams Capital has entered into negotiated dealer agreements ("Dealer Agreements") with TD Ameritrade and E*Trade Securities LLC for the retail distribution of certain securities offerings at the original issue prices. Pursuant to the Dealer Agreements. TD Ameritrade and E*TRADE Securities LLC may purchase Bonds from Williams Capital at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that such firm sells.

TAX MATTERS
The Series 2014A Bonds
Federal tax law contains a number of requirements and restrictions which apply to the Series 2014A Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Series 20I4A Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Series 20I4A Bonds to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Scries 2014A Bonds.
Subject to the City's compliance with the above-referenced covenants, under present law, in the opinion of Co-Bond Counsel, interest on the Series 20I4A Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the Series 20I4A Bonds is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations.
In rendering its opinion, Co-Bond Counsel will rely upon certifications ofthe City with respect to certain material facts within the City's knowledge and upon the mathematical computations of the yield on the Bonds and the yield on certain investments by the Verifier. Additionally, Co-Bond Counsel will assume, without independent verification, the validity and tax-exempt status ofthe Refunded Bonds to the extent described in the opinions of bond counsel for the Refunded Bonds delivered in connection with the issuance thereof. Co-Bond Counsel's opinion represents its legal judgment based upon its review ofthe law and the facts that it deems relevant to render such opinion and is not a guarantee of a result.
The Code includes provisions for an alternative minimum tax ("AMT") for corporations in addition to the corporate regular tax in certain cases. The AMT. if any, depends upon the corporation's

33

alternative minimum taxable income ("AMIT"). which is the corporation's taxable income with certain adjustments. One of the adjustment items used in computing the AM'l'I of a corporation (wilh certain exceptions) is an amount equal to 75% ofthe excess of such corporation's "adjusted current earnings" over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). "Adjusted current earnings" would include certain tax-exempt interest, including interest on the Series 2014 A Bonds.
Ownership ofthe Series 2014A Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Series 2014A Bonds should consult their tax advisors as to applicability of any such collateral consequences.
The issue price (the "Issue Price") for each maturity of the Series 20I4A Bonds is the price at which a substantial amount of such maturity ofthe Scries 20I4A Bonds is first sold to the public. The Issue Price of a maturity ofthe Series 2014 A Bonds may be di liferent from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof.
If the Issue Price of a maturity of the Series 2014A Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Series 20I4A Bonds (the "OID Bonds") and the principal amount payable at maturity is original issue discount.
For an investor who purchases an OID Bond in the initial public offering at the Issue Price for such maturity and who holds such OID Bond to its stated maturity, subject to the condition that the City complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable from gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gajn or market discount upon payment of such OID Bond at its slated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue under Illinois income tax law, accreted original issue discount on such OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Bonds should consult their own tax advisors with respect to the slate and local lax consequences of original issue discount on such OID Bonds.
Owners of Series 2014A Bonds who dispose of Series 20I4A Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Series 2014A Bonds in the initial public offering, but at a price different from Ihe Issue Price or purchase Series 20I4A Bonds subsequent lo Ihe initial public offering should consult their own tax advisors.
If a Series 20I4A Bond is purchased at any time for a price that is less than the Series 2014A Bond's stated redemption price at maturity or, in Ihe case of an OID Bond, its Issue Price plus accreted original issue discount (the "Revised Issue Price"), the purchaser will be treated as having purchased a Series 2014A Bond with market discounl subject to the market discount rules of the Code (unless a statutory Je minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Series 20I4A Bond is disposed of (to the extent such accrued discount does not

34

exceed gain realized) or, at the purchaser's election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability ofthe market discount rules may adversely affect the liquidity or secondary market price of such Series 20I4A Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount wilh respect lo the Series 2014A Bonds.
An investor may purchase a Series 20I4A Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as "bond premium" and must be amortized by an investor on a constant yield basis over the remaining term ofthe Series 2014A Bond in a manner that lakes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a lax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor's basis in the Series 20I4A Bond. Investors who purchase a Series 2014A Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Series 2014 A Bond's basis for purposes of computing gain or loss in connection wilh the sale, exchange, redemption or early retirement or the Scries 2014A Bond.
There are or may be pending in the Congress ofthe United States legislative proposals, including some thai carry retroactive effective dales, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value ofthe Series 20I4A Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers ofthe Series 20I4A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Co-Bond Counsel express no opinion regarding any pending or proposed federal tax legislation.
I he Internal Revenue Service (Ihe "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit ofthe Series 2014A Bonds. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the Series 2014A Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Series 2014A Bonds until the audit is concluded, regardless ofthe ultimate outcome.
Payments of interest on, and proceeds of the sale, redemption or maturity' of. tax-exempt obligations, including the Series 20I4A Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Series 20I4A Bond owner who fails lo provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Series 20I4A Bond owner who is notified by the Service of a failure to report any interest or dividends required to be. shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes.
The Taxable Scries 2014B Bonds
Interest on the Taxable Series 20I4B Bonds is includible in gross income for federal income purposes. Ownership of the Taxable Series 2014B Bonds may result in other federal income tax consequences to certain taxpayers. Taxable Series 201413 Bondholders should consult their tax advisors with respect to the inclusion of interest on the Taxable Scries 20I4B Bonds in gross income for federal income tax purposes and any collateral tax consequences.


35

The City may deposit moneys or securities with a Defeasance Escrow Agent pursuant to the terms ofthe Bond Ordinance in such amount and manner as to cause the Taxable Series 2014B Bonds to be deemed to be no longer secured by the Bond Ordinance (a "defeasance"1). See "THE BONDS -Defeasance." A defeasance ofthe Taxable Series 2014B Bonds may be treated as an exchange of the Taxable Series 20I4B Bonds by the holders thereof and may therefore result in gain or loss to the holders. Bondholders should consult their own tax advisors about the consequences (if any) of such a defeasance. The City is required to provide notice of defeasance of the Taxable Series 2014B Bonds as a Reportable Event under its Continuing Disclosure Undertaking. See "SECONDARY MARKET DISCLOSURE."
State and Local Considerations
Interest on the Bonds is not exempt from present State of Illinois income taxes. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Co-Bond Counsel express no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes.

APPROVAL OF LEGAL MATTERS
Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinions of Co-Bond Counsel, who have been retained by, and act as. Bond Counsel to the City. Except as noted below, Co-Bond Counsel have not been retained or consulted on disclosure matters and have not undertaken to review or verify the accuracy, completeness or sufficiency of this Official Statement or other offering material relating to the Bonds and assume no responsibility for the statements or information contained in or incorporated by reference in this Official Statement, except lhat Co-Bond Counsel have, at the request and for the benefit ofthe City, reviewed only those portions ofthe Official Statement involving the description of the Bonds, the security for the Bonds (excluding forecasts, projections, estimates or any other financial or economic information in connection therewith) and the description of the federal tax status of interest on the Bonds. This review was undertaken solely at the request of the City and did not include any obligation to establish or confirm factual matters set forth herein.
Certain legal matters will be passed on for the City by (i) its Corporation Counsel, (ii) in connection with the preparation of this Official Statement, Duane Morris LLP, Chicago, Illinois, and Shanahan & Shanahan LLP, Chicago, Illinois, Co-Disclosure Counsel to the City, and (iii) in connection with certain pension matters described in this Official Statement, Chapman and Cutler LLP, Chicago, Illinois, Special Disclosure Counsel. Certain legal matters will be passed on for the Underwriters by Peck, Shaffer & Williams, a division of Dinsmore & Shohl LLP, Chicago, Illinois, Underwriters' Counsel.

SECONDARY MARKET DISCLOSURE
The City will enter into a Continuing Disclosure Undertaking (the "Undertaking") for the benefit ofthe beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the "MSRB") pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the "Rule"') adopted by the Commission under the Exchange Act. The MSRB has designated its Electronic Municipal Market Access system, known as EMMA, as the system to be used for continuing disclosures lo investors. I he information to be provided on an annual basis, Ihe events that will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below.

36






A failure by the City to comply with the Undertaking will not constitute a default under the Bonds or the Bond Ordinance and beneficial owners of the Bonds arc limited to the remedies described in the Undertaking. See "— Consequences of Failure ofthe City to Provide Information" under this caption. A failure by the City to comply with the Undertaking must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price.
The following is a brief summary of certain provisions of the Undertaking ofthe City and does not purport to be complete. The statements made under this caption are subject to the detailed provisions ofthe Undertaking, a copy of which is available upon request from the City.
Annual Financial Information Disclosure
The Cily covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements (as described below) to the MSRB. The Cily is required to deliver such information so that the MSRB receives the information by the dates specified in the Undertaking.
"Annual Financial Information" means information generally consistent with that contained under the caption "THE CITY — Corporate Fund," "— Use of Long-Term Reserves," "— Capital Improvements Program," "— Property Taxes," "— General Obligation Debt," and "— Retirement Funds and Other Post-Employment Benefits — Future Pension Conlribtttionsf and in APPENDIX B — "FINANCIAL AND OTHER CITY INFORMATION," APPENDIX D — "ECONOMIC, DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION" (except for the information in APPENDIX D under the headings "— Economy," "— Percentage of Total Non-Farm Employment by Major Industry Sector" and "— Housing Market," and information relating to population, per capita personal income employment, and unemployment rate with respect to the United Slates, the State of Illinois, Cook County and the Chicago MSA) and Tables 1-10 included in APPENDIX E — "RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS" (said tables collectively referred to as the "Third-Party Sourced Retirement Fund Tables"). The information contained in the Third-Party Sourced Retirement Fund Tables is sourced from documents published by the Municipal Employees' Annuity and Benefit Fund of Chicago, the Policemen's Annuity and Benefit Fund of Chicago, the Firemen's Annuity and Benefit Fund of Chicago and the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago, and the Cily takes no responsibility for the accuracy and completeness of such information. If the information contained in the Third-Party Sourced Retirement Fund Tables is no longer publicly available or is not publicly available in the form, manner or time that the Annual Financial Information is required to be disseminated by the City, the City shall, as part of its Annual Financial Information for the year in which such a lack of availability arises, include a statement to that effect and to the effect that it will promptly file such information as it becomes available.
"Audited Financial Statements" means the audited basic financial statements ofthe City prepared in accordance with generally accepted accounting principles applicable to governmental units as in effect from time to time.
Annual Financial Information exclusive of Audited Financial Statements will be provided to the MSRB not more than 210 days after the last day ofthe City's fiscal year, which currently is December 3 I. If Audited Financial Statemenls are not available when the Annual Financial Information is filed, unaudited financial statements will be included, and Audited Financial Statements will be filed within 30 days of availability to the City.



37

Reportable Events Disclosure
The Cily covenants that it will disseminate in a timely manner, not in excess of ten business days, to the MSRB the disclosure ofthe occurrence of a Reportable Event (defined below). Certain Reportable Events are required to be disclosed only lo the extent that such Reportable Event is material, as materiality is interpreted under the Exchange Act. The "Reportable Events," certain of which may not be applicable to the Bonds, arc:
principal and interest payment delinquencies;
non-payment related defaults, if material;
unscheduled draws on debt service reserves reflecting financial difficulties;
unscheduled draws on credit enhancements reflecting financial difficulties;
substitution of credit or liquidity providers, or their failure to perform;
(0 adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, notices of proposed issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status ofthe Series 20I4A Bonds, or other material events affecting the tax status ofthe Series 20I4A Bonds;
modifications to rights of security holders, if material;
bond calls, if material, and tender offers;
(i) defeasances;
(j) release, substitution or sale of property securing repayment of the securities, if material; (k) rating changes;
(I) bankruptcy, insolvency, receivership or similar event of the City (considered to have occurred in the following instances: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if the jurisdiction of the City has been assumed by leaving the City Council and the City's officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all ofthe assets or business ofthe City);
(m) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all ofthe assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating lo any such actions, other than pursuant to its terms, if material; and
(n) appointment of a successor or additional trustee or the change of name of a trustee, if material.



38

Consequences of" Failure of the City to Provide Information
The City shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking.
In the event of a failure of the City to comply with any provision of the Undertaking, the beneficial owner of any Bond may seek mandamus or specilic performance by court order, to cause the City to comply with its obligations under the Undertaking. The Undertaking provides that any court action must be initialed in the Circuit Court. A default under the Undertaking shall not be deemed a default under the Bonds or the Bond Ordinance, and the sole remedy under the Undertaking in the event of any failure ofthe City to comply with the Undertaking shall be an action to compel performance.
The City is currently in compliance with undertakings previously entered into by it pursuant to the Rule. The City has had to take corrective action with respect to its undertakings for its Single Family Mortgage Revenue Bonds issued from 1996 to 2002. See "—Corrective Action Related to Certain Bond Disclosure Requirements" below.
Except as noted in "—Corrective Action Related to Certain Bond Disclosure Requirements" below, the City is currently in compliance with undertakings previously entered into by it pursuant to the Rule.
Amendment; Waiver
Notwithstanding any other provision ofthe Undertaking, the City may amend the Undertaking, and any provision ofthe Undertaking may be waived, if:
(i) the amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status ofthe City or type of business conducted; ^

the Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations ofthe Rule, as well as any change in circumstances; and
the amendment or waiver does not materially impair the interests of the beneficial owners ofthe Bonds, as determined by a party unaffiliated with the City (such as the Bond Registrar or co-bond counsel), or by approving vote of the owners of the Bonds at the time of the amendment or waiver; or
the amendment or waiver is otherwise permitted by the Rule.
EMMA
All documents submitted to the MSRB through EMMA pursuant to the Undertaking shall be in electronic format and accompanied by identifying information as prescribed by the MSRB, in accordance with the Rule. All documents submitted lo the MSRB through EMMA will be word-searchable PDFs, configured to permit documents to be saved, viewed, printed and electronically retransmitted.

Termination of Undertaking
The Undertaking shall be terminated if the City shall no longer have any legal liability for any obligation on or relating to repayment ofthe Bonds.
Additional Information
Nothing in the Undertaking shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition lo that which is required by the Undertaking. If the City chooses to include any information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the City shall have no obligation under the Undertaking to update such information or include it in any future Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event.
Corrective Action Related to Certain Bond Disclosure Requirements
The City is currently in compliance with respect to its undertakings to lile Annual Financial Information and notices of Events relating to previously issued bonds and notes in accordance with the Rule.
With respect to the City's Collateralized Single Family Mortgage Revenue Bonds, Series 2006A (the "Series 2006A Bonds"). S&P lowered its rating on the Series 2006A Bonds from "AA+" to "AA" and placed the Series 2006A Bonds on "Credit Watch with negative implications" effective December 16, 201 1. The City did not cause the trustee as dissemination agent to tile a notice of an Event with EMMA at that time. Subsequently, S&P upgraded the rating on the Series 2006A Bonds from "AA" to "AA+" effective March 12, 2012. On March 18, 2012, S&P removed the "Credit Watch with negative implications" characterization from the Series 2006A Bonds. The City caused the trustee, as dissemination agent, for the Series 2006A Bonds to tile a notice of an Event with EMMA on March 26, 2012 disclosing the downgrade and subsequent upgrade ofthe Series 2006A Bonds by S&P.
With respect to the City's Chicago O'l-lare International Airport General Airport Third Lien Revenue Bonds, Series 2011, American Airlines is an "obligated person" with respect to such bonds. On November 29, 201 I, AMR Corporation (the parent company of American Airlines and American Eagle) and certain of its United States-based subsidiaries (including American Airlines and American Eagle) filed voluntary petitions for Chapter I I reorganization in the United States Bankruptcy Court for the Southern District of New York. The Cily filed a notice with EMMA with respect to this event on March 30, 2012.
With respect to the City's outstanding Motor Fuel Tax Revenue Bonds, the City's pledge of additional City revenues to the payment of such bonds (in addition to the .pledge of motor fuel tax revenues) became effective as of March 19, 2013. The City filed a notice with EMMA describing the pledge of this additional source of revenue on May 16, 2013.
With respect to the City's outstanding Chicago OTIare International Airport Customer Facility Charge Senior Lien Revenue Bonds, Series 2013, Simply Wheelz. LLC d/b/a Advantage Rent A Car ("Advantage") is an "obligated person" with respect lo such bonds. Advantage filed a voluntary bankruptcy petition in the Southern District of Mississippi on November 5, 2013. The City filed a notice with EMMA with respect to this event on December 5. 2013.


40

MISCELLANEOUS
The foregoing summaries or descriptions of provisions of the Bond Ordinance and the Undertaking and ail references to other materials not purporting to be quoted in full, are qualified in their' entirety by reference to the complete provisions of the documents and other materials summarized or described. Copies of these documents may be obtained from the Chief Financial Officer ofthe City.
The Bonds are authorized and are being issued pursuant to the City Council's approval under the powers ofthe City as a home rule unit under Article VII ofthe Illinois Constitution of 1970. This Official Statement has been authorized by the City Council.
CITY OF CHICAGO

By: /s/ Lois A. Scott Chief Financial Officer


































41

[Tins Page Intentionally Left Blank]
APPENDIX A CITY OF CHICAGO REAL PROPERTY TAX SYSTEM AND LIMITS
[Tins Pagi; Intentionally left Blank]
TABLE OF CONTENTS
Page
Real Property Assessment, Tax Levy and Collection Procedures A-l
General A-l
Assessment A-l
Equalization A-2
Exemptions :'. A-2
Tax Levy A-4
Collection A-5
Property Tax Limit Considerations A-6
State Legislation A-6
Slate of Illinois A-6
The City A-6
[Tins Page Intentionally Lett Blank!
Real Property Assessment, Tax Levy and Collection Procedures
General. Information under this caption provides a general summary ofthe current procedures lor real property assessment, tax levy and tax collection in Cook County (the "County"). The following is not an exhaustive discussion, nor can there be any assurance that the procedures described under this caption will not be changed either retroactively or prospectively. The Illinois laws relating to real property taxation arc contained in the Illinois Property Tax Code (the "Property Tax Code").
Substantially all (approximately 99.99 percent) ofthe "Equalized Assessed Valuation" (described below) of taxable property in the City is located in the County. The remainder is located in DuPage County. Accordingly, unless otherwise indicated, the information set forth under this caption and elsewhere in this Official Statement with respect to taxable property in the Cily does not reflect the portion situated in DuPage County.
Assessment. The Cook County Assessor (the "Assessor") is responsible for the assessment of all taxable real property within the County, except for certain railroad property and pollution control equipment assessed directly by the State. One-third ofthe real property in the County is reassessed each year on a repeating triennial schedule established by the Assessor. The City was last reassessed in 2012. The suburbs in the northern and northwestern portions ofthe County were reassessed in 2013. The suburbs in the western and southern portions ofthe County arc being reassessed in 2014. The City will next be reassessed in 2015.
Real property in the County is separated into various classifications for assessment purposes. After the Assessor establishes the fair cash value of a parcel of land, that value is multiplied by one ofthe classification percentages to arrive at the assessed valuation (the "Assessed Valuation") for the parcel. Beginning with the 2009 tax year, the classification percentages range from 10 to 25 percent depending on the type of property (e.g., residential, industrial, commercial) and whether it qualifies for certain incentives for reduced rates. For prior years, Ihe classification percentages ranged from 16 to 38 percent.
The Cook County Board of Commissioners has adopted various amendments to the County's Real Property Assessment Classification Ordinance (the "Classification Ordinance"), pursuant to which Ihe Assessed Valuation of real property is established. Among other things, these amendments have reduced certain property classification percentages, lengthened certain renewal periods of classifications and created new property classifications.
The Assessor has established procedures enabling taxpayers lo contest the Assessor's tentative Assessed Valuations. Once the Assessor certifies final Assessed Valuations, a taxpayer can seek review of its assessment by the Cook County Board of Review (the "Board of Review"). The Board of Review has powers to review and adjust Assessed Valuations set by the Assessor. Owners of property are able to appeal decisions of Ihe Board of Review lo the Illinois Property Tax Appeal Board (the "PTAB"), a state­wide administrative body, or to the Circuit Court of Cook County (the "Circuit Court"). The PTAB has the power to determine the Assessed Valuation of real property based on equity and the weight of the evidence. Based on the amount of the proposed change in assessed valuation, taxpayers may appeal decisions of the PTAB to either the Circuit Court or the Illinois Appellate Court under the Illinois Administrative Review Law.
In a series of PTAB decisions, the PTAB reduced the assessed valuations of certain commercial and industrial property in the County based upon the application of median levels of assessment derived from Illinois Department of Revenue sales-ratio studies instead of utilizing the assessment percentages provided in the Classification Ordinance. On appeal, the Illinois Appellate Court determined that it was


A-l

improper for the PTAB, on its own initiative, to use the sales-ratio studies when such studies were not even raised as an issue by the taxpayer before the Board of Review or in its appeal to the PTAB.
The Appellate Court decisions do not preclude a taxpayer in a properly presented case from introducing into evidence sales-ratio studies for the purpose of obtaining an assessment below that which would result from application of the Classification Ordinance! No prediction can be made whether any currently pending or future case would be successful. The City believes that the impact of any such case on the City would be minimal, as the City's ability lo levy or collect real property taxes would be unaffected.
As an alternative to seeking review of Assessed Valuations by the PTAB. taxpayers who have first exhausted their remedies before the Board of Review may file an objection in the Circuit Court. The City filed a petition to intervene in certain of these proceedings for the first lime in 2003, but the Circuit Court denied the City's petition in early 2004. The City appealed the Circuit Court decision. On appeal, the Circuit Court decision was reversed and the matter was remanded to the Circuit Court with instructions to allow the City to proceed with its petitions to intervene. In addition, in cases where the Assessor agrees that an assessment error has been made alter tax bills have been issued, the Assessor can correct the Assessed Valuation, and thus reduce the amount of taxes due, by issuing a Certificate of Error.
Equalization. After the Assessed Valuation for each parcel of real estate in a county has been determined for a given year including any revisions made by the Board of Review, the Illinois Department of Revenue reviews the assessments and determines an equalization factor (the '"Equalization Factor''), commonly called the "multiplier," for each county. The purpose of equalization is to bring the aggregate assessed value of all real property, except farmland, wind turbines with a nameplate capacity of at least 0.5 megawatts and undeveloped coal, in each county to the statutory requirement of 33-1/3 percent of estimated fair cash value. Adjustments in Assessed Valuation made by the PTAB or the courts are not reflected in the Equalization Factor. The Assessed Valuation of each parcel of real estate in the County is multiplied by the County's Equalization Factor to determine the parcel's equalized assessed valuation (the "Equalized Assessed Valuation").
The Equalized Assessed Valuation for each parcel is the final property valuation used for determination of tax liability. The aggregate Equalized Assessed Valuation for all parcels in any taxing body's jurisdiction, after reduction for all applicable exemptions, plus the valuation of property assessed directly by the State, constitutes the total real estate tax base for the taxing body and is the figure used to calculate tax rates (the "Assessment Base"). The Equalization Factor for a given year is used in computing the taxes extended for collection in the following year. The Equalization Factors for each of the last II tax levy years, from 2002 through 2012 (the most recent years available), are listed in APPENDIX B in the table captioned "Property Tax Information."
In 1991, legislation was enacted by the State which provided that for 1992 and for subsequent years' tax levies, the Equalized Assessed Valuation used to determine any applicable tax limits is the one for the immediately preceding year and not the current year, 'this legislation impacts taxing districts with rate limits only and currently does not apply to the City. See "— Property Tax Limit Considerations" below.
Exemptions. The Illinois Constitution allows homestead exemptions for residential property. Pursuant to the Illinois Property Tax Code, property must be occupied by the owner as a principal residence on January I ofthe tax year for which the exemption will be claimed.
The annual general homestead exemption provides for the reduction of the Equalized Assessed Valuation ("EAV") of certain property owned and used exclusively for residential purposes by the

A-2

amount ofthe increase over the 1977 EAV, currently up to a maximum reduction of $7,000 in Cook County and $6,000 in all other counties. There is an additional homestead exemption for senior citizens (individuals at least 65 years of age), for whom the Assessor is authorized to reduce the EAV by $5,000. A recent amendment to this exemption requires senior citizens to reapply for it on an annual basis. There is also an exemption available for homes owned and exclusively used for residential purposes by disabled veterans or their spouses, for whom the Assessor is authorized to annually exempt up lo $70,000 of the Assessed Valuation. An additional exemption is available for disabled persons, for whom Ihe Assessor is authorized to reduce the EAV by $2,000. An exemption is available for homestead improvements by an owner of a single family residence of up to $75,000 ofthe increase in the fair cash value of a home due lo certain home improvements lo an existing structure for at least four years from the date the improvement is completed and occupied. Senior citizens whose household income is $55,000 or less, and who are either the owner of record or have a legal or equitable interest in the property, qualify lo have the EAV of their property frozen in the year in which they first qualify for the so-called "freeze" and each year thereafter in which the qualifying criteria are maintained. Each year applicants for the Senior Citizens Assessment Freeze Homestead Exemption must file ihe appropriate application and affidavit with the chief county assessment office.
On July 12, 2004, the Properly Tax Code was amended to permit each county in Ihe State, by enacting an ordinance within six months ofthe effective date ofthe law, to limit future increases in the taxable value of residential property in such a county to an annual increase of not more than 7% per year. This is known as the Alternative General Homestead Exemption (AGHE). Upon adoption of such an ordinance, homestead property will generally be entitled to an annual homestead exemption equal to the difference between the property's EAV and the property's "adjusted homestead value." The County adopted an ordinance electing to be governed by this law. The purpose of the law is to reduce the increase in the taxable value of residential property that otherwise occurs when home values rise rapidly.
In 2007, the Alternative General Homestead Exemption law enacted in 2004 was allowed to sunset. Later in 2007, Public Act 95-0644 was enacted, which extended the AGHE law for an additional three years, subject to certain revisions and adjustments to the prior law. On May I, 2011, Public Act 96-1418 was enacted to extend the AGHE for three more years, and lo reduce the maximum amount ofthe exemption. For tax years beginning in 2008, the maximum exemption for homeowners is as follows: For homeowners in the City, $20,000 for the 2008 and 2009 tax years (taxes paid in 2009 and 2010), $16,000 for the 2010 tax year (taxes paid in 2011) and $12,000 for the 2011 tax year (taxes paid in 2012); for homeowners in Ihe northern and northwestern portions of the County, $26,000 for the 2008 tax year (taxes paid in 2009), $20,000 for the 2009 and 2010 tax years (taxes paid in 2010 and 2011), $16,000 for the 2011 tax year (taxes paid in 2012) and $12,000 for the 2012 tax year (taxes paid in 2013); and for homeowners in the western and southern portions of the County, $33,000 for the 2008 tax year (taxes paid in 2009), $26,000 for the 2009 tax year (taxes paid in 2010), $20,000 for the 2010 and 2011 tax years (taxes paid in 2011 and 2012), $16,000 for the 2012 tax year (taxes paid in 2013) and $12,000 for Ihe 2013 tax year (taxes paid in 2014). In the year that a homeowner loses all of its 7% savings, a Sunset Exemption provides an additional one-liinc deduction of $5,000 off the equalized assessed value of a property for eligible homeowners.
Aside'from homestead exemptions, upon application, review and approval by the Board of Review, or upon an appeal to the Illinois Department of Revenue, there arc exemptions generally available for properties of religious, charitable (including qualifying not-for-profit hospitals), and educalional organizations, as well as units of federal, stale and local governments.
Additionally, counties have been authorized to create special property tax exemptions in long-established residential areas or in areas of deteriorated, vacant or abandoned homes and properties. Under such an exemption, long-time, residential owner-occupants in eligible areas would be entitled to a deferral

A-3

or exemption from that portion of property taxes resulting from an increase in market value because of refurbishment or renovation of other residences or construction of new residences in the area. On June 5, 2001, the County enacted the Longtime Homeowner Exemption Ordinance, which provides properly tax relief from dramatic rises in property taxes directly or indirectly attributable lo gentrilication in the form of an exemption. This is generally applicable to homeowners: (i) who have resided in Iheir homes for 10 consecutive years (or five consecutive years for homeowners who have received assistance in the acquisition of the property as pari of a government or nonprofit housing program), (ii) whose annual household income for the year ofthe homeowner's triennial assessment does not exceed 115 percent of the Chicago Primary Metropolitan Statistical Area median income as defined by the United States Department of Housing and Urban Development, (iii) whose property has increased in assessed value to a level exceeding 150 percent ofthe current average assessed value for properties in the assessment district where the properly is located, (iv) whose property has a market value for assessment purposes of $300,000 or less in the current reassessment year, and (v) who. for any triennial assessment cycle, did not cause a substantial improvement which resulted in an increase in the property's fair cash value in excess of the $45,000 allowance set forth in the Property Tax Code.
Tax Levy. There are over 800 units of local government (the "Units") located in whole or in pari in the County that have taxing power. The major Units having taxing power over property within the City are the City, the Chicago Park District, the Board of Education ofthe City of Chicago, the School Finance Authority, Community College District No. 508, the Metropolitan Water Reclamation District of Greater Chicago, the County and the Forest Preserve District of Cook County.
As part of the annual budgetary process of the Units, each year in which the determination is made to levy real estate taxes, proceedings are adopted by the governing body for each Unit. The tax levy proceedings impose the Units' respective real estate taxes in terms of a dollar amount. Each Unit certifies its real estate tax levy, as established by the proceedings, to the County Clerk's Office. The remaining administration and collection ofthe real estate taxes is statutorily assigned to the County Clerk and the County Treasurer, who is also the County Collector (the "County Collector").
Alter the Units file their annual tax levies, the County Clerk computes the annual tax rate for each Unit by dividing the levy of each Unit by the Assessment Base ofthe respective Unit. If any tax rate thus calculated or any component of such a tax rate (such as a levy for a particular fund) exceeds any applicable statutory rate limit, the County Clerk disregards the excessive rate and applies the maximum rate permitted by law.
The County Clerk then computes the total tax rate applicable to each parcel of real property by aggregating the tax rates of all the Units having jurisdiction over the particular parcel. The County Clerk enters in the books prepared for the County Collector (the "Warrant Books") the tax (determined by multiplying that total lax rate by the Equalized Assessed Valuation of that parcel), along with the tax rates, the Assessed Valuation and the Equalized Assessed Valuation. The Warrant Books are the County Collector's authority for the collection of taxes and are used by the County Collector as the basis for issuing lax bills to all property owners.
The Illinois Truth in Taxation Law (the "Truth in Taxation Law") contained within the Property Tax Code imposes procedural limitations on a Unit's real estate taxing powers and requires that notice in prescribed form must be published if the aggregate annual levy is estimated to exceed 105 percent ofthe levy of the preceding year, exclusive of levies for debt service, levies made for the purpose of paying amounts due under public building commission leases and election costs. A public hearing must also be held, which may not be in conjunction with the budget hearing of Ihe Unit on the adoption of the annual levy. No amount in excess of 105 percent of the preceding year's levy may be used as the basis for issuing tax bills to property owners unless the levy is accompanied by certification of compliance with the

A-4

foregoing procedures. The Truth in Taxation Law does not impose any limitations on the rate or amount ofthe levy to pay principal of and interest on the general obligations bonds and notes ofthe City.
Collection. Property taxes are collected by the County Collector, who remits to each Unit its share ofthe collections, 'faxes levied in one year become payable during the following year in two installments, the first due on March I and the second on the later of August I or 30 days after the mailing ofthe tax bills. The first installment is an estimated bill calculated at 55% of the prior year's tax bill. The second installment is for the balance of the current year's tax bill, and is based on the current levy, assessed value and Equalization Factor and applicable tax rates, and reflects any changes from the prior year in those factors. Taxes on railroad real property used for transportation purposes are payable in one lump sum on the same date as the second installment.
The following table sets forth the second installment penalty date for the tax years 2003 to 2012; the first installment penalty date has been March 2 for all years.
Second Installment
Tax Year Penalty Date
2012 August 1,2013
2011 November 1,2012
2010 November 1,2011
2009 December 13,2010
2008 December 1, 2009
2007 November 3, 2008
2006 December 3, 2007
2005 September I, 2006
2004 November 1,2005
2003 November 15, 2004
The County may provide for tax bills to be payable in four installments instead of two. The County has not determined to require payment of lax bills in four installments. During the periods of peak collections, tax receipts are forwarded to each Unit not less than weekly.
At the end of each collection year, the County Collector presents the Warrant Books to the Circuit Court and applies for a judgment for all unpaid taxes. The court order resulting from the application for judgment provides for an annual sale of all unpaid taxes shown on the year's Warrant Books (the "Annual Tax Sale"'). The Annual Tax Sale is a public sale, at which time successful tax buyers pay the unpaid laxes plus penalties. Unpaid taxes accrue interest at the rate of 1.5 percent per month from their due date until the date of sale. Taxpayers can redeem their property by paying the amount paid at the sale, plus an additional penalty fee calculated from the penalty bid at sale times a certain multiplier based on each six-monlh period after the sale. If no redemption is made within the applicable redemption period (ranging from six months to Iwo and one-half years depending on the type and occupancy of the property) and the tax buyer files a petition in Circuit Court, notifying the necessary parties in accordance with applicable law, the tax buyer receives a deed to the property. In addition, there are miscellaneous statutory provisions for foreclosure of tax liens.
If there is no sale ofthe lax lien on a parcel of property at the Annual Tax Sale, the taxes arc forfeited and eligible to be purchased at any time thereafter at an amount equal to all delinquent taxes, interest and certain other costs to the date of purchase. Redemption periods and procedures are the same as applicable to the Annual Tax Sale, except that a different penalty rate may apply depending on the length ofthe redemption period.

A-5

A scavenger sale (the "Scavenger Sale"), like the Annual Tax Sale, is a sale of unpaid taxes. A Scavenger Sale must be held, at a minimum, every two years on all property in which taxes arc delinquent for two or more years. The sale price of the unpaid taxes is the amount bid at the Scavenger Sale, which may be less than the amount of the delinquent taxes. Redemption periods vary from six months to two and one-half years depending upon the type and occupancy of the property.
The annual appropriation ordinance ofthe City has a provision for an allowance for uncollectible taxes. The City reviews this provision annually to determine whether adjustments are appropriate. For tax year 2013, collectible in 2014, the allowance for uncollectible taxes is about four percent of the estimated gross tax levy. For financial reporting purposes, uncollected taxes are written off by the City after four years, but are fully reserved after one year.
Property Tax Limit Considerations
State Legislation. As described above under "Real Property Assessment, Tax Levy and Collection Procedures — Exemptions," the Alternative Homestead Exemption was not extended for years after 2013.
State of Illinois. The Property Tax Code limits (a) the amount of properly taxes that can be extended for non-home rule units of local government located in the County and five adjacent counties and (b) the ability of those entities to issue general obligation bonds without voter approval (collectively, the "State fax Cap"). Generally, the extension of property taxes for a unit of local government subject to the State Tax Cap may increase in any year by five percent or the percent increase in the Consumer Price Index for the preceding year, whichever is less, or the amount approved by referendum. The State Tax Cap does not apply to "limited bonds" payable from a unit's "debt service extension base" or to "double-barreled alternate bonds" issued pursuant to Section 15 ofthe Local Government Debt Reform Act.
As a home rule unit of government, the City is not subject to the Slate Tax Cap. Under the Illinois Constitution of 1970, the enactment of legislation applying the State Tax Cap to the City and other home rule municipalities would require a law approved by the vote of three-fifths ofthe members of each house ofthe Illinois General Assembly and the concurrence ofthe Governor ofthe Stale of Illinois. It is not possible to predict whether, or in what form, any property lax limitations applicable to the City would be enacted by the Illinois General Assembly. The adoption of any such limits on the extension of real property taxes by the Illinois General Assembly may, in future years, adversely affect the City's ability to levy property taxes to finance operations at current levels and the City's power to issue additional general obligation debt without the prior approval of voters.
State law imposes certain notice and public hearing requirements on non-home rule units of local government that propose lo issue general obligation debt. These requirements do not apply to the City.
The City. In 1993, the City Council of the City adopted an ordinance (the "Chicago Property Tax Limitation Ordinance") limiting, beginning in 1994, ihe City's aggregate property tax levy to an amount equal to the prior year's aggregate property tax levy (subject to certain adjustments) plus the lesser of (a) five percent or (b) the percentage increase in the annualized Consumer Price Index for all urban consumers for all items, as published by the United States Department of Labor, during the 12-month period most recently announced prior to the filing of the preliminary budget estimate report. The City Tax Limitation Ordinance also provides that such limitation shall not reduce that portion of each levy attributable to the greater of: (i) for any levy year, interest and principal on general obligation notes and bonds ofthe City outstanding on January 1, 1994, to be paid from collections of the levy made for such levy year, or (ii) the amount of the aggregate interest and principal payments on the City's general obligation bonds and notes during the 12-month period ended January 1, 1994, subject to annual increase

A-6

in the manner described above tor the aggregate levy (the ''Safe Harbor"). Additional safe harbors are provided for portions of any levy attributable to payments under installment contracts or public building commission leases or attributable to payments due as a result ofthe refunding of general obligation bonds or notes or of such installment contracts or leases.
The tax limits set forth in the City Tax Limitation Ordinance may in future years adversely affect the City's ability to finance operations at current levels and limit the ability ofthe Cily to finance capital improvement projects through the issuance of property-lax-supported bonds.
Pursuant to the Bond Ordinance, the taxes levied by the City for the payment of principal and interest on the Bonds is not subject to the limitations contained in the City Tax Limitation Ordinance.







































A-7

[Tins Page Intentionally Left Blank]
APPENDIX B CITY OF CHICAGO FINANCIAL AND OTHER INFORMATION
[This Pagl: Intentionally Left Blank]
TABLE OF CONTENTS
The following tables reflect information for Cook County, which represents approximately 99.99 percent of the equalized assessed value of taxable property in the City, unless otherwise indicated.
Page
PROPERTY TAX INFORMATION B-1
Assessed. Equalized Assessed and Estimated Value of All Taxable Property 2002 - 2012 B-1
Property Taxes for All City Funds, Collections and Estimated Allowance for
Uncollectible Taxes 2003 - 2012 B-2
PROPERTY TAX RATES BY FUND PER $100 OF EQUALIZED ASSESSED
VALUATION 2003 - 2012 B-3
Combined Property Tax Rates ofthe City and Other Major Governmental Units Per $100 of
Equalized Assessed Valuation 2003 - 2012 B-4
PROPERTY TAX SUPPORTED BONDED DEBT B-5
Computation of Direct and Overlapping Bonded Debt B-5
Selected Debt Statistics B-6
Debt Service Schedule B-7
PROPERTY TAX LEVIES BY FUND 2008 - 2012 B-8
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES B-9
General Fund for fiscal years ended 2008 - 2012 B-9
Special Revenue Funds for fiscal years ended 2008 - 2012 B-10
Debt Service Funds for fiscal years ended 2008 - 2012 B-11
Capital Projects Funds for fiscal years ended 2008 - 2012 B-12
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor
Governmental Funds Year Ended December 31, 2012 B-13
[Tinspageintentionally Lei t Blank]
































i
O -a 51) - —
~-a " ° 2
75 u o .5 a
C «i w

-d- o o CT\ O r-i fp r>i fi - 6 ri c 6 1/1 ^
CN CN CI d r*l r-l r] ro ^




o rs
I
«s o o
mcNrNOOrioonO\NO
ri -t 'O oo ^ o h r, o
OO r-i" O r-" O ri" 0C OO \0 vo
n r- oo n o cc oo cc *n
O in o — r- '/"i m n CT\ oo
—¦ ri" rNriOOOO — rN
o n m; m n r-i r- oo n n
fN oi rj (N m en n ri oi rN


•ri m n rN o o o c\ o — rN

T3 C CO

o


x H

"3 "2-
3 i/> w
fMr^i'OOrM'Oroooo-i-r-
Oifn^f.^^Tror- — oo
oo vo o >ri — m 'ri oo - cti n
d oo r- •? — o r4 o
n\Or-0-^i^oooor-iin fl-rNri vi'OOimO — rN vS ri '/"T oT on ri o tj-" N *ri iri - - -, »o vo i— oo oo oo r-- vo
S w -3 u.
0\OQhO^^VO-OVOVO
oooviNr-nooooo1^ ^o»/"tr-^no^J"r-*-p-or^-o
t Tt- rN r*i r-i r-i r«i rg rN ri ri rN- rN|1010|C
CL O
r- — — r-f -r —# vc \o
Tj" rN od r-~ tt ri vi r-^ iri ri ^-OrirNr-fNONrivoON n I— ri n C; ^ \o ri ri"1 ri .—T o* O rN ri (N ri n ri rn m r^,


CO TD


•a "3|1010|CO
o
c
Id
T3 0>

a <
r^- OO "O O VO On f") oo —¦
n O -tq w- r-j n \o
On r-' "rT r^i' oo od* en ¦—' -^r*
fi t t t <: 'rrn
rN ri C» x o *o vo n ri TTflMO-d-COrl-T —.VO
•— r—- -^r ¦— o '1 in o n
OO o o oo "
OO — N i— O0>0 O O O w-i rn r)
oonT^-rNnr^
O 04 r^i r] O O O
vOrNMflMM^O — ~rr
-3- r~~ ~rr — c\ rj 'O '0 as n 'n o 00 r~- oo ^3
«/-T ri ri" CnT \0 00" oi rN" \0 —' 'OriOOTTO'^DO — r-\D OO Ol CO OO O h ^ M t —¦








B 9i O S ¦
o 2 "° '

0 -


CO
c
'?
o

4>
r-
MOsOOOrn^T - CO CO
cnos'— nr-'or-oor-o
vo - n m cc ui On *o ri
—" r-" 00 o' ^ cn — o o
r-i r- cc r>i r-» ri n - n r~
cj vo on Tj- o r*-i ri on
ei"fN"rN n 00 oc cri 00 00V"

fl f, 1- vO M» On O — rN
OOOOOOOO —
OOOOOOOOOOO fN tN fN (N r-t M PI rN ri rN

C l. ~
3 n c

U Z 2 2 ¦2 2 S
iu a> at

5 c a c
y o y 3
1: (J ri
o ^' —
c «> o O £ ri
£ £_Q o
p £- ^ u
P ,c 5
8" - § £ g = o
H £ u ^ w "
lie
£ > on 00
O \o •n M NO >n CN n rsi t o|1010|d « U U
E
C it X
ea — re
•a ^ o i_
oo o o oo o n c~, r-1 >n oo-^'nr-fNOrn-— oo n- r-i r-i r~ o o rn

(J c

<
¦a
E
W 2
o
T3 C
« I
B ©
o o
fN
Ji ">
= X
o a
U H
|1010|u.


-a c rr)
O -C f-
c
- n 5 oj
c H 5 -3
O - " K
u o o H
a. H -





H u



= -°
5 5

vo ri o r> n oo '/n. ©O -rf
o 'o vq — o »o o r~




CN
r> r> n -+ m
— O — no n n - r--o
o o on cn rN — on
r^r^vOr^occooooor-*.


rs n cs t vo t - ocn o \c n — vo o 'n »n \onri»M>--co
|1010|— -o o c



CI iZ -





r-

c o u a,
g IS
2 « "5
Tfp^r—o — or-or-.




n — ONOor-jr-^j-oC'—
on cn 'n o o_ »n '/~^ — *n ri
•^r -rf" o cn vd o" o o" o*
r-- On On ri — r^. o On O ON
fee




3 -
a» TJ


\ tn CO

*J k «no — o — d ci c* « \o ^or^orsm — — o o no (-i 5 ^ °- °° °^ °- ^ w U. ^ ^ H o

^ ^> "7 —
3 (=
o o
3^ o

>1 L-
> re
^-^-'/-ivor—ccoo — CN
ooooooo
Oooooooooo rj ri ri rj cm r^j r-i cn
ooo^i-NC^J-moO'—r~ m m n o o o o\ o ¦— fN
o ¦
o ©
cn -3- — no
iO «n O 'n \o
r-~ r~ MO ^
— n-i vo 'n
o o p o o
o o o o o

ca >
01
C\ -3- n — r» t ri ^ r, ¦t m tj- r> x cc oo 'n — —¦
O»ricic%cooooooooo OOoooNccoor*-r-coo *— o o o o o o o o — oo'oooooooo


03
w o
o
\o oo m o cn r-i tj- in \£> ci
— ^OOC>OOOOrnrnc>
ci o \0 n ri — r- -3- O oo ooctn — h ri o '— o r-~- cn ri o r-- vo «o vo as cn c-1 rN —• ~ —¦ —; —; ^ ~ oo'oooooooo
CO


T3
c|1010|>->
ca
o> a
a;
« H >> u
V
a.
o

u 3 a, = C (B O C



V © ^ Q. at
i i £
a -a
w Dfi
NCr^noovO(N-t-c>
oo — tj- — cn r-» o — o ri ¦— nONC\r^*Or^ONfl
ri ol fN - - fN
00000 0*0000



^or^ovo-^-^or- — cn
" o a\ oo n o oo >n n n'OCNvooooNoo-*i' x \o >o n in vq r>
oo'oooooooo



a
U C i>
— i u ° P Cti
JE o
5-g
Si c-

c: c W

^ X N r, irl "O O CO ^7 n
vor*«ocNn — — oosvo
On O* oo" c> On ^ -tf m tj-'
— — t}- ri n m ri ci
r^r^r--r--r--ooocoocooo


n-^-w-NNOr^oooo —• cn
ooooooo —
oooooooooo
CN CN CN CN CN CN CN rN CN CN
i s Ji
O S ^ o
O ~ nil
a l. n
¦f" Sr ° u
o .o >• o
fl'ii
OK 1) P T3 -D

(U o —
o H
en oo oo o o — n n 'n on ^ ri c> n On co o o> -t_
>o >n -r -r ^ >n 'O

o o
u<5
O rn en O vO »n m CN —
oo'oooooooo

cn o o m — o\ — oo n >r\ \C no «~i »/"> ^1" »o *n no oooooooooo oooooooooo
00

S|910|
i; °
O o
? c|109|%
c -o
« 52
5 °
o « 2 'C

s «

cm ^ o
S K -
— r- 'n -3- cn rt ¦— -rf o O cn cn m ri ri cn ri rt co cn oooooooooo


-d-'nmON^nmONCNNO'/-i •0 -3- r- >ri cl o ~ tt O -^¦tfTfmcnr^cnrnmm
o'c'ooooo'ooo
u
J=
NOCN-^-'nCNNOO — »no M n ri M - — —' — — —
o o o o o o o

a 05
x a H|1010|U
o o
o .2 ¦P £

n ^1- no r-. cn r4 no — vi m -3"OrNONoor~NOoor^ri ri n ri ri ri ri r! ri n

_u <«
a,
cu p
15
E o U
o _ s. C
M O u t
a o = 5
•l-g S€


o cm o o» c -a . « o = « e
¦= ^ 5 o ,3
— r-. r-» oo —. •n r-* n ¦— g
© o o o o
oo E


OriroriTj-O'O'OOO OOC-tvO-rriX - — r-r«~> ro (-1 O O O O, O — ri


rn-T^NOrvgoONO - ol
ooooooo-
oooooooooo cn n n m m ri n n cn cn

CITY OF CHICAGO PROPERTY TAX SUPPORTED BONDED DEBT Computation of Direct and Overlapping Bonded Debt As of March 13,2014
(Adjusted for the issuance and application of proceeds from the Bonds) (Dollars in Thousands)

Direct Dehl.
General-Obligation Bonds ;inil Notes' $7,878,373
I he Bonds 883,420
Short-Term Obligations' (395,797)
Net Direct I .one-Term Debt $8JftL22fi
Net Direct Percent Debt
Overlapping Debt2 P"MJ Overlapping4 Applicable
Cily Colleges ol'Chicago $ 250,000 100.00% $ 250,000
Board ofTiducalion 6,1 17,455s 100.00 6,117.455
Chicago Park District 826,190' 100 00 826,190
Metropolitan Water Reclamation District Ol'Greater Chicago 2,458,516 48.91 1,202,560
Cook County 3,578,905 47 92 1,714,876
Cook County l-oresl Preserve District 179,655 47 92 86.084
Total Overlapping Long-1 enn Debt S 10,197,165
Net Direct and Overlapping Long-Term Debt $ 18,563,161







Includes outstanding General Obligation Commercial Paper Notes and lines or credit consisting of (dollars in thousands)
Amount Scries
$187,502 2002B
63,295 20U2D
145.000 2013 line of credit
1 Includes debt secured by property taxes (including "alternate bonds" and "limited lax" bonds)and PBC bonds secured by long-term lease
obligations also secured by properly taxes 1 Source P.ach of the respective lax districts 1 Source Cook County Clerk's Office
3 Includes S5.944.515.661 and S3V6.57O.OU0 of general obligation bonds ofthe Board of Education and the Chicago Park District, respectively, issued as "alternate revenue" bonds secured by alternate revenue sources An ad valorem properly lax levy is filed in an amounl sufficient lo pay debt service on the altemale revenue bonds When sufficient revenues have accumulated to pay annual debt service on Ihe alternate revenue bonds, the property lax levy is abated 'lo date, alternate revenues have been available in amounts sufficient lo pay principal and interest coming due on the alternate revenue bonds issued by ihe Board of Lducjlion and Chicago Park District







B-5

Selected Debt Statistics

Population (2010) 2,695,598'
Total Equali/.cd Assessed Value (2012) $65,250,3X7,2672
Total Estimated Fair Cash Value (2011) $222.856,063.5015


Percent of Total
Percent of Total
, Estimated Fair
Amount Per Capita Cash Value
Net Direct Long-Term Debt $ 8365,996,160 $3,103 3.75%
Total Net Direct and Overlapping Long-Term Debt... $18,563,160,160 $6,886 8.33%






1 Source U S Census Bureau
1 Source Cook County Clerk's Office. Total Equalized Assessed Value is net of exempt ions Includes assessment of pollution control facilities and excludes portions of the City in DuHagc County
Source 'I he Civic federation F.\cludcs railroad property, pollution control facilities and portion of the City in DuPage County



[REMAINDER Ol7 PAGE INTENTIONALLY LEFT BLANK]




















B-6

Ov O (MS
-1 -T O vO r i
O, — O o
inr«ir"»mo,Or"«C"iOf^r"i\Of*ir",iinr» p (*i C"l *f f_ **> CJ» m — O
i O to -O '
>o" o" v3 ri Oi r"» i-J rf ~T r— — o\ •* — n n 01" oC rT — r
r1 "P. **1 "T. T °. "*l -1 w. "r. —. <~>, O 00 r~- c -
ij vi r| (; O r*. >f ^' fj ;— n ^ O n Ci -f
- O w-i t (
— < "2 to «


















§^3
•S « —|910|.2? « o B
.— .O -r oj a.

