INDEBTEDNESS

Authorization Procedure and Limitations

Bonds and notes are generally authorized on behalf of the City by vote of two-thirds of all the members of the City Council with the approval of the Mayor. Provision is made for a referendum on the filing of a petition bearing the requisite number of signatures. Borrowings for certain purposes require state administrative approval. Temporary loans in anticipation of current revenues and certain state and county reimbursements are generally authorized by majority vote but provision is made for temporary loans in anticipation of federal grants and for other purposes in certain circumstances without City Council authorization.

The general debt limit of the City consists of a normal debt limit and a double debt limit. The normal debt limit is 2 1/2 percent of the valuation of taxable property as last equalized by the State Department of Revenue. The City can authorize debt up to this amount without State approval. It can authorize debt up to twice this amount (the double debt limit) with the approval of the State Emergency Finance Board.

There are many categories of general obligation debt which are exempt from and do not count against the general debt limit. Among others, these exempt categories include revenue anticipation notes and grant anticipation notes, emergency loans, loans exempted by special laws, certain school bonds and sewer bonds, and subject to special debt limits, bonds for water (limited to 10 percent of equalized valuation), housing urban renewal and economic development (limited to 5 1/2 percent) and electric and gas (subject to a separate limit equal to the general debt limit, including the same doubling provision). Industrial revenue bonds and electric revenue bonds are not subject to these debt limits. The general debt limit and water debt limit apply at the time debt is authorized.

Debt Limits

General Debt Limit. The General Debt Limit of the City consists of a Normal Debt Limit and a Double Debt Limit. The Normal Debt Limit is 2 1/2 percent of the valuation of taxable property as last equalized by the State Department of Revenue. The City can authorize debt up to this amount without State approval. It can authorize debt up to twice this amount (the Double Debt Limit) with the approval of the State Emergency Finance Board.

There are many categories of general obligation debt which are exempt from and do not count against the General Debt Limit. Among others, these exempt categories include revenue anticipation notes and grant anticipation notes, emergency loans, loans exempted by special laws, certain school bonds, sewer bonds, and solid waste disposal facility bonds, and subject to special debt limits, bonds for water (limited to 10 percent of equalized valuation), housing, urban renewal, and economic development (subject to various debt limits), and electric and gas (subject to a separate limit equal to the General Debt Limit, including the same doubling provision). Industrial revenue bonds, electric revenue bonds and water pollution abatement revenue bonds are not subject to these debt limits. The General Debt Limit and the special debt limit for water bonds apply at the time debt is authorized. The other special debt limits generally apply at the time debt is incurred.

Revenue Anticipation Notes. The amount borrowed in each fiscal year by the issue of revenue anticipation notes is limited to the tax levy of the prior fiscal year, together with the net receipts in the prior fiscal year from the motor vehicle excise and certain payments made by the Commonwealth in lieu of taxes. The fiscal year ends on June 30. Notes may mature in the following fiscal year, and notes may be refunded into the following fiscal year to the extent of the uncollected, unabated current tax levy and certain other items, including revenue deficits, overlay deficits, final judgments and lawful unappropriated expenditures, which are to be added to the next tax levy, but excluding deficits arising from a failure to collect taxes of earlier years. (See "Taxation to Meet Deficits" under "PROPERTY TAX" above.) In any event, the period from an original borrowing to its final maturity cannot exceed one year.

Types of Obligations

General Obligations. Massachusetts cities and towns are authorized to issue general obligation indebtedness of these types:

Serial Bonds and Notes. These are generally required to be payable in equal or diminishing annual principal amounts beginning no later than the end of the next fiscal year commencing after the date of issue and ending within the terms permitted by law. The maximum terms vary from one year to 40 years, depending on the purpose of the issue. Most of the purposes are capital projects. Bonds or notes may be made callable and redeemed prior to their maturity, and a redemption premium may be paid. Refunding bonds or notes may be issued subject to the maximum term measured from the date of the original bonds or notes. Serial bonds may be issued as "qualified bonds" with the approval of the State Emergency Finance Board, subject to such conditions and limitations (including restrictions on future indebtedness) as may be required by the Board. The State Treasurer is required to pay the debt service on qualified bonds and thereafter to withhold the amount of the debt service from state aid or other state payments; administrative costs and any loss of interest income to the State are to be assessed upon the city or town.

Bond Anticipation Notes. These generally must mature within two years of their original dates of issuance but may be refunded from time to time for a period not to exceed five years from their original dates of issuance, provided that (except for notes issued for certain school projects that have been approved for state school construction aid) for each year that the notes are refunded beyond the second year they must be paid in part from revenue funds in an amount at least equal to the minimum annual payment that would have been required if the bonds had been issued at the end of the second year. The maximum term of the bonds issued to refund bond anticipation notes is measured from the date of the original issue of the notes, except for notes issued for such state aided school construction projects.

