NEW ISSUES: FULL BOOK-ENTRY Standard & Poor’s “A”

In the opinion of Quarles & Brady LLP, Bond Counsel, assuming continued compliance with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), under existing law interest on the Obligations is excludable from gross income and is not an item of tax preference for federal income tax purposes. The interest on the Obligations is not exempt from present Wisconsin income or franchise taxes. See “LEGAL MATTERS – Tax Exemption” and “Form of Legal Opinion” for the Obligations herein. The Obligations will be designated by the Village as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code.

OFFICIAL STATEMENT Village of Kohler Sheboygan County, Wisconsin

$1,365,000 $3,365,000 General Obligation Promissory Notes, General Obligation Corporate Purpose Bonds, Series 2013A Series 2013B

Dated: Date of Delivery Delivery: On or about August 28, 2013

The $1,365,000 General Obligation Promissory Notes, Series 2013A (the “Notes”) are being issued by the Village of Kohler, Wisconsin (the “Village”) pursuant to Wisconsin Statutes, Section 67.12(12). The Notes will be issued to provide financing for capital projects, the refunding of certain obligations of the Village, and to pay the costs of issuing the Notes.

The $3,365,000 General Obligation Corporate Purpose Bonds, Series 2013B (the “Bonds”) are being issued by the Village pursuant to Chapter 67 of the Wisconsin Statutes. The Bonds will be issued to provide financing for capital projects, the refunding of certain obligations of the Village, and to pay the costs of issuing the Bonds.

The Notes and the Bonds (collectively, the “Obligations”), will be issued as fully registered obligations without coupons and, when issued, will be registered in the name of CEDE & Co., as nominee of The Depository Trust Company (the “Depository” or “DTC”). The Depository will act as securities depository of the Obligations. Individual purchases may be made in book- entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificates representing their interest in the Obligations purchased. (See “Book-Entry-Only System” herein.)

The Obligations will be general obligations of the Village for which its full faith and credit and unlimited taxing powers are pledged.

Principal, payable on June 1 as set forth on the following page, and interest on the Obligations, payable semiannually on each June 1 and December 1 commencing June 1, 2014, will be paid to the Depository, which will in turn remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Obligations. See “Book-Entry-Only System” herein.

U.S. Bank National Association, St. Paul, Minnesota will act as Paying Agent and Registrar for the Obligations. The Notes are not subject to prior optional redemption. The Bonds are subject to prior redemption at the option of the Village on June 1, 2023 and any date thereafter at a price of par plus accrued interest.

SEE INSIDE COVER PAGE FOR MATURITY AND PRICING SCHEDULE, AND CUSIP NUMBERS

Bank Qualified: The Obligations are designated as “qualified tax-exempt obligations.”

Legal Opinion: Quarles & Brady LLP, Milwaukee, Wisconsin

Financial Advisor: Public Financial Management, Inc., Milwaukee, Wisconsin

The date of this Official Statement is August 12, 2013.

(THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THESE ISSUES. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.)

The Notes The Bonds Bankers’ Bank Bernardi Securities, Inc.

Maturity, Pricing Schedule, and CUSIP Numbers

Village of Kohler Sheboygan County, Wisconsin

$1,365,000 General Obligation Promissory Notes, Series 2013A

June 1 Year Amount Rate Yield CUSIP 2015 $ 80,000 0.60% 0.60% 500244CM8 2016 80,000 0.80% 0.80% 500244CN6 2017 80,000 1.00% 1.00% 500244CP1 2018 80,000 1.30% 1.30% 500244CQ9 2019 85,000 1.60% 1.60% 500244CR7 2020 190,000 1.90% 1.90% 500244CS5 2021 250,000 2.20% 2.20% 500244CT3 2022 255,000 2.40% 2.40% 500244CU0 2023 265,000 2.60% 2.60% 500244CV8

$3,365,000 General Obligation Corporate Purpose Bonds, Series 2013B

June 1 Year Amount Rate Yield CUSIP 2024 $ 280,000 3.50% 3.00% 500244CW6 2025 290,000 3.50% 3.10% 500244CX4 2026 300,000 3.50% 3.35% 500244CY2 2027 315,000 3.50% 3.50% 500244CZ9 2028 325,000 3.65% 3.65% 500244DA3 2029 340,000 3.80% 3.80% 500244DB1 2030 355,000 3.90% 3.90% 500244DC9 2031 370,000 4.00% 4.00% 500244DD7 2032 385,000 4.10% 4.10% 500244DE5 2033 405,000 4.20% 4.20% 500244DF2

i No dealer, broker, sales representative or other person has been authorized by the Village, the Financial Advisor or the Underwriters to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such information and representations must not be relied upon as having been authorized by the Village, the Financial Advisor or the Underwriters. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of the Obligations by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Village and other sources which are believed to be reliable, but it is not to be construed as a representation by the Financial Advisor or the Underwriters. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made thereafter shall, under any circumstances, create any implication that there has been no change in the affairs of the Village or in any other information contained herein, since the date hereof.

TABLE OF CONTENTS

Page Page

INTRODUCTION TO THE OFFICIAL Overlapping Debt ...... 14 STATEMENT ...... 1 Future Financing ...... 14 DESCRIPTION OF THE OBLIGATIONS ...... 3 FINANCIAL INFORMATION ...... 15 Authorization and Purpose ...... 3 Financial Reports ...... 15 Sources and Uses ...... 3 Cash and Investments ...... 16 Security Provisions ...... 4 PROPERTY VALUATIONS AND TAXES ...... 17 Redemption Provisions ...... 4 Assessed and Equalized Values ...... 17 Interest Payments and Computation ...... 4 Property Tax Levies and Collections ...... 18 Registration, Transfer and Exchange ...... 4 Property Tax Rates ...... 19 Book-Entry-Only System ...... 4 Principal Taxpayers ...... 19 Continuing Disclosure ...... 6 Levy Limits ...... 20 THE VILLAGE ...... 7 LEGAL MATTERS ...... 21 General Information ...... 7 Pending Litigation ...... 21 Village Government ...... 7 Approval of Legal Proceedings ...... 21 Education ...... 7 Tax Exemption ...... 21 Employee Relations and Collective Qualified Tax-Exempt Obligations ...... 22 Bargaining ...... 8 MISCELLANEOUS ...... 22 ECONOMIC AND DEMOGRAPHIC Rating ...... 22 INFORMATION ...... 9 Financial Advisor ...... 22 Population ...... 9 Underwriting ...... 22 Labor Force and Unemployment Statistics ...... 9 Certificates Concerning Official Major Employers ...... 10 Statement ...... 23 Construction ...... 10 FINANCIAL SUMMARY ...... 11 Appendix A - Excerpts from Financial Statements INDEBTEDNESS ...... 12 Appendix B - Forms of Legal Opinions General Obligation Long-Term Debt ...... 12 Appendix C - Forms of Continuing Disclosure Payment Record ...... 13 Certificates Debt Limit ...... 14

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INTRODUCTION TO THE OFFICIAL STATEMENT

The following information is furnished solely to provide limited introductory information regarding the Village’s $1,365,000 General Obligation Promissory Notes, Series 2013A (the “Notes”) and $3,365,000 General Obligation Corporate Purpose Bonds, Series 2013B (the “Bonds” and, collectively with the Notes, the “Obligations”), and does not purport to be comprehensive. All such information is qualified in its entirety by reference to the more detailed descriptions appearing in this Official Statement, including the appendices hereto.

Issuer: Village of Kohler, Wisconsin.

Dated: Date of Delivery.

Delivery: Delivery is expected on or about August 28, 2013.

Security: The Obligations will be general obligations of the Village, secured by an unlimited tax levy. The Obligations will be payable from ad valorem taxes levied upon all taxable property in the Village which may be levied without limitation of rate or amount.

Purpose and Authority: The Notes: The proceeds of the Notes will be used to provide financing for capital projects, to refund certain of the outstanding obligations of the Village as described herein, and to pay the cost of issuing the Notes pursuant to the Laws of the State of Wisconsin including Section 67.12(12) of the Wisconsin Statutes and by resolutions adopted by the Village Board on July 8, 2013, and an award resolution adopted by the Village Board on August 12, 2013.

The Bonds: The proceeds of the Bonds will be used to provide financing for capital projects, to refund certain of the outstanding obligations of the Village as described herein, and to pay the cost of issuing the Bonds pursuant to the Laws of the State of Wisconsin including Chapter 67 of the Wisconsin Statutes and by resolutions adopted by the Village Board on July 8, 2013, and an award resolution adopted by the Village Board on August 12, 2013.

Optional Redemption: The Notes: The Notes are not subject to prior redemption.

The Bonds: The Bonds are subject to prior redemption at the option of the Village on June 1, 2023 and any date thereafter at a price of par plus accrued interest.

Denominations: $5,000 or integral multiples thereof.

Record Date: The 15th day of the calendar month preceding the payment date.

Principal Payments: The Notes: Annually, June 1, 2015 through 2023. The Bonds: Annually, June 1, 2024 through 2033.

Interest Payments: On each June 1 and December 1, commencing June 1, 2014.

Tax Exemption: Interest on the Obligations is excludable from gross income and is not an item of tax preference for federal income tax purposes, see “LEGAL MATTERS - Tax Exemption” herein. Interest on the Obligations is not exempt from Wisconsin income or franchise taxes.

Bank Qualified: The Obligations will be designated as “qualified tax-exempt obligations.”

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Professional Consultants: Financial Advisor: Public Financial Management, Inc. Milwaukee, Wisconsin

Bond Counsel: Quarles & Brady LLP Milwaukee, Wisconsin

Paying Agent: U.S. Bank National Association St. Paul, Minnesota

Legal Matters: Legal matters incident to the authorization and issuance of the Obligations are subject to the opinions of Quarles & Brady LLP, Bond Counsel, as to validity and tax exemption. The opinions will be substantially in the forms set forth in Appendix B attached hereto. Bond Counsel has not assumed responsibility for this Official Statement or participated in its preparation (except with respect to the section entitled “LEGAL MATTERS – Tax Exemption” and the “Forms of Legal Opinions” attached hereto as Appendix B) and has not performed any investigation as to its accuracy, completeness or sufficiency.

Conditions Affecting Issuance of Obligations: The Obligations are offered when, as and if issued, subject to the approving legal opinions of Quarles & Brady LLP, Milwaukee, Wisconsin.

Book-Entry-Only: The Obligations will be issued as book-entry-only securities through The Depository Trust Company.

No Litigation: There is no litigation now pending or, to the knowledge of Village officials, threatened, which questions the validity of the Obligations or of any proceedings of the Village taken with respect to the issuance or sale thereof.

Limitations on Offering or Reoffering Securities: No dealer, broker, sales representative or other person has been authorized by the Village or the Financial Advisor to give any information or to make any representations other than those contained in the Official Statement and, if given or made, such information and representations must not be relied upon as having been authorized by the Village, or the Financial Advisor. The Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of the Obligations by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

Continuing Disclosure: In the resolutions awarding the sale of the Obligations, the Village will covenant and agree, for the benefit of the holders of the Obligations from time to time, to comply with the provisions of Securities and Exchange Commission Regulations, 17 C.F.R. Section 240, Paragraph (b)(5) of 15c2-12, (“Rule 15c2-12”); and, for this purpose, to provide certain financial information and operating data relating to the Village annually to the Municipal Securities Rulemaking Board (the “MSRB”), and to provide notices of the occurrence of certain events enumerated in Rule 15c2-12 electronically or in the manner otherwise prescribed by the MSRB to the MSRB. The Village is the only “obligated person” in respect of the Obligations within the meaning of Rule 15c2-12. A description of the undertaking is in Appendix C.

Questions regarding the Obligations or the Official Statement can be directed to and additional copies of the Official Statement, the Village’s audited financial reports and the resolutions authorizing the Obligations may be obtained from Public Financial Management, Inc., 115 South 84th Street, Suite 315, Milwaukee, Wisconsin 53214, (414) 771-2700, the Village’s financial advisor.

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DESCRIPTION OF THE OBLIGATIONS

Authorization and Purpose

The Notes are being issued pursuant to the laws of the State of Wisconsin including Section 67.12(12) of the Wisconsin Statutes, resolutions adopted by the Village Board on July 8, 2013, and an award resolution adopted by the Village Board on August 12, 2013.

The Bonds are being issued pursuant to the laws of the State of Wisconsin including Chapter 67 of the Wisconsin Statutes, resolutions adopted by the Village Board on July 8, 2013, and an award resolution adopted by the Village Board on August 12, 2013.

The Obligations are being issued to provide financing for certain capital projects within the Village as described in Table 1, and to refund certain outstanding obligations (the “Refunded Obligations”) of the Village as described in Table 2.

Table 1 Project List

Projects The Notes The Bonds Total Street Improvements -- $ 1,513,000.00 $ 1,513,000.00 Memorial Building Improvements $ 1,185,000.00 -- 1,185,000.00 Fire Station Improvements -- 855,000.00 855,000.00 Total $ 1,185,000.00 $ 2,368,000.00 $ 3,553,000.00

Table 2 Refunded Obligations

Amount Amount Dated Issue Refunded By Outstanding Refunded Call Date 01/28/2013 State Trust Fund Loan The Bonds $ 933,602.74 $ 933,602.74 08/30/2013 01/28/2013 State Trust Fund Loan The Notes 150,000.00 150,000.00 08/30/2013

Sources and Uses

Table 3 Estimated Sources and Uses

Estimated Sources The Notes The Bonds Total Par Amount $ 1,365,000.00 $ 3,365,000.00 $ 4,730,000.00 Original Issue Premium -- 25,157.00 25,157.00 Estimated Interest Earnings 500.00 2,500.00 3,000.00 Total Sources $ 1,365,500.00 $ 3,392,657.00 $ 4,758,157.00

Estimated Uses Memorial Building Project $ 1,185,000.00 -- $ 1,185,000.00 2014 Street Projects -- $ 1,513,000.00 1,513,000.00 Fire Station Improvements -- 855,000.00 855,000.00 Refunding Refunded Obligations 152,198.63 941,992.38 1,094,191.01 Estimated Cost of Issuance 27,200.00 78,087.00 105,287.00 Debt Service Fund (rounding) 1,101.37 4,577.62 5,678.99 Total Uses $ 1,365,500.00 $ 3,392,657.00 $ 4,758,157.00

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Security Provisions

Non-repealable, Direct, Annual Tax. As security for the Obligations, the Village pledges its full faith, credit and taxing powers and there will be levied on all of the taxable property in the Village a non-repealable, direct, annual tax in an amount and the times sufficient to pay the principal of and interest on the Obligations. The taxes will be levied under the award resolutions.

The award resolutions provide that the taxes will be, from year to year, carried onto the tax rolls of the Village and collected as other taxes are collected and that the Village shall not repeal such levies or obstruct the collection of the taxes. Provision is made for reducing the amount of taxes carried onto the tax rolls by the amount of any surplus money in the Debt Service Funds for the Obligations.

Redemption Provisions

The Notes are not subject to prior optional redemption.

The Bonds are subject to prior redemption at the option of the Village on June 1, 2023 and any date thereafter at a price of par plus accrued interest.

Interest Payments and Computation

Interest on the Obligations will be computed on a 360-day year, 30-day month basis. Payments coming due on a non-business day will be paid the following business day. Interest will be payable semiannually on June 1 and December 1 commencing June 1, 2014.

Registration, Transfer and Exchange

The Village has designated U.S. Bank National Association to serve as fiscal agent for the Obligations. The Village may, at any time, at its option replace U.S. Bank National Association as fiscal agent with another bank, trust company or national banking association designated by the Village or may designate the Village Clerk/Treasurer to serve as fiscal agent.

The Obligations will be initially registered in the name of Cede & Co., as nominee of the Depository. The Depository will act as securities depository for the Obligations. Individual purchases may be made in book-entry- only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the Obligations purchased. See “Book-Entry-Only System.”

Book-Entry-Only System

The information contained in the following paragraphs of this subsection “Book-Entry-Only System” has been extracted from a schedule prepared by The Depository Trust Company (“DTC”) entitled “SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE.” The Village makes no representation as to the completeness or the accuracy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Obligations. The Obligations 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 certificate will be issued for each series of the Obligations, each in the aggregate principal amount of such series, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code,

4 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 2.2 million issues of U.S. and non-U.S. equity, 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, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“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 and www.dtc.org.

Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for the Obligations on DTC’s records. The ownership interest of each actual purchaser of each of the Obligations (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations 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 Obligations, except in the event that use of the book-entry system for the Obligations is discontinued.

To facilitate subsequent transfers, all Obligations 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 Obligations with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Obligations 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.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all the Obligations 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.

Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Obligations unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Village 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 Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the Obligations 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 Village on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of

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DTC or the Village, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Village, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to the Village. Under such circumstances, in the event that a successor securities depository is not obtained, certificates for the Obligations are required to be printed and delivered.

The Village may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates for the Obligations will be printed and delivered to DTC.

NEITHER THE VILLAGE NOR THE UNDERWRITER WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT; (2) THE PAYMENT BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE OBLIGATIONS; (3) ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO HOLDERS OF THE OBLIGATIONS; (4) ANY CONSENT GIVEN BY DTC OR OTHER ACTION TAKEN BY DTC AS A HOLDER; OR (5) THE SELECTION BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY BENEFICIAL OWNER TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE OBLIGATIONS.

Continuing Disclosure

In order to assist the Underwriters in complying with Rule 15c2-12, the Village shall covenant pursuant to resolutions adopted by the Governing Body to enter into an undertaking (the “Undertaking”) for the benefit of holders including beneficial holders of the Obligations to provide certain financial information and operating data relating to the Village annually to the MSRB, and to provide notices of the occurrence of certain events enumerated in Rule 15c2-12 to the MSRB electronically or in the manner otherwise prescribed by the MSRB. The details and terms of the Undertaking, as well as the information to be contained in the annual report or the notices of material events, are set forth in the Continuing Disclosure Certificates to be executed and delivered by the Village at the time the Obligations are delivered. Such Certificates will be in substantially the forms attached hereto as Appendix C. In the previous five years, the Village has not failed to comply in all material respects with any previous undertakings under Rule 15c2-12 to provide annual reports or notices of material events. A failure by the Village to comply with the Undertaking will not constitute an event of default on the Obligations (although holders will have the right to obtain specific performance of the Obligations under the Undertaking). Nevertheless, such a failure must be reported in accordance with Rule 15c2-12 and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Obligations in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Obligations and their market price.

The Village will file its continuing disclosure information using the Electronic Municipal Market Access system. Investors will be able to access continuing disclosure information filed with the MSRB at www.emma.msrb.org.

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THE VILLAGE

General Information

The Village of Kohler was incorporated in 1912 and is located in Sheboygan County, Wisconsin, covering an area of 4.5 square miles. It is intersected by Interstate 43 and State Highway 23, and is located approximately 54 miles north of the City of Milwaukee. The Village provides: water service, sewer service, police, fire protection, emergency medical services, public works, parks, library, administration and other services to its residents. It is a participant in the Wisconsin Retirement System (WRS) covering all eligible employees on a non-contributory basis. The annual employer’s contribution rate, which is actuarially determined by the State, provides for funding of prior service costs, including interest, over 40 years beginning January 1, 1990. The Village has repaid this unfunded pension liability.

The Village was developed as a garden/industrial community by Walter J. Kohler, son of Kohler Company founder John Michael Kohler. Using the talents of Frederick Law Olmsted, the noted landscape architect whose designs include New York’s Central Park and the Biltmore Estate’s grounds, Walter Kohler developed one of the nation’s first and finest planned communities.

Today the concepts introduced by Walter Kohler are being protected and enhanced through the joint cooperation of Kohler Company and the Village of Kohler. Artful planning is reflected throughout the Village, in its emphasis on natural and historic preservation and its carefully considered design for residential and commercial growth.

Village Government

The Village operates under the laws of the State of Wisconsin, with an elected Village Board, which establishes policy, and a full-time Village Clerk/Treasurer to administer the day-to-day affairs of the Village and execute the policy decisions of the Village Board. The Village Board is comprised of a seven member Board of Trustees, of which the Village President is a voting member. All are elected to two year terms. The Village is also served by eight committees, commissions and boards made up of Village Board members and appointed citizens. The current Board of Trustee members and Administration are listed in the tables below.

Village Board

Name Position Thomas Schnettler President Bill Kunst Member Chuck Keller Member Brian Post Member John Pethan Member Brett Edgerle Member Sue Jaberg Member

Administration

Laurie Lindow Clerk/Treasurer Cindi Gamb Deputy Clerk/Treasurer

Education

The School District of Kohler provides education for children in pre-kindergarten through twelfth grade. The District has 684 students enrolled for the 2012/2013 school year, and has approximately 80 full-time employees. The District has one building, which is located in the Village that houses both the Kohler Elementary/Middle School and Kohler High School.

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Employee Relations and Collective Bargaining

The Village employs approximately 17 persons, of whom 15 are full-time. Public safety and protection is provided by a police force of five full-time officers. Additionally, the Village has approximately 33 paid, on-call volunteer firefighters, two of whom are also Emergency Medical Technicians (“EMTs”). Table 4 provides details on the Village’s single bargaining unit.

All eligible Village personnel are covered by the Municipal Employment Relations Act (“MERA”) of the Wisconsin Statutes. Pursuant to that law, employees have limited rights to organize and collectively bargain with the municipal employers. MERA was amended by 2011 Wisconsin Act 10 (the “Act”) and by 2011 Wisconsin Act 32, which altered the collective bargaining rights of public employees in Wisconsin.

Certain legal challenges have been brought with respect to the Act. On May 26, 2011, the Dane County Circuit Court (the “Circuit Court”) issued a decision which voided the legislative action taken with respect to the Act due to violations of the State's Open Meetings Law. However, on June 14, 2011, the Supreme Court of Wisconsin overturned the Circuit Court's decision by vacating and declaring all orders and judgments of the Circuit Court with respect to the Act to be void. As a result, the Act took effect on June 29, 2011, the day after it was published in accordance with State statutes. On September 14, 2012, the Circuit Court issued a decision which declared that certain portions of the Act violate State Constitutional rights to freedom of speech and association and equal protection, including portions of the Act that prohibit collectively bargaining with municipal employees with respect to any factor or condition of employment except total base wages. On September 18, 2012, the State Attorney General filed an appeal to the Circuit Court's decision and requested a stay on the enforcement of the decision until such an appeal is decided. On October 22, 2012, the Circuit Court denied the motion for the stay until the appeal is decided. As a consequence, until the appeal is decided, local governments and school districts may be prohibited from following the portions of the Act that have been found unconstitutional. The outcome of these legal proceedings cannot be predicted at this time.

As a result of the amendments to MERA, the Village is prohibited from bargaining collectively with municipal employees, other than public safety employees, with respect to any factor or condition of employment except total base wages. The Village or employee union has the option to pursue mediation and grievance arbitration. Voluntary impasse resolution procedures are prohibited for municipal employees, other than public safety employees, including binding interest arbitration. Strikes by any municipal employee or labor organization are expressly prohibited. As a practical matter, it is anticipated that strikes will be rare. Furthermore, if strikes do occur, they may be enjoined by the courts. Impasse resolution for public safety employees is subject to final and binding arbitration procedures, which do not include a right to strike. Interest arbitration is available for transit employees if certain conditions are met.

Table 4 Bargaining Units

Union/Association Contract Expiration Number of Members Police Association Local 316 12/31/2015 5

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ECONOMIC AND DEMOGRAPHIC INFORMATION

Population

The January 1, 2012 population estimate for the Village by the State of Wisconsin Department of Administration is 2,121. The three most recent United States Department of Commerce, Bureau of the Census decennial estimates for the Village are presented in Table 5

Table 5 Population 1

Year Population 2010 2,120 2000 1,926 1990 1,817

Labor Force and Unemployment Statistics

Table 6 compares the annual average unemployment rate for Sheboygan County, the State of Wisconsin, and the United States. The unadjusted unemployment rate for Sheboygan County, the State of Wisconsin, and the United States in May 2013 was 6.1 percent, 6.7 percent, and 7.3 percent, respectively.

Table 6 Unemployment Statistics 2

Sheboygan State of Year County Wisconsin United States 2012 6.6% 6.9% 8.1% 2011 7.7% 7.5% 8.9% 2010 8.9% 8.5% 9.6% 2009 9.3% 8.7% 9.3% 2008 4.4% 4.8% 5.8%

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1 Source: United States Census Bureau 2 Source: Wisconsin Department of Workforce Development, www.dwd.state.wi.us. 9

Major Employers

The major employers in the Village and the surrounding cities of Sheboygan and Sheboygan Falls are listed in Table 7.

Table 7 Major Employers 3

Employer Business Services Employees Kohler Company Plumbing Fixtures, Engines, Hospitality 3,000 Bemis Manufacturing Company Plastic/Health Care Product Mfr 1,900 Sheboygan Area School District Education 1,700 J.L. French Corporation Foundry/Automotive Parts 1,132 Sheboygan Clinic Aurora Medical Clinic 950 Johnsonville Sausage Meat Processing 933 St. Nicholas Hospital Health Care 875 Sheboygan County Government 856 Sheboygan Memorial Medical Center (Aurora) Health Care 850 Acuity Mutual Insurance Insurance 827 Wal-Mart Retail 735 Rockline Industries Inc. Paper Manufacturing 700 The Vollrath Company Stainless Steel Products 600 Sargento Cheese Co., Inc. Cheese Processing and Packaging 570 City of Sheboygan Government 500 Fresh Brands Inc. (Piggly Wiggly) Wholesale/Retail Grocers 400

Construction

New construction activity within the Village as shown by its building permit records for the most recent five years are provided in Table 8.

Table 8 Building Permits4

Multi Family Single Family Homes Buildings Commercial/Industrial Total Year No. Valuation No. Valuation No. Valuation No. Valuation 2012 ------2011 ------1 $ 12,000,000 1 $ 12,000,000 2010 1 323,290 ------1 323,290 2009 ------2008 ------1 1,397,956 1 1,397,956 2007 1 200,000 -- -- 1 845,000 2 1,045,000 2006 1 575,000 -- -- 2 3,825,990 3 4,400,990

3 Source: Wisconsin Manufacturers and Business Services Directory, Wisconsin’s Worknet, Sheboygan Chamber of Commerce, and Direct Employer Inquiries. 4 Includes remodels and additions. 10

FINANCIAL SUMMARY

The following financial summary presents pertinent statistics relating to property valuations as assessed in 2012 for taxes collectible in 2013, indebtedness, population and area, and the indebtedness of overlapping governmental units to the Village. The information provided in the Financial Summary is subject in all respects to more complete information contained in this Official Statement.

Equalized Value (January 1, 2012) $ 409,466,400

General Obligation Long-Term Debt $ 7,572,376

Overlapping Debt $ 9,376,222

Population (2012 State Estimate) 2,121

Debt Debt as % Per Capita of Equalized Debt Statistics Amount (2,121) Valu e Direct Debt (Levy Supported) $ 7,572,376 $ 3,570 1.85% Overlapping Debt 9,376,222 4,421 2.29% Total $ 16,948,598 $ 7,991 4.14%

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11

INDEBTEDNESS

General Obligation Long-Term Debt

Table 9 and Table 10 summarize the Village’s general obligation long-term debt as of the issuance of the Obligations.

Table 9 General Obligation Long-Term Debt by Issue

Original Outstanding Date of Amount Interest Final Principal Issue Name of Obligation Issued Rate Range Maturity Outstanding 03/22/00 Clean Water Fund Loan $ 367,072 3.03% 05/01/19 $ 139,079 09/09/09 State Trust Fund Loan 170,000 3.50% 03/15/14 45,495 12/15/10 Associated Bank Loan 866,000 3.65% 03/01/20 749,659 01/01/11 Promissory Note (Kohler) 75,105 0.00% 05/01/15 30,042 01/04/11 Associated Bank Loan 850,000 3.65% 03/01/19 663,059 05/02/11 G.O. Refunding Bonds 845,000 1.40% - 3.00% 12/01/18 730,000 07/01/11 Clean Water Fund Loan 530,290 2.40% 05/01/30 485,042 01/28/13 State Trust Fund Loan5 950,000 2.00% 03/15/14 -- 01/28/13 State Trust Fund Loan5 150,000 2.50% 03/15/17 -- Subtotal $ 2,842,376

08/28/13 G.O. Promissory Notes $ 1,365,000 0.60% - 2.60% 06/01/23 $ 1,365,000 08/28/13 G.O. Corporate Purpose Bonds 3,365,000 3.50% - 4.20% 06/01/33 3,365,000 $ 4,730,000

Total $7,572,375.92

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5 Principal Outstanding reflects refunding by the Obligations. 12

Table 10 General Obligation Debt Annual Maturity Schedule

Outstanding G.O. Debt The Obligations Total Year Principal Interest Principal Interest Debt Service 2013 $ 393,457 $ 91,573 -- -- $ 485,029 2014 407,671 80,731 -- $ 193,956 682,358 2015 370,124 69,135 $ 80,000 153,898 673,156 2016 363,282 58,420 80,000 153,338 655,039 2017 376,854 47,009 80,000 152,618 656,480 2018 390,680 34,915 80,000 151,698 657,292 2019 269,818 21,860 85,000 150,498 527,175 2020 194,773 12,726 190,000 148,013 545,511 2021 27,676 7,075 250,000 143,458 428,209 2022 28,340 6,403 255,000 137,648 427,391 2023 29,020 5,715 265,000 131,143 430,878 2024 29,717 5,010 280,000 122,798 437,524 2025 30,430 4,288 290,000 112,823 437,541 2026 31,160 3,549 300,000 102,498 437,207 2027 31,908 2,792 315,000 91,735 441,436 2028 32,674 2,017 325,000 80,291 439,983 2029 33,458 1,224 340,000 67,900 442,582 2030 34,261 411 355,000 54,518 444,190 2031 -- -- 370,000 40,195 410,195 2032 -- -- 385,000 24,903 409,903 2033 -- -- 405,000 8,505 413,505 Total $ 3,075,304 $ 454,852 $ 4,730,000 $ 2,222,428 $ 10,482,583

Payments Made by 8/28/2013 (232,928) (67,762) -- -- (300,690) Total $ 2,842,376 $ 387,090 $ 4,730,000 $ 2,222,428 $ 10,482,583

Payment Record

The Village has never defaulted in the payment of the principal or interest on its debt obligations, nor has the Village issued any refunding securities for the purpose of preventing default in principal or interest on its debt obligations.

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Debt Limit

Wisconsin Statutes, Section 67.03 and Section III, Article XI, of the Wisconsin Constitution limit the Village’s indebtedness to 5% of the equalized value of taxable property located within the Village.

Table 11 shows the debt limit computation for the Village.

Table 11 Debt Limit Computation

2012 Equalized Value $ 409,466,400 Legal Debt Limit (5% of Equalized Value) 20,473,320

Debt Outstanding (37.0% of Capacity) 7,572,376 Remaining borrowing capacity (63.0% of Capacity) $ 12,900,944

Overlapping Debt

There are taxing jurisdictions which overlap the Village and which had general obligation debt outstanding as of the date of this issue. Table 12 sets forth the general obligation debt for each of those jurisdictions and the amount of that debt applicable to the Village.

Table 12 Overlapping Debt to the Village

General % of Debt Portion Obligation Allocable Allocable to Governmental Entity Debt to Village to Village Kohler School District $ 9,450,648 78.35% $ 7,404,662 Sheboygan County 26,640,000 4.77% 1,271,618 Lakeshore Technical College District 23,970,000 2.92% 699,941 Total $ 9,376,222

Future Financing

The Village does not anticipate issuing additional general obligation or utility revenue debt for capital projects during the next six months.

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FINANCIAL INFORMATION

Financial Reports

The Village’s accounts are independently audited. Excerpts from the audited financial statements for the year ended December 31, 2012 are attached hereto as Appendix A. The auditors have not performed any additional review and have not consented to the inclusion of the audit report or extracts from the audit report in this Official Statement. The Village did not seek the consent of the auditors. A comparative Statement of Revenues, Expenditures and Changes in Fund Balance for the General Fund for years 2009 to 2012 is presented below.

