City of Cleveland, Ohio

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 this Preliminary Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. * Preliminary, subjectto change. The dateofthis Official Statementis______, 2016andtheinformationspeaks onlyasofthatdate. Blaylock Beal Van,LLC ______, 2016. Wilkerson &AssociatesCo., LPA.TheSeries2016Bondsareexpectedtobeavailable fordeliverytoDTConorabout Langhenry, itsDirectorofLaw,andfortheUnderwritersby matters willbepassedupon fortheCitybyBarbara A. on certainlegalmattersrelatingtotheirissuanceof SquirePattonBoggs(US)LLP,BondCounsel.Certainlegal as abasisforthemakingofinformedinvestmentjudgments. Bonds orthematterssetforthherein.Investorsshould readtheentireOfficialStatementtoobtaininformation Statement. See“THESERIES2016BONDS–RedemptionoftheSeries 2016Bonds.”] the trusteeandregistrarforSeries2016Bonds(the“Trustee”). escrow agentandpayingfortheCity’sSinkingFund (the“EscrowAgent”).U.S. Bank NationalAssociationservesas 2016 BondswillbepayablebywiretransfermadetoDTC oneachpaymentdatebyTheHuntingtonNationalBank,as So longastheSeries2016BondsareheldbyDTCinabook-entryonlysystem,principalofandintereston Series Statement. See“APPENDIX C–BOOK-ENTRYONLYSYSTEM.” transferable orexchangeable,exceptfortransfertoanothernomineeofDTCasotherwisedescribedinthis Official of theSeries2016Bondstoultimatepurchasers.Theincertificatedformassuch will notbe initially registeredinthenameofTheDepositoryTrustCompany(“DTC”)oritsnominee.Therewillbenodistribution See “SECURITYANDSOURCESOFPAYMENT.” mill limitationimposedbyOhiolaw,andmunicipalincometaxespledgedtheCityunderitsGeneralBondOrdinance. sources, aretobepaidfromtheproceedsofCity’slevyadvalorempropertytaxes,leviedbyCitywithin theten- premium onallunvotedgeneralobligationbondsoftheCity,includingSeries2016Bonds,unlesspaidfrom other “THE SERIES2016BONDS-AuthorizationandPurpose” 2016A Bonds,the“Series2016Bonds”)aregeneralobligationsofCity,issuedforpurposesdescribedherein. See Final JudgmentGeneralObligationRefundingBonds,Series2016B(the“SeriesBonds”,andtogetherwiththe Series Dated: DateofIssuance NEW ISSUE–BOOKENTRYONLY MATTERS” herein. alternative minimumtaxonaportionofthatinterest.Formorecompletediscussiontheaspects,see“TAX Series 2016Bondsmaybesubjecttocertainfederaltaxesimposedonlyoncorporations,includingthecorporate the totalequitycapitaloffinancialinstitutions,andnetworthbasecorporatefranchisetax.Intereston except the estate tax, the domestic insurance company tax, the dealers in intangibles tax, the tax levied on the basis of on thesale,exchangeorotherdispositionof,Series2016BondsareexemptfromallOhiostateandlocaltaxation, federal alternativeminimumtaximposedonindividualsandcorporations,(ii)intereston,anyprofitmade excluded fromgrossincomeforfederaltaxpurposesandisnotanitemofpreferencethe compliance withcertaincovenantsandtheaccuracyofrepresentations,interestonSeries2016Bondsis Various PurposeandRefundingGeneralObligation The Series2016Bondsareofferedwhen,asandifissued, andacceptedbytheUnderwriters,subjecttoopinions This coverpageincludescertaininformationforreference only.ItisnotasummaryoftheSeries2016 [Certain of the Series 2016 Bonds are subject to redemption by the City prior to maturity, as described in this Official Interest ontheSeries2016BondsispayablesemiannuallyeachJune 1 andDecember 1, beginningDecember 1, 2016. The Series2016Bondswillbeinitiallyissuedasfullyregisteredbonds,issuableunderabook-entryonlysystem, The VariousPurposeandRefundingGeneralObligationBonds,Series2016A(the“SeriesBonds”) the In theopinionofSquirePattonBoggs(US)LLP,BondCounsel,underexistinglaw(i)assumingcontinuing Bonds, Series2016A $47,650,000* PRELIMINARY OFFICIAL STATEMENT DATED APRIL 27, 2016

GENERAL OBLIGATIONBONDS KeyBanc CapitalMarkets Inc. CITY OF CLEVELAND, OHIO OFFICIAL STATEMENT BofA Merrill Lynch $53,040,000* Consisting Of: Final JudgmentGeneralObligationRefunding and “Plan ofRefunding.”Principal,interestandany

Bonds, Series2016B $5,390,000* Standard &Poor’s (See “RATINGS”herein) Due: December 1, Moody’s as shownherein US Bancorp

Ratings AA A1

MATURITY SCHEDULE ON DECEMBER 1

$53,040,000* CITY OF CLEVELAND, OHIO GENERAL OBLIGATION BONDS

$47,650,000* Various Purpose and Refunding General Obligation Bonds, Series 2016A

Principal Interest CUSIP+ Maturity Amount Rate Yield Price No. 2017 $ 150,000 2018 1,615,000 2019 1,645,000 2020 1,675,000 2021 3,355,000 2022 3,450,000 2023 3,585,000 2024 3,730,000 2025 3,915,000 2026 4,115,000 2027 3,905,000 2028 4,355,000 2029 3,980,000 2030 2,045,000 2031 2,110,000

$4,020,000 _____%Term Bond Due December 1, 2033 Yield ____% Price ____** Cusip+ No. ______

$5,390,000* Final Judgment General Obligation Refunding Bonds, Series 2016B

Principal Interest CUSIP+ Maturity Amount Rate Yield Price No. 2028 $ 765,000 2029 785,000 2030 805,000 2031 835,000

$745,000 _____%Term Bond Due December 1, 2027 Yield ____% Price ____** Cusip+ No. ______$1,455,000 _____%Term Bond Due December 1, 2033 Yield ____% Price ____** Cusip+ No. ______

+ Copyright American Bankers Association. 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.

** Priced to call date.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

*Preliminary, subject to change.

CITY OF CLEVELAND, OHIO

MAYOR PRESIDENT OF COUNCIL Frank G. Jackson Kevin J. Kelley

DEPARTMENT OF FINANCE Director of Finance Sharon Dumas

Assistant Secretary, Sinking Fund Commission Elizabeth C. Hruby

DEPARTMENT OF LAW Director of Law Barbara A. Langhenry

TRUSTEE AND BOND REGISTRAR U.S. Bank National Association

ESCROW AND PAYING AGENT The Huntington National Bank

BOND COUNSEL Squire Patton Boggs (US) LLP Cleveland, Ohio

CO-FINANCIAL ADVISORS Phoenix Capital Partners, LLP Government Capital Management, L.L.C. Philadelphia, Pennsylvania Tuxedo Park, New York

INDEPENDENT AUDITOR Clark Schaefer Hackett

REGARDING THIS OFFICIAL STATEMENT

This Official Statement does not constitute an offering of any security other than the original offering of the Series 2016 Bonds of the City identified on the cover. No person, other than the Director of Finance of the City, has been authorized by the City or the Underwriters to give any information or to make any representation other than as contained in this Official Statement. Any other representation not so authorized should 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.

The information and expressions of opinion herein are subject to change without notice. Neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the City since the date hereof.

Any statements made in this Official Statement that involve matters of opinion 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 that has been derived by the City from its official records and other sources is believed by the City to be accurate and reliable. Information other than that obtained from official records of the City has not been independently confirmed or verified by the City.

Upon issuance, the Series 2016 Bonds will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency, except the City, will have passed upon the accuracy or adequacy of this Official Statement or approved the Series 2016 Bonds for sale.

U.S. Bank National Association, by acceptance of its duties as trustee and registrar under its agreement with the City, and the Escrow Agent, has not reviewed this Official Statement and has made no representations as to the information contained herein, including but not limited to, any representations as to the financial feasibility or related activities.

The Underwriters have provided the following sentence for inclusion in this Official Statement: the Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

IN CONNECTION WITH THE OFFERING OF THE SERIES 2016 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICES OF SUCH SERIES 2016 BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE PRICES AND OTHER TERMS RESPECTING THE OFFERING AND SALE OF THE SERIES 2016 BONDS MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS AFTER SUCH SERIES 2016 BONDS ARE RELEASED FOR SALE, AND SUCH SERIES 2016 BONDS MAY BE OFFERED AND SOLD AT PRICES OTHER THAN THE INITIAL OFFERING PRICES, INCLUDING SALES TO DEALERS.

This Official Statement includes the front cover page and all appendices hereto.

BOND ISSUE SUMMARY

The information contained in this Bond Issue Summary is qualified in its entirety by the entire Official Statement, which should be reviewed in its entirety by potential investors.

Issuer: City of Cleveland, Ohio Issues: (a) $47,650,000* Various Purpose and Refunding General Obligation Bonds, Series 2016A and (b) $5,390,000* Final Judgment General Obligation Refunding Bonds, Series 2016B (collectively the “Series 2016 Bonds”). Dated Date: Date of Issuance Interest Payment Dates: Interest will be payable on June 1 and December 1 of each year, beginning December 1, 2016. Principal Payment Dates: See inside front cover. Optional Redemption: The Series 2016A Bonds maturing on or after December 1, 20__ are subject to prior redemption on or after December 1, 20__, by and at the sole option of the City, in whole or in part on any date at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date. The Series 2016B Bonds maturing on or after December 1, 20__ are subject to prior redemption on or after December 1, 20__, by and at the sole option of the City, in whole or in part on any date at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date. Purpose: See “THE SERIES 2016 BONDS - Authorization and Purpose.” Security: The Series 2016 Bonds are unvoted general obligations of the City payable from the sources described in this Official Statement, subject to bankruptcy laws and other laws affecting creditors’ rights and to the exercise of judicial discretion. The basic security for the Series 2016 Bonds is the pledge in the General Bond Ordinance of ad valorem property taxes within the ten-mill limitation and municipal income taxes of the City. Those ad valorem property taxes and such annual amount of the municipal income taxes as is necessary to pay debt service charges on the City’s unvoted general obligation Bonds, including the Series 2016 Bonds, are to be deposited in escrow in an account in the Sinking Fund (the City’s bond retirement fund) and are irrevocably committed for the timely payment of the principal of, and interest on, the Series 2016 Bonds. See “SECURITY AND SOURCES OF PAYMENT.” The City income tax is imposed on gross salaries and wages earned in the City by non- residents of the City and on gross salaries, wages and other compensation of City residents earned within or outside the City. The tax is currently levied at the rate of 2%. One-ninth of the receipts of the total 2% tax must be used only for capital improvements or debt service on obligations issued for capital improvements or the payment of past deficits. The remaining eight-ninths of the receipts of the municipal income tax is pledged to, and may also be used for, debt service on the Bonds to the extent required. See “SECURITY AND SOURCES OF PAYMENT - Pledged Income Taxes.” A portion of the property tax revenues, up to the amount of millage available for debt service (4.35 mills), is deposited directly by the County Treasurer with the Escrow Agent designated under the City’s General Bond Ordinance. A portion of the income tax receipts in an amount necessary to make principal and interest payments coming due is transferred directly by the Central Collection Agency to the Escrow Agent. Only after provision is made for debt service payments are income tax receipts available for other City purposes. The Authorizing Legislation provides further security by making a pledge of the full faith and

ii credit of the City for the payment of debt service on the Series 2016 Bonds as it becomes due. Included in that pledge are all funds of the City except those specifically limited to another use or prohibited from that use by the Ohio Constitution or other applicable laws or revenue bond trust agreements. Credit Rating: The City’s general obligation bonds, including the Series 2016 Bonds, were rated “A1” by Moody’s Investors Service and “AA” by Standard & Poor’s Ratings Services. Tax Matters: 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 2016 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 2016 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 2016 Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see “TAX MATTERS” herein. Bank Qualification: The City has not designated the Series 2016 Bonds as “qualified tax exempt obligations” within the meaning of Section 265(B)(3) of the Internal Revenue Code of 1986, as amended. Legal Opinion: Squire Patton Boggs (US) LLP, Cleveland, Ohio Trustee and Bond Registrar: U.S. Bank National Association Escrow and Paying Agent: The Huntington National Bank Financial Advisors: Phoenix Capital Partners, LLP, Philadelphia, Pennsylvania Government Capital Management, L.L.C., Tuxedo Park, New York Verification Agent: Grant Thornton LLP Book-Entry Only System: The Series 2016 Bonds will be initially issued as fully registered bonds, issuable under a book-entry only system, initially registered in the name of The Depository Trust Company (“DTC”) or its nominee. There will be no distribution of the Series 2016 Bonds to the ultimate purchasers. The Series 2016 Bonds in certificated form as such will not be transferable or exchangeable, except for transfer to another nominee of DTC or as otherwise described in this Official Statement. The principal of and interest on the Series 2016 Bonds will be payable by wire transfer made to DTC. See “APPENDIX C - BOOK-ENTRY ONLY SYSTEM.” Delivery and Payment: It is expected that delivery of the Series 2016 Bonds in definitive form will be made through DTC on or about ______, 2016. The Series 2016 Bonds will be released to the Underwriters against payment in federal funds. City Official: Questions concerning the Official Statement should be directed to Elizabeth C. Hruby, Assistant Secretary, Sinking Fund Commission, Department of Finance, 601 Lakeside Avenue, Cleveland, Ohio 44114. Telephone (216) 664-3663.

iii TABLE OF CONTENTS

INTRODUCTION ...... 1 THE SERIES 2016 BONDS ...... 2 Authorization and Purpose ...... 2 Terms...... 2 Redemption of the Series 2016 Bonds ...... 3 Selection of Bonds to be Redeemed ...... 3 Notice of Call for Redemption ...... 4 Purchase in Lieu of Redemption ...... 4

SECURITY AND SOURCES OF PAYMENT ...... 4 The General Bond Ordinance ...... 5 Sinking Fund ...... 5 Pledged Property Taxes ...... 5 Pledged Income Taxes...... 6 Schedule of Income Tax Deposits ...... 6 Debt Service Requirements and Pledged Taxes ...... 7 The Trustee ...... 7 Accounting and Balanced Budget Covenants ...... 8 Enforcement of Rights and Remedies ...... 8 Bankruptcy ...... 9 SOURCES AND USES OF FUNDS ...... 9 PLAN OF REFUNDING ...... 10 DEBT SERVICE REQUIREMENTS ON OUTSTANDING BONDS ...... 11 THE CITY - GENERAL INFORMATION ...... 11 General Introduction ...... 11 City Government ...... 11 County Government ...... 12 FINANCIAL MATTERS ...... 12 Budgeting, Tax Levy and Appropriations Procedures ...... 13 Financial Reports and Examinations of Accounts ...... 13 Summary of Major City Funds ...... 14 Summary of General Fund Cash Receipts and Expenditures – Non-GAAP Budgetary Basis ...... 15 General Fund Financial Budget for 2016 ...... 16 Management Discussion of the City’s Unaudited General Fund Results for the Fiscal Year Ended December 31, 2015–Budget Basis ...... 18 General Fund Balances ...... 20 Management Discussion of General Fund GAAP Basis Results for the Fiscal Year Ended December 31, 2014 ...... 20 Investment Policy ...... 21 MAJOR GENERAL FUND REVENUE SOURCES ...... 22 Municipal Income Taxes ...... 22 Local Government Fund/Local Government Revenue Assistance Fund ...... 23 Ad Valorem Property Taxes ...... 24 Overlapping Governmental Entities ...... 30 Tax Incentive Programs ...... 31

CITY DEBT AND OTHER OBLIGATIONS ...... 31

iv Debt Limitations ...... 31 Direct Debt Limitations ...... 32 Indirect Debt Limitation ...... 33 Debt Outstanding ...... 35 Overlapping Subdivisions – Millage Requirements ...... 36 Projected Outstanding Debt and Debt Service For Fiscal Year 2016 ...... 36 Leases and Other Obligations ...... 36 Derivative Transactions Payable from General Fund ...... 37 Future Financings ...... 37

THE CITY — ECONOMIC AND DEMOGRAPHIC INFORMATION ...... 38 Population ...... 38 Employment ...... 39 Corporate Headquarters ...... 42 Home Values, Housing Units and Home Sales ...... 42 Building Permits ...... 43 Utilities ...... 43 Transportation ...... 43 Financial Services ...... 44 Education ...... 44 Health Care ...... 44 Recreation and Entertainment ...... 45 Downtown and Other Economic Development ...... 46 Housing and Neighborhood Development ...... 48 Brownfield Redevelopment ...... 50 Pension Obligations ...... 51 Employees ...... 52 Police and Fire Overtime ...... 53

LITIGATION ...... 53 LEGAL MATTERS ...... 54 TAX MATTERS ...... 54 Risk of Future Legislative Changes and/or Court Decisions ...... 56 Original Issue Discount/Original Issue Premium ...... 56

INDEPENDENT AUDITORS ...... 57 RATINGS ...... 57 FINANCIAL ADVISORS ...... 57 UNDERWRITING ...... 58 VERIFICATION ...... 58 TRUSTEE ...... 58 CONTINUING DISCLOSURE CERTIFICATE ...... 58 CONCLUDING STATEMENT ...... 59 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND THE SINKING FUND ORDINANCE ...... A-1 APPENDIX B TEXT OF OPINIONS OF BOND COUNSEL ...... B-1 APPENDIX C BOOK-ENTRY ONLY SYSTEM ...... C-1 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE ...... D-1

OFFICIAL STATEMENT of the

$53,040,000* CITY OF CLEVELAND, OHIO GENERAL OBLIGATION BONDS Consisting Of:

$47,650,000* $5,390,000* Various Purpose and Refunding General Obligation Final Judgment General Obligation Refunding Bonds, Series 2016A Bonds, Series 2016B

INTRODUCTION

The purpose of this Official Statement, which includes the cover page and appendices hereto, is to provide certain information with respect to the issuance by the City of Cleveland, Ohio of its (a) $47,650,000* Various Purpose and Refunding General Obligation Bonds, Series 2016A (the “Series 2016A Bonds”) and (b) $5,390,000* Final Judgment General Obligation Refunding Bonds, Series 2016B (the “Series 2016B Bonds” and together with the Series 2016A Bonds, the “Series 2016 Bonds”).

As used in this Official Statement, the term “debt service” means principal of and interest on, and any premium with respect to, the obligations referred to; the term “County” means the County of Cuyahoga, Ohio; and the term “State” or “Ohio” means the State of Ohio. The term “Bonds” means the currently outstanding unvoted general obligation bonds of the City, the Series 2016 Bonds and any future series of unvoted general obligation bonds issued by the City under the General Bond Ordinance described below; the term “BANs” means bond anticipation notes; the term “Bondholders” means the registered owners of the outstanding Bonds referred to. Certain other capitalized words and phrases used in this Official Statement are defined in “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND THE SINKING FUND ORDINANCE - Certain Definitions.”

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

This Official Statement should be considered in its entirety, and no one subject discussed should be considered less important than any other by reason of its location in the text. Reference should be made to laws, reports or documents referred to in this Official Statement for more complete information regarding their contents.

References to provisions of Ohio law, whether codified in the Ohio Revised Code (the “Revised Code”) or uncodified, or of the Ohio Constitution, are references to current provisions. Those provisions may be amended, repealed or supplemented from time to time.

Prior to issuance and delivery of the Series 2016 Bonds, copies of the General Bond Ordinance and the Series 2016 Ordinance may be obtained at the office of the City’s Department of Finance, 601 Lakeside Avenue, Cleveland, Ohio 44114, at cost to the requesting party; thereafter, copies will be available for inspection at the Cleveland, Ohio corporate trust office of the Trustee.

*Preliminary, subject to change.

THE SERIES 2016 BONDS

Authorization and Purpose

The Series 2016 Bonds are to be issued pursuant to the laws of the State of Ohio, the Charter of the City (the “Charter”), and the provisions of Ordinance No. 1749-80, passed on October 8, 1980, as amended by Ordinance No. 1112-83, passed on May 6, 1983, and as further amended by Ordinance No. 944-96, passed on June 10, 1996 (collectively, the “General Bond Ordinance”), and Ordinance Nos. 334-16, 335-16, and 336-16, passed on March 21, 2016 and Ordinance No. 1591-14, passed on December 8, 2014, (collectively the “Series 2016 Ordinance,” and together with the General Bond Ordinance, the “Authorizing Legislation”) and pursuant to the terms of the Certificates of Award authorized thereunder.

The Series 2016A Bonds are being issued to (i) pay costs of certain permanent improvements as described in more detail below, (ii) refund certain of the City’s outstanding General Obligation Bonds (the “Series 2016A Refunded Bonds”), and (iii) pay costs of issuing the Series 2016A Bonds and refunding the Series 2016A Refunded Bonds as follows:

$4,750,000* of the principal amount of the Series 2016A Bonds is being issued to pay costs of improvements providing for the discharge of various governmental functions and services, including facilities in, of and for the City Hall, police stations, fire stations, service stations, centers and facilities, waste collection, market facilities, transfer and disposal facilities, correctional facilities, and health and other facilities..

$22,750,000* of the principal amount of the Series 2016A Bonds is being issued to pay costs of improving the municipal street system and related facilities, including streets, expressways, roadways, driveways, underground vaults, sidewalks, bikeways and walkways, by acquiring, constructing, reconstructing, opening, extending, widening, grading, draining, paving, resurfacing, sealing, lighting and curbing, removing or reconstructing underground vaults to preserve the public right of way, removing and replacing trees within the public right of way, installing gutters, sidewalks and related pedestrian and cyclist improvements, constructing and improving culverts, resetting and constructing catch basins and other storm drainage facilities, constructing, reconstructing, replacing, renovating and improving bridges, acquiring any real estate and interests in real estate, including easements, necessary for such purpose, and installing signs, signals, markings and other devices for traffic control purposes.

$625,000* of the principal amount of the Series 2016A Bonds is being issued to pay costs of improving municipal parks and recreation facilities by constructing, reconstructing, installing, renovating, enlarging, redeveloping and otherwise improving parks and recreation centers and areas, pools, skating rinks, greenhouses, bicycle paths, playgrounds, playfields, tracks, fields and related buildings, structures, walkways, safety surfaces, pavement, plazas, landscaping and facilities.

$19,525,000* of the principal amount of the Series 2016A Bonds is being issued to refund the Series 2016A Refunded Bonds. See “PLAN OF REFUNDING” herein.

The Series 2016B Bonds are being issued to (i) refund certain of the City’s outstanding Final Judgment General Obligation Bonds (the “Series 2016B Refunded Bonds”, and together with the Series 2016A Refunded Bonds, the “Refunded Bonds”), and (ii) pay costs of issuing the Series 2016B Bonds and refunding the Series 2016B Refunded Bonds. See “PLAN OF REFUNDING” herein.

Terms

The Series 2016 Bonds will mature on December 1 in the years and in the respective principal amounts, will bear interest at the rates and will be payable on the dates and at the place and in the manner described on the cover and inside cover page of this Official Statement. Interest will be payable on June 1 and December 1 of each year, beginning December 1, 2016. The Series 2016 Bonds will be dated their date of delivery and will bear interest from that date until the principal amount has been paid. Certain of the Series 2016 Bonds will be subject to redemption prior to maturity as described below. See “THE SERIES 2016 BONDS - Redemption.”

*Preliminary, subject to change.

Redemption of the Series 2016 Bonds

The Series 2016A Bonds

The Series 2016A Bonds maturing in the years 20__ through 20__, inclusive, are not subject to redemption prior to maturity.

Certain of the Series 2016A Bonds are subject to optional and mandatory sinking fund redemption as follows:

Optional Redemption. The Series 2016A Bonds maturing on or after December 1, 20__ are subject to prior redemption on or after December 1, 20__, by and at the sole option of the City, in whole or in part on any date at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date.

Mandatory Sinking Fund Redemption. The Series 2016A Bonds maturing December 1, 20__ (“20__ Term Bonds”) will be subject to mandatory redemption prior to maturity at a redemption price of 100% of the principal amount thereof to be redeemed, plus interest accrued to the redemption date, on December 1, 20__ in the principal amount of $______.

The remaining $______principal amount of the 20__ Term Bonds due December 1, 20__ will be payable at maturity.

Series 2016A Term Bonds redeemed by optional redemption or purchased for cancellation may be credited against the mandatory sinking fund redemption requirements.

The Series 2016B Bonds

The Series 2016B Bonds maturing in the years 20__ through 20__, inclusive, are not subject to redemption prior to maturity.

Certain of the Series 2016B Bonds are subject to optional and mandatory sinking fund redemption as follows:

Optional Redemption. The Series 2016B Bonds maturing on or after December 1, 20__ are subject to prior redemption on or after December 1, 20__, by and at the sole option of the City, in whole or in part on any date at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date.

Mandatory Sinking Fund Redemption. The Series 2016B Bonds maturing December 1, 20__ (“20__ Term Bonds”) will be subject to mandatory redemption prior to maturity at a redemption price of 100% of the principal amount thereof to be redeemed, plus interest accrued to the redemption date, on December 1, 20__ in the principal amount of $______.

The remaining $______principal amount of the 20__ Term Bonds due December 1, 20__ will be payable at maturity.

Series 2016B Term Bonds redeemed by optional redemption or purchased for cancellation may be credited against the mandatory sinking fund redemption requirements.

Selection of Bonds to be Redeemed

If fewer than all outstanding Series 2016 Bonds are called for optional redemption at one time, they will be called as selected by and selected in a manner determined by the Director of Finance of the City. If less than all of the Series 2016 Bonds (when issued in certificated form) of a single maturity and interest rate are to be redeemed, the selection of Series 2016 Bonds (or portions of Series 2016 Bonds in integral multiples of $5,000) to be redeemed will be made by the Bond Registrar by lot in a manner determined by the Bond Registrar.

*Preliminary, subject to change 3

If less than all of the Series 2016 Bonds of one maturity under a book-entry only system are to be called for redemption, the Bond Registrar will give notice of redemption only to DTC or its nominee as registered owner. The selection of the book entry interests in that Series 2016 Bond to be redeemed, and notice of call to the owners of those interests called, is the responsibility of DTC pursuant to its rules and procedures and its Participants and Indirect Participants. See “APPENDIX C - BOOK-ENTRY ONLY SYSTEM.”

In the case of a partial redemption by lot when Series 2016 Bonds of denominations greater than $5,000 are then outstanding, each $5,000 unit of principal will be treated as though it were a separate Series 2016 Bond of the denomination of $5,000.

Notice of Call for Redemption

The Bond Registrar is to cause notice of the call for redemption, identifying the Series 2016 Bonds or portions of Series 2016 Bonds to be redeemed, to be sent by first class mail, postage prepaid, at least thirty (30) days prior to the date fixed for redemption, to the registered owner of each Series 2016 Bond subject to redemption in whole or in part at the registered owner’s address shown on the Register at the close of business on the fifteenth day preceding that mailing. Any defect in the notice or any failure to receive notice by mailing will not affect the validity of any proceedings for the redemption of any Series 2016 Bond.

Notice having been mailed in the manner provided, on the date designated for redemption, the Series 2016 Bonds and portions thereof called for redemption shall become due and payable. If the Bond Registrar then holds sufficient moneys for the redemption of all the Series 2016 Bonds and portions thereof to be redeemed, together with interest accrued thereon to the redemption date, interest on each Series 2016 Bond (or portion of a Series 2016 Bond) so called for redemption will cease to accrue on that date.

So long as all Series 2016 Bonds are held under a book-entry only system by a securities depository (such as DTC), call notice is sent by the Bond Registrar only to the depository or its nominee. Selection of book entry interests in the Series 2016 Bonds called, and notice of the call to the owners of those interests called, are the responsibilities of DTC (or any successor securities depository) pursuant to its rules and procedures, and of its participants. Any failure of DTC (or any successor securities depository) to advise any participant to notify the book entry interest owners, of any such notice and its content or effect will not affect the validity of any proceedings for the redemption of any Series 2016 Bonds. See “APPENDIX C - BOOK-ENTRY ONLY SYSTEM.”

Purchase in Lieu of Redemption

The City has the option to purchase any Series 2016 Bonds which are then redeemable by optional redemption at a purchase price no less than the redemption price required to be paid to bondholders upon optional redemption. The City may exercise purchase in lieu of redemption by written notice from the Director of Finance to the Bond Registrar and the Escrow Agent.

SECURITY AND SOURCES OF PAYMENT

The Series 2016 Bonds are unvoted general obligations of the City payable from the sources described in this Official Statement, subject to bankruptcy laws and other laws affecting creditors’ rights and to the exercise of judicial discretion. The basic security for the Series 2016 Bonds is the pledge in the General Bond Ordinance of ad valorem property taxes within the ten-mill limitation and municipal income taxes of the City. Those ad valorem property taxes and such annual amount of the municipal income taxes as is necessary to pay debt service charges on the City’s unvoted general obligation Bonds, including the Series 2016 Bonds, are to be deposited in escrow in an account in the Sinking Fund (the City’s bond retirement fund) and are irrevocably committed for the timely payment of the principal of, and interest on, the City’s unvoted general obligation Bonds, including the Series 2016 Bonds.

The Authorizing Legislation provides further security by making a pledge of the full faith and credit of the City for the payment of debt service on the Series 2016 Bonds as it becomes due. Included in that pledge are all funds of the City except those specifically limited to another use or prohibited from that use by the Ohio Constitution or other applicable laws or revenue bond trust agreements.

After the delivery of the Series 2016 Bonds and the refunding of the Refunded Bonds, Bonds will be outstanding in the principal amount of $______. For a more detailed description of the debt service on the outstanding Bonds, see “DEBT SERVICE REQUIREMENTS ON OUTSTANDING BONDS.”

