HomeMy WebLinkAbout2003-024 SunDome Improvement Bonds / Yakima County Agreement ORDINANCE NO. 2003- 24
AN ORDINANCE of the City of Yakima, Washington, providing for
the issuance of limited tax general obligation bonds of the City in
the principal sum of not to exceed $4,500,000 for the purpose of
providing funds to refund certain outstanding bonds and not to
exceed $1,500,000 to finance improvements to the SunDome and
providing the form and terms of the bonds.
WHEREAS, the City of Yakima, Washington (the "City ") now has outstanding its
Limited Tax General Obligation Bonds, 1994, issued under date of February 1, 1994 (the "1994
Bonds "), of which $3,870,000 are callable for redemption in advance of their maturity, and
WHEREAS, Ordinance No 93 -108, passed on November 23, 1993, and Resolution
No R -94 -9, adopted on February 1, 1994, which authorized the issuance and sale of the
1994 Bonds, provides that the City may call such bonds for redemption on or after
December 1, 2004, at a price of par, and
WHEREAS, the City has agreed with Yakima County that the City will finance the costs
of expanding and improving the SunDome, and
WHEREAS, it appears to the City Council that it is in the best interest of the City that its
limited tax general obligation and refunding bonds be sold in the aggregate principal amount of
not to exceed $4,500,000 to effect such savings and in the aggregate principal amount of not to
exceed $1,500,000 to finance the expansion of and improvements to the SunDome,
NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as
follows
SECTION 1 Definitions. As used in this ordinance, the following words shall have the
following meanings, unless a different meaning clearly appears from the context.
"Arbitrage and Tax Certification" means the certificate executed on the day of closing of
the Bonds by the Director of Finance and Budget, or her designee, setting forth the requirements
of the Code for maintaining the tax - exemption of interest on the Bonds
"Bond Register" means the registration records for the Bonds maintained by the Bond
Registrar
"Bond Registrar" means the fiscal agency of the State of Washington, currently in New
York, New York, for the purposes of registering and authenticating the Bonds, maintaining the
Bond Register, effecting transfer of ownership of the Bonds and paying principal of and interest
on the Bonds
"Bonds" means the not to exceed $6,000,000 principal amount of the City of Yakima,
Washington, Limited Tax General Obligation and Refunding Bonds, 2003, issued pursuant to
this ordinance
"CEDE & Co " means the nominee of The Depository Trust Company
"City" means the City of Yakima, Washington, a municipal corporation duly organized
and existing under and by virtue of the Constitution and laws of the State of Washington.
"City Council" means the legislative authority of the City as the same shall be duly and
regularly constituted from time to time
"Code" means the Internal Revenue Code of 1986, as amended, together with
corresponding and applicable final, temporary or proposed regulations and revenue rulings
issued or amended with respect thereto by the United States Treasury Department of the Internal
Revenue Service, to the extent applicable to the Bonds
"Commission" means the Securities and Exchange Commission.
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"Debt Service Fund" means the "LTGO Bond Debt Service Fund, 2003" authorized to be
created by Section 6
"DTC" means The Depository Trust Company of New York, as depository for the Bonds,
or any successor or substitute depository for the Bonds
"Letter of Representations" means the Blanket Letter of Representations from the City to
DTC
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions
"NRMSIR" means a nationally- recognized municipal securities information repository
"Refunded Bonds" means all of the 1994 Bonds maturing on or after December 1, 2005
"Refunding Account" means the account by that name established pursuant to Section 12
"Registered Owner" means the person in whose name a Bond is registered on the Bond
Register For so long as the City utilizes the book -entry system for the Bonds, DTC shall be
deemed to be the Registered Owner
"Rule" means the Securities and Exchange Commission's Rule 15c2 -12 under the
Securities Exchange Act of 1934
"Sale Resolution" means the resolution or resolutions to be adopted by the City Council
setting the final terms of the Bonds
"SID" means a state information repository for the State of Washington (if one is
created)
SECTION 2 Findings For the purpose of refunding the Refunded Bonds and thereby
effecting a savings to the City and its taxpayers and to finance the expansion of and
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improvements to the SunDome, the City shall issue its limited tax general obligation and
refunding bonds.
SECTION 3 Authorization of Bonds The City shall issue and sell the Bonds in the
aggregate principal amount of not to exceed $6,000,000 to refund the Refunded Bonds, finance
the SunDome expansion and improvements and pay costs of issuing the Bonds The Bonds shall
be general obligations of the City; shall be designated "City of Yakima, Washington, Limited
Tax General Obligation and Refunding Bonds, 2003" and with any appropriate series
designation, shall be dated as of the date or dates set forth in the Sale Resolution, shall be issued
in fully registered form in the denomination of $5,000 or any integral multiple thereof, provided
that no Bond shall represent more than one maturity; shall be numbered separately and in such
manner and with any additional designation as the Bond Registrar deems necessary for purposes
of identification and control, shall bear interest (calculated based on a 360 -day year of 12 30 -day
months) at the rates set forth in the Sale Resolution, until the Bonds have been paid or their
payment duly provided for, payable on December 1, 2003, and semiannually thereafter on the
first day of each June and December and shall mature on December 1 of each year as established
in the Sale Resolution.