Table 13 Statement of Revenues, Expenditures and Changes in Fund Balance – General Fund

Revenues 2009 2010 2011 2012 Taxes $ 1,573,483 $ 1,684,513 $ 1,746,101 $ 1,797,005 Intergovernmental Revenues 400,206 395,789 425,756 371,107 Licenses and Permits 67,866 83,790 110,572 82,021 Fines, Forfeitures and Penalties 26,244 37,398 29,408 25,408 Public Charges for Services 142,861 160,694 160,744 173,155 Investment Income 4,184 242 923 1,587 Miscellaneous Revenues 76,228 63,574 56,662 82,543 Total Revenues 2,291,072 2,426,000 2,530,166 2,532,826

Expenditures Current General Government 358,962 377,857 360,412 367,959 Public Safety 933,033 989,183 1,073,305 1,120,783 Public Works 592,003 530,249 146,374 462,250 Health and Social Services 126,509 146,702 533,458 152,869 Culture, Recreation, and Education 464,351 492,142 493,662 538,505 Total Expenditures 2,474,858 2,536,133 2,607,211 2,642,366 (Deficiency) of Revenues Over Expenditures (183,786) (110,133) (77,045) (109,540)

Other Financing Sources Sales of Village assets -- -- 7,425 177 Transfers In (tax equivalent) 52,879 57,483 57,150 58,356 Transfers Out (230,000) ------Net Change in Fund Balances (360,907) (52,650) (12,470) (51,007)

Fund Balance - January 1 636,917 276,010 223,360 210,890 Fund Balance - December 31 $ 276,010 $ 223,360 $ 210,890 $ 159,883*

* During 2012 the Village used $149,654 of General Fund reserves to provide interim financing for certain capital projects. The Village’s General Fund was subsequently reimbursed for this amount with the proceeds of a $150,000 State Trust Fund Loan that closed on January 28, 2013. If the proceeds of the loan would have been received during 2012, the Village’s 12/31/2012 General Fund balance would have been stated as $309,537.

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Cash and Investments

State statutes authorize the Village to invest in obligations of the United States Treasury, U.S. government agencies and instrumentalities, and Wisconsin governmental units, time deposits with maturities of less than three years in any financial institution in Wisconsin, the State of Wisconsin Local Government Investment Pool, the Wisconsin Investment Trust, any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency, repurchase agreements if secured by U.S. government securities, and securities of open-end management investment companies or investment trusts if the portfolio meets certain restrictions. The Village only deposits and invests its monies in investments allowed by State statute.

Bank deposits are insured up to $250,000 for the combined amount of all time and savings accounts by the Federal Deposit Insurance Corporation (“FDIC”). Additionally, bank deposits are also guaranteed by the State up to $400,000 for each depository, for losses incurred, subject to the availability of funds in the State’s Deposit Guarantee Fund (the State is not currently replenishing this Fund).

A description of investment practices and investments at year-end 2012 is included in Appendix A in the Notes to Financial Statements. A summary of the estimated market value of the Village’s investments as of December 31, 2012 is presented below.

Table 14 Cash and Investments

WI Local Government Investment Pool $ 2,665,656 Bank Deposits 382,917 Petty Cash 278 Total $ 3,048,851

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PROPERTY VALUATIONS AND TAXES

Assessed and Equalized Values

Wisconsin State Statutes, Section 70.57, requires the State Department of Revenue to annually determine the equalized value (also referred to as full equalized value or aggregate full value) of all taxable property in each county and taxation district. The equalized value is an independent estimate of value used to equate individual local assessment polices so that property taxes are uniform throughout the various subdivisions in the State. Equalized value is calculated based on the history of comparable sales and information about value changes or taxing status provided by the local assessor. A comparison of the State determined equalized value and the local assessed value, expressed as a percentage, is known as the assessment ratio or level of assessment. The Department of Revenue notifies each county and taxing jurisdiction of its equalized value on August 15; school districts are notified on October 15. The equalized value of each county is the sum of the evaluations of all cities, villages, and towns within its boundaries.

The equalized value is determined by the Department of Revenue in order to maintain equity between municipalities and counties. The value represents the current market value of all the property in the taxing district. These certified values are used for apportioning county property taxes, public school taxes, and vocational school taxes as well as for distributing property tax relief. Taxing jurisdictions lying in more than one municipality, such as counties, school districts, or special taxing districts, use the equalized value of the underlying units in calculating and levying their respective levies. Equalized values are also used to apportion state aids and calculate municipal general obligation debt limits.

Table 15 shows the equalized value of property by category in the Village as of January 1, 2012.

The “assessed value” of taxable property in a municipality is determined by the local assessor, except for manufacturing properties which are valued by the state. Each city, village or town retains its own local assessor, who must be certified by the State Department of Revenue. Assessed value is used by these municipalities to determine tax levy mill rates and to apportion levies among individual property owners. The assessed value is the value of taxable property upon which tax levies are spread. With the exception of manufacturing property, it is determined annually by the local assessor as of January 1. The State Department of Revenue makes the annual assessment of all manufacturing property in the State.

Table 15 Equalized Property Value

2012 Percent of Equalized Value Total Value Residential $ 230,394,200 56.27% Commercial 115,997,900 28.33% Manufacturing 29,939,300 7.31% Agriculture 211,600 0.05% Undeveloped 21,000 0.01% Ag Forest 86,300 0.02% Other 580,300 0.14% Personal Property 32,235,800 7.87% Total $ 409,466,400 100.00%

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Table 16 sets forth the equalized values since 2000.

Table 16 Historical Values

Equalized Year Value 2012 $ 409,466,400 2011 414,206,300 2010 412,957,500 2009 451,370,600 2008 389,855,200 2007 406,862,300 2006 407,983,900 2005 364,459,000 2004 334,750,300 2003 316,622,100 2002 317,556,500 2001 255,620,700 2000 234,951,000

Property Tax Levies and Collections

Personal property taxes, special assessments, special charges and special taxes must be paid to the town, city or village treasurer in full by January 31. Real property taxes may be paid in full by January 31 or in two equal installments payable by January 31, and July 31. Municipalities have the option of adopting payment plans which allow taxpayers to pay their real property taxes in installments, provided that the first installment is paid by January 31, two thirds of the taxes are paid by April 30 and the remainder is paid by July 31. On or before January 15 and February 20 and the 15th day of each month following a month in which an installment payment is due in municipalities with three or more installments, the town, city or village treasurer settles with other taxing jurisdictions for all collections through the preceding month. On or before August 20, the county treasurer must settle in full with the underlying taxing districts for all real property taxes and special taxes. Any county board may authorize its county treasurer to also settle in full with the underlying taxing districts for all special assessments and special charges.

Under the Wisconsin collection system, where counties absorb delinquencies of property taxes on real property, the Village collects 100% of its real estate taxes in the year when due. Table 17 presents tax levies and collections for Village residents from 2006/07 through 2011/12.

Table 17 Tax Levies

Levy for Village Percent Levy/Equalized Value Collection Year Purposes Only Collected in dollars per $1,000 2012 $ 1,648,780 In Process $ 3.98 2011 1,578,523 100% 3.82 2010 1,647,751 100% 3.65 2009 1,628,180 100% 4.18 2008 1,628,837 100% 4.00 2007 1,679,164 100% 4.12 2006 1,635,131 100% 4.49

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Property Tax Rates

Table 18 represents the tax rates per $1,000 of equalized value for tax collection years 2008 through 2012.

Table 18 Tax Rates Per $1,000 of Equalized Value

Taxing Entity 2012 2011 2010 2009 2008 School District $ 10.85 $ 11.16 $ 9.74 $ 10.09 $ 10.16 Technical College 1.56 1.56 1.49 1.47 1.48 County Tax 5.14 5.10 4.83 4.98 5.12 Local Tax 3.98 3.82 3.65 4.18 4.00 Other Taxes 0.17 0.17 0.17 0.17 0.17 Gross Rate 21.70 21.81 19.88 20.89 20.93

State School Credit (1.72) (1.75) (1.62) (1.92) (1.60)

Total Net Taxes $ 19.98 $ 20.06 $ 18.26 $ 18.97 $ 19.33

Principal Taxpayers

The ten largest taxpayers in the Village, according to the 2012 assessment roll, are set forth in Table 19.

Table 19 Principal Taxpayers

2012 Percent of Total Taxpayer Business Assessed Value Assessed Value Kohler Company Manufacturing $ 145,366,823 35.20% Inland Real Estate Shopping Center 17,080,000 4.14% Home Depot Retail 7,311,070 1.77% Target Retail 6,763,880 1.64% PBJC Tires Investors Commercial Real Estate 4,571,000 1.11% Individual Residence 1,729,100 0.42% Individual Residence 1,682,400 0.41% A&L Properties Shopping Center 1,590,000 0.39% Individual Residence 1,253,200 0.30% Individual Residence 1,197,900 0.29% Total - Top 10 Village Taxpayers $ 188,545,373 45.67%

Total - Kohler 2012 Assessed Value $ 412,956,390

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Levy Limits

Section 66.0602 of the Wisconsin Statutes, imposes a limit on property tax levies by cities, villages, towns and counties. No city, village, town or county is permitted to increase its tax levy by a percentage that exceeds its valuation factor (which is defined as a percentage equal to the greater of the percentage change in the political subdivision's January 1 equalized value due to new construction less improvements removed or zero percent). The base amount in any year to which the levy limit applies is the actual levy for the immediately preceding year. This levy limitation is an overall limit, applying to levies for operations as well as for other purposes.

A political subdivision that did not levy its full allowable levy in the prior year can carry forward the difference between the allowable levy and the actual levy, up to a maximum of 1.5% of the prior year's actual levy. The use of carry forward levy adjustment needs to be approved by a majority vote of the political subdivision’s governing body (except in the case of towns) if the amount of carry forward levy adjustment is less than or equal to 0.5% and by a super majority vote of the political subdivision’s governing body (three-quarters vote if the governing body is comprised of five or more members, two-thirds vote if the governing body is comprised of fewer than five members) (except in the case of towns) if the amount of the carry forward levy adjustment is greater than 0.5% up to the maximum increase of 1.5%. For towns, the use of the carry forward levy adjustment needs to be approved by a majority vote of the annual town meeting or special town meeting after the town board has adopted a resolution in favor of the adjustment by a majority vote if the amount of carry forward levy adjustment is less than or equal to 0.5% or by two-thirds vote or more if the amount of carry forward levy adjustment is greater than 0.5% up to the maximum of 1.5%.

Special provisions are made with respect to property taxes levied to pay general obligation debt service. Those are described below. In addition, the statute provides for certain other exclusions from and adjustments to the tax levy limit. Among the items excluded from the limit are amounts levied for any revenue shortfall for debt service on a revenue bond issued under Section 66.0621. Among the adjustments permitted is an adjustment applicable when a tax increment district terminates, which allows an amount equal to the prior year's allowable levy multiplied by 50% of the political subdivision's percentage growth due to the district's termination.

With respect to general obligation debt service, the following provisions are made:

(a) If a political subdivision's levy for the payment of general obligation debt service, including debt service on debt issued or reissued to fund or refund outstanding obligations of the political subdivision and interest on outstanding obligations of the political subdivision, on debt originally issued before July 1, 2005, is less in the current year than in the previous year, the political subdivision is required to reduce its levy limit in the current year by the amount of the difference between the previous year's levy and the current year's levy.

(b) For obligations authorized before July 1, 2005, if the amount of debt service in the preceding year is less than the amount of debt service needed in the current year, the levy limit is increased by the difference between the two amounts. This adjustment is based on scheduled debt service rather than the amount actually levied for debt service (after taking into account offsetting revenues such as sales tax revenues, special assessments, utility revenues, tax increment revenues or surplus funds). Therefore, the levy limit could negatively impact political subdivisions that experience a reduction in offsetting revenues.

(c) The levy limits do not apply to property taxes levied to pay debt service on general obligation debt authorized on or after July 1, 2005.

The Obligations will be authorized after July 1, 2005.

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LEGAL MATTERS

Pending Litigation

There is no controversy or litigation of any nature now pending, or to the best of the Village’s knowledge, threatened seeking to restrain or enjoin the issuance, sale, execution or delivery of the Obligations, or in any way contesting the validity of the Obligations.

Approval of Legal Proceedings

Certain legal matters incident to the authorization and issuance of the Obligations are subject to the approval of Quarles & Brady LLP, Bond Counsel, whose approving legal opinions will be available at the time of the delivery of the Obligations. The proposed forms of such opinions are attached hereto as Appendix B. Bond Counsel has not participated in the preparation of this Official Statement, except for guidance concerning the sections entitled “LEGAL MATTERS - Tax Exemption” and will not pass upon its accuracy, completeness or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements or data contained in the Official Statement, and will express no opinion with respect thereto. See Appendix B “Forms of Legal Opinions” for the Obligations.

Tax Exemption

Quarles & Brady LLP, Milwaukee, Wisconsin, Bond Counsel, will deliver a legal opinion with respect to the federal income tax exemption applicable to the interest on the Obligations under existing law substantially in the following form:

“The interest on the Obligations is excludable for federal income tax purposes from the gross income of the owners of the Obligations. The interest on the Obligations is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Internal Revenue Code of 1986, as amended (the “Code") on corporations (as that term is defined for federal income tax purposes) and individuals. However, for purposes of computing the alternative minimum tax imposed on corporations, the interest on the Obligations is included in adjusted current earnings. The Code contains requirements that must be satisfied subsequent to the issuance of the Obligations in order for interest on the Obligations to be or continue to be excludable from gross income for federal income tax purposes. Failure to comply with certain of those requirements could cause the interest on the Obligations to be included in gross income retroactively to the date of issuance of the Obligations. The Issuer has agreed to comply with all of those requirements. The opinion set forth in the first sentence of this paragraph is subject to the condition that the Issuer comply with those requirements. We express no opinion regarding other federal tax consequences arising with respect to the Obligations.”

The interest on the Obligations is not exempt from present Wisconsin income or franchise taxes.

Prospective purchasers of the Obligations should be aware that ownership of the Obligations may result in collateral federal income tax consequences to certain taxpayers. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Obligations should consult their tax advisors as to collateral federal income tax consequences.

From time to time legislation is proposed, and there are or may be legislative proposals pending in the Congress of the United States that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Obligations. It cannot be predicted whether, or in what form, any proposal that could alter one or more of the federal tax matters referred to above or adversely affect the market value of the Obligations may be enacted. Prospective purchasers of the Obligations should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

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Qualified Tax-Exempt Obligations

The Village will designate the Obligations as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) relating to the ability of financial institutions to deduct from income for Federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations.

MISCELLANEOUS

Rating

The Obligations are rated “A” by Standard & Poor’s Rating Service. A rating reflects only the view of the rating organization and explanations of the significance of such rating may be obtained from the rating agency furnishing the same. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency, if in the judgment of such rating agency circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Obligations.

Financial Advisor

The Village has retained Public Financial Management, Inc., of Milwaukee, Wisconsin, as financial advisor (the “Financial Advisor”) in connection with the issuance of the Obligations. In preparing the Official Statement, the Financial Advisor has relied upon governmental officials, and other sources, which have access to relevant data to provide accurate information for the Official Statement, and the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Financial Advisor is not a public accounting firm and has not been engaged by the Village to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. 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 and therefore will not participate in the underwriting of the Obligations.

Requests for information concerning the Village should be addressed to Public Financial Management, Inc., 115 South 84th Street, Suite 315, Milwaukee, Wisconsin 53214 (414/771-2700).

Underwriting

Bids for the Obligations were received at a competitive public sale on August 12, 2013.

Bankers’ Bank has agreed, subject to the conditions of closing set forth in the Official Notice of Sale for the Notes, to purchase the Notes at a purchase price of $1,358,175 (consisting of the par amount of the Notes, less an underwriter's discount of $6,825).

Bernardi Securities, Inc. has agreed, subject to the conditions of closing set forth in the Official Notice of Sale for the Bonds, to purchase the Bonds at a purchase price of $3,341,445 (consisting of the par amount of the Bonds, plus an original issue premium of $25,157, less an underwriter's discount of $48,712).

The Obligations will be offered at the initial public offering prices which produce the yields shown on the inside cover page of this Official Statement. After the Obligations are released for sale to the public, the initial public offering prices and other selling terms may from time to time be varied by the underwriters.

22

Certificates Concerning Official Statement

Concurrently with the delivery of the Obligations, the Clerk of the Village will deliver to the purchasers of the Obligations a certificate stating, that, to the best of their knowledge, the Official Statement did not as of its date and as of the sale date and does not, as of the date of delivery of the Obligations, contain an untrue statement of a material fact or omit to state a material fact required to be included therein for the purpose for which the Official Statement is to be used or necessary to make the statements therein, in the light of the circumstances under which they were made not misleading.

The execution and delivery of this Official Statement by its Clerk/Treasurer has been duly authorized by the Village Board.