The General Bond Ordinance

The General Bond Ordinance is Ordinance No. 1749-80, passed by the Council of the City on October 8, 1980, as amended by Ordinance No. 1112-83, passed on May 6, 1983, and as further amended by Ordinance No. 944-96, passed on June 10, 1996. The General Bond Ordinance constitutes the basic security document for the City’s unvoted general obligation bonds issued since 1980. Under the General Bond Ordinance, the City has made certain covenants and provided for the deposit in the applicable accounts of the Sinking Fund held in the custody of the Escrow Agent of the ad valorem property taxes and the municipal income taxes pledged thereunder to secure its general obligation bonds. For a more detailed description of the General Bond Ordinance and the Sinking Fund and the particular provisions discussed below, see “APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND THE SINKING FUND ORDINANCE.”

The General Bond Ordinance provides that the ad valorem property taxes within the ten-mill limitation pledged to the payment of debt service, the pledged income taxes and applicable accounts of the Sinking Fund secure the Series 2016 Bonds, to the extent described herein, on a parity with other Bonds consisting of (i) the outstanding unvoted general obligation bonds issued by the City under the General Bond Ordinance, and (ii) any unvoted general obligation bonds the City may issue in the future under and in accordance with the General Bond Ordinance.

Sinking Fund

The Sinking Fund (the bond retirement fund for general obligation debt of the City) consists of four separate accounts, all of which are held by the Escrow Agent, established pursuant to Chapter 179 of the Codified Ordinances of the City (referred to herein as the “Sinking Fund Ordinance”). The accounts include the Voted Obligations Account, the Unvoted Self-Supporting Obligations Account, the Unvoted Tax Supported Obligations Account, and the Unvoted Bond and Note Redemption Account. The Escrow Agent disburses moneys from the applicable account of the Sinking Fund in the required amounts to the paying agents for debt service on the obligations payable from the respective accounts. The City has covenanted in the General Bond Ordinance that, so long as any Bonds issued pursuant to the General Bond Ordinance are outstanding, it will maintain the moneys and investments in the Sinking Fund in trust with the Escrow Agent, will maintain the accounts solely for the purposes provided, and will provide for deposits to the appropriate accounts of the Sinking Fund in the amounts and at the times required.

Pledged Property Taxes

The City levies ad valorem property taxes on real property, including utility real property, and public utility tangible property within the City. The Constitution and laws of the State require that the City provide for the levy of property taxes sufficient to meet debt service on its general obligation debt but the amount of that property tax to be levied or collected in any year may be reduced by the amount to be available for that purpose from lawfully available special assessments, revenues, surplus funds or other moneys specifically assigned by law or by legislation of the City for payment of debt, such as the City’s municipal income taxes. The levy and collection of taxes for debt charges on unvoted general obligations of the City is to be placed before and in preference to all other levies for the full amount of debt charges. The City’s ability to levy property taxes to pay debt service charges on unvoted general obligation bonds, including the Series 2016 Bonds, is limited to the extent that no property may be taxed, by all subdivisions having authority to tax that property, in excess of an aggregate of ten mills per dollar of assessed valuation (the “ten-mill limitation”) without a popular vote. See “CITY DEBT AND OTHER OBLIGATIONS—Indirect Debt Limitation” for a discussion of the ten-mill limitation as applied to the City and its overlapping taxing authorities.

In 2016, before the issuance of the Series 2016 Bonds and the refunding of the Refunded Bonds, debt service on the City’s outstanding Bonds will exceed by an estimated $16.1 million the amount of ad valorem property taxes within the ten-mill limitation that the City expects to receive for payment of debt service. Other amounts which are required to be deposited in the Unvoted Tax Supported Obligations Account of the Sinking Fund to pay debt service on the outstanding Bonds during the year to the extent they are available in any given year include investment earnings,

distributions from the State of the commercial activity tax, premiums received from the issuance of bonds, and the closing of old bond funds . To the extent these funds are insufficient to pay debt service on the outstanding Bonds, the City is required to apply Restricted Income Tax Proceeds (defined below) and the Unrestricted Income Tax Proceeds (defined below) to the payment of debt service. In accordance with the Mayor’s estimate, the City expects to apply the Restricted Income Tax Proceeds (defined below) to cover $11.78 million of that debt service.

Pledged Income Taxes

The City, pursuant to the General Bond Ordinance, has pledged City income tax receipts to the extent required to pay debt service charges on the Bonds and has provided for the direct deposit to the Unvoted Tax Supported Obligations Account of the Sinking Fund held by the Escrow Agent of income tax receipts in amounts and at times sufficient to supplement the unvoted ad valorem property taxes to be deposited to that Account. The amounts to be deposited are determined in the budgeting process, are subject to adjustment as needed, and are subject to review by a nationally recognized firm of certified public accountants or the State of Ohio’s Auditor of State, as required by Ohio law.

The City income tax is imposed on gross salaries and wages earned in the City by non-residents of the City and on gross salaries, wages and other compensation of City residents earned within or outside the City. The tax is currently levied at the rate of 2%. One-ninth of the receipts of the total 2% tax (the “Restricted Income Tax Proceeds”) must be used only for capital improvements or debt service on obligations issued for capital improvements or the payment of past deficits. The remaining eight-ninths of the receipts of the municipal income tax (the “Unrestricted Income Tax Proceeds”) is pledged to, and may also be used for, debt service on the Bonds to the extent required. See “MAJOR GENERAL FUND REVENUE SOURCES - Municipal Income Taxes” below.

The Central Collection Agency, within the City’s Division of Taxation, is the collector of the municipal income taxes of the City and over 40 other member communities. Under the General Bond Ordinance, the Central Collection Agency must disburse directly to the Escrow Agent each month the total amount of the City’s income tax receipts scheduled to be paid into the Sinking Fund in that month before the Central Collection Agency may disburse any of the City’s income tax receipts to other funds of the City.

On a budget basis of accounting, the City’s unaudited income tax receipts for 2015 totaled approximately $347,565,000, of which the Restricted Income Tax Proceeds (computed on the basis of one-ninth of the total income tax receipts for the entire year) totaled approximately $38,618,000, with $34,571,000 of that amount being used for debt service on Bonds and other obligations of the City. According to the Mayor’s estimate (determined prior to the issuance of the Series 2016 Bonds and refunding of the Refunded Bonds), in 2016, $11,775,000 of the City’s Restricted Income Tax Proceeds are expected to be required to be applied to the payment of debt service charges on the Bonds, after ad valorem property tax receipts, investment earnings on Sinking Fund accounts, and other lawfully available moneys are applied for that purpose. Consequently, the Unrestricted Income Tax Proceeds are not expected to be required to be used for the payment of such debt service, although such receipts are pledged for that purpose to the extent required.

Schedule of Income Tax Deposits

In order to ensure that the income tax revenue required to supplement the pledged property taxes is available on a timely basis, the General Bond Ordinance requires that the City prepare for delivery to the Trustee and the Central Collection Agency a schedule (the “Schedule”) of deposits of such revenue. The Schedule itemizes on a monthly basis the revenues (exclusive of income tax receipts) available for and the payments due for debt service on each class of the City’s general obligations. The Schedule is required to identify any deficiency in non-income tax revenues available for debt service payments and to indicate the funding of any such deficiency by equal monthly deposits of income tax receipts. The Schedule is required to be amended by the City as necessary.

The Schedule for fiscal year 2015 provided for the deposit of $14,500,000 in income tax receipts to the Unvoted Tax Supported Obligations Account, and the City made those deposits on a monthly basis as required. The Schedule for fiscal year 2016 calls for the City to deposit $11,775,000 of income tax receipts to the Unvoted Tax Supported Obligations Account. The City has made, and will continue to make, the monthly deposits to that Account from the Restricted Income Tax Proceeds as required.

The City must monitor its actual performance in comparison with the Schedule, and if receipts, other than income taxes, expected to be deposited to the Unvoted Tax Supported Obligations Account are less than estimated, or the debt service requirements payable therefrom exceed the budgeted amounts, the Director of Finance is required to certify a revised schedule to the Trustee and the Central Collection Agency, increasing the deposits of income tax receipts accordingly. In any event, either the Trustee or Escrow Agent may, at any time, notify the City and the Central Collection Agency that amounts in and to be deposited to the Unvoted Tax Supported Obligations Account will be insufficient to meet debt service payments therefrom and must state the amount of such deficiency. Upon receipt of such notice, the Central Collection Agency is required to transfer moneys equal to the amount of such deficiency from City income tax receipts then held by the Central Collection Agency, and income tax receipts first received after such notice, before making any distribution of income tax receipts to any other City fund.

Debt Service Requirements and Pledged Taxes

Set forth below are actual debt service requirements on the Bonds of the City from 2011 through 2014, unaudited amounts for 2015, and the budgeted 2016 amount along with the historical and budgeted 2016 amounts of receipts from ad valorem property taxes within the ten-mill limitation to be applied to debt service and municipal income taxes. The General Bond Ordinance does not require the City to meet any specific debt service coverage test with respect to the issuance of additional unvoted tax-supported general obligations. However, the City must comply with applicable State law debt limitations described below. See “CITY DEBT AND OTHER OBLIGATIONS.”

UNVOTED GENERAL OBLIGATION DEBT SERVICE AND PLEDGED TAXES-BUDGET BASIS (000’s Omitted)

Unaudited Budget DEBT SERVICE 2011 2012 2013 2014 2015 2016

Bonds Outstanding $44,944 $43,970 $40,615 $38,363 $36,622 $33,816(a)

Series 2016 Bonds (est.) N/A N/A N/A N/A N/A $583

Total Debt Service $44,944 $43,970 $40,615 $38,363 $36,622 $34,399

PLEDGED TAXES

Ad Valorem Property Taxes(b) $21,393 $21,320 $18,730 $19,058 $19,213 $18,268

Restricted Income Taxes(c) 34,466 36,309 37,581 37,140 38,618 39,350

Municipal Income Taxes (Less Restricted Income Taxes) 275,731 290,474 300,648 297,124 308,947 314,800

Total Pledged Taxes $331,590 $348,103 $356,959 $353,322 $366,778 $372,418

(a) Prior to the issuance of the Series 2016 Bonds and the refunding of the Refunded Bonds. Debt service following the issuance of the Series 2016 Bonds will be lower than the amount budgeted.

(b) Estimate for 2016 is based on information provided by the County and reflects current assessed valuations and a property tax rate of 4.35 mills. Includes Homestead/Rollback reimbursement from the State. See “MAJOR GENERAL FUND REVENUE SOURCES - Collection of Ad Valorem Property Taxes.”

(c) The City has pledged the proceeds of up to its entire municipal income tax and granted a first lien thereon, to the full extent required to meet debt service charges payable from the Unvoted Tax Supported Obligations Account. To the extent not needed for such purpose, the use of those proceeds is not restricted to the payment of such debt service charges, and, other than the Restricted Income Tax Proceeds, are available and used to pay operating expenses of the City.

The Trustee

Pursuant to the General Bond Ordinance, the Trustee is to receive schedules of receipts and disbursements of the Sinking Fund and monthly reports on all transactions and balances of the Sinking Fund accounts as prepared by the Escrow Agent. Budgets, appropriation measures, interim financial reports and all audited financial statements are

available to the Trustee, and the Trustee has access to the records, books of account and reports of the City as may be reasonably necessary to carry out the Trustee’s functions.

Before an amendment of the General Bond Ordinance or Chapter 179 of the Codified Ordinances of the City pertaining to the Sinking Fund can be binding, it must be executed by the Trustee, subject to Bondholder approval if required. All Bonds issued under the General Bond Ordinance must be authenticated by the Trustee. The Trustee may, and upon the direction of the required percentage of Bondholders shall, give notice to the City of defaults of covenants which, if unremedied, become events of default under the General Bond Ordinance. Failure to pay debt service or to deposit moneys to the Sinking Fund when and as required are immediate events of default. Upon the occurrence of an event of default, the Trustee has the authority to pursue available remedies, subject to direction by the required percentage of Bondholders. The City has covenanted not to provide for or permit any diminution in the power, duties or authority of the Trustee.

Accounting and Balanced Budget Covenants

The City has covenanted to maintain an accounting and reporting system that conforms to generally accepted accounting principles (“GAAP”) modified as required by State law. The City has also covenanted to provide annual financial statements audited by a nationally-recognized independent firm of certified public accountants or the State of Ohio Office of the Auditor, as required by Ohio law. Clark Schaefer Hackett has audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City for 2014. The General Bond Ordinance provides that copies of the City’s annual audited financial statements as well as certain other documents required to be filed by the City with the Trustee shall be made available by the City to any Bondholder upon request and payment of reasonable charges incurred by the City. Such information is also available from the website of the Auditor of State, currently located at www.auditor.state.oh.us. The City additionally has covenanted in the General Bond Ordinance to follow specified practices toward achieving balanced budgets. Those practices are described in “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND SINKING FUND ORDINANCE.”

Enforcement of Rights and Remedies

In addition to the right of individual bondholders to sue upon their particular Series 2016 Bonds to enforce payment thereof when due, the General Bond Ordinance provides that the Trustee may pursue any available remedy to enforce payment of the Bonds (including the Series 2016 Bonds) and the compliance by the City with its covenants under the General Bond Ordinance. See also “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND SINKING FUND ORDINANCE.”

The State has pledged to and agreed with holders of securities such as the Series 2016 Bonds that

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

Bankruptcy

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

“No taxing subdivision shall be permitted, in availing itself of such acts of congress [the Bankruptcy Code], to scale down, cut down, or reduce the principal sum of its securities, except that interest thereon may be reduced in whole or in part.” (Section 133.36 of the Revised Code.)

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

SOURCES AND USES OF FUNDS

The proceeds of the Series 2016A Bonds and the uses of those proceeds are as follows:

Sources: Par amount of the Series 2016A Bonds $47,650,000.00* Net original issue premium Total Sources of Funds

Uses: Deposit to Project Fund Deposit to Debt Service Fund Deposit to Escrow Account Costs of issuance of the Series 2016A Bonds1 Total Uses of Funds

The proceeds of the Series 2016B Bonds and the uses of those proceeds are as follows:

Sources: Par amount of the Series 2016A Bonds $5,390,000.00* Net original issue premium Total Sources of Funds

Uses: Deposit to Debt Service Fund Deposit to Escrow Account Costs of issuance of the Series 2016B Bonds1 Total Uses of Funds

1 Costs of issuance is the aggregate of underwriting discount, legal, consulting, financial advisor, trustee, verification, and other professional fees, printing expenses, and credit rating fees. *Preliminary, subject to change.

PLAN OF REFUNDING

On the date of delivery and payment for the Series 2016A Bonds, The Huntington National Bank as the Escrow Agent (the “Refunding Escrow Agent”) under the Escrow Agreement for the Series 2016A Refunded Bonds between the City and the Refunding Escrow Agent, will receive a portion of the proceeds of the Series 2016A Bonds (“2016A Refunding Proceeds”). The Refunding Escrow Agent will use 2016A Refunding Proceeds to purchase direct obligations of the United States of America that will mature on the dates and in the respective principal amounts that will be sufficient, together with any portion of the 2016A Refunding Proceeds held uninvested as cash, (i) to pay when due any principal of and interest on the Series 2016A Refunded Bonds to be retired on their state maturity dates, (ii) to pay on the scheduled interest payment dates the interest due and payable on the Series 2016A Refunded Bonds to be called for redemption prior to their stated maturity, and (iii) to pay the principal of, redemption premium, if any, and interest on the Series 2016A Refunded Bonds to be called for redemption prior to their stated maturity.

The 2016A Refunded Bonds consist of the following outstanding Bonds of the City:

SERIES 2016A REFUNDED BONDS Earliest Optional Redemption Refunded Interest Redemption Price Series Maturity Rate CUSIP** Par Amount Date (% of Par)

On the date of delivery and payment for the Series 2016B Bonds, the Refunding Escrow Agent under the Escrow Agreement for the Series 2016B Refunded Bonds between the City and the Refunding Escrow Agent, will receive a portion of the proceeds of the Series 2016B Bonds (“2016B Refunding Proceeds”). The Refunding Escrow Agent will use 2016B Refunding Proceeds to purchase direct obligations of the United States of America that will mature on the dates and in the respective principal amounts that will be sufficient, together with any portion of the 2016B Refunding Proceeds held uninvested as cash, (i) to pay when due any principal of and interest on the Series 2016B Refunded Bonds to be retired on their state maturity dates, (ii) to pay on the scheduled interest payment dates the interest due and payable on the Series 2016B Refunded Bonds to be called for redemption prior to their stated maturity, and (iii) to pay the principal of, redemption premium, if any, and interest on the Series 2016B Refunded Bonds to be called for redemption prior to their stated maturity.

The 2016B Refunded Bonds consist of the following outstanding Bonds of the City:

SERIES 2016B REFUNDED BONDS Earliest Optional Redemption Refunded Interest Redemption Price Series Maturity Rate CUSIP** Par Amount Date (% of Par)

**CUSIP numbers were assigned by an independent company not affiliated with the City and are included solely for the convenience of the holders of the Refunded 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 Refunded Bonds or as indicated above. .

Irrevocable instructions will be given by the City to the Trustee, as Registrar, to redeem those Refunded Bonds to be called for prior redemption. A verification report will be provided by Grant Thornton LLP as to the adequacy of the cash and United States Treasury Securities to provide for the payment when due or upon prior redemption of the principal of and any premium and interest on the Refunded Bonds. Upon deposit of cash and United States Treasury Securities with the Refunding Escrow Agent and the delivery of the irrevocable notice of redemption and the verification report, the Refunded Bonds will be deemed to have been paid and to be no longer outstanding under the General Bond Ordinance.

DEBT SERVICE REQUIREMENTS ON OUTSTANDING BONDS

The debt service requirements on the outstanding unvoted general obligation Bonds of the City prior to the issuance of the Series 2016 Bonds and the refunding of the Refunded Bonds are set forth below. Currently, the City has no outstanding voted general obligation bonds and no outstanding general obligation BANs.

Outstanding Series 2016 Series 2016 Series 2016 Total Annual Year Debt Service Principal Interest Total Debt Service Debt Service 2016 $33,815,981.26 2017 32,421,106.26 2018 32,118,156.26 2019 29,672,668.76 2020 26,831,543.76 2021 22,737,293.76 2022 20,695,006.26 2023 19,920,131.28 2024 16,519,518.76 2025 13,852,075.02 2026 13,314,425.02 2027 11,951,831.28 2028 9,556,743.78 2029 9,550,050.02 2030 4,858,475.00 2031 2,039,125.02 2032 1,489,950.00 2033 731,487.50 Total $302,075,569.00

THE CITY - GENERAL INFORMATION

General Introduction

The City is a municipal corporation and political subdivision of the State of Ohio (the “State”). It is located on the southern shore of Lake Erie and is the county seat of Cuyahoga County in northeastern Ohio. The City was incorporated as a village in 1814 and became a city in 1836. See “THE CITY – ECONOMIC AND DEMOGRAPHIC INFORMATION.”

City Government

The City operates under and is governed by the Charter, which was first adopted by the voters in 1913 and has been and may be further amended by the voters from time to time. The City is also subject to certain general State laws that are applicable to all cities in the State. In addition, under Article XVIII, Section 3 of the Ohio Constitution, the City may exercise all powers of local self-government and may exercise police powers to the extent not in conflict with applicable general State laws. The Charter provides for a mayor-council form of government.

Legislative authority is currently vested in a 17-member City Council (“Council”). The terms of Council members and the Mayor are four years. All Council members are elected from wards. The current terms of the Mayor and Council members expire on January 1, 2018. Council fixes compensation of City officials and employees and

enacts ordinances and resolutions relating to City services, tax levies, appropriating and borrowing money, licensing and regulating businesses and trades, and other municipal functions. The presiding officer is the President of Council, who is elected by the Council members. Kevin J. Kelley was elected as President of Council for the term beginning January 6, 2014. The Clerk of Council is appointed by Council.

Pursuant to the City Charter, City Council is required to re-divide the City into wards based on the City’s population. Currently, there are 17 wards in the City.

The City’s chief executive and administrative officer is the Mayor who is elected by the voters for a four-year term. Frank G. Jackson was re-elected to his third term as Mayor of the City on November 5, 2013 and began his current term on January 6, 2014. Prior to assuming office as Mayor, Mr. Jackson served as President of Council from January 2002 through December 2005 and as Ward 5 Council Member since 1989. The Mayor may veto any legislation passed by Council. A veto may be overridden by a two-thirds vote of all members of Council.

The Charter establishes certain administrative departments, and Council may establish divisions thereof or additional departments. The Mayor appoints all of the directors of the City’s 14 departments.

County Government

On November 6, 2009, the voters of Cuyahoga County adopted a County Charter that became effective January 1, 2010. The Charter provided for the elimination of several elected offices including the County Commissioners, County Auditor, County Treasurer, and County Recorder. The Charter provides for a County Executive and a County Council. Under the Charter, the County Executive appoints, among other positions, a Fiscal Officer, who assumes the duties previously performed by the County Auditor and County Recorder, and a County Treasurer, who retains the duties previously performed by the elected County Treasurer.

To the extent that this Official Statement refers to information provided by the County, this refers to the appropriate official in place at the relevant time period.

FINANCIAL MATTERS

The responsibilities for the City’s major financial functions are vested in the Director of Finance. The Director of Finance is responsible for preparing and implementing the City’s current operating budget and capital improvement plan, collecting the City’s revenues, and procuring the City’s goods and services and making payments therefor. The Director of Finance is also responsible for maintaining an effective system of internal accounting control which includes the maintenance of a centralized accounting system and the supervision of the City’s internal audit staff. Preparation and issuance of the City’s internal and external financial reports are supervised by the Director of Finance.

The Director of Finance for the City is Sharon A. Dumas. Ms. Dumas served as Assistant Director of Finance for Budget and Capital from October 13, 2003 until her appointment as Director of Finance on March 29, 2006. Prior to joining the City of Cleveland Finance Department, Ms. Dumas worked as Assistant Director of Community Development for the City. Ms. Dumas also served as Finance Director for the City of East Cleveland, Ohio from 1988 to 1994. Ms. Dumas holds a Masters of Accounting and Financial Information Systems from Cleveland State University and has over 30 years of experience in private and public sector accounting.

James T. Hartley was named an Assistant Finance Director in April 2007 and, in addition, has served as acting City Treasurer and now City Treasurer since April 2008. Prior to accepting his current positions, Mr. Hartley was the Chief Investment Officer for the Ohio Treasurer of State from 1999 until 2007. As a member of the Treasurer’s senior staff, he was responsible for overseeing and directing the State’s investment program, including the State Operating Fund, STAR Ohio Local Government Investment Pool, and the State Tobacco Settlement Funds.

James E. Gentile, CPA, returned to the City as Controller in February 2002. Prior to accepting the position, Mr. Gentile was Deputy Auditor for the Auditor of State’s Office since 1995 where he planned and supervised audits of cities, school districts and other local government agencies. From 1991 through 1995, he was employed by the City as an accountant and, in his final year, as Acting City Controller.

Elizabeth C. Hruby has served as the City’s debt manager since 1996. She is the Assistant Secretary to the Sinking Fund Commission. She has been employed by the City since 1982 when she began as a Budget Analyst in the Office of Budget and Management. She was promoted to Operating Budget Manager in 1987 and was responsible for the development and monitoring of the City’s annual operating budget. From January 7, 2002 until April 1, 2002, Ms. Hruby served as interim Director of Finance for the City.

Budgeting, Tax Levy and Appropriations Procedures

Detailed provisions for City budgeting, tax levies, and appropriations procedures are set forth in the Revised Code and in the Charter. The procedures involve review by County and State officials.

The City’s fiscal year corresponds with the calendar year. The City’s budgeting process formally begins with the preparation by the City’s Office of Budget and Management, and then the adoption by City Council after a public hearing each year, of a tax budget for the following year. Pursuant to the General Bond Ordinance, the City has covenanted to maintain balanced budgets by estimating revenues no greater than, and expenses no less than, those for the previous year, except for variations justified on a specific basis as described in the General Bond Ordinance and certified by the City’s Director of Finance. See “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND SINKING FUND ORDINANCE – Protective Covenants.”

Unless an extension is obtained, the City is required to file by July 20 of each year certain information obtained during its budgeting process and set forth in a document entitled “Alternative Tax Budget Information.” The County Budget Commission, composed of the County Fiscal Officer, County Executive and County Prosecuting Attorney, reviews the Alternative Tax Budget Information and, with particular attention to debt service, determines and approves levies for debt service outside and inside the ten-mill limitation. The Revised Code provides that “if any debt charge is omitted from the budget, the County Budget Commission shall include it therein.” Upon approval of the tax budget, the County Budget Commission certifies to the City its action together with the estimate by the County Fiscal Officer of the property tax rates outside and inside the ten-mill limitation. Thereafter, and before the end of the then calendar year, City Council approves the tax levies and certifies them to the proper County officials. The approved and certified property tax rates are then reflected in the tax bills sent to property owners. Real property taxes are payable by property owners to the County in two installments, the first in January and the second in July. The County Treasurer distributes property tax receipts in periodic installments throughout the year.

City Council adopts by each December of the preceding year, a temporary appropriation measure for the following fiscal year. A permanent appropriation measure is adopted by City Council after the start of the current fiscal year but no later than April 1. Annual appropriations may not exceed the County Budget Commission’s official estimate of resources, and the County Fiscal Officer must certify that the City’s appropriation measures do not appropriate moneys in excess of the amounts set forth in those estimates.

Financial Reports and Examinations of Accounts

In accordance with the requirements of the General Bond Ordinance, the City’s financial transactions are recorded and reported in conformity with GAAP. As required by the General Bond Ordinance, annual financial reports are prepared by the City and audited by a nationally recognized independent firm of certified public accountants or the State of Ohio Office of the Auditor, as required by Ohio law.

For financial statement purposes, all financial transactions for governmental and fiduciary funds are recorded on the modified accrual basis of accounting. Under this accounting method, revenues are recorded when received in cash, except for those revenues susceptible to accrual, which are recorded as revenues when measurable and available to finance current City operations. Revenues accrued at year end consist of reimbursements from other governments for grant expenditures, revenues from other governmental entities for services rendered and individual income tax receivables arising from payroll tax withholdings in December and received within 60 days after year end. Property taxes are recorded as revenue when distributed to the City after collection by the County. Governmental fund expenditures are accrued when the liability is incurred except for interest on long-term debt, which is recorded when due.

As required by State law, the City’s budgetary process accounts for certain transactions on a basis other than GAAP. The major differences between the budget basis and the GAAP basis are the following:

(a) Revenues are recorded when received in cash (budget) as opposed to when susceptible to accrual (GAAP).

(b) Expenditures are recorded when paid in cash or encumbered (budget) as opposed to when susceptible to accrual (GAAP basis). Encumbrances are recorded as expenditures (budget) as opposed to reservations of fund balances (GAAP).

The City maintains budgetary control by not permitting expenditures to exceed appropriations for personnel costs, benefits, and other costs within a division of the City without the approval of City Council. The City’s appropriation process does not include annual appropriation of revenues and expenditures for grant funds. Expenditures from grant funds are limited by the amount of the grant.

Under the City’s General Bond Ordinance, moneys used to pay debt service on the City’s unvoted General Obligation Bonds are derived from property tax revenues and a portion of the City’s municipal income tax revenues specifically earmarked for the payment of debt service. A portion of the property tax revenues, up to the amount of millage available for debt service (4.35 mills), is deposited directly by the County Treasurer with the Escrow Agent designated under the City’s General Bond Ordinance. A portion of the income tax receipts in an amount necessary to make principal and interest payments coming due is transferred directly by the Central Collection Agency to the Escrow Agent. Only after provision is made for debt service payments are income tax receipts available for other City purposes.

Summary of Major City Funds

The City’s major funds are the General Fund, the Enterprise Funds and the Special Revenue Funds. The General Fund is the major operating fund of the City and accounts for the general operating revenues and expenditures of the City not recorded elsewhere. Enterprise Funds are used to account for operations that provide services that are financed in whole or in part by user charges. It is the policy of the City that obligations of its enterprises, except for certain debt service of minor Enterprise Funds, be paid from revenues generated from the operations of the applicable Enterprise Fund. The four major Enterprise Funds consist of (a) the Port Control Fund (airports), (b) the Cleveland Public Power Fund, (c) the Water Fund, and (d) the Water Pollution Control Fund. The City also has separate funds for its minor enterprises, consisting of the Cemeteries Fund, the Convention Center Fund, the Municipal Golf Courses Fund, the West Side Market Fund, the Municipal Parking Facilities Fund and the Central Collection Agency. Special Revenue Funds are used to account for proceeds of certain specific revenue sources that are legally restricted to expenditures for specified purposes. Examples of the City’s Special Revenue Funds are the Restricted Income Tax Fund, funds for federal grant programs such as the Community Development Block Grant program and funds for State programs such as the Workforce Investment Act program, and, beginning in 2010, the Stadium Fund (formerly accounted for as an Enterprise Fund).

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Summary of General Fund Cash Receipts and Expenditures – Non-GAAP Budgetary Basis

Set forth below is a comparative summary of General Fund actual cash receipts by source and expenditures by function for the years 2011 through 2014 (audited), 2015 (unaudited), and the budgeted amounts for 2016 based on the appropriation ordinance approved by City Council.

Summary of General Fund Cash Receipts by Source and Budgetary Expenditures by Function – Non-GAAP Budgetary Basis (a) (000’s Omitted) Unaudited Budgeted 2011 2012 2013 2014 2015 2016 RECEIPTS

Income Taxes (b) $275,731 $290,474 $300,648 $297,124 $308,947 $314,800 Property Taxes (c) 36,618 36,028 32,705 32,338 32,684 30,932 State Local Government Fund 47,257 34,673 28,180 25,021 26,580 25,093 Other Shared Revenues (d) 42,058 46,929 54,954 49,921 53,575 52,803 Licenses & Permits (e) 14,329 12,372 13,521 13,106 16,684 15,678 Charges for Services (e) 31,601 33,837 32,954 33,418 31,695 34,666 Fines & Forfeitures (e) 23,461 21,626 20,174 23,733 15,691 14,490 Investment Earnings (e) 208 250 467 454 446 430 Miscellaneous (e) 31,440 41,812 30,095 40,118 30,781 36,479 Total Receipts $502,703 $518,001 $513,698 $515,233 $516,783 $525,371

(a) Table based upon budget basis of accounting. (b) Represents annual income tax receipts net of receipts from the portion of the City’s income tax restricted to use for capital improvements and debt service. (c) Reflects adjustments to assessed values following the 2012 and 2015 reappraisals. (d) Includes the following taxes: admission, parking, casino, hotel, property rollback, electric excise, motor vehicle, cigarette & liquor, estate, and the commercial activity tax. See “THE CITY – MAJOR GENERAL FUND REVENUE SOURCES – Ad Valorem Property Taxes.” (e) Certain of these receipts are committed to City obligations payable from, or secured by, non-tax revenues of the City.