SECTION 4 Registration, Exchange and Payments.
(a) Registrar /Bond Register The City hereby adopts the system of
registration approved by the Washington State Finance Committee, which utilizes the fiscal
agency of the State of Washington, as registrar, authenticating agent, paying agent and transfer
agent (the "Bond Registrar ") The Bond Registrar shall keep, or cause to be kept, at its principal
corporate trust office, sufficient records for the registration and transfer of the Bonds (the "Bond
Register "), which shall be open to inspection by the City The Bond Registrar is authorized, on
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behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with
the provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar's
powers and duties under this ordinance The Bond Registrar shall be responsible for its
representations contained in the Certificate of Authentication on the Bonds
(b) Registered Ownership The City and the Bond Registrar may deem and
treat the Registered Owner of each Bond as the absolute owner for all purposes, and neither the
City nor the Bond Registrar shall be affected by any notice to the contrary Payment of any such
Bond shall be made only as described in Section 4(h) hereof, but such registration may be
transferred as herein provided. All such payments made as described in Section 4(h) shall be
valid and shall satisfy the liability of the City upon such Bond to the extent of the amount or
amounts so paid.
(c) DTC Acceptance /Letter of Representations The Bonds shall initially be
held in fully immobilized form by DTC acting as depository To induce DTC to accept the
Bonds as eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket
Issuer Letter of Representations (the "Letter of Representations ")
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees with respect to the Bonds for the
accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or any
DTC participant of any amount in respect of the principal of or interest on Bonds, any notice that
is permitted or required to be given to Registered Owners under this ordinance (except such
notices as shall be required to be given by the City to the Bond Registrar or to DTC), the
selection by DTC or any DTC participant of any person to receive payment in the event of a
partial redemption of the Bonds, or any consent given or other action taken by DTC as the
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Registered Owner For so long as any Bonds are held in fully immobilized form hereunder, DTC
or its successor depository shall be deemed to be the Registered Owner for all purposes, and all
references in this ordinance to the Registered Owners shall mean DTC or its nominee and shall
not mean the owners of any beneficial interest in any Bonds.
(d) Use of Depository
(i) The Bonds shall be registered initially in the name of CEDE &
Co , as nominee of DTC, with a single Bond for each maturity in a denomination equal to the
total principal amount of such maturity Registered ownership of such immobilized Bonds, or
any portions thereof, may not thereafter be transferred except (A) to any successor of DTC or its
nominee, provided that any such successor shall be qualified under any applicable laws to
provide the service proposed to be provided by it; (B) to any substitute depository appointed by
the City pursuant to subsection (ii) below or such substitute depository's successor; or (C) to any
person as provided in subsection (iv) below
(ii) Upon the resignation of DTC or its successor (or any substitute
depository or its successor) from its functions as depository or a determination by the City to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the City may appoint a substitute depository Any such substitute
depository shall be qualified under any applicable laws to provide the services proposed to be
provided by it.
(ui) In the case of any transfer pursuant to clause (A) or (B) of
subsection (i) above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together
with a written request on behalf of the City, issue a single new Bond for each maturity then
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outstanding, registered in the name of such successor or substitute depository, or its nominee, all
as specified in such written request of the City
(iv) In the event that (A) DTC or its successor (or substitute depository
or its successor) resigns from its functions as depository, and no substitute depository can be
obtained, or (B) the City determines that it is in the best interest of the beneficial owners of the
Bonds that the Bonds be provided in certificated form, the ownership of such Bonds may then be
transferred to any person or entity as herein provided, and shall no longer be held in fully
immobilized form. The City shall deliver a written request to the Bond Registrar, together with a
supply of definitive Bonds in certificated form, to issue Bonds in any authorized denomination.
Upon receipt by the Bond Registrar of all then outstanding Bonds, together with a written request
on behalf of the City to the Bond Registrar, new Bonds shall be issued in the appropriate
denominations and registered in the names of such persons as are provided in such written
request.
(e) Transfer or Exchange of Registered Ownership, Change in
Denominations The registered ownership of any Bond may be transferred or exchanged, but no
transfer of any Bond shall be valid unless it is surrendered to the Bond Registrar with the
assignment form appearing on such Bond duly executed by the Registered Owner or such
Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar Upon
such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and
deliver, without charge to the Registered Owner or transferee, a new Bond (or Bonds at the
option of the new Registered Owner) of the same date, maturity and interest rate and for the
same aggregate principal amount in any authorized denomination, naming as Registered Owner
the person or persons listed as the assignee on the assignment form appearing on the surrendered
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Bond, in exchange for such surrendered and canceled Bond. Any Bond may be surrendered to
the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of
Bonds of the same date, maturity and interest rate, in any authorized denomination. The Bond
Registrar shall not be obligated to transfer or exchange any Bond during a period beginning at
the opening of business on the 15th day of the month next preceding any interest payment date
and ending at the close of business on such interest payment date, or, in the case of any proposed
redemption of the Bonds, after the mailing of notice of the call of such Bonds for redemption.
