NEW ISSUE; BOOK-ENTRY ONLY Ratings: Moody’s: Aa2

See Ratings

In the opinion of Squire Patton Boggs (US) LLP, Bond Counsel, under existing law: (i) assuming continuing compliance with certain covenants and the
accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax
preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and the Bonds are qualified tax-exempt
obligations as defined in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended; and (ii) interest on, and any profit made on the sale,
exchange or other disposition of, the Bonds are exempt from all Ohio state and local taxation, except the estate tax, the domestic insurance company tax,
the dealers in intangibles tax, the tax levied on the basis of the total equity capital of financial institutions, and the net worth base of the corporate
franchise tax. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative
minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see Tax Matters.

$8,575,000
CITY OF STOW, OHIO
GENERAL OBLIGATION (Limited Tax)
VARIOUS PURPOSE REFUNDING BONDS, SERIES 2014

Dated: Closing Date

The Bonds. The Bonds are unvoted general obligations of the City, issued to refund certain securities issued previously
to finance permanent improvements, as described under Authorization and Purpose. Principal and interest, unless paid
from other sources, are to be paid from the proceeds of the City’s levy of ad valorem property taxes, which taxes are
within the 7.2-mill limitation provided by the City’s Charter.

Book-Entry Only. The Bonds will be initially issued only as fully-registered bonds, one for each maturity, issuable
under a book-entry system, registered initially in the name of The Depository Trust Company or its nominee (DTC).
There will be no distribution of Bonds to the ultimate purchasers. The Bonds in certificated form as such will not be
transferable or exchangeable, except for transfer to another nominee of DTC or as otherwise described in this Official
Statement. See Appendix E.

Payment. (See Maturity Schedule on inside cover.) Principal and interest will be payable to the registered owner (DTC),
principal upon presentation and surrender at the designated corporate trust office of The Huntington National Bank (the
Bond Registrar) and interest transmitted by the Bond Registrar on each interest payment date (June 1 and December 1 of
each year, beginning December 1, 2014) to the registered owner (DTC) as of the 15 th day preceding that interest payment
date.
Prior Redemption. Bonds maturing on or after December 1, 2018, are subject to optional redemption by the City prior
to maturity, beginning December 1, 2017, as described in this Official Statement. See Prior Redemption.

The Bonds are offered when, as and if issued, and accepted by Fifth Third Securities, Inc. (the Underwriter),
subject to the opinion on certain legal matters relating to their issuance of Squire Patton Boggs (US) LLP, Bond Counsel
to the City. The Bonds are expected to be available for delivery to DTC or its agent on June 24, 2014.

This Official Statement has been prepared by the City in connection with its original offering for sale of the Bonds. The
Cover includes certain information for quick reference only. It is not a summary of the Bond issue. Investors should read
the entire Official Statement to obtain information as a basis for making informed investment judgments.

The date of this Official Statement is June 17, 2014, and the information herein speaks only as of that date.
 PRINCIPAL MATURITY SCHEDULE
ON DECEMBER 1

Interest CUSIP©(a)
Year Amount Rate Price No. 862386

2014 $ 25,000 1.500% 100.544% HT9

2015 370,000 1.500 101.645 HU6
2016 375,000 1.500 102.418 HV4
2017 380,000 1.500 102.367 HW2
2018 385,000 1.500 101.344 HX0
2019 390,000 1.500 100.334 HY8
2020 395,000 2.000 101.164 HZ5
2021 400,000 2.000 100.164 JA8
2022 420,000 2.250 100.328 JB6
2023 430,000 2.500 100.656 JC4
2024 430,000 2.500 100.162 JD2
2025 440,000 2.750 100.653 JE0
2026 460,000 3.000 101.141 JF7
2027 470,000 3.250 101.627 JG5
2028 480,000 3.250 101.135 JH3
2029 500,000 3.250 100.809 JJ9
2030 515,000 3.500 101.292 JK6
2031 530,000 3.750 101.774 JL4
2032 510,000 4.000 102.254 JM2
2033 215,000 4.000 101.928 JN0
2034 225,000 4.000 101.603 JP5
2035 230,000 4.000 101.280 JQ3

____________________

(a) Copyright ©, CUSIP Global Services (see Regarding This Official Statement).
 CITY OF STOW, OHIO

CITY OFFICIALS

Mayor: Sara Drew

Director of Finance: John M. Baranek
Director of Law: Amber Zibritosky, Esq.

City Council:

Bob Adaska
Jim Costello, President Pro-Tem
Brian D’Antonio
Brian Lowdermilk
John Pribonic
Mike Rasor, Vice President
Matt Riehl, President

PROFESSIONAL SERVICES

Bond Counsel: Squire Patton Boggs (US) LLP

Bond Registrar and Escrow Agent: The Huntington National Bank

Financial Advisor: Sudsina & Associates, LLC

Underwriter: Fifth Third Securities, Inc.

Verification Agent: Causey Demgen & Moore P.C.

[This Page Is Intentionally Left Blank.]
 REGARDING THIS OFFICIAL STATEMENT

This Official Statement does not constitute an offering of any security other than the
original offering of the Bonds identified on the Cover (as defined herein). No dealer, broker,
sales person or other person has been authorized by the City to give any information or to make
any representation other than as contained in this Official Statement, and if given or made, such
other information or representation must not be relied upon as having been given or authorized
by the City. This Official Statement does not constitute an offer to sell or the solicitation of an
offer to buy, and there shall not be any sale of the Bonds by any person, in any jurisdiction in
which it is unlawful to make that offer, solicitation or sale.

The information in this Official Statement is provided by the City in connection with
the original offering of the Bonds. Reliance should not be placed on any other information
publicly provided, in any format including electronic, by the City for other purposes, including
general information provided to the public or to portions of the public. The information in this
Official Statement is subject to change without notice. Neither the delivery of this Official
Statement nor any sale made under it shall, under any circumstances, give rise to any implication
that there has been no change in the affairs of the City since its date.

This Official Statement contains statements that the City believes may be “forward-
looking statements.” Words such as “plan,” “estimate,” “project,” “budget,” “anticipate,”
“expect,” “intend,” “believe” and similar terms are intended to identify forward-looking
statements. The achievement of results or other expectations expressed or implied by such
forward-looking statements involves known and unknown risks, uncertainties and other factors
that are difficult to predict, may be beyond the City’s control and could cause actual results,
performance or achievements to be materially different from any results, performance or
achievements expressed or implied by such forward-looking statements. The City undertakes no
obligation, and does not plan, to issue any updates or revisions to such forward-looking
statements.

UPON ISSUANCE, THE BONDS WILL NOT BE REGISTERED BY THE CITY

UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES
EXCHANGE. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
OTHER FEDERAL, STATE OR OTHER GOVERNMENTAL ENTITY OR AGENCY WILL
HAVE AT THE REQUEST OF THE CITY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED OR DISAPPROVED THE
BONDS FOR SALE.

CUSIP is a registered trademark of the American Bankers Association. CUSIP

Global Services (CGS) is managed on behalf of the American Bankers Association by Standard
& Poor’s. CUSIP data herein are provided by Standard & Poor’s, CUSIP Service Bureau, a
division of The McGraw-Hill Companies, Inc. CUSIP numbers have been assigned by an
independent company not affiliated with the City and are included solely for the convenience of
the holders of the Bonds. The City, the Bond Counsel and the Underwriter are not responsible
for the selection or use of these CUSIP numbers and make no representation as to their
correctness on the Bonds or the Cover or as indicated above. The CUSIP number for a specific
maturity is subject to being changed after the issuance of the Bonds as a result of various
subsequent actions and events.

The Ohio Municipal Advisory Council (OMAC) has requested that this paragraph be
included in this Official Statement. Certain information contained in the Official Statement is
attributed to OMAC. OMAC compiles information from official and other sources. OMAC

1
believes the information it compiles is accurate and reliable, but OMAC does not independently
confirm or verify the information and does not guaranty its accuracy. OMAC has not reviewed
this Official Statement to confirm that the information attributed to it is information provided by
OMAC or for any other purpose.

The City may, and the successful bidder is authorized to, complete the Cover or add a
separate page on the front of this Official Statement to indicate the offering prices or yields,
interest rate(s), the identity of the Underwriter, and the rating.

[Balance of This Page Intentionally Left Blank.]

2
 TABLE OF CONTENTS

REGARDING THIS OFFICIAL STATEMENT ------------------------..l

INTRODUCTORY S -------------------------------..7
THEBONDS ------------------------------------------..9
AUTHORIZATION AND PURPOSE ------------------------------9
Use of Proceeds — ----------------.--------------.9
CERTAIN TERMS ()P THE BONDS -----.------------------------..9
General; Bo SIe1cuz---------------------------.---.g
Prior ------------------------------------. |A
Optional ------------------------------.lU
Selection o[ Bonds and Book-Entry Interests hobcRedccmed---------lO
Notice of Call for Re o'Effxt---------------------'l0
SECURITY AND SOURCES ()PP/\YM2NT-------------------------lT
Basic Security--------------------------------------l|
Additional Sources of Payment —.---------------------------.l|
Enforcement uf Rights and Rculcdiea--------------------------l2
Bankruptcy---------------------------------------..|2
Refunding-------------.--------------------------.. l]
LITIGATION------------------------------------------.)3
OPINION (}P BOND COUNSEL -------------------------------..i3
TAX M/\TTEllB--------------------------------------.—..l4
Risk of Future Legislative Changesand/or Court [}ociei/ny--------------.l6
Original Issue Discount and Original Issue Prcmiunz------------------l6
I~[1(~IB|LlT,~P()I~l~J\/|~ST&~[l~T/~~J[}/\S PUBLIC ~~()I~E~~ SECURITY ....................... 17
UNDERWRITING —,_,____________—,----------.-----------. l7
RATING...................................................................................................................................... 18
TRANSCRIPT AND CLOSING CERTIFICATES ----------------------'I8
CONTINUING DISCLOSURE ------------------------.lN
VERIFICATION OF MATHEMATICAL COMPUTATIONS.................................................. 19
F1N[ANCL&iA[)\/lS()fI------------------------------------.l9
BOND REGISTRAR AND ESCROW /\GBNT------------------------.|9
THE CITY -------------------------------------------'2O
GENERAL INy(}RM/\Il(}N----------------------------------20
CitvGnvcrnuleut------------------------------------..2Z
Eozp/oycna----.-----------------------------------'2+
Retirement a----------------------------------.. 24
Health Care --.--.—.---.----------.-------------------25
CityFouilitics--------------------------------------. 26
Economic and Demographic {nfbroouiiouz------------------------2h
un ------------------------------------26
(~oozn~eroia|,|nduotdu1mndDeadenio]/\c~i ---------------..27
Employment uodl000mc----------------------------. 28
Housing and Building Pcrozity-------------------------.. 30

3
 TABLE OF CONTENTS

Page

FINANCIAL MATTERS ............................................................................................................ 31

Introduction ...................................................................................................................... 31
Budgeting, Property Tax Levy and Appropriations Procedures ...................................... 32
Financial Reports and Audits ........................................................................................... 33
Financial Outlook............................................................................................................. 33
GENERAL FUND ....................................................................................................................... 34
AD VALOREM PROPERTY TAXES AND SPECIAL ASSESSMENTS ................................ 34
Assessed Valuation .......................................................................................................... 34
Overlapping Governmental Entities ................................................................................ 37
Tax Rates ......................................................................................................................... 37
TAX TABLE A Overlapping Tax Rates ............................................................. 37
TAX TABLE B City Tax Rates ........................................................................... 38
Collections ....................................................................................................................... 39
Special Assessments ........................................................................................................ 40
Delinquencies ................................................................................................................... 41
MUNICIPAL INCOME TAX ..................................................................................................... 42
STATE LOCAL GOVERNMENT ASSISTANCE FUNDS ...................................................... 43
ESTATE TAXES ......................................................................................................................... 43
CITY DEBT AND OTHER LONG-TERM OBLIGATIONS .................................................... 44
Security for General Obligation Debt; Bonds and BANs ................................................ 44
Statutory Direct Debt Limitations .................................................................................... 45
Indirect Debt and Unvoted Property Tax Limitations ..................................................... 47
Debt Outstanding ............................................................................................................. 48
Bond Anticipation Notes.................................................................................................. 48
Bond Retirement Fund ..................................................................................................... 49
Future Financings............................................................................................................. 49
Long-Term Financial Obligations Other Than Bonds and Notes .................................... 49
CONCLUDING STATEMENT .................................................................................................. 51

Debt Tables

A: Principal Amounts of Outstanding General Obligation

(GO) Debt; Leeway for Additional Debt within Direct
Debt Limitations ............................................................................................ DT-1
B: Various City and Overlapping GO Debt Allocations
(Principal Amounts) ....................................................................................... DT-2
C: Projected Debt Charges Requirements on City GO Debt .............................. DT-3
D: Outstanding GO Bond Anticipation Notes .................................................... DT-4
E: Outstanding GO Bonds .................................................................................. DT-5

4
 TABLE OF CONTENTS

Appendix A: Comparative Cash-Basis Summary of General Fund Receipts and Expenditures

for Fiscal Years 2009 through 2013 and Budgeted Fiscal Year 2014

Appendix B-1: All-Funds Summary for Fiscal Year 2012

Appendix B-2: All-Funds Summary for Fiscal Year 2013

Appendix C: Basic Financial Statements from the City’s Financial Report for Fiscal Year
2012 (Audited)

Appendix D: Proposed Text of Opinion of Bond Counsel

Appendix E: Book-Entry System; DTC

Appendix F: Proposed Form of Continuing Disclosure Agreement

5
[This Page Is Intentionally Left Blank]

6
 INTRODUCTORY STATEMENT

This Official Statement has been prepared by the City of Stow, Ohio (the City), in
connection with its original issuance and sale of the Bonds identified on the Cover (the Bonds).
Certain information concerning the Bonds, including their authorization, purpose, terms and
security and sources of payment, and the City is provided in this Official Statement.

This Introductory Statement briefly describes certain information relating to the

Bonds and supplements certain information on the Cover. It is not intended as a substitute for
the more detailed discussions in this Official Statement. Investors should read the entire Official
Statement to obtain information as a basis for making informed investment judgments.

All financial and other information in this Official Statement has been provided by
the City from its records, except for information expressly attributed to other sources and except
for certain information on the Cover. The presentation of information, including tables of
receipts from taxes and other sources, is intended to show recent historical information, and is
not intended to indicate future or continuing trends in the financial position or other affairs of the
City. No representation is made that past experience, as is shown by that financial and other
information, will necessarily continue or otherwise be predictive of future experience. See also
Regarding This Official Statement.

This Official Statement should be considered in its entirety and no one subject should
be considered less important than another by reason of location in the text. Reference should be
made to laws, reports or documents referred to for more complete information regarding their
contents. References to provisions of Ohio law, including the Revised Code and the Ohio
Constitution, and of the City Charter (the Charter) are references to those current provisions.
Those provisions may be amended, repealed or supplemented.

As used in this Official Statement:

 “Beneficial Owner” means the owner of a book-entry interest in the Bonds,

as defined in Appendix E.

 “Council” means the Council of the City.

 “County” means the County of Summit, Ohio.

 “County Fiscal Officer” means the Fiscal Officer of the County.

 “Cover” means the cover page and the inside cover of this Official Statement.

 “Debt charges” means the principal (including any mandatory sinking fund
deposits and mandatory redemption payments), interest and any redemption
premium payable on the obligations referred to as those payments come due
and payable; debt charges may also be referred to as “debt service.”

 “Fiscal Year” means the 12-month period ending December 31, and
reference to a particular Fiscal Year (such as “Fiscal Year 2014”) means the
Fiscal Year ending on December 31 in that year.
 “Revised Code” means the Ohio Revised Code.

 “State” or “Ohio” means the State of Ohio.

7
  “2013 State Budget Act” means Amended Substitute House Bill No. 153,
passed by the Ohio General Assembly and signed by the Governor on June 30,
2013, providing State appropriations for its 2014-2015 biennium (beginning
July 1, 2013 through June 30, 2015) and enacting other statutory provisions.

The Bonds are issued by the City of Stow, Ohio. They are authorized by Chapter 133
of the Revised Code, the Charter, and legislation passed by the Council. The Bonds are issued to
refund certain outstanding bonds of the City as described herein under Authorization and
Purpose.

The Bonds are general obligations of the City, the full faith and credit and general
property taxing power of which are pledged to the payment of debt charges. Unless paid from
other sources, debt charges are to be paid from the proceeds of the City’s levy of ad valorem
property taxes, which taxes are within the 7.2-mill limitation provided by the City’s Charter. See
Security and Sources of Payment.

The Authorizing Legislation (see Authorization and Purpose) provides that the
Bonds will be issued in the denomination of $5,000 or in whole multiples of $5,000. The Bonds
will be initially issued only as fully-registered bonds, one for each maturity, issuable under a
book-entry system and registered initially in the name of The Depository Trust Company, New
York, New York, or its nominee (DTC). The Bonds will be issued in the denomination of
$5,000 or in whole multiples of $5,000. See General; Book-Entry System and Appendix E.

Principal and interest will be payable to the registered owner (DTC). Principal will
be payable on presentation and surrender at the designated corporate trust office of the Bond
Registrar. See Bond Registrar. Interest will be transmitted by the Bond Registrar on each
interest payment date (June 1 and December 1, beginning December 1, 2014) to the registered
owner as of the 15th day preceding that interest payment date.

The Bonds maturing on or after December 1, 2018, are subject to prior redemption on
any date, by and at the sole option of the City, in whole or in part as selected by the City (in
whole multiples of $5,000), on or after December 1, 2017, at a redemption price equal to 100%
of the principal amount redeemed, plus interest accrued to the redemption date. See Prior
Redemption.

The opinion as to the validity of the Bonds and the tax-exempt status of the interest
on the Bonds will be rendered by Squire Patton Boggs (US) LLP (Bond Counsel). See Opinion
of Bond Counsel and Tax Matters and Appendix D.

[Balance of This Page Intentionally Left Blank.]

8
 THE BONDS

AUTHORIZATION AND PURPOSE

The Bonds are to be issued pursuant to Chapter 133 of the Revised Code, the Charter,
an ordinance passed by the Council and a certificate of award provided for by that ordinance
(collectively, the Authorizing Legislation).

The Bonds are being issued to refund at a lower interest cost certain of the City’s
outstanding Various Purpose Bonds, Series 2007, dated May 9, 2007, and maturing on
December 1 in the years 2015 through 2029, 2031 and 2035 (collectively, the Refunded Bonds),
which were issued for the purpose of (i) paying a portion of the costs of constructing, furnishing,
equipping and otherwise improving a new Stow Municipal Court facility and equipping and
improving its site and (ii) improving the recreational and park facilities of the City by acquiring
the real and personal property constituting the existing Fox Den Golf Course.

Use of Proceeds – Refunding

Proceeds from the sale of the Bonds that will be used to advance refund the Refunded
Bonds will be deposited in an Escrow Fund held by The Huntington National Bank (the Escrow
Agent), pursuant to an Escrow Agreement between the City and the Escrow Agent dated June 24,
2014 (the Escrow Agreement). The money deposited in the Escrow Fund will be (a) held in cash
to the extent not needed to make the investments described in (b) below, and (b) invested in
direct obligations of or obligations guaranteed as to payment by the United States (within the
meaning of Section 133.34(D) of the Revised Code) that mature or are subject to redemption by
and at the option of the holder, in amounts sufficient, together with any uninvested cash in the
Escrow Fund but without further investment or reinvestment, for the (i) payment of interest on
the Refunded Bonds when due on June 1 and December 1 of each year from December 1, 2014,
through June 1, 2015, and (ii) payment of the principal amount of the Refunded Bonds upon their
prior optional redemption on June 1, 2015, as provided in the Authorizing Legislation. The
Authorizing Legislation provides for an irrevocable call for optional redemption of the Refunded
Bonds on June 1, 2015, at a redemption price equal to 100% of the principal amount redeemed,
plus interest accrued to the redemption date.

Any premium received by the City on the sale of the Bonds in excess of that
necessary to fully fund the Escrow Fund as described above and to pay costs of issuing the
Bonds and refunding the Refunded Bonds and any interest accrued on the Bonds will be
deposited in the Bond Retirement Fund. Money in that Fund is used to pay debt charges on City
debt obligations. See also the discussion under Verification of Mathematical Computations.

CERTAIN TERMS OF THE BONDS

General; Book-Entry System

The Bonds will be dated their date of original issuance, will be payable in the
principal amounts and on the dates and will bear interest (computed on the basis of a 360-day
year and 12 30-day months) at the rates and be payable on the dates, at the place and in the
manner, all as described on the Cover.

The Bond Registrar will act as the paying agent for the Bonds and will keep all books
and records necessary for registration, exchange and transfer of the Bonds. See Bond Registrar.

The Bonds will be delivered in book-entry-only form and, when issued, registered in
the name of The Depository Trust Company (DTC), New York, New York, or its nominee
9
Cede & Co., which will act as securities depository for the Bonds. For discussion of the book-
entry system and DTC and the replacement of Bonds in the event that the book-entry system is
discontinued, see Appendix E.

Prior Redemption

The Bonds are subject to optional redemption as follows.

Optional Redemption

The Bonds maturing on or after December 1, 2018, are subject to prior redemption,
by and at the sole option of the City, in whole or in part as selected by the City (in whole
multiples of $5,000), on any date on or after December 1, 2017, at a redemption price equal to
100% of the principal amount redeemed, plus interest accrued to the redemption date.

Selection of Bonds and Book-Entry Interests to be Redeemed

If fewer than all outstanding Bonds are called for optional redemption at one time, the
Bonds to be called will be called as selected by, and selected in a manner as determined by, the
City.

If less than all of an outstanding Bond of one maturity under a book-entry system is to
be called for redemption (in the amount of $5,000 or any whole multiple), the Bond Registrar
will give notice of redemption only to DTC as registered owner. The selection of the book-entry
interests in that Bond to be redeemed is discussed below under Notice of Call for Redemption;
Effect.

If bond certificates are issued to the ultimate owners, and if fewer than all of the
Bonds of a single maturity are to be redeemed, the selection of Bonds (or portions of Bonds in
the amount of $5,000 or any whole multiple) to be redeemed will be made by lot in a manner
determined by the Bond Registrar.

In the case of a partial redemption by lot when Bonds of denominations greater than
$5,000 are then outstanding, each $5,000 unit of principal will be treated as if it were a separate
Bond of the denomination of $5,000.

Notice of Call for Redemption; Effect

The Bond Registrar is to cause notice of the call for redemption, identifying the
Bonds or portions of Bonds to be redeemed, to be sent by first-class mail, at least 30 days prior
to the redemption date, to the registered owner (initially, DTC) of each Bond to be redeemed at
the address shown on the Register on the 15th day preceding that mailing. Any defect in the
notice or any failure to receive notice by mailing will not affect the validity of any proceedings
for the redemption of any Bonds.

On the date designated for redemption, Bonds or portions of Bonds called for
redemption shall become due and payable. If the Bond Registrar then holds sufficient money for
payment of debt charges payable on that redemption date, interest on each Bond (or portion of a
Bond) so called for redemption will cease to accrue on that date.

So long as all Bonds are held under a book-entry system by a securities depository
(such as DTC), a call notice is to be sent by the Bond Registrar only to the depository or its
nominee. Selection of book-entry interests in the Bonds called, and giving notice of the call to
the owners of those interests called, is the sole responsibility of the depository and of its Direct
Participants and Indirect Participants. Any failure of the depository to advise any Direct
10
Participant, or of any Direct Participant or any Indirect Participant to notify the Beneficial
Owners, of any such notice and in its content or effect will not affect the validity of any
proceedings for the redemption of any Bonds or portions of Bonds. See Appendix E.

SECURITY AND SOURCES OF PAYMENT

The Bonds will be unvoted general obligation debt of the City payable from the
sources described, subject to bankruptcy laws and other laws affecting creditors’ rights and to the
exercise of judicial discretion.

Basic Security

The basic security for payment of the Bonds is the requirement that the City levy
ad valorem property taxes within the ten-mill limitation imposed by Ohio law to pay debt
charges on the Bonds. The State constitution specifically prohibits a subdivision such as the City
from incurring general obligation indebtedness unless the authorizing legislation makes
provision “for levying and collecting annually by taxation an amount sufficient to pay” the debt
charges on the bonds. (Ohio Constitution Article XII Section 11.)

The Ohio Supreme Court has stated:

“Section 11 of Article XII of the Constitution of Ohio imposes a

mandatory duty upon the State and its political subdivisions to pay the
interest and principal of their indebtedness before provisions are to be
made for current operating expenses.” State ex rel. Nat’l City Bank v. Bd.
of Ed. of the Cleveland City School District, 52 Ohio St. 2d 81, 85 (1977).

Under State law, the levy for debt charges on unvoted general obligations of the City
is to be placed before and in preference to all other levies and for the full amount of those debt
charges. See the further discussions under Ad Valorem Property Taxes and Special
Assessments and City Debt and Other Long-Term Obligations.

Ohio law requires the City to levy and collect that property tax to pay debt charges on
the Bonds as they come due, unless and to the extent those debt charges are paid from other
sources, such as described below.
The Authorizing Legislation provides further security by making a pledge of the full
faith and credit and the general property taxing power of the City for the payment of debt
charges on the Bonds as they come due. All funds of the City are included in that pledge, except
those specifically limited to another use or prohibited from that use by the Ohio Constitution, or
Ohio or federal law, or revenue bond trust agreements. Those exceptions as to portions of the
Bonds include tax levies voted for specific purposes or expressly pledged to certain obligations,
special assessments pledged to particular bonds or notes, and certain utility revenues. A similar
pledge is made in each ordinance authorizing voted or unvoted general obligation debt.

Additional Sources of Payment

The Authorizing Legislation also contains specific covenants that debt charges on a
portion ($4,785,000) of the Bonds will be paid from municipal income taxes, in accordance with
Section 133.05(B)(7) of the Revised Code. See Debt Table A and Debt Table C. Those
include covenants to appropriate annually from lawfully available municipal income taxes, and
to continue to levy and collect those income taxes, in amounts necessary to meet the debt charges
on the Bonds. See Municipal Income Tax.

11
Enforcement of Rights and Remedies

In addition to the right of individual bondholders to sue upon their particular Bonds,
Ohio law authorizes the holders of not less than 10% in principal amount of the outstanding
Bonds, whether or not then due and payable or reduced to judgment, to bring mandamus or other
actions to enforce all contractual or other rights of the bondholders, including the right to require
the City to assess levy, charge, collect and apply the unvoted property taxes and other pledged
receipts to pay debt charges and to perform its duties under law. Those bondholders may, in the
case of any default in payment of debt charges to bring action to require the City to account as if
it were the trustee of an express trust for the bondholders or to enjoin any acts that may be
unlawful or in violation of bondholder rights. See also Appendix E.

The State has pledged to and agreed with holders of securities such as the Bonds that

“…the state will not, by enacting any law or adopting any rule, repeal,
revoke, repudiate, limit, alter, stay, suspend, or otherwise reduce, rescind,
or impair the power or duty of a subdivision to exercise, perform, carry
out, and fulfill its responsibilities or covenants under this chapter
[Chapter 133, the State’s Uniform Public Securities Law] or legislation or
agreements as to its Chapter 133. securities, including a credit
enhancement facility, passed or entered into pursuant to this chapter, or
repeal, revoke, repudiate, limit, alter, stay, suspend, or otherwise reduce,
rescind, or impair the rights and remedies of any such holders fully to
enforce such responsibilities, covenants, and agreements or to enforce the
pledge and agreement of the State contained in this division, or otherwise
exercise any sovereign power materially impairing or materially
inconsistent with the provisions of such legislation, covenants, and
agreements.” (Section 133.25(D) of the Revised Code.)

Bankruptcy

Federal and State laws provide procedures for the adjustment of indebtedness of
political subdivisions, such as the City. Chapter 9 of the U.S. Bankruptcy Code would permit the
City to make such an adjustment if (i) it were “insolvent” (i.e., the City was not paying its debt
charges as they came due or it was unable to pay those debt charges as they became due), (ii) it
met certain other criteria (e.g., having negotiated in good faith with its creditors and failed to
reach agreement or such negotiation was impractical because of time restrictions, the number of
creditors or other reasons) and (iii) it were authorized under State law (by legislation or by a
governmental officer) to seek relief under Chapter 9. The State’s Uniform Public Securities Law
provides that the City or any other subdivision must obtain the approval of the State Tax
Commissioner in order to file a bankruptcy petition stating that it is insolvent and “that it desires
to effect a plan for the composition or adjustment of its debts and to take such further
proceedings” under the Bankruptcy Code. That law also states:

“No taxing subdivision shall be permitted, in availing itself of such acts of

congress [the Bankruptcy Code], to scale down, cut down, or reduce the
principal sum of its securities, except that interest thereon may be reduced
in whole or in part.” (Section 133.36 of the Revised Code.)

The County may also initiate proceedings under the Bankruptcy Code. Because it
collects, distributes or otherwise provides revenues to the City, the City’s financial condition
could be affected by such an action.

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Refunding

State law authorizes the refunding and advance refunding of all or a portion of the
Bonds. If the City places in escrow either money or direct obligations of, or obligations
guaranteed as to payment by, the United States, or a combination of both, that with investment
income thereon will be sufficient for the payment of debt charges on the refunded Bonds, those
Bonds will no longer be considered to be outstanding. They will also not be considered in
determining any direct or indirect limitation on City indebtedness, and the levy of taxes to pay
debt charges on them will not be required. For this purpose, direct obligations of or obligations
guaranteed by the United States include rights to receive payments or portions of payments of
the principal of or interest or other investment income on (i) those U.S. obligations and (ii) other
obligations fully secured as to payment by those U.S. obligations and the interest or other
investment income on those obligations.

LITIGATION

To the knowledge of the appropriate City officials, no litigation or administrative

action or proceeding is pending restraining or enjoining, or seeking to restrain or enjoin, the
issuance and delivery of the Bonds, or the levy and collection of taxes to pay the debt charges on
the Bonds, or contesting or questioning the proceedings and authority under which the Bonds
have been authorized and are to be issued, sold, signed or delivered, or the validity of the Bonds.
No petitions for referendum with respect to the Authorizing Legislation or any other measure
authorizing the payment of or security for the Bonds, or the carrying out of the government
purposes to which the Bond proceeds are to be applied, and no petitions seeking to initiate any
measure affecting the same or the proceedings therefor, have been filed. The City will deliver to
the Underwriter a certificate to that effect at the time of original delivery of the Bonds to the
Underwriter.

The City is a party to various legal proceedings seeking damages or injunctive or

other relief and generally incidental to its operations. These proceedings are unrelated to the
Bonds or the security for the Bonds, or the permanent improvements being financed. The
ultimate disposition of these proceedings is not now determinable, but will not, in the opinion of
the Law Director, have a material adverse effect on the Bonds, the security for the Bonds, or
those improvements or the City’s operating revenues.

Under current Ohio law, City money, accounts and investments are not subject to
attachment to satisfy tort judgments in State courts against the City.

See also City Facilities; Insurance.

OPINION OF BOND COUNSEL

Certain legal matters incident to the issuance of the Bonds and with regard to the
tax-exempt status of the interest on the Bonds (see Tax Matters) are subject to the opinion of
Squire Patton Boggs (US) LLP (known as Squire Sanders (US) LLP prior to June 1, 2014), Bond
Counsel to the City. The signed legal opinion of Bond Counsel, substantially in the form
attached hereto as Appendix D, dated and premised on law in effect on the date of issuance of
the Bonds, will be delivered on the date of issuance of the Bonds. The text of the opinion to be
delivered may vary from the text as set forth in Appendix D if necessary to reflect facts and law
on the date of delivery. The opinion will speak only as of its date, and subsequent distribution of
it by recirculation of this Official Statement or otherwise shall create no implication that Bond
Counsel has reviewed or expresses any opinion concerning any of the matters referred to in the
opinion subsequent to its date.

13
 The opinion of Bond Counsel and any other legal opinions and letters of counsel to be
delivered concurrently with the delivery of the Bonds express the professional judgment of the
attorneys rendering the opinions or advice regarding the legal issues and other matters expressly
addressed therein. By rendering a legal opinion or advice, the giver of such opinion or advice
does not become an insurer or guarantor of the result indicated by that opinion, or the transaction
on which the opinion or advice is rendered, or of the future performance of parties to the
transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute
that may arise out of the transaction.

Bond Counsel has drafted those portions of this Official Statement under the captions
Certain Terms of the Bonds (excluding the information concerning the book-entry system),
Security and Sources of Payment and Tax Matters. Bond Counsel and others, including the
Financial Advisor, have assisted the City with its preparation of certain other portions of this
Official Statement. Bond Counsel and those other parties have not been engaged to, and will not,
independently confirm or verify that information or any other information provided by the City
or others, and will not express an opinion as to the accuracy, completeness or fairness of any
such information or any other reports, financial information, offering or disclosure documents or
other information pertaining to the Bonds that may be prepared or made available by the City or
others to potential or actual purchasers of the Bonds, to owners of the Bonds, including
Beneficial Owners, or to others.

In addition to rendering its opinion, Bond Counsel will assist in the preparation of and
advise the City concerning documents for the bond transcript. The City has also retained the
legal services of that law firm from time to time as special counsel in connection with matters
that do not relate to City financings. Squire Patton Boggs (US) LLP also serves and has served
as bond counsel for one or more of the political subdivisions that the City territorially overlaps.

TAX MATTERS

In the opinion of Squire Patton Boggs (US) LLP (known as Squire Sanders (US) LLP
prior to June 1, 2014), Bond Counsel to the City, under existing law: (i) interest on the Bonds is
excluded from gross income for federal income tax purposes under Section 103 of the Internal
Revenue Code of 1986, as amended (the Code), and is not an item of tax preference for purposes
of the federal alternative minimum tax imposed on individuals and corporations and the Bonds
are qualified tax-exempt obligations as defined in Section 265(b)(3) of the Code; and (ii) interest
on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from
all Ohio state and local taxation, except the estate tax, the domestic insurance company tax, the
dealers in intangibles tax, the tax levied on the basis of the total equity capital of financial
institutions, and the net worth base of the corporate franchise tax. Bond Counsel expresses no
opinion as to any other tax consequences regarding the Bonds.

The opinion on tax matters will be based on and will assume the accuracy of certain
representations and certifications, and continuing compliance with certain covenants, of the City
contained in the transcript of proceedings and that are intended to evidence and assure the
foregoing, including that the Bonds are and will remain obligations the interest on which is
excluded from gross income for federal income tax purposes. Bond Counsel will not
independently verify the accuracy of the City’s certifications and representations or the
continuing compliance with the City’s covenants.

