HomeMy WebLinkAboutR-1998-037 Finance / Purchase of Limited Tax General Obligation Bonds / Street RepairsRESOLUTION NO. R-98-37
A RESOLUTION of the City Council of the City of Yakima,
Washington approving acceptance of a proposal for the purchase
of limited tax levy general obligation bonds of the City in the
principal amount of $1,430,000 and fixing the interest rates of
such bonds.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 98-07
passed and approved on February 17, 1998, authorized the sale and issuance of limited tax levy
general obligation bonds of the City in the aggregate principal amount of $1,430,000 (the
"Bonds") to provide funds to make certain capital improvements for the City; and
WHEREAS, the proposal of Seattle -Northwest Securities Corporation to purchase the
Bonds has been received in accordance with Ordinance No. 98-07, and it is in the best interest of
the City that the Bonds be sold on the terms set forth in such proposal and as provided in
Ordinance No. 98-07 and this resolution; and
WHEREAS, Ordinance No. 98-07 provides that the City shall approve the interest rates,
price, redemption provisions, and certain other terms of such Bonds, by resolution;
NOW, THEREFORE, the City of Yakima does resolve:
Section 1. Bond Terms. The principal amount of the Bonds is $1,430,000. They shall be
issued under date of April 1, 1998, with interest payable semiannually on the first days of June and
December of each year, commencing June 1, 1998.
Section 2. Redemption. The Bonds are not subject to optional redemption prior to
maturity as set forth in the proposal of Seattle -Northwest Securities Corporation to purchase the
Bonds attached hereto as Exhibit A. Exhibit A is hereby incorporated by reference as if fully set
forth herein.
Section 3. Sale of Bonds. The proposal of Seattle -Northwest Securities Corporation to
purchase the Bonds at the price and bearing the interest rates set forth in Exhibit A is hereby
accepted and approved and the Bonds shall mature in such amounts, at such times and shall bear
interest rates as set forth therein.
Section 4. Security for the Bonds. The City hereby affirms its covenants contained in
Ordinance No. 98-07 securing the Bonds and further irrevocably covenants and agrees for as long
as any of the Bonds are outstanding and unpaid that each year it will include in its budget and levy
an ad valorem tax, within and as a part of the tax millage levy permitted to cities without a vote of
the people, upon all the property within the City subject to taxation in an amount which will be
sufficient, together with other available money, to pay the principal of and interest on the Bonds
as the same shall become due; and pledges that a sufficient portion of each annual levy to be
levied and collected by the City prior to the full payment of the principal of and interest on the
Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the
principal of and interest on the Bonds. The City further irrevocably pledges its full faith, credit
and resources for the annual levy and collection of said taxes and for the prompt payment of the
principal of and interest on the Bonds as the same shall become due.
Section 5. Effective Date. This resolution shall take effect immediately.
ADOPTED at a regular meeting of the City Council of the City of Yakima this 17th day of
March, 1998.
ATTEST:
City Clerk
-2-
CITY OF YAKIMA, WASHINGTON
i
BY
John Pu cinelli, Mayor
JHRO5Z.DOC 98/03/16
CERTIFICATE
I, the undersigned, Clerk of the City of Yakima, Washington (the "City"), and keeper of
the records of the City Council (herein called the "Council"), DO HEREBY CERTIFY:
1. That the attached Resolution is a true and correct copy of Resolution No. R-98-37
of the Council (herein called the "Resolution"), duly passed at a regular meeting thereof held on
the 17th day of March, 1998.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
legal quorum was present throughout the meeting and a legally sufficient number of members of
the Council voted in the proper manner for the passage of said Resolution; that all other
requirements and proceedings incident to the proper passage of said Resolution have been duly
fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City this 17th day of March, 1998.
City Clerk
SEATTLE -NORTHWEST
SECURITIES CORPORATION
March 17, 1998
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$1,430,000 Limited Tax General Obligation Bonds, 1998
Dated: April 1, 1998
1 420 Fifth Avenue
Suite 4300
Seattle, Washington 98101
(206)628-2882
Honorable Mayor and City Council:
Seattle -Northwest Securities Corporation ("Purchaser") offers to purchase from the City of
Yakima, Washington ("Seller"), all the above-described bonds (the Bonds"), on the terms and
based upon the covenants, representations and warranties set forth below. Appendix A, which is
incorporated into this Bond Purchase Agreement (the "Agreement") by reference, contains a brief
description of the Bonds, including principal amounts, maturities, interest rates, purchase price,
and the proposed date and place of delivery and payment (the "Closing"). Other provisions of
this Agreement are as follows:
1. Prior to the Closin, Seller will approve a Preliminary Official Statement, and will pass an
ordinance authorizing the issuance of Bonds and a resolution approving the sale of the
Bonds (together, the "Bond Ordinance") with such changes as are requested by the Seller
and its counsel. The Purchaser is authorized by Seller to use these documents and the
information contained in them in connection with the public offering of the Bonds and the
Final Official Statement in connection with the sale and delivery of the Bonds.
2. Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) it has and will have at the Closing the power and authority to enter into and perform
this Agreement, to pass the Bond Ordinance and to deliver and sell the Bonds to the
Purchaser;
(b) this Agreement and the Bonds do not and will not conflict with, or constitute or create
a breach or default under, any existing law, regulation, order or agreement to which
Seller is subject;
(c) no governmental approval or authorization other than the Bond Ordinance which has
not been obtained, or will not be obtained prior to closing, is required in connection
with the sale of the Bonds to the Purchaser;
(d) the Preliminary Official Statement with corrections, if any, noted by the Seller and its
counsel, as of its date and (except as to matters corrected or added in the Final Official
Statement) as of the Closing, is accurate and complete in all material respects as of its
date to the knowledge and belief of the officers and employees of the Seller, after due
review;
(e) the Seller has previously provided the Purchaser with a copy of its Preliminary Official
Statement dated March 9, 1998. As of its date, the Preliminary Official Statement has
been "deemed final" by the Seller for purposes of Securities and Exchange Commission
("S.E.C.") Rule 15c2 -12(b)(1);
Exhibit A
Honorable Mayor and City Council
City of Yakima
March 17, 1998
Page 2
(f)
the Seller agrees to cooperate with the Purchaser to permit the Purchaser to deliver or
cause to be delivered, within seven business days after any final agreement to purchase,
offer, or sell the securities and in sufficient time to accompany any confirmation that
requests payment from any customer of the Purchaser, copies of a final Official
Statement m sufficient quantity to comply with paragraph (b)(4) of the S.E.C.
Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board ("MSRB").
The Purchaser agrees to deliver the required number of copies of the final Official
Statement to the MSRB and to all nationally recognized municipal securities
information repositories on the business day on which the final OfficialStatementis
available, and in any event no later than ten business days after the date hereof;
(g) the Seller agrees to enter into a written agreement or contract, constituting an
undertaking (the "Undertaking") to provide ongoing disclosure about the City of
Yakima, Washington, for the benefit of the owners of the Bonds on or before the
Closing as required by Section (b)(5)(i) of S.E.C. Rule 15c2-12 (the "Rule"), and in
the form as summarized by the Preliminary Official Statement, with such changes as
may be agreed to in writing by the Purchaser;
(h) if, at any time prior to the Closing, any event occurs as a result of which the
Preliminary Official Statement might include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Seller shall promptly
notify the Purchaser thereof.
3. The Purchaser shall have the right to cancel this Agreement to purchase the Bonds by
notifying the Seller of its election to do so if, after the execution of this Agreement and prior
to the Closing:
(a) a decision by a court of the United States or the United States Tax Court shall be
rendered, or a ruling or a regulation (final, temporary, or proposed) by or on behalf of
the Treasury Department of the United States, the Internal Revenue Service or other
governmental agency shall be issued and in the case of any such regulation, published in
the Federal Register, or legislation shall have been introduced in, enacted by or
favorably reported to either the House of Representatives or the Senate of the United
States, with respect to Federal taxation upon interest received on bonds of the type and
character of any of the Bonds which, in the reasonable judgment of the Purchaser,
materially adversely affects the marketability of the Bonds or their sale by the Purchaser,
at the contemplated public offering prices; or
(b) the United States shall have become engaged in hostilities which have resulted in
declaration of war or national emergency, or other national or international calamity or
other event shall have occurred or accelerated to such an extent as, in the reasonable
opinion of the Purchaser, to have a materially adverse effect on the marketability of the
Bonds; or
(c) there shall have occurred a general suspension of trading on the New York Stock
Exchange; or
(d) a general banking moratorium shall have been declared by United States, New York
State or Washington State authorities; or
(e) legislation shall hereafter be enacted, or actively considered for enactment, with an
effective date prior to the date of the delivery of the Bonds, or a decision by a court of
the United States shall hereafter be rendered, or a ruling or regulation by the S.E.C. or
other governmental agency having jurisdiction of the subject matter shall hereafter be
made, the effect of which is that
Honorable Mayor and City Council
City of Yakima
March 17, 1998
Page 3
(1)
the Bonds are not exempt from the registration, qualification or other
requirements of the Securities Act of 1933, as amended and as then in effect, or
the Securities Exchange Act of 1934, as amended and then in effect, or
(2) the Bond Ordinance is not exempt from the registration, qualification or other
requirements of the Trust Indenture Act of 1939, as amended and as then in
effect, or
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the
effect of which is that the issuance, offering or sale of the Bonds, as contemplated
herein or in the Final Official Statement, is in violation of any provision of the
Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of
1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as
amended and as then in effect, and which, in its reasonable judgment, adversely affects
the marketability of the Bonds or the market price thereof.
4. The Purchaser's obligations hereunder are also subject to the condition that at or prior to the
Closing Seller will deliver to the Purchaser all of the following:
(a) the Bonds, fully registered in book -entry form only in the name of Cede & Co., as
bond owner and nominee for The Depository Trust Company;
(b) the approving opinion of Bond Counsel dated the Closing date;
(c) written evidence of the assignment to the Bonds of a rating of A3 by Moody's Investors
Service; and
(d) a certificate setting forth the facts, estimates and circumstances in existence on the date
of Closing which establish that it is not expected that the proceeds of the Bonds will be
used in a manner that could cause the Bonds to be `arbitrage bonds" within the
meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and any
applicable regulations thereunder;
(e) a certified copy of the Bond Ordinance; and
(f) such additional certificates, instruments or opinions or other evidence as the Purchaser
may deem reasonably necessary or desirable to evidence the due authorization,
execution, authentication and delivery of the Bonds, the truth and accuracy as of the
time of the Closing of the Seller's representations and warranties, and the conformity of
the Bonds and Bond Ordinance with the terms thereof as summarized in the Official
Statement, and to cover such other matters as it reasonably requests.
5. Seller will pay the cost of preparing, printing and executing the Bonds, the fees and
disbursements of Bond Counsel, bond registration and rating fees and expenses, the cost of
printing and distributing the Preliminary and Final Official Statements, travel and lodging
expenses of Seller's employees and representatives, and other expenses of Seller.
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of
preparation and filing of blue sky and legal investment surveys where necessary, Purchaser's
travel expenses, and other expenses of Purchaser. As a convenience to Seller, Purchaser may
from time to time, as Seller's agent, make arrangements for certain items for which Seller is
responsible hereunder, such as printing of the Official Statement and travel or lodging
arrangements for Seller's representatives.
Honorable Mayor and City Council
City of Yakima
March 17, 1998
Page 4
Purchaser also may advance for Seller's account when appropriate the cost of the items for
which Seller is responsible by making payments to third -party vendors. In such cases, Seller
shall pay such costs or expenses directly, upon submission of appropriate invoices by
Purchaser, or promptly reimburse Purchaser in the event Purchaser has advanced such costs
or expenses for Seller's account. It is understood that Seller shall be primarily responsible for
payment of all such items and that Purchaser may agree to advance the cost of such items
from time to time solely as an accommodation to Seller and on the condition that it shall be
reimbursed in full by Seller.