VILLAGE OF KOHLER, WISCONSIN

By /s/ Laurie Lindow Village Clerk/Treasurer

* * * * *

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APPENDIX A

Village of Kohler, Wisconsin Excerpts from Financial Statements for the Year Ended December 31, 2012

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VILLAGE OF KOHLER Kohler, Wisconsin

FINANCIAL STATEMENTS

Including Independent Auditors' Report

As of and for the Year Ended December 31, 2012 VILLAGE OF KOHLER

TABLE OF CONTENTS As of and for the Year Ended December 31, 2012

Page(s)

Independent Auditors' Report i - ii Management's Discussion and Analysis iii- xii Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 1 Statement of Activities 2-3 Fund Financial Statements Balance Sheet- Governmental Funds 4 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 5 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 6-7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 8 Statement of Net Position - Proprietary Funds 9- 10 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 11 Statement of Cash Flows- Proprietary Funds 12- 13 Statement of Fiduciary Net Position - Fiduciary Fund 14 Index to Notes to Financial Statements 15 Notes to Financial Statements 16-39 Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund 40 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual- Tourism Promotion/Development Fund 41 Notes to Required Supplementary Information 42 Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance- Budget and Actual- Capital Projects Fund 43 Comparative Schedule of Property Taxes Levied and Assessed and Equalized Valuations - 2008 - 2012 Tax Rolls 44 ~AKER TILLY

Baker Tilly Virchow Krause, LLP 777 E W'isconsin Ave, 32nd Floor Milwaukee, W I 53202-5313 cel414 777 5500 fax4!4 777 5555 bakcrrilly.com

INDEPENDENT AUDITORS' REPORT

To the Honorable President and Board of Trustees Village of Kohler Kohler, Wisconsin

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 remaining fund information of the Village of Kohler, Wisconsin, as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the Village of Kohler's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village of Kohler's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Village of Kohler's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

~ aorndtPI~dlnl"'ll'fberol BAKER TILLY Pagei INTERNATIONAL .-\n _-\ftlrnnmt.\Lrion Equ o1. ! Opporrunin I mployct To the Honorable President and Board of Trustees Village of Kohler

Opinions

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 remaining fund information of the Village of Kohler, Wisconsin, as of December 31, 2012 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note I, the Village of Kohler adopted the provisions of GASB Statement No. 63, Financial Reporting for Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, effective January 1, 2012. Our opinion is not modified with respect to this matter.

Other Matters

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison schedules as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Kohler's basic financial statements. The individual fund financial statements and schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such 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, the individual fund financial statements and schedules as listed in the table of contents are fairly stated in all material respects, in relation to the basic financial statements as a whole.

Milwaukee, Wisconsin April 24, 2013

Page ii Village of ohler A Card a Commuoity

Management's Discussion and Analysis (Unaudited)

As management of the Village of Kohler, we offer readers of the Village's financial statements this narrative overview and analysis of the financial activities of the Village for the fiscal year ended December 31, 2012 and 2011.

Financial Highlights

The assets of the Village of Kohler exceeded its liabilities at the close of the most recent fiscal year by $7.8 million (net position).

Restricted net position represents amounts held for future debt service expenditures and sanitary sewer equipment replacement funds in accordance with Department of Natural Resources regulations.

The Village's total net position increased by approximately $4,250. The governmental activities change in net position was a decrease of $154,788 and the business-type activities reported an increase in net position of $159,038.

As of the close of the current fiscal year, the Village of Kohler's governmental funds reported combined ending fund balances of $362,385, a decrease of approximately $209,700 in comparison with the prior year. Of this decrease, the General Fund had a decrease of approximately $51,000 due to unbudgeted expenses. The remaining significant portion of the total decrease related to the use of prior year fund balance in the Capital Projects Fund to fund 2012 expenditures. Borrowing took place in 2013 for 2012 capital projects.

At the end of the current fiscal year, the Village set aside approximately $151,188 in the General Fund for working capital or 6% of total 2012 General Fund budgeted expenditures. This amount is included in unassigned fund balance.

The Village of Kohler's total debt decreased $364,471 during the current fiscal year, due to current year scheduled debt payments.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Village of Kohler's basic financial statements. The Village of Kohler's basic financial statements comprise three components: 1) government­ wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Page iii Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Village of Kohler's finances, in a manner similar to a private­ sector business.

The statement of net position presents information on all of the Village of Kohler's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village of Kohler is improving or deteriorating.

The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in the future fiscal periods (e.g., uncollected taxes and accrued interest).

Both of the government-wide financial statements distinguish functions of the Village of Kohler that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Village of Kohler include general government, public safety, public works, health and human services, culture, education and recreation, and interest and fiscal charges. The business-type activities of the Village of Kohler include the Sewer Utility and the Water Utility.

The government-wide financial statements includes only the Village of Kohler itself (known as the primary government), because no other legally separate component units exist for which the Village of Kohler is financially accountable. The Sewer and Water Utilities function for all practical purposes as departments of the Village of Kohler, and therefore have been included as an integral part of the primary government.

The government-wide financial statements can be found on pages 1 through 3 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Village of Kohler, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance­ related legal requirements. All of the funds of the Village of Kohler can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government­ wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The Village of Kohler maintains five individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Special Revenue- Tourism Promotion/Development Fund, Debt Service Fund, and Capital Projects Fund, all of which are considered to be major funds. Data from the Crime Prevention governmental fund is also shown on these statements and is listed as a nonmajor governmental fund.

Pageiv The basic governmental fund financial statements can be found on pages 4 through 8 of this report.

The Village of Kohler adopts an annual appropriated budget for all funds except the Crime Prevention Fund. Budgetary comparison statements, found on pages 41 through 42, have been provided as required supplementary information for the General Fund and Special Revenue Fund- Tourism Promotion/Development Fund to demonstrate compliance with the adopted budgets.

Proprietary funds. The Village of Kohler maintains a proprietary fund to account for its enterprise activities. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Village of Kohler uses enterprise funds to account for its Sewer and Water Utilities.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Sewer, and Water Utilities, both of which are considered to be major funds of the Village of Kohler.

The basic proprietary fund financial statements can be found on pages 9 through 13 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Village of Kohler's own programs. The only fiduciary fund maintained by the Village of Kohler is the Subsequent Year's Tax Roll Fund which records the tax roll and tax collections for other taxing jurisdictions within the Village of Kohler. The accounting used for fiduciary funds is much like that used for governmental funds.

The basic fiduciary fund financial statements can be found on page 14 of this report.

Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 16 through 40 of this report.

Other information. The required supplemental information which presents budgetary comparison data for the General Fund and the Tourism Promotion/Development Fund is presented on pages 41 through 42. Supplemental information on the Capital Projects Fund - Budget to Actual and Comparative Schedule of Property Taxes Levied and Assessed and Equalized Valuations- 2008-2012 Tax Rolls can be found on pages 44 through 45 of this report.

Page v Government-wide Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the Village of Kohler, assets exceeded liabilities by $7.78 million at the close of the most recent fiscal year in comparison to $7.77 million in the prior year, as presented in the following table.

VILLAGE OF KOHLER NET POSITION December 31, 2012 and 2011 (In Thousands) Governmental Business-type Activities Activities Totals

2012 2011 2012 2011 2012 2011 Current and other assets $ 2,336 $ 2,430 $ 1,520 $ 1,268 $ 3,856 $ 3,698 Capital assets 3 737 3,983 5,278 5,428 9,015 9 411 Total assets 6 073 6 413 6,798 6,696 12,871 13,109

Current and other liabilities 1,978 1,881 122 96 2,100 1,977 Noncurrent liabilities 2,022 2,304 972 1,055 2,994 3,359 Total liabilities 4,000 4,185 1,094 1 '151 5,094 5,336

Net position Net investment in capital assets 1,715 1,679 4,306 4,373 6,021 6,052 Restricted 35 13 283 280 318 293 Unrestricted 323 536 1 '115 892 1,438 1,428 Total net position $ 2,073 $ 2,228 $ 5,704 $ 5,545 $ 7,777 $ 7,773

The Village of Kohler's net position reflects its net investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that are still outstanding as $6.0 million. The Village of Kohler uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Village's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the Village of Kohler's net position, $318,000 represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position is $1.4 million.

The government's net position increased by $4,250 during the current fiscal year.

Page vi Governmental activities. Governmental activities decreased the Village of Kohler's net position by approximately $155,000 and $100,000, for the years ended 2012 and 2011, respectfully.

The following is a more detailed review of the two years' operations.

VILLAGE OF KOHLER'S CHANGES IN NET POSITION For the years ending December 31, 2012 and 2011 (In Thousands) Governmental Business-type Activities Activities Totals Revenues 2012 2011 2012 2011 2012 2011 Program revenues Charges for services $ 299 $ 321 $ 1,367 $ 1,308 $ 1,666 $ 1,629 Operating grants and contributions 267 287 267 287 Capital grants and contributions 90 90 General revenues Property taxes 1,649 1,579 1,649 1,579 Room taxes 902 872 902 872 Intergovernmental revenues not restricted 104 139 104 139 Investment income 2 1 2 2 4 3 Gain on disposal of assets 12 12 Miscellaneous 64 36 64 36 Total revenues 3,287 3,337 1,369 1,310 4,656 4,647

Expenses General government 397 382 397 382 Public safety 1,193 1,137 1,193 1,137 Public works 588 671 588 671 Health and human services 193 174 193 174 Culture, education and recreation 1,055 1,047 1,055 1,047 Interest and fiscal charges 74 83 74 83 Water 674 623 674 623 Sewer 478 443 478 443 Total Expenses 3,500 3,494 1,152 1,066 4,652 4,560 Transfer in/(out) 58 57 (58) (57) Increase (decrease) in net position (155) (100) 159 187 4 87 Net position - January 1 , 2,228 2,328 5,545 5,358 7,773 7,686 Net position- December 31, $ 2,073 $ 2,228 $ 5,704 $ 5,545 $ 7,777 $ 7,773

Page vii Expenses by Function- Governmental Activities

--.·------General ----l rnment 11% I

Culture, education ------.. and recreation 30% Public safety 34%

Health and human services 6% Public works [ _·~------~------~!% ------

Program and General Revenues by Source- Governmental Activities

Investment Other Charges for income services lntergovernmentai _ _ ~O~%:...... ----:/f"""_'l_ 9% 3% I Operating grants 1 and contributions Gain on disposal 8% of assets 0%

Capital grants and contributions Other taxes 0% 28%

Property taxes 50% '------"

Page viii Business-type activities. During 2012, business-type activities increased the Village of Kohler's net position by $159,038 compared to $187,000 increase in 2011. The operating income of each of the utilities improved this last year.

Expenses and Program Revenues - Business-type Activities

900 800 700 • Revenues 600 • Expenses 500 400 300 200 100 0 Water Sewer

Revenues by Source- Business-type Activities

Charges for services 100% L ______. __ _

Pageix Financial Analysis of the Government's Funds

As noted earlier, the Village of Kohler uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the Village of Kohler's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, the Village of Kohler's governmental funds reported combined ending fund balances of approximately $362,385, a decrease of $209,692 in comparison with the prior year. Approximately 42% of this total amount ($151 ,200) constitutes unassigned fund balance, which is available for spending at the government's discretion. Management has planned for this amount to provide working capital. The Village has restrict fund balance for debt service in the amount of $57,318. They have also committed fund balance for tourism promotion/development ($94,919), and for a variety of other capital projects ($45, 192). The Village has assigned $8,695 of fund balance for the Police Departments uniforms.

The General Fund is the chief operating fund of the Village of Kohler. At the end of the current fiscal year, unassigned fund balance of the General Fund was $151 ,200, which is planned for working capital. As a measure of the General Fund's liquidity, it may be useful to compare the fund balance set aside for working capital to the total fund expenditures. This amount represents 6% of total General Fund expenditures and 5% of 2013 budgeted expenditures.

The fund balance of the Village of Kohler's General Fund decreased by approximately $51,007 during the current fiscal. The most significant reasons for the decrease are unbudgeted operating expenses in hydrant rental fees, salt purchases in the Street department, and solid waste collection/recycling costs.

Proprietary funds. The Village of Kohler's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

The Sewer Utility had unrestricted net position of $680,738 at December 31, 2012. The Water Utility unrestricted net position amounted to $434,020. The change in net position for the funds was an increase in the Sewer Utility of $47,755 and an increase in the Water Utilities of $111,283.

General Fund Budgetary Highlights

During the year the Village General Fund revenue budget was under by $37,655. Total expenditures compared to the final budget were over budget by $12,428 for the year. In total, the General Fund's actual operating results were very comparable to its budget.

Pagex Capital Asset and Debt Administration

Capital assets. The Village of Kohler's investment in capital assets for its governmental and business-type activities as of December 31, 2012, amounts to $9.0 million (net of accumulated depreciation). This investment in capital assets includes land, land improvements, buildings, machinery and equipment, and infrastructure.

Major capital asset at the end of the current fiscal year included the following:

VILLAGE OF KOHLER'S CAPITAL ASSETS (net of accumulated depreciation) December 31 , 2012 and 2011 (In Thousands)

Governmental Business-type Activities Activities Totals 2012 2011 2012 2011 2012 2011 Land & improvements $ 228 $ 228 $ 3 $ 3 $ 231 $ 231 Buildings and improvements 1,898 1,897 1,898 1,897 Machinery and equipment 563 761 563 761 Infrastructure Streets 992 1,039 992 1,039 Sidewalks 16 17 16 17 Storm stabilization 40 41 40 41 Sewer Utility 2,876 2,951 2,876 2,951 Water Utility 2,396 2,470 2,396 2,470 Total $ 3,737 $ 3,983 $ 5,275 $ 5,424 $ 9,012 $ 9,407

Additional information on the Village of Kohler's capital assets can be found in Note I II.D. on pages 30 through 32 of this report.

Long-term obligations. At the end of the current fiscal year, the Village of Kohler had total debt outstanding of $2.9 million. The entire amount of this debt is backed by the full faith and credit of the government.

VILLAGE OF KOHLER'S LONG-TERM OBLIGATIONS December 31, 2012 and 2011 (In Thousands)

Governmental Business-type Activities Activities Totals

2012 2011 2012 2011 2012 2011

General obligation bonds and notes $ 2,022 $ 2,304 $ 972 $ 1,054 $ 2,994 $ 3,358

State statutes limit the amount of general obligation debt a governmental entity may issue to 5 percent of its total equalized valuation. The current debt limitation tor the Village of Kohler is $20.5 million which is significantly in excess of the Village of Kohler's outstanding general obligation debt of $3.0 million.

Page xi Additional information on the Village of Kohler's long-term debt can be found in Note Ill, F. on pages 34 through 35 of this report.

Economic Factors and Next Year's Budgets

The Village's population trend has been very stable.

The Village's tax levy to finance 2014 operations is essentially unchanged from the prior year tax levy.

Requests for Information

This financial report is designed to provide a general overview of the Village of Kohler's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to the Village Clerk!freasurer, Village of Kohler, 319 Highland Drive, Kohler, Wisconsin 53044.