The opinion of Bond Counsel is based on current legal authority and covers certain
matters not directly addressed by such authority. It represents Bond Counsel’s legal judgment as
to exclusion of interest on the Bonds from gross income for federal income tax purposes but is
not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service
(IRS) or any court. Bond Counsel expresses no opinion about (i) the effect of future changes in

14
the Code and the applicable regulations under the Code or (ii) the interpretation and the
enforcement of the Code or those regulations by the IRS.

The Code prescribes a number of qualifications and conditions for the interest on
state and local government obligations to be and to remain excluded from gross income for
federal income tax purposes, some of which require future or continued compliance after
issuance of the obligations. Noncompliance with these requirements by the City may cause loss
of such status and result in the interest on the Bonds being included in gross income for federal
income tax purposes retroactively to the date of issuance of the Bonds. The City has covenanted
to take the actions required of it for the interest on the Bonds to be and to remain excluded from
gross income for federal income tax purposes, and not to take any actions that would adversely
affect that exclusion. After the date of issuance of the Bonds, Bond Counsel will not undertake
to determine (or to so inform any person) whether any actions taken or not taken, or any events
occurring or not occurring, or any other matters coming to Bond Counsel’s attention, may
adversely affect the exclusion from gross income for federal income tax purposes of interest on
the Bonds or the market value of the Bonds.
A portion of the interest on the Bonds earned by certain corporations may be subject
to a federal corporate alternative minimum tax. In addition, interest on the Bonds may be subject
to a federal branch profits tax imposed on certain foreign corporations doing business in the
United States and to a federal tax imposed on excess net passive income of certain S corporations.
Under the Code, the exclusion of interest from gross income for federal income tax purposes
may have certain adverse federal income tax consequences on items of income, deduction or
credit for certain taxpayers, including financial institutions, certain insurance companies,
recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or
continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise
eligible for the earned income tax credit. The applicability and extent of these and other tax
consequences will depend upon the particular tax status or other tax items of the owner of the
Bonds. Bond Counsel will express no opinion regarding those consequences.

Payments of interest on tax-exempt obligations, including the Bonds, are generally

subject to IRS Form 1099-INT information reporting requirements. If a Bond owner is subject to
backup withholding under those requirements, then payments of interest will also be subject to
backup withholding. Those requirements do not affect the exclusion of such interest from gross
income for federal income tax purposes.

Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the
Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the
owners of the Bonds regarding the tax status of interest thereon in the event of an audit
examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine
whether the interest thereon is includible in gross income for federal income tax purposes. If the
IRS does audit the Bonds, under current IRS procedures, the IRS will treat the City as the
taxpayer and the beneficial owners of the Bonds will have only limited rights, if any, to obtain
and participate in judicial review of such audit. Any action of the IRS, including but not limited
to selection of the Bonds for audit, or the course or result of such audit, or an audit of other
obligations presenting similar tax issues, may affect the market value of the Bonds.

Prospective purchasers of the Bonds upon their original issuance at prices other than
the respective prices indicated on the Cover of this Official Statement, and prospective
purchasers of the Bonds at other than their original issuance, should consult their own tax
advisers regarding other tax considerations such as the consequences of market discount, as to all
of which Bond Counsel expresses no opinion.

15
Risk of Future Legislative Changes and/or Court Decisions

Legislation affecting tax-exempt obligations is regularly considered by the United

States Congress and may also be considered by the State legislature. Court proceedings may also
be filed, the outcome of which could modify the tax treatment of obligations such as the Bonds.
There can be no assurance that legislation enacted or proposed, or actions by a court, after the
date of issuance of the Bonds will not have an adverse effect on the tax status of interest or other
income on the Bonds or the market value or marketability of the Bonds. These adverse effects
could result, for example, from changes to federal or state income tax rates, changes in the
structure of federal or state income taxes (including replacement with another type of tax), or
repeal (or reduction in the benefit) of the exclusion of interest on the Bonds from gross income
for federal or state income tax purposes for all or certain taxpayers.

For example, recent presidential and legislative proposals would eliminate, reduce or
otherwise alter the tax benefits currently provided to certain owners of state and local
government bonds, including proposals that would result in additional federal income tax on
taxpayers that own tax-exempt obligations if their incomes exceed certain thresholds. Investors
in the Bonds should be aware that any such future legislative actions (including federal income
tax reform) may retroactively change the treatment of all or a portion of the interest on the Bonds
for federal income tax purposes for all or certain taxpayers. In such event, the market value of
the Bonds may be adversely affected and the ability of holders to sell their Bonds in the
secondary market may be reduced. The Bonds are not subject to special mandatory redemption,
and the interest rates on the Bonds are not subject to adjustment in the event of any such change.

Investors should consult their own financial and tax advisers to analyze the
importance of these risks.

Original Issue Discount and Original Issue Premium

Certain of the Bonds (Discount Bonds) as indicated on the Cover may be offered and
sold to the public at an original issue discount (OID). OID is the excess of the stated redemption
price at maturity (the principal amount) over the “issue price” of a Discount Bond. The issue
price of a Discount Bond is the initial offering price to the public (other than to bond houses,
brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a
substantial amount of the Discount Bonds of the same maturity is sold pursuant to that offering.
For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period
to maturity based on the constant yield method, compounded semiannually (or over a shorter
permitted compounding interval selected by the owner). The portion of OID that accrues during
the period of ownership of a Discount Bond (i) is interest excluded from the owner’s gross
income for federal income tax purposes to the same extent, and subject to the same
considerations discussed above, as other interest on the Bonds, and (ii) is added to the owner’s
tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other
disposition of that Discount Bond. The amount of OID that accrues each year to a corporate
owner of a Discount Bond is taken into account in computing the corporation’s liability for
federal alternative minimum tax. A purchaser of a Discount Bond in the initial public offering at
the price for that Discount Bond stated on the Cover who holds that Discount Bond to maturity
will realize no gain or loss upon the retirement of that Discount Bond.

Certain of the Bonds (Premium Bonds) as indicated on the Cover may be offered and
sold to the public at a price in excess of their stated redemption price at maturity (the principal
amount). That excess constitutes bond premium. For federal income tax purposes, bond
premium is amortized over the period to maturity of a Premium Bond, based on the yield to
maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated
maturity, the amortization period and yield may be required to be determined on the basis of an

16
earlier call date that results in the lowest yield on that Premium Bond), compounded
semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond.
For purposes of determining the owner’s gain or loss on the sale, redemption (including
redemption at maturity) or other disposition of a Premium Bond, the owner’s tax basis in the
Premium Bond is reduced by the amount of bond premium that is amortized during the period of
ownership. As a result, an owner may realize taxable gain for federal income tax purposes from
the sale or other disposition of a Premium Bond for an amount equal to or less than the amount
paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the initial public
offering at the price for that Premium Bond stated on the Cover who holds that Premium Bond to
maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the
lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that
Premium Bond.

Owners of Discount and Premium Bonds should consult their own tax advisers
as to the determination for federal income tax purposes of the amount of OID or bond
premium properly accruable or amortizable in any period with respect to the Discount or
Premium Bonds and as to other federal tax consequences and the treatment of OID and
bond premium for purposes of state and local taxes on, or based on, income.

ELIGIBILITY FOR INVESTMENT AND AS PUBLIC MONEY SECURITY

To the extent that the matter as to the particular investor is governed by Ohio law, and
subject to any applicable limitations under other provisions of Ohio law, the Bonds are lawful
investments for banks, savings and loan associations, credit union share guaranty corporations,
trust companies, trustees, fiduciaries, insurance companies (including domestic for life and
domestic not for life), trustees or other officers having charge of sinking and bond retirement or
other funds of the State and State subdivisions and taxing districts, the Commissioners of the
Sinking Fund, the Administrator of Workers’ Compensation, and State retirement systems
(Teachers, Public Employees, Public School Employees, and Police and Fire), notwithstanding
any other provisions of the Revised Code or rules adopted pursuant to those provisions by any
State agency with respect to investments by them.

The Bonds are acceptable under Ohio law as security for the repayment of the deposit
of public money.

Beneficial Owners of the Bonds should make their own determination as to such
matters as legality of investment in or pledgability of book-entry interests.

UNDERWRITING

The Bonds are being purchased by Fifth Third Securities, Inc. (the Underwriter), at a
price of $8,573,986.10. The aggregate initial offering price of the Bonds is $8,679,419.45;
therefore, the gross underwriting spread is $105,433.35. The Underwriter may offer and sell the
Bonds to certain dealers (including dealers depositing into investment trusts) and others at prices
lower than the public offering prices set forth on the cover pages (the Offering Prices). The
Offering Prices may be changed after the initial offering by the Underwriter. The purchase of
the Bonds by the Underwriter is subject to certain conditions and requires that the Underwriter
will purchase all of the Bonds, if any are purchased.

The Underwriter has reviewed the information in this Official Statement pursuant to
its responsibilities to investors under the federal securities laws, but the Underwriter does not
guarantee the accuracy or completeness of such information.

17
 RATING

The Bonds have been rated “Aa2” by Moody’s Investors Service. The rating
assigned is shown on the Cover. No application for a rating has been made by the City to any
other rating service.

The rating reflects only the views of the rating service, and any explanation of the
meaning or significance of the rating may only be obtained from the rating service. The City
furnished to the rating service certain information and materials, some of which may not have
been included in this Official Statement, relating to the Bonds and the City. Generally, rating
services base their ratings on such information and materials and on their own investigation,
studies and assumptions.

There can be no assurance that a rating when assigned will continue for any given
period of time or that it will not be lowered or withdrawn entirely by a rating service if in its
judgment circumstances so warrant. Any lowering or withdrawal of a rating may have an
adverse effect on the marketability or market value of the Bonds.
The City expects to furnish the rating service with information and materials that may
be requested. The City, however, assumes no obligation to furnish requested information and
materials, and may issue debt for which a rating is not requested. Failure to furnish requested
information and materials, or the issuance of debt for which a rating is not requested, may result
in the suspension or withdrawal of a rating on the Bonds.

TRANSCRIPT AND CLOSING CERTIFICATES

A complete transcript of proceedings and a certificate (described under Litigation)

relating to litigation will be delivered by the City when the Bonds are delivered by the City to the
Underwriter. The City at that time will also provide to the Underwriter a certificate, signed by
the City officials who sign this Official Statement and addressed to the Underwriter, relating to
the accuracy and completeness of this Official Statement and to its being a “final official
statement” in the judgment of the City for purposes of SEC Rule 15c2-12(b)(3).

CONTINUING DISCLOSURE AGREEMENT

The City has agreed, for the benefit of the holders and Beneficial Owners from time
to time of the Bonds, in accordance with SEC Rule 15c2-12 (the Rule), to provide or cause to be
provided to the Municipal Securities Rulemaking Board such annual financial information and
operating data, audited financial statements and notices of the occurrence of certain events in
such manner as may be required for purposes of the Rule (the Continuing Disclosure Agreement).
See Appendix F for the proposed form of the Continuing Disclosure Agreement. The foregoing
information, data and notices can be obtained from:

John M. Baranek
Director of Finance
City of Stow, Ohio
3760 Darrow Road
Stow, Ohio 44224
Telephone: (330) 689-2839
E-mail: baranekj@stow.oh.us
The performance by the City of the Continuing Disclosure Agreement will be subject
to the annual appropriation by the City of any funds that may be necessary to perform it. The
Continuing Disclosure Agreement will remain in effect only for such period that the Bonds are

18
outstanding in accordance with their terms and the City remains an obligated person with respect
to the Bonds within the meaning of the Rule.

Within the last five years, the City has in a timely manner made all filings and given
all notices required under its prior continuing disclosure agreements.

VERIFICATION OF MATHEMATICAL COMPUTATIONS

Prior to the delivery of the Bonds, Causey Demgen & Moore P.C., an independent
public accounting firm, will deliver a report on the mathematical accuracy of certain
computations contained in schedules provided to them by the Financial Advisor and/or the
Underwriter. These computations will relate to the adequacy of the money and maturing
principal amounts of the direct obligations of or obligations guaranteed as to payment by the
United States held in the Escrow Fund for the (i) payment of interest on the Refunded Bonds
when due on June 1 and December 1 of each year from December 1, 2014, through June 1, 2015,
and (ii) payment of the principal amount of the Refunded Bonds upon their prior optional
redemption on June 1, 2015, (at a redemption price of 100% of the principal amount optionally
redeemed), all in accordance with the terms of the Escrow Agreement.

FINANCIAL ADVISOR

The City has retained Sudsina & Associates, LLC (the Financial Advisor), to provide
financial advice in connection with the City’s issuance of the Bonds. The Financial Advisor is
not obligated to undertake, and has not undertaken to make, an independent verification or to
assume responsibility for the accuracy, completeness or fairness of the information contained in
this Official Statement. The Financial Advisor is an independent advisory firm and is not
engaged in the business of underwriting, trading or distributing municipal securities or other
public securities.

BOND REGISTRAR AND ESCROW AGENT

The Huntington National Bank will act as bond registrar, paying agent, transfer agent
and authenticating agent for the Bonds (the Bond Registrar) and as escrow agent for the
Refunded Bonds (the Escrow Agent). The Bond Registrar will keep all books and records
necessary for registration, exchange and transfer of the Bonds, in accordance with the terms of
agreements between it and the City. The Bond Registrar is a national banking association. It has
designated its Cleveland, Ohio corporate trust office in connection with the Bonds.

[Balance of This Page Intentionally Left Blank.]

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 THE CITY

GENERAL INFORMATION

The City is located in Summit County in northeastern Ohio, approximately eight

miles northeast of Akron and 30 miles southeast of Cleveland. It was incorporated as a village in
1957, and became a city in 1960.

In the 2010 Census classifications, the City was in the Akron Primary Metropolitan
Statistical Area (PMSA), comprised of Summit and Portage counties. It was also in the
Cleveland-Akron-Lorain Consolidated Metropolitan Statistical Area (CMSA). Effective in 2003,
the PMSA was renamed the Akron Metropolitan Statistical Area (MSA). The CMSA was
reclassified as the Cleveland-Akron-Elyria Combined Statistical Area (CSA). Only limited
statistics are now available for the new CSA.

The City’s 2010 population was 34,837.

The City’s area is approximately 17.25 square miles, broken down by land use as
follows:

Percent of Assessed
Valuation of
Real Property

Residential 77.45%
Commercial/Industrial 22.30
Agricultural 0.25
Public Utility 0.00
Undeveloped (a)

(a) Included in above categories.

Source: County Fiscal Officer.

The City is served by diversified transportation facilities, including three State

highways and convenient access to I-71, I-76, I-77, I-80 (the Ohio Turnpike) and I-271 (which
connects with I-90). It is served by Conrail and is adjacent to areas served by Amtrak, and has
access to passenger air services at Akron-Canton Regional Airport located in southern Summit
County and Cleveland Hopkins International Airport located in the City of Cleveland. Public
mass transit for the area is provided by the METRO Regional Transit Authority.

One daily newspaper and one weekly newspaper serve the City. The City is within
the broadcast area of 10 television stations and 40 AM and FM radio stations. Multi-channel
cable TV service, including educational, governmental and public access channels, is provided
by Time-Warner Cable and AT & T.

The area is served by the following hospitals located in the County, and several other
local hospitals: Akron City Hospital, Western Reserve Hospital, Saint Thomas Medical Center,
which constitute the Summa Health System (2,000 beds); Akron General Medical Center
(532 beds); and Akron Children’s Hospital (253 beds). The City is also in close proximity to
world-renowned hospitals in the City of Cleveland.
Banking and financial services are provided to the City by local offices of
commercial banks and savings and loan associations, all of which have their principal offices
elsewhere.

20
 Within commuting distance are several public and private two-year and four-year
colleges and universities providing a wide range of educational facilities and opportunities.
These include The University of Akron, Baldwin Wallace University, Case Western Reserve
University, the Cleveland Institute of Art, the Cleveland Institute of Music, Cleveland State
University, Cuyahoga Community College, Hiram College, John Carroll University, Kent State
University, Northeast Ohio Medical University, Notre Dame College and Ursuline College.

Founded in 1924, the Stow Public Library is a vital resource within the community.
The Library well reflects the impressive growth of the City. Over the past decade, a completely
remodeled and expanded library has been built, circulation has more than doubled and reference
questions have tripled. Public use computers, internet service, online database searching and
interlibrary loans are available to all patrons. Circulating materials include books, magazines,
newspapers, video tapes, cassette tapes, CDs and pamphlets. The Stow Public Library offers
summer reading programs for children and young adults as well as book discussion groups and
jazz concerts for the community. Other special programs, services and events include tax
counseling for the elderly, story hours for children, The Friends’ Annual Book Sale, local artist
displays and exhibits and many related programs.
A comprehensive parks and recreation system exists in the region and is comprised of
the Cuyahoga Valley National Park, State parks, a County-wide metropolitan park district and
numerous City parks and recreational facilities. All offer year-round programs for all age groups.
The City parks include bike and hike trails and facilities for picnicking, fishing, swimming,
tennis, softball, basketball, winter sports and camping. Boating, water skiing and snow skiing
facilities are located within minutes of the City. Private recreational and cultural facilities are
abundantly available, including two public golf courses located within the City, one of which is
owned and operated by the City.

The 3,000-seat E.J. Thomas Performing Arts Hall, located on the campus of The
University of Akron, offers ballet, opera and symphony and band concerts, as well as musicals,
traveling theater productions and entertainment programs. The Hall is home to the 90-member
Akron Symphony Orchestra. The Ohio Ballet, a 20-member professional dance company in
residence at The University of Akron, performs for audiences locally and internationally.
Blossom Music Center, located in neighboring Cuyahoga Falls, is the summer home of the
internationally renowned Cleveland Orchestra and hosts a variety of musical programs
throughout the summer. The outdoor pavilion seats approximately 5,000 and the lawn
accommodates an additional 15,000.

Community theaters within the County include Weathervane Community Playhouse,

Goodyear Community Theatre, Coach House Theatre, Akron Children’s Theatre and the Stow
Players. The University of Akron regularly stages plays and musicals.

The Akron Art Museum is one of a few in the country specializing in American art of
the 19th and 20th centuries. The museum presents works by nationally prominent artists in
addition to its permanent collection, and offers concerts and lectures.

A number of facilities of historic significance are located in the County, including

Hower House, a 122-year old restored High Victorian mansion on the campus of The University
of Akron, and Stan Hywet Hall, a 65-room manor house furnished with antiques and works of art
dating from the 14th century and considered the finest example of Tudor Revival architecture in
the United States. Hale Farm and Village, a working farm and community recreated from the
early 19th century, feature a homestead, restored buildings and live demonstrations of early
American crafts. The history of the rubber industry, from Charles Goodyear’s home laboratory
through the growth of a major corporation, is displayed in the Goodyear World of Rubber
Museum.

21
 The Stow-Munroe Falls Chamber of Commerce (the Chamber), established in 1965,
is a non-profit coalition of more than 350 business, professional, civic and community leaders
working together to enhance the economic opportunities and quality of life in the region. For 40
years, the Chamber has served the community by being in the forefront in leadership and
business development. Chamber members serve as volunteers in many capacities, both within
the Chamber and in the community, and take pride in what has been accomplished collectively.

The Stow community, through its various service organizations and volunteers, holds
many special events, including the Fourth of July Pride Week celebration, which has numerous
activities throughout a two-week period, the Joshua Stow Fest, the Harvest Festival, the
Community Showcase, Aviation Day/Heritage Day, Summer Sunset Blast and the July 4th
Parade which attracts up to 50,000 people to the City.

City Government

The City operates under and is governed by its Charter, first adopted by the voters in
1958 and which has been and may be amended by the voters from time to time. The City is also
subject to some general laws applicable to all Ohio cities. Under the Ohio Constitution, the City
may exercise all powers of local self-government and police powers to the extent not in conflict
with applicable general laws. The Charter provides for a mayor-council form of government.

Legislative authority is vested in a seven member Council, of whom three are elected
at large and four are elected from wards, all for two-year terms. The Council fixes the
compensation of City officials and employees, and enacts ordinances and resolutions relating to
City services, tax levies, appropriating and borrowing money, licensing and regulating
businesses and trades, and other municipal purposes. The presiding officer is the President of
Council, who is elected by the Council from among its members for a one-year term. The
Charter establishes certain administrative departments; the Council may establish divisions of
those departments and additional departments.

The City’s chief executive and administrative officer is the Mayor, who is elected by
the voters specifically to that office for a four-year term. The Mayor may veto any legislation
passed by Council. A veto may be overridden by the affirmative vote of five members of
Council. The other elected officials are the Director of Finance and the Director of Law, each
elected for a four-year term. The Mayor currently serves as the Director of Public Safety and
appoints, subject to the approval of Council, the other directors of City departments. The Mayor
also appoints members to a number of boards and commissions, and appoints and removes, in
accordance with civil service requirements, all appointed officers and employees, except Council
officers and employees and the employees of the Departments of Finance and Law.

All elected officials, except Council serve full-time. The current elected officials, and
some of the major appointed officials, are:

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 ELECTED

Years in Vocation in
Office Name Office Private Life

Mayor Sara Drew(a) 2½ Full-time position

Director of Finance John M. Baranek 18½ Full-time position
Director of Law Amber Zibritosky (b) Full-time position

Members of Council:

Bob Adaska ½ Construction

James M. Costello(c) 10½ Retired
Brian D’Antonio 2½ Sales
Brian Lowdermilk 2½ Sales
John Pribonic 6½ Retail Manager
Mike Rasor(d) 4½ Attorney
Matt Riehl(e) 6½ Consultant
(a) Mayor Drew previously served as a member of Council for four years.
(b) Ms. Zibritosky was appointed Director of Law by the Mayor on May 3, 2014, upon the resignation of the
former Director of Law. Under the Charter, the Mayor may appoint a Director of Law for up to 75 days, after
which period the Mayor may appoint the Director of Law with confirmation of City Council for the balance of
the unexpired term, which has now occurred.
(c) President Pro-Tem.
(d) Vice President.
(e) President.

APPOINTED

Years of
Years in Service with
Office Name Position the City

Budget and Management John Earle 6½ 32

Clerk of Council Bonnie J. Emahiser 34 ½ 37
Economic Development Ken Trenner 1½ 23
Engineer Jim McCleary 3 31
Fire Bill Kalbaugh 9 34
Parks & Recreation Linda Nahrstedt 2 31
Planning & Development Rob Kurtz 2 18
Police Louis A. Dirker, Jr. 12 12
Service Nick Wren 1½ 14½
Tax Administrator Christine Snyder 1½ 1½

The present terms of all elected officials expire on January 2, 2016. All non-protected appointed
officials, except the Clerk of Council, serve at the pleasure of the Mayor, Director of Finance or
Director of Law, respectively, according to who appointed them. The Clerk of Council serves at
the pleasure of Council. Commencing with terms beginning January 2, 2012, no elected official
may serve more than eight consecutive years in the same office.

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Employees

The City has 235 full-time and 125 part-time employees. The number of full-time
employees has decreased by 41 since January 1, 2009. A statewide public employee collective
bargaining law applies generally to public employee relations and collective bargaining.

Eligible full-time employees are represented by the following bargaining units:

Agreement Number of
Bargaining Unit Duration Employees

AFSCME 07/01/12-12/31/14 42

Int’l Association of Fire Fighters 10/01/12-03/31/15 51

Ohio Patrolmen’s Benevolent

Association (Dispatchers) 07/01/12-12/31/14 15
(Police No. 1) 07/01/12-12/31/14 10
(Police No. 2) 07/01/12-12/31/14 30
The remaining full-time City employees are not eligible to join a bargaining unit.

The Council by ordinance establishes wages and economic benefits for all non-
bargaining unit personnel. For those employees covered by bargaining units under State law, the
wages and economic benefits are mutually negotiated by the City and the respective labor unions
subject to ratification by Council and the impasse provisions of State law. Increases in wages
and benefits have been approved and implemented for City employees on an annual basis, except
for several years of wage freezes.

In the City’s judgment, its employee relations have been very good.

Retirement Expenses

Present and retired employees of the City are covered under two statewide public
employee retirement (including disability retirement) systems. The Ohio Police and Fire Pension
Fund (OP&F) covers uniformed members of the police department. All other eligible City
employees are covered by the Ohio Public Employees Retirement System (OPERS).

In 2013, employees covered by OPERS contributed at a statutory rate of 10.0% of

earnable salary or compensation. As the employer, the City’s statutory contribution rate for
those employees was 14.0% of the same base. In 2013, employees covered by OP&F contribute
at a statutory rate of 10.0% of gross salary. As the employer, the City’s statutory contribution
rates, applied to the same base, were 19.5% for police personnel and 24.0% for fire personnel.
These employee and employer contribution rates are the maximums permitted under current
State law. (See the discussion below of State legislation enacted in 2012.)

For further information on these pension plans, see the Notes to the Basic Financial
Statements included in Appendix C. Financial and other information for OPERS and OP&F can
also be found on the respective website for each retirement system including its Comprehensive
Annual Financial Report.
OPERS and OP&F are two of five statewide public employee retirement systems
created by and operating pursuant to Ohio law, all of which currently have unfunded actuarial
accrued liabilities. The General Assembly has the power to amend the format of those systems
and to revise rates and methods of contributions to be made by public employers and their
24
employees and eligibility criteria, benefits or benefit levels for employee members. On
September 12, 2012, the General Assembly passed five separate pension reform bills intended to
assist each of the five retirement systems in addressing its unfunded actuarial accrued liabilities.
Employer contributions were not increased on any of those bills. The bills passed with respect to
OPERS and OP&F provide for (i) no change in the City contribution rates with respect to its
employees’ earnable salaries, (ii) no change in OPERS employee contribution rate, and (iii) an
increase in the OP&F employee contribution rate from 10% to 12.25% in annual increments of
0.75% beginning on July 2, 2013. With certain transition provisions applicable to certain current
employees, the bills increase minimum age and service requirements for retirement and disability
benefits, revise the calculation of an employee’s final average salary on which pension benefits
are based to include the five highest years (rather than the three highest years), provide for
OPERS pension benefits to be calculated on a lower, fixed formula, change provisions with
respect to future cost-of-living adjustments to limit those adjustments to the lesser of any
increase in the Consumer Price Index or three percent, and make other changes. The OP&F bill
also authorizes the OP&F board to further adjust member contribution rates or further adjust age
and service requirements after November 1, 2017, if, after an actuarial investigation, the board
determines that an adjustment is appropriate.
The City’s current employer contributions to OPERS and OP&F, and the payments
toward the accrued OP&F liability, have been treated as current expenses and included in the
City’s operating expenditures, except to the extent paid from the proceeds of the “Police and Fire
Pension” levy referred to under Tax Rates.

Federal law requires City employees hired after March 31, 1986 to participate in the
federal Medicare program, which requires matching employer and employee contributions, each
being 1.45% of the wage base. Otherwise, City employees who are covered by a State
retirement system are not currently covered under the federal Social Security Act. OPERS and
OP&F are not subject to the funding and vesting requirements of the federal Employee
Retirement Income Security Act of 1974.

In addition to the post-retirement benefits provided by OPERS and OP&F, the City
provides certain of its retired employees with post-retirement life insurance benefits in
accordance with union agreements and City Council ordinances. Those City employees may
become eligible for those benefits if they reach normal retirement age while working for the City.
As of December 31, 2013, approximately 100 retirees met those eligibility requirements. The
City pays 100% of the cost of life insurance benefits. These benefits are financed on a pay-as-
you-go basis; as such, the cost of retiree life insurance benefits is recognized as
expenditure/expense as claims are incurred. For 2013, those costs totaled $3,609; for 2014, those
costs are estimated to be $3,608.

Health Care

The City’s partially self-funded employee group health benefit plan ended Fiscal
Year 2013 with a cash reserve of $1,391,000. The plan is protected annually against catastrophic
loss with both individual and total group stop-loss insurance coverage. Total net annual
expenditures for claims, all administrative costs and stop-loss insurance amounted to $2,499,168
in the 2013 plan year. Funding for the plan in 2013 amounted to $2,539,160.

25
City Facilities

The City’s major facilities include:

City Facilities Estimated Value

Stow Municipal Courthouse $10,000,000

Safety Building 7,900,000
Service Center 7,900,000
Stow City Hall 5,500,000
Fox Den Golf Course 5,500,000
Park Maintenance Center 4,200,000
Water Tower 3,500,000
Fire Station No. 2 2,200,000
Fire Station No. 3 2,000,000
Various Park Facilities(a) 1,960,000
Marsh Road Pump Station 1,400,000
Silver Springs Lodge 800,000
Silver Springs Swim Pavilion 400,000
Senior Center 245,000
(a) Includes historical buildings.

The City currently carries real property and contents casualty insurance in the amount
of $58,500,000, with a deductible of $2,500.

Economic and Demographic Information

Population

Recent Census population has been:

Year City(a) County(a) MSA CMSA

1970 20,061 553,371 679,239 3,098,513
1980 25,303 524,472 660,328 2,938,277
1990 27,702 514,990 657,575 2,859,644
2000 32,139 542,899 694,960 2,945,831
2010 34,837 541,781 703,200 2,881,937

(a) U.S. Census Bureau.

2010 Census figures show the following breakdown by age groups of the population
of the City:

Under 5 5-19 20-34 35-44 45-54 55-64 65+ Total

1,916 6,766 6,689 4,689 5,502 4,470 4,805 34,837

26
 Educational attainment for the City’s and the County’s population (25 years or older)
is set forth in the following table.

City County

Less than 9th Grade 312 (1.3%) 9,228 (2.5%)

9th to 12th Grade (no diploma) 1,099 (4.7%) 27,375 (7.4%)
High School graduate (includes GED) 5,754 (24.6%) 118,514 (32.1%)
Some college, no degree 4,857 (20.7%) 75,425 (20.4%)
Associate degree 2,225 (9.5%) 30,200 (8.2%)
Bachelor degree 6,257 (26.7%) 70,443 (19.1%)
Graduate or professional degree 2,907 (12.4%) 38,085 (10.3%)
Source: U.S. Census Bureau Selected Source Characteristics in the United States 2008-2012.

Commercial, Industrial and Residential Activity

Located in the northern part of the County, the City has experienced steady growth in
the last decade. The City is conveniently located between the cities of Akron and Cleveland and
offers excellent access to major highways. The City’s 2010 population of 34,837 represents an
8.4% increase since 2000 and makes it the third largest city in the County.

This growth is managed through the use of the City’s Zoning Code, Comprehensive
Plan and economic development policies. The City has long recognized the need for proper
balance between residential, commercial and industrial areas and adopted its first Comprehensive
Plan in 1960. It was updated in 1991, and again in 2001, in order to ensure that the land-use
policies and goals reflected current development patterns. This Comprehensive Plan serves as a
continuing guide in defining community land use objectives and policies. In 2010, a Community
Survey/Town Meeting process was completed that included several specific recommendations
regarding land use policies for the City’s commercial areas. The City’s Zoning Code and Map
divide the City into residential, commercial and industrial districts and provide detailed
regulations on the specific uses permitted in those districts. The Zoning Code is periodically
reviewed to ensure that it remains effective, with the last comprehensive update occurring in
2008.

In 2006, the City adopted the Stow Economic Development Strategic Plan as a future
guide to economic development in the community. This was the City’s first economic
development plan and it set the specific course of action for the City to follow to build a stronger
tax base. The City’s Economic Development Coordinator spearheads the implementation of the
Plan. The City has also reactivated its Community Improvement Corporation (CIC) to serve as
its development arm. The City annually allocates funds to the CIC to finance its development
activities in the City.

One of the long standing goals of planning in the City has been to limit retail
development at major intersections throughout the City, in order to avoid “strip” retail
development along major roads. Currently, there are 14 shopping centers throughout the City,
with major anchors such as Target, Kohl’s, Macy’s, CVS, Wal-Mart, Lowe’s, Acme and Giant
Eagle. In recent years, the Steels Corners Road/State Route 8 area has experienced significant
growth in commercial development to serve the industrial companies in the northwest quadrant
as well as the City’s increasing population. Between 2006 and 2009, nearly 200,000 square feet
of office, medical and supporting commercial development was constructed at the Steels
Corners/State Route 8 interchange. Two of the landmark projects include the 97,000-square-foot
Akron General Medical Center health and wellness center opened in 2007 and the $10 million
Stow Municipal Courthouse which opened in 2008. The Akron General Medical Health &
Wellness Center includes a fitness component, an emergency room, physical therapy and

27
diagnostic offices. Akron General also opened a 40,000-square-foot physicians’ office building
adjacent to the health and wellness center in 2009. The Staybridge Suites also opened in 2008
which represents the third hotel at this interchange.

A 20,000 square-foot medical building is currently under construction and will be

completed by spring of 2014.

Other significant projects completed in the City in the last five years involving either
the expansion or occupation of industrial facilities include the 130,000-square-foot addition to
the Wrayco Industries facility; two new flex-space buildings in the Hudson Drive Business
Campus; and a 44,000-square-foot addition and renovation of the former VMI Americas building
for Pneumatic Scale Angelus. Many of Stow’s large industrial buildings which had been
underutilized in the recent past have been renovated and are currently fully occupied. Overall,
Stow’s industrial vacancy rate has decreased from 15% in 2008 to just 1.4% in 2014.

The City offers a wide range of housing choices, including executive homes located
in golf course subdivisions, several medium priced subdivisions, condominiums and moderately
priced dwellings, as well as numerous apartment developments.

The business environment includes a diverse mix of employment in manufacturing,

retail goods, service establishments and public services. The City is home to companies
producing a variety of products, ranging from parts for the automotive, heavy construction and
aerospace industries, to adhesives, high-tech sound systems, machining and mold design and
production.

Growth of industrial, commercial and residential development reflects the City’s

willingness and desire to assist business development and promote future growth in the City. To
assist in new commercial and industrial development, and the expansion of existing industries,
the City offers a variety of tax incentives including an enterprise zone, community reinvestment
areas and a foreign trade zone.

Employment and Income

The following table shows comparative employment and unemployment statistics for
the indicated periods.
Employed in Unemployment Rate
Year(a) City County MSA City County MSA State U.S.
2005 18,700 273,500 357,800 4.7% 5.7% 5.7% 5.9% 5.1%
2006 19,000 278,600 364,400 4.3 5.3 5.3 5.4 4.6
2007 19,100 280,400 366,500 4.5 5.4 5.4 5.6 4.6
2008 18,800 278,100 364,600 5.3 6.1 6.1 6.6 5.8
2009 17,900 264,700 347,800 8.5 9.8 9.8 10.2 9.3
2010 18,100 259,900 343,600 8.4 10.0 9.9 10.0 9.6
2011 18,100 260,000 344,200 7.3 8.5 8.4 8.6 8.9
2012 18,200 262,000 346,900 5.7 6.8 6.8 7.2 8.1
2013 18,100 260,300 344,300 6.0 7.2 7.2 7.4 7.4
2014
Jan. 18,200 261,600 346,100 6.0 7.1 7.2 7.5 7.0
Feb. 18,200 262,500 347,200 5.4 6.5 6.6 7.0 7.0
Mar. 18,300 264,000 349,200 5.0 6.0 6.0 6.2 6.8
April 18,400 264,800 350,300 4.2 5.1 5.0 5.3 5.9
(a) Not seasonally adjusted.
Source: Ohio Department of Job and Family Services – Bureau of Labor Market Information.