2i Xi y

1 ^ °. ^ ri M
to

<0 l~~ O "T r-» 8 _ _
> TT in in \0_ O '
«' V \0* *T -T -
O O oo CM O — r
T r- O C\ r- O ''I 'T r-i_ O C*p
-j V£> —' -O — r"V r-i" r* » ^' n r{ O f> Ci O
¦ CI Oi "J i". ¦
- ri S o 3 *-'

n C r-l O T OT ' n" t' -t t~. C i rf —* -

OPQOQOOOOOO
8 8 8888888.88
. O O wi
=0, O ~[ I
— — — Oi OS C» C*i C*i On


ID r* n —1 — vi ri '1 D - O vj ¦
O — o_ r-_ — r i_ c i_ od r-( oo <3\ oo <, co no -T — \£>" i-i c' 'O n —'

)QOOCOOOOOOOOOOO
>ooooooooooooooo
c_ © o_ c o_ o_ o o p o_ p p p o_ p ) m* o «n" w* »n" o" © m' v-i" Q «n vi m* m" o-
) — ri '5 iA - T O Ov •£> -T SO i- — m ¦ ri m o Oiri ^ W t_ rt r~_ On no O r-- uo
rfo r i >n" Ci" iO so r*' W o" -O





r-iO — ?i n >ri ii - OfJ(OC\Dr--f^.-r>Cf
O O O f~> O r-t OO O » "1 Cri_ I— CI ¦— CO —_ t I T iri^ >/t_ in -r_ cjn c. oo m_ I
r* (7> i--' o" -r v-C —' no f-T ri >o* o* «n no" oo" c" o" —' r-" —' m" i . — j M oo h ri — »D Oi cl /i d o « o r- r- r-r- oc-i> ^¦h r»cor«ir-->/1TDOoori^-r-«0'j^rn— - cl^ Oi Oma in ¦ ! iO n v-iV « 00 o" O in -t r-t' O r-l \C} O* O f. r-f t r- f^' —" O O O r— ¦
' oiOirt^nriri-OO'W^NDfr, rj-OiOTM-00>MTri'


¦S c ^- ^ ^

B -F. ' 3 5 -o Si- 5
111
9 2 *f
-a) c o -a o ^ -
I) 3)S
2 0
•* « s
.** < g ^ii s
c „ o
0 E o
12 ;






— XI 5° .3
ol
.*f 5 £ « Si c
l°-s

„ 5 u
« e 3
-j *- o




? IS s
2 S S < -E »
-O C/l -D
- o ^
fc O it >. n tV) «
a c 0
I J"S
111
^ y,ac "r; o v £ S
. o **
"5° = *
c c o
c o -£
Si

_ _ -r-OmOOOO 1 O- *G O. r- O m r i to o O O fi\OinG,'""iOOO
ri n
Ci O
r r- co Si ?!
r I «n o» —^ -o vi — Cn O ¦¦
O O vi O* m" JD ri ri (

v> — — oortowOOOri^-mooinO'O rlr-NOtr-o — -TOfi — O ri o ' ' *~-t n ci Cs r> n t m o f3"> — r-oo
ri oo vC Ci -r ^ '
r~ r-i — o \o r
Oi T 0_ i*i_ O _
C7i rJ — rl c ri (
t ri vi ri O oo Oi ¦
'/I » OA O •
2S!
oo to t* to c
' O no c



to 3'
S8;
nfliCiflDvOiOOOOfl'flOOOOri - in in in «n m w-i u-i O O O O C m O ^ I N n rl U) M go ri iQ * Ii 'O OO T f>i
) to* oo* oo* oo" T* no' Ci »n c> cK C- oi
O * CS t Ci
o c o o o o
o o o o
O O
O O O O O O i O O O O O O (
o o o o r> <
laOOOOOOJiCOiO-OOOlMiOin'

o o o o o o o o o
oooooooooooot
OOOOCJOOOOOOOt
o o o_ o o_ 5 p p p o p o_ t
w-i m" o" C O O «"i o" m' m o in" c
— I- O O O i i r~ m vi o -T r
<0 do r- p. O r-_ >o iq n ri_ rn r- '
ri ¦>» o On" oo r-" o" r- oo ri -t" — ¦
¦cf -.7 *r '£> "O rn m

nvor- doCTnO*— r-i — To — r-i r-i -r m»£>r~ooc>0 — «"ir-i — — — — — n ri ri n ri n n n n ri n "1 n n " nr-. n n n 7 n "T 1 oocoooooooooooriooooooooooooooo

5 ^ rt


a g S
2 S g" Z






"03


Q. - 5 p "
£ *3 Q llJ
o " £ — 0 -2 O ij

X rr c o S a:
o " o


6 SIS ¦ = 85
E -2 jj -S
7 m 3 o
Z ^ 5 d
2 « r5 H
"3 -o „
" 5 a 3 ^
^ 5 ? « j
!= a.- 'J>
"J a ^ 2 !
-- c o u 3 '
!o —• ~

oo —




If, —.


r~~ >o
Q
z


oo



O T3
T3 3 4) O
fN — — o — — o o —'
•— OJ



— —





3 T5 Co.
o t- a «

H J « >• > o
H — Q
Dfi 3 W .2
O u

rt
r5
H -a
O .
1.
•y — —





r3
o
g I
c
=
5 "5
o

3 a 3 o f"
3 OJ
tr CO
< si

2 £
CITY OF CHICAGO
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
General Fund1 For Fiscal Years Ended 2008-20122
(Dollars in Thousands)

2008 2009 2010 2011 2012
Revenues:
Utility Tax $ 524,842 $ 4X1,275 3i 467,411 $ 467,630 S 462,475
Sales l ux 518,131 476,557 495,842 536,281 572,185
Stale Income Tax 378,545 251,820 282,011 236,521 282,779
Other Tuxes 637,923 572,472 590,575 618,385 694,383
Federal/Stale Grants 2,347 1,714 1,735 1,294 1,074
Other Revenues3 813,983 777,788 773,278 921,056 907.760
Total Revenues 2,875,771 2,561,626 2,6)0,852 2,781,166 2,920,656
Expenditures: Current:
Public Safety 1.856,634
General Government 889.266
Other4 356.066
Debt Service 5.318
Total Expenditures 3,107.284
Revenues Under Expenditures (231.51 j)
Other Financing Sources (Uses): Proceeds of Debt, Net of Original Discount/Including
Premium 164,000
Transfers In 94,058
Transfers Out (25,193)
Total Other Financing
Sources (Uses) 232,865
Revenues and Other Financing Sources Over (Under) Expenditures and Other
Financing Uses 1.352
Fund Balance - Beginning of Year 44,307
Change in Inventory 2,784
Fund Balance - End of Year $48,443
1,862,914 857,626 288,559 4,978
1,828,984 903,890 296.063 5^004
1.956,152 864,556 258,501 2,160

1,895,404 863,622 278,561 2,849
3,014.077 3,033.941 3,040,436 3,081,369
58,500 416,135 (17,463)
457,172
16,500 502.502 (13,600)
505,402
55,000 31.617 (26.965)
59,652
(452.451) (423,089) (259,270) (160,713)



95,000 372,744 (14,357)
4.721
48,443 1.542
82.313
54,706 (1,478)
453.387


194,117 (101,061)
135,541 335,533 5,875 (3,170)
$ 54,706 $ 135,541 $ 335,533 $ 232,096




1 The General Fund is Ihe chief operating fund of the Cily It is comprised of the Corporate Fund .is well lis other non-mu|or opciating funds where fund balance is nol restricted or committed as defined by the Government Accounting Standards Board (GASB)
" Source fable 6 in the Statistical Seuion of the City of Chicago Comprehensive Annual financial Report (CAI-'IO for Ihe year ended December 31, 2012 The City's CAIR for the year ended December 31, 2(112 is available upon request from the Office of the City Comptroller|109|Includes Internal Service, Licences and Permits, Fines, Investment Income, Charges for Services and Miscellaneous Revenues|109|Includes Health. Streets and Sanitation, Transportation, Cultural and Recreational and Other Expenditures

B-9

Special Revenue Funds For Fiscal Years Ended 2008-20121 (Dollars in Thousands)

2008 2009 Z0I0 2011 2012
Revenues:
Property Tax $ 326.334 $ 334.792 $316,618 $ 373,163 $ 350,408
Utility Tux 82.373 75,688 72,201 83.317 63,883
Sales Tax - -
Stale Income Tax 56,848 95,994 103.657 108.153 108,506
OtherTuxes 554,096 572.651 588.717 217,188 607,135
Federal/Slate (irants 794,564 751,555 814,144 974,757 876,790
Other Revenues2 120,401 131,295 121.017 105,705 149,956
Total Revenues 1.934.616 1.961.975 2,016,354 1.862,283 2,156,678
Expenditures: Current:
Public Safely 35.518 50,797 80,744 88,908 119,807
General Government 915,659 799,236 882,553 1,193,781 941,885
Employee Pensions 413,690 430,915 435.432 481,407 458,951
Other1 677.990 566,612 521.876 522,377 725,578
Capital Outlay 4,360 3,357 4,903 2.964 5,259
Debt Service 5,628 3.632 3,898 2,533 723
Total Expenditures 2,052,845 1,854,549 1.929,406 2,291,970 2.252,203
Revenues Under Expenditures (118,229) 107,426 86,948 (429,687) (95,525)
Other Financing Sources (Uses): Proceeds of Debt. Net of Original Discount/
Inckidina Premium 163.628 72.925 88.018 72,925 70,541

Translersln 155,637 185,358 94,424 149,574 76,640
Transfers Out (48,604) (1,746,126) (65.807) (380,543) (56,622)
Total Other Financing
Sources (Uses) 270,661 (1.487,843) I 16.635 (158.044) 90.559
Revenues and Other Financing Sources Over (Under) Expenditures and Other
Financing Uses 152,432 (1,380.417) 203,583 (587,731) (4,966)

Fund Balance-Beginning of Year 883.097 1,035,529 (344.888) (141,305) (729,036)
Fund Balance-End of Year $1.035.529 $(344,888) $(141,305) $(729,036) $(734,002)




1 .Source Tabic 7 in'ihe Statistical Section of ihe City of ChiLago Comprehensive Annual Financial Report (CAFR) for the year ended December 31. 2012 The City's CAFR for the year ended December 31, 2012 is available upon request from Ihe Office ot the City Comptroller
? Includes Internal Service, Licenses and Permits, Fines, Investment Income. Charges tor Services and Miscellaneous Revenues Includes I leallh. Streets and Sanitation, Transportation, Cultural and Recreational and Other Expenditures

B-10
Debt Service Funds' For Fiscal Years Ended 2008 - 20123
(Dollars in Thousands)
2008
2009
2011
2010
Revenues:
Property Tax $403,4X9 $471.2IK $ 437,463 $515,368
Utility lax 22,282 22,138 22,324 13,289
Sales Tax 30,440 27,395 31,162 26,875
Other Taxes 220,220 131,993 129,566 146,126
Other Revenues1 6,562 38,720 61,004 44,101
Total Revenues 682,993 691,464 681.519 745,759
Expenditures:
Debt Service 1,022,156 777,725 747,061 613,048
Total Expenditures 1,022,156 777,725 747,061 613,048
Revenues Over (Under)
Expenditures (339.163) (86,261) (65,542) 132,711
Other Financing Sources (Uses):
Proceeds of Debt, Net of Original
Discount/Including Premium 405,311 340,324 560,524 580,015
Payment to Refunded Bond
Escrow Agent (186,421) (213,435) (412,184) (476,787)
Translersln 33,186 684,277 44,185 47,134
'Transfers Out (141,498) (81,291) (110.049) (176,285)
Total Other Financing
Sources (Uses) 110.578 729.875 82,476 . (25,923)
Revenues and Other Financing
Sources Over (Under) Expenditures and
Other Financing Uses (228,585) 643,614 16,934 106,788
Fund Balance-Beginning of Year (8,911) (237,496) 406,118 423,052
Fund Balance-End of Year $(237,496) $406,118 $423.052 $ 529,840
2012
$590,990 22,324 22,105 18,717 53,340 707,476

799,833 799,833

(92,357)


337,410
(268,397) 47,322 (83,359)
32.976

(59,381) 529,840 $ 470,459











|10
9|The Debl Service Funds -arc compnsed of ihe Bond, Note Redemption and Interest Fund and the Debt Service Fund - Special Taxing Areas for General Obligation and Tax Increment Financing|109|Source Table 8 in the Stalislic.il Section ofthe City of Chicago Comprehensive Annual Financial Report (CAFR)lbr the year ended December 31. 2012 The City's CAFR for the year ended December 31. 2012 is available upon request from the Office of the City Comptroller
Includes Investment Income and Miscellaneous Revenues

B-11
Capital Projects Funds' For Fiscal Years Ended 2008-2012:
(Dollars in Thousands)
2008
Revenues:
Other Revenues5 $ 44.464
Total Revenues 44.464
Expenditures
Capital Outlay 657.104
Total Expenditures 657.104
Revenues Under Expenditures (612.640)
Other Financing Sources (Uses): Proceeds of Debt, Net of Original
Discount/Including Premium 62.493
Translersln 10,567
Transfers Out (96)
Total Other Financing
Sources (Uses) 72,964
Revenues and Other Financing Sources
Over (Under) Expenditures and Other
Financing Uses (539.676)
Fund Balance - Beginning of Year 983.823
Fund Balance - End of Year $ 444,147
2012
2010
2011
2009
18,240
16,243
11,343
$ 18,240 $ 43,135 $ 16,243 $ 11,343
624.007 624,007
615,916 615.916
430,341 430.341
43,135

467,249 467,249
769,348 6,296 (99)
775.545
529.553 16,334 (3.734)
542,153
(597.676) (580,872) (451,006) (418,998)


464.386 295,606 2,759 22,843 (25) (11.804)
(55.523) 444.147
194,673 388.624
467,120 306,645

16,114 (112,353) 583,297 599,411
$ 388,624 $ 583.297 $ 599,411 $ 487,058
















1 The Capitol Projects-Funds are comprised ol'the Community Development and Improvement Projects Fund and the Non Major Capital Projects Fund
! Source Table 9 in the Statistical Section of the City of Chicago Comprehensive Annual Financial Report (CAI-K)for the year ended December 31. 2012 I he City's CAI-R for the year ended December 31, 2012 is available upon request from Ihe Office of the City Comptroller
* Includes Investment Income, Charges for Services and Miscellaneous Revenues


B-12

Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Year Ended Deccmber3l, 20121
(Dollars in Thousands)



REVENUES
Property Tax
Utility Tax
Sales Tax
Transportation Tax Slate Income Tax ... Transaction Tax Special Area Tax .
Other Taxes
Federal/Stale Grants. Internal Service ...
Fines
Investment Income . Charges lor Services Miscellaneous . . Total Revenues
Total Special Revenue l-'unds
$ 35O.40S 63.883
177,019 108.506 '10,846
18.816
16.361 15,711 2.814 37.297 21.433 853,094
Debt Service F und Special Taxiny Areas
i 103.276






36 991
104,303
Total Capital Project Funds








776 1.333
2.109
Total Nonmajor Governmental Funds*
$ 453,684 63.883
177.019 108,506 40,846
18,816
16,361 15,711 3,626 37.297 23.757 959.506
EXPENDITURES Current:
• General Government
IIcalth
Public Safely
Streets and Sanitation
Transportation
Cultural and Recreational. .
Employee Pensions
Other
Capital Outlay
Debt Service:
Principal Retirement
Interest and Other Fiscal Charges.
Total Expenditures

244.116 1,600 6,424 49,919 68,224 77,738 458,951 924


720
908,616









43,025 29,136
72.161

244,116 1,600 6,424 49,919 68,224 77,738 458.951 924 90.429
43,025 29,856
1.071.206

Revenues Over (Under) Expenditures
OTHER FINANCING SOURCES (USES)
Issuance oT Debt
Payment lo Refunded Bond Escrow Agcnl . . . .
Transfers In
Transfers Oul ...
'Total Other Financing Sources (Uses) .
Net Change in Fund Balances
Fund Balance - beginning of Year
Fund Balance-End oTYear
(55.522)
70,54 I 7.965
78.506
22,984 81,749
$ 104,733
32,142


47.322 (73,254)
(25,932)
6,210 117,530
$ 123.740
(88,320)

51,874
19.000 (9,482)
61,392
(26,928; 113,576
$ 86.648
(111,700)

122.415
74,287 (82.736) 113,966
2.266 312,855 $ 315.121


Source Schedule B-2 in the Nonmajor Governmental Funds Section of Ihe City of Chicago Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2012 The City's CAFR for the year ended December 31, 2012 is available upon request from the Office of the City Comptroller
' Ihe line items under "lolal Nonmajor Governmental Funds" above arc identical lo the line items under Ihe column eaplioncd "Other Governmental Funds" appeanng as Exhibit 4 to the City s Basic Financial Statements for the year ended December 31, 2012 included as APPENDIX Cheiulo


B- I 3

[THIS PAGE iNTENTIONALL Y LI2I-T Bl.ANK]
APPENDIX C
CITY OF CHICAGO
BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012|10
10|








[Tins Page intj n ijonally ieit Blank]
6,








City of Chicago

Basic Financial Statements for the Year Ended December 31, 2012








Rahm Emanuel, Mayor

Lois Scott, Chief Financial Officer Amcr Ahmad, City Comptroller

CITY OF CHICAGO, ILLINOIS YEAR ENDED DECEMBER 31, 2012 TABLE OF CONTENTS



Pages
INDEPENDENT AUDITORS'REPORT 1-2
MANAGEMENT'S DISCUSSION AND ANALYSIS 3-15
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements:
Exhibit 1 Statement of Net Position 17
Exhibit 2 Statement of Activities 18-19
Fund Financial Statements:
Exhibit 3 Balance Sheet - Governmental Funds 20-21
Exhibit 4 Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds ' 22-25
Exhibit 5 Reconciliation of the Statement of Revenues, Expenditures and Changes
in Fund Balances of Governmental Funds to the
Statement of Activities 26
Exhibit 6 Statement of Revenues and Expenditures - Budget and Actual -
General Fund (Budgetary Basis) 27
Exhibit 7 Statement of Net Position - Proprietary Funds 28-29
Exhibit 8 Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 30
Exhibit 9 Statement of Cash Flows - Proprietary Funds 31-32
Exhibit 10 Statement of Fiduciary Net Position - Fiduciary Funds 33
Exhibit 11 Statement of Changes in Plan Net Position -
Pension Trust Funds 34

NOTES TO BASIC FINANCIAL STATEMENTS 35-79
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS FUNDING PROGRESS 80
Deloitte
Colonic- 5 louche LLP' HIS. woika Dnve Oiicouo, IL 60606 a 301 US*
fr;l. ? ! 312 436,1000 F.i.c +1 512 436 M66 \.'.v,v: delo'lte.con

INDEPENDENT AUDITOR'S REPORT

To the Honorable Rahm Emanuel, Mayor and Members ofthe City Council City of Chicago, Illinois
Report on the Financial Statements
We have audited the accompanying financial statements ofthe governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information ofthe City of Chicago, Illinois (the "City''), as of and for the year ended December 3 I, 2012, and the related notes lo the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance wilh accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant lo the preparation and fair presentation of financial statements that arc free from material misstatement, whether due lo fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements ofthe City's Pension Plans (the "Plans") which, in aggregate, represent substantially all the assets and revenues ofthe fiduciary funds, included in the aggregate remaining fund informalion. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates lo the amounts included for the Plans, is based solely on Ihe reports ofthe other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment ofthe risks ofmatcrial misstatement of Ihe financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant lo the entity's preparation and fair presentation ofthe financial slatemenls in oidcr to design audit procedures lhat arc appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall financial statement presentation ofthe financial statements.



Member ot -
oini¦ Te-utStf To*-*-----.!, t im.tp-rl

We believe lhal the audit evidence we and oilier auditors have obtained is sufficient and appropriate lo provide a basis for our audit opinions.
Opinions
In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities, the business-type activities, each major fund, and the aggregaic remaining fund information of the Cily, as of December 31, 2012, and the respective changes in financial position and, where applicable, cash flows thereof and ihe respective budgetary comparison for the General Fund for ihe year then ended in accordance with accounting principles generally accepted in the United Slates of America.
Other Matters
Required Supplementary Information
Chicago, Illinois June 29, 2013
Accounting principles generally accepted in the United Stales of America require that the Management's Discussion and Analysis and Schedule of Other Postemploymcnt Benefits Funding Progress, as listed in the table of contents, be presented to supplement the basic financial statements. Such informalion, although not a part ofthe basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United Slates of America, which consisted of inquiries of management about the methods of preparing the information and comparing the informalion for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit ofthe basic financial statements. We do not express an opinion or provide any assurance on the informalion because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.















- 2 -

CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
Management's Discussion and Analysis
As management of the City of Chicago, Illinois (City) we offer readers of the City's Comprehensive Annual Financial Report (CAFR) this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2012. We encourage the readers to consider the information presented here in conjunction with information contained within this report.
2012 Financial Highlights
Liabilities and Deferred Inflows of the City, in the government-wide financial statements, exceeded its assets and deferred outflows at the close of the most recent fiscal year by $3,828.3 million (net deficit). Of this amount. $8,891.6 million is an unrestricted deficit, while $2,172.3 million is net investment in capital assets and $2,891.0 million is restricted for specific purposes.
The City's total assets increased by $631.7 million. The increase primarily relates to a $1,004.0 million increase in capital assets as a result of the City's capital improvement program, offset by a $319.7 million decrease in cash and cash equivalents and investments primarily as a result of the City's financing of its operations.
Revenues and Other Financing Sources, in the fund financial statements, available for general governmental operations during 2012 were $6,751.5 million, a decrease of $889.7 million (11.6 percent) from 2011 due to a decrease in the amount of bonds issued.
The General Fund, also in the fund financial statements, ended 2012 with a total Fund Balance of $231.3 million. Total Fund Balance decreased from 2011 primarily because Revenues and Other Financing Sources were less than Expenditures and Other Financing Uses by $101.1 million. Fund Balance at December 31, 2012 of $177.0 million was assigned. Unassigned Fund Balance was $33.4 million at December 31, 2012.
The City's general obligation bonds and notes outstanding increased by $234.1 million during the current fiscal year The proceeds from the increase in bonds-were used to finance the City's capital plan and certain operating expenses.
Overview of the Basic Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, which include the following components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains required supplementary information in addition to the basic financial statements. These components are described below:
Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, using accounting methods similar to those used by private-sector companies. The statements provide both short-term and long-term information about the City's financial position, which assists in assessing the City's economic condition at the end of the fiscal year. These financial statements are prepared using the flow of economic resources measurement focus and the accrual basis of accounting. This basically means such statements follow methods that are similar to those used by most businesses. They take into account all revenues and expenses connected with the fiscal year even if cash involved has not been received or paid.
The government-wide financial statements include two statements:
The statement of net position presents information on all of the City's assets, deferred outflows, liabilities, and deferred inflows with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating, respectively. To assess the overall health of the City, the reader should consider additional non-financial factors such as changes in the City's property tax base and the condition of the City's roads.
The statement of activities presents information showing how the government's net position changed during each fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods (for example, uncollected taxes, and earned but unused
|1010|
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
vacation). This statement also presents a comparison between direct expenses and program revenues for each function of the City.
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, streets and sanitation, transportation, health, and cultural and recreation. The business-type activities of the City include water, sewer, tollway and airport services.
The government-wide financial statements present information about the City as a primary government, which includes the Chicago Public Library and the City related funds of Ihe Public Building Commission. The government-wide financial statements can be found immediately following this management's discussion and analysis
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of a fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities.
The City maintains 19 individual governmental funds. Information for the six funds that qualify as major is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances. The six major governmental funds are as follows: the General Fund, the Federal. State and Local Grants Fund, the Special Taxing Areas Fund, Service Concession and Reserve Fund, the Bond, Note Redemption and Interest Fund, and the Community Development and Improvement Projects Fund. Data from the other governmental funds are combined into a single, aggregated presentation.
The City adopts an annual appropriation budget for its general and certain special revenue funds on a non-GAAP budgetary basis. A budgetary comparison statement has been provided for the General Fund, the only major fund with an appropriation budget, to demonstrate compliance with this budget. The basic governmental fund financial statements can be found immediately following the government-wide statements.
Proprietary funds. These funds are used to show activities that operate more like those of commercial enterprises. Because these funds charge user fees for services provided to outside customers including local governments, they are known as enterprise funds. Proprietary funds, like government-wide statements, use the accrual basis of accounting and provide both long- and short-term financial information. There is no reconciliation needed between the government-wide financial statements for business-type activities and the proprietary fund financial statements. The City uses five enterprise funds to account for its water, sewer, tollway, and two airports operations.
Proprietary funds provide the same type of information as the government-wide financial statements, but provide more detail The proprietary fund financial statements provide separate information for the Water Fund, Sewer Fund, Chicago Skyway Fund, Chicago-O'Hare International Airport Fund and the Chicago Midway International Airport Fund All the proprietary funds are considered to be major funds of the City. The basic proprietary fund financial statements can be found immediately following the governmental fund financial statements.
|1010|
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
Fiduciary funds. Fiduciary funds are used primarily to account for resources held for the benefit of parties outside the primary government. The City is the trustee, or fiduciary, for its employees' pension plans. It is also responsible for other assets that, because of a trust arrangement can be used only for the trust beneficiaries. The City also uses fiduciary funds to account for transactions for assets held by the City as agent for various entities. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. Fiduciary funds are nof reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. All of the City's fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund basic financial statements can be found immediately following the proprietary fund financial statements.
Notes to the basic financial statements. The notes provide additional information that is essential for a full understanding of data provided in the government-wide and fund basic financial statements. The notes to the basic financial statements can be found immediately following the fiduciary fund basic financial statements.
Financial Analysis of the City as a whole
Net Position. As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, liabilities and deferred inflows exceeded assets by $3,828.2 million at December 31, 2012.
A large portion of the City's net position, $2,172.3 million, reflects its investment in capital assets (land, buildings, roads, bridges, etc.) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities and deferred inflows.























|1010|CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
City of Chicago, Illinois Summary Statement of Net Position (in millions of dollars)
Governmental Activities
2012
Business-type Activities
2012
Current and other assets $ 5,789.0
Capital assets 7,869.7
Total Assets 13,658 7
Deferred outflows 224 2
Total 13.882.9
Long-term liabilities outstanding . . 16,863 2
Other liabilities 1,245.8
Total Liabilities 18,109.0
Deferred Inflows 1,618.4
Net Position:
Net investment in capital assets . (216.0)
Reslncted 1,908.5
Unrestricted (7,537.0)
Total net (deficit) position $ (5,844 5)

$ 10,233.1 20,385.2
$ 10,605 5 19,381 1
' 6.125.2 7,579 9
13,705.1 236 0
13,941 1
15,212.4 1,484.0
16.696 4 1,639.4
$ 4.480.3 11,801 2
16,281 5 255.1
16,536 6
11,827 3 1,223.6
13,050 9 1,700.6
30,618 3 477 3
31,095 6
29,359.2 2,264.2
31,623.4 3,300 5
2,172 3 2,891 0 (8,891.6)
29,986 6 491 1
30,477.7
27,039.7 2,707.6
29,747.3 3,340 0
2,151 9 2,471.3 (7,232.7)
$ 4,444 1 12,515 5
16,959 6 253 1
17,212 7
12,496.0 1,018.4
(299.9) 1,596.4 (5,691.2)
2.451.8 874.8 (1,541.5)
13,514.4 1,682.1

2.388.3 982.5 (1.354 6)
$ (4,394.7) $ 2,016 2 $ 1,785.1 $ (3,828 3) $ (2,609 5)

An additional portion of the City's net position ($2,891.0 million) represents resources that are subject to external restrictions on how they may be used.
Governmental Activities. Net position of the City's governmental activities decreased $1,449.8 million to a deficit of $5,844.5 million. However, a significant portion of net position is either restricted as to the purpose they can be used for or they are net investment in capital assets (buildings, roads, bridges, etc.) Consequently, unrestricted net position showed a $7,537.0 million deficit at the end of this year. This deficit does not mean that the City does not have the resources available to pay its bills next year. Rather, it is the result of having long-term commitments that are greater than currently available resources. Specifically, the City did not include in past annual budgets the full amounts needed to finance future liabilities arising from personnel, property, pollution and casualty claims ($888.6 million) and Municipal employees, Policemen's and Firemen's net pension obligation and post-employment benefits ($6,364.9 million). The City will include these amounts in future years' budgets as they come due. In addition, the remaining deferred inflow of $1,618.4 million will be amortized into income over the life of the concession service agreements.
Revenues for all governmental activities in 2012 were $5,554.5 million, with over half of the City's revenue derived from taxes. Total tax receipts decreased slightly. Total tax revenue includes a decrease in property taxes received of $38 5 million (4.1 percent). Other taxes decreased by $115.8 million (5.3 percent) as a result of decreases in sales and transaction taxes. Federal/State grants vary from year to year depending primarily on the level of spending for programs, construction and other projects.
Expenses for governmental activities in 2012 were $7,004.3 million. This reflects an increase of $195.5 million (2.9 percent) over 2011. Public Safety accounted for approximately 41.5 percent of total expenses.
The cost of all governmental activities was $7,004.3 million The amount that taxpayers paid for these activities through City taxes was only $2,963.7 million. Some of the cost was paid by those who directly benefited from' the programs ($750.2 million), or by other governments and organizations that subsidized certain programs with grants and contributions ($920.8 million).
The City paid $919.8 million for the "public benefit" portion with other revenues such as state aid, interest and miscellaneous income.
|1010|CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
Although total net position of business-types activities was $2,016.2 million, these resources cannot be used to make up for the deficit in net position in governmental activities. The City generally can only use this net position to finance the continuing operations of the water, sewer, tollway, and airports activities.

City of Chicago, Illinois Changes in Net Position Years Ended December 31, (in millions of dollars)
Governmental Activities
2012
Revenues:
Program Revenues:
Licenses, Permits, Fines and
Charges for Services $ 750.2
Operating Grants and Contributions 748.3
Capital Grants and Contributions 172.5
General Revenues:
Property Taxes 896 3
Other Taxes 2,067.4
Grants and Contnbutions not
Restricted to Specific Programs 692 2
Other 227.6
Total Revenues 5,554.5
Expenses:
General Government 2,751.9
Public Salety 2,910 2
Streets and Sanitation 228 6
Transportation 383.5
Health 123.1
Cultural and Recreational 146.3
Interest on Long-term Debt 460.7
Water - ¦
Sewer
Midway International Airport
Chicago-O'Hare International Airport
Chicago Skyway
Total Expenses 7.004.3
Change in Net Position Before Transfers . (1.449 8)
Special Item
Transfers
Change in Net Position (1.449 8)
Net (Deficit) Position. Beginning of Year (4,394.7)
Net (Deficit) Position, End of Year S (5,844 5)

2011
Total
2,175 2 788.8 539.4
934.8 2,183.2
598 4 323.5 7.543.3
2012


2.639.3 748.3 255.7
896 3 2.067 4
2,734.4 2.689.4 245.9 410.8 151 2 102 8 474 3 416 3 194.8 218.1 879 3 109 8.528 2 (984.9)
692.2 291 6 7.590.8
(1.038.8) (1,570 8)

2,751.9 2,910.2 228 6 383 5 123.1 146.3 460.7 417 5 195 9 225.9 955.3 10.6 8,809 5 (1,218.7)

(1,218.7) (2,609.6)
$ (3,828 3) $ (2,609.6)




|1010|CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012


Expenses and Program Revenues - Governmental Activities
(in millions of dollars)


General Government Public Safety Streets and Sanitation Transportation Health
Cultural and Recrealional Interest on Long-term Debt

|1010|
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2012
Business-type Activities. Revenues of the City's business-type activities increased by $231.1 million in 2012 mostly from an increase in the charges for services and rental income revenues. All Funds met debt service coverage ratios set forth in the applicable bond indentures.
The Water Fund's operating revenue increased by $122.1 million (26.9%) from 2011 due to a 25% increase in water rates and increase in usage resulting from a drought summer in 2012. Operating expenses before depreciation and amortization for the year ended 2012 increased by $7.3 million (2.6%) from the year ended 2011 due to an increase in central services and General Fund reimbursements, increase in power and pumping and increase in administrative and general offset by a decrease in purification resulting from a decrease in costs of sediment disposals.
The Sewer Fund's operating revenue increased in 2012 by $50.6 million (24.9%) primarily due to an increase in water and sewer rates. Operating expenses before depreciation and amortization for 2012 remained consistent with 2011. Depreciation and amortization increased slightly due to an increase in utility plant.
Chicago Midway International Airport Fund's operating revenues for 2012 increased by $0,462 million (0.3%) from 2011 primarily due to increased other rentals and fueling fees, offset by decreased landings fees and terminal area use charges. Concessions increased by $1.8 million primarily due to an increase in auto parking, restaurants, and auto rental offset by a decrease in other concessions. Operating expenses before depreciation and amortization increased by $4.2 million (3.8%) million primarily due to an increase in salary and wages, adjustments to a capital lease and an increase in provision for doubtful accounts, offset by a decrease in repairs and maintenance expenses.
Chicago O'Hare International Airport Fund's operating revenues for 2012 increased by $23.2 million (3.3%) compared to 2011 primarily due to an increased terminal rental and usage charges. Operating expenses before depreciation and amortization increased by $19.1 million (4.4%) primarily due to an increase in salaries and wages, employee benefits, professional and engineering services and capital asset impairment, offset by a decrease in repairs and maintenance expense.
The Chicago Skyway was leased for 99 years to a private company. The agreement granted the company to operate the Skyway and to collect toll revenue during the term of the agreement. The City received an upfront payment of $1.83 billion of which $446.3 million was used to advance refund all of the outstanding Skyway bonds. The upfront payment is being amortized into non-operating revenue over the period of the lease ($18.5 million annually).

















|10 10|
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012




Expenses and Program Revenues - Business-type Activities (in millions of dollars)

100 200 300 400 500 600 700 800 900 1,000 1,100 1,200

Water
Sewer
Chicago Midway International Airport Chicago-O'Hare Internalional Airport Chicago Skyway
10




Revenues by Source - Business-type Activities


CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
Financial Analysis of the City's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.
At December 31, 2012, the City's governmental funds reported combined ending fund balances of $1,593.4 million, a decrease of $262.6 million in comparison with the prior year. Of this total amount $882.1 million was committed to specific expenditures, $177.0 million was assigned to anticipated uses, a deficit of $1,819.5 million was unassigned, $2,332.9 million was of restricted in use by legislation, and $20.9 million was nonspendable.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $33.4 million with a total fund balance of $231.3 million. As a measure of the General Fund's liquidity, it may be helpful to compare both unassigned fund balance and total fund balance to total fund expenditures. Total General Fund balance represents 7.5 percent of total General Fund expenditures. The fund balance of the City's General Fund decreased by approximately $104.2 million during the current fiscal year.
The Federal, State and Local Grants Fund has a total deficit fund balance of $206.1 million. This is $84.4 million lower than 2011 primarily due to slower reimbursement of expenditures.
The Special Taxing Areas Fund has a total fund balance of $1,499.4 million, which is all restricted to specific expenditures.
The Service Concession and Reserve Fund accounts for deferred inflows from non-business type long-term concession and lease transactions and has $624.9 million committed to specific expenditures. The unassigned amount of $1,618.4 million results from the deferred inflows from long-term asset leases.
The Bond, Note Redemption and Interest Fund has a total fund balance of $346.7 million. This is $65.6 million lower than 2011.
The Community Development and Improvement Projects Fund has a total fund balance of $400.4 million. This is $85.4 million lower than 2011 due to increase capital improvement efforts.
Changes in fund balance. The fund balance for the City's governmental funds decreased by $262.6 million in 2012. This includes an decrease in inventory of $3.2 million.
Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.
Unrestricted net position of the Water, Sewer, Chicago Skyway, Chicago-O Hare International Airport, and Chicago Midway International Airport Funds at the end of the year amounted to a deficit of $1,354.6 million. The unrestricted net position deficit decreased by $186.9 million due to an increase in the unrestricted net position in Chicago O'Hare International Airport, Chicago Midway International Airport, Water, and Sewer Funds. Other factors concerning the finances of these five funds have already been addressed in the discussion of the City's business-type activities.
General Fund Budgetary Highlights
The City's 2012 Original General Fund Budget was $3,104.3 million. This budget reflects a decrease of $159.4 million (4.9 percent) over the 2011 Budget. The City's 2012 General Fund Budget was approved by the City Council on November 16, 2011. The General Fund revenues on a budgetary basis were $27.4 million less than the final budget as a result of lower transfers in and lower than expected use of budgeted prior years' surplus, offset by higher

11

CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
than expected taxes. Expenditures were $27.4 million more than budgeted as a result of unfavorable variances in public safety, primarily as a result of higher than expected personnel related expenses Additional information on the City's budget can be found in Note 3 under Stewardship, Compliance and Accountability within this report.
The General Fund revenues and expenditures in 2012 ended the current fiscal year with an unassigned fund balance of $33.4 million.
Capital Asset and Debt Administration
Capital Assets. The City's capital assets for its governmental and business-type activities as of December 31, 2012 amount to $20,385.2 million (net of accumulated depreciation). These capital assets include land, buildings and system improvements, machinery and equipment, roads, highways and bridges, and property, plant and equipment.
Major capital asset events during the current fiscal year included the following:
The City continues its commitment to sustainable design in new construction projects utilizing the Leadership in Energy & Environmental Design (LEED) strategy. Completed construction in 2012 included a new fire house for Engine Company 16 totaling $16.8 million. Police District 12 totaling $3.4 million and the Grand Crossing Reading Garden totaling $0.6 million
During 2012 the City completed $116.4 million in bridge and viaduct reconstruction projects, $90.3 million street construction projects and $3 5 million in street lighting projects. At year end, Infrastructure projects still in process had expenses totaling nearly $606 8 million.
At the end of 2012 the Water Fund had $2,861.3 million invested in utility plant, net of accumulated depreciation. During 2012, the Water Fund expended $318.9 million on capital activities. This included $2.2 million for structures and improvements, $133.9 million for distribution plant, $5.8 million for equipment, and $177.2 million for construction in progress.
During 2012, net completed projects totaling $63.7 million were transferred from construction in progress to applicable capital accounts. The major completed projects were related to installation and replacements of water mains ($63.4 million). The 2012 Water Main Replacement Program completed 79.7 miles of water mams of which approximately 31.0 miles were completed by in-house crews.
At the end of 2012, the Sewer Fund totaled capital assets of $1,671.3 million. During 2012, the Sewer Fund had capital additions being depreciated of $246.6 million, and completed projects totaling $79.2 million were transferred from construction in progress to applicable facilities and structures capital accounts. The 2012 Sewer Main Replacement Program completed 17.4 miles of sewer mains and 51.4 miles of rehning of existing sewer mains at a cost of $246.6 million.
At the end of 2012, Chicago-Midway International Airport totaled $1,167.3 million, invested in net capital assets. During 2011, the Airport had additions of $64.8 million related to capital activities. This included $3.4 million for land acquisition and the balance of $61.4 million for construction projects relating to terminal improvements, parking and roadway enhancements, and runway improvements.
At the end of 2012 Chicago-O'Hare International Airport totaled $6.5 billion, invested in net capital assets. During 2012, the Airport had additions of $476.5 million related to capital activities. This included $8.6 million for land acquisition and the balance of $467.9 million for terminal improvements, road and sidewalk enhancement, runway and taxiway improvements, along with general parking enhancements. During 2012, completed projects totaling $314.8 million were transferred from construction in progress to applicable buildings and other facilities capital accounts. These major completed projects were related to runway improvements, heating and refrigeration, road and sidewalk enhancements, electrical, water drainage, fuel system enhancements and terminal improvements.








12
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
City of Chicago, Illinois Capital Assets (net of depreciation) (in millions of dollars)
Governmental Activities
Business-type Activities
2012
Land $ 1,404.5
Works of Art and
Historical Collections 13.2
Construction in Progress 644.3
Buildings and Other Improvements 1,677.7
Machinery and Equipment 255 6
Infrastructure 3 874 4
Total $ 7,869.7
$ 1,401.0

13.1
466.3 1,699.0 313.6 3,686.9 $ 7,579 9
$ 1,024.7


1,548 3 9,618 2 324.3

$ 12,515.5
S 1,012.6


1,3104 9,141.0 337.3

$ 11,801.3
$ 2,429.2

13.2
2.192.6 11,295.9 579.9 3,874.4 $ 20,385.2
$ 2,413 6
13 1 1.776 7 10,840.0 650.9 3.686.9 $ 19,381.2

Information on the City's capital assets can be found in Note 7 Capital Assets in this report.
Debt. At the end of the current fiscal year, the City had $7,315.4 million in General Obligation Bonds and $696.4 million in General Obligation Certificates and Other Obligations outstanding. Other outstanding long-term debt is as follows: $193.0 million in Motor Fuel Tax Revenue Bonds; $577.3 million of Sales Tax Revenue Bonds; $112.2 million in Tax Increment Financing Bonds; and $11,967.8 million in Enterprise Fund Bonds and long-term obligations. For more detail, refer to Note 10 Long-term Obligations in the Basic Financial Statements.
City of Chicago, Illinois General Obligation and Revenue Bonds (in millions of dollars)
Governmental Activities
Business-type Activities
2012
General Obligation
¦ Installment Purchase Agreement
Tax Increment
Revenue Bonds
Total
. $ 8,011.8
112.2 770 3 $ 8,894.3
$ 7,777 7
131.6 776 0 $ 8,685.3


11,967.8 $ 11,967.8


11,715.0 $ 11.7150
$ 8.0118
1122 12,738 1 S 20.862.1
$ 7,777.7
131.6 12,491 0
$ 20,400 3
During 2012, the City issued the following: General Obligation Bonds:
General Obligation Bonds, Project Series 2012A, Taxable Project Series 2012B, and Refunding Series 2012C ($594.9 million)
General Obligation Commercial Paper Notes ($133.8 million)






13
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
Enterprise Fund Revenue Bonds and Notes:
Chicago-O'Hare International Airport Third Lien Revenue Refunding Bonds, Series 2012A (Alternative Minimum Tax - AMT), Series 2012B (AMT) and Series 2012C (Non-AMT) ($728.9 million)
Chicago-O'Hare International Airport Passenger Facility Charge Revenue Refunding Bonds, Series 2012A (Non-AMT) and 2012B (AMT) ($452.1 million)
Chicago-O'Hare International Airport General Commercial Paper Notes ($50.6 million) Second Lien Water Revenue Bonds, Project Series 2012 ($399.4 million)
Second Lien Wastewater Transmission Revenue Bonds, Project and Refunding Series 2012 ($276.5 million)

At December 31, 2012 the City had credit ratings with each of the three major rating agencies as follows:
Standard & Poor's
General Obligation: City
Revenue Bonds: 0'Har.e Airport:
First Lien General Airport Revenue Bonds
First Lien Passenger Facility Charge (PFC) Midway Airport:
First Lien
Second Lien Water:
First Lien
Second Lien Wastewater:
First Lien
Junior Lien
Aa3

A2 A2
A2 A3
Aa2 Aa3
Aa2 Aa3
A+

A-A-
A
A-
AA AA-
AA-A+
AA-

A-A
A
A-
AA+ AA
NR AA
Sales Tax Motor Fuel Tax
Aa3 Aa3
AAA AA+
AA-A-

ln 2012, the City closed and extinguished the First and Second General Airport Revenue (GAR) bonds. The third Lien bonds became the First Lien bonds.

Economic Factors and Next Year's Budgets and Rates
The City's finances are closely tied with the local, national, and global economies. Throughout 2012, the local and national economies experienced moderate growth, continuing the recovery from the economic downturn. The strong commercial real estate market seen throughout 2011 continued into 2012, and 2012 also saw the housing market join in this recovery. Home sales increased by 22 percent over 2011, and home prices, which had been slower to recover, ticked up 5.7 percent over 2011. Nationwide, retail sales grew 5 percent over 2011 in 2012, and consumer confidence surged during the holiday season. The average national unemployment rate decreased from 8.9 percent in 2011 to 8.1 percent in 2012, and Chicago's unemployment rate fell from 11.3 percent in 2011 to 10.1 percent in 2012. Tourism and business and convention travel to Chicago reached near-record levels in 2012, with 46.2 million visitors to the City, an increase of 6 percent over 2011. This growth was evident in local hotel occupancy, which was up 4 percent in 2012 from 2011, and revenue per available room, which was up 10 percent in 2012 from 2011.



14




i
CITY OF CHICAGO, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2012
The City's 2013 General Fund budget, totaling $3,159 million, was approved by a 46 to 3 vote of City Council on November 15, 2012. The 2013 budget balanced a preliminary budget shortfall of $369 million by cutting spending and increasing efficiencies without raising any taxes or introducing any new fees. The 2013 Corporate Fund shortfall was the smallest preliminary budget deficit since the recession, demonstrating the progress and reforms made in the 2012 budget and throughout the year. The 2013 budget built on that progress, investing in youth, public safety, and critical infrastructure while continuing to phase out the heavy reliance on nonrecurring revenue sources, including funds from the City's asset concession reserves, seen prior to 2012. In 2012, the City returned $20 million to its long-term reserves, and the 2013 budget commits an additional $15 million to those reserves.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all of those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Chicago Comptroller's Office.


































15




i
'Mention
Exhibit 1
CITY OF CHICAGO, ILLINOIS STATEMENT OF NET POSITION, December 31, 2012
(Amounts are in Thousands of Dollars)

729,095 1.626,647 499.754
1,258,648 929,230 (35,190) 20,885
4,495 622,628 132,814
2,062,009 5,807,660 7.869,669 .
13,658,675
224,236
882,094 1.797,020 499,754
1,258,648 1,265,843
39,704
1,002,019 2,840,691 647,291
4,634,980 15,750,207 20,385,187
30,618,251
477,356
ASSETS AND DEFERRED OUTFLOWS
Cash and Cash Equivalents $
Investments
Cash and Investments with Escrow Agent
Receivables (Net of Allowances):
336,613 35,190 18,819
997,524 2,218,063 514,477
2,572,971 9,942,547 12,515,518
16,959,576
253,120
Property Tax
Accounts
Internal Balances
Inventories :
Restricted Assets:
Cash and Cash Equivalents
Investments
Other Assets
Capital Assets:
Land, Art, and Construction in Progress
Other Capital Assets, Net of Accumulated Depreciation
Total Capital Assets
Total Assets
13,882,911 $ 17,212,696 $ 31,095,607
Deferred Outflows
Total Assets and Deferred Outflows $
601,946 672 210,413 335,930 96,867
280,720 255,376 16,327,129 18,109,053
1,022.207 672 447,328 513,867 280,073
495,951 508,496 28,354,779 31,623,373
3,300,481
420,261 $
236,915 177,937 183,206
215,231
253,120
12,027,650
13,514,320
1,682,121
LIABILITIES AND DEFERRED INFLOWS
Voucher Warrants Payable $
Short-term Debt
Accrued Interest
Accrued and Other Liabilities
Unearned Revenue
Long-term Liabilities:
Due Within One Year
Derivative Instrument Liability
Due in More Than One Year
1,618,360
Total Liabilities
Deferred Inflows
(215,961)
2,172,349
173,130 420,726 1,499,414 140,142 141,566 245,200 270,855 (8,891,629)
2,388,310
173,130 11,624
140,142 141,566 245,200 270,855 (1,354,572)
NET POSITION
Net Investment in Capital Assets
Restricted for:
409,102 1,499,414
Capital Projects
Debt Service
Special Taxing Areas
Passenger Facility Charges
Contractual Use Agreement
Noise Mitigation Program
(7,537,057)
Airport Purposes
Unrestricted (Deficit)
Total Net Position
$ (5,844,502) $ 2,016,255 $ (3,828,247)

See notes to basic financial statements.

Exhibit 2
CITY OF CHICAGO, ILLINOIS STATEMENT OF ACTIVITIES Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)


Licenses, Permits, Fines and
Functions/Programs Expenses Charges for Services
Primary Government
Governmental Activities:
General Government $ 2,751,944 $ 452,892
Public Safety 2,910,160 199,572
Streets and Sanitation 228,622 42,138
Transportation 383,510 39,343
Health 123,055 1,751
Cultural and Recreational 146,283 14,454
Interest on Long-term Debt 460,660 -
Total Governmental Activities 7,004,234 750,150

Business-type Activities:
Water 417,499 576,287
Sewer 195,911 253,912
Chicago Midway International Airport 225,867 201,749
Chicago-O'Hare International Airport 955,276 857,114
Chicago Skyway 10,621 -
Total Business-type Activities 1,805,174 1,889,062
Total Primary Government $ 8,809,408 $ 2,639,212
















See notes to basic financial statements.
Program Revenues Net (Expense) Revenue and Changes in Net Assets
Primary Government
Operating Capital
Grants and Grants and Governmental Business-type
Contributions Contributions Activities Activities Total

521,362 115.976

95,675 15,243
748,256
$ 11,615 160,841


172,456

(1,766,075) (2,594,612) (186,484) (183,326) (25,629) (116,586) (460,660) (5,333,372)

(1,766,075) (2,594,612) (186,484). (183,326) (25,629) (116.586) (460,660) (5,333,372)

2,500 2,500 4,681 73,538
83,219
161,288 60,501 (19,437) (24,624) (10,621)
167,107
161,288 60,501 (19,437) (24,624) (10,621)
167,107
(5,333,372)
General Revenues Taxes:
Property Tax
Utility Tax
Sales Tax
Transportation Tax
Transaction Tax
Special Area Tax
Recreation Tax
Other Taxes
Grants and Contributions not Restricted to
Specific Programs
Unrestricted Investment Earnings
Miscellaneous
Total General Revenues
Change in Net Assets
Net Position - Beginning
Net Position - Ending

896,246 548,682 294,417 373,544 281,957 274,617 163,194 131,086
25,197 38,842
64,039
692,232 92,050 135,511 3,883,536 (1,449,836) (4,394,666)
$ (5,844,502) $ 2,016,255

896,246 548,682 294,417 373,544 281,957 274,617 163,194 131,086
692,232 117,247 174,353 3,947,575 (1,218,690) (2,609,557) (3,828,247)




19
Exhibit 3
CITY OF CHICAGO, ILLINOIS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2012
(Amounts are in Thousands of Dollars)

745 72,702
ASSETS
Cash and Cash Equivalents $
Investments
Cash and Investments with Escrow Agent
Receivables (Net of Allowances):
219,300 165,078 222,604 20,885 389
Property Tax
Accounts
Due From Other Funds
Due From Other Governments
Inventories
Restricted Cash and Cash Equivalents
Restricted Investments
Other Assets -
Total Assets $ 701,703
Federal, State and Local Grants
20,931 52,705


10,809 29,694 362,651
3,220
5,362 $ 485,372
Special Taxing Areas
623,433 620,267

350,032 3.732 258,238




$ 1,855,703
LIABILITIES, DEFERRED INFLOWS AND FUND BALANCE Liabilities:
Voucher Warrants Payable $
Bonds, Notes and Other Obligations Payable - Current
Accrued Interest
Due To Other Funds
Accrued and Other Liabilities
Claims Payable
Deferred Revenue
Total Liabilities
Deferred Inflows


181,998

139,397 110,177 37,685 1,144 470,401


157,322 271
281,434 9,467
242,966 691,460


49$ 12

11,534 3,872
291,271
356,289
Fund Balance:
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total Fund Balance
Total Liabilities, Deferred Inflows and Fund Balance $

20,885

177,000 33,417 231,302 701,703


27,821

(233,909) (206,088) $ 485,372


1,499,414


1,499,414 $ 1,855,703


See notes to basic financial statements.