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Summary of General Fund Cash Receipts by Source and Budgetary Expenditures by Function - Non-GAAP Budgetary Basis (a) (000’s Omitted) Audited Unaudited Budgeted 2011 2012 2013 2014 2015 2016 EXPENDITURES Public Safety $297,770 $294,746 $301,076 $299,797 $309,858 $330,753 General Government 74,644 78,496 81,317 83,892 85,851 93,933 Public Service (c) 34,571 - - - - - Parks, Recreation & Properties (c) 34,756 - - - - - Public Works (c) - 63,848 63,827 64,977 65,340 67,806 Public Health 4,737 5,346 5,057 5,705 6,351 7,480 Community Development/Building & Housing 8,303 8,465 9,207 8,896 9,203 10,149 Economic Development 1,393 1,413 1,456 1,538 1,488 1,718 Other 16,709 16,229 23,972 22,779 16,985 24.188 Total Expenditures $472,883 $468,543 $485,912 $487,584 $495,076 $536,027 Excess of Cash Receipts Over Expenditures $29,820 $49,458 $27,786 $27,649 $21,707 $(10,656)

OTHER FINANCING SOURCES (USES) Operating Transfers Out: Other (b) (19,789) (17,941) (29,682) (29,572) (29,862) (30,790) Excess (Deficiency) of Cash Receipts and other Financing Sources over Expenditures and Other Uses 10,031 31,517 (1,896) 1,923 (8,155) (41,446) Decertification (Recertification) of Prior Year Encumbrances 686 2,181 640 2,247 625 0 Fund Balances at Beginning of Year 6,144 16,861 50,559 49,303 49,627 42,097 Fund Balances at End of Year $16,861 $50,559 $49,303 $49,627 $42,097 $651

(a) Table based upon budget basis of accounting. (b) Includes transfers to cover deficiencies in other funds and amounts as needed for various City financings and other obligations. (c) The Departments of Public Service and Parks, Recreation and Properties were merged into the Department of Public Works in 2011 and are reflected as one department beginning in 2012.

General Fund Financial Budget for 2016

The Mayor’s proposed budget was delivered to City Council on February 1, 2016 in accordance with the Charter. After a series of public hearings, Council passed the 2016 budget on March 21, 2016 as required by State law. General Fund revenue is projected to increase by 1.6% ($8.5 million) from 2015 actual levels to $525 million. Income tax receipts, the largest revenue source for the General Fund, are projected to increase by 1.9 percent over 2015 actual collections to $315 million. Property tax revenue is projected to decrease by 5.3% from 2015 actual levels to $31 million. The County certifies property tax receipts for the City each year. The decrease in property tax revenue is due to the reappraisal of all property values which is done every three years by the County. While in recent years new construction projects have added to residential property values, the value of commercial properties decreased in the reappraisal due to the sale of various properties at values less than what was previously on the County’s records. State and Local Government Fund (SLGF) revenue is projected to decrease by $1.5 million from 2015 actual receipts to $25 million. As a result of the State’s budget balancing measures implemented in 2011, the City collected 44% less in SLGF revenue in 2015 than it did in 2011. The City is not anticipating any more cuts to SLGF.

Other Shared Revenue includes the following taxes: admission, parking, casino, hotel, property rollback, electric excise, motor vehicle lessor, cigarette & liquor, estate, and commercial activity. The 2016 budget for this category is $52.8 million, which represents a $773,000 decrease from 2015 actual collections. The State’s estate tax was repealed for estates of individuals with a date of death on or after January 1, 2013. The impact of the repeal of the State’s estate tax is now complete and accounts for $179,749 of the $773,000 decrease. The 2016 budget reflects

parking, motor vehicle lessor, and hotel taxes at levels similar to those collected in 2015. The City is projecting receipts of $9.3 million in casino revenue for the General Fund, which represents 85% of the total City collections from this source. As in 2015, electric excise tax receipts are being evenly split between the General Fund and Cleveland Public Power (CPP), with the General Fund half estimated at $3 million. All of these numbers reflect the City’s conservative approach to budgeting revenues each year.

Revenues from Licenses and Permits are expected to decrease by $1.0 million from 2015 actual levels. The 2016 budgeted amount is $15.6 million compared to $16.6 million collected in 2015. The decrease is mainly attributable to the fact that many of the large construction projects taking place throughout the City in recent years have completed the permit process. The pace for construction projects accelerated the last two years in anticipation of finishing projects before the start of the 2016 Republican National Convention in July 2016. The 2016 budget for Charges for Services is $34.6 million or approximately $3.0 million more than 2015 actual. Revenue from Emergency Medical Services (“EMS”) transportation runs accounts for most of the increase due to the expected elimination of the backlog in billing which hampered collections in 2015.

The 2016 budget for Fines and Forfeitures is $14.5 million dollars, compared to 2015 collections of $15.7 million, a net decrease of 7.6%. Criminal fines accounts for over 90% of the total decrease but is a conservative estimate. In 2015, there was a permanent decrease of approximately $8.7 million in this category due to the approval of a voter referendum effectively eliminating the violations related to traffic light cameras. The 2016 budget for Miscellaneous Revenue is projected to increase by $5.7 million from 2015 actual receipts due to higher indirect cost recoveries ($3.5 million) from the City’s Enterprise Funds as a result of an updated cost recovery plan. In addition, this category includes $2.1 million in revenue from the sale of City assets.

General Fund expenses for 2016 are budgeted at $566.8 million. This represents an 8% or $41.8 million increase in expenditures from 2015 actual levels. Salary and benefit increases account for 65% of the total expense increase. On May 26, 2015, the City and the Department of Justice (DOJ) entered into a Consent Decree for the reformation of the Division of Police in several areas related to recruitment of police cadets, new and improved training for new police cadets and seasoned officers, technology upgrades and database management, and programs to analyze and aid officers underperforming in their duties. The City will be under the Consent Decree for a period of five years. If the City is not in compliance with the Decree at that time, the period could be extended. The City has contracted with an independent monitoring group that will track and advise the court on the City’s progress under the decree. The court will ultimately determine if the City is in compliance after the five year period. The 2016 budget reflects the first full year implementation of the Consent Decree, and is projected to cost the City $7.4 million in 2016, of which $5 million is related to salaries and benefits.

Besides the increase in DOJ-related salaries and benefits, 2016 salaries also reflect the payment of accumulated wage increases for union contracts that were settled late in 2015 but were paid out in 2016. These are the 1%, 2% and 2% salary increases from 2013 through 2015. There are no salary increases budgeted for 2016. Employee benefits are projected to increase by $6.2 million to a total of $130 million. Hospitalization and pension costs account for 82% of the $6.2 million increase. Hospitalization costs are budgeted to increase by 7% in 2016 from 2015 levels as the City continues its transition to self-insurance, mainly for building a reserve and increases in claim costs. Pension costs, which are tied to salary costs, are estimated to increase by 9% due to a combination of the payment of the prior wage increases plus the filling of personnel vacancies that existed at the end of 2015 but will be filled in 2016. Total personnel costs represent 77.4% of the 2016 General Fund expense budget.

Non-personnel expenses of the budget consist of such items as professional contracts, utilities, training, materials and supplies, maintenance contracts, claims, internal service chargebacks and transfers to other funds. These categories increased by $14.6 million from the 2015 actuals. The Department of Public Safety is projected to increase by $4 million in non-personnel expenses. Half of the increase is for professional service contracts related to the consent decree for the independent monitor, youth explore program (recruitment), training consultants, and data study review/analysis for the newly created Community Police Commission. In addition, Public Safety maintenance contracts increased by $500,000 for police body cameras, interdepartmental charges increased $767,000 for upgrades in radio technology, and materials and supplies rose by $616,000. General government saw an increase of $1.5 million in non- personnel expenditures in anticipation of fire and police cadet examinations (including recruitment costs) and fire and police promotional exams. The Department of Public Works budget includes an increase of $1 million with $534,000

being for waste disposal and $500,000 for an EPA payment and for security guard contracts for the West Side Market and various recreation facilities.

Other expenses are projected to increase by $7.2 million, of which $5.9 million is for the City’s payment to the County for the Justice Center tower maintenance. Due to on-going discussions with the County regarding these payments, the City made no payment in 2015 and, as a result, the 2016 budget includes payments for both 2015 and 2016. The remaining projected increases in Other include $700,000 for street lighting costs due to electric rate increases from Cleveland Public Power, and $640,000 for Board of Election expenses due to the upcoming elections.

Operating Transfers Out to other funds are projected to increase by nearly $1 million. The largest increase is to the Division of Streets with smaller increases needed for the Cemeteries and Debt Service Funds. Transfers to cover debt service on bonds issued to build FirstEnergy Stadium (formerly known as Cleveland Browns Stadium) are slightly lower in 2016 at approximately $9.3 million. In addition, the City has agreed to contribute $2 million a year for 15 years towards renovations to FirstEnergy Stadium and 2016 will be the third year of this transfer. The City has not budgeted for a deposit to the Rainy Day Fund in 2016.

As adopted, the 2016 General Fund budget not only maintains existing services and staffing levels within the resources available but also incorporates the estimated funding needed to implement the DOJ consent decree and to host the Republican National Convention (RNC). The emphasis will also continue on controlling the City’s operating costs through operational efficiencies and the improvement and coordination of service delivery throughout the City’s neighborhoods. Consistent with other years, the budget assumes the use of nearly all of the $42.1 million balance carried over from the prior year with a budgeted year end 2016 balance of $651,000. While the RNC and DOJ consent decree implementation bring some uncertainty with regard to 2016 expenditures, it is expected that the City’s conservative revenue estimates coupled with on-going operating efficiencies and controlled hiring will cause the year end 2016 budget basis General Fund Balance to exceed the budgeted balance.

Management Discussion of the City’s Unaudited General Fund Results for the Fiscal Year Ended December 31, 2015–Budget Basis

Revenues – In 2015, General Fund revenue increased by $1.55 million to $516.8 million from the 2014 actual level of $515.2 million. Income tax is the largest single source of General Fund revenue and accounted for 60% or $309 million of total receipts. Since the recession of 2008, income tax receipts rebounded from 2010 to 2015. In 2010, the City collected $263.5 million in income taxes while collections totaled $309 million in 2015, an increase of $45.5 million. This rebound coincided with the construction boom throughout the City, most notably in the downtown and University Circle areas, as well as with the opening of the new casino in May 2012. The City’s income tax collections are divided between the General Fund (the “unrestricted share”) which receives eight-ninths of the receipts, and the Restricted Income Tax Fund which receives the remaining one-ninth. The Restricted Income Tax Proceeds may only be used for capital improvements or for debt service on obligations issued to provide funds for capital improvements. See “MAJOR GENERAL FUND REVENUE SOURCES – Municipal Income Taxes.”

The two other major components of General Fund revenues were ad valorem property taxes and the State Local Government Fund. Together these two sources accounted for 11.4% of total receipts. In Ohio, the true value of taxable real property is adjusted by the counties every three years to reflect current market values. The last complete reappraisal for all properties in the County occurred in 2012 for collections beginning in 2013. Property tax revenues have remained consistent since the initial drop in collections stemming from that reappraisal. In 2015, the General Fund received $32.7 million in property taxes. See “MAJOR GENERAL FUND REVENUE SOURCES-Ad Valorem Property Taxes.”

Local Government Fund (LGF) receipts reached their peak at $56.2 million in 2007 but began to fall as the economic conditions in the State worsened and various adjustments were made to the distributions since that time. As part of its budget balancing measures, in 2011 the State imposed a 25% decrease in LGF distributions effective July 1, 2011 through June 30, 2012 with the cut being increased to 50% beginning July 1, 2012 and thereafter. As a result, 2012 receipts from the Local Government Fund were reduced to $34.7 million and then fell to $28.2 million in 2013. In 2014, the revenue decreased by another 11% to $25 million. However, in 2015 the revenue from this source increased by 6.2% to $26.6 million. The City does not anticipate more cuts to the Local Government Fund. “MAJOR

GENERAL FUND REVENUE SOURCES-Local Government Fund/Local Government Revenue Assistance Fund.”

Other Shared Revenues include locally imposed taxes such as the 8% admission tax, the 8% parking tax and a $6 per lease motor vehicle lessor tax as well as distributions by the State from its collections from the estate tax (repealed by the State with small amounts from the imposition of the estate tax on estates of individuals with a date of death prior to January 1, 2013 still being received), the electric excise tax, and gaming taxes on the State’s four casinos. It also includes the State’s reimbursement of Homestead and Rollback taxes. Per City ordinance, 85% of the casino revenues collected are deposited into the City’s General Fund. The City’s General Fund collected $9.2 million in 2015. Total Other Shared revenue collections increased by $3.6 million to $53.5 million in 2015. The increase is attributed to higher admission, hotel and parking tax receipts due to the Cleveland Cavaliers progressing to the NBA finals in 2015 and due to the increased convention business experienced in the City.

Revenues from Licenses and Permits increased by $3.5 million or 27% in 2015. The large volume of construction projects in the City caused the increase in this source of revenue. Revenues from Charges for Services declined by $2 million in 2015 due in part to a billing backlog relating to EMS transportation runs. Revenue from Fines and Forfeitures decreased by $8 million in 2015 due to the elimination of the traffic camera violations program. The program was effectively shut down in late 2014 due to a vote by the citizens of Cleveland to ban usage of cameras unless a law enforcement official is present to issue the violation. In 2015, Investment earnings totaled $445,000, which was slightly lower than 2014 actual receipts of $454,000.

Miscellaneous Revenue includes a wide variety of revenues such as expenditure recoveries from grants, indirect cost reimbursements, reimbursements for police officers stationed at the Airport, workers compensation reimbursement from the State and transfers from other funds. In 2015, revenue from this source was $30.8 million, a decrease of $9.3 million from 2014. The bulk of this decrease ($5.8 million) was from transfers from other funds. In 2014, the transfers were comprised of receipts from the sale of City-owned land at Chagrin Highlands and from the shared revenue received through Joint Development Agreements (JDA’s) related to Chagrin Highlands. Grant revenue decreased by $1.3 million due to the expiration of the Community Oriented Policing Services grant in 2014. Expenditure recoveries decreased by $4.8 million due to a one time workers’ compensation reimbursement received in 2014. Central service cost receipts increased by $3.3 million due to a new cost allocation plan that resulted in an increased indirect cost rate. The City did not access the Rainy Day Fund in 2015 for General Fund operations.

Expenditures – Total General Fund expenditures, including operating transfers needed to meet debt service requirements on various City financings, increased by $7.8 million in 2015 to $524.9 million. Personnel expenses increased by $14.9 million. On the salaries side, the City saw an increase of $7.7 million in wage-related expenses stemming from a 2% salary increase effective April 1, 2015 for all non-union employees and those union employees who had approved the new 2013 – 2016 labor contracts. For those unions which ratified contracts in 2015, the City made wage increase payments for all amounts due for the contract period. Employee benefits expenses increased by $7.1 million. Health and prescription benefit costs increased by $7 million as the City continued its transition to a self insurance plan. Police and fire pension expenses increased by $1 million in conjunction with increased wages and overtime in the Divisions of Police and Fire. Workers compensation expenses decreased by $1.9 million.

General Fund non-personnel expenses dropped by a total of $7.1 million in 2015. Although expenditures for utilities, materials and supplies, and maintenance increased slightly from 2014 levels, Other expenses decreased $6.4 million from 2014 amounts. The two largest components of this decrease were a $2.6 million drop in the payment of Justice Center maintenance to the County as the City and County continued discussions on the payment amounts and a decrease in transfers to capital projects of $3.4 million. Additionally, charges from Motor Vehicle Maintenance decreased by $1.8 million due to lower fuel costs and upgrades to the City’s vehicle fleet.

Operating Transfers include subsidies and transfers to other funds. The transfers increased slightly by $290,000 in 2015 to $29.9 million. While the transfers to cover the debt service on various obligations of the City were $1.3 million lower than in 2014, the subsidies to the Division of Streets and to Public Auditorium increased by $1.2 million and $330,000 respectively. The City transferred the second of fifteen $2 million annual payments for Stadium capital repairs as part of an agreement with the Cleveland Browns. There was no transfer to the Rainy Day Fund in 2015.

The continued strict management of expenditures and improving economic conditions in the area were offset by State revenue cuts to the City and the loss of the traffic camera violations program. As a result, the City’s General Fund experienced a deficiency of cash receipts over expenditures and other uses of $8.1 million. However, these results, coupled with a beginning budget basis balance of $49.6 million and decertification of prior year encumbrances of $625,000, still allowed the City to end 2015 with an unaudited budget basis fund balance of $42.1 million.

General Fund Balances

The following presents a summary of General Fund balances on a GAAP basis, rather than a non-GAAP budgetary basis.

SUMMARY OF GENERAL FUND - FUND BALANCE - GAAP BASIS (000’s Omitted) Audited

2010 2011 2012 2013 2014

Fund Balance at Beginning of Year $5,865 $30,815* $51,594 $71,750 $89,748

Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures and Other Uses 6,676 20,779 20,156 17,998 4,579

Fund Balance at End of Year $12,541 $51,594 $71,750 $89,748 $94,327

*Restated based upon the implementation of GASB Statement No. 54.

Management Discussion of General Fund GAAP Basis Results for the Fiscal Year Ended December 31, 2014

On a GAAP basis, the City’s audited General Fund revenues and other financing sources totaled $497,455,000 in 2014, a decrease of $4.4 million from 2013. Expenditures and other uses totaled $492,876,000, representing an increase of $9.0 million from the previous year. Revenues and other sources exceeded expenditures and other uses by $4,579,000 which caused the unaudited General Fund GAAP basis balance to increase to $94.3 million at the end of 2014. There was no deposit to the Rainy Day Reserve Fund in 2014 which maintained its balance of $18.7 million. The unassigned fund balance in the General Fund was $78,401,000 at the end of 2014, up from $75,891,000 in 2013. Overall, the City’s unaudited General Fund GAAP basis fund balance increased from $89,748,000 at year end 2013 to $94,327,000 at year end 2014, an increase of 5.1%.

In 2014, income tax receipts, the largest General Fund revenue source, increased by $3.9 million from 2013 levels reflecting the continued recovery in the local economy since the 2008 recession. Property tax receipts fell by only $356,000 as both residential and commercial property valuations and collection rates stabilized. State Local Government Fund receipts dropped by another $3.4 million or 11.8% due to the final impact from decreases in the distributions to local governments implemented as part of the State’s budget balancing measures. Other taxes and shared revenues decreased $3.6 million or 6.3% from 2013 levels primarily because of the elimination of the estate tax by the State. Licenses and Permits fell by $568,000 million or 4.2% due to the fact that many of the construction projects that were started in the previous few years had already completed the permitting process. Charges for Services remained unchanged at $33.5 million, while revenue from Fines, Forfeitures and Settlements increased $2.8 million mostly due to an increase in speeding and red light camera fines. Investment earnings also remained largely unchanged in 2014 at $507,000 because of the continuing low interest rates earned on cash balances. Operating Transfers In totaled $5.6 million and was primarily comprised of $3.9 million from land sales at Chagrin Highland.

General Fund expenditures and other uses grew to $492,876,000 in 2014, an increase of $9.0 million or 1.9% from 2013. The increase stemmed partially from employee wage increases effective in 2014 and also from an additional $5.0 million in Operating Transfers Out in 2014. Although there was no transfer to the Rainy Day Fund in 2014, Transfers Out grew due to an increase in the amount needed for stadium debt service since the receipt of sin tax revenue was no longer available for that purpose and also because of the start of a $2 million annual commitment by the

City to fund improvements to FirstEnergy Stadium over the next fifteen years. These increases were partially offset by reduced staffing levels throughout the City.

Total General Fund assets increased by $3.1 million in 2014. Cash and Cash Equivalents increased by $2.7 million, primarily due to increased income tax revenue which was primarily due to increased employment throughout the City. At the same time, Taxes Receivable also increased by $2.0 million. Due from Other Governments decreased by $1.5 million because of the decrease in State Local Government Funds provided by the State. Finally, there was also a decrease of $2.4 million in the Allowance for Doubtful Accounts.

General Fund liabilities and deferred inflows of resources decreased by $1.5 million from 2013 levels. The most significant changes in liabilities were a decrease of $7.2 million in Accrued Wages and Benefits which is attributed to 2013 having a 27th pay period and a $3.6 million increase in Accounts Payable. Additionally Due to Other Funds increased $1.1 million and Deferred Inflows increased by $946,000.

The 2015 financial audit is still in process and has not yet been completed by the City’s outside auditors or the State Auditor’s Office. As a result, the most recently released and publicly available financial statements of the City are for Fiscal Year 2014. See Basic Financial Statements section of the City’s 2014 Comprehensive Annual Financial Report which can be found at http://www.city.cleveland.oh.us/CityofCleveland/Home/Government/ CityAgencies/Finance/formsandpublication.

Investment Policy

Investments and deposits of City funds are made by the City’s Treasurer and are governed by the Charter, Chapter 178 of the Codified Ordinances of the City and the City’s Cash Management and Investment Policy promulgated and annually reviewed by the Director of Finance. Chapter 178 provides that investments of City funds under trust agreements securing outstanding bonds are governed by those agreements.

Eligible investments under Chapter 178 include obligations issued by the United States and its agencies, bonds and notes of the State, the State Treasurer’s investment pool (“STAR Ohio”), full faith and credit bonds and notes of Ohio political subdivisions, repurchase agreements with a term not to exceed one year for the purchase of obligations issued by the United States or its agencies that have a market value in excess of the purchase price and that are held by a custodial bank, fully insured or fully collateralized certificates of deposit of eligible depositories and certain money market mutual funds. The City’s Cash Management and Investment Policy provides that safety of principal is the foremost objective, that the City’s investment portfolio will remain sufficiently liquid to enable the City to meet reasonably anticipated operating requirements and the City’s investment portfolio will be designated with the objective of achieving a rate of return that will provide the maximum level of income without subjecting the City to undue risk. The Policy currently provides that five years is the maximum maturity of any investment instrument or asset purchased by the City. However, the maximum maturity of investments of funds governed by a trust indenture or bond legislation is not subject to this policy.

The City biennially selects commercial banks to be designated as eligible depositories of the City’s funds based on the creditworthiness, capitalization and liquidity of the bank, and also on the bank’s policies and practices regarding housing and economic development in the City and compliance with other public purpose policies of the City. Under the current Cash Management and Investment Policy, a bank (or its corporate holding company parent) must have a credit rating of at least “A” from Moody’s Investors Service, Standard & Poor’s Ratings Services, or Fitch Ratings. Eligible depositories are required to pledge and deposit with the City or a custodian, as security for the repayment of money of the City so deposited, eligible securities that have an aggregate market value equal to 110% of the City’s money at any time on deposit. As of March 31, 2016, the City’s General Fund related portfolio had an average life of approximately 32 days and a weighted average yield of 0.183%. The portfolio generally consists of Money Market Funds and United States agency obligations.

MAJOR GENERAL FUND REVENUE SOURCES

Municipal Income Taxes

Ohio law authorizes a municipal income tax on net profits from the operation of a business or profession and on employee wages, salaries, and other compensation at a rate of up to 1% without voter authorization and at a rate above 1% with voter authorization. In 1979 and in 1981, the voters in the City approved increases of one-half of one percent to the rate of the income tax, bringing it to the current 2% rate. By the terms of the 1981 voter approval as amended in 1985, the Restricted Income Tax Proceeds(one-ninth of the receipts of the total 2% tax) must be used only for capital improvements or debt service on obligations issued for capital improvements or the payment of past deficits. The remaining eight-ninths of the receipts of the municipal income tax is pledged to, and may also be used for, debt service on the unvoted tax-supported obligations to the extent required. See “SECURITY AND SOURCES OF PAYMENT – General Bond Ordinance.”

The income tax is imposed on gross salaries and wages earned in the City by non-residents of the City and on salaries, wages and other compensation of City residents earned within or outside the City. The income tax liability of a City resident employed outside the City is reduced by a credit equal to 50% of the tax paid to the municipality in which the City resident is employed. The tax on business profits is imposed on that part of profits attributable to business conducted within the City. In 2015, approximately 90% of the total income taxes paid to the City was derived from non-residents employed in the City and from business profits.

All employers doing business in the City are required to withhold the income tax from their employees and remit it to the City on a monthly or quarterly basis depending on the amount being withheld. Individuals who do not have the tax withheld are required to file an estimated declaration each year and pay the income tax on a quarterly basis to avoid any penalties. At the end of each year, all employers must file a reconciliation document along with all W-2 forms issued to any employee and must remit any additional tax due at that time. Any resident 18 years of age or older who fails to file a tax return, regardless of income, is in violation of the municipal income tax ordinance and, as such, will be subject to fines and penalties as prescribed by law.

The Ohio Constitution provides that the General Assembly may enact laws restricting the power of municipalities to levy taxes, including municipal income taxes. Current Ohio law permits the reduction or elimination of a municipal income tax by action of the city council, or by vote of the electors initiated by petition of 10% of the number of electors of the city who voted at the last regular municipal election for president of council, following initiated ordinance procedures, or 10% of the electors of the city, following charter amendment procedures. Under current law, a city council could, unless restricted by a charter provision, reimpose a 1% tax without authorization by the electors. The City has covenanted in the General Bond Ordinance not to repeal or amend any ordinance for the levy or collection of its income taxes in any manner or to such extent that the City would not be able to meet its obligations under the General Bond Ordinance.

From time to time, legislation affecting the collection of municipal income taxes is considered by the State legislature. The Governor signed Substitute House Bill 5 into law on December 19, 2014. The law modifies certain provisions of the State tax code for municipal income taxes. Its provisions are effective for municipal income tax years that begin on or after January 1, 2016. The City does not anticipate that Substitute House Bill 5 will have a material effect on the City’s collection of its income tax.

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The total annual income tax receipts, including the restricted portion (on the budget basis), for the last five calendar years are shown in the following table:

Year Amount Rate 2011 $310,197,000 2.00% 2012 326,784,000 2.00 2013 338,229,000 2.00 2014 334,264,000 2.00 2015 347,565,000 2.00

The City is budgeting collections, including interest earnings on those collections, amounting to $354,150,000 from income taxes in calendar year 2016. See “FINANCIAL MATTERS - General Fund Financial Budget for 2016.”

The City projects income tax receipts on the basis of historical collections and does not include any projection of delinquent income tax collections in its budget. The City does, however, have procedures for identifying and collecting delinquent income taxes. Delinquent taxes collected in 2015 were approximately $4,715,000.

The ten largest employers based on payroll tax withholdings for 2015 are alphabetized by nature of business:

Name of Employer Nature of Business Case Western Reserve University Education Cleveland Metropolitan School District Education KeyBank Financial Services City of Cleveland Government Cuyahoga County Government DFAS (Defense Finance & Accounting Service) Government The Cleveland Clinic Foundation Health care The MetroHealth System Health care University Hospitals of Cleveland Health care Sherwin Williams Co. Manufacturing

Local Government Fund/Local Government Revenue Assistance Fund

From 1993 through 2011, the State and Local Government Fund (“LGF”) and Local Government Revenue Assistance Fund (“LGRAF”) were the City’s second largest source of General Fund revenue. Through these funds, Ohio subdivisions shared in a portion of the State’s collection of the State tax revenues (referred to hereinafter as the “percentage share”). Periodically, the amounts of and formula for distribution of LGF and LGRAF funds were considered by the State legislature for revision. In January 2008, the LGRAF was consolidated into the LGF and a “percentage of revenue” funding method was restored. However, rather than receiving a percentage of revenues from certain designated tax sources, the LGF received 3.68% of all General Revenue Fund tax sources.

Pursuant to statutory law in Ohio, LGF revenues are divided into county and State portions. The county portion, the larger of the two, is distributed to each of the State’s 88 counties and is allocated based upon a statutory formula utilizing county population and county municipal property values. Once received by a county, the funds can either be distributed to all subdivisions using the statutory formula or the county and its subdivisions may agree upon an alternate method for allocating the funds. The County and its recipient communities have chosen the latter method, which is comprised of a base allocation and an excess allocation. The excess allocation takes into account such factors as assessed value per capita, per capita income, population density and the number of individuals receiving public assistance.

The State portion of the LGF is distributed directly by the State to those municipalities which impose an income tax. A municipality receives its share of the funds based upon its percentage of total municipal income taxes collected throughout the State in a given year.

The biennial appropriation legislation passed in May 2011 reduced the monthly LGF allocations for the State’s two fiscal years, ending June 30, 2013. From August 2011 through June 2012, each month’s LGF allocation equaled 75% of the allocation made in the corresponding month in State fiscal year 2011. From July 2012 through June 2013, the monthly allocation equaled 50% of the allocation made in the corresponding month in State fiscal year 2011. Under the bill, the reductions made in State fiscal years 2012 and 2013 would become the basis for all future allocations. In State fiscal year 2014, the allocation returned to a “percentage of revenues” funding method, with municipalities sharing in any growth thereafter.

Listed below are the actual distributions to the City of these funds for the City’s five fiscal years ending December 31, 2015, and the budgeted amounts for 2016.