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 Most City residents work outside the City. The following employers (private and
public) have the largest work forces within the City (as of January 1, 2014):

Approximate
Number of
Employer Nature of Activity or Business Employees

Stow-Munroe Falls City School

District Public education 620
Wrayco Industries Inc. Steel fabricating 267
MacTac-Morgan Adhesives* Adhesives manufacturer 250
Matco Tools Distributor of professional grade tools 250
The City Municipal government 240
Stow-Glen Nursing Home Nursing home and retirement center 221
National Machine Co. Manufacturer of aircraft parts and
machining 184
Akron Wellness Center Medical and Fitness center 180
Maison Aine Alzheimer’s treatment center and
nursing home 142
Briarwood Skilled nursing facility 124
Source: The City.
* Will be reducing work force by 115 employees as of July 1, 2014.

The 2012 median family and household incomes, as reported by the Census Bureau in
its “2008-2012 American Community Survey 5-Year Estimates,” are set forth in the following
table.

2012 Median Income

Family Household

City $82,227 $64,299

County 63,639 49,227
MSA 64,107 49,936
State 59,680 47,358
United States 62,982 51,914

According to the Ohio Department of Taxation, the average federal adjusted gross
income for residents of Stow-Munroe City School District (which overlaps the City) filing Ohio
personal income tax returns for calendar year 2011 was $61,262, compared to the averages of
$66,744 for all Ohio school districts (for all tax returns filed, the 2011 state average for tax
returns that indicated school districts was $53,988) and $64,819 for all districts in the County.

29
 The income per household in the City, County and MSA is estimated to be distributed
as set forth in the following table.

Income and Benefits(a) City County MSA

Less than $10,000 331 (2.4%) 18,024 (8.1%) 23,144 (8.2%)

$10,000 to $14,999 504 (3.7%) 13,189 (6.0%) 16,269 (5.8%)
$15,000 to $24,999 963 (7.1%) 23,889 (10.8%) 30,263 (10.7%)
$25,000 to $34,999 1,368 (10.1%) 24,560 (11.1%) 30,659 (10.9%)
$35,000 to $49,999 1,925 (14.2%) 32,530 (14.7%) 40,988 (14.5%)
$50,000 to $74,999 2,683 (19.7%) 42,627 (19.3%) 54,505 (19.3%)
$75,000 to $99,999 2,194 (16.1%) 25,244 (11.4%) 34,024 (12.1%)
$100,000 to $149,999 2,414 (17.7%) 24,940 (11.3%) 32,521 (11.5%)
$150,000 to $199,999 801 (5.9%) 8,639 (3.9%) 10,798 (3.8%)
$200,000 or more 420 (3.1%) 7,654 (3.5%) 9,141 (3.2%)
(a) In 2012 inflation-adjusted dollars.
Source: U.S. Census Bureau Selected Source Characteristics in the United States 2008-2012.

The U.S. Census Bureau also estimates that 7.2% of people in the City, 14.8% of the
people in the County and 14.9% of the people in the MSA have incomes that fall below the
poverty level.

Housing and Building Permits

The following is Census information concerning housing in the City, with

comparative County and State statistics.

2012 Median %
Value of Constructed Number of
Owner-Occupied Prior to Housing Units %
Homes 1940 2000 2010 Change

City $166,600 3.7% 12,852 15,141 +17.8%

County 137,700 20.7 230,880 245,109 +6.2
State 133,700 21.3 4,783,051 5,127,508 +7.2
(a) Source: U.S. Census Bureau Selected Source characteristics in the United States 2008-2012.
(b) Source: U.S. Census Bureau American Fact-Finder 2012 Census Redistricting Data (Public Law 94-171) Summary
File.

County Fiscal Officer figures show the following average sales price of residential
property in the County and City:

Year County City

2009 $160,039 $170,678

2010 171,003 178,593
2011 175,176 170,921
2012 178,567 172,300
2013 174,748 169,940

30
 The number and value of all building permits (including commercial, industrial,
residential and public, and both remodeling and new construction) issued by the City are shown
in the following table.

Year Number Value

2009 1205 $13,998,799

2010 1086 11,675,618
2011 1105 26,150,449
2012 1396 15,406,124
2013 1562 34,272,193

Source: City Building Department

Utilities; Public Safety and Services

Water service within the City is provided by the City (which procures water from the
City of Akron) and is purchased directly by consumers. In 2001, the City reacquired from the
County the portion of the County water system serving the City, which the City now owns and
operates. The City had transferred its water distribution system to the County in 1974 in
connection with the County’s agreement to provide water service. Sewage collection and
disposal is provided primarily by the County, with approximately 5% of the City being served by
the City of Akron’s sewer system. Electricity is obtained from FirstEnergy, and natural gas is
supplied primarily by the Dominion East Ohio Gas Company. Police and fire protection and
emergency medical services are provided by the City. Solid waste collection is provided by
private haulers. The City provides all customary general government services to its citizens.

FINANCIAL MATTERS

Introduction

The City’s Fiscal Year corresponds with the calendar year.

The main sources of City revenue have been and are property taxes and income taxes,
and State distributions, as described below.
The Mayor, the Director of Finance (the Fiscal Officer), and the Council are
responsible for the major financial functions of the City.

Other important financial functions include general financial recommendations and

planning by the Mayor and Fiscal Officer; budget preparation by the Mayor with the assistance
of the Fiscal Officer; and express approval of appropriations by the Council.

The Fiscal Officer is the City’s fiscal and chief accounting officer. In this role, that
officer’s duties include keeping the books and accurate statements of all money received and
expended and of all taxes and assessments; at the end of each Fiscal Year, or more often if
requested by Council, examining all accounts of City officers and departments; and ensuring that
the amount set aside for any appropriation is not overdrawn, or the amount appropriated for any
one item of expense is not drawn upon for any other purpose, or a voucher is only paid if
sufficient funds are in the City treasury to the credit of the fund on which the voucher is drawn.
The Fiscal Officer is responsible for receiving, maintaining custody of and disbursing all City
funds.

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 The Fiscal Officer has charge of the financial affairs of the City, including the
keeping and supervision of all City accounts and the custody and disbursements of all City funds
and money. The Fiscal Officer is elected and serves as financial advisor to the Mayor and
Council.

Investments and deposits of City funds are governed by the Uniform Depository Law
(Chapter 135 of the Revised Code) applicable to all subdivisions, and by the City Charter and
ordinances. The Fiscal Officer is responsible for those investments and deposits. Under recent
and current practices, and the City’s adopted investment policy, in addition to deposits evidenced
by interest bearing certificates of deposit, investments are made in the State Treasurer’s
subdivision investment pool (STAR Ohio), federal or federal agency securities, and repurchase
agreements (with the underlying securities held on the City’s behalf by FirstMerit Bank, N.A.).

For property taxation purposes, assessment of real property is by the County Fiscal
Officer subject to supervision by the State Tax Commissioner, and assessment of public utility and
tangible personal property is by the State Tax Commissioner. Property taxes and assessments are
billed and collected by County officials.

Budgeting, Property Tax Levy and Appropriations Procedures

Detailed provisions for budgeting, property tax levies and appropriations are made in
the Revised Code, including a requirement that the City levy a property tax in a sufficient amount,
with any other money available for the purpose, to pay the debt charges on securities payable from
property taxes.

The law requires generally that a subdivision prepare, and then adopt after a public
hearing, a tax budget approximately six months before the start of the next fiscal year. The tax
budget is then presented for review by the county budget commission, which is comprised of the
county fiscal officer, treasurer and prosecuting attorney. A county budget commission may,
however, waive the requirement for a tax budget and require an alternative form of more limited
information required by the commission to perform its duties. The Summit County Budget
Commission has waived the requirement of a tax budget and permitted the City to file the
alternative form. In addition, the offices of the Summit County Fiscal Officer and Treasurer have
been combined into one fiscal office.

The county budget commission then determines and approves levies for debt charges
outside and inside the ten-mill limitation. The Revised Code provides that “if any debt charge is
omitted from the budget, the commission shall include it therein.”

The county budget commission then certifies to each subdivision its action on the tax
budget together with the estimate by the County Fiscal Officer of the tax rates outside and inside the
ten-mill limitation. Thereafter, and before the end of the then Fiscal Year, the taxing authority (the
Council in the case of the City) approves the tax levies and certifies them to the proper County
officials. The approved and certified tax rates are then reflected in the tax bills sent to property
owners. Real property taxes are payable in two equal installments, the first usually by February and
the second in July.

The Council adopts, by December 31, a permanent appropriation measure for the next
Fiscal Year. Although called “permanent,” the annual appropriation measure may be, and often is,
amended during the Fiscal Year. Annual appropriations may not exceed the County Budget
Commission’s official estimates of resources, and the County Fiscal Officer must certify that the
City’s appropriation measures do not appropriate money in excess of the amounts set forth in
those estimates.

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Financial Reports and Audits

The City maintains its accounts, appropriations and other fiscal records in accordance
with the procedures established and prescribed by the Ohio Auditor of State (the State Auditor).
The State Auditor is charged by law with the responsibility of inspecting and supervising the
accounts and records of each taxing subdivision and most public agencies and institutions.

City receipts and expenditures are compiled on a cash basis, pursuant to accounting
procedures prescribed by the State Auditor that are generally applicable to all Ohio political
subdivisions. Beginning with Fiscal Year 1986, the records of these cash receipts and
expenditures are converted annually for reporting purposes to a modified accrual basis of
accounting for governmental funds and an accrual basis for proprietary funds. These accounting
procedures conform to generally accepted accounting principles as prescribed by the
Governmental Accounting Standards Board (GASB). Those principles, among other things,
provide for a modified accrual basis of accounting for the general fund, all special revenue funds
and the debt service (bond retirement) fund and for a full accrual basis of accounting for all other
funds, and for the preparation for each fund of balance sheets, statements of revenues and
expenditures and statements showing changes in fund balances.

The City has issued a Comprehensive Annual Financial Report (CAFR), including
General Purpose and Basic Financial Statements, for each of the Fiscal Years 2000 through
2012. The CAFRs through Fiscal Year 2012 were awarded the Government Finance Officers
Association’s Certificate of Achievement for Excellence in Financial Reporting, which is
awarded to those governmental reporting agencies that comply with the GFOA reporting
standards. The City is preparing its 2013 CAFR for submission to the GFOA for consideration.

Audits are made by the State Auditor, or by private auditing firms (CPAs) at the
direction of that officer, pursuant to Ohio law and under certain federal program requirements.
No other independent examination or audit of the City’s financial records is made.

The most recent audit (including compliance audit) of the City’s accounts was
completed through Fiscal Year 2012. See Appendix C. No material findings, citations or items
for adjustment, or material weaknesses in internal controls, were noted as part of that audit. The
2013 audit is currently under review by the Auditor of the State.

Annual financial reports are prepared by the City and are filed as required by law
with the State Auditor after the close of each Fiscal Year.

See Appendix A for an unaudited comparative cash basis summary, prepared by the
City, of General Fund receipts and expenditures for the last five Fiscal Years and estimated for
Fiscal Year 2014. All funds receipts and expenditures for the two prior Fiscal Years are set forth
in Appendix B. See Appendix C for the audited Basic Financial Statements for Fiscal
Year 2012.

The audited financial statements are public records, no consent to their inclusion is
required, and no bring-down procedures have been undertaken by the State Auditor (or CPA)
since their date.

Financial Outlook

The City’s General Fund cash-basis summary of balances, receipts and expenditures
as of December 31 for each of the years 2009 through 2013 and budgeted for 2014 are shown in
Appendix A.

33
 The City currently anticipates a favorable financial outlook, although the current
economic climate and prolonged slump have impacted the City and required some budgetary
adjustments and limited use of reserves. The City has reduced its budget level and long-term
spending to compensate for the impact of the poor economy, the loss of State local government
funds and the repeal of the estate tax. The City has accomplished this by eliminating lower
priority capital projects and significantly reducing its full-time workforce. The City prohibits
hiring without formal procedural scrutiny of Council and full justification within the operating
budget. Its incurrence of debt, to the extent feasible, is limited by using a “pay-as-you-go” (cash)
financing approach for high priority capital projects. Although recent large highway projects
have required the issuance of debt by the City (see Commercial, Industrial and Residential
Activity and Debt Table D), historically, the City incurs special project debt only if such debt
can be repaid through a dedicated revenue stream. See Commercial, Industrial and
Residential Activity. The City has issued no “new money” debt since 2011.

The City will continue to place a high priority on local economic development.
Through numerous policy initiatives and related supportive actions, the City plans to devote
considerable effort and resources to economic development, including emphasis on retention and
expansion of, as well as attraction of, new businesses and industries. The City employs a full-
time Economic Development Coordinator and appropriate consultants to enhance its capacities
and effort in this area.

GENERAL FUND

The General Fund is the City’s main operating fund, from which most expenditures
are paid and into which most revenues are deposited. The General Fund receives money from
many sources, but primarily from ad valorem property taxes and income taxes levied by the City
and State local government assistance distributions. Appendices A and B provide further
information regarding other revenue sources for the General Fund and other City funds.

AD VALOREM PROPERTY TAXES AND SPECIAL ASSESSMENTS

Assessed Valuation

The following table shows the recent assessed valuations of property subject to ad
valorem taxes levied by the City.

Total
Collection Tangible Public Assessed
Year Real(a) Personal(b)(c)(d) Utility(d) Valuation
2010 $856,851,080 $824,295 $7,716,670 $865,392,045
2011 856,849,280 0 7,868,390 864,717,670
2012(e) 786,242,680 0 8,207,030 794,449,710
2013 781,007,610 0 8,909,660 789,917,270
2014 783,392,790 0 9,856,170 793,248,960
(a) Other than real property of railroads. The real property of public utilities, other than railroads, is assessed by the County Fiscal
Officer. Real property of railroads is assessed, together with tangible personal property of all public utilities, by the State Tax
Commissioner.
(b) Other than public utility.
(c) The State reduced the valuation of tangible personal property of general businesses and railroads in increments beginning in
2006 to zero in 2009 and reduced the valuation of tangible personal property of telecommunications companies in increments
beginning in 2007 to zero in 2011; see the discussion of those reductions and related State makeup payments below.
(d) Tangible personal property of all public utilities and real property of railroads; see footnotes (a), (b) and (c).
(e) Reflects triennial adjustment.

Source: County Fiscal Officer.

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 Taxes collected on “Real” in one calendar year are levied in the preceding calendar
year on assessed values as of January 1 of that preceding year. Taxes collected on “Tangible
Personal” in one calendar year were levied in the same calendar year on assessed values during
and at the close of the taxpayer’s most recent fiscal year that ended on or before December 31 of
the preceding calendar year, and at the tax rates determined in the preceding year. “Public
Utility” (real and tangible personal) taxes collected in one calendar year are levied in the
preceding calendar year on assessed values determined as of December 31 of the second year
preceding the tax collection year.

Based on County Fiscal Officer records of assessed valuations for the 2014 collection
year, the largest City ad valorem property tax payers are:

Total
Assessed
Name of Taxpayer Nature of Business Valuation

Real
DDR Ohio Opportunity II LLC Shopping center $8,048,220
Wyndham Ridge LTD Apartment complex 7,819,040
Heron Springs Associates LLC Apartment complex 6,962,660
JVM Hidden Lake Apartments LLC Apartment complex 4,634,850
Stow Glen Properties LLC Nursing home 4,348,390
Morgan Adhesive Co. Adhesive manufacturer 4,145,900
SFC Enterprises LTD Real estate development 3,972,000
Steels Corners Apartment Co. LTD Apartment complex 3,473,390
Walmart Real Estate Business Trust Real estate investment trust 3,409,090
Stow Associates Apartment complex 3,392,300

Public Utility

Ohio Edison Electric $7,952,800

East Ohio Gas Natural gas 1,133,860
American Transmission Electric transmission 763,970
General Electric Capital Commercial, Inc. Electric 5,540

Pursuant to statutory requirements for sexennial reappraisals, in 2008 the County

Fiscal Officer adjusted the true value of taxable real property to reflect current fair market values.
Those adjustments were first reflected in the 2008 duplicate (collection year 2009) and in the ad
valorem taxes distributed to the City in 2009 and thereafter. The latest such sexennial reappraisal
will be completed in 2014, and the resulting adjustments to be true value of taxable real property
will be reflected in the 2014 duplicate (collection year 2015) and in the ad valorem taxes being
distributed to the City in 2015. The County Fiscal Officer is required to adjust (but without
individual appraisal of properties except in the sexennial reappraisal), and has adjusted (most
recently for collection year 2012), taxable real property value triennially to reflect true values.

The “assessed valuation” of real property is fixed at 35% of true value and is
determined pursuant to rules of the State Tax Commissioner. An exception is that real property
devoted exclusively to agricultural use is to be assessed at not more than 35% of its current
agricultural use value. Real property devoted exclusively to forestry or timber growing is taxed
at 50% of the local tax rate upon its assessed value.
The taxation of all tangible personal property used in general businesses (excluding
certain public utility tangible personal property) was phased out over tax years 2006 to 2009.
Previously, machinery and equipment and furniture and fixtures were generally taxed at 25% of
35
true value, and inventory was taxed at 23%. The taxation of all tangible personal property used
by telephone, telegraph or interexchange telecommunications companies (“telecommunications
property”) was phased out over tax years 2007 to 2011. Previously, telecommunications
property was taxed at 25% or 46% of true value (depending on the type of equipment and when
it was placed into service).

To compensate for tax revenue losses as the tangible personal property taxes have
been phased out, the State in 2006 commenced making distributions to taxing subdivisions (such
as the City) from revenue generated by the State’s commercial activity tax. In 2011 new
thresholds were established for municipalities to qualify for those distributions that reduce or
eliminate the amount of that reimbursement related to: (a) “current expense levies” to zero for
most municipalities and (b) “non-current expense levies” to 50% in Fiscal Year 2012, and 25%
thereafter, of the amount received with respect to such levies in Fiscal Year 2010.
Reimbursements for taxes levied for debt purposes within the ten-mill limitation or pursuant to a
municipal charter (“unvoted debt levies”) are to continue at the same amount as received in
Fiscal Year 2010 through Fiscal Year 2017; thereafter no such reimbursement will be made. The
City did not receive a reimbursement payment in Fiscal Year 2013.
Public utility tangible personal property (with some exceptions) is currently assessed
(depending on the type of property) from 25% to 88% of true value. Effective for collection year
2002, the assessed valuation of electric utility production equipment was reduced from 100% and
natural gas utility property from 88% of true value, both to 25% of true value. The City has been
receiving reimbursement payments from the State to compensate for portions of the tax revenue
losses as a result of those reductions. The amount of those payouts were and are being reduced
in generally the same manner as described above for reimbursements from the commercial
activity tax, except that reimbursement payments related to unvoted debt levies would end after
Fiscal Year 2016. While eligible municipalities have received, and are to continue to receive,
reimbursement payments from the State to offset portions of such reductions, the City does not
now qualify.

As indicated herein, the General Assembly has from time to time exercised its power
to revise the laws applicable to the determination of assessed valuation of taxable property and
the amount of receipts to be produced by ad valorem taxes levied on that property and may
continue to make similar revisions.

Ohio law grants tax credits to offset increases in taxes resulting from increases in the
true value of real property. Legislation classifies real property as between residential and
agricultural property and all other real property, and provides for tax reduction factors to be
separately computed for and applied to each class.

These tax credits apply only to certain voted levies on real property, and they do not
apply to unvoted levies or to voted levies to provide a specified dollar amount or to pay debt
charges on general obligation debt. None of the City’s tax levies are affected by these credits.
These credits are discussed further following Tax Table A.

The City currently has property tax incentive agreements with the following
companies: National Machine, Sadler Corporation, Courtyard by Marriott, Tyres International,
Interchez Logistics System, Inc., Mickey Thompson Tires, Wrayco LLC, GVI, LLC (Vizmeg
Landscape), Albrecht, Inc, Vision Landmarks, LLC (Northeast Ohio Eye Surgeons) and Stow
Professional Building, L.P. (Clunk). To date, the companies involved in these agreements have
total combined capital investments of over $37.4 million, have created 479 jobs and retained an
additional 486 jobs.

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Overlapping Governmental Entities

The major political subdivisions or other governmental entities that overlap all or a
portion of the territory of the City are listed below. The “(__%)” figure is that approximate
percentage of a recent assessed valuation of the overlapping entity that is located within the City.

 The County (functions allocated to counties by Ohio law, such as elections, health
and human services, and judicial). (6.94%)

 Stow-Munroe Falls City School District which includes 100% of the territory within
the City (K-12 educational responsibilities). (87.23%)

 Akron Metro Regional Transit Authority (public mass transit). (6.94%)

 Muskingum Watershed Conservancy District. (2.11%)

 Stow-Munroe Falls Library. (87.23%)

 Summit Metropolitan Park District. (7.30%)

Each of these entities operates independently, with its own separate budget, taxing
power and sources of revenue. Only the County, school district, and the Metro Regional Transit
Authority may, as may the City, levy ad valorem property taxes within the ten-mill limitation
(subject to available statutory allocation of the 10 mills) described under City Debt and Other
Long-Term Obligations – Indirect Debt and Unvoted Property Tax Limitations.

Tax Rates

All references to tax rates under this caption are in terms of stated rates in mills per
$1.00 of assessed valuation.

The Charter provides that the maximum total tax rate that may be levied without a vote
of the electors for all purposes is 7.2 mills, plus an additional 2.3 mills (effective beginning with tax
collection year 2001) only for the purposes of paying staffing, operating, vehicle, equipment,
facilities and other costs associated with the provision of emergency medical services, including
transportation, and fire protection. See Indirect Debt and Unvoted Property Tax Limitations.
The following are the rates at which the City and overlapping taxing subdivisions
have in recent years levied ad valorem property taxes in that area of the City having the highest
overlapping tax rate.

TAX TABLE A
Overlapping Tax Rates

Collection Stow-Munroe Falls Stow-Munroe Falls

Year City County(a) City School District Public Library Total

2010 9.50 14.16 45.15 1.0 69.81

2011 9.50 14.16 45.05 2.0 70.71
2012 9.50 14.16 53.24 2.0 78.90
2013 9.50 14.16 53.55 2.0 79.21
2014 9.50 14.16 53.47 2.0 79.13
(a) Includes property taxes which are levied on behalf of the Akron Metropolitan Park District.
Source: County Fiscal Officer.

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 Statutory procedures limit, by the application of tax credits, the amount realized by
each taxing subdivision from real property taxation to the amount realized from those taxes in
the preceding year plus both:

 the proceeds of any new taxes (other than renewals) approved by the electors,
calculated to produce an amount equal to the amount that would have been
realized if those taxes had been levied in the preceding year; and

 amounts realized from new and existing taxes on the assessed valuation of real
property added to the tax duplicate since the preceding year.

These procedures were instituted initially in 1976 to limit in part the effect of increasing property
values on the growth of those property taxes.

As noted above, all of the City’s property tax levies, as levies inside the Charter tax
rate, are exempt from those tax credit provisions. The tax credit provisions do not apply to
amounts realized from taxes levied at whatever rate required to produce a specified amount or an
amount to pay debt charges, or from taxes levied inside the ten mill limitation or any applicable
charter tax rate limitation. To calculate the limited amount to be realized, a reduction factor is
applied to the stated rates of the levies subject to these tax credits. A resulting “effective tax
rate” reflects the aggregate of those reductions, and is the rate based on which real property taxes
are in fact collected. As an example, the total overlapping tax rate for the 2014 tax collection
year of 79.13 mills within the City (in the portion overlapping Stow-Munroe Falls City School
District) is reduced by reduction factors of 0.140110 for residential/agricultural property and
0.126479 for all other real property, which results in “effective tax rates” of 68.043082 mills for
residential and agricultural property and 69.121738 mills for all other real property. See Tax
Table A.

Residential and agricultural real property tax amounts paid by taxpayers generally are
further reduced by an additional 10% (12.5% in the case of owner-occupied residential property);
however, the State Budget Act eliminates such reductions for additional and replacement levies that
will be approved at elections after its effective date and for other taxes (or increases in taxes) not
levied for tax year 2013. See Collections for a discussion of reimbursements by the State to taxing
subdivisions for these reductions and related changes made by the State Budget Act.

The following are the rates at which the City levied property taxes for the general
categories of purposes for the years shown, all inside the 7.2-mill (plus 2.30 mills for emergency
medical services) Charter limitation. The City does not have any voted property tax levies.

TAX TABLE B
City Tax Rates

Inside the Charter Limitation

Collection Police and

Year Operating Fire Pension EMS Total

2010 6.60 0.60 2.30 9.50

2011 6.60 0.60 2.30 9.50
2012 6.60 0.60 2.30 9.50
2013 6.60 0.60 2.30 9.50
2014 6.60 0.60 2.30 9.50

38
 See the discussion of the 7.2-mill Charter limitation, and the priority of claim on that
millage for debt charges on unvoted general obligation debt, under Indirect Debt and Unvoted
Property Tax Limitations.

Collections

The following are the amounts billed and collected for City ad valorem property taxes
for the tax collection years shown.

Collection Current Current Current Accumulated

Year Billed Collected % Collected Delinquent

Real and Public Utility

2009 $8,138,730 $7,896,204 97.02% $335,756

2010 8,213,417 7,951,169 96.81 420,350
2011 8,214,843 7,899,776 96.16 543,137
2012 7,547,293 7,242,454 95.96 430,318
2013 7,504,237 7,326,910 97.64 313,799

Tangible Personal Property

2009 $15,662 $15,616 $ 99.71 $13,520

2010 8,200 8,200 100.00 15,247
2011 0 0 -- 9,466
2012 0 0 -- 5,911
2013 0 0 -- 3,539
Source: County Fiscal Officer.

Included in the “Billed” and “Collected” figures above are payments made from State
revenue sources under two statewide real property tax relief programs (which do not apply to
special assessments). Homestead exemptions are available for persons over 65 and the disabled.
Payments to taxing subdivisions have been made in amounts equal to approximately 10% (12.5%
with respect to owner-occupied residential property) of all ad valorem real property taxes levied,
thereby reducing the tax obligations of real property owners in any given year by the applicable
10% or 12.5%. This State assistance reflected in the City’s tax collections for 2013 was
$183,089 for the elderly/disabled homestead payment and $697,775 for the rollback payment.

State legislation first effective with respect to tax bills payable in 2008 has provided
for an expansion of the homestead property tax exemption. Under that legislation, an Ohio
resident homeowner who (a) is at least 65 years old, (b) is totally and permanently disabled or
(c) (i) is the surviving spouse of a person who was receiving the previous homestead exemption
at the time of death and (ii) was at least 59 years old on the date of death of his or her spouse,
may apply to exempt $25,000 of the market value of the home from all local property taxes.
This exemption commenced with tax bills payable in calendar year 2008. Local governments,
such as the City, and school districts are to receive payments from the State to make up for the
property tax loss due to this expanded exemption.

Real property taxes are payable in two installments, the first usually by February and
the second in July.

39
Special Assessments

The City regularly conducts residential and other street improvements, which can
include paving, resurfacing, draining, planting shade trees and constructing curbs, sidewalks,
storm sewers, sanitary sewers and water lines. The cost of these improvements is paid in part
from special assessments levied against the property benefiting from those improvements; the
remaining cost is paid by the City. Unless all of the benefiting property owners petition to pay
all costs, State law requires the City to pay at least 2% (plus the cost associated with intersections)
of the total cost of the improvements.

Owners of benefiting properties may commence a street improvement project by

filing a petition with City Council requesting the improvement. Alternatively, Council, with a
three-quarter majority, may by resolution declare the necessity for such an improvement. The
special assessment proceedings provide for notice to property owners and an opportunity for
property owners to object to the special assessments. At the commencement of construction of
the improvement, bond anticipation notes are issued to pay the property owners’ portion of the
project cost. Following completion of the work and determination of final costs, the special
assessments are levied by Council against the benefiting property. Special assessments not paid
within 30 days are certified to the County Fiscal Officer for collection over a period of time
(usually 10 to 20 years for most projects). Special assessments are billed and collected by the
County Fiscal Officer along with and at the same time as real property taxes. The real property
taxes levied on any property against which special assessments have been levied are not to be
paid unless those special assessments are also paid.

Bonds are issued in anticipation of the collection of the special assessments to refund
(together with any cash payments of special assessments) those notes. The special assessments
certified for collection bear the same interest as the bonds. Under State law, those bonds are to
be paid from the anticipated special assessments, but they are also general obligations of the City,
payable from ad valorem property taxes to the extent not paid from those special assessments.
See City Debt and Other Long-Term Obligations – Statutory Direct Debt Limitations,
Indirect Debt and Unvoted Property Tax Limitations and Debt Tables A and B. The City
has never been required to levy an ad valorem property tax for debt charges on bonds issued in
anticipation of the collection of special assessments because special assessments have been
collected as required and sufficient balances have been available in the Bond Retirement Fund to
cover any temporary shortfall.

The City conducts annual programs for the provision of street lighting and street
cleaning services (including sprinkling, sweeping and removing snow and leaves) for its streets,
alleys and other public ways. A portion of the cost of street lighting is paid by the City from
general funds; the remaining portion is financed by the levy each year of special assessments
upon the benefited properties. Notes may be issued in anticipation of those special assessments
to fund these programs. If issued, these notes generally have a maturity of one year or less and
are payable solely from those special assessments. The notes are not general obligations of the
City. By statute, no property tax may be pledged or used for their payment.

40
 The following are the amounts billed and collected for City special assessments for
the tax collection years shown.

Collection Current Current Current Accumulated

Year Billed Collected % Collected Delinquent

2009 $202,074 $195,635 96.81% $ 0

2010 208,784 201,017 96.28 16,513
2011 249,301 216,084 86.68 8,346
2012 241,784 213,860 88.45 27,925
2013 248,295 217,249 87.50 107,774
Source: County Fiscal Officer.

Delinquencies

The following is a general description of delinquency procedures under Ohio law, the
implementation of which may vary in practice among the counties. Under the Revised Code,
taxes become a lien of the State on the first day of January, annually, and continue until the taxes,
including any penalties, interest or other charges, are paid. Real estate taxes and special
assessments that are not paid in the year they are due are to be certified by the county fiscal
officer’s office as delinquent. Any amount of a previous tax bill not paid before new tax bills are
mailed for the next half of the year is considered delinquent and becomes subject to a 10%
penalty. A list of delinquent properties is compiled by the county fiscal officer (the “delinquent
land duplicate”). If delinquent taxes (and special assessments) are not paid within 60 days after a
copy of the county fiscal officer’s delinquent land duplicate is delivered to the county treasurer,
then the county treasurer is to enforce the lien of the State that attached on January 1 of the year
the taxes first became payable. Under State law (Section 323.25 of the Revised Code), the
county treasurer is to enforce the lien “in the same way mortgage liens are enforced,” that is, by
an action in the court of common pleas for foreclosure and sale of the property in satisfaction of
the delinquency. If the county treasurer fails to bring an action to enforce the lien, then the State
Tax Commissioner is to do so. In addition, one year after certification of a delinquent land list,
the county prosecuting attorney is authorized to institute foreclosure proceedings in the name of
the county treasurer to foreclose the lien.

The property owner may arrange a payment plan with the county treasurer providing
for payments over a period not to exceed five years. If payments are made when due under the
plan, no further interest will be assessed against delinquent balances covered by the plan; a
default in any payment under the plan or in the payment of current taxes will invalidate the
taxpayer’s participation in the plan. If a payment plan is not adhered to or if none is arranged,
foreclosure proceedings may be initiated by the county. Mass foreclosure proceedings and sales
are permitted after three years’ delinquency. Proceeds from delinquent property foreclosure
sales become part of and are distributed as current collections to the taxing subdivisions.

In recent years, the State legislature has enacted several programs with respect to
forestalling the foreclosure process or the forfeiture of property due to tax delinquency that may
have the effect of delaying or eliminating the collection of certain property taxes.
Notwithstanding the delay or loss of the tax revenues from those properties, an issuer of general
obligation notes or bonds, such as the City, remains obligated to pay the debt charges on those
notes or bonds from the available revenues. See Security and Sources of Payment.
Of the 13,679 nonexempt parcels in the City for collection year 2013, the number of
delinquent parcels was 118, against four of which foreclosure proceedings were commenced.

41
 The Summit County Fiscal Officer’s office has advised that these taxpayers
accounted for more than 5% of the remaining accumulated delinquencies for prior real property
taxes and tangible personal property taxes identified above at the end of collection year 2013:

Current Status Taxpayer Amount Due

Real Property(a)

Delinquent Jonnat Inc. $222,983

Delinquent Akron Gen Medical Center(b) 550,231

Personal Property(c)

Delinquent Ark II Manufacturing LLC $ 2,615

Delinquent Target Corporation 18,868

(a) Includes both taxes due and penalties assessed that are owed to all overlapping taxing
subdivisions, of which approximately 14% is due the City.
(b) Exemption Status Pending.
(c) Includes both taxes due and penalties assessed that are owed to all overlapping taxing
subdivisions, of which approximately 12% is due the City.

Source: County Fiscal Officer.

MUNICIPAL INCOME TAX

Ohio law authorizes a municipal income tax on both corporate income and employee
wages and salaries at a rate of up to 1% without, and above that rate with, voter authorization. In
1989 City electors authorized an income tax at the rate of 2%. The City, pursuant to Council action
and that voter authorization, currently levies the tax at the rate of 2%.

This tax on business income and individuals’ salaries and wages is collected and
administered by the City.

The tax is in effect for a continuing period of time. It could be reduced or terminated by
action of the Council, or by vote of the electors initiated by petition of 10% of the number of
electors of the City who voted for governor at the last preceding general election for the office of
governor, following initiated ordinance procedure, or 10% of the electors of the City who voted at
the last preceding City general election, following charter amendment procedures. Under current
law, the Council could unless restricted by a Charter provision reimpose a 1% tax without
authorization by the electors.

Income tax proceeds, after payment of collection expenses, have been allocated by the
Council since the inception of that tax in 1967 as follows: 40% to capital expenditures, including
payment of debt charges, and 60% to the General Fund.

