City Hall 8500 Santa Fe Drive Overland Park, Kansas 66212 www.opkansas.org August 3, 2012 Mayor Carl Gerlach Council President Dan Stock Members of the City Council RE: PRAIRIEFIRE – Waiver of the City’s selection process and authorization to engage

Stifel Nicolaus to provide underwriting services and Canyon Research Southwest, Inc. to prepare a STAR Bond Feasibility Study for the project.

Mayor and Members of the City Council, The Prairiefire at Lionsgate development (the “Project”) was first approved by the Planning Commission and City Council in 2006. In December, 2008 the City Council passed Ordinance No. SB-2786 establishing a STAR Bond District for the Project (the “STAR Bond District”). Following establishment of the STAR Bond District, in August of 2009, the City Council approved and adopted a STAR Bond Project Plan (the “Project Plan”) for the Project. The Kansas Secretary of Commerce (the “Secretary”) approved the Project Plan in September of 2009. The amount of project costs approved by the Secretary was $66.1 million. In June of 2011 the Secretary approved an increase in the Star Bond authorization of $14.9 million for the Project to a total authorized amount of $81 million. This increase was based on the retail and entertainment destination lease commitments negotiated by the Merrill Companies (the “Developer”). These lease commitments include "first-to-market" destination tenants including REI, the Fresh Market, Rock and Brews, Pinstripes and Cinetopia. For your reference attached are maps of the current site plan. The Project is now planned to occur in two phases and the maps illustrate the location(s) of each phase. In addition to establishment of the STAR Bond District and Project Plan, in September of 2008 the City Council also approved Ordinance No. TDD-2781 creating a Transportation Development District (“TDD”) to finance certain transportation related costs for the Project. Subsequent to that approval, the Developer petitioned the City to dissolve the TDD and at the same time petitioned for the creation of a Community Improvement District (“CID”) to pay certain costs that are eligible under the CID Act. In January of 2011 the City Council approved Ordinance No. CID-2901 approving a total CID project cost of $30 million and imposing a CID Sales Tax of one and one-half percent (1.5%) within the CID district.

The Developer has leases in place and is ready to proceed with construction of the first phase of the Project. During the past month the City staff and legal counsel have been working closely with the Developer and the Developer’s legal counsel on a strategy to finance eligible expenses of the Project through the issuance of Sales Tax and Revenue Bonds (“STAR Bonds”) and Community Improvement District Bonds (“CID Bonds”) (collectively the “Bonds”). A schedule has been outlined that contemplates termination of the existing Project Plan, completion of a new project plan, negotiation of a development agreement, finalization of a bond structure, and preparation of the necessary documents for a bond sale by the end of October. In order to facilitate this timeline, some special meetings of the City Council are likely to be needed. At this time there are two key items necessary to proceed. The first is the update of the feasibility study prepared in accordance with K.S.A. 12-17, 166 as included in the 2009 STAR Bond application to the State of Kansas Department of Commerce. The initial study was conducted by Canyon Research Southwest, Inc. (“Canyon”). Canyon has provided a proposal for preparing this updated feasibility study, a copy of which is attached. The second key item is the selection of a bond underwriter to market and sell the Bonds. Since the initial 2009 approval of the Project Plan by the Secretary, the Developer has consulted with the bond underwriting firm of Stifel Nicolaus (“Stifel”) to assist in financial planning for the Project. Due to Stifel’s knowledge of and history with the Project, the Developer has requested that the City engage Stifel to serve as the underwriter for the Project. In order to move forward with the Project the following actions are recommended: Waive the City’s selection process and direct the City Manager to engage Canyon Research

Southwest, Inc. to prepare a STAR Bond Feasibility Study for the new project plan to be submitted to the Secretary; and

Waive selection process and authorize the Mayor and City Manager to take the necessary actions to engage Stifel Nicolaus to provide underwriting services for the Bonds.

