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Minibond Program) DATED DUE Date of Delivery February 15, 2023 PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 15, 2018 Ratings: See “Ratings” herein. Fitch Ratings: AAA Moody’s Investors Service, Inc.: Aaa S&P Global Ratings: AAA New Issue In the opinion of Locke Lord LLP, Bond Counsel, based upon an analysis of existing law and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Bonds will not be included in computing the alternative minimum taxable income of individuals or, except as described herein, corporations. Under existing law, interest on the Bonds is exempt from Massachusetts personal income taxes, and the Bonds are exempt from Massachusetts personal of an offer to buy, nor shall there be any be any shall there buy, nor offer to of an property taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or ld nor may offers to buy be accepted prior offers to buy be accepted prior ld nor may disposition of, or the accrual or receipt of interest on, the Bonds. See “Tax Exemption” herein. The Bonds will not be designated as “qualified tax-exempt obligations” for purposes of section 265(b)(3) of the Code. CITY OF CAMBRIDGE, MASSACHUSETTS $2,500,000* GENERAL OBLIGATION BONDS, 2018 Series A (Minibond Program) DATED DUE Date of Delivery February 15, 2023 cial Statement. so The not be Bonds may The Bonds are issuable only in fully registered form, registered in the name of Cede & Co., as Bondowner and nominee for constitute an offer to sell or the solicitation offer to sell or the constitute an The Depository Trust Company ("DTC"), New York, New York. DTC will act as securities depository for the Bonds. qualification under the applicable securities laws of any such jurisdiction. Final written of any such jurisdiction. securities laws qualification under the applicable Purchases of the Bonds will be made in book-entry form, in the denomination of $1,000 or any integral multiple thereof. See "THE BONDS - Book-Entry Transfer System" herein. Principal of the Bonds will be paid on the maturity date set forth above. Interest on the Bonds will be payable semiannually on February 15 and August 15, commencing August 15, 2018, until maturity. Principal and semiannual interest on the Bonds will be paid by U.S. Bank National Association, Boston, Massachusetts, as Paying Agent. So long as DTC or its nominee, Cede & Co., is the Bondowner, such payments will be made directly to such Bondowner. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of the DTC Participants and Indirect Participants, as more fully described herein. l prior to the registration or or to the registration l prior The Bonds are not subject to redemption prior to their stated maturity date. See “THE BONDS – Description of the Bonds” herein. An opinion of Bond Counsel will be delivered with the Bonds to the effect that the Bonds are valid general obligations of the shall this Preliminary Official Statement City of Cambridge, Massachusetts and, to the extent not paid from other sources, the principal of and interest on the Bonds are payable from taxes which may be levied upon all taxable property in the City subject to the limit imposed by Chapter 59, Section 21C of the General Laws. MATURITY, AMOUNT*, RATE, YIELD/PRICE AND CUSIP d herein are subject to completion or amendment in a Final Offi amendment subject to completion or are d herein licitation or sale would be unlawfu licitation or Final Official Statement is delivered to the purchaser. Due Principal Interest Yield/or CUSIP # February 15 Amount* Rate Price 132285 2023$ 2,500,000 % % The Bonds are offered when, as and if issued and received by the Underwriter subject to the final approving opinion of Locke Lord LLP, Boston, Massachusetts, Bond Counsel, as aforesaid, and to certain other conditions referred to herein. Hilltop Securities Inc., Boston, Massachusetts has acted as Financial Advisor to the City with respect to the Bonds. See “Financial Advisory Services of Hilltop Securities Inc.” herein. The Bonds in definitive form will be delivered to DTC, or its custodial agent, on or about March 15, 2018* for settlement in federal funds. ________ ________________ sale of the Bonds in any jurisdiction in which such offer, so offer, which such in any jurisdiction the Bonds in sale of This Preliminary Official Statement and the information containe confirmation of the sale shall not be conclusive unless the to the time the Official Statement is delivered in final form. Under no circumstances delivered in final form. to the time Official Statement is *Preliminary, subject to change. TABLE OF CONTENTS Page Page SUMMARY STATEMENT 3 Tax Collections 44 PRELIMINARY OFFICIAL STATEMENT: Tax Titles and Possessions 44 THE BONDS: Taxation to Meet Deficits 44 Minibond Program 4 Tax Limitations 45 Description of the Bonds 4 Tax Levies and Levy Limits 46 Security and Remedies 5 