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 Annual income tax receipts (all at 2%) have been and for 2014 are estimated to be:

Annual
Delinquency
Year Receipts Amounts(a)

2009 $11,954,831 $ 99,289

2010 11,637,366 89,372
2011 12,802,708 84,658
2012 13,564,116 106,532
2013 14,402,090 82,488
2014(est.) 14,824,302 75,500

(a) Delinquency amounts are not cumulative; the amounts shown are the amounts
unpaid as of June 30 of the year following the end of the last year listed, except
for 2014.

Residents are currently permitted as a credit against their City income tax liability amounts paid
as municipal income tax at the rate of up to 2% on the same income to another municipal
corporation.

No single employer contributed, via corporate and withheld income taxes, more than 5%
of the total of the 2013 income tax collections.

Certain of the income subject to the municipal income tax is also subject to State income
tax.

STATE LOCAL GOVERNMENT ASSISTANCE FUNDS

Statutory state-level local government assistance funds, comprised of designated State

revenues, are another source of revenue to the General Fund. Most are distributed to each county
and then allocated on a formula basis, or in some cases on an agreement basis, among the county
and cities, villages and townships, and in some cases park districts, in the county. City receipts
from those funds were and for 2014 are estimated to be:

Year Receipts
2009 $1,487,898
2010 1,507,914
2011 1,491,627
2012 1,044,683
2013 799,932
2014(est.) 775,000

The amounts of and formula for distribution of these funds have been and may be revised from
time to time.

ESTATE TAXES

The State distributed significant portions of the State estate tax to decedents’
communities of residence. Due to the very nature of this tax, the annual amounts received varied
significantly. The City received $509,824 and $732,889 from this source in 2012 and 2013,
respectively. The City credited these distributions to its General Fund. The State estate tax has

43
been eliminated for decedents dying on or after January 1, 2013; however, distributions related to
the estates of decedents dying before that date will continue until those estates are settled.

CITY DEBT AND OTHER LONG-TERM OBLIGATIONS

The following describes the security for general obligation debt such as the Bonds,
and applicable debt and ad valorem property tax limitations, and outstanding and projected bond
and note indebtedness and certain other long-term financial obligations of the City.

As used in the discussions that follow, the term “BANs” refers to notes issued in
anticipation of the issuance of general obligation bonds.

As further described below, the Bonds are:

 unvoted general obligations of the City, subject to the indirect debt and related
property tax limitation (the 7.2-mill Charter tax rate limitation)
 subject to the direct debt limitations in part ($3,790,000) because the remaining
portion is exempt debt.

The City has periodically issued industrial development revenue bonds for facilities
used by private corporations or other entities in order to promote economic and other
development in the City. The City is not obligated in any way to pay debt charges on those
bonds from any of its funds, and, therefore, those bonds have been excluded entirely from the
following debt discussion and tables. The City is not aware of and has not been notified of any
condition of default under those bonds or the related financing documents.

The City is not, and to the knowledge of current City officials has not in at least the
last 25 years been, in default in the payment of debt charges on any of the bonds or notes on
which the City is obligor or in a condition of default under any financing documents relating to
any issue of revenue bonds. The City, however, makes no representation as to the existence of a
condition of default resulting from a default by any private entity under any financing documents
relating to the industrial development bonds referred to above.

Security for General Obligation Debt; Bonds and BANs

The following describes the security for City general obligation debt: bonds (such as
the Bonds) and bond anticipation notes (BANs).

Voted Bonds. The basic security for voted City general obligation bonds is the
authorization by the electors for the City to levy to pay debt charges on those bonds, without
limitation as to rate or amount, ad valorem taxes on all real and tangible personal property
subject to ad valorem taxation by the City. The tax is outside of the Charter tax limitation, and is
to be sufficient in amount to pay (to the extent not paid from other sources) as it comes due the
debt charges on the voted bonds (subject to bankruptcy, insolvency, arrangement, fraudulent
conveyance or transfer, reorganization, moratorium and other laws relating to or affecting
creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion,
and to limitations on legal remedies against public entities).

Unvoted Bonds. The basic security for unvoted City general obligation bonds is the
City’s ability to levy, and its levy pursuant to constitutional and statutory requirements of, ad
valorem taxes on all real and tangible personal property subject to ad valorem taxation by the
City, within the Charter tax limitation described below. This tax must be in sufficient amount to

44
pay (to the extent not paid from other sources) as they come due the debt charges on unvoted
general obligation bonds. The law provides that the levy necessary for debt charges has priority
over any levy for other purposes within that tax limitation; that priority may be subject to
bankruptcy, insolvency, arrangement, fraudulent conveyance of transfer, reorganization,
moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable
principles, to the exercise of judicial discretion, and to limitations on legal remedies against public
entities. See the discussion below, under Indirect Debt and Unvoted Property Tax
Limitations of the Charter tax limitation, and the priority of claim on it for debt charges on
unvoted general obligation debt of the City.

BANs. While BANs are outstanding, Ohio law requires the levy of ad valorem
property taxes in an amount not less than what would have been levied if bonds had been issued
without the prior issuance of the BANs. That levy need not actually be collected if payment in
fact is to be provided from other sources, such as the proceeds of the bonds anticipated or of
renewal BANs. BANs, including renewal BANs, may be issued and outstanding from time to
time up to a maximum period of 240 months from the date of issuance of the original notes (the
maximum maturity for special assessment BANs is five years). Any period in excess of five
years must be deducted from the permitted maximum maturity of the bonds anticipated. Portions
of the principal amount of BANs outstanding for more than five years must be retired in amounts
at least equal to, and payable not later than, those principal maturities that would have been
required if the bonds had been issued at the expiration of the initial five-year period.

The City has $4,125,000 of outstanding BANs.

Statutory Direct Debt Limitations

The Revised Code provides that:

 The net principal amount of both voted and unvoted debt of a city, excluding
“exempt debt” (discussed below), may not exceed 10½% of the total tax
(assessed) valuation of all property in the city as listed and assessed for
taxation.

 The net principal amount of unvoted debt of a city, excluding exempt debt,
may not exceed 5½% of that valuation, as discussed below.

These two limitations, which are referred to as the “direct debt limitations,” may be amended
from time to time by the General Assembly.

A city’s ability to incur unvoted debt (whether or not exempt from the direct debt
limitations) is also restricted by the indirect debt limitation discussed under Indirect Debt and
Unvoted Property Tax Limitations.

Certain debt (including $4,785,000 of the Bonds) that the City may issue is exempt
from the direct debt limitations (exempt debt). Exempt debt includes, among others, the
following categories.

 General obligation debt:

 That is “self-supporting” debt (i.e., nontax revenues from the facility

or category of facilities are sufficient to pay operating and
maintenance expenses and related debt charges and other requirements)
issued for facilities for city utility systems, airports, railroads, mass
transit systems, parking, health care, solid waste, urban development,
recreation, sports, convention, museum and other public attractions,
45
 natural resource exploration, development, recovery, use or sale,
correctional and other related rehabilitation.

 To the extent debt charges are expected to be paid from tax increment
financing payments in lieu of taxes pledged to the payment of those
debt charges (subject to certain limitations).

 For highway improvements if the municipality has covenanted to pay

debt charges and financing costs from distributions of motor vehicle
license and fuel taxes.

 Issued in anticipation of the levy or collection of special assessments.

 To pay final judgments or court-approved settlements.

 Securities issued to improve water or sanitary or storm water sewerage

facilities to the extent that another subdivision has agreed to pay to the City
amounts equal to debt charges on those securities.

 Unvoted general obligation bonds to the extent that debt charges will be met
from lawfully available municipal income taxes, to be applied to debt charges
pursuant to ordinance covenants.

 Revenue debt and mortgage revenue bonds to finance municipal utilities.

 Notes issued in anticipation of (i) the collection of current revenues (which

have a latest maturity of the last day of the Fiscal Year in which issued) or
(ii) the proceeds of a specific tax levy.

 Notes issued for certain energy conservation improvements or certain

emergency purposes.

 Debt issued in anticipation of the receipt of federal or State grants for

permanent improvements, or to evidence loans from the State capital
improvements fund or State infrastructure bank.

 Voted debt for urban redevelopment purposes not in excess of 2% of the

City’s assessed valuation.
 Debt issued to make a single payment on certain accrued liability to the
statewide Police and Fire Pension Fund.

 Debt issued for certain municipal educational and cultural facilities and sports
facilities.

BANs issued in anticipation of exempt bonds also are exempt debt.

The City may incur debt for operating purposes, such as current tax revenue
anticipation notes or tax anticipation notes, only under certain limited statutory authority.

In the calculation of debt subject to the direct debt limitations, the amount in a city’s
bond retirement fund allocable to the principal amount of nonexempt debt is deducted from gross
nonexempt debt. Without consideration of amounts in the Bond Retirement Fund, and based on
outstanding debt and the Bonds and the current tax (assessed) valuation, the City’s voted and
unvoted nonexempt debt capacities are:
46
 Nonexempt Additional
Debt Debt Capacity
Limitation Outstanding Within Limitation

10½% = $83,291,140 $18,025,000 $65,266,140

5½% = $43,628,692 $18,025,000 $25,603,692

This is further detailed in Debt Table A.

Indirect Debt and Unvoted Property Tax Limitations

Voted general obligation debt may be issued by the City if authorized by vote of the
electors. Ad valorem taxes, without limitation as to amount or rate, to pay debt charges on voted
bonds are authorized by the electors at the same time they authorize the issuance of the bonds.

General obligation debt such as the Bonds also may be issued by the City without a vote
of the electors. This unvoted debt may not be issued unless the ad valorem property tax for the
payment of debt charges on:

 Those bonds (or the bonds in anticipation of which BANs are issued), and

 All outstanding unvoted general obligation bonds (including bonds in

anticipation of which notes are issued) of the City resulting in the highest tax
required for such debt charges,

in any year is 7.2 mills or less per $1.00 of assessed valuation. This indirect debt limitation is
imposed by the Charter. In addition, pursuant to its Charter the City may levy an additional
2.30 mills (unvoted) for the purposes of paying staffing, operating, vehicle, equipment, facilities
and other costs associated with the provision of emergency medical services, including
transportation, and fire protection.

In lieu of the ten-mill limitation briefly discussed below, the electors of a charter
municipality such as the City may authorize the levy of a tax at a rate subject to a different
limitation. The electors of the City have authorized the Council to levy each year a tax of up the
Charter tax rate limitation on all the taxable property in the City without further authorization from
the electors, but subject to change by further action of the electors.

In the case of BANs issued in anticipation of unvoted general obligation bonds, the
highest annual debt charges estimated for the anticipated bonds is used to calculate the millage
required.

Revenue bonds and notes and mortgage revenue bonds are not included in debt subject
to the indirect limitation since they are not general obligations, and the full faith and credit of the
issuer is not pledged for their payment.

The indirect limitation applies to all unvoted general obligation debt even if debt charges
on some of it is expected to be paid in fact from special assessments, utility earnings or other
sources.

If the City were to convert to the anticipated bonds its $4,125,000 outstanding unvoted
general obligation BANs (see Debt Table D) the highest debt charges requirement in any year for
all City debt subject to the Charter tax limitation is estimated to be $2,174,690. That debt includes
the Bonds and unvoted general obligation bonds outstanding or bonds anticipated by BANs
outstanding (see Debt Table D). The payment of those annual debt charges would require a levy of
2.7415 mills based on current assessed valuation.
47
 The total millage theoretically required by the City for its outstanding unvoted bonds
(including bonds in anticipation of which BANs are outstanding) is as shown above 2.7415 mills for
the year of the highest potential debt charges. There thus remains 4.4585 mills within the Charter
tax limitation which has yet to be allocated to debt charges by the City, and which is available to the
City in connection with the issuance of additional unvoted general obligation debt.

In the absence of the Charter tax rate limitation, the applicable indirect debt limitation
would be the product of what is commonly referred to as the “ten-mill limitation” imposed by a
combination of provisions of the Ohio Constitution and of the Revised Code. The ten-mill
limitation is the maximum aggregate millage for all purposes that may be levied without elector
approval on a single piece of property by all overlapping taxing subdivisions, with the 10 mills
being allocated among certain overlapping taxing subdivisions (including the cities) pursuant to a
statutory formula. The inside millage so allocated is required by Ohio law to be used first for the
payment of debt charges on unvoted general obligation debt of the subdivisions (unless provision
has been made for its payment from other sources) and the balance may be used for other purposes
of the subdivisions. If the ten-mill limitation applied to the City (that is, if the City did not have the
Charter tax rate limitation), unvoted obligations could not be issued by the City unless the tax
required to be imposed in any one year would be 10 mills or less per $1.00 of assessed valuation for
payment of annual debt charges on those obligations (if BANs, the bonds in anticipation of which
the BANs are issued) and all outstanding unvoted general obligation bonds (including bonds in
anticipation of which BANs are issued) of the combination of overlapping taxing subdivisions
including the City resulting in the highest tax rate required for that debt charges. To the extent that
this inside millage is required for debt charges of a taxing subdivision (which may exceed the
formula allocation for that subdivision), the amount that would otherwise be available to that
subdivision or to other overlapping subdivisions for general fund purposes would be reduced. In the
case of the City, however, a law applicable to all Ohio cities and villages requires that any lawfully
available receipts from a municipal income tax or from voted property tax levies be allocated to pay
debt charges on City unvoted debt before the formula allocations of the inside millage to
overlapping subdivisions can be invaded for that purpose.

Debt Outstanding

The Debt Tables attached provide information concerning the City’s outstanding debt
represented by bonds and notes, City and overlapping subdivisions general obligation debt
allocations and projected debt charges on the City’s general obligation debt, including the Bonds.
See Debt Tables.

The following table shows the principal amount of City general obligation debt
(bonds and notes) outstanding as of January 1 in the years shown.

Year Total, All Unvoted

2009 $31,640,600
2010 29,935,000
2011 28,805,000
2012 26,630,000
2013 24,020,000

Bond Anticipation Notes

$4,125,000 of the debt of the City is currently in the form of BANs (listed in Debt
Table D). BANs may be retired at maturity from the proceeds of the sale of renewal notes or of

48
the bonds anticipated by the BANs, or available funds of the City, or a combination of these
sources.

Bond Retirement Fund

The Bond Retirement Fund is the fund from which the City pays debt charges on its
general obligation debt, and into which moneys required to be applied to those payments are
deposited. The following table is an unaudited summary of Bond Retirement Fund receipts and
disbursements (excluding proceeds of renewal or refunding obligations) for prior Fiscal Years
and projected for the current Fiscal Year.

Jan. 1
Year Balance Receipts(a) Disbursements

2009 $ -0- $ 937,939 $937,939

2010 -0- 942,627 942,647
2011 -0- 1,012,896 987,896
2012 25,000 919,432 944,432
2013 -0- 946,678 946,678
2014(b) -0- 946,356 946,356
(a) All from unvoted property taxes.
(b) Projected.

Future Financings

At this time, the City has no plans to undertake or participate in any additional new
major capital improvement projects for which it plans to borrow additional money or enter into
long-term financial undertakings, with the potential exception of a $1.0 to $1.3 borrowing
through the Ohio Public Works Commission to finance construction of a water project.

Long-Term Financial Obligations Other Than Bonds and Notes

The City has entered into a $231,688 Ohio Public Works Commission (OPWC) loan
agreement for the Lillian Road Waterline Improvement. The City will make annual payments of
$5,792 through Fiscal Year 2025.

The City has entered into a 10-year capital lease agreement in the amount of
$1,199,214 for the acquisition of various items of equipment. The annual rental payments are
$149,114. The City has two combined 5-year capital leases for various items of equipment
totaling $591,898. The annual rental payments are a combined $134,148.

Full-time employees earn and accumulate paid vacation and sick leave, which within
certain limits, can be paid to separated and/or retired employees at termination. Some full-time
safety employees can also accumulate limited holiday hours which are payable upon termination.
The City’s maximum long-term liability for these accumulated hours, all of which may or may
not be eventually paid or payable, is estimated to be $4,809,000 as of December 31, 2013. The
sick leave component of the liability, which is the largest, will diminish through actual usage of
the benefit by employees during their tenure with the City prior to eligibility for retirement.

The City has no other long-term debt obligations, other than the bonds and notes
described above.

49
 See the discussion under Retirement Expenses of the City’s required annual
payments for allocated accrued liability of the statewide pension fund for police and fire
personnel.

[Balance of Page Intentionally Left Blank.]

50
 CONCLUDING STATEMENT

To the extent that any statements made in this Official Statement involve matters of
opinion or estimates, whether or not expressly stated to be such, they are made as such and not as
representations of fact or certainty and no representation is made that any of those statements
have been or will be realized. Information in this Official Statement has been derived by the
City from official and other sources and is believed by the City to be accurate and reliable.
Information other than that obtained from official records of the City has not been independently
confirmed or verified by the City and its accuracy is not guaranteed.

Neither this Official Statement nor any statement that may have been or that may be
made orally or in writing is to be construed as or as part of a contract with the original purchasers
or subsequent holders or Beneficial Owners of the Bonds.

This Official Statement has been prepared and delivered by the City and signed for
and on behalf of the City by its officials identified below.

CITY OF STOW, OHIO

By /s/ Sara Drew

Mayor

/s/ John M. Baranek

Director of Finance

51
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 DEBT TABLE A

Principal Amounts of Outstanding General Obligation (GO) Debt;

Leeway for Additional Debt within Direct Debt Limitations

A. Total debt (including the Bonds): $ 22,980,000

B. Exempt debt: $ 4,955,000

C. Total nonexempt debt [A minus B]: $ 18,025,000

D. 5½% of tax valuation (unvoted $ 43,628,692

nonexempt debt limitation):

E. Total nonexempt limited tax bonds

and notes outstanding:

Bonds $ 13,900,000

Notes $ 4,125,000 $ 18,025,000

F. Debt leeway within 5½%

unvoted debt limitation
[D minus E]: $ 25,603,692*

G. 10½% of tax valuation

(voted and unvoted debt
limitation): $ 83,291,140

H. Total nonexempt bonds

and notes outstanding:

Bonds $ 13,900,000

Notes $ 4,125,000 $ 18,025,000

I. Debt leeway within 10½%

debt limitation [G minus H]:
$ 65,266,140*

* Debt leeway in this table determined without considering money in the Bond Retirement Fund.

DT-1
 DEBT TABLE B

Various City and Overlapping

GO Debt Allocations (Principal Amounts)

% of City’s Current
Amount Per Capita(b) Assessed Valuation(c)

City Nonexempt GO Debt $18,025,000 $517.41 2.27%

Total City GO Debt

(exempt and nonexempt) 22,980,000 659.64 2.90

Highest Total Overlapping

GO Debt(d) 29,524,391 847.50 3.72

(a) Based on 2010 population of 34,837.

(b) Based on the current assessed valuation of $793,248,960.

(c) Includes, in addition to “Total City GO Debt,” allocations of total GO debt of overlapping debt issuing subdivisions
(as of June 24, 2014) resulting in the calculation of highest total overlapping debt based on percent of tax valuation of
territory of the subdivisions located within the City (% figures are resulting percent of total debt of subdivisions
allocated to the City in this manner), as follows:

$ 4,697,817 County (6.94%); and

$ 1,839,287 Stow-Munroe Falls City School District (87.23%); and
$ 7,287 Akron Metro Regional Transit Authority (6.94%).

Source of tax (assessed) valuation and confirmation of GO debt figures for overlapping subdivisions: OMAC and the
County Auditor.

* Ohio Municipal Advisory Council (OMAC) compiles information from official and other sources. OMAC believes the
information it compiles is accurate and reliable but OMAC does not independently confirm or verify the information
and does not guaranty its accuracy. OMAC has not reviewed this Annual Information Filing to confirm that the
information attributed to it is information provided by OMAC or for any other purpose.

DT-2
 DEBT TABLE C
Projected Debt Charges Requirements on City GO Debt

Debt Charges on To be Paid from

Bonds
The Outstanding Anticipated by Limited Ad Income Tax
Year Bonds Bonds BANS(b) Total Valorem Taxes Revenues

2014 $126,984.58 $1,206,938.75 $ 0.00 $1,333,923.33 $1,089,892.43 $244,030.90

2015 603,475.00 1,117,265.00 165,000.00 1,885,740.00 1,535,840.00 349,900.00
2016 602,925.00 1,118,015.00 453,750.00 2,174,690.00 1,823,165.00 351,525.00
2017 602,300.00 1,106,577.50 441,375.00 2,150,252.50 1,802,177.50 348,075.00
2018 601,600.00 1,105,977.50 429,000.00 2,136,577.50 1,786,952.50 349,625.00
2019 600,825.00 548,837.50 416,625.00 1,566,287.50 1,220,187.50 346,100.00
2020 599,975.00 552,857.50 404,250.00 1,557,082.50 1,209,507.50 347,575.00
2021 597,075.00 556,177.50 391,875.00 1,545,127.50 1,197,352.50 347,775.00
2022 609,075.00 553,782.50 379,500.00 1,542,357.50 1,189,482.50 352,875.00
2023 609,625.00 555,845.00 367,125.00 1,532,595.00 1,180,457.50 352,137.50
2024 598,875.00 556,445.00 354,750.00 1,510,070.00 1,164,432.50 345,637.50
2025 598,125.00 551,445.00 342,375.00 1,491,945.00 1,147,807.50 344,137.50
2026 606,025.00 556,045.00 330,000.00 1,492,070.00 1,140,220.00 351,850.00
2027 602,225.00 554,845.00 317,625.00 1,474,695.00 1,126,245.00 348,450.00
2028 596,950.00 553,845.00 305,250.00 1,455,245.00 1,111,057.50 344,187.50
2029 601,350.00 555,427.50 292,875.00 1,449,652.50 1,099,890.00 349,762.50
2030 600,100.00 552,000.00 280,500.00 1,432,600.00 1,087,750.00 344,850.00
2031 597,075.00 552,730.00 268,125.00 1,417,930.00 1,073,930.00 344,000.00
2032 557,200.00 552,640.00 255,750.00 1,365,590.00 1,053,590.00 312,000.00
2033 241,800.00 551,730.00 243,375.00 1,036,905.00 1,036,905.00 0.00
2034 243,200.00 0.00 231,000.00 474,200.00 474,200.00 0.00
2035 239,200.00 0.00 218,625.00 457,825.00 457,825.00 0.00

(a) Assuming all BANs are retired with bonds having first interest payments in 2015 and principal payments in 2016,
being paid serially and over the number of years at the estimated interest rates referred to in the ordinance
authorizing the BANs. See also Debt Table D.

DT-3
 DEBT TABLE D

Outstanding GO Bond Anticipation Notes(a)

The following debt is reflected in Debt Tables A, B and C.

Estimated Original Notes

Bond Year
General Purpose Principal Maturity Interest of Principal
of Issue Amount Due Years Rate Issuance Amount

Various Purpose $4,125,000 05/01/2015 20 6.00% 2001 $ 2,300,000

2002 15,505,000

The ability of the City to retire BANs from the proceeds of the sale of either bonds or
renewal BANs will be dependent upon the marketability of those obligations under market conditions
prevailing at the time of that sale. Under present laws applicable to the City, there is no statutory
maximum interest rate applicable to those bonds or renewal BANs.

DT-4
 DEBT TABLE E

Outstanding GO Bonds(a)

The following debt is reflected in Debt Tables A, B and C.

Bonds
Original Outstanding
Date of Final Principal Principal
Issue Issuance Maturity Amount Amount

Safety Center Refunding Bonds, Series 2004 08/01/2004 2018 $6,440,000 $2,495,000

Various Purpose Bonds, Series 2007 05/09/2007 2014(b) 9,700,000 280,000

Various Purpose Bonds, Series 2008 05/08/2008 2033 8,620,000 7,505,000

The Bonds 06/24/2014 2035 8,575,000 8,575,000

(a) Not included in this Table are City bond issues that have been refunded but yet to be paid until they mature or are called for
redemption in accordance with provisions of a related escrow agreement.
(b) Certain Bonds of this Series having been refunded.

DT-5
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 APPENDIX A

Comparative Cash-Basis Summary of General Fund Receipts

and Expenditures for Fiscal Years 2009 through 2013
and Budgeted Fiscal Year 2014

Budgeted
2009 2010 2011 2012 2013 2014
Receipts
Municipal Income Tax $ 8,596,327 $ 8,431,290 $ 8,990,412 $ 9,255,952 $9,848,885 $10,154,581
Property Taxes 5,044,854 5,038,563 5,031,502 4,579,344 4,675,759 4,700,000
Special Assessments 0 7,553 4,675 9,678 6,373 0
Charges for Services 320,430 331,507 378,720 424,113 364,697 385,000
Licenses and Permits 822,826 663,389 733,361 832,976 872,223 750,000
Fines and Forfeitures 2,051,183 2,277,502 2,392,541 2,479,373 2,346,329 2,240,000
Intergovernmental 3,288,641 3,479,019 3,075,542 2,909,252 3,051,648 1,953,500
Investment Income 300,973 66,234 50,597 88,155 70,254 85,000
Other 903,585 808,084 565,346 523,039 542,375 600,000
Total Receipts $21,328,819 $21,103,141 $21,222,696 $21,101,882 $21,778,543 $20,868,081

Expenditures
Current
General Government $ 8,759,162 $ 8,153,730 $ 7,621,817 $ 7,599,485 $7,756,026 $7,607,039
Security of Persons and
Property 9,637,548 9,720,022 9,611,430 9,912,044 10,132,853 10,162,282
Public Health and
Welfare 374,992 367,568 377,044 378,268 353,523 401,035
Transportation 422,431 607,008 843,160 916,005 948,182 606,846
Community Environment 1,301,309 1,115,531 1,028,066 1,019,096 1,024,625 1,037,297
Leisure Time Activities 1,837,249 1,668,908 1,513,375 1,404,844 1,225,048 1,145,054
Capital Outlay 0 0 0 0 0 0
Total Expenditures $22,332,691 $21,632,767 $20,994,892 $21,229,742 $21,470,257 $20,959,553

Excess of Revenues Over

(Under) Expenditures $(1,003,872) $ (529,626) $ 227,804 $ (127,860) $308,286 $ (91,472)

Other Financing Sources

(Uses)
Other Financing Sources $ 50,000 $ 0 $ 0 $ 0 $ 0 $ 0
Other Financing Uses 0 0 0 0 0 0
Sale of Fixed Assets 0 0 0 0 0 0
Operating Transfers In 750,000 550,000 500,000 173,000 425,541 665,000
Operating Transfers Out (664,122) (566,923) (602,673) $ (693,228) (642,914) (719,740)
Total Other Financing
Sources (Uses) $ 135,878 $ (16,923) $ (102,673) $ (520,228) $ (217,373) $ (54,740)

Excess of Revenues and

Other Financing Sources
Over (Under)
Expenditures and Other
Financing Uses $ (867,994) $ (546,549) $ 125,131 $ (648,088) $ 90,913 $ (146,212)
Beginning Balance 4,232,287 3,641,398 3,540,081 4,174,785 4,041,256 4,752,208
Prior Year Encumbrances 277,105 445,232 509,573 514,559 620,039 0
Ending Balance $ 3,641,398 $ 3,540,081 $ 4,174,785 $ 4,041,256 $4,752,208 $4,605,996

(a) Reflects restated balance.

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 APPENDIX B-1

All-Funds Summary 2012(a)

(Cash Basis)

Gross Beginning Net Ending

Fund Balance Receipts Expenditures Balance

General $ 4,689,345 $25,583,044 $26,231,133 $ 4,041,256

Special Revenue 4,180,928 7,651,351 7,885,266 3,947,013

Debt Service 25,000 919,432 944,432 0

E M S Levy 50,207 2,297,144 2,274,696 72,655

Enterprise 4,373,749 6,610,962 6,437,661 4,547,050

Internal Service 1,451,998 3,375,780 3,462,771 1,365,007

Capital Projects 4,817,548 17,096,360 17,459,508 4,454,400

Agency 640,136 394,283 420,377 614,042

Fiduciary 1,286 0 0 1,286

Totals $20,230,197 $63,928,356 $65,115,844 $19,042,709

(a) The General Fund beginning and ending balances shown for 2012 in Appendix A are net balances and, therefore, vary from
the balances shown in Appendix B, which are gross balances and include encumbrances. The General Fund receipts and
expenditures shown for 2012 in Appendix B vary from those shown for the General Fund in Appendix A due to the fact that
the financial activity for the General Fund shown in Appendix B is presented on a gross basis as part of the City’s total cash
position. In Appendix B, the income tax revenue is reported entirely in the General Fund and has not been allocated directly
to the project funds.

B-1-1
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 APPENDIX B-2

All-Funds Summary 2013(a)

(Cash Basis)

Gross Beginning Net Ending

Fund Balance Receipts Expenditures Balance

General $ 4,661,294 $26,757,288 $26,666,374 $4,752,208

Special Revenue 4,485,557 8,006,807 8,554,773 3,937,590

Debt Service 0 946,678 946,678 0

E M S Levy 73,458 2,217,536 2,251,086 39,908

Enterprise 5,185,462 6,672,235 7,402,491 4,455,206

Internal Service 1,365,007 2,539,160 2,499,168 1,404,999

Capital Projects 5,278,190 15,130,088 15,605,092 4,803,186

Agency 614,444 361,074 384,087 591,431

Fiduciary 1,286 0 0 1,286

Totals $21,664,698 $62,630,866 $64,309,750 $19,985,814

(a) The General Fund beginning and ending balances shown for 2012 in Appendix A are net balances and, therefore, vary from
the balances shown in Appendix B, which are gross balances and include encumbrances. The General Fund receipts and
expenditures shown for 2012 in Appendix B vary from those shown for the General Fund in Appendix A due to the fact that
the financial activity for the General Fund shown in Appendix B is presented on a gross basis as part of the City’s total cash
position. In Appendix B, the income tax revenue is reported entirely in the General Fund and has not been allocated directly
to the project funds.

B-2-1
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 APPENDIX C

Basic Financial Statements from

the City’s Financial Report for Fiscal Year 2012 (Audited)

C-1
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 INDEPENDENT AUDITOR’S REPORT

City of Stow
Summit County
3760 Darrow Road
Stow, Ohio 44224-4094

To the City Council:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate discretely presented component unit and remaining fund
information of the City of Stow, Summit County, Ohio (the City), as of and for the year ended December
31, 2012, and the related notes to 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 preparing and fairly presenting these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes designing,
implementing, and maintaining internal control relevant to preparing and fairly presenting financial
statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to opine on these financial statements based on our audit. We audited in accordance
with auditing standards generally accepted in the United States of America and the financial audit
standards in the Comptroller General of the United States’ Government Auditing Standards. Those
standards require us to plan and perform the audit to reasonably assure the financial statements are free
from material misstatement.

An audit requires obtaining evidence about financial statement amounts and disclosures. The procedures
selected depend on our judgment, including assessing the risks of material financial statement
misstatement, whether due to fraud or error. In assessing those risks, we consider internal control
relevant to the City's preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not to the extent needed to opine on the
effectiveness of the City's internal control. Accordingly, we express no opinion. An audit also includes
evaluating the appropriateness of management’s accounting policies and the reasonableness of their
significant accounting estimates, as well as our evaluation of the overall financial statement presentation.

We believe the audit evidence we obtained is sufficient and appropriate to support our audit opinions.

101 Central Plaza South, 700 Chase Tower, Canton, Ohio 44702‐1509
Phone: 330‐438‐0617 or 800‐443‐9272 Fax: 330‐471‐0001
www.ohioauditor.gov

1
City of Stow
Summit County
Independent Auditor’s Report
Page 2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund,
and the aggregate discretely presented component unit and remaining fund information of the City of
Stow, Summit County, Ohio, as of December 31, 2012, and the respective changes in financial position
and where applicable, cash flows, thereof and the respective budgetary comparisons for the General and
EMS/Fire Tax Levy funds for the year then ended in accordance with the accounting principles generally
accepted in the United States of America.

Emphasis of Matter

As discussed in Note 3 to the financial statements, during 2012 the City adopted new accounting
guidance in Governmental Accounting Standards Board Statement No. 63, “Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position”, and Statement No.
65, “Items Previously Reported as Assets and Liabilities”. Our opinion is not modified with respect to this
matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require this presentation to
include Management’s discussion and analysis, listed in the table of contents, to supplement the basic
financial statements. Although this information is not part of the basic financial statements, the
Governmental Accounting Standards Board considers it essential for placing the basic financial
statements in an appropriate operational, economic, or historical context. We applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, consisting of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to
our inquiries, to the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not opine or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to opine or provide any other assurance.

Supplementary and Other Information

Our audit was conducted to opine on the City’s basic financial statements taken as a whole. The
introductory section, the financial section’s combining statements, individual fund statements and
schedules, and the statistical section information present additional analysis and are not a required part of
the basic financial statements.

The financial section’s combining statements, individual fund statements and schedules are
management’s responsibility, and were derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. We subjected these statements and
schedules to the auditing procedures we applied to the basic financial statements. We also applied
certain additional procedures, including comparing and reconciling this information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, this information is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.

We did not subject the introductory section and statistical section information to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion or any other
assurance on them.

2
City of Stow
Summit County
Independent Auditor’s Report
Page 3

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 21, 2013,
on our consideration of the City’s internal control over financial reporting and our tests of its compliance
with certain provisions of laws, regulations, contracts and grant agreements and other matters. That
report describes the scope of our internal control testing over financial reporting and compliance, and the
results of that testing, and does not opine on internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the City’s internal control over financial reporting and compliance.