Page xii VILLAGE OF KOHLER

STATEMENT OF NET POSITION As of December 31, 2012

Governmental Business Activities T~12e Activities Totals ASSETS Cash and investments (deficit) $ (632,555) $ 914,450 $ 281,895 Receivables (net) Taxes receivable 1,810,134 1,810,134 Accounts 204,698 272,022 476,720 Special assessments 17,807 17,807 Internal balances (13,511) 13,511 Inventories and prepaid items 950,000 19,355 969,355 Unamortized debt discount 17,762 17,762 Restricted assets Cash and investments 283,304 283,304 Capital assets (net of accumulated depreciation) Land 223,000 3,000 226,000 Other capital assets, net of depreciation 3,513,643 4,741,246 8,254,889 Non-utility property 3,760 3,760 Intangible assets 530,291 530,291 Total Assets 6,073,171 6,798,746 12,871,917

LIABILITIES Accounts payable and accrued expenses 184,243 122,387 306,630 Unearned revenue 1,793,803 1,793,803 Noncurrent liabilities Due within one year 311,996 84,848 396,844 Due in more than one year 1,709,893 887,162 2,597,055 Total Liabilities 3,999,935 1,094,397 5,094,332

NET POSITION Net investment in capital assets 1,714,754 4,306,287 6,021,041 Restricted for Equipment Replacement 283,304 283,304 Debt service 35,653 35,653 Unrestricted 322,829 1114 758 1,437,587

TOTAL NET POSITION $ 2,073,236 ~ 5,704,349 ~ 7,777,585

See accompanying notes to financial statements. Page 1 VILLAGE OF KOHLER

STATEMENT OF ACTIVITIES For the Year Ended December 31 , 2012

Program Revenues Operating Charges for Grants and Functions/Programs Expenses Services Contributions

Governmental Activities General government $ 397,204 $ 13,017 $ Public safety 1,193,037 76,925 16,614 Public works 588,105 23,705 203,308 Health and human services 192,891 18,655 7,438 Culture, education and recreation 1,055,061 166,937 39,535 Interest and fiscal charges 73 375 Total Governmental Activities 3,499,673 299,239 266,895

Business-type Activities Water Utility 674,386 840,800 Sewer Utility 477 458 526,342 Total Business-type Activities 1,151,844 1,367,142

Total $ 4,651,517 $ 1,666,381 =$==2=66=,8=9=5

General Revenues Taxes Property taxes, levied for general purposes Property taxes, levied for debt service Other taxes Intergovernmental revenues not restricted to specific programs Investment income Gain on disposal of assets Miscellaneous Total General Revenues Transfers

Change in net position

NET POSITION- Beginning of Year

NET POSITION - END OF YEAR

See accompanying notes to financial statements. Page2 Net {Ex~enses} Revenues and Changes in Net Position

Governmental Business-type Activities Activities Totals

$ (384, 187) $ - $ (384, 187) (1 ,099,498) (1 ,099,498) (361 ,092) (361 ,092) (166,798) (166,798) (848,589) (848,589) (73,375) (73,375) (2,933,539) (2,933,539)

166,414 166,414 48 884 48 884 215,298 215,298

(2,933,539) 215,298 (2, 718,241)

1,274,085 1,274,085 374,695 374,695 901,587 901,587

104,262 104,262 1,701 2,096 3,797 177 177 63 888 63,888 2,720,395 2 096 2,722,491 58,356 (58,356)

(154,788) 159,038 4,250

2,228,024 5,545,311 7,773,335

§ 2,073,236 § 5,704,349 § 7,777,585

See accompanying notes to financial statements. Page 3 VILLAGE OF KOHLER

BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2012

Special Non major Revenue Governmental Fund Funds Tourism Promotion/ Crime Development Debt Service Capital Prevention General Fund Fund Fund Projects Fund Fund Totals ASSETS Cash and investments (deficit) $ 116,187 $ 93,675 $ 57,318 $ (904,808) $ 5,073 $ (632,555) Receivables Tax roll receivable 1,349,975 392,659 67,500 1,810,134 Accounts 132,971 71,727 204,698 Prepaid items 950,000 950,000

TOTAL ASSETS $ 1 ,599,133 $ 165,402 $ 449,977 $ 112,692 $ 5,073 $ 2,332,277

LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 39,185 $ 70,483 $ - $ - $ - $ 109,668 Accrued liabilities 52,910 - - - - 52,910 Due to other funds 13,511 - - - - 13,511 Deferred revenues 1,333,644 - 392,659 67,500 - 1,793,803 Total Liabilities 1,439,250 70 483 392,659 67,500 - 1,969,892

Fund Balances Restricted 57,318 -- 57,318 Committed 94,919 - 45,192 5,073 145,184 Assigned 8,695 - - - - 8,695 Unassigned 151,188 - - - - 151 188 Total Fund Balances 159.883 94,919 57,318 45.192 5.073 362.385

TOTAL LIABILITIES AND FUND BALANCES $ 1 ,599,133 $ 165,402 $ 449,977 $ 112,692 $ 5,073 $ 2,332,277

See accompanying notes to financial statements. Page4 VILLAGE OF KOHLER

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION As of December 31, 2012

Total Fund Balances- Governmental Funds $ 362,385

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

Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Land 223,000 Land improvements 7,498,416 Less: Accumulated depreciation (3,984,773)

Some liabilities, including long-term debt, are not due and payable in the current period and therefore, are not reported in the funds. Bonds and notes payable (2,021 ,889) Accrued interest (21 ,665) Unamortized debt discount and issue costs 17762

NET POSITION OF GOVERNMENTAL ACTIVITIES $ 2,073,236

See accompanying notes to financial statements. Page 5 VILLAGE OF KOHLER

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES­ GOVERNMENTAL FUNDS For the Year Ended December 31, 2012

Non major Special Governmental Revenue Funds Funds Tourism Promotion/ Crime Development Debt Service Capital Projects Prevention General Fund Fund Fund Fund Fund Totals REVENUES Taxes $ 1,797,005 $ 378,667 $ 374,695 $ - $ - $ 2,550,367 Intergovernmental 371,107 - - - - 371,107 Licenses and permits 82,021 - - - - 82,021 Fines, forfeitures and penalties 25,408 - - - - 25,408 Public charges for services 173,155 - - - - 173,155 Investment income 1,587 114 - - - 1,701 Miscellaneous 82,543 - -- 50 82,593 Total Revenues 2.532.826 378.781 374.695 - 50 3.286.352

EXPENDITURES Current General government 367,959 367,959 Public safety 1,120,783 3,080 1,123,863 Public works 462,250 462,250 Health and human services 152,869 152,869 Culture, recreation and education 538,505 372,977 911,482 Capital Outlay 161,133 161 '133 Debt Service Principal 281,978 281,978 Interest and fiscal charges -- 93,043 93.043 Total Expenditures 2,642,366 372 977 375,021 161,133 3.080 3,554,577

Excess {deficiency) of revenues over expenditures (109,540} 5 804 (326} (161,133} (3.030} (268.225)

See accompanying notes to financial statements. Page 6 Nonmajor Special Governmental Revenue Fund Fund Tourism Promotion/ Crime Development Debt Service Capital Projects Prevention General Fund Fund Fund Fund Fund Totals

OTHER FINANCING SOURCES Proceeds from the sale of capital assets 177 - - - - 177 Transfers in 58,356 - - - - 58,356 Total Other Financing Sources 58,533 - - - - 58,533

Net Change in Fund Balances (51 ,007) 5,804 (326) (161,133) (3,030) (209,692)

FUND BALANCES - Beginning of Year 210,890 89,115 57,644 206,325 8,103 572,077

FUND BALANCES • END OF YEAR $ 159,883 $ 94,919 $ 57,318 $ 45,192 $ 5,073 $ 362,385

See accompanying notes to financial statements. Page? THIS PAGE IS INTENTIONALLY LEFT BLANK VILLAGE OF KOHLER

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 $ (209,692)

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

Governmental funds report capital outlays as expenditures. However, in the statement of net position the cost of these assets is capitalized and they are depreciated over their estimated useful lives and reported as depreciation expense in the statement of activities.

Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements 161,133 Some items reported as capital outlay were not capitalized (24,993) Depreciation is reported in the government-wide financial statements (377,808) Net book value of assets retired (5,074)

Debt issued provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal repaid 281,978

Governmental funds report debt premiums, discounts and issuance costs as other financing sources (uses) or expenditures. However, in the statement of net position, these are deferred and reported as other assets or deductions from long-term debt. These are allocated over the period the debt is outstanding in the statement of activities and are reported as interest expense. Debt discount and issuance costs (3,552)

Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Accrued interest on debt 23,220

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ {154,788)

See accompanying notes to financial statements. Page 8 VILLAGE OF KOHLER

STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2012

Business-type Activities - Enterprise Funds Water Utility Sewer Utility Totals ASSETS Current Assets Cash and investments $ 322,856 $ 591,594 $ 914,450 Receivables Accounts 148,679 123,343 272,022 Due from other funds 10,677 2,834 13,511 Inventories and prepayments 19,355 19,355 Total Current Assets 501,567 717 771 1,219,338

Noncurrent Assets Restricted Assets Cash and investments 283,304 283,304 Capital Assets Intangible assets 530,291 530,291 Property and equipment 3,803,419 3,824,754 7,628,173 Less: Accumulated depreciation (1 ,407,501) (1 ,476,426) (2,883,927) Other Assets Special assessments receivable 17,807 17,807 Non-utility property 3 760 3 760 Total Noncurrent Assets 2,417,485 3,161,923 5,579,408

Total Assets 2,919,052 3,879,694 6,798,746

See accompanying notes to financial statements. Page 9 Business-type Activities - Entererise Funds Water Utility Sewer Utility Totals LIABILITIES Current Liabilities Accounts payable $ 26,383 $ 28,376 $ 54,759 Accrued wages 3,259 2,689 5,948 Accrued taxes 51,614 51,614 Accrued interest 4,098 5,968 10,066 Current portion of long-term debt 27,529 57 319 84 848 Total Current Liabilities 112,883 94 352 207,235

Noncurrent Liabilities Long-Term Debt General obligation long-term debt payable 169,454 717 708 887,162 Total Noncurrent Liabilities 169,454 717 708 887,162

Total Liabilities 282,337 812,060 1,094,397

NET POSITION Net investment in capital assets 2,202,695 2,103,592 4,306,287 Restricted for Restricted for replacement of capital assets 283,304 283,304 Unrestricted 434,020 680,738 1 114 758

TOTAL NET POSITION $ 2,636,715 ~ 3,067,634 ~ 5,704,349

See accompanying notes to financial statements. Page 10 THIS PAGE IS INTENTIONALLY LEFT BLANK VILLAGE OF KOHLER

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2012

Business-ty:12e Activities - Enter12rise Funds Water Utility Sewer Utility Totals

OPERATING REVENUES $ 840.800 $ 526.342 $ 1.367.142

OPERATING EXPENSES Operation and maintenance 574,199 361,735 935,934 Depreciation 86,780 95,907 182,687 Taxes 6 607 6607 Total Operating Expenses 667.586 457.642 1.125.228

Operating Income 173 214 68.700 241 914

NONOPERATING REVENUES (EXPENSES) Interest on investments 304 771 1,075 Interest- special assessments 1,021 1,021 Interest expense (6,800) (19,816) (26,616) Total Nonoperating Revenues (Expenses) (5,475) (19,045) (24,520)

Income Before Transfers 167 739 49,655 217 394

TRANSFERS Transfers out (56,456) (1,900) (58,356) Total Transfers (56,456) (1,900) (58,356)

Change in Net Position 111,283 47,755 159,038

NET POSITION -Beginning of Year 2,525,432 3,019,879 5,545,311

NET POSITION - END OF YEAR $ 2,636,715 ~ 3,067,634 ~ 5,704,349

See accompanying notes to financial statements. Page 11 VILLAGE OF KOHLER

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2012

Business-t~~e Activities - Enter~rise Funds Water Utilit~ Sewer Utilit~ Totals CASH FLOWS FROM OPERATING ACTIVITIES Received from customers $ 734,408 $ 427,888 $ 1,162,296 Paid to suppliers for goods and services (536,667) (269,316) (805,983) Paid to employees for services (42,123) (65,658) (107,781) Paid to municipality (8,030) (266) (8,296) Net Cash Flows From Operating Activities 147 588 92,648 240,236

CASH FLOWS FROM INVESTING ACTIVITIES Investment income 1 325 771 2 096 Net Cash Flows From Investing Activities 1 325 771 2 096

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Paid to municipality for tax equivalent (56,456) (1 ,900) (58,356) Net Cash Flows From Noncapital Financing Activities (56,456) (1 ,900) (58,356)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Debt retired (26,875) (55,618) (82,493) Interest paid (6,967) (22,015) (28,982) Special assessments received 5,722 5,722 Acquisition and construction of capital assets (14,703) (18,560) (33,263) Net Cash Flows From Capital and Related Financing Activities (42,823) (96, 193) (139,016)

Net Change in Cash and Cash Equivalents 49,634 (4,674) 44,960

CASH AND CASH EQUIVALENTS- Beginning of Year 273,222 879.572 1,152,794

CASH AND CASH EQUIVALENTS- END OF YEAR $ 322,856 m 874,898 m 1,197,754

See accompanying notes to financial statements. Page 12 Business-t:t~?e Activities - Enter12rise Funds Water Utilit:t Sewer Utilit:t Totals RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income $ 173,214 $ 68,700 $ 241,914 Adjustments to Reconcile Operating Income to Net Cash Flows From Operating Activities Depreciation 86,780 95,907 182,687 Depreciation charged to other funds 5,368 (5,368) Changes in assets and liabilities Customer accounts receivable (111 ,760) (93,086) (204,846) Accounts payable 3,295 27,707 31,002 Payable to municipality (8,030) (266) (8,296) Other current liabilities (1 .279) (946) (2,225)

NET CASH FLOWS FROM OPERATING ACTIVITIES $ 147,588 $ 92,648 $ 240,236

RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION- PROPRIETARY FUNDS Cash and investments - statement of net position $ 322,856 $ 591,594 $ 914,450 Restricted cash and investments - statement of net position 283,304 283,304

CASH AND CASH EQUIVALENTS $ 322,856 ~ 874,898 ~ 1,197,754

NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None

See accompanying notes to financial statements. Page 13 VILLAGE OF KOHLER

STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUND As of December 31, 2012

Agency Fund ASSETS Cash and investments $ 2,483,652 Receivables Tax roll receivable 4.763.486

TOTAL ASSETS $ 7,247,138

LIABILITIES Due to other taxing units $ 7.247,138

TOTAL LIABILITIES $ 7,247,138

See accompanying notes to financial statements. Page 14 VILLAGE OF KOHLER

INDEX TO NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Page Summary of Significant Accounting Policies 16 A. Reporting Entity 16 B. Government-Wide and Fund Financial Statements 16 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 19 D. Assets, Liabilities, and Net Position or Equity 20 1. Deposits and Investments 20 2. Receivables 22 3. Prepaid Items 22 4. Restricted Assets 23 5. Capital Assets 23 6. Other Assets 24 7. Compensated Absences 24 8. Long-Term Obligations/Conduit Debt 24 9. Claims and Judgments 25 10. Equity Classifications 25 11. Basis for Existing Rates 27 II Stewardship, Compliance, and Accountability 27 A. Budgetary Information 27 B. Limitations on the Village's Tax Levy 27 Ill Detailed Notes on All Funds 28 A. Deposits and Investments 28 B. Receivables 29 C. Restricted Assets 30 D. Capital Assets 30 E. lnterfund 32 F. Long-Term Obligations 34 G. Lease Disclosures 35 H. Net Position/Fund Balances 36 IV Other Information 37 A. Employees' Retirement System 37 B. Risk Management 39 C. Commitments and Contingencies 39 D. Subsequent Events 39 E. Effect of New Accounting Standards on Current-Period Financial Statements 39 F. Major Customers 39

Page 15 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the Village of Kohler, Wisconsin conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The accepted standard­ setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB).

A. REPORTING ENTITY

This report includes all of the funds of the Village of Kohler. The reporting entity for the village consists of (a) the primary government, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading or incomplete. A legally separate organization should be reported as a component unit if the elected officials of the primary government are financially accountable for the organization. The primary government is financially accountable if it appoints a voting majority of the organization's governing body and (1) it is able to impose its will on that organization or (2) there is a potential for the organization to provide specific financial benefits to or burdens on the primary government. The primary government may be financially accountable if an organization is fiscally dependent on the primary government.

A legally separate, tax exempt organization should be reported as a component unit of a reporting entity if all of the following criteria are met: (1) The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; (2) The primary government is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization; (3) The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. Blended component units, although legally separate entities, are, in substance, part of the government's operations and are reported with similar funds of the primary government. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the primary government. This report does not contain any component units.

8. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

In June 2011, the GASB issued statement No. 63 - Financial Reporting of Deferred Outflows of Revenues, Deferred Inflows of Resources, and Net Position. This statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Previous financial reporting standards did not include guidance for these elements, which are distinct from assets and liabilities.

The village made the decision to implement this standard effective January 1, 2012.

Page 16 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.)

Government-Wide Financial Statements

The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services.

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

Fund Financial Statements

Financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, liabilities, net position/fund equity, revenues, and expenditure/expenses.

Funds are organized as major funds or nonmajor funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the village or meets the following criteria:

a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 1 0% of the corresponding total for a!! funds of that category or type; and

b. The same element of the individual governmental or enterprise fund that met the 1 0% test is at least 5% of the corresponding total for all governmental and enterprise funds combined.

c. In addition, any other governmental or enterprise fund that the village believes is particularly important to financial statement users may be reported as a major fund.

Separate financial statements are provided for governmental funds and proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Page 17 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

8. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.)

Fund Financial Statements (cont.)