If you have questions or need additional information please contact me or Kristy Stallings at any time. BILL EBEL CITY MANAGER

366351.2

REQUEST FOR PROPOSAL STAR BOND FEASIBILITY STUDY

PRAIRIEFIRE STAR BOND DISTRICT 135th STREET AND NALL AVENUE

OVERLAND PARK, KANSAS July 2012

CANYON RESEARCH SOUTHWEST, INC. COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS

475 ELLICOTT STREET, SUITE 301 / BUFFALO, NY 14203 / (716) 551-0655 366351.2

REQUEST FOR PROPOSAL STAR BOND FEASIBILITY STUDY

PRAIRIEFIRE STAR BOND DISTRICT 135th STREET AND NALL AVENUE

OVERLAND PARK, KANSAS July 2012 Prepared for:

MC Prairiefire, LLC 6240 West 135th Street, Suite 200 Overland Park, KS 66223

Prepared by:

Canyon Research Southwest, Inc. 475 Ellicott Street, Suite 301 Buffalo, NY 14203

CANYON RESEARCH SOUTHWEST, INC. COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS

475 ELLICOTT STREET, SUITE 301 / BUFFALO, NY 14203 / (716) 551-0655 366351.2

July 31, 2012 Fred L. Merrill MC Prairiefire, LLC 6240 West 135th Street, Suite 200 Overland Park, KS 66223 Re: Request for Proposal – STAR Bond Feasibility Study Update Prairiefire at LionsGate in Overland Park, Kansas Fred; Canyon Research Southwest, Inc. is pleased to submit for your consideration a proposal to prepare a STAR Bond Feasibility Study for Prairiefire at Lionsgate, a mixed-use project planned for development at 135th Street and Nall Avenue in Overland Park, Kansas. The STAR Bond Feasibility Study will be submitted to the Kansas Secretary of Commerce for the purpose of securing approval for a new project plan to the previously approved Prairiefire at Lionsgate STAR Bond District. The report will address the project’s current development plan. Pursuant to K.S.A. 12-1780c, a Feasibility Study examines the impact of the redevelopment project or special bond project upon similar businesses in the project market area, quantifies out-of-state visitation, forecasts the project’s economic impact and evaluates the project’s ability to remain profitable past the term of the STAR Bonds. Upon review of the proposal, should any questions arise or additional information requested, contact me directly via my cell at (480) 227-4483. Respectfully submitted, CANYON RESEARCH SOUTHWEST, INC. Eric S. Lander, Principal Enclosure

T A B L E O F C O N T E N T S

Canyon Research Southwest, Inc. 366351.2

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Page # SCOPE OF WORK .................................................................................. 2 Report Methodology ............................................................................... 2 Requested Project Information ................................................................ 6 Contract Fee ............................................................................................. 6 Report Delivery ........................................................................................ 7 Additional Terms and Conditions ............................................................ 7

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SCOPE OF WORK

MC Prairiefire, LLC has requested a proposal from Canyon Research Southwest, Inc. to prepare a STAR Bond Feasibility Study for Prairiefire at Lionsgate, a mixed-use project proposed for construction at 135th Street and Nall Avenue in Overland Park, Kansas. The report’s methodology and terms of the consulting engagement are discussed in the text below. The project’s development plan has been revised since completion of the STAR Bond Feasibility Study in 2009. The study will reflect the new development plan.

Report Methodology All STAR bond projects are subject to approval by the Kansas Secretary of Commerce. Pursuant to the STAR Bond Financing Act, a STAR bond application must be accompanied by a Feasibility Study that examines the impact of the proposed development or special bond project upon similar businesses in the project market area, quantifies out-of-state visitation, forecasts the project’s economic impact and evaluates the project’s ability to remain profitable past the term of the STAR bonds. According to Section 7 of the STAR Bond Financing Act the Feasibility Study should contain the following:

1. Whether a STAR bond project’s revenue and tax increment revenue and other available revenue are expected to exceed or be sufficient to pay for the project costs;

2. The effect, if any, a STAR bond project will have on any outstanding special obligation

bonds payable from the revenues described in K.S.A. 2009 Supp. 12-17,169, and amendments thereto;