Dave Yost
Auditor of State
Columbus, Ohio

June 21, 2013

3
(This Page Intentionally Left Blank)
 CITY OF STOW, OHIO

STATEMENT OF NET POSITION

DECEMBER 31, 2012

Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Assets:
Equity in pooled cash and cash equivalents . . $ 14,013,917 $ 6,962,863 $ 20,976,780 $ 71,467
Receivables:
Property taxes . . . . . . . . . . . . . . . . 7,026,861 - 7,026,861 -
Income taxes. . . . . . . . . . . . . . . . . 2,165,013 60,939 2,225,952 -
Accounts. . . . . . . . . . . . . . . . . . . 148,947 483,310 632,257 -
Intergovernmental . . . . . . . . . . . . . . 1,747,391 - 1,747,391 -
Accrued interest . . . . . . . . . . . . . . . 25,962 - 25,962 -
Internal balance. . . . . . . . . . . . . . . . . 157,208 (157,208) - -
Materials and supplies inventory. . . . . . . . 591,814 260,685 852,499 -
Capital assets:
Nondepreciable capital assets . . . . . . . . 12,503,044 7,126,736 19,629,780 -
Depreciable capital assets, net. . . . . . . . 51,709,340 28,028,704 79,738,044 -
Total capital assets, net. . . . . . . . . . . . . 64,212,384 35,155,440 99,367,824 -
Total assets . . . . . . . . . . . . . . . . . . . . 90,089,497 42,766,029 132,855,526 71,467

Deferred outflows of resources:

Unamortized deferred charges on debt refunding. 197,701 - 197,701 -

Liabilities:
Accounts payable. . . . . . . . . . . . . . . . 499,722 146,225 645,947 -
Contracts payable. . . . . . . . . . . . . . . . - 248,331 248,331 -
Accrued wages and benefits payable . . . . . . 390,722 28,380 419,102 -
Intergovernmental payable . . . . . . . . . . . 959,251 530,583 1,489,834 -
Accrued interest payable . . . . . . . . . . . . 96,038 19,673 115,711 -
Claims payable . . . . . . . . . . . . . . . . . 498,926 - 498,926 -
Notes payable. . . . . . . . . . . . . . . . . . 1,450,000 200,000 1,650,000 -
Long-term liabilities:
Due within one year . . . . . . . . . . . . . 1,962,696 289,972 2,252,668 -
Due in more than one year. . . . . . . . . . 23,368,708 5,816,989 29,185,697 -

Total liabilities . . . . . . . . . . . . . . . . . . 29,226,063 7,280,153 36,506,216 -

Deferred inflows of resources:

Property taxes levied for the next fiscal year. . . 6,634,278 - 6,634,278 -

Net position:
Net investment in capital assets. . . . . . . . . 42,370,606 29,113,459 71,484,065 -
Restricted for:
Capital projects . . . . . . . . . . . . . . . 182,532 - 182,532 -
Transportation projects . . . . . . . . . . . 3,473,011 - 3,473,011 -
Public service programs. . . . . . . . . . . 66,723 - 66,723 -
Community development programs . . . . . 109,952 - 109,952 -
Police and fire pension . . . . . . . . . . . 6,807 - 6,807 -
Other purposes. . . . . . . . . . . . . . . . 904,564 - 904,564 -
Security programs . . . . . . . . . . . . . . 1,579,591 - 1,579,591 -
Unrestricted . . . . . . . . . . . . . . . . . . 5,733,071 6,372,417 12,105,488 71,467
Total net position . . . . . . . . . . . . . . . . . $ 54,426,857 $ 35,485,876 $ 89,912,733 $ 71,467

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

15
 CITY OF STOW, OHIO

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2012

Program Revenues
Charges for Operating Grants Capital Grants
Expenses Services and Sales and Contributions and Contributions
Governmental activities:
General government . . . . . . . . . . . . $ 8,752,518 $ 4,191,996 $ 77,024 $ -
Security of persons and property . . . . . . 14,882,885 722,327 155,042 -
Public health . . . . . . . . . . . . . . . . 460,036 71,036 47,633 -
Leisure time activity . . . . . . . . . . . . 1,522,538 363,581 116,496 -
Community and economic development . . 1,252,957 195,990 89,508 -
Transportation . . . . . . . . . . . . . . . 4,186,489 18,025 1,856,024 2,112,844
Interest and fiscal charges . . . . . . . . . 745,063 - - -
Total governmental activities . . . . . . . . . 31,802,486 5,562,955 2,341,727 2,112,844

Business-type activities:
Water . . . . . . . . . . . . . . . . . . . . 4,027,924 5,249,886 - 328,040
Golf . . . . . . . . . . . . . . . . . . . . . 1,005,084 806,780 - -
Storm Water Utility . . . . . . . . . . . . . 844,828 820,731 - -
Total business-type activities . . . . . . . . . 5,877,836 6,877,397 - 328,040

Total primary government . . . . . . . . . . . $ 37,680,322 $ 12,440,352 $ 2,341,727 $ 2,440,884

Component Unit:
Stow Community Improvement
Corporation . . . . . . . . . . . . . . . . $ 43,963 $ - $ 50,250 $ -

General revenues:
Property taxes levied for:
General purposes . . . . . . . . . . . . .
Special revenue . . . . . . . . . . . . . .
Municipal income taxes . . . . . . . . . . .
Grants and entitlements not restricted
to specific programs . . . . . . . . . . . .
Investment earnings . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . .
Total general revenues . . . . . . . . . . . . .

Transfers . . . . . . . . . . . . . . . . . . . .

Total general revenues and transfers . . . . . .

Change in net position . . . . . . . . . . . . .

Net position at beginning of year (restated) .

Net position at end of year. . . . . . . . . . .

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

16
 Primary Government
Net (Expense) Revenue and Changes in Net Position
Governmental Business-type Component
Activities Activities Total Unit

$ (4,483,498) $ - $ (4,483,498) $ -
(14,005,516) - (14,005,516) -
(341,367) - (341,367) -
(1,042,461) - (1,042,461) -
(967,459) - (967,459) -
(199,596) - (199,596) -
(745,063) - (745,063) -
(21,784,960) - (21,784,960) -

- 1,550,002 1,550,002 -
- (198,304) (198,304) -
- (24,097) (24,097) -
- 1,327,601 1,327,601 -

(21,784,960) 1,327,601 (20,457,359) -

- - - 6,287

4,535,441 - 4,535,441 -
2,214,325 - 2,214,325 -
13,440,529 369,843 13,810,372 -

3,146,808 - 3,146,808 -
25,117 - 25,117 -
244,661 240,160 484,821 -
23,606,881 610,003 24,216,884 -

(353,651) 353,651 - -

23,253,230 963,654 24,216,884 -

1,468,270 2,291,255 3,759,525 6,287

52,958,587 33,194,621 86,153,208 65,180

$ 54,426,857 $ 35,485,876 $ 89,912,733 $ 71,467

17
 CITY OF STOW, OHIO

BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2012

General Other Total

EMS/Fire Capital Governmental Governmental
General Tax Levy Improvements Funds Funds
Assets:
Equity in pooled cash and cash equivalents . . $ 4,689,754 $ 73,458 $ 3,500,788 $ 4,384,909 $ 12,648,909
Receivables:
Property taxes . . . . . . . . . . . . . . . . 4,845,611 1,688,621 - 492,629 7,026,861
Income taxes. . . . . . . . . . . . . . . . . 1,518,957 - 285,937 360,119 2,165,013
Accounts. . . . . . . . . . . . . . . . . . . 148,947 - - - 148,947
Intergovernmental . . . . . . . . . . . . . . 776,025 109,238 67,112 795,016 1,747,391
Accrued interest . . . . . . . . . . . . . . . 25,962 - - - 25,962
Loans to other funds . . . . . . . . . . . . . . 150,000 - - - 150,000
Materials and supplies inventory. . . . . . . . 136,318 - - 455,496 591,814
Total assets . . . . . . . . . . . . . . . . . . . . $ 12,291,574 $ 1,871,317 $ 3,853,837 $ 6,488,169 $ 24,504,897

Liabilities:
Accounts payable. . . . . . . . . . . . . . . . $ 337,326 $ 1,219 $ 20,010 $ 141,167 $ 499,722
Accrued wages and benefits payable . . . . . . 351,256 39,219 - 247 390,722
Compensated absences payable . . . . . . . . 139,161 - - - 139,161
Intergovernmental payable . . . . . . . . . . . 541,524 130,264 - 287,463 959,251
Accrued interest payable. . . . . . . . . . . . - 663 8,951 - 9,614
Notes payable. . . . . . . . . . . . . . . . . . - 100,000 1,350,000 - 1,450,000
Total liabilities . . . . . . . . . . . . . . . . . . 1,369,267 271,365 1,378,961 428,877 3,448,470

Deferred inflows of resources:

Property taxes levied for the next fiscal year . . 4,609,079 1,606,193 - 419,006 6,634,278
Delinquent property tax revenue not available . 236,532 82,428 - 21,504 340,464
Accrued interest not available . . . . . . . . . . 12,477 - - - 12,477
Income tax revenue not available . . . . . . . . 437,646 - 82,385 103,758 623,789
Intergovernmental nonexchange transactions. . 627,621 108,500 - 507,632 1,243,753
Total deferred inflows of resources . . . . . . . . 5,923,355 1,797,121 82,385 1,051,900 8,854,761

Fund balances:
Nonspendable . . . . . . . . . . . . . . . . . 286,318 - - 455,496 741,814
Restricted. . . . . . . . . . . . . . . . . . . . - - 1,497,206 3,761,317 5,258,523
Committed . . . . . . . . . . . . . . . . . . . 17,955 - 895,285 1,051,263 1,964,503
Assigned . . . . . . . . . . . . . . . . . . . . 3,471,773 - - - 3,471,773
Unassigned (deficit) . . . . . . . . . . . . . . 1,222,906 (197,169) - (260,684) 765,053
Total fund balances. . . . . . . . . . . . . . . . 4,998,952 (197,169) 2,392,491 5,007,392 12,201,666
Total liabilities, deferred inflows
of resources and fund balances. . . . . . . . . $ 12,291,574 $ 1,871,317 $ 3,853,837 $ 6,488,169 $ 24,504,897

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

18
 CITY OF STOW, OHIO

RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO

NET POSITION OF GOVERNMENTAL ACTIVITIES
DECEMBER 31, 2012

Total governmental fund balances $ 12,201,666

Amounts reported for governmental activities on 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 funds. 64,212,384

Other long-term assets are not available to pay for current-

period expenditures and therefore are deferred inflows in the funds.
Income taxes receivable $ 623,789
Real and other taxes receivable 340,464
Intergovernmental receivable 1,243,753
Accrued interest receivable 12,477
Total 2,220,483

Long-term liabilities, including bonds payable, are not due and

payable in the current period and therefore are not reported
in the funds.
Compensated absences (4,602,764)
Capital lease payable (803,451)
General obligation bonds payable (14,024,129)
Construction notes payable (5,575,000)
Total (25,005,344)

Accrued interest payable is not due and payable in the current

period and therefore is not reported in the funds. (86,424)

Unamortized deferred amounts on refundings are not recognized

in the governmental funds. 197,701

Unamortized premiums on bond issuances are not recognized

in the funds. (186,899)

Internal service funds are used by management to charge the costs of

insurance to individual funds. The assets and liabilities of the internal
service funds are included in governmental activities in the statement of
net position. 866,082

An internal balance is recorded in governmental activities to reflect

underpayments to the internal service funds by the business-type
actvities. 7,208

Net position of governmental activities $ 54,426,857

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

19
 CITY OF STOW, OHIO

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2012

General Other Total

EMS/Fire Capital Governmental Governmental
General Tax Levy Improvements Funds Funds
Revenues:
Real and other taxes. . . . . . . . . . . . . $ 4,579,344 $ 1,595,832 $ - $ 637,783 $ 6,812,959
Income taxes . . . . . . . . . . . . . . . . 9,270,721 - 1,814,909 2,182,641 13,268,271
Special assessments . . . . . . . . . . . . . 9,678 - 18,025 51,711 79,414
Charges for services. . . . . . . . . . . . . 424,318 - - 680,881 1,105,199
Licenses and permits . . . . . . . . . . . . 832,976 - - - 832,976
Fines and forfeitures . . . . . . . . . . . . 2,445,762 - - 832,596 3,278,358
Intergovernmental. . . . . . . . . . . . . . 2,808,356 322,443 2,077,893 2,206,592 7,415,284
Investment income. . . . . . . . . . . . . . 64,196 - - 13,834 78,030
Rent . . . . . . . . . . . . . . . . . . . . . 179,983 - - 83,806 263,789
Contributions and donations. . . . . . . . . 11,075 - 15,716 67,992 94,783
Other . . . . . . . . . . . . . . . . . . . . 236,805 - 34,951 133,671 405,427
Total revenues . . . . . . . . . . . . . . . . . 20,863,214 1,918,275 3,961,494 6,891,507 33,634,490

Expenditures:
Current:
General government . . . . . . . . . . . 7,423,934 - - 500,210 7,924,144
Security of persons and property . . . . . 9,705,888 2,241,577 - 1,321,870 13,269,335
Public health . . . . . . . . . . . . . . . 380,981 - - 47,862 428,843
Leisure time activties . . . . . . . . . . . 1,290,188 - - 45,625 1,335,813
Community and economic development . 998,339 - - 93,436 1,091,775
Transportation . . . . . . . . . . . . . . 928,883 - - 1,479,549 2,408,432
Capital outlay . . . . . . . . . . . . . . . . - 579 2,946,663 1,245,309 4,192,551
Debt service:
Principal retirement. . . . . . . . . . . . - 22,490 225,514 687,873 935,877
Interest and fiscal charges . . . . . . . . - 8,022 374,953 444,755 827,730
Total expenditures . . . . . . . . . . . . . . . 20,728,213 2,272,668 3,547,130 5,866,489 32,414,500

Excess (deficiency) of revenues

over (under) expenditures. . . . . . . . . . 135,001 (354,393) 414,364 1,025,018 1,219,990

Other financing sources (uses):

Note issuance . . . . . . . . . . . . . . . . - 275,000 5,300,000 - 5,575,000
Refunding of notes . . . . . . . . . . . . . - - (6,650,000) (375,000) (7,025,000)
Premium on sale of notes . . . . . . . . . . - 3,848 68,229 - 72,077
Transfers in . . . . . . . . . . . . . . . . . 173,000 101,500 1,157,190 1,616,834 3,048,524
Transfers (out). . . . . . . . . . . . . . . . (683,228) - (267,637) (2,097,659) (3,048,524)
Total other financing sources (uses) . . . . . . (510,228) 380,348 (392,218) (855,825) (1,377,923)

Net change in fund balances . . . . . . . . . . (375,227) 25,955 22,146 169,193 (157,933)

Fund balances (deficit) at beginning of year . 5,374,179 (223,124) 2,370,345 4,838,199 12,359,599
Fund balances (deficit) at end of year . . . . $ 4,998,952 $ (197,169) $ 2,392,491 $ 5,007,392 $ 12,201,666

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

20
 CITY OF STOW, OHIO

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2012

Net change in fund balances - total governmental funds $ (157,933)

Amounts reported for governmental activities in the

statement of activities are different because:

Government funds report capital outlays as expenditures. However, in the

statement of activities, the cost of those assets is allocated over their
estimated useful lives as depreciation expense. This is the amount by which
depreciation expense exceeded capital outlays in the current period.
Capital asset additions $ 2,648,076
Current year depreciation (3,054,369)
Total (406,293)

Governmental funds only report the disposal of capital assets to the

extent proceeds are received from the sale. In the statement of activities,
a gain or loss is reported for each disposal. (238,685)

Revenues in the statement of activities that do not provide current financial

resources are not reported as revenues in the funds.
Delinquent property taxes (63,193)
Intergovernmental (80,069)
Municipal income taxes 172,258
Interest (39,079)
Total (10,083)

Repayment of long-term debt is an expenditure in the governmental funds,

but the repayment reduces long-term liabilities in the statement of net position. 935,877

Refunding of notes is an other financing use in the governmental funds,

but the payment reduces long-term liabilities in the statement of net position 7,025,000

In the statement of activities, interest is accrued on outstanding bonds,

whereas in governmental funds, interest is expensed when due.
Accrued interest 34,806
Unamortized charges (32,950)
Bond premium 8,734
Total 10,590

The issuance of notes is recorded as revenue in the funds, however, in the

statement of activities, notes are not reported as other financing sources as
they increase liabilities on the statement of net position. (5,575,000)

Some expenses, such as compensated absences, reported in the statement

of activities do not require the use of financial resources and therefore are
not reported as expenditures in governmental funds. (9,008)

Internal service funds used by management to charge the cost of insurance,

to individual funds are not reported in the expenditures and related internal
service fund revenues are eliminated. The net revenue of the internal service
funds is allocated among the governmental activities. (106,195)

Change in net position of governmental activities $ 1,468,270

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

21
 CITY OF STOW, OHIO

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2012

Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Property and other taxes. . . . . . . . . . . . . . $ 4,613,129 $ 4,613,129 $ 4,579,344 $ (33,785)
Income taxes . . . . . . . . . . . . . . . . . . . . 8,441,836 8,441,836 9,255,952 814,116
Special assessments . . . . . . . . . . . . . . . . 41,832 41,832 9,678 (32,154)
Charges for services . . . . . . . . . . . . . . . . 554,000 554,000 424,113 (129,887)
Licenses and permits. . . . . . . . . . . . . . . . 983,100 983,100 832,976 (150,124)
Fines and forfeitures. . . . . . . . . . . . . . . . 2,736,000 2,736,000 2,479,373 (256,627)
Intergovernmental . . . . . . . . . . . . . . . . . 3,231,039 3,231,039 2,909,252 (321,787)
Investment income . . . . . . . . . . . . . . . . 125,000 125,000 88,155 (36,845)
Rent . . . . . . . . . . . . . . . . . . . . . . . . 250,100 250,100 179,983 (70,117)
Contributions and donations. . . . . . . . . . . . 15,000 15,000 11,075 (3,925)
Other . . . . . . . . . . . . . . . . . . . . . . . 527,625 527,625 331,981 (195,644)
Total revenues . . . . . . . . . . . . . . . . . . . . 21,518,661 21,518,661 21,101,882 (416,779)

Expenditures:
Current:
General government . . . . . . . . . . . . . . 9,311,515 9,311,515 7,599,485 1,712,030
Security of persons and property. . . . . . . . 10,116,529 10,116,529 9,912,044 204,485
Public health . . . . . . . . . . . . . . . . . . 378,508 378,508 378,268 240
Leisure time activities. . . . . . . . . . . . . . 1,465,000 1,465,000 1,404,844 60,156
Community and economic environment . . . . 1,037,355 1,037,355 1,019,096 18,259
Transportation . . . . . . . . . . . . . . . . . 1,090,820 1,090,820 916,005 174,815
Total expenditures . . . . . . . . . . . . . . . . . . 23,399,727 23,399,727 21,229,742 2,169,985

Excess of revenues over expenditures . . . . . . . . (1,881,066) (1,881,066) (127,860) 1,753,206

Other financing sources (uses):

Transfers in . . . . . . . . . . . . . . . . . . . . 400,000 400,000 173,000 (227,000)
Transfers out . . . . . . . . . . . . . . . . . . . (693,228) (693,228) (693,228) -
Total other financing sources (uses). . . . . . . . . (293,228) (293,228) (520,228) (227,000)

Net change in fund balance . . . . . . . . . . . . . (2,174,294) (2,174,294) (648,088) 1,526,206

Fund balance at beginning of year . . . . . . . . 4,174,785 4,174,785 4,174,785 -

Prior year encumbrances appropriated. . . . . . 514,559 514,559 514,559 -

Fund balance at end of year . . . . . . . . . . . . $ 2,515,050 $ 2,515,050 $ 4,041,256 $ 1,526,206

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

22
 CITY OF STOW, OHIO

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS)
EMS/FIRE TAX LEVY FUND
FOR THE YEAR ENDED DECEMBER 31, 2012

Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Property and other taxes. . . . . . . . . . . . . . $ 1,611,883 $ 1,611,883 $ 1,595,832 $ (16,051)
Intergovernmental. . . . . . . . . . . . . . . . . 526,230 526,230 322,465 (203,765)
Other . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000 - (2,000)
Total revenues. . . . . . . . . . . . . . . . . . . . 2,140,113 2,140,113 1,918,297 (221,816)

Expenditures:
Current:
Security of persons and property. . . . . . . . 2,299,976 2,499,976 2,244,782 255,194
Capital outlay. . . . . . . . . . . . . . . . . . . 579 579 579 -
Debt service:
Principal retirement . . . . . . . . . . . . . . 22,490 22,490 22,490 -
Interest and fiscal charges . . . . . . . . . . . 6,845 6,845 6,845 -
Total expenditures . . . . . . . . . . . . . . . . . 2,329,890 2,529,890 2,274,696 255,194

Excess of expenditures over revenues . . . . . . . (189,777) (389,777) (356,399) 33,378

Other financing sources (uses):

Sale of notes. . . . . . . . . . . . . . . . . . . . 375,000 375,000 375,000 -
Premium on notes. . . . . . . . . . . . . . . . . - - 3,848 3,848
Transfers in . . . . . . . . . . . . . . . . . . . . 45,958 45,958 - (45,958)
Total other financing sources (uses). . . . . . . . . 420,958 420,958 378,848 (42,110)

Net change in fund balance . . . . . . . . . . . . . 231,181 31,181 22,449 (8,732)

Fund balance at beginning of year . . . . . . . . 46,298 46,298 46,298 -

Prior year encumbrances appropriated. . . . . . 3,909 3,909 3,909 -

Fund balance at end of year . . . . . . . . . . . . $ 281,388 $ 81,388 $ 72,656 $ (8,732)

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

23
 CITY OF STOW, OHIO

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
DECEMBER 31, 2012

Business-type Activities - Enterprise Funds Governmental

Activities -
Storm Water Internal
Water Golf Utility Total Service Funds
Assets:
Current assets:
Equity in pooled cash and cash equivalents . $ 5,909,013 $ 87,468 $ 966,382 $ 6,962,863 $ 1,365,008
Receivables:
Income taxes. . . . . . . . . . . . . . . . - 60,939 - 60,939 -
Accounts. . . . . . . . . . . . . . . . . . 400,479 - 82,831 483,310 -
Materials and supplies inventory. . . . . . . 229,556 31,129 - 260,685 -
Total current assets . . . . . . . . . . . . . . . 6,539,048 179,536 1,049,213 7,767,797 1,365,008
Noncurrent assets:
Capital assets:
Nondepreciable capital assets. . . . . . . 2,011,371 5,115,365 - 7,126,736 -
Depreciable capital assets, net. . . . . . . 21,022,979 207,714 6,798,011 28,028,704 -
Total capital assets, net. . . . . . . . . . . . 23,034,350 5,323,079 6,798,011 35,155,440 -
Total assets . . . . . . . . . . . . . . . . . . . . 29,573,398 5,502,615 7,847,224 42,923,237 1,365,008
Liabilities:
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . 51,643 11,822 82,760 146,225 -
Contracts payable. . . . . . . . . . . . . . . 248,331 - - 248,331 -
Accrued wages and benefits payable . . . . . 21,673 958 5,749 28,380 -
Intergovernmental payable . . . . . . . . . . 511,421 12,216 6,946 530,583 -
Accrued interest payable . . . . . . . . . . . 2,993 16,680 - 19,673 -
Claims payable . . . . . . . . . . . . . . . . - - - - 498,926
Note payable . . . . . . . . . . . . . . . . . 200,000 - - 200,000 -
Current portion of compensated absences. . . 35,832 - 14,496 50,328 -
Current portion of general obligation bonds . 15,530 165,000 - 180,530 -
Current portion of OPWC loan . . . . . . . . 11,584 - - 11,584 -
Current portion of capital lease obligation . . - - 47,530 47,530 -
Total current liabilities . . . . . . . . . . . . . 1,099,007 206,676 157,481 1,463,164 498,926
Long-term liabilities:
Compensated absences. . . . . . . . . . . . 157,903 - 56,749 214,652 -
General obligation bonds. . . . . . . . . . . 483,814 4,793,108 - 5,276,922 -
OPWC loan . . . . . . . . . . . . . . . . . 144,808 - - 144,808 -
Loans from other funds. . . . . . . . . . . . 150,000 - - 150,000 -
Capital lease obligation . . . . . . . . . . . - - 180,607 180,607 -
Total long-term liabilities. . . . . . . . . . . . 936,525 4,793,108 237,356 5,966,989 -
Total liabilities. . . . . . . . . . . . . . . . . . . 2,035,532 4,999,784 394,837 7,430,153 498,926
Net position:
Net investment in capital assets . . . . . . . . . 22,178,614 364,971 6,569,874 29,113,459 -
Unrestricted . . . . . . . . . . . . . . . . . . . 5,359,252 137,860 882,513 6,379,625 866,082
Total net position . . . . . . . . . . . . . . . . . $ 27,537,866 $ 502,831 $ 7,452,387 35,493,084 $ 866,082

Adjustment to reflect the consolidation of the internal service funds activities related to enterprise funds. (7,208)

Net position of business-type activities $ 35,485,876

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

24
 CITY OF STOW, OHIO

STATEMENT OF REVENUES, EXPENSES AND

CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2012

Business-type Activities - Enterprise Funds Governmental

Activities -
Storm Water Internal
Water Golf Utility Total Service Funds
Operating revenues:
Charges for services . . . . . . . . . . . . $ 5,225,474 $ 806,780 $ 799,456 $ 6,831,710 $ 2,587,112
Tap-in fees. . . . . . . . . . . . . . . . . 18,470 - - 18,470 -
Other operating revenues . . . . . . . . . 85,942 129,279 24,939 240,160 762,346
Total operating revenues. . . . . . . . . . . 5,329,886 936,059 824,395 7,090,340 3,349,458

Operating expenses:
Personal services . . . . . . . . . . . . . 1,042,277 420,213 301,919 1,764,409 -
Contract services. . . . . . . . . . . . . . 2,554,313 84,809 204,488 2,843,610 321,173
Materials and supplies. . . . . . . . . . . 43,362 290,218 24,817 358,397 -
Claims expense . . . . . . . . . . . . . . - - - - 3,120,136
Depreciation. . . . . . . . . . . . . . . . 370,696 5,410 303,962 680,068 -
Other . . . . . . . . . . . . . . . . . . . 3,180 - - 3,180 -
Total operating expenses. . . . . . . . . . . 4,013,828 800,650 835,186 5,649,664 3,441,309

Operating income (loss) . . . . . . . . . . . 1,316,058 135,409 (10,791) 1,440,676 (91,851)

Nonoperating revenues (expenses):

Income taxes. . . . . . . . . . . . . . . . - 369,843 - 369,843 -
Special assessments . . . . . . . . . . . . 5,942 - 21,275 27,217 -
Interest and fiscal charges . . . . . . . . . (22,676) (208,211) (11,629) (242,516) -
Total nonoperating revenues (expenses). . . (16,734) 161,632 9,646 154,544 -

Income (loss) before contributions and

transfers . . . . . . . . . . . . . . . . . . 1,299,324 297,041 (1,145) 1,595,220 (91,851)

Transfer in . . . . . . . . . . . . . . . . . . - - 24,025 24,025 -

Transfer out . . . . . . . . . . . . . . . . . (24,025) - - (24,025) -
Capital contributions. . . . . . . . . . . . . 328,040 - 353,651 681,691 -

Change in net position . . . . . . . . . . . . 1,603,339 297,041 376,531 2,276,911 (91,851)

Net position at beginning of year (restated). 25,934,527 205,790 7,075,856 957,933

Net position at end of year . . . . . . . . . . $ 27,537,866 $ 502,831 $ 7,452,387 $ 866,082

Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds. 14,344

Change in net position of business-type activities. $ 2,291,255

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

25
 CITY OF STOW, OHIO

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2012

Business-type Activities - Enterprise Funds Governmental

Activities -
Storm Water Internal
Water Golf Utility Total Service Funds
Cash flows from operating activities:
Cash received from customers. . . . . . . . . . . . $ 5,214,320 $ 806,780 $ 801,755 $ 6,822,855 $ 2,587,112
Cash received from tap-in fees. . . . . . . . . . . . 18,470 - - 18,470 -
Cash received from other operations. . . . . . . . . 85,942 129,279 31,339 246,560 788,668
Cash payments for personal services. . . . . . . . . (1,028,434) (419,564) (263,509) (1,711,507) -
Cash payments for contract services . . . . . . . . . (2,514,846) (84,267) (138,929) (2,738,042) (321,173)
Cash payments for materials and supplies . . . . . . (123,573) (300,509) (23,358) (447,440) -
Cash payments for claims . . . . . . . . . . . . . . - - - - (3,141,597)

Net cash provided by (used in)

operating activities . . . . . . . . . . . . . . . 1,651,879 131,719 407,298 2,190,896 (86,990)

Cash flows from noncapital financing activities:

Income taxes . . . . . . . . . . . . . . . . . . . . . - 371,340 - 371,340 -

Net cash provided by noncapital

financing activities . . . . . . . . . . . . . . . - 371,340 - 371,340 -

Cash flows from capital and related

financing activities:
Acquisition of capital assets . . . . . . . . . . . . . (1,028,193) (73,248) (33,194) (1,134,635) -
Special assessments . . . . . . . . . . . . . . . . . 5,942 - 21,275 27,217 -
Intergovernmental . . . . . . . . . . . . . . . . . . 328,040 - - 328,040 -
Principal retirement . . . . . . . . . . . . . . . . . (626,438) (160,000) (45,567) (832,005) -
Interest and fiscal charges . . . . . . . . . . . . . . (29,764) (212,321) (11,629) (253,714) -
Note issuance . . . . . . . . . . . . . . . . . . . . 200,000 - - 200,000 -
Premium on notes . . . . . . . . . . . . . . . . . . 2,052 - - 2,052 -

Net cash used in capital and related

financing activities . . . . . . . . . . . . . . . (1,148,361) (445,569) (69,115) (1,663,045) -

Net increase (decrease) in cash and

cash equivalents. . . . . . . . . . . . . . . . . . . . 503,518 57,490 338,183 899,191 (86,990)

Cash and cash equivalents at beginning of year . . . 5,405,495 29,978 628,199 6,063,672 1,451,998

Cash and cash equivalents at end of year . . . . . . . $ 5,909,013 $ 87,468 $ 966,382 $ 6,962,863 $ 1,365,008

- - Continued

26
 CITY OF STOW, OHIO

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2012

Business-type Activities - Enterprise Funds Governmental

Activities -
Storm Water Internal
Water Golf Utility Total Service Funds
Reconciliation of operating income (loss) to net
cash provided by (used in) operating activities:

Operating income (loss) . . . . . . . . . . . . . . . . $ 1,316,058 $ 135,409 $ (10,791) $ 1,440,676 $ (91,851)

Adjustments:
Depreciation. . . . . . . . . . . . . . . . . . . . . 370,696 5,410 303,962 680,068 -

Changes in assets and liabilities:

(Increase) in materials and supplies inventory. . . . (91,045) (3,451) - (94,496) -
Decrease (increase) in accounts receivable . . . . . (7,974) 8,699 725 26,322
Increase (decrease) in accounts payable . . . . . . . (754) (6,542) 67,662 60,366 -
Increase (decrease) in accrued wages and benefits. . 2,154 (406) 1,270 3,018 -
Increase in intergovernmental payable. . . . . . . . 53,092 1,299 42 54,433 -
Increase in compensated
absences payable . . . . . . . . . . . . . . . . . . 9,652 - 36,454 46,106 -
(Decrease) in claims payable. . . . . . . . . . . . . - - - - (21,461)
Net cash provided by (used in) operating activities . . . $ 1,651,879 $ 131,719 $ 407,298 $ 2,190,896 $ (86,990)

Non-Cash Transactions:
During 2012 and 2011, the Water fund purchased $248,331 and $27,607, respectively, of capital assets on account.
During 2011, the Storm Water Utility fund purchased $33,194 of capital assets on account.
The Storm Water Utility fund received $353,651 and $24,025 in capital contributions from governmental activities and business-type
activities, respectively, during 2012.

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

27
 CITY OF STOW, OHIO

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS
DECEMBER 31, 2012

Private-Purpose
Trust Agency
Assets:
Current assets:
Equity in pooled cash and cash equivalents . . $ 1,286 $ 625,135
Cash in segregated accounts. . . . . . . . . . - 501,687
Receivables:
Accounts . . . . . . . . . . . . . . . . . . - 2,122
Total assets. . . . . . . . . . . . . . . . . . . . 1,286 $ 1,128,944

Liabilities:
Current liabilities:
Intergovernmental payable . . . . . . . . . . $ - $ 201,730
Deposits held and due to others. . . . . . . . - 22,837
Undistributed monies . . . . . . . . . . . . . - 904,377
Total liabilities. . . . . . . . . . . . . . . . . . - $ 1,128,944

Net position:
Held in trust . . . . . . . . . . . . . . . . . . 1,286
Total net position . . . . . . . . . . . . . . . . $ 1,286

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

28
 CITY OF STOW, OHIO

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2012

Private-Purpose
Trust

Net position at beginning of year. . . . . . . $ 1,286

Net position at end of year . . . . . . . . . . $ 1,286

SEE ACCOMPANYING NOTES TO THE BASIC FINANCIAL STATEMENTS

29
THIS PAGE IS INTENTIONALLY LEFT BLANK

30
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 1 - DESCRIPTION OF THE CITY

The City of Stow, Ohio, (the “City”) is a home rule municipal corporation which was established under the
laws of the State of Ohio and operates under its own charter. The current charter, which provides for a
Mayor/Council form of government, was adopted in 1958 and became effective January 2, 1960.
Amendments to the charter have been approved by the electorate in 1965, 1968, 1970, 1972, 1975, 1980,
1985, 1990, 1991, 1997, 1998, 2000, 2002, 2005 and 2010.

The City provides various services and consists of many different activities and smaller accounting entities
which include police, fire-fighting and EMS forces, street and highway maintenance, building and zoning
inspection, comprehensive community planning, various general government services and a water
distribution system. The City offers numerous parks and recreation programs and operates a park system, a
golf course, three municipal cemeteries and a group of rental lodges available for public or private events.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

A. Reporting Entity

A reporting entity is comprised of the primary government, component units and other organizations
that are included to ensure that the financial statements are not misleading. The primary government
of the City consists of all funds, departments, boards, agencies and commissions that are not legally
separate from the City.

Component units are legally separate organizations for which the City is financially accountable. The
City is financially accountable for an organization if the City appoints a voting majority of the
organization’s Governing Board and (1) the City is able to significantly influence the programs or
services performed or provided by the organization; or (2) the City is legally entitled to or can
otherwise access the organization’s resources; (3) the City is legally obligated or has otherwise
assumed the responsibility to finance deficits of, or provide financial support to, the organization; (4)
or the City is obligated for the debt of the organization. Component units may also include
organizations for which the City approves the budget, the issuance of debt, or the levying of taxes.
Certain organizations are also included as component units if the nature and significance of the
relationship between the primary government and the organization is such that exclusion by the
primary government would render the primary governments financial statements incomplete or
misleading. The City has one component unit.

Stow Community Improvement Corporation (CIC) - The Stow Community Improvement

Corporation was formed pursuant to Ohio Revised Code Section 1724. The Articles of
Incorporation were approved on November 8, 1985. The CIC was designated as a not-for-profit
agency of the City for advancing, encouraging and promoting the industrial, economic,
commercial, and civic development of Stow and the surrounding territory surrounding Stow.

The Board of Trustees consists of nineteen members, which include the Mayor, Director of
Planning and Development, Director of Finance, Law Director, City Council President, City
Council Finance Committee Chairperson, Stow-Munroe Falls School District Treasurer or
Designee, and City Council Chairperson. Trustees also include at least one representative of each
of the following categories: private citizens, small business, commerce, industry, civic
organizations, and financial institution.

