City of Cleveland, Ohio Public Power System Revenue Refunding Bonds, Series 2016A
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PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 22, 2016 NEW ISSUE - BOOK-ENTRY ONLY Ratings Moody’s: Applied For S&P: A- (See “RATINGS”) In the opinion of Squire Patton Boggs (US) LLP, Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2016A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Series 2016A Bonds and the Series 2016B Bonds are exempt from all Ohio state and local taxation, except the estate tax, the domestic insurance company tax, the dealers in intangibles tax, the tax levied on the basis of the total equity capital of financial institutions, and the net worth base of the corporate franchise tax. Interest on the Series 2016A Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. INTEREST ON THE SERIES 2016B BONDS IS NOT EXCLUDED FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES. For a more complete discussion of the tax aspects, see “TAX MATTERS” herein. OFFICIAL STATEMENT CITY OF CLEVELAND, OHIO $81,820,000* $13,265,000* Public Power System Revenue Refunding Bonds, Public Power System Taxable Revenue Refunding Series 2016A Bonds, Series 2016B Dated: Date of delivery Due: November 15, as shown on the inside front cover The $81,820,000* City of Cleveland, Ohio Public Power System Revenue Refunding Bonds, Series 2016A (the “Series 2016A Bonds”) and $13,265,000* City of Cleveland, Ohio Public Power System Taxable Revenue Refunding Bonds, Series 2016B (the “Series 2016B Bonds,” and together with the Series 2016A Bonds, the “Series 2016 Bonds”) will be issued only as one fully registered bond for each interest rate of each maturity of each series under a book-entry only system, and will be registered initially in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchasers of beneficial interests in the Series 2016 Bonds will not receive delivery of the Series 2016 Bonds. So long as Cede & Co., as nominee for DTC, is the registered owner of the Series 2016 Bonds, references herein to owners or registered owners of the Series 2016 Bonds shall mean Cede & Co., and shall not mean the Beneficial Owners of the Series 2016 Bonds. See A“ PPENDIX D - BOOK-ENTRY ONLY SYSTEM.” The Series 2016 Bonds will be dated the date of delivery. The inside front cover contains information concerning their maturity schedules, interest rates, and price or yields. Interest on the Series 2016 Bonds will be payable on May 15, 2017 and on each May 15 and November 15 thereafter. The principal of the Series 2016 Bonds is payable, so long as Cede & Co. is the registered owner of the Series 2016 Bonds, to Cede & Co., as nominee for DTC. The Series 2016 Bonds are subject to redemption prior to maturity as described herein. See “THE SERIES 2016 BONDS – Terms.” The Series 2016 Bonds are issued pursuant to the Indenture (as defined herein) between the City of Cleveland, Ohio (the “City”), and U.S. Bank National Association, Cleveland, Ohio, as Trustee (the “Trustee”), and are payable from and secured under the Indenture, on a parity with other Series of Outstanding Bonds and Additional Bonds and other parity obligations that may be issued or incurred in the future, solely by a pledge of and a first lien on the Net Revenues of Cleveland Public Power and the Special Funds established under the Indenture, all as more fully described herein. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” The Series 2016 Bonds are being issued to refund certain Outstanding Bonds. See “INTRODUCTION - Authorization and Purpose of Issue.” THE SERIES 2016 BONDS ARE SPECIAL OBLIGATIONS OF THE CITY, PAYABLE SOLELY FROM THE SOURCES DESCRIBED IN THIS OFFICIAL STATEMENT. THE SERIES 2016 BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY AND THE HOLDERS OF SERIES 2016 BONDS WILL NOT HAVE THE RIGHT TO HAVE EXCISES OR TAXES LEVIED BY THE CITY FOR THE PAYMENT OF PRINCIPAL OF OR ANY PREMIUM OR INTEREST ON THE SERIES 2016 BONDS. The Series 2016 Bonds are offered when, as and if issued and received by the Underwriters and are subject to receipt of approving legal opinions of Squire Patton Boggs (US) LLP, Cleveland, Ohio, Bond Counsel, and to certain other conditions. Certain legal matters will be passed upon for the City by its