3. A statement of how the jobs and taxes obtained from the STAR bond project will

contribute significantly to the economic development of the state and region;

4. Visitation expectations;

5. The unique quality of the project;

6. Economic impact study;

7. Market study;

8. Market impact study;

9. Integration and collaboration with other resources or businesses;

10. The quality of service, and experience provided, as measured against national consumer standards for the specific target market;

11. Project accountability, measured according to best industry practices;

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12. The expected return on state and local investment that the project is anticipated to

produce;

13. A statement concerning whether a portion of the local sales and use taxes are pledged to other uses and are unavailable as revenue for the STAR bond project; and

14. An anticipated principal and interest payment schedule on the bond issue.

The Feasibility Study for the Prairiefire at Lionsgate in Overland Park, Kansas will address each of these 14 issues. A brief outline of the methodology for some of the more key issues is summarized in the text below. Forecast STAR Bond Revenues The STAR bond program provides Kansas municipalities the opportunity to issue bonds to finance the development of major commercial entertainment and tourism areas, and use sales tax revenue generated by the development to pay off the bonds. STAR bonds possess a 20-year term. An eligible area for the STAR bond program includes a historic theater, major tourism area, major motorsports complex, auto race track facility, river walk canal facility, major multi-sport athletic complex or a major commercial entertainment and tourism area. The STAR Bond Act allows for the pledge of 100% of the tax increment revenue received by the city from any local sales and use taxes, including the city’s share of any county sales tax, which are collected from taxpayers doing business within the STAR bond project district. The STAR bond financing being sought for the Prairiefire at Lionsgate will be repaid by incremental retail sales and lodging taxes. Gross retail and lodging sales for the district will be forecast based on the mix of project components, estimated annual attendance, local tourism market, and trade area demographics and direct retail competition. The supportable retail sales originating from out-of-town visitors will be estimated separately. Industry sources to be used in estimating retail and lodging sales include: 1) Actual retail sales volumes for similar lifestyle an entertainment centers; 2) Dollars & Cents of Shopping Centers published by the Urban Land Institute; 3) Sales data published by the International Council of Shopping Centers; 4) Tourism spending characteristics published by the Travel Industry Association of America; 5) Competitive hotel operating results provided by Smith Travel Research; and 6) Trade area demographics and visitor counts.

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Impact on Active STAR Bond Projects As an economic development tool the State of Kansas adopted STAR bond legislation that affords bond financing for eligible development projects. STAR bonds provide Kansas municipalities the opportunity to issue bonds to finance the development of major commercial entertainment and tourism areas and use sales tax revenue generated by the development to pay off the bonds. In order to be considered a major commercial entertainment and tourism area, a proposed project must be capable of being characterized as a statewide and regional destination, and include a high quality innovative entertainment and tourism attraction, containing unique features which will increase tourism, generate significant positive and diverse economic and fiscal impacts and be capable of sustainable development over time. STAR bond financing allows eligible projects to capture local and county portion of sales taxes generated within the established district for use in reimbursing such project costs as land acquisition, infrastructure improvements and certain soft costs. The state may also agree to contribute its portion of the sales tax revenue generated within the district. To determine the impact of the Prairiefire at Lionsgate STAR Bond District in Overland Park, Kansas on active STAR Bond Districts in the Kansas City MSA a comparison will be made on each project’s major attraction(s); commercial tenant mix; market positioning and target market. The possible synergy of these projects will also be evaluated. Forecast Visitor Attendance The following criteria will be evaluated when considering the tourism potential of the Prairiefire at Lionsgate STAR Bond District in Overland Park, Kansas:

• Out-of-state visitation from multiple states should have a target of 20 percent of total annual visitation to be considered a major, unique, destination attraction;

• A target of 30 percent of total annual visitation should be drawn from greater than 100

miles distance from the attraction community; and

• Total annual visitation should compare very favorably to existing attractions in Kansas. Visitation forecasts for the Prairiefire at Lionsgate STAR Bond District will be segmented into three sources, including: 1) local residents residing within a 100-mile radius; 2) regional visitors residing outside of a 100-mile radius and 3) out-of-state visitors. Economic Impact Study The following economic impacts are forecast when considering the tourism potential of a project applying for STAR bond financing:

• Direct expenditures: Visitor spending that directly supports the jobs and incomes of people and firms that deal directly with visitors;

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• Indirect expenditures: Changes in sales, income or jobs in regional sectors that supply goods and services in support of direct expenditure entities;

• Direct job creation: The total number of jobs (distinguished as full-time or part-time)

supported by the target attraction; and

• Creation of overnight hotel stays. Market Study The Market Study portion of the report will determine the ability of the STAR bond project to gain market share locally, regionally and nationally and the ability of the project to gain sufficient market share to:

• Remain profitable past the term of repayment; and • Maintain status as a significant factor for travel decisions.

The Market Study will focus on evaluating the market potential for the retail and hotel components. Findings from any market studies prepared for the Prairiefire at Lionsgate will be reviewed and incorporated into the analysis. Due to the importance of the Prairiefire at Lionsgate District’s retail component the Market Study portion of the report will evaluate the suitability of the project to accommodate a mix of retail land uses, including a lifestyle/entertainment center, big-box retailers, restaurants and more. The Market Study will evaluate the competitive retail and hotel real estate markets by identifying historical trends in new construction, retail sales and bed tax collections; trade area pull factor and retail sales gap analysis; and high-end specialty retailers operating in the Kansas City MSA as well as provide a survey of competitive shopping centers and comparable retail/entertainment districts and quantifying the short-term need for additional retail space and lodging. A site specific evaluation will determine the ability of the Prairiefire at Lionsgate District to accommodate commercial and hotel development. Marketing Impact Study The Marketing Impact Study component will examine the impact of the STAR bond project upon similar businesses in the projected market area (i.e., that the project will increase total sales in the surrounding area, not diminish sales from existing retailers in the surrounding area). The study will evaluate similar retail and lodging entities operating in the competitive market area. Findings of the RMP Opportunity Gap – Retail Stores Report published by Claritas, Inc. will identify segments of the local retail market that are currently under retailed and possess the potential for additional businesses. The local retail pull factor will also be discussed and the potential for the Prairiefire at Lionsgate STAR Bond District to improve the competitive market area’s retail draw and sales.

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STAR Bond Principal and Interest Schedule The ability of the Prairiefire at Lionsgate STAR Bond District to satisfy the projected STAR bond obligations will be determined by comparing the annual retail sales and lodging tax revenues with debt service estimates. A 20-year amortization schedule will be prepared that also includes debt coverage ratios to determine if ample “cushion” exists to cover the debt service on bond financing. The report will assume that all annual STAR bond revenue, less an administrative fee, would be used to pay bond debt.

Requested Project Information The MC Prairiefire, LLC must provide, if available, Canyon Research Southwest with the following information on the Prairfire at Lionsgate STAR Bond District.

• Site plan; • Estimated development costs and STAR Bond eligible costs; • Proposed project’s customer profile; • Detailed description of the major attraction and forecast annual attendance; • Detailed outline of project components, including use, square footage, number of

residential units and number of hotel rooms; • Forecast ADR and stabilized occupancy for the hotel (if included in plan); • Phasing schedule and development timeline; • Project positioning and types of anchor and small shop tenants envisioned for the project; • List of committed tenants, size and opening date; • Distinguish committed tenants by those executing signed leases or letters of intent; • Reasons why retail component will be distinguished from existing market; • Any market studies prepared for the museum, retail or hotel components; and • Project developer bio and list of projects.

Contract Fee The fee to complete the outlined study is Seven Thousand Dollars ($7,000.00). This fee includes one trip to Overland Park, Kansas to complete the necessary primary research. What is required before work commences on the outlined scope of work is for MC Prairiefire, LLC to return to Canyon Research Southwest, Inc. two signed contracts, the requested project information and a 50 percent retainer in the amount of Three Thousand Five Hundred Dollars ($3,500.00) to the Buffalo, New York address provided on the cover page of this proposal.