(f) Bond Registrar's Ownership of Bonds The Bond Registrar may become
the Registered Owner of any Bond with the same rights it would have if it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as member of or in any other capacity with respect to, any committee
formed to protect the rights of the Registered Owners of the Bonds
(g) Registration Covenant The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain or caused to be maintained a system for recording the
ownership of each Bond that complies with the provisions of Section 149 of the Code
(h) Place and Medium of Payment Both principal of and interest on the
Bonds shall be payable in lawful money of the United States of America. For so long as all
Bonds are in fully immobilized form, payments of principal and interest shall be made as
provided in accordance with the operational arrangements of DTC referred to in the Letter of
Representations In the event that the Bonds are no longer in fully immobilized form, interest on
the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners appearing on the Bond Register on the 15th day of the month preceding
the interest payment date, and principal of the Bonds shall be payable upon presentation and
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surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar;
provided, however, that if so requested in writing by the Registered Owner of at least $1,000,000
principal amount of Bonds, interest will be paid by wire transfer on the date due to an account
with a bank located within the United States.
SECTION 5 Redemption and Purchase
(a) Optional Redemption The City reserves the right to redeem the Bonds
prior to their maturity as set forth in the Sale Resolution. If less than a whole of a maturity is
called for redemption, the Bonds to be redeemed shall be chosen by lot in integral multiples of
$5,000 by the Bond Registrar or, so long as the Bonds are registered in the name of CEDE & Co
or its registered assign, by DTC
(b) Mandatory Redemption In the Sale Resolution, the City Council may
designate certain Bonds to be term bonds
(c) Partial Redemption If less than all of the principal amount of any Bond is
redeemed, upon surrender of such Bond at the principal office of the Bond Registrar, there shall
be issued to the registered owner, without charge, for the then unredeemed balance of the
principal amount, a new Bond or Bonds, at the option of the registered owner, of like maturity
and interest rate in any authorized denomination.
(d) Notice of Redemption Written notice of any redemption of Bonds shall be
given by the Bond Registrar on behalf of the City by first class mail, postage prepaid, not less
than 30 days nor more than 60 days before the redemption date to the registered owners of Bonds
that are to be redeemed at their last addresses shown on the Bond Register or other address
designated in wrrtmg by the registered owner So long as the Bonds are in book -entry form,
notice of redemption shall be given as provided in the Letter of Representations.
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The requirements of this section shall be deemed complied with when notice is mailed,
whether or not it is actually received by the owner
Each notice of redemption shall contain the following information. (1) the redemption
date, (2) the redemption price, (3) if less than all outstanding Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts) of the Bonds to be
redeemed, (4) that on the redemption date the redemption price will become due and payable
upon each Bond or portion called for redemption, and that interest shall cease to accrue from the
redemption date, (5) that the Bonds are to be surrendered for payment at the principal office of
the Bond Registrar, (6) the CUSIP numbers of all Bonds being redeemed, (7) the dated date of
the Bonds, (8) the rate of interest for each Bond being redeemed, (9) the date of the notice, and
(10) any other information needed to identify the Bonds being redeemed.
Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and
maturity, the Bonds being redeemed with the proceeds of such check or other transfer
(e) Effect of Redemption Unless the City has revoked a notice of redemption,
the City shall transfer to the Bond Registrar amounts that, in addition to other money, if any, held
by the Bond Registrar, will be sufficient to redeem, on the redemption date, all the Bonds to be
redeemed. From the redemption date interest on each Bond to be redeemed shall cease to accrue
(f) Amendment of Notice Provisions The foregoing notice provisions of this
section, including but not limited to the information to be included in redemption notices and the
persons designated to receive notices, may be amended by additions, deletions and changes in
order to maintain compliance with duly promulgated regulations and recommendations regarding
notices of redemption of municipal securities
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(g) Purchase on Open Market The City reserves the right to purchase any of
the Bonds in the open market at any time and at any price
SECTION 6 Creation of Debt Service Fund and Provision for Tax Levy Payments A
special fund of the City known as the "LTGO Bond Debt Service Fund, 2003" (the "Debt
Service Fund "), is hereby authorized to be created. The Director of Finance and Budget may
create subaccounts in the Debt Service Fund for each series of Bonds. The Debt Service Fund
shall be drawn upon for the sole purpose of paying the principal of and interest on the Bonds.
