City of South Euclid, Ohio Notes to the Basic Financial Statements For The Year Ended December 31,

2011

Note 14 - Note Debt

The Citys note activity, including amounts outstanding and interest rates, is as follows:
Balance 12/31/2010 $1,800,000 2,000,000 1,739 9,595,000 17,775 7,675,000 54,224 0 0 0 0 0 0 0 $21,143,738 Balance 12/31/2011 $0 0 0 0 0 0 0 0 0 9,595,000 58,865 7,675,000 45,705 1,800,000 $19,174,570

Land Acquisition Fund 1.45% Short Term Note 1.00% Short Term Note 1.00% Short Term Note Premium 1.00% Short Term Note 1.00% Short Term Note Premium 1.50% Short Term Note 1.50% Short Term Note Premium Brownfield Redevelopment Fund Note Commercial Redevelopment Fund Note 1.38% Short Term Note 1.38% Short Term Note Premium 1.25% Short Term Note 1.25% Short Term Note Premium 1.45% Short Term Note Total

Additions $0 0 0 0 0 0 0 544,143 320,109 9,595,000 78,487 7,675,000 60,940 1,800,000 $20,073,679

Reductions $1,800,000 2,000,000 1,739 9,595,000 17,775 7,675,000 54,224 544,143 320,109 0 19,622 0 15,235 0 $22,042,847

In 2011, the City issued and retired $544,143 in Brownfield Redevelopment fund notes for acquiring real property and improving the site to assist in providing housing. In 2011, the City issued and retired $320,109 in Commercial Redevelopment fund notes for acquiring real property and improving the site to assist in developing business. In 2011, the City issued $1,800,000 in Housing Development bond anticipation notes for acquiring real property and improving the site to assist in providing housing. These notes mature on December 14, 2012. The Housing Development bond anticipation notes that were issued in 2010 for $1,800,000 matured on December 15, 2011. The $9,595,000 Land Acquisition Bond Anticipation note issued September 27, 2011 at 1.38 percent and the $7,675,000 Land Acquisition Bond Anticipation note issued September 27, 2011 at 1.25 percent and outstanding at December 31, 2011, will mature September 26, 2012. The notes will be paid from the land acquisition capital projects fund. The Land Acquisition bond anticipation notes that were issued in 2010 for $9,595,000 and $7,675,000 matured on September 28, 2011. The $2,000,000 Land Acquisition Bond Anticipation note issued September 29, 2010 at 1.00 percent matured March 29, 2011. The notes are backed by the full faith and credit of the City of South Euclid and mature within one year. The note liability is reflected in the fund which received the proceeds.

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City of South Euclid, Ohio Notes to the Basic Financial Statements For The Year Ended December 31, 2011

Note 15 - Long-Term Obligations

Original issue amounts and interest rates of the Citys debt issues are as follows.
Debt Issue 1998 Recreational Facilities Improvement Refunding Bonds: Capital Appreciation Bonds 2010 Various Purpose Refunding Bonds 2002 Parking Lot Improvement Special Assessment Bond OPWC Liberty Road Bridge Replacement OPWC Whitehall Road Bridge Replacement OPWC Bexley Infrastructure OPWC Cedar Center OPWC Nine Mile Creek Rehabiliation OPWC Green Road OPWC Rainbow Creek OWDA Stormwater Improvement OAQDA Series A OAQDA Series B Police and Fire Pension Interest Rate Original Issue Year of Maturity

4.75% to 4.85% 2.0% to 4.0% 4.0% to 6.7% 0% 0% 0% 0% 0% 0% 0% N/A 3.15% 5.45% 4.25%

$59,994 5,430,000 630,000 755,891 188,822 1,247,424 260,039 341,315 543,801 132,399 2,052,371 386,146 386,145 391,010

2011 2018 1994 to 2014 2002 to 2022 2006 to 2025 2005 to 2024 N/A N/A N/A N/A N/A 2020 2026 1973 to 2035