Audited Unaudited Budgeted 2011 2012 2013 2014 2015 2016* Local Govt. Fund- County Portion $42,708,341+ $31,509,083 $25,601,980 $22,473,898 $24,578,225 $24,093,612 Local Govt. Fund- State Portion 4,548,620 3,163,623 2,578,348 2,547,115 2,001,542 999,470 TOTAL $47,256,961 $34,672,706 $28,180,328 $25,021,013 $26,579,767 $25,093,082

+In 2011, a special pool of money was created by the State that was allocated among the various subdivisions for that year only. The City received approximately $4 million. *Provided by the County.

Ad Valorem Property Taxes

Assessed Valuation

The following table shows the assessed valuation in thousands of dollars, for the most recent five tax collection years, of property subject to ad valorem property taxes levied by the City:

Public Utility Tax Collection Tangible Total Assessed Year Real Property(a) Personal(b) Valuation 2012 $5,385,180 $246,081 $5,631,261 2013(c) 4,597,342 271,426 4,868,768 2014 4,601,349 298,603 4,899,952 2015 4,629,285 318,829 4,948,114 2016(d) 4,257,595 331,843 4,589,438

(a) Other than real property of railroads. The real property of public utilities, other than railroads, is assessed by the County. Real property of railroads is assessed, together with tangible personal property of all public utilities, by the State Tax Commissioner. (b) Tangible personal property of all public utilities and real property of railroads. (c) Reflects impact of sexennial reappraisal in 2012 for collection year 2013. (d) Reflects impact of triennial appraisal in 2015 for collection year 2016.

Source: The County.

Taxes collected from real property in one calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Public utility real and tangible personal property taxes collected in one calendar year are levied in the preceding calendar year on assessed values determined as of December 31 of the second year preceding the tax collection year.

Pursuant to statutory requirements for sexennial reappraisals, the County adjusts the true value of taxable real property to reflect current fair market values. The most recent reappraisal was conducted in 2012 and was reflected beginning in the 2013 collection year valuation. The County is required to adjust (but without individual appraisal of properties except in the sexennial reappraisal) and has adjusted taxable real property values triennially to reflect true

values. The most recent triennial adjustment was conducted in 2015 and is reflected in the 2016 collection year valuations.

The “assessed valuation” of real property is fixed at 35% of true value and is determined pursuant to rules of the State Tax Commissioner. An exception is that real property devoted exclusively to agricultural use is to be assessed at not more than 35% of its current agricultural use value. Real property devoted exclusively to forestry or timber growing is taxed at 50% of the local tax rate upon its assessed value.

The taxation of all tangible personal property used in general businesses (excluding certain public utility tangible personal property) was phased out from tax year 2006 to tax year 2009. Previously, machinery and equipment and furniture and fixtures were generally taxed at 25% of true value, and inventory was taxed at 23%. The taxation of all tangible personal property used by telephone, telegraph or interexchange telecommunications companies (“telecommunications property”) was phased out over tax years 2007 to 2011. Previously, telecommunications property was taxed at 25% or 46% of true value (depending on the type of equipment and when it was placed into service).

As a result of the phase-out of taxation of tangible personal property used in general business (excluding certain public utility property) and tangible personal property used by telephone, telegraph or interexchange telecommunications companies, and the reduction of the percentages of true value of electric utility production equipment and natural gas utility property assessed for taxation as described above, eligible local governments have received reimbursement payments from the State to account for the loss of property tax revenue. Under Amended Substitute House Bill No. 64, passed by the Ohio General Assembly and signed by the Governor on June 30, 2015, providing State appropriations for its 2016-2017 biennium (the period from July 1, 2015 through June 30, 2017) and enacting other statutory provisions (the “State Budget Act”), such reimbursements have been combined and are to be distributed by the State to the county auditors in August and February.

The State’s reimbursement payment to the City in 2015 was $51,000 to the General Fund and $2,949,000 to the Sinking Fund and for 2016 is budgeted to be $2,949,000 to the Sinking Fund. The General Fund will not receive funds from this source any longer. See “FINANCIAL MATTERS – 2015 General Fund Budget.” The reimbursement is scheduled to be $2,949,000 in 2017, which is expected to be the last payment.

Public utility tangible personal property (with some exceptions) is currently assessed (depending on the type of property) from 25% to 88% of true value. Effective for collection year 2002, the assessed valuation of electric utility production equipment was reduced from 100% and natural gas utility property from 88% of true value, both to 25% of true value. Makeup payments in varying and declining amounts are to be made through 2016 to taxing subdivisions such as the City by the State from State resources. The State’s reimbursement payment to the City in 2014 was $546,000 and was $539,000 in 2015. The budget legislation adopted by the State in May of 2011 provided for an immediate phase-out of distributions to local taxing subdivisions from the proceeds of the public utility tangible personal property tax for those entities for which this source of revenue comprises less than 2% of total operating revenues, which includes the City. The portion of the public utility tangible personal property tax designated for debt service was not reduced. See “FINANCIAL MATTERS - General Fund Financial Budget for 2016.”

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

Ohio law grants tax credits to offset increases in taxes resulting from increases in the true value of real property. Legislation classifies real property as between residential and agricultural property and all other real property, and provides for tax reduction factors to be separately computed for and applied to each class. These tax credits apply only to certain voted levies on real property, and do not apply to unvoted levies, or to voted levies to pay debt service on general obligation debt, or to levies within rate limitations provided by a municipal charter. Accordingly, none of the City’s tax levies, all of which fall within the exceptions previously noted, are affected by these credits.

The following table lists the largest property taxpayers with respect to both real and tangible personal property located in the City, based on assessed valuation of property for the 2016 tax collection year. State law permits, and in the past the City has granted, exemptions from real property taxation for up to 100% of assessed valuation by reason of tax abatement or tax increment financings. The amounts shown in the following table are adjusted to reflect reductions in valuations resulting from abatements:

Largest Property Taxpayers Tax Collection Year 2016

Assessed Valuation Percentage of Real and Tangible Personal Total Assessed Name of Taxpayer Nature of Business Property Valuation

CEI/FirstEnergy (a) Utilities – Electric $205,760,440 4.48% The City (b) Government 106,589,610 2.32% Cleveland-Cuyahoga County Port Government 84,142,890 1.83% Authority (c) Key Center Properties LLC Commercial Real Estate Holdings 80,915,000 1.76% East Ohio Gas (a) Utilities – Natural Gas 80,661,170 1.76% Cleveland Financial Associates Commercial Real Estate Holdings 43,903,130 0.96% American Transmission System Commercial Real Estate Holdings 43,113,040 0.94% (a)(d) PNC Bank Commercial Real Estate Holdings 33,508,720 0.73% Higbee Mothership LLC Commercial Real Estate Holdings 32,900,010 0.72% Hub North Point Properties LLC Commercial Real Estate Holdings 32,101,800 0.70% TOTAL $743,595,810 16.20%

Total Assessed Valuation – All Categories $4,589,437,780 100.00%

(a) Tangible personal property for certain utilities is included as taxable properties. See “Ad Valorem Property Taxes” above. (b) Includes, among other things, the following properties which are subject to ad valorem taxation: land comprising the site of Cleveland Browns FirstEnergy Stadium, various municipal parking lots, areas of Cleveland Hopkins International Airport and Burke Lakefront Airport which are leased to third parties, and public utility property owned by the City. The City has applied for property tax exemptions relative to certain of these assessed parcels. However, as the outcome of the exemption applications is unknown, those values are included herein. Regarding many of the parcels that are leased to third parties, while the City is statutorily responsible for the property tax, third parties have contractually agreed to pay those taxes on the City’s behalf. (c) Includes property owned by the Cleveland-Cuyahoga County Port Authority as part of its various public financing programs. Regarding many of the parcels that are leased to third parties, while the Port Authority is statutorily responsible for the property tax, third parties have contractually agreed to pay those taxes on the Port Authority’s behalf. (d) American Transmission Systems is an affiliate of FirstEnergy.

Source: The County.

Ad Valorem Property Tax Rates

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

The Charter provides that the maximum total tax rate that may be levied without a further vote of the electors for current operating expenses is 8.35 mills. The Charter further provides that City Council may authorize an additional levy in any year not to exceed 0.2 mills and within the ten-mill limitation imposed by Ohio law, for the purpose of financing specific public improvements and equipment having an estimated useful life of five years or longer.

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The following are the rates in mills per $1.00 of assessed valuation (35% of true value), for the years indicated at which the City and the taxing subdivisions overlapping the City levied ad valorem property taxes (in that area of the City having the highest percentage of total assessed valuation):

TAX TABLE A Overlapping Tax Rates

Library & Cleveland County and Metropolitan School Collection Year City Others District Total 2012 12.70 18.30 71.60 102.60 2013 12.70 18.30 86.60 117.60 2014 12.70 20.03 86.60 119.33 2015 12.70 20.93 86.70 120.33 2016 12.70 20.93 86.10 119.73

Source: The County.

The following are the rates at which the City levied ad valorem property taxes for the purposes and in the years indicated:

TAX TABLE B City Tax Rates

Police and Fire Unvoted Debt Collection Year Operating Pension Retirement (a) Total 2012 7.75 0.60 4.35 12.70 2013 7.75 0.60 4.35 12.70 2014 7.75 0.60 4.35 12.70 2015 7.75 0.60 4.35 12.70 2016 7.75 0.60 4.35 12.70

(a) The City has no outstanding Voted General Obligation Bonds

Source: The County.

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Collection of Ad Valorem Property Taxes The following are the amounts billed and collected for City ad valorem property taxes on real property, utility property and tangible personal property for the indicated tax collection years: (000’s Omitted) Total Collections As Percent Collection Current Delinquent Total Current Current Levy Delinquent Total Of Current Accumulated Year Levy Levy (a) Levy Collection Collected Collection Collection Levy Delinquency 2011 $74,313 $35,614 $109,927 $59,308 79.8% $5,105 $64,406 86.7% $44,679 2012 76,328 45,815 122,143 58,665 76.9% 6,972 65,637 86.0% 47,654 2013 68,192 36,761 104,953 57,320 84.1% 4,665 61,985 90.9% 40,344 2014 72,904 37,425 110,329 60,147 82.5% 4,543 64,690 88.7% 41,285 2015 75,116 35,031 110,147 62,192 82.8% 4,537 66,729 88.8% 47,221

(a) Levy includes adjustments, abatements, additions and penalties against current delinquent levy. Source: The County.

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The current and delinquent taxes are billed and collected by County officials for all taxing or assessing subdivisions in the County, including the City. The County employs procedures for collection of delinquent taxes, including the initiation of foreclosure proceedings.

Included in the above figures for ad valorem property taxes under the columns headed “Total Levy,” “Total Collection,” and “Total Collections as Percent of Current Levy” are payments made from State revenue sources under two Statewide real property tax relief programs – the Homestead Exemption and the Property Tax Rollback Exemption. Homestead Exemptions have been available for (i) persons 65 years of age or older, (ii) persons who are totally or permanently disabled and (iii) surviving spouses of persons who were totally or permanently disabled or 65 years of age or older, and had applied and qualified for a reduction of property taxes in the year of death, so long as the surviving spouses were not younger than 59 or older than 65 years of age on the date of their deceased spouses’ deaths. The Homestead Exemption exempts $25,000 of the homestead’s market value from taxation, thereby reducing the property owner’s ad valorem property tax liability. The Property Tax Rollback Exemption applies to all non-business properties, and reduces each property owner’s ad valorem property tax liability by either 12.5% (for owner-occupied non-business properties) or 10% (for non-owner non-business occupied properties). Payments to taxing subdivisions have been made in amounts approximately equal to the Homestead and Property Tax Rollback Exemptions granted. This State assistance reflected in the City’s tax collections for 2015 was $1,902,848 for the elderly/disabled homestead payment and $2,960,708 for the rollback payment.

State legislation passed in 2013 made the Homestead Exemption subject to means testing beginning January 1, 2014, and eliminated the Property Tax Rollback Exemption and related reimbursements with respect to new or replacement tax levies approved at elections after September 29, 2013, and other taxes (or increases in taxes) not levied for tax year 2013.

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

Delinquencies

The following is a general description of delinquency procedures under Ohio law, the implementation of which may vary in practice among the counties. Under the Revised Code, taxes become a lien of the State on the first day of January, annually, and continue until the taxes, including any penalties, interest or other charges, are paid. Real estate taxes and special assessments that are not paid in the year they are due are to be certified by the county auditor’s office as delinquent. Any amount of a previous tax bill not paid before new tax bills are mailed for the next half of the year is considered delinquent and becomes subject to a 10% penalty. A list of delinquent properties is compiled by the county auditor (the “delinquent land duplicate”). If delinquent taxes (and special assessments) are not paid within 60 days after a copy of the county auditor’s delinquent land duplicate is delivered to the county treasurer, then the county treasurer is to enforce the lien of the State that attached on January 1 of the year the taxes first became payable. Under State law (Section 323.25 of the Revised Code), the county treasurer is to enforce the lien “in the same way mortgage liens are enforced,” that is, by an action in the court of common pleas for foreclosure and sale of the property in satisfaction of the delinquency. If the county treasurer fails to bring an action to enforce the lien, then the State Tax Commissioner is to do so. In addition, one year after certification of a delinquent land list, the county prosecuting attorney is authorized to institute foreclosure proceedings in the name of the county treasurer to foreclose the lien. In Cuyahoga County, beginning in 2011, the roles of both the county auditor and county treasurer described above are performed by the County Fiscal Officer. See “THE CITY - GENERAL INFORMATION – County Government.”

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

In recent years, the State legislature has enacted several programs with respect to forestalling the foreclosure process or the forfeiture of property due to tax delinquency that may have the effect of delaying or eliminating the collection of certain property taxes. Notwithstanding the delay or loss of the tax revenues from those properties, an issuer of general obligation notes or bonds, such as the City, remains obligated to pay the debt charges on those notes or bonds from the available revenues. See “SECURITY AND SOURCES OF PAYMENT.”

Current and delinquent property taxes are billed and collected by County officials for all taxing subdivisions in the County. There were 142,370 nonexempt parcels in the City for collection year 2015, and 1,865 foreclosure proceedings were commenced against those parcels. The total number of delinquent parcels was not available from the County Fiscal Officer’s office.

There is no one taxpayer that accounts for more than 5% of any of the delinquencies of ad valorem real property taxes or special assessments identified above for tax collection year 2014.

Overlapping Governmental Entities

The major political subdivisions or other governmental entities overlapping all or a portion of the territory of the City and, in most cases, the County are listed below along with a brief description of their functions.

The County performs the traditional functions allocated to counties by Ohio law, such as human services, elections, road maintenance, public hospitals and administration of a portion of the court system. Property located within the City constitutes 16.67% of the property assessed for valuation within the taxing jurisdiction of the County.

The Cleveland Metropolitan School District (the “School District”) is charged with educational responsibilities for children from kindergarten through the twelfth grade. The School District is the principal school system in the City and the second largest in the State. Property located within the City constitutes 96.70% of the property assessed for valuation within the taxing jurisdiction of the School District. Other property in the City is located in portions of two other school districts: (a) the Shaker Heights City School District and (b) the Berea City School District.

On September 9, 1998, the Mayor-appointed nine-member school board and Chief Executive Officer assumed control and management of the School District. The State legislation authorizing this assumption of control provided as follows: (a) the Mayor-appointed board of education has no interest in the funds or property of the City; (b) the budgets of the School District and the City are to be estimated, planned, and financed separately; and (c) at no time are any funds of the School District and the City to be commingled in any manner, and all School District funds and accounts shall be maintained and accounted for totally independently of any funds and accounts of the City. In November 2002, the voters of the School District approved the continuance of the governance of the School District by the Mayor-appointed board of education.

The Greater Cleveland Regional Transit Authority (“RTA”) owns and operates a public mass transit system. It was created in 1974 for the purpose of acquiring the Cleveland Transit System, the Shaker Rapid Transit System and other municipal transit systems in the County, and became operational in September 1975. Property located within the City constitutes 16.67% of the property assessed for valuation within the taxing jurisdiction of RTA.

The Northeast Ohio Regional Sewer District (“NEORSD”) was established in 1972 under Chapter 6119 of the Revised Code with the consent of the City, to implement a comprehensive wastewater treatment and control system in the Cleveland metropolitan area. NEORSD presently operates and maintains three wastewater treatment plants and the combined sewer outflow and interceptor sewer system which serves the City and all or part of 59 suburban communities.

The Cleveland Metropolitan Park District owns and operates park and recreation areas. Property located within the City constitutes 16.49% of the property assessed for valuation within the taxing jurisdiction of this district.

The Cuyahoga County District Library owns and operates library facilities. Property located within the City constitutes 0.31% of the property assessed for valuation within the taxing jurisdiction of this district.

The Cleveland-Cuyahoga County Port Authority owns and operates port facilities in the Port of Cleveland. Property located within the City constitutes 16.67% of the property assessed for valuation within the taxing jurisdiction of this authority.

The Cuyahoga Community College District operates a two-year public institution of higher education. Approximately 33,500 students enroll annually at its three campuses. Property located within the City constitutes 16.67% of the property assessed for valuation within the taxing jurisdiction of this district.

Each of these entities operates independently under and is governed by Ohio law, with its own separate budget, taxing power and sources of revenue. Only the County, The Cleveland Municipal School District, the Shaker Heights City School District, the Berea City School District and RTA may, in addition to the City, levy ad valorem property taxes within the ten-mill limitation described under “CITY DEBT AND OTHER OBLIGATIONS – Indirect Debt Limitation.”

Tax Incentive Programs

To facilitate economic growth and development, the City primarily utilizes two tax incentive programs, an Enterprise Zone Program and a Community Reinvestment Program.

The Enterprise Zone Program (as approved by the State Director of Development) provides real and personal property tax exemptions for certain businesses which locate or expand in designated qualified enterprise zones. Under the Enterprise Zone Program, agreements entered into between businesses and municipalities can grant exemptions, not to exceed 10 years, on up to 100% of tangible personal property and up to 100% of the value of real property improvements.

The State has approved several enterprise zones within the City under which the City provides tax exemptions up to 100% of tangible and real property to industrial and non-retail commercial businesses for up to 10 years.

Municipal corporations and counties are permitted to create community reinvestment areas (“CRAs”) in which a real property tax exemption may be granted for the total or increased real property valuation that would result from new construction or remodeling of existing structures. The City’s current policy is to provide 100% tax exemptions for 15 years on newly constructed market rate single/two family homes. The entire geographic area of the City is designated a CRA.

Municipal corporations are also authorized to enter into development agreements with owners and developers of property in urban redevelopment areas and to grant real property tax exemption for up to 30 years for certain improvements undertaken pursuant to such development agreements. The City is currently a party to a number of agreements with respect to large urban renewal projects in its downtown. In some cases the property owners make payments to the City and the School District in lieu of taxes.

CITY DEBT AND OTHER OBLIGATIONS

The information set forth below summarizes provisions dealing with the debt limitations imposed by State law applicable to the City and its general obligations.

Debt Limitations

State laws restrict the ability of municipalities to incur debt. Unvoted general obligations of the City are subject to both the direct debt limitations in the Revised Code (except to the extent debt service on the unvoted general obligations of the City is to be paid from lawfully available municipal income taxes applied under ordinance

covenants) and the indirect debt limitation imposed by a combination of the provisions of the Ohio Constitution and the Revised Code.

Direct Debt Limitations

The Revised Code provides that the net principal amount of both voted and unvoted debt of a city, excluding exempt debt described below, may not exceed 10½% of the total tax valuation of all property in a city as listed and assessed for taxation, and that the net principal amount of unvoted non-exempt debt may not exceed 5½% of that valuation. These two limitations are referred to as the direct debt limitations and may be amended from time to time by the Ohio General Assembly.

Certain debt the City may issue is exempt from the direct debt limitations (“exempt debt”). Exempt debt includes each of the following:

(a) General obligation debt that is:

(i) “self-supporting” (that is, non-tax revenues from the facility or category of facilities are sufficient to pay operating and maintenance expenses and related debt service and other requirements) issued for city utility systems or facilities; airports or landing fields; railroads and other mass transit systems; parking facilities; health care facilities; solid waste facilities; urban development; recreation, sports, convention, museum and other public attraction facilities; facilities for natural resource exploration, development, recovery, use or sale; correctional and other related rehabilitation facilities;

(ii) issued when debt charges are expected to be paid from tax increment financing payments in lieu of taxes pledged to the payment of those charges (subject to certain limitations);

(iii) issued for highway improvements if the municipality has covenanted to pay debt service and financing costs from distributions of motor vehicle license and fuel taxes;

(iv) issued in anticipation of the levy or collection of special assessments; or

(v) issued to pay final judgments or court-approved settlements.

(b) Securities issued to improve water or sanitary or storm water sewerage facilities to the extent that another subdivision has agreed to pay the municipality amounts equal to debt service on those securities.

(c) Unvoted general obligation bonds to the extent that debt service will be met from lawfully available municipal income taxes to be applied to that debt service under ordinance covenants.

(d) Debt that is not general obligation debt.

(e) Revenue debt.

(f) Notes anticipating the collection of current revenues or the proceeds of a specific tax levy.

(g) Notes issued for certain energy conservation improvements or emergency purposes.

(h) Debt issued in anticipation of the receipt of federal or state grants for permanent improvements.

(i) Debt issued to evidence loans from the State capital improvement fund or State infrastructure bank.

(j) Voted debt for urban redevelopment purposes not in excess of 2% of the City’s assessed valuation.

(k) Debt issued to pay obligations of the City under an agreement relating to the police and fireman’s disability and pension fund.

(l) Debt issued for municipal, educational, cultural, and sport facilities.

(m) Debt for the acquisition of property for public use in excess of that needed for public improvements.

(n) Revenue debt and mortgage bonds issued to finance municipal utilities.

(o) Notes issued in anticipation of exempt bonds.

In the calculation of debt subject to the direct debt limitations, the amount in a city’s bond retirement fund (in the case of the City, its Sinking Fund) allocable to the principal amount of non-exempt debt is deducted from gross non-exempt debt. See “Debt Outstanding” below for a summary of the outstanding debt of the City and the City’s current voted and unvoted non-exempt debt capacities, calculated without consideration of amounts in the City’s Sinking Fund and based on the 2015 assessed valuation of property in the City for the 2016 tax collection year.

Indirect Debt Limitation

Voted general obligation debt may be issued by the City if authorized by the voters in the City. Ad valorem property taxes, without limitation as to amount or rate, to pay debt service on voted bonds are authorized by the voters at the same time they authorize the issuance of the bonds. The City currently has no outstanding voted bonds and no outstanding general obligation BANs.

General obligation debt also may be issued by the City without authorization from the voters. This unvoted debt may not be issued unless the ad valorem property tax for the payment of debt service on (a) those bonds (or the bonds in anticipation of which BANs are issued), and (b) all outstanding unvoted general obligation bonds (including bonds in anticipation of which BANs are issued) of the combination of overlapping taxing subdivisions, including the City, resulting in the highest tax required for such debt service in any year is ten mills or less per $1.00 of assessed valuation. This indirect debt limitation, the product of what is commonly referred to as the “ten-mill limitation,” is imposed by a combination of provisions of the Ohio Constitution and the Revised Code. In the case of BANs issued in anticipation of unvoted general obligation bonds, the highest annual debt service estimated for the anticipated bonds is used to calculate the millage required. The indirect debt limitation applies to all unvoted general obligation debt even if debt service on some of it is expected to be paid, in fact, from income tax revenues, special assessments, utility earnings or other resources. However, revenue bonds and notes, notes issued in anticipation of the collection of special assessments for City services in limited circumstances, certain urban renewal bonds and mortgage revenue bonds are not included in debt subject to the ten-mill limitation because they are not general obligations of the City and neither the general revenue nor the full faith and credit of the City is pledged for their payment.

The indirect debt limitation commonly referred to as the “ten-mill limitation” is imposed by a combination of provisions of the Ohio Constitution and the Ohio Revised Code. The ten-mill limitation is the maximum aggregate millage for all purposes, in the absence of a charter tax rate limitation, that may be levied without voter approval on any single piece of property by a combination of all overlapping taxing subdivisions without a vote of the electors. The ten mills which may be levied without a vote of the electors is in fact levied, collected and allocated among the City and its overlapping taxing subdivisions for general fund purposes pursuant to a statutory formula. The latter ten mills is otherwise known as the subdivisions’ “inside” millage.

Present Ohio law requires this “inside” millage allocated to a taxing subdivision to be used first for the payment of debt service on its unvoted general obligation debt, unless provision has been made for that payment from other sources, with the balance usable for other purposes. To the extent this inside millage is required for debt service of a taxing subdivision (which may exceed the formula allocation to that subdivision), the amount that would otherwise be available to that subdivision or other overlapping subdivisions for general fund purposes would be reduced. In the case of the City, however, a law applicable to all Ohio cities and villages requires that any lawfully

available receipts from a municipal income tax or from voted property tax levies be allocated to pay debt service on City unvoted debt before the formula allocations of the inside millage to overlapping subdivisions can be invaded for that purpose.

The current allocation of the inside millage in the City is as follows: 4.40 mills to the City, 4.00 mills to the Cleveland Municipal School District and 1.50 mills to the County. Of the 4.40 mills allocated to the City, 4.35 mills are levied for debt service on unvoted general obligation bonds and 0.05 mills is levied for fire pensions. For 2016, the City has levied 4.40 mills of inside millage, consisting of 4.35 mills for debt service on its unvoted general obligation bonds and 0.05 mills for fire pension obligations.

The voters of a charter municipality such as the City may authorize the levy of a tax at a rate subject to a different limitation. The City voters in the City’s Charter authorized City Council to levy each year for current operating expenses and for police and fire pensions a tax of up to 8.35 mills on all taxable property in the City without further voter authorization, but subject to change by further action of the voters. These 8.35 mills are in addition to the City’s share of inside millage (i.e., the 4.35 mills for collection year 2016).

The City has levied 8.30 mills outside that ten-mill limitation, pursuant to the Charter’s 8.35 mill authorization, for current operating expenses and for police and fire pensions. Satisfying the City’s pension obligations requires 0.55 mills of the 8.30 mills, leaving 7.75 mills for operations. If the City’s allocated 4.35 mill levy within the ten-mill limitation is insufficient to cover the payment of debt service on its unvoted general obligation bonds, State law requires that the City must first exhaust its municipal income tax receipts and its 8.30 mill operating and pension levy receipts before a reallocation of any other political subdivision’s share of the inside millage may be made to the City to provide for the payment of that debt service.

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Debt Outstanding

The following table summarizes: (i) the principal amount of outstanding debt, revenue bonds and other obligations of the City as of April 15, 2016, prior to the issuance of the Series 2016 Bonds and the refunding of the Refunded Bonds, and the portion of all obligations that is exempt from the 5½% and 10½% direct debt limitations discussed above; and (ii) the remaining leeway within those direct debt limitations. Currently, the City has no voted bonds outstanding; consequently, the amount of outstanding debt subject to the 5½% and 10½% limitations in the table below is the same.

A. Total Debt $2,236,036,880 B. Exempt Debt Category Self-Supporting Revenue Bonds and Notes Waterworks $629,245,000 Airport 729,375,000 Electric 222,272,880 Parking(a) 23,690,000 Water Pollution Control 32,390,000 Urban Renewal Bonds 1,615,000 General Obligation Bonds with Income Tax Covenant(b) 228,740,000 Other Non-General Obligation Debt Subordinate Lien Unrestricted Income Tax Bonds 38,885,000 Subordinate Lien Income Tax Bonds 265,995,000 Non Tax Revenue Bonds (Core City) 50,805,000 Non Tax Revenue Bonds Series 2014 (Stadium Project) 7,135,000 Non Tax Revenue Bonds Lower Euclid Avenue Project 5,889,000 Total $2,236,036,880 C. Total Non-Exempt Debt (A minus B) $0 D. Assessed Valuation for the 2015 Tax Year (2016 collection year) $4,589,437,780 E. 5 ½% of Assessed Valuation $252,419,078 F. Debt Leeway within 5 ½% (E minus C) $252,419,078 G. 10 ½% of Assessed Valuation $481,890,967 H. Debt Leeway-10 ½% (G minus C) $481,890,967

(a) These bonds are payable from net parking revenues and certain non-tax revenues of the City. (b) Debt leeway in this table is determined without considering the balance available in the Sinking Fund.

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Overlapping Subdivisions – Millage Requirements

The following table shows the unvoted general obligation debt outstanding for the City, after the issuance of the new money portion of the Series 2016 Bonds, and for the subdivisions overlapping the City and currently subject to the ten-mill limitation; debt service on that debt; and the millage required to pay that debt service in 2017, the year of the highest potential debt service for purposes of the table. The total millage theoretically required by the City, the County, the RTA, and the Shaker Heights City School District (those being the only taxing subdivisions overlapping the City with the highest potential debt service for purposes of the ten-mill limitation) for their outstanding unvoted obligations, and for the new money portion of the Series 2016 Bonds, is 9.6291* mills for 2017. Accordingly, there remains 0.3709* mills within the ten-mill limitation which has yet to be allocated to debt service by the City, the County, RTA, and the Shaker Heights City School District and which is available to any or all of those subdivisions or other overlapping subdivisions in connection with the issuance of additional unvoted general obligation debt.

Projected Outstanding Debt and Debt Service For Fiscal Year 2017

Current Unvoted Required Tax (Mills) GO Debt Principal Interest Rate in Mills City(a) Outstanding Bonds(b) $228,740,000 $22,350,000 $10,071,106 7.0643 Series 2016 Bonds(c) $28,125,000* 1,480,000* 1,010,263* 0.5426* County(d) 243,900,000 18,605,000 11,132,362 1.0803 RTA(d) 88,715,000 9,435,000 3,499,233 0.4699 Shaker Heights City School District(d) 3,245,000 325,000 61,125 0.4720 Total Millage Required 9.6291 Margin Within Ten-Mill Limitation 0.3709

(a) Source: City Finance Department. (b) Before the refunding of the Refunded Bonds and the issuance of the Series 2016 Bonds. (c) Excludes Series 2016 Bonds issued to refund the Refunded Bonds. (d) Source: The County, as of April 7, 2016.

Note: Calculation is performed for year which produces the highest annual aggregate debt charges for all overlapping jurisdictions.