The City hereby 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 ad valorem taxes
upon all the property within the City subject to taxation in an amount that will be sufficient to
pay the principal of and interest on the Bonds as the same shall become due
The City hereby irrevocably pledges that the annual tax provided for herein to be levied
for the payment of such principal and interest shall be within and as a part of the tax levy
permitted to cities without a vote of the people, and 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 to the extent that other legally available funds are
not deposited into the Debt Service Fund. The full faith, credit and resources of the City are
hereby irrevocably pledged for the annual levy and collection of the taxes and for the prompt
payment of the principal of and interest on the Bonds as the same shall become due
SECTION 7 Bonds Deemed To Be No Longer Outstanding. In the event that the City,
in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt
Service Fund or in another special account, held in trust by a trustee, cash or noncallable
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government obligations, as such obligations are now or hereafter defined in RCW 39 53, or any
combination of cash and /or noncallable government obligations, in amounts and maturities
which, together with the known earned income therefrom, are sufficient to redeem or pay and
retire such Bond in accordance with its terms and to pay when due the interest and redemption
premium, if any, thereon, and such cash and /or noncallable government obligations are
irrevocably set aside and pledged for such purpose, then no further payments need be made into
the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner
of a Bond so provided for shall cease to be entitled to any lien, benefit or security of this
ordinance except the right to receive payment of principal, premium, if any, and interest from
such special fund, and such Bond shall be deemed to be not outstanding under this ordinance
SECTION 8 Tax Covenant; Special Designation. The City covenants to undertake all
actions required to maintain the tax - exempt status of interest on the Bonds under Section 103 of
the Code as set forth in the Arbitrage and Tax Certification that will be executed at the closing of
the Bonds The City hereby designates the Bonds as "qualified tax - exempt obligations" under
Section 265(b)(3) of the Code for banks, thrift institutions and other financial institutions
SECTION 9 Lost or Destroyed Bonds. If any Bonds are lost, stolen or destroyed, the
Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount, maturity and
tenor to the Registered Owner upon the owner paying the expenses and charges of the Bond
Registrar and the City in connection with preparation and authentication of the replacement
Bond or Bonds and upon his or her filing with the Bond Registrar and the City evidence
satisfactory to both that such Bond or Bonds were actually lost, stolen or destroyed and of his or
her ownership, and upon furnishing the City and the Bond Registrar with indemnity satisfactory
to both.
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SECTION 10 Form of the Bonds The Bonds shall be in substantially the following
form.
[STATEMENT OF INSURANCE]
UNITED STATES OF AMERICA
NO $
STATE OF WASHINGTON
CITY OF YAKIMA
LIMITED TAX GENERAL OBLIGATION
AND REFUNDING BOND, 2003
INTEREST RATE MATURITY DATE CUSIP NO
REGISTERED OWNER.
PRINCIPAL AMOUNT DOLLARS
The City of Yakima, Washington, a municipal corporation organized and existing under
the laws and Constitution of the State of Washington (the "City "), hereby acknowledges itself to
owe and for value received promises to pay to the Registered Owner identified above, or
registered assigns, on the Maturity Date identified above, the Principal Amount specified above,
unless redeemed prior thereto as provided herein, together with interest on such Principal
Amount from the date hereof or the most recent date to which interest has been paid or duly
provided for at the Interest Rate set forth above payable December 1, 2003, and semiannually
thereafter on each June 1 and December 1 until payment of the principal sum has been made or
duly provided for Both principal of and interest on this bond are payable in lawful money of the
United States of America. For so long as the bonds of this issue are held in fully immobilized
form, payments of principal and interest thereon shall be made as provided in accordance with
the operational arrangements of DTC referred to in the Blanket Issuer Letter of Representations
from the City to The Depository Trust Company In the event that the bonds of this issue are no
longer held in fully immobilized form, interest on this bond shall be paid by check or draft
mailed to the Registered Owner at the address appearing on the Bond Register on the 15th day of
the month preceding the interest payment date, and principal of this bond shall be payable upon
presentation and surrender of this bond by the Registered Owner at the principal office of the
fiscal agency of the State of Washington in New York, New York (the "Bond Registrar "),
provided, however, that if so requested in writing by the Registered Owner of at least $1,000,000
principal amount of bonds, interest will be paid by wire transfer on the date due to an account
with a bank located within the United States
This bond is one of an issue of limited tax general obligation refunding bonds of the City
of like date and tenor, except as to number, interest rate and date of maturity, in the aggregate
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principal amount of $ , issued pursuant to Ordinance No of the City, passed
on , 2003, and Resolution No , adopted on , 2003 (the "Bond
Ordinance "), to refund certain outstanding limited tax general obligation bonds of the City and
finance capital improvements
[The City has [not] reserved the right to redeem the bonds of this issue maturing on and
after December 1, 20, on or after December 1, 20, in whole or in part (maturities to be
selected by the City and by lot within a maturity in such manner as DTC or the Bond Registrar
shall determine), at par plus accrued interest to the date of redemption.
Notice of any such intended redemption shall be given not less than 30 nor more than
60 days prior to the redemption date by first class mail, postage prepaid, to the Registered Owner
of any bond to be redeemed at the address appearing on the Bond Register The requirements of
the Bond Ordinance shall be deemed to be complied with when notice is mailed as herein
provided, regardless of whether or not it is actually received by the owner of any bond. Interest
on all such bonds so called for redemption shall cease to accrue on the date fixed for redemption
unless such bond or bonds so called for redemption are not redeemed upon presentation made
pursuant to such call.
Portions of the principal sum of this bond in installments of $5,000 or any integral
multiple thereof may also be redeemed in accordance with the schedule set forth above, and if
less than all of the principal sum hereof is to be redeemed, upon the surrender of this bond at the
principal office of the Bond Registrar there shall be issued to the Registered Owner, without
charge therefor, for the then unredeemed balance of the principal sum hereof, at the option of the
owner, a bond or bonds of like maturity and interest rate in any of the denominations authorized
by the Bond Ordinance ]
The City has designated the bonds of this issue as "qualified tax - exempt obligations" for
purchase by financial institutions.