6. This Agreement is intended to benefit only the parties hereto, and Seller's representations
and warranties shall survive any investigation made by or for the purchase, delivery and
payment for the Bonds, and the termination of this Agreement. Should the Seller fail to
satisfy any of the foregoing conditions or covenants, or if the Purchaser's obligations are
terminated for any reasons permitted under this Agreement, then neither the Purchaser nor
the Seller shall have any further obligations under this Agreement, except that any expenses
incurred shall be borne in accordance with Section 5.
7. This Agreement may be modified or amended by an instrument in writing executed by the
parties hereto.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Respectfully submitted,
Seattle -Northwest Securities Corporation
By: s' :cyT •1a
Alan K. Granberg, Vice President
Accepted March 17, 1998
City of Yakixiashingto
� JJ
crry CONTRACT l: 28.7.31
RUCtUTf _E=94.77.32._ ,_
APPENDIX A
Description of Bonds
(a) Purchase Price: $1,412,838.95 ($98.799927 per $100), plus accrued interest from the
dated date of April 1, 1998 to date of Closing.
(b) Denominations: $5,000, or integral multiples thereof.
(c) Form: Fully registered in book -entry form only in the name of Cede & Co., as bond
owner and nominee for The Depository Trust Company.
(d) Interest Payment Dates: June 1 and December 1, commencing June 1, 1998.
(e)
Maturity Schedule: Bonds shall mature serially on June 1 of each year and bear interest as
follows:
Due Interest Due Interest
June 1 Amounts RatesJune 1 Amounts Rates
1999 $ 115,000 4.00% 2004 $ 145,000 4.30%
2000 120,000 4.00 2005 150,000 4.40
2001 125,000 4.50 2006 160,000 4.40
2002 135,000 4.10 2007 165,000 4.50
2003 140,000 4.20 2008 175,000 4.50
(f) No Optional Redemption: The Bonds will not be subject to redemption prior to their
maturity.
(g) Closing Date: With definitive Bonds or a temporary Bond on or about April 2, 1998.
(h) Offer Expires: 11:00 p.m., March 17, 1998.
(i) Bond Counsel: Preston Gates & Ellis LLP.
For Information Purposes Only:
Net Interest Cost: 4.576362%.
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 1 0
For Meeting Of 4/17/98
ITEM TITLE: Resolution approving acceptance of a proposal from Seattle Northwest
Securities, for the purchase of $1.43 Million Limited Tax General Obligation Bonds for the
purpose of funding street repairs.
SUBMITTED BY: Department of Finance & Budget
CONTACT PERSON/TELEPHONE: John H son, Director of Finance & Budget 575-6070
Tim J 576-6639
SUMMARY EXPLANATION: On February 17,1998 the City Council passed ordinance 98-7
authorizing the Finance Department to issue Limited Tax General Obligation bonds at such
time in the future when our financing goals could be realized. On March 16 the Finance
Department in conjunction with the City's Underwriters, Seattle Northwest Securities, plans to
market the issue to investors and return to the Council on Tuesday March 17 with a final
purchase offer. Attached is a draft resolution and purchase offer with amounts left blank, and
an estimate of interest rates the Department anticipates as of Monday. We do not expect any
adverse market conditions to occur between now and then. However, If conditions worsen,
we will postpone the sale.
Resolution _X _Ordinance Contract X Other (Specify) Purchase offer, estimated debt
service schedule from Seattle Northwest Securities and Preliminary Official Statement.
Funding Source N/A
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Approve Resolution
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
BOND DEBT SERVICE
CITY OF YAKIMA, WA
Limited Tex General Obligation Bonds, 1948
Dated Date 4/01/1998
Delivery Date 4/02/1998
Period
Ending Principal Coupon Interest Debt Service Debt Service
Annual
Apr 2, 1998 -
Jun 1, 1998 - 10,269.17 10,269.17 -
Dec 1, 1998 - - 30,807.50 30,807.50 41,076.67
Jun 1, 1994 115,000.00 4.000% 30,807.50 145,807.50 -
Dec 1, 1999 - - 28,507.50 28,507.50 174,315.00
Jun 1, 2000 120,000.00 4.0007 28,501.50 148,507.50 -
Dec 1, 2000 - - 26,107.50 26,107.50 174,615.00
Jun 1, 2001 125,000.00 4.500% 26,107.50 151,107.50
Deo 1, 2001 - - 23,295.00 23,295.00 174,402.50
Jun 1, 2002 135,000.00 4.100% 23,295.00 158,295.00
Dec 1, 2002 - 20,527.50 20,527.50 178,822.50
Jun 1, 2003 140,000.00 4.2007 20,527.50 160,527.50
Dec 1, 2003 - - 17,587.50 17,587.50 178,115.00
Jun 1, 2004 145,000.00 4.300% 17,587.50 162,587.50
Dec 1, 2004 - 14,470.00 14,470.00 177,057.50
Jun 1, 2005 150,000.00 4.400X 14,470.00 164,470.00
Dec 1, 2005 - - 11,170.00 11,170.00 175,640.00
Jun 1, 2006 160,000.00 4.400% 11,170.00 171,170.00
Doc 1, 2006 - - 7,650.00 7,650.00 178,820.00
Jun 1, 2007 165,000.00 4.500X 7,650.00 172,650.00
Dec 1, 2007 - 3,937.50 3,937.50 176,587.50
Jun 1, 2008 175,000.00 4.500% 3,937.50 178,937.50 178,937.50
1,430,000.00 378,389.17 1,808,389.17 1,808,389.17
16 -Mar -98 11:12 am Prepared by ADD - SEATTLE-HORTHtJEST SECURITIES (Finance 3.100 YAKCITY:YAKCITY-98UTG0) Page 1
TO:
FROM:
SUBJ:
MEMORANDUM
March 17, 1998
The Honorable Mayor and Members of the
dy Council
John Hanson, Director of Finance & B
Timothy Jense j, CPA Accountant
Agenda Item #10 -- Sale of $1.430 Million LTGO Bonds
Monday, the City of Yakima and its underwriter, Seattle Northwest Securities,
Inc. conducted a public offering of $1.430 million of the City of Yakima's
LTGO Bonds, dated April 1, 1998. Attached is a completed purchase offer
from Seattle Northwest Securities and a purchase resolution for the Council's
consideration. All but one of the financing goals the City set was achieved.
The net proceeds amount to $1.395 million compared to the target of $1.4
million. This shortfall of $5,000 will be supplemented with interest earnings
before the project begins. Debt service averages $177,906 per year for 10 years.
The net interest cost is 4.58%, and the issue matures in 2008 -- 10 years. This
issue is not insured. It is our recommendation that Council accept this
purchase offer and adopt the accompanying resolution.
HDB/Daily
Tim Jensen/4
OFFICIAL STATEMENT
City of Yakima, Washington
$1,430,000*
Limited Tax General Obligation Bonds, 1998
The City of Yakima, Washington (the "City"), a municipal corporation duly organized and existing under
and by virtue of the laws of the State of Washington (the "State") furnishes this Official Statement in
connection with the offering of $1,430,000* aggregate principal amount of Limited Tax General Obligation
Bonds, 1998, dated April 1, 1998 (the "Bonds"). This Official Statement provides information concerning
the City and the Bonds.
The Bonds are issued pursuant to Titles 35 and 39 of the Revised Code of Washington ("RCW"), and
Ordinance No. 98-7 passed by the City Council (the "Council") on February 17, 1998 (the "Bond
Ordinance").
Description of the Bonds
Principal Amount, Date, Interest Rates and Maturities
The Bonds will be issued in the aggregate principal amount of $1,430,000* and will be dated and bear
interest from April 1, 1998. The Bonds will mature on the dates and in the principal amounts and will bear
interest (payable semiannually on June 1 and December 1, commencing June 1, 1998) at the rates set forth
on the cover of this Official Statement to their maturity or earlier redemption. Interest on the Bonds will be
computed on the basis of a 360 -day year consisting of twelve 30 -day months.
Form, Denomination and Registration
The Bonds will be issued in fully registered form in the denomination of $5,000, or any integral multiple
thereof within a single maturity. Individual purchases may be made in book -entry form only. Purchasers
will not receive certificates representing their interest in the Bonds purchased. The Bonds, when issued, will
be registered in the name of Cede & Co., as registered owner and nominee of The Depository Trust
Company, New York, New York ("DTC").
So long as Cede & Co. is the registered owner of the Bonds, references herein to the registered owners or
bond owners will mean Cede & Co. and will not mean the `Beneficial Owners" of the Bonds. In this
Official Statement, the term `Beneficial Owner" means the person for whom a DTC participant acquires an
interest in the Bonds.
Registrar
Principal of and interest on the Bonds will be payable by either State fiscal agent (the "Registrar" or the
"Fiscal Agent") in New York, New York, or Seattle, Washington, currently The Bank of New York and
Wells Fargo Bank, National Association. So long as Cede & Co. is the registered owner of the Bonds,
principal of and interest on the Bonds are payable by wire transfer by the Registrar to DTC, which, in turn,
is obligated to remit such principal and interest to its participants for subsequent disbursement to the
Beneficial Owners of the Bonds, as further described herein under the caption "Book -Entry Only System."
No Optional Redemption
The Bonds will not be subject to redemption prior to their maturity.
* Preliminary, subject to change
1
Open Market Purchase
The City reserves the right and option to purchase any or all of the Bonds in the open market at any time at
a price deemed reasonable by the City. All Bonds so purchased will be canceled.
Book -Entry n.,1 , System
The following information has been provided by DTC. The City makes no representation as to the accuracy or
completeness thereof Beneficial Owners should confirm the following with DTC or the Participants (as hereinafter
defined).
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered Bonds,
registered in the name of Cede & Co. (DTC's partnership nominee). One fully -registered security
certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such issue, and
will be deposited with DTC.
DTC limited -purpose ori de the \TP V�,..1 Banbin Law, a "hondring
1115✓ 1J a trust company organized under the 1 e .or Lan ing i..a , a va u ng
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 securities that its participants (the "Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need
of physical movement of securities certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc.
and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
of Bonds ds_ the must ib",made byor through Direct Participants, which will
Purchases under DTC system .,.b..
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each
Bond ("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, but Beneficial Owners
are 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 Bonds are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the Bonds, except in the event that use of the
book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name
of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Bonds are credited, which may or may not be the Beneficial Owners. The 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.
Redemption notices will be sent to Cede & Co. If less than all of the 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
Bonds to be redeemed.
2
Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. 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 the Bonds are
credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct
Participant's accounts on a payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on payable date. 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 Fiscal Agent, or the City, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the City or the Fiscal Agent, 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.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by
giving reasonable notice to the City or the Fiscal Agent. Under such circumstances, in the event that a
successor securities 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 transfers through DTC (or a successor
securities depository). In that event, Bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book -entry system has been obtained from
sources the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
Procedure in the Event of Revisions of Book -Entry Transfer System
If the City is unable to retain a qualified successor to DTC, or the City has determined that it is in the best
interest of the City not to continue the book -entry system of transfer or that interests of the Beneficial
Owners of the Bonds might be adversely affected if the book -entry system of transfer is continued, the City
will execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their nominees,
Bonds in fully registered form, in the denomination of $5,000 or any integral multiple thereof within a
maturity. Thereafter, the principal of the Bonds will be payable upon due presentment and surrender
thereof at the principal corporate trust office of the Registrar; interest on the Bonds will be payable by check
or draft mailed by the Registrar to the persons who are named as the registered owners of the Bonds on the
registration books for the Bonds (the "Bond Registrar,") at the address appearing upon the Bond Register
on the 15th day of the month preceding an interest payment date, and the Bonds will be transferable as
provided in the Bond Ordinance.
Use of Proceeds
The proceeds from the sale of the Bonds will be used to provide all or part of the funds for street
improvements to various sections of several streets and for other authorized purposes of the City. The street
improvements will include grinding and replacing worn wheel paths and poor surface areas, including some
edge grinding and resurfacing with asphalt.