Director of Law and by its disclosure counsel, Tucker Ellis LLP. Certain legal matters will be passed upon for the Underwriters by their counsel, Bricker & Eckler LLP, Cleveland, Ohio. The Series 2016 Bonds are expected to be available for delivery through the facilities of DTC, New York, New York, on or about December __, 2016. Citigroup Barclays Cabrera Capital Markets, LLC Janney Montgomery Scott RBC Capital Markets LLC The date of this Official Statement is _______, 2016, and the information speaks only as of that date. This Preliminary Official Statement and information contained herein are subject to change, completion or amendment without notice. These securities may not be sold nor may offers to buy be accepted prior to the time Official Statement to offers not be sold nor may These securities may This Preliminary completion or amendment without notice. contained herein are subject to change, Official Statement and information any sale of these securitiesany jurisdiction nor shall there be in in which such offer, buy, to any offer Under no circumstances shall this Preliminary to sell or the solicitation of Official Statement constitute an offer form. in final is delivered be unlawful. solicitation or sale would * Preliminary, subject to change. $81,820,000* City of Cleveland, Ohio Public Power System Revenue Refunding Bonds, Series 2016A MATURITY SCHEDULE Principal Interest Maturity Amount* Rate Price Yield CUSIP1:186398 11/15/2017 $ 140,000 11/15/2018 5,995,000 11/15/2019 6,285,000 11/15/2020 6,595,000 11/15/2021 9,220,000 11/15/2022 9,695,000 11/15/2023 10,175,000 11/15/2024 10,685,000 11/15/2025 1,170,000 11/15/2026 1,235,000 11/15/2027 1,295,000 11/15/2028 1,360,000 11/15/2029 1,430,000 11/15/2030 1,500,000 11/15/2031 1,575,000 11/15/2032 1,655,000 11/15/2033 1,735,000 11/15/2034 1,825,000 11/15/2035 1,915,000 11/15/2036 2,010,000 11/15/2037 2,110,000 11/15/2038 2,215,000 $13,265,000* City of Cleveland, Ohio Public Power System Taxable Revenue Refunding Bonds, Series 2016B MATURITY SCHEDULE Principal Interest Maturity Amount Rate Price Yield CUSIP1: 186398 1 CUSIP numbers have been assigned by an independent company not affiliated with the City and are included solely for the convenience of the holders of the Series 2016 Bonds. The City is not responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Series 2016 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2016 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2016 Bonds. * Preliminary, subject to change. CITY OF CLEVELAND, OHIO CLEVELAND PUBLIC POWER MAYOR CITY COUNCIL PRESIDENT FRANK G. JACKSON KEVIN J. KELLEY DEPARTMENT OF FINANCE Director of Finance SHARON DUMAS DEPARTMENT OF PUBLIC UTILITIES Director of Public Utilities ROBERT DAVIS Commissioner of the Division of Cleveland Public Power IVAN HENDERSON DEPARTMENT OF LAW Director of Law BARBARA A. LANGHENRY TRUSTEE U.S. BANK NATIONAL ASSOCIATION Cleveland, Ohio BOND COUNSEL SQUIRE PATTON BOGGS (US) LLP Cleveland, Ohio DISCLOSURE COUNSEL TUCKER ELLIS LLP Cleveland, Ohio CO-FINANCIAL ADVISORS GOVERNMENT CAPITAL MANAGEMENT, L.L.C. Rutherford, New Jersey PHOENIX CAPITAL PARTNERS Philadelphia, Pennsylvania REGARDING THE USE OF THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the Series 2016 Bonds. No person has been authorized by the City or by Citigroup Global Markets Inc., Barclays Capital Inc., Cabrera Capital Markets, LLC, Janney Montgomery Scott LLC and RBC Capital Markets LLC (together, the “Underwriters”) to give any information or to make any representation other than that contained in this Official Statement, and if given or made such other information or representation must not be relied upon as having been given or authorized by the City or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2016 Bonds by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Any statements made in this Official Statement which involve matters of opinions or estimates, whether expressly stated to be such, are made as such and not as representations of fact or certainty, and no representation is made that any of those statements have been or will be realized. Information in this Official Statement has been derived by the City from official and other sources and is believed by the City to be accurate and reliable.