The City has irrevocably covenanted with the owner of this bond that it will annually
include in its budget and levy taxes, within and as a part of the tax levy permitted to cities
without a vote of the electorate, upon all the property subject to taxation in amounts sufficient to
pay the principal of and interest on this bond as the same shall become due The full faith, credit
and resources of the City are hereby irrevocably pledged for the annual levy and collection of
such taxes and the prompt payment of such principal and interest.
The pledge of tax levies for payment of principal of and interest on the bonds may be
discharged prior to maturity of the bonds by making provision for the payment thereof on the
terms and conditions set forth in the Bond Ordinance
The bonds of this issue are issued in fully registered form in the denomination of $5,000
each or any integral multiple thereof, provided that no bond shall represent more than one
maturity Upon surrender to the Bond Registrar, bonds are interchangeable for bonds in any
authorized denomination of an equal aggregate principal amount and of the same interest rate
and maturity This bond is transferable only on the records maintained by the Bond Registrar for
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that purpose upon the surrender of this bond by the registered owner hereof or his /her duly
authorized agent and only if endorsed in the manner provided hereon, and thereupon a new fully
registered bond of like principal amount, maturity and interest rate shall be issued to the
transferee in exchange therefor Such exchange or transfer shall be without cost to the registered
owner or transferee The City may deem the person in whose name this bond is registered to be
the absolute owner hereof for the purpose of receiving payment of the principal of and interest on
this bond and for any and all other purposes whatsoever
Reference is made to the Bond Ordinance as more fully describing the covenants with
and the rights of Registered Owners of the bonds or registered assigns and the meanings of
capitalized terms appearing on this bond which are defined in such ordinance
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall
have been manually signed by the Bond Registrar
It is hereby certified and declared that this bond is issued pursuant to and in strict
compliance with the Constitution and laws of the State of Washington and ordinances of the
City, that all acts, conditions and things required to be done precedent to and in the issuance of
this bond and the bonds of this issue have happened, been done and performed, and that this
bond and the bonds of this issue do not exceed any constitutional or statutory limitations
IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be
signed on behalf of the City with the manual or facsimile signature of the Mayor and to be
attested by the manual or facsimile signature of the Clerk of the City, as of this , 2003
CITY OF YAKIMA, WASHINGTON
By /s/ manual or facsimile
Mayor
ATTEST
/s/ manual or facsimile
Clerk of the City
The Certificate of Authentication for the Bonds shall be in substantially the following
form and shall appear on each Bond.
CERTIFICATE OF AUTHENTICATION
Date of Authentication.
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This bond is one of the City of Yakima, Washington, Limited Tax General Obligation
and Refunding Bonds, 2003, dated , 2003
WASHINGTON STATE FISCAL
AGENCY, as Bond Registrar
By
Authorized Signer
AS SIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER OF TRANSFEREE
(Please print or typewrite name and address, including zip code of Transferee)
the within bond and all rights thereunder and does hereby irrevocably constitute and appoint
of , or its successor,
as Agent to transfer said bond on the books kept by the Bond Register for registration thereof,
with full power of substitution in the premises
DATED
SIGNATURE GUARANTEED
NOTICE Signature(s) must be
guaranteed pursuant to law
NOTE The signature on this Assignment
must correspond with the name of the
Registered Owner as it appears upon the
face of the within bond in every particular,
without alteration or enlargement or any
change whatever
SECTION 11 Execution of the Bonds The Bonds shall be executed on behalf of the
City with the manual or facsimile signature of the Mayor and attested by the manual or facsimile
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signature of the City Clerk. In case either or both of the officers who have signed or attested any
of the Bonds cease to be such officer before such Bonds have been actually issued and delivered,
such Bonds shall be valid nevertheless and may be issued by the City with the same effect as
though the persons who had signed or attested such Bonds had not ceased to be such officers,
and any Bond may be signed or attested on behalf of the City by officers who at the date of
actual execution of such Bond are the proper officers, although at the nominal date of execution
of such Bond such officer was not an officer of the City
Only Bonds that bear a Certificate of Authentication in the form set forth in Section 10,
manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled
to the benefits of this ordinance Such Certificate of Authentication shall be conclusive evidence
that the Bonds so authenticated have been duly executed, authenticated and delivered and are
entitled to the benefits of this ordinance
In case either of the officers of the City who shall have executed the Bonds shall cease to
be such officer or officers of the City before the Bonds so signed shall have been authenticated
or delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be
authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be
as binding upon the City as though those who signed the same had continued to be such officers
of the City Any Bond may also be signed and attested on behalf of the City by such persons as
at the actual date of execution of such Bond shall be the proper officers of the City although at
the original date of such Bond any such person shall not have been such officer
SECTION 12 Refunding Plan and Procedures At the time of delivery of the Bonds, the
proceeds of the Bonds shall be deposited as follows
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(a) The accrued interest, if any, to the date of delivery shall be deposited to
the Debt Service Fund and used to pay interest on the, Bonds on December 1, 2003
(b) The amount necessary to finance the SunDome expansion and
improvements shall be deposited into an account designated by the Director of Finance and
Budget.