Security for the Bonds
The Bonds are limited tax general obligation bonds of the City. The City, in the Bond Ordinance, has
irrevocably pledged that, unless the principal of and interest on the Bonds are paid from other sources, it
will make annual levies of taxes, within the constitutional and statutory limitations provided by law without
a vote of the electors of the City, upon all of the property in the City subject to taxation in amounts
sufficient to pay such principal and interest as the same will become due. The City has pledged its full faith,
3
credit and resources to the annual levy and collection of such taxes and for he prompt payment of such
„1 p�1 ��.1. u ",J....,�.
The City may, subject to applicable laws, apply other funds available to make payments with respect to the
Bonds and thereby reduce the amount of future tax levies for such purpose.
The Bonds do not constitute a debt or indebtedness of the State, or any political subdivision thereof other
than the City.
Debt Payment Record
The City has promptly met all debt service payments on outstanding obligations. No refunding bonds have
been issued to avoid an impending default.
Tntnre -Financings
Other than the Bonds, the City has no authorized but unissued bonds, nor does it anticipate issuing
additional long-term general obligation debt in the next 12 months. The City may draw upon its general
obligation line of credit in an amount up to $700,000 to finance certain improvements within the next 12
months.
Taxing Powers and Debt Capacity
The power of the City to contract debt of any kind is controlled and limited by State law. All debt must be
incurred in accordance with detailed budget procedures and paid for out of identifiable receipts and
revenues. The budget must be balanced for each fiscal year. It is unlawful for an officer or employee of the
City to incur liabilities in excess of budgetary appropriations.
In an emergency, the City Council may put a plan into effect and authorize indebtedness outside the current
budget. All expenditures for emergency purposes must be paid by warrants from any available money in the
fund properly chargeable with such expenditures. If mere is insufficient money on hand in the fund, the
warrants become registered interest-bearing warrants. In adopting the budget for any fiscal year, the City
Council must appropriate funds to retire any outstanding registered warrants issued since the adoption of
the last preceding budget.
General Obligation Debt Capacity and Taxing Powers
As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities,
subject to 60 percent majority vote of registered voters, is limited to 2.5 percent of assessed valuation for
general purposes, 2.5 percent for utilities and 2.5 percent for open space/park facilities. Within the 2.5
percent of assessed valuation for general purposes, the City may, without a vote of the electors, incur general
obligation indebtedness in an amount not to exceed 1.5 percent of assessed valuation. Additionally, within
the 2.5 percent of assessed valuation for general purposes, the City may also, without a vote of the electors,
enter into leases, if the total principal component of the lease payments together with the other nonvoted
general obligation indebtedness of the City, does not exceed 1.5 percent of assessed valuation. The
combination of unlimited tax and limited tax general obligation debt for general purposes, including leases,
cannot exceed 2.5 percent of assessed valuation and for all purposes cannot exceed 7.5 percent of assessed
valuation.
The City may, without a vote of the electorate, issue debt as follows:
(1) Pursuant to an ordinance specifying the amount and object of the expenditure of the proceeds, the City
Council may borrow money for corporate purposes and issue bonds within the constitutional and
statutory limitations on indebtedness.
(2) The City may execute conditional sales contracts for the purchase of real or personal property.
4
(3) The City may execute leases with or without an option to purchase.
For the purpose of maintaining a local improvement guaranty fund (the "guaranty fund"), a city or town
may provide for the levy of a sum sufficient to pay warrants issued against the guaranty fund not paid by
other revenue sources of the guaranty fund. The levy must not exceed the greater of (1) twelve percent of
the outstanding obligations guaranteed by the guaranty fund, or (2) the total amount of dehnquent
assessments and interest accumulated on the delinquent assessments. The taxes levied for the maintenance
of the guaranty fund will be in addition to, and if need be, in excess of all statutory and charter limitations
applicable to tax levies in any city or town. (RCW 35.54.060)
5
Statutory Debt Limit
1998 Assessed Valuation
$2,792,000,801
1.50% of Assessed Value
2.50% of Assessed Value
Add: Cash on hand for
Debt Redemption
Less: LT Debt Outstanding*
Less: UT Bonds Outstanding
Legal Debt Margin
Less: The Bonds
Remaining Debt Capacity
Computation of Debt Capacity
(As of December 31, 1997)
Limited Tax
General Ca aci
$ 41,880,012
0
$ 41,880,012
$ 494,932
(14,133,948)
0
$ 28,240,996
(1,430,000)
Unlimited Tax
General Capacity
Open Space and Park Utility Purposes
0 $
69,800,020
0
69,800,020
$ 0
69,800,020
69,800,020 $ 69,800,020 $ 69,800,020
$ 1,121,523
(14,133,948)
(4,820,000)
$ 51,967,595
(1,430,000)
$ 0 $ 0
(1,505,000) 0
$ 68,295,020 $ 69,800,020
0 0
$ 26,810,996 $ 50,537,595 $ 68,295,020 $ 69,800,020
*Includes lease purchase and contract agreements outstanding in the amount of $20,7.22 and the City's portion ($1,104,489) of the Yakima County (Sun Dome
Agricultural Complex) Bonds, dated February 1, 1988 and October 1, 1989, and four Lunited Tax General Obligation notes for housing rehabilitation in the
combined amount of $1,158,737.
Sources: Yakima County Assessor and the City of Yakima
Regular Property Tax Limitations
The authority of a City to levy taxes without a vote of the people for general City purposes, including the
payment of debt service on limited tax general obligation indebtedness, is subject to the limitations
described below. Information relating to regular property tax limitations is based on existing statutes and
constitutional provisions. Changes in such laws could alter the impact of other interrelated tax limitations
on the City.
Maximum Rate Limitation. RCW 84.52.043 allows a city to levy taxes of $3.375 per $1,000 of taxable
property in the city and RCW 41.16.060 allows an additional $0.225 per $1,000, for any municipal
purpose, if not required to fund pension programs. These taxes may be levied without a vote of the people.
This limitation is exclusive of a levy for the maintenance of a local improvement guaranty fund.
The Percentage Limit. The percentage limit (chapter 84.55 RCW) is a limit on the amount of regular taxes
levied by individual taxing districts. The law provides, in substance, that unless a higher levy is approved by
a majority of the voters at an election (as described below), the regular property tax levy by a taxing district
must be set so that the amount of the property taxes which will become payable in a given year will not
exceed 106 percent of the highest amount of taxes that could have been levied lawfully since 1985. Since the
percentage limit applies to the dollar amount levied rather than to levy rates, increases in property values
exceeding six percent per year result in decreased tax levy rates. RCW 84.55.050 allows a taxing district to
increase its regular tax levy by more than six percent, for a limited period or to satisfy a limited purpose,
after obtaining a majority vote of its electors. A newly created taxing district can initiate its levy at the
maximum permitted statutory levy rate, unless such amount would exceed the limitations described below.
On November 4, 1997, Senate Bill 5835 (the "Property Tax Act") was adopted by voters in a Statewide
referendum. The Property Tax Act provides that a municipality's regular property tax levy be linuted to an
amount egii 1 to the highest allowable levy since 1985 multiplied by a limit factor. The limit factor is
defined as the greater of (i) the lesser of 106 percent or 100 percent plus inflation or (ii) any percent up to
106 percent, if approved by a majority plus one vote of the governing body of the municipality upon a
finding of substantial need.
The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of the Washington Constitution,
as amended in 1973, limits aggregate regular property tax levies by the State and all taxing districts, except
port districts and public utility districts, to one percent of the true and fair value of property. RCW
84.52.050 provides the same hmitation by statute.
$5.90/$1,000 Aggregate Regular Levy Limitation. Within the one percent limitation under RCW 84.52.050
described above, RCW 84.52.043(2) imposes an aggregate limitation on regular tax levies by all taxing
districts other than the State, of $5.90/$1,000 of assessed valuation, except levies for any port or public
utility district; excess levies authorized in Article VII, section 2 of the State Constitution; and certain levies
for acquiring conservation futures, for emergency medical services or care and to finance affordable housing.
Uniformity Requirement. Article VII, Section 1 of the Washington Constitution requires that property taxes
be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district
levying such taxes. It is possible because of different overlapping taxing districts in different areas of the
City that the maximum permissible levy might vary within the City. In that event, to comply with the
constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of the City
would be applied to the entire City.
Prioritization of Levies. RCW 84.52.010 provides that if aggregate levies certified by all taxing districts
exceed the aggregate levy limitations described above, levies certified by junior taxing districts are reduced or
eliminated in order to bring the aggregate levy into compliance with statutory maximum prescribed by
RCW 84.52.050 and 84.52.043. RCW 84.52.043 defines "junior taxing districts" as all taxing districts
other than the state, counties, road districts, cities, towns, port districts, and public utility districts.
Authorization of Excess Levies. RCW 84.52.052 authorizes the levying of taxes in excess of the $5.90/$1,000
and one percent limits imposed by RCW 84.52.043 and 84.52.050, respectively, by any taxing district
7
districts, when larger levy isorder to prevent the impairment ofthe obligation
except school ULS LLIL W, �.. .. a larger necessary in — -- Y vi -- -obligation
contracts Any curb taxing district may also levy taxes in excess of the rates specified by statute when
authorized to do so by the voters of such taxing district. Excess levies by school districts for unlimited tax
general obligation bonds, maintenance and operation support and capital projects are authorized by RCW
84.52.053.
Assessed Valuation Determination
The County Assessor, or equivalent thereof, ("Assessor") determines the value of all real and personal
property throughout the county which is subject to ad valorem taxation, except certain utility properties
which are valued by the State Department of Revenue. The Assessor is an elected official whose duties and
methods of determining value are prescribed and controlled by statute and by detailed regulations
promulgated by the State Department of Revenue. For tax purposes the assessed value of property is 100
percent of its market value. Three approaches may be used to determine real property value: market data,
replacement cost and income generating capacity: In Yakima County, all property is subject to revaluation
every year based on market value, and receives an on-site appraisal every six years. The property is listed by
the Assessor on a roll at its current assessed value and the roll is filed in the Assessor's office. The Assessor's
determinations are subject to revisions by the County Board of Equalization and, for certain property,
subject to further revisions by the State Board of Equalization.
The Property Tax Act includes provisions with respect to the valuation of property. The assessed value of a
property will be defined as the lower of the current appraised value (the true and fair value of the property
as last determined by the Assessor) and a limited value. The Property Tax Act defines limited value as the
greater of (i) the sum of the improvement increase (an increase in property value due to physical
improvements in the property) plus 115 percent of the previous assessed value, and (ii) the sum of the
previous assessed value plus any increase in improvement value and 25 percent of the market -related
increase.
On January 30, 1998, ten Assessors filed a lawsuit directly in the State Supreme Court challenging the
property tax valiation provisions of the Property TaxActon the grounds that those provisions v violate die
uniformity -of -taxation requirements of Article VII, Section 1 of the State Constitution. Regardless of its
outcome that lawsuit would affect the allocation of property taxes among taxpayers, but not the total
amount of property taxes the City collects.
Tax Collection Procedure
Property taxes are levied in specific amounts and the rate for all taxes levied for all taxing districts in Yakima
County (including the City) are determined, calculated and fixed by the Assessor based upon the assessed
valuation of the property within the various taxing districts. The Assessor extends the taxes to be levied
within each taxing district upon a tax roll which contains the total amount of taxes to be so levied and
collected. The tax roll is delivered to the County Treasurer (the "Treasurer") (an elected official) by
January 15 of each year, who creates a tax account for each taxpayer and is responsible for the collection of
taxes due to each account. All such taxes are due and payable on the thirtieth of April of each year, but if the
amount due from a taxpayer exceeds 50 dollars, one-half may be paid then and the balance no later than
October 31, of each year. The method of giving notice of payment of taxes due, the accounting for the
money collected, the division of the taxes among the various taxing districts, notices of delinquency, and
collection procedures are all covered by detailed statutes. The lien for property taxes is prior to all other
liens or encumbrances of any kind on real or personal property subject to taxation. By law the Treasurer
may not commence foreclosure of a tax lien on real property until three years have passed since the first
delinquency. The State courts have not decided whether or not the homestead law (chapter 6.13 RCM-)
gives the occupying homeowner a right to retain the first $30,000 proceeds of forced sale of a family
residence for delinquent general property taxes. See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982),
holding the homestead right superior to liens for local improvement district assessments.