Service Community
Concession Bond, Note Development Other Total
and Redemption and Improvement Governmental Governmental
Reserve and Interest Projects Funds Funds
$ 202 $ 10,922 $ 442 $ 72,420 $ 729.095
40 128,886 528,111 223,936 1,626,647
399,260 1.781 98,713 499.754
470,746 - 437,870 1,258,648
1,305 37,658 2.204 10,910 285,918
30,068 67,799 93,854 644,731
3,017 - 51,040 639,312
20,885
674 - 211 - 4,495
622,628 - - - 622,628
: : - -_ ' 5,362
S 624,849 $ 1,080,557 $ 600,548 $ 988,743 $ 6,337,475


$ - $ - $ 99,249 $ 76,771 $ 564,952
89,970 - 5,910 96,151
. 208,254 - 2,159 210,413
97,857 205,273 735,495
3,032 19,255 145,803
37,685
-_ 435,614 - 364,254 1,335,249
- 733,838 200,138 673,622 3,125,748
1,618,360 - - - 1,618,360

20,885
189,883 400,410 215,383 2,332,911
624,849 156,836 - 100,442 882,127
177,000
(1,618,360) : - (704) (1,819,556)
(993,511) 346,719 400,410 315,121 1,593,367
$ 624,849 $ 1,080,557 $ 600,548 $ 988,743' $ 6,337,475
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not reported in the lunds ... 7,869,669
Other long-term assets are not available to pay for current-period expenditures and therefore are deferred in the funds . 1,259,145
Certain liabilities, including bonds payable, are not due and payable in the current
period and therefore are not reported in the funds (16,566,683)
Net position of governmental activities $ (5,844,502)




21
Exhibit 4
CITY OF CHICAGO, ILLINOIS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)



Revenues:
Property Tax
Utility Tax
Sales Tax (Local and State)
Transportation Tax
State Income Tax
Transaction Tax
Special Area Tax
Recreation Tax
Other Taxes
Federal/State Grants
Internal Service
Licenses and Permits
Fines
Investment Income
Charges for Services
Miscellaneous


General

462,475 572,185 177.890 282.779 241,111
163,194 112,188 1,074 302,924 117,568 290,799 5,439 133,021 58,009
Federal, State and Local Grants








876,790
Special Taxing Areas






370,454





29,771 406 5,130
Total Revenues
Expenditures: Current:
General Government
Health
Public Safety
Streets and Sanitation
Transportation
Cultural and Recreational
• Employee Pensions
Other
Capital Outlay
Debt Service:
Principal Retirement
Interest and Other Fiscal Charges

864,556 24,371 1.956,152 178,065 53,815 13
2,237

1.645 515

391,817 101,558 112,429
325,491 16,076
8,564' 5,259

305,952 38 954 116 66,773 8,557
Total Expenditures
Revenues (Under) Over Expenditures



Continued on following pages.

Service Concession and Reserve

Bond, Note Redemption and Interest
Community Development
and Improvement Projects

Nonmajor Governmental Funds

Total Governmental Funds
$ - $ 487,714 $ - $ 453,684 $ 941,398
22,324 - 63,883 548,682
22,105 - - 594,290
18.635 - 177,019 373,544
108,506 391,285 40,846 281,957 370,454 163,194
82 - 18,816 131,086
877,864
16,361 319,285 117,568
15,711 306,510
18,084 29,153 4,812 3,626 90,885
37,297 170,724
21,033 23,160 4,422 23,757 135,511
39,117 603,173 9,234 959,506 5,814,237


100 - - 244,116 1,806,541
1,600 127,567
6,424 2,075,959
49,919 228,100
68,224 514.303
77,738 102,384
458,951 458,951
924 11,725
339,912 90,429 435,600
296,084 - 43,025 340,754
- 431,588 - 29,856 461,962
100 727,672 339,912 1,071,206 6,563,846
39,017 (124,499) (330,678) (111,700) (749,609)








23

Exhibit 4 - Concluded
CITY OF CHICAGO, ILLINOIS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)
Federal, State and Local
General Grants
Special Taxing Areas
Other Financing Sources (Uses):
Issuance of Debt $ 55,000 $ - $
Premium ...
Payment to Refunded Bond Escrow Agent
Transfers In 31,617 - 68,675
Transfers Out (26,965) - (44,264)
Total Other Financing Sources (Uses) 59,652 24,411
Net Changes in Fund Balance (101,061) (84,404) 47,779
Fund Balance, Beginning of Year 335,533 (121,684) 1,451,635
Change in Inventory (3,170) - -
Fund Balance, End of Year $ 231,302 $ (206,088) $ 1,499,414


See notes to basic financial statements.
























24
Service Concession Agreements and Reserve

Bond, Note Redemption and Interest
Community Development
and Improvement Projects

Nonmajor Governmental Funds

Total Governmental Funds




328 (12,358)
337,410 (268,397) (10,105)
207,566 36,166
3,843 (2,322)
122,415

74,287 (82,736)
722,391 • 36,166 (268,397)
178,750 (178,750)
(12,030)
26,987 (1,020,498)
(65,591) 412.310
(85,425) 485,835
2,266 312,855
(259,449) 1,855,986 (3,170)
$ (993,511) $ 346,719 $ 400,410 $




























25

Exhibit 5
CITY OF CHICAGO, ILLINOIS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)

Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds $ (259,449)
Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current
period 278,635
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds (63,855)
Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net
assets. This is the amount by which proceeds exceeded repayments (150,751)
Certain expenses reported in the.statement of activities do not require the use of current financial resources and therefore are not reported as
expenditures in governmental funds (1,254,416)
Change in the net position of governmental activities $ (1,449,836)
























26

Exhibit 6
CITY OF CHICAGO, ILLINOIS
STATEMENT OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND (BUDGETARY BASIS) Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)
Original Budget
Revenues:
Utility Tax $ 475,306
Sales Tax 250,748
Transportation Tax 174,271
Transaction Tax 192.167
Recreation Tax 160,956
Business Tax 94,146
State Income Tax 209,401
State Sales Tax 284,421
State Auto Rental 3,354
Federal/State Grants 1,568
Internal Service 362,398
Licenses and Permits * 135,110
Fines 290,131
Investment Income 4,200
Charges for Services 125,141
Municipal Utilities 8,667
Leases, Rentals and Sales 9,680
Miscellaneous 57,100
Issuance of Debt, Net of
Original Discount 50,000
Budgeted Prior Years' Surplus
and Reappropriations 143,549
Transfers In/Out 72,000
Total Revenues 3,104,314
Expenditures: Current"
General Government * 960,820
Health 25.407
Public Safety 1,881,453
Streets and Sanitation 178,644
Transportation 55,610
Debt Service-
Principal Retirement 1,645
Interest and Other Fiscal Charges 735
Total Expenditures 3,104,314
Revenues Over (Under) Expenditures ... $ -

Final Budget
475,306 250,748 174,271 192,367 160,956 94,146 209,401 284,421 3,354 1,568 362,398 135,110 292,631 4,200 125,141 8,667 9,680 57,100

50,000
143,549 72,000
3,107,014


963,520 25,407 1,881,453 178,644 55.610
1,645 735
3,107,014
Actual Amounts
462,475 272,312 177,890 241,111 163,194 108,278 282,779 299,873 3.910 1,074 302,924 117,568 290,799 5,439 124,606 8,415 14,747 43,262
55,000
72,347 31,617
3,079,620


882,437 25.896 1,938,657
178,338 51,914
1,645 733
3,079,620
Variance Positive (Negative)
(12,831) 21,564 3,619 48,744 2,238 14,132 73,378 15,452 556 (494) (59,474) (17,542) (1,832) 1,239 (535) (252) 5,067 (13,838)
5,000
(71,202) (40,383)
(27,394)


81,083 (489) (57,204) 306 3,696



27,394
See notes to basic financial statements. * Housing Revenue Fund is included.

Exhibit 7
CITY OF CHICAGO, ILLINOIS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2012
(Amounts are in Thousands of Dollars)
Business-type Activities - Enterprise Funds
Chicago-O'Hare
International Chicago
Airport Skyway Total
Major Funds
Chicago
Midway
International
Water Sewer Airport
ASSETS AND DEFERRED OUTFLOWS CURRENT ASSETS:
Cash and Cash Equivalents $ 84,429 $ 17,722 $ 11,785 $ 38,226 $ 837 $ 152,999
Investments 44.188 16,952 36,079 72,758 396 170,373
Accounts Receivable (Net of
Allowances) 128,805 74,328 13,663 91,589 58 308,443
Due from Other Funds 20.607 18,840 14,437 28,482 - 82,356
Due from Other Governments - - - 28,170 - 28,170
Inventories 17,356 1,463 - -_ - 18,819
Total Current Assets 295,385 129,305 75,964 259,225 1,291 761,170

RESTRICTED ASSETS'
Cash and Cash Equivalents 39,102 71,216 122.523 764,683 - 997,524
Investments 395,439 270,573 197,960 1,354,091 -_ 2.218,063
Total Restncted Assets 434,541 341,789 320,483 2,118,774 -_ 3,215,587
NONCURRENT ASSETS:
Other Assets . 16,446 11,694 134,927 341,223 10,187 514,477
Property, plant, and equipment
Land 5,083 560 112,840 893,588 12,609 1,024,680
Structures, Equipment and
Improvements . 3,462,288 2,072,542 1,415,216 7,014,287 490,818 14,455,151
Accumulated Depreciation (868,311) (434,774) (430,549) (2,566,099) (212,871) (4,512,604)
Construction Work in Progress... 262,280 33,011 69,847 1,183,153 -_ 1,548,291
Total Property. Plant and Equipment . 2,861,340 1,671,339 1,167,354 6.524,929 290,556 12,515,518
Total Noncurrent Assets 2,877,786 1,683,033 1,302.281 6.866,152 300,743 13,029,995
Total Assets 3,607,712 2,154,127 1,698.728 9,244,151 302,034 17,006,752
DEFERRED OUTFLOWS 126.371 89,955 36,794 -_ -_ 253,120
Total Assets and Deferred Outflows $ 3,734.083 $ 2,244.082 $ 1,735.522 $ 9,244,151 $ 302,034 S 17,259,872


See notes to basic financial statements.


28

Business-type Activities - Enterprise Funds
Major Funds
Chicago Chicago-
Midway O'Hare
International International Chicago
Water Sewer Airport Airport Skyway Total
LIABILITIES CURRENT LIABILITIES.
" Voucher Warrants Payable $ 31,875 $ 4,639 $ 21,738 $ 62.408 $ 265 $ 120,925
Due to Other Funds ... ... 11.196 12,113 20,142 3,710 15 47,176
Accrued and Other Liabilities . 82,296 26.B69 774 7,190 - 117,129
Unearned Revenue 26,746 20,386 9,836 126,238 -_ 183,206
Total Current Liabilities 152,113 64,007 52,490 199,546 280_ 468,436
PAYABLE FROM RESTRICTED ASSETS Current Liabilities Payable From
Restncted Assets 130,427 138,032 74,793 468,011 - 811,263
Total payable from restricted assets 130.427 138,032 74,793 468,011 - 811,263
NONCURRENT LIABILITIES:
Revenue Bonds Payable 2,061,696 1,386,443 1.412.016 7,167,495 - 12,027,650
Derivative Instrument Liability 126,371 89,955 36.794 - - 253,120
Long-term Purchase Obligation 1,027 ^_ -_ -_ - 1,027
Total Noncurrent Liabilities 2,189,094 1,476,398 1,448,810 7,167,495 ^ 12,281,797
Total Liabilities 2,471,634 1,678,437 1,576,093 7,835,052 280_ 13,561,496
DEFERRED INFLOWS - - - - 1,682,121 1,682,121
NET POSITION Net Investment
in Capital Assets 1,073,309 455,195 (82,226) 651,476 290,556 2,388,310
Restncted Net Position:
Debt Service - - 11,624 - - 11,624
Capital Projects 1,308 50,014 807 121,001 - 173,130
Passenger Facility Charges - - 5,117 135,025 - 140,142
Contractual Use Agreement - - 26,234 115,332 - 141.566
Noise Mitigation Program - - 124,576 120,624 - 245,200
Other - - 36.725 234,130 - 270.855
Unrestncled Net Position W.832 60.436 36,572 31,511 (1,670,923) (1,354,572)
Total Net Position $ 1,262,449 $ 565,645 $ 159,429 $ 1,409,099 $ (1,380,367) $ 2,016,255


See notes to basic financial statements




29
Exhibit 8
CITY OF CHICAGO, ILLINOIS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
Year Ended December 31, 2012
(Amounts are in Thousands of Dollars)
Business-type Activities - Enterprise Funds
Major Funds
Chicago Chicago-
Midway O'Hare
International International
Sewer Airport Airport

Chicago Skyway
Operating Revenues'
Charges for Services
Rent
Other
Total Operating Revenues

562,572 $ 252.943 $ 70,912 $ 436,909 $ 86,921 265,655
576,287
702,564
157,833
13,715 969
253,912

$ 1,323,336 352.576 14.684
1,690,596

Operating Expenses:
Personal Services
Contractual Services
Repairs and Maintenance Commodities and Matenals Depreciation and Amortization
Capital Asset Impairment
General Fund Reimbursements
Other
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses): Investment Income (Loss) .
Interest Expense
Passenger Facility Charges
Other
109,525 49,104 1.671 29,137 48.887
68,183 31,845
338,352
237,935

270 (79,147)
(1.341)
21,254 3.085 57,527

27,735

31.709

141.310
112,602

1.021 (54,601)

(154)
44,463 15.011 37,990

55,119

16.833
169,416
(11,583)

2.292 (56,451) 43,916
2,126
163.542 74,307 88,784
216,762 21,601
123,546
688,542
14,022

21.612 (266.734) 154.550 19,565
338,784 141,507 185,972 29,137 359.124 21,601 99.892 172,224
1,348,241 342,355

25,197 (456,933) 198,466 38,842
Total Nonoperating Revenues
(Expenses)
Capital Grants
Net Income (Loss)
Net Position (Deficit) - Beginning of Year
Net Position (Deficit) - End of Year
8,027 (1,388,394)
$ 1,262,449 S 565,645 $ 159,429 $ 1,409,099 $ (1,380,367) $ 2,016,255



See notes to basic financial statements.
Exhibit 9
CITY OF CHICAGO, ILLINOIS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)
Business-type Activities - Enterprise Funds
Major Funds



Water
Cash Flows from Operating Activities.
Received from Customers $ 546.056
Payments to Vendors (84,738)
Payments to Employees (109.525)
Transactions with Other City Funds (80,972)
Cash Flows Provided By
Operating Activities 270,821
Cash Flows from Capital and Related Financing Activities. Proceeds Irom Issuance of Bonds 447,538 Proceeds from Federal Government .. Acquisition and Construction of
Capital Assets (253,684)
Capital Grant Receipts
Bond Issuance Cosls (2,604)
Payment to Refund Bonds (35,595)
Pnncipal Paid on Debt (59,859)
Interest Paid . (91.514)
Passenger Facility Charges
Noise Mitigation Program
Termination of Swaption
Deposit
Other ¦
Cash Flows (Used in) Provided By Capital
and Related Financing Activities ... . 4,282
Cash Flows from Investing Activities-
Sale (Purchases) of Investments, Net . . (212,113)
Investment Interest 2,457
Cash Flows (Used in) Provided By
Investing Activities (209,656)
Net Increase (Decrease) in Cash and
Cash Equivalents 65,447
58,084
Cash and Cash Equivalents, Beginning of Year .
$ 123,531 $ 88,938 $ 134,308 $ 802,909 S 837 $ 1,150,523
Cash and Cash Equivalents. End of Year . ...


See notes to basic financial statements.
Exhibit 9 - Concluded
CITY OF CHICAGO, ILLINOIS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Year Ended December 31, 2012
(Amounts are in Thousands of Dollars)
Business-lype Activities - Enterprise Funds
Major Funds
Chicago Chicago-
Midway O'Hare
International International
Airport Airport

Chicago Skyway
Reconciliation of Operating Income to Cash Flows Irom Operating Activities'
Operating Income (Loss)
Adjustments to Reconcile:
Depreciation and Amortization
Provision for Uncollectible Accounts . . . Change in Assels and Liabilities'
(Increase) Decrease in Receivables
(Increase) Decrease in Due From Other Funds Increase (Decrease) in Voucher Wanants
Payable and Due to Olher Funds
Increase (Decrease) in Deferred Revenue
and Olher Liabilities
(Increase) Decrease in Inventories and
Other Assels

48,887 15,714
(42.570) (3,100)
(8,549)
23,515
0.011)
27.735 8,842
(22,658) 4,305
1,820
10,068
859
55,119 371
3,289 (12,790)
16,648
(14,182)
443
380,725 39,907
(67,655) (14,860)
18,934
(56,008)
2,074


$ 237,935 $ 112,602 $ (11.583) $ 14,022 $ (10,621) $ 342,355

10,621
238,363 14,980
(5,716) (3,275)
9,015
(75,409)
1,783

J 270.821 $ 143,573 $ 37,315 $ 193,763


Supplemental Disclosure of Noncash Hems: Capital asset additions in 2012 have outstanding accounts payable
and accrued and other liabilities $ 65,787 $ 63,913 $ 33,248 $ 148,476 $ $ 311,424



See noles to basic financial statements.










32

Exhibit 10
CITY OF CHICAGO, ILLINOIS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS December 31, 2012
(Amounts are in Thousands of Dollars)
Pension Trust Agency
ASSETS
Cash and Cash Equivalents $ 185,408 $ 118,148
Investments - 92,504
Investments, at Fair Value Bonds and U.S. Government
Obligations 2,336,591
Stocks 5,343,390
Mortgages and Real Estate 664,762
Other 1,906,928
Cash and Investments wilh
Escrow Agent - 10,046
Property Tax Receivable - 91,534
Accounts Receivable, Net 663,429 57,380
Due From City 55,574
Invested Securities Lending Collateral 1,126,065 -
Total Assets $ 12,282,147 $ 369,612

Deferred Outflows 301
Total Assets and Deferred Outflows 12,282,448

LIABILITIES
Voucher Warrants Payable $ 356,780 $ 35,481
Accrued and Other Liabilities - 334,131
Deferred Revenue
Securities Lending Collateral 1,126,065 -__
Total Liabilities 1,482,845 $ 369,612

NET POSITION

Held in Trust for Employees 10,799,603
Total Net Position $ 10,799,603




See notes to basic financial statements.






33

Exhibit 11
CITY OF CHICAGO, ILLINOIS
STATEMENT OF CHANGES IN PLAN NET POSITION FIDUCIARY FUNDS - PENSION TRUST FUNDS
Year Ended December 31, 2012 (Amounts are in Thousands of Dollars)
Total
ADDITIONS Contributions:
Employees $ 295,990
City 464,168
Total Contributions 760,158
Investment Income: Net Appreciation in
Fair Value of Investments 1,057,568
Interest, Dividends and Other 241,995
Investment Expense (49,831)
Net Investment Income 1,249,732
Securities Lending Transactions:
Securities Lending Income 3,741
Securities Lending Expense 1,440
Net Securities Lending Transactions 5,181
Total Additions 2,015,071
DEDUCTIONS
Benefits and Refunds of Deductions 1,731,545
Administrative and General 20,059
Total Deductions 1,751,604
Net Increase in Net Position 263,467
Net Position:
Beginning of Year 10,536,136
End of Year $ 10,799,603





See notes to basic financial statements.







34


i

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
1) Summary of Significant Accounting Policies
The City of Chicago (City), incorporated in 1837, is a "home rule" unit under State of Illinois (State) law. The City has a mayor-council form of government. The Mayor is the Chief Executive Officer of the City and is elected by general election. The City Council is the legislative body and consists of 50 members, each representing one of the City's 50 wards. The members of the City Council are elected through popular vote by ward for four-year terms.
The accounting policies of the City are based upon accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board (GASB). Effective January 1, 2012, the City adopted the following GASB Statements:
GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The objective of this Statement is to improve financial reporting by addressing uses related to service concession and reserve fund (SCAs), which are a type of public-private or public-public partnership. There was no impact on the City's Financial Statements as a result of the implementation of Statement No. 60.
GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. This Statement incorporates into the GASB's authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30,1989, which do not conflict with or contradict GASB pronouncements:
Financial Accounting Standards Board Statements and Interpretations
Accounting Principles Board Opinions
Accounting Research Bulletins of the American Institute of Certified Public Accountants' Committee on Accounting Procedure
The Statement also supersedes Statement No. 20, Accounting and Financial Reporting for Propriety Funds and Other Governmental Entities That Use Proprietary Fund Accounting. Those entities who chose to apply post-November 30, 1989 FASB Statements and Interpretations that do not conflict with or contradict GASB pronouncements can continue to apply those pronouncements as other accounting literature. The financial reporting impact resulting from the implementation of GASB Statement No. 62 was not material.
GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows or Resources, and Net Position. Statement No. 63 standardizes the presentation of deferred outflows of resources and deferred inflows of resources and their effect on a government's net position. It alleviates uncertainty about reporting those financial statement elements by providing guidance where none previously existed. The financial reporting impact resulting from the implementation of GASB Statement No. 63 is primarily the change in terminology from Net Assets to Net Position.
GASB Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions -An Amendment to GASB Statement No. 53. Statement No. 64 clarifies whether an effective hedge relationship continues after the replacement of a swap counterparty or a swap counterparty's credit support provider. This statement sets forth criteria that establish when the effective hedging relationship continues and hedge accounting should continue to be applied. There was no impact on the City's Financial Statements as a result of the implementation of Statement No. 64.
Other accounting standards that the City is currently reviewing for applicability and potential impact on the financial statements include:
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, will be effective for the City beginning with its year ending December 31, 2013. The objective of this statement is to establish accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities.
35

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
GASB Statement No. 66, Technical Corrections -2012- an amendment of GASB Statements No. 10 and No. 62, will be effective for the City beginning with its year ending December 31, 2013. The objective of this statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements.
GASB Statement No. 68, Accounting and Financial Reporting for Pensions, establishes new financial reporting requirements for most governments that provide their employees with pension benefits through these types of plans. Statement-No. 68 will bo effective for the City beginning with its year ending December 31, 2015. GASB Statement No. 68 replaces the requirements of GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and GASB Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. GASB Statement No. 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. The Statement also enhances accountability and transparency through revised and new note disclosures and required supplementary information (RSI).
GASB Statement No. 69, Government Combinations and Disposals of Government Operations, establishes accounting and financial reporting standards related to government combinations and disposals of government operations. Statement No. 69 will be effective for the City beginning with its year ending December 31, 2014. GASB Statement No. 69 requires disclosures to be made about government combinations and disposals of government operations to enable financial statement users to evaluate the nature and financial effects of those transactions.
GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, establishes accounting and financial reporting standards for financial guarantees that are nonexchange transactions (nonexchange financial guarantees) extended or received by a state or local government. Statement No. 70 will be effective for the City beginning with its year ending December 31, 2014. GASB Statement No. 70 requires a government that has issued an obligation guaranteed in a nonexchange transaction to report the obligation until legally released as an obligor. This Statement also requires a government that is required to repay a guarantor for making a payment on a guaranteed obligation or legally assuming the guaranteed obligation to continue to recognize a liability until legally released as an obligor. When a government is released as an obligor, the government should recognize revenue as a result of being relieved of the obligation. This Statement also provides additional guidance for intra-entity nonexchange financial guarantees involving blended component units and requires disclosures to be made about government combinations and disposals of government operations to enable financial statement users to evaluate the nature and financial effects of those transactions.
a) Reporting Entity - The City includes the Chicago Public Library and the City-related funds of the Public Building Commission. The financial statements for the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), applicable to governmental units, as required by the Municipal Code of Chicago (Code).
The City's financial statements include the following legal entities as fiduciary trust funds:
The Municipal Employees' Annuity and Benefit Fund of Chicago is governed by a five-member board: three members are elected by plan participants and two are members ex-officio.
The Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago is governed by an eight-member board: two members are elected by plan participants, two are members ex-officio, two members are appointed by the City Department of Human Resources, one member is elected by retired plan participants and one member is elected by the local labor union.

36

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The Policemen's Annuity and Benefit Fund of Chicago is governed by an eight-member board: four members are elected by plan participants and four are appointed by the Mayor.
The Firemen's Annuity and Benefit Fund of Chicago is governed by an eight-member board: four members are elected by plan participants and four are members ex-officio.
Financial statements for each of the pension plans may be obtained at the respective fund's office.
Related Organizations - City officials are responsible for appointing a voting majority of the members of the boards of other organizations, but the City's accountability for these organizations does not extend beyond making appointments and no fiscal dependency exists between the City and these organizations. Therefore, the Chicago Park District, Chicago Public Schools, Community College District No. 508, Chicago Housing Authority and the Chicago Transit Authority are deemed to be related organizations.
Government-wide and fund financial statements"- The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on user fees and charges for services.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identified with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions thai are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
Measurement focus, basis of accounting, and financial statement presentation - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectable within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 90 days of the end of the current fiscal period with the exception of property tax revenue, which is deferred unless taxes are received within 60 days subsequent to year-end. Licenses and permits, charges for services and miscellaneous revenues are not considered to be susceptible to accrual and are recorded as revenues when received in cash. All other revenue items are considered to be measurable and available only when cash is received by the City. Expenditures generally are recorded when a liability is incurred, as under accrual basis of accounting, except for interest and principal on long-term debt, the long-term portion of compensated absences, claims and judgments and pension obligations.



37

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The City reports the following major governmental funds:
The General Fund is the City's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in in another fund.
Federal, State and Local Grants Fund accounts for the expenditures for programs, which include general government, health, public safety, transportation, aviation, cultural and recreational, and capital outlays. The majority of revenues are provided by several agencies of the Federal government, departments of the Illinois State government and City resources.
Special Taxing Areas Fund accounts for expenditures for special area operations and maintenance and for redevelopment project costs as provided by tax levies on special areas.
Service Concession and Reserve Fund accounts for monies committed for mid and long term uses. The Mid-term portion is subject to appropriation for neighborhood human infrastructure programs, health, and other initiatives. Whereas the Long-term portion is committed for future budgetary and credit rating stabilization. These reserves were created as a result of the Skyway Lease and Parking Meter System transactions. The deferred inflows result from long-term concession and lease transactions whose proceeds are recognized as revenue over the term of the leases.
Bond, Note Redemption and Interest Fund accounts for the expenditures for principal and interest as provided by property tax, utility tax, sales tax, transportation tax, and investment income.
Community Development and Improvement Projects Funds account for proceeds of debt used to acquire property, finance construction, and finance authorized expenditures and supporting services for various activities.
Within the governmental fund types, fund balances are reported in one of the following classifications:
Nonspendable - includes amounts that cannot be spent because they are either: a) not in a spendable form; or b) legally or contractually required to be maintained intact.
Restricted - includes amounts that are restricted to specific purposes, that is, when constraints placed on the use of resources are either: a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation.
Committed - includes amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority (i.e, City Council); to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest-level action to remove or change the constraint.
Assigned - includes amounts that are constrained by the City's intent to be used for specific purposes, but that are neither restricted nor committed. Residual fund balances in these fund types that are not restricted or committed are reported as assigned.
Unassigned - includes the residual fund balance that has not been restricted, committed, or assigned within the general fund and deficit fund balances of other governmental funds.
The City reports the following major proprietary funds as business-type activities:
Water Fund accounts for the operations of the Chicago Water System (Water). The Water system purifies and provides Lake Michigan water for the City and 125 suburbs. The Water Fund operates two water treatment facilities and 12 pumping stations with a combined pumping capacity of 3,661 million gallons per day.

38

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Sewer Fund accounts for the operations of the Wastewater Transmission System (Sewer). The Sewer system transports wastewater to the Metropolitan Water Reclamation District of Greater Chicago for processing and disposal. This service is provided for the residents and businesses of the City and certain suburban customers.
Chicago Midway International Airport Fund records operations of Chicago Midway International Airport (Midway) that provides regional travelers with access to airlines that generally specialize in low-cost, point-to-point, origin and destination passenger services. Midway Airport is conveniently located 10 miles from downtown Chicago.
Chicago-O'Hare International Airport Fund records operations of Chicago-O'Hare International Airport (O'Hare), the primary commercial airport for the City. The airlines servicing the airport operate out of four terminal buildings. Three domestic terminal buildings, having a total of 169 gates, serve domestic flights and certain international departures. The International Terminal, having a total of 20 gates and five remote aircraft parking positions, serves the remaining international departures and all international arrivals requiring customs clearance.
Chicago Skyway Fund records operations of the Chicago Skyway (Skyway) which provides vehicle passage across the Calumet River, between the State of Indiana and the State of Illinois (State) through the operation of a tollway which consists of a 7 8-mile span connecting the Dan Ryan Expressway to the Indiana Toll Road. Facilities include a single toll plaza consisting of a central office, maintenance garage and toll collection area. In January 2005, the City entered into a long-term Concession and Lease Agreement of the Skyway, granting a private company the ability to operate and to collect toll revenue during the 99-year term of the agreement. The City received a one-time upfront payment of $1.83 billion.
Additionally, the City reports the following fiduciary funds:
Pension Trust Funds report expenditures for employee pensions as provided by employee and employer contributions and investment earnings.
Agency Funds account for transactions for assets held by the City as agent for certain activities or for various entities. Payroll deductions and special deposits are the primary transactions accounted for in these funds.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payment-in-lieu of taxes and other charges between the City's water, sewer, airports and skyway funds. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenues include: 1) charges lo customers or applicants for goods and services, or privileges provided, or fines, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Certain indirect costs have been included as part of the program expenses reported for the various functional activities.
In the fund financial statements, proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water and sewer funds are charges to customers for sales and services. The airport funds principal operating revenues are derived from landing fees and terminal use charges as well as rents and concessions. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.


39

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources, as they are needed.
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

d) Assets, liabilities, deferred inflows, deferred outflows, and net position or equity
Cash, Cash Equivalents and Investments generally are held with the City Treasurer as required by the Code. Interest earned on pooled investments is allocated to participating funds based upon their average combined cash and investment balances. Due to contractual agreements or legal restrictions, the cash and investments of certain funds are segregated and earn and receive interest directly. The City uses separate escrow accounts in which certain tax revenues are deposited and held for payment of debt.
The Code permits deposits only to City Council-approved depositories, which must be regularly organized state or national banks and federal and state savings and loan associations, located within the City, whose deposits are federally insured.
Investments authorized by the Code include interest-bearing general obligations of the City, State and U.S. Government; U.S. Treasury bills and other noninterest-bearing general obligations of the U.S. Government purchased in the open market below face value; domestic money market funds regulated and in good standing with the Securities and Exchange Commission and tax anticipation warrants issued by the City. The City is prohibited by ordinance from investing in derivatives, as defined, without City Council approval. The City values its investments at fair value or amortized cost. U.S. Government securities purchased at a price other than par with a maturity of less than one year are reported at amortized cost.
The City's four retirement plans are authorized to invest in bonds, notes, and other obligations of the U.S. Government; corporate debentures and obligations; insured mortgage notes and loans; common and preferred stocks; stock options; real estate; and other investment vehicles as set forth in the Illinois Compiled Statutes. These investments are reported at fair value.
Repurchase agreements can be purchased only from banks and certain other institutions authorized to do business in the State. The City Treasurer requires that securities that are pledged to secure these agreements have a fair value equal to the cost of the repurchase agreements plus accrued interest.
Investments generally may not have a maturity date in excess of ten years from the date of purchase. Certain other investments are held in accordance with the specific provisions of applicable ordinances
Cash equivalents include certificates of deposit and other investments with maturities of three months or less when purchased.
Deficit cash balances result in interfund borrowings from the aggregate of funds other than escrowed funds. Interest income and expense are generally not recognized on these interfund borrowings.
State statutes and the City's Pension Plans' policies permit lending Pension Plan securities to broker-dealers and other entities with a simultaneous agreement to return the collateral for the same securities in the future. Securities lent at year-end for cash collateral are presented as not categorized in the schedule of custodial credit risk; securities lent for securities collateral are classified according to the category for the collateral.
Receivables and Payables activity between funds are representative of services rendered, outstanding at the end of the fiscal year, and are referred to as either "due to/from other funds" (i e., the current
40

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances."
All trade and property tax receivables are shown net of an allowance for uncollectibles. The allowance is based on historical trends. The estimated value of services provided but unbilled at year-end has been included in receivables.
Inventory includes government-wide inventories, which are stated at cost determined principally, using the average cost method. For proprietary funds, the costs of inventories are recorded as expenses when used (consumption method). Governmental fund inventories are accounted for using the purchases method and represent nonspendable resources because they do not represent expendable available financial resources.
Assets Held for Resale includes land and buildings of $5.4 million, recorded at lower of cost or market in the Federal, State and Local Grant Funds. These assets are purchased through the use of federal grants and City resources and are intended to be resold.
Restricted Assets include certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment. These assets are classified as restricted or committed in the basic financial statements because they are maintained in separate bank accounts and their use is limited by applicable bond covenants or specific City Council action. ,
The Water and Sewer funds maintain Rate Stabilization Accounts where any net revenues remaining after providing sufficient funds for all required deposits in the bond accounts may be transferred upon the direction of the City to be used for any lawful purpose of the specific fund.
The O'Hare and Midway funds maintain Passenger Facility Charge accounts as restricted as they are subject to Federal Aviation Administration regulation and approval, to finance specific eligible capital and debt related activities.
Capital Assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets, or a network of assets, with an initial cost of more than $5,000 (not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalization value of the assets constructed. The total interest expense (Governmental and Business Activities) incurred by the City during the current fiscal year was $918 9 million, of which $126.4 million was capitalized as part of the capital assets under construction projects in proprietary funds.







41

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Property, plant, and equipment of the City are depreciated using the straight-line method, in the year subsequent to acquisition or when placed into service, over the following estimated useful lives:
Utility plant 25- 100 years
Utility structures and improvements 50 - 100 years
Buildings and improvements 15- 40 years
Airport runways, aprons, tunnels, taxiways, and paved roads 5-40 years
Bridge infrastructure 10- 40 years
Lighting infrastructure 25 years
Street infrastructure 10- 25 years
Transit infrastructure 40 years
Equipment (vehicle, office, and computer) 5 - 20 years ¦
The City has a collection of artwork and historical treasures presented for public exhibition and education that are being preserved for future generations. The proceeds from sales of any pieces of the collection are used to purchase other acquisitions A portion of this collection is not capitalized or depreciated as part of capital assets.
Deferred Outflows represent the fair value of derivative instruments that are deemed to be effective hedges.
Employee Benefits are granted for vacation and sick leave, workers' compensation and health care. Unused vacation leave is accrued and may be partially earned over for one year. Sick leave is accumulated at the rate of one day for each month worked, up to a maximum of 200 days. Severance of employment terminates all rights to receive compensation for any unused sick leave. Sick leave pay is not accrued. Employee benefit claims outstanding, including claims incurred but not reported, are estimated and recorded in the government-wide and proprietary fund financial statements.- A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.
Employees are eligible to defer a portion of their salaries until future years under the City's deferred compensation plan created in accordance with Internal Revenue Code Section 457. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. Third-party administrators who maintain the investment portfolio administer the Plan. The plan's assets have been placed in trust accounts with the plan administrators for the exclusive benefit of participants and their beneficiaries and are not considered assets of the City.
The City is subject to the State of Illinois Unemployment Compensation Act and has elected the reimbursing employer option for providing unemployment insurance benefits for eligible former employees. Under this option, the City reimburses the State for claims paid by the State. Expenditures for workers' compensation are recorded when paid in the governmental funds. A liability for these amounts is recorded in the government-wide and proprietary fund financial statements.
Judgments and claims are included in the government-wide financial statements and proprietary fund types. Uninsured claim expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. In the fund financial statements, expenditures for judgments and claims are recorded on the basis of settlements reached or judgments entered within the current fiscal year. Amounts that related to deferred compensatory time and reserves for questioned costs are treated Ihe same way.
Long-term obligations are included in the government-wide financial statements and proprietary fund types in the fund financial statements Long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type
42

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the related debt, except in the case of refunding debt transactions where the amortization period is over the term of the refunding or refunded debt, whichever is shorter.
The City enters into interest rate ,swap agreements to modify interest rates and/or cash flows on outstanding debt. For existing swaps, the net interest expenditures resulting from these arrangements are recorded as interest expense. The fair value of derivative instruments that are deemed to be effective is accounted for as deferred outflows. Derivative instruments that are deemed not effective are adjusted to fair value with the change in fair value recorded to investment earnings. All interest rate swaps and swaptions are approved by City Council.
In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received and discounts given on debt issued are reported as other financing sources or uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures.
Certain debt obligations are to be paid from sales tax, motor fuel or special area taxes.
Long-term purchase obligation represents an agreement with DuPage Water Commission to construct electrical generation facilities not to exceed $15.0 million. The payment of the obligation will be in the form of credits against the charges for water supplied.
Deferred inflows represent amounts to be recognized as revenue on a straight line basis over the life of the related long-term lease and concession agreements.
Fund equity in the government-wide statements is classified as net position and displayed in three components:

Net investement in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or any other borrowings that are attributable to the acquisition, construction, or improvement of those assets.
Restricted net position - Consists of net position with constraints placed on the use either by external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or are legally restricted through constitutional provisions or enabling legislation.
Restricted net position for business activities are provided in Exhibit #7, Statement of Net Position, Proprietary Funds.
Unrestricted - All other net position that do not meet the definition of "restricted" or "net investement in capital assets."
2) Reconciliation of Government-wide and Fund Financial Statements
a) Explanation of certain differences between the governmental funds balance sheet and the government-wide statement of net position.
i) The governmental funds balance sheet includes a reconciliation between fund balance - total governmental funds and net position - governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that "Other long-term assets are not available to pay for current-period expenditures and therefore are deferred in the funds." The details of this $1,259.1 million are as follows (dollars in thousands):

43

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012

Deferred revenue - property tax and grants $ 1,238,382
Other assets - pension excess 57,757
Accounts payable - infrastructure retainage (36,994)
Net adjustment to increase fund balance - lotal governmental funds - to arrive at net assets -
governmental activities $ 1,259,145

ii) Another element of that reconciliation explains that "Certain liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $16,566.7 million are as follows (dollars in thousands):
Long-term liabilities:
Total bonds, notes and certificates payable $ 9,182,943
Pension and other postemployment benefits 6,364,927
Lease obligation 163,013
Pollution remediation 8,373
Claims and judgments 888,593
Total Long-term liabilities 16,607,849
Bonds, notes and other obligations payable current (95,479)
Other assets - issuance costs (74,603)
Accrued interest 4,908
, Derivative instruments 31,140
Accrued and other liabilities - compensated absences 92,868
Net adjustment to reduce fund balance - total governmental funds - to arrive at net assets -
governmental activities $ 16,566,683

b) Explanation of certain differences between the governmental funds statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities.
i) The governmental funds statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net position - governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statements of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $278 6 million are as follows (dollars in thousands):

Capitalized asset expenditures $ 682,382
Depreciation expense (403,747)
Net adjustment to increase net changes in fund balances - total governmental funds - to arrive at
changes in net assets - governmental activities $ 278,635


44

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
ii) Another element of that reconciliation states that "Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position." The details of this decrease of $150.8 million are as follows (dollars in thousands):
Proceeds of debt $ (728,638)
Premium (36,166)
Payment of refunded bond escrow agent 268,397
Principal retirement 340,754
Payment of cost of issuance 6,035
Interest expense (1,133)
Net adjustment to reduce net changes in fund balances - total governmental funds - to arrive at
changes in net assets - governmental activities $ (150,751)

iii) A third element of that reconciliation states that "Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this decrease of $1,254.4 million are as follows (dollars in thousands):
Claims and judgments $ (220,943)
Pension and other post employment benefit liabilities (1,049,315)
Pollution remediation 2,862
Vacation , 12,376
Lease obligations 3,774
Inventory (3,170)
Net adjustment to reduce net changes in fund balances - total governmental funds - lo arrive at
changes in net assets - governmental activities $ (1,254,416)

3) Stewardship, Compliance and Accountability
a) Annual Appropriation Budgets are established for the General Fund and the Vehicle Tax, Pension, Chicago Public Library and certain Miscellaneous, Special Events, Tourism and Festivals nonmajor Special Revenue Funds, on a non-GAAP budgetary basis'
Prior to November 15, the Mayor submits to the City Council a proposed budget of expenditures and the means of financing them for the next year.
The budget document is available for public inspection for at least ten days prior to passage of the annual appropriation ordinance by the City Council, which is also required to hold at least one public hearing.
Prior to January 1, the budget is legally enacted through passage ofthe appropriation ordinance.
Subsequent to the enactment of the appropriation ordinance, the City Council has the authority to make necessary adjustments to the budget, which results in a change in total or individual appropriations. The legal level of budgetary control is designated in the budget by object grouped by purpose except for the Motor Fuel Tax Fund, which is subsequently re-appropriated by project. A separate Motor Fuel Tax Fund Report demonstrates compliance with annual and project-length budgets required by the State. The separately issued Supplement to the Comprehensive Annual Financial Report provides budgetary information for all other budgeted funds. Copies of this report are available upon request.
45

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
v) All annual appropriations unused and unencumbered lapse at year-end. Encumbered appropriations are carried forward to the following year. Project-length financial plans are adopted for Capital Project Funds. Appropriations for Debt Service Funds are established by bond ordinance.
b) Reconciliation of GAAP Basis to Budgetary Basis - The City's budgetary basis of accounting used for budget vs. actual reporting differs from GAAP. For budgetary purposes, encumbrances are recorded as expenditures but are included in "Unassigned" fund balance for GAAP purposes. For budgetary purposes, proceeds of long-term debt and transfers in are classified as revenues. For budgetary purposes prior years' resources used to cover current year budgetary expenditures are recorded as revenues. For GAAP purposes, proceeds of long-term debt and transfers out are treated as other financing sources. Provision for doubtful account expenditures are not budgeted. A reconciliation of the different basis of revenue and expenditure recognition for the year ended December 31, 2012 is as follows (dollars in thousands):

General
Fund
Revenues, GAAP Basis $ 2.920,656
Add:
Proceeds of Debt 55,000
Transfers In 31,617
Prior Year's Surplus Utilized 72,347
Revenues, Budgetary Basis $ 3,079,620
Expenditures, GAAP Basis $ 3,081,369
Add:
Transfers Out 26,965
Encumbered in 2012 16,605
Deduct:
Payments on Prior Years' Encumbrances (39,045)
Provision for Doubtful Accounts and Other (6,274)
Expenditures, Budgetary Basis $ 3,079,620

c) Individual Fund Deficits includes the Chicago Skyway Fund, an Enterprise Fund, has a fund deficit of $1,380.4 million which management anticipates will be funded through recognition of deferred inflows. Federal State and Local Grants, a governmental fund, has a deficit of $206.1 million and will be funded by the recognition of deferred grant revenues. Also, the Service Concession and Reserve Fund, a Special Revenue Fund, has a deficit fund balance of $993.5 million which will be funded through the recognition of deferred inflows.












46

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
4) Restricted and Unrestricted Cash, Cash Equivalents and Investments
a) Investments As of December 31, 2012, the City had the following Investments (dollars in thousands):
Investment Type Investment Maturities (in Years)
More Than
Less Than 1 1-5 '6-10 10 Total
City Funds
US. Treasuries S - $ - $ 2,490 $ 42.232 $ 44,722
U.S. Agencies* 345,580 2,621.259 857,328 145.684 3.969,851
Commercial Paper 284.644 - - - 284.644
Corporate Bonds 44.151 232,284 39,904 104,812 421.151
Corporate Equities 881 26 - - 907
Municipal Bonds 24.465 245.260 183.334 20,715 473,774
Supra national Bonds 10,024 - - - 10,024
Certificates of Deposit and
Other Short-term 1.464.492 4,590 - - 1,469,082
Total City Funds $ 2,174,237 $ 3,103.419 $ 1,083,056 $ 313,443 $ 6,674,155
"U.S. Agencies include investments in government-sponsored enterprises such as Federal National Mortgage Association, Federal Home Loan Banks, and Federal Home Loan Mortgage Corp.

Pension Trust Funds
U S. and Foreign
Government Agencies $ 280,778 $ 351,620 S 172.501 $ 441.450 $ 1.246,349
Corporate Bonds 916,831 477,231 360.518 263,354 2,017.034
Corporate Equities 5,835,602 - - - 5,835,602
Pooled Funds 73.104 25.950 - - 99.054
Real Estate 615.379 - - - 615,379
Securities Received from
Securities Lending 1,126.065 - - - 1,126.065
Venture Capital 455,757 - - - 455,757
Certificates of Deposit and
Other Short-term 125,245 - - - 125.245
Olher 39,610 39,610
Total Pension Trust Funds $ 9,468,371 S 854,801 $ 533,019 S 704,804 $ 11,560,995

Total $ 11,642.608 S 3,958.220 $ 1.616.075 $ 1,018.247 $ 18.235,150
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits all securities so purchased, except tax anticipation warrants, municipal bonds, notes, commercial paper or other instruments representing a debt obligation of the City, shall show on their face that they are fully payable as to principal and interest, where applicable, if any, within ten years from the date of purchase.
Credit Risk - The Code limits investments in commercial paper to banks whose senior obligations are rated in the top two rating categories by at least two national rating agencies and who are required to maintain such rating during the term of such investment. The Code also limits investments to domestic money market mutual funds regulated by, and in good standing with, the Securities and Exchange Commission. Certificates of Deposit are also limited by the Code to national banks which provide collateral of at least 105 percent by marketable U.S. government securities marked to market at least
47

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
monthly; or secured by a corporate surety bond issued by an insurance company licensed to do business in Illinois and having a claims-paying rating in the top rating category, as rated by a nationally recognized statistical rating organization maintaining such rating during the term of such investment. The following schedule summarizes the City's and Pension Trust Funds exposure to credit risk (in thousands):
Quality Rating City
Aaa/AAA $ 163,532
Aa/AA 4,230,548
A/A 259,846
Baa/BBB 10,007
Ba/BB
B/B
Caa/CCC 30,666
Ca
C/CC
DID
P1/A1 445,518
Not Rated* 1,534,038
Total Funds $ 6,674,155
134,000 173,641 300,095 308,998 127,983 149,359 29,880 1,573 999 3,471 313,968 867,806
Quality Rating Pension Trust Funds
Aaa/AAA ~S
Aa/AA
A/A
Baa/BBB
Ba/BB
B/B
Caa/CCC
Ca
C/CC
DID
Not Rated
2,411,773
Other

* Not rated is primarily composed of money market mutual funds
iii) Custodial Credit Risk - Cash and Certificates of Deposit This is the risk that in the event of a bank failure, the City's deposits may not be returned. The City's Investment Policy states that in order to protect Ihe City's deposits, depository institutions are to maintain collateral pledges on City deposits during the term of the deposit of at least 102 percent of marketable U.S. government, or approved securities or surety bonds, issued by top-rated insurers. Collateral is required as security whenever deposits exceed the insured limits of the FDIC. The bank balance of cash and certificates of deposit with the City's various municipal depositories was $532.3 million. 100 percent of the bank balance was either insured or collateralized with securities held by City agents in the City's name.
iv) Custodial Credit Risk - Investments For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. The City has no custodial credit risk exposure because investment securities are insured, registered and held by the City.