31
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

The CIC operates independently, but with oversight by the City, which includes City Council
approval of the CIC’s annual budget. The CIC has the authority to expend its funds as it
determines within the approved budget. The City is the primary source of funding for the CIC (in
most years, the City provides the CIC’s entire funding allocation). If the CIC developed its own
funding sources, its independence would increase. No debt would be issued by the CIC without
the concurrence of the City. The CIC has no taxing authority. The City does not appoint a
majority of the Board of Trustees and the CIC does not provide services entirely or almost entirely
to the City.

Financial statements can be obtained from the Director of Finance, Stow Community
Improvement Corporation, 3760 Darrow Road, Stow, Ohio 44224. Information relative to the
component unit is presented in Note 22.

B. Basis of Presentation - Fund Accounting

The City’s BFS consist of government-wide statements, including a statement of net position and a
statement of activities and fund financial statements which provide a more detailed level of financial
information.

Government-wide Financial Statements - The statement of net position and the statement of activities
display information about the City as a whole. These statements include the financial activities of the
primary government, except for fiduciary funds. The activities of the internal service funds are
eliminated to avoid “doubling up” revenues and expenses. The statements distinguish between those
activities of the City that are governmental and those that are considered business-type activities.

The statement of net position presents the financial condition of the governmental and business-type
activities of the City at year end. The statement of activities presents a comparison between direct
expenses and program revenues for each program or function of the City’s governmental activities and
for the business-type activities of the City. Direct expenses are those that are specifically associated
with a service, program or department and therefore clearly identifiable to a particular function.
Program revenues include charges paid by the recipient of the goods or services offered by the
program, grants and contributions that are restricted to meeting the operational or capital requirements
of a particular program and interest earned on grants that is required to be used to support a particular
program. Revenues which are not classified as program revenues are presented as general revenues of
the City, with certain limited exceptions. The comparison of direct expenses with program revenues
identifies the extent to which each business segment or governmental functions are self-financing or
draw from the general revenues of the City.

Fund Financial Statements - During the year, the City segregates transactions related to certain City
functions or activities in separate funds in order to aid financial management and to demonstrate legal
compliance. Fund financial statements are designed to present financial information of the City at this
more detailed level. The focus of governmental and enterprise fund financial statements is on major
funds. Each major fund is presented in a separate column. Nonmajor funds are aggregated and
presented in a single column. The internal service funds are presented in a single column on the face
of the proprietary fund financial statements. Fiduciary funds are reported by type.

32
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund’s principal ongoing operation. The principal operating revenues of
the City’s proprietary funds are charges for services. Operating expenses for the enterprise funds
include personnel and other expenses related to water, golf course and storm water operations and
operating expenses for the internal service funds include claims and administrative expenses. All
revenues and expenses not meeting these definitions are reported as nonoperating revenues and
expenses.

C. Fund Accounting

The City uses funds to maintain its financial records during the year. A fund is defined as a fiscal and
accounting entity with a self balancing set of accounts. There are three categories of funds:
governmental, proprietary and fiduciary. The following categories are used by the City:

Governmental Funds - Governmental funds are those through which most governmental functions
typically are financed. Governmental fund reporting focuses on the sources, uses and balances of
current financial resources. Expendable assets are assigned to the various governmental funds
according to the purposes for which they may or must be used. Current liabilities are assigned to the
fund from which they will be paid. The difference between governmental fund assets and liabilities is
reported as fund balance. The following are the City's major governmental funds:

General fund - The general fund is used to account for and report all financial resources not
accounted for and reported in another fund. The general fund balance is available to the City for
any purpose provided it is expended or transferred according to the charter of the City of Stow
and/or the general laws of Ohio.

EMS/fire tax levy fund - The EMS/fire tax levy fund is a special revenue fund that accounts for
proceeds of levy money that is legally restricted to expenditures to provide EMS and fire
protection services.

General capital improvements fund - The general capital improvements fund accounts for the
portion of municipal income tax designated by Council for the purpose of improving, constructing,
maintaining, and purchasing the capital items necessary to enhance the operation of the City.

Other governmental funds of the City are used to account for (a) specific revenue sources that are
restricted or committed to expenditures for specified purposes other than debt service or capital
projects and (b) financial resources that are restricted, committed, or assigned to expenditure for
principal and interest.

Proprietary Funds - Proprietary fund reporting focuses on changes in net position, financial position
and cash flows. Proprietary funds are classified as either enterprise or internal service.

Enterprise funds - The enterprise funds may be used to account for any activity for which a fee is
charged to external users for goods or services. The following are the City’s major enterprise funds:

Water fund - This fund accounts for revenues generated from the charges for the treatment and
provisions of water to the residents and commercial users of the City.

Golf fund - The golf fund accounts for revenues generated and expenses for the Fox Den golf
course.

33
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Storm water utility fund - The storm water utility fund accounts for the provision of storm
drainage runoff service to the residents and commercial users located within the City.

Internal service fund - Internal service funds account for the financing of services provided by one
department or agency to other departments or agencies of the City on a cost-reimbursement basis. The
City’s internal service funds are the Administrative Insurance fund and the Self-Insurance fund which
report on the administrative costs and the payments of premiums and claims for healthcare.

Fiduciary Funds - Fiduciary fund reporting focuses on net position and changes in net position. The
fiduciary fund category is split into four classifications: pension trust funds, investment trust funds,
private-purpose trust funds and agency funds. Trust funds are used to account for assets held by the
City under a trust agreement for individuals, private organizations, or other governments and are
therefore not available to support the City’s own programs. The City’s trust funds are private-purpose
trust funds established to account for funds bequeathed and donated to the City for the Wells Perkins
cemetery, scholarships and Stow seniors commission. The City’s agency funds are purely custodial
(assets equal liabilities) and thus do not involve measurement of results of operations. The City’s
agency funds account for building permit fees collected on behalf of the State, municipal court
collections that are distributed to various local governments, performance bonds pledged by
contractors, a flexible spending plan and money on deposit with the Stow Municipal Court. The City
does not have pension trust funds or investment trust funds.

D. Measurement Focus

Government-wide Financial Statements - The government-wide financial statements are prepared

using the economic resources measurement focus. All non-fiduciary assets and all liabilities associated
with the operation of the City are included on the statement of net position. The statement of activities
presents increases (e.g. revenues) and decreases (e.g. expenses) in total net position.

Fund Financial Statements - All governmental funds are accounted for using a flow of current
financial resources measurement focus. With this measurement focus, only current assets and current
liabilities generally are included on the balance sheet. The statement of revenues, expenditures and
changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses
(i.e., expenditures and other financing uses) of current financial resources. This approach differs from
the manner in which the governmental activities of the government-wide financial statements are
prepared. Governmental fund financial statements therefore include a reconciliation with brief
explanations to better identify the relationship between the government-wide statements and the
financial statements for governmental funds.

Like the government-wide statements, all proprietary funds are accounted for on a flow of economic
resources measurement focus. All assets and all liabilities associated with the operation of these funds
are included on the statement of net position. The statement of changes in fund net position presents
increases (i.e., revenues) and decreases (i.e., expenses) in total net position. The statement of cash
flows provides information about how the City finances and meets the cash flow needs of its
proprietary activities. The private-purpose trust fund is accounted for using the flow of economic
resources measurement focus.

The agency funds do not report on a measurement focus as they do not report operations.

34
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

E. Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on
the financial statements. Government-wide financial statements are prepared using the accrual basis of
accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and
fiduciary funds also use the accrual basis of accounting. Differences in the accrual and modified
accrual basis of accounting arise in the recognition of revenue, the recording of deferred inflows and
outflows, and in the presentation of expenses versus expenditures.

Revenues - Exchange and Nonexchange Transactions - Revenue resulting from exchange

transactions, in which each party gives and receives essentially equal value, is recorded on the accrual
basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal
year in which the resources are measurable and become available. Available means that the resources
will be collected within the current fiscal year or are expected to be collected soon enough thereafter to
be used to pay liabilities of the current fiscal year. For the City, available means expected to be
received within sixty days of year-end.

Nonexchange transactions, in which the City receives value without directly giving equal value in
return, include income taxes, property taxes, grants, entitlements and donations. On an accrual basis,
revenue from income taxes is recognized in the period in which the income is earned (See Note 8).
Revenue from property taxes is recognized in the year for which the taxes are levied (See Note 7).
Revenue from grants, entitlements and donations is recognized in the year in which all eligibility
requirements have been satisfied. Eligibility requirements include timing requirements, which specify
the year when the resources are required to be used or the year when use is first permitted, matching
requirements, in which the City must provide local resources to be used for a specified purpose, and
expenditure requirements, in which the resources are provided to the City on a reimbursement basis.
On a modified accrual basis, revenue from nonexchange transactions must also be available before it
can be recognized.

Under the modified accrual basis, the following revenue sources are considered to be both measurable
and available at year end: income tax, State-levied locally shared taxes (including gasoline tax, local
government funds and permissive tax), interest, grants, fees and rentals.

Deferred Inflows of Resources and Deferred Outflows of Resources - A deferred inflow of resources
is an acquisition of net position by the City that is applicable to a future reporting period. A deferred
outflow of resources is a consumption of net position by the City that is applicable to a future reporting
period.

Property taxes for which there is an enforceable legal claim as of December 31, 2012, but which were
levied to finance year 2013 operations, and other revenues received in advance of the year for which
they were intended to finance, have been recorded as deferred inflows. Income taxes and special
assessments not received within the available period, grants and entitlements received before the
eligibility requirements are met, and delinquent property taxes due at December 31, 2012, are recorded
as deferred inflows in governmental funds.

On governmental fund financial statements, receivables that will not be collected within the available
period have been reported as a deferred inflow.

Expenses/Expenditures - On the accrual basis of accounting, expenses are recognized at the time they
are incurred.

35
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

The measurement focus of governmental fund accounting is on decreases in net financial resources
(expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in
which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and
amortization, are not recognized in governmental funds.

F. Budgetary Process

The budgetary process is prescribed by provisions of the Ohio Revised Code and entails the
preparation of budgetary documents within an established timetable. The major documents prepared
are the Tax Budget (or the Alternative Tax Budget as permitted by law), the certificate of estimated
resources and the annual appropriation ordinance, all of which are prepared on the budgetary basis of
accounting. The certificate of estimated resources and the annual appropriation ordinance are subject to
amendment throughout the year with the legal restriction that appropriations cannot exceed estimated
resources, as certified. All funds, other than agency funds, are legally required to be budgeted and
appropriated. The legal level of budgetary control has been established by Council at the personal
services and other object level within each department of each fund. For both the personal services
and object levels the Finance Director has been authorized to allocate appropriations within any object
level which he maintains on his books.

Estimated Resources - The County Budget Commission determines if the budget substantiates a need
to levy all or part of previously authorized taxes and reviews estimated revenue. The Commission
certifies its actions to the City by September 1. As part of this certification, the City receives the
official certificate of estimated resources, which states the projected revenue of each fund. Prior to
December 31, the City must revise its budget so that the total contemplated expenditures from any
fund during the ensuing year will not exceed the amount available as stated in the certificate of
estimated resources. The revised budget then serves as the basis for the annual appropriation
ordinance. On or about January 1, the certificate of estimated resources is amended to include
unencumbered fund balances at December 31 of the preceding year. The certificate of estimated
resources may be further amended during the year if the Finance Director determines and the Budget
Commission agrees that an estimate needs to be either increased or decreased. The amounts reported
on the budgetary statements reflect the amounts in the original and final amended official certificate of
estimated resources issued during 2012.

Appropriations - For management, a temporary appropriation ordinance to control expenditures may

be passed on or about January 1 of each year for the period January 1 to March 31. The Annual
Appropriation Ordinance must be passed by April 1 of each year for the period January 1 to December
31. Appropriations by fund must be within the estimated resources as certified by the County Budget
Commission and the total of expenditures and encumbrances may not exceed the appropriations at any
level of control.

Any revisions that alter the appropriations of the legal level of budgetary control within a fund must
first be approved by City Council. Council may pass supplemental fund appropriations so long as the
total appropriations by fund do not exceed the amounts set forth in the most recent certificate of
estimated resources.

Formal budgetary integration is employed as a management control device during the year for all funds
consistent with statutory provisions. Appropriation amounts are as originally adopted, or as amended
by City Council throughout the year by supplemental appropriations which either reallocate or increase
the original appropriation amounts. During the year, supplemental appropriation measures were legally
enacted; however, none of these amendments were significant. The budgetary figures which appear in
the statements of budgetary comparisons represent the original and final appropriation amounts,
including all amendments and modifications.

36
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Encumbrances - As part of formal budgetary control, purchase orders, contracts and other
commitments for the expenditure of monies are recorded as the equivalent of expenditures on the non-
GAAP budgetary basis in order to reserve that portion of the applicable appropriation and to determine
and maintain legal compliance. The Ohio Revised Code prohibits expenditures plus encumbrances
from exceeding appropriations at the legal level of budgetary control. On the GAAP basis,
encumbrances outstanding at year end are reported as assigned, committed, or restricted fund balances
for subsequent-year expenditures for governmental funds.

Lapsing of Appropriations - At the close of each year, the unencumbered balance of each
appropriation reverts to the respective fund from which it was appropriated and becomes subject to
future appropriations. The encumbered appropriation balance is carried forward to the succeeding year
and is not reappropriated.

G. Cash, Cash Equivalents and Investments

To improve cash management, cash received by the City is pooled. Monies for all funds, including
proprietary funds, are maintained in this pool. Individual fund integrity is maintained through the
City’s records. Each fund’s interest in the pool is presented as “equity in pooled cash and cash
equivalents” on the financial statements.

During 2012, investments were limited to the State Treasury Asset Reserve of Ohio (STAR Ohio),
repurchase agreements, and federal agency securities.

Except for nonparticipating investment contracts, investments are reported at fair value which is based
on quoted market prices. Nonparticipating investment contracts such as repurchase agreements are
reported at cost.

STAR Ohio is an investment pool managed by the State Treasurer’s Office which allows governments
within the State to pool their funds for investment purposes. STAR Ohio is not registered with the
SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the
Investment Company Act of 1940. Investments in STAR Ohio are valued at STAR Ohio’s shares
price which is the price the investment could be sold for on December 31, 2012.

Following Ohio statutes, the City has, by resolution, specified the funds to receive an allocation of
interest earnings. Interest revenue credited to the general fund during 2012 amounted to $64,196 of
which $50,461 was assigned from other City funds.

For purposes of the statement of cash flows and for presentation on the statement of net position,
investments of the cash management pool and investments with original maturities of three months or
less at the time they are purchased by the City, are considered to be cash equivalents. Investments with
maturities greater than three months at the time of purchase are reported as investments. An analysis
of the City's investment account at year end is provided in Note 4.

H. Interfund Balances

On fund financial statements, long-term interfund loans are classified as “loans to/from other funds”.
These amounts are eliminated in the governmental and business-type activities columns of the
statement of net position, except for any net residual amounts due between governmental and business-
type activities, which are presented as internal balances.

37
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

I. Inventory

Inventories of all funds are stated at cost which is determined on a first-in, first-out basis. Inventory in
governmental funds consists of expendable supplies held for consumption. The cost of inventory items
is recorded as expenditures in the governmental fund types and as expenses in the proprietary fund
type.

J. Capital Assets

General capital assets are those assets not specifically related to activities reported in the proprietary
funds. These assets generally result from expenditures in the governmental funds. These assets are
reported in the governmental activities column of the government-wide statement of net position, but
are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are
reported both in the business-type activities column of the government-wide statement of net position
and in the respective funds.

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and
retirements during the year. The City was able to estimate the historical cost for the initial reporting of
infrastructure by back trending (i.e. estimating the current replacement cost of the infrastructure to be
capitalized and using an appropriate price-level index to deflate the cost of the acquisition year or
estimated acquisition year). Donated capital assets are recorded at their fair market values as of the
date received. The City maintains a capitalization threshold of $5,000. The City’s infrastructure
consists of bridges, culverts, curbs, storm sewers, streets, irrigation systems, water and sewer lines and
infrastructure acquired December 31, 1980 and later. Improvements are capitalized; the costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s
life are not. Interest incurred during the construction of capital assets is also capitalized for business-
type activities.

All reported capital assets are depreciated except for land and construction in progress. Improvements
are depreciated over the remaining useful lives of the related capital assets. Useful lives for
infrastructure were estimated based on the City’s historical records of necessary improvements and
replacement. Depreciation is computed using the straight-line method over the following useful lives:

Governmental Business-Type
Activities Activities
Description Estimated Lives Estimated Lives
Buildings and improvements 4 to 50 years 4 to 50 years
Infrastructure 20 to 75 years 20 to 75 years
Equipment, furniture and fixtures 3 to 15 years 3 to 15 years
Vehicles 15 years 15 years

K. Compensated Absences

Vacation benefits are accrued as a liability as the benefits are earned if the employee’s rights to receive
compensation are attributable to services already rendered and it is probable that the City will
compensate the employees for the benefits through paid time off or some other means. The City
records a liability for accumulated unused vacation time when earned for all employees with more than
one year of service.

38
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Sick leave benefits are accrued as a liability using the termination method. An accrual for sick leave is
made to the extent that it is probable that benefits will result in termination payments. The liability is
an estimate based on the City’s past experience of making termination payments. In proprietary funds,
the entire amount of compensated absences is reported as a fund liability. The entire compensated
absence liability is reported on the government-wide financial statements.

For governmental funds, the current portion of unpaid compensated absences is the amount expected to
be paid using expendable available resources based upon the occurrence of employee resignations and
retirements. These amounts are recorded in the account “compensated absences payable” in the fund
from which the employees who have accumulated unpaid leave are paid.

L. Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities and long-term obligations are reported in the government-wide
financial statements, and all payables, accrued liabilities and long-term obligations payable from
proprietary funds are reported on the proprietary fund financial statements.

In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely
manner and in full from current financial resources are reported as obligations of the funds. However,
claims and judgments and compensated absences that will be paid from governmental funds are
reported as a liability in the fund financial statements only to the extent that they are due for payment
during the current year. Bonds, long-term notes and capital leases are recognized as a liability on the
governmental fund financial statements when due.

M. Fund Balance

Fund balance is divided into five classifications based primarily on the extent to which the City is
bound to observe constraints imposed upon the use of the resources in the governmental funds. The
classifications are as follows:

Nonspendable - The nonspendable fund balance classification includes amounts that cannot be
spent because they are not in spendable form or legally required to be maintained intact. The “not
in spendable form” criterion includes items that are not expected to be converted to cash. It also
includes the long-term amount of loans receivable in the general fund.

Restricted - Fund balance is reported as restricted when constraints are placed on the use of
resources that are either externally imposed by creditors (such as through debt covenants),
grantors, contributors, or laws or regulations of other governments, or imposed by law through
constitutional provisions or enabling legislation.

Committed - The committed fund balance classification includes amounts that can be used only for
the specific purposes imposed by a formal action (ordinance) of City Council (the highest level of
decision making authority). Those committed amounts cannot be used for any other purpose
unless City Council removes or changes the specified use by taking the same type of action
(ordinance) it employed to previously commit those amounts. Committed fund balance also
incorporates contractual obligations to the extent that existing resources in the fund have been
specifically committed for use in satisfying those contractual requirements.

39
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Assigned - Amounts in the assigned fund balance classification are intended to be used by the City
for specific purposes but do not meet the criteria to be classified as restricted nor committed. In
governmental funds other than the general fund, assigned fund balance represents the remaining
amount that is not restricted or committed. In the general fund, assigned amounts represent
intended uses established by policies of City Council, which includes giving the Finance Director
the authority to constrain monies for intended purposes.

Unassigned - Unassigned fund balance is the residual classification for the general fund and
includes all spendable amounts not contained in the other classifications. In other governmental
funds, the unassigned classification is only used to report a deficit fund balance resulting from
overspending for specific purposes for which amounts had been restricted, committed, or assigned.

The City applies restricted resources first when expenditures are incurred for purposes for which
restricted and unrestricted (committed, assigned, and unassigned) fund balance is available. Similarly,
within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then
unassigned amounts when expenditures are incurred for purposes for which amounts in any of the
unrestricted fund balance classifications could be used.

N. Net Position

Net position represents the difference between assets plus deferred outflows of resources less liabilities
plus deferred inflows of resources. Net investment in capital assets consists of capital assets, net of
accumulated depreciation, reduced by the outstanding balances of any borrowing used for the
acquisition, construction or improvement of those assets. Net position is reported as restricted when
there are limitations imposed on the use of resources either through enabling legislation or through
external restrictions imposed by creditors, grantors or laws or regulations of other governments.

The City applies restricted resources first when an expense is incurred for purposes for which both
restricted and unrestricted net position is available.

O. Unamortized Bond Premium/Accounting Gain or Loss

Bond premiums are amortized over the term of the bonds using the straight-line method. Bond
premiums are presented as an addition to the face amount of the bonds.

For advance refunding resulting in the defeasance of debt, the difference between the reacquisition
price and the net carrying amount of the old debt is deferred and amortized as a component of interest
expense. This accounting gain or loss is amortized over the remaining life of the old debt or the life of
the new debt, whichever is shorter, and is presented as a deferred outflow.

On the governmental fund financial statements, issuance costs, bond premiums, bond discounts, and
deferred charges from refunding are recognized in the current period.

P. Operating Revenues and Expenses

Operating revenues are those revenues that are generated directly from the primary activity of the
proprietary funds. For the City, these revenues are for water, golf course, storm water utility and self-
insurance programs. Operating expenses are necessary costs incurred to provide the goods or services
that are the primary activity of the funds. All revenues and expenses not meeting these definitions are
reported as non-operating.

40
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Q. Contributions of Capital

Contributions of capital in proprietary fund financial statements arise from outside contributions of
capital assets or from grants or outside contributions of resources restricted to capital acquisition and
construction and from contributions from governmental funds. During 2012, the storm water utility
fund received contributions of capital in the amount of $353,651 and $24,025 from governmental
activities and the water enterprise fund, respectively. During 2012, the water fund received
contributions of capital in the amount of $328,040 from the State for Issue II Ohio Public Works
Commission funding.

R. Interfund Activity

Transfers between governmental and business-type activities on the government-wide statements are
reported in the same manner as general revenues.

Exchange transactions between funds are reported as revenues in the seller funds and as
expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another
without a requirement for repayment are reported as interfund transfers. Interfund transfers are
reported as other financing sources/uses in governmental funds and after nonoperating
revenues/expenses in proprietary funds. Repayments from funds responsible for particular
expenditures/expenses to the funds that initially paid for them are not presented on the Basic Financial
Statements (“BFS”).

S. Extraordinary and Special Items

Extraordinary items are transactions or events that are both unusual in nature and infrequent in
occurrence. Special items are transactions or events that are within the control of the City
Administration and that are either unusual in nature or infrequent in occurrence. Neither item occurred
during 2012.

T. Estimates

The preparation of the BFS in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the BFS and accompanying notes. Actual results may
differ from those estimates.

NOTE 3 - ACCOUNTABILITY AND COMPLIANCE

A. Change in Accounting Principles

For 2012, the City has implemented GASB Statement No. 60, “Accounting and Financial Reporting
for Service Concession Arrangements”, GASB Statement No. 62, “Codification of Accounting and
Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
pronouncements”, GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position”, and GASB Statement No. 65, “Items Previously
Reported as Assets and Liabilities”.

41
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 3 - ACCOUNTABILITY AND COMPLIANCE - (Continued)

GASB Statement No. 60 addresses issues related to service concession arrangements (SCAs), which
are a type of public-private or public-public partnership. An SCA is an arrangement between a
transferor (a government) and an operator (governmental or nongovernmental entity) in which (1) the
transferor conveys to an operator the right and related obligation to provide services through the use of
infrastructure or another public asset (a “facility”) in exchange for significant consideration and (2) the
operator collects and is compensated by fees from third parties. The implementation of GASB
Statement No. 60 did not have an effect on the financial statements of the City.

GASB Statement No. 62 codifies accounting and financial reporting guidance contained in pre-
November 30, 1989 FASB and AICPA pronouncements in an effort to codify all sources of GAAP for
State and local governments so that they derive from a single source. The implementation of GASB
Statement No. 62 did not have an effect on the financial statements of the City.

GASB Statement No. 63 provides financial and reporting guidance for deferred outflows of resources
and deferred inflows of resources which are financial statement elements that are distinct from assets
and liabilities. GASB Statement No. 63 standardizes the presentation of deferred outflows or resources
and deferred inflows of resources and their effects on a government’s net position. The
implementation of GASB Statement No. 63 has changed the presentation of the City’s financial
statements to incorporate the concepts of net position, deferred outflows of resources and deferred
inflows of resources.

GASB Statement No. 65 establishes 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. GASB Statement No. 65 also
provides other financial reporting guidance related to the impact of the financial statement elements
deferred outflows of resources and deferred inflows of resources, such as changes in the determination
of the major fund calculations and limiting the use of the term deferred in financial statement
presentations. The implementation of GASB Statement No. 65 had the following effect on the
financial statements of the City:

Governmental Business-type Enterprise Funds

Activities Activities Water Golf
Net assets as previously reported $ 53,225,085 $ 33,275,027 $ 25,943,405 $ 277,318

Removal of unamortized
bond issuance costs (266,498) (80,406) (8,878) (71,528)

Net position at January 1, 2012 $ 52,958,587 $ 33,194,621 $ 25,934,527 $ 205,790

42
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 3 - ACCOUNTABILITY AND COMPLIANCE - (Continued)

B. Deficit Fund Balances

Fund balances/net position, at December 31, 2012 included the following individual fund deficits:

Major governmental fund Deficit

EMS/Fire tax levy $ 197,169
Nonmajor governmental funds
Police pension and disability 129,649
Fire pension and disability 129,766
COPS grant 1,269

These funds complied with Ohio State law, which does not permit a cash basis deficit at year end. The
general fund is liable for any deficit in these funds and provides transfers when cash is required, not
when accruals occur.

NOTE 4 - DEPOSITS AND INVESTMENTS

State statutes classify monies held by the City into three categories:

Active deposits are public deposits necessary to meet current demands on the treasury. Such monies must
be maintained either as cash in the City Treasury, in commercial accounts payable or withdrawable on
demand, including negotiable order of withdrawal (NOW) accounts, or in money market deposit accounts.

Inactive deposits are public deposits that Council has identified as not required for use within the current
five year period of designation of depositories. Inactive deposits must either be evidenced by certificates of
deposit maturing not later than the end of the current period of designation of depositories, or by savings or
deposit accounts including, but not limited to, passbook accounts.

Interim deposits are deposits in interim monies. Interim monies are those monies which are not needed for
immediate use, but which will be needed before the end of the current period of designation of depositories.
Interim deposits must be evidenced by time certificates of deposit maturing not more than one year from
the date of deposit or by savings or deposit accounts including passbook accounts. Interim monies may be
deposited or invested in the following securities:

1. United States Treasury Notes, Bills, Bonds, or any other obligation or security issued by the United
States Treasury or any other obligation guaranteed as to principal or interest by the United States;

2. Bonds, notes, debentures, or any other obligations or securities issued by any federal government
agency or instrumentality, including, but not limited to, the Federal National Mortgage Association,
Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation,
Government National Mortgage Association, and Student Loan Marketing Association. All federal
agency securities shall be direct issuances of federal government agencies or instrumentalities;

3. Written repurchase agreements in the securities listed above provided that the market value of the
securities subject to the repurchase agreement must exceed the principal value of the agreement by at
least two percent and be marked to market daily, and that the term of the agreement must not exceed
thirty days;

4. Bonds and other obligations of the State of Ohio;

43
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued)

5. No-load money market mutual funds consisting exclusively of obligations described in items (1) or (2)
and repurchase agreements secured by such obligations, provided that investments in securities
described in this division are made only through eligible institutions;

6. The State Treasurer’s investment pool (STAR Ohio);

7. High grade commercial paper for a period not to exceed 180 days in an amount not to exceed twenty-
five percent of the City’s interim monies available for investment; and,

8. Bankers acceptances for a period not to exceed 180 days and in an amount not to exceed twenty-five
percent of the City’s interim monies available for investment.

The City may also invest any monies not required to be used for a period of six months or more in the
following:

1. Bonds of the State of Ohio;

2. Bonds of any municipal corporation, village, county, township, or other political subdivision of this
State, as to which there is no default of principal, interest or coupons;

3. Obligations of the City.

Protection of the City’s deposits is provided by the Federal Deposit Insurance Corporation (FDIC), by
eligible securities pledged by the financial institution as security for repayment, by surety company bonds
deposited with the finance director by the financial institution or by a single collateral pool established by
the financial institution to secure the repayment of all public monies deposited with the institution.

Investments in stripped principal or interest obligations, reverse repurchase agreements and derivatives are
prohibited. The issuance of taxable notes for the purpose of arbitrage, the use of leverage and short selling
are also prohibited. An investment must mature within five years from the date of purchase unless matched
to a specific obligation or debt of the City, and must be purchased with the expectation that it will be held
to maturity. Investments may only be made through specified dealers and institutions. Payment for
investments may be made only upon delivery of the securities representing the investments to the treasurer
or qualified trustee or, if the securities are not represented by a certificate, upon receipt of confirmation of
transfer from the custodian.

A. Cash in Segregated Accounts

Cash in Segregated Accounts: At year end, the City had $501,687 deposited with a financial
institution for monies related to the Stow Municipal Court agency fund. This amount is included in the
City’s depository balance below.

B. Deposits with Financial Institutions

At December 31, 2012, the carrying amount of all City deposits was $8,152,038, exclusive of the
$3,880,000 repurchase agreement included in investments below. As of December 31, 2012, the
City’s bank balance was $8,470,560, of which $274,334 was exposed to custodial risk as discussed
below, while $8,196,226 was covered by the FDIC.

44
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued)

Custodial credit risk is the risk that, in the event of bank failure, the City will not be able to recover
deposits or collateral securities that are in the possession of an outside party. As permitted by Ohio
Revised Code, the City’s deposits are collateralized by a pool of eligible securities deposited with
Federal Reserve Banks, or at member banks of the Federal Reserve System, in the name of the
depository bank and pledged as a pool of collateral against all public deposits held by the depository.
The City has no deposit policy for custodial credit risk beyond the requirements of State statute.
Although the securities were held by the pledging institutions’ trust department and all statutory
requirements for the deposit of money had been followed, noncompliance with federal requirements
could potentially subject the City to a successful claim by the FDIC.

C. Investments

As of December 31, 2012, the City had the following investments and maturities:

Investment Maturities
6 months or 7 to 12 13 to 18 19 to 24 Greater than
Investment type Fair Value less months months months 24 months
FFCB $ 7,001,390 $ 500,540 $ - $ 2,000,920 $ 500,010 $ 3,999,920
FHLB 1,502,115 - $ 1,001,760 500,355 - -
STAR Ohio 1,569,345 1,569,345 - - - -
Repurchase agreement 3,880,000 3,880,000 - - - -

Total $ 13,952,850 $ 5,949,885 $ 1,001,760 $ 2,501,275 $ 500,010 $ 3,999,920

Interest Rate Risk: The Ohio Revised Code generally limits security purchases to those that mature
within five years of the settlement date. Interest rate risk arises because potential purchasers of debt
securities will not agree to pay face value for those securities if interest rates subsequently increase.
The City’s investment policy addresses interest rate risk by requiring the consideration of market
conditions and cash flow requirements in determining the term of an investment.

Custodial Credit Risk: For an investment, custodial credit risk 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 investment or collateral
securities that are in the possession of an outside party. The City has no investment policy dealing
with investment custodial risk beyond the requirement in Ohio law that prohibits payments for
investments prior to the delivery of the securities representing such investments to the treasurer or
qualified trustee. The City’s investment in repurchase agreements is collateralized by underlying
securities pledged by the investment’s counterparty, not in the name of the City. Ohio law requires the
fair value of the securities subject to a repurchase agreement must exceed the principal value of
securities subject to a repurchase agreement by 2%. The City has no investment policy dealing with
investment custodial risk beyond the requirement in State statute that prohibits payment for
investments prior to the delivery of the securities representing such investments to the Treasurer or
qualified trustee.

Credit Risk: STAR Ohio carries a rating of AAAm by Standard & Poor’s. Ohio law requires that
STAR Ohio maintain the highest rating provided by at least one nationally recognized standard rating
service. The City’s investments in federal agency securities, and the federal agency securities that
underlie the repurchase agreement, were rated AA+ and Aaa by Standard & Poor’s and Moody’s
Investor Services, respectively. The City’s investment policy does not specifically address credit risk
beyond requiring the City to only invest in securities authorized by State statute.

45
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 4 - DEPOSITS AND INVESTMENTS - (Continued)

Concentration of Credit Risk: The City’s investment policy addresses concentration of credit risk by
requiring investments to be diversified to reduce the risk of loss resulting from over concentration of
assets in a specific issue or specific class of securities.

The following table includes the percentage of each investment type held by the City at December 31,
2012:
Investment type Fair Value % of Total
FFCB $ 7,001,390 50.18
FHLB 1,502,115 10.77
STAR Ohio 1,569,345 11.24
Repurchase agreement 3,880,000 27.81

Total $ 13,952,850 100.00

D. Reconciliation of Cash and Investments to the Statement of Net Position

The following is a reconciliation of cash and investments as reported in the note above to cash and
investments as reported on the statement of net position as of December 31, 2012:

Cash and investments per note

Carrying amount of deposits $ 8,152,038
Investments 13,952,850
Total $ 22,104,888

Equity in pooled cash and investments per statement of net position

Governmental activities $ 14,013,917
Business type activities 6,962,863
Private purpose trust funds 1,286
Agency funds 1,126,822
Total $ 22,104,888

NOTE 5 - INTERFUND TRANSACTIONS

A. Long-term loans to/from other funds at December 31, 2012, consist of the following:

Receivable
Fund
Payable fund General
Water $ 150,000

Loan balances between governmental funds are eliminated for reporting on the government-wide
statement of net position. The loan is scheduled to be repaid by fiscal year 2013. Loan balances
between governmental activities and business-type activities are reported as a component of the
“internal balances” reported on the statement of net position.

46
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 5 - INTERFUND TRANSACTIONS - (Continued)

B. Interfund transfers for the year ended December 31, 2012, consisted of the following:

Transfers From
General
Capital Nonmajor Total
Transfers To General Improvements Governmental Water Transfers In

General $ - $ - $ 173,000 $ - $ 173,000

EMS/Fire tax levy - - 101,500 - 101,500
General capital
improvements - - 1,157,190 - 1,157,190
Nonmajor
governmental 683,228 267,637 665,969 - 1,616,834
Storm water utility - - - 24,025 -

Total Transfers Out $ 683,228 $ 267,637 $ 2,097,659 $ 24,025 $ 3,048,524

Transfers are used to move revenues from the fund that statute or budget requires to collect them to the
fund that statute or budget requires to expend them; to move unrestricted revenues collected in the
general fund to finance various programs accounted for in other funds in accordance with budgetary
authorizations; to segregate money for anticipated capital projects; to provide additional resources for
current operations or debt service; and to return money to the fund from which it was originally
provided once a project is completed.