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Report Delivery It is estimated that completion of a draft copy of the report available for review by the client will be provided within two weeks of receipt of the executed contract, retainer and requested project information. Delivery of the final report will occur following necessary revisions resulting from comments made by project team members. Three bound copies, one unbound original copy and an electronic copy of the final report will be delivered to the client.

Additional Terms and Conditions This contract is subject to our usual terms and conditions enumerated below:

A. The report delivery period shall commence at time of receipt of signed contract and retainer.

B. Payment of all services shall be due and payable within thirty (30) days after services

have been performed and the final reports delivered to the client.

C. MC Prairiefire, LLC will receive three (3) bound copies and one original copy of the final report. Extra report production costs at standard rates and approved extra expenses shall be billed when incurred and due upon receipt of the statement.

D. Abandonment or suspension of the study by MC Prairiefire, LLC shall not release the

client of monies due. Canyon Research Southwest, Inc. shall be paid for their services performed; and all work and such extra work caused or on account of it, shall be paid for at no less than the usual daily charge of $1,000 plus travel related expenses, but not to exceed the contract amount of $7,000.

E. MC Prairiefire, LLC and Canyon Research Southwest, Inc. each bind themselves in

respect to all covenants of this agreement. Neither party shall assign, sublet, transfer or diminish his obligation hereunder, without the written consent of the other party hereto.

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Shall any part of this contract be held invalid by a Court of Law, all other parts remain in full force and effect. It is mutually agreed that this shall form a contract, subject to acceptance by the client within ten (10) days from the date hereon, that being July 31, 2012. Canyon Research Southwest, Inc. Dated: Eric S. Lander, Principal MC Prairiefire, LLC Dated: Fred L. Merrill

Everyday.Creating Solutions For Your Financing Needs

PUBLIC FINANCE

At Stifel, Nicolaus & Company, Incorporated,our clients receive all the advantages of a full-service brokerage and investment banking firmwith a long history of success. Established in1890, we are committed to helping you achieveyour goals and making sure that you receive the full benefit of our extensive experience.

Our clients reflect a diverse number of publicand non-profit entities, including municipalities,hospitals, long-term care facilities, educationalinstitutions, school districts, public agencies,housing authorities, and other state and localgovernmental bodies.

We have been providing investment servicesnationally for over 120 years, and we are one of the few remaining independent, full-service, securities-related financial services firms in the country. Whether a borrower has a one-time project or a long list of needs, each client is important to us.

Leading the WAy in Public Finance Since 1890

At Stifel Nicolaus, it’s about building relationships.

Stifel Nicolaus has worked for many large issuers across the country for the last 120 years, including notable initial financings for the Michigan Mackinac Bridge and Chicago O’Hare International Airport. More recently, Stifel Nicolaus has completed numer-ous important infrastructure projects for borrowers including Colorado Department of Transportation, the City of St. Louis, the University of Colorado, Cuyahoga County, Ohio, the Michigan Finance Authority, and the State of Texas, to name a few.

Our dedication to our clients includes a long-lasting relationship that starts before the transaction and lasts beyond the closing date.

At Stifel Nicolaus, we pride ourselves in standing out from our competition by offering our clients the versatility of tailored transactions that meet their unique needs, and the ability to ensure the lowest cost to the issuer every day. Putting the welfare of the clients and community first, we strive to be the banker of choice in our industry.

1890Birth of the companyin St. Louis, Missouri

1958Stifel Nicolaus joins theNew York Stock Exchange

1960Hanifen Imhoff foundedin Denver, Colorado

1970sStifel grows from 13 offices to 23while other firms reduce in sizeor went out of business

1983Stifel Financial Corp. stock goes public (NYSE: “SF”)

2005Acquisition of Legg Mason Capital Markets; Stifel doubles capital markets operations

1920sStifel provides financings for St. Louis’ leading companies and gains recognition and popularity

1990Stifel’s 100th anniversary

1998Recognition of implementingindustry-leading computertechnology, providing clientswith immediate market data

1996Creation of www.stifel.com,enabling clients to accesstheir own accounts

Merger with investment banking firmThomas Weisel Partners

2006Acquisition of Miller JohnsonSteichen Kinnard, Inc.’sprivate client group

2010Fortune magazine names Stifel #25 on Fastest-Growing Companies list(#65 overall)

2009Stifel acquires 56 national offices from UBS Financial Services, Inc.