48

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
v) Foreign Currency Risk - In the case of the Pension Trust Funds, is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The risk of loss is managed by limiting its exposure to fair value loss by requiring their international securities managers to maintain diversified portfolios. The following schedule summarizes the Pension Trust Funds exposure to foreign currency risk (in thousands):
Foreign Currency Risk
Australian dollar $ 89,116
Brazilian real 41,595
British pound 353,039
Canadian dollar 103,772
Chilean peso 5,333
Chinese yuan (605)
Columbian peso 5,120
Czech Republic koruna 1,421
Danish krone 25,158
Egyptian pound 420
European euro 452,912
Hong Kong dollar 172,221
Hungarian forint 472
Indian rupee 32,856
Indonesian rupiah 19,054
Japanese yen 307,725
Malaysian ringgit 13,056
Mexican peso 25,976
Moroccan dirham 143
New Israeli shekel 8,696
New Taiwan dollar 23,085
New Zealand dollar 3,218
Nigeria Naira 1,555
Norwegian krone 21,313
Pakistan rupee 269
Peruvian Nuevo Sol |9
10|Philippines peso 3,503
Polish zloty 3,604
Qatari riyal 2,259
Singapore dollar 31,025
South African rand 37,723
South Korean won 51,593
Swedish krona 44,158
Swiss franc 106,680
Taiwan dollar 3,774
Thailand baht 21,703
Turkish lira 12,230
United Arab Emirates dirham 1,039
Total Pension Trust Funds $ 2,026,212



49

I
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
vi) The following schedule summarizes the cash and investments reported in the basic financial statements(dollars in thousands):
Per Note 4:
Investments - City $ 6,674,155
Investments - Pension Trust Funds 11,560,995
$ 18,235,150
Per Financial Statements:
Restricted Investments $ 2,840,691
Unrestricted Investments 1,797,020
Investments with Fiduciary Funds 10,344,175
Investments with Escrow Agent 509,800
Invested Securities Lending Collateral 1,126,065
Investments Included as Cash and Cash
Equivalents on the Statements of Net Position 1,617,399
$ 18,235,150


5) Property Tax
The City's property tax becomes lien on real property on January 1 of the year it is levied. The Cook County Assessor (Assessor) is responsible for the assessment of all taxable real property within Cook County (County), except for certain railroad property assessed directly by the State. The County Board has established a triennial cycle of reassessment in which one-third of the County will be reassessed each year on a repeating schedule established by the Assessor.
Property in the County is separated into nine classifications for assessment purposes. After the Assessor establishes the fair market value of a parcel of land, that value is multiplied by one of the classification percentages to arrive at the assessed valuation (Assessed Valuation) for that parcel. These percentages range from 16.0 percent for certain residential, commercial, and industrial property to 38.0 percent for other commercial and industrial property.
The Illinois Department of Revenue has the statutory responsibility of ensuring uniformity of real property assessments throughout the State. Each year, the Department of Revenue furnishes the county clerks with an adjustment factor to equalize the level of assessment among counties. This factor (Equalization Factor) is then applied to the Assessed Valuation to compute the valuation of property to which a tax rate will be applied (Equalized Assessed Valuation). The County Clerk adds the Equalized Assessed Valuation of all real property in the County to the valuation of property assessed directly by the State (to which the Equalization Factor is not applied) to arrive at the base amount (Assessment Base) used in calculating the annual tax rates.
The County Clerk computes the annual tax rate by dividing the levy by the Assessment Base and then computes the rate for each parcel of real property by aggregating the tax rates of all governmental units having jurisdiction over that particular parcel. The County Treasurer then issues the tax bills. Property taxes are deposited with the County Treasurer, who remits to the City its respective share of the collections. Taxes levied in one year become due and payable in two installments during the following year on March 1 and August 1 or 30 days from mailing of tax bills if later than July 1. The first installment is estimated and is 55.0 percent of the prior year's tax bill. The second installment is based on the current levy, assessment and equalization and also reflects any changes from the prior year.
The City Council has adopted an ordinance beginning in 1994, limiting the City's aggregate property tax levy to an amount equal to the prior year's aggregate property tax levy plus the lesser of (a) five percent or (b) the percentage increase in the annualized Consumer Price Index, all as defined in the ordinance. The ordinance provides a safe harbor for that portion of any property tax debt service levy equal to the aggregate interest and principal payments on
50
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
the City's general obligation bonds and notes during the 12-month period ended January 1, 1994, subject to annual increase in the manner described above for the aggregate levy, all as provided by the ordinance. Increases in the debt service portion of each levy may, however, reduce amounts available within such levy to finance operations.
6) Interfund Balances and Transfers
a) The following balances at December 31, thousands):
Fund Type/Fund
Governmental Funds:
General $
Federal, State and Local Grants
Special Taxing Areas
Service Concession and Reserve
Bond, Note Redemption and Interest
Community Development and Improvement Projects..
Nonmajor Governmental Funds
Total Governmental Funds
Enterprise Funds:
Water
Sewer
Chicago Midway International Airport
Chicago-O'Hare International Airport
Chicago Skyway
Total Enterprise Funds
Fiduciary activities:
Pension Trust
Total Fiduciary activities
Total $
165,078 $ 29,694 258.238
30,068 67,799 93,854
644,731

20,607 18,840 14,437 28,482

82,366

55,574
55.574
782,671 $
139,397 281,434 11,534

97,857 205,273
735,495

11,196 12,113 20,142 3,710 15
47,176





782,671

The balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system and (3) payments between funds are made.








51

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
b) The following balances at December 31, 2012 represent interfund transfers among all funds (dollars in
thousands):
Fund Type/Fund Transfer In Transfer Out
Governmental Funds:
General $ 31,617 $ 26,965
Federal, State and Local Grants
Special Taxing Areas 68,675 44,264
Service Concession and Reserve 328 12,358
Reserve
Bond, Note Redemption and Interest - 10,105
Community Development and Improvement Projects.. 3,843 2,322
Nonmajor Governmental Funds 74,287 82,736
' .Total Governmental Funds ¦ $ 178,750 $ 178,750


Transfers are used to move revenues from the fund that the statute or budget requires to collect them to the fund that statute or budget requires to expend them and to move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due.

























52

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
7) Capital Assets
a) Capital Assets activity for the year ended December 31. 2012 was as follows (dollars in thousands):
Balance Disposals Balance
January 1, and December 31,
2012 Additions Transfers 2012
Governmental activities:
Capital assets, not being depreciated:
Land $ 1,400,977 $ 3,524 $ - $ 1,404,501
Works of Art and Historical Collections 13,132 51 - 13,183
Construction in Progress 466,267 614,211 (436,153) 644,325
Total capital assets, not being depreciated 1,880.376 617,786 (436,153) 2,062,009
Capital assets, being depreciated:
Buildings and Other Improvements 2,446,349 43,497 - 2,489,846
Machinery and Equipment 1,339,484 54,347 (28,186) 1,365,645
Infrastructure 6,965,900 413,971 - 7,379,871
Total capital assets, being depreciated 10,751,733 511,815 (28,186) 11,235,362
Less accumulated depreciation for:
Buildings and Other Improvements 747,256 64,955 - 812,211
Machinery and Equipment 1,025,874 112,317 (28,186) 1,110,005
Infrastructure 3,279,011 226,475 - 3,505,486
Total accumulated depreciation 5,052,141 403,747 (28,186) 5,427,702
Total capital assets, being depreciated, net 5,699,592 108,068 : 5,807,660
Total governmental activities $ 7,579,968 $ 725,854 $ (436,153) $ 7,869,669
Business-type activities:
Capital assets, not being depreciated:
Land $ 1,012,637 $ 12.043 $ - $ 1,024,680
Construction in Progress 1,310,364 739,488 (501,561) 1,548,291
Total capital assets, not being depreciated 2,323,001 751,531 (501,561) 2,572,971
Capital assets, being depreciated:
Buildings and Other Improvements 13,069,921 751,994 (20,564) 13,801,351
Machinery and Equipment 651,105 8,654 (5,959) 653,800
Total capital assets, being depreciated 13,721,026 760,648 (26,523) 14,455,151
Less accumulated depreciation for:
Buildings and Other Improvements 3,928,965 250,195 3,943 4,183,103
Machinery and Equipment 313,807 20,459 (4,765) 329,501
Total accumulated depreciation 4,242,772 270,654 (822) 4,512,604
Total capital assets, being depreciated, net 9,478,254 489,994 (25,701) 9,942,547
Total business-type activities $ 11,801,255 $ 1,241,525 $ (527,262) $ 12,515,518
Total Capital Assets $ 19,381,223 $ 1,967.379 S (963,415) $ 20,385,187




53

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
b) Depreciation expense was charged to functions/programs of the City as follows (dollars in thousands):
Governmental activities:
General Government... $ 86,528
Public Safely 21,776
Streets and Sanitation 13,981
Transportation 235,258
Health 1,694
Cultural and Recreational 44,510
Total Depreciation Expense - Governmental Activities $ 403,747
Business-type Activities:
Water $ 48,275
Sewer .- 26,600
Chicago Midway International Airport 45,011 •
Chicago-O'Hare International Airport 140,258
Chicago Skyway 10,510
Total Depreciation Expense - Business-type Activities $ 270,654

8) Leases
a) Operating Leases
The City leases building and office facilities under noncancelable operating leases. Total costs for such leases were approximately $18.4 million for the year ended December 31, 2012.
The future minimum lease payments for these leases are as follows (dollars in thousands):
$ 18,093
12,231
7,322
2016 2.950
2017 2,288
2018-2022 9,141
2023-2027 1,959
2028-2032 312
2033-2037 216
2C38 - 2042 152
Total Future Rental Expense $ 54,664
b) Capital Leases
During 2003, the City entered into lease and lease back agreements with third parties pertaining to 911 Center Qualified Technological Equipment (QTE), with a book value of $143.3 million at December 31, 2003. Under the QTE lease agreement, which provides certain cash and tax benefits to the third party, the City entered into a long-term lease for applicable assets back to the City under a sublease Under the sublease, the City is required to make future minimum lease payments.

54

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
During 2005, the City entered into sale and lease back agreements with third parties pertaining to the City owned portion of a rapid transit line with a book value of $430.8 million at December 31, 2005. Under the lease agreement, which provides certain cash and tax benefits to the third party, the City entered into a long-term lease for applicable assets back to the City under a sublease. Under the sublease, the City is required to make future minimum lease payments.

The future minimum payments for these leases are as follows (dollars in thousands):

Year Ending Total
December 31,
$ 104
9,000
9,000
9,000
9,000
2018-2022 35.631
2023 - 2027 76,370
2028-2032 167.164
Total Minimum Future Lease Payments 315,269
Less Interest 152,256
Present Value of Minimum
Future Lease Payments _$ 163,013

c) Lease Receivables
Most of the O'Hare land, buildings and terminal space are leased under operating lease agreements to airlines and other tenants. The following is a schedule of the minimum future rental income on noncancelable operating leases as of December 31, 2012 (dollars in thousands):
$ 84,203
83,796
66,513
66,510
66,789
2018-2022 133,707
2023 - 2027 8,867
2028 - 2032 9,656
2033 - 2036 5,738
Total Minimum Future Rental Income $ 525,779

Contingent rentals that may be received under certain leases based on the tenants' revenues or fuel flow are not included in minimum future rental income. Rental income for O'Hare, consisting of all rental and concession revenues except ramp rentals and automobile parking, amounted to $365.8 million, including contingent rentals of $86.0 million.


55

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Most of the Midway land and terminal space is leased under operating lease agreements to airlines and other tenants. The following is a schedule of the minimum future rental income on noncancelable operating leases as of December 31, 2012 (dollars in thousands):

2013 $ 30,900
2014 29,803
2015 27,282
2016 : 26,529
2017 26,529
Total Minimum Future Rental Income $ 141,043

Contingent rentals that may be received under certain leases based on tenants' revenues are not included in minimum future rental income. Rental income for Midway, consisting of all rental and concession revenues except aircraft parking fees and certain departure fees (turns) and automobile parking, amounted to $101.0 million, including contingent rentals of $40.4 million

9) Short-term Debt
Matured bonds represent principal due on coupon bonds in which the coupons have not been presented for payment. For the year ended December 31, 2012, there was minor activity; the balance remained at $0.7 million.

























56
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
10) Long-term Obligations
Balance January 1, 2012
a) Long-term Debt activity for the year ended December 31, 2012 was as follows (in thousands):
Additions
Balance December 31, 2012
Reductions
Governmental activities'
$ 728.638 $
494,475 19,410 5,715 519.600
15,816 56,983 14,540 575,307
7.777,667 131,561 776,027
8,685.255
166,065 196,637 264,402 8,980,229
8,011,830 112,151 770,312
8,894,293
170,180 175,820 283,010 9,182,943
Bonds, notes and commercial paper payable.
General obligation debt and commercial paper... . $
Tax increment
728,638
19,931 36.166 33.148 778.021
Revenue

Less unamortized debt refunding transactions
Add unamortized premium
Add accretion of capital appreciation bonds
Total bonds, notes and certificates payable
Other liabilities:
1,017,243 8,957
38,984 12.731 2.862 142,405 196,982
5.386,668 166.787 11,235 667.650
6,232,340
6,364,927 163.013 8.373 888.593
7,424.906
Pension and other postemployment
benefits obligations
Lease obligations
363.348 1,389,548
Pollution Remediation
Claims and judgments
15,212.569 $ 2.167,569 $ 772.289 $ 16.607,849 $ 280,720
Total other liabilities
Total governmental activities $
Business-type activities: Revenue bonds and notes payable
Water $ 1,721,187 $ 399,950 $ 90,960
Sewer 1.112,022 280,249 28,497
Chicago-O'Hare International Airport 7.420,349 1,211,687 1,499,475
Chicago Midway International Airport 1,461,490 34,639 54,800
11,715.048 1,926.525 1,673,732
Less unamortized debt refunding transactions . . 110,535 29,597 17,080
Add unamortized premium 141,020 58,550 (109,714)
Add accretion of capital appreciation bonds .. 84,188 9,114 4,493
Total business-type activities $ 11,829.721 $ 1,964,592 $ 1,551,431

Total long-term obligations $ 27.042.290 $ 4,132,161 $ 2.323.720


2,030,177 1.363,774 7,132,561 1,441,329
11,967,841
123,052 309,284 88,809
8.750
12,242,882 $ 215,232

28,850,731 $ 495,952
The Pension obligation liability will be liquidated through a Special Revenue Fund (Pension Fund) as provided by tax levy and State Personal Property Replacement Tax revenues.


57

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
b) Issuance of New Debt
Commercial Paper Notes
During 2012, the City issued $133.8 million in commercial paper notes for certain capital and operating uses. The City has excluded commercial paper from current liabilities, as it intends and has the ability to refinance the obligation on a long-term basis.
General Obligation Bonds
General Obligation Bonds, Project Series 2012A ($179.9 million), Taxable Project and Refunding Series 2012B ($308.0 million),and Refunding Series 2012C ($107.0 million) were sold at a premium in May 2012. The bonds have interest rates ranging from 4.0 percent to 5.432 percent and maturity dates from January 1, 2020 to January 1, 2042. Net proceeds of $627.1 million will be used to finance infrastructure improvements; transportation improvements; grants or loans to assist not-for-profit organizations or educational or cultural institutions; or to assist other municipal corporations or units of local government, or school districts; cash flow needs of the City; acquisition of personal property; acquisition, demolition, remediation or improvement of real property for industrial, commercial or residential purposes; constructing, equipping, altering and repairing various municipal facilities including fire stations, police stations, libraries, senior and health centers and other municipal facilities; enhancement of economic development within the City by making grants or deposits to secure obligations of not-for-profit or for-profit organizations doing or seeking to do business in the City; litigation judgments or settlements agreements involving the City, including escrow accounts or other reserves needed for such purposes; payments of certain pension contributions; providing for facilities, services and equipment to protect and enhance public safety, and other uses permitted by the Ordinance ($292.4 million), to refund certain maturities of bonds outstanding ($268.2 million), and to fund capitalized interest ($66.5 million). The current refunding of the bonds increased the City's total debt service payments by $242.7 million, resulted in a net economic gain of approximately $ 8 million and a book loss of approximately $19.9 million.
In February 2012, the City entered into a swap overlay agreement (i.e., basis trade) associated with the General Obligation Series 2005D variable rate bonds with PNC Bank, N.A. for a notional amount of $207.9 million. The agreement is effective January 1, 2031 through January 1, 2040, and the City will pay SIFMA and receive 72.5 percent of one month LIBOR The City received an upfront payment of $4.0 million.
In February 2012, the City entered into a swap overlay agreement (i.e., Constant Maturity Swap (CMS) reversal) associated with the General Obligation Series 2003B variable rate bonds with PNC Bank, N A. for a notional amount of $144.6 million. The agreement is effective March 1, 2014 through November 1, 2014 and the City will pay 66.91 percent of 10 year LIBOR and receive 75 percent of one month LIBOR. Together with the existing underlying swaps on the bonds, in which the City pays 4.052 percent and receives 66.91 percent of 10 year LIBOR, the net effect is that the City will pay a fixed rate of 4.052 percent and receive 75 percent of one month LIBOR through November 1, 2014, after which time the City will receive 66.91 percent of 10 year LIBOR through expiration (January 1, 2034). The City received an upfront payment of $1.3 million.
Enterprise Fund Revenue Bonds and Notes
Chicago O'Hare International Airport Senior Lien Revenue Bonds, Series 2012A-C (S728.9 million) were sold at a premium in August 2012. The bonds have interest rates ranging from 1.0 percent to 5.0 percent and maturity dates from January 1, 2013 to January 1, 2032. Net proceeds of $796.3 million and other monies $155.3 million will be used to refund certain General Airport Revenue Bonds maturities of bonds outstanding ($837.2 million), to fund debt service reserves ($114 2 million), and to fund capitalized interest ($.2 million). The current refunding of the bonds decreased the City's total debt service payments by $156.2 million, resulted in a net economic gain of approximately $118.2 million and a book loss of approximately $19 7 million.
58

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Chicago O'Hare International Airport Passenger Facility Charge Revenue Refunding Bonds, Series 2012 ($452.1 million) were sold at a premium in September 2012. The bonds have interest rates ranging from 2.5 percent to 5.0 percent and maturity dates from January 1, 2014 to January 1, 2032. Net proceeds of $493.7 million and other monies $55.9 million will be used to refund certain PFC maturities of bonds outstanding ($511.1 million) and to fund debt service reserves ($38.5 million). The current refunding of the bonds decreased the City's total debt service payments by $100.3 million, resulted in a net economic gain of approximately $73.5 million and a book loss of approximately $9.0 million.
Second Lien Water Revenue Project Bonds, Series 2012 ($399.4 million) were sold at a premium in May 2012. The bonds have interest rates ranging from 4.0 percent to 5.0 percent and maturity dates from November 1, 2016 to November 1, 2042. Net proceeds of $444.4 million will be used to finance certain costs of improvements and extensions to the water system ($400.0 million), to retire water commercial paper notes outstanding ($35.9 million), and fund certain capitalized interest ($8.5 million).
In 2012, the Water Fund drew $0.5 million from the Illinois Environment Protection Agency loan agreement. The loan has no interest and has principal maturity dates from June 2. 2012 to December 2, 2031.
Second Lien Wastewater Revenue Project, Series 2012 ($276.5 million) were sold at a premium in September, 2012. The bonds have interest rates ranging from 3.0 percent to 5.0 percent and maturity dates from January 1, 2014 to January 1, 2042. Net proceeds of $303.8 million will be used to finance certain costs of improvements and extensions to the wastewater system ($300.0 million), and fund certain capitalized interest ($3.8 million).
In 2012, the Sewer 'Fund drew $3.7 million from the Illinois Environment Protection Agency loan agreement. The loan has an interest rate of 2.5% with maturity dates from June 21, 2013 to June 21, 2031.
In 2012, $30.6 million of Chicago O'Hare International Airport Commercial Paper Notes Series 2005 were issued. The proceeds were used to finance portions ofthe costs of authorized airport projects.
In 2012, $34.6 million of Chicago Midway International Airport Commercial Paper Notes Series A, B, C & D were issued. The proceeds were used to finance portions of the costs of authorized airport projects.
c) Annual requirements listed below for each year include amounts payable January 1 of the following year. Bonds maturing and interest payable January 1, 2013 have been excluded because funds for their payment have been provided for. Annual requirements to amortize debt outstanding as of December 31, 2012 are as follows (dollars in thousands):
General Obligation Tax Increment
Year Ending Principal Interest Principal Interest
December 31,
$ 1.12,132 $ 408,456 $ 26,114 $ 5,931
214,375 409,006 14,602 11,819
236,206 403,012 8,965 3,951
251,617 392,344 11,160 3,400
274,802 380,870 11,685 2,666
2018-2022 1,534,410 1,711,157 33,715 4,737
2023-2027 1,475,610 1,371,842
2028-2032 1,568,684 1,023,299
2033-2037 1,186,826 577,348
2038-2041 918,641 163,143 - -
$ 7,773,303 $ 6,840,477 $ 106,241 $ 32,504

59

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Revenue Business-type Activities
Year Ending Principal 1 Interest Principal Interest
December 31,
$ 18,040 $ 36,140 $ 263,342 $ 582,754
18,980 35,200 378,095 571,111
18.400 34,228 381.052 553,539
18.135 33,289 370,679 536,765
18,525 32,355 423,016 519,332
2018-2022 107,075 147,318 1,951,670 2,312,220
2023-2027 132,903 121,499 2,181,607 1,845,583
2028-2032 119,841 135,032 2,708,989 1,204,226
2033-2037 191,334 .71,914 2,194,130 582,979
2038-2041 109,930 11,172 866,590 100,285
$ 753,163 $,658,147 $11,719,170 $ 8,808,794

Debt service requirements above exclude commercial paper issues as the timing of payments is not certain. For the requirements calculated above, interest on variable rate debt was calculated at the rate in effect or the effective rate of a related swap agreement, if applicable, as of December 31, 2012. Standby bond purchase agreements or letters of credit were issued by third party financial .institutions that are expected to be financially capable of honoring their agreements.
The City's variable rate bonds may bear interest from time to time at a flexible rate, a daily rate, a weekly rate, an adjustable long rate, or the fixed rate as determined by the remarketing agent, in consultation with the City. An irrevocable letter of credit provides for the timely payment of principal and interest. In the event the bonds are put back to the bank and not successfully remarketed, or if the letter of credit agreements expire without an extension or substitution, the bank bonds will convert to a term loan. There is no principal due on the potential term loans within the next fiscal year.
d) Derivatives
i) Pay-Fixed, Receive-Variable Interest Rate Swaps
(1) Objective of the swaps. In order to protect against the potential of rising interest rates and/or changes in cash flows, the City has entered into various separate pay-fixed, receive-variable interest rate swaps at a cost less than what the City would have paid to issue fixed-rate debt. The notional amounts related to bonds maturing on January 1, 2013 have been excluded below because funds for their payment have been provided for.












60
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Changes in Fair Value Classification Amount
Fair Value at December 31, 2012
Classification
Notional Amount
Governmental Activities
Hedges'
Pay-lixed Interest Rate SWAPS Investment Derivative Instruments: Pay-fixed Interest Rate SWAPS

Deferred Outflow of Resources

Investment Income

Deferred Outflow of
Resources $(260,496) $ 781,630
(36,313)
199,040

Investment Revenue

Business-type Activities
Hedges:

Pay-fixed Interest Rate SWAPS

Deferred Outflow of Resources

Deferred Outflow of Resources
$ (549,929)

(2) Terms, fair values, and credit risk. The objective and terms, including the fair values and credit ratings, of the City's hedging derivative instruments outstanding as of December 31, 2012, are as follows. The notional amounts of the swaps match the principal amounts of the associated debt. The City's swap agreements contain scheduled reductions to outstanding notional amounts that are expected to approximately follow scheduled or anticipated reductions in the associated "bonds payable" category. The notional amounts related to bonds maturing on January 1, 2013 have been excluded below because funds for their payment have been provided for. Under the swaps, the City pays the counterparty a fixed payment and receives a variable payment computed according to Ihe London Interbank Offered Rate (LIBOR) and/or The Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index. The terms, including fair values of the swaptions as of December 31, 2012, are as follows (dollars in thousands):

















61
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012

Associated Bond Issue
Hedging Instruments Governmental Activities:

Notional Effective Amounts Date

Fair Values
Counter-Termi- party nation Credit Date Rating

11/8/2007 Pay 3 998% receive SIFMA $ (60,127)
$ 200,000 1/1/2014 Pay SIFMA, receive 72 5% of 1 Mo LIBOR * (19,839)
A2/A+ 1/1/2042 Baal/A-1/1/2042 Aa3/AA-

8/17/2005 Pay 4 104%, receive SIFMA (69,632)

1/1/2014 Pay SIFMA; receive 72.5% ol 1 Mo. LIBOR * (14,089) 222.790 1/1/2030 Pay SIFMA; receive 72.5%of 1 Mo. LIBOR * (5.918)
A3/A-1/1/2040 A2/A+ Aa1/AA-A2/A+ 1/1/2031 A2/A+ 1/1/2040 A2/A
GO VRDB (Neighborhoods Alive 21 Program, Series 2002B) .
Aa3/A+ 1/1/2037 A3/A

113.240 6/27/2002 Pay 4 23%: receive 75 25% of 3 Mo. LIBOR

38,900 9/1/1999 Pay 5084% receive 67% of I Mo LIBOR
Business-type Activities:
Chicaqo Midway International Airport
Revenue Bonds (Series 2004C&D)
12/14/2004 Pay 4 174% receive SIFMA Plus 05% (21,552) 1/1/2035 A3/A-
148,500 4/21/2011 Pay 4 247% receive SIFMA Plus 05% (15.242) 1/1/2035 Aa3/AA-



Wastewater Transmission Variable Rale Revenue Bonds (Series 2008C).
Pay 3.886%, receive 95% of 3 Mo. LIBOR (il LIBOR is < 3%) or 232,560 1/3/2011 67% of 3 Mo. LIBOR (if LIBOR is > 3%) Pay 3 886% receive SIFMA (if LIBOR is<3%) 99.670 7/29/2004 or 67% of 1 Mo LIBOR (if LIBOR is > 3%)


(62,760) 1/1/2039 A2/A+
Aa3/A+ (27.195) 1/1/2039 A3/A

185.780 4/16/2008 Pay 3 8694% receive SIFMA

190,520 8/5/2004 Pay 3.8669% receive SIFMA

100,000 4/16/2008 Pay 3.8694% receive SIFMA
Investment Instruments
Governmental Activities:


GO VRDB (Series 2003B).
Total
8/7/2003 Pay 4.052% receive66 91%of 10 YrLIBOR
Pay 66 91% of 10 Yr LIBOR, 3/1/2011 receive 75% of 1 Mo. LIBOR * 199,040 3/1/2014 receive 75% of 1 Mo LIBOR "
$ 1,937,700
(32.986) 1/1/2034 Aa3/AA-Aa3/A+
(2,070) 3/1/2014 Aal/AA-(1,257) 11/1/2014 A2/A
(549.929)
See Table 31 in Statistical Section for Counterparty Entities and additional details for credit ratings. Type and objective for all the SWAPS is the same, as mentioned earlier. * Reflects SWAP Overlay agreement. VRDB means variable rate demand bonds.


62

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Fair Value. As of December 31, 2012, the swaps had a negative fair value of $549.9 million. As per industry convention, the fair values of the City's outstanding swaps were estimated using the zero-coupon method. This method calculates the future net settlement payments required by the swap, assuming that the forward rates implied by the yield curve correctly anticipate future spot rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on the swap. Because interest rates are below the Fixed Rate Paid, the City's swaps had negative values. Note that the combination of the negative fair value of $549.9 million and the unamortized interest rate swap premium balance of $5.1 million related to investment derivative instruments and $36.3 million related to governmental cash flow hedges represent the total fair value of the derivative liability in the statement of net position.
Credit Risk. The City is exposed to credit risk (counterparty risk) through the counterparties with which it enters into agreements. If minimum credit rating requirements are not maintained, the counterparty is required to post collateral to a third party. This protects the City by mitigating the credit risk, and therefore the ability to pay a termination payment, inherent in a swap. Collateral on all swaps is to be in the form of cash or Eligible Collateral held by a third-party custodian. Upon credit events, the swaps also allow transfers, credit support, and termination if the counterparty is unable to meet the said credit requirements.
Basis Risk. Basis risk refers to the mismatch between the variable rate payments received on a swap contract and the interest payment actually owed on the bonds. The two significant components driving this risk are credit and SIFMA/LIBOR ratios. Credit may create basis risk because the City's bonds may trade differently than the swap index as a result of a credit change in the City. SIFMA/LIBOR ratios (or spreads) may create basis risk. With percentage of LIBOR swaps, if the City's bonds trade at a higher percentage of LIBOR over the index received on the swap, basis risk is created. This can occur due to many factors including, without limitation, changes in marginal tax rates, tax-exempt status of bonds, and supply and demand for variable rate bonds. The City is exposed to basis risk on all swaps except those that are based on Cost of Funds, which provide cash flows that mirror those of the underlying bonds. For all other swaps, if the rate paid on the bonds is higher than the rate received, the City is liable for the difference. The difference would need to be available on the debt service payment date and it would add additional underlying cost to the transaction.
Tax Risk. The swap exposes the City to tax risk or a permanent mismatch (shortfall) between the floating rate received on the swap and the variable rate paid on the underlying variable-rate bonds due to tax law changes such that the federal or state tax exemption of municipal debt is eliminated or its value reduced. There have been no tax law changes since the execution of the City's swap transactions.
Termination Risk. The risk that the swap could be terminated as a result of certain events including a ratings downgrade for the issuer or swap counterparty, covenant violation, bankruptcy, payment default or other defined events of default. Termination of a swap may result in a payment made by Ihe issuer or to the issuer depending upon the market at the time of termination.
Swap payments and associated debt. Bonds maturing and interest payable January 1, 2013 have been excluded because funds for their payment have been provided for. As of December 31, 2012, debt service requirements of the City's outstanding variable-rate debt and net swap payments, assuming current interest rates remain the same, for their term are as follows (dollars in thousands):





63

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Interest
Variable-Rate Bonds Rate
Year Ending Principal Interest Swaps, Net Total
December 31,
$ 22,070 $ 4,844 $ 71,650 $ 98,564
36,320 4,866 70,701 111,887
37,865 4,818 69,379 112,062
57,465 4,759 67,786 130,010
60,150 4,563 65,663 130,376
2018-2022 390,265 19,706 291,232 701,203
2023-2027 383,250 13,566 213,664 610,480
2028-2032 445,040 9,035 144,946 599,021
2033-2037 360,745 3,754 60,522 425,021
2038-2042 133,855 441 10,943 145,239
$ 1,927,025 $ 70,352 $ 1,066,486 $ 3,063,863

ii) Swaptions
During 2012, the City terminated all outstanding swaptions, as noted below.
In April 2012, the City terminated the swaption transaction with J.P. Morgan in relation to Chicago Midway International Airport bonds with an original notional amount of $397.7 million and a trade date of October 27, 1999. The City paid $8.2 million to terminate the swaption. Note that $8.3 million of Chicago Midway Airport Commercial Paper Notes Series 2003 were issued to fund the swaption termination payment.
In May 2012, the City terminated three swaption transactions with J.P. Morgan in relation to Chicago Sales Tax Revenue bonds with notional amounts of $69.3 million, $60.6 million and $23 3 million and a trade date of June 21, 2002. The City paid $0.54 million, $0,365 million and $0.02 million respectively to terminate the swaptions. Note that $1.0 million of General Obligation Commercial Paper Notes Series 2002 were issued to fund the Sales Tax Revenue Bonds swaptions termination .payments.
In July 2012, the City terminated the swaption transaction with Goldman Sachs in relation to General Obligation bonds with a total notional amount of $318.7 million and a trade date of December 18, 2003. The City paid a total of $4.9 million to terminate the swaption. Note that $4.9 million of General Obligation Commercial Paper Notes Series 2003 were issued to fund the swaption termination payment.
e) Debt Covenants
i) Water Fund - The ordinances authorizing the issuance of outstanding Water Revenue Bonds provide for the creation of separate accounts into which net revenues, as defined, or proceeds are to be credited, as appropriate. The ordinances require that net revenues available for bonds, as adjusted, equal 120 percent of the current annual debt service on the outstanding senior lien bonds and that City management maintains all covenant reserve account balances at specified amounts The above requirements were met at December 31, 2012. The Water Rate Stabilization account had a balance in restricted assets of $74.9 million at December 31, 2012.
The ordinances authorizing the issuance of outstanding Second Lien Water Revenue Bonds provide for the creation of separate accounts into which monies will be deposited, as appropriate. The ordinances
64

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
require that net revenues are equal to the sum of the aggregate annual debt service requirements for the fiscal year of the outstanding senior lien bonds and 110 percent of the aggregate annual debt service requirements of the outstanding second lien bonds. This requirement was met at December 31, 2012.
Sewer Fund - The ordinances authorizing the issuance of outstanding Wastewater Transmission Revenue Bonds provide for the creation of separate accounts into which net revenues, as defined, or proceeds are to be credited, as appropriate. The ordinances require that net revenues available for bonds equal 115 percent of the current annual debt service requirements on the outstanding senior lien bonds. This requirement was met at December 31, 2012. The Sewer Rate Stabilization account had a balance in restricted assets of $29.6 million at December 31, 2012.
The ordinances authorizing the issuance of outstanding Second Lien Wastewater Transmission Revenue Bonds provide for the creation of separate accounts into which monies will be deposited, as appropriate. The ordinances require that net revenues equal 100 percent of the sum of the current maximum annual debt service requirements of the outstanding senior lien bonds and the maximum annual debt service requirements of the second lien bonds. This requirement was met at December 31, 2012.
Chicago Midway International Airport Fund - The master indenture securing the issuance of Chicago Midway International Airport Revenue Bonds requires that the City set rates and charges for the use and operation of Midway so that revenues, together with any other available monies and the cash balance held in the Revenue Fund on the first day of such year not required to be deposited in any fund or account, will be at least sufficient (a) to provide for the operation and maintenance expenses for the year and (b) to provide for the greater of (i) the amounts needed to be deposited into the First and Junior Lien Debt Service Fund, the Operations & Maintenance Reserve Account, the Working Capital Account, the First Lien Debt Service Reserve Fund, the Repair and Replacement Fund, and the Special Project Fund and (ii) an amount not less than 125 percent of the Aggregate First Lien Debt Service for such fiscal year reduced by an amount equal to the sum of any amount held in any capitalized interest account for disbursement during such fiscal year to pay interest on First Lien Bonds. These requirements were met at December 31, 2012.
Chicago-O'Hare International Airport Fund - In 1983, the City Council adopted the General Airport Revenue Bond ordinance authorizing the issuance and sale of Chicago-O'Hare International Airport General Airport Revenue Bonds in unlimited series for the purpose of financing the cost of improvements and expansion of O'Hare and to redeem its existing outstanding bond obligations. The ordinance further permits the issuance of second lien notes, bonds and other obligations which are payable from, and secured by, a pledge of amounts deposited in the junior lien obligation debt service account created under the ordinance. The ordinance requires that net revenues in each year equal not less than the sum of (i) the amount required to be deposited for such year in the debt service reserve fund, the maintenance reserve fund, the special capital projects fund and the junior lien debt service fund, and (ii) 110 percent of the aggregate first lien and second lien debt service for the bond year commencing during such fiscal year reduced by an amount equal to the sum of any amount held in any capitalized interest account for disbursement during such fiscal year to pay interest on bonds. This requirement was met at December 31, 2012. The ordinance provides for the creation of separate accounts that are to be credited with revenues in a specified priority. At the end of each year, any excess funds over amounts required in accounts other than Special Capital Projects, Emergency Reserve and Airport Development accounts are reallocated with the following year's revenues.
The Master Indenture of Trust securing Chicago-O'Hare International Airport Third Lien Obligations requires that Revenues in each Fiscal Year, together with Other Available Moneys deposited with the Trustee with respect to that Fiscal Year and any cash balance held in the Revenue Fund on the first day of that Fiscal Year not then required to be deposited in any Fund or Account, will be at least sufficient: (i) to provide for the payment of Operation and Maintenance Expenses for the Fiscal Year; and (ii) to provide for the greater of (a) the sum of the amounts needed to make the deposits required to be made pursuant to all resolutions, ordinances, indentures and trust agreements pursuant to which all outstanding First Lien Bonds, Second Lien Obligations, Third Lien Obligations or other Airport Obligations are issued and
65

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
secured, and (b) 110 percent the Aggregate First, Second and Third Lien Debt Service for the Bond Year commencing during that Fiscal Year, reduced by any proceeds of Airport Obligations held by the Trustee for disbursement during that Bond Year to pay principal of and interest on First Lien Bonds, Second Lien obligations or Third Lien obligations. This requirement was met at December 31, 2012.
The master indenture securing the Passenger Facility Charge (PFC) Revenue Bonds requires PFC revenues, as defined, to be deposited into the PFC Revenue Fund. The PFC Revenue Fund is required to transfer amounts no later than the twentieth day of each month to various funds, as defined, as appropriate to meet debt service and debt service reserve requirements.
f) No-Commitment Debt and Public Interest Loans include various special assessment, private activity bonds and loans. These types of financings are used to provide private entities with low-cost capital financing for construction and rehabilitation of facilities deemed to be in the public interest. Bonds payable on no-commitment debt are not included in the accompanying financial statements because the City has no obligation to provide for their repayment, which is the responsibility of the borrowing entities. In addition, federal programs/grants, including Community Development Block Grants and Community Service Block Grants, provide original funding for public interest loans. Loans receivable are not included as assets because payments received on loans are used to fund new loans or other program activities in the current year and are not available for general City operating purposes. Loans provided to third parties are recorded as current and prior year programs/grants expenditures. Funding for future loans will be from a combination of the repayment of existing loans and additional funds committed from future programs/grants expenditures.




























66

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
g) Defeased Bonds have been removed from the Statement of Net Position because related assets have been placed in irrevocable trusts that, together with interest earned thereon, will provide amounts sufficient for payment of all principal and interest. Defeased bonds at December 31, 2012, not including principal payments due January 1, 2013, are as follows (dollars in thousands):

Amount
Defeased Outstanding
Emergency Telephone System-Series 1993 $ 213,730 $ 123,115
General Obligation Refunding Bonds - Series 1993B 27,515 6,000
General Obligation Project and Refunding Bonds - Series 1998 345,770 14,005
General Obligation Bonds-Series 2001A 404,131 131,515
General Obligation Project and Refunding Bonds - Series 2003A 108,000 67,690
General Obligation Project Bonds - Series 2003C 126,960 116,710
General Obligation Project Bonds - Series 2004A 276,620 256,060
General Obligation Project and Refunding Bonds - Series 2005A 72,690 59,630
General Obligation Project and Refunding Bonds - Series 2005B 8,725 4,465
General Obligation Direct Access Bonds - Series 2005E 22,186 10,835
General Obligation Project and Refunding Bonds - Series 2006A 23,775 13,285
General Obligation Direct Access Bonds - Series 2006 4,755 2,635
General Obligation Project and Refunding Bonds - Series 2007A 10,505 9,710
General Obligation Project and Refunding Bonds - Series 2007C 23,805 11,530
General Obligation Project and Refunding Bonds - Series 2008 210 105
Neighborhoods Alive 21 Program-Series 2001A 213,825 60,170
Neighborhoods Alive 21 Program - Series 2003 90,600 83,440
Lake Millenium Project Parking Facilities Bonds - Series 1998 149,880 43,880
Near South Redevelopment Project Tax Increment - Series 1994A 23,000 3,825
Chatham Ridge Redevelopment Project Tax Increment - Series 2002 6,565 3,575
Special Transportation Revenue Bonds - Series 2001 118,715 97,290
Midway 2nd Lien Series 2010D-1 4,435 4,435
Midway 2nd Lien Series 2010D-2 16,460 16,460
Total $ 2,292,857 $ 1,140,365
















67

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
11) Pension Trust Funds
a) Retirement Benefit-Eligible City employees participate in one of four single-employer defined benefit pension plans (Plans). These Plans are: the'Municipal Employees'; the Laborers' and Retirement Board Employees'; the Policemen's; and the Firemen's Annuity and Benefit Funds of Chicago. Plans are administered by individual retirement boards represented by elected and appointed officials. Certain employees of the Chicago Board of Education participate in the Municipal Employees' or the Laborers' and Retirement Board Employees' Annuity and Benefit Funds for which the City levies taxes to make the required employer contributions. Each Plan issues a publicly available financial report that includes financial statements and required supplementary information.
The financial statements of the Plans are prepared using the accrual basis of accounting. Employer and employee contributions are recognized in the period in which employee services are performed. Benefits and refunds are recognized when payable.
Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on national or international exchanges are valued at the last reported sales price at current exchange rates. Fixed income securities are valued principally using quoted market prices provided by independent pricing services. For collective investments, the net asset value is determined and certified by the investment managers as of the reporting date. Real estate investments are generally valued by appraisals or other approved methods. Investments that do not have an established market are reported at estimated fair value.
The Plans have a securities lending program. At year-end, the Plans have no credit risk exposure to borrowers because the amounts the Plans owe the borrowers exceed the amounts the borrowers owe the Plans. The contract with the Plans' master custodian requires it to indemnify the Plans if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the fund for income distributions by the securities' issuers while the securities are on loan. All securities loans can be terminated on demand by either the Plans or the borrower, although the average term of the loans has not exceeded 131 days The Plans' custodian lends securities for collateral in the form of cash, irrevocable letters of credit and/or U.S. government obligations equal to at least 102 percent of the fair value of securities or international securities for collateral of 105 percent. Cash collateral is invested in the lending agents' short-term investment pool, which at year-end has a weighted average maturity that did not exceed 81 days. The Plans cannot pledge to sell collateral securities received unless the borrower defaults. Loans outstanding as of December 31, 2012 are as follows; market value of securities loaned $1,122.8 million, market value of cash collateral from borrowers $1,126.1 million and market value of non-cash collateral from borrowers $17.3 million.
The Plans provide retirement, disability, and death benefits as established by State law. Benefits generally vest after 20 years of credited service. Employees who retire at or after age 55 (50 for policemen and firemen) with 20 years of credited service qualify to receive a money purchase annuity and those with more than 20 years of credited service qualify to receive a minimum formula annuity. The annuity is computed by multiplying the final average salary by a percentage ranging from 2.0 percent to 2.4 percent per year of credited service. The final average salary is the employee's highest average annual salary for any four consecutive years within the last 10 years of credited service.
State law requires City contributions at statutorily, not actuarially determined rates. The City's contribution is equal to the total amount of contributions by employees to the Plan made in the calendar year two years prior, multiplied by 1.25 for the Municipal Employees', 1 00 for the Laborers', 2.00 for the Policemen's, and 2.26 for the Firemen's. State law also requires covered employees to contribute a percentage of their salaries.




68

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The City's annual pension cost for the current year and related information for each Plan is as follows (dollars in
thousands):
Municipal
Employees' Laborers' Policemen's Firemen's Total
Contribution rates:
City (a) (a) (a) (a) (a) n/a
Plan members 8.5% 8.5% 9% 9.125% n/a
Annual required contribution $ 690.823 $ 77,566 $ 431,010 $ 271,506 $ 1,470,905
Interest on net pension obligation 117,591 (10,377) 165,221 120,807 393,242
Adjustment to annual required
contribution (120,895) 10,668 (112,872) (124,201) (347,300)
Annual pension cost 687,519 77,857 483,359 268,112 1,516,847
Contributions made 148,859 11,853 197,886 81,522 440,120
Increase in net pension obligation.. 538,660 66,004 285,473 186,590 1,076,727
Net pension obligation (excess),
beginning of year 1,469,886 (129,712) 2,065,266 1,510,089 4,915,529
Net pension obligation (excess),
end of year $2,008,546 $ (63,708) * $ 2,350,739 $ 1,696,679 $ 5,992,256
' Laborers' net pension excess is recorded in other assets in the statement of net position.
Municipal
Employees' Laborers' Policemen's
Actuarial valuation date 12/31/2012 12/31/2012 12/31/2012
Actuarial cost method Entry age normal Entry age normal Entry age normal
Amortization method Level dollar, open Level dollar, open Level percent, open
Remaining amortization period 30 years 30 years 30 years
Asset valuation method 5-yr. Smoothed 5-yr. Smoothed 5-yr. Smoothed
Market Market Market
Actuarial assumptions:
Investment rate of return (a) 7.5% 7.5% 7.75%
Projected salary increases (a):
Inflation 3.0 3.0 3.0
Seniority/Merit (b) (c) (d)
Postretirement benefit increases (f) (f) (g)
(a) Proceeds from a tax levy nol more than the amount equal to the total amount of contributions by
the employees to the Fund made in the calendar year, two years pnor to the year for which the annual
applicable tax is levied multiplied by 1.25 for Municipal, 1.00 for Laborers', 2.00 Policemen's and 2.26 for Firemen's
(bj Service-based increases equivalent to a level annual rate increase of 1 4 percent over a full career.
Service-based increases equivalent to a level annual rate increase of 1 2 percent over a full career.
Service-based increases equivalent to a level annual rate increase of 2.8 percent over a full career.
Service-based increases equivalent to a level annual rate increase of 3.0 percent over a full career. (0 3 0 percent per year beginning al the earlier of:

the later of the first of January of the year after retirement and age 60;
the later of the first of January of the year after the second anniversary of retirement and age 53.
(g) Uses 3 0 percent per year for annuitants age 55 or over, bom before 1955 with at least 20 years of service and 1 5 percent per year for 20 years for annuitants age 60 or over, bom in 1955 or later


Firemen's
12/31/2012
Entry age normal Level dollar, open
30 years 5-yr. Smoothed Market
8.0%
.3.0 (e) (9)

69
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The following tables of information assist users in assessing each fund's progress in accumulating sufficient assets to pay benefits when due. The three-year historical informalion for each Plan is as follows (dollars in thousands):
Annual % of Annual Net Pension
Pension Pension Cost (Asset) /
Year Cost Contributed Obligation
Municipal Employees':
2010 $ 482,420 32.08% $ 1,007,406
2011 609,491 24.12 1,469,886
2012 687,519 21.65 2,008,546
Laborers':
47,129 32.57 (174,585)
57,651 22.17 (129,712)
77,857 15.22 (63,707)
Policemen's:
403,228 , "43.28 1,791,146
448,153 38.83 2,065,266
483,359 40.94 2,350,739
Firemen's:
215,666 37.53 1,345,927
247,031 33.55 1,510,089
268,112 30.41 1,696,679





Actuarial
Valuation
Year Date
Municipal Employees':
12/31/10
12/31/11
12/31/12
Laborers':
12/31/10
12/31/11
12/31/12
Policemen's:
12/31/10
12/31/11
12/31/12
Firemen's:
12/31/10
12/31/11
12/31/12
SCHEDULE OF FUNDING PROGRESS
(dollars in thousands)
Actuarial Value of Assets (a)
Unfunded (Surplus)
AAL
(b-a)
Actuarial Accrued Liability
(AAL) Entry Age (b)
$ 11,828,666 $ 5,825,276
12,292,930 13,475,377
2,030,025 2,152,854 2,336,189
9,210,056 9,522,395 10,051,827
3,655,026 3,851,919 4,020.138
$ 6,003,390 5,552,291 5,073,320
1,529,404 1,422,414 1,315,914
3,718,955 3,444,690 3,148,930
1,198,114 ¦ 1,101,742 993,284





Covered Payroll (c)
45 38
75 66 56
40 36 31
33 29 25
51 % $\. 1,541,388
1,605,993 1,590,794
199,863 ¦ 195,238 198,790
1,048,084 1,034.403 1,015,171
400,404 425,385 418.965

Unfunded (Surplus) AAL as a Percentage of Covered Payroll ((b-a)/c)
378 %
420
528
250 374 513
524 588 680
614 647 722

70
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The unfunded liability to the Plans poses significant financial challenges. The unfunded liability has consistently increased in recent years, and actuaries for the Municipal Employees' Plan and the Laborers' Plan indicate that the unfunded liability of those plans will continue to increase for the foreseeable future. Although the actuaries for the Policemen's and the Firemen's Plans project that the unfunded liabilities of those Plans will decrease in the future, such a decrease will result from significantly increased contributions to those Plans as a result of State Law. Furthermore, the contributions made by the City to the Plans have been lower than the cash outlays of the Plans in recent years. As a result, the Plans have used investment earnings or assets of the Plans to satisfy these cash outlays. The use of investment earnings or assets of the Plans for these purposes reduces the amount of assets on hand to pay benefits in the future and prevents the Plans from recognizing the full benefits of compounding investment returns. Since 2001, the City has contributed to the Plans as required by State Law. However, this amount has not been sufficient to fully fund the Normal Cost plus an amortized portion of the UAAL in each year as a result of a contribution limitation which has had the effect, and may have the effect in the future, of limiting the Pension Levy to an amount insufficient to fully fund the Plans to the amount of the Actuarially Required Contribution. No assurance can be made that the State Law applicable to the Plans will not be amended in the future.
b) Other Post Employment Benefits (OPEB) - Under State law, certain health benefits are available to employees who retire from the City based upon their participation in the City's pension plans. The Pension Plans and the City agreed to share in the cost of the Settlement Health Care Plan (see Note 12). This single employee defined benefit plan is administered by the City. Substantially all employees who qualify as Municipal or Laborers' pension plan participants older than age 55 with at least 20 years of service and Police and pension plan participants older than age 50 with at least 10 years of service may become eligible for postemployment benefits if they eventually become an annuitant. Health benefits include basic benefits for annuitants and supplemental benefits for Medicare' eligible annuitants. The amounts below represent the accrued liability of the City's pension plans related to their own employees and a subsidy paid to the City (see Note 12). The plan is financed on a pay as you go basis (dollars in thousands).
Annual OPEB Cost and Contributions Made For Fiscal Year Ending December 31, 2012
Municipal
Employees' Laborers' Policemen's Firemen's Total
A portion of the City's contribution from the tax levy is used to finance the health insurance supplement benefit payments.
Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual -Required Contribution
Annual OPEB Cost Contributions Made

(3,970)
(324)
(380)
(520)
$ 14,632 $ 3,070 $ 10,474 $ 4,276 S 32,452
3,041 248 479 398 4,166
13,703 9,522
2,994 2,562
10.573 9,766
4,154 2,622
(5.194)
31,424 24,472
Increase in
Net OPEB Obligation
Net OPEB Obligation, Beginning of Year
$ 71,756 $ 5,951 S 11,461 $ 10,382 S 99,550


71
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Actuarial Method and Assumptions - Projections of benefits for financial reporting purposes are based on the substantive plan (the plan understood by the employer and plan members) and included the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial method and assumptions used include techniques that are designed to reduce the effects of short term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long term perspective of the calculations.

Actuarial Valuation Date Actuarial Cost Method

Amortization Method
Remaining Amortization Method
Asset Valuation Method
Municipal Employees'
12/31/2012
Entry Age Normal
Level Dollar, Open
30 years
No Assets (Pay-as-you-go)
Laborers'
12/31/2012
Entry Age Normal
Level Dollar, Open
30 years
No Assets (Pay-as-you-go)
Policemen's
12/31/2012
Entry Age Normal
Level Percent, Open
30 years
No Assets (Pay-as-you-go)
Firemen's
12/31/2012
Entry Age Normal
Level Dollar, Open
30 years
No Assets (Pay-as-you-go)
Actuarial assumptions: OPEB Investment Rate of Return (a)
Projected Salary Increases (a) Inflation
Seniority / Merit
Healthcare Cost Trend Rate (f)

4.5% 3.0%
(b) 0.0%

4.5% 3.0%
(c) 0.0%

4.5% 3.0%
(d) 0.0%

4.5% 3.0%
(e) 0.0%
( a ) Compounded Annually
( b ) Service-based increases equivalent to a level annual ( c ) Service-based increases equivalent to a level annual ( d ) Service-based increases equivalent to a level annual ( e ) Service-based increases equivalent to a level annual ( f) Trend not applicable - fixed dollar subsidy

rate of increase of 1.4 percent over a full career rate of increase of 1.2 percent over a full career rate of increase of 1.8 percent over a full career rate of increase of 1.8 percent over a full career
OPEB COST SUMMARY
(dollars in thousands)
Annual OPEB Cost
% of Annual OPEB Obligation
Net OPEB Obligation
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
22,375 22.047 13,703
3,559 3,479 2,994
10.736 10.627 10.573
4.354 4,372 4.154
42.68 %
43.16
69.49
72.68 74.15 85.56
87.13 90.25 92.37
60 74 60.12 63.13
55.045 67.575 71.756
4,619 5,519 5,951
9,619 10,654 11,461
7.107 8,850 10.382
72

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions as the results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presents, as required, supplementary information following the notes to the financial statements (dollars in thousands, unaudited).