Transfers out from the court special projects, probation, indigent drivers, and IDIA monitoring
nonmajor special revenue funds in the amount of $1,350,190, $65,000, $250,000, and $330,969,
respectively, were court ordered to provide for reimbursement from one court fund to another for
expenditures, and to supplement, or cover the deficit, of the overall general fund court operating
budget. A transfer out from the EMS transport nonmajor special revenue fund to the EMS/Fire tax
levy major fund in the amount of $101,500 was required to for the principal retirement and refinancing
of the short-term note payable for fire rescue vehicles (see Note 11 for detail) reported as a fund
liability in the EMS/Fire tax levy fund.

A transfer out from the water enterprise fund to the storm water utility enterprise fund in the amount of
$24,025 was for capital contributions for storm water lines.

NOTE 6 - RECEIVABLES

Receivables at December 31, 2012, consisted primarily of taxes, accounts (billings for user charged
services, rents and royalties), accrued interest, loans receivable and intergovernmental receivables arising
from grants, entitlements and shared revenues. All receivables are deemed collectible in full. All
receivables, other than loans, are expected to be collected within the subsequent year.

47
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 7 - PROPERTY TAXES

Property taxes include amounts levied against all real and public utility property located in the City. Taxes
collected from real property taxes (other than public utility) in one calendar year are levied in the preceding
calendar year on the assessed value as of January 1 of that preceding year, the lien date. Assessed values
are established by the County Auditor at 35 percent of appraised market value. All property is required to
be revaluated every six years. Real property taxes are payable annually or semi-annually. If paid annually,
payment is due December 31; if paid semi-annually, the first payment is due December 31, with the
remainder payable by June 20. Under certain circumstances, State statute permits later payment dates to be
established.

Public utility real and tangible personal property taxes collected in one calendar year are levied in the
preceding calendar year on assessed values determined as of December 31 of the second year proceeding
the tax collection year, the lien date. Public utility tangible personal property is assessed at varying
percentages of true value; public utility real property is assessed at 35 percent of true value. 2012 public
utility property taxes became a lien December 31, 2011, are levied after October 1, 2012, and are collected
in 2013 with real property taxes. Public utility property taxes are payable on the same dates as real
property taxes described previously.

The Summit County Fiscal Officer collects property taxes on behalf of all taxing districts in the County,
including the City of Stow. The Summit County Fiscal Officer periodically remits to the City its portion of
the taxes collected. Property taxes receivable represents real property taxes, public utility taxes, tangible
personal property taxes and outstanding delinquencies which are measurable as of December 31, 2012 and
for which there is an enforceable legal claim. In the governmental funds, the current portion receivable has
been offset by unearned revenue since the current taxes were not levied to finance 2012 operations and the
collection of delinquent taxes has been offset by a deferred inflow since the collection of the taxes during
the available period is not subject to reasonable estimation. On a full accrual basis, collectible delinquent
property taxes have been recorded as a receivable and revenue while on a modified accrual basis the
revenue is reported as a deferred inflow.

The full tax rate for all City operations for the year ended December 31, 2012 was $9.50 per $1,000 of
assessed value. The assessed values of real and tangible personal property upon which 2012 property tax
receipts were based are as follows:

Real Property
Residential/Agricultural $ 606,378,040
Commercial/Industrial/Mineral 179,846,650

Public Utility
Real 17,990
Personal 8,207,030

Total Assessed Value $ 794,449,710

NOTE 8 - INCOME TAX

The City levies and collects a municipal income tax of two percent on all income earned within the City as
well as on income of residents earned outside of the City. In the latter case, the City allows a credit of 100
percent on the income earned outside of the City and paid to another municipality. Employers within the
City are required to withhold income tax on employee earnings and remit the tax to the City at least
quarterly. Corporations and other individual taxpayers are required to pay their estimated tax at least
quarterly and file a final return annually.

48
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 8 - INCOME TAX - (Continued)

Income tax revenues are distributed among the general fund (60 percent) and the general capital
improvement fund and further distribution to other funds, including the street construction fund to be used
for existing and future capital projects and/or expansion or for debt service for existing and future capital
improvements (40 percent). In accordance with the City’s codified ordinances, all income tax revenues are
first recorded in the general fund. Subsequently, 40 percent of those revenues, net of collection
expenditures, are distributed to the capital improvement fund and other funds mentioned above, unless a
lesser amount than 40 percent is approved by City Council.

NOTE 9 - CAPITAL ASSETS

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

Balance Balance
Governmental activities: 12/31/11 Additions Deductions 12/31/12
Capital assets, not being depreciated:
Land $ 11,202,207 $ - $ - $ 11,202,207
Construction in progress 3,110,833 2,120,420 (3,930,416) 1,300,837

Total capital assets, not being depreciated 14,313,040 2,120,420 (3,930,416) 12,503,044

Capital assets, being depreciated:

Buildings and building improvements 32,434,109 14,800 - 32,448,909
Vehicles 7,339,019 237,011 (227,991) 7,348,039
Equipment, furniture and fixtures 6,110,777 408,530 (42,712) 6,476,595
Infrastructure 31,318,849 3,797,731 (261,684) 34,854,896

Total capital assets, being depreciated 77,202,754 4,458,072 (532,387) 81,128,439

Less: accumulated depreciation:

Buildings and building improvements (7,360,718) (784,829) - (8,145,547)
Vehicles (3,995,200) (399,927) 171,921 (4,223,206)
Equipment, furniture and fixtures (3,772,695) (346,426) 32,379 (4,086,742)
Infrastructure (11,529,819) (1,523,187) 89,402 (12,963,604)

Total accumulated depreciation (26,658,432) (3,054,369) 293,702 (29,419,099)

Total capital assets, being depreciated, net 50,544,322 1,403,703 (238,685) 51,709,340

Governmental activities capital assets, net $ 64,857,362 $ 3,524,123 $ (4,169,101) $ 64,212,384

Depreciation expense was charged to governmental activities as follows:

General government $ 402,225

Security of persons and property 890,821
Public health 7,094
Leisure time activities 142,916
Community and economic development 32,552
Transportation 1,578,761
Total depreciation expense $ 3,054,369

49
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 9 - CAPITAL ASSETS - (Continued)

Capital assets of the business-type activities are as follows:

Balance Balance
Business-type activities: 12/31/11 Additions Deductions 12/31/12
Capital assets, not being depreciated:
Land $ 5,377,376 $ - $ - $ 5,377,376
Construction in progress 1,829,169 1,164,742 (1,244,551) 1,749,360

Total capital assets, not being depreciated 7,206,545 1,164,742 (1,244,551) 7,126,736

Capital assets, being depreciated:

Buildings and building improvements 3,415,519 - - 3,415,519
Vehicles 790,563 138,635 - 929,198
Equipment, furniture and fixtures 346,879 82,391 - 429,270
Infrastructure 28,771,643 1,534,599 - 30,306,242

Total capital assets, being depreciated 33,324,604 1,755,625 - 35,080,229

Less: accumulated depreciation:

Buildings and building improvements (718,719) (74,724) - (793,443)
Vehicles (250,797) (55,785) - (306,582)
Equipment, furniture and fixtures (236,707) (20,638) - (257,345)
Infrastructure (5,165,234) (528,921) - (5,694,155)

Total accumulated depreciation (6,371,457) (680,068) - (7,051,525)

Total capital assets, being depreciated, net 26,953,147 1,075,557 - 28,028,704

Business-type activities capital assets, net $ 34,159,692 $ 2,240,299 $ (1,244,551) $ 35,155,440

Depreciation expense was charged to business - type activities as follows:

Water $ 370,696
Golf 5,410
Storm water utility 303,962

Total depreciation expense $ 680,068

NOTE 10 - LEASES

A. Capital Leases - Lessee Disclosure

In prior years, the City entered into capital lease agreements for courthouse furnishings, brine
equipment, a bus, a leaf machine, two road rescue/EMS vehicles, a vactor truck, dispatch consoles and
cabinetry. Principal and interest payments for the courthouse furnishings, brine equipment, bus, road
rescue/EMS vehicles, dispatch consoles and cabinetry will be paid from the governmental funds and
the principal and interest payments for the leaf machine and vactor truck will be paid from the storm
water utility enterprise fund.

50
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 10 - LEASES - (Continued)

Capital lease payments in governmental funds have been reclassified and are reflected as debt service
expenditures in the combined BFS and are reported as function expenditures on the budgetary
statements. In the enterprise fund a liability has been recorded.

Capital assets have been capitalized in the statement of net position in the amount of $1,413,327 in
governmental activities. This amount represents the present value of the minimum lease payments at
the time of acquisition. A liability of $803,451 is reported on the statement of net position at year end,
which represents the amount of principal payments the EMS/fire levy fund and the capital projects
fund will be making. Principal and interest payments in 2012 totaled $185,731 and $39.354,
respectively.

Capital assets have been capitalized in the storm water utility enterprise fund in the amount of
$383,367. The amount of $228,137 represents the present value of the future minimum lease payments
and has been recorded as a liability in the storm water utility fund. Principal and interest payments in
2012 totaled $45,567 and $10,877, respectively.

The assets acquired through capital leases are as follows:

Governmental Business-type
Activities Activities

Assets:
Equipment $ 1,063,556 $ -
Vehicles 349,771 383,367

Less: accumulated depreciation (390,292) (100,787)

Total $ 1,023,035 $ 282,580

The following is a schedule of the future long-term minimum lease payments required under the
capital leases and the present value of the minimum lease payments as of December 31, 2012.

Year Ending Governmental Business-type

December 31, Activities Activities

2013 $ 227,359 $ 57,174

2014 227,360 57,175
2015 112,869 36,243
2016 112,870 36,244
2017 112,869 36,243
2018 112,870 36,244

Total 906,197 259,323

Less: amount representing interest (102,746) (31,186)

Present value of net minimum lease payments $ 803,451 $ 228,137

51
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 10 - LEASES - (Continued)

B. Operating Leases - Lessee Disclosure

In February 2006, the City acquired a golf course and the City assumed an existing operating lease
agreement with George and Patricia Hanson to use their premises to operate a driving range. The City
renewed the operating lease for a period commencing April 1, 2009 through April 1, 2012. During
2012, the City renewed the lease for a period commencing April 1, 2012 through April 1, 2015.
Monthly lease payments have been established at $2,000 per month for thirty-six consecutive months
under both lease renewals. The amount of the future lease payments required under the operating lease
at December 31, 2012 are:

Year Ending
December 31, Amount
2013 $ 24,000
2014 24,000
2015 6,000

Total $ 78,000

The City entered into an operating lease agreement on April 18, 2008, with South East Golf Car
Company to lease fifty eight golf cars for use on the Fox Den golf course. The lease is for a period of
five years, commencing April 1, 2008, and ending on April 1, 2013. The lease payments are $900 per
car per year, or $52,200 per year with payments due in five equal monthly installments of $10,440 due
on the tenth day of the months of May through September for each year of the agreement. The City
paid $52,200 on the operating lease during 2012.

NOTE 11 - SHORT-TERM NOTES PAYABLE

Changes in the City’s short-term note activity for the year ended December 31, 2012, was as follows:

Balance Balance
12/31/2011 Issued Retired 12/31/2012
Governmental fund notes
Fire rescue vehicles - 1.50% $ 100,000 $ - $ (100,000) $ -
Fire rescue vehicles - 1.00% - 100,000 - 100,000
Municipal courthouse construction - 1.50% 200,000 - (200,000) -
Municipal courthouse construction - 1.00% - 500,000 - 500,000
Rt. 8/Seasons Road interchange - 1.50% 350,000 - (350,000) -
Rt. 8/Seasons Road interchange - 1.00% - 350,000 - 350,000
Steel Corners upgrade - 1.50% 200,000 - (200,000) -
Steel Corners upgrade - 1.00% - 500,000 - 500,000

Total governmental fund notes $ 850,000 $ 1,450,000 $ (850,000) $ 1,450,000

52
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 11 - SHORT-TERM NOTES PAYABLE - (Continued)

Balance Balance
12/31/2011 Issued Retired 12/31/2012
Enterprise fund notes
Automated water reading system - 1.50% $ 400,000 $ - $ (400,000) $ -
Automated water reading system - 1.00% - 200,000 - 200,000

Total enterprise fund notes $ 400,000 $ 200,000 $ (400,000) $ 200,000

The short-term notes outstanding at December 31, 2012 were issued on May 3, 2012 and represent the
portion of the 2012 note issues that will be retired when the notes are refinanced on May 2, 2013 (see Note
23 for detail).

All short-term notes were backed by the full faith and credit of the City and mature within one year. The
short-term note liability is reflected in the fund which received the proceeds. The short-term notes were
issued in anticipation of long-term bond financing and will be refinanced until such funds are issued.

NOTE 12 - LONG-TERM OBLIGATIONS

The original issue date, interest rate, original issue amount and date of maturity of each of the City’s debt
issues follows:

Interest Original Date of

Debt Issue Rate Issue Amount Maturity

Business-type activities:
OPWC Lillian Road waterline improvement 0.00% $ 231,688 7/1/2025
Golf course general obligation bonds 4.25%-5.25% 5,500,000 12/1/2032
Service center general obligation bonds 3.25%-6.25% 546,068 12/1/2033

Governmental activities:
Safety center construction general
obligation bond 2.00%-4.05% 6,440,000 12/1/2018
Courthouse general obligation bonds 4.25%-5.25% 4,200,000 12/1/2035
Service center general obligation bonds 3.25%-6.25% 5,923,932 12/1/2033
Fire station general obligation bonds 3.25%-6.25% 2,150,000 12/1/2033
2012 Fire rescue vehicles note 1.00% 275,000 5/3/2013
2012 Municipal court construction note 1.00% 4,100,000 5/3/2013
2012 Rt. 8/Seasons Rd. interchange note 1.00% 450,000 5/3/2013
2012 Hudson Drive reconstruction note 1.00% 750,000 5/3/2013

53
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 12 - LONG-TERM OBLIGATIONS - (Continued)

At December 31, 2011, the long-term liabilities of the governmental activities were restated to exclude
deferred charges on the refunding of general obligation bonds in the amount of $230,651. These deferred
charges are now reported on the statement of net position under deferred outflows of resources. Long-term
obligations activity for the year ended December 31, 2012 was as follows:

Restated Amounts
Balance Balance Due in
Governmental activities: 12/31/2011 Increase Decrease 12/31/2012 One Year

General obligation bonds:

Safety center construction
general obligation bonds $ 3,370,000 $ - $ (430,000) $ 2,940,000 $ 445,000
Service center construction
general obligation bonds 5,486,275 - (161,146) 5,325,129 168,470
Add: unamortized premium 106,776 - (4,872) 101,904 -
Fire station construction
general obligation bonds 1,993,000 - (59,000) 1,934,000 61,000
Add: unamortized premium 38,619 - (1,762) 36,857 -
Municipal court general
obligation bonds 3,925,000 - (100,000) 3,825,000 105,000
Add: unamortized premium 50,238 - (2,100) 48,138 -

Total general obligation bonds 14,969,908 - (758,880) 14,211,028 779,470

Long-term notes:
2011 Fire rescue vehicles note 375,000 - (375,000) - -
2011 Municipal court construction note 4,600,000 - (4,600,000) - -
2011 Rt. 8/Seasons Rd. interchange note 800,000 - (800,000) - -
2011 Steels Corners upgrade note 500,000 - (500,000) - -
2011 Hudson Drive reconstruction note 750,000 - (750,000) - -
2012 Fire rescue vehicles note - 275,000 - 275,000 -
2012 Municipal court construction note - 4,100,000 - 4,100,000 -
2012 Rt. 8/Seasons Rd. interchange note - 450,000 - 450,000 -
2012 Hudson Drive reconstruction note - 750,000 - 750,000 -
Total long-term notes 7,025,000 5,575,000 (7,025,000) 5,575,000 -

Other debt:
Capital lease obligation 989,182 - (185,731) 803,451 193,597
Compensated absences 4,753,709 997,702 (1,009,486) 4,741,925 989,629
Total other debt 5,742,891 997,702 (1,195,217) 5,545,376 1,183,226

Total governmental activities $ 27,737,799 $ 6,572,702 $ (8,979,097) $ 25,331,404 $ 1,962,696

54
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 12 - LONG-TERM OBLIGATIONS - (Continued)

Amounts
Balance Balance Due in
Business-type activities: 12/31/2011 Increase Decrease 12/31/2012 One Year

General obligation bonds:

Golf course general
obligation bonds $ 5,050,000 $ - $ (160,000) $ 4,890,000 $ 165,000
Add: unamortized premium 71,528 - (3,420) 68,108 -
Service center general
obligation bonds 505,725 - (14,854) 490,871 15,530
Add: unamortized premium 8,878 - (405) 8,473 -

Total general obligation bonds 5,636,131 - (178,679) 5,457,452 180,530

Long-term notes:
2011 Automated water reading system 200,000 - (200,000) - -

Total long-term notes 200,000 - (200,000) - -

Other debt:
OPWC Lillian Road water line
Improvement 167,976 - (11,584) 156,392 11,584
Capital lease obligation 273,704 - (45,567) 228,137 47,530
Compensated absences 218,874 234,881 (188,775) 264,980 50,328

Total other debt 660,554 234,881 (245,926) 649,509 109,442

Total business-type activities $ 6,496,685 $ 234,881 $ (624,605) $ 6,106,961 $ 289,972

General Obligation Bonds

The government issues general obligation bonds to provide funds for the acquisition and construction of
major capital facilities. General obligation bonds have been issued for governmental activities. During
2004, general obligation bonds totaling $6,440,000 were issued to refund general obligation bonds of
$5,820,000. During 2007, the City issued $4,200,000 in general obligation bonds to finance the
construction of the Municipal Courthouse. During 2008, the City issued $6,470,000 and $2,150,000 in
general obligation bonds to retire notes issued to finance the construction of the service and parks
maintenance center building and the fire station, respectively. Approximately 8.44 percent of the service
and parks maintenance center construction bond is being used to finance the water department maintenance
and operational areas of the new service building. Therefore, $546,068 (approximately 8.44 percent) of the
above mentioned $6,470,000 bond was allocated to the water fund. General obligation bonds are direct
obligations and pledge the full faith and credit of the government. The general obligation bonds will be
repaid from income tax monies allocated into the debt service fund from the capital projects funds.

55
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 12 - LONG-TERM OBLIGATIONS - (Continued)

Loans Payable
The OPWC loan will be repaid with operating revenue from the water fund.

Long-Term Notes Payable

The City issued various long-term notes payable on May 3, 2012. The notes bear an interest rate of 1.00%
and mature on May 2, 2013. The $275,000 long-term note in governmental activities is being used to
finance the purchase of fire/rescue vehicles and is accounted for in the EMS/fire levy fund. The City
reissued $4,100,000 in municipal courthouse construction notes during 2012. The City also reissued long-
term notes in the amounts of $450,000 and $750,000 in 2012 to finance the Rt.8/Seasons Rd. interchange
and the Hudson Drive reconstruction.

Notes that were refinanced prior to the issuance of the financial statements and have a new maturity beyond
the end of the year in which the report is issued have been reported in the government-wide statements as a
long-term liability. The portion of the 2012 note issues that will be retired on May 2, 2013 (see Note 23 for
detail) have been reported as short-term notes payable in Note 11. The notes are backed by the full faith
and credit of the City.

Compensated Absences
Compensated absences will be paid from the funds from which the employees’ salaries are paid. For the
City, compensated absences will be paid from the general, EMS/fire tax levy, water, and storm water utility
funds.

Capital Lease Obligations

See Note 10 for detail on the City’s capital lease obligations.

Legal Debt Margin

As of December 31, 2012, the City’s overall legal debt margin (the ability to issue additional amounts of
general obligation debt) was $61,984,631 and the unvoted legal debt margin was $22,154,734.

The annual requirements to amortize all long-term debt outstanding as of December 31, 2012 are as
follows:

Governmental Activities Business-Type Activities

Year General Obligation Bonds Payable General Obligation Bonds Payable
Ended Principal Interest Total Principal Interest Total
2013 $ 779,470 $ 572,615 $ 1,352,085 $ 180,530 $ 223,218 $ 403,748
2014 808,880 543,400 1,352,280 186,120 214,050 400,170
2015 833,542 506,642 1,340,184 191,458 204,198 395,656
2016 872,614 467,643 1,340,257 202,386 193,983 396,369
2017 902,276 428,039 1,330,315 207,724 186,051 393,775
2018 - 2022 2,713,720 1,727,601 4,441,321 1,181,280 805,015 1,986,295
2023 - 2027 2,656,860 1,250,137 3,906,997 1,438,140 554,227 1,992,367
2028 - 2032 3,235,359 667,541 3,902,900 1,759,641 235,596 1,995,237
2033 - 2035 1,221,408 83,041 1,304,449 33,592 1,377 34,969

Total $ 14,024,129 $ 6,246,659 $ 20,270,788 $ 5,380,871 $ 2,617,715 $ 7,998,586

56
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 12 - LONG-TERM OBLIGATIONS - (Continued)

Business-Type Activities
Year OPWC Loan Payable
Ended Principal Interest Total
2013 $ 11,584 $ - $ 11,584
2014 11,584 - 11,584
2015 11,584 - 11,584
2016 11,584 - 11,584
2017 11,584 - 11,584
2018 - 2022 57,925 - 57,925
2023 - 2025 40,547 - 40,547

Total $ 156,392 $ - $ 156,392

NOTE 13 - RISK MANAGEMENT

A. Liability Insurance

The City is exposed to various risks of loss related to torts, theft, damage to or destruction of assets,
errors and omissions, employee injuries, and natural disasters. The City has a comprehensive property
and casualty policy with a deductible of $1,000 per incident. The City’s vehicle liability insurance
policy limit is $1,000,000 with a $1,000 collision deductible; vehicles with a cost of over $100,000
have a $1,000 deductible. All Council members, administrators and employees are covered under a
City professional liability policy. The limits of this coverage are $1,000,000 per occurrence and
$1,000,000 in aggregate. The general liability aggregate is $2,000,000. The City also carries a
$10,000,000 umbrella liability extending coverage of the general, automobile and employers/public
official’s liability. Settled claims have not exceeded this commercial coverage in any of the past three
years. There has not been a reduction of coverage from the prior year.

B. Fidelity Bond

The Finance Director, Assistant Finance Director/Director of Budget and Management and Tax
Administrator have a $100,000 position bond. All City employees are covered by a $1,000,000 public
employee crime coverage policy, which includes employee dishonesty and faithful performance of
duty coverage.

C. Workers’ Compensation

The City pays the State Workers’ Compensation System, an insurance purchasing pool, a premium
based on a rate per $100 of salaries. This rate is calculated based on accident history and administrative
costs. The City participates in a group rating plan to help control workers’ compensation premium
costs.

57
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 13 - RISK MANAGEMENT - (Continued)

D. Employee Health Insurance

The City has elected to provide employee medical, prescription and dental benefits through a self-
insurance program. The City maintains a self-insurance internal service fund to account for and finance
its uninsured risk of loss in this program. This 2012 plan provides a medical plan with a $700.00
family and $350.00 single deductible and a dental plan with a $75.00 family and $25.00 single
deductible. A third party administrator, a subsidiary of Medical Mutual of Ohio (MMO), reviews all
medical and dental claims which are then paid by the City. The City has purchased stop-loss coverage
of $150,000 per employee and for claims in excess of $2,708,238 in the aggregate from Medical
Mutual of Ohio. The City pays into the self-insurance internal service fund $1,076.96 per month for
each employee with family medical coverage and $344.89 per month for each employee with
individual medical coverage. Premiums for dental coverage are $119.67 monthly for each employee
with family coverage and $38.31 monthly for each employee with individual coverage. All premiums
are paid by the fund that pays the salary for the employee.

The claims liability of $498,926 reported in the self-insurance internal service fund at December 31,
2012 is based on the requirements of GASB Statement No. 10, “Accounting and Financial Reporting
for Risk Financing and Related Insurance Services”, which requires that a liability for unpaid claim
costs, including estimates of costs relating to incurred but not reported claims, be reported. The claims
liability is based on an estimate supplied by the City’s third party administrator. The claims liability is
expected to be paid within one year.

A summary of the fund’s claims liability during the past two years is as follows:

Balance at
Beginning Current Claims Balance at
of Year Claims Payment End of Year

2012 $ 520,387 $ 3,120,136 $ (3,141,597) $ 498,926

2011 309,227 2,725,304 (2,514,144) 520,387

NOTE 14 - PENSION PLANS

A. Ohio Public Employees Retirement System

Plan Description - The City participates in the Ohio Public Employees Retirement System (OPERS).
OPERS administers three separate pension plans. The Traditional Pension Plan is a cost-sharing,
multiple-employer defined benefit pension plan. The Member-Directed Plan is a defined contribution
plan in which the member invests both member and employer contributions (employer contributions
vest over five years at 20% per year). Under the Member-Directed Plan, members accumulate
retirement assets equal to the value of the member and vested employer contributions plus any
investment earnings. The Combined Plan is a cost-sharing, multiple-employer defined benefit pension
plan that has elements of both a defined benefit and a defined contribution plan. Under the Combined
Plan, employer contributions are invested by the retirement system to provide a formula retirement
benefit similar to the Traditional Pension Plan benefit. Member contributions, whose investment is
self-directed by the member, accumulate retirement assets in a manner similar to the Member-Directed
Plan.

58
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 14 - PENSION PLANS - (Continued)

OPERS provides retirement, disability, survivor and death benefits and annual cost of living
adjustments to members of the Traditional Pension and the Combined Plans. Members of the
Member-Directed Plan do not qualify for ancillary benefits. Authority to establish and amend benefits
is provided by Chapter 145 of the Ohio Revised Code. OPERS issues a stand-alone financial report
which may be obtained by visiting https://www.opers.org/investments/cafr.shtml, writing to OPERS,
Attention: Finance Director, 277 E. Town St., Columbus, OH 43215-4642 or by calling (614) 222-
5601 or (800) 222-7377.

Funding Policy - The Ohio Revised Code provides statutory authority for member and employer
contributions. For 2012, member and contribution rates were consistent across all three plans. The
2012 member contribution rates were 10.00% for members. The City’s contribution rate for 2012 was
14.00% of covered payroll.

The City’s contribution rate for pension benefits for members in the Traditional Plan for 2012 was
10.00%. The City’s contribution rate for pension benefits for members in the Combined Plan for 2012
was 7.95%. The City’s required contributions for pension obligations to the Traditional Pension and
Combined Plans for the years ended December 31, 2012, 2011, and 2010 were $864,418, $923,268,
and $880,009, respectively; 90.24% has been contributed for 2012 and 100% has been contributed for
2011 and 2010. The remaining 2012 pension liability has been reported as intergovernmental payable
on the basic financial statements. Contributions to the member-directed plan for 2012 were $15,764
made by the City and $11,260 made by the plan members.

B. Ohio Police and Fire Pension Fund

Plan Description - The City contributes to the Ohio Police and Fire Pension Fund (OP&F), a cost-
sharing multiple-employer defined benefit pension plan. OP&F provides retirement and disability
benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries.
Benefit provisions are established by the Ohio State Legislature and are codified in Chapter 742 of the
Ohio Revised Code. OP&F issues a publicly available financial report that includes financial
statements and required supplementary information for the plan. That report may be obtained by
writing to the OP&F, 140 East Town Street, Columbus, Ohio 43215-5164 or by visiting the website at
www.op-f.org.

Funding Policy - Plan members are required to contribute 10.0% of their annual covered salary, while
the City is required to contribute 19.50% and 24.00% for police officers and firefighters, respectively.
Contribution rates are established by State statute. For 2012, the portion of the City’s contributions to
fund pension obligations was 12.75% for police officers and 17.25% for firefighters. The City’s
required contributions for pension obligations to OP&F for police officers and firefighters were
$358,771 and $643,400 for the year ended December 31, 2012, $366,291 and $631,257 for the year
ended December 31, 2011, and $371,980 and $614,776 for the year ended December 31, 2010. The
full amount has been contributed for 2011 and 2010. 76.35% has been contributed for police and
77.07% has been contributed for firefighters for 2012. The remaining 2012 pension liability has been
reported as intergovernmental payable on the basic financial statements.

59
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 15 - POSTRETIREMENT BENEFIT PLANS

A. Ohio Public Employees Retirement System

Plan Description - OPERS maintains a cost-sharing multiple employer defined benefit post-
employment healthcare plan, which includes a medical plan, prescription drug program and Medicare
Part B premium reimbursement, to qualifying members of both the Traditional Pension and the
Combined Plans. Members of the Member-Directed Plan do not qualify for ancillary benefits,
including post-employment health care coverage.

To qualify for post-employment health care coverage, age-and-service retirees under the Traditional
Pension and Combined Plans must have ten years or more of qualifying Ohio service credit. The Ohio
Revised Code permits, but does not mandate, OPERS to provide OPEB benefits to its eligible
members and beneficiaries. Authority to establish and amend benefits is provided in Chapter 145 of
the Ohio Revised Code.

Disclosures for the healthcare plan are presented separately in the OPERS financial report which may
be obtained by visiting https://www.opers.org/investments/cafr.shtml, writing to OPERS, Attention:
Finance Director, 277 E. Town St., Columbus, OH 43215-4642 or by calling (614) 222-5601 or (800)
222-7377.

Funding Policy - The post-employment healthcare plan was established under, and is administered in
accordance with, Internal Revenue Code Section 401(h). State statute requires that public employers
fund post-employment healthcare through contributions to OPERS. A portion of each employer’s
contribution to the Traditional or Combined Plans is set aside for the funding of post-employment
health care.

Employer contribution rates are expressed as a percentage of the covered payroll of active employees.
In 2012, local government employers contributed 14.00% of covered payroll. Each year the OPERS’
Retirement Board determines the portion of the employer contribution rate that will be set aside for the
funding of the postemployment health care benefits. The portion of employer contributions allocated
to fund post-employment healthcare for members in the Traditional Plan for 2012 was 4.00%. The
portion of employer contributions allocated to fund post-employment healthcare for members in the
Combined Plan for 2012 was 6.05%.

The OPERS Retirement Board is also authorized to establish rules for the payment of a portion of the
health care benefits provided, by the retiree or their surviving beneficiaries. Payment amounts vary
depending on the number of covered dependents and the coverage selected. Active members do not
make contributions to the post-employment healthcare plan.

The City’s contributions allocated to fund post-employment health care benefits for the years ended
December 31, 2012, 2011, and 2010 were $354,513, $377,740, and $497,876, respectively; 90.24%
has been contributed for 2012 and 100% has been contributed for 2011 and 2010. The remaining
2012 post-employment health care benefits liability has been reported as intergovernmental payable on
the basic financial statements.

Changes to the health care plan were adopted by the OPERS Board of Trustees on September 19,
2012, with a transition plan commencing January 1, 2014. With the recent passage of pension
legislation under State Bill 343 and the approved health care changes, OPERS expects to be able to
consistently allocate 4 percent of the employer contributions toward the health care fund after the end
of the transition period.

60
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 15 - POSTRETIREMENT BENEFIT PLANS - (Continued)

B. Ohio Police and Fire Pension Fund

Plan Description - The City contributes to the OP&F Pension Fund sponsored health care program, a
cost-sharing multiple-employer defined postemployment health care plan administered by OP&F.
OP&F provides healthcare benefits including coverage for medical, prescription drugs, dental, vision,
Medicare Part B Premium and long term care to retirees, qualifying benefit recipients and their eligible
dependents.

OP&F provides access to post-employment health care coverage to any person who receives or is
eligible to receive a monthly service, disability or survivor benefit check or is a spouse or eligible
dependent child of such person.

The Ohio Revised Code allows, but does not mandate OP&F to provide OPEB benefits. Authority for
the OP&F Board of Trustees to provide health care coverage to eligible participants and to establish
and amend benefits is codified in Chapter 742 of the Ohio Revised Code.

OP&F issues a publicly available financial report that includes financial statements and required
supplementary information for the plan. That report may be obtained by writing to the OP&F, 140
East Town Street, Columbus, Ohio 43215-5164 or by visiting the website at www.op-f.org.

Funding Policy - The Ohio Revised Code provides for contribution requirements of the participating
employers and of plan members to the OP&F (defined benefit pension plan). Participating employers
are required to contribute to the pension plan at rates expressed as percentages of the payroll of active
pension plan members, currently, 19.50% and 24.00% of covered payroll for police and fire
employers, respectively. The Ohio Revised Code states that the employer contribution may not exceed
19.50% of covered payroll for police employer units and 24.00% of covered payroll for fire employer
units. Active members do not make contributions to the OPEB Plan.

OP&F maintains funds for health care in two separate accounts, one account is for health care benefits
under an Internal Revenue Code Section 115 trust and the other account is for Medicare Part B
reimbursements administered as an Internal Revenue Code Section 401(h) account, both of which are
within the defined benefit pension plan, under the authority granted by the Ohio Revised Code to the
OP&F Board of Trustees.

The Board of Trustees is authorized to allocate a portion of the total employer contributions made into
the pension plan into the Section 115 trust and the Section 401(h) account as the employer contribution
for retiree health care benefits. For the year ended December 31, 2012, the employer contribution
allocated to the health care plan was 6.75% of covered payroll. The amount of employer contributions
allocated to the health care plan each year is subject to the Trustees’ primary responsibility to ensure
that the pension benefits are adequately funded and is limited by the provisions of Sections 115 and
401(h).

The OP&F Board of Trustees also is authorized to establish requirements for contributions to the
health care plan by retirees and their eligible dependents, or their surviving beneficiaries. Payment
amounts vary depending on the number of covered dependents and the coverage selected.

61
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 15 - POSTRETIREMENT BENEFIT PLANS - (Continued)

The City’s contributions to OP&F which were allocated to fund post-employment healthcare benefits
for police officers and firefighters were $189,938 and $251,765 for the year ended December 31, 2012,
$193,919 and $247,013 for the year ended December 31, 2011, and $196,930 and $240,564 for the
year ended December 31, 2010. The full amount has been contributed for 2011 and 2010. 76.35% has
been contributed for police and 77.07% has been contributed for firefighters for 2012. The remaining
2012 post-employment health care benefits liability has been reported as intergovernmental payable on
the basic financial statements.