2007Acquisition of Ryan Beck and First Service Bank (renamed Stifel Bank & Trust)

1890 – 1920s 1950 – 1960s 1970 – 1980s 1990s

2008Acquisition of Butler Wick

2000 – present

Over 120 years of heading in the right direction – towards success.

1965Celebration of 75th Anniversary

Established in 1890 as a partnership of two individuals, Stifel Nicolaus has grown to one of the largest brokerage firms in the country (in regard to the number of financial advisors). The philosophy of “safeguarding the money of others as if it was your own” has not changed – the same can be said for our determination and focus on creating and fostering long term relationships with each of our clients.

While maintaining an active retail brokerage for individual investors, the firm also became a pioneer in municipal underwriting and became a member of the New York Stock Exchange in 1958.

Through the historical challenges of the industry, such as the Great Depression, the late 1960s “paper jam” for the security firm industry, and the financial crisis of 2008 – 2009, Stifel Nicolaus has not only survived, but also thrived. Instead of merging with our competitors to stay afloat, or being forced to drop out of the industry, Stifel has positioned itself to successfully handle challenging times by maintaining a robust capital position approaching $2.0 billion, enabling us to provide our clients with a partner that can underwrite $5 billion of unsold securities at any point.

Stifel Nicolaus – Our History

Nationwide Coverage for Our Clients

Ranked as one of the largestbrokerage �rms in the United States – and growing.

Public Finance issuers

Stifel Nicolaus provides public finance services to a variety of clients, including states, cities, counties, school districts, special purpose districts, housing authorities, utilities, and 501(c)(3) organizations.

Above all else, Stifel Nicolaus is committed to finding the lowest cost of capital for our clients. Whether we represent a small rural school district or a large state agency, Stifel Nicolaus can creatively tailor financing solutions for your capital needs. Our bankers pride themselves on providing our clients the best in innovation, outstanding customer service, creative problem solving, and reliability and continued commitment every day.

Marketing Your Bonds

As one of the nation’s premier investment banks, Stifel Nicolaus combines the experience of seasoned and innovative public finance bankers with exceptional local and regional municipal bond distribution capa-bilities. Stifel Nicolaus maintains one of the strongest, most comprehensive distribution networks in the industry, coupled by coast-to-coast retail brokerage services for individual investors.

The firm is one of the few major investment banks maintaining significant relationships with all market segments of bond purchasers, from local banks and individual investors to national and international firms with well over $1 billion in assets. The depth of our relationships and our ability to create a secondary market allows us to generate greater demand for your bonds, increase the liquidity of the investment, and reduce interest rates.

Stifel Nicolaus combines the national resources and distribution capabilities of one of the largest independent broker/dealers and investment banks in the country with the focused customer attention of a regional boutique. With public finance, research, and retail offices stretching from coast-to-coast, the firm feels the pulse of each region.

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Stifel Nicolaus maintains institutional sales offices in both national and regional financial centers around the country, including Denver, Atlanta, Boston, Chicago, Detroit, Houston, Kansas City, Los Angeles, Minneapolis, Brookfield, New Orleans, New York City, St. Louis, and San Francisco. Our broad geographic coverage allows Stifel Nicolaus’ brokers to focus not only on the large mutual bond funds, but on smaller and more active regional institutional buyers.