Revenue Anticipation Notes. These are issued to meet current expenses in anticipation of taxes and other revenues. They must mature within one year but, if payable in less than one year, may be refunded from time to time up to one year from the original date of issue. The following table sets forth the amounts of revenue anticipation notes issued during the shown fiscal years (exclusive of refunding) and the amount outstanding as of each fiscal year end.

(1) Exclusive of refunding.

(2) In the opinion of Bond Counsel, revenue anticipation notes, when duly authorized, may be issued on or after May 1 of a fiscal year to mature in the following fiscal year to the extent of the uncollected and unabated current tax levy and certain other items.

(3) Beginning in fiscal 1992, the City instituted quarterly billing of real and personal property taxes, greatly reducing the City's need to issue revenue anticipation notes. See "Tax Levies and Collections."

Grant Anticipation Notes. These are issued for temporary financing in anticipation of federal grants and state and county reimbursements. Generally, they must mature within two years but may be refunded from time to time as long as the municipality remains entitled to the grant or reimbursement.

Revenue Bonds. Cities and towns may issue revenue bonds for solid waste disposal facilities and for projects financed under the Commonwealth's Water Pollution Abatement Revolving Loan Program. In addition, cities and towns having electric departments may issue electric revenue bonds, and notes in anticipation of such bonds, subject to the approval of the State Department of Public Utilities.

City of Revere

Direct Debt Summary (1)

General Obligation Bonds:
Outstanding
	General		$2,800,000
	Sewer (MWRA)		1,130,629
	School		3,275,000
	Total Outstanding			$7,205,629
	These issues:			__9,015,000
		Total Long Term Debt			$16,220,629
Temporary Loans:
	Revenue Anticipation Notes			0
	Bond Anticipation Notes (2)			2,772,000
	Retired with Bond proceeds			(2,772,000)
		Total Short Term Debt			0
TOTAL DIRECT DEBT					$16,220,629

(1) Projected outstanding debt as of June 30, 1997.

(2) Payable June 27, 1997; to be permanently financed at maturity with Bond proceeds.

Projected Principal Payments by Purpose

The following table sets forth the projected principal payments by purpose on outstanding general obligation bonds of the City of Revere.

Projected Principal Payments by Purpose (1)

As of June 30, 1997

Fiscal Year	Schools	General	Sewer	Total
1997	$230,000	$420,000	$105,846	$755,846
1998	230,000	170,000	102,361	502,361
1999	230,000	170,000	103,650	503,650
2000	230,000	170,000	105,028	505,028
2001	230,000	170,000	32,161	432,161
2002	230,000	170,000	33,737	433,737
2003	230,000	170,000	35,424	435,424
2004	230,000	170,000	37,213	437,213
2005	230,000	170,000	39,129	439,129
2006	205,000	170,000	41,183	416,183
2007	205,000	170,000	43,366	418,366
2008	195,000	170,000	46,022	411,022
2009	120,000	170,000	48,841	338,841
2010	120,000	170,000	51,552	341,552
2011	115,000	170,000	54,452	339,452
2012	135,000	0	57,555	192,555
2013	110,000	0	60,836	170,836
2014	0	0	64,304	64,304
2015	0	0	67,969	67,969
TOTAL	$3,275,000	$2,800,000	$1,130,629	$7,205,629

(1) Excludes lease and installment purchase obligations, overlapping debt and unfunded pension liability.

Debt Ratios

The following table sets forth the ratio of debt to equalized valuation and per capita debt ratios at the end of the five most recent fiscal years. The table considers the principal amount of general obligation bonds of the City of Revere only. The table does not deduct anticipated state grant payments applicable to the principal amount of outstanding bonds or debt that may be supported in whole, or part, by non-tax revenues. (See "Direct Debt Summary.")

(1) 1990 federal census used for 1992-1996.

(2) 1994 equalized valuation is used for fiscal 1995 and 1996; 1992 equalized valuation is used for fiscal 1993 and 1994; and 1990 equalized valuation is used for fiscal 1992.

Authorized Unissued Debt and Prospective Financing

Following delivery of the Bonds, the City will have $4,125,000 authorized unissued debt of which $1,570,000 is remaining authorization for RESCO payment purposes (solid waste project). The $2,555,000 balance is remaining authorization of the original $4.2 million state and local share of a $12 million federal flood damage project at Roughan’s Point, against which $1,645,000 bonds are currently being issued. The balance of project costs have or are being provided by a federal grant in the amount of $7.8 million, a state grant in the amount of $1.645 million and a City appropriation from available funds in the amount of $910,000. Upon completion of the project, the City’s excess authorization in the amount of $2.555 million is expected to be rescinded. Other than the above, the City has no authorized, unissued debt. Projects under consideration include: a $426,259 borrowing to be issued through the MWRA in late summer 1997; a new police station ($6 to $7 million), a new middle school (no estimate), and a lease for energy saving improvements throughout the school system ($4 million). The latter, if approved, is expected to result in annual debt service savings greater than the fully allocated construction costs.