Leases and Other Obligations

The City entered into a lease agreement dated as of June 1, 1997 in connection with the funding of the construction of an open-air municipal stadium for professional football. The City’s obligation to make lease payments under that stadium lease, as supplemented and amended, is subject to the annual appropriation of funds sufficient for that purpose. The lease payments due during the remaining portion of the current lease term ending December 31, 2016, amount to approximately $8,591,375 (including both the principal component and the interest component). Assuming renewal of the lease through December 31, 2028, the remaining aggregate of the principal components of the lease payments under that stadium lease amounts to $105,595,000.

The City also has current obligations under four leases for vehicles and equipment. As of April 15, 2016, the remaining lease payments due during the year ending December 31, 2016 under those leases amount to $3,121,049 (including the principal and interest components of those leases). Assuming renewal of all of those leases through all subsequent renewal terms, as of April 15, 2016, the aggregate of the principal components of the lease payments under all those equipment and vehicle leases amounted to $10,351,989.

* Preliminary, subject to change.

On December 21, 2010, the Cleveland-Cuyahoga County Port Authority issued its $11,000,000 Cleveland- Cuyahoga County Port Authority City Annual Appropriation Bonds, Series 2010 (City of Cleveland, Ohio – Flats East Project), of which $10,020,000 is currently outstanding. The City has agreed to pay debt service on these bonds by way of a Cooperative Agreement subject to annual appropriation.

Derivative Transactions Payable from General Fund

The City is a party to various hedge agreements involving the exchange of interest payments on notional amounts related to certain outstanding bonds and lease obligations. The following is a brief summary of those hedge agreements currently in effect that do or may require payments from General Fund revenues. Under certain circumstances, each of these hedge agreements may be terminated prior to its stated termination date. Upon early termination, depending on prevailing economic circumstances, a payment may be owed by the City to the counterparty or a payment may be owed by the counterparty to the City.

In February 2003, the City sold an option to JPMorgan Chase Bank (“JPM”) that gives JPM the right to enter into an interest rate swap with the City, at JPM’s discretion, at any time before May 15, 2024 (the “JPM Agreement”). To date JPM has not exercised that option. The JPM Agreement originally related to the City’s then- outstanding Subordinated Income Tax Variable Rate Refunding Bonds, Series 1994 (the “1994 Bonds”) and a prior swap agreement between the City and Ambac Financial Services, LLC relating to the 1994 Bonds under which the City paid a fixed rate and received a floating rate on a notional amount equal to the 1994 Bonds. If JPM exercises its option, the City would pay JPM a floating rate of interest based on the BMA (now SIFMA) Municipal Swap Index, and JPM would pay the City a fixed rate of 4.88%, having the effect of reversing the swap with Ambac Financial Services, LLC. On August 6, 2008, the 1994 Bonds were retired from the proceeds of the City’s $59,560,000 Subordinate Lien Unrestricted Income Tax Bonds, Series 2008 (referred to herein as the “Series 2008 Bonds”), and the swap with Ambac Financial Services, LLC was terminated. On November 18, 2015, a portion of the Series 2008 Bonds were refunded from the proceeds of the City’s $28,975,000 Subordinate Lien Unrestricted Income Tax Refunding Bonds, Series 2015 (referred to herein as the “Series 2015 Bonds”). Consequently, the JPM Agreement now relates to a portion of the Series 2008 Bonds and a portion of the Series 2015 Bonds. If JPM exercises its swap option and if the City becomes obligated to make any payments under the JPM Agreement, the periodic interest equivalent payments will be payable from, and secured by a pledge of, the City’s Unrestricted Income Tax Receipts on a parity with the City’s Subordinate Lien Income Tax Bonds, the Series 2008 Bonds and the City’s Subordinate Lien Unrestricted Income Tax Refunding Bonds, Series 2015. Any termination payment payable by the City to JPM is also secured by a pledge of the same funds, but is payable on a basis subordinate to the Series 2008 Bonds, the Series 2015 Bonds, any other Parity Obligations and the City’s outstanding and future general obligation bonds.

On August 3, 2006, the City entered into a basis swap with UBS AG (“UBS”) as the counterparty with respect to its Parking Facilities Refunding Revenue Bonds, Series 2006, currently outstanding in the principal amount of $23,690,000 (the “Parking Facilities Bonds”). The stated termination of this swap is September 15, 2022. The notional amount of this swap is equal to the principal amount of the Parking Facilities Bonds, declining in notional amount as the outstanding principal of the Parking Facilities Bonds is paid. Effective March 15, 2013, this swap was novated from UBS to PNC Bank, National Association (“PNC”). Under the swap agreement the City pays floating rates of interest based on the BMA (now SIFMA) Municipal Swap Index, and PNC pays a rate equivalent to 67% of one-month LIBOR. The obligation of the City under the swap agreement to make the periodic variable payments is secured by a pledge of the Parking Revenue and Additional Pledged Revenue as defined in the trust indenture securing the Parking Facilities Bonds. Any payment due by the City to PNC upon early termination of the agreement is secured by the same pledged funds but is subordinate to the payment of debt service on the Parking Facilities Bonds then outstanding and to the payment of periodic interest payments under the swap agreement.

Future Financings

The City currently has authorization to issue multiple series of bonds for the purpose of refunding various outstanding bonds but no specific refundings are contemplated at this time other than the refunding of the Refunded Bonds.

THE CITY — ECONOMIC AND DEMOGRAPHIC INFORMATION

In the 2010 Census classifications, the City was in the Cleveland-Elyria-Mentor Metropolitan Statistical Area (“MSA”), which consists of Cuyahoga (the “County”), Geauga, Lake, Lorain and Medina counties. In 2010, the MSA had a population of 2,077,240, ranking it the 28th largest metropolitan area (out of 366) in the United States. The City was also in the Cleveland-Lorain-Elyria Primary Metropolitan Statistical Area (“PMSA”), which consisted of the counties of Ashtabula, Cuyahoga, Geauga, Lake, Lorain and Medina and the Cleveland-Akron Consolidated Metropolitan Statistical Area (“CMSA”), which consisted of eight northeast Ohio counties until June of 2003 when the U.S. Census Bureau ceased using the PMSA and CMSA distinctions.

Population

Set forth below are population statistics from the U.S. Bureau of the Census for the City, the County, the PMSA, the CMSA and the State for each decade from 1970 to 2000 and for the City, the County, the PMSA and the State for 2010 and estimated for 2014 and 2015.

Year City County PMSA CMSA State

1970 750,973 1,721,330 2,418,809 2,999,811 10,652,017 1980 573,822 1,498,400 2,277,949 2,834,412 10,797,630 1990 505,616 1,412,140 2,202,069 2,859,644 10,847,115 2000 478,403 1,393,978 2,250,871 2,945,831 11,353,140 2010 396,815 1,280,122 2,077,240(a) N/A 11,536,504 2014-est. 392,114 1,267,513 2,063,598(a) N/A 11,594,163 2015-est. ---(b) 1,255,921 2,060,810(a) N/A 11,613,423

(a) Indicates population for the MSA. (b) Data not available.

Source: U.S. Bureau of the Census.

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Employment

The following table compares estimated employment and unemployment statistics (annual averages) for the City, the County and the MSA, including comparisons with unemployment rates for the State and the United States.

Employment Statistics(a)

Employed Unemployed Unemployment Rate Year City County MSA City County MSA City County MSA Ohio U.S.

2007 172,400 616,500 1,035,100 13,400 37,200 59,700 7.2% 5.7% 5.5% 5.6% 4.6% 2008 168,900 604,200 1,020,200 14,300 40,000 64,900 7.8 6.2 6.0 6.4 5.8 2009 159,800 571,100 972,500 18,900 54,500 91,200 10.6 8.7 8.6 10.3 9.3 2010 148,800 577,900 964,100 17,900 53,800 87,900 10.8 8.5 8.4 10.3 9.6 2011 148,200 577,000 965,800 16,000 47,600 76,800 9.7 7.6 7.4 8.8 8.9 2012 148,700 579,100 970,900 14,200 42,400 68,400 8.7 6.8 6.6 7.4 8.1 2013 148,200 577,500 970,600 14,700 44,300 72,000 9.0 7.1 6.9 7.5 7.4 2014 150,000 584,400 982,000 13,100 39,900 64,500 8.0 6.4 6.2 5.7 6.2 2015 162,300 588,900 975,900 11,200 33,800 49,600 6.9 5.4 4.8 4.9 5.3 2016(b) 147,000 572,300 964,300 9,800 29,500 49,200 6.2 4.9 4.9 6.0 6.1

(a) Rounded to the nearest hundred. (b) As of January 2016. Source: Ohio Department of Job & Family Services, Labor Market Information Division. City and County estimates are NOT seasonally adjusted.

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The following table indicates the distribution of employee classifications in the MSA for the years 2011 through 2016:

Distribution of Employees by Sector (Amounts in 000’s) 2011 2012 2013 2014 2015 2016(a) Goods Producing Industries Mining, Logging, Construction 32.8 33.4 34.1 35.2 35.8 28.1 Primary Metal 8.2 8.7 8.8 8.7 8.3 8.0 Fabricated Metal 27.2 27.7 27.5 27.9 27.3 26.6 Transportation Equipment 11.8 12.2 12.6 12.5 12.8 12.6 Other 72.9 74.4 74.9 74.9 76.4 73.8 Total Goods Producing Industries 152.9 156.4 157.9 159.2 160.6 149.1

Service Producing Industries Transportation & Public Utilities 29.2 29.8 30.3 30.2 30.1 28.9 Wholesale Trade 47.9 49.6 49.4 50.2 51.4 51.4 Retail Trade 100.2 101.2 101.8 101.3 104.5 100.1 Finance, Insurance & Real Estate 63.4 62.9 62.8 64.9 68.5 64.6 Health Services 157.3 161.6 164.0 163.0 169.4 169.5 Other Services 315.0 321.7 327.3 334.2 341.9 330.6 Federal Government 19.0 18.5 18.3 18.3 18.7 18.9 State Government 7.2 7.0 6.9 7.3 7.7 7.6 Local Government 109.1 107.9 107.6 108.2 110.7 109.4 Total Service Producing Industries 848.3 860.2 868.4 877.6 902.9 881.0

Total 1,001.2 1,016.6 1,026.3 1,036.7 1,063.5 1,030.0

Goods Producing Percentage 15.3% 15.4% 15.4% 15.4% 15.1% 14.5% Service Producing Percentage 84.7% 84.6% 84.6% 84.6% 84.9% 85.5%

(a) As of February 2016 Source: Ohio Department of Job & Family Services, Labor Market Information Division.

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The following table indicates the per capita income for the County, the MSA, the State, and the United States for the years 2005 through 2014.

Per Capita Income Year County MSA Ohio U.S. 2005 $37,235 $36,161 $32,758 $35,888 2006 39,621 38,350 34,422 38,127 2007 41,012 39,751 36,199 39,804 2008 42,432 40,827 36,399 40,873 2009 40,369 39,192 35,527 39,379 2010 41,325 40,114 36,199 40,144 2011 44,216 42,964 38,631 42,332 2012 46,395 44,937 40,230 44,200 2013 47,294 45,747 41,049 44,765 2014 48,521 46,960 42,236 46,049

Source: U.S. Bureau of Economic Analysis.

The income per household in the City and the County is estimated to be distributed as set forth in the following table:

City County Income and Benefits(a) # Households % Households # Households % Households Less than $10,000 33,753 20.3% 58,103 10.9% $10,000 to $14,999 17,676 10.6% 35,347 6.6% $15,000 to $24,999 28,946 17.4% 67,356 12.6% $25,000 to $34,999 20,934 12.6% 59,232 11.1% $35,000 to $49,000 22,364 13.4% 73,234 13.7% $50,000 to $74,999 21,377 12.8% 89,222 16.7% $75,000 to $99,999 10,220 6.1% 56,239 10.5% $100,000 to $149,999 7,806 4.7% 56,481 10.6% $150,000 to $199,999 1,792 1.1% 19,176 3.6% $200,000 or more 1,782 1.1% 20,331 3.8%

(a) In 2014 inflation-adjusted dollars. Source: U.S. Census Bureau Selected Economic Characteristics in the United States 2010-2014.

The U.S. Census Bureau also estimates that 35.4% of the people in the City and 18.8% of the people in the County have incomes that fall below the poverty level.

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Corporate Headquarters

Listed below are 12 corporations (representing 12 different industries) among the Fortune 1000 largest corporations of 2015 (ranked by worldwide revenues) that have headquarters in the County. Corporations Headquartered in County Among Fortune’s Top 1000 Within the 1,000 Largest U.S. Corporations Ranked by Revenues(a)

Rank Company Major Products 153 Progressive Insurance 230 Parker Hannifin Corp Hydraulic Components 266 The Sherwin Williams Company(b) Paints & Chemicals 365 TravelCenters of America National Travel Center Chain 547 Aleris International Metals 560 Cliffs Natural Resources(b) Mining, Crude Oil Production 592 KeyCorp(b) Financial Services 792 Lincoln Electric Holdings Industrial Equipment 805 Hyster-Yale Materials Handling Industrial Machinery 879 Medical Mutual of Ohio(b) Health Care Insurance 880 Applied Industrial Technologies Inc.(b) Industrial Components 904 TransDigm Group, Inc.(b) Aircraft Components

(a) Source: 2015 Fortune Directory of the Largest U.S. Corporations. (b) Headquartered in the City.

Home Values, Housing Units and Home Sales

The 2014 estimated median value of owner-occupied homes in the City, the County and the MSA were $73,100, $123,300, and $139,800, respectively, compared with $129,600 in the State and $175,700 in the United States. The number of housing units within the City for the nine-year period from 2006 to 2014 decreased by 0.77%, from 213,915 to 212,269, compared with a decrease of 0.19% for the County, from 621,066 to 619,863. (All figures in this paragraph are derived from the U.S. Bureau of the Census.) In recent years, as part of the City’s community development initiatives, the City has provided financial assistance to nonprofit and for-profit developers to stimulate new housing construction in the City and made additional efforts to address increased foreclosures. See “Housing And Neighborhood Development” below.

Listed below are sale price summary statistics for the City and the County, respectively.

Housing Sales Statistics 2011-2015

City County Year Number of Sales Average Sales Price Number of Sales Average Sales Price

2011 2,307 $54,638 10,132 $128,300 2012 2,432 57,842 11,915 133,129 2013 2,809 59,737 13,674 139,950 2014 3,761 54,548 16,021 129,634 2015 3,266 67,280 15,672 144,206

Source: The County

Building Permits

The following table shows information concerning the filing with the County of building permits for construction and demolition and the net assessed valuation (not the actual construction or demolition cost) of those building permits as determined by the County, for the City by class:

2011 2012 2013 2014 2015 # of Assessed # of Assessed # of Assessed # of Assessed # of Assessed Permits Value(a) Permits Value(a) Permit Value(a) Permit Value(a) Permit Value(a) s s s

Commercial 781 $192,044 698 $63,958 786 $157,917 758 $153,627 889 $87,635 Industrial 84 3,428 106 4,470 154 8,858 105 4,403 103 2,401 Exempt 150 6,300 393 0 381 713 318 427 1,175 2,541 Public 1 0 2 0 0 0 0 0 2 0 Residential 3,253 7,394 3,616 6,838 4,330 13,622 4,907 7,853 5,884 7,015

Total: 4,269 $209,166 4,815 $75,266 5,651 $181,110 6,088 $166,310 8,053 $99,592 (a) In thousands. Source: The County

Utilities

The MSA is well served with adequate and reliable water and energy resources. The principal source of water in the MSA is Lake Erie, the twelfth largest lake in the world. The principal provider of potable water in the County is the City’s Division of Water. A large amount of fresh water is available to the area for its foreseeable needs. The two principal providers of electric energy in the MSA are the City’s Cleveland Public Power and the Cleveland Electric Illuminating Company, a wholly-owned electric utility operating as a subsidiary of FirstEnergy Corp. Sewer services in the MSA are provided by the Northeast Ohio Regional Sewer District.

Transportation

The City is a major regional center for economic and commercial activity and is served by diversified transportation facilities. There is immediate access to six United States’ highways and seven interstate highways. The Cleveland Innerbelt Modernization Plan is focused on improving safety, reducing congestion and traffic delays, and modernizing interstate travel along I-71, I-77 and I-90 through downtown Cleveland. This investment by the State of Ohio will rehabilitate and reconstruct the Innerbelt Freeway system – including construction of two new bridges to carry I-90 traffic – and address operational, design, safety and access shortcomings that severely impact the ability of the Innerbelt Freeway system to meet the transportation needs of Northeast Ohio. The Ohio Department of Transportation (“ODOT”) constructed a new Innerbelt Bridge in the fall of 2013. Demolition of the old bridge has been completed. ODOT has commenced construction of a new eastbound bridge in its place. Upon completion of the proposed second bridge, there will be a two bridge system to accommodate the more than 138,000 vehicles that cross the bridge each day. Total costs for the construction of the two bridges are estimated to be $560.4 million.

In the fall of 2014, ODOT commenced construction on its Opportunity Corridor Project, a three-mile, approximately $331 million road project that is designed to improve the transportation system and support planned economic development within the City in the areas between I-490/I-77 and University Circle. The Opportunity Corridor encompasses nearly 1,000 acres on the City’s southeast side and is anchored by University Circle and the Cleveland Clinic. In addition to transportation benefits, it is anticipated that the Opportunity Corridor Project will bring new economic development and new jobs to the community. The Opportunity Corridor Project supports an economic development plan of the City and Greater Cleveland Partnership for the area through enhanced mobility, direct access to freeways and the University Circle area, new frontage for potential development, improved visibility and improved multi-modal access. The Opportunity Corridor Project is being funded in part by bonds issued by the Ohio Turnpike and Infrastructure Commission. The Opportunity Corridor Project is divided into three stages: the

first stage commenced in the fall of 2014; the second stage is expected to commence in the spring of 2016; and the third stage is expected to commence in 2017.

Cleveland Hopkins International Airport (“Hopkins”) is the primary commercial service airport for northeastern Ohio. Hopkins is situated approximately ten miles southwest of the downtown area and is accessible via highway from multiple directions. In addition, heavy rail rapid transit service to Hopkins is also provided from downtown by the Greater Cleveland Regional Transit Authority (“RTA”). Hopkins is owned by the City and operated by the City’s Department of Port Control. As of November 2015, Hopkins was served by eight major and national carriers, 18 regional and commuter airlines, one foreign-flag airline, and three all-cargo airlines.

Hopkins’ approximately 935,000 square foot terminal complex includes a multi-level terminal building and four concourse buildings which support 63 jet gates and 33 commuter aircraft parking positions. Due to the announcement by United Airlines (“UAL”) in early February 2014 that UAL would significantly reduce service at Hopkins, Concourse D was closed on June 4, 2014 and all of UAL’s operations were consolidated in Concourse C. There are three runways at Hopkins. On October 17, 2011 airport officials broke ground on a new FAA-funded Air Traffic Control Tower and Terminal Radar Approach Control Facility, which replaces the existing tower, originally built in 1988. The $69 million tower, completed in 2015, is equipped with the latest technology—allowing the airport to seamlessly integrate with the FAA’s move toward a Next-Generation (or “NextGen”) Air Transportation System. The tower is one element in a coordinated program of airfield safety improvements.

Burke Lakefront Airport (“Burke”), which also is City-owned and operated, has two parallel runways on 480 acres adjacent to downtown Cleveland. Burke recorded 63,163 terminal operations in 2015, the majority by air taxi operators serving business activity in downtown Cleveland, and the remainder almost entirely by corporate and private general aviation aircraft operators.

The Port of Cleveland (the “Port”) is an interlake and international shipping center located on the shores of Lake Erie and the Cuyahoga River. The Port primarily handles steel and bulk commodities and is a heavy lift port which is favorable for such items as automobile manufacturing equipment, presses and raw and finished steel and factory components. The Port brings more than $572 million into the Greater Cleveland economy annually through payroll for the approximately 17,800 jobs dependent upon maritime activities. Approximately $900 million in merchandise and material is shipped to and from the Port each year. The Port averages 13 million tons of cargo per year.

Norfolk Southern and CSX chose the City as their gateway to the Northeast and Midwest after the respective railroads restructured the rail systems following the acquisition of Conrail.

The City is also served by the RTA. The RTA owns and operates a public mass transit system, providing transportation to a 457 square mile service area which includes 59 municipalities, one of which is the City.

Financial Services

The City is a regional financial center and is the headquarters for the Fourth District Federal Reserve Bank, serving Ohio, the western portion of Pennsylvania and portions of Kentucky and West Virginia.

Education

Within the County are 13 public and private two-year and four-year colleges and universities, including, among others, Case Western Reserve University, John Carroll University, Cleveland State University, Cuyahoga Community College, Baldwin Wallace University, Notre Dame College, Ursuline College, the Cleveland Institute of Music, and the Cleveland Institute of Art.

Health Care

There are over 20 hospitals, including acute care and private psychiatric hospitals, in the County. Among these institutions are the Cleveland Clinic Foundation, University Hospitals Health System (affiliated with Case Western Reserve University School of Medicine), and the MetroHealth System, all headquartered in the City.

Recreation and Entertainment

The City is noted for its many cultural institutions, including the internationally acclaimed Cleveland Orchestra and the Cleveland Museum of Art, the latter of which completed a $350 million renovation and expansion project in late 2013. The project included refurbishing historic galleries and adding 35,000 square feet of gallery space, which opened in stages. Theaters and entertainment centers include Playhouse Square (a complex of eight theaters and performance venues, currently with seating for over 10,000), Public Auditorium, Karamu House, and Severance Hall. Other cultural institutions include the Cleveland Play House, Great Lakes Theater, Cleveland Public Theater, Apollo’s Fire (the Cleveland Baroque Orchestra), Verb Ballet, and Dance Cleveland.

The Rock and Roll Hall of Fame and Museum, a 150,000 square foot facility located at North Coast Harbor, opened in 1995 and has attracted more than 10 million visitors to date.

The Great Lakes Center for Science and Technology, located on North Coast Harbor next to the Rock and Roll Hall of Fame and Museum, opened in July 1996. With more than 400 hands-on exhibits and a six-story Omnimax theater, the Center gives visitors the chance to explore science, environment and technology and their relationships to the Great Lakes.

Other museums include Museum of Contemporary Art Cleveland, Cleveland Botanical Gardens, Cleveland Museum of Natural History, Dunham Tavern Museum, Cleveland Children’s Museum and Western Reserve Historical Society. Recreational facilities in the County include the 18,800-acre Metropolitan Park System, Cleveland Metroparks Zoo, Wade Park, Rockefeller Park, Cultural Gardens, Lakefront State Park and, outside the City, the Cuyahoga Valley National Park. The Cleveland Metroparks Zoo opened its new $2 million carousel and play area in May of 2014 and opened Stillwater Place, its new $2.3 million 10,000 square foot event center, in May of 2015. The Crawford Auto Aviation Museum, part of the Western Reserve Historical Society, reopened in January 2013 after a $4 million renovation.

Professional sports are available to area residents at various facilities located in the City’s downtown. FirstEnergy Stadium (previously known as Cleveland Browns Stadium), located on the lakefront in downtown Cleveland on the same site as the former Cleveland Municipal Stadium, was completed in August 1999 and is the home of the National Football League’s Cleveland Browns. The facility consists of an open-air stadium with approximately 68,000 seats. In addition to NFL football, the facility is suitable for major league soccer and open-air concerts.

The Gateway Sports Complex, located in the central business district of the City, includes Progressive Field (home of the American League’s Cleveland Indians), Quicken Loans Arena (home of the National Basketball Association’s Cleveland Cavaliers, the American Hockey League’s Lake Erie Monsters, and the Arena Football League’s Cleveland Gladiators), and a parking garage.

Progressive Field, which opened in April 1994, is an open air, natural turf baseball stadium with a current seating capacity for approximately 36,000 people. Quicken Loans Arena, which opened in October 1994, is a multi- functional, indoor facility for sporting and entertainment events and seats approximately 20,000 people. The Gateway common areas consist of approximately 13 acres and include Gateway Square, an area for outdoor entertainment and activities.

The City hosted the Rock and Roll Hall of Fame inductions in April of 2015 and hosted the 2014 Gay Games which featured more than 35 sports, band and choral competitions and community and cultural events. More than 10,000 participants from more than 65 countries attended. In addition, the City hosted the National Senior Games in July 2013. The Games attracted over 10,000 registered athletes and had a total attendance of approximately 65,000.

The Republican National Committee has selected the City to host the 2016 Republican National Convention in July of 2016. The Convention is expected to draw 50,000 attendees.

Downtown and other Economic Development

The City continues to focus its strategies on identified clusters of regional strength including health technology, paints and coatings, lighting and electrical, information technology, automotive and automotive related, aerospace, and banking and finance. Retention efforts include two visitation programs: the Cleveland Industrial Retention Initiative for all manufacturers, distribution and related supply chain businesses and a specific downtown stakeholders’ visitation program through Downtown Cleveland Alliance. In 2015, Oatey Co., a long time Cleveland manufacturer of plumbing products with locations around the world, announced it would build a new 52,000 square foot headquarters building in Cleveland’s Emerald Corporate Park.

One of the central focus areas is the Health Tech Corridor, a three-block wide transit-oriented development running from Cleveland State University to University Circle, encompassing 1,600 acres. The Health Tech Corridor includes three colleges and universities and three major hospitals. In 2014, RTA completed a new transit station in University Circle on Cedar Avenue and completed construction of a new transit station on Mayfield Road in August 2015. These stations complement RTA’s Health Line transportation system by connecting it to the City’s heavy rail system, with direct access to the airport, and providing better connectivity to the City’s second “downtown.” The Health Line was key in the retention of Dealer Tire in Cleveland’s Midtown area. It has agreed to lease the Victory Building for its current and future growth, which is expected to retain over 400 employees and create an additional 100 jobs. The area also continues to provide a location for incubated health technology companies like Abeona, which has announced its intention to build a gene manufacturing facility (one of 10 in the United States) in the Health Tech corridor.

Hemmingway Development has agreed to purchase a ten acre brownfield site that the City assembled and cleaned-up and plans to develop another Health Technology Campus to be anchored by a 40,000 square foot University Hospitals clinic and a 50,000 square foot speculative tech center, both expected to break ground in 2016. The Frost Building will become home to a 15,000 square foot co-working space. The space is expected to be home to over 400 member businesses within two years, creating a new location for entrepreneurs. The City of Cleveland also started clean-up activities on another 2.5 acre site to keep pace with demand in the Health Tech Corridor and is working with a potential buyer.

University Circle has seen a great deal of new investment. The Cleveland Clinic commenced construction of a $276 million 377,000 square foot cancer hospital. It will also complete a new $36 million, 3,000 space employee parking garage with over 12,000 square feet of retail in the area. First Interstate Properties announced a new 28-story residential tower called One University Circle that is expected to begin construction in 2016. Centric, a residential and office complex by Midwest Development Partners and the Coral Company, plans to start construction in 2016. The two projects represent a total investment of over $230 million. The proposed UC3 Development, a multi-block mixed use project with over 700 apartments and 150,000 square feet of retail, is expected to break ground in 2016.

In 2013, the Cleveland Clinic demolished a block of buildings across from its campus to make way for a new medical school in partnership with Case Western Reserve University. Originally planned as a 165,000 square foot medical education building, the project has now been expanded to become a Health Technology Campus of in excess of 200,000 square feet and a cost over $200 million. The project broke ground on October 1, 2015.

In 2015, Integrated CC LLC, as the developer, commenced construction of a 276-room all service Holiday Inn Hotel located on the Cleveland Clinic Campus. The hotel will have a full service restaurant and lounge. The hotel is designed to serve the public and the families of overnight patients at the Cleveland Clinic. The $45 million project was financed with bonds issued by the Cleveland-Cuyahoga County Port Authority. The hotel is expected to open for business in June of 2016.

The Uptown neighborhood has seen a great deal of investment including the new $27.2 million Museum of Contemporary Art Cleveland which opened in 2012; the 153-room, $27 million Courtyard by Marriot which opened in 2013; and the 158,000 square foot, $44.5 million Phase I of the Uptown project including restaurants, retail and 102 market rate apartments which opened in 2012. The $21 million Uptown Phase II, which includes an additional 43 apartments, dormitories for students of the nearby Cleveland Institute of Art, and additional retail space, opened in August 2014.

The Cleveland Institute of Art completed the $30 million Phase I of its eight-year expansion and renovation project that included the McCullough Center for the Visual Arts in 2013. In 2015, it completed construction on the $33.5 million Phase II which included a 79,000 square foot addition to the McCullough Center. The expansion is named the George Gund Building and includes a new 300-seat theater for the Cinematheque and a new art gallery.

The County’s $465 million Convention Center and Global Center for Health Innovation project in downtown Cleveland was completed in 2013. The project included an integrated facility for (i) exhibition space and showrooms for medical devices and equipment and related functions (the Global Center for Health Innovation) and (ii) exhibition, tradeshow and conference facilities, meeting rooms and related functions. A $260 million Hilton convention center hotel, funded through bonds issued by the County, is on track to open in mid-2016 in time for the Republican National Convention. The 30-story, 650-room Hilton is being built on the site of the former County administration building, which was razed in early 2014. In preparation for the Republican National Convention, several other hotels were either recently completed or will be completed in time for the convention. They include the 481-room Westin, which opened in the spring of 2014; the 150-room Metropolitan, which opened in the fall of 2014; the 120-room Kimpton Schofield which opened in March of 2016, and the 180-room Drury Plaza Hotel, expected to open in the summer of 2016.

In the NineTwelve District in Downtown Cleveland, Geis Companies completed and opened the Metropolitan, 120 luxury apartments, as well as meeting and banquet spaces in the Ameritrust complex at Ninth Street and Euclid Avenue. As part of the $240 million renovation, Geis also renovated the Cleveland Trust Rotunda, built in 1906. The same complex is home to a second renovated office building, which includes a Heinen’s grocery store, other retail and office space, and residential units. The grocery store opened in February of 2015, followed by Geiger’s, a long-time retailer of outdoor gear and clothing. A new 222,000 square foot office structure was constructed and leased to the County to serve as the new County Administration building.