NOTE 16 - COMPENSATED ABSENCES

Full-time City employees earn and accumulate paid vacation leave for each work hour or paid service hour
completed for the City. The maximum base used for accumulation of vacation pay is eighty hours per pay
period. Based upon length of service, employees can earn vacation at rates varying from two weeks to six
weeks per year. Part-time employees may earn partial vacation credits while seasonal employees are
ineligible for vacation benefits. Upon termination from the City, an employee is entitled to compensation
at his or her current base rate of pay for all earned, but unused vacation leave to his or her credit at the time
of termination, subject to the maximum amount which can be accumulated at any time, provided the 50th
week of employment had been reached. In the case of death, unused vacation leave is paid in the name of
the employee to his or her spouse.

Full-time City employees and certain part-time employees earn sick leave at the rate of .05769 hours for
every paid service hour completed for the City. The maximum base used for accumulation of sick pay is
80 hours per pay period. Sick leave to be paid for time away from work due to illness may be accumulated
without limit. For employees hired prior to July 1, 1996, an employee or his/her estate is paid upon
retirement or death 100 percent of the unused amount accumulated equivalent up to 1,000 hours and 50
percent of unused sick leave up to a maximum hours of an additional 1,000 hours at the current base rate,
but only to the extent such benefits have been earned as employees of the City. In the case of retirement or
death of an employee hired on or after July 1, 1996, the employee or his/her estate is paid 100 percent of
the unused amount accumulated to a maximum of 1,000 hours and is not eligible to receive cash payment
of 50 percent of unused sick leave up to a maximum of an additional 1,000 hours. The entitlement award
for firefighters is prorated according to their respective work year.

Full-time police officers, communication specialists and firefighters are permitted to accumulate holiday
time. Police department employees must use their accumulated holiday time prior to April 1 of the
following year and the employees of the fire department by July 1 of the following year.

As of December 31, 2012, the liability for compensated absences was $5,006,905 for the entire City.

NOTE 17 - JOINT ECONOMIC DEVELOPMENT ZONE AGREEMENT

The City of Stow and the City of Akron entered into a Joint Economic Development Zone Agreement
(JEDZ Agreement). The revenue sharing agreement was established to facilitate economic development, to
create or preserve jobs and employment opportunities, and to improve the economic welfare in the region.
The agreement became effective November 6, 2001 and will continue for a period of ninety-nine years,
unless modified, supplemented, rescinded, or canceled by mutual agreement.

The JEDZ Agreement establishes three joint economic development zones and details how income tax
revenues will be collected and shared within each zone between the City of Stow and the City of Akron.
The City made payments of $196,275, which includes $54,137 in accounts payable, during 2012 to the City
of Akron as a result of this agreement.

62
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 18 - BUDGETARY BASIS OF ACCOUNTING

While reporting financial position, results of operations, and changes in fund balance on the basis of
generally accepted accounting principles (GAAP), the budgetary basis as provided by law is based upon
accounting for certain transactions on a basis of cash receipts and disbursements.

The statement of revenue, expenditures and changes in fund balance - budget and actual (non-GAAP
budgetary basis) presented for the general fund and the EMS/fire tax levy fund is presented on the
budgetary basis to provide a meaningful comparison of actual results with the budget. The major
differences between the budget basis and the GAAP basis are that:

(a) Revenues and other financing sources are recorded when received in cash (budget basis) as opposed to
when susceptible to accrual (GAAP basis);

(b) Expenditures and other financing uses are recorded when paid in cash (budget basis) as opposed to
when the liability is incurred (GAAP basis);

(c) In order to determine compliance with Ohio law, and to reserve that portion of the applicable
appropriation, total outstanding encumbrances (budget basis) are recorded as the equivalent of an
expenditure, as opposed to assigned, committed, or restricted fund balance for that portion of
outstanding encumbrances not already recognized as an account payable (GAAP basis);

(d) Advances-in and advances-out are operating transactions (budget basis) as opposed to balance sheet
transactions (GAAP basis);

(e) Investments are reported at fair value (GAAP basis) rather than cost (budget basis); and,

(f) Some funds are included in the general fund (GAAP basis), but have separate legally adopted budgets
(budget basis).

The following table summarizes the adjustments necessary to reconcile the GAAP basis statements (as
reported in the fund financial statements) to the budgetary basis statements for all governmental funds for
which a budgetary basis statement is presented:

Net Change in Fund Balance

EMS/Fire
General Tax Levy

Budget basis $ (648,088) $ 22,449

Net adjustment for revenue accruals (248,668) (22)

Net adjustment for expenditure accruals (112,584) 1,226

Net adjustment for other sources (uses) 10,000 1,500

Funds budgeted elsewhere 4,074 -

Adjustment for encumbrances 620,039 802

GAAP basis $ (375,227) $ 25,955

63
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 19 - FUND BALANCE

Fund balance is classified as nonspendable, restricted, committed, assigned and/or unassigned based
primarily on the extent to which the City is bound to observe constraints imposed upon the use of resources
in the governmental funds. The constraints placed on fund balance for the major governmental funds and
all other governmental funds are presented below:
General Nonmajor Total
Fire/EMS Capital Governmental Governmental
Fund balance General Tax Levy Improvements Funds Funds

Nonspendable:
Materials and supplies inventory $ 136,318 $ - $ - $ 455,496 $ 591,814
Loans 150,000 - - - 150,000
Total nonspendable 286,318 - - 455,496 741,814

Restricted:
Police and fire - - - 182,532 182,532
Street repair and maintenance - - - 2,478,470 2,478,470
Public health - - - 78,992 78,992
Leisure time activities - - - 109,952 109,952
Special assessments - - - 6,807 6,807
Municipal court - - - 904,564 904,564
Capital outlay - - 1,497,206 - 1,497,206
Total restricted - - 1,497,206 3,761,317 5,258,523

Committed:
General government 17,955 - - 362,118 380,073
Police and fire - - - 75,613 75,613
Leisure time activities - - - 189,969 189,969
Community & economic development - - - 316,152 316,152
Debt service - - - 107,411 107,411
Capital outlay - - 895,285 - 895,285
Total committed 17,955 - 895,285 1,051,263 1,964,503

Assigned:
Subsequent year appropriations 3,027,929 - - - 3,027,929
General government 208,834 - - - 208,834
Police and fire 119,826 - - - 119,826
Street repair and maintenance 2,533 - - - 2,533
Leisure time activities 91,402 - - - 91,402
Community & economic development 21,249 - - - 21,249
Total assigned 3,471,773 - - - 3,471,773

Unassigned (deficit) 1,222,906 (197,169) - (260,684) 765,053

Total fund balances $ 4,998,952 $ (197,169) $ 2,392,491 $ 5,007,392 $ 12,201,666

64
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 20 - CONTINGENCIES

A. Grants

The City receives significant financial assistance from numerous federal and State agencies in the form
of grants. The disbursement of funds received under these programs generally requires compliance
with terms and conditions specified in the grant agreements and are subject to audit by the grantor
agencies. Any disallowed claims resulting from such audits could become a liability of the general
fund or other applicable funds. However, in the opinion of management, any such disallowed claims
will not have a material effect on any of the financial statements of the reporting units included herein
or on the overall financial position of the City at December 31, 2012.

B. Litigation

The City is a party to legal proceedings. The City management is of the opinion that ultimate
disposition of these claims and legal proceedings will not have a material effect, if any, on the financial
condition of the City.

NOTE 21 - OTHER COMMITMENTS

The City utilizes encumbrance accounting as part of its budgetary controls. Encumbrances outstanding at
year end may be reported as part of restricted, committed, or assigned classifications of fund balance. At
year end, the City’s commitments for encumbrances in the governmental funds were as follows:

Year-End
Fund Encumbrances
General fund $ 796,235
Fire/EMS levy fund 1,305
General capital improvements 480,190
Other governmental 579,990
Total $ 1,857,720

NOTE 22 - STOW COMMUNITY IMPROVEMENT CORPORATION

The Stow Community Improvement Corporation (“CIC”) was formed pursuant to Ohio Revised Code
Section 1724. The Articles of Incorporation were approved on November 8, 1985. The CIC was
designated as a not-for-profit agency of the City for advancing, encouraging and promoting the industrial,
economic, commercial, and civic development of Stow and the territory surrounding Stow.

The City of Stow (the “City”) is a charter municipal corporation incorporated under the laws of the State of
Ohio. In accordance with the Governmental Accounting Standards Board (GASB) Statement No. 14, The
Financial Reporting Entity, the City’s financial statements include all organizations, activities and
functions which comprise the primary government and those legally separate entities for which the City is
financially accountable.

The CIC operates independently, but with oversight by the City, which includes City Council approval of
the CIC’s annual budget. The CIC has the authority to expend its funds as it determines within the
approved budget. The City is the primary source of funding for the CIC (in most years, the City provides
the CIC’s entire funding allocation). If the CIC developed its own funding sources, its independence would
increase. No debt would be issued by the CIC without the concurrence of the City. The CIC has no taxing
authority. The City does not appoint a majority of the Board of Trustees and the CIC does not provide
services entirely or almost entirely to the City. The CIC is presented as a discrete component unit of the
City. The CIC does not include any other units in its presentation.
65
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 22 - STOW COMMUNITY IMPROVEMENT CORPORATION - (Continued)

Summary of Significant Accounting Policies

The basic financial statements (BFS) of the CIC have been prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP) as applied to governmental units.
The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles.

The CIC’s significant accounting policies are described below.

A. Basis of Accounting

The financial statements of the CIC are prepared using the accrual basis of accounting.

B. Federal Income Tax

The Stow Community Improvement Corporation is exempt from federal income tax under Section 501
(c) (3) of the Internal Revenue Code.

C. Cash

All monies received by the CIC are deposited in a demand deposit account and covered by FDIC.

D. Net position

Net position represents the difference between assets and liabilities.

E. Estimates

The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.

Related Party Transactions and Economic Dependence

The CIC received contributions from the City of Stow in the amount of $50,000 to support operations of
the CIC for fiscal year 2012.

Ohio Department of Development Loan

On July 12, 2011, the CIC, acting as a pass-through entity, received a $1,250,000 loan from the Ohio
Department of Development (ODOD) to be used for the purchase and subsequent leaseback of certain
machinery and equipment owned by Wrayco LLC. The CIC then entered into an agreement to assign the
lease payments from Wrayco LLC to the ODOD for payment of the loan. The principal and interest
payments on the loan will be made directly from Wrayco LLC to the ODOD. The loan is scheduled to
mature on August 1, 2018 and bears an interest rate of 1% in the first year and an interest rate of 3% for the
remaining years. The CIC has no responsibility for the payment of the debt issued as the repayment is
supported solely by pledged receipts of Wrayco LLC. The CIC has no obligation to the ODOD in the event
of Wrayco LLC’s default.

66
 CITY OF STOW, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2012

NOTE 23 - SIGNIFICANT SUBSEQUENT EVENTS

The following notes were due and refinanced in 2013:

• The $375,000 2012 fire/rescue vehicles notes were retired and $275,000 was refinanced on May 2,
2013.

• The $4,600,000 2012 municipal courthouse construction notes were retired and $4,100,000 was
refinanced on May 2, 2013.

• The $800,000 2012 Rt. 8/Seasons Rd. interchange notes were retired and $450,000 was refinanced
on May 2, 2013.

• The $750,000 2012 Hudson Drive reconstruction project notes were retired and reissued for
$750,000 on May 2, 2013.

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 APPENDIX D

Proposed Text of Opinion of Bond Counsel

We have served as bond counsel to our client the City of Stow, Ohio (the “City”) and not
as counsel to any other person in connection with the issuance by the City of its $8,575,000
Various Purpose Refunding Bonds, Series 2014 (the “Bonds”), dated the date of this letter and
issued for the purpose of refunding at a lower interest cost certain of the City’s outstanding
Various Purpose Bonds, Series 2007, dated May 9, 2007, which were issued for the purpose of
(i) paying a portion of the costs of constructing, furnishing, equipping and otherwise improving a
new Stow Municipal Court facility and equipping and improving its site and (ii) improving the
recreational and park facilities of the City by acquiring the real and personal property constituting
the existing Fox Den Golf Course. In our capacity as bond counsel, we have examined the
transcript of proceedings relating to the issuance of the Bonds, a copy of the signed and
authenticated Bond of the first maturity and such other documents, matters and law as we deem
necessary to render the opinions set forth in this letter.
Based on that examination and subject to the limitations stated below, we are of the
opinion that under existing law:

1. The Bonds constitute valid and binding general obligations of the City, and the
principal of and interest on the Bonds, unless paid from other sources, are to be paid
from the proceeds of the levy of ad valorem taxes, within the 7.2-mill limitation
provided by the City’s Charter, on all property subject to ad valorem taxes levied by
the City.

2. Interest on the Bonds is excluded from gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the
“Code”), and is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations; however, portions of the
interest on the Bonds earned by certain corporations may be subject to a corporate
alternative minimum tax. The Bonds are qualified tax-exempt obligations as
defined in Section 265(b)(3) of the Code. Interest on, and any profit made on the
sale, exchange or other disposition of, the Bonds are exempt from all Ohio state and
local taxation, except the estate tax, the domestic insurance company tax, the
dealers in intangibles tax, the tax levied on the basis of the total equity capital of
financial institutions, and the net worth base of the corporate franchise tax. We
express no opinion as to any other tax consequences regarding the Bonds.
The opinions stated above are based on an analysis of existing laws, regulations, rulings
and court decisions and cover certain matters not directly addressed by such authorities. In
rendering all such opinions, we assume, without independent verification, and rely upon (i) the
accuracy of the factual matters represented, warranted or certified in the proceedings and
documents we have examined and (ii) the due and legal authorization, execution and delivery of
those documents by, and the valid, binding and enforceable nature of those documents upon, any
parties other than the City.

In rendering those opinions with respect to the treatment of the interest on the Bonds and
the status of the Bonds as qualified tax-exempt obligations under the federal tax laws, we further
assume and rely upon compliance with the covenants in the proceedings and documents we have
examined, including those of the City. Failure to comply with certain of those covenants
subsequent to issuance of the Bonds may cause interest on the Bonds to be included in gross
income for federal income tax purposes retroactively to their date of issuance and may cause the
Bonds not to be qualified tax-exempt obligations.

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 The rights of the owners of the Bonds and the enforceability of the Bonds are subject to
bankruptcy, insolvency, arrangement, fraudulent conveyance or transfer, reorganization,
moratorium and other laws relating to or affecting creditors’ rights, to the application of
equitable principles, to the exercise of judicial discretion, and to limitations on legal remedies
against public entities.

The opinions rendered in this letter are stated only as of this date, and no other opinion
shall be implied or inferred as a result of anything contained in or omitted from this letter. Our
engagement as bond counsel with respect to the Bonds has concluded on this date.

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 APPENDIX E

Book-Entry System; DTC

Book-Entry System

The information set forth in the following numbered paragraphs is based on

information provided by The Depository Trust Company in its “Sample Offering Document
Language Describing DTC and Book-Entry-Only Issuance” (August 2011). As such, the City
believes it to be reliable, but the City takes no responsibility for the accuracy or completeness of
that information. It has been adapted to the Bond issue by substituting “Bonds” for
“Securities,” “City” for “Issuer” and “Bond Registrar” for “registrar” and by the addition of
the italicized language set forth in the text. See also the additional information following those
numbered paragraphs.

1. The Depository Trust Company (“DTC”), New York, 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 the Bonds, each in the aggregate principal amount of such (maturity), and will be
deposited with and retained in the custody of DTC or its agent.

2. DTC, the world’s largest securities depository, is a limited-purpose trust

company organized under the New York Banking Law, a “banking organization” within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing
corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing
agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S.
equity issues, corporate and municipal debt issues, and money market instruments (from over
100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also
facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-entry transfers and
pledges between Direct Participants’ accounts. This eliminates the need for physical movement
of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers
and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC
is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”).
DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by
the users of its regulated subsidiaries. Access to the DTC system is also available to others such
as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of
AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com. (This internet site
is included for reference only, and the information in this internet site is not incorporated by
reference in this Official Statement.)

3. 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 to be recorded on the
Direct and Indirect Participants’ records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into

E-1
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 Bonds,
except in the event that use of the book-entry system for the Bonds is discontinued.

4. 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 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 of the Direct Participants to whose accounts
such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and
Indirect Participants will remain responsible for keeping account of their holdings on behalf of
their customers.

5. Conveyance of notices and other communications by DTC to Direct

Participants, by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them
of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults
and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds
may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain
and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to
provide their names and addresses to the Bond Registrar and request that copies of notices be
provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Bonds within
an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or
vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s
MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting
rights to those Direct Participants to whose accounts the Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions and dividends (debt charges 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 the Bond
Registrar, on the 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,
distributions and dividends (debt charges) to Cede & Co. (or such other nominee as may be
requested by an authorized representative of DTC) is the responsibility of the City or the 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.

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 9. (Not Applicable to the Bonds.)

10. DTC may discontinue providing its services as depository with respect to the
Bonds at any time by giving reasonable notice to the City or the Bond Registrar. Under such
circumstances, in the event that a successor depository is not obtained, Bond certificates are
required to be printed (or otherwise produced) and delivered.

11. The City may decide to discontinue use of the system of book-entry-only
transfers through DTC (or a successor securities depository). In that event, Bond certificates will
be printed (or otherwise produced) and delivered to DTC. (See also Revision of Book-Entry
System; Replacement Bonds.)

12. The information (above) in this section concerning DTC and DTC’s book-
entry system has been obtained from sources that the City believes to be reliable, but the City
takes no responsibility for the accuracy thereof.

Direct Participants and Indirect Participants may impose service charges on

Beneficial Owners in certain cases. Purchasers of book-entry interests should discuss that
possibility with their brokers.

The City and the Bond Registrar have no role in the purchases, transfers or sales of
book-entry interests. The rights of Beneficial Owners to transfer or pledge their interests, and
the manner of transferring or pledging those interests, may be subject to applicable state law.
Beneficial Owners may want to discuss with their legal advisors the manner of transferring or
pledging their book-entry interests.

The City and the Bond Registrar have no responsibility or liability for any aspects of
the records or notices relating to, or payments made on account of, beneficial ownership, or for
maintaining, supervising or reviewing any records relating to that ownership.

The City and the Bond Registrar cannot and do not give any assurances that DTC,
Direct Participants, Indirect Participants or others will distribute to the Beneficial Owners
payments of debt charges on the Bonds made to DTC as the registered owner, or redemption, if
any, or other notices, or that they will do so on a timely basis, or that DTC, Direct Participants or
Indirect Participants will serve or act in a manner described in this Official Statement.

For all purposes under the Bond proceedings (except the Continuing Disclosure
Agreement under which others as well as DTC may be considered an owner or holder of the
Bonds, see Continuing Disclosure Agreement), DTC will be and will be considered by the City
and the Bond Registrar to be the owner or holder of the Bonds.

Beneficial Owners will not receive or have the right to receive physical delivery of
Bonds, and, except to the extent they may have rights as Beneficial Owners or holders under the
Continuing Disclosure Agreement, will not be or be considered by the City and the Bond
Registrar to be, and will not have any rights as, owners or holders of Bonds under the Bond
proceedings.

Reference herein to “DTC” includes when applicable any successor securities

depository and the nominee of the depository.

Revision of Book-Entry System; Replacement Bonds

The Bond proceedings provide for issuance of fully-registered Bonds (Replacement

Bonds) directly to owners of Bonds other than DTC only in the event that DTC (or a successor

E-3
securities depository) determines not to continue to act as securities depository for the Bonds.
Upon occurrence of this event, the City may in its discretion attempt to have established a
securities depository book-entry relationship with another securities depository. If the City does
not do so, or is unable to do so, and after the Bond Registrar has made provision for notification
of the Beneficial Owners of the Bonds by appropriate notice to DTC, the City and the Bond
Registrar will authenticate and deliver Replacement Bonds of any one maturity, in authorized
denominations, to or at the direction of any persons requesting such issuance, and, if the event is
not the result of City action or inaction, at the expense (including legal and other costs) of those
requesting.

Debt charges on Replacement Bonds will be payable when due without deduction for
the services of the Bond Registrar as paying agent. Principal of and any premium on
Replacement Bonds will be payable when due to the registered owner upon presentation and
surrender at the designated corporate trust office of the Bond Registrar. Interest on Replacement
Bonds will be payable on the interest payment date by the Bond Registrar by transmittal to the
registered owner of record on the Bond Register as of the 15th day preceding the interest payment
date. Replacement Bonds will be exchangeable for other Replacement Bonds of authorized
denominations, and transferable, at the designated corporate trust office of the Bond Registrar
without charge (except taxes or governmental fees). Exchange or transfer of then-redeemable
Replacement Bonds is not required to be made: (i) between the 15th day preceding the mailing of
notice of redemption of Replacement Bonds and the date of that mailing, or (ii) of a particular
Replacement Bond selected for redemption (in whole or part).

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 APPENDIX F

Proposed Form of Continuing Disclosure Agreement

$8,575,000
City of Stow, Ohio
Various Purpose Refunding Bonds, Series 2014

CONTINUING DISCLOSURE AGREEMENT

THIS CONTINUING DISCLOSURE AGREEMENT, dated as of June 24, 2014 (the

Agreement), is made, signed and delivered by the CITY OF STOW, OHIO, a municipal
corporation and political subdivision duly organized and existing under its Charter and the
Constitution and laws of the State of Ohio (the City), for the benefit of the Holders and
Beneficial Owners (as defined herein) from time to time of the City’s $8,575,000 Various
Purpose Refunding Bonds, Series 2014 (the Bonds), authorized by Ordinance No. 2013-84,
passed by the Council of the City on May 23, 2013 (the Bond Ordinance).

RECITAL

The City, by passage of the Bond Ordinance, has determined to issue the Bonds to
provide funds for City purposes, and Fifth Third Securities, Inc. (the Participating Underwriter),
has agreed to provide those funds to the City by purchasing the Bonds. As a condition to the
purchase of the Bonds from the City and the sale of Bonds to Holders and Beneficial Owners, the
Participating Underwriter is required to reasonably determine that the City has undertaken, in a
written agreement for the benefit of Holders and Beneficial Owners of the Bonds, to provide
certain information in accordance with the Rule (as defined herein).

NOW, THEREFORE, in accordance with the Bond Ordinance, the City covenants and
agrees as set forth in this Continuing Disclosure Agreement.

Section 1. Purpose of Continuing Disclosure Agreement. This Agreement is being

entered into, signed and delivered for the benefit of the Holders and Beneficial Owners of the
Bonds and in order to assist the Participating Underwriter of the Bonds in complying with
Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (SEC) pursuant to
the Securities Exchange Act of 1934, as may be amended from time to time (the Rule).

Section 2. Definitions. In addition to the definitions set forth above, the following
capitalized terms shall have the following meanings in this Agreement, unless the context clearly
otherwise requires. Reference to “Sections” shall mean sections of this Agreement.

“Annual Filing” means any Annual Information Filing provided by the City pursuant to,
and as described in, Sections 3 and 4.

F-1
 “Audited Financial Statements” means the audited basic financial statements of the City,
prepared in conformity with generally accepted accounting principles.

“Beneficial Owner” means any person that (a) has the power, directly or indirectly, to
vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.

“EMMA” means the Electronic Municipal Market Access system of the MSRB;
information regarding submissions to EMMA is available at http://emma.msrb.org.

“Filing Date” means the last day of the ninth month following the end of each Fiscal Year
(or the next succeeding business day if that day is not a business day), beginning September 30,
2015.

“Fiscal Year” means the 12-month period beginning on January 1 of each year or such
other 12-month period as the City shall adopt as its fiscal year.

“Holder” means, with respect to the Bonds, the person in whose name a Bond is
registered in accordance with the Bond Ordinance.

“MSRB” means the Municipal Securities Rulemaking Board.

“Obligated Person” means, any person, including the issuer of municipal securities (such
as the Bonds), who is generally committed by contract or other arrangement to support payment
of all or part of the obligations on the municipal securities being sold in an offering document
(such as the Official Statement); the City is the only Obligated Person for the Bonds.

“Official Statement” means the Official Statement for the Bonds dated June 17, 2014.

“Participating Underwriter” means any of the original underwriters of the Bonds required
to comply with the Rule in connection with offering of the Bonds.

“Specified Events” means any of the events with respect to the Bonds as set forth in
Section 5(a).

“State” means the State of Ohio.

Section 3. Provision of Annual Information.

(a) The City shall provide (or cause to be provided) not later than the Filing Date to
the MSRB an Annual Filing, which is consistent with the requirements of Section 4. The Annual
Filing shall be submitted in an electronic format and contain such identifying information as is
prescribed by the MSRB, and may be submitted as a single document or as separate documents
comprising a package, and may cross-reference other information as provided in Section 4;
provided that the Audited Financial Statements of the City may be submitted separately from the
balance of the Annual Filing and later than the Filing Date if they are not available by that date.

F-2
If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a
Specified Event under Section 5.

(b) If the City is unable to provide to the MSRB an Annual Filing by the Filing Date,
the City shall, in a timely manner, send a notice to the MSRB in an electronic format as
prescribed by the MSRB.

Section 4. Content of Annual Filing. The City’s Annual Filing shall contain or include
by reference the following:

(a) Financial information and operating data of the type included in the Official
Statement under the captions: Ad Valorem Property Taxes and Special Assessments –
Collections, – Special Assessments and – Delinquencies, together with information as to
aggregate assessed valuation of the City and overlapping and City tax rates; Municipal Income
Tax; State Local Government Assistance Funds; City Debt and Other Long-Term
Obligations, including Debt Tables, as applicable; and Appendices A and B.

(b) The Audited Financial Statements of the City utilizing generally accepted
accounting principles applicable to governmental units as described in the Official Statement,
except as may be modified from time to time and described in such financial statements.

The foregoing shall not obligate the City to prepare or update projections of any financial
information or operating data.

Any or all of the items listed above may be included by specific reference to other
documents, including annual information statements of the City or official statements of debt
issues of the City or related public entities, which have been submitted to the MSRB or the
Securities and Exchange Commission. The City shall clearly identify each such other document
so included by reference.

Section 5. Reporting Specified Events.

(a) The City shall provide to the MSRB, in an electronic format and containing such
identifying information as is prescribed by the MSRB and in a timely manner but not later than
ten business days after the occurrence of the event, notice of any of the following events with
respect to the Bonds, as specified by the Rule:

(1) Principal and interest payment delinquencies;

(2) Non-payment-related defaults, if material;

(3) Unscheduled draws on debt service reserves reflecting financial

difficulties; (a)

(4) Unscheduled draws on credit enhancements reflecting financial

difficulties; (a)

F-3
(5) Substitution of credit or liquidity providers, or their failure to perform; (a)

(6) (Issuance of) Adverse tax opinions, the issuance by the Internal Revenue
Service of proposed or final determinations of taxability, Notices of
Proposed Issue (IRS Form 5701-TEB) or other material notices or
determinations with respect to the tax status of the security (i.e., the
Bonds), or other material events affecting the tax status of the security;

(7) Modifications to rights of security holders, if material;

(8) Bond calls, if material, and tender offers; (b)

(9) Defeasances;

(10) Release, substitution, or sale of property securing repayment of the

securities, if material; (c)

(11) Rating changes;

(12) Bankruptcy, insolvency, receivership or similar event of the Obligated

Person; Note: For the purposes of the event identified in this
subparagraph, the event is considered to occur when any of the following
occur: the appointment of a receiver, fiscal agent or similar officer for an
Obligated Person 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 Obligated Person, or if such jurisdiction has
been assumed by leaving the existing governmental body and officials or
officers in possession but subject to the supervision and orders of a court
or governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of the
assets or business of the Obligated Person.

(13) The consummation of a merger, consolidation, or acquisition involving an

Obligated Person or the sale of all or substantially all of the assets of the
Obligated Person, other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or the termination
of a definitive agreement relating to any such actions, other than pursuant
to its terms, if material; and

(14) Appointment of a successor or additional trustee or the change of name of

a trustee, if material.

F-4
 Note:

(a) The City has not obtained or provided, and does not expect to obtain or
provide, any debt service reserves, credit enhancements or credit or
liquidity providers for the Bonds.
(b) Any scheduled redemption of Bonds pursuant to mandatory sinking fund
redemption requirements does not constitute a specified event within the
meaning of the Rule.
(c) Repayment of the Bonds is not secured by a lien on any property capable
of release or sale or for which other property may be substituted.

For the Specified Events described in Section 5(a) (2), (6, as applicable), (7), (8, as
applicable), (10), (13) and (14), the City acknowledges that it must make a determination
whether such Specified Event is material under applicable federal securities laws in order to
determine whether a filing is required.

Section 6. Amendments. The City reserves the right to amend this Agreement, and
noncompliance with any provision of this Agreement may be waived, as may be necessary or
appropriate to (a) achieve its compliance with any applicable federal securities law or rule,
(b) cure any ambiguity, inconsistency or formal defect or omission and (c) address any change in
circumstances arising from a change in legal requirements, change in law or change in the
identity, nature or status of the City or type of business conducted by the City. Any such
amendment or waiver shall not be effective unless the Agreement (as amended or taking into
account such waiver) would have materially complied with the requirements of the Rule at the
time of the primary offering of the Bonds, after taking into account any applicable amendments
to or official interpretations of the Rule, as well as any change in circumstances, and until the
City shall have received either (i) a written opinion of bond counsel or other qualified
independent special counsel selected by the City that the amendment or waiver would not
materially impair the interests of Holders or Beneficial Owners or (ii) the written consent to the
amendment or waiver of the Holders of at least a majority of the principal amount of the Bonds
then outstanding. An Annual Filing containing any revised operating data or financial
information shall explain, in narrative form, the reasons for any such amendment or waiver and
the impact of the change on the type of operating data or financial information being provided.
If the amendment relates to the accounting principles to be followed in preparing Audited
Financial Statements, (A) the City shall provide notice of such change in the same manner as for
a Specified Event under Section 5 and (B) the Annual Filing for the year in which the change is
made should present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements or information as prepared on the basis of the new accounting
principles and those prepared on the basis of the former accounting principles.

Section 7. Additional Information. Nothing in this Agreement shall be deemed to

prevent the City from disseminating any other information, using the means of dissemination set
forth in this Agreement or providing any other means of communication, or including any other
information in any Annual Filing or providing notice of the occurrence of an event, in addition to
that which is required by this Agreement. If the City chooses to include any information in any
document or notice of occurrence of an event in addition to that which is specifically required by
this Agreement, the City shall have no obligation under this Agreement to update such

F-5
information or include it in any future Annual Filing or notice of occurrence of a Specified
Event.

Section 8. Remedy for Breach. This Agreement shall be solely for the benefit of the
Holders and Beneficial Owners from time to time of the Bonds. The exclusive remedy for any
breach of the Agreement by the City shall be limited, to the extent permitted by law, to a right of
Holders and Beneficial Owners to institute and maintain, or to cause to be instituted and
maintained, such proceedings as may be authorized at law or in equity to obtain the specific
performance by the City of its obligations under this Agreement in a court in the County of
Summit, Ohio. Any such proceedings shall be instituted and maintained only in accordance with
Section 133.25(B)(4)(b) or (C)(1) of the Revised Code (or any like or comparable successor
provisions); provided that any Holder or Beneficial Owner may exercise individually any such
right to require the City to specifically perform its obligation to provide or cause to be provided a
pertinent filing if such a filing is due and has not been made. Any Beneficial Owner seeking to
require the City to comply with this Agreement shall first provide at least 30 days’ prior written
notice to the City of the City’s failure, giving reasonable detail of such failure, following which
notice the City shall have 30 days to comply. A default under this Agreement shall not be
deemed an event of default under the Bond Ordinance, and the sole remedy under this
Agreement in the event of any failure of the City to comply with this Agreement shall be an
action to compel performance. No person or entity shall be entitled to recover monetary
damages under this Agreement.

Section 9. Appropriation. The performance by the City of its obligations under this
Agreement shall be subject to the availability of funds and their annual appropriation to meet
costs that the City would be required to incur to perform those obligations. The City shall
provide notice to the MSRB in the same manner as for a Specified Event under Section 5 of the
failure to appropriate funds to meet costs to perform the obligations under this Agreement.

Section 10. Termination. The obligations of the City under the Agreement shall remain
in effect only for such period that the Bonds are outstanding in accordance with their terms and
the City remains an Obligated Person with respect to the Bonds within the meaning of the Rule.
The obligation of the City to provide the information and notices of the events described above
shall terminate, if and when the City no longer remains such an Obligated Person. If any person,
other than the City, becomes an Obligated Person relating to the Bonds, the City shall use its best
efforts to require such Obligated Person to comply with all provisions of the Rule applicable to
such Obligated Person.

Section 11. Dissemination Agent. The City may, from time to time, appoint or engage
a dissemination agent to assist it in carrying out its obligations under this Agreement, and may
discharge any such agent, with or without appointing a successor dissemination agent.

Section 12. Beneficiaries. This Agreement shall inure solely to the benefit of the City,
any dissemination agent, the Participating Underwriter and Holders and Beneficial Owners from
time to time of the Bonds, and shall create no rights in any other person or entity.

F-6
 Section 13. Recordkeeping. The City shall maintain records of all Annual Filings and
notices of Specified Events and other events including the content of such disclosure, the names
of the entities with whom such disclosures were filed and the date of filing such disclosure.

Section 14. Governing Law. This Agreement shall be governed by the laws of the
State.

[Signature Page Follows]

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 IN WITNESS WHEREOF, the City has caused this Continuing Disclosure Agreement to
be duly signed and delivered to the Participating Underwriter, as part of the Bond proceedings
and in connection with the original delivery of the Bonds to the Participating Underwriter, on its
behalf by its officials signing below, all as of the date set forth above, and the Holders and
Beneficial Owners from time to time of the Bonds shall be deemed to have accepted this
Agreement made in accordance with the Rule.

CITY OF STOW, OHIO

By:
Mayor

By:
Director of Finance

F-8
 CERTIFICATE – CONTINUING DISCLOSURE AGREEMENT

As fiscal officer of the City of Stow, Ohio, I certify that the money required to meet the
obligations of the City under the Agreement made by the City in accordance with the Rule, as set
forth in the Bond Ordinance and the attached Continuing Disclosure Agreement, during Fiscal
Year 2014, has been lawfully appropriated by the City for those purposes and is in the City treasury
or in the process of collection to the credit of an appropriate fund, free from any previous
encumbrances. This Certificate is given in compliance with Sections 5705.41 and 5705.44 of the
Revised Code.

Dated: June 24, 2014

Director of Finance
City of Stow, Ohio

F-9
 $8,575,000
CITY OF STOW, OHIO
GENERAL OBLIGATION (Limited Tax)
VARIOUS PURPOSE REFUNDING BONDS, SERIES 2014

S UDS INA &

ASSOCI ATES, LLC
REGISTERED
MUNICIPAL
ADVISERS

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