The village reports the following major governmental funds:

General Fund - accounts for the village's primary operating activities. It is used to account for and report all financial resources except those accounted for and reported in another fund. Tourism Promotion/Development- Special revenue fund - used to account for and report grants and local revenues legally restricted or committed to supporting expenditures for tourism promotion and development activities. Debt service fund - used to account for and report financial resources that are restricted, committed, or assigned to expenditure for the payment of general long-term debt principal, interest, and related costs, other than TID or enterprise debt. Capital projects fund - used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets for the capital improvement program.

The village reports the following major enterprise funds:

Water Utility -accounts for operations of the water system Sewer Utility - accounts for operations of the sewer system

The village reports the following nonmajor governmental fund:

Special Revenue Funds - used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects).

Crime Prevention Fund

In addition, the village reports the following fund types:

Agency funds are used to account for and report assets held by the village in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units.

Tax Collection Fund

Page 18 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE I- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION

Government-Wide Financial Statements

The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and unearned revenue. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the village's water and sewer and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Fund Financial Statements

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the village considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources.

Property taxes are recorded in the year levied as receivables and deferred revenues. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. intergovernrnental aids and giants aie iecognized as revenues in the period the village is entitled the resources and the amounts are available. Amounts owed to the village which are not available are recorded as receivables and deferred revenues. Amounts received prior to the entitlement period are also recorded as deferred revenues.

Special assessments are recorded as revenues when they become measurable and available as current assets. Annual installments due in future years are reflected as receivables and deferred revenues.

Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above.

Page 19 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.)

Fund Financial Statements (cont.)

The village reports deferred revenues on its governmental funds balance sheet. Deferred revenues arise from taxes levied in the current year which are for subsequent year's operations. For governmental fund financial statements, deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are received before the village has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the village has a legal claim to the resources, the liability for deferred revenue is removed from the balance sheet and revenue is recognized.

Proprietary and fiduciary fund financial statements (other than agency funds) are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting, and do not have a measurement focus.

The 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 operations. The principal operating revenues of the water and sewer utility are charges to customers for sales and services. Special assessments are recorded as receivables and contribution revenue when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

All Financial Statements

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

D. ASSETS, LIABILITIES, AND NE7 POSITION OR EQUITY

1. Deposits and Investments

For purposes of the statement of cash flows, the village considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents.

Investment of village funds is restricted by Wisconsin state statutes. Available investments are limited to:

a. Time deposits in any credit union, bank, savings bank or trust company maturing in three years or less.

Page 20 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (cont.)

1. Deposits and Investments (cont.)

b. Bonds or securities of any county, city, drainage district, technical college district, village, town, or school district of the state. Also, bonds issued by a local exposition district, a local professional baseball park district, a local professional football stadium district, a local cultural arts district, the University of Wisconsin Hospitals and Clinics Authority, or the Wisconsin Aerospace Authority.

c. Bonds or securities issued or guaranteed by the federal government.

d. The local government investment pool.

e. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency.

f. Securities of an open-end management investment company or investment trust, subject to various conditions and investment options.

g. Repurchase agreements with public depositories, with certain conditions.

The village has adopted an investment policy. That policy follows the state statute for allowable investments.

Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank statement balance and carrying value is due to outstanding checks and/or deposits in transit.

The \tVisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund {SIF}, and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At December 31, 2012, the fair value of the village 's share of the LGIP's assets was substantially equal to the amount as reported in these statements.

See Note Ill. A. for further information.

Page 21 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (cont.)

2. Receivables

Property taxes are levied in December on the assessed value as of the prior January 1. In addition to property taxes for the village, taxes are collected for and remitted to the state and county governments as well as the local school district and technical college district. Taxes for all state and local governmental units billed in the current year for the succeeding year are reflected as receivables and due to other taxing units on the accompanying agency fund statement of fiduciary net position.

Property tax calendar - 2012 tax roll:

Lien date and levy date December 2012 Tax bills mailed December 2012 Payment in full, or January 31, 2013 First installment due January 31, 2013 Second installment due July 31, 2013 Personal property taxes in full January 31, 2013 Tax sale- 2012 delinquent real estate taxes October 2015

Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made for the water and sewer utilities because they have the right by law to place substantially all delinquent bills on the tax roll, and other delinquent bills are generally not significant.

During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as "due to and from other funds." Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds." lnterfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmental-wide financial statements as internal balances.

3. Prepaid Items

Governmental fund inventory items are charged to expenditure accounts when purchased. Year-end inventory was not significant. Proprietary fund inventories are generally used for construction and/or for operation and maintenance work. They are not for resale. They are valued at cost based on FIFO, and charged to construction and/or operation and maintenance expense when used.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Page 22 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE I- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (cont.)

4. Restricted Assets

Mandatory segregations of assets are presented as restricted assets. Such segregations are required by bond agreements and other external parties. Current liabilities payable from these restricted assets are so classified. The excess of restricted assets over current liabilities payable from restricted assets will be used first for retirement of related long-term debt. The remainder, if generated from earnings, is shown as restricted net position.

5. Capital Assets

Government-Wide Statements

Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are defined by the government as assets with an initial cost of more than $1 ,000 for general capital assets and $1 ,000 for infrastructure assets, and an estimated useful life in excess of 1 year. All capital assets are valued at historical cost, or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation.

Additions to and replacements of capital assets of business-type activities are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed fund proceeds. No interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced, retired or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation.

Depreciation and amortization of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation and amortization reflected in the statement of net position. Depreciation and amortization is provided over the assets' estimated useful lives using the straight-line method. The range of estimated useful lives by type of asset is as follows:

Buildings 45 Years Land Improvements 20 Years Machinery and Equipment 3-20 Years Utility System 20-80 Years Infrastructure 20-30 Years Intangibles 10-20 Years

Page 23 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (cont.}

5. Capital Assets (cont.)

Fund Financial Statements

In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements.

6. Other Assets

In governmental funds, debt issuance costs are recognized as expenditures in the current period. For the government-wide and the proprietary fund type financial statements, debt issuance costs are deferred and amortized over the term of the debt issue.

For the government-wide financial statements, debt issue costs incurred in the governmental funds are recognized as expense in the period incurred. While this method of accounting is not in accordance with generally accepted accounting principles, the effect on the financial statements is not material.

7. Compensated Absences

The village does not accrue vacation or sick leave, but rather expenses these costs as paid. Vacation time is not cumulative from year to year. Accumulated sick leave benefits are not payable to employees upon termination, retirement, or death. The village does not have a post-employment benefit plan.

B. Long-Term Obligations/Conduit Debt

All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes, bonds, and loan payable.

Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements.

The village has approved the issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the village. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. The total amount of IRB's outstanding at the end of the year is approximately $4,000,000, made up of 1 issue.

Page 24 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE I- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSJTJON OR EQUITY (cont.)

9. Claims and Judgments

Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments are only reported in governmental funds if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. Refer to Note IV. C. on commitments and contingencies.

10. Equity Classifications

Government-Wide Statements

Equity is classified as net position and displayed in three components:

a. Net investment in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

b. Restricted net position - Consists of net position with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation.

c. Unrestricted net position - All other net positions that do not meet the definitions of "restricted" or "net investment in capital assets."

When both restricted and unrestricted resources are available for use, it is the village's policy to use restricted resources first, then unrestricted resources as they are needed.

Fund Statements

Governmental fund equity is classified as fund balance. In accordance with Governmental Accounting Standards Board Statement No. 54 - Fund Balance Reponing and Governmental Fund Type Definitions, the village classifies governmental fund balance as follows:

a. Nonspendable - Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact.

b. Restricted - Consists of fund balances with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation.

Page 25 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (cont.)

Fund Statements (cont.)

c. Committed- Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (resolution) of the village. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the village that originally created the commitment.

d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific purposes that are not considered restricted or committed. Fund balance may be assigned through the following; 1) The village has adopted a financial policy authorizing the Finance Committee and the Village Clerk!Treasurer to assign amounts for a specific purpose. 2) All remaining positive spendable amounts in governmental funds, other than the general fund, that are neither restricted nor committed. Assignments may take place after the end of the reporting period.

e. Unassigned - Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those purposes.

Proprietary fund equity is classified the same as in the government-wide statements.

The village considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents I contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the village would first use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made.

The village has a formal minimum fund balance policy. That policy is to maintain a working capital fund of 25% of subsequent years general fund expenditures, which is $657,942. The balance at year end was $151,188 and is included in unassigned general fund balance.

See Note Ill. H. for further information.

Page 26 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (cont.)

11. Basis for Existing Rates

Water and sewer utility customers are primarily within the village's municipal boundaries. Metered water sales to customers are billed at rates established by the Wisconsin Public Service Commission and the sewer service revenues are based on rates established by the Village Board. All customers are billed on a quarterly basis as of the fifteenth day of March, June, September and December, payable in 20 days. Revenue for half of the month of December is consistently recognized as revenue in the subsequent year. Delinquent balances at the time of property tax lien date are placed on the customer's tax bill and collected through the normal tax collection process.

NOTE II- STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. BUDGETARY INFORMATION

Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note I. C.

A budget has been adopted for the General Fund, Tourism Promotion/Development Fund, Debt Service Fund, Capital Projects Fund. A budget has not been formally adopted for Crime Prevention Fund. Wisconsin Statute 65.90 requires that an annual budget be adopted for all funds.

The budgeted amounts presented include any amendments made. The village may authorize transfers of budgeted amounts within departments. Transfers between departments and changes to the overall budget must be approved by a two-thirds board action.

Appropriations lapse at year end unless specifically carried over. There were no carryovers to the following year. Budgets are adopted at the fund level of expenditure.

B. LIMITATIONS ON THE VILLAGE'S TAX LEVY

As part of Wisconsin's Act 32 (2011 ), legislation was passed that limits the village's future tax levies. Generally the village is limited to its prior tax levy dollar amount (excluding TIF Districts), increased by the greater of the percentage change in the village's equalized value due to new construction or zero percent for the 2011 levy collected in 2012 and thereafter. Changes in debt service from one year to the next are generally exempt from this limit with certain exceptions.

Page 27 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill - DETAILED NOTES ON ALL FUNDS

A. DEPOSITS AND INVESTMENTS

The village's deposits and investments at year end were comprised of the following:

Carrying Statement Value Balances Associated Risks

Deposits $ 382,917 $ 1,497,739 Custodial Credit LGIP 2,665,656 2,665,739 Credit Petty cash 278 - N/A

Total Deposits and Investments ~ 3,048,851 ~ 4,163,478

Reconciliation to financial statements Per statement of net position Unrestricted cash and investments $ 281,895 Restricted cash and investments 283,304 Per statement of net position- fiduciary funds Agency Fund 2,483,652

Total Deposits and Investments $ 3,048,851

Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and savings accounts (including NOW accounts), $250,000 for interest-bearing demand deposit accounts, and unlimited amounts for noninterest-bearing transaction accounts through December 31, 2012. On January 1, 2013, the temporary unlimited coverage for non interest bearing transaction accounts expired. Therefore, demand deposit accounts (interest-bearing and noninterest-bearing) are insured for a total of $250,000 beginning January 1, 2013. In addition, if deposits are held in an institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposit accounts.

Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the relatively small size of the Guarantee Fund in relationship to the total deposits covered and other legal implications, recovery of material principal losses may not be significant to individual municipalities. This coverage has not been considered in computing custodial credit risk.

Custodial Credit Risk

Deposits

Custodial credit risk is the risk that in the event of a financial institution failure, the village's deposits may not be returned to the village.

Page 28 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and tor the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

A. DEPOSITS AND INVESTMENTS (cont.)

Custodial Credit Risk (cont.)

Deposits (cont.)

As of December 31, 2012, $1 ,223,975 of the village's total bank balances were exposed to custodial credit risk as follows: Uninsured and uncollateralized $ 1,223,975

Total $ 1,223,975

Credit Risk

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.

The village had investments in the external Wisconsin Local Government Investment Pool which is not rated.

See Note I.D.1. tor further information on deposit and investment policies.

8. RECEIVABLES

All of the receivables on the balance sheet are expected to be collected within one year.

Governmental funds report deterred revenue in connection with receivables tor revenues that are not considered to be available to liquidate liabilities of the current period. Property taxes levied tor the subsequent year are not earned and cannot be used to liquidate liabilities of the current period. Governmental funds also deter revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:

Unearned

Property taxes receivable tor subsequent year $ 1,793,803

Total Deterred/Unearned Revenue tor Governmental Funds $ 1,793,803

Page 29 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

C. RESTRICTED ASSETS

The following represent the balances of the restricted assets:

Equipment Replacement Account

The sewer utility established an equipment replacement account to be used for significant mechanical equipment replacement as required by the Wisconsin Department of Natural Resources.

Restricted assets as of December 31, 2012 was $283,304.

D. CAPITAL ASSETS

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

Beginning Ending Balance Additions Deletions Balance Governmental Activities Capital assets not being depreciated Land $ 2231000 $ - $ - $ 2231000 Total Capital Assets Not Being Depreciated/ Amortized 2231000 2231000 Capital assets being depreciated Land Improvements $ 41,555 $ - $ - $ 41,555 Buildings 3,621,639 72,652 11,050 3,683,241 Machinery and equipment 2,406,208 63,488 13,178 2,456,518 Infrastructure I 13"171"102 113171102 Total Capital Assets Being Depreciated 713861504 136 140 241228 714981416

Total Capital Assets 716091504 136 140 241228 7)211416 Less: Accumulated depreciation for Land Improvements (36,209) (832) (37,041) Buildings (1 ,724,222) (70,224) 9,230 (1,785,216) Machinery and equipment (1 ,645,429) (257,846) 9,924 (1 ,893,351) Infrastructure (2201259) (481906) (269%165) Total Accumulated Depreciation (316261 119) (3771808) 19 154 (319841773) Net Capital Assets Being Depreciated 317601385 (241 1668) 5 074 315131643 Total Governmental Activities Capital Assets, Net of Accumulated Depreciation § 319831385 § (241 1668) § 51074 § 317361643

Page 30 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

D. CAPITAL ASSETS (cont.)

Depreciation expense was charged to functions as follows:

Governmental Activities General government $ 21 '188 Protection of persons and property 61,613 Highway and transportation 119,912 Culture, recreation and education 143,579 Health and sanitation 31,516

Total Governmental Activities Depreciation Expense $ 377,808

Beginning Ending Balance Additions Deletions Balance Business-type Activities Capital assets not being depreciated Land $ 3,000 $ - $ - $ 3,000 Total Capital Assets Not Being Depreciated 3 000 3 000 Capital assets being depreciated Structures and improvements $ 3,531,371 $ 13,506 $ 3,850 $ 3,541,027 Machinery and equipment 258,344 1,197 150 259,391 Structures and improvements 3,099,623 3,099,623 Machinery and equipment 714,208 18,561 7,637 725,132 Intangibles 530!291 5301291 Total Capital Assets Being Depreciated 8!133,837 33264 11 637 8!155,464

Total Capital Assets 8!136!837 33,264 11 637 8,1581464 Less: Accumulated depreciation for Water Utility (1 ,319,352) (92, 148) 4,001 (1 ,407,499) Sewer Utility {1,393!526) {90,539) 7 637 {1 !4761428) (1 R? F>R7) Total Accumulated Depreciation (2,712,878) ',...,_, ...... I 11 638 (?,883,9?7) Net Capital Assets Being Depreciated 5,420,959 (149,423) 1) 5,2711537

Business-type Capital Assets, Net of Accumulated Depreciation ~ 5,423,959 ~ {149,423) ~ {1) ~ 5,274,537

Page 31 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

D. CAPITAL ASSETS (cont.)

Depreciation expense was charged to functions as follows:

Business-type Activities Water $ 86,780 Sewer 95,907

Total Business-type Activities Depreciation Expense $ 182,687

Depreciation expense is different from additions because of joint metering.

E. INTERFUND

lnterfund Receivab/es!Payab/es

The following is a schedule of interfund receivables and payables including any overdrafts on pooled cash and investment accounts:

Receivable Fund Payable Fund Amount Water Utility General $ 10,677 Sewer Utility General 2 834

Total Internal Balances- Government-Wide Statement of Net Position $ 13.511

All amounts are due within one year.

The principal purpose of these interfunds is to record transactions between funds. All remaining balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

For the statement of net position, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated.