Across the street, the 1.4 million square foot The 925 Building was purchased by Hudson Holdings who has received State and Federal Historic Tax Credits to renovate the building. The $370 million project includes 580 apartments and 93 micro-units available to companies and workers participating in their Business Incubator which will be on the Sixth floor of the building. The project will also include a 279 room hotel, 200,000 square feet of office space, a fitness club and retail space. The building’s lobby, described as the world’s largest, will function as events space and lobby for the apartments and hotel. The project is expected to create over 1,500 construction jobs and 1,800 permanent jobs.

The NineTwelve District has become the location of several growing companies. Assurint, a 12 year old designer of background screening products, and its landlord are planning to spend $2.4 million for new space in the area where they expect to grow from 104 employees to over 220 employees in the next 3 years. Explorys, a Cleveland Clinic incubated software company, was purchased by IMS which intends to keep the company in Cleveland and plans to add 100 new jobs to its current workforce.

Stark Enterprises purchased two buildings and a surface parking lot and has announced plans to create a 2.6 acre site that will become “nuCLEus”, a $250 million development that will include 500 residential units, 200,000 square feet of office space, 130,000 square feet of retail space, two new parking garages and a new hotel.

The $275 million Cleveland Flats East Development Project Phase I was completed in 2013. This project consisted of an approximately 476,000 square foot, 18-story office tower, an approximately 550-space parking garage, a 150-room Aloft hotel, and approximately 31,000 square feet of restaurant and retail space. The office tower is nearly 90% leased and restaurant and retail spaces are 100% leased. The $146 million Phase II includes 243 apartments and 80,000 square feet of ground floor restaurant and retail as well as 48,000 square feet of entertainment space. A new 1,200 linear foot river walk has been completed and provides access to the riverfront. The Phase II grand opening was held in October 2015, and work on the final tenant spaces is nearing completion. The Metroparks announced plans to open a water taxi service that will connect both sides of the river and a lakefront beach at Wendy Park, furthering the tourist draw to this area.

The Ohio City neighborhood continues to grow and be a destination for residents and tourists. The neighborhood includes the City-owned West Side Market, the oldest continually operating market in the country, which recently celebrated its 100th anniversary. The West 25th Street Lofts Project is under construction to create

83 loft style apartments and some rooftop penthouse units, as well as 9,100 square feet of commercial space. It is expected to be completed in late 2016. Total project cost is over $60 million. Abode Modern Lifestyle Developers has assembled 4 acres of land with hopes of constructing a $40 to $50 million new mixed use development. The area has seen more than $15 million in new investment to redevelop over 198,000 square feet of vacant or underutilized mixed use space, including historic renovations and some new construction. The Snavely Group has announced a $60 Million mixed-use, mixed-income development that will begin construction in 2016. The success of Ohio City investments has led to development moving along the retail corridor on Lorain Avenue, with investors buying buildings from West 25th Street to West 50th Street with a variety of retail and commercial projects that include microbreweries, a home brewing supplier, an organic grocery store, restaurants and a shuffle board club. Many of the buildings are renovating long vacant apartments over the first floor retail space as the Ohio City housing market continues to draw new residents from all income levels looking to be in this walkable, transit-oriented community.

The Detroit Shoreway neighborhood adjacent to Ohio City is also enjoying an arts and entertainment resurgence. The Cleveland Public Theater and Capital Theater were joined in 2015 by a new performing arts venue, the Near West Theatre. The Templin Bradley, a 30-unit mixed income apartment building with both market rate and low-income units, opened in June of 2015.

In late 2008, the City established a new program called the Vacant Property Initiative, providing a combination of loans and forgivable loans to companies that redevelop a vacant building or lot to create and retain jobs in the City. The goal of the program is to keep existing companies in the City and attract new companies by leveling the playing field with suburban locations. As of 2015, the City has funded 91 companies by providing $31.9 million in City funds that leveraged almost $680 million for projects totaling over $711 million in new investment. The program created 4,744 jobs and retained another 2,160 jobs. In addition to keeping and increasing payroll taxes, the program increases real estate taxes through the investment in these vacant properties.

Housing and Neighborhood Development

The City continues to implement strategies to position the City and its neighborhoods to capitalize on future opportunities. The City has identified areas (i) where significant needs must be addressed, (ii) where need and market potential overlap, (iii) where scattered site rehabilitation will be sustainable, and (iv) where the City can create new housing opportunities, particularly for very low income households. In these target areas, the City has focused market-building and stabilization efforts, specifically focused on demolition, housing renovation and land reutilization.

Housing

Cleveland’s housing strategy embodies the core principles of creating healthy mixed-income neighborhoods of choice while preserving and expanding housing opportunities for low and moderate income households. The City has used its funds to develop homes and apartments for low income families, for seniors, and to continue the City’s long term commitment to preserving the existing stock of HUD-assisted rental housing.

All housing development supported by City funding, including tax abatement, complies with the City’s Green Building Standards, which were updated and re-issued in 2013. The standards further the City’s commitment to both green building and the ongoing development of quality housing, particularly for low and moderate income families. The City’s Green Building Standards incorporate National standards such as LEED and Enterprise Community Partners’ Green Community Standards.

Overall, the downtown housing market has remained strong. The 97.8% occupancy rate has been maintained even with the addition of more units such as The 9 and The Residences at 1717. With the completion of new projects, the downtown population exceeds 14,000 residents. Since 2011, 1,700 residential units have been added downtown, while 969 residential units are currently under construction. $25 million in State Historic Tax Credits were awarded to The 925 Building, which will include 673 apartments in addition to commercial space, and $5 million in tax credits was awarded to the Cleveland Athletic Club, which will include 175 apartments and a restaurant.

Large scale housing projects completed in 2015 include Innova, a 177-unit market-rate apartment project in the Hough neighborhood; Templin Bradley, an adaptive reuse of a commercial building into a 30-unit mixed-income apartment project in Detroit Shoreway; and New Community Place, a renovation of 147 apartments and townhomes for low-income households. Construction started on several more projects, including Emerald Alliance VIII, a 66- unit permanent supportive housing apartment building serving a chronically homeless population; Notre Dame Apartments, a rehabilitation of a 73-unit affordable multifamily building, and Historic Shoreway Apartments, a rehabilitation of two structures for a total of 21 units of affordable housing.

Another City focus is the renovation and new construction of single family housing. These efforts resulted in the completion and sale of 122 homes. Renovated homes in the City supported by City funding or tax abatement had a median sale price of $135,916, while the median new home sales price was $334,540. City programs also assisted people with maintaining or repairing their homes. In 2015, 318 families received home repair assistance, including code or safety issues, while 339 families received assistance with energy efficiency improvements.

The City has also partnered with experienced non-profit housing developers and service providers to create permanent supportive housing units for chronically homeless persons with disabilities. Through the Housing First Initiative, over 600 units of such housing have been developed since 2006. Housing First’s building management staff and supportive services staff work together to serve residents providing the support they need to remain housed and achieve other life goals. Funding for the most recent project supported by the City, Emerald Alliance IX, was secured in 2015 to allow construction to commence in 2016 for 66 permanent supportive housing apartments in the Lee-Miles neighborhood.

Habitat for Humanity has continued to expand its affordable home ownership model, renovating nine homes in 2015.

Other initiatives for housing renovation continued in 2015, including the Slavic Village recovery, a unique partnership between Safeguard, Inc., Forest City Enterprises and Slavic Village Development. This effort plans to perform moderate rehabilitation of 50 homes in a targeted part of the Broadway neighborhood. By the end of 2015, 33 homes had been completed.

In 2015, the City continued efforts to assist people in avoiding foreclosure and staying in their homes. A partnership with the Cleveland/Cuyahoga County Office of Homeless Services, Cleveland Tenants Organizations, and other partners, continued to assist residents threatened with the loss of housing.

Demolition

The City has continued an aggressive pursuit of demolition or renovation of distressed properties that have proliferated as a result of foreclosures. The City renewed its code enforcement partnership with community based development corporations. In 2015, the City razed 490 condemned structures at the cost of $4.61 million. Between 2006 and 2015, the City razed 8,365 condemned structures at a cost in excess of $52 million.

These demolitions position the City to be able to eliminate blight and strategically assemble land and to begin site preparation in anticipation of a stronger economy. The local strategies for the re-use of vacant land have been broad, have involved many partners and have been innovative. Those ongoing efforts have been particularly focused on urban gardens and agricultural programs. The City uses Community Development Block Grant funds to contract with The Ohio State University Extension Program to administer the Summer Sprout Community Garden Program, which now includes more than 50 acres at 196 gardens and 3,729 gardeners in all wards of the City. The gardens donated 16,843 pounds of produce to the local food banks and hunger programs in 2015.

Land Reuse

The City has assembled land, and has begun site preparation, in anticipation of a rebound in the housing market. Several sites across the City are, or have been, assembled to be ready for development. One of those sites is under construction for a 72-unit housing project, Trailside at Morgana Run. The first ten units are completed and 7 of them have been sold.

Over the past few years, the City has made vacant land reuse a priority – particularly urban agriculture and urban farming. Repurposing vacant urban land into productive community gardens and urban farms makes the City’s neighborhoods more vibrant and sustainable. Specifically, urban agriculture is a means of addressing food deserts, promoting healthy eating, supporting principles of sustainability, and encouraging community engagement and participation.

The Re-Imagining Cleveland Pilot Program encourages the redevelopment of land-bank property as green space, urban agriculture and the expansion of resident’s side yards. This program piloted new policies and procedures for vacant land management, including long-term leases and subsidized access to the City’s water system. It has invested nearly $1.4 million in NSP-1 and NSP-2 funding to fund 63 greening and urban agriculture sites and 73 side yard expansions. The 5 year pilot program has expired, and sites are being evaluated for sale or lease to the tenants.

The most significant large-scale urban farming initiative is the 28-acre Urban Agriculture Innovation Zone. City-owned vacant land in this area is leased for several urban agriculture programs, including a market farm incubator operated by The OSU Extension.

Brownfield Redevelopment

The City is committed to the elimination of vacant and condemned houses and commercial structures and has identified seven priority areas for potential economic growth. Hundreds of structures have been demolished in these areas to clear and assemble sites for redevelopment. These priority areas were selected because of their proximity to highways and existing infrastructure and the opportunity for economic growth.

Since 2007, the City’s Industrial-Commercial Land Bank facilitated the following reclamation efforts:

• The former Tops grocery store at Superior and Lakeview was taken into the Industrial Commercial Land Bank as a deed in lieu of foreclosure action. The property was marketed to a local developer who has created the Shops at Garrett Square attracting a Save-a-Lot and the first Ohio location for Forman Mills. The City and the developer share in the profits from the sale or lease of the outlots. An AutoZone is under construction on an outlot. The project has created over 85 jobs to date.

• Completed the environmental remediation of the 5.6-acre Trinity Building, securing a No Further Action Letter (“NFA”) in 2012. The United States Environmental Protection Agency (“EPA”) and the State of Ohio Clean Ohio Assistance Fund have provided funding to complete the project. The site is being redeveloped for the new 13,500square foot City of Cleveland kennel. The City has budgeted over $5 million for the project.

• The former General Motors Fisher Auto Body facility on Coit Road underwent years of environmental remediation and remained vacant. The City worked with Forest City Enterprises to complete the environmental evaluation of the site. An NFA was issued in 2013. Quasar, a bio-digester facility, has purchased five acres in the northern section of the 25 acre site and has completed the City’s first biodigester, creating a sustainable asset available to many businesses to turn waste into power.

• Worked with a local Community Improvement Corporation to use beneficial re-use strategies to redevelop a 60 acre parcel of land that was the former coke plant owned by ArcelorMittal. The site was certified as a Job Ready Site by the State of Ohio in early 2014. Approximately 15 acres of the site were sold to the Ohio Department of Transportation for construction of a maintenance facility. The remaining property is currently being marketed, with several interested parties.

• Using $10 million in HUD 108 and Brownfield Economic Development Initiative funds, financed the construction of a cooperatively-owned greenhouse on almost 10 acres in Cleveland’s Central neighborhood. The greenhouse will employ neighborhood residents and produce fresh produce for market and local food banks. The greenhouse opened in early 2013 and currently has over 20 employees.

• Secured over $3 million in funding through Clean Ohio for the assessment and remediation of the Miceli Dairy Products Company expansion site. The remediation of the site will enable Miceli to expand production on almost 25 acres of brownfield property. Miceli has completed Phase I of its expansion. The $20 million Phase II, expected to be completed by 2016 will allow the addition of new product lines and will include a bio-digester to turn the company’s waste stream into energy.

• Conducted asbestos abatement at the former Warner Swasey facility to prepare the site for redevelopment. The abatement of the facility, located at the prime corner of East 55th and Carnegie, was funded by over $1.1 million in USEPA Revolving Loan Funds through the County and the State. Asbestos abatement was completed in 2013, and the City is currently marketing the site.

• Ohio EPA approved an Urban Setting Designation Study for the City of Cleveland. As a result, costs to remediate property in the City are now significantly decreased.

• The City undertook a feasibility analysis of dredge material and slag to cap an old landfill to support a solar field. Clean Ohio funds and a USEPA-NREL program were used to complete the environmental and solar feasibility studies of the site. NREL completed their analysis in 2013. The City has solicited proposals to redevelopment of the site as a solar farm.

• Secured $3 million in Clean Ohio funding to support the remediation of the Flats Phase II site, enabling the development of a waterfront entertainment and residential district.

• Moved forward with land acquisition in multiple areas of the City in order to consolidate parcels and create future greenfield development sites, enabling the City to better compete for relocations and expansions.

• Completed a multifaceted remediation project in North Broadway that involved the demolition of two large long-vacant industrial buildings and remediation of several properties using both State funds and federal EPA funds. The parcels will be redeveloped as Trailside at Morgana Run, which will have 95 homes of different types, new infrastructure and green space. In 2013, construction began on the first units, with initial homeowners moving in in late 2013.

Pension Obligations

Present and retired employees of the City are covered under two statewide public employee retirement (including disability retirement) systems. The Ohio Police and Fire Pension Fund (“OP&FPF”) is applicable to uniformed members of the police and fire departments. All other City employees are covered by the Ohio Public Employees Retirement System (“OPERS”).

OPERS currently reports 348,235 active contributing accounts statewide. The number of active members included in the plan for the City as of February 2016 was approximately 5,279. Employees covered by OPERS contribute at a statutory rate of 10.0% of earnable salary or compensation, and the City contributes 14.0% (actuarially established for OPERS) of the same base. The City’s contribution to OPERS for the year ending December 31, 2015 was approximately $36,356,000.

OP&FPF covers approximately 2,270 City full-time police and fire department employees and currently reports over 27,000 active accounts statewide. Police and fire employees contribute at a statutory rate of 12.25%.. The City currently contributes 19.5% for police personnel and 24.0% for fire personnel. The City’s contribution to OP&FPF for the year ending December 31, 2015 was approximately $35,179,000.

For further information on these pension plans, see the financial statements of the City located at www.auditor.state.oh.us. Financial and other information for OPERS and OP&FPF can also be found on the respective website for each retirement system including its Comprehensive Annual Financial Report.

The City’s current employer contributions to OPERS and OP&FPF have been treated as current expenses and are included in the City’s operating expenditures, except to the extent that they are paid from the proceeds of a Police and Fire Pension levy collected by the City.

OPERS and OP&FPF are two of five statewide public employee retirement systems created by and operating pursuant to Ohio law, all of which currently have unfunded actuarial accrued liabilities. The General Assembly has the power to amend (and in the past has amended) the format of those systems and could revise rates or methods of contributions to be made by the City and its employees to OPERS and/or OP&FPF and could also revise benefits or benefit levels. In 2012, the General Assembly passed five separate pension reform bills intended to assist each of the five retirement systems in addressing its unfunded actuarial accrued liabilities. The bills passed with respect to OPERS and OP&F provide for (i) no change in the City contribution rates with respect to its employees’ earnable salaries, (ii) no change in OPERS employee contribution rate, and (iii) an increase in the OP&F employee contribution rate from 10% to 12.25% in annual increments of 0.75% in July of each of the years from 2013 through 2015. With certain transition provisions applicable to certain current employees, the bills increase minimum age and service requirements for retirement and disability benefits, revise the calculation of an employee’s final average salary on which pension benefits are based to include the five highest years (rather than the three highest years), provide for OPERS pension benefits to be calculated on a lower, fixed formula, change provisions with respect to future cost–of-living adjustments to limit those adjustments to the lesser of any increase in the Consumer Price Index or three percent, and make other changes. The OP&F bill also authorizes the OP&F board to further adjust member contribution rates or further adjust age and service requirements after November 1, 2017, if, after an actuarial investigation, the board determines that an adjustment is appropriate.

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

Employees

As of March 21, 2016 the City had approximately 7,000 full-time employees and 730 part-time employees. Thirty-one bargaining units represent approximately 5,640 employees. The larger units, together with the approximate number of employees represented by those units, include the American Federation of State, County and Municipal Employees, Local 100 (1,123); Cleveland Police Patrolmen's Association (1,220); the International Association of Firefighters (759); Municipal Foreman and Laborers Union, Local 1099 (428); Teamsters Local 244 (375); and the Fraternal Order of Police (274). There have been no significant labor disputes or work stoppages within the City within the last twenty-five years.

The City’s three-year labor agreements with its labor unions expired on March 31, 2016. Negotiations have begun with several unions on new three-year contracts. Until new contracts are approved, the previous contracts remain operational. Once new contracts are approved and entered into, any changes in pay under the new contracts are retroactive to the expiration of the prior contracts. Non-union employees receive the same wage increases as those negotiated with the various unions.

City Council by ordinance establishes schedules of salaries, wages and other benefits for City employees. Generally, the terms of these ordinances have been the product of negotiations with representatives of the employees or bargaining units, and increases in economic benefits have normally been provided on an annual basis.

Chapter 4117 of the Revised Code (the “Collective Bargaining Law”), establishes procedures for, and regulates, public employer-employee collective bargaining and labor relations for the City and other state and local governmental units in Ohio. The Collective Bargaining Law creates a three-member State Employment Relations Board (the “SERB”), which administers and enforces the Collective Bargaining Law. Among other things, the Collective Bargaining Law: (a) creates rights and obligations of public employers, public employees and public employee organizations with respect to labor relations; (b) defines the employees it covers; (c) establishes methods for (i) the recognition of employees and organizations as exclusive representatives for collective bargaining and (ii) the determination of bargaining units; (d) establishes matters for which collective bargaining is either required,

prohibited, or optional; (e) establishes procedures for bargaining and the resolution of disputes, including (i) negotiation, (ii) mediation and (iii) fact finding; and (f) permits all covered employees to strike, except certain enumerated classes of employees, such as police and fire personnel.

Disputes with employees who are prohibited from striking are to be resolved by binding arbitration starting with best offer, on an issue-by-issue basis. In the event that a legal strike presents a clear and present danger to the public health or safety, the appropriate Ohio court of common pleas may issue a temporary restraining order against the strike for a period not to exceed 72 hours, and in such a case the employer may request authorization of the SERB to enjoin the strike beyond the period of the temporary restraining order. The SERB determines whether a clear and present danger to public health or safety exists, and if it so determines, the court of common pleas issuing the temporary restraining order has jurisdiction to enjoin the strike for a period of 60 days after the expiration of the temporary restraining order or when agreement is reached, whichever occurs first. Thereafter, no court has jurisdiction to issue injunctions or other orders, and a strike may be resumed at the end of the 60-day period. The law established certain employers, employee and employee organization unfair labor practices and remedies for unfair labor practices.

Police and Fire Overtime

The City compensates the members of the City’s police and fire departments at a rate of one and one-half times the regular rate of pay for overtime and holidays worked. It has been the City’s practice that, for each one hour unit of overtime or holiday time worked, those employees receive one hour of pay at their regular rate and, at the discretion of the employee, one-half hour of pay at the regular rate or a credit of one-half hour of compensatory time for which they will be paid, to the extent that time is not used as vacation time, at their then current rate of pay upon termination of employment because of death, retirement, resignation, layoff or dismissal. A collective bargaining agreement between the City and the Cleveland Police Patrolmen’s Association provides that employees may request payment of all or part of their compensatory time in money, and that if the requests exceed the total budgeted amount, the requests will be paid on a pro rata basis. Similar agreements have been reached with the Association of Cleveland Firefighters and the Fraternal Order of Police. The total estimated amount of the City’s liability for accumulated compensatory time as of December 31, 2015 was $42,222,000, and that amount is unfunded. That amount was calculated based on the employees’ then existing regular rate of pay. The rate of pay used to determine any cash payments made upon retirement or other termination or upon the request of the employee will be the rate of pay in effect at the time of such determination. The City has budgeted $4,990,000 for payment in 2016 of accrued overtime and other separation benefits anticipated to be payable in connection with retirements. The City has budgeted $625,000 in 2016 for payments requested by employees.

LITIGATION

To the knowledge of the appropriate officials of the City, no litigation or administrative action or proceeding is pending or threatened (a) restraining or enjoining, or seeking to restrain or enjoin the issuance, sale or delivery of the Series 2016 Bonds, or the levy and collection of taxes to pay debt service on the Series 2016 Bonds, or (b) contesting or questioning either the proceedings and authority under which the Series 2016 Bonds have been authorized and are to be issued, sold, executed or delivered, or the validity of the Series 2016 Bonds or the Authorizing Legislation or the powers or authority of the City with respect thereto. The City will deliver a certificate to that effect to the Underwriters at the time of original delivery of the Series 2016 Bonds to the Underwriters.

The City is a party to various legal proceedings seeking damages or injunctive or other relief generally incidental to its operations. These proceedings are not directly related to the Series 2016 Bonds or the security for the Series 2016 Bonds. The ultimate disposition of these proceedings is not now determinable. It is the opinion of the City’s Director of Law, based on her present understanding and knowledge of these proceedings, that the disposition of these proceedings, individually or in the aggregate, will not result in liabilities in an amount which, in the opinion of the City’s Director of Finance, will have a material adverse effect on the Series 2016 Bonds, the security for the Series 2016 Bonds, the improvements being financed by the Series 2016 Bonds, or the City’s operating revenues.

LEGAL MATTERS

Certain legal matters incident to the issuance of the Series 2016 Bonds and with regard to the tax-exempt status of the interest on the Series 2016 Bonds (see “Tax MATTERS,” below) are subject to the legal opinions of Squire Patton Boggs (US) LLP, Bond Counsel to the City. The signed legal opinions of Bond Counsel, substantially in the forms in Appendices B-1 and B-2 and premised on law in effect on the date of issuance of the Series 2016 Bonds, will be delivered on the date of issuance of the Series 2016 Bonds. The text of the opinions to be delivered may vary from the text as set forth in Appendices B-1 and B-2 if necessary to reflect facts and law on the date of delivery. The opinions will speak only as of their date, and subsequent distribution of them by recirculation of this Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referred to in the opinions subsequent to their date.

The opinions of Bond Counsel and any other legal opinions and letters of counsel to be delivered concurrently with the delivery of the Series 2016 Bonds express the professional judgment of the attorneys rendering the opinions or advice regarding the legal issues and other matters expressly addressed therein. By rendering a legal opinion or advice, the giver of such opinion or advice does not become an insurer or guarantor of the result indicated by that opinion, or the transaction on which the opinion or advice is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

Bond Counsel has assisted in drafting those portions of this Official Statement under the captions The Series 2016 Bonds (excluding the information concerning the book-entry system therein and in Appendix C), Security and Sources of Payment, Tax Matters and Appendix A – Summary of Certain Provisions of the General Bond Ordinance and the Sinking Fund Ordinance. Bond Counsel and others, including the Underwriters, Underwriters’ counsel and the financial advisors to the City, have assisted the City with its preparation of certain other portions of this Official Statement. Bond Counsel and those other parties have not been engaged to, and will not, independently confirm or verify that information or any other information provided by the City or others, and will not express an opinion as to the accuracy, completeness or fairness of any such information or any other reports, financial information, offering or disclosure documents or other information pertaining to the Series 2016 Bonds that may be prepared or made available by the City or others to potential or actual purchasers of the Series 2016 Bonds, to owners of the Series 2016 Bonds, including Beneficial Owners, or to others.

In addition to rendering its legal opinions, Bond Counsel will assist in the preparation of and advise the City concerning documents for the bond transcript.

Certain legal matters be passed upon for the City by its Director of Law and for the Underwriters by Wilkerson & Associates Co., LPA

The City has also retained the legal services of Squire Patton Boggs (US) LLP and Wilkerson & Associates Co., LPA from time to time as special counsel in connection with matters that do not relate to City financings. Squire Patton Boggs (US) LLP also serves as bond counsel for one or more of the political subdivisions that the City territorially overlaps and has served as counsel to the Underwriters in connection with matters that do not relate to the Series 2016 Bonds.

TAX MATTERS

In the opinion of Squire Patton Boggs (US) LLP, Bond Counsel, under existing law: (i) interest on the Series 2016 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Series 2016 Bonds are exempt from all Ohio state and local taxation, except the estate tax, the domestic insurance company tax, the dealers in intangibles tax, the tax levied on the basis of the total equity capital of financial institutions, and the net worth base of the corporate franchise tax. Bond Counsel expresses no opinion as to any other tax consequences regarding the Series 2016 Bonds.

The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the Issuer contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Series 2016 Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of the Issuer’s certifications and representations or the continuing compliance with the Issuer’s covenants.

The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly addressed by such authority. It represents Bond Counsel’s legal judgment as to exclusion of interest on the Series 2016 Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service (“IRS”) or any court. Bond Counsel expresses no opinion about (i) the effect of future changes in the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS.

The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations. Noncompliance with these requirements by the Issuer may cause loss of such status and result in the interest on the Series 2016 Bonds being included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2016 Bonds. The Issuer has covenanted to take the actions required of it for the interest on the Series 2016 Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Series 2016 Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or any other matters coming to Bond Counsel’s attention, may adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2016 Bonds or the market value of the Series 2016 Bonds.

A portion of the interest on the Series 2016 Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the Series 2016 Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Series 2016 Bonds. Bond Counsel will express no opinion regarding those consequences.

Payments of interest on tax-exempt obligations, including the Series 2016 Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If a Bond owner is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes.

Bond Counsel’s engagement with respect to the Series 2016 Bonds ends with the issuance of the Series 2016 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Issuer or the owners of the Series 2016 Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Series 2016 Bonds, under current IRS procedures, the IRS will treat the Issuer as the taxpayer and the beneficial owners of the Series 2016 Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the Series 2016 Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Series 2016 Bonds.

Prospective purchasers of the Series 2016 Bonds upon their original issuance at prices other than the respective prices indicated on the inside cover of this Official Statement, and prospective purchasers of the Series

2016 Bonds at other than their original issuance, should consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion.

Risk of Future Legislative Changes and/or Court Decisions

Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Series 2016 Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Series 2016 Bonds will not have an adverse effect on the tax status of interest or other income on the Series 2016 Bonds or the market value or marketability of the Series 2016 Bonds. These adverse effects could result, for example, from changes to federal or state income tax rates, changes in the structure of federal or state income taxes (including replacement with another type of tax), or repeal (or reduction in the benefit) of the exclusion of interest on the Series 2016 Bonds from gross income for federal or state income tax purposes for all or certain taxpayers.

For example, recent presidential and legislative proposals would eliminate, reduce or otherwise alter the tax benefits currently provided to certain owners of state and local government bonds, including proposals that would result in additional federal income tax on taxpayers that own tax-exempt obligations if their incomes exceed certain thresholds. Investors in the Series 2016 Bonds should be aware that any such future legislative actions (including federal income tax reform) may retroactively change the treatment of all or a portion of the interest on the Series 2016 Bonds for federal income tax purposes for all or certain taxpayers. In such event, the market value of the Series 2016 Bonds may be adversely affected and the ability of holders to sell their Bonds in the secondary market may be reduced. The Series 2016 Bonds are not subject to special mandatory redemption, and the interest rates on the Series 2016 Bonds are not subject to adjustment in the event of any such change in the tax treatment of interest on the Series 2016 Bonds.

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

Original Issue Discount and Original Issue Premium

Certain of the Series 2016 Bonds (“Discount Bonds”) may be offered and sold to the public at an original issue discount (“OID”). OID is the excess of the stated redemption price at maturity (the principal amount) over the “issue price” of a Discount Bond. The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Bond (i) is interest excluded from the owner’s gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Series 2016 Bonds, and (ii) is added to the owner’s tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Bond. The amount of OID that accrues each year to a corporate owner of a Discount Bond is taken into account in computing the corporation’s liability for federal alternative minimum tax. A purchaser of a Discount Bond in the initial public offering at the price for that Discount Bond stated on the cover of this Official Statement who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of that Discount Bond.

Certain of the Series 2016 Bonds (“Premium Bonds”) may be offered and sold to the public at a price in excess of their stated redemption price at maturity (the principal amount). That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner’s gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner’s tax basis in the Premium Bond is reduced by the amount of bond premium that is amortized during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a

Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the initial public offering at the price for that Premium Bond stated on the cover of this Official Statement who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond.

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

INDEPENDENT AUDITORS

The financial statements of the governmental activities, the business-type activities, and each major fund of the City, for the year ending December 31, 2014, have been audited by Clark Schaefer Hackett and accepted by the State of Ohio Office of the Auditor of State (the “Auditor of State”). A complete copy may be obtained from the Director of Finance at the City of Cleveland City Hall, 601 Lakeside Avenue, Cleveland, Ohio 44114. A copy is also currently available at the Auditor of State’s website located at http://www.auditor.state.oh.us. The audited financial statements are public records, no consent to their inclusion is required, and no bring down procedures have been undertaken by the Auditor of State since their date. The City continues to maintain an internal audit function and an active external audit committee.

The 2015 financial audit is in process and the City expects to file the audit with the State Auditor within the 150 days after the end of the fiscal year as required by State law. As a result, the most recently released and publicly available financial statements of the City are for Fiscal Year 2014.