(c) The balance of the proceeds of the Bonds shall be deposited in the
Refunding Account (as hereinafter defined) and applied as set forth in this section.
There is hereby authorized and established a special account of the City to be maintained
with the Escrow Agent (as hereinafter defined) to be known as the "City of Yakima 2003
Limited Tax General Obligation Refunding Account" (the "Refunding Account ") The
Refunding Account shall be drawn upon for the sole purpose of paying the principal of and
interest on the Refunded Bonds and of paying costs related to issuance of the Bonds and
refunding the Refunded Bonds The proceeds of the sale of the refunding portion of the Bonds
shall be deposited into the Refunding Account to provide for refunding the Refunded Bonds, as
authorized by Ordinance No 93 -108, and to pay the costs of issuance of the Bonds.
The Director of Finance and Budget is authorized to determine, in consultation with the
City's financial advisor, which of the Refunded Bonds, if any, are to be refunded. The final plan
of refunding and call for redemption of the Refunded Bonds shall be set forth in and approved by
the Sale Resolution. Money in the Refunding Account shall be used immediately upon receipt
thereof to defease the Refunded Bonds and discharge the other obligations of the City relating
thereto under Ordinance No 93 -108 by providing for the payment of the principal of and interest
on the Refunded Bonds as set forth in the Sale Resolution. The City shall defease such bonds
and discharge such obligations by the use of the money in the Refunding Account to purchase
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certain "Government Obligations" as such obligations are defined in Chapter 39 53 RCW as now
or hereafter amended (which obligations so purchased are herein called "Acquired Obligations "),
bearing such interest and maturing as to principal and interest in such amounts and at such times
that, together with any necessary beginning cash balance, will provide for the payment of the
Refunded Bonds, as set forth in the Sale Resolution. Such Acquired Obligations shall be
purchased at a yield not greater than the yield permitted by the Code and regulations relating to
acquired obligations in connection with refunding bond issues
In connection with the issuance of the Bonds, to carry out the refunding and defeasance
of the Refunded Bonds, the Director of Finance is hereby authorized to appoint as escrow agent a
bank or trust company qualified by law to perform the duties described herein (the "Escrow
Agent ") Any beginning cash balance and the Acquired Obligations shall be irrevocably
deposited with the Escrow Agent in an amount sufficient to defease the Refunded Bonds in
accordance with this ordinance and the Sale Resolution.
The City will take such actions as are found necessary to see that all necessary and proper
fees, compensation and expenses of the Escrow Agent shall be paid when due The proper
officers and agents of the City are directed to obtain from the Escrow Agent an agreement setting
forth the duties, obligations and responsibilities of the Escrow Agent in connection with the
redemption and retirement of the Refunded Bonds as provided herein and setting forth such
provisions for the payment of the fees, compensation and expenses of such Escrow Agent as are
satisfactory to it. To carry out the purposes of this section of this ordinance, the Director of
Finance and Budget is authorized and directed to execute and deliver to the Escrow Agent such
an escrow agreement.
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SECTION 13 Sale of the Bonds To accomplish the plan of refunding and capital
improvements authorization by this ordinance, the City Council shall adopt the Sale Resolution,
which will set the interest rates, maturity amounts and years of the Bonds and approve the
purchase contract and official statement for the Bonds. The Sale Resolution also may establish
redemption provisions, approve bond insurance and set any other terms for the Bonds. The
issuance of the Bonds for the SunDome improvements shall be conditioned on receipt of an
interlocal agreement between the City and Yakima County
SECTION 14 Undertaking to Provide Ongoing Disclosure
(a) Contract /Undertaking This section constitutes the City's written
undertaking for the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule
(b) Financial Statements /Operating Data The City agrees to provide or
cause to be provided to each NRMSIR and to the SID, if any, in each case as designated by the
Commission in accordance with the Rule, the following annual financial information and
operating data for the prior fiscal year (commencing in 2004 for the fiscal year ended
December 31, 2003)
1 Annual financial statements showing ending fund balances prepared in
accordance with regulations prescribed by the Auditor of the State of Washington from time to
time
2 The assessed valuation of taxable property in the City;
3 Property taxes due, property taxes collected and property taxes delinquent;
4 Property tax levy rate per $1,000 of assessed valuation, and
5 Outstanding general obligation debt of the City
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Such annual information and operating data described above shall be so provided on or
before the expiration of nine months after the end of the City's fiscal year (which now ends
December 31) The City may adjust such date if the City changes its fiscal year by providing
written notice of the change of fiscal year and the new reporting date to each then existing
NRMSIR and the SID, if any In lieu of providing such annual financial information and
operating data, the City may cross - reference to other documents provided to the NRMSIRs, the
SID or to the Commission and, if such document is a final official statement within the meaning
of the Rule, available from the MSRB
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement prepared in accordance with regulations
prescribed by the Washington State Auditor pursuant to RCW 43 09.200 (or any successor
statutes), when and if available, to each then existing NRMSIR and the SID, if any
(c) Material Events The City agrees to provide or cause to be provided, in a
timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence
of any of the following events with respect to the Bonds, if material
• Principal and interest payment delinquencies,
• Non - payment related defaults,
• Unscheduled draws on debt service reserves reflecting financial
difficulties,
• Unscheduled draws on credit enhancements reflecting financial
difficulties,
• Substitution of credit or liquidity providers, or their failure to
perform,
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• Adverse tax opinions or events affecting the tax - exempt status of
the Bonds,
• Modifications to the rights of Bond owners,
• 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- 238560),
• Defeasances,
• Release, substitution or sale of property, securing repayment of the
Bonds, and
• Rating changes.