Overlapping Debt

The City of Revere is located in Suffolk County and is a member of the Massachusetts Water Resources Authority (MWRA) and the Massachusetts Bay Transportation Authority (MBTA). The following table sets forth the outstanding bonded debt, exclusive of temporary loans in anticipation of bonds or current revenue, of Suffolk County, the MWRA, the MBTA and the Northeast Metropolitan Regional Vocational School District and the City of Revere's gross share of such debt and the fiscal 1997 dollar assessment for each.

(1) Excludes debt of the Commonwealth.

(2) All Suffolk County debt is an obligation of the City of Boston. There is no assessment to the other municipalities.

(3) Source: Massachusetts Water Resources Authority ("MWRA"). Debt is as of June 30, 1996. The Massachusetts Water Resources Authority (the "Authority"), established by the Massachusetts Water Resources Authority Act, Chapter 372 of the Acts of 1984 of the Commonwealth of Massachusetts, is a body politic and corporate and public instrumentality and an independent public authority of the Commonwealth. In 1985, the Authority assumed possession and control from the Metropolitan District Commission of a water distribution system and a sewer system which provide wholesale services to 61 cities and towns located primarily in eastern Massachusetts, including most of the metropolitan Boston area. In addition to its operating responsibilities, the Authority is responsible for rehabilitating and repairing the systems to bring them into compliance with applicable environmental laws. The largest share of major capital improvements to the system (the "Capital Program") is for projects relating to constructing and rehabilitating sewerage collection and treatment facilities in order to bring the sewer system's wastewater discharges into Boston Harbor into compliance with federal and state pollution control requirements. These projects are conducted in substantial part under court orders entered by the U.S. District Court in a continuing Clean Water Act enforcement proceeding filed against the Authority by the U. S. Environmental Protection Agency. The cost of the proposed Capital Program is estimated to be $4.8 billion in constant dollars over the next ten years.

(4) Source: Massachusetts Bay Transportation Authority. Debt is as of June 30, 1996; assessment is for 1995 calendar year. The MBTA is comprised of cities and towns in the Greater Boston area. The Commonwealth pays approximately 90 percent of the debt service on MBTA bonds. It has also been state practice in recent years to absorb enough of the net cost of service of the MBTA to assure that the total assessments on the cities and towns within the territory of the MBTA will not exceed 102 1/2 percent of the prior year's assessments. The remainder of the net cost of service is assessed on those cities and towns.

(5) Debt as of June 30, 1996. Dollar Assessment for Fiscal Year 1997.

Contractual Obligations

Municipal contracts are generally limited to currently available appropriations. Statutory authority is granted, however, to make contracts extending into future years for certain specified purposes and subject to specific maximum term limits. A city or town generally has authority to enter into contracts for the exercise of any of its corporate powers for any period of time deemed to serve its best interests, but generally only when funds are available for the first fiscal year; obligations for succeeding fiscal years generally are expressly subject to availability and appropriation of funds. Municipalities have specific authority in relatively few cases to enter long term contractual obligations not subject to annual appropriation, including contracts for refuse disposal (20 year maximum term). Municipalities may also enter into long-term contracts in aid of housing and renewal projects. There is implied authority to make other long-term contracts required to carry out authorized municipal functions, such as contracts to purchase water from private water companies.

Pursuant to the Home Rule Amendment to the Massachusetts Constitution, cities and towns may also be empowered to make other contracts and leases.

The City currently has two long-term contractual relationships: a 15 year contract with Refuse Energy Systems Company (RESCO) for solid waste disposal and a 3 year contract with Atlantic Waste Systems for recycling.

On July 10, 1995 the City of Revere entered into a fifteen year agreement with RESCO of Saugus, for the disposal of the City’s solid waste. The agreement also includes an option to the City which allows the Agreement to be extended for an additional five year term to the year 2015.

On January 15, 1997, RESCO informed the City that the 1997 fee for disposal of the City’s solid waste would be $58.45 per ton effective January 1, 1997. Based upon projected tonnage for calendar year 1997, estimated to be 20,000 tons, the City’s cost to dispose of its solid waste at RESCO is estimated to cost $1,169,000.

RETIREMENT PLAN

The City contributes to the Revere Retirement System ("System"), a single employer, public employee retirement system that acts as the investment and administrative agent for the City. The City's payroll for employees covered by the System for the year ended June 30, 1996, was $13,336,000. Public school teachers are covered by the Commonwealth of Massachusetts Teacher's Retirement System (TRS) to which the City of Revere does not contribute. The City's payroll covered by TRS was $17,465,009 in 1996. Total payroll for the City was $30,801,009. The System and the TRS are contributory defined benefit plans covering all City employees and teachers deemed eligible.