RATINGS

Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”) have assigned their ratings of “A1” and “AA” respectively, to the Series 2016 Bonds. No application has been made to any other rating agency for the purpose of obtaining an additional rating on the Series 2016 Bonds.

A rating reflects only the views of the rating agency, and any explanation of the meaning or significance of the rating may only be obtained from the respective rating agency. The City furnished to the rating agencies certain information and materials, some of which may not have been included in this Official Statement, relating to the Series 2016 Bonds and the City. Generally, rating agencies base their ratings on such information and materials on their own investigation, studies and assumptions. There is no assurance that a rating when assigned will continue for any given period of time or that it will not be revised downward or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. Any downward revision or withdrawal of a rating may have an adverse effect on the marketability or market price of the Series 2016 Bonds. The City expects to furnish the rating services with information and materials that may be requested. The City, however, assumes no obligation to furnish requested information and materials and may issue debt for which a rating is not requested. Failure to furnish requested information and materials or the issuance of debt for which a rating is not requested may result in the suspension or withdrawal of a rating of the Series 2016 Bonds. The City and the Underwriters have undertaken no responsibility either to bring to the attention of the holders of the Series 2016 Bonds any proposed change in or withdrawal of the ratings or to oppose any revision or withdrawal.

FINANCIAL ADVISORS

The City has retained Government Capital Management, L.L.C. and Phoenix Capital Partners, LLP (the “Financial Advisors”) in connection with the issuance of the Series 2016 Bonds. The Financial Advisors are not obligated to undertake, and have not undertaken to make, an independent verification or to assume the responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. Government Capital Management, L.L.C. and Phoenix Capital Partners, LLP are independent financial advisory firms and are not engaged in the business of underwriting, trading or distributing municipal or other public securities.

UNDERWRITING

KeyBanc Capital Markets Inc., on behalf of itself and as representative for the Underwriters identified on the front cover, has agreed, subject to certain conditions, to purchase the Series 2016 Bonds from the City at an aggregate purchase price of $______(the principal amount of the Series 2016 Bonds, plus $______[net] original issue premium, and less $______Underwriter’s discount). The Bond Purchase Agreement with respect to the Series 2016 Bonds provides that the Underwriter will purchase all of the applicable Series 2016 Bonds if any are purchased. The Series 2016 Bonds may be offered and sold by the Underwriters to certain dealers and others at prices lower than the public offering prices shown on the inside cover hereof, and the public offering prices may be changed from time to time by the Underwriters.

“US Bancorp” is the marketing name of U.S. Bancorp and its subsidiaries, including U.S. Bancorp Investments, Inc., which is serving as an Underwriter of the Series 2016 Bonds, and U.S. Bank National Association, which is serving as Trustee for the Series 2016 Bonds.

VERIFICATION

Grant Thornton LLP, a firm of independent public accountants, will deliver to the City, on or before the settlement date of the Series 2016 Bonds, its verification report indicating that it has verified, in accordance with attestation standards established by the American Institute of Certified Public Accountants, the mathematical accuracy of (a) the mathematical computations of the adequacy of the cash and the maturing principal of and interest on the Government Obligations, to pay, when due or at prior redemption, the principal of, interest on and any related call premium requirements of the Refunded Bonds, as applicable, and (b) the mathematical computations of yield used by Bond Counsel to support its opinion that interest on the Series 2016 Bonds will be excluded from gross income for federal income tax purposes. See “PLAN OF REFUNDING.”

The verification performed by Grant Thornton LLP will be solely based upon data, information and documents provided to Grant Thornton LLP by the City and its representatives. Grant Thornton LLP has restricted its procedures to recalculating the computations provided by the City and its representatives and has not evaluated or examined the assumptions or information used in the computations.

TRUSTEE

U.S. Bank National Association will serve as Trustee, bond registrar, and transfer and authenticating agent for the Series 2016 Bonds and will keep all books and records necessary for registration, exchange and transfer of the Series 2016 Bonds, in accordance with the terms of agreements between it and the City.

The Trustee is a national banking association organized and existing under and by virtue of the laws of the United States of America and duly authorized to exercise corporate trust power under Ohio laws. The Trustee maintains its principal corporate trust office in Minneapolis, Minnesota and has branch offices throughout the State. The Trustee regularly acts as bond registrar for bond issues of Ohio local governments through its Cleveland, Ohio office. The Trustee is a member of the Federal Reserve System and FDIC. The Trustee serves as the trustee for the City’s general obligation bonds issued under its General Bonds Ordinance and for various revenue bond issues and serves as the depository bank for various City funds and accounts.

CONTINUING DISCLOSURE CERTIFICATE

The City has agreed, for the benefit of the holders and beneficial owners from time to time of the Series 2016 Bonds, in accordance with SEC Rule 15c2-12 (the “Rule”), to provide or cause to be provided to the Municipal Securities Rulemaking Board such annual financial information and operating data, audited financial statements and notices of the occurrence of certain events in such manner as may be required for purposes of paragraph (b)(5)(i) of the Rule (the “Continuing Disclosure Certificate”). See APPENDIX D for the proposed form of the Continuing Disclosure Certificate. The performance by the City of the Continuing Disclosure Certificate will be subject to the annual appropriation by the City of any funds that may be necessary to perform it. The Continuing Disclosure Certificate will remain in effect only for such period that the Series 2016 Bonds are outstanding in accordance with

their terms and the City remains an Obligated Person with respect to the Series 2016 Bonds within the meaning of the Rule.

The City believes that it has complied in all material respects with its previous continuing disclosure undertakings under the Rule during the past five years, but the City notes the following instances of noncompliance, including: (i) it did not file or did not file on a timely basis event notices relating to certain changes to ratings assigned to the insurers of insured bonds or to the underlying ratings, (ii) it filed certain annual reports on June 30 of each year, which at times was one or two days later than the 180th day following the end of the fiscal year of the City, (iii) it filed certain annual reports on July 30 or July 31 of each year, which at times was one or two days later than the 210th day following the end of the fiscal year of the City, (iv) in 2012 it mistakenly uploaded the incorrect file for its parking revenue bonds 2011 annual information filing but corrected that filing as soon as the mistake was brought to its attention, (v) it did not file a statement every year that Continental/United Airlines’ annual reports were available on the SEC’s EDGAR website, (vi) certain annual reports filed by the City were not properly matched with all required CUSIP numbers, (vii) it amended one page on its 2013 Airport Annual Filing to add a column of information regarding enplaned passengers that was mistakenly excluded on the original version, (viii) it mistakenly omitted the required “CPP Net Gain of CEI Meters” table from its CPP Annual Filings for Fiscal Years 2010-2013, and (ix) it mistakenly omitted certain required information from the “Debt Service Requirements and Pledged Taxes” table in filings related to the Income Tax Receipts Obligations and the “Total Restricted and Unrestricted Income Tax Receipts” table in filings related to the Series 2008 Subordinate Lien Unrestricted Income Tax Bonds for Fiscal Years 2010-2013, which omissions were corrected in the City’s 2014 Annual Filings for those bonds. In addition, the City has notified Continental/United Airlines about the necessity of posting on EMMA the availability of its annual reports pursuant to United’s continuing disclosure agreements as an obligated person that were entered into with the trustee of the City’s airport revenue bonds. The foregoing description of instances of non-compliance by the City with continuing disclosure undertakings should not be construed as an acknowledgment that any such instance was material. The City has reviewed the current requirements of the Rule and adopted procedures to ensure full compliance with the Rule.

CONCLUDING STATEMENT

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

The summaries and descriptions of provisions of the Authorizing Legislation and all references to other materials not purporting to be quoted in full are qualified in their entirety by reference to the complete provisions of the documents and other materials summarized or described.

The agreement of the City with the owners of the Series 2016 Bonds is fully set forth in the Authorizing Legislation. Neither this Official Statement nor any statement that may have been or that may be made orally or in writing is to be construed as or as part of a contract with the original purchasers or subsequent holders of the Series 2016 Bonds.

This Official Statement has been prepared and delivered by the City and executed for and on behalf of the City by its Director of Finance.

CITY OF CLEVELAND, OHIO

By: Director of Finance

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APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND THE SINKING FUND ORDINANCE

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SUMMARY OF CERTAIN PROVISIONS OF THE GENERAL BOND ORDINANCE AND THE SINKING FUND ORDINANCE

Under the provisions of the General Bond Ordinance the City has pledged up to the total municipal income taxes of the City to the extent needed to pay debt service on its obligations payable from the Unvoted Tax Supported Obligations Account of the Sinking Fund (as defined below and being, generally, the unvoted general obligation bonds of the City that are not paid from revenues of a self-supporting enterprise of the City). The City has also made certain covenants in the General Bond Ordinance and provided in the General Bond Ordinance and the Sinking Fund Ordinance for the deposit into escrow of the ad valorem property taxes and the municipal income taxes pledged to secure its unvoted general obligation bonds. The General Bond Ordinance provides that so long as any bonds issued thereunder are outstanding, the City will maintain the moneys and the investments in all the accounts of the Sinking Fund irrevocably in trust with the Escrow Agent for the benefit of holders of bonds and notes of the City payable from various Accounts in the Sinking Fund.

Certain Definitions

In addition to the words and terms elsewhere defined in this Official Statement, the following terms, as used herein, shall have the following meanings:

“Accounts” means the accounts created in the Sinking Fund pursuant to the Sinking Fund Ordinance, as amended or supplemented from time to time.

“Agency” means the Central Collection Agency within the City’s Division of Taxation or other entity or officer having charge of collection of the City’s income taxes at the time.

“Debt service charges” or “debt charges” means the principal, including any mandatory sinking fund requirements, interest, and redemption premium, if any, required to be paid by the City on the obligations referred to.

“Enterprise” means a water system, electric power or distribution system, airports or ports, any motor vehicle parking system, solid waste collection, disposal or recovery system or other facility or group or system of facilities, determined to be an enterprise for purposes of the Sinking Fund Ordinance pursuant to an ordinance authorizing the issuance of Self-Supporting Obligations for the purpose of such system or facility.

“General Bond Ordinance” means Ordinance No. 1749-80, passed by the Council of the City on October 8, 1980, as amended by Ordinance No. 1112-83, passed by the Council of the City on May 6, 1983, and as further amended by Ordinance No. 944-96, passed on June 10, 1996, providing for the general terms and provisions for the issuance of unvoted general obligation bonds of the City that are determined by the City to be issued thereunder.

“Self-Supporting Obligations” means general obligation bonds of the City, and notes issued in anticipation of such bonds, issued for permanent improvements which constitute or are part of an Enterprise of the City, to the extent that the City’s Self-Supporting Revenues from such Enterprise are sufficient and available to meet the annual debt charges on such bonds issued or to be issued for the purposes of such Enterprise.

“Self-Supporting Revenues” means the annual income to the City, including charges, prices, fees and rentals, from the operation or ownership of an Enterprise, after deducting therefrom the City’s annual cost of operation and maintenance (other than depreciation) of such Enterprise and any payments or deposit, required to be made by the City under any ordinance, trust indenture, trust agreement or other agreement which pertains to revenue or mortgage revenue bonds or notes issued for the purposes of such Enterprise or which otherwise creates a prior pledge or lien on such income for payments of any obligations other than debt charges on general obligation bonds or notes of the City.

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“Sinking Fund” means the bond retirement fund of the City required by the Revised Code and further detailed in the Sinking Fund Ordinance of the City.

“Sinking Fund Commission” means the commission consisting of the Mayor (who is the President), the Director of Finance (who is the Secretary) and the President of Council, established pursuant to Section 110 of the Charter to manage and control the Sinking Fund in the manner provided by ordinance or by general law to the extent not provided by ordinance.

“Sinking Fund Ordinance” means Chapter 179 of the Codified Ordinances of the City.

“Unvoted Bond and Note Redemption Account” means an account in the Sinking Fund to be held and applied solely to the payment of debt charges and accrued interest on unvoted general obligation bonds, and notes issued in anticipation of such bonds, which are to be retired from the proceeds of the issuance of renewal notes, bonds or refunding bonds, or from special assessments or other money transferred for such purpose.

“Unvoted Self-Supporting Obligations Account” means an account in the Sinking Fund to be held for and applied solely to the payment of debt charges on Unvoted Self-Supporting Obligations.

“Unvoted Tax Supported Obligations” means general obligation bonds of the City, not authorized by vote of the electors, and notes issued in anticipation of such bonds, other than Self-Supporting Obligations, payable from ad valorem property taxes levied within the limitations provided by law, irrespective of whether such bonds or notes are secured by other receipts of the City in addition to such ad valorem property taxes, and including any such general obligation bonds, and notes issued in anticipation of such bonds, which are not or cease to be Self- Supporting Obligations.

“Unvoted Tax Supported Obligations Account” means an account in the Sinking Fund to be held for and applied solely to the payment of debt charges on Unvoted Tax Supported Obligations (other than the payment of principal on bond anticipation notes except for the amount of such notes required to be retired pursuant to Section 133.22 of the Revised Code if such notes are outstanding for more than five years).

“Voted Obligations” means general obligation bonds of the City authorized by vote of the electors and notes issued in anticipation of such bonds.

“Voted Obligations Account” means an account in the Sinking Fund to be held for and applied solely to the payment of debt charges on Voted Obligations.

Summary of the Codified Ordinances Relating to the Sinking Fund

General Pursuant to the General Bond Ordinance, Section 110 of the Charter and the Sinking Fund Ordinance, the City has established a Sinking Fund, constituting its bond retirement fund, and has deposited the moneys and investments in all the Accounts in the Sinking Fund in trust with the Escrow Agent for the benefit of holders of bonds and notes of the City payable from the Accounts in the Sinking Fund.

As long as any bonds issued pursuant to the General Bond Ordinance are outstanding, the City covenants to maintain such moneys and investments with the Escrow Agent, to maintain the accounts and sub-accounts as provided in the Sinking Fund Ordinance, and to provide for deposits into and maintenance of required amounts in the Sinking Fund as described in the Sinking Fund Ordinance, unless the required consents of bondholders are received agreeing to modifications of such covenants.

Sinking Fund Commission

Pursuant to the Charter, the Sinking Fund Commission manages and controls the Sinking Fund. The Secretary of the Sinking Fund Commission may, on behalf of the Commission, take all actions which the Sinking Fund Commission is required or authorized to take under the Sinking Fund Ordinance (other than designation of an

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Escrow Agent) with respect to the Sinking Fund, including, without limitation, causing deposits to be made to various Accounts, establishing sub-accounts, authorizing permitted transfers and giving instructions as to investment of moneys, all as more fully described in the Sinking Fund Ordinance.

Establishment of Accounts – Deposits and Disbursements

The Sinking Fund Ordinance establishes four separate Accounts within the Sinking Fund: the Voted Obligations Account, the Unvoted Tax Supported Obligations Account, the Unvoted Self-Supporting Obligations Account and the Unvoted Bond and Note Redemption Account. The Sinking Fund Commission may establish sub- accounts within the Accounts, provided each sub-account shall be for a purpose within the purpose of such Account.

In 1980, pursuant to the Sinking Fund Ordinance and in connection with the issuance of the first series of bonds to be issued under the General Bond Ordinance, the Sinking Fund Commission deposited in the Accounts of the Sinking Fund held by the Escrow Agent all moneys and investments then held in the City’s Sinking Fund and other funds of the City for the payment of debt charges and credited such moneys and investments to the appropriate Accounts in the Sinking Fund.

In addition to making the original deposits of such moneys and investments to the credit of the respective Accounts, the City is required to deposit in the following Accounts certain revenues as described below:

(a) Voted Obligations Account – That portion of each distribution or advance of ad valorem property taxes by the County Fiscal Officer to the City allocable to levies outside the ten-mill limitation for payment of debt charges on Voted Obligations, and such Self-Supporting Revenues and other moneys as are designated for payment on Voted Obligations, provided that Self-Supporting Revenues of an Enterprise shall be deposited to such Account only to the extent available after application to payment of all debt charges on unvoted general obligations issued for such Enterprise.

(b) Unvoted Tax Supported Obligations Account – That portion of each distribution or advance of ad valorem property taxes by the County Fiscal Officer to the City allocable to levies within the ten-mill limitation for payment of debt charges on Unvoted Tax Supported Obligations, and such other revenues (including without limitation, municipal income taxes, but excluding Self-Supporting Revenues) to be applied for payment of such debt charges.

(c) Unvoted Self-Supporting Obligations Account – Self-Supporting Revenues to the extent necessary to pay debt charges on unvoted Self-Supporting Obligations (prior to the deposit of any such self-supporting revenues in the Voted Obligations Account).

(d) Unvoted Bond and Note Redemption Account – Any proceeds from the issuance of unvoted general obligation bonds or revenue or mortgage revenue bonds, or of notes issued in anticipation of such bonds to be used for the purpose of retiring, renewing or refunding such general obligation bonds or notes, any other moneys transferred for such purpose and any proceeds from advance payment of special assessments in anticipation of which bonds or notes were issued.

The Sinking Fund Commission is required to make those deposits of revenues in the amounts and at the times necessary to allow for the timely payment of debt charges from those Accounts, and the Escrow Agent is required to make timely disbursements to the appropriate paying agents for such purpose. The Sinking Fund Ordinance prohibits any transfer from any Account to any other Account or fund.

Investment of Sinking Fund Account Moneys

Moneys credited to the Accounts of the Sinking Fund shall, by written instruction of the Sinking Fund Commission, be invested by the Escrow Agent only in the following obligations:

(a) Direct obligations of the United States of America or obligations the timely payment of the principal of and interest on which is fully guaranteed by the United States of America;

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(b) certificates of deposit, demand deposits or time deposits of any state bank or trust company or national banking association, including the Escrow Agent or any affiliate of the Escrow Agent, which is a member of the Federal Deposit Insurance Corporation (FDIC), (including any investment in pools of those certificates of deposit, demand deposits or time deposits owned by the bank, trust company or national banking association), provided that any such certificate of deposit, demand deposit or time deposit is

(i) continuously and fully insured by FDIC, or

(ii) issued by an entity that has (or guaranteed by an entity’s parent holding company that has) either unsecured, unguaranteed and uninsured commercial paper rated in the highest rating category, or unsecured, unguaranteed and uninsured long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts, or

(iii) fully secured, to the extent not insured by FDIC, by obligations of the type described in paragraph (i) above (A) that have a market value at all times at least equal to the uninsured principal amount of the deposit, (B) that are held by the Escrow Agent (except in case of a certificate of deposit, demand deposit or time deposit of the Escrow Agent) or any Federal Reserve Bank or depository of the United States of America, as custodian for the institution issuing the deposit, together with the undertaking of such institution, in form satisfactory to the Escrow Agent, that the aggregate market value of the obligations securing such deposit at all times will be maintained in an amount meeting the requirements of this subparagraph (b), and (C) in which the Escrow Agent has a prior perfected first lien and which are not subject to any third-party claims;

(c) repurchase agreements collateralized by securities described in paragraph (b)(i) above with any registered broker/dealer under the jurisdiction of the Securities Investors’ Protection Corporation or any state bank or trust company or national banking association, including the Escrow Agent, if such broker/dealer, bank or trust company has (or its parent holding company has, if it provides a guarantee of the obligation) unsecured, uninsured and unguaranteed commercial paper rated in the highest rating category, or unsecured, uninsured and unguaranteed long-term obligations rated in the third-highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts, provided that:

(i) a master repurchase agreement or specific written repurchase agreement governs the transaction,

(ii) the securities are held by the Escrow Agent or an independent third party acting solely as agent for the Escrow Agent free and clear of any lien, and such third party is (A) a Federal Reserve Bank, or (B) a bank that is a member of the FDIC and that has combined capital, surplus and undivided profits of not less than $50,000,000, and the Escrow Agent shall have received written confirmation from such third party that it holds such securities, free of any lien, as agent for the Escrow Agent,

(iii) a perfected first security interest in such securities under the Uniform Commercial Code or book entry procedures prescribed by federal regulations is created for the benefit of the Escrow Agent (as demonstrated by an opinion of counsel upon which the Escrow Agent may rely as to perfection and priority),

(iv) the repurchase agreement has a term of 30 days or less, or the Escrow Agent will value the collateral securities no less frequently than once every seven days and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two business days of such valuation, and

(v) the fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 100%;

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(d) investment contracts (which term shall not include repurchase agreements) fully collateralized by securities described in paragraph (b)(i) above, with an institution that has (or its parent holding company has, if it provides a guarantee of the obligation) either unguaranteed and uninsured commercial paper rated in the highest rating category, or unsecured, unguaranteed and uninsured long-term obligations rated in the third-highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts;

(e) obligations of any state of the United States of America or any political subdivision of any state, other than the City, for the payment of which the full faith and credit of the state or political subdivision is pledged, provided that such obligations are rated in the second-highest or higher rating category by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts; and

(f) investments in the pooled investment program established in the custody of the Treasurer of the State pursuant to Section 135.45 of the Ohio Revised Code for investment of money by political subdivisions of the State.

Such investments shall mature or be redeemable at the option of the holder at such times and in such amounts to allow the Escrow Agent to make all required payments of debt charges in a timely manner. All income from any investment shall be credited to the Sinking Fund account for which such investment was made.

Reports

The Escrow Agent is required promptly to notify the Sinking Fund Commission of all deposits to, disbursements and transfers from, and investments of moneys in any Account. Upon request of the Sinking Fund Commission, the Escrow Agent must furnish to the Commission a statement of current balances in the Accounts. Monthly statements are required to be provided to the Trustee under the General Bond Ordinance. The Sinking Fund Commission must provide to the Council at least once a year a full and detailed statement of the City’s outstanding obligations, together with information regarding annual receipts and disbursements, investments and income therefrom of the various Sinking Fund Accounts. In addition, the Sinking Fund Commission must submit in itemized form to Council the amount needed in the following year for the required payments of debt charges from various Sinking Fund Accounts and for the operating expenses of the Sinking Fund Commission, and such amount is required to be included in the annual City budget submitted to the County Fiscal Officer and in the Mayor’s annual appropriation request.

Summary of Certain Provisions of the General Bond Ordinance and Sinking Fund Ordinance

Pledge of Property Taxes

The City covenants to include in each tax budget the full amount of ad valorem property taxes produced by the rate levied for the 1980 fiscal year within the minimum levy of the City for and to the extent of total debt charges to be paid in such budget year on unvoted general obligation debt of the City, subject to certain reductions to reflect certain other receipts available for the purpose, and to levy such taxes in that amount and appropriate and deposit the proceeds thereof to the Unvoted Tax Supported Obligations Account. The City has also agreed to and provided for the County Fiscal Officer’s direct deposit with the Escrow Agent of the amount of ad valorem property taxes within the ten-mill limitation to the credit of the Unvoted Tax Supported Obligations Account. Such ad valorem property taxes are pledged, and a prior lien is granted therein, to secure the payment of debt charges payable from that Account.

In addition, the City covenants in the General Bond Ordinance to include in its tax budget and to levy, appropriate and deposit such ad valorem property taxes outside the ten-mill limit to the Voted Obligations Account of the Sinking Fund as are necessary for the timely payment of all debt charges to be paid therefrom. Such levy may be reduced only by amounts which are reasonably estimated to be available and budgeted for payment of such debt charges. For more information with respect to the pledge of property taxes and property taxes generally, see “SECURITY AND SOURCES OF PAYMENT – Pledged Property Taxes” and “MAJOR GENERAL FUND REVENUE SOURCES – Ad Valorem Property Taxes.”

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Pledge of Income Taxes

The City has covenanted that, so long as any of the bonds issued under the General Bond Ordinance are outstanding, the City will collect, appropriate and deposit its municipal income taxes, and has pledged and granted a first lien thereon, to the full extent required to meet debt charges payable from the Unvoted Tax Supported Obligations Account and to the full extent necessary to pay the interest on notes issued in anticipation of obligations payable from the Unvoted Tax Supported Obligations Account. The City has further covenanted not to repeal or amend any ordinance for the levy or collection of its income taxes to such extent that the City would not be able to meet such obligations.

The amount of income tax required for the Unvoted Tax Supported Obligations Account is determined by a budget process and is, in effect, the amount needed after taking into account other receipts that will be deposited to that Account.

With each tax budget, the City must set forth the Schedule, on a monthly basis for a full budget year, showing the year-end balances and tax and other receipts to be credited to various Sinking Fund Accounts, exclusive of income tax receipts, and also set forth the times and amounts of required payments from such Accounts to meet the required debt service. For such purpose, the taxes and other receipts which may be regarded as available to the Unvoted Tax Supported Obligations Account must be limited to the ad valorem tax levy within the ten-mill limitation, special assessments levied for debt charges on unvoted general obligations, accrued interest and premium received upon the sale of unvoted general obligations and reasonably estimated interest income.

The Schedule must identify on a monthly basis any deficiency of those receipts (other than income tax) to be available to the Unvoted Tax Supported Obligations Account to meet the debt service charges payable from such Account, and must specify the required monthly deposits of income tax receipts to meet that deficiency, in equal amounts from the first month of the year to the month preceding the month for which the deficiency was calculated. If at any time the projected or actual amount of receipts in the Unvoted Tax Supported Obligations Account from sources other than income tax is less than the amount budgeted, or the projected amount required to be paid from such Account is greater than the amount estimated, a revised Schedule of increased income tax deposits must be prepared to meet such requirements. If the deposits from such other sources have exceeded the amounts scheduled therefrom for three consecutive months, a revised Schedule of income tax deposits may also be prepared. The Schedule and any revisions thereto must be certified by the Director of Finance and delivered to the Trustee, together with a report by an independent accounting firm showing financial data sufficient to demonstrate that the total amount to be deposited to the Unvoted Tax Supported Obligations Account from income tax receipts in any month is consistent with the requirements of the General Bond Ordinance and. that making such deposits can reasonably be expected to result in amounts sufficient to make timely payment of debt charges scheduled from such Account. The Schedule and revisions must also be certified to the Agency. All income taxes and other taxes, receipts and available revenues to be deposited to the credit of the Unvoted Tax Supported Obligations Account are deemed to be appropriated to such Account and shall not be available for or appropriated to any other purpose.

Commencing with the first day of each month during which a deposit of income tax receipts in the Unvoted Tax Supported Obligations Account must be made in accordance with the Schedule last certified by the Director of Finance, the Agency must withhold from the City’s income tax collection the full amount to be deposited from such receipts and pay such amount directly to the Escrow Agent in the most expeditious manner practicable. The Agency is prohibited from paying to any other City fund any amount from such income tax receipts until the scheduled payment has been made in full to the Escrow Agent.

In any event, if at any time the Escrow Agent or Trustee notifies the Director of Finance and the Agency that amounts held in and projected to be deposited to the Unvoted Tax Supported Obligations Account are insufficient to meet ensuing payments of debt charges, the City shall promptly transfer to that Account from the income tax receipts of the City held by the Agency and from the first such receipts following the certification, the amounts of such deficiency before making further distributions therefrom to other funds of the City.

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Protective Covenants

Among the protective covenants made by the City in the General Bond Ordinance for the benefit of the Bondholders are the following:

Balanced Budget. The General Bond Ordinance requires the City to comply with certain financial covenants pertaining to limitations on appropriations measures and maintaining a balanced budget.

(a) With respect to each appropriation measure, the City has agreed that appropriations from each fund shall not exceed the lesser of (i) the amounts set forth in the current official certificate of estimated resources for such fund or (ii) the sum of estimated unencumbered fund balances of such fund from the prior fiscal year and taxes, revenues, income and other receipts to such fund for the current fiscal year. Such taxes, revenues, income and other receipts are to be stated at levels no greater than such amounts estimated to be and actually realized in the prior fiscal year. Any increase or decrease in such amounts shall be certified in writing by the City’s Director of Finance to the Council together with the basis for such increase or decrease, within those permitted by the General Bond Ordinance. Appropriations must be sufficient to support levels of actual and estimated expenditures no less than those of the prior fiscal year unless the Director of Finance certifies to Council the basis for such lower levels, within those permitted by the General Bond Ordinance. Appropriations must be sufficient to support levels of actual and estimated expenditures no less than those of the prior fiscal year unless the Director of Finance certifies to Council the basis for such lower levels, within those permitted by the General Bond Ordinance.

(b) In the event of a fund balance deficit at the end of any fiscal year, the City shall provide for the elimination of such deficit in the succeeding fiscal year’s appropriation measure and shall actually eliminate such deficit by the end of such succeeding fiscal year. A fund balance deficit may be eliminated over a longer period of time if such is contemplated in a financial plan adopted pursuant to Chapter 118, Ohio Revised Code, the State’s Municipal Fiscal Emergency Act, to the extent that such deficit arises because tax revenues or other receipts attributable thereto declined by more than 10% from the prior fiscal year, provided that certain determinations are made as required by the General Bond Ordinance.

(c) Within 120 days after the beginning of each fiscal year, the Director of Finance is required to certify to the Trustee that the requirements described in the preceding two paragraphs have been met for the current fiscal year. The certification of the Director of Finance is to be accompanied by an independent accounting firm’s statement showing with specificity financial data and confirming the City’s compliance with the preceding two paragraphs if, at the end of the preceding fiscal year, as reflected in the City’s audited financial statements, prepared in conformity with GAAP for government entities, the aggregate of any deficits in the City’s General Fund, Special Revenue Funds, Sinking Fund, Capital Projects Funds and Internal Service Funds exceeds 2% of General Fund receipts during such preceding year.

The City has complied with the procedures previously described in paragraphs (a) and (b). The City has also complied with the procedures described in paragraph (c), but in order to do so, the City requested in years since 1983, and the Trustee granted, an extension so that the City could utilize its audited financial statements in preparing certain information relating to the subject of the certification.