8
Collection
Year
1998
1997
1996
1995
1994
1993
Tax Collection Record
Assessed
Valuation
$2,792,000,801
2,591,498,001
2,390,575,503
2,059,141,834
1,940,782,112
1,665,659,331
Ad Valorem
Tax Levy
$10,476,934
9,461,635
8,606,733
7,931,995
7,441,744
6,926,413
Tax Collection
Year As of
Of Levy 12/31/97
NA NA
96.1%
96.8
97.9
97.4
97.1
NO 1't;: Taxes are due and payable on April 30 of each year succeeding the levy. The entire tax o
paid on or before April 30, or else the total amount becomes delinquent on May 1. The
tax is payable on or before October 31, becoming delinquent November 1.
Source: Yakima County Assessor and Treasurer
96.1%
97.4
98.9
99.6
99.9
r first half must be
second half of the
Collection
Year
1998
1997
1996
1995
1994
1993*
General
$3.2869
3.2266
3.1872
3.4004
3.3552
3.6000
Ad Valorem Tax Levies
Levy Rates
Bond
$0.4814
0.4410
0.4293
0.4659
0.4936
0.5683
*Includes refund levy.
Source: Yakima County Assessor and Treasurer
Total
$3.7683
3.6676
3.6165
3.8663
3.8488
4.1683
General
$9,176,934
8,361,635
7,619,242
7,001,906
6,500,067
5,996,373
Levy Amounts
Bond
$1,300,000
1,100,000
987,491
930,089
941,677
930,040
Total
$10,476,934
9,461,635
8,606,733
7,931,995
7,441,744
6,926,413
Representative Levy Rates for Collection Year 1998
(Per $1,000 of Assessed Valuation)
State Schools
Yakima County (Total County)
The City
School District No. 7
County Library
County Emergency Services
Total
Source: Yakima County Assessor
9
$ 3.514020
1.737247
3.768302
5.530684
0.472304
0.250000
$ 15.272557
Overlapping Taxing Districts
The overlapping taxing districts within the City have the statutory power to levy regular property taxes at
the following rates subject to the limitations provided by chapter 84.55 RCW.
C 111nry (Total Cry! 1nty)
County (Unincorporated)
Library District
Fire Districts
Port Districts
State Schools
Hospital Districts
$1.800 per S1,000 of Assessed Value
$2.250 per $1,000 of Assessed Value
$0.500 per $1,000 of Assessed Value
$L500 per $1,000 of Assessed Value
$0.450 per $1,000 of Assessed Value
$3.600 per $1,000 of Assessed Value
$0.750 per $1,000 of Assessed Value
(1)
(1) Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per 51,000 to a rate not to exceed
$2.475 per $1,000 for general county purposes if (i) the total levies for both the county and any road district
within the county do not exceed $4.05 per $1,000 and (ii) no other taxing district has its levy reduced as a result of
the increased county levy.
(2) RCW 41 16.060. To be used for pension funding purposes, if required, otherwise this tax may be levied and used
for any other municipal purpose.
The $3.60 per $1,000 of assessed value statutory rate is adjusted for each county by a property tax ratio which is
the ratio of total assessed value for real and personal property to market or actual value.
(3)
Authorized investments
Chapter 35.39 RCW limits the investment by cities or towns of its inactive funds or other funds in excess of
current needs to the following authorized investments: U.S. Bonds, U.S. certificates of indebtedness, State
bonds or warrants, general obligation or utility revenue bonds of any city or town in the State, its own
bonds or warrants of a local improvement district which are within the protection of the local improvement
guaranty fund law, and any other investment authorized by law for any other taxing district. Under chapter
39,59, a city or town may also invest in the general obligation bonds of any other state or local government
which have one of the three highest credit ratings and any investments authorized for the State Treasurer.
Under chapter 43.84 RCW, the State Treasurer may invest in obligations of the U.S. Government, its
agencies and wholly owned corporations, in State, county, municipal or school district general obligation
bonds within the statutory limitation of indebtedness, in motor vehicle fund warrants, in the obligations of
the federal home loan bank, fe deras national mortgage association and other government corporations, in
bankers' acceptances, in negotiable certificates of deposit of any national or state commercial or mutual
savings bank or savings and loan association, and in commercial paper.
Moneys available for investment may be invested on an individual fund basis or may, unless otherwise
restricted by law, be commingled within one common investment portfolio. All income derived from such
investment may be either apportioned to and used by the various participating funds or for the benefit of the
general government in accordance with city ordinances or resolutions.
Authorized Investments,for Bond Proceeds. Funds derived from the sale of bonds or other instruments of
indebtedness will be invested or used in such manner as the initiating ordinances, resolutions or bond
covenants may lawfully prescribe. In addition to the eligible investments discussed above, bond proceeds
may also be invested in mutual funds with portfolios consisting of U.S. Treasury and federally guarantied
agency securities with average maturities of less than four years, municipal securities rated in one of the four
highest categories, and money market funds consisting of the same, so long as municipal securities held in
the fund(s) are in one of the two highest rating categories. Bond proceeds may also be invested in shares of
money market funds with portfolios of securities otherwise authorized by law for investment by local
governments.
Local Government Investment Pool
The State Treasurer's Office administers the Washington State Local Government Investment Pool (the
"LGIP"), a $2.2 billion dollar fund that invests money on behalf of more than 350 cities, counties and
10
special taxing districts. In its management of LGIP, the State Treasurer is required to adhere, at all times,
to the principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the
safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (Hi) to attain the
highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient
liquidity to meet all cash flow demands.
The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the
opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer
participants increased safety of principal and the ability to achieve a higher investment yield than would
otherwise be available to them. The pool is restricted to investments with maturities of 395 days or less,
and the average life typically is less than 90 days. Investments permitted under the pool's guidelines include
U.S. government and agency securities, bankers' acceptances, high quality commercial paper, repurchase and
reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified
Washington State depositories.
General Obligation Bonds
(As of December 31, 1997)
Amount Date Final Amount
Type Issued Issued Maturity Outstanding
LTGO $ 400,000 12/1/85 7/1/02 $ 190,000
LTGO Housing Notes 165,160 12/15/89 12/31/09 158,737
LTGO Housing 400,000 10/28/91 9/1/01 400,000
LTGO Housing 400,000 4/1/92 4/20/02 400,000
LTGO Housing 200,000 4/1/93 4/1/03 200,000
LTGO 6,800,000 2/1/94 12/1/13 5,945,000
UTGO & Refunding 7,300,000 10/1/95 12/1/14 6,325,000
LTGO Convention Center 6,000,000 1/1/96 11/1/19 5,715,000
LTGO 1,430,000 3/1/98 6/1/08 1,430,000
11
Summary of General Obligation Debt Service Requirements
(Years ending December 31)
Limited Tax
Outstanding Sundlome Outstanding The Bonds* Total Debt
Years UCGO Bonds Bonds Bonds Principal Interest Total Service
1998 $ 1,247,339 $ 149,347 $ 1,150,271 $ 0 $ 54,16:3 $ 54,163 $ 1,407,943
1999 1,255,484 149,907 1,150,671 115,000 62,609 177,609 1,655, 796
2000 730,571 150,221 1,149,511 120,000 57,643 177,643 1,655,017
2001 847,684 150,282 1,540,511 125,000 52,313 177,313 2,045,4 18
2002 816,459 150,084 1,489,757 135,000 46,559 181,559 2,002,959
2003 344,946 149,621 1,221,610 140,000 40,405 180,405 1,732,041
2004 313,446 151,934 1,013,397 145,000 33,956 178,956 1,523,243
2005 308,096 150,697 1,017,658 150,000 27,208 177,208 1,522,770
2006 309,309 149,173 1,015,132 160,000 19,998 179,998 1,524,300
i; 2007 309,754 150,404 1,015,827 165,000 12,319 177,319 1,520,869
2008 309,504 75,000 1,014,423 175,000 4,200 179,200 1,447,823
2009 283,539 75,000 1,012,722 0 0 0 1,087,722
2010 313,139 0 991,676 0 0 0 991,676
2011 310,419 0 994,989 0 0 0 994,989
2012 311,919 0 996,014 0 0 0 996,014
2013 312,344 0 994,674 0 0 0 994,674
2014 311,594 0 446,254 0 0 0 446,254
2015 0 0 449,094 0 0 0 449,094
2016 0 0 445,894 0 0 0 445,894
2017 0 0 446,275 0 0 0 446,275
2018 0 0 445,581 0 0 0 445,581
2019 0 0 _ 368,813 0 0 0 368,813
Totals $ 8,635,544 $ 1,651,670 $ 20,370,753 $ 1,430,000 $ 411,370 $ 1,841,370 $ 25,705,163
* Preliminary, subject to change; assumed rates range from 4.1596 to 4.80%.
City of Yakima
Financial Information
(As of December 31, 1997)
Total 1998 Assessed Valuation:
Estimated 1997 Population:
$2,792,000,801
63,510
Net Direct and Overlapping Debt
Direct Debt
Unlimited Tax General Obligation Bonds $ 6,325,000
Limited Tax General Obligation Debt, including the Bonds (1) 15,563,948
Less: Cash and Investments in General Obligation Debt Service Funds (1,121,523)
Net Direct Debt $ 20,767,425
Estimated Overlapping Debt
Yakima County (2) $ 4,203,335
School Districts 55,795,419
59,998,754
Total Net Direct and Overlapping Debt $ 80,766,179
(1) Includes lease purchase and contract agreements outstanding in the amount of $20,722 and the City's portion
($1,104,489) of the Yakima County (Sun Dome Agricultural Complex) Bonds dated February 1, 1988 and
October 1, 1989, and four Limited Tax General Obligation notes for housing rehabilitation totaling $1,158,737.
(2) Excludes the City's portion of the Sun Dome Agricultural Complex bonds dated February 1, 1988 and October 1,
1989.