Actuarial Valuation Date
Municipal
Employees' 12/31/2012
Laborers' 12/31/2012
Policemen's 12/31/2012
Firemen's 12/31/2012


Actuarial Value of Assets (a)
Actuarial Accrued Liability
(AAL) Entry Age (°)
$ 162,083 38.653 168.811 46,206


Unfunded (Surplus)
UAAL
(b-a)
162,083 38.653
168,811 46,206



Funded Ratio (a/b)



Covered Payroll (<=)
$ 1,590,794 198,790 1,015,171 418,965
Unfunded (Surplus) AAL as a Percentage of Covered
Payroll ((b-a)/c)
10.19% 19.44 16 63 11.03


12) Other Post Employment Benefits - City Obligation
The annuitants who retired prior to July 1, 2005 received a 55 percent subsidy from the City and the annuitants who retired on or after July 1, 2005 received a 50, 45, 40 and zero percent subsidy from the City based on the annuitant's length of actual employment with the City for the gross cost of retiree health care under a court approved settlement agreement. The pension funds contributed $65 per month for each Medicare eligible annuitant and $95 per month for each Non-Medicare eligible annuitant to their gross cost. The annuitants contributed a total of $67.8 million in 2012 to the gross cost of their retiree health care pursuant to premium amounts set forth in the above-referenced settlement agreement.
The cost of health benefits is recognized as an expenditure in the accompanying financial statements as claims are reported and are funded on a pay-as-you-go basis. In 2012, the net expense to the City for providing these benefits to approximately 24,408 annuitants plus their dependents was approximately $97.5 million.
The City's net expense and the annuitants' contribution indicated above are preliminary and subject to the reconciliation per the court approved settlement agreement.
Plan Description Summary- The City of Chicago is party to a written legal settlement agreement outlining the provisions of the retiree health program, The Settlement Health Care Plans (the Plans), through June 30, 2013. The agreement does not require or extend continuation of the Plans after June 30, 2013. Pursuant to the Settlement, the City administers a single employer defined benefit healthcare plan (the Health Plan), for which the City pays a portion of the costs on a pay as you go method. Under the Settlement agreement, the City of Chicago sponsors health benefit plans for employees, former employees and retired former employees. The provisions of the program provide in general, that the City pay a percentage of the cost (based upon an employee's service) for hospital and medical coverage to eligible retired employees and their dependents for a specified period, until June 30, 2013 (see Note 17 for subsequent update).
In addition, Illinois Compiled Statutes authorize the four respective Pension Funds (Police, Fire, Municipal, and Laborers) to provide a fixed monthly dollar subsidy to each annuitant who has elected coverage under the Health Plan through June 30, 2013. After that date, no supplements are authorized.

73
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The liabilities for the monthly dollar supplements paid to annuitants enrolled in the retiree medical plan by their respective Pension Funds are included in the NPO valuation reports of the respective four Pension Funds (see Note 11).
Special Benefits under the Collective Bargaining Agreements (CBA) - Under the terms of the latest collective bargaining agreements for the Fraternal Order of Police and the International Association of Fire Fighters, certain employees who retire after attaining age 55 with the required years'of service are permitted to enroll themselves and their dependents in the healthcare benefit program offered to actively employed members. They may keep this coverage until they reach the age of Medicare eligibility. These retirees do not contribute towards the cost of coverage, but the Police pension fund contributes $95 per month towards coverage for police officers (which is assumed to continue); the Fire Pension Fund does not contribute. Once CBA early retirees reach Medicare eligibility age, their healthcare benefits are provided under the provisions of the Settlement Plan.
No extension of the CBA has been negotiated as of the end of the governing contract period (June 30, 2012), and therefore this valuation assumes the expiration of the early retirement special benefits as of December 31, 2012, but includes the liabilities for continuation of payments to those members already retired under the CBA as of December 31, 2012.
Funding Policy - The City's retiree health plan is a single employer plan which operates on a pay as you go funding basis. No assets are accumulated or dedicated to funding the retiree health plan benefits.
Annual OPEB Cost and Net OPEB Obligation - The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC (Annual Required Contribution) represents a level of funding, that if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities over a period of one year (the remaining year of coverage under the Settlement agreement).
The following table shows the components of the City's annual OPEB costs for the year for the Health Plan and CBA Special Benefits, the amount actually contributed to the plan and changes in the City's net OPEB obligation. The Net OPEB Obligation is the amount entered upon the City's Statement of Net Position as of year end as the net liability for the other postemployment benefits - the retiree health plan. The amount of the annual cost that is recorded in the Statement of Changes in Net Position for 2012 is the Annual OPEB Cost (expense).
Annual OPEB Cost and Contributions Made
(dollars in thousands)


Contnbulion Rates Cily
Plan Members
Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual Required Contribution
Annual OPEB Cost Contributions Made
Decrease in Net OPEB Obligation
Net OPEB Obligation, Beginning of Year
Net OPEB Obligation. End of Year
Retiree Settlement Health Plan
Total
N/A
58.456 1,463 (20,386)
N/A
252,747 3,816 (179,586)
Pay As You Go Pay As You Go Pay As You Go
N/A
37,444 97,531
39,533 18,430
194,291 2.353 (159,200)
(60,087)
21.103
76,977 115,961
156,847
97,498
(38,984)
96.760
118,601
254.345
215,361


74

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2012 is as follows (dollars in thousands):
Schedule of Contributions, OPEB Costs and Net Obligations
Fiscal Year Ended
Settlement Plan
12/31/2012 12/31/2011 12/31/2010
CBA Special Benefits
12/31/2012
Annual OPEB Cost

37,444 48,954 82,874

$ 39.533
Percenlage of Annual OPEB Cost Contributed

260 5%
202.4
129.6

46.6%
Net OPEB Obligation

S 96,760 254,345 304,483

S 118,601

12/31/2012 12/31/2011 12/31/2010

76,977 48.954 82,874

150.6%
202.4
129.6

215,361 254,345 304,483

Funded Status and Funding Progress - As of January 1, 2012, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $471.0 million all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was approximately $2,518.7 million and the ratio.of the unfunded actuarial accrued liability to the covered payroll was 18.7 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions as the results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presents, as required, supplementary information following the notes to the financial statements (dollars in thousands, unaudited).
Unfunded UAAL
Actuarial Actuarial Actuarial Actuarial as a
Valuation Value of Accrued Accrued Liabilily Funded Covered Percenlage of
Dale Assels Liability (AAL) (UAAL) Ratio Payroll Covered Payroll
Settlement Plan
12/31/2011 $ S 191,378 $ 191,378 0% $ 2,518,735 7.6 %
CBA Special Benefits
12/31/2011 $ S 279,574 $ 279,574 0% $ 1,471,692 19 0%
Total
12/31/2011 $ - $ 470,952 $ 470,952 0% $ 2.518.735 18 7%

Actuarial Method and Assumptions - Projections of benefits for financial reporting purposes are based on the substantive plan (the plan understood by the employer and plan members) and included the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial method and assumptions used include techniques that are designed to reduce the effects of short term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long term perspective of the calculations
75
CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
For the Settlement Plan benefits (not provided by the Pension Funds) in the actuarial valuation for the fiscal year ended December 31, 2012, the projected unit credit actuarial cost method was used. The actuarial assumptions included an annual healthcare cost trend rate of 10 5 percent initially, reduced by decrements to an ultimate rate of 10.0 percent. Both rates included a 3.0 percent inflation assumption. The plan has not accumulated assets and does not hold assets in a segregated trust. However, the funds expected to be used to pay benefits are assumed to be invested for durations which will yield an annual return rate of 1.5 percent. The Unfunded Accrued Actuarial Liability is being amortized as a level dollar amount over one year.
For the Special Benefits under the CBA for Police and Fire, the contract expiration date of June 30, 2012 is reflected, such that liabilities are included only for payments beyond 2012 on behalf of early retirees already retired and in pay status as of December 31, 2012. Assumptions and methods were selected to reflect the expiring obligation. The projected unit credit method was selected. The actuarial assumptions included an annual healthcare cost trend rate of 10.5% in 2012, reduced by decrements to an ultimate rate of 5.0% in 2030. Rates included a 3% inflation assumption. The plan has not accumulated assets and does not hold assets in a segregated trust. The funds expected to be used to pay benefits are assumed to be invested for durations which will yield an annual return rate of 1.50%. The remaining Unfunded Accrued Actuarial Liability is being amortized as a level dollar amount over five years.
Summary of Assumptions and Methods

Actuarial Valuation Date
Actuarial Cost Method
Amortization Method
Remaining Amortization Period
Asset Valuation Method
Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Healthcare Inflation Rate

Settlement Health Plan
December 31, 2011 Projected Unit Credit
Level Dollar 1 year
Market Value
CBA Special Benefits
December 31, 2011 Projected Unit Credit Level Dollar
1.50% 3.0%
5 years Market Value
1.50% 3 0%
10 5% in 2012 to 10 0% in 2013 10.5% initial to 5.0% in 2030
13) Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; certain benefits for and injuries to employees and natural disasters. The City provides worker's compensation benefits and employee health benefits under self-insurance programs except for insurance policies maintained for certain Enterprise Fund activities. The City uses various risk management techniques to finance these risks by retaining, transferring and controlling risks depending on the risk exposure.
Risks for O'Hare, Midway, and certain other major properties, along with various special events, losses from certain criminal acts committed by employees and public official bonds are transferred to commercial insurers. Claims have not exceeded the purchased insurance coverage in the past three years, accordingly, no liability is reported for these claims. All other risks are retained by the City and are self-insured. The City pays claim settlements and judgments from the self-insured programs. Uninsured claim expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. The General Fund is primarily used to record all non-Enterprise Fund claims The estimated portion of non-Enterprise Fund claims not yet settled has been recorded in the Governmental Activities in the Statement of Net Position as claims payable along with amounts related to deferred compensatory time and estimated liabilities for questioned costs. As of December 31, 2012, the total amount of non-Enterprise Fund claims was S556.5 million and Enterprise Fund was $52.0 million. This liability is the City's best estimate based on available information. Changes in the reported liability for all funds are as follows (dollars in thousands):
76

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
2012 2011
Balance, January 1 $ 554,797 $555,285
Claims incurred and
change in estimates 755,278 585,980
Claims paid on current and
prior year events (701,590) (586,468)
Balance, December 31 $ 608,485 $ 554,797
14) Expenditure of Funds and Appropriation of Fund Balances
The City expends funds by classification as they become available, and "Restricted" funds are expended first. If/when City Council formally sets aside or designates funds for a specific purpose, they are considered "Committed'. The Mayor (or his/her designee) may in this capacity, also set aside or designate funds for specific purposes and all of these funds will be considered "Assigned". Any remaining funds, which are not specifically allocated in one or more of the previous three categories, are considered "Unassigned" until such allocation is completed.
In addition to the categories above, any amounts which will be used to balance a subsequent year's budget will be considered "Assigned" as Budgetary Stabilization funds. The amounts may vary from fiscal year to fiscal year or depending on the City's budgetary condition, or may not be designated at all. The funds may be assigned by the Mayor or his designee, up to the amount of available "Unassigned" fund balance at the end of the previous fiscal year.
a) Fund Balance Classifications
On the fund financial statements, the Fund Balance consists of the following (dollars in thousands):
Nonspendable for Inventory $ 20,885
Restricted for Grants and Donations 27,821
Restricted for Debt Service 313,623
Restricted for TIF & Special Service Area
Programs and Redevelopment 1,499,414
Restricted for Capital Projects 487,762
Committed for Debt Service 156,836
Committed for Budget and Credit Rating Stabilization 624,849
Committed for Repair, Maintenance and City Services ... 100,442
Assigned for Future Appropriated Fund Balance 160,395
Assigned for Encumbrances 16,605
Restricted for Special Events 4,291
Unassigned (1,819,556)
Total Government Fund Balance $ 1,593,367
At the end of the fiscal year, total encumbrances for the General Operating Fund amounted to $16.6 million, $19.1 million for the Special Taxing Areas Fund, $34.8 million for the Capital Projects Fund and $10.8 million for the Non Major Special Revenue Fund.
15) Commitments and Contingencies
The City is a defendant in various pending and threatened individual and class action litigation relating principally to claims arising from contracts, personal injury, property damage, police conduct, alleged discrimination, civil rights actions and other matters. City management believes that the ultimate resolution of these matters will not have a material adverse effect on the financial position of the City.

77

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
The City participates in a number of federal-and state-assisted grant programs. These grants are subject to audits by or on behalf of the grantors to assure compliance with grant provisions. Based upon past experience and management's judgment, the City has made provisions in the General Fund for questioned costs and other amounts estimated to be disallowed. City management expects such provision to be adequate to cover actual amounts disallowed, if any.
As of December 31, 2012, the Enterprise Funds have entered into contracts for approximately $565.5 million for construction projects.
The City's pollution remediation obligation of $8.4 million is primarily related to Brownfield redevelopment projects. These projects include removal of underground storage tanks, cleanup of contaminated soil, and removal of other environmental pollution identified at the individual sites. The estimated liability is calculated using the expected cash flow technique. The pollution remediation obligation is an estimate and subject to changes resulting from price increases or reductions, technology, or changes in applicable laws or regulations.
Concession Agreements '
The major fund entitled Service Concession and Reserve Fund is used for the purpose of accounting for the deferred inflows associated with governmental fund long-term lease and concession transactions. Deferred inflows are amortized over the life of the related lease and concession agreements. Proceeds from these transactions may be transferred from this fund in accordance with ordinances approved by City Council that define the use of proceeds.
In February 2009, the City completed a $1.15 billion concession agreement to allow a private operator to manage and collect revenues from the City's metered parking system for 75 years. The City received an upfront payment of $1.15 billion which was recognized as a deferred inflow that will be amortized and recognized as revenue over the term of the agreement. The City recognizes $15.3 million of revenue for each year through 2083.
In December 2006, the City completed a long-term concession and lease of the City's downtown underground public parking system. The concession granted a private company the right to operate the garages and collect'parking and related revenues for the 99-year term of the agreement. The City received an upfront payment of $563.0 million of which $347.8 million was simultaneously used to purchase three of the underground garages from the Chicago Park District. The City recognized a deferred inflow that will be amortized and recognized as revenue over the term of the lease. The City recognizes $5.7 million of revenue for each year through 2105.
In January 2005, the City completed a long-term concession and lease of the Skyway. The concession granted a private company the right to operate the Skyway and to collect toll revenue from the Skyway for the 99-year term of the agreement. The City received an upfront payment of $1.83 billion; a portion of the payment ($446.3 million) advance refunded all of the outstanding Skyway bonds. The City recognized a deferred inflow of $1.83 billion that will be amortized and recognized as revenue over the 99-year term of the agreement. The City recognizes $18.5 million of revenue related to this transaction for each year through 2103. Skyway land, bridges, other facilities and equipment continue to be reported on the Statement of Net Position and will be depreciated, as applicable, over their useful lives. The deferred inflow of the Skyway is reported in the Proprietary Funds Statement of Net Position.
Subsequent Events
As of December 31, 2012, the outstanding balance for Chicago General Obligation Commercial Paper Notes (G O. CP) was $166 5 million. As of the date of this report, the City has paid $95.0 million of G.O. CP, issued $69.1 million to fund various authorized capital projects, and had an outstanding balance of $140.6 million.
Since January 2013, the City Motor Fuel Tax Revenue Bonds have been downgraded by Moody's Investors Service and Fitch Ratings. Moody's downgraded the rating from Aa3 to A3 in March and from A3 to Baal in June. Fitch downgraded the rating from A- to BBB+ in June. Moody's and Fitch currently have a negative outlook on the ratings. In January 2013, the City entered into two swap overlay agreements (i.e., Constant Maturity Swap (CMS) reversal) associated with the General Obligation Series 2003B variable rate bonds with PNC Bank, N.A. (PNC) for a notional amount of $48.2 million and The Bank of New York Mellon (BNYM) for a notional amount of $144.6 million. The
78

CITY OF CHICAGO, ILLINOIS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2012
agreement with PNC is effective March 1, 2014 through January 1, 2019 and the agreement with BNYM is effective November 1, 2014 through January 1, 2019. Under both agreements the City will pay 66.91 percent of 10 year LIBOR and receive 75 percent of one month LIBOR. Together with the existing underlying swaps on the bonds, in which the City pays 4.052 percent and receives 66.91 percent of 10 year LIBOR, the net effect is that the City will pay a fixed rate of 4.052 percent and receive 75 percent of one month LIBOR through January 1, 2019, after which time the City will receive 66.91 percent of 10 year LIBOR through expiration (January 1, 2034). The City received a total upfront payment of $7.5 million.
In February 2013, the City increased the Letter of Credit (LOC) support for the Chicago Midway International Airport Commercial Paper Program from $85.0 million to $150.0 million. The $65.0 million LOC is provided by PNC Bank. While the City has City Council authorization to issue up to an aggregate principal of $250.0 million of Chicago Midway International Airport Commercial Paper Notes (Midway CP Notes), the LOC support provides only for the issuance of up to $150.0 million aggregate principal amount of Midway CP Notes. The Midway CP Notes are authorized to be issued by the City for the financing and refinancing of certain projects (which may include payments on certain related bonds and notes) at Chicago Midway International Airport.
In March 2013, the City entered into a Revolving Credit Agreement with Bank of America, N.A., which allows the City to draw on the line of credit in an aggregate amount not to exceed $200.0 million. The City's repayment obligation under the line of credit is a general obligation of the City. The line of credit expires March 1, 2016.
In May 2013, the City issued $23.0 million aggregate principal amount of Midway CP Notes. The proceeds will be used to finance a portion of the costs of authorized airport projects.
In May 2013, the City extended the OPEB benefits for retirees under the OPEB Settlement Health Care Plans from June 30, 2013 until December 31, 2013, with a commitment to provide reduced subsidies after 2013, with a complete phase out in five years. The liability associated with six additional months of payments for the remaining Settlement Plan retirees is approximately $45 million. The liability associated with the five year phase out is unknown since the level of subsidy and plan provisions are not yet determined.
In June 2013, the City entered into a loan agreement with the United States Department of Transportation under the Transportation Infrastructure Finance and Innovation Act (TIFIA) program to complete the Wacker Drive Reconstruction Project. The loan amount of $98.66 million will fund the Chicago Riverwalk along the main branch of the Chicago River. The interest rate is 3.33% and the final maturity of the loan is 1/1/2048.
The 1996 Reauthorization Act, Title 49 United States Code §47134, authorized the Federal Aviation Administration ("FAA") to establish the Airport Privatization Pilot Program (the "Pilot Program"), pursuant to which the FAA is authorized to permit public airport sponsors to sell or lease an airport. The 2012 Reauthorization Act'increased the number of airports that could participate in the program from five to ten. Only one of the ten airports can be a "large hub" airport (having enplanements that equal or exceed one percent of the enplanements at all U.S. commercial airports). On September 2006, the City applied to the FAA under the Pilot Program with respect to Chicago Midway International Airport ("Midway") with extensions requested periodically and most recently in April 2012. The City is currently pursuing bids for a lease of Midway under the provisions of the Pilot Program. The City is not under any obligation to accept any bids, and it is not possible at this time to predict whether or not the City will enter into a lease of Midway pursuant to the Pilot Program or when such a transaction might occur.









79

REQUIRED SUPPLEMENTARY INFORMATION CITY OF CHICAGO, ILLINOIS
SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS FUNDING PROGRESS Last Three Years (dollars are in thousands)


Actuarial Valuation Date


Actuarial
Value of Assets (a)

Actuarial Accrued Liability (AAL) Entry Age (b)
Unfunded Actuarial Accrued Liability (UAAL) (b-a)



Funded Ratio (a/b)



Covered Payroll (c)
Unfunded (Surplus) AAL as a Percentage of Covered
Payroll ((b-a)/c)

Municipal Employees'
2010 12/31/2010 $
12/31/2011
12/31/2012
Laborers'
12/31/2010
12/31/2011
12/31/2012
Policemen's
12/31/2010
12/31/2011
12/31/2012
Firemen's
. 12/31/2010
12/31/2011
12/31/2012
City of Chicago
12/31/2009
12/31/2010
12/31/2011

223,564 163,242 162,083

41,361 38,328 38.654

164,796 165,955 168,811

48,222 46,980 46,206

533,387 390,611 470,952

223,564 163,242 162,083

41.361 38,328 38.654

164,796 165,955 168,811

48,222 46,980 46,206

533,387 390,611 470,952

0/
/o







%

$ 1,541,388 1,605,993 1,590,794

199,863 195,238 198,790

1,048,084 1,034,404 1,015,171

400,404 425,385 418,965

2,546,961 2,475,080 2,518,735

14.50 10.16 10.19

20.69 19.63 19.44

15.72 16.04 16.63

12.04 11.04 11.03

20.94 15.78 18.70

0/ /?








/o















80

APPENDIX D CITY OF CHICAGO ECONOMIC, DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION
[This Page Intlni ionally Left Blank]
ECONOMIC, DEMOGRAPHIC AND SUPPLEMENTAL INFORMATION
Set forth below is certain economic, demographic and supplemental information regarding the City. Sources of information are indicated immediately following each table or section. Wilh respect to non-City sources, the City considers these sources to be reliable but has made no independent verification of the information provided and does not warrant its accuracy.

The City
Chicago is ihe third largest city in the United States and localed in the second most populous county in the country - Cook County, Illinois. On the shores of Lake Michigan, the City has a 228 square mile footprint and is 26 miles long.

Economy
Chicago's large and diverse economy contributes to a gross regional product of more than $500 billion. With 9.5 million people, 4.2 million employees, and over 270,000 businesses, the Chicago metropolitan area is home to more than 400 major corporate headquarters, including 30 Fortune 500 headquarters, and 29 S&P 500 companies.
Since the 1850s, Chicago has been an important center for North American transportation and distribution. Because of its unique geography, Chicago's distribution network offers access lo air. rail, and water, with two ports capable of handling ocean-going ships and barges, and an airport system that moves 1.5 million tons of freight, mail, and goods annually. Chicago is also the only city where the country's six largest freight railroad companies interchange traffic.
Manufacturing employs over 400,000 workers in the Chicago metropolitan area and makes up nearly than 10 percent ofthe regional economy.
Health care and life science-related businesses employ over 500,000 workers in the Chicago metropolitan area. Five ofthe nation's 15 major teaching hospitals are located in Chicago.
Health care and life science-related businesses employ over 500,000 workers in the Chicago-metropolitan area. Five ofthe nation's 15 major teaching hospitals are located in Chicago.

Population
Chicago is home to nearly 2.7 million people that live in more than one million households across 77 communities. Total number of households over past 40 years has remained very stable at 1.2 million, providing a stable and robust population base. City's population edged up 0.7% over the past two years to 2.71 million while other Midwest cities have seen declines.










D-1

The population ofthe United Slates, the State of Illinois. Cook County and the City for the census years from 1980 to 2010 is set forth below.
Population 1980 — 2012
Year United States State of Illinois Cook County City
1980 226.545,805 11,427,409 5,253,655 3,005,072
1990 248.709.873 11,430,602 5,105.067 2.783,726
2000 281,421,906 12,419,293 5,376.741 2,896,016
2010 308,745,538 12.830,632 5,194,675 2.695,598
2012 Estimate 313,873,685 12,868,192 5.231,351 2,714,856
Source U S Census Durcnii
More than 100 languages are spoken and more than 26 ethnic groups have populations greater than 25,000. 33.6 percent of Chicago's residents have bachelor's degrees, which is higher than the national averages of 28 percent. The age distribution of Chicago's population closely matches its peer cities, with the highest relative percentage ofthe population between the ages of 25 and 44.
Per Capita Income and Wages
The per capita personal income (estimated annual earnings) for the United States, the State of Illinois. Cook County and the Chicago MSA is set forth below for Ihe years 2003 through 2012.
Per Capita Income 2003 — 2012
Year United States State of Illinois Cook County City of Chicago
$32,676 $34,726 $36,554 $37,151
34.300 . 36,184 38,559 38,635
35,888 37,702 40,549 40,553
38,127 40,194 43,541 43,369
39,804 42,271 46.264 ' 45,556
40,873 43.338 47.752 46,230
39.357 41,544 46,161 43,907
40,163 42,074 45,318 44,294
42,299 44,119 47.008 46,305
43,741 45.857 48,943 48,305
Source: U S Department of Commerce. Rureuu of Economic Analysis Data as recorded in I 'ebmary 2014.
Chicago's median household income is $47,408, compared to $56,853 in Illinois and $51,914 in the U.S., and Chicago ranks 36th among other major metropolitan areas on the cost of living index.
Employment

Total employment for the State of Illinois, the Chicago MSA, Cook County and the City for the years 2003 through 2013 is set forth below.

Employment 2003-2013
Year
2003 2004 2005 2006 2007 2008 2009 2010 20) I 2012 2013
Chicago
1.215.104 1,212,169 1,198,929 1,228,075 1.249,238 1,237,856 1,171,841 1,116,830 1.120.402 1,144,896 1,153,725*
Cook County
2,417.183 2,413.682 2,393,339 2,453,204 2,490,758 2,461,017 2,325,536 2,309,021 2,316.502 2,367.143 2,385,399*
Chicago MSA
4.378,289 4.414.548 4,432,502 4.577,389 4,658,245 4,619,024 4,374,965 4,350,762 4,372,294 4,455,488 4,473.324**
State of Illinois
5,916,830 5.968,561 6,033,421 6,225,095 6,322,029 6.248,336 5,937,296 5,925.554 5,942,809 6,007,953 5,975,726**
Source: U S Department of" Labor, Bureau of Labor .Statistics. Data as recorded in February 2014
'November 2013 data •?December 2013 data.
The percentage of total (nonfarm) employment by sector for the Chicago MSA. Stale of Illinois and the United States for November 2008 versus November 2013 is shown in the following table.
Percentage of Total Non Farm Employment by Major Industry Sector November 2008 vs. November 2013

Sector
Trade, Transportation and Utilities Government
Education and Health Services
Professional and Business Services
Leisure and Hospitality
Manufacturing
Financial Activities
Construction
Other Services
Information
Mining and logging
Total
Chicago MSA
Nov-08 Nov-13
20.5% 20.5%
12.8% 12.3%
13.8% 15.2%
16.1% 17.4%
8.9% 9.4%
10.2% 9.2%
6.9% 6.4%
4.4% 3.3%
4.4% 4.3%
1.9% 1.8%
0.0% 0.0%
100% 100%
Illinois
Nov-08 Nov-13
20.4% 20.4%
14.7% 14.3%
13.7% 15.2%
14.3% 15.4%
8.8% 9.1%
10.9% 9.8%
6.5% 6.3%>
4.3% 3.3%
4.4% 4.3%
1.9% 1.7%
0.2% 0.2%
100%. 100%
United Nov-08
19.2% 16.9% 14.3% 12.8% 9.5% 9.6% 5.9% 5.1% 4.0% 2.2% 0.6% 100%
States Nov-13 19.2% 16.1% 15.5% 13.7% 10.2% 8.7% 5.7% 4.3% 3.9% 1.9% 0.6% 100%
Source U S Department of Labor, Bureau of Labor Statistics Data as recorded in February 2014
Chicago's average annual unemployment rate decreased from 11.3 percent in 2011 to 10.1 percent in 2012, while statewide, Illinois1 unemployment rate dropped from 9.7 percent in 2011 to 8.9


D-3

percent in 2012. In November 2013, Chicago's unemployment rale before seasonal adjustment was 9.6 percent, which is down from the November 2012 rate of 9.7 percent.
The annual unemployment rates (percent of population, not seasonally adjusted) for the United States, the State of Illinois, Cook County, the Chicago MSA and the City is set forth below for the years 2003 through 2013.
Annual Unemployment Rates 2003 — 2013
Cook Chicago State of United
Year Chicago County MSA Illinois States
8.1% 7.4% 6.8% 6.7% 6.0%
7.5 6.7 6.2 6.2 5.5
7.1 6.4 5.9 5.8 5.1
5.3 4.8 4.5 4.6 4.6
5.7 5.2 4.9 5.1 4.6
6.9 6.4 6.1 6.4 5.8
10.9 10.4 10.1 10.0 9.3
11.6 10.8 10.4 10.5 9.6
201 I 11.3 10.3 9.8 ' 9.7 8.9

10.1 9.3 8.9 8.9 8.1
9.6* 8.6* 8.3** 8.6** 7.4
.Source. U.S. Department nfl.abor, Bureau of Labor Statistics Data as recorded in February 2014
•November 2013 data
••December 2013 data
Employers
Chicago has a strong and vibrant business community. In 2012, there were over 600 corporate expansions and relocations in the Chicago region, accounting for more than 50,000 created and retained jobs. Tech companies accounted for more than 6,000 new jobs in 2012.

















D-4

The companies employing the greatest number of workers in the Cily as ofthe end of 2012 are set forth below.
Chicago's Largest Employers
2012


Kmplnycr
J.P. Morgan Chase Bank, N.A.
United Airlines
Accenlurc LLP
Northern Trust Corporation
Jewel Food Stores, Inc.
Ford Motor Company
Bank of America NT & SA
ABM Janitorial Services - North Central
American Airlines
Walgreen's Co.

Number of Employees
8,168 7,521 5,590 5,448 4,572 4,187 3,811 3,398 3,076 2,789
Percentage of
Total City Employment
0.76%
0.70
0.52
0.51
0.43
0.39
0.36
0.32
0.29
0.26
Source: City of Chicago, Department of Revenue, Employer's Expense Tax Returns.
Tourism

Chicago hosted 46.3 million domestic and overseas visitors in 2012, including 34.1 million domestic leisure travelers, 10.9 million domestic business travelers, and 1.3 million overseas visitors. In 2012. visitors to Chicago spent more than $12.76 billion, generated $805.6 million in tax revenue, and helped create over 132,000 jobs.
According to statistics compiled by Airports Council International in 2012, O'Hare ranked fifth worldwide and second in the United States in terms of total passengers while Midway ranked 27lh in the United States. According to CDA and USDOT survey data, O'Hare and Midway had 33,231.201 and 9,671,619 total enplaned passengers in 2012. respectively. O'Hare supports substantial international service with international passengers constituting 14.9% of total enplaned passengers in 2012.
McCormick Place is North America's largest convention facility, and hosted close to 3 million in
2012.
There are over 37,000 hotel rooms in Chicago's central business district, and over 108,000 rooms in the Chicagoland area.
In April 2014, Chicago will host the U.S. Travel Association's IPW, the world's largest U.S. tourism marketplace for international inbound travel.
Transportation
Chicago has been an important center for North American transportation and distribution. Chicago's distribution network offers access to air. rail, and water, with two ports capable of handling ocean-going ships and barges, and an airport system that moves 1.5 million tons of freight, mail, and


D-5

goods annually. Chicago is also the only city where the country's six largest freight railroad companies interchange traffic.
The Chicago Transit Authority operates the second largest public transportation system in the nation, with: 1,781 buses operating over 140 routes and 1,959 route miles, making 25,000 trips per day and serving 12,000 bus stops; 1,200 rail cars operating over eight routes and 242 miles of track, making 2,145 trips each day and serving 144 stations; and 1.64 million rides on an average daily basis and over 550 million rides a year (bus and train combined).
Schools
The Chicago Public School system is the third largest school district in the nation, serving approximately 404,000 students. CPS is comprised of 472 elementary schools, 106 high schools, 7 contract schools, and 96 charter school campuses. The City Colleges of Chicago operate seven colleges and serve approximately 120,000 students.
Government
The number of full-time employees ofthe City for the years 2006 through 2013 is included in the following table.
City Full-Time Employees 2006 — 2013
Budgeted Full-Time Equivalent Year Positions
40,297
40,207
39,921
37,419
2010. 36,889

36,448
33,708
2013 33,554*
Source: Chicago Comprehensive Annual Financial Report for the year ended December 31, 2012. * Estimate from Ihe City of Chicago 2013 Annual Financial Analysis.

The City has 1.27 million registered voters.
Arts & Culture
The city has more than 200 theater companies and is the only U.S. city with five Tony award-winning theater companies. Chicago is home to the Chicago Symphony, the Lyric Opera, and the Joffrey Ballet. Chicago has over 35 museums and was voted the U3 art destination in the country by American Style Magazine. The Chicago Cultural Center, the first free municipal cultural center in the country, attracted more than 800 thousand visitors in 2012.




D-6

Recreation
The Chicago metro area has 80 miles of public shoreline and 94 beaches. Lincoln Park Zoo is the oldest public zoo in the country, with an estimated annual attendance of 3 million. Chicago has 552 parks, including Lincoln Park which is the second most visited city park in the country, attracting 20 million visitors annually. Chicago is home to nine major professional sports teams. Chicago has more free festivals and events than any other city in the country. Millennium Park, a 25-acre park in the heart of downtown, attracts 4 million visitors annually.
Restaurants and Shopping
There arc over 600 stores in and around Michigan Avenue. There are more than 5.500 restaurants in Chicago, including four that were awarded a Five-Star rating by Forbes Travel.
Housing Market

Home prices in the Chicago MSA housing market have strengthened through 2013. and City residential home sales experienced its 30th consecutive month of year-over-year growth by number in December 2013. According to the Freddie Mac Housing Price Index, the Chicago MSA index went from 103.54 in September 2012 to 114.08 in September 2013.
The Chicago MSA traditionally lags the national housing market. As experienced nationally, the Chicago market is recovering and the property tax base remains robust. Recently, the number of home sales has increased while the number of foreclosure Filings has decreased.
The monthly home sales and the median home sale prices for Chicago for the years 2009 through 2013 are shown below.
Chicago Monthly Home Sales 2009 — 2013
2009 2010 2011 2012 2013
January 917 1,202 1,034 1,123 1,485
February 866 1,225 1,056 1,250 1,378
March 1,212 1,814 1,450 1,664 1,894
April 1407 1,984 1,466 1.816 2,331
May 1,557 2,057 1,703 2,125 2,762
June 1.981 2,526 1,841 2,332 2,623
July 1.975 1.588 1,655 2,164 2,838
August 1,927 1,486 1,787 2,293 2,797
September 1,918 1.403 1,498 1,906 2,352
October 2,012 1,216 1,312 2,076 2,231
November 1,859 1,144 1,429 1,798 1,800
December 1,767 1,444 1,576 .1,849 2,080
Source: Illinois Association of Realtors



D-7

Chicago Median Home Sale Prices 2009 — 2013
2009 2010 2011 2012 2013
January $205,000 $195,000 $150,000 $148,000 $159,000
February 218.625 176,500 150.000 140.000 158.000
March 219,000 209,000 163.200 172,1)00 187.500
April 218.000 225.000 169,000 182,000 222,000
Muy 225,000 230,000 190,000 200,000 234,000
June 242,050 * 234,250 207,000 217.000 254,900
July 245.000 196.500 210.000 200.000 250.000
August 229.900 200.000 192,500 200,000 245.000
September 225,000 180,000 190,000 188,400 231,000
October 2)5,000 183,000 162.000 175,000 218,500
November 215,000 182,500 157.000 180,000 200.000
December 210,000 166,250 155,000 185.000 210.000
Source' Illinois Association uf Realtors





























D-8



l

APPENDIX E
RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS
APPENDIX E
RETIREMENT FUNDS AND OTHER POST-EMPLOYMENT BENEFITS TABLE OF CONTENTS
Page

RETIREMENT FUNDS E-l
General E-l
Source Information E-3
Background Information Regarding the Retirement Funds E-3
General E-3
The Retirement Funds E-4
Overlapping Taxing Bodies E-5
Certain Duties E-6
Investments E-6
Determination of Employee Contributions E-7
Determination of City's Contributions E-8
City Contributions to FABF E-9
City's Required Contributions to PABF and FABF Beginning with the Levy made in 2015 E-9
The Actuarial Valuation ; E-10
General E-10
Actuaries and the Actuarial Process E-10
City's Contributions Not Related to GASB Standards E-l 1
City's Contributions to PABF and FABF under P.A. 96-1495
Will Not Conform to GASB Standards E-12
Actuarial Methods E-12
Actuarial Value of Assets E-12
Actuarial Accrued Liability E-l3
Actuarial Assumptions E-l4
Assumed Investment Rate of Return E-14
Funded Status ofthe Retirement Funds E-15
Projection of Funded Status and Insolvency E-24
Report and Recommendations ofthe Commission to Strengthen Chicago's Pension Funds E-31
Diversion of Grant Money to PABF and FABF Under P.A. 96-1495 E-32
GASB Statements 67 and 68 E-33
Legislative Changes E-33
P.A. 96-0889 E-33
P.A. 96-1495 : E-34
Pension Reform E-34
OTHER POS T-EMPLOYMENT BENEFITS E-35
General : E-35
The Settlement E-36
City Financing ofthe Health Plan E-36
Actuarial Considerations E-36
City Obligation E-36
Actuarial Methods and Assumptions E-37
Funded Status ¦. E-37
Retiree Health Benefits Commission E-38
Status of Healthcare Benefits After the Settlement Period E-38

RETIREMENT FUNDS

General
Pursuant lo the Illinois Pension Code, as revised from time to time (the "Pension Code"), the Cily contributes lo four retiremenl funds, which provide benefits upon retirement, clealh or disability to employees and beneficiaries. Such retiremenl funds arc, in order from largest lo smallest membership: (i) the Municipal Employees' Annuity and Benefit Fund of Chicago ("MEABF"); (ii) the Policemen's Annuity and Benefit Fund of Chicago ("PABF'); (iii) ihe Firemen's Annuity and Benefit. Fund of Chicago ("FABF"); and (iv) the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago ("LABF' and, logclhcr with MEABF, PABF and FABF, Ihe "Retirement Funds").
The Retirement Funds are cslablished, administered and financed under the Pension Code, as separate bodies politic and corporate and for ihe benefit of the employees of ihe City and their beneficiaries. The City's contributions to the Rclircment Funds, and benefits for annuitants of ihe Retirement Funds, arc governed by the provisions of the Pension Code. Sec "— Detennination of City's Contributions" below. This Appendix describes, among other things, ihe current provisions of the Pension Code applicable lo the City's funding of the Rclircment Funds; no assurance can be made that Ihe Pension Code will not be amended in ihe future.

The Retirement Funds have been actuarially determined to be significantly underfunded. The unfunded liabilities have increased in recent years, and actuaries for MEABF" and LABF indicate thai, under current law, the unfunded liabilities of those Retirement Funds will continue to increase for the foreseeable future and jeopardize ihe solvency of MEABF and LABF. See "— Funded Slalus of the Rclircment Funds" and "— Projection of Funded Slalus" below. Furthermore, although the actuaries for PABF and FABF project lhat Ihe unfunded liabilities of those Retirement Funds will decrease in ihe future, such a decrease is expected to result from significantly increased Cily contributions to those Retiremenl Funds as a resull of the enactment of P.A. 96-1495, which is described and defined herein. The increases in the City's contributions to PABF and FABF mandated by P.A. 96-1495 are expected lo substantially burden Ihe City's financial condition.

In 2010, the Illinois General Assembly enacted legislation to address the pension benefits of members who joined the Retiremenl Funds on or after January I, 201 I. See "— Legislative Changes" below. While this legislation is expected lo reduce Ihe Retirement Funds' unfunded liabilities over lime, it is not expected lo materially reduce such liabilities in the near future.

With respect lo ihe unfunded liabilities associated with members who joined the Retirement Funds before January I, 2011, the only significant action laken lo date by the Illinois General Assembly has been Ihe enactment of P.A. 96-1495 which, among other things, significantly increased future contributions to be made by the City to PABF and FABF. Sec "— Determination of City's Contributions - City's Required Contributions to PABF and FABF Beginning wilh ihe Levy made in 2015" below. P.A. 96-1495 has been projected to require an increase in the City's contributions to PABF and FABF by more than $584,000,000, or 200%, starling in 2016 and increasing by approximately three percent each year thereafter. See "TABLE 13 - PROJECTION OF FUTURE FUNDING STATUS - FABF' and "TABLE 14 - PROJECTION OF FUTURE FUNDING STATUS - PABF' below. Given the substantial burden these increased contributions would place on the City's financial condition, the Cily is exploring options which would reduce the near-icrm burden of such increased contributions.



E-l

As discussed under "— Pension Reform"" below, ihe Cily believes thai reductions in Ihe benefits provided by each of the Retirement Funds are necessary, in combination with any increases in employer and employee contributions, to adequately address the unfunded liabilities ofthe Retirement Funds. Any reduction in benefits would require action by the Illinois General Assembly to modify the Pension Code. No assurance can be given lhat any proposal to modify benefits will be enacted. Furthermore, given the Illinois Pension Clause (defined below) of the Illinois Constitution, no assurance can be given that legislation lo modify benefits, if enacted, will he upheld upon a legal challenge. See "— Background Informalion Regarding the Rclircment Funds — General" below.

The Rclircment Funds' sources of funding are the City's contributions, the employees' contributions and investment income on the Retirement Funds' assels. The City's and employees' contribution levels arc determined pursuant to the Pension Code. There is no mechanism in the Pension Code by which the funding can self-adjust, because contributions arc not affected by a change in benefits, assets or investments, but only by a change in current payroll, as described in "— Determination of City's Contributions" below.
The financial health of ihe Rclircment Funds and the projected impact of ihe Retirement Funds' underfunding on future conlribulions to be made hy the City has impacted the rating agencies' determination ofthe City's creditworthiness. On April 17, 2013, Moody's Investors Service ("Moody's") issued a release (the "Release") announcing a new approach to analyzing slate and local government pensions. The method of evaluating public pension plans established in the Release is intended to be a method of standardizing information among public pension plans and does not impact the City's required conlribulions, the value ofthe Retirement Funds' assels, or the liabilities owed by the Retirement Funds. The City does not endorse Ihe method of analysis adopted by Moody's in ihe Release.
Moody's new pension analysis will include, among olher things, adjusting pension plan Actuarial Accrued Liabilities by using certain common assumptions, such as ihe discount rate and amortization period. Certain olher actuarial assumptions, such as mortality and salary growth rates, were not standardized across governmental plans. To accomplish their review, Moody's has staled that it will use a discount rate based on Citibank's Pension Liability Index discount rale as of a pension plan's valuation dale. Such a discount rale will be lower than the discount rale currently used by ihe Retirement Funds and is closer lo Ihe discount rate for a typical pension plan in the private sector. The City estimates that Moody's new method of analysis would result in Ihe following Funded Ratios, as hereinafter defined, of ihe Retirement Funds (based on data as of December 31, 2012): 25.2% Tor MEABF, 38.4% for LABF, 20.3% for PABF, and 15.8% for FABF. See Tables 5 through 8 below for information on the Retiremenl Funds' historical Funded Ratios. For informalion regarding the Retirement Funds' discount rate, see "— Actuarial Assumptions —Assumed Investment Rale of Rclurn" below. The Release can be obtained from Moody's; provided, however, that the Release is nol incorporated herein by such reference.
On July 17, 2013, Moody's downgraded the ratings of the City's general obligation bonds and sales lax revenue bonds from "Aa3" lo "A3," the City's water and sewer senior lien revenue bonds from "Au2" lo "AI," and the Cily's waler and sewer second lien revenue bonds from "Aa3" to "A2," each wilh a negative outlook. Moody's indicated in the ratings action report associated wilh these downgrades (ihe "Rating Report") lhat the downgrades "reflect Chicago's very large and growing pension liabilities and accelerating budget pressures associated with (hose liabilities." The Cily makes no prediction as to whether Ihe Moody's rating action described above will result in additional downgrades, or the impact that the financial condition of Ihe Retirement Funds will have on Moody's or any other rating agency's judgment of the Cily's creditworthiness or on the Cily's future financing costs. The Rating Report can be obtained from Moody's; provided, however, that the report is not incorporated herein by such reference.


E-2





i
On September 13, 2013, Standard & Poor's Ratings Group ("S&P") affirmed the City's "A+" general obligation bond rating, but changed its outlook on the Cily's general obligation debt from "stable" to "negative." In changing ihe City's general obligation bond outlook, S&P cited the City's pension liabilities. Furthermore, S&P indicated that the increased contributions required by current stale law could result in rulings downgrades for the Cily if Ihe Cily substantially reduces its reserves lo make these increased payments.
On November 8, 2013, Fitch Ratings Inc. ("Filch") reduced the Cily's general obligation bond and sales tax bond ratings from "AA-" to "A-" and the ruling on the City's commercial paper notes from "A+" to "BF3B+." Fitch assigned a negative outlook to each of these rulings. In announcing these ratings downgrades, Fitch cited, among other things, the Cily's pension liability and the "strong legal protection lo pension benefits" in Illinois.
In addition, other ruling agencies may have established, or may csiublish in the future, methods for evaluating Ihe financial health of ihe Rclircment Funds and (heir impact on the City's creditworthiness ihul arc different from the information provided in this Appendix.
Source Information
The information contained in rhis Appendix relics in part on information produced by the Retirement Funds, their independent accountants and their independent actuaries (the "Source Informalion"). Neither the City nor ihe Cily's independent auditors have independently verified the Source Information and make no representations nor express any opinion as to the accuracy of the Source Informalion.
Furthermore, where Ihe tables in ihis Appendix present aggregate informalion regarding Ihe Retirement Funds, such combined informalion results solely from (he arithmetic calculation of numbers presented in the Source Information and may not conform to the requirements for the presentation of such informalion by (he Governmental Accounting Standards Board ("GASB") or the Pension Code.
Certuin of ihe comprehensive annual financial reports of the Retirement Funds (cuch, a "CAFR" and together, the "CAFRs"), und certuin of the actuarial valuations of the Retirement Funds (each, an "Actuarial Valuation" and together, the "Actuarial Valuations"), muy be obtained by contacting the Retirement Funds. Certain of these reports muy also be available on the Retirement Funds' websiles (www.meabf.org ; www.chipabf.org ; www.lubfchicago.org ; und www.fuhf.org ); provided, however, thai the contents of ihese reports und of the Retirement Funds' websites are not incorporated herein by such reference.
Background Information Regarding the Retirement Funds
General
Each of the Retirement Funds is u single-employer, defincd-benefit public employee retirement system. "Single-employer" refers to the fact that ihcrc is a single plan sponsor, in this cuse, Ihe City. "Dcfined-hencfil" refers lo Ihe fuel that Ihe Retirement Funds pay a periodic benefit lo retired employees und survivors in u fixed amount determined at Ihe time of retirement. 'ITie amount of the periodic benefit is generally determined on the busis of service credits und salary. Eligible employees receive ihe defined benefit on a periodic busis for life, along with certain benefits to spouses unci children that survive Ihe death of the employee.