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, if any, notice of its failure to provide the annual financial
information described in subsection (b) above on or prior to the date set forth in subsection (b)
above
(d) Termination /Modification The City's obligations to provide notices of
material events shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Bonds. Any provision of this section shall be null and void if the City (1) obtains an
opinion of nationally recognized bond counsel to the effect that the portion of the Rule that
requires that provision is invalid, has been repealed retroactively or otherwise does not apply to
the Bonds and (2) notifies each NRMSIR and the SID, if any, of such opinion and the
cancellation of this section. The City may amend this section with an approving opinion of
nationally recognized bond counsel in accordance with the Rule
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(e) Bond Owner's Remedies Under This. Section The right of any bondowner
or beneficial owner of Bonds to enforce the provisions of this section shall be limited to a right to
obtain specific enforcement of the City's obligations under this section, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds. For purposes of this section, "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.
SECTION 15 General Authorization, Ratification of Prior Acts. The Director of
Finance and Budget and City Manager and other appropriate officers of the City are authorized
to take any actions and to execute documents as in their judgment may be necessary or desirable
in order to carry out the terms of, and complete the transactions contemplated by, this ordinance.
The Director of Finance and Budget is authorized to establish a reserve account for the Project if
the Director of Finance and Budget determines it would be advisable to have reserves for the
construction and /or operation of the Project. All acts taken pursuant to the authority of this
ordinance but prior to its effective date are hereby ratified.
SECTION 16 Severability If any provision in this ordinance is declared by any court of
competent jurisdiction to be contrary to law, then such provision shall be null and void and shall
be deemed separable from the remaining provisions of this ordinance and shall in no way affect
the validity of the other provisions of this ordinance or of the Bonds.
SECTION 17 Effective Date. This ordinance shall be effective thirty (30) days after its
publication as provided by law
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PASSED by the City Council of the City of Yakima at a regular meeting thereof, held
this 6 day of May, 2003
CITY OF YAKIMA, WASHINGTON
Mayor
ATTEST
) ,
City Clerk
APPROVED AS TO FORM.
City Attorney
Publication Date 5 -9 -03
Effective Date 6 -8 -03
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CERTIFICATE
I, the undersigned, Clerk of the City of Yakima, Washington (herein called the "City ")
and keeper of the records of the City Council of the City (the "City Council "), DO HEREBY
CERTIFY
1 That the attached ordinance is a true and correct copy of Ordinance No of
the City (the "Ordinance "), as finally passed at a regular meeting of the City Council held on
May 6, 2003, and duly recorded in my office
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
quorum of the City Council was present throughout the meeting and a legally sufficient number
of members of the City Council voted in the proper manner for the passage of said Ordinance,
that all other requirements and proceedings incident to the proper adoption or passage of said
Ordinance have been duly fulfilled, carried out and otherwise observed, and that I am authorized
to execute this certificate
DATED this May 6, 2003
City Clerk
P \NMN \NMN211 05/02/03
DRAFT
PRELIMINARY OFFICIAL STATEMENT DATED , 2003
City of Yakima, Washington
y Limited Tax General Obligation and Refunding Bonds, 2003
$1,202,242.50 (1)(2)
o
($2,400,000( Final Maturity Amount)
Ts c 2003 Series A (New Money)
0 To $4,165,000(
c 2003 Series B (Refunding)
•
SERIES A DATED- Date of Delivery DUE: December 1, as shown below
a g SERIES B DATED- June 1, 2003
dE
c w STANDARD & POOR'S RATING — Applied for; see "Rating" herein.
o (1) BOOK -ENTRY ONLY —The Bonds will be issued as fully registered bonds in denominations of $5,000, or integral multiples
o thereof, and will be registered in the name of Cede & Co., as bond owner and nominee for The Depository Trust
▪ 0 Company ( "DTC ") DTC will act as securities depository for the Bonds. Purchasers will not receive certificates
c representing their interest in the Bonds purchased (see Appendix B).
✓ as
✓ PRINCIPAL AND INTEREST PAYMENTS — The Series A Bonds are being issued as deferred interest bonds and will be dated
as of the date of their delivery, payable only at maturity Interest on the Series B Bonds will be payable on December 1,
N -0 2003 and semiannually thereafter on June 1 and December 1 of each year to the maturity or earlier redemption of the
o c B onds. Principal of and interest on the Series A Bonds and Series B Bonds (together, the "Bonds ") will be payable by the
s ca fiscal agency of the State of Washington (the "Bond Registrar ") in New York, New York, currently The Bank of New
York, as further described herein. For so long as the Bonds remain in a "book -entry only" transfer system, the fiscal
CD
y a agent will make such payments only to DTC, which in turn will remit such principal and interest to its Participants for
2 o subsequent disbursement to Beneficial Owners of the Bonds as further described herein in Appendix B.