Instituted in 1940, the System is a member of the Massachusetts Contributory System and is governed by Chapter 32 of the Massachusetts General Laws. Membership in the System in mandatory immediately upon the commencement of employment for all permanent, full-time employees. There are currently 577 retirees and beneficiaries currently receiving benefits, 507 active employee members and 29 inactive members.

Both systems provide for retirement allowance benefits up to a maximum of 80% of a member's highest three-year average annual rate of regular compensation. Benefit payments are based upon a member's age, length of credible service, level of compensation and group classification. Members joining the System after January 1, 1979 were subject to a cap of $30,000 on the level of compensation upon which their benefits are calculated. Effective December 21, 1990, the $30,000 cap was removed.

Members of both systems become vested after 10 years of creditable service. A retirement allowance may be received upon reaching age 65 or upon attaining 20 years of service. The Systems also provide for early retirement at age 55 if a Participant 1) has a record of 10 years of creditable service, 2) was on the City payroll on January 1, 1978, 3) voluntarily left City employment on or after that date, and 4) left accumulated annuity deductions in the fund. Active members contribute either 5, 7 or 8% of their gross regular compensation depending on the date upon which their membership began. Employees hired after January 1, 1979 contribute 10% of their compensation over $30,000.

Total unfunded pension benefit obligation applicable to the System was $40,570,000 at January 1, 1996.

The system's funding policy is governed by Section 22D of Chapter 32 of the Massachusetts General Laws. Accordingly, the minimum contribution the City of Revere is required to make through June 30, 1994 is an amount approximating the pension benefits (less certain interest credits) expected to be paid during the year ("pay-as-you-go" method). This amount is determined in advance by PERA and is based in part on the previous year's benefit payout. No actuarial information is used in determining this amount. Generally accepted accounting principles require that pension costs be actuarially determined. Subsequent to June 30, 1994, the City of Revere is required to fund each year the actuarially determined normal cost plus an amount to amortize the unfunded liability. The Commonwealth of Massachusetts currently reimburses the System on a quarterly basis for the portion of benefit payments owing to cost-of-living increases granted after the implementation of Proposition 2 1/2.

The City's contribution to the System for the calendar year ending December 31, 1995 of $6,311,247 was made in accordance with the funding policy described above and was funded as follows: The City contributed $5,198,100 (41% of current covered payroll); employees contributed $1,113,147 (7% of current covered payroll).

(1) Source: Audited financial statements.

EMPLOYEE RELATIONS

City and town employees (other than managerial and confidential employees) are entitled to join unions and to bargain collectively on questions of wages, hours and other terms and conditions of employment. Provisions for compulsory arbitration of labor disputes involving fire fighters and police officers were repealed by the initiative law adopted at the November 1980 election.

The following table sets forth the number of full-time employees in the City by major department:

The following table sets forth the collective bargaining units within the City, the number of employees in each and contract expiration date of each:

Negotiations with the School Administrations Group whose contract expired on 6/30/96 continue, and negotiations with AFSCME, police, fire, municipal and public works unions are ongoing. The Teachers Association is currently under a "memorandum of understanding" until 6/30/99.

LITIGATION

At present there are various cases pending in various courts throughout the Commonwealth where the City of Revere is a defendant. In the opinion of the City Solicitor, none of the pending litigation is likely to result, either individually or in the aggregate, in final judgments against the City that would materially affect its financial position.

UNDERWRITING

The Underwriter has agreed, subject to certain conditions, to purchase from the City the Bonds described on the cover page of this Official Statement at a purchase price, exclusive of accrued interest, of $ and to reoffer the Bonds at no greater than the initial public offering price or prices set forth on the cover page hereof. The Bonds may be offered and sold to certain dealers (including dealers depositing the Bonds into investment trusts) and other investors at prices lower than such public offering prices, and such prices may be changed from time to time by the Underwriter. The Underwriter will be obligated to purchase all Bonds if any such Bonds are purchased.

LEGAL MATTERS

The Purchaser will be furnished the legal opinion of the firm of Ropes & Gray, of Boston, Massachusetts. The opinion will be dated and given on and will speak only as of the date of original delivery of the Bonds to the successful bidder. A proposed form of legal opinion is included herein as Appendix B.

Other than as to matters expressly set forth herein as the opinion of Bond Counsel, Bond Counsel is not passing upon and do not assume any responsibility for the accuracy or adequacy of the statements made in this Preliminary Official Statement and make no representation that they have independently verified the same.

CITY OF REVERE
Mr. George M. Anzuoni
City Treasurer