Bonded Debt Ratios
Net Direct Debt to Assessed Valuation 0.74%
Net Direct and Overlapping Debt to Assessed Valuation 2.89%
Per Capita Assessed Valuation $ 43,962
Per Capita Net Direct Debt $ 327
Per Capita Net Direct and Overlapping Debt $ 1,272
13
Comparative Statement of General Fund Revenues,
Expenditures and Changes in Fund Balance
(Years ended December 31)
Audited
1997* 1996 1995 1994 1993 1992
Beginning Fund Balance $ 3,710,671 $ 3,574,468 $ 3,361,034 $ 2,706,597 $ 2,652,468 $ 2,940,149
Revenues
Taxes and Special Assessments 21,846,920 19,867,396 18,632,170 17,745,920 17,502,676 1(,356,589
Licenses and Permits 588,017 494,314 533,245 481,031 440,771 435,658
Intergovernmental 2,475,080 2,568,414 2,594,756 2,344,758 1,258,110 1,388,117
Charges for Services 2,992,555 2,558,230 2,560,898 2,495,905 2,564,415 2,369,394
Fines and Forfeitures 1,216,959 1,128,705 1,037,679 998,399 852,501 850,138
Interest 902,398 795,866 869,779 603,128 512,377 682,174
Other 225,275 58510 37,455 92,838 53,076 41,095
Total Revenues $ 30,247,204 27,471,435 26,265,982 24,761,979 23,183,926 22,123,165
Total Resources 33,957,875 31,045,903 29,627,016 27,468,576 25,836,394 25,063,314
Expenditures
General Government 7,330,891 6,626,926 5,955,517 5,832,097 5,691,482 5,405,272
Security of Persons and Property 16,691,443 16,573,662 15,658,141 14,482,140 13,935,347 13,711,340
Physical Environment 1,174,638 1.,071,430 1,113,052 1,038,705 996,532 952,997
Economic Environment 567,466 558,772 577,469 501,294 474,635 513,925
Mental and Physical Health 25,112 25,101 337,755 245,217 243,436 237,274
Culture and Recreation 1,133,479 1,031,723 973,201 891,165 813,275 782,352
Capital Outlay 290,303 241,044 525,268 163,676 117,955 612,371
Debt Service 426,108 393,289 371,830 378,005 379,687 386,982
Total Expenditures 27,639,440 26,521,947 25,512,233 23,532,299 22,652,349 22,602,513
Net Adjustments/Transfers (1,622,573) (813 285) (540,315) (575,243) (477,448) 191,667
Ending Fund Balance $ 4,695,862 $ 3 710671 $ 3,574,468 $ 3,361,034 $ 2,706,597 $ 2,652,468
*Preliminary
Source: CityofYakimu
1998 General Fund Budget
(As Adopted)
Beginning Fund Balance $ 4,695,861
Revenues
Taxes and Special Assessments 22,597,823
Licenses and Permits 432,850
Intergovernmental 2,353,971
Charges for Services 3,157,830
Fines and Forfeitures 1,084,500
Interest 717,000
Other 135,850
Total Revenues 30,479,824
Total Resources 35,175,685
Expenditures
General Government 8,287,519
Security of Persons and Property 18,417,397
Physicial Environment 1,268,992
Economic Environment 593,779
Mental and Physical Health 24,849
Culture and Recreation 1,150,526
Capital Outlay 280,595
Debt Service 208,592
Total Expenditures 30,232,249
Transfers and Other 1,814,904
Total Expenditures and Other 32,047,153
Ending Fund Balance $ 3,128,532
Source: City of Yakima
15
The eity
The City of Yakima was incorporated in 1886. It is the seventh largest city in the State, and encompasses
approximately 17 square miles. The City provides the full range of municipal services contemplated by
charter or statute. These include public safety (police, fire, building), public improvements (streets, traffic
signals, storm sewer), sanitation (solid waste disposal, sanitary sewer uunty), water utility, coiiununity
development, parks and recreation, and general administrative services.
The City operates under a council/manager form of government with a full-time city manager. The City
Council consists of seven council members. Four members are elected from individual districts and three
are elected at large. The mayor is chosen by the council from within its own membership every two years.
Elected Officials
City Council
John Puccinelh, Mayor
Clarence C. Barnett
Henry C. Beauchamp
Lynn K. Buchanan
John IZlingele
Mary Place
Bernard J. Sims
Term Expires
December 1999
December 1999
December 2001
December 1999
December 1999
December 2001
December 2001
Accounting Policies
Accounting records for the City are maintained in accordance with methods prescribed by the State Auditor
under the authority of Washington State law. The City financially reports on the calendar year basis and
employs a double -entry modified accrual system for all fund categories with the exception of proprietary,
nonexpendable and pension trust funds which require full accrual reporting. The modified accrual basis
differs from the accrual basis in the following ways: (i) purchases of capital assets are considered
expenditures; (n) redemption of long-term debt is considered an expenditure when due; (iii) revenues are
recognized only when they become both measurable and available to finance expenA.itires of the current
period, revenues that are measurable but not available are recorded as receivable and offset by deferred
revenues; (iv) inventories and prepaid items are reported as expenditures when purchased; (v) interest on
long-term debt is not accrued but is recorded as an expenditure when due; and (vi) accumulated unpaid
vacation and sick pay are considered expenditures when paid.
Fund Accounting. The accounts of the City are organized on the basis of funds and account groups; each of
which is considered a separate accounting entity. The City uses governmental, proprietary and fiduciary
funds. Each governmental fund and expendable trust or agency fund is accounted for with a separate set of
self -balancing accounts that comprise its assets, liabilities, fund balances, revenues and expenditures.
Proprietary and similar trust funds use the revenue, expense and equity accounts of similar businesses in the
private sector. The City's resources are allocated to and accounted for in individual funds depending on
what they are to be spent for and how they are controlled.
Governmental Funds. All governmental funds are accounted for on a spending or "financial flow"
measurement focus. This means that only current assets and current liabilities are generally included on
their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available
expendable resources." Governmental fund operating statements focus on measuring changes in financial
position, rather than net income; they present increases (revenues and other financing sources) and
decreases (expenditures and other financing uses) in net current assets.
Budgetary Process
The City Council annually approves the City's operating budget. The operating budget is designed to
allocate annually available resources among the City's services and programs and to provide for associated
financing decisions.
16
Annual appropriated budgets are adopted on the modified accrual basis of accounting. For governmental
funds, there are no differences between budgetary basis and generally accepted accounting principles.
Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include
budgetary comparisons for the General Fund and Special Revenue Funds only. Budgets for debt service and
capital projects are adopted at the level of the individual debt issue or project and for fiscal periods that
correspond to the lines of debt issues or projects. Annual appropriated budgets are adopted at the fund
level. Subsidiary revenue and expenditure ledgers are used to compare the budgeted amounts with actual
revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures
for individual functions and activities by object class. Appropriations for general and special revenue funds
lapse at year-end.
The City Manager is authorized to transfer budgeted appropriations between departments within any fund;
however, any revisions that alter the total expenditures of a fund, or that affect the number of permanently
authorized employee positions, salary ranges, or other conditions of employment must be approved by the
City Council.
Cash and Investments
Cash and investments are managed under the guidance of the City's Investment Policy adopted by a
resolution of the City Council. The policy was based on the Model Investment Policy prepared by the
Municipal Treasurers' Association of the United States and Canada and applies to all financial assets of the
City.
Investments are made using the "prudent person" standard with primary objectives being safety of principal,
liquidity enabling the City to meet all operating requirements and a return on investment objective of
attaining a market rate of return through budgetary and economic cycles. City policies require the City to
minimize counterparty risks by safekeeping all purchased securities and conducting all trades on a delivery
versus payment basis. A report on the performance of the Treasury Division is prepared quarterly for
review by the City Council and City Manager.
Investments of City funds except those of the Firemen's Relief and Pension Fund are limited to:
(i) investment deposits, including certificates of deposit with qualified public depositories as defined in
chapter 39.58 RCW; (ii) certificates, notes or bonds of the United States, or other obligations of the United
States, or its agencies, or of any corporation wholly owned by the government of the United States; (iii)
obligations of government-sponsored corporations which are eligible as collateral for advances to member
banks as determined by the Board of Governors of the Federal Reserve System; (iv) banker's acceptances
sold on the secondary market; and (v) the LGIP.
The market value of investments held in the combined portfolios under the control of the Department of
Finance and Budget as of December 31, 1997 was $35.4 million versus an amortized cost of $35.5 million.
Of that amount, 38.6 percent was in agency securities, 28.5 percent was in the LGIP, 21.2 percent was
invested in U.S. Treasuries, and 11.7 percent was invested in municipal securities. At December 31, 1997,
the City was holding $205,000 in floating-rate and/or mortgage-backed securities. These holdings represent
only minimal market rate risk and are not expected to adversely effect the liquidity or performance of the
portfolio as a whole. The City is not involved in any other floating-rate, derivative, or swap transactions
which have not been disclosed as of December 31, 1997. Earnings on these investments during 1997
totaled $2.4 million. The market value of the Deferred Compensation Plan investments administered by
ICMA was $11.4 million at the end of 1997.
Auditing of City Finances
The State Auditor is required to examine the affairs of cities with a population of greater than 10,000
annually. The examination must include, among other things, the financial condition and resources of the
City, whether the laws and constitution of the State are being complied with, and the methods and accuracy
of the accounts and reports of the City. Reports of the auditor's examinations are required to be filed in the
office of the State Auditor and in the auditing department of the City.
17
.1
n• -1..11f
'�YVilixYfig�.i3lGixt
The City maintains Reserve Funds to provide for self-insurance coverage in the areas of Unemployment
Compensation, Medical/Dental coverage, and Workers' Compensation. In addition, the City maintains a
Risk Management Fund to provide for property, liability, and other coverages.
Unemployment Compensation. In 1978, the City established an Unemployment Compensation Reserve
Fund to provide unemployment compensation coverage for its employees, and thereby elected to participate
with the State in a cost -reimbursement instead of monthly premium program. In doing so, the City
retained its right to appeal awards and determinations made by the State Department of Employment
Security.
Self-insured Medical/Dental Program. The City, in August 1979, self-insured its medical and dental
programs for all employees other than temporary employees, employees hired to work less than half-time.
The City's Personnel Office administers the self-insured program and claims payment services are provided
by Direct Administrators, a division of Beard, Bench and Mendenhall, Inc., a Yakima -based firm. Each
operating fund is charged an accrual amount per covered employee which would otherwise have been paid
to an insurance carrier. Interfund premiums to the Employee Health Benefit Reserve Fund for 1997 were
$3,346,778. Incurred but not reported claims of $55,595 were accrued as a liability in 1996. The City
expects 1997 claims to be less than 1996 claims.
In order to avoid catastrophic losses, the City "reinsures" the program by purchasing insurance known as
"stop -loss insurance." Two types of "stop -loss" insurance are purchased: (i) individual stop -loss, and
(ii) aggregate stop -loss, with both provided through Safeco Insurance Company. Under the individual stop-
loss insurance, the City pays the first $115,000 of claims for an individual employee or dependent. Any
charges accrued by an individual in excess of $115,000 in a calendar year are thereafter reimbursed by
Safeco. The aggregate stop -loss is designed to protect the City from multiple large claims which may not
reach the individual stop -loss attachment point of $115,000. The aggregate stop -loss attachment point is
calculated by determining the projected amount of claims for the year and adding an additional 25 percent
of that amount (125 percent of projected claims).
Workers' Compensation Program. The City self-insured its workers' compensation program for all employees
except those covered by the LEOFF I Retirement System in July 1984. This workers' compensation
program provides coverage identical to the state administered workers' compensation program; however,
the City pays only the direct injury -related costs and certain administrative fees. The program is
adirunistered by the City's Personnel Office with claims administration and safety services provided by Scott
Wetzel Services, Inc.
Each operating fund is charged an appropriate accrual amount, per employee, based on rate requirements
prescribed by the State. Each year the Reserve Fundi is reviewed to determine a contribution rate which
provides for an appropriate reserve. Interfund premiums to the Workers' Compensation Fund for 1997
were $514,232. Based on the claims manager's estimate, the City has accrued incurred but not reported
claims of $43,148 at December 31, 1996 and does not expect that number to be higher in 1997.
In order to avoid catastrophic losses, the City "reinsures" the program bay purchasing insurance known as
"stop -loss insurance." This insurance is provided through Sedgwick James of Washington under a policy
purchased from Employers Reassurance. Under the individual stop -loss portion of the insurance, the City is
liable for the first $350,000 of claims resulting from a specific accident. Charges beyond that $350,000 are
covered by the stop -loss insurance.
Risk.Management Program. The Risk Management Reserve Fund was established in 1986 when the City
elected to self -insure the liability exposure portion of its insurance program. Resources accrue to the fund
through interfund premiums to Operating Funds for appropriate insurance coverage and the replenishment
and building of reserves for potential liability claims. City contributions to the Risk Management Reserve
Fund for 1997 were $507,330. The Fund provides for administration, legal services, claims adjustment, and
for the purchase of property and other insurance coverages. Based on the claims manager's estimate, the
18
City has incurred but not reported claims of $241,219 at December 31, 1996. The City does not expect this
number to be higher in 1997.