A schedule of changes in bonds and other long-term obligations of the City during 2011 follows:
Amount Outstanding 12/31/2010 Governmental Activities General Obligation Bonds 1998 Recreational Facilities Improvement Refunding Bonds Capital Appreciation Bonds Accretion on Capital Appreciation Bonds Total 1998 Recreational Facilities Bonds 2010 Various Purpose General Obligation Refunding Bonds Accounting Loss on Refunding Premium on Various Purpose Bonds Total 2010 Various Purpose General Obligation Refunding Bonds Total General Obligation Bonds Special Assessment Bonds with Governmental Commitment 2002 Parking Lot Improvement Amount Outstanding 12/31/2011 Amounts Due In One Year

Additions

Deletions

$26,408 461,498 487,906 5,430,000 (91,406) 265,815 5,604,409 6,092,315

$0 82,094 82,094 0 0 0 0 82,094

($26,408) (543,592) (570,000) (600,000) 11,546 (33,577) (622,031) (1,192,031)

$0 0 0 4,830,000 (79,860) 232,238 4,982,378 4,982,378

$0 0 0 620,000 0 0 620,000 620,000

$190,000

$0

($45,000)

$145,000

$45,000

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City of South Euclid, Ohio Notes to the Basic Financial Statements For The Year Ended December 31, 2011
Amount Outstanding 12/31/2010 Governmental Activities - Continued OPWC Loans: Liberty Road Bridge Replacement Whitehall Road Bridge Replacement Bexley Infrastructure Cedar Center Nine Mile Creek Rehabiliation Rainbow Creek Green Road Total OPWC Loans OWDA Stormwater Improvement OAQDA Loans: OAQDA 2011 Series A OAQDA 2011 Series B Total OAQDA Loans Police and Fire Pension Capital Lease Compensated Absences Total Governmental Activities $453,535 146,337 873,196 260,039 502,597 0 0 2,235,704 1,724,826 0 0 0 295,528 217,631 889,893 $11,645,897 $0 0 0 4,345 0 132,399 543,801 680,545 0 201,700 201,700 403,400 0 304,060 177,079 $1,647,178 ($37,794) (9,441) (62,371) 0 0 0 0 (109,606) (88,701) 0 0 0 (7,065) (56,666) (320,106) ($1,819,175) $415,741 136,896 810,825 264,384 502,597 132,399 543,801 2,806,643 1,636,125 201,700 201,700 403,400 288,463 465,025 746,866 $11,473,900 $37,795 9,441 62,371 0 0 0 0 109,607 0 28,605 0 28,605 7,368 113,787 112,497 $1,036,864 Amount Outstanding 12/31/2011 Amounts Due In One Year

Additions

Deletions

In 1998, the City defeased a 1991 recreational facilities improvement bond issue in order to take advantage of lower interest rates. The proceeds of the new bonds were placed in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the Citys financial statements. On December 31, 2011, none of the defeased bonds are still outstanding. On August 15, 1998 the City issued $4,744,994 in voted general obligation bonds which included serial and capital appreciation (deep discount) bonds in the amount of $4,685,000 and $59,994, respectively. The general obligation bonds were issued for the purpose of refunding a portion of the 1991 recreational facilities improvement bonds to take advantage of lower interest rates. The bonds were issued for a fourteen year period with a final maturity at December 1, 2011. The bonds have been retired from the general obligation bond retirement fund. During 2010, the City issued $5,430,000 in Various Purpose General Obligation Bonds for the purpose of refunding the 2003 General Obligation Bonds in order to take advantage of lower interest rates and for construction projects throughout the City. An analysis of the information follows: 2003 General Obligation Bonds Outstanding at December 31, 2010 Amount Refunded Accounting Loss Outstanding at December 31, 2010 - 40 $5,595,361 (5,687,729) 92,368 $0