Annual Audit and Quarterly Projections and Statements. The City is required to have its annual financial statements audited by a nationally recognized firm of certified public accountants and to file such audited financial statements with the Trustee within 120 days of the end of each fiscal year. In addition, the City must prepare, within 30 days after Council passes the annual appropriations ordinance, quarterly projections for the remainder of the fiscal year of receipts, expenses and cash balances for all governmental and proprietary funds reported in the annual financial statements, and statements as of the end of each quarter comparing those projections with actual results. Those projections and statements, together with other documents and financial information pertaining to the City (including copies of tax budgets, appropriation measures, certificates of estimated resources and amendments thereto, ordinances or resolutions levying ad valorem property taxes or authorizing the issuance of bonds, detailed financial plans approved by Council, and annual financial reports submitted to the Auditor of State,

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among others) shall be filed with the Trustee and made available for inspection and review by the Bondholders at the offices of the Trustee.

Prohibition on Transfers. The City is prohibited from applying moneys in its various bond construction funds for any purpose other than that for which the bonds, or notes in anticipation thereof, were issued. Further, the City may not transfer moneys from such funds to any other fund except (a) to pay reasonable costs for the use of the City’s personnel, supplies or equipment with respect to the purpose for which such fund was created and (b) to transfer any surplus in the bond construction fund to the Sinking Fund. Transfers from any other fund shall only be made upon certification by the Director of Finance to the Council that such transfer (i) will not be inconsistent with the Revised Code or Charter, (ii) will not create a deficit in the fund from which that transfer is made and (iii) will not result in receipts to the fund from which the transfer is made being inadequate to meet appropriations therefrom. Events of Default and Remedies

Events of Default. The following are events of default under the General Bond Ordinance:

(a) Failure to pay any debt charges on any bond when and as the same shall have become due and payable or failure to make any deposit in any Sinking Fund Account required pursuant to the Sinking Fund Ordinance and the General Bond Ordinance by the time required;

(b) Failure by the City to perform or observe any other covenant or agreement contained in the General Bond Ordinance, the applicable Series Bond Ordinance or in the bonds issued under the General Bond Ordinance, which failure continues for a period of 90 days after written notice of such failure. Such notice may be given by the Trustee in its discretion and shall be given at the written request of holders of at least 25% in aggregate principal amount of outstanding bonds issued pursuant to the General Bond Ordinance; provided that if such default cannot reasonably be expected to be cured within such 90-day period, such failure shall not constitute an event of default so long as, in the judgment of the Trustee, the City institutes corrective action and diligently pursues such action to completion; and

If an event of default occurs as described in clause (a) or (c) above, or circumstances occur which would give rise to an event of default described in clause (b) above if notice were given of such circumstances and such circumstances were not remedied as described in clause (b), the Trustee shall, within five days after knowledge of such event of default, give written notice thereof, by registered or certified mail, to all registered Bondholders and the Trustee shall also give notice to the City with respect to events of default described in clauses (a) and (c) above.

The Trustee may in its discretion waive an event of default as described in clause (b) above and its consequences (other than any default, notice of which was requested by the holders of not less than 25% in aggregate principal amount of the outstanding bonds issued pursuant to the General Bond Ordinance) and shall waive any such event of default upon the written request of the holders of at least 51% in aggregate principal amount of such outstanding bonds. In case of any waiver, or in case any proceeding taken by the Trustee on account of any default is discontinued or abandoned or determined adversely, the City, the Trustee and such Bondholders shall be restored to their former positions and rights under the General Bond Ordinance. No waiver or rescission shall extend to any subsequent or other default or impair any right consequent thereto.

Remedies. Upon the occurrence of an event of default known to the Trustee, the Trustee may pursue any available remedy to enforce the payment of defaulted principal and interest payments on the bonds issued pursuant to the General Bond Ordinance or the compliance with any other obligation set forth in the General Bond Ordinance or such bonds. The City has covenanted in the General Bond Ordinance that the City will not, in any ordinance, trust agreement or other contract or agreement forming part of or pertaining to any general obligation debt of the City, make provision for, or authorize or permit the holders or owners of any such general obligation debt or anyone acting on their behalf to effect, the acceleration of the principal amount of such debt, such that all or any part thereof shall become due and payable in advance of the time otherwise scheduled for such payment. Accordingly, the remedy of acceleration is not available with respect to the Series 2016 Bonds.

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Upon the occurrence of an event of default, the Trustee may, and if requested so to do by the holders of at least 25% in aggregate principal amount of outstanding bonds issued pursuant to the General Bond Ordinance, after having been indemnified as provided in the General Bond Ordinance, the Trustee shall, exercise such of the rights and powers conferred by the General Bond Ordinance as the Trustee, being advised by counsel, shall deem most expedient in the interests of such Bondholders. The holders of 51% in aggregate principal amount of outstanding bonds issued pursuant to the General Bond Ordinance have the right, upon offering satisfactory indemnity to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the General Bond Ordinance, such bonds or any proceedings thereunder, unless such direction is unlawful or not in accordance with the provisions of the General Bond Ordinance. No such Bondholder shall have any right to pursue remedies under the General Bond Ordinance unless: (i) an event of default shall have occurred and be continuing of which the Trustee has or is deemed to have notice; (ii) the holders of at least 25% in aggregate principal amount of such bonds then outstanding shall have requested the Trustee, in writing, to pursue a remedy; (iii) the Trustee shall have been offered satisfactory indemnity; and (iv) the Trustee shall have failed to comply with such request within a reasonable time. Nothing in the General Bond Ordinance or such bonds shall affect the right of the holder thereof to enforce payment thereof at or after the date of maturity without the consent of the Trustee or any other holder of such bonds. The provisions of the General Bond Ordinance relating to a one percent increase in the interest rate on such bonds during an Event of Default, however, only applies to bonds issued prior to 1985.

Modifications

The General Bond Ordinance contains provisions whereby the City and the Trustee may, without the consent of, or notice to, holders of bonds issued pursuant to the General Bond Ordinance, amend the General Bond Ordinance to cure ambiguities, inconsistencies, defects or omissions therein, to grant additional rights to the Escrow Agent or the Trustee, to subject additional taxes or revenues to the lien of the General Bond Ordinance, to add covenants of the City for the protection of such Bondholders and to evidence the assumption by any successor to the City of its covenants contained in the General Bond Ordinance.

Modifications of the General Bond Ordinance for other purposes may be made only with the consent of the holders of not less than 66 2/3% in aggregate principal amount of outstanding bonds issued pursuant to the General Bond Ordinance. No modifications shall, without the consent of each such Bondholder so affected, extend the maturity of the principal of, or interest on, any such bond or reduce the principal amount or rate of interest thereon; and no such modification shall, without the consent of the holders of all such outstanding bonds decrease the taxes or revenues pledged for debt charges on such bonds or reduce the aggregate principal amount of such bonds required for consent to such amendments.

The Trustee shall be entitled to rely upon the opinion of any counsel satisfactory to it that such proposed amending ordinance complies with the provisions of the General Bond Ordinance.

The General Bond Ordinance sets forth certain provisions requiring that notice be given to holders of bonds issued pursuant to the General Bond Ordinance in the event of a proposed amendment to such ordinance. The provisions for modifications described above apply equally to amendments to the Sinking Fund Ordinance.

Defeasance

When all of the bonds issued pursuant to the General Bond Ordinance have been paid and discharged, and provision has been made for paying all sums payable under the General Bond Ordinance, the General Bond Ordinance shall cease, and the covenants of the City shall be discharged. Thereupon the Trustee shall, at the request of the City, execute and deliver to the City such instruments in writing as shall discharge the lien thereof and the Trustee shall assign and deliver to the City any property at the time subject to the lien of the General Bond Ordinance which may then be in its possession.

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Bonds issued pursuant to the General Bond Ordinance shall be deemed to have been paid and discharged within the meaning of the General Bond Ordinance:

(a) if the Escrow Agent or any paying agent for such bonds shall hold in special accounts or sub-accounts, in trust for and irrevocably committed solely thereto, sufficient money, or

(b) if the Escrow Agent shall hold in special accounts or sub-accounts in trust for and irrevocably committed solely thereto, direct obligations of the United States certified by an independent public accounting firm of national reputation to be of such maturities and interest payment dates and to bear such interest as will, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (likewise to be held in trust and committed, except as hereinafter provided), be sufficient together with moneys referred to in subsection (a) above, for the payment, at their maturities or redemption dates, of all debt charges thereon to the date of maturity or redemption, as the case may be, or if default in such payment shall have occurred on such date, then to the date of the tender of such payment; provided, that if any such bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of such notice. Any such moneys shall be invested by the Escrow Agent, upon written direction of the Director of Finance, only in direct obligations of the United States of America, maturing, or redeemable at the option of the holder, at times and in amounts sufficient to meet payments of debt charges on such bonds.

The Trustee

The Trustee is entitled to act upon any written advice or opinion of counsel and shall not be liable for any such action taken in good faith and believed by it to be within the discretion or rights conferred upon it by the General Bond Ordinance. In addition, the Trustee is entitled to rely on certificates and other instruments as specified in the General Bond Ordinance. The City also has covenanted to indemnify the Trustee for, and hold it harmless against, any loss, liability or expense incurred by the Trustee without negligence or bad faith in connection with the performance of its duties. The General Bond Ordinance also contains provisions relating to the resignation and removal of the Trustee and the appointment of a successor trustee.

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APPENDIX B

PROPOSED TEXT OF OPINIONS OF BOND COUNSEL

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APPENDIX B-1

PROPOSED TEXT OF OPINION OF BOND COUNSEL PERTAINING TO THE VARIOUS PURPOSE AND REFUNDING GENERAL OBLIGATION BONDS, SERIES 2016A

We have served as bond counsel to our client the City of Cleveland, Ohio (the “City”) and not as counsel to any other person in connection with the issuance by the City of its $______Various Purpose and Refunding General Obligation Bonds, Series 2016A (the “Series 2016A Bonds”), dated the date of this letter and issued to pay costs of various permanent improvements of the City as more particularly described in the Bond Ordinances (defined below) and to refund certain outstanding General Obligation Bonds of the City. The Series 2016A Bonds are issued pursuant to the Constitution and laws of the state of Ohio, the Charter of the City, Ordinance No. 1749- 80, passed by the Council of the City on October 8, 1980, as amended by Ordinance No. 1112-83, passed by the Council of the City on May 6, 1983, and as further amended by Ordinance No. 944-96, passed by the Council of the City on June 10, 1996 (collectively, the “General Bond Ordinance”) and Ordinances No. 334-16, 335-16 and 336- 16, each passed by the Council of the City on March 21, 2016, and Ordinance No. 1591-14, passed by the Council of the City on December 8, 2014 (collectively, the “Bond Ordinances”). In our capacity as bond counsel, we have examined the transcript of proceedings relating to the issuance of the Series 2016A Bonds, a copy of the signed and authenticated Series 2016A Bond of the first maturity and such other documents, matters and law as we deem necessary to render the opinions set forth in this letter.

Based on that examination and subject to the limitations stated below, we are of the opinion that under existing law:

1. The Series 2016A Bonds constitute valid and binding general obligations of the City, and the principal of and interest on the Series 2016A Bonds, unless paid from other sources, are to be paid from the proceeds of the levy of ad valorem taxes, within the ten-mill limitation imposed by law, on all property subject to ad valorem taxes levied by the City and from the proceeds of the City’s municipal income tax.

2. Interest on the Series 2016A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”) and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, portions of the interest on the Series 2016A Bonds earned by certain corporations may be subject to a corporate alternative minimum tax. Interest on, and any profit made on the sale, exchange or other disposition of, the Series 2016A Bonds are exempt from all Ohio state and local taxation, except the estate tax, the domestic insurance company tax, the dealers in intangibles tax, the tax levied on the basis of the total equity capital of financial institutions, and the net worth base of the corporate franchise tax. We express no opinion as to any other tax consequences regarding the Series 2016A Bonds.

The opinions stated above are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. In rendering all such opinions, we assume, without independent verification, and rely upon (i) the accuracy of the factual matters represented, warranted or certified in the proceedings and documents we have examined and (ii) the due and legal authorization, execution and delivery of those documents by, and the valid, binding and enforceable nature of those documents upon, any parties other than the City.

In rendering those opinions with respect to the treatment of the interest on the Series 2016A Bonds under the federal tax laws, we further assume and rely upon compliance with the covenants in the proceedings and documents we have examined, including those of the City. Failure to comply with certain of those covenants subsequent to issuance of the Series 2016A Bonds may cause interest on the Series 2016A Bonds to be included in gross income for federal income tax purposes retroactively to their date of issuance.

The rights of the owners of the Series 2016A Bonds and the enforceability of the Series 2016A Bonds are subject to bankruptcy, insolvency, arrangement, fraudulent conveyance or transfer, reorganization, moratorium and

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other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion, and to limitations on legal remedies against public entities.

The opinions rendered in this letter are stated only as of this date, and no other opinion shall be implied or inferred as a result of anything contained in or omitted from this letter. Our engagement as bond counsel with respect to the Series 2016A Bonds has concluded on this date.

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APPENDIX B-2

PROPOSED TEXT OF OPINION OF BOND COUNSEL PERTAINING TO THE FINAL JUDGMENT GENERAL OBLIGATION REFUNDING BONDS, SERIES 2016B

We have served as bond counsel to our client the City of Cleveland, Ohio (the “City”) and not as counsel to any other person in connection with the issuance by the City of its $______Final Judgment General Obligation Refunding Bonds, Series 2016B (the “Series 2016B Bonds”), dated the date of this letter and issued to refund certain outstanding Final Judgment General Obligation Bonds of the City. The Series 2016B Bonds are issued pursuant to the Constitution and laws of the state of Ohio, the Charter of the City, Ordinance No. 1749-80, passed by the Council of the City on October 8, 1980, as amended by Ordinance No. 1112-83, passed by the Council of the City on May 6, 1983, and as further amended by Ordinance No. 944-96, passed by the Council of the City on June 10, 1996 (collectively, the “General Bond Ordinance”), and Ordinance No. 1591-14, passed by the Council of the City on December 8, 2014. In our capacity as bond counsel, we have examined the transcript of proceedings relating to the issuance of the Series 2016B Bonds, a copy of the signed and authenticated Series 2016B Bond of the first maturity and such other documents, matters and law as we deem necessary to render the opinions set forth in this letter.

Based on that examination and subject to the limitations stated below, we are of the opinion that under existing law:

1. The Series 2016B Bonds constitute valid and binding general obligations of the City, and the principal of and interest on the Series 2016B Bonds, unless paid from other sources, are to be paid from the proceeds of the levy of ad valorem taxes, within the ten-mill limitation imposed by law, on all property subject to ad valorem taxes levied by the City and from the proceeds of the City’s municipal income tax.

2. Interest on the Series 2016B Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”) and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, portions of the interest on the Series 2016B Bonds earned by certain corporations may be subject to a corporate alternative minimum tax. Interest on, and any profit made on the sale, exchange or other disposition of, 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. We express no opinion as to any other tax consequences regarding the Series 2016B Bonds.

In rendering those opinions with respect to the treatment of the interest on the Series 2016B Bonds under the federal tax laws, we further assume and rely upon compliance with the covenants in the proceedings and documents we have examined, including those of the City. Failure to comply with certain of those covenants subsequent to issuance of the Series 2016B Bonds may cause interest on the Series 2016B Bonds to be included in gross income for federal income tax purposes retroactively to their date of issuance.

The rights of the owners of the Series 2016B Bonds and the enforceability of the Series 2016B Bonds are subject to bankruptcy, insolvency, arrangement, fraudulent conveyance or transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion, and to limitations on legal remedies against public entities.

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APPENDIX C

BOOK-ENTRY ONLY SYSTEM

The information set forth in the following is based on information provided by The Depository Trust Company in its “Sample Offering Document Language Describing DTC and Book-Entry-Only Issuance” (June 2013). As such, the City believes it to be reliable, but the City takes no responsibility for the accuracy or completeness of that information. It has been adapted to the Bond issue by substituting “Series 2016 Bonds” for “Securities,” “City” for “Issuer” and “Trustee” for “registrar” and by the addition of the italicized language set forth in the text. See also the additional information following those numbered paragraphs.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Series 2016 Bonds”). The Series 2016 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each stated maturity of the Series 2016 Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. So long as Cede & Co. is the registered owner of the Series 2016 Bonds, as partnership nominee for DTC, references herein to Bondholders, holders or owners of the Series 2016 Bonds (other than under the captions “Tax Matters” and “Continuing Disclosure Certificate” herein) shall mean Cede & Co. and shall not mean the Beneficial Owners of the Series 2016 Bonds.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2016 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2016 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Security (“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 Series 2016 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2016 Bonds, except in the event that use of the book-entry system for the Series 2016 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2016 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2016 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2016 Bonds. DTC’s records reflect only the identity of the Direct

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Participants to whose accounts such Series 2016 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2016 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2016 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the offering documents. For example, Beneficial Owners of the Series 2016 Bonds may wish to ascertain that the nominee holding the Series 2016 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of a series of the Series 2016 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2016 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2016 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2016 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, 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.

A Beneficial Owner shall give notice to elect to have its Series 2016 Bonds purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Series 2016 Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2016 Bonds, on DTC’s records, to the Paying Agent. The requirement for physical delivery of Series 2016 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2016 Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Series 2016 Bonds to the Paying Agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the Series 2016 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.

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

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

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Direct Participants and Indirect Participants may impose service charges on book entry interest owners in certain cases. Purchasers of book entry interests should discuss that possibility with their brokers.

The City and the Trustee have no role in the purchases, transfers or sales of book entry interests. The rights of Beneficial Owners (i.e., book-entry interest owners) to transfer or pledge their interests, and the manner of transferring or pledging those interests, may be subject to applicable state law. Beneficial Owners may want to discuss with their legal advisers the manner of transferring or pledging their book entry interests.

The City and the Trustee have no responsibility or liability for any aspects of the records or notices relating to, or payments made on account of, book entry interest ownership, or for maintaining, supervising or reviewing any records relating to that ownership.

The City cannot and does not give any assurances that DTC, Direct Participants, Indirect Participants or others will distribute to the Beneficial Owners payments of debt charges on the Series 2016 Bonds made to DTC as the registered owner, or any redemption or other notices, or that the City will do so on a timely basis, or that DTC will serve and act in a manner described in this Official Statement.

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APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE

CONTINUING DISCLOSURE CERTIFICATE

This CONTINUING DISCLOSURE CERTIFICATE, dated as of ______, 2016 (the “Certificate”), is made, signed and delivered by the CITY OF CLEVELAND, OHIO, a municipal corporation and political subdivision duly organized and existing under its Charter and the Constitution and laws of the State of Ohio (the “City”), for the benefit of the Holders and Beneficial Owners (as defined herein) from time to time of the City’s $______Bonds, Series 2016____, authorized by Ordinance No. ____, passed on ______(the “Bond Ordinance”).

RECITAL

The City, by passage of the Bond Ordinance, has determined to issue the Series 2016__ Bonds to provide funds for City purposes, and KeyBanc Capital Markets Inc., as representative (the “Underwriter”), has agreed to provide those funds to the City by purchasing the Series 2016__ Bonds. As a condition to the purchase of the Series 2016__ Bonds from the City and the sale of the Series 2016__ Bonds to Holders and Beneficial Owners, the Underwriter is required to reasonably determine that the City has undertaken, in a written agreement for the benefit of Holders and Beneficial Owners of the Series 2016__ Bonds, to provide certain information in accordance with the Rule (as defined herein).

NOW, THEREFORE, in accordance with the Bond Ordinance, the City covenants and agrees as set forth in this Continuing Disclosure Certificate.

Section 1. Purpose of Continuing Disclosure Certificate. This Certificate is being entered into, signed and delivered for the benefit of the Holders and Beneficial Owners of the Series 2016__ Bonds and in order to assist the Underwriter of the Series 2016__ Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (SEC) pursuant to the Securities Exchange Act of 1934, as may be amended from time to time (the “Rule”).

Section 2. Definitions. In addition to the definitions set forth above, the following capitalized terms shall have the following meanings in this Certificate, unless the context clearly otherwise requires. Reference to “Sections” shall mean sections of this Certificate.

“Annual Filing” means any Annual Information Filing provided by the City pursuant to, and as described in, Sections 3 and 4.

“Audited Financial Statements” means the audited basic financial statements of the City, prepared in conformity with generally accepted accounting principles.

“Beneficial Owner” means any person that (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2016__ Bonds (including persons holding Series 2016__ Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2016__ Bonds for federal income tax purposes.

“EMMA” means the Electronic Municipal Market Access system of the MSRB; information regarding submissions to EMMA is available at http://emma.msrb.org.

“Filing Date” means the last day of the ninth month following the end of each Fiscal Year (or the next succeeding business day if that day is not a business day), beginning September 30, 2017.

“Fiscal Year” means the 12-month period beginning on January 1 of each year or such other 12-month period as the City shall adopt as its fiscal year.

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“Holder” means, with respect to the Series 2016__ Bonds, the person in whose name a Series 2016__ Bond is registered in accordance with the Bond Ordinance.

“MSRB” means the Municipal Securities Rulemaking Board.

“Obligated Person” means, any person, including the issuer of municipal securities (such as the Series 2016__ Bonds), who is generally committed by contract or other arrangement to support payment of all or part of the obligations on the municipal securities being sold in an offering document (such as the Official Statement); the City is the only Obligated Person for the Series 2016__ Bonds.

“Official Statement” means the Official Statement for the Series 2016__ Bonds dated May __, 2016.

“Participating Underwriter” means any of the original underwriters of the Series 2016__ Bonds required to comply with the Rule in connection with offering of the Series 2016__ Bonds.

“Specified Events” means any of the events with respect to the Series 2016__ Bonds as set forth in Section 5(a).

“State” means the State of Ohio.

Section 3. Provision of Annual Information.

(a) The City shall provide (or cause to be provided) not later than the Filing Date to the MSRB an Annual Filing, which is consistent with the requirements of Section 4. The Annual Filing shall be submitted in an electronic format and contain such identifying information as is prescribed by the MSRB, and may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4; provided that if the Audited Financial Statements of the City are unavailable on the Filing Date, the City shall submit unaudited financial statements with the Annual Filing on the Filing Date and then submit the Audited Financial Statements of the City when available. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Specified Event under Section 5.

(b) If the City is unable to provide to the MSRB an Annual Filing by the Filing Date, the City shall, in a timely manner, send a notice to the MSRB in an electronic format as prescribed by the MSRB.

Section 4. Content of Annual Filing. The City’s Annual Filing shall contain or include by reference the following:

(a) Financial information and operating data of the type included in the Official Statement under the subcaption Unvoted General Obligation Debt Service Requirements and Pledged Taxes; in the table Summary of General Fund Cash Receipts by Source and Budgetary Expenditures by Function – Non-GAAP Budgetary Basis; under the subcaption Summary of General Fund Cash Receipts and Expenditures – Non-GAAP Budgetary Basis; in the table Summary of General Fund – Fund Balance – GAAP Basis under the subcaption General Fund Balances; in the table under the subcaption Municipal Income Taxes; in the table under the subcaption Local Government Fund/Local Government Revenue Assistance Fund; in the tables Assessed Valuation, TAX TABLE A – Overlapping Tax Rates, TAX TABLE B – City Tax Rates, and Collection of Ad Valorem Property Taxes under the subcaption Ad Valorem Property Taxes; in the table under the subcaption Debt Outstanding, and in the table under “Projected Outstanding Debt and Debt Service for Fiscal Year 2016.”

(b) The Audited Financial Statements of the City utilizing generally accepted accounting principles applicable to governmental units as described in the Official Statement, except as may be modified from time to time and described in such financial statements; provided that if the Audited Financial Statements of the City are unavailable on the Filing Date, the City shall submit unaudited financial statements with the Annual Filing on the Filing Date and then submit the Audited Financial Statements of the City when available.

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The foregoing shall not obligate the City to prepare or update projections of any financial information or operating data.

Any or all of the items listed above may be included by specific reference to other documents, including annual informational statements of the City or official statements of debt issues of the City or related public entities, that have been submitted to the MSRB or the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting Specified Events.

(a) The City shall provide to the MSRB, in an electronic format and containing such identifying information as is prescribed by the MSRB and in a timely manner but not later than ten business days after the occurrence of the event, notice of any of the following events with respect to the Series 2016__ Bonds, as specified by the Rule:

(i) Principal and interest payment delinquencies;

(ii) Non-payment related defaults, if material;

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties;1

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties;1

(v) Substitution of credit or liquidity providers, or their failure to perform;1

(vi) (Issuance of) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security (i.e., the Series 2016__ Bonds), or other material events affecting the tax status of the security;

(vii) Modifications to rights of security holders, if material;

(viii) Bond calls, if material, and tender offers;2

(ix) Defeasances;

(x) Release, substitution, or sale of property securing repayment of the securities, if material;3

(xi) Rating changes;

(xii) Bankruptcy, insolvency, receivership or similar event of the Obligated Person;4

1 The City has not obtained or provided, and does not expect to obtain or provide, any debt service reserves, credit enhancements or credit or liquidity providers for the Series 2016__ Bonds. 2 Any scheduled redemption of Series 2016 Bonds pursuant to mandatory sinking fund redemption requirements does not constitute a specified event within the meaning of the Rule. 3 Repayment of the Series 2016__ Bonds is not secured by a lien on any property capable of release or sale or for which other property may be substituted. 4 For the purposes of the event identified in this subparagraph, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person.

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(xiii) The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

(xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) For the Specified Events described in Section 5(a)(ii), (vi, as applicable), (vii), (viii, as applicable), (x), (xiii) and (xiv), the City acknowledges that it must make a determination whether such Specified Event is material under applicable federal securities laws in order to determine whether a filing is required.

Section 6. Amendments. The City reserves the right to amend this Certificate, and noncompliance with any provision of this Certificate may be waived, as may be necessary or appropriate to achieve its compliance with any applicable federal securities law or rule, to cure any ambiguity, inconsistency or formal defect or omission, and to address any change in circumstances arising from a change in legal requirements, change in law, or change in the identity, nature, or status of the City, or type of business conducted by the City. Any such amendment or waiver shall not be effective unless the Certificate (as amended or taking into account such waiver) would have materially complied with the requirements of the Rule at the time of the primary offering of the Series 2016__ Bonds, after taking into account any applicable amendments to or official interpretations of the Rule, as well as any change in circumstances and until the City shall have received either (i) a written opinion of bond counsel or other qualified independent special counsel selected by the City that the amendment or waiver would not materially impair the interests of Holders or Beneficial Owners or (ii) the written consent to the amendment or waiver of the Holders of at least a majority of the principal amount of the Series 2016__ Bonds then outstanding. An Annual Filing containing any revised operating data or financial information shall explain, in narrative form, the reasons for any such amendment or waiver and the impact of the change on the type of operating data or financial information being provided. If the amendment relates to the accounting principles to be followed in preparing Audited Financial Statements, the City shall provide notice of such change in the same manner as for a Specified Event under Section 5 and the Annual Filing for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements or information as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

Section 7. Additional Information. Nothing in this Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Certificate or providing any other means of communication, or including any other information in any Annual Filing or providing notice of the occurrence of an event, in addition to that which is required by this Certificate. If the City chooses to include any information in any document or notice of occurrence of an event in addition to that which is specifically required by this Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Filing or notice of occurrence of a Specified Event.

Section 8. Remedy for Breach. This Certificate shall be solely for the benefit of the Holders and Beneficial Owners from time to time of the Series 2016__ Bonds. The exclusive remedy for any breach of the Certificate by the City shall be limited, to the extent permitted by law, to a right of Holders and Beneficial Owners to institute and maintain, or to cause to be instituted and maintained, such proceedings as may be authorized at law or in equity to obtain the specific performance by the City of its obligations under this Certificate in a court in Cuyahoga County, Ohio. Any such proceedings shall be instituted and maintained only in accordance with Section 133.25(B)(4)(b) or (C)(1) of the Revised Code (or any like or comparable successor provisions); provided that any Holder or Beneficial Owner may exercise individually any such right to require the City to specifically perform its obligation to provide or cause to be provided a pertinent filing if such a filing is due and has not been made. Any Beneficial Owner seeking to require the City to comply with this Certificate shall first provide at least 30 days’ prior written notice to the City of the City’s failure, giving reasonable detail of such failure, following which notice the City shall have 30 days to comply. A default under this Certificate shall not be deemed an event of default under the Bond Ordinance, and the sole remedy under this Certificate in the event of any failure of the City

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to comply with this Certificate shall be an action to compel performance. No person or entity shall be entitled to recover monetary damages under this Certificate.

Section 9. Appropriation. The performance by the City of its obligations under this Certificate shall be subject to the availability of funds and their annual appropriation to meet costs that the City would be required to incur to perform those obligations. The City shall provide notice to the MSRB in the same manner as for a Specified Event under Section 5 of the failure to appropriate funds to meet costs to perform the obligations under this Certificate.

Section 10. Termination. The obligations of the City under the Certificate shall remain in effect only for such period that the Series 2016__ Bonds are outstanding in accordance with their terms and the City remains an Obligated Person with respect to the Series 2016__ Bonds within the meaning of the Rule. The obligation of the City to provide the information and notices of the events described above shall terminate, if and when the City no longer remains such an Obligated Person. If any person, other than the City, becomes an Obligated Person relating to the Series 2016__ Bonds, the City shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person.

Section 11. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent.

Section 12. Beneficiaries. This Certificate shall inure solely to the benefit of the City, any dissemination agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Series 2016__ Bonds, and shall create no rights in any other person or entity.

Section 13. Recordkeeping. The City shall maintain records of all Annual Filings and notices of Specified Events and other events including the content of such disclosure, the names of the entities with whom such disclosures were filed and the date of filing such disclosure.

Section 14. Governing Law. This Certificate shall be governed by the laws of the State.

IN WITNESS WHEREOF, the City has caused this Continuing Disclosure Certificate to be duly signed and delivered to the Underwriter, as part of the Series 2016__ Bond proceedings and in connection with the original delivery of the Series 2016__ Bonds to the Underwriter, on its behalf by its officials signing below, all as of the date set forth above, and the Holders and Beneficial Owners from time to time of the Series 2016__ Bonds shall be deemed to have accepted this Certificate made in accordance with the Rule.

CITY OF CLEVELAND, OHIO

By: ______Director of Finance

Approved as to form:

By: ______Assistant Director of Law

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