To lund ihe benefils to be paid by a defined benefit pension plan, both employees and employers make contributions lo the plan. Generally in a defined-bencfit pension plan, employees coniributc a fixed percentage of their annual salary and employers contribute the additional amounts required (which amounts may be determined pursuant lo sialuic, as in ihe case of Ihe City), when combined wilh ihe investment earnings on plan assets, to pay the benefils under the pension plan. See "Table I -Membership," "— Detennination of Employee Conlribulions" and "— Dclcrminaiion of Cily's Contributions" below.
The benefits available under the Rclircment Funds accrue throughout Ihe lime a member is employed by ihe Cily. Although the benclits accrue during employment, certain age and service requirements must be achieved by an employee lo generalc a rclircment or survivor's periodic defined benefit payment upon rclircment or termination from the City. The Retirement Funds also provide certain disability benefits and retiree healthcare benefits to eligible members.
Section 5 of Article XIII of the Illinois Constiluiion (Ihe "Illinois Pension Clause") provides as
follows:
"Membership in any pension retiremenl system of Ihe Slate, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, ihe benefils of which shall nol he diminished or impaired."
For a discussion of the Illinois Pension Clause in the context of possible pension reform related to the Retirement Funds, sec "— Pension Reform" below.
For purposes of this Appendix, references lo "employee" or "member" are references lo Ihe employees ofthe Cily, ihe employees of Ihe Retirement Funds participaling in ihe Rclircment Funds, and wilh regard lo MEABF, certain employees and annuitants of the Chicago Board of Education who are members of MEABF as described below.
The Retirement Funds
Municipal Employees' Annuity and Benefit Fund of Chicago. MEABF is established by and administered under Article 8 of the Pension Code. MEABF provides age and service retiremenl benefits, survivor benefils and disability benefils to all eligible members and survivors. MEABF is administered under the direction of a live-member board of trustees (the "MEABF Board"), whose members arc responsible for managing and administering MEABF for the benefit of iis members. In addition to City employees, MEABF's membership includes non-instructional employees of ihe Chicago Board of Education ("CBOE Employees"). With respect to MEABF, the terms "employee" and "member" include the CBOE Employees. The CBOE Employees account for almost half of MEABF's membership. The Mayor of (he City, ihe City Clerk, the City Treasurer, and members of the City Council may participate in MEABF if such persons file, while in office, wrillen application lo Ihe MEABF Board.
Policemen's Annuity and Benefit Fund of Chicago. PABF is established by and administered under Article 5 of the Pension Code. PABF provides retirement and disability benefits lo the police officers ofthe City, their surviving spouses and their children. PABF is administered by an eight-member hoard of trustees (the "PABF Board"). Members of the PABF Board arc charged with administering ihe PABF under the Pension Code for the benefit of its members.
Firemen's Annuity and Benefit Fund of Chicago. FABF is established by and administered under Article 6 of the Pension Code FABF provides retirement and disability benefits lo fire service employees

E-4

anil their survivors. FABF is governed by an eight-member hoard of trustees (the "FABF Board"). Members of the FABF Board are statutorily mandated to discharge their duties solely in the interest of FABF's participants and beneficiaries.
Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago. LABF is established by and administered under Article I 1 of the Pension Code. LABF provides retirement and disability benefils for employees of the Cily who arc employed in a title recognized by ihe City as labor service and for ihe survivors of such employees. LABF is governed by an eight-member board of trustees (the "LABF Board" and. together with ihe MEABF Board, the PABF Board and the FABF Board, ihe "Retirement Fund Boards"). Members of ihe LABF Board arc statutorily inundated lo discharge their duties solely in Ihe interest of LABF's participants and beneficiaries.
The membership of the Retiremenl Funds as of December 3 1, 2012, was us follows:

TABLE I - MEMBERSHIP

Retirement Active Inactive/ Entitled Retirees and
Fund Members to Benefits Beneficiaries Totals
MEABF 31,326 13.465 24.120 68.911
PABF 12.026 664 12,966 25.656
FABF 4.740 60 4.613 9.413
LABF 2.865 1.408 3.976 8.249
Total 50.957 15,597 45,675 112.229

Source: CAFR;. of (he Retirement Kinds us of December 31. 2012
Overlapping Taxing Bodies
The City's lax base overlaps wilh numerous other units of government, including the Chicago Board of-Education, ihe Chicago Park District ("CPD"), the County of Cook, and ihe Slate of Illinois (collectively, all such other units arc referred to herein as ihe "Governmental Unils"). Certain of the Governmental Unils maintain Iheir own defined benefit pension plans (collectively, all such other plans are referred to herein as the "Other Retirement Funds"), many of which arc also significantly underfunded. The underfunding of these Olher Rclircment Funds places a substantial additional potential burden on (he Cily's taxpayers, who bear the burden of funding a portion of the contributions of the Governmental Units.
On December 5, 2013, Governor Put Quinn signed Public Act 98-0599 into law (the "Stale Pension Reform Act"). The Stale Pension Reform Act provides for certain cost-saving and other reforms to the Stale's four largest pension plans, including, but not limited lo, changes to the employer contribution formula, cost of living adjustments, retirement ages and employee conlribulions. Such changes arc scheduled lo lake effect on June I, 2014. The Stale Pension Reform Act has been challenged by five separate lawsuits on behalf of various classes of annuitants, currenl and former workers, und labor organizations, alleging, among other things, that the legislation violates ihe Illinois Pension Clause. On March 3, 2014, the Illinois Supreme Court consolidated four of these lawsuits und ordered lhat the consolidated lawsuit proceed in Sangamon County Circuit Court. 'Ihe fifth lawsuit was filed after such

consolidation. The Cily makes no prediction as to whether the tiling of these lawsuits or their outcome will impact Ihe Cily's pension reform efforts.
On January 7, 2014, Governor Pal Quinn signed Public Act 98-0622 into law (the "CPD Pension Reform Act"). The CPD Pension Reform Act provides for certain cosl-saving and other reforms to CPD's pension plan, including, but not limited lo, changes lo the employer contribution formula, cost of living adjustments, retirement ages and employee conlribulions. Such changes are scheduled lo lake effect on June J, 2014. To dale, no lawsuit has been filed challenging the CPD Pension Reform Act. The City makes no prediction as to whether lawsuits will be IT led challenging the CPD Pension Reform Act, or whether the filing of any such lawsuit or its outcome will impact Ihe City's pension reform efforts, nor docs the City make any prediction as (o whether Ihe outcome of Ihe four lawsuits against the Slate Pension Reform Act will impact the CPD Pension Reform Act.
For more informalion on ihcsc Other Rclircment Funds, please refer to the Stale's Commission on Government Forecasting and Accountability ("COGFA") website at ; provided, however, that the contents of the COGFA website arc not incorporated herein by such reference. The City believes the information on COG FA's websile to be reliable; however, ihe Cily lakes no responsibility for ihe continued accuracy of the Internet address or for the accuracy or timeliness of information posted on the website.
Certain Duties
F.ach Retirement Fund Board is a fiduciary of ils respective Retirement Fund and is authorized to perform all functions necessary for operation ofthe Retiremenl Funds. The Pension Code authorizes each Retirement Fund Board to make certain autonomous decisions, including decisions regarding the investment of funds, Ihe management of assets, the disbursement of benefits, and the hiring of staff, financial advisors and asset managers.
Fach Retirement Fund Board is authorized to promulgate rules and procedures regarding their administration of benefils and other mailers in accordance with Ihe Illinois Administrative Procedure Act, and their decisions in awarding, limiting, or denying benefits are subject to the Illinois Administrative Procedure Act. Certain aspects of the Retiremenl Funds, however, including the defined benefits and the employer and employee contribution levels, are established in the Pension Code and may be amended only by an amendment to the Pension Code.
The Pension Code provides that the expenses incurred in connection with ihe administration of the Retirement Funds are nol construed lo be debt imposed upon ihe City. Such expenses arc the obligation ofthe Retirement Funds exclusively, as separate bodies politic and corporate.
The Illinois Atlorney General and annuitants may bring a civil action to obtain relief for violations of a fiduciary duly lo the Retirement Funds or any act or practice which violates any provision of the Pension Code.
Investments
Fach Rclircment Fund Board manages the investments of its respective Retiremenl Fund. Slate law regulates the types of investments in which the Retirement Funds' assets may be invested. Furthermore, the Retiremenl Fund Boards invest ihe Retirement Funds' assets in accordance with the prudent person rule, which requires members of ihe Retiremenl Fund Boards, who are fiduciaries of ihe


F-6

Retirement Funds, to discharge their duties wilh Ihe care, prudence and diligence that a prudent person acting in a like capacity and familiar with such matters would use in a similar situation.
In carrying out their investment duty, the Retirement Fund Boards may appoint and review investment managers as fiduciaries lo manage the investment assets of the Retirement Funds. Such investment managers are granted discretionary authority to manage the Retirement Funds' assets. Additional information regarding the Retirement Funds' investments and investment management may be found on the Retirement Funds' websites; provided, however, lhat the contents of such wehsilcs are not incorporated into this Appendix by such reference.
Table 2 provides information on the investment returns experienced by each of Ihe Retirement
Funds.

TABLE 2 - INVESTMENT RATES OF RETURN, 2003-2012

Fiscal
Year MEABF FABF LABF PABF
19.6% 28.3% 17.5% 21.2%
10.3 12.8 11.5 I 1.0
6.6 9.5 7.8 7.3
12.7 14.0 11.2 12.1
7.3 11.0 8.0 8.8
(28.7) (33.8.) (29.2) (27.8)
19.4 23.7 21.5 21.5
13.7 17.7 15.5 12.7
0.1 (2.0) (0.3) 0.8
12.9 16.2 14.6 12.4
Assumed Rale'" 7.5 8.0 7.5 7.75

Source- The audited fin;inci.il Maienieius nf ihe FABF as nf December 31 of the years 2003-2012: and for MEABF. LABF and PABF. Ihe CAFRs ofthe respective Retirement Fund for the fiscal ye;irs ending December 31. 2003-2012
(1) Reflecls Ihe assumed rale of return for each fund as ot December 31. 2012. as discussed in further detail under "Acluari.il
AsMimpiions—Assumed Investment Rale of Return" below.

Determination of Employee Contributions
Cily employees who arc members of the Rclircment Funds arc required lo contribute to their respective Rclircment Fund as set forth in ihe Pension Code.
Members of MEABF contribute 8.5% of their salary lo MEABF (consisting of a 6.5% contribution for employee benefits, a 1.5% contribution for spouse benefits, and a 0.5% contribution for an annuity increase benefit).
Members of PABF contribute 9.0% of their salary to PABF (consisting of a 7.0% contribution for employee benefits, a 1.5% contribution for spouse benefits and a 0.5% contribution for an annuity increase benefit).


E-7

Members of FABF contribute 9.125% of their salary lo FABF (consisting of a 7.125% contribution for employee benefits, a 1.5% contribution for spouse benefits, a 0.375% contribution for an annuity increase benefit and a 0.125% contribution for disability benefits).
Members of LABF contribute 8.5% of their salary Lo LABF (consisting of a 6.5% contribution for employee benefils, a 1.5% contribution for spouse benefits, and a 0.5% contribution for an annuity increase benefit).
For each Retiremenl Fund, if an employee leaves without qualifying for an annuity, accumulated -employee contributions are refunded.

Determination of City's Contributions
Under the Pension Code, the City's conlribulions lo fund the Retirement Funds are determined pursuant lo a statutory formula on an annual basis. The Pension Code provides that the City's contributions to the Retirement Funds arc lo be made from the proceeds of an annual levy of properly taxes for each of the Retirement Funds (collectively, the "Pension Levy") by the City solely for such purpose. The Pension Levy is exclusive of and in addition to the amount of properly lax which the Cily levies for olher purposes.
The amount, of the Pension Levy may not exceed the product of a multiplier established in Ihe Pension Code for each Retirement Fund (each, a "Multiplier") and the amount contributed by the City's employees iwo years prior lo the year in which the lax is levied (the "Multiplier Funding"). For levy years 2011 and 2012, Ihe Multiplier for each Retirement Fund was as follows: 1.25 for MEABF; 2.00 for PABF; 2.26 for FABF; and 1.00 for LABF. The Cily's conlribulions arc made as governed by the Pension Code and are not based on ihe Actuarially Required Contribution (as hereinafter defined). See "—The Actuarial Valuation—City's Contributions Not Related lo GASB Standards" below.
The Pension Code provides- that the Retirement Fund Boards must each annually certify lo the City Council a delermination of ihe required Cily contribution lo the Retirement Funds. In making its request for the Cily's annual contribution, each Rclircment Fund, acting through its Retirement Fund Board, annually approves and then submits a resolution to the Cily Council requesting lhat the City Council levy for a particular contribution amount. The Cily has generally paid Ihe amounts' so rcqueslcd. Sec "Cily Contributions to FABF' below.
In lieu of levying all or a portion of Ihe annual Pension Levy, ihe City is permitted under ihe Pension Code to deposit with the City Treasurer other legally available funds to be used for ihe same purpose as the Pension Levy (collectively, the "Olher Available Funds"). In recent years, the Cily has utilized these provisions by depositing wilh the City Treasurer certain amounts paid by the Slate to the Cily from the Personal Property Replacement Tax Fund ("PPRT") of the State pursuant to Section 12 of the Revenue Sharing Act of Ihe Stale. The City's dislribulive share of PPRT is not required to be used for this purpose but il can be used by the City for corporate purposes. Since 2003, the amount of PPRT contributed by ihe Cily to the Retirement Funds in the aggregate has averaged approximately $78,387,000 annually. In 2011, 2012 and 2013, the amounts of PPRT contributed to the Rclircment Funds in the aggregate were approximately $108,153,000, $101,875,000 and $126,629,000, rcspeciively. For those same years, the Cily's lolal distributive share of PPRT was $144,332,846, $139,461,000 and $159,559,000, respectively. 2013 PPRT informalion is based on unaudited City data. As such, the 2013 data is subject to change.

For purposes ol" this Appendix, references to "Pension Levy" may include the Other Available Funds of the City.
The City's contributions to the Retirement Funds have equaled the Multiplier Funding and certain other amounts required by the Pension Code and have not been in excess of that amount. The Cily's contributions in accordance wilh the Pension Code, which arc generally lower lhan the Actuarially Required Contribution, as described below, have contributed to the significant underfunding of the Retirement Funds. Moreover, the City's conlribulions in accordance with the Pension Code have had the effect of deferring the funding of the Retiremenl Funds' liabilities, which increases the costs of such liabilities and Ihe associated financial risks, including the risk thai each Rclircment Fund will not be able to pay its obligations as they become due. Any .significant increases in the Cily's contributions to the Rclircment Funds can be expected lo place further sirain on the City's finances.
Cily's Contributions to FABF
For levy year 2014, the FABF has requested certain amounts which the City has dclemiincd arc not required by the Pension Code. The amount requested by the FABF Board in excess ofthe amount the City has determined lo be the statutory requirement for 2014 was $18,147,000. The FABF Board has made similar requests for amounts in excess of the amounl the City has determined to be the statutory requirement in each ofthe last several years. In each such year, including the current year, ihe City has indicated that it will not contribute amounts in excess of Ihe amount the City has determined to be the statutory contribution requirement to FABF.
City's Required Contributions to PABF and FABF Beginning with the Levy wade in 2015
On December 30, 2010, Governor Pal Quinn signed into law Public Act 096-1495 ("P.A. 96-1495") which, among other things, created a new method of determining the contribution to be made by Ihe Cily lo PABF and FABF. P.A. 96-1495 requires that, beginning in 2015, the Pension Levy each year for PABF and FABF will be equal to the amounl necessary to achieve a Funded Ralio (as hereafter defined) of 90% in PABF and FABF by the end of fiscal year 2040 (ihe "P.A. 96-1495 Funding Plan").
Pursuant to the P.A. 96-1495 Funding Plan, Ihe Pension Levy for PABF and FABF will be calculated as Ihe level percenlage of payroll necessary lo reach the 90% Funded Ralio target by 2040. In Cook and DuPage Counties (in which the Cily is located), properly taxes (including ihe Pension Levy) levied in one year become payable during the following year in two installments. As such, the Pension Levy for PABF and FABF made in calendar year 2015 will be payable in calendar year 2016. •
The P.A. 96-1495 Funding Plan, if implemented, would significantly increase the City's required contributions to PABF and FABF beginning in 2016 and, if implemented, would impose a significant financial burden on the Cily. The City is exploring options lo change Ihe P.A. 96-1495 Funding Plan lo reduce the near-term burden on the City's financial condition imposed by dramatically increased conlribulions lo PABF and FABF under P.A. 96-1495, including shifting all or a portion of such burden to future years. -Any change lo the P.A. 96-1495 Funding Plan which would reduce the contributions required of the City would have the effect of increasing the unfunded liabilities and decreasing ihe Funded Ratio with respect lo PABF and FABF when compared to Ihe projected unfunded liabilities and Funded Ratio as set forth in Tables 13 and 14 below. Furthermore, any such change would require legislative action by ihe Illinois General Assembly.




E-9

Illinois House Bill 3088 ("HB 3088") contains a proposed amendment that would: (i) delay implementation of Ihe actuarial funding required by the P.A. 96-1495 Funding Plan until tax levy year 2022, and instead require the Cily to continue contributing to PABF and FABF under the Multiplier Funding system ihrough lax levy year 2021; and (ii) provide lhat PABF and FABF achieve a 90% Funded Ralio by 2061 rather than 2040 as currently required by P.A. 96-1495 (collectively, (he "96-1495 Delay Bill"). If enacted, ihe 96-1495 Delay Bill would increase the cost of PABF's and FABF's respective liabilities, as well as the associated financial risks, including the risk that the PABF and FABF will become insolvent. For more information regarding Ihe possible insolvency of the Rclircment Funds, see "Projection of Funded Status and Insolvency" below.
No assurance can be given that a bill modifying the P.A. 96-1495 Funding Plan, including the 96-1495 Delay Bill, will be enacted into law.
P.A. 96-1495 does nol affect the manner in which the City contributes to MEABF and LABF.
The Actuarial Valuation
General
In addition lo the process outlined above, the Pension Code requires thai the Retirement Funds annually submit lo the Cily Council a report containing a detailed statement of Ihe affairs of such Retirement Fund, its income and expenditures, and assets and liabilities, which consists of the Actuarial Valuation. The Actuarial Valuation measures Ihe financial position and determines the Actuarially Required Contribution (as defined below) of such Retiremenl Fund for reporting purposes pursuant to GASB Statement No. 25 ("GASB 25").
A description of the statistics generated hy the Rclircment Funds' actuaries in the Actuarial Valuations follows in the next few paragraphs. This informalion was derived from ihe Source Informalion.
GASB, which is part of a private non-profit corporation known as the Financial Accounting Foundation, promulgates standards regarding accounling and financial reporting for governmental entities. These principles have no legal effect and do not impose any legal liability on the City. The references to GASB principles in this Appendix do not suggest and should nol be construed to suggest otherwise.
Actuaries and the Actuarial Process
GASB standards require disclosure of an "Aciuarially Required Contribution," which is a financial reporting requirement but nol a funding requirement. One of the primary purposes of the Acluarial Valuations is to determine ihe Actuarially Required Contribution, which is the annual conlribution amount lhat GASB standards would calculate is needed lo fully fund the Retiremenl Funds. GASB pronouncements refer to this concept as the "Annual Required Contribution"; however, this Appendix refers to the concept as the Actuarially Required Contribution lo denote the fact lhat the Actuarially Required Contribution is Ihe amount an actuary would calculate pursuant to GASB standards to be contributed in a given year, to differentiate it from the amount ihe Cily will be rcquiretl lo contribute under the Pension Code.
The Aciuarially Required Contribution consists of iwo components: (I) that portion of Lhc present value of pension plan benefits which is allocated lo the valuation year hy the actuarial cost

method (as described in "— Actuarial Methods — Actuarial Accrued Liability" below), termed the "Normal Cost"; and (2) an amortized portion of any UAAL (defined below).
In producing the Actuarial Valuations, the Retiremenl funds' actuaries use demographic data (including employee age, salary and service credits), economic assumptions (including estimated future salary and interest rales), and decrement assumptions (including employee turnover, mortality and retirement rates) lo calculate, as of the valuation dale, the Normal Cost, the Actuarial Accrued Liability (defined below), the Actuarial Value of Assets (defined below), and the actuarial present values for the Retirement Fund. The Retirement Funds' actuaries use this data to determine the following fiscal year's Actuarially Required Conlribulion. The Retirement Funds' Actuarial Valuations are publicly available and may be obtained from the Retiremenl Funds. Sec "— Source Information" above.
The Actuarial Accrued Liability is an estimate of the present value of Ihe benefits each Retirement Fund must pay to current and retired employees as a result of Ihcir past employment with the Cily and parlicipalion in such Retirement Fund. The Actuarial Accrued Liability is calculated by use of a variety of demographic and other dala (such as employee age, salary and service credits) and various assumptions (such as estimated salary increases, interest rates, employee turnover, retirement dale and age, mortality and disability rales). The Actuarial Value of Assets reflects the value of the investments and other assels held by each Retirement Fund. Various methods exist for calculating the Actuarial Value of Assets and the Actuarial Accrued Liabiliiy. For a discussion of the methods and assumptions used lo calculate (he Retirement Funds' Actuarial Accrued Liability and Actuarial Value of Assels, see "— Actuarial Methods" and "— Actuarial Assumptions" below.
Any shortfall between ihe Actuarial Value of Assets and the Actuarial Accrued Liability is referred to as Ihe "Unfunded Actuarial Accrued Liability" or "UAAL." The UAAL represents the present value of benefits attributed to past service that are in excess of plan assets. In addition, the actuary will compute the "Funded Ratio," which is ihe Actuarial Value of Assets divided by the Actuarial Accrued Liability, expressed as a percentage. The Funded Ratio and the UAAL provide one way of measuring the financial health of a pension plan.

City's Contributions Not Related to GASB Standards
The City's contributions lo the Retirement Funds are not based on the contribution standards promulgated by GASB for reporting purposes. Instead, the Cily's contributions arc based on ihe formulas and amounts established in the Pension Code. Whereas GASB's contribution standards arc actuarially based, the conlribulion amounts required by ihe Pension Code, with the exception of the P.A. 96-1495 Funding Plan discussed above, are not actuarially based. Sec "— Determination of City's Contributions" above.
The difference between ihe Cily's actual contributions and the Actuarially Required Conlribulion (as calculated by the Rclircment Funds' actuaries) for fiscal years 2003-2012 is shown in "Table 4 -Informalion Regarding City's Contributions - Aggregated" below. The Retirement Funds' Actuarially Required Contribution is equal to ils Normal Cost plus an amortization ofthe Retirement Funds' UAAL over a 30-year period. MFABF, LABF and FABF amortize the UAAL on a level dollar basis, whereas PABF amortizes the UAAL on a level percent of payroll basis. Both methods of calculating the Actuarially Required Contribution are acceptable under the standards promulgated by GASB.





C-11

dry's Contributions to PABF and FABF under P.A. 96-1495 Will Not Conform to GASB Financial Reporting Benchmarks
As discussed above, beginning with the property tax levy made in 2015 (and collectible in 2016), the Pension Levy for PABF and FABF is required to be calculated pursuant to P.A. 96-1495. The P.A. 96-1495 Funding Plan differs from the manner of calculation GASB requires for financial reporting purposes. The primary difference between GASB's financial reporting standards and the P.A. 96-1495 Funding Plan is lhat the goal ofthe P.A. 96-1495 Funding Plan is for PABF and FABF lo reach a Funded Ralio of 90% by 2040. GASB's financial reporting standards require amortization of the entire UAAL towards attainment of a J00% Funded Ratio.
Actuarial Methods
The Retirement Funds' actuaries employ a variely of actuarial methods lo arrive at the Actuarial Value of Assets and the Actuarial Accrued Liability.
Actuarial Value of Assets
The Retirement Funds calculate their respective Actuarial Value of Assets by smoothing investment gains and losses over a period of live years, a method of valuation referred lo as the "Asset Smoothing Method." Under the Asset Smoothing Method, the Retirement Funds recognize in the current year 20% of the investment gain or loss realized in that year and each of the previous four years. The Asscl Smoothing Method is an allowable method of calculation according to GASB.
The Asset Smoothing Method lessens the immediate impact of market fluctualions on ihe Actuarial Value of Assets, which is used to calculate the UAAL and the Funded Ratio, that may otherwise occur as a result of market volalility. However, asscl smoothing delays recognition of gains and losses, thereby providing an Actuarial Value of Assels lhal does not reflect ihe true value of pension plan assets at the time of measurement. As a result, presenting the Actuarial Value of Assets as determined under the Asset Smoothing Method might provide a more or less favorable presentation of the current financial position of a pension plan than would a method lhat recognizes investment gains and losses annually.
Table 3 provides a comparison of Ihe assets of (he Rclircment Funds (as aggregated) on a fair value basis and after application of the Asset Smoothing Method.

















E-12

TABLE 3 - ASSET SMOOTHED VALUE OF ASSETS VS. FAIR VALUE OF NET ASSETS'" -
AGGREGATED

Actuarial Value a.s
Fiscal Actuarial Value Fair Value of a Percentage of
Year of Assets'1' Net Assets Fair Value
$13,297,599 $12,277,994 108.30%
13.10S.645 12,952,096 101.21
13.086.060 13,245.445 98.80
13.435.692 14.164.347 94.86
14.254,816 14.595,514 97.67
13,797.344 9,844.339 140.16
13,051,349 10.876.846 119.99
12.449.863 11,408.555 109.13
11.521.138 10.536,135 109.35
10.531.447 10.799.603 97.51

Source: 2U03 llnuugh 2010 ilala is from Ihe Acluanal Valualions of Ihe KcliieinciH hinds as of December 31. 2010, and CAFRs of Ihe Retirement Funds lor the fiscal year ending December 31. 2010. 2011 and 2012 data is sourced from Ihe Actuarial Valualions of Ihe Retirement Funds as of December 31. 2011 and Deceinl>er 31. 2012. respectively
In thousands of dollars Data is presented in the aggregate for Ihe Retiremenl Funds.
The Acluanal Value ol Assels is calculated through use of the Asset Smoothing Method.
Actuarial Accrued Liability
As the final slcp in the Actuarial Valuation, the actuary applies a cost method to allocate the total value ol" benefits to past, present and future periods of employee service. This allocation is accomplished by Ihe development of the Actuarial Accrued Liability and the Normal Cost. Currently, all of the Retirement Funds use the cnlry age normal actuarial cost method (the "FAN Method") with costs allocated on the basis of earnings. The FAN Method is a GASB-approved actuarial cost method.
Under the EAN Method, the present value of each member's projected pension is assumed to be funded by annual installments equal lo a level percent of Ihe member's earnings for each year between entry age and assumed cxil age. Each member's Normal Cost for the current year is equal to the portion of the value so determined, assigned to the current year. Therefore, the Normal Cost for the plan for the year is the sum of Ihe normal costs of all active members.
P.A. 96-1495 requires that, beginning in 2015, PABF and FABF calculate Ihe Actuarial Accrued Liability pursuant to the projected unit credit actuarial cost method (the "PUC Method"). Under Ihe PUC Method, Normal Cost represents the actuarial prcscnl value of lhat portion of a member's projected benefit lhat is attributable lo service in the current year, based on future compensation projected to retirement. Under this method, the Actuarial Accrued Liability equals the actuarial prcscnl value of lhat portion of a member's projected benefit lhat is attributable to service to dale, again, on the basis of future compensation projected to retirement.
Under either cost method, the Actuarial Accrued Liability is the portion of the present value of benefits assigned by the cost method lo years of service up lo ihe valuation date, i.e., for past service.


E-13

This value changes as the member's salary changes and years of service increases, and as some members leave and new members arc hired. Future Normal Cost is the portion of the present value of benefils assigned to future years of service and is assumed to be funded annually.
As compared (o Ihe EAN Method, the PUC Method will produce a more back-loaded growth in liabilities because the PUC Method allocates a higher portion of retirement costs closer lo the time of retirement. Therefore, the PUC Method results in a slower accumulation of assels, which in turn requires smaller initial, and larger future, contributions (assuming funding is actuarially based, as is the P.A. 96-1495 Funding Plan). Deferring contributions in this manner increases the cost ofthe liabilities and the associated financial risks for PABF and FABF.
Actuarial Assumptions
The Actuarial Valuations of the Retiremenl Funds use a variety of assumptions in order lo calculate ihe Actuarial Accrued Liability and the Actuarial Value of Assels. Although several of the assumptions are the same across all of the Retirement Funds, each Retiremenl Fund determines, within actuarial standards, the assumptions lo be used in ils Actuarial Valuation unless a specific assumption is fixed by ihe Pension Code. No assurance can be given that any of the assumptions underlying the Actuarial Valuations will reflect the actual results experienced by the Retirement Funds. Variances between the assumptions and actual results may cause an increase or decrease in the Actuarial Value of Assets, ihe Actuarial Accrued Liability, (he UAAL, the Funded Ralio or Ihe Actuarially Required Conlribulion. Additional informalion on each Retiremenl Fund's actuarial assumptions is available in the 2011. Actuarial Valuations, with respeel lo PABF and FABF, and the 2012 Actuarial Valuations wilh respect to MEBF and LABF. See "— Source Infonnation" above.
The actuarial assumptions used by the Retirement Funds are determined by the individual Retiremenl Fund Boards upon the advice of Ihe actuaries. The Retiremenl Funds periodically perform experience studies to evaluate the actuarial assumptions in use. The purpose of an experience study is to validate lhat Ihe actuarial assumptions used in the Actuarial Valuation continue lo reasonably estimate the actual experience of the pension plan or, if necessary, to develop recommendations for modifications to the acluanal assumptions to ensure their continuing appropriateness.
Assumed Investment Rate of Return
The Actuarial Valuations assume an investment rale of return on the assets in each Rclircment Fund. As described in Table 2 above, the Rclircment Funds all assumed an average long-term inveslment rale of relurn of 8.00% for (he fiscal year ended December 31, 2011. Due lo ihe volatility of the marketplace, however, the actual rate of return earned by the Retirement Funds on Iheir assels in any year may be higher or lower than the assumed rale. Sec Table 2 for ihe rales of relurn earned on the Retirement Funds' assels for the last ten fiscal years. Changes in the Retirement Funds' assels as a result of market performance will lead lo an increase or decrease in ihe UAAL and ihe Funded Ralio. As a result of the Rclircment Funds' use of the Asset Smoothing Method, however, only a portion of these increases or decreases will be recognized in the current year, with the remaining gain or loss spread over ihe remaining four years. See "— Actuarial Mclhods — Actuarial Value of Assels" above.
Beginning with calendar year 2012, Ihe Retirement Fund Boards of MEABF, LABF and PABF rcduced the assumed investment rate of return lo be used by Iheir respective actuaries in preparing future actuarial valuations. For MEABF and LABF, the assumed investment rate of return has been decreased to 7.5% beginning with calendar year 2012. For PABF, the assumed investment rale of relurn was

/
E-l 4




i
decreased to 7.75% for calendar year 2012 and 7.50% beginning with calendar year 2013. I-"A13F-" continucs to assume an investment rate of return of 8.0%. For a discussion of the rate lo be used by Moody's in analyzing public pension plans, see "— General" above.
The assumed investment rate of return is used by each Retirement Fund's actuary as ihe discount rale lo determine the present value of future payments to such Retiremenl Fund's members. Such a delerminalion is part of ihe actuary's process lo develop ihe Actuarial Accrued Liability. Reducing the assumed investment rale of return will, taken independently of olher changes, produce a larger Acluarial Accrued Liability for each Retiremenl Fund. Furthermore, as discussed above, an increase in Ihe Acluarial Accrued Liability will, taken independently, increase the UAAL, decrease the funded ralio and increase the Actuarially Required Contribution.
These changes to the assumed investment rale of return will nol impact contributions by the Cily lo MEABF and LABF because ihesc Rclircment Funds are funded pursuant lo ihe statutory Multiplier Funding system. However, beginning in 2016, Ihe Cily's contributions to PABF are expected to increase even further as a result of the change in the assumed investment rate of return, taken independently of olher factors, because PABF's UAAL will increase as described above and the P.A. 96-1495 Funding Plan requires an amortization of the UAAL to reach (he 90% funding target by 2040
Funded Status of the Retirement Funds
In recent years, the City has contributed lo ihe Retirement Funds the full amounl of Multiplier Funding and cerlain olher amounts determined by the City to be required by the Pension Code through a combination of property tax revenues (through the Pension Levy) and PPRT funds.* However, these amounts have nol been sufficient lo fully fund the Retirement Funds' Aciuarially Required Conlribulion. Moreover, expenses related to the Health Plan (as defined below) arc paid from the City's contributions, which has the effect of reducing the Acluarial Value of Assets and decreasing the Funded Ralio.
Furthermore, the income from all sources (including employee conlribulions, Cily conlribulions and investment earnings) to the Retiremenl Funds has been lower than the cash outlays ofthe Retiremenl Funds in recent years. As a result, the Retirement Funds have liquidated investments and used assets of the Retirement Funds to satisfy these cash outlays. The use of investment earnings or assets of ihe Rclircment Funds for Ihesc purposes reduces ihe amount of assels on hand to pay benefits in ihe future and prevents the Retirement Funds from recognizing Ihe full benefils of compounding investment returns.
Table 4 provides information on the Actuarially Required Contribution, the City's actual contributions in accordance wilh ihe Pension Code and the percenlage of the Actuarially Required Contribution made in each year.






As discussed under "— Delerminalion of City's Contributions" above, ihe Cily and FABF have disagreed over whether certain amounts arc required under the Pension Code. In addition, pursuant to ihe Pension Code, the City did not make any contributions to or levy the Pension Levy for LABF in fiscal years 2001 through 2006 because LABF had funds on hand in excess of its liabilities. I he Pension Code provides lhat the City will cease lo make contributions lo LABF in such a situation.^ The City continued Lo levy the Pension Levy for ihe other Retirement Funds during those years.

E-l 5

TABLE 4 - INFORMATION REGARDING CITY'S CONTRIBU TIONS'" - AGGREGATED

Fiscal Year
2003
2004
2005
2006
2007"
2008"
2009"
2010"
2011"
2012"
Actuarially Required Contribution
$451.239 545.232 698.185 785.111 865.776 886.215 990,381 1.112.626 1.321,823 1.470,905

Actual Employer Contribution'"
$343.291 345.398 423.515 394.899 395.483 416.130 423,929 425.552 416.693 440.120
Percentage of Actuarially Required Contribution Contributed"'
76.1%
63.3
60.7
50.3
45.7
47.0
42.8
38.2
31.5
29.9

-Sources. Actuarial Valuations of Ihe Retirement Funds as of Dccciiihcr .11. 2010. December 31. 2011 and December 31. 2012. CAFRs of die Retirement Funds for ihe fiscal year ending December 31. 21)10. and CAFRs of ihe Cily for ihe fiscal year ending December 31. 2011 and December 31.2012.
ID In thousands of dollars. Data is presented in ihe aggregate lor die Retirement Funds and uses assumptions and mclhods employed by
each of Ihe Retirement Funds. For the data presented as of December 31. 21X11 through December 31. 2006. contribution inlbrmaiion includes amounts related to olher posl-einploymeill benefils Beginning ill 2007. as a result of a change in GASH standards, contribution information is presented exclusive of amounts relaled lo other ixist-cmploymciil benefils.
Includes ihe portion of Ihe PPRT contributed lo the Rctiiemenl Funds in each of ihe years 2002-2010
The estimated multiplier lhal would have been necessary for each Retirement Fund lo make ihe lull Aciuarially Required Contribution in 2012 were as follows 4.4? lor MbABF: 6.52 for FABF: 5 44 lor I.AUF: and 6.73 for PABF. Beginning with ihe levy made in 2015 (and collectible in 2016). ihe City's contributions lo PABF and FABF will nol he calculated in accordance wilh Ihe Multiplier as described in "— Determination of City's Contributions" above.
14) Beginning in 2007. as a result of a change in GASB standards, the information in ilns Table 4 does not include olher post-employment
bene!its. which Ihe Cily's Comprehensive Annual Financial Report pieseius separately.
The continued decline in the percentage ofthe Actuarially Required Conlribulion contributed by the City, as shown in Tabic 4 above, results, in pari, from ihe fact thai Ihe acluarial liability continues lo grow and as a result of the delayed recognition of gains and losses resulting from the Retirement Funds' use of the Asset Smoothing Method for financial reporting purposes. See "— Actuarial Methods— Actuarial Value of Assels" above.
The Cily contributed approximately $463 million lo the Retirement Funds in Fiscal Year 2013. This conlribulion is divided among ihe Retirement Funds as follows: MEABF - $159.1 million; LABF -$14.5 million; PABF - $204.8 million; and FABF - $84.6 million. The amount of the City's 2013 contribution to the Retiremenl Funds is provided by ihe Cily and is unaudited. This informalion is preliminary and no assurance can be given that ihe information will nol change once an audit is completed.
As of the end of fiscal year 2010, ihe Retiremenl Funds had an aggregate UAAL of approximately $15,315 billion on a fair value basis and $14,274 billion on an acluarial basis (using ihe Asscl Smoothing Melhod). The respective Funded Ralios for these UAALs are 42.7% and 46.6%. The UAAL increased between the end of fiscal year 2009 and the end of fiscal year 2010 primarily as a result of (i) insufficient contributions compared to the Actuarially Required Conlribulion and (ii) investment losses brought on by the severe global economic downturn.





E-16

As of the end of fiscal year 2011, Ihe Retirement Funds had an aggregate UAAL of approximately $17,284 billion on a fair value basis and $16,299 billion on an acluarial basis (using the Asset Smoothing Method). The respective Funded Ratios for these UAALs arc 37.9% and 41.4%.
As of the end of fiscal year 2012, ihe Retiremenl Funds had an aggregate UAAL of approximately $19,084 billion on a fair value basis and $19,352 billion on an actuarial basis (using the Asset Smoothing Method). The respective Funded Ratios for these UAALs are 36.1 % and 35.2%.

The following tables summarize the financial condition and the funding trends of the Retirement
Funds.








































E-17
so — oo
vc oc os
r l r«-, —
O OO OS
r-i OO
¦— ¦—• u -

\D r*~. O QC V, V,




VO rn
w-) r-"
ri r- o
O *r,
n t. ri w oo
r- r— c* o n
C Ol
>r! r( x od
\n —.
— o — cn .
C) r, oo ci O
ri so vO —.
n ri on o" —<
'/^j O "T
m n oi r-
it" ri o- vo


r*"l oo m so P-l —- — so
IjT,
OO Tt
O r-
o vc"
C vo r*~. vo „c, o vo r- r-
r<~, vo O ri o OO
O oo c~. oo



fa
m <
— oo Ol OO OS SO Cs sC v0^*00 r*-, V~. O-

Os r*~i Gt" "* £ rS
r~- oo rr
M s> ^ „ . c
£ = ^ m ^
^ ° rn
r! . vo m
£ 2 ¦*
r-i oo so
O ur, cn
in — ir, o .
c< rr-' r-r !£
o cc ^ - ^
f^, sC r>

s =
i

fa © Z 8tf P
o 3
z o
o
S3 H
Z

Q
Z . .
o <
CJ W
<« J
i—i <; . .
O cj
Z t/5 w
z *

w
M <

oi ol sc
~t v~i oi
¦3- ir, os
cs vi
n-. r-» oo
~ — Tl-





oi r— —
so —
v~. O Is*!
oi vi oi
Ol v~, O
tt

»n Os O cc — r-l K O; ^
od
»n v-, r-— — i/-.

O CT\ ri vd






oi ir, O



OO O*

VO Tt
"t ^ ^. r! ^ "
o" od oo od d on
On vD i/^ [¦**¦ I""** NO
CO Cn cn O
VO Cn cf r*{

vo oo ¦— n
t - a, r- s>
—; — on on r I
Cn NO ri
o r~ r*-. vc n- '
vo On oi ri

c7n ri ^ r, ^ k0
r» —¦ ri n C= C>
m ri r<-| oo r— v,
ri o rn od cd
r0. Cn — v3 O
CO CI OO On
vo On ri ri

VO O sT, o
h o o ri s?
o in r~- -^r on
rf-, cd iri it" O
-zf o vo vc r-
r^-j OO u-, -rj-

Os oo co ,c >.c
C\ m (5^ Cs
O O OO w~; •—• Cn
r*~. On O VO
¦so r^' ri —"
IE.
3H
^ < P I
2 -I
o c:


H y F

U T3 : S 2 •
!
,|109|g1-!|109|-B ' £ o ! ? 2 ^ S c « ^: c
r = SI 2 2 :
: (u _i — f i -j -
i ; ° ' i S-s Si
¦ > 12 a- u ¦
: 5 *< — -
i S s S";
1-
' £ -a . ;
; - = ^ J
- = "S
on p c = O E r S O rj ;


rt -r > 2
u, <
s I s -
E = « s
i = 1 =
H 5 o £
ca U
(J i: c £ £ £ <3

S s u ^ is
> < 5 <-> 5
<
<|1010|t: « t1- < e:

UJ < < n
i
i
ri OO -O
On ot r»
CO CN —•
¦n r-T ri'
O r- tj- co

i- it, r, o
— O CO Cn
<¦*"¦¦ O nO VO

cn t-J \o oj cn m cn in no —
o >n vo v. 0 0
Os On co o I> t>
•O rn oq r-^ Tt oj
ti- oi *C r-" m' vo
't ri N n*,
Tt >n m o
cn" G\ no" vo"
cn m, co o o cn w~, 01
—' — I * On (¦*"i *"t
r- r-i r- -*
-r — «n cn
— — —• CN
no m oc n ri ^ ^
r» o 'n ci *i. ^
on — o — —: *o
-3-' vo o — 2°
OO r*-| — «n ~' -r
oo r- x
rf',' od rt
fa ca <
u 33 H fa O
z o
H
Q
Z
o u
<
u z





WD
Q Z <
3 O 3C H
Z
r- o on o o oi o \o



O OO



v. on o co i— o»
C; c r[ q
—' r-" o-' —
o — Tt

O — On CO
— — OO VO
- c\ n r.
o' —-
oo o









od ri


On — CO NO O vo
O Tt -O *T
oj r- r-» r- >n m oo
rn ci •—' CO
CN CO CO CO
O Tf -3" *0

M rr, C —i
— o r- oo ct —
r. cj oo oo in m
CJ C-l CO ON
Tt" oo" cn ^n

0\ o oo
On »n -t go ^
r~~- On o- —* o
on m Tt Tt m m
ON On On
rn o- m~ rn

ri p- O »n rj ^
rn rn o o c=
Tt r-_ On c; fi r-
Tt oi r-' co —I c
—¦ OJ VO O if. \f.
on r- p- co
n r-" n r,


.c o
CO -o|10910|¦S o
o >
o;|910|U. c:
< u
vJ &
5°
—I —I CN O .ft r,
m \o
O oi -ct Of O On
m Tt CO — in m
co m o o m in
On p —;
rn r-' m* ^n

VO CO O O-
Cn — CO — vo
oo oo Tt m
o in oo >n
Tt o ol of
oo
^ Xi
5 <3
1 £
>
I I S ° .2
S >
3 -
> « ^ Z3
LL. <


5'>
o —
E = _ u -S CJ v 2
5 O = 2

5 2
£ 3
2 so -5 iH
c. S | h x iB <;
LU , ,
"-S sj
u. <
-O TD
<
<
D|910|co -t r, oo
co >n en cn

ri
r- oo ^, ^
- - IT;
On C-1 CO Ol ~*
ON O On O
^ Tt" rf r~'
r i cn *f~i o- ^
Tt — Tt r- £> t>
o- cn — —< co o
—* — 06 o v. 06
O IO, l/-| Ol OJ)
—• co co r-
—< rS oi oi
O (N O
—¦ O On On r~, OO
co* in od no o oi
on in Tt m r*-,
— no u~, Tt
— Tf
—¦ rn

o
—¦ co v~, r-
m rn On O CI OO « O
r- cr\ O r-p*> v, c\ m
oi -r m —







¦ CO
^ © Z
O S3
H Z
2? co PS << fa >-J
<: u
co fa
fa
I
W CO

o o
r|
o rr c~. r-oo Tt on o Tt r- O —¦ O* rn Tt


O — no oj r-l [— O vO — ri oo —


r i — o
oi r— o Ol ON Tt


r- on r- no
On r I —¦
NO —; p Tt
O c-i
cn On —•


r- u-, Tt c.








~ Tt
co oi


r- O
ri On
>n oi ri
NO
w. Cn NO Tt
on no r* r- l>
VO_ oi O iO vO V) —" r4-" 10
en —• cn r- ri
r-~ — —
r*-p o~. m On

OS -tf ^ ^
Cs

00 <^ -
r- Tt O r- ^ ^
t> ri T ri !> I?
,Tt — NO NO 1— CN
Tt" 00 no en iri o
no co Cn 01 Tt Tt
Ol O NO CO
—' rn ——
00
OO-OI
C5
S K S r! °°.
Ol OO On
00 O r-. 00 no no

On Tt r- w. .c
r- 01 Tt *t t> t>"
w. 10, m on r-i m
ol cn o* o r*-j oi
b> —
- s
a s
S ^
LL -o


O 3




0> O a)
Q —

<


¦It
§2 i
± n P
O rt -ft* 3 'J
P I J






III
y = 22
r LO R








o
CN 1
UJ
— 01 — —
S TT ^ « '

o
O
to
no m cn co
nO Ol On
r-i' o" on
Tt NO Tt
co 00 r~~ O .0 .0
O \0 O VO l> t>
p Ol O- Ol — Tt
Tt r-' r-' n"i Tt r-^

E 5
» ^ IS
rt
rt O
c:
rt —
— -o ^
_3 ^
1 =
O -is
U t ¦u c
< 13 u i. S > <
« « f- < « os
¦a s s
< <
Tt
o
NO
Cn vi O V, — vo v, *r Tt
— Tt cn r-
On —i — ci rn
vT no" vT o od -o
— m nO ci v, v,
rn rn Cn 0_
—'- oi —r

O m v; \d rO On VI On
Tt O O „c
— V. V, Tt L>
Tt OO OI Tf ^ —;
ci oi on o — no
ol v, rn m no no
Tt — co r-
C-1

r- Tt
ON NO
oi oo
s —
o oi — oi IS t> Tt O CO nO rn rn
on o ci o o vi



— v, oi O r- Tt
nO Cn \0







O =
o Z OS U>
O «
H
Z
Z U t£ z tu


Tt v. On r-'


m C\ v;
- IT, O
Tf Tf C^
od v* v,
— _ r-i


— NO NO Cn O r*~.
r» — vi













V, V,
O cc
Tt CN

O- Tt rn . q ^e,
Ol oi -rt CN t> c>
Tt rn j-— oo '— o-
od v* vd no* ci cc
On -— oi " nO CO
O CN O- CI

oo t> t>
Vj NO C I


oo n ci Tt <^ ^ it, oo n in t> t>
O NO O NO Tt —«


v. O On v, =j ^
on o m o E> v, m oi r- oi O



CO .
<
< ¦







Li­en
< i


33 < ¦
Ii'
a. ,.j
2 S S 6


P I

i/» irt C
- !£.' °^
a> u p
S d E
P O ^
» s §.
9- -£ -
Ml
— r- vi
CN ON Tf
v, ^ O
CO CI
v, r» ON oo
CN V,
V, —
ON
ON Tt"
Tt r-
NO NO
v; <>
vC oc V,
- 2 5 ¦-. 8 < ~

r- o vo —
VI ON
NO m ol m ^a -r.
Cn vo O m t> <>
[""¦» V) (N CI rn ~~
On CO no — V, rr,
r-- oi r- >o, cn O
NO NO w —
a " " r, 5

•5 uu o '
E 5 S
S 5 c
, F o
« T3 >»
n : I


(J £ o O
1^




v c is c £ o
¦ CD < ^

O
1> 3
i > a
' «|910|o c
n c3 OS
¦o -a
< <
_ _ U- <
"a -a
§ § D u. u.
> 2
CJJ O CJ>^
; ca I— CQ 0
CO I— — cn so rn m
Tf —¦ O Tt
oo ri On -r
-t m p-l OfJ
Tf »n On O
1-*-, r-i TJ
rn cc oo in
m oc O rn
O On' on On
oi — —
in Tt m —
o O o> oj
oo' Os c-i
oo" O oo
On -r cn
— r- r- o


Q U Z ca
O u
oo Q Z
fa H Z fa
fa
OO
a z «c
co co PS 3
SS o
H «^
fa
OS °
w o
O
H Z
u ><
<
co »—i fa
EC E-i fa O
z o
H 3
z o u 1-1
u z <: z
(N oo On tt
v, vo rt
r~ —
ON ON ci



r- rt w~i oo
cj tj- r-






wj o — O
p— no *n on
cm on oo —
io" o- a

T x r, r-
TT ON Tt U-}
q on —
tt" in Tf —
oo oo r-
pj m m


vo r- ri tt
o o n
o — v, oc
m~ ~~r —"I



»n u-i r— tj-on Tt- m n c-i r-i









NO Ol
no oo'














-- r-tt O vn oi
rn m co o tJe
\o r- — — i> t>
°°. r-. cn on On
on »n m - ¦
-j- oi — r- no
" ^ '"i|9
10|n vd — on —¦ —

CO OJ ON ^3 h.O
o vo xn o;
m p- on --
o ON o ON
— OJ —
?
m no — i§ j,?
(N M CO ^ ^
cn rn on On £ £
p- ri r» -r - _
m Tt Tf O

£ oo —
- OO Tf
-j- m oo do

cn m oo m
O co t> .t
« - g £
w-i — r- >n m p- O m - •
Tt r-j — oo jn O
rn" ri od OO
— r-i

O m O Vi

o
«n — *n no
Tt — — O I>
NO ON CO CN r-
oc O od ri ^
C — m O m
—; ^ »n ri
rn o" r~' p-'







if I


o c CJ o
- 1; 5 ?!
2 t o -e
—^ t_j

C «

B —
* rn








o '^5
> S
aa
£
S









•5 5


It c —

U J ca <
os — r- in o^ o o c
°i ^
r-? tXJ vO m
£?¦£ S -I-
= E ~o o
: 5 c > p —
E =
o ...
CJ t: -J o
«-e cj




o 'E B
y -O r " CO <£

i> p a c
K O u. 3
> < S 5
<
<
•= ¦= u-. .<
3 3 < <
- E q. £ _
g 2 C

o o S r-j ri r—
ol O —'
od -d- o ^i-
r i r- o
01 oi oi oi
oi o o
rr o oi oi
oo — cs
-rr -d ur;


CO Q Z
fa
{-
Z fa
m
PS
i-H
H fa PS fa EE
DS
o
fa Q
s
O
u
W r* I—l o 03 (S
oo
3 o
K H
Z
o Z o)
cn
oo oo
PS
PS >H
co ^
fa
O O PS
Oh
O
z
t-H
Q Z
fa fa
o fa
Q fa
O
co

fa
m
H
© _ —
— S3|910|J £ 'u
<<





OS ^




^ o .2
c a|910|ass|910|fa U


?J 3
< > D .=
fa

-J .2




> 2 S
•a » < fa



> <


TJ >
41 i'

r- on o
xt on O
-t --r vo
-T m o oi r- r-
-— oo in o- — m m o\ vo c7> cc oo ci r-oj cn o-i oi cn cn

M-OOOOO^vOO-'O
m rninr-cooo-r, tM(N c> n n Tt rn Tt r-_ r-^ o r--m" rn o" on v' O of o>" -- m"
OIOOCOVOOOOOO'OOVOOI
oo vo oo O - - - M M rN of r4 rn fi n n' n r, oo
m vo -t oi







o «*n vo m Tt r- vo no vo o rn

i— mooomvooioooNON
o — tt m u~) co vo '—1 *0 rN
t> tX) r; — r-_ On CN Ol CO On
o od ri o o o" in vd rn
m >n »n o —1 Tt on — on co
Tt rn rn -- vO_ Ol_ O ^i vq 0_
vo" o-" co~ co co" Tt" tt" 'n vo on"


r-i no -n m co —. on O O Tt
O vo oi On m oo »*n ¦—« \o co
cn oi — r- Tt on Tt On on o
oo" of oi* >n od Tt" on rn co oi
¦—1 O ¦— m m Cn —'O-Onv,
Tt oi oo on ri cn c-i oj cn
od co od" o* —" tt no on"
OO

on vo v. «o m
m Tt v*. m O
cn oq v. —^ vq
p^' oi vi Tt in Tt" vd od vo" on
r- m TtvcONTto-Or-iON
ri on oi — u*. oci co Tt «n r-;
oi ri cn Tt Tf' On o — o" O
r~ —> o

Tt VO CN —
VO O VO CO
co vo" in Tt
O co cn in On
—. o Tt oi o Tt
q o
Tt Tt NO
. rn n ri Tt rn cn oi


. O co — m oi o m *n
IT, - C7» r> — t> r> M ^
— m m cn oi



S = .2








^5 S-
U. oi
5 s

- u H




:3









3 £ <
3 o <















5 5






Q. in
E= ra
Ol TD J, o
"2









SI



m Tt m no r- co o O —- oi
OOOOOOO —
OOOOOOOOOO Ol Ol Ol Oi Ol Oi OJ CN CN Ol
g ^ t s 5, 2
r» o» U. l_- CO f—

A variety of factors impact the Retirement Funds' UAAL and funded Ralio. A lower return on investment than that assumed by the Retiremenl Funds, and insufficient contributions when compared lo ihe Normal CosL plus inleresl will all cause an increase in the UAAL and a decrease in the Funded Ralio. Conversely, higher returns on investment than assumed, and contributions in excess of Normal Cost plus interest will decrease the UAAL and increase Ihe Funded Ratio. In addition, legislative amendments, changes in acluarial assumptions and certain olher factors (including, but not limited lo, higher or lower incidences of retirement, disability, in-service mortality, retiree mortality or terminations than assumed) will have an impact on the UAAL and the Funded Ralio.
Projection of Funded Status and Insolvency
The Retirement Funds' funding level has decreased in receni years due lo a combination of factors, including: adverse market conditions and investment returns as a result of Ihe financial downturns experienced in 2001 and in 2008 and beyond; and contributions that arc lower than the Actuarially Required Contribution.
The following projections (collectively, the "Projections") are based upon numerous variables lhat are subject lo change. The Projections arc forward-looking statements regarding future events based on the Retiremenl Funds' actuarial assumptions and assumptions made regarding such future events, including that there are no changes lo the current legislative structure and that all projected contributions to the Retirement Funds are made as required. No assurance can be given lhat Ihese assumptions will be realized or lhat actual events will not cause material changes lo the data presenled in this subsection.
The Projections are based on the 2012 Actuarial Valuations of the Retirement Funds and are provided to indicate cxpecled trends in the funded status of Ihe Retirement Funds under current law.
