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Notable Transactions Across the Country

MICHIGAN – Michigan Municipal Bond AuthorityLocal Government Loan Program$38,245,000

The Michigan Municipal Bond Authority (“MMBA”) and its financing team led by Stifel Nicolaus created the first Michigan pooled financing of Qualified School Construction Bonds (“QSCBs”) and Qualified Zone Academy Bonds (“QZABs”). Pooling of these bonds required complex tax analysis due to Federal requirements. The transaction was completed based solely on the credit of a State Aid Intercept through the Local Government Loan Program School Program with an “A+” rating and required no credit analysis of the individual school district participants. This differs significantly from the credit of most other QSCBs sold to date in Michigan that benefited from the enhanced “AA-” rating of the Michigan School Bond Loan Fund Qualification (“MSBLFQ”). This financing pooled six different school district borrowers and produced a True Interest Cost, inclusive of all costs, of 0.67% after the interest subsidy. The MMBA issue was the first of its kind and pioneered a new avenue to provide issuers alternative ways of financing their debt, especially through the unique programs offered through the American Recovery and Reinvestment Act (ARRA).

NEW YORK – Onondaga County, New YorkProperty Tax Receivable Trust – Taxable Certificates of Participation$13,300,000

Onondaga County, New York, selected Stifel Nicolaus to serve as Placement Agent for the sale of $13.3 million Taxable Certificates of Participation. This transaction helped the County monetize its tax liens for the years 2007 through 2009. Using historical and projected collection data, Stifel Nicolaus was able to structure a three-year bullet maturity for the Certificates. This structure allowed the County to use excess proceeds from delinquent real property tax payments, including interest and penalties, to pre-pay on the outstanding balance of the certificates; thereby, reducing the overall cost of borrowing. The County agreed to purchase any outstanding, unredeemed certificates at final maturity. Stifel Nicolaus worked closely with the County to secure a Fitch AA rating on the certificates. Ultimately, this aided in achieving the exceptionally low taxable rate of 3.50%. Stifel Nicolaus came up with a uniquely structured transaction that allowed the County to achieve its goal of monetizing the tax liens, while at the same time providing a structure that reduced the overall cost of borrowing.

OHIO – City of Columbus, OhioVarious Purpose General Obligation Bonds$413,200,000

Stifel Nicolaus was selected as the senior manager for the City’s new money and refunding transaction, after serving as senior manager for the City of Columbus’ $251 million borrowing. The $413 million bond issue included 5 separate series for 28 different purposes; both limited and unlimited tax tax-exempt bonds, limited and unlimited tax Build America Bonds (BABs), a series of taxable bonds, as well as a term bond of $15 million designated as Recovery Zone Economic Develop-ment Bonds. Included in the tax-exempt series were approximately $57 million of refunding bonds. For the refunding portion, Stifel continually monitored eight outstanding series of bonds for refunding opportunities and provided weekly feedback on the amount of negative arbitrage present in the escrow. While the present value savings percentage on several series exceeded the 3 to 4% threshold, we did not recommend including any refunding series until the negative arbitrage, as a percentage of the savings amount, was below 50%. At the time of pricing, the refunding bonds generated almost 7% in present value savings and negative arbitrage of less than 25%.

Stifel Nicolaus suggested that the City structure the BABs financing with as many serial maturities as possible and sell the bonds in a manner more typical for tax-exempt bonds with a par optional call, as well as an extraordinary redemption provision at par. By serializing the issue, as opposed to selling one or two term bonds, we shortened the break–even maturity by five years, selling serial maturities from 2016–2026 and receiving little investor pushback on the extraordinary par call. We managed a retail order period for the nine firm syndicate and sold more than $65 million to retail accounts. The aggressive retail pricing allowed us to take orders from institutions later in the day, and we successfully sold the balance of the bonds in the same day. We received orders from 52 institutional accounts, including 36 orders from second and third tier accounts. More than 60% of the BABs were sold to second and third tier accounts. This allowed Stifel Nicolaus to achieve spreads that were very aggressive to comparable Aaa/AAA/AAA transactions, as well as historical spreads achieved by the City.