Community Preservation Act 46 Record Date 6 Book-Entry Transfer System 6 CITY FINANCES: Authorization of the Bonds and Use of Proceeds 8 Budget and Appropriation Process 48 Risk Factors 8 Budget Comparison 49 Tax Exemption 8 Revenues 50 Risk of Future Legislative Changes and/or Court Decisions 9 Property Taxes 50 Ratings 10 Federal Aid 50 Underwriting 10 State Aid 50 Opinion of Bond Counsel 10 Motor Vehicle Excise 51 Financial Advisory Services of Hilltop Securities Inc. 10 Water and Sewer 51 Continuing Disclosure 10 Room Occupancy Tax 51 Local Meals Excise Tax 52 THE CITY OF CAMBRIDGE, MASSACHUSETTS: Investment of City Funds 52 General 11 Annual Audits 52 Principal Elected Officials 11 Basis of Accounting 52 Principal Executive Officers 12 Financial Statements 52 Municipal Services and Facilities 13 Balance Sheet (Governmental Funds) for the Organizational Chart 15 fiscal years ending The Cambridge Economy 16 June 30, 2017 53 Principal Employers 17 June 30, 2016 54 Labor Force, Employment and Unemployment Rate 18 June 30, 2015 55 Income Levels and Population Characteristics 18 Statement of Revenues, Expenditures and Changes in Per Capita Income 18 Fund Balance (Governmental Funds) for the fiscal Population Characteristics 19 years ending Population and Rates of Change 19 June 30, 2017 56 Local Economic Trends 20 June 30, 2016 57 Life Sciences and Technology 20 June 30, 2015 58 Innovation Venture Capital and Incubators 21 June 30, 2014 59 Housing 22 June 30, 2013 60 Transportation and Transit 23 Free Cash (Uniform System of Accounting) 61 Commercial Real Estate Market 24 Tax Increment Financing for Development Districts 61 Volpe Transportation Center Purchase by MIT 26 Affordable Housing Initiatives/Community INDEBTEDNESS: Preservation Act 28 Authorization Procedure and Limitations 62 Economic Development Districts 29 Types of Obligations 62 Concord/Alewife 29 Direct Debt Summary 63 Porter Square 30 Five Year Direct Debt Summary 64 Harvard Square 30 Debt Ratios 64 Central Square 32 Ratio of Gross Direct Debt to Assessed Value University Park/Cambridgeport 32 and Gross Direct Debt per Capita 65 Kendall Square/Cambridge Center 33 Debt Service Requirements 65 East Cambridge/Riverfront/Cambridgeside Galleria 35 Authorized Unissued Debt and Prospective Financing 66 North Point/Cambridge Crossing 36 Overlapping Debt 66 Housing and construction Activity 36 Contractual Obligations 66 High Education 38 RETIREMENT PLAN 67 The Cambridge Public Health Commission 38 Current Funding Schedule 68 Other-Post Employment Benefits 69 PROPERTY TAXATION: EMPLOYEE RELATIONS 70 Tax Levy Computation 40 LITIGATION 70 Assessed Valuations and Tax Levies 41 Classification by Property 41 APPENDIX A - AUDITED FINANCIAL STATEMENTS Largest Taxpayers 42 AS OF JUNE 30, 2017 State Equalized Valuation 42 APPENDIX B - PROPOSED FORM OF LEGAL OPINION Abatements and Overlay 43 APPENDIX C - PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE _____________________________ The Preliminary Official Statement is not to be construed as a contract or agreement between the City and the purchasers or holders of any of the Bonds. Any statements made in this Preliminary Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinion and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale of the Bonds described herein shall, under any circumstances, create any implication that there has been no change in the affairs of the City of Cambridge, since the date hereof. 2 SUMMARY STATEMENT The information set forth below is qualified in its entirety by the information and financial statements appearing elsewhere in this Official Statement. Issuer: City of Cambridge, Massachusetts. Issue: $2,500,000* General Obligation Bonds, 2018 Series A (Minibond Program), see "THE BONDS - Book-Entry Transfer System" herein. Minibond Program: Initially, the Bonds are intended to be offered solely to Cambridge residents – see “THE BONDS - Minibond Program” herein. Subsequent transfers will not be restricted to Cambridge residents. Preliminary Official Statement Dated: February 15, 2018. Dated Date of the Bonds: Date of delivery. Principal Due: February 15, 2023. Interest Payable: Semiannually on February 15 and August 15, commencing August 15, 2018, to the maturity date of the Bonds. Redemption: The Bonds are not subject to redemption prior to their stated maturity date. Purpose and Authority: The Bonds are authorized for various municipal purposes under Chapter 44, of the Massachusetts General Laws as detailed herein. Security of the Bonds: The Bonds are valid general obligations of the City of Cambridge, and, to the extent not paid from other sources, the Bonds are payable from taxes which may be levied upon all taxable property within the territorial limits of the City, subject to the limit imposed by Chapter 59, Section 21C of the General Laws.
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