E-24

I

TABLE J1 - PROJECTION OF FUTURE FUNDING STATUS - MEABF "

Market
Actuarial Unfunded Accrued
Accrued Market Actuarial Liabilities Market Employer
Fiscal Liability Assets (UAAL) Funded Ratio Contribution
Year (a) (b) (a-b) (b/a)
<> .: : r • ™»rj" ~ ' —
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$14,536,397 15.048,196 15.560,462 16.082.630 16,601.674 17.114.069 17,616.057 18,104,325 18.576.408 19.044.224 19.493.710 19,922.976 20,330,539 20.714.947 21.075.196 21.409,418 21,7)5.387 21,992.990 22,243.068 22.467.127 22,667.597 22,846.617 23.006.737 23,150,602 23,280.753 23.400.356 23,512.563 23,622.082 23.734.828 23.855.936
$4,891,512 4,678.909 4.418.517 4,116.817 3.757.415 3,333,218 2.863.458 2,260,041 1.596,843 853.400 10,479
$ 9.644,885 10.369,287 11,141.945 11.965,81.3 12.844,259 13,780.851 14.752,599 15,844.284 16.979,565 18.190.824 19.483,231 19.922,976 20,330,539 20,714,947 21.075.196 21,409.418 21.715.387 21.992.990 22.243,068 22,467.127 22.667,597 22,846,617 23.006,737 23.150,602 23.280.753 23.400,356 23.512.563 23.622,082 23.734.828 23.855.936
33.65%
31.09
28.40
25.60
22.63
19.48
16.25
12.48
8.60
4.48
0.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$156,091 162,992 168.394 174,085 179.934 185,880 191.946 198,105 204.365 210,645 217,119 224.610 231.509 238.478 245,611 252.856 260,223 267,721 275.359 282.999 290.786 298.804 307.058 315,512 324,231 333.228 342,489 352.018 361.889 372.010
For fiscal years 2014-2025, Ciabriel Rocdcr Smith & Company. Ciabriel Kocdcr Smiih & Company is the consulting actuary for the Rclircincill l-umls. Beginning wilh fiscal year 2025, Ihe Cily has adjusted Ciabnel Rocdcr Snnlh & Company's projections by using differeni assumptions In parlicnlar, ihe Cily has assumed ih.il il will conliinie lo contribute to MEABF pursuant lo Ihe Multiplier Funding System upon the insolvency of MEABF Projection den veil Iroin acluarial data as of December 31. 2012 In thousands of dollars.







E-25

TABLE 12 - PROJECTION OF FUTURE FUNDING STATUS - LABF
Actuarial Accrued Fiscal Liability
Year
Market
Unfunded Accrued
Market Actuarial Liabilities Market
Assets (UAAL) Funded Ratio
_ (b). (a-b) (b/a)

Employer Contribution

2014
2015
2016'
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$2,463,253 2.519.158 2.573.437 2.628.859 2.682.630 2.734,485 2.783,726 2,830.103 2,873.247 2,913.025 2.948.881 2.980.541 3.007.674 3,029.960 3.047,254 3.059,371 3.066.267 3.068.479 3.066.566 3.061,130 3.053.004 3,042.845 3,031.278 3.019.032 3,006,471 2,993.998 2.982.375 2.972.440 2,964.758 2.959,792
$1,318,110 1,280.233 1.234,100 1.182.049 1.120.849 1.049.746 967.528 873.379 766.264 645,342 509,366 357.263 187.822
$1,145,143 1.238.925 1.339.337 1,446,810 1.561.781 1,684.739 1,816.198 1,956,724 2.106,983 2,267.683 2.439.515 2.623,278 2.819.852 3,029.960 3,047,254 3.059,371 3.066,267 3.068.479 3.066.566 .3,061,130 3,053.004 3,042,845 3,031,278 3.019.032 3.006.471 2.993.998 2.982.375 2,972.440 2,964.758 2.959.792
53.51%
50.82
47.96
44.96
41.78
38.39
34.76
30.86
26.67
22.15
17.27
1 1.99
6.24
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$14,472 15.267 15,582 15,972 16,425 16.932 17.480 18.057 18.660 19.280 19.935 20.620' 21.313 22.217 22,758 23.540 24.344 25.175 26.030 26.866 27,715 28.587 29.474 30.343 31.151 31.937 32.7)0 33.476 34,216 34.931
Source: Fur fiscal years 2014-2027, Gabriel Roeder Sninh & Company. Gabriel Roeder Smith & Company is the consulting actuary for the Retirement Fund*. Beginning with fiscal year 2028. the City has adjusted Gabriel Roeder Smilh & Company's projections by using different assumptions. In particular, the City has assumed dial it will continue lo contribute lo LABF pursuant to Ihe Multiplier Funding System upon Ihe insolvency of 1.AUK. I'roieclion derived from acluanal daia as ol December .11. 2012
(11 In thousands of dollars.







C-26

TABLE 13 - PROJECTION OF FUTURE FUNDING STATUS - FABF "


Fiscal Year
Actuarial Accrued
Liability

Market Unfunded Accrued Market Actuarial Liabilities Assets (UAAL) (b) (a-b)

Market Employer Funded Ratio Contribution
.„„,i!^)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ' 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
$4,308,913 4.452.548 4.594.292 4,732.564 4.865.986 4.993.722 5.115.953 5.233,558 5,346.933 5,456.021 5.560,197 5.659.686 5.752.106 5,837.310 5,917,012 5.993.837 6.067,128 6.135.774 6.200,107 6,260.250 6.318,352 6,375,454 6,432.317 6,491.291 6.554.092 6,623.040 6.697.483 6.777.096
$ 941.185 891.353 972.576 1.055,322 1.139.769 1.226.299 1.316.101 1.410.714 1,512.021 1.622.484 IJ43.090 1.875.596 2.020.813 2.180.795 2.356.907 2.549.978 2.759,815 2.985.293 3,227,475 3,487,783 3.768.672 4,071.910 4.399,407 4,755.142 5.142,726 5.566.252 6.027.735 6.099.386
$3,367,728 3.561.195 3.621,716 3,677,242 3.726,217 3.767.423 3.799,852 3.822.844 3.834.912 3.833.537 3.817,107 3.784.090 3.731.293 3,656.515 3,560,105 3.443.859 3.307.313 3,150.481 2.972.632 2,772,467 2.549.680 2.303,544 2.032.910 J,736.149 1,411,366 1.056,788 669,748 677.710
21.84%
20.02
21.17
22.30
23.42
24.56
25.73
26.96
28.28
29.74
31.35
33.14
35.13
37.36
39.83
42.54
45.49
48.65
52.06
55.71
59.65
63.87
68.40
73.25
78.47
84.04
90.00
90.00
$109,532 113,915 255.005 262,352 270,459 278,982 287.895 296.875 306,529 317.645 329.021 340.809 351,914 362.004 371,235 379.748 387,404 393.386 399.100 404.588 409.351 413,540 417.415 421.670 426,181 430.865 435.877 27,164
Source: Gabriel Rocdcr Siimh & Company. Gabriel Roeder Smith it Company is Ihe consulting actuary lor the Retirement Funds. Projection
derived from actuarial data as of December 31.2012
(I) In thousands of dollars.











E-27

TABLE 14 - PROJECTION OF FUTURE FUNDING STATUS - PABF1


Fiscal Year
Actuarial Accrued Liability
(a)
Market
Unfunded Accrued
Market Actuarial Liabilities Market
Assets (UAAL) Funded Ratio
(I)) (a-b) (b/a)

Employer Contribution

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043
$10,679,810 11.034,979 11.395,936 11.761.717 12,130.320 12.499.767 12,867,620 13.231,797 13,591,726 13.946.178 14,293.787 14.633.563 14.964.374 15,285.111 15.594.800 15.888,196 16.153.064 16.393.712 16.614.659 16,817,565 17.005.616 17.182,873 17,353.593 17.521,586 17.690.275 17.861.422 18.036.440 18.216.283 18.401.525 18,592,418
$2,971,019 2.800.866 3,053.949 3.323,004 3,606.440 3.903.754 4.215.416 4.541,104 4.882.757 5.242.297 5.620.728 6.020,954 6.445.257 6.896.318 7,380.260 7.898.871 8.450,706 9,033,687 9,648.140 10,294.939 10.978.965 11,707,115 12,485,517 13,320.879 14.219.878 15.188.465 16.232.796 16.394.654 16,561.373 16,733.176
$7,708,791 8.234,113 8.341.987 8.438,713 8.523.880 8.596.013 8,652.204 8,690.693 8.708.969 8.703.881 8.673.059 8.612.609 8.519.117 8,388,793 8.214.540 7,989.325 7.702.358 7.360,025 6.966,519 6,522.626 6,026.651 5.475.758 4.868,076 4.200.707 3.470.397 2.672.957 1.803.644 1,821.629 1.840.152 1.859,242
27.82%
25.38
26.80
28.25
29.73
31.23
32.76
34.32
35.92
37.59
39.32
41.14
43.07
45.12
47.33
49.72
52.32
55.10
58.07
61.22
64.56
68.13
71.95
76.03
80.38
85.04
90.00
90.00
90.00
90.00
$191,784 187,071 630.587 651.583 671.892 692.290 713.832 735,563 758.198 781.920 805.966 831.501 857.847 885,110 914,849 . 942.743 966.719 986,247 1,003,249 1,017,798 1.031.828 1,045,281 1,057.977 1,070.245 1.082,388 1,094.165 1.106.278 189.858 193,339 197.089

Source: Gabriel Roeder Snnlh & Company. Gabriel Roeder Siniih & Company is ihe consulting actiury for die Reiireiiicni l-'unds
derived from acluanal data as of December ? 1. 2012
(I) In thousands of dollars.









C-28

TABLE 15 - PROJECTION OF FUTURE FUNDING STATUS - AGGREGATE" "2'


Fiscal Year
Acluarial Accrued Liability
00
Market
Unfunded Accrued
Market Actuarial Liabilities Market
Assets (UAAL) Funded Ratiu
(b) (a-b) (b/a)

Employer Contribution

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
$31.988373 33.054.881 34.124.127 35.205.770 36.280,610 37,342.043 38.383.356 39.399.783 40,388.314 41.359.448 42,296.575 43.196.766 44.054,693 44.867.328 45,634.262 46.350.822 47.001.846 47,590.955 48,124.400 48.606.072 49,044.569 49.447,789 49.823,925 50.182,51) 50.531.591 50.878.816 51.228.861 51,587.901
$10,121,826 9,651.361 9.679,142 9.677,192 9.624.473 9,513.017 9,362.503 9.085.238 8.757,885 8,363.523 7.883,663 8,253.813 8,653,892 9,077,113 9,737.167 10,448.849 11.210.521 12,018.980 12.875.615 13.782.722 14.747.637 15,779,025 16.884.924 18,076.021 19.362.604 20.754.717 22.260.53) 22,494.040
$21,866,547 23.403.520 24,444,985 25,528.578 26.656,137 27.829.026 29.020.853 30.314.545 31.630.429 32.995,925 34,412,912 34,912.953 35.400,801 35.790,215 35.897,095 35.901.973 35.791,325 35.571,975 35,248.785 34,823,350 34.296.932 33.668,764 32.939,001 32.106.490 31.168.987 30,124,099 28.968.330 29.093,861
31.64%
29.20
28.36
27.49
26.53
25.48
24.39
23.06
21.68
20.22
18.64
19.11
19.64,.
20.23
21.34
22.54
23.85
25.25
26.75
28.36
30.07
31.91
33.89
36.02
38.32
40.79
43.45
43.60
$ 471.879 479.245 1.069,568 1.103,992 1.138.710 1.174.084 1,211,153 1.248.600 1,287.752 1.329.490 1.372.041 1.417.540 1.462.583 1.507.809 1.554,453 1,598.887 1.638.690 1,672.529 1.703,737 1,732,251 1.759.681 1.786.213 1.811.924 1.837,77) 1.863,951 1.890.195 1.917.355 602,517
Source: The aggregated information presented in this lahlc is derived from the projections piesenied in Tables 11-14. Please lefer lo Tables 11-14 for source information.
(I) In thous.uid.s of dollars.
(2| Aggregate data presented in this table includes data for all four Retiremenl Funds.
The projections in Tables 11 and 12 show that Ihe assets of MEABF and LABF will be depleted hy 2025 anil 2028, respectively, under current law. This means that, under the Pension Code as currently enacted, MEABF and LABF will not have assels on hand to make payments to beneficiaries beginning in 2025 and 2028, respectively. The employer contributions in Tables 11 and 12 reflect the formula for such contributions under current law, namely. Multiplier Funding. See "— Determination of Cily's Contributions" herein. These employer conlribulions, when combined with employee contributions and



E-29

other sources of revenue, such as investment returns, are projected to be insufficient to provide for full payments to beneficiaries by MEABF and LABF upon insolvency.
The City cannot predict the impact that the insolvency of MEABF or LABF would have on its conlribulions to these Retirement Funds. One possibility upon insolvency of MEABF or LABF would be changes in the Pension Code to provide for pay-as-you-go funding. Under pay-as-you-go funding, the employer contribution equals ihe amounl necessary, when added to other income, specifically employee conlribulions, to fund the current year benefits lo be paid by the retirement fund. Gabriel Roeder Smith & Company ("GRS") projects lhat, should the Cily be required lo adopt pay-as-you-go funding to ensure lhat payments to beneficiaries arc made to MEABF and LABF beneficiaries following the insolvency of such Retirement Funds, the City's contributions to such Retiremenl Funds would increase substantially. With respect to MEABF, GRS projects that pay-as-you-go funding would increase Ihe City's contribution from approximately $217 million in 2024 lo $1,129 billion in 2025, $1,686 billion in 2042 and $1,684 billion in 2060. With respect to LABF, GRS projects lhat pay-as-you-go funding would increase the Cily's conlribulion from approximately $22.7 million in 2027 lo $222 million in 2028, $251 million in 2036 and $229 million in 2060. Such large increases in the Cily's conlribulions, if required, could have a material adverse impact on the City's financial condition.
Additionally, the City cannot predict if or when changes lo the Pension Code or judicial decisions relevant to ils contributions will be enacted or decided, respectively, and the impact any such legislation or judicial decisions would have on the manner in which il contributes to the Retirement Funds. Contributing pursuant to Multiplier Funding or pay-as-you-go funding, as discussed in this subsection, represent two possible outcomes, however the City can make no represenlalion lhat some olher method of determining contributions, including payments that are possibly even larger than pay-as-you-go funding, would not be required.
The projections in Tables 13 and 14 show lhat Ihe assels of both FABF and PABF will, under current law, begin to increase in 2016. This increase assumes the implementation ofthe P.A. 96-1495 Funding Plan, beginning with levy year 2015. This projection docs not consider the impact of any pending legislation. The Cily projects lhat, should the 96-1495 Delay Bill be enacted in ils current form, the Funded Ratio of such Retirement Funds would continue to decrease during Ihe period by which P.A. 96-1495 is delayed.
The statements made in this subsection are based on projections, are forward-looking in nature and are developed using assumptions and informalion currently available. Such statements are subject lo certain risks and uncertainties. The projections set forth in this Appendix rely on information produced by the Retirement Funds' independent actuaries (except where specifically noted otherwise) and were not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect lo prospective financial information. This informalion is not fact and should nol be relied upon as being necessarily indicative of future results. Readers of this Appendix are cautioned not to place undue reliance on the prospective financial information. Neither the Cily, Ihe City's independent auditors, nor any other independent accountants have compiled, examined, or performed any procedures wilh respect (o the prospective financial informalion contained herein, nor have ihey expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association wilh, the prospective financial information.





E-30

Report and Recommendations of the Commission to Strengthen Chicago's Pension Funds
The information contained in this subsection describing the CSCP and the Pinal Report (each as defined herein) relies on information produced by the CSCP, including the Final Report. The Final Report is available at hllp://www.chipabf.org/ChicagoPolicePension/PDF/Financials/pension_commi ssion/CSCP_Final_Report_Vol.J_4.30.20IO.pdf; however, the content of the Final Report and such website is not incorporated herein by such reference. The City makes no representation nor expresses any opinion as lo the accuracy of the Final Report, the statements made or the informalion therein, some of which may be conflicting. Furthermore, information about the Final Report is being provided for historical purposes only.
On January I 1, 2008, Ihen Mayor Richard M. Daley announced the formation of the Commission lo Slrenglhen Chicago's Pension Funds (ihe "CSCP"), which was composed of a broad cross-section of Cily officials, union leaders, pension fund executives, and business and civic professionals. The CSCP was charged wilh examining the Retirement Funds and recommending ways to improve the Funded Ralio of each Retirement Fund. The CSCP met several times in 2008 through 2010, and at the CSCP's final meeting on March 24, 2010, the CSCP endorsed its final report, with three commissioners disscniing. The CSCP's final report, which included letters from the dissenting commissioners, was submitted lo Mayor Daley on April 30, 2010 (the "Final Report").
The CSCP's approval of the Final Report occurred before the enactment of Ihe Pension Reform Act and P.A. 96-1495 and, therefore, does not consider the impact of these acts on ihe Retirement Funds. See "— Determination of Cily's Conlribulions" and "— Legislative Changes" above for additional information on these acts. As described below, certain of the CSCP's findings and recommendations as contained in the Final Report are addressed by cither act.
The CSCP found lhat the financial health of the Retiremenl Funds had deteriorated due to a combination of factors, including the following: increasing liabilities due to enhanced benefits (e.g., non­recurring early retiremenl programs lhat were not properly funded); inadequate contributions, which were based upon a fixed percentage of payroll and nol acluarial need (i.e., the Multiplier Funding); and adverse market conditions leading to fluctuating returns on investments (in 2000-2002 and 2007-2009) which could not keep pace wilh growth in liabilities. Wilh regard lo Ihe CSCP's finding of inadequate contributions, P.A. 96-1495 addresses this finding with regard lo PABF and FABF. As described in "— Delerminalion of City's Conlribulions" and "— Lcgislaiive Changes — P.A. 96-1495" above, the City's Pension Levy applicable to PABF and PABF will be calculated as Ihe level percenlage of payroll necessary lo reach the 90% Funded Ralio target by 2040 pursuant to the P.A. 96-1495 Funding Plan, which will significantly increase the City's conlribulions lo PABF and FABF beginning with ihe levy made in 2015 (and collectible in 2016).
The CSCP found that due lo the inadequate contributions, the Retirement Funds have had lo use assets to pay current benefils, which in turn put pressure on the asset bases and Funded Ratios of the Retirement Funds.
The CSCP modeled a set of scenarios for the Retirement Funds and found that, based on the actuarial assumptions in use by the Retirement Funds and the condition of the Retiremenl Funds at the end of 2009, the Retirement Funds would, in the absence of substantial changes to the Retirement Funds' funding policy and/or benefit structure, deplete all assets in each of the Retiremenl Funds at different dates but all within Iwenly years of the dale of the Final Report. However, the CSCP's approval of the

Final Report occurred before the enactment of the Pension Reform Act and P.A. 96-1495 and the depiction dates as estimated in the Final Report would not have taken into account the impact of such legislation. See "— Projection of Funded Status" above for the projections based upon the current legislative structure applicable to the Retirement Funds.
The CSCP suggested that the issues related lo the Retirement Funds need to be addressed as soon as possible and offered the following specific recommendations: (i) Ihe delincd benefit structure used by the Retirement Funds should remain (as opposed to a defined contribution structure); (ii) new employees should continue lo become members of the Retirement Funds; (iii) the Rclircment Funds should be funded on an actuarial basis; (iv) changes in the Rclircment Funds for new members, while recognized hy the CSCP as undesirable, will probably be necessary; (v) contributions to the Retirement Funds should be increased and revenue sources identified; (vi) employee conlribulions should not exceed the value of benefils on a career basis; (vii) review any provisions in current law for refunds or for alternalive benefit calculations lo ensure that the anticipated financial results of a reform program are actually obtained; (viii) in general, no changes in (he Retiremenl Funds should be made unless financially neutral or advantageous to the Retirement Funds, now or in the future; (ix) a variely of other reforms should be considered, including reforming potential abuses, establishing sound reciprocity with other Illinois public pensions, implementing new structures to manage investments of Ihe Retirement Funds, and improving administration of disability claims and benefits; and (x) any reform legislation must comprehensively and simultaneously address all aspects of ihe pension funding program.
CSCP's recommendations were made prior to the enactment of the Pension Reform Act and P.A. 96-1495. Certain of the CSCP's recommendations, including changes in the Retirement Funds for new members, were part of the Pension Reform Act (with regard to MEABF and LABF) and,P A. 96-1495 (with regard to PABF and FABF).
Diversion of Grant Money to Police and Fire Funds Under P.A. 96-1495
P.A. 96-1495 allows the Stale Comptroller to divert Stale grant money intended for the City to either of PABF and FABF lo satisfy contribution shortfalls by Ihe City (the "Recapture Provision"). If the City fails lo conlribule to PABF and FABF as required by the Pension Code, the City will be subject to a reallocation of grants of Stale funds to the City if (i) the Cily fails lo make the required payment for 90 days past the due date, (ii) the subject Retirement Fund gives notice of the failure lo Ihe Cily, and (iii) such Retirement Fund certifies lo the Stale Comptroller that such payment has not been made. Upon the occurrence of these events, the Stale Comptroller will withhold grants of Slate funds from the City in an amount not in excess of the delinquent payment amount in the following proportions: (i) in fiscal year 2016, one-third of Ihe Cily's Stale grant money, (ii) in fiscal year 2017, two-thirds of the Cily's Stale grant money, and (iii) in fiscal year 201 8 and in each fiscal year thereafter, 100% of the City's Slate grant money. Should the Recapture Provision in P.A. 96-1495 be invoked as a result of the Cily's failure to contribute all or a portion of ils required contribution, a reduction in Stale grant money may have a significant adverse impact on the City's finances.
A delay bill such as the P.A. 96-1495 Delay Bill may, if enacted, delay the implementation ofthe Recapture Provision of P.A. 96-1495. No assurance can be given lhal a bill such as the P.A. 96-1495 Delay Bill will be enacied. See "— Determination of Cily's Conlribulions— City's Required Contributions to PABF and FABF Beginning with the Levy made in 2015"

GASH Statements 67 and 68
On June 25, 2012, GASB announced it was adopting new Statements 67 and 68 (collectively, the "Statements") covering the manner in which pension plans and governments, respectively, account for and report information regarding those pension plans. The Statements lake effect in fiscal years 2014 and 2015, respectively. The Cily expects they will significantly alter Ihe financial .statements produced by the City and the Retiremenl Funds; however, because the City contributes to ihe Retirement Funds pursuant to the methods established in the Pension Code, the Statements would nol impact the contributions made by the Cily without legislative action.
Legislative Changes
P.A. 96-0889
On April 14, 2010, Governor Quinn signed Public Acl 96-0889 (the "Pension Reform Act") into law. The Pension Reform Acl establishes a "two-tier" benefit system with less generous benefils for employees who become members of MEABF and LABF on or after January 1, 2011 as compared to those provided lo employees prior to such date. The Pension Reform Acl does not impact persons who first became members or participants prior lo ils effective dale of January I, 201 I.
Among olher changes, the Pension Reform Act: (i) increases the minimum age at which an active employee may retire with unreduced benefits to age 67 from age 60 or younger based on a formula combining the age of the employee and the number of years of service; (ii) increases the minimum age at which an active employee may retire with reduced benefils lo age 62 from age 50; (iii) provides thai final average salary is based on 96 consecutive months within the lasl 120 months of employment (instead of 48 months of the last 120 months); (iv) reduces Ihe annual cost of living adjustment to the lower of 3% or 50% of Ihe change in ihe consumer price index for all urban consumers, whichever is lower, and eliminates compounding for employees hired after January I, 2011, compared with a cost of living adjustment of 3%, compounded, under prior law; and (v) caps the salary on which a pension may he calculated at $ 106,800 (subject to certain adjustments for inflation).
The Pension Reform Act does not change Cily or employee conlribulions to MEABF or LABF. The Pension Code continues to require that the City contribute to MEABF and LABF pursuant to Ihe respective Multiplier.
The Pension Reform Acl as described in this subsection, taken independently of any other legislative or market effects, is expected to reduce benefils afforded new hires and therefore reduce over time the growth in the Acluarial Accrued Liability, (he UAAL and (he Actuarially Required Contribution. In calculating the Acluarial Accrued Liability, ihe actuaries make assumptions about future benefit levels. As the value of future benefils decreases over time, and as a greater percentage of the City's workforce is covered by the Pension Reform Act, the Acluarial Accrued Liability is expected lo decrease compared to what it would have been under previous law. Conscquenlly, the UAAL is expected to grow more slowly and the Funded Ralio to improve. As the growth in ihe UAAL slows, the Actuarially Required Contribution is expected lo be reduced as the amounl of UAAL to be amortized decreases. However, no assurance can be given lhat these expectations will be the actual experience going forward.





E-33

P.A. 96-1495
P.A. 96-1495 has a significant impact nn PABF and FABF. Certain provisions of P.A. 96-1495 are discussed above in — Determination ot" Cily's Contributions — City's Required Conlribulions lo PABF and FABF Beginning with the Levy made in 2015." The P.A. 96-1495 Funding Plan will have the effect of significantly increasing Ihe portion of the Pension Levy applicable lo PABF and FABF because, among other things, the Multiplier Funding will no longer serve lo cap the Pension Levy (applicable lo PABF and FABF) and because the P.A. 96-1495 Funding Plan is designed lo require larger conlribulions by the City. The greater contributions projected to be required under the P.A. 96-1495 Funding Plan are expccied to pose a substantial burden for the City's financial condition beginning in 2016. Sec "— Projection ol Funded Status and Insolvency" above.
In addilion, P.A. 96-1495 makes changes to benefils for police officers and firefighters first participating in PABF and FABF on or after January 1, 2011. Among olher changes, P.A. 96-1495: (i) increases the minimum eligibility age for unreduced retiremenl benefits from 50 (wilh len years of service) to 55 (with ten years of service); (ii) provides for retirement at age 50 (with ten years of service) with the annuity reduced by .5% per month; (iii) provides lhat final average salary is based on 96 consecutive months within the last 120 months of employment (instead of 48 months of the lasl 120 months); (iv) reduces the cost of living adjustment to the lower of 3% or 50% of the change in ihe consumer price index for all urban consumers, whichever is lower, commencing at age 60; (v) provides thai widow benefils are 66 2/3%' of ihe employee's annuity at the date of dcalh; and (vi) caps the salary on which a pension may be calculated at $106,800 (subject lo certain adjustments for inflation).
While ihe reforms discussed in this section arc expected to contribute lo a reduction in the Rclircment Funds' respective UAALs over lime, such reforms are nol expected to materially reduce such UAALs in the near future.
Pension Reform
The City believes lhat significant legislative changes are required lo properly fund ihe Retirement Funds and is considering the options available to address those unfunded liabilities. Based on its work in developing the Mayor's 2012 pension reform proposal (see below) and olher analysis, the City believes lhat Ihe Retirement Funds' unfunded liabilities cannot be adequately and practically addressed through increases in the Cily's contributions alone and without a modification lo the current level of benefits. If the City attempted to fund such increased contributions ihrough an increase in taxes, the increase would be larger than any increase in recent history, politically difficult lo enact, and harmful to the City's financial condition and, likely, its economy. If the City attempted to fund such increased contributions through expenditure cuts, essential City services, including, bul nol limited to, public health and safety, would be jeopardized. And Ihe amount that could be derived from ihe sale of Cily assets would be inconsequential when compared lo the Rclircment Funds' unfunded liabilities. Finally, a combination of revenue increases and expenditure cuts likely would not be practical lo address the unfunded liabilities, given their magnitude. This is true both when considering the Retiremenl Funds on their own, and when viewed collectively with the unfunded liabilities of the Olher Retiremenl Funds, whose sponsoring Governmental Unils" have lax bases that overlap wilh Ihe City's lax base. See "'—Overlapping Tax Bodies." Therefore, the Cily believes that reductions in Ihe benefils provided by each of ihe Retirement Funds are necessary, in combination wilh any increases in employer and employee contributions, to adequately address the unfunded liabilities of Ihe Retirement Funds.



E-34

On May 8, 20)2, Mayor Rahni Emanuel lestitied before the Committee on Personnel and Pensions of the Illinois House of Representatives and presented the following proposal to amend provisions of the Pension Code in order to help address the unfunded liabilities of the Retiremenl Funds: (a) suspending for a period of lime automatic increases in pension amounts payable lo annuitants; (b) increasing (he required employee contribution to the applicable Retiremenl Fund by an additional five percent of pensionable compensation (phased in over lime); (c) increasing the rclircment age for active members hired before January 1, 2011; and (d) offering new members and certain existing members options lo make their retirement plans more competitive and consistent wilh those offered in the private sector.
No assurance can be given that a bill embodying the proposed plan will be introduced in the Illinois General Assembly or that any such bill would be enacted, or that if enacted, any such bill would contain any of the proposed changes described above. Furthermore, any reduction in benefits (whether pursuant to the proposed plan or otherwise) would require action by the Illinois General Assembly to modify the Pension Code, and no assurance can be given (hal any proposal to modify benefils will be enacted. Given ihe Illinois Pension Clause in the Illinois Constitution, any legislation which reduces benefits may be challenged under this constitutional provision, and no assurance can be given that such legislation will be upheld upon a legal challenge.

The City continues lo make ils statutory conlribulions lo each Rclircment Fund.

OTHER POST-EMPLOYMENT BENEFITS
General
The City and the Retiremenl Funds share the cost of posl-cmployment healthcare benefils available to City employees participating in the Retirement Funds through a single-employer, defined benefit healthcare plan (the "Health Plan"), which is administered by the Cily. Prior lo June 30, 2013, the costs of ihe Health Plan were shared pursuant (o a settlement agreement (as amended, the "Settlement") entered into between ihe City and the Retirement Funds regarding ihe responsibilily for payment of these health benefits as described below under"— The Settlement."
MEABF and LABF participants older than 55 wilh at least 20 years of service and PABF and FABF participants older than 50 with at least 10 years of service may become eligible for the Health Plan if they eventually become an annuitant. The Health Plan provides basic health benefits to non-Medicare eligible annuitants and provides supplemental health benefils to Medicare-eligible annuitants.
The Cily contributes a percentage toward ihe cost of Ihe Health Plan for each eligible annuitant. Annuitants who retired prior to July I, 2005 receive a 55% subsidy from the City, whereas annuitants retiring on or after such dale receive a subsidy equal to 50%, 45%), 40% or zero percent based on the annuitant's length of actual employment wilh the City. The Retiremenl Funds contribute a fixed dollar amount monthly ($65 for each Medicare-eligible annuitant and $95 tor each non-Medicare eligible annuitant) for each of (heir annuitants. The annuitants are responsible for contributing the difference between the cost of their health benefits and the sum of Ihe subsidies provided by the Cily and Ihe related Retirement Fund.
The Retirement Funds' subsidies are paid from the Pension Levy, as provided in the Pension Code. These payments therefore reduce the amounts available in the Retirement Funds lo make payments

E-35

on pension liabilities. See Tables 5-9 in "Retirement Funds—Funded Status of Retiremenl Funds'' above for Retirement Funds' statement of net assets, which incorporates the expense related to the Health Flan as part of the "Administration" line item. The Pension Levy is described in "Retirement Funds — Determination of City's Contributions" above.
The Settlement
In 1987, the Cily sued the Retirement Funds asserting, among other things, lhat ihe Cily was nol obligated to provide healthcare benefits to certain retired Cily employees. Certain retired employees intervened as a class in ihe litigation, and the Rclircment Funds counlersued the Cily. To avoid (he risk and expense of protracted litigation, Ihe Cily and the other parties entered into the Settlement, Ihe terms of which have been renegotiated over time. The City coniributed lo ihe Health Plan as a result of the obligation established by the Settlement during Ihe term of the Settlement (the "Settlement Period"). The Settlement expired on June 30, 2013. See "— Status of Healthcare Benefits After the Settlement Period" below.
City Financing of the Health Plan
The Health Plan is funded on a pay-as-you-go basis. Pay-as-you-go funding refers lo the fact that assels are not accumulated or dedicated to funding the Health Plan. Instead, the City contributes the amounl necessary lo fund ils share of the current year costs of the Health Plan. The Cily's contributions are made from funds derived from ihe Pension Levy, which is described above in "Retirement Funds — Delerminalion of City's Contributions" as required by the Pension Code. See Table 17 below for a schedule of historical contributions made by the City lo ihe Health Plan.
Actuarial Considerations
City Obligation
The Cily has an Actuarial Valuation completed for its conlribulions to the Health Plan annually. The purpose and process behind an Actuarial Valuation is described above in "Reliremenl Funds — The Acluarial Valuation — Actuaries and the Actuarial Process." In addition, the Reliremenl Funds produce an Actuarial Valuation for.the liability of such Retirement Fund to its retirees for the benefits provided under ihe Health Plan.
Although ihesc Acluarial Valuations all refer to the liability owed for ihe same benefils, ihe results of (he Reliremenl Funds' Acluarial Valuations differ significantly from the Cily's Actuarial Valuation for two reasons. First, the Cily's Acluarial Valuation only reflects Ihe portion of liabilities the Cily owes under the Settlement. Second, the Actuarial Valuations of Ihe Cily and the Retirement Funds differ because the actuarial methods and assumptions used for each purpose vary.
This Appendix addresses Ihe funded slalus of Ihe City's obligation lo make payments for the Health Plan. For additional information on ihe amounts owed to members of Ihe Retirement Funds for retiree healthcare benefils, see the Acluarial Valuations of ihe Retirement Funds, which are available as described in "Rclircment Funds — Source Informalion" above, and Note 11(b) to the City's Basic-Audited Financial Statements, which are available on Ihe Cily's website at ve_annualfinancialstatemenLs.html; provided, however, lhat the contents ofthe City's website are not incorporated herein by such reference.


E-36

Acluarial Methods and Assumptions
The Acluarial Valuation lor the Cily's obligation to the Health Plan utilizes various acluarial methods and assumptions similar to those described in "Retiremenl Funds" above with respect to the Retirement Funds. The Cily does nol use an Actuarial Method lo calculate the Acluarial Value of Assets of Ihe Health Plan because no assets are accumulated therein for payment of future benefits. As such, Ihe Actuarial Value of Assels for the Health Plan is always zero.
The City's Actuarial Valuation employs Ihe PUC Method lo allocate Ihe CiLy's obligations under the Settlement. For more information on the PUC Method, see "Retirement Funds — Acluarial Methods" above.
The Cily's 2012 Acluarial Valuation amortizes the Health Plan's UAAL over a closed l-year period, in order to reflect Ihe remainder of the Settlement Period. The use of a closed, I-year period has the effect of increasing the Actuarially Required Contribution as compared lo the typical 30-year open amortization period because (i) the period of time over which the UAAL will be amortized is shorter, and (ii) the amortization period is one year as opposed lo remaining at 30 years for each period going forward.
Funded Status
The following tables provide information on the financial health of the Health Plan. The Health Plan is funded on a pay-as-you-go basis, which means no assets are accumulated lo pay for the liabilities ofthe Health Plan. As such, the Funded Ralio with respect to the Health Plan is perpetually zero.
Table 16 summarizes the current financial condition and ihe funding progress ofthe Health Plan. TABLE 16 - SCHEDULE OF FUNDING PROGRESS "

Unfunded
Actuarial Actuarial Actuarial UAAL as a
Value of Accrued Accrued Funded Covered Percentage of
Assets Liability Liability Ratio Payroll Payroll
$0 $1,062,864 $1,062,864 0% $2,562,007 41.5%|109|787,395 787,395|99|2.475.107 31.8|109|533,387 533.387|99|2,546.961 20.9|109|390.611 390.611|99|2.475,000 15.8|109|470.952 470,952|99|2.518,735 18.7

Sources: Comprehensive Annual Financial Report of the Cily for the fiscal years ending December 31, 2010-2012.
In thousands ol dollars
The City, as required, adopted CASH Siatenieiti No 45 in fiscal year 2007. The information provided in this table was produced in 2007 or Liter







E-37-

Tabic 17 shows the amounts actually contributed to the Health Plan by the Cily.
Hi
TABLE 17 - HISTORY OF CITY'S CONTRIBUTIONS'

Actual City Contribution
2008 2009 2010 2011 2012
$98,065 98,000
107.431 99.091 97.531

Sources: Comprehensive Annual Financial Report ol the Cily for Ihe fiscal years ending 20118-2012
In thousands of dollars.
The Cily. as required, adopted GASB Statement No. 45 in fiscal year 2007.

Retiree Health Benefits Commission
The Settlement provided lor the creation of the Retiree Health Benefils Commission (the "RHBC"), which was tasked wilh, among other things, making recommendations concerning reliree health benefits after June 30, 2013. The RHBC's members were appointed by the Mayor of the City for terms lhat do nol expire. The Settlement required that the RHBC be composed of experts who will be objective and fair-minded as lo the interest of both retirees and taxpayers, and include a representative of the Cily and a representative of the Retirement Funds.
On January II, 2013, Ihe RHBC released its "Report to ihe Mayor's Office on the Stale of Reliree Healthcare" (the "RHBC Report"). The RHBC Report can be found on the Cily's website al commissionreporttothemayor.html; provided, however, lhat the contents of the RHBC Report and of the Cily's website are not incorporated herein by such reference.
The RHBC Report concluded lhat maintaining ihe funding arrangement ihen in place for the Health Plan was untenable, would prevent Ihe City from continuing to provide the current level of benefits to retirees in Ihe future, and could result in olher financial consequences, such as changes lo Ihe City's bond rating and ils creditworthiness. The RHBC Report presented several options for ihe Mayor to consider which would reduce the level of spending wilh respect lo the Health Plan from approximately $108 million annually lo between $90 million and $12.5 million annually depending on Ihe option.
Status of Healthcare Benefits After the Settlement Period
On May 15, 2013, ihe City announced plans lo, among other things: (i) provide a lifetime healthcare plan lo employees who retired before Augusl 23, 1989 with a contribution from the City of up to 55% of the cost of thai plan; and (ii) beginning January I, 2014, provide employees who retired on or after August 2.3, 1989 wilh healthcare benefits but with significant changes to the terms provided by the Health Plan, including increases in premiums and deductibles, reduced benefils and the phase-out ofthe entire Hcallh Plan for such employees hy the beginning of 2017.




E-38

On May 30, 2013, the General Assembly passed Senate Bill 1584, which was signed into law by the Governor on June 28, 2013. Senate Bill 1584 extends the Retirement Funds' subsidies for retiree healthcare costs until such lime as the City no longer provides a health care plan for annuitants or December 31, 2016, whichever comes first.
Al'ler the June 30, 2013 expiration of the Settlement, on July 5, 2013, certain participants in the Health Plan filed a motion to "re-activate" the 1987 litigation covered by the Settlement. On July 17, 2013, the Circuit Court of Cook County, Illinois denied that motion. On July 23, 2013, certain of the participants filed a new lawsuit (the "Lawsuit") in the Circuit Court against the City and the Trustees of each of Ihe four Retiremenl Fund Boards, seeking to bring a class action on behalf of former and current City employees who previously contributed or now contribute lo one of the four Retirement Funds. The plaintiffs assert, among olher things, lhat pursuant to the Illinois Pension Clause, each such Cily employee is entitled lo a permanent and unreduced level of healthcare coverage by the Cily, which vesls as of the dale Ihey began participating in any of Ihe four Retirement Funds and is subsidized by their respeciive Reliremenl Fund. The Cily subsequently moved the Lawsuit to federal court, and filed a motion to dismiss Ihe Lawsuit wilh prejudice. The court granted the Cily's motion to dismiss, and plaintiffs appealed and motioned for an injunction pending the appeal. The court denied plaintiffs' motion for an injunction and subsequently determined lhat Ihe plaintiffs' appeal should be held in abeyance pending the resolution of Kanerva (defined below). The Cily intends lo vigorously defend the appeal.
On August 16, 2013, the City filed a brief as amicus curiae wilh the Supreme Court of Illinois in the case of Kanena v. Weems ("Kanerva"). Although the City is nol a parly in the Kanerva litigation, the Cily believes that the outcome of the Kanerva case may impact the law at issue in the Lawsuit, particularly wilh respect to the question of whether retiree health benefits are protected by the Pension Clause.
The Cily expects lo save approximately $100 million annually beginning in 2017 as a result of the phase-out ot the Health Plan.





















E-39

I



























[TI MS PAGIi INTENTIONALLY Llil-T BLANK]
APPENDIX F FORMS OF OPINIONS OF CO-BOND COUNSEL
[Tins PACii Intentionally left Blank]





























(
I

Proposed form of Opinion of Co-bond Counsel
|Leti kkiiead ok Co-Bond Counski.|

| l O UK DA I ED CLOSJNG D.-VTE|


Wc have examined a certified copy of the record of the proceedings (the "Proceedings") ofthe Cily Council ofthe City of Chicago (the "Cily"), including an ordinance adopted by the City Council of the City on the 5th day of February, 2014 (the "Ordinance"), as supplemented by a Notification of Sale (the "Notification of Sale"), relating to the issue of its fully registered General Obligation Bonds, Project and Refunding Series 2014A (the "Bonds"), in the aggregate principal amount of $432,630,000, dated March 24, 2014, due on January 1 ofthe years and in the amounts and bearing interest as follows:
2018
2019
2020
2021
2022
2023
2024
2024
2025
2026
2027
2028
2029
2030
2030
2031
2032
2033
2034
2035
2036
$ 2,735,000 2.850,000 3,700,000 4,950,000 5,075,000 4,920,000
625.000
4,500,000 5.000,000 4,000,000 10,675,000 23,055,000 30,270,000 3,710,000 36,950,000 15.425.000 42,615,000 44,875,000 49,700,000 69,000,000 68,000,000
4.00%
4.00%
4.00%
5.00%
5.00%'
5.00%
4.00%
5.00%
5.00%
5.00%
5.00%
5.25%
5.25%
5.00%
5.25%
5.25%
5.25%
5.25%
5.00%
5.00%
5.00%
The Bonds due on or after January 1, 2025, are subject to redemption prior to maturity at the option ofthe City as a whole or in part, on January 1, 2024, or on any date thereafter, at the redemption price of par plus accrued interest to the redemption date, as provided by the Ordinance and the Notification of Sale.

The Bonds are authorized and issued pursuant to the provisions of Section 6 of Article VII ofthe Illinois Constitution of 1970 and by virtue of the Ordinance, and we are of the opinion that the Proceedings show lawful authority for said issue under the laws ofthe State of Illinois now in force.

We have examined the form of bond prescribed for said issue and find the same in due form of law, and in our opinion said issue, in the amount named herein, is valid and legally binding upon the City and is payable from any funds ofthe City legally available for such purpose, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights ofthe owners of the Bonds and the enforceability ofthe Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

It is our opinion that, subject to the City's compliance with certain covenants, under present law, interest on the Bonds is excludable from gross income of the owners thereof for federal income lax purposes and is nol included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986. but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such City covenants could cause interest on the Bonds to be includible in gross income for federal income tax purposes retroactively to the date of issuance ofthe Bonds. Ownership ofthe Bonds may result in other federal tax consequences lo certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.
Interest on the Bonds is not exempt from present State of Illinois income taxes. Ownership ofthe Bonds may result in other state and local tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

We express no opinion herein as to Ihe accuracy, adequacy or completeness of any information furnished to any person in connection with any offer or sale ofthe Bonds.

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

















F-2

Proposed Form ok Opinion ok Co-Bond Counsel

|LETTERHEAD OK CO-BOND COUNSEI,|

11 O BE DATED CJ.OSING D.\TE|


We have examined a certified copy ofthe record of the proceedings (the "Proceedings") ofthe City Council ofthe City of Chicago (the "City"), including an ordinance adopted by the City Council ofthe City on the 5th day of February, 2014 (the "Ordinance"), as supplemented by a Notification of Sale (the "Notification of Sale"), relating to the issue of its fully registered 6.314% General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Bonds"), in the aggregate principal amount of $450,790,000, dated March 24, 2014. due on January I, 2044, and subject to mandatory redemption, in integral multiples of $5,000 at a redemption price of par plus accrued interest to the redemption date, selected as provided in the Ordinance and the Notification of Sale, on January 1 ofthe years and in the principal amounts as follows:
2037 2038 2039 2040 2041 2042 2043 2044
$ 37,770.000 50,625,000 57,670,000 28,255,000 32,255,000 34,300,000 101,745,000
108,170.000 (maturity)
The Bonds are further subject to redemption prior to maturity at the option ofthe City as a whole or in part, on any business day, upon the terms as provided by the Ordinance and the Notification of Sale.

The Bonds are authorized and issued pursuant lo the provisions of Section 6 of Article VII ofthe Illinois Constitution of 1970 and by virtue of the Ordinance, and we are of the opinion that the Proceedings show lawful authority for said issue under the laws ofthe State of Illinois now in force.

We have examined the form of bond prescribed for said issue and find the same in due form of law, and in our opinion said issue, in the amount named herein, is valid and legally binding upon the City and is payable from any funds ofthe City legally available for such purpose, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and Ihe enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

It is our opinion that under present law, interest on the Bonds is includible in gross income of the owners thereof for federal income tax purposes. Ownership of tbe Bonds may result in other federal income tax consequences to certain taxpayers. Bondholders should consult their own tax advisors concerning tax consequences of ownership of the Bonds.

Interest on the Bonds is not exempt from present State of Illinois income taxes. Ownership ofthe Bonds may result in other stale and local tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

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

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



































F-4

APPENDIX G BOND INSURANCE
[This page intfntionaixy Lev r Bi. ank]
BOND INSURANCE

Bond Insurance Policy
Concurrently with the issuance ofthe Bonds, Assured Guaranty Municipal Corp. ("AGM") will issue its Municipal Bond Insurance Policy (the "Policy") for the Series 20I4A Bonds maturing on January I, 2031 (the "Insured Bonds"). The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form ofthe Policy included at the end of this APPENDIX G — "BOND INSURANCE."
The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.
Assured Guaranty Municipal Corp.
AGM is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. ("AGL"'), a Bermuda-based holding company whose shares are publicly traded and arc listed on the New York Stock Exchange under the symbol "AGO". AGL. through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured linance markets. Neither AGL nor any of its shareholders or alfiliates, other than AGM, is obligated to pay any debts of AGM or any claims under any insurance policy issued by AGM.
AGM's financial strength is rated "AA-" (stable outlook) by Standard and Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ("S&P") and "A2" (stable outlook) by Moody's Investors Service, Trie. ("Moody's"). Each rating of AGM should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM's long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any ofthe above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by AGM on the datc(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms ofthe relevant insurance policy), and does not guarantee the market price'or liquidity ofthe securities it insures, nor does it.guarantee that the ratings on such securities will not be revised or withdrawn.

Current Financial Strength Ratings
On February 10, 2014, Moody's issued a press release stating that it had affirmed AGM's insurance financial strength rating of "A2" (stable outlook). AGM can give no assurance as lo any further ratings action that Moody's may take.
On June 12, 2013, S&P published a report in which it affirmed AGM's "AA-" (stable outlook) financial strength rating. AGM can give no assurance as to any further ratings action that S&P may take.
For more information regarding AGM's financial strength ratings and the risks relating thereto, see AGL's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

G-l

!






Capitalization of AGM
At December 31. 2013, AGM's policyholders' surplus and contingency reserves were approximately $3,529 million and its net unearned premium reserve was approximately SI.891 million. Such amounts represent the combined surplus, contingency reserves and net unearned premium reserve of AGM and its wholly owned subsidiary Assured Guaranty (Europe) Ltd., plus 60.7% ofthe contingency reserve and net unearned premium reserve of AGM's indirect subsidiary, Municipal Assurance Corp.
Incorporation of Certain Documents by Reference
Portions of the following document filed by AGL with the Securities and Exchange Commission (the "SEC"') that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof: the Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (filed by AGL with the SEC on February 28, 2014).
All consolidated financial statements of AGM and all other information relating to AGM included in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof "furnished" under Item 2.02 or Item 7.01 of Form 8-K, after the filing ofthe last document referred to above and before the termination ofthe offering ofthe Insured Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dales of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC's website at , at AGL's website at , or will be provided upon request to Assured Guaranty Municipal Corp.: 31 West 52nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) 974-0100). Except for the information referred to above, no information available on or through AGL's website shall be deemed to be part of or incorporated in this Official Statement.
Any information regarding AGM included herein under the caption "INSURED BONDS" or included in a document incorporated by reference herein (collectively, the "AGM Information") shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded. >
Miscellaneous Matters
AGM or one of its affiliates may purchase a portion ofthe Insured Bonds or any uninsured bonds offered under this Official Statement and such purchases may constitute a significant proportion ofthe bonds offered. AGM or such affiliate may hold such Insured Bonds or uninsured bonds for investment or may sell or otherwise dispose of such Insured Bonds or uninsured bonds at any time or from time to time.
AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy ofthe information regarding AGM supplied by AGM and presented under this APPENDIX G —"BOND INSURANCE."