City of South Euclid, Ohio Notes to the Basic Financial Statements For The Year Ended December 31, 2011 The bonds were sold at a premium of $265,815. Proceeds of $5,687,729 were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded portion of the various bonds. These Various Purpose General Obligation bonds will be paid with revenues from the road improvement and flood control capital projects funds. The City decreased its total debt service payments by $254,059 as a result of the advance refunding. The City also incurred an economic gain (difference between the present values of the old and new debt service payments) of $220,774. The Special Assessment Parking Lot Improvement bonds will be paid with special assessment revenue from the special assessment bond retirement fund. The Special Assessment bond issue is backed by the full faith and credit of the City. In the event that an assessed property owner fails to make payments, the City will be required to pay the related debt. The Liberty Road Bridge Replacement, Whitehall Road Bridge Replacement and Bexley Infrastructure OPWC loans will be paid with special assessment revenue from the flood control capital projects fund. In the event that an assessed property owner fails to make payments, the City will be required to pay the related debt. A line of credit has been established with the Ohio Public Works Commission in the amount of $264,384 for improvements to the Cedar Center; however, since this loan is not finalized, the repayment schedule is not included in the schedule of debt service payments. The loan will be paid from the flood control capital projects fund. A line of credit has been established with the Ohio Public Works Commission in the amount of $512,000 for the Rehabilitation of Nine Mile Creek; however, since this loan is not finalized, the repayment schedule is not included in the schedule of debt service payments. This loan will be paid from the flood control capital projects fund. A line of credit has been established with the Ohio Public Works Commission in the amount of $132,399 for the Rehabilitation of Rainbow Creek; however, since this loan is not finalized, the repayment schedule is not included in the schedule of debt service payments. This loan will be paid from the flood control capital projects fund. A line of credit has been established with the Ohio Public Works Commission in the amount of $543,801 for the Rehabilitation of Green Road; however, since this loan is not finalized, the repayment schedule is not included in the schedule of debt service payments. This loan will be paid from the road improvement capital projects fund. A line of credit has been established with the Ohio Water Development Authority in the amount of $2,154,990 for improvements to the Sewer system; however, since this loan is not finalized, the repayment schedule is not included in the schedule of debt service payments. The loan will be paid from the flood control capital projects fund. A line of credit has been established with the Ohio Air Quality Development Authority in the amount of $386,146 in Series A and $386,146 in Series B Ohio Air Quality Development Authority loans, (OAQDA); however, since these loans are not finalized, the repayment schedules are not included in the schedule of debt service payments. The loans will be paid from the general capital improvements capital projects fund.

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City of South Euclid, Ohio Notes to the Basic Financial Statements For The Year Ended December 31, 2011 The police and fire pension liability represents police and fire pension obligations and will be paid from taxes received in the general fund. The capital lease will be paid from resources received in the general capital improvements capital projects fund. Compensated absences reported in the compensated absences payable account will be paid from the general fund and the street construction maintenance and repair, state highway and the sewer rental special revenue funds. As of December 31, 2011, the City's overall legal debt margin (the ability to issue additional amounts of general obligation bonded debt) was $18,842,346 and the unvoted legal debt margin was $3,348,607. Principal and interest requirements to retire the Citys long-term obligations outstanding at December 31, 2011 are as follows:
General Obligation Refunding Bonds Principal 2012 2013 2014 2015 2016 2017-2018 Total $620,000 645,000 665,000 685,000 700,000 1,515,000 $4,830,000 Interest $148,185 135,785 116,435 96,485 75,935 78,735 $651,560 Special Assessment Bonds Principal $45,000 50,000 50,000 0 0 0 $145,000 Interest $9,715 6,700 3,350 0 0 0 $19,765

Police and Fire Pension Principal 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2035 Total $7,368 7,685 8,015 8,359 8,718 49,489 61,132 75,441 62,256 $288,463 Interest $12,182 11,865 11,535 11,191 10,833 48,264 36,620 22,311 5,296 $170,097

OPWC Loans Principal $109,607 109,607 109,607 109,607 109,607 548,033 267,394 0 0 $1,363,462

Note 16 - Compensated Absences

The criteria for determining vacation and sick leave benefits are derived from negotiated agreements and State laws. Employees earn two to six weeks of vacation per year, depending on length of service. Employees may use accumulated vacation after the completion of one year of service with the City.

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