Labor Relations
The City employs 841 people including part-time employees.
represented by bargaining units as follows:
Bargaining Unit
AFSCME Municipal
YPPA
Fire Suppression
AFSCME Transit
Fire Communications
Fire PERS
Number
of Employees
333
108
67
42
13
4
A majority of the City's employees are
Contract Expiration Date
December 31, 1998
December 31, 2000
December 31, 1998
December 31, 1997
December 31, 1998
December 31, 1998
Those contracts which expired on December 31, 1997 are currently under negotiation. The City has a good
relationship with its bargaining units and has no history of labor disputes or strikes.
Pension System
Substantially all full-time and qualifying part-time employees participate in one of the following statewide
local government retirement systems administered by the Department of Retirement Systems, under cost-
sharing, multiple -employer public employee retirement systems. Actuarial information is on a system -wide
basis and is not considered pertinent to the City's financial statements. Contributions to the systems by
both employee and employer are based upon gross wages covered by plan benefits.
Both LEOFF and PERS include two plans. Participants who joined the system by September 30, 1977 are
Plan I members. Those who joined thereafter are enrolled in Plan II. Retirement benefits are financed from
both employee and employer contributions and investment earnings. Retirement benefits under both plans
are vested after completion of five years of ehgible service.
PERS. The City's contribution, 7.42 percent of covered payroll, for the year ending December 31, 1996,
of $1,157,505 represents its full liability under the system, except that future rate may be adjusted to meet
the system need.
LEOFF. The City's contribution, 6.00 percent (LEOFF I) and 5.06 percent (LEOFF II) of covered
payroll, for the year ending December 31, 1996, of $486,440 represents its full liability under the system,
except that future rates may be adjusted to meet the system needs.
Unfunded Pension Liabilities. The City maintains two single employer defined benefit pension plans,
Firemen's Pension and Police Pension, which are closed systems covering Firemen and Police Officers hired
prior to March 1, 1970. Both plans had their first annual actuarial valuation as of March 31, 1989, and the
required contributions identified in that valuation have been the basis for recording the unfunded pension
liability since 1989.
The Police Pension is a department in the General Fund, and is operating on a pay-as-you-go basis. The
unfunded pension liability will be adjusted annually by comparing actual expenditures for pension benefits to
the actuarially determined contribution. The City intends to maintain this plan on a pay-as-you-go basis.
The Firemen's Pension is a trust fund, and has as its funding sources a portion of local property taxes, a state
tax on fire insurance premiums and interest income. This fund had an unfunded pension liability of
$12,886,000 at December 31, 1996.
19
LJ 4.1iikJ,,L Oita Ili- .L11L Ji YiiQi.Y.JL
The City hes in central Washington State in Yakima County (the "County") about 142 miles southwest of
Seattle and 188 miles northeast of Portland, Oregon. Yakima County ranks second in the State in terms of
square miles and seventh in terms of population. The City is the County seat and the largest incorporated
community in the County.
Population
Yakima City of
Year County Yakima
1997 208,700 63,510
1996 207,600 62,670
1995 204,100 60,850
1994 202,100 59,740
1993 197,000 59,580
nnn- 100 012 CSI 042
177V 100,023 JT,V�CJ
*Source: U.S. Census
Source: Washington State Office ofFinanczalManagement
Yakima County
The City lies within the fertile Yakima River Valley, which is known as the "Fruit Bowl of the Nation" due
to its large fruit harvest. Irrigation in the valley is made possible from water from the U.S. Bureau of
Reclamation's Yakima Project. Apples, cherries, peaches, pears, grapes, and other fruits plus a wide variety
of vegetables, seeds, field crops and cereal grains make the Yakima Valley one of the top agricultural
producing areas of the nation. The County also ranked number one in the State for cattle and calf
inventory, with 237,000 in 1996.
The top five agricultural products for 1996 in Yakima County are shown below.
Top Five Agricultural Products
Yakima County, 1996
Crop Total Value
Apples $291,175,012
Cattle 184,000,000
Dairy 82,559,000
Hops 78,775,210
Grapes 41,708,486
Source: Yakima County Development Association
Tree Top is a farmer -owned cooperative engaged in the processing of apple juice, apple cider, fruit juice
blends, and dehydration of apples. Employing 800 full-time equivalent employees throughout the County
during the ten-month processing season, Tree Top is the nation's largest producer of apple juice. The
company's primary facilities are in Selah. Graham Company, a manufacturer of plastic bottles, opened a
plant in Selah in 1996 and employs approximately 30 people. The company's primary customer is Tree
Top.
Del Monte has facilities in Yakima and a fruit processing plant in Toppenish in the lower Yakima Valley.
The company employs 438 full-time employees in the County. Del Monte recently added 15,000 square
feet to its Toppenish plant and has begun processing corn, squash, asparagus and other vegetables at that
facility. The company, in a partnership with Silgan, a manufacturer of canned food containers, completed a
new 274,000 square -foot $6 million dry goods warehouse with associated railroad and truck loading
facilities at its Toppenish site in 1996. Silgan purchased a can factory from Del Monte in 1993, and has
recently added two production lines at a cost of $6.5 million, which doubled its production and expanded its
operation to 125 employees.
20
John I. Haas primarily grows hops, as well as asparagus and concord grapes in the Yakima Valley. The
company is the largest hops grower in the world, and Yakima County is the largest hops growing area in the
world. The company's two hops extract plants (including a new, state-of-the-art CO2 extract facility) in
Yakima together employ about 70 people. The company has facilities throughout the world, and has been
in business for over 30 years. The Haas harvest and process facility in nearby Toppenish employs between
15 and 230 people, depending on the season. Haas Fruit is a subsidiary of the company, and has several
orchards located in the Yakima area.
Snokist Growers processes and packs apples and other soft fruits within Yakima. The company recently
completed an $8 million expansion of its cannery facilities and equipment to facilitate an increase in
production to a projected 120,000 tons annually. The company expanded to 1,735 full-time employees.
Other large fruit processors and packers in the Yakima area include Zirlde Fruit, which employs 475 full-
time and 1,000 seasonal employees, and Evans Fruit, which employs 300 year-round full-time employees.
In early 1996 Pace International relocated its processing plant into the former Seneca Foods Corporation
warehouse in Wapato. Pace manufactures post-harvest treatment products, such as apple wax, hand cleaners
and other chemical products. The Company purchased the factory for $1.09 million and currently employs
approximately 45 people.
Macro Plastics, the leading manufacturer of plastic bins for fruits and vegetables in the North American
agribusiness industry, opened a $3 million, 30,000 square foot manufacturing facility in Union Gap in early
1997. The company currently employs approximately 25 people and is considering expansion of its
production line.
R & R Beverage, beer and wine distributors, has nearly completed a new 125,000 square foot warehouse.
A & D Plastics has recently begun construction on a new facility.
Two of Yakima's largest nonfood products manufacturing employers are Boise Cascade and Shields Bag and
Printing. Boise Cascade operates two sawmills, a plywood mill, and a planing and finishing facility,
providing employment to about 406 people. The company has been in Yakima since 1903. The company
has a diverse timber resource base, including its own lands, other privately owned lands, the Wenatchee
National Forest and the Yakima Indian Reservation. In spring 1997, the company temporarily laid off
approximately 180 employees at its Yakima plywood plant due to a depleted log supply. Its timber supply
was replenished and workers returned to work after a four week layoff. Shields Bag and Printing
manufactures polyethylene bags and also does conventional printing, employing 478 full-time equivalent
employees.
Another timber -related concern is the Longview Fibre Company, a manufacturer of paperboard. The
company has been located in the Yakima area for over twenty years and employs 140 employees. Longview
Fibre recently completed a $15 million expansion project. The project included a 52,500 square -foot
expansion of its warehouse for manufacturing use, a new shipping and receiving facility, and the addition of
a corrugation and finishing machine.
Western Recreational Vehicles is a manufacturer of trailer and recreational vehicles in Yakima which
supplies dealers in 14 states. The company has about 400 FTE employees. Several years ago the firm
expanded its operation to include a new $2.5 million, 120,000 square -foot building, which has doubled the
firm's space. This company is currently developing a new production line.
Another large manufacturing company in the Yakima area is Dowty Aerospace, which produces aircraft
hydraulic equipment and mechanical assemblies. The company was recently contracted to supply the
hydraulic system for the military's new training aircraft. As the new program progresses, additional
machinists will be hired. Dowty is the primary manufacturer of hydraulic equipment for the aerospace
industry and currently employs 230 people.
21
The Yakima area's largest nonmanufacturing employers are the Yakima School District with 1,500 FTE
employees; Providence YAk__4 Medical Center, formerly St. Elizabeth 1H1ospitQ1, with 857 employees;
Yakima County with 947 employees; the City of Yakima with 687 employees; and Yakima Valley Memorial
Hospital with 900 employees. The Yakima Valley Memorial Hospital recently completed the expansion of
its emergency room and energy plant, adding 7,000 square feet at a cost of $3 million, as well as a 43,000
square -foot $6.5 million addition to its psychiatry and surgery centers. The hospital also recently added
three stories to an existing wing, as well as renovated the third floor. Providence recently completed a
tower, which added three stories to an existing hospital wing, as well as a 20,000 square -foot, two-story
medical office building, and is currently remodeling the fourth floor of the Centennial Tower for use by
heart patients. The total cost of the projects at Providence is nearly $10 million.
Ace Hardware Corporation operates a wholesale distribution center serving the northwestern United States
including Alaska and western Canada. Built in 1983, the facility was recently expanded by 175,000 square
feet bringing it up to 550,000 square feet. Over 210 workers are employed at the Yakima facility.
Transportation is an important aspect of Yakima's economy. Located on State Highway 82, Yakima is
served by seven scheduled motor freight lines, Greyhound Bus, and the Union Pacific railroads. Burlington -
Northern purchased Yakima -based Washington Central Railroad for $40 million in 1996. This was the
final acquisition to complete Burlington-Northern's plans to reopen Stampede Pass and begin operating
empress freight trains through the Yakima Valley to the Puget Sound region in late 1997. Commercial
airline service is provided by United Express and Horizon Airlines through the Yakima Airport.
There are several higher education institutions serving the Yakima area. Heritage College is located just
west of Toppenish, and is an accredited four-year liberal arts college. Heritage College offers several
degrees, with 683 students enrolled at its Toppenish campus. Yakima Valley Community College in
Yakima is a two-year institution which offers over 50 degrees. There are 6,155 students enrolled at the
college, and 414 full-time employees. The Perry Technical Institute is a private, non-profit technical school,
which offers programs in a number of technical areas such as telecommunications, instrumentation,
refrigeration, and graphic arts. The institute, which employs about 50 people and includes 360 students,
has a cooperative agreement with Yakima Valley Community College to help students achieve AA degree
requirements.
Yakima is a popular location for conventions due to its dry climate and central location in the State. In
1997, a total of 202 conventions, hosting 117,780 delegates were held in Yakima, generating approximately
$2L2 million for the area economy. A $6 million expansion of the City's convention facility, opened in late
1997.
Construction of a multipurpose trade and convention center, the Sun Dome, was completed in 1990. The
Sim Dome holds 8,000 people and has generated 500 direct and indirect jobs. The Sun Dome was
constructed at a cost of $8.5 million and is the State's third domed center. It hosts concerts, athletic events,
rallies and will be used during the Central Washington State Fair each year. Yakima now has a minor league
baseball team as well as a Continental Basketball Association professional basketball team.
The Yakima Training Center, a military reservation used for troop maneuvers, field training and artillery
practice, lies northeast of the City of Yakima. One of the largest military installations in the United States
encompassing 263,311 acres, the training center trains over 10,000 National Guard and Army Reserve
personnel annually. This facility has approximately 415 permanent military and civilian employees and
generates local spending of more than $10 million annually. A $2.4 million armory which includes space for
administration, a classroom, kitchen and dining area for the 951st Heavy Equipment Maintenance Company
was completed in late 1993. Another 63,000 acres are currently being added to the training area. Recent
and pending military base closures on the west coast are expected to result in more units coming to Yakima
for training.