TEXAS – Bexar County Hospital DistrictCertificates of Obligation$246,395,000

Bexar County Hospital District (University Hospital) sold $246 million Certificates of Obligation Taxable Series (Direct Subsidy – Build America Bonds). The recent sustainability and strength of the Build America Bond program prompted the Bexar County Hospital District to utilize this structure, which has saved issuers millions in interest cost since its inception. The bonds were sold through a seven-member syndicate, which Stifel Nicolaus was an 8% co-manager ($19.7 million liability). During the order period, Stifel Nicolaus placed orders for $62 million (more than 3 times our liability per the Agreement Among Under-writers) and received allocations of $56 million, almost 23% of the par amount of the bonds. Bexar County Hospital District sold its Build America Bonds in maturities from 2018 to 2039, with serial maturities from 2018 to 2013 and term maturities in 2028 and 2039. Stifel Nicolaus’ strong performance demonstrates the sales effort that its 195–person fixed income sales and trading team can provide our clients. COLORADO – Colorado Educational and Cultural Facilities AuthorityRevenue and Revenue Refunding BondsUniversity Corporation For Atmospheric Research Project$27,485,000 The University Corporation for Atmospheric Research (UCAR) is a Colorado not-for–profit corporation. It was organized in 1946 and has 75 member institutions, each of which grants doctoral degrees in the atmospheric and related sciences. The major activity of UCAR is the management and operation of the National Center for Atmospheric Research (NCAR) under an agreement with the National Science Foundation. NCAR is one of the premier atmospheric sciences research laboratories in the world. NCAR’s research is designed to improve the understanding of the behavior of the atmosphere and its interaction with the sun and oceans, including climate change, severe weather events, and air pollution. The bonds were unsecured obligations of the Corporation and are not secured by any specific payment stream or assets of the Corporation. About half of UCAR’s funding comes from the National Science Foundation. The bonds were rated A+/A2 and did not have a reserve fund. Due to the unusual nature of the borrower, Stifel Nicolaus felt that is was important to give our sales force and potential investors a chance to be briefed by representatives of UCAR on the organization and the project through a conference call and presentation. The uniqueness of the credit led to a slow initial order period and at the end of the period, Stifel Nicolaus underwrote an unsold balance of bonds of over 50%. We were confident that we had priced the bonds appropri-ately and that UCAR should benefit from these rates. We knew that with more time our sales force could distribute the bonds throughout the system.

MISSOURI – St. Louis Municipal Library DistrictRecovery Zone Facility Bonds and Build America Bonds$65,000,000

The Library District serves the City of St. Louis, Missouri and currently consists of the Central Library (built in 1912), 15 branch locations of various sizes, and two administrative buildings. The Library District is consistently ranked among the top library systems in the nation. The Library placed second in 2009 in studies conducted by the Center for Public Policy and Social Research at Central Connecticut State University. The Library’s core collections are comprised of approximately 870,000 volumes, more than a million federal, state and city documents, 950,000 vertical files, 650,000 microfilms, 15,000 CDs, 130,000 maps, artwork and original furniture dating from 1865.

The Series 2010 A and B Bonds funded an approximately $75 million extensive rehabilitation designed to maintain the historical nature of the Central Library building in anticipation of its 100 year anniversary in 2012. The Central Library will be completely renovated and will feature a new auditorium with seating for approximately 240 people, new technology and a new entry lobby and atrium on the facility’s north side. New mechanical, electrical, HVAC and other systems will be installed throughout the Central Library facility, and the building’s wood work, stained glass and other original features will be restored. The Series A Bonds ($50,000,000) were publicly offered on June 23, 2010 and carry AA- ratings from both Standard & Poor’s and Fitch. Simultaneously, the Series B Bonds ($15,000,000) were privately placed. The Library District was able to take advantage of two programs under the 2009 Stimulus Act and issued more than half of the Series A Bonds as Recovery Zone Facility Bonds and approximately one quarter of the Series A Bonds as Build America Bonds. A portion of the Bonds will be repaid primarily from receipts of the Library’s $20 million capital campaign. Stifel Nicolaus served as the sole underwriter for the Series A Bonds and as the sole placement agent for the Series B Bonds.

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