G-2

^aiVani^' municipal bond
u municipal INSURANCE POLICY



ISSUER: .^P-o'jcyNo: "N
BONDS: $ in aggregate principal amount of Effective Date:
Prernlum: $


ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), ^fpf consideration deceived, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trusted;({he "Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuaifce.of.and securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of AGM, dire. Due for Payment or the Business Day next following the Business Dayton whFch»AGMVshall rVave receWed Notice of Nonpayment, AGM will disburse to or for the benefit of eachl^wner of a*BondJtH^faC'e amount of principal of and interest on the Bond that is then Due for Payment But i&Jthen unpaidiby reasofiVpf Nonpayment by the Issuer, but only upon receipt by AGM, in a form reasonably satisfactory"tajt, of (a) evidence of the Owner's right to receive payment of the principal oii*intereSl» then "ube for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the-^Owner's .fights with respect to payment of such principal or interest that is Due for Payment shall thereup'6rj;yest in AGM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received/prior to 1:00 p.m. (New York time) on such Business Day; otherwise,.Jt^.will BdrSjdeemed received on the next Business Day. If any Notice of Nonpayment received by>'AGM~is incomplete, it shall ,be deemed not to have been received by AGM for purposes of the preceding sentence aqd^AGM shall* promptly so advise the Trustee, Paying Agent or Owner, as approprrafe,';'who ma^:i:Submit'vaKamerided Notice of Nonpayment. Upon disbursement in respect of a Bond, AGM shall bee6me the^owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payrn'ent,pf principal of or interest on the Bond and shall be fully subrogated to the rights of the Owner, including the^Cjwner'si;jight to receive payments under the Bond, to the extent of any payment by AGM hereunder. Payrirfent by ACJM^ to the Trustee or Paying Agent for the benefit of Ihe Owners shall, to the extent thereof, discharge the obligation of AGM under this Policy.
Except to!ino extent expressly modified by an endorsement hereto, the following terms shall have the meanings specifi^iJ;for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday. pr,.Sunday or'{b')',a2day on which banking institutions in the State of New York or the Insurer's FiscalI'A'geptSreJ^thorizM or required by law or executive order to remain closed. "Due for Payment" means~(a) when referringto the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date qruwhich payment is due by reason of call for redemption (other than by mandatory sinking fund redemption)'," acceleration or other advancement of maturity unless AGM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the





G-3

Page 2 of 2 Policy No. -N

United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except lhat "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.
AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of'ttijs Policy by
giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the
Insurer's Fiscal Agent. From and after the date of receipt of such notice by.thej^fustee.and tne; Paying
Agent, (a) copies of all notices required to be delivered to AGM pursuant tbVthisHPpijcyj-.sli^ll be
simultaneously delivered to the Insurer's Fiscal Agent and to AGM and shail'npt be deemed recerveo:'until
received by both and (b) all payments required to be made by AGM under this Policy maybe made directly
by AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurers Fiscal Agent is the,agent of AGM
only and the Insurer's Fiscal Agent shall in no event be liable to anyOW^ier. for any;ac.t of the Insurer's Fiscal
Agent or any failure of AGM to deposit or cause to be deposited sufficient, funds to make payments due
under this Policy. '^Sj-i. .?f
To the fullest extent permitted by applicable law, AGM^g'rees not to-'assert, ;and hereby waives, only for the benefit of each Owner, all rights (whether by countere|aim;-;s.etoff or'qtherwise) and defenses (including, without limitation, the defense of fraudfc'jiwhether acquire'dUby subrogation, assignment or otherwise, to the extent that such rights and defens"es;^n\£iy.;be_ available'tofAGM to avoid payment of its obligations under this Policy in accordance witlvthe express' ptoVfsions'of this "policy.
This Policy sets forth in full the undertaking of'AGM, aridishall not be modified, altered or affected by any other agreement or instrument, inclu'dibg any modification or amendment thereto. Except to the extent expressly modified by an;ehdorsement herej&.-^a) any'premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE {SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. it
^ : m
In witness;.wt)ereof, ASSUREDjiGyARANTY MUNICIPAL CORP. has caused this Policy to be executed on its behalf by" its.Authorized Office>K---:'>"'


ASSURED GUARANTY MUNICIPAL CORP.
•O' t>.
••a
Authorized Officer



A subsidiary of Assured Guaranty Municipal Holdings Inc. 31 West 52nd Street, New York, N.Y. 10019

Form 500NY (5/90)

APPENDIX H REFUNDED BONDS
[Tins Page Intentionally Lei-t Blank]
































I
o o o o o o o ooooooo ooooooo
oooooooooooooo oooooooooooooo oooooooooooooo



-r -s- t t *r
T T Tt -rr T tt r] M (N m <^i r*i


in Q
z o
ca
Q u a
z
w
¦a a
o 03
V




c/)
T3
o o

ooooooo o o o o o o o
O O O O O O O
CJ\ CJ\ CJ\ <
o o" «/S o o"
— - . o o r-
— —; Ol
' —" —" *rl'


o o o o o o o
u-> u-> >o •/-) ir> o
fN CN CN CN fN CJ O
•n io >n ¦/-> «*n

ooooooooooooooo
OOOOOOOOOOOOOOO
CD O O O O O Os O 0_ 0_ O O O CD CD 'fl' t\ *r\ CD <-f>" o" Ti" O i/C o" o" >/"T ,/_•
oo r- oo in o •") fN — io c> o N ^ oo cji o oo — cr\ — r—¦ —¦ r-- ¦— -o oo
— — cn" —'.' ri' —" ci" —" cn — ci rs f-1


OOCDCDCDCDCDCDCDCDCDOOO O
"0'f>«*nO'0 0«OCDCDOOOOO O
rNCNr-iorNorsjooooooo o
i/i a i/S io •/"» »n i/i «/S »/S w-i i/S */") 'fi '/S



MN(NHMrifNNMN(N(NfMnin
T Tt -r Tt Tt
ooooooo


>¦>•>¦>•>¦ r-J Cf
v-, vi 'n >ri *n \© oo oo oo oo oo oo Tt -3- Tt Tt Tt "J-r- r~- r~- r- r~~-
*o NO \C so >o *o

>>>qXU>->\,CEXO'ciiO^O'O'ciciSQirt;^ ^
Q UJ Q Z
u. LU
< b

<<<<<<<
m rn rn i m rn rn
OOOOOOO OOOOOOO ri rN ri in n rN n
<<<<<<<<<<<<<< <
OOOOOOOOOOOOOO o
oooooooooooooo o
ri rJ ol rN rN (N ri rs ri cn fN fN n rs
u- If)
o o o o o
o o o o o
o o o o o
o o o o o
o o o o o
o o o o o o o o o o o o coo
oooooooooooooooooo oooooooooooooooooo oooooooooooooooooo



¦a
B
o
ca
CO
Tt
3 = =: ™
« « « S


o o o o o o o o o. o o_ o
¦n «n o" o*
N CO ri 1
m oO tJ-fN vi \0 r-i
t tt -r ¦



o o o o o o o o o o o o o o o

fN fN on rr -r -er o o o


o o o o o o o q o o" o" «n" r- ^ -r r— m rn

ri rN rN rN fN w r-l r^ ri N fN rN r< rN r) ri
oooooooooooooooooo

oooooooooooooooooo oooooooooooooooooo °- 0» °- °„ ° on o__ o, o q, o o o o o q_ o o_
O O O O inr>|ror--rsOf-iTr'vi^r^ o irj'Ovor^r-r-oowCr.oo
cu n B n
o o o o o
f— E- r- i— t-

O O O O o
O O O o o
q o^ o o o
o" ¦n" o" O 'n
O O — *N rn
>n rN r- <7; r-
n ~T r-i *n

X
H
o o o
r-J '/") O O
—_ r-i «n in
>n so >n vi
•n r-- r- r- o c
m rn rn o G
¦/-) >n >n »n «n
oooooooooooooooooo ¦/-! V, «n 'n o «-> o o o o o o o o o rirMfNrN(N(NOrMOriOOOOOOOO ^ >n ir) >n vi 'n iri in i/i iri in in i/"i ^ it, i/~i
o o o o
O OC O "O
o oe o rn •n -r vi vS



E o
-n >n in >n
o O o o o o o o
>n vo r- oo
O O O^ O^ O^ O O O O O

<3 O^ O O O O
•nvor~-ooo»o —>—•r,ir-j<-nm-rt-ij-»n»nvor-*
C ™ v " C CJ Ci Q C! C! C^' Ci C1 CJ Is
OOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOO
«n *n »n >n in
O O O O o O O O O o

-d->T'cr-^--T-r^r-^-rr-r-rr-^--^---r-rr--rT-r-d"
ft rj pi fN fN rN fN rN fN fN fN rN rN rN rN fN rN fN OOOOOOOOOCQCbOOOOOcCCOCiOOOOOOOOOOOCO OOOOOOOOOOOOOOOOOO

— o r- m —
cq cj Q c-1 r?
O O U ^
v, «n n
DO OC oo oo oo
T -T T -T T
r- r- r— t—
\0 vO vO vO vO

O oo r~~
ll: lu >-


v-j'oovOnOncononOvc -o vo o o OOCOOOOOOOOOCCOOOOOOOOOCOOOOOOOOOOOO
r-~r~j—¦r~-r~-t-~r-~r— r~-r~-r-^i--r--r--(— r- r~- r~-\0 O nO vO O no VO vo vo VO vo nO vo no VO nO

IT V *^ CCQ :=; cc a.
«n Vi so «n >n
oo oo oc oo oo
t t T f T
r- r- r-
vo vO vo vo \C
Q uj Q 7.
u.


O H

a < <
rn in oo —
CJn O C7n o
O CT> Cr\ O
— —¦ — fN
< < < < <
ri rN rN n r)
O O O O O
O O O O O
ri rN r-i rN rj
<<< <<<<<<<<<<<<<<<<<<
-T TT T*" Tf TT
ooo OOOOOOOOOOOOOOOOO. OOO OOOOOOOOOOOOOOOOOCJ rN n fN r) fN r»j rN n n rj rN fN rl fN rN rN r-l fN rl fN rJ
< U G Q U
»n vi «n vo r-
o o o o o
o o o o o
rN fN fN fN ri


Schedule I Terms and Authorization
ScheduleIA
$432,630,000 General Obligation Bonds, Project and Refunding Series 2014A
Aggregate Principal Amount: $432,630,000
Dated: March 24,2014
Maturities, Principal Amounts, Interest Rates, Prices and CUSIP Numbers:
Maturity January 1
2018 2019 2020 2021 2022 2023 2024 2024 2025 2026 2027 2028 2029 2030 2030 2031 2032 2033 2034 2035 2036
Principal Amount

% 2,735,000 2,850,000 3,700,000 4,950,000 5,075,000 4,920,000 625,000 4,500,000 5,000,000 4,000,000 10,675,000 23,055,000 30,270,000 3,710,000 36,950,000 15,425,000 42,615,000 44,875,000 49,700,000 69,000,000 68,000,000
4. Interest Payment Dates: January 1 and July 1.

Interest Rate (%) Price CUSIP

4.00 108.935 167486 SE0
4.00 109.338 167486 SF7
4.00 ' 108.289 167486 SG5
5.00 112.361 167486 SH3
5.00 110.911 167486 SJ9
5.00 109.262 167486 SK6
4.00 100.397 167486 SL4
5.00 108.436 167486 TA7
5.00 106.598 167486 SM2
5.00 104.716 167486 SN0
5.00 103.351 167486 SP5
5.25 104.580 167486 SW0
5.25 103.706 167486 SQ3
5.00 100.000 167486 SRI
5.25 102.918 167486 SZ3
5.25 103.864 167486 SY6
5.25 101.673 167486 SS9
5.25 101.134 167486 ST7
5.00 98.511 167486 SU4
5.00 98.217 167486 SV2
5.00 97.658 167486 SX8

July 1, 2014, and semiannually thereafter on each

5. Redemption: The Series 2014A Bonds are subject to optional redemption prior to maturity, as described below The Series 2014A Bonds shall be redeemed only in principal amounts of $5,000 and integral multiples thereof.

Optional Redemption ofthe Series 2014A Bonds. The Series 2014A Bonds maturing on and after January 1, 2025, are subject to redemption prior to maturity at the option of the City, in whole or in part, on any date on or after January 1, 2024, and if less than all of the outstanding Series 2014A Bonds of a single maturity and interest rate are to be redeemed, the Series 2014A

r the Dep°sitory


- S^^accwd 1 - - - •- si -
Senes 2014A Bon ^ ^ ,t *e ^ proved {rom















































-2-
Schedule IB

$450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B

Aggregate Principal Amount: $450,790,000

Dated: March 24,2014

Maturity, Principal Amount, Interest Rate, Price and CUSIP Number:
Maturity January 1
Principal Amount

$450,790,000
Interest Payment Dates. July 1, 2014, and semiannually thereafter on each January 1 and July 1.
Redemption. The Taxable Series 2014B Bonds are subject to both optional and mandatory redemption prior to maturity, as described below. The Taxable Series 2014B Bonds shall be redeemed only in principal amounts of $5,000 and integral multiples thereof.

Optional Redemption of the Taxable Series 2014B Bonds with Make Whole Payment. The Taxable Series 2014B Bonds are subject to redemption prior to maturity at the option of the City, in whole or in part, on any Business Day (as defined below) at a redemption price equal to the greater of: (A) the principal amount of the Taxable Series 2014B Bonds to be redeemed, or (B) the sum of the present values of the remaining scheduled payments of principal and interest on the Taxable Series 2014B Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date such bonds are to be redeemed, discounted to the date of redemption of the Taxable Series 2014B Bonds to be redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (defined below) plus 40 basis points, plus accrued interest on the Taxable Series 2014B Bonds being redeemed to the date fixed for redemption.

The make whole optional redemption price of the Taxable Series 2014B Bonds to be redeemed will be calculated by an independent accounting firm, investment banking firm or financial advisor (the "Calculation Agent") retained by the City at the City's expense. The Bond Registrar and the City may rely on the Calculation Agent's determination of the make whole optional redemption price and will not be liable for such reliance. An authorized officer of the City shall confirm and transmit the redemption price as so calculated on such dates and to such parties as shall be necessary to effectuate such redemption.

The "Treasury Rate" is, as of any redemption date, the yield to maturity as of such redemption date of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly

available four Business Days (as defined below) prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the maturity date of the Taxable Series 2014B Bonds to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year will be used. "Business Day" means any day other than a day on which banks in New York, New York, Chicago, Illinois, or the city in which the Bond Registrar maintains its designated office are required or authorized to close. The Treasury Rate will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the City at the City's expense.

The City is authorized to sell or waive any right the City may have to call the Taxable Series 2014B Bonds for optional redemption.

Mandatory Redemption of the Taxable Series 2014B Bonds. The Taxable Series 2014B Bonds are subject to mandatory redemption at a redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption, on January 1 of the following years and in the following principal amounts:

Year Principal Amount
$ 37,770,000
50,625,000
57,670,000
28,255,000
32^55,000
34,300,000
101,745,000
108,170,000 (maturity)

Selection of Taxable Series 2014B Bonds for Redemption. If less than all of the Taxable Series 2014B Bonds are to be redeemed prior to maturity, the Taxable Series 2014B Bonds being redeemed, or portions thereof to be redeemed, will be selected on a pro-rata pass-through distribution of principal basis to the extent permitted by and in accordance with procedures of The Depository Trust Company ("DTC"). If the DTC operational arrangements do not allow for the redemption of the Taxable Series 2014B Bonds on a pro-rata pass-through distribution of principal basis, then the Taxable Series 2014B Bonds will be selected for redemption in accordance with DTC procedures, by lot.










-2-

ScheduleIC Refunded Outstanding Indebtedness
General Obligation Bonds, Refunding Series 1993B
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:


Principal Amount Refunded by the Taxable Series 2014B Bonds:
$153,280,000
September 15,1993
October 14,1993
The Bank of New York Mellon Trust Company, N.A.


$12,425,000

Principal Year Amount (January 1) Refunded ($)
2015 12,425,000
(the "Refunded 1993B Bonds")
Call Feature:
Original Principal Amount ($)

12,425,000


CUSIP 167486 QB8


The Refunded 1993B Bonds are not subject to optional redemption prior to maturity.
General Obligation Bonds, Project and Refunding Series 1995A-2
Original Principal Amount: Dated:
Originally Issued:

Escrow Agent, Bond Registrar and Paying Agent:

Principal Amount Refunded by the Taxable Series 2014B Bonds:
$220,390,000 April 1,1996 April 3,1996
Amalgamated Bank of Chicago


$15 385,000

Principal Year Amount (January 1) Refunded ($)
2015 15,385,000
(the "Refunded 1995A-2 Bonds")
Call Feature:
Original Principal Amount ($)

15,385,00


CUSIP 167484 CN2


The Refunded 1995A-2 Bonds are not subject to optional redemption prior to maturity.


























-2-

General Obligation Bonds, Project and Refunding Series 1998
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:


Principal Amount Refunded by the Taxable Series 2014B Bonds:
$426,600,000 March 1, 1998 April 1,1998
The Bank of New York Mellon Trust Company, N.A.


$6,830,000

Year (January 1)
Principal Amount refunded ($)
2015 6,830,000 (the "Refunded 1998 Bonds") Call Feature:
Original Principal Amount ($)

11,070,000


CUSIP 167486 KU2


The Refunded 1998 Bonds are not subject to optional redemption prior to maturity.

























-3-

General Obligation Bonds, Project and Refunding Series 2001A
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:
Principal Amount Refunded by" the Taxable Series 2014B Bonds:
$491,760,262.50 March 28, 2001 March 28,2001
Amalgamated Bank of Chicago $2,440,000
Year (January 1)
Principal Amount Refunded ($)
2015 2,440,000 (the "Refunded 2001A Bonds") Call Feature:
Original Principal Amount ($)

9,345,000



CUSIP 167485 EG2


The Refunded 2001A Bonds are called for redemption and payment prior to maturity on April 24,2014, at the redemption price of par plus accrued interest to the redemption date.






















-4-
i I
I





General Obligation Bonds, Project and Refunding Series 2002A
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:
Principal Amount Refunded by the Taxable Series 2014B Bonds:
$169,765,000 June 13,2002 June 13,2002
Amalgamated Bank of Chicago $780,000


Year (January 1)

2015 2016 2017 2018 2019
Principal Amount Refunded ($)

160,000 170,000 180,000 190,000 80,000
Original Principal Amount ($)

5,510,000 5,810,000 6,120,000 6,450,000 2,720,000

Interest Rate(%)

5.375 5.375 5.375 5.000 5.000


CUSIP

167485 GB1 167485 GC9 167485 GD7 167485 W23 167485 W31
(the "Refunded 2002A Bonds") Call Feature:



The Refunded 2002A Bonds are called for redemption and payment prior to maturity on April 24,2014, at the redemption price of par plus accrued interest to the redemption date.


















-5-

General Obligation Bonds, Project and Refunding Series 2003A
Year (January 1)
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Principal Amount Refunded ($)
900,000 945,000 995,000 1,050,000 1,105,000 1,160,000 1,225,000* 1,285,000*
1,345,000* 1,415,000
Original Principal Amount ($)
2,515,000
2,645,000
2,785,000
2,930,000
3,085,000
3250,000
3,420,000*
3,590,000*
3,770,000*
3,960,000
$157,990,000
April 3,2003
April 3,2003
Seaway Bank and Trust Company

$11,425,000

Interest Rate(%)
5.25 5.25 5.25 5.25 5.25 5.25 5.00 5.00 5.00 5.00



















Mandatory sinking fund installment of 2027 term bond.


-6-

Principal Amount Refunded by the Taxable Series 2014B Bonds:
Year (January I)
2015 2016 2017
Principal Amount Refunded ($)
770,000 330,000 345,000
Original Principal Amount ($)
2,155,000 2270,000 2,390,000
Interest Rate(%)
5.25 5.25 5.25

CUSIP
167485 EQ0 167485 ER8 167485 Y47
(collectively, the "Refunded 2003A Bonds") Call Feature:



The Refunded 2003A Bonds are called for redemption and payment prior to maturity on April 24, 2014, at the redemption price of par plus accrued interest to the redemption date.
































-7-

General Obligation Bonds, Project and Refunding Series 2004A
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:
Principal Amount Refunded by the Series 2014A Bonds:
$408,110,000 August 24, 2004 August 24, 2004 Wells Fargo Bank, N.A.


$32,055,000


Year (January 1)

2018
2019
2020
2021
2021
2022
2022
2023 .
2023
2024
2024
2025
2025
2026
2027
Principal Amount Refunded ($)

1,890,000 1,985,000 2,775,000 1,085,000 2,850,000 1,105,000 2,930,000 1,125,000 2,710,000 1,155,000 2,775,000 2,690,000 1,190,000 2,825,000 2,965,000
Original Principal Amount ($)

11,000,000 11,580,000 12,190,000
5385,000 12,830,000
5,650,000 13,500,000
5,935,000 14210,000
6230,000 14,920,000
6,545,000 15,665,000 16,450,000 . 17270,000

Interest Rate (%)

525 525 5.25 5.00 525 5.00 5.25 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00


CUSIP

167486 HV4 167486 HW2 167486 QW2 167486 RB7 167486 QX0 167486 RC5 167486 QY8 167486 QZ5 167486 RD3 167486 RA9 167486 RE1
2H3
RF8 167485 2J9 167485 2K6
















-8-
I





Principal Amount Refunded by the Taxable Series 2014B Bonds:

Year (January 1)

2015 2016 2017 2018 2019 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025 2025 2026 2027
Principal Amount Refunded ($)

1,640,000 30,000 20,000 20,000 25,000 1,570,000 695,000 1,650,000 725,000 1,735,000
770,000 ¦ 1,825,000 805,000 1,920,000 30,000 845,000 30,000 30,000
Original Principal Amount ($)

9,435,000
9,930,000 10,455,000 11,000,000 11380,000 12,190,000
5,385,000 12,830,000
5,650,000 13300,000
5,935,000 14210,000
6230,000 14,920,000
6345,000 15,665,000 16,450,000 17270,000

Interest Rate(%)

525 525 525 525 525 5.25 5.00 5.25 5.00 525 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00


CUSIP

167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486 167486
(collectively, the "Refunded 2004A Bonds") Call Feature:



The Refunded 2004A Bonds are called for redemption and payment prior to maturity on April 24,2014, at the redemption price of par plus accrued interest to the redemption date.















-9-
General Obligation Refunding Bonds, Series 2005A
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:
Principal Amount Refunded by the Taxable Series 2014B Bonds:
$441,090,000 March 16, 2005 March 16,2005 Wells Fargo Bank, N.A.


$63 390,000

Year (January 1)
Principal Amount Refunded ($)
2015 63390,000 (the "Refunded2005A Bonds") Call Feature:
Original Principal Amount ($)

63390,000


CUSIP 167485 BT7


The Refunded 2005A Bonds are not subject to optional redemption prior to maturity.


























-10-

I















I















I



I















i
I
I

General Obligation Bonds, Project and Refunding Series 2005B
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:
Original Principal Amount ($)
3230,000

Principal Amount Refunded by the Taxable Series 2014B Bonds:

Principal Year Amount (January 1) Refunded ($)

2015 2,710,000

(the "Refunded 2005B Bonds")

Call Feature:
$300,350,000
August 17,2005
August 17,2005
The Bank of New York Mellon Trust Company, N.A.


$2,710,000


Interest
Rate (%) CUSIP
5.00 167486 JN0



The Refunded 2005B Bonds are not subject to optional redemption prior to maturity.
General Obligation Bonds, Taxable Series 2005C
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:


Principal Amount Refunded by the Taxable Series 2014B Bonds:
$38,925,000
August 17,2005
August 17,2005
The Bank of New York Mellon Trust Company, N.A.


$4205,000

Year (January 1)
Principal Amount Refunded ($)
2015 4205,000 (the "'Refunded 2005C Bonds") Call Feature:
Original Principal Amount ($)

4205,000


CUSIP 167485 JJ1


The Refunded 2005C Bonds are not subject to optional redemption prior to maturity.

























¦12-

General Obligation Bonds, Taxable Series 2006B
.Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:

Principal Amount Refunded by the Taxable Series 2014B Bonds:
$67360,000 March 29,2006 March 29,2006
U.S. Bank National Association $4,920,000

Principal Year Amount (January 1) Refunded ($)
2015 4,920,000
(the "Refunded 2006B Bonds")
Call Feature:
Original Principal Amount ($)

8,685,000


CUSIP 167485 RU7


The Refunded 2006B Bonds are not subject to optional redemption prior to maturity.


























-13-

General Obligation Bonds,Project and Refunding Series 2007C
Original Principal Amount: Dated:
Originally Issued:
Escrow Agent, Bond Registrar and Paying Agent:
Principal Amount Refunded by the Taxable Series 2014B Bonds:
$312^40,000
November 8,2007
November 8,2007
U.S. Bank National Association


$5,735,000

Year (January 1)
Principal Amount Refunded ($)
2015 5,735,000 (the "Refunded2007C Bonds") Call Feature:
Original Principal Amount ($)

5,735,000


CUSIP 167485 P96


The Refunded 2007C Bonds are not subject to optional redemption prior to maturity.


























-14-
General Obligation Commercial Paper Notes and Lines of Credit

Proceeds from the Series 2014A Bonds and the Taxable Series 2014B Bonds in the amount of $151,691,054 will be paid to The Bank of New York Mellon Trust Company, NA. ("BNY"), and used to retire a portion of the City's Commercial Paper Notes, 2002 Program.

Proceeds from the Series 2014A Bonds and the Taxable Series 2014B Bonds in the amount of $145,109,175 will be paid to Bank of America, NA. ("BOA"), pursuant to the-Revolving Credit Agreement, dated March 1, 2013. Proceeds from the Taxable Series 2014B Bonds in the amount of $276,771.18 will be paid to the City for interest expenses under said Agreement.
Payment to BNY
Payment to BOA
Payment to City

2014A Project Fund 2013A Capital Project Account
2012/2013 Lewis Capital Projects
Account
Equipment Fund 2013 Equipment Account
Taxable 2014B Project Fund 2013B Capital Projects Account
$ 19,085,922.19 66,000,104.00
13380.973.81 53324.054.00
$ 15,429,893.41 34,570,106.59

95.109.175.00
$151,691,054.00






























-15-

Schedule II Notification of Tax Abatement
State of Illinois )
)SS
County of Cook )
Notification of Tax Abatement $432,630,000
General Obligation Bonds, Project and Refunding Series 2014A

$450,790,000
General Obligation Bonds, Taxable Project and Refunding Series 2014B

of the City of Chicago

To: The City Council of the City of Chicago and the County Clerks of The Counties of Cook and DuPage, Illinois

Please be advised that responsive to authority contained in an Ordinance (the "Ordinance") adopted by the City Council (the "City Council") of the City of Chicago (the "City") on February 5, 2014, authorizing the issuance of up to $900,000,000 aggregate principal amount of general obligation bonds of the City plus original issue discount, on March 24, 2014 the City issued its $432,630,000 General Obligation Bonds, Project and Refunding Series 2014A, and $450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B (collectively, the "Bonds"), having the terms described in that certain Bond Purchase Agreement dated March 13, 2014 (the "Bond Purchase Agreement") between the City and Wells Fargo Bank, National Association, acting on behalf of itself and as representative of certain underwriters named therein.

Capitalized terms used herein without definition have the meanings assigned to such terms in the Ordinance.

Notification of the sale of the Bonds to the City Council and of the determinations made by the Chief Financial Officer of the City with respect to the sale of the Bonds, the filing of the Bond Purchase Agreement, and the Official Statement for the Bonds, all as provided for or required by the Ordinance was made by the filing with the City Clerk of a Notification of Sale executed and delivered by the Chief Financial Officer on the date of issuance ofthe Bonds.

Please be further advised that Section 7 of the Ordinance provides for a direct annual tax in and for each of the years 2013 to 2054, inclusive, to pay the interest on the Bonds promptly when and as the same falls due and to pay and discharge the principal thereof at maturity. Pursuant to Section 12 of the Ordinance, please be further advised that the amount of the annual tax levy requirements for the payment of the principal of and interest on the Bonds resulting from the sale of the Bonds is less than the levy of taxes authorized in Section 7 of the Ordinance. I have determined that a reduction in the amount of the tax levy in the years 2013 to 2054, inclusive, is deemed desirable in connection with the sale of the Bonds. The amount of the taxes
i
3543589.01.09.B .doc !
2205201 i
i
I I
levied in the Ordinance to pay debt service on the Bonds, the amount of the taxes to be abated resulting from the sale of the Bonds, and the remainder of the taxes levied which is to be extended for collection are as follows:

Tax to be
Amoun t Levied Extended
in Bond Excess Levy for Payment of
Levy Year Ordinance to be Abated the Bonds
2013 $150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
$150,000,000.00 129,019222.00 99321,744.40 96,786,744.40 96,781,144.40 96,045,144.40 94,943,144.40 95,065,644.40 95,474,394.40 95315,394.40 95,890394.40 97,140,394.40 90,665,394.40 78,819,144.40 72,814331.90 64,013,706.90 91374,081.90 64,993,894.40 64,971,181.90 62 302,119.40 45,687,119.40 50,137,119.40 83,767,119.40 73296,917.20 69,448,379.70 102304,663.50 100288,684.20 100280264.90 35,000,966.90 35,000,146.20 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00 150,000,000.00
$ 0.00 20,980,778.00 50,478255.60 53213255.60 53218,855.60 53,954,855.60 55,056,855.60 54,934,355.60 54325,605.60 54,484,605.60 54,109,605.60 52,859,605.60 59,334,605.60 71,180,855.60 77,185,468.10 85,986293.10 58,625,918.10 85,006,105.60 85,028,818.10 87,497,880.60 104,312,880.60 99,862,880.60 66232,880.60 76,703,082.80 80351,620.30 47,495,336.50 49,711,315.80 49,719,735.10 114,999,033.10 114,999,853.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

I



Respectfully submitted as of this day of tAMUM 2014.

Chief Financial Officer












































-3-

Acknowledgment of Filing Notification of Tax Abatement

The foregoing Notification of Tax Abatement relating to $432,630,000 General Obligation Bonds, Project and Refunding Series 2014A, and $450,790,000 General Obligation Bonds, Taxable Project and Refunding Series 2014B, of the City of Chicago (the "City") has been filed in my office as City Clerk of the City and is part of the official files and records of my office.

In Witness Whereof, I have hereunto affixed my signature and caused to be affixed hereto the corporate seal of the City this day of lAWUM . 2014.

Susana A. Mendoza{ City Clerk

[Seal]
Schedule III Refunded Bonds Tax Abatement
State of Illinois )
) SS
County of Cook )

Certificate of Reduction of Certain Taxes Levied to Pay Principal of and Interest on Certain Outstanding General Obligation Bonds of the City of Chicago

To: The County Clerks of The Counties of Cook and DuPage, Illinois

Please be advised that on February 5, 2014, the City Council of the City of Chicago (the "City Council") adopted an ordinance (the "Bond Ordinance") authorizing, among other things, the issuance of (i) $432,630,000 aggregate principal amount of General Obligation Bonds, Project and Refunding Series 2014A (the "Series 2014A Bonds") and (ii) $450,790,000 aggregate principal amount of General Obligation Bonds, Taxable Project and Refunding Series 2014B (the "Taxable Series 2014B Bonds," and together with the Series 2014A Bonds, the "Refunding Bonds") for the purpose of refunding the outstanding General Obligation Bonds of the City described herein (collectively, the "Refunded Bonds").

Please be further advised that on the 13th day of March, 2014, the Chief Financial Officer of the City (the "Chief Financial Officer"), with the concurrence of the Chairman of the Committee on Finance of the City Council, entered into a Bond Purchase Agreement on behalf of the City with Wells Fargo Bank, National Association, as Representative of certain underwriters named therein, for the sale of the Refunding Bonds.

Please be further advised that pursuant to the authority provided in Section 15 of the Bond Ordinance, the Chief Financial Officer is now filing in the offices of (i) the County Clerk of The County of Cook, Illinois (the "Cook County Clerk") and (ii) the County Clerk of The County of DuPage, Illinois (the "DuPage County Clerk"), a certificate of reduction of taxes levied for the years from and after 2013 for the payment of the Refunded Bonds.

You are Therefore Ordered and Directed to abate the taxes levied in each of the ordinances authorizing the issuance of the Refunded Bonds, as follows.















3543593.01.08.B.doc 2205201

1. Series 1993B Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on September 15, 1993 (the "Series 1993B Bond Ordinance") and filed in each of your offices on October 14, 1993, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Refunding Series 1993B (the "Series 1993B Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 1993B Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 1993B Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)


Taxes Levied by Series 1993B Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result of the Refunding of
Series 1993B Bonds
(c)
Exact Amount of
Taxes Required to be Extended Pursuant to
the Series 1993B Bond Ordinance

2.013 2014 2015 2016 2017 2018 2019 2020
$15393,019.00 15,801238.00 17,691,150.00 5,184350.00 5,186,919.00 5,188,469.00 5,188,488.00 2,491,463.00
$13,061,781.25
0.00 0.00 0.00 0.00 0.00 0.00 0.00
$ 2331237.75 15,801238.00 17,691,150.00 5,184,350.00 5,186,919.00 5,188,469.00 5,188,488.00 2,491,463.00

*As adjusted for any prior abatements.
2. Series 1995A-2 Bonds. For each of the following levy years specified below are
the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on November 8, 1995 (the "Series 1995A-2 Bond Ordinance") and filed in each of your offices on December 13,1995, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Project and Refunding Series 1995A-2 (the "Series 1995A-2 Bonds"), as adjusted to reflect any prior abatement of taxes by the City;
the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 1995A-2 Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 1995A-2 Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)



Taxes Levied by Series 1995A-2 Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result of the Refunding of Series 1995A-2
Bonds
(c)

Exact Amount of
Taxes Required to be Extended Pursuant to
the Series 1995A-2
Bond Ordinance

2013 2014 2015 2016
$19,194,462.50 19,192,900.00 19,193,925.00 19,190,450.00
$16,346362.50
0.00 0.00 0.00
$ 2,847,900.00 19,192,900.00 19,193,925.00 19,190,450.00

*As adjusted for any prior abatements.
I
I
1 ]
! i
i
3. Series 1998 Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on December 10, 1997 (the "Series 1998 Bond Ordinance") and filed in the office of (i) the Cook County Clerk on March 10, 1998 and (ii) the DuPage County Clerk on March 11, 1998, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Project and Refunding Series 1998,(the "Series 1998 Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 1998 Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 1998 Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)


Taxes Levied by Series 1998 Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result of the Refunding of
Series 1998 Bonds
(c)
Exact Amount of
Taxes Required to be Extended Pursuant to
the Series 1998 Bond Ordinance

2013 2014 2015
$ 8,877,925.00 13,147275.00 19,971,150.00
$7205,650.00 0.00 0.00
$ 1,672275.00 13,147 275.00 19,971,150.00

* As adjusted for any prior abatements.
4. Series 2001A Borids. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on November 15,2000 (the "Initial Series 2001A and B Bond Ordinance") and filed in the office of (i) the Cook County Clerk on January 2, 2001 and (ii) the DuPage County Clerk on December 28, 2000, as amended by the Ordinance adopted by the City Council on February 7, 2001 and filed in the office of (i) the Cook County Clerk on March 23, 2001 and (ii) the DuPage County Clerk on March 22, 2001 (the "Amendatory Series 2001A and B Bond Ordinance" and, collectively with the Initial Series 2001 and B Bond Ordinance, the "Series 2001A and B Bond Ordinance"), authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Project and Refunding Series 2001, issued as (x) General Obligation Bonds, Project and Refunding Series 2001A (the "Series 2001A Bonds") and (y) Taxable General Obligation Bonds, Series 2001B (the "Series 2001B Bonds" and, collectively with the Series 2001A Bonds, the "Series 2001A and B Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2001A Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2001A and B Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).





[Remainder of Page Left Intentionally Blank; Chart Follows on Next Page]





Levy Year

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
(a)


Taxes Levied by Series 2001A and B Bond Ordinance*

$ 6,845352.69 10397,709.19 10399,904.69 10 399,397.69 10,605,941.19 10,602,466.19 10399,974.19 10,601,838.19 3,961,980.19 3,965,895.19 3,962,015.19 3,965313.19 3,964,920.19 3,959,940.69 3,960,920.19 3,962,012.69
(b)
Amount of Taxes Abated as a Result of the Refunding of Series 2001a Bonds

$
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(c)
Exact Amount of Taxes Required to be Extended Pursuant to the Series 2001A and B Bond Ordinance

$
10397,709.19 10399,904.69 10399,397.69 10,605,941.19 10,602,466.19 10399,974.19 10,601,838.19 3,961,980.19 3,965,895.19 3,962,015.19 3,965,313.19 3,964,920.19 3,959,940.69 3,960,920.19 3,962,012.69

*As adjusted for any prior abatements.
5. Series 2002A Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on December 5, 2001 (the "Series 2002A Bond Ordinance") and Filed in each of your offices on June 7, 2002, and June 4, 2002, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Project and Refunding Series 2002A (the "Series 2002A Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2002A Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2002A Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)



Taxes Levied by Series 2002A Bond Ordinance*
(b)
Amount of Taxes Abated as a Result of the Refunding of Series 2002A Bonds
(c)

Exact Amount of Taxes Required to be Extended Pursuant to the Series 2002A Bond Ordinance

2013 2014 2015 2016 2017 2018 2019

*As adjusted for any prior abatements.
6. Series 2003A Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on May 1, 2002 (the "Series 2003A Bond Ordinance") and filed in each of your offices on April 1, 2003, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Project and Refunding Series 2002C, which were ultimately issued as General Obligation Bonds, Project and Refunding Series 2003A (the "Series 2003A Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2003A Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2003A Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a)' and the amount specified in column (b)).





[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; CHART FOLLOWS ON NEXT PAGE]





Levy Year

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


Taxes Levied by Series 2003A Bond Ordinance*

$3^26,475.00 3226,050.00 3228325.00 3228,637.50 3226,387.50 3226,775.00 3229337.50 3229,412.50 3 226,400.00 3230300.00 3229250.00 3,805,000.00 3,198,750.00 3,198,000.00 3,198,750.00 3,900,750.00 3,898,750.00 3,901,000.00 3,087,000.00 3,087250.00 3,087,750.00 3,088250.00 3,088300.00 3,088250.00 3,087250.00 3,085250.00 3,087,000.00 3,087,000.00
(b)
Amount of Taxes Abated as a Result of ti-ie Refunding of Series 2003A Bonds

$1,432300.00 952,075.00 949,750.00 1,486,637.50 1,484,387.50 1,484,775.00 1,48733730 1,487,412.50 1,484,400.00 1,488 300.00 1,487250.00 1,483,000.00 1,485,750.00 0.00 0.00 , 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(c)
Exact Amount of Taxes Required to be Extended Pursuant to the Series 2003A Bond Ordinance

$1,793,975.00 2273,975.00 2278,775.00 1,742,000.00 1,742,000.00 1,742,000.00 1,742,000.00 1,742,000.00 1,742,000.00 1,742,000.00 1,742,000.00 2322,000.00 1,713,000.00 3,198,000.00 3,198,750.00 3,900,750.00 3,898,750.00 3,901,000.00 3,087,000.00 3,087250.00 3,087,750.00 3,088250.00 3,088300.00 3,088250.00 3,087 250.00 3,085 250.00 3,087,000.00 3,087,000.00

*As adjusted for any prior abatements.
7. Series 2004'A Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on May 26, 2004 and filed in each of your offices on August 24, 2004 (the "Series 2004A and B Bond Ordinance"), authorizing, among other things, the issuance of general obligation bonds of the City, including the City's (x) General Obligation Bonds, Project and Refunding Series 2004A (the "Series 2004A Bonds") and (y) General Obligation Bonds, Taxable Series 2004B (the "Series 2004B Bonds" and, collectively with the Series 2004A Bonds, the "Series 2004A and B Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2004A Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2004A and B Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the' amount specified in column (b)).
(a)

Taxes Levied
BY SERiES 2004A AND B
Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result of the Refunding of
Series 2004A Bonds
(c)
Exact Amount of
Taxes Required to be Extended Pursuant to the Series 2004A and B
Bond Ordinance

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
$ 9,058,900.00 9,062,100.00 12,646,950.00 12,647,687.50 12,645 237.50 14,873,787.50 11200,175.00 11,089,925.00 10,688312.50 10392,012.50 8,35926230 6221312.50 6218,76230 6219,012.50 6221,762.50 6218250.00 23,614300.00 23,612250.00 4,437 300.00 4,436250.00
$4,008,800.00 2312,700.00 2,301,125.00 4,190,075.00 4,189,800.00 6,419275.00 8,126,162.50 8,015,912.50 7,614300.00 7318,000.00 5 285 250.00 3,147300.00 3,144,750.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
$ 5,050,100.00
6,749,400.00 10,345,825.00 8,457,612.50 8,455,437.50 8,454312.50 3,074,012.50 3,074,012.50 3,074,012.50 3,074;012.50 3,074,012.50 3,074,012.50 3,074,012.50 6219,012.50 6221,762.50 6218250.00 23,614300.00 23,612250.00 4,437300.00 4,436250.00

*As adjusted for any prior abatements.

8. Series 2005A Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on February 9, 2005 and filed in each of your offices on March 3, 2005 and March 7, 2005 (the "Series 2005A Bond Ordinance"), authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Refunding Bonds, Series 2005A (the "Series 2005A Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2005A Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2005A Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)

Taxes Levied by Series 2005A Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result of the Refunding of
Series 2005A Bonds
(c)
Exact Amount of
Taxes Required to be Extended Pursuant to
the Series 2005A Bond Ordinance

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
$79315,025.00 70,052,962.50 57,164387.50 32388,837.50 30,858,737.50 30,734,487.50 ' 15310237.50 15,491237.50 7,828,487.50 8,645,487.50 5,880,737.50 5207,06230 3,386362.50 3,096,81230
$66,769300.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
$12345 325.00 70,052,96230 57,164387.50 32,388,83730 30,858,737.50 30,734,487.50 1531023730 15,491,237.50 7,828,487.50 8,645,487 30 5,880,737.50 5207,062.50 3 38636230 3,096,812.50

*As adjusted for any prior abatements.

9. Series 2005B Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on July 27, 2005 and filed in each of your offices on August 17, 2005 (the "Series 2005B and Direct Access Bond Ordinance") authorizing, among other things, the issuance of general obligation bonds of the City, including the City's (x) General Obligation Bonds, Project and Refunding Series 2005B (the "Series 2005B Bonds"), (y) General Obligation Direct Access Bonds, Series 2005-1, Series 2005-2 and Series 2005-3 (collectively, the "Series 2005 Direct Access Bonds") and (z) General Obligation Direct Access Bonds, Series 2006-1 (the "Series 2006 Direct Access Bonds" and, collectively with the Series 2005B Bonds and the Series 2005 Direct Access Bonds, the "Series 2005B and Direct Access Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2005B and Direct Access Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2005B and Direct Access Bonds that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).



[Remainder of Page Left Intentionally Blank; Chart Follows on Next Page]



























-12-







Levy Year

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


Taxes Levied by Series 2005B and Direct Access Bond
Ordinance* ,

$38,128,146.45 35,496,159.16 40,356,185.28 55,145,303.82 45308,416.32 41,135,716.32 48243,137.78 42,093,968.82 49371,965.32 48258,822.82 44,673,011.78 44,849,170.32 52346,405.32 52,336,855.32 44,648226.78 48,910,015.32 38,637209.32 38,635,357.26 28,606294.64 28 228,740.46 22,865,480.45 32,838,827.53 21,953,674.52 35,864,808.46 35,871,456.58 20353,388.59
(b)
Amount of Taxes Abated as a Result of the Refunding of Series 2005B and Direct Access Bonds

$
0.00 . 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(c)
Exact Amount of Taxes Required to be Extended Pursuant to the Series 2005B and Direct Access Bond Ordinance

$
35,496,159.16 40,356,185.28 55,145303.82 45308,416.32 41,135,716.32 48243,137.78 42,093,968.82 49371,965.32 48258,822.82 44,673,011.78 44,849,170.32 52346,405.32 52336,855.32 44,648226.78 48,910,015.32 38,637209.32 38,635,357.26 28,606294.64 28228,740.46 22,865,480.45 32,838,82733 21,953,674.52 35,864,808.46 35,871,456.58 20,353,388.59

*As adjusted for any prior abatements.
10. Series 2005C Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on July 27 , 2005 (the "Series 2005C Bond Ordinance") and filed in each of your offices on August 17, 2005, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Taxable Series 2005C (the "Series 2005C Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2005C Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due. the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2005C Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)



Taxes Levied by Series 2005C Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result of the Refunding of Series 2005C
Bonds
(c)

Exact Amount of Taxes Required to be Extended Pursuant to the Series 2005C Bond Ordinance

2013 2014 2015 2016 2017

*As adjusted for any prior abatements.
11. Series 2006B Bonds. For each of the following levy years specified below are (a) the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on March 1, 2006 (the "Series 2006B Bond Ordinance") and filed in each of your offices on March 28, 2006, and March 27, 2006, authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Taxable Series 2006B (the "Series 2006B Bonds"), as adjusted to reflect any prior abatement of taxes by the City; (b) the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2006B Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2006B Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).
(a)



Taxes Levied by Series 2006B Bond Ordinance*
(b)
Amount of
Taxes Abated as a
Result ofthe Refunding of Series 2006B
Bonds
(c)

Exact Amount of
Taxes Required to be Extended Pursuant to
the Series 2006B Bond Ordinance

2013 2014

*As adjusted for any prior abatements.
12. Series 2007C Bonds. For each of the following levy years specified below are
the taxes levied by Section 7 of the Ordinance of the City adopted by the City Council on September 27, 2007 and filed in each of your offices on November 7, 2007 (the "Series 2007C Bond Ordinance"), authorizing, among other things, the issuance of general obligation bonds of the City, including the City's General Obligation Bonds, Project and Refunding Series 2007C (the "Series 2007C Bonds"), as adjusted to reflect any prior abatement of taxes by the City;
the amount of taxes that are being abated pursuant to this Certificate of Reduction as a result of the refunding of certain of the Series 2007C Bonds with a portion of the proceeds of the Refunding Bonds; and (c) the remainder of those taxes required to be extended to pay when due the principal of and interest on all outstanding general obligation bonds issued pursuant to the Series 2007C Bond Ordinance that have not been so refunded (such amount being equal, for each levy year, to the difference between the amount specified in column (a) and the amount specified in column (b)).





[Remainder of Page Left Intentionally Blank; Chart Follows on Next Page]































-16-

(a)

Taxes Levied by Series 2007C Bond Ordinance*
(b)
Amount of Taxes Abated as a Result of the Refunding of Series 2007C Bonds
(c)
Exact Amount of Taxes Required to be Extended Pursuant to the Series 2007C Bond Ordinance

2013 $30,173^26.50
30,323,610.00
35,664,960.00
40,960,721.00
35,424,059.00
31,814,429.00
27,468,947.00
28,751391.00
28,930361.00
27,706^13.00
43,942,650.00
42,863,150.00
35,042,900.00
35,968,400.00
40,713,650.00
39,637,900.00
39202,650.00
21,800,150.00
47,436,400.00
47,311,979.00
26,491,151.06
14,085,634.50
14,058,981.00
20361 14,040,349.75
2037 ^ 7,748,666.00
23262,782.20
23211221.00
23,148,985.50
$ ¦ $
0.00 30,323,610.00
0.00 35,664,960.00
0.00 40,960,721.00
0.00 35,424,059.00
0.00 31,814,429.00
0.00 27,468,947.00
0.00 28,751391.00
0.00 28,930,361.00
0.00 27,706213.00
0.00 43,942,650.00
0.00 42,863,150.00
0.00 -35,042,900.00
0.00 35,968,400.00
0.00 40,713,650.00
0.00 39,637,900.00
0.00 39 202,650.00
0.00 21,800,150.00
0.00 47,436,400.00
0.00 47,311,979.00
0.00 26,491,151.06
0.00 14,085,634.50
0.00 14,058,981.00
0.00 14,040,349.75
0.00 7,748,666.00
0.00 23262,782.20
0.00 23 211,221.00
0.00 23,148,985.50

*As adjusted for any prior abatements.
I






In Witness Whereof, I have executed this Certificate on this day of
,2014.














































Certificate of Reduction for Refunded Bonds
i
State of Illinois County of Cook

)
) SS )

Filing Certificate

I, David D. Orr, County Clerk of The County of Cook, Illinois (the "County"), do hereby
certify that on the day of , 2014, there has been filed in my office as tax
extension officer of the County and remains on file in my office a certificate of the Chief
Financial Officer of the City of Chicago, dated , 2014, entitled:

Certificate of Reduction of Certain Taxes Levied to Pay Principal of and Interest on Certain Outstanding General Obligation Bonds of the City of Chicago

In Witness Whereof, I have set my hand and affixed the seal of The County of Cook,
Illinois, this day of , 2014.



County Clerk of The County of Cook, Illinois
[Seal]
I






State of Illinois )
) SS
County of DuPage )

Filing Certificate

I, Gary A. King, County Clerk of The County of DuPage, Illinois (the "County"), do
hereby certify that on the day of , 2014, there has been filed in my office as
tax extension officer of the County and remains on file in my office a certificate of the Chief
Financial Officer of the City of Chicago, dated , 2014, entided:

Certificate of Reduction of Certain Taxes Levied to Pay Principal of and Interest on Certain Outstanding General Obligation Bonds of the City of Chicago

In Witness Whereof, I have set my hand and affixed the seal of The County of DuPage,
Illinois, this day of , 2014.



County Clerk of The County of DuPage, Illinois
[Seal]





























i
Acknowledgment of Filing Notification of Sale

The foregoing Notification of Sale of $432,630,000 aggregate principal amount of General Obligation Bonds, Project and Refunding Series 2014A, and $450,790,000 aggregate principal amount of General Obligation Bonds, Taxable Project and Refunding Series 2014B, of the City of Chicago (the "City") has been filed in my office as City Clerk of the City and is part of the official files and records of my office.
I






In WITNESS WHEREOF, I have hereunto affixed my signature and caused to be affixed hereto the corporate seal of the City this day of \A^^V\ 2014.

Susana A. Mendoza \ City Clerk
[Seal]











































-2-