The Yakima Mall, located in downtown Yakima, is the largest local retail area. The mall has of a total of 80
stores, including The Bon Marche, Mervyn's and JC Penney, with Nordstrom located across the street. The
mall underwent a $1 million revitalization project in 1996. A 30,000 square -foot expansion of the mall,
22
which will add approximately 15 stores, is planned, although the timing of the expansion is not known. An
estimated 350 to 400 people are currently employed at the mall.
Over the past several years, several new retail stores have been completed in the Yakima area. A S1.1
million Safeway Superstore opened, which employs about 200 full and part-time people. A 150,000 square -
foot PriceCostco store opened in the City of Union Gap, which employs about 100 people. Top Foods
opened a $3.2 million store which also employs approximately 200 people. A 160,000 square -foot Fred
Meyer retail store recently opened in Yakima.
Among the recent projects completed, under construction or proposed for development in the Yakima area
are the following:
• Residential development within the Yakima area has been dramatic over the last several years. One
of the larger of the new subdivisions is Ridgeview West with a total of 80 lots. Sun Meadows is
another residential development which was recently developed, which consists of 64 lots.
Construction was recently completed on Tieton Orchard Estates, a 16 -lot single-family development,
and on TNR Estates, a 17 -lot development.
• The 360 -acre Hull Ranch Project, commonly referred to as the Apple Tree Development, located
west of the City of Yakima, would include single-family, multi -family and commercial space. An 18 -
hole golf course (Apple Tree), a club house and restaurant, which were recently completed,
constituted Phase I of this potential planned mixed-use development. Continued development of the
project is currently on hold pending the establishment of additional water and sewer service, and
therefore, the timing of the remaining phases is unknown at this time.
• A $13 million facility for the Yakima Agriculture Research Laboratory for the U.S. Department of
Agriculture was completed in early 1996 in Yakima. The facility includes six different types of labs as
well as 13 environmental rooms and 13 greenhouses. The lab's 40 -member staff focuses primarily on
research of insects which impact fruit production in the area.
• A 129,000 square -foot Wal-Mart Superstore on 21 acres in the City was recently completed. The
store is one of the largest Wal -Marts in the country and currently employs about 250 people. A
65,000 square -foot supermarket was developed at the site as well.
• Phase I of a 225,000 square -foot retail center on 19 acres called Yakima Gateway Center was recently
completed, and Phase II recently began within the City. A 96,000 square -foot Target retail store, as
well as a supermarket and ten other stores located adjacent to the center, have been built. An
estimated 500 new jobs have been created by the new shopping center.
• The Yakama Indian Nation opened a $9 million, 450,000 square foot casino in Toppenish in mid-
1996. The casino, which employs approximately 400 people, features a food court and a day-care
center for its employees, as well as a supervised play land and arcade for customers' children.
• The City of Yakima opened a $10.8 million police station and legal center in early 1996.
• A 24,000 -square foot, $4.1 million Children's Village Medical Clinic opened in October 1997 in
west Yakima. The facility, which was funded largely by private contributions and features a child
friendly "frontier village" design. The Village will consolidate pediatric offices which includes sibling
child care services, a hearing and speech center, dental clinics, and a therapeutic swimming pool
creating the nation's most comprehensive one-stop medical center for children with disabilities and
special health care needs.
• A 94 -acre sports complex in east Yakima was recently proposed and is currently seeking private
investors to form a public-private partnership. The $20 million complex includes 14 softball and
baseball fields, eight basketball courts, eight soccer fields, two in-line hockey rinks, skateboard park,
swimming pool and water slide area, volleyball courts, offices, and concession stands.
• An 850,000 square -foot regional mall, the Riverside Mall, has been proposed by Mercy Enterprises
to be built in Yakima. The developers have requested to rezone 89 acres from light industrial to large
convenience center, to build potentially the largest mall in the Yakima Valley. The site plan includes
space for five department stores, and an additional 215,000 square feet set aside for retail shops and
another 150,000 square feet for future expansion.
23
• A proposal by Southerland Business Park to build a 60 -acre industrial park in the City of Union Gap
i___ __ City ._ call 1997 TL___ 1 ___4._L L_ begun const _ f ,__--
WdJ alJp1V VCU by the City in fall 177/. Phase 1, which has UC�'LLLL construction, consists of two
buildings, 34,000 and 42,000 square feet, respectively, on 8.8 acres for Western Recreational
Vehicles for the manufacture of travel trailers and eventually motor homes. Western plans to
construct a total of eight buildings.
• Tenneco Building Products is undergoing a $3.6 million expansion of its Yakima plant to
manufacture a foam insulation product for West Coast markets. The new manufacturing line will
add about 30 jobs when full operation is reached in year 2000. The plant currently manufactures
polystyrene packaging trays used in packaging meat for retail sale and employs 64 people.
Additional economic indicators for the City and Yakima County are as follows:
Taxpayer
Boise Cascade Corporation
U.S. West Communication
Longview Fibre Company
Yakima Mall Shopping Center
Shields Bag and Printing
John I. Haas, Inc.
PacifiCorp
Ace Hardware
Cascade Natural Gas
Roundup Company
Source: Yaktma County Treasurer's Office
City of Yakima
Major Taxpayers
Business
Lumber products
Utility
Manufacturing
Retail sales
Manufacturing
Hop processing
Utihty
Retail sales
Utility
Food wholesale
Yakima County
Personal and Per Capital Income*
Personal Per Capita
Year Income (000) Personal Income
1995 $3,934,366 $18,427
1994 3,738,361 17,810
1993 3,599,022 17,559
1992 3,434,670 17,221
1991 3,114,097 16,043
* Presented in 1995 dollars
Source: U.S. Bureau of Economic Analysts
Sources:
Year
1997
1996
1995
1994
1993
Building Permits
Yakima
No. of
Permits
2,062
1,591
1,648
1,784
1,820
Yakima County Building Department
County
Valuation
$ 96,302,552
88,580,039
96,910,948
110,724,459
96,041,326
24
1998 Cnllectinn Year
Assessed Value
$27,442,113
25,756,216
20,230,106
19,194,047
18,267,158
16,865,879
14,705,673
14,242,123
11,419,125
11,018,415
City of Yakima
No. of
Permits Valuation
1,339 $72,922,547
804 64,851,286
941 69,279,317
922 45,893,626
942 43,190,868
Yakima County
Taxable Retail Sales
1997*
1996
1995
1994
1993
1992
*First two quarters only
Source: Washington State Department of Revenue
Employer
Snokist Growers
Yakima School District No. 7
Yakima County
Providence Medical Center
Yakima Valley Memorial Hospital
Tree Top
City of Yakima
Washington Beef
Shields Bag and Printing
Sunnyside School District
Del Monte Corporation
Yakima Valley Community College
Yakima Training Center
Selah School District
Boise Cascade Corporation
$ 980,295,888
1,935,198,088
1,870,109,691
1,874,989,559
1,725,606,355
1,596,921,138
Yakima Area
Largest Employers
Product or Service
Fruit growers, packers Sc processors
Education
Government
Health care
Health care
Apple juice
Government
Beef
Polyethylene bags/printing
Education
Fruit processing
Education
Government
Education
Paper products
Source: Greater Yakima Chamber of Commerce, 1997
Yakima County
Nonagricultural Wage & Salary Workers
and Labor Force and Employment Data
Civihan Labor Force
Employment
Unemployment
Percent of labor force
Total Nonagricultural Wage and Salary Earners
Manufacturing
Food and kindred products
Lumber and wood products
Paper and allied products
Printing and publishing
Machinery excluding electrical
Transportation equipment
Other manufacturing
Construction and mining
Transportation and public utilities
Wholesale trade
Retail trade
Finance, insurance and real estate
Services and miscellaneous
Government
* Preliminary
Source: Washington State Employment Security Department
25
Number of
FTE Employees
1,735
1,500
947
914
900
800
731
635
478
440
438
432
415
409
400
Annual Average
1996* 1995 1994 1993
116,100 113,700 110,900 112,700
100,500 99,400 98,000 96,400
15,600 14,300 12,900 16,300
13 4% 12.6% 11.6% 14.5%
73,600 73,000 71,900 69,700
10,600 10,600 10,700 10,200
3,900 4,300 4,500 4,400
1,700 1,700 1,900 1,700
800 700 700 700
400 400 400 400
800 800 700 600
800 700 700 700
2,200 2,000 1,800 1,600
3,000 3,100 3,300 3,100
3,100 3,000 2,900 2,900
8,000 8,700 8,300 7,500
14,000 13,700 13,400 13,200
2,300 2,200 2,200 2,200
19,400 18,500 18,100 17,800
13,300 13,100 13,000 12,800
T
- i 4.LIUii
There is no litigation pending questioning the validity of the Bonds or the power and authority of the City
to issue the Bonds.
Approval of Counsel
Legal matters incident to the authorization, issuance and sale of Bonds by the City are subject to the
unqualified approving legal opinion of Preston Gates & Ellis LLP, Seattle, Washington, Bond Counsel. A
draft copy of the opinion of Bond Counsel is attached hereto. Bond Counsel has reviewed this document
only to confirm that the portions of it describing the Bonds and the authority to issue them, conform to the
Bonds and the applicable laws under which they are issued.
1dX
sciAcmp taunt
General. In the opinion of Preston Gates & Ellis LLP, Seattle, Washington, Bond Counsel, interest on the
Bonds is excluded from gross income subject to federal income taxation pursuant to Section 103 of the
Internal Revenue Code of 1986, as amended and any Treasury Regulations promulgated thereunder
(collectively the "Code"), provided the arbitrage requirements of Section 148 of the Code described in this
section under the heading "Continuing Requirements" are comp --
ed with.
The Bonds are not private activity bonds, and interest on the Bonds is not an item of tax preference for
purposes of determining alternative minimum taxable income for individuals or corporations under the
Code. However, interest on the Bonds is taken into account in the computation of adjusted current
earnings for purposes of the corporate alternative minimum tax under Section 55 of the Code as more fully
described in this section under the heading "Certain Federal Income Tax Consequences."
Except as described herein, Bond Counsel expresses no opinion on any federal, state or local tax consequence
arising with respect to ownership of the Bonds.
Continuing Requirements. Section 148 of the Code has continuing arbitrage requirements that must be met
subsequent to the issuance of the Bonds for the interest on the Bonds to be, and remain, exempt from
regular federal income taxation. These requirements include provisions that prescribe investment yield
limitations for the proceeds of the Bonds and that certain investment earnings be paid on a periodic basis to
the federal government. The Bond Ordinance contains covenants of the City to comply with these
continuing arbitrage requirements. Bond Counsel has not undertaken to determine (or to inform any
person) whether any action taken (or not taken) or events occurring (or not occurring) after the date of
issuance of the Bonds may affect the tax status of the interest on the Bonds.
Certain Federal Income Tax Consequences. The following is a discussion of certain federal tax matters under
the Code. This discussion does not purport to deal with all aspects of federal taxation that may be relevant
to particular bondowners. Prospective bondowners, particularly those who may be subject to special rules,
are advised to consult their own tax advisors regarding the federal tax consequences of owning and disposing
of the Bonds, as well as any tax consequences arising under the laws of any state or other taxing jurisdiction.
Alternative Minimum Tax on Corporations. Section 55 of the Code imposes an alternative minimum tax
on corporations equal to the excess of the tentative minimum tax for the taxable year over the regular tax
for such year. The tentative minimum tax is based upon alternative minimum taxable income which is
regular taxable income with certain adjustments and increased by the amount of certain items of tax
preference. One of the adjustments is a portion (75 percent for any taxable year beginning after 1989) of
the amount by which a corporation's adjusted current earnings exceeds the corporation's alternative
minimum taxable income (determined without regard to such adjustment and the alternative tax net
operating loss deduction). Interest on tax-exempt obligations, such as the Bonds, is included in a
corporation's adjusted current earnings.