Page 32 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

E. INTERFUND (cont.)

Transfers

The following is a schedule of interfund transfers:

Fund Transferred To Fund Transferred From Amount Principal Purpose

General Water Utility $ 56,456 Payment in lieu of taxes General Sewer Utility ___.:.;I t.:::9..:::0~0 Payment in lieu of taxes

Total $ 58,356

Fund Transferred To Fund Transferred From Amount

Governmental Activities Business-type Activities $ 58,356 Business-type Activities Governmental Activities

Total Government-wide Financial Statements $ 58,356

Generally, transfers are used to (I) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

For the statement of activities, interfund transfers within the governmental activities or business-type activities are netted and eliminated.

Page 33 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

F. LONG-TERM 0BLIGA TIONS

Long-term obligations activity for the year ended December 31, 2012, was as follows:

Amounts Due Beginning Ending Within One Balance Increases Decreases Balance Year Governmental Activities Bonds and Notes Payable General obligation debt $ 2,303,867 $ - $ 281,978 $ 2,021,889 $ 311,996 Sub-totals 2,303,867 281,978 2,021,889 311 996

Total Governmental Activities Long-Term Liabilities $ 2,303,867 $ - $ 281,978 $ 2,021,889 $ 311 996

Business-type Activities Bonds and Notes Payable General obligation debt $ 1,054,503 $ - $ 82,493 $ 972,010 $ 84 848 Sub-totals 1,054,503 82,493 972,010 84,848

Total Business-type Activities Long-Term Liabilities $ 1,054,503 $ - $ 82 493 $ 972,010 $ 84 848

In accordance with Wisconsin Statutes, total general obligation indebtedness of the village may not exceed 5% of the equalized value of taxable property within the village's jurisdiction. The debt limit as of December 31, 2012, was $20,473,320. Total general obligation debt outstanding at year end was $2,993,899.

General Obligation Debt

All general obligation notes and bonds payable are backed by the full faith and credit of the village. Notes and bonds in the governmental funds will be retired by future property tax levies accumulated by the debt service fund. Business-type activities debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. Balance Governmental Activities Date of Final Interest Original December 31, General Obligation Debt Issue Maturit~ Rates Indebtedness 2012 Promissory Notes 2009 3/15/14 3.5% $ 170,000 $ 89,452 2010 3/1/20 3.65% 866,000 798,007 Refunding Bonds 2011 3/1/19 3.65% 553,000 431,783 2011 12/1/18 1.0-3.0% 761,176 657,584 Loans 2011 5/1/15 0% 75,105 45,063

Total Governmental Activities- General Obligation Debt $ 2,021,889

Page 34 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

F. LONG-TERM 0BLIGA TIONS (cont.)

General Obligation Debt (cont.) Balance Business-ty~e Activities Date of Final Interest Original December 31, General Obligation Debt Issue Maturity: Rates Indebtedness 2012

Promissory Notes 2000 5/1/19 3.03% $ 367,072 $ 159,930 2011 5/1/30 2.4% 530,291 507,935 Refunding 2011 3/1/19 3.65% 297,000 231,729 2011 12/1/18 1.0-3.0% 83,824 72 416

Total Business-type Activities- General Obligation Debt ~ 972,010

Debt service requirements to maturity are as follows:

Governmental Activities Business-type Activities General Obligation Debt General Obligation Debt Years Princi~al Interest Princi~al Interest 2013 $ 311,996 $ 61,663 $ 84,848 $ 26,522 2014 323,524 53,189 87,610 24,080 2015 283,715 44,072 89,948 21,524 2016 274,590 35,907 92,359 18,845 2017 285,206 27,254 95,344 16,059 2018-2022 542,858 26,997 269,271 44,456 2023-2027 152,236 21,355 2028-2030 100 394 3 652

Totals ~ 2,021,889 ~ 249,082 ~ 972,010 $ 176,493

G. LEASE DISCLOSURES

Lessor- Operating Leases

The village leases a portion of its Village Hall facility to the U.S. Post Office under an operating lease with a fixed term ending April 30, 2017. The revenue received from the lease in 2012 was $5,221. The minimum future rentals on the noncancelable operating lease as of December 31, 2012 are $28,171. This represents the total amount remaining on the current lease.

Page 35 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

H. NET POSITION/FUND BALANCES

Net position reported on the government wide statement of net position at December 31, 2012, includes the following:

Governmental Activities

Net Investment in Capital Assets Land $ 223,000 Construction in progress 3,513,643 Less: Long-term debt outstanding (210211889) Total Net Investment in Capital Assets 1 714 754

Restricted Restricted for debt service 35 653 Total Restricted 35,653

Unrestricted 3221829

Total Governmental Activities Net Position § 210731236

Governmental Funds

Governmental fund balances reported on the fund financial statements at December 31, 2012, include the following:

Restricted Major Fund Debt Service Fund $ 57.318

Committed Major Funds Tourism Promotion/Development Fund- Special Revenue Fund $ 94,919 Capital Projects Fund 45192

Total $ 140Yi1

Nonmajor Funds Crime Prevention Fund - Special Revenue Fund $ 5.073

Assigned Major Funds General Fund Police uniforms $ 8.695

Page 36 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE Ill- DETAILED NOTES ON ALL FUNDS (cont.)

H. NET POSITION/FUND BALANCES (cont.)

Governmental Funds (cont.)

Unassigned Major Funds General fund $ 151,188

Business-type Activities

Net Investment in Capital Assets Land $ 3,000 Non-utility property, net of accumulated depreciation 3,760 Other capital assets, net of accumulated depreciation 4,741,246 Intangibles 530,291 Less: Long-term debt outstanding (972,01 0) Total Net Investment in Capital Assets 4,306,287

Restricted Restricted for equipment replacement 283,304 Total Restricted 283,304

Unrestricted 1114 758

Total Business-type Activities Net Position ~ 5,704,349

NOTE IV- OTHER INFORMATION

A. EMPLOYEES' RETIREMENT SYSTEM

All eligible village employees participate in the Wisconsin Retirement System (WRS), a cost-sharing, multiple-employer, defined benefit, public employee retirement system. All employees, initially employed by a participating WRS employer prior to July 1, 2011, expected to work over 600 hours a year and expected to be employed for at least one year from employee's date of hire are eligible to participate in the WRS. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1,200 hours a year and expected to be employed for at least one year from employee's date of hire are eligible to participate in the WRS.

Prior to June 29, 2011, covered employees in the General category were required by statute to contribute 6.2% of their salary (3.2% for Executives and Elected Officials, 5.5% for Protective Occupations with Social Security, and 3.9% for Protective Occupations without Social Security) to the plan. Employers could make these contributions to the plan on behalf of employees. Employers were required to contribute an actuarially determined amount necessary to the fund the remaining projected cost of future benefits. Page 37 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE IV- OTHER INFORMATION (cont.)

A. EMPLOYEES' RETIREMENT SYSTEM (cont.)

Effective the first day of the first pay period on or after June 29, 2011 the employee required contribution was change to one-half of the actuarially determined contribution rate for General category employees, and Executives and Elected Officials. Required contributions for protective contributions are the same as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. Contribution rates for December 31, 2012 are:

Employee Employer General 5.9% 5.9% Executives and Elected Officials 7.05% 7.05% Protective with Social Security 5.9% 9.0% Protective without Social Security 5.9% 11.3%

The payroll for village employees covered by the WRS for the year ended December 31, 2012 was $1 ,009,234; the employer's total payroll was $1,180,850. The total required contribution for the year ended December 31, 2012 was $145,383 or 14.4% of covered payroll. Of this amount, 100% was contributed for the current year. Total contributions for the years ending December 31, 2011 and 2010 were $144,289 and $135,249, respectively, equal to the required contributions for each year.

Employees who retire at or after age 65 (62 for elected officials and 54 for protective occupation employees with less than 25 years of service, 53 for protective occupation employees with more than 25 years of service) are entitled to receive a retirement benefit. Employees may retire at age 55 (50 for protective occupation employees) and receive actuarially reduced benefits. The factors influencing the benefit are: (1) final average earnings, (2) years of creditable service, and (3) a formula factor. Final average earnings is the average of the employee's three highest years earnings. Employees terminating covered employment and submitting application before becoming eligible for a retirement benefit may withdraw their contributions and, by doing so, forfeit all rights to any subsequent benefit. For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998 and prior to July 1, 2011 are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011 must have five years of creditable service to be vested.

The System also provides death and disability benefits for employees. Eligibility for and the amount of all benefits is determined under Chapter 40 of Wisconsin Statutes. The System issues an annual financial report which may be obtained by writing to the Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931.

As of December 31, 2012 there was no pension related debt for the village.

Page 38 VILLAGE OF KOHLER

NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2012

NOTE IV- OTHER INFORMATION (cont.)

B. RISK MANAGEMENT

The village is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; and health care of its employees. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year.

C. COMMITMENTS AND CONTINGENCIES

From time to time, the village is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the village attorney that the likelihood is remote that any such claims or proceedings will have a material adverse effect on the village's financial position or results of operations.

Contingent Liability

The Kohler Company is pursuing litigation against the village for the reimbursement of taxes paid, based on the company's assessed value for fiscal years 2011 and 2012. The amounts that the village could potentially have to refund could be approximately $220,900 for 2011 and $616,400 for 2012. At this time, it is undetermined if the village will be liable for these amounts.

D. SUBSEQUENT EVENTS

The village received proceeds from two State Trust Fund loans in January 2013. The amount of the loans were $950,000 and $150,000. These proceeds will be used to purchase a new fire truck and to fund various capital projects.

E. EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS

The Governmental Accounting Standards Board (GASB) has approved GASB Statement No. 61, The Financial Reporting Entity: Omnibus; Statement No. 65, Items Previously Reported as Assets and Liabilities; Statement No. 66, Technical Corrections- 2012- an amendment of GASB Statements No. 10 and No. 62; Statement No. 67, Financial Reporting for Pension Plans- an amendment of GASB Statement No. 25; and Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27. Application of these standards may restate portions of these financial statements.

F. MAJOR CUSTOMERS

The Village has one major taxpayer whose tax bill for 2011 represented approximately 33% of the total 2012 taxes.

The Sewer Utility and Water Utility derived approximately 68% and 50% of their respective revenues from one industrial customer.

Page 39 THIS PAGE IS INTENTIONALLY LEFT BLANK REQUIRED SUPPLEMENTARY INFORMATION VILLAGE OF KOHLER

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL- GENERAL FUND For the Year Ended December 31, 2012

Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Taxes $ 1,880,730 $ 1,797,005 $ 1,797,005 $ Intergovernmental 368,869 368,869 371,107 2,238 Licenses and permits 80,000 85,891 82,021 (3,870} Fines, forfeitures and penalties 28,800 28,800 25,408 (3,392) Public charges for services 164,700 174,343 173,155 (1 ,188) Investment income 450 450 1,587 1,137 Miscellaneous 46 932 64 511 82 543 18 032 Total Revenues 2,570.481 2,519.869 2.532,826 12 957

EXPENDITURES Current: General government 363,268 367,882 367,959 (77) Public safety 1,147,835 1,114,750 1,120,783 (6,033) Health and human services 127,000 153,632 152,869 763 Public works 507,841 464,861 462,250 2,611 Culture, recreation and education 483 994 537 754 538,505 (751)

Total Expenditures 2.629,938 2.638,879 2,642,366 (3.487)

Excess (deficiency) of revenues over (under) expenditures (59,457) (119,010) (109,540) 9 470

OTHER FINANCING SOURCES Proceeds from sale of capital assets 177 177 Transfers in 59 457 59 457 58356 (1,101) Total Other Financing Sources 59 457 59 457 58 533 (924)

Net Change in Fund Balance $ - $ (59,553) $ (51 ,007) $ 8,546

FUND BALANCE- Beginning of Year 210,890

FUND BALANCE- END OF YEAR ~ 159,883

See independent auditors' report and accompanying notes to required supplementary information. Page 40 VILLAGE OF KOHLER

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL- TOURISM PROMOTION/ DEVELOPMENT FUND For the Year Ended December 31, 2012

Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Taxes $ 439,294 $ 439,294 $ 378,667 $ (60,627} Investment income 200 200 114 (86) Total Revenues 439 494 439 494 378 781 (60,713)

EXPENDITURES CURRENT Culture, recreation and education 374 813 374 813 372 977 1 836 Total Expenditures 374 813 374 813 372 977 1 836

Excess (deficiency) of revenues over (under) expenditures 64 681 64 681 5 804 (58,877)

Net Change in Fund Balance $ 64,681 $ 64,681 5,804 $ (58,877)

FUND BALANCE- Beginning of Year 89 115

FUND BALANCE - END OF YEAR ~ 94,919

See independent auditors' report and accompanying notes to required supplementary information. Page 41 THIS PAGE IS INTENTIONALLY LEFT BLANK SUPPLEMENTARY INFORMATION VILLAGE OF KOHLER

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION As of and for the Year Ended December 31, 2012

BUDGETARY INFORMATION

Budgetary information is derived from the annual operating budget and is presented using generally accepted accounting principles and the modified accrual basis of accounting.

Excess expenditures over appropriations are as follows:

Final Budget Expenditures Excess

General Fund General government $ 367,882 $ 367,959 $ 77 Public safety 1,114,750 1,120,783 6,033 Culture, recreation and education 537,754 538,505 751

See independent auditors' report. Page 42 VILLAGE OF KOHLER

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL- CAPITAL PROJECTS FUND For the Year Ended December 31, 2012

Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Total Revenues $ - $ - $ - $

EXPENDITURES Capital Outlay General public buildings 2,442 8,051 8,057 (6) Fire protection equipment and vehicles 982,000 13,056 13,056 DPW street equipment 33,000 42,795 42,795 Library improvements 8,000 2,185 2,185 Parks 5,000 3,195 3,195 Memorial building 174,000 84,387 84,387 Recreation - swimming pool 8 000 8 000 7 458 542 Total Expenditures 1,212,442 161 669 161 133 536

Excess (deficiency) of revenues over (under) expenditures (1 ,212,442) (161 ,669) (161,133) 536

OTHER FINANCING SOURCES Debt issued 1,041,442 Transfers in 171 000 5 609 (5,609) Total Other Financing Sources 1,212,442 5 609 (5,609)

Net Change in Fund Balance $ - $ (156,060) (161,133) $ (5,073)

FUND BALANCE- Beginning of Year 206,325

FUND BALANCE- END OF YEAR ~ 45,192

Page 43 VILLAGE OF KOHLER

COMPARATIVE SCHEDULE OF PROPERTY TAXES LEVIED AND ASSESSED AND EQUALIZED VALUATIONS 2008-2012 Tax Rolls

2008 2009 2010 2011 2012

STATE TAXES $ 66,161 $ 76,600 $ 70,081 $ 70,293 $ 69,489

COUNTY TAXES 1,898,910 2,179,393 2,104,858 2, 128,198 2,157,033

LOCAL TAXES Village property taxes 1,671,528 1,647,751 1,578,523 1,648,780 1,793,803

SCHOOL TAXES School District of Kohler 3,934,177 4,395,151 4,609,707 4,479,987 4,362,461 Other school districts 280 349 345 378 372 Vocational and Technical School District 574,042 672,929 643,210 647,404 657,783 Total School Taxes 4,508,499 5,068,429 5,253,262 5,127,769 5,020,616

Total General Property Taxes 8,145,098 8,972,173 9,006,724 8,975,040 9,040,941

SPECIAL ASSESSMENTS AND SPECIAL CHARGES 11,257 14,373 13,747 12,290 12,409

TOTAL TAX ROLL $ 8,156,355 $ 8,986,546 $ 9,020,471 $ 8,987,330 $ 9,053,350

ASSESSED VALUATION $ 399,522,550 $ 403,875,440 $ 386,460,990 $386,001,120 $412,956,390

EQUALIZED VALUATION $ 389,855,200 $ 451,370,600 $412,957,500 $414,206,300 $409,466,400

RATIO OF ASSESSMENT :1Q2 48% 8948% 9358% 93:19% jQQ 85°/Q

Page 44

APPENDIX B

Forms of Legal Opinions

(This page has been left blank intentionally.)

August 28, 2013

Re: Village of Kohler, Wisconsin ("Issuer") $1,365,000 General Obligation Promissory Notes, Series 2013A, dated August 28, 2013 ("Notes")

We have acted as bond counsel to the Issuer in connection with the issuance of the Notes. In such capacity, we have examined such law and such certified proceedings, certifications, and other documents as we have deemed necessary to render this opinion.

Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

The Notes are numbered from R-1 and upward; bear interest at the rates set forth below; and mature on June 1 of each year, in the years and principal amounts as follows:

Year Principal Amount Interest Rate

2015 $ 80,000 0.60% 2016 80,000 0.80 2017 80,000 1.00 2018 80,000 1.30 2019 85,000 1.60 2020 190,000 1.90 2021 250,000 2.20 2022 255,000 2.40 2023 265,000 2.60

Interest is payable semi-annually on June 1 and December 1 of each year commencing on June 1, 2014.

The Notes are not subject to optional redemption.

We further certify that we have examined a sample of the Notes and find the same to be in proper form.

Based upon and subject to the foregoing, it is our opinion under existing law that:

1. The Notes have been duly authorized and executed by the Issuer and are valid and binding general obligations of the Issuer.

QB\22012851.1 2. All the taxable property in the territory of the Issuer is subject to the levy of ad valorem taxes to pay principal of, and interest on, the Notes, without limitation as to rate or amount. The Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Notes except to the extent that necessary funds have been irrevocably deposited into the debt service fund account established for the payment of the principal of and interest on the Notes.

3. The interest on the Notes is excludable for federal income tax purposes from the gross income of the owners of the Notes. The interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Internal Revenue Code of 1986, as amended (the "Code") on corporations (as that term is defined for federal income tax purposes) and individuals. However, for purposes of computing the alternative minimum tax imposed on corporations, the interest on the Notes is included in adjusted current earnings. The Code contains requirements that must be satisfied subsequent to the issuance of the Notes in order for interest on the Notes to be or continue to be excludable from gross income for federal income tax purposes. Failure to comply with certain of those requirements could cause the interest on the Notes to be included in gross income retroactively to the date of issuance of the Notes. The Issuer has agreed to comply with all of those requirements. The opinion set forth in the first sentence of this paragraph is subject to the condition that the Issuer comply with those requirements. We express no opinion regarding other federal tax consequences arising with respect to the Notes.

We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement or any other offering material relating to the Notes. Further, we express no opinion regarding tax consequences arising with respect to the Notes other than as expressly set forth herein.

The rights of the owners of the Notes and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and may be subject to the exercise of judicial discretion in accordance with general principles of equity, whether considered at law or in equity.

This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

QB\22012851.1

August 28, 2013

Re: Village of Kohler, Wisconsin ("Issuer") $3,365,000 General Obligation Corporate Purpose Bonds, Series 2013B, dated August 28, 2013 ("Bonds")

We have acted as bond counsel to the Issuer in connection with the issuance of the Bonds. In such capacity, we have examined such law and such certified proceedings, certifications, and other documents as we have deemed necessary to render this opinion.

Regarding questions of fact material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

The Bonds are numbered from R-1 and upward; bear interest at the rates set forth below; and mature on June 1 of each year, in the years and principal amounts as follows:

Year Principal Amount Interest Rate

2024 $280,000 3.50% 2025 290,000 3.50 2026 300,000 3.50 2027 315,000 3.50 2028 325,000 3.65 2029 340,000 3.80 2030 355,000 3.90 2031 370,000 4.00 2032 385,000 4.10 2033 405,000 4.20

Interest is payable semi-annually on June 1 and December 1 of each year commencing on June 1, 2014.

The Bonds are subject to redemption prior to maturity, at the option of the Issuer, on June 1, 2023 or on any date thereafter. Said Bonds are redeemable as a whole or in part, and if in part, from maturities selected by the Issuer and within each maturity, by lot, at the principal amount thereof, plus accrued interest to the date of redemption.

We further certify that we have examined a sample of the Bonds and find the same to be in proper form.

Based upon and subject to the foregoing, it is our opinion under existing law that:

QB\22015718.1 1. The Bonds have been duly authorized and executed by the Issuer and are valid and binding general obligations of the Issuer.

2. All the taxable property in the territory of the Issuer is subject to the levy of ad valorem taxes to pay principal of, and interest on, the Bonds, without limitation as to rate or amount. The Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds except to the extent that necessary funds have been irrevocably deposited into the debt service fund account established for the payment of the principal of and interest on the Bonds.

3. The interest on the Bonds is excludable for federal income tax purposes from the gross income of the owners of the Bonds. The interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Internal Revenue Code of 1986, as amended (the "Code") on corporations (as that term is defined for federal income tax purposes) and individuals. However, for purposes of computing the alternative minimum tax imposed on corporations, the interest on the Bonds is included in adjusted current earnings. The Code contains requirements that must be satisfied subsequent to the issuance of the Bonds in order for interest on the Bonds to be or continue to be excludable from gross income for federal income tax purposes. Failure to comply with certain of those requirements could cause the interest on the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The Issuer has agreed to comply with all of those requirements. The opinion set forth in the first sentence of this paragraph is subject to the condition that the Issuer comply with those requirements. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement or any other offering material relating to the Bonds. Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein.

The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and may be subject to the exercise of judicial discretion in accordance with general principles of equity, whether considered at law or in equity.

This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

QB\22015718.1

APPENDIX C

Forms of Continuing Disclosure Certificates

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CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Village of Kohler, Sheboygan County, Wisconsin (the "Issuer") in connection with the issuance of $1,365,000 General Obligation Promissory Notes, Series 2013A, dated August 28, 2013 (the "Securities"). The Securities are being issued pursuant to Resolutions adopted by the Governing Body of the Issuer on July 8, 2013 and August 12, 2013 (collectively, the "Resolution") and delivered to Bankers' Bank (the "Purchaser") on the date hereof. Pursuant to the Resolution, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. In addition, the Issuer hereby specifically covenants and agrees as follows:

Section 1(a). Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the holders of the Securities in order to assist the Participating Underwriters within the meaning of the Rule (defined herein) in complying with SEC Rule 15c2-12(b)(5). References in this Disclosure Certificate to holders of the Securities shall include the beneficial owners of the Securities. This Disclosure Certificate constitutes the written Undertaking required by the Rule.

Section 1(b). Filing Requirements. Any filing under this Disclosure Certificate must be made solely by transmitting such filing to the MSRB (defined herein) through the Electronic Municipal Market Access ("EMMA") System at www.emma.msrb.org in the format prescribed by the MSRB. All documents provided to the MSRB shall be accompanied by the identifying information prescribed by the MSRB.

Section 2. Definitions. In addition to the defined terms set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

"Annual Report" means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

"Audited Financial Statements" means the Issuer's annual financial statements, which are currently prepared in accordance with generally accepted accounting principles (GAAP) for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and which the Issuer intends to continue to prepare in substantially the same form.

"Final Official Statement" means the Final Official Statement dated August 12, 2013 delivered in connection with the Securities, which is available from the MSRB.

"Fiscal Year" means the fiscal year of the Issuer.

"Governing Body" means the Village Board of the Issuer or such other body as may hereafter be the chief legislative body of the Issuer.

"Issuer" means the Village of Kohler, Wisconsin which is the obligated person with respect to the Securities.

QB\22012883.1 "Issuer Contact" means the Village Clerk/Treasurer of the Issuer who can be contacted at 319 Highland Drive, Kohler, WI 53044, phone (920) 459-3873, fax (920) 459-5668.

"Material Event" means any of the events listed in Section 5(a) of this Disclosure Certificate.

"MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, Virginia 22314.

"Participating Underwriter" means any of the original underwriter(s) of the Securities (including the Purchaser) required to comply with the Rule in connection with the offering of the Securities.

"Rule" means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and official interpretations thereof.

"SEC" means the Securities and Exchange Commission.

Section 3. Provision of Annual Report and Audited Financial Statements.

(a) The Issuer shall, not later than 365 days after the end of the Fiscal Year, commencing with the year that ends December 31, 2013, provide the MSRB with an Annual Report filed in accordance with Section 1(b) of this Disclosure Certificate and which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report 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 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and that, if Audited Financial Statements are not available within 365 days after the end of the Fiscal Year, unaudited financial information will be provided, and Audited Financial Statements will be submitted to the MSRB when and if available.

(b) If the Issuer is unable or fails to provide to the MSRB an Annual Report by the date required in subsection (a), the Issuer shall send in a timely manner a notice of that fact to the MSRB in the format prescribed by the MSRB, as described in Section 1(b) of this Disclosure Certificate.

Section 4. Content of Annual Report. The Issuer's Annual Report shall contain or incorporate by reference the Audited Financial Statements and updates of the following sections of the Final Official Statement to the extent such financial information and operating data are not included in the Audited Financial Statements:

1. Indebtedness 2. Financial Information 3. Property Valuations and Taxes

Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, -2- QB\22012883.1 which are available to the public on the MSRB’s Internet website or filed with the SEC. The Issuer shall clearly identify each such other document so incorporated by reference.

Section 5. Reporting of Material Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events with respect to the Securities:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. 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 Securities, or other material events affecting the tax status of the Securities;

7. Modification to rights of holders of the Securities, if material;

8. Securities calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the Securities, if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of the Issuer;

13. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, 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.

For the purposes of the event identified in subsection (a)12. above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Issuer 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 Issuer, or if such jurisdiction has -3- QB\22012883.1 been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer.

(b) When a Material Event occurs, the Issuer shall, in a timely manner not in excess of ten business days after the occurrence of the Material Event, file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Material Events described in subsections (a) (8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Securities pursuant to the Resolution.

(c) Unless otherwise required by law, the Issuer shall submit the information in the format prescribed by the MSRB, as described in Section 1(b) of this Disclosure Certificate.

Section 6. Termination of Reporting Obligation. The Issuer's obligations under the Resolution and this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all the Securities.

Section 7. Issuer Contact; Agent. Information may be obtained from the Issuer Contact. Additionally, the Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolution and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent.

Section 8. Amendment; Waiver. Notwithstanding any other provision of the Resolution or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause the undertakings to violate the Rule. The provisions of this Disclosure Certificate constituting the Undertaking or any provision hereof, shall be null and void in the event that the Issuer delivers to the MSRB an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Securities. The provisions of this Disclosure Certificate constituting the Undertaking may be amended without the consent of the holders of the Securities, but only upon the delivery by the Issuer to the MSRB of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of this Disclosure Certificate and by the Issuer with the Rule.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event.

-4- QB\22012883.1 Section 10. Default. (a) Except as described in the Final Official Statement, in the previous five years, the Issuer has not failed to comply in all material respects with any previous undertakings under the Rule to provide annual reports or notices of material events.

(b) In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any holder of the Securities may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under the Resolution and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Securities and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and holders from time to time of the Securities, and shall create no rights in any other person or entity.

IN WITNESS WHEREOF, we have executed this Certificate in our official capacities effective the 28th day of August, 2013.

______Thomas Schnettler President

(SEAL)

______Laurie Lindow Village Clerk/Treasurer

-5- QB\22012883.1 CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Village of Kohler, Sheboygan County, Wisconsin (the "Issuer") in connection with the issuance of $3,365,000 General Obligation Corporate Purpose Bonds, Series 2013B, dated August 28, 2013 (the "Securities"). The Securities are being issued pursuant to Resolutions adopted by the Governing Body of the Issuer on July 8, 2013 and August 12, 2013 (collectively, the "Resolution") and delivered to Bernardi Securities, Inc. (the "Purchaser") on the date hereof. Pursuant to the Resolution, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. In addition, the Issuer hereby specifically covenants and agrees as follows:

Section 1(a). Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the holders of the Securities in order to assist the Participating Underwriters within the meaning of the Rule (defined herein) in complying with SEC Rule 15c2-12(b)(5). References in this Disclosure Certificate to holders of the Securities shall include the beneficial owners of the Securities. This Disclosure Certificate constitutes the written Undertaking required by the Rule.

Section 1(b). Filing Requirements. Any filing under this Disclosure Certificate must be made solely by transmitting such filing to the MSRB (defined herein) through the Electronic Municipal Market Access ("EMMA") System at www.emma.msrb.org in the format prescribed by the MSRB. All documents provided to the MSRB shall be accompanied by the identifying information prescribed by the MSRB.

Section 2. Definitions. In addition to the defined terms set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

"Annual Report" means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

"Audited Financial Statements" means the Issuer's annual financial statements, which are currently prepared in accordance with generally accepted accounting principles (GAAP) for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and which the Issuer intends to continue to prepare in substantially the same form.

"Final Official Statement" means the Final Official Statement dated August 12, 2013 delivered in connection with the Securities, which is available from the MSRB.

"Fiscal Year" means the fiscal year of the Issuer.

"Governing Body" means the Village Board of the Issuer or such other body as may hereafter be the chief legislative body of the Issuer.

"Issuer" means the Village of Kohler, Wisconsin which is the obligated person with respect to the Securities.

QB\22015785.1 "Issuer Contact" means the Village Clerk/Treasurer of the Issuer who can be contacted at 319 Highland Drive, Kohler, WI 53044, phone (920) 459-3873, fax (920) 459-5668.

"Material Event" means any of the events listed in Section 5(a) of this Disclosure Certificate.

"MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, Virginia 22314.

"Participating Underwriter" means any of the original underwriter(s) of the Securities (including the Purchaser) required to comply with the Rule in connection with the offering of the Securities.

"Rule" means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and official interpretations thereof.

"SEC" means the Securities and Exchange Commission.

Section 3. Provision of Annual Report and Audited Financial Statements.

(a) The Issuer shall, not later than 365 days after the end of the Fiscal Year, commencing with the year that ends December 31, 2013, provide the MSRB with an Annual Report filed in accordance with Section 1(b) of this Disclosure Certificate and which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report 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 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and that, if Audited Financial Statements are not available within 365 days after the end of the Fiscal Year, unaudited financial information will be provided, and Audited Financial Statements will be submitted to the MSRB when and if available.

(b) If the Issuer is unable or fails to provide to the MSRB an Annual Report by the date required in subsection (a), the Issuer shall send in a timely manner a notice of that fact to the MSRB in the format prescribed by the MSRB, as described in Section 1(b) of this Disclosure Certificate.

Section 4. Content of Annual Report. The Issuer's Annual Report shall contain or incorporate by reference the Audited Financial Statements and updates of the following sections of the Final Official Statement to the extent such financial information and operating data are not included in the Audited Financial Statements:

1. Indebtedness 2. Financial Information 3. Property Valuations and Taxes

-2- QB\22015785.1 Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which are available to the public on the MSRB’s Internet website or filed with the SEC. The Issuer shall clearly identify each such other document so incorporated by reference.

Section 5. Reporting of Material Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events with respect to the Securities:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. 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 Securities, or other material events affecting the tax status of the Securities;

7. Modification to rights of holders of the Securities, if material;

8. Securities calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the Securities, if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of the Issuer;

13. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, 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.

For the purposes of the event identified in subsection (a)12. above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent

-3- QB\22015785.1 or similar officer for the Issuer 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 Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer.

(b) When a Material Event occurs, the Issuer shall, in a timely manner not in excess of ten business days after the occurrence of the Material Event, file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Material Events described in subsections (a) (8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Securities pursuant to the Resolution.

(c) Unless otherwise required by law, the Issuer shall submit the information in the format prescribed by the MSRB, as described in Section 1(b) of this Disclosure Certificate.

Section 6. Termination of Reporting Obligation. The Issuer's obligations under the Resolution and this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all the Securities.

Section 7. Issuer Contact; Agent. Information may be obtained from the Issuer Contact. Additionally, the Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolution and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent.

Section 8. Amendment; Waiver. Notwithstanding any other provision of the Resolution or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause the undertakings to violate the Rule. The provisions of this Disclosure Certificate constituting the Undertaking or any provision hereof, shall be null and void in the event that the Issuer delivers to the MSRB an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Securities. The provisions of this Disclosure Certificate constituting the Undertaking may be amended without the consent of the holders of the Securities, but only upon the delivery by the Issuer to the MSRB of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of this Disclosure Certificate and by the Issuer with the Rule.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses

-4- QB\22015785.1 to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event.

Section 10. Default. (a) Except as described in the Final Official Statement, in the previous five years, the Issuer has not failed to comply in all material respects with any previous undertakings under the Rule to provide annual reports or notices of material events.

(b) In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any holder of the Securities may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under the Resolution and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Securities and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters and holders from time to time of the Securities, and shall create no rights in any other person or entity.

IN WITNESS WHEREOF, we have executed this Certificate in our official capacities effective the 28th day of August, 2013.

______Thomas Schnettler President

(SEAL)

______Laurie Lindow Village Clerk/Treasurer

-5- QB\22015785.1