NEW ISSUECOMPETITIVE via PDXAuction.com RATINGS: Moody’s Aaa BOOK-ENTRY ONLY Standard & Poor’s AAA (FSA-Insured) In the opinion of Preston Gates & Ellis LLP, Portland, Oregon, Bond Counsel, assuming compliance with certain covenants of the City, interest on the 2004 Bonds is excluded from the gross income of the owners of the 2004 Bonds for federal income tax purposes under existing law, as currently enacted and construed. Interest on the 2004 Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax. Interest on the 2004 Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain corporations as more fully described under the caption “TAX EXEMPTION” herein. Under the laws of the State of Oregon, as currently enacted and construed, the interest on the 2004 Bonds is exempt from Oregon personal income tax. Under the laws of the State of Oregon and current ordinances of Multnomah County, the interest on the 2004 Bonds is also exempt from personal income taxation by Multnomah County, Oregon. City of Portland Oregon $163,500,000 $93,080,000 First Lien Sewer System First Lien Sewer System Revenue Bonds Revenue Refunding Bonds 2004 Series A 2004 Series B BASE CUSIP: 736742 DATED: Date of Delivery DUE: As shown on inside cover The First Lien Sewer System Revenue Bonds, 2004 Series A (the “2004 Series A Bonds”) and the First Lien Sewer System Revenue Refunding Bonds, 2004 Series B (the “2004 Series B Bonds”), (collectively, the “2004 Bonds”) will be issued in registered book-entry form only, in denominations of $5,000 or integral multiples thereof. The 2004 Bonds, when executed and delivered, will be registered in the name of Cede & Co., as the registered owner and nominee for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the 2004 Bonds. While Cede & Co. is the registered owner of the 2004 Bonds (the “Owner”) as nominee of DTC, references herein to the Bondowners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the 2004 Bonds. See “BEO System” herein. MATURITIES, AMOUNTS AND INTEREST RATES AS SHOWN ON THE REVERSE HEREOF The 2004 Bonds will bear or accrue interest rates as set forth on the inside cover. The 2004 Bonds will be dated as of the Date of Delivery. Interest on the 2004 Series A Bonds will be payable semiannually on April 1 and October 1 of each year, beginning April 1, 2005. Interest on the 2004 Series B Bonds will be payable semiannually on June 1 and December 1 of each year, beginning June 1, 2005. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the 2004 Bonds by FINANCIAL SECURITY ASSURANCE INC. The 2004 Series A Bonds being offered pursuant to this Official Statement are being issued to finance certain capital facilities and improvements to the sanitary sewer and stormwater drainage system (the “System” or “Sewer System”) owned and operated by the City, to pay the premium for a municipal bond insurance policy and a municipal bond debt service reserve insurance policy, and to pay the costs of issuance of the 2004 Series A Bonds. The 2004 Series B Bonds are being issued to refund certain maturities of the Outstanding Sewer System Revenue Bonds, 1996 Series A, to pay the premium for a municipal bond insurance policy and a municipal bond debt service reserve insurance policy, and to pay the costs of issuance of the 2004 Series B Bonds. See “THE 2004 BONDS – Sources and Uses of Proceeds” herein. The 2004 Bonds are secured by a first pledge of and lien on, and are payable solely from, the Net Revenues derived from the Sewer System. The 2004 Bonds do not constitute a general obligation of the City, and neither the full faith and credit nor the taxing power of the City is pledged for the payment of the principal of, premium (if any), or interest on the 2004 Bonds. No recourse may be had against any funds or assets of the City (other than the Net Revenues of the Sewer System) to enforce payment of any amounts owing under or with respect to the 2004 Bonds. See “SECURITY FOR THE 2004 BONDS” herein. The 2004 Bonds are subject to optional redemption prior to maturity. See “THE 2004 BONDS – Optional Redemption of the 2004 Bonds” herein. This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. The 2004 Bonds are offered when, as and if issued by the City and accepted by the Underwriters, subject to prior sale, withdrawal or modification of the offer without notice, to the final approving opinion of Preston Gates &Ellis LLP, Bond Counsel, Portland, Oregon, and to certain other conditions. The City expects that the 2004 Bonds will be available for delivery through the facilities of DTC in New York, New York on or about November 30, 2004. Official Statement Dated November 18, 2004 MATURITY SCHEDULES $163,500,000 FIRST LIEN SEWER SYSTEM REVENUE BONDS 2004 SERIES A Due Principal Interest Price or CUSIP No. October 1 Amount Rate Yield 736742 2005 $5,010,000 3.00% 2.00% KB 2 2006 5,180,000 4.00 2.13 KC 0 2007 5,420,000 5.00 2.27 KD 8 2008 5,700,000 5.00 2.52 KE 6 2009 5,990,000 5.00 2.80 KF 3 2010 6,300,000 5.00 3.01 KG 1 2011 6,630,000 5.00 3.18 KH 9 2012 6,970,000 5.00 3.33 KJ 5 2013 7,320,000 5.00 3.48 KK 2 2014 7,700,000 5.00 3.59 KL 0 2015 8,090,000 5.00 3.69† KM 8 2016 8,510,000 5.00 3.79† KN 6 2017 8,900,000 4.00 4.02 KP 1 2018 9,310,000 5.00 3.95† KQ 9 2019 9,790,000 5.00 4.00† KR 7 2020 10,290,000 5.00 4.08† KS 5 2021 10,770,000 4.25 4.35 KT 3 2022 11,290,000 5.00 4.25† KU 0 2023 11,860,000 5.00 4.31† KV 8 2024 12,470,000 5.00 4.37† KW 6 † Priced to call on October 1, 2014. $93,080,000 FIRST LIEN SEWER SYSTEM REVENUE REFUNDING BONDS 2004 SERIES B Due Principal Interest Price or CUSIP No. June 1 Amount Rate Yield 736742 2007 $1,510,000 3.00% 2.25% KX 4 2008 1,555,000 4.00 2.50 KY 2 2009 1,615,000 4.00 2.77 KZ 9 2010 1,685,000 4.00 3.01 LA 3 2011 1,750,000 5.00 3.20 LB 1 2012 1,835,000 5.00 3.35 LC 9 2013 1,930,000 5.00 3.50 LD 7 2014 2,020,000 5.00 3.61 LE 5 2015 2,125,000 5.00 3.71 LF 2 2016 37,575,000 5.00 3.83† LG 0 2017 39,480,000 5.00 3.91† LH 8 † Priced to call on June 1, 2015. OFFICIAL STATEMENT OF THE CITY OF PORTLAND MULTNOMAH, WASHINGTON AND CLACKAMAS COUNTIES STATE OF OREGON CITY OF PORTLAND, OREGON $163,500,000 $93,080,000 First Lien Sewer System First Lien Sewer System Revenue Bonds Revenue Refunding Bonds 2004 Series A 2004 Series B CITY COUNCIL (1) Vera Katz, Mayor and Commissioner of Finance and Administration Jim Francesconi, Commissioner of Public Utilities Randy Leonard, Commissioner of Public Safety Dan Saltzman, Commissioner of Public Affairs Erik Sten, Commissioner of Public Works CITY OFFICIALS Gary Blackmer, City Auditor David E. Thurman, City Treasurer Linda Meng, City Attorney Timothy Grewe, Chief Administrative Officer Kenneth L. Rust, Chief Financial Officer DEBT MANAGEMENT Eric H. Johansen, Debt Manager 1221 SW Fourth Avenue, Room 120 Portland, Oregon 97204 Phone: (503) 823-6851 Fax: (503) 823-4209 [email protected] BOND COUNSEL Preston Gates & Ellis LLP Portland, Oregon Notes: (1) The term of office for Mayor Vera Katz expires on December 31, 2004. Tom Potter has been elected as City Mayor, and will take office on January 1, 2005. Commissioner Jim Francesconi’s term of office as Commissioner of Public Utilities expires on December 31, 2004. Sam Adams has been elected to fill this position and will take office on January 1, 2005. No dealer, broker, salesperson or other person has been authorized by the City of Portland (the “City”) to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Bond Counsel’s review of this document is limited; see “Legal Matters” herein. This Official Statement has been deemed final as of its date by the City pursuant to Rule 15c2-12 of the Securities Exchange Act of 1934, as amended. 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, the Underwriters have reviewed the information in this Official Statement but do not guarantee its accuracy or completeness.