26
For taxable years beginning after December 31, 1997, the corporate alternative minimum tax is repealed
for small business corporations that had average gross receipts of less then $5 million for the three-year
period beginning after December 31, 1994, and such small business corporations will continue to be
exempt from the corporate alternative minimum tax so long as their average gross receipts do not exceed
$7.5 million.
Qualified Tax Exempt Obligations. The City has designated the Bonds as Qualified Tax -Exempt
Obligations for banks, thrift institutions and other financial institutions so that such financial institutions
will not be denied a deduction of 100 percent of their interest expenses allocable to the Bonds. However,
corporate tax preference rules reduce by 20 percent the amount that may be deducted by such financial
institutions for interest on funds allocable to tax-exempt obligations such as the Bonds.
Borrowed Funds. The Code provides that interest paid on funds borrowed to purchase or carry tax-
exempt obligations during a tax year is not deductible. In addition, under rules used by the Internal
Revenue Service for determining when borrowed funds are considered used for the purpose of
purchasing or when carrying particular assets, the purchase of obligations may be considered to have been
made with borrowed funds even though the borrowed funds are not directly traceable to the purchase of
such obligations.
Property and Casualty Insurance Companies. The deduction for loss reserves for property and casualty
insurance companies is reduced by 15 percent of the sum of certain items, including the interest received
on tax-exempt obligations, such as the Bonds.
Social Security and Railroad Retirement Benefits. The Code also requires recipients of certain Social
Security or Railroad Retirement benefits to take into account, in determining gross income, receipts or
accruals of interest that is exempt from federal income tax.
Branch Profits Tax. Certain foreign corporations doing business in the United States may be subject to a
branch profits tax on their effectively connected earnings and profits, including tax-exempt interest on
obligations such as the Bonds.
S Corporations. Certain S corporations that have subchapter C earnings and profits at the close of a
taxable year and gross receipts more than 25 percent of which are passive investment income, which
includes interest on tax-exempt obligations, such as the Bonds, may be subject to a tax on excess net
passive income.
Rating
As noted on the cover page of this Official Statement, the City has applied for a rating for the Bonds from
Moody's Investors Service. The rating reflects only the view of the rating agency and an explanation of the
sig uficance of the rating may be obtained from the rating agency. There is no assurance that the rating will
be retained for any given period of time or that the rating will not be revised downward or withdrawn
entirely by the rating agency if, in its judgment, circumstances so warrant. Any such downward revision or
withdrawal of the rating will be likely to have an adverse effect on the market price of the Bonds.
Underwriting
The Bonds are being purchased by Seattle -Northwest Securities Corporation acting as the Underwriter.
The purchase contract provides that the Underwriter will purchase all of the Bonds, if any are purchased, at
a price of percent of the par value of the Bonds, plus accrued interest. The Bonds will be reoffered
at an average price of percent of the par value of the Bonds. After the initial public offering, the
public offering prices may be varied from time to time.
27
Ivliscellaaiieous
All forecasts, estimates and other statements in this Official Statement involving matters of opinion, whether
or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is
not intended to be construed as a contract or agreement between the City and the purchasers or holders of
any of the Bonds. The information contained in this Official Statement is presented for the guidance of
prospective purchasers of the Bonds described therein. The information has been compiled from official
sources and, while not guaranteed by the City, is believed to be correct.
Continuing Disclosure Undertaking
In accordance with Section (b)(5) of Securities and Exchange Commission Rule 15c2-12 under the
Securities Exchange Act of 1934, as the same may be amended from time to time (the "Rule"), the City has
agreed in the Bond Resolution for the benefit of the Bond Owners or Beneficial Owners of the Bonds to
provide or cause to be provided to each nationally recognized municipal securities information repository
("NRMSIR") and to the state information depository for the State of Washington (if one is created)
("SID"), in each case as designated by the Securities and Exchange Commission (the "Comnussion") in
accordance with the Rule, the following annual financial information and operating data for the prior fiscal
year (commencing in 1999 for the fiscal year ended December 31, 1998): (i) annual financial statements,
which statements may or may not be audited showing ending fund balances, prepared in accordance with
regulations prescribed by theState Auditorto RCW�T 43.09 200 (or to tP ) and
p'w:SiSa itt i rr v .<.vv any successor statutes)
generally of the type included in this Official Statement for the Bonds under the headings "Comparative
General Fund Statement of Revenues, Expenditures and Changes in Fund Balance;" (ii) the assessed
valuation of taxable property in the City; (in) ad valorem taxes due and percentage of taxes collected;
(iv) property tax levy rate per $1,000 of assessed valuation; and (v) outstanding general obligation debt of
the City.
Such annual information and operating data described above will be so provided on or before the end of
nine months after the end of the City's fiscal year. The City may adjust such date if the City changes its
fiscal year by providing written notice of the change of fiscal year to each then existing NRMSIR and the
SID. The City's current fiscal year ends on December 31. In lieu of providing such annual financial
information and operating data, the City may cross-reference to other documents provided to the NRMSIR,
the SID or to the Commission, and, if such document is a final official statement within the meaning of the
Rule, such document will be available from the Municipal Securities Rulemaking Board ("MSRB").
The City agrees to provide or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB
and to the SID notice of its failure to provide the annual financial information and operating data described
above on or prior to the date set forth above.
If not provided as part of the annual financial information discussed above, the City will provide its audited
annual financial statement prepared in accordance with regulations prescribed by the State Auditor pursuant
to the statutes cited above (or any successor statutes) when and if available to each then existing NRMSIR
and the SID.
The City further agrees to provide or cause to be provided, in a timely manner, to the SID and to each
NRMSIR or to the MSRB notice of the occurrence of any of the following events with respect to the
Bonds, if such event is material: (i) principal and interest payment delinquencies; (ii) non-payment related
defaults; (iii) unscheduled draws on debt service reserves for the Bonds, reflecting financial difficulties;
(iv) unscheduled draws on credit enhancements for the Bonds, reflecting financial difficulties;
(v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or
events affecting the tax-exempt status of the Bonds; (vii) modifications to the rights of Bond owners;
(viii) Bond calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund
redemptions for which notice is given pursuant to Exchange Act Release 34-23856); (ix) defeasances;
(x) release, substitution or sale of property, securing repayment of the Bonds; and (xi) rating changes.
28
The City's obligations to provide annual financial information and notices of material events will terminate
upon the legal defeasance, prior redemption or payment in full of all of the Bonds. The undertaking, or any
provision thereof, will be null and void if the City (i) obtains an opinion of nationally recognized bond
counsel to the effect that those portions of the Rule which require the undertaking, or any such provision,
are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies each
then existing NRMSIR and the SID of such opinion and the cancellation of the undertaking.
Notwithstanding any other provision of the undertaking, the City may amend the provisions described in
the undertaking and any provision of the undertaking may be waived, with an approving opinion of
nationally recognized bond counsel and in accordance with the Rule.
In the event of any amendment of or waiver of a provision of the undertaking, the City will describe such
amendment in the next annual report, and will include, as applicable, a narrative explanation of the reason
for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles,
on the presentation) of financial information or operating data being presented by the City. In addition, if
the amendment relates to the accounting principles to be followed in preparing financial statements,
(i) notice of such change will be given in the same manner as for a material event, and (ii) the annual report
for the year in which the change is made will present a comparison (in narrative form and also, if feasible, in
quantitative form) between the financial statements as prepared on the basis of the new accounting
principles and those prepared on the basis of the former accounting principles.
A Bond Owner's or Beneficial Owner's right to enforce the provisions of the City's undertaking will be
limited to a right to obtain specific enforcement of the City's obligations, and any failure by the City to
comply with the provisions of the undertaking will not be an event of default with respect to the Bonds. For
purposes of the undertaking, `Beneficial Owner" means any person who has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any bonds, including persons
holding bonds through nominees or depositories.
Prior Compliance with Continuing Disclosure Undertakings. The City has entered into undertakings with
respect to its obligations issued after July 3, 1995 subject thereto and is in compliance with its obligations
thereunder.
Official Statement
The City, pursuant to the Bond Ordinance, deemed "final" this Preliminary Official Statement as of its date,
except for the omission of information dependent on the pricing of this issue and completion of the
underwriting agreement, for the purpose of compliance with Securities and Exchange Commission Rule
15c2-12.
29
PRESTON GATES & ELLIS L L P
ATTORNEYS
April 2, 1998
City of Yakima
Yakima, Washington
Seattle -Northwest Securities Corporation
Seattle, Washington
Re: City of Yakima, Washington, Limited Tax General Obligation Bonds, 1998 -
$1,430,000
Ladies and Gentlemen:
We have examined a certified transcript of all of the proceedings taken in the matter of the
issuance by the City of Yakima, Washington (the "City"), of its Limited Tax General Obligation
Bonds, 1998, in the aggregate principal amount of $1,430,000 (the "Bonds"). The Bonds are
issued pursuant to Ordinance No. of the City, passed on March 17, 1998, for the purpose of
funding certain capital improvements for the City.
The Bonds are dated April 1, 1998, are fully registered, are in the denomination of $5,000
each or any integral multiple thereof within a single maturity, bear interest at the following rates,
payable on June 1, 1998, and semiannually thereafter on the first days of each December and June,
and mature on December 1 of the following years in the following principal amounts:
Maturity Years Principal Interest
(December 1) Amounts Rate
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
The Bonds are subject to optional redemption as provided in the Bond Ordinance.
A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES
ANCHORAGE • COEUR D ALENE • HONG KONG • Los ANGELES • PORTLAND • SEATTLE • SPOKANE WASHINGTON D C
701 FIFTH AVENUE SUITE 5000 SEATTLE, WASHINGTON 98104•7078 206.623.7580 FX 206.623.7022 www.prestongates com
City of Yakima
Seattle -Northwest Securities Corporation
A,,,;t 7 1004
rspiu
J.age2
We hwe not been enrra ci 4 nnr havA me to rPviPw t1i aRc 11ra 'v emm�1Ptan PCC
or sufficiency of the official statement or other offering material relating to the Bonds (except to
the extent, if any, stated in the official statement), and we express no opinion relating thereto or
relating to the undertaking of the City to provide ongoing disclosure pursuant to SEC
Rule 15c2-12.
From such examination it is our opinion that the Bonds have been legally issued and
constitute valid general obligations of the City, except to the extent that the enforcement of the
rights and remedies of the owners of the Bonds may be limited by laws relating to bankruptcy,
reorganization or other similar laws of general application affecting the rights of creditors. Both
principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be
made upon all of the taxable property within the City permitted to be levied without a vote of the
electorate in amounts which, together with other available funds, will be sufficient to pay such
principal and interest as the same shall become due.
Interest on the Bonds is excluded from gross income for purposes of federal income
taxation pursuant to Section 103 of the Internal Revenue Code of 1986 (the "Code"). We are
also of the opinion that the Bonds are not private activity bonds.
Interest on the Bonds is not an item of tax preference for purposes of the federal
alternative minimum tax imposed on individuals or corporations, but is taken into account in the
computation of adjusted current earnings for purposes of the corporate alternative minimum tax
under Section 55 of the Code.
The opinions stated in the two immediately preceding paragraphs are subject to the
condition that the City comply with all requirements of the code that must be satisfied subsequent
to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from
gross income for federal income tax purposes. The City has covenanted to comply with all such
requirements. Failure to comply with certain of such requirements may cause interest on the
Bonds to be included in gross income for federal income tax purposes retroactive to the date of
issuance of the Bonds.
The City has designated the Bonds as "qualified tax-exempt obligations" pursuant to
Section 265(b)(3) of the Code.
City of Yakima
Seattle -Northwest Securities Corporation
April 2, 1998
Page 3
Except as stated herein, we express no opinion regarding any federal, state or local tax
consequences arising with respect to ownership of the Bonds.
Very truly yours,
PRESTON GATES & ELLIS LLP
By
FWW:ja
J:1FW VN2573&00.035103L6FW. DOC
Forrest W. Walls