w u
O - MATURITY SCHEDULE LOCATED ON INSIDE COVER
a> 3
r
w
V REDEMPTION — The Bonds are not subject to redemption prior to maturity
• SECURITY — The Bonds are limited tax general obligations of the City The City hereby irrevocably covenants and agrees for
s y as long as any of the Bonds are outstanding and unpaid that each year it will include in its budget and levy ad valorem
c taxes upon all the property within the City subject to taxation in an amount that will be sufficient and all other revenues
R m and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same
c t shall become due. The full faith, credit and resources of the City have been pledged irrevocably for the annual levy and
collection of such taxes and the prompt payment of such principal and interest. The Bonds do not constitute a debt or
m indebtedness of the State of Washington, or any political subdivision thereof other than the City (see "Security for the
• y Bonds" herein)
° 2 TAX EXEMPTION —In the opinion of Bond Counsel, interest on the Bonds is excluded from gross income subject to federal income
taxation pursuant to the Internal Revenue Code of 1986, as amended, subject to certain conditions and assumptions described herein
a under "Tax Exemption." The Bonds are not private activity bonds. Interest on the Bonds is included in the computation of certain
federal taxes on corporations.
c L BANK QUALIFIED —The City has designated the Series B Bonds as "Qualified Tax - Exempt Obligations" for banks, thrift
CD E w institutions and other financial institutions (see "Tax Exemption" herein).
mo
- DELIVERY —The Bonds are offered for sale to the original purchaser subject to the final approving legal opinion of Preston
cn ct , Gates & Ellis LLP, Seattle, Washington ( "Bond Counsel ") It is expected that the Bonds will be available for delivery to
To the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, on or about J une 10 2003
T.
• (1) Original Principal Amount is estimated at $1,202,242.50.
e ( 2) Preliminary, subject to change.
c O. This cover page contains certain information for quick reference only It is not a sun of the issue. Investors must read the entire Official Statement to
•E obtain information essential to the making of an informed investment decision.
. m SECURITIES CORPORATION
L .
y a
r
H
DRAFT
City of Yakima, Washington
Limited Tax General Obligation and Refunding Bonds, 2003
MATURITY SCHEDULE
$1,202,242.50( ($ 2,400,000( 1 ) Final Maturity Amount)
Limited Tax General Obligation Bonds, 2003 Series A (New Money)
Original Final Price Approximate Original Final Price Approximate
Due Principal Maturity per $5,000 Yield to Due Principal Maturity per $5,000 Yield to
Dec. 1 Amounts( Amount( at Maturity Maturity Dec. 1 Amounts( Amount( at Maturity Maturity
2010 $112,383.00 $150,000 $ % 2018 $70,915.50 $150,000 $ %
2011 105,901.50 150,000 2019 66,486.00 150,000
2012 100,236.00 150,000 2020 62,214.00 150,000
2013 95,080.50 150,000 2021 58,627.50 150,000
2014 90,015 00 150,000 2022 54,673.50 150,000
2015 85,053.00 150,000 2023 51,397.50 150,000
2016 80,208.00 150,000 2024 48,270 00 150,000
2017 75,492.00 150,000 2025 45,289.50 150,000
$4,165,000 (
Limited Tax General Obligation Refunding Bonds, 2003 Series B (Refunding)
Due Interest Price or Due Interest Price or
Dec. 1 Amount( Rate Yield CUSIP Dec. 1 Amount( Rate Yield CUSIP
2003 $35,000 % 2009 $445,000
2004 60,000 2010 460,000
2005 415,000 2011 475,000
2006 420,000 2012 490,000
2007 425,000 2013 505,000
2008 435,000
(Plus accrued interest from the Dated Date)
(1) Original Principal Amount is estimated at $1,202,242.50.
(2) Preliminary, subject to change.
11
DRAFT
City of Yakima, Washington
129 North Second Street
Yakima, Washington 98901
(509) 575 -6000
Mayor and City Council
Mary Place Mayor
Paul George Assistant Mayor
Clarence Barnett Council Member
Lynn K. Buchanan Council Member
Larry Mattson Council Member
John Puccinelli Council Member
Bernard J Sims Council Member
Administrative Officials
Richard A. Zais, Jr City Manager
Glenn K. Rice Assistant City Manager
Rita M. Anson, CPA Director of Finance & Budget
Timothy Jensen Treasury Services Officer
Ray Paolella City Attorney
Bond Counsel
Preston Gates & Ellis LLP
Seattle, Washington
206 - 623 -7580
Bond Registrar
The Bank of New York
New York, New York
1- 800 - 438 -5473
This Official Statement does not constitute an offer to sell the Bonds in any jurisdiction in which or to a person to whom it is
unlawful to make such an offer No dealer, salesperson or other person has been authorized by the City or the Underwriter to
give any information or to make any representations, other than those contained herein, in connection with the offering of the
Bonds and, if given or made, such information or representations must not be relied upon. The City makes no representation
regarding the accuracy or completeness of the information provided in Appendix B — Book Entry Transfer System, which has
been fitrnished by DTC. Estimates and opinions are included and should not be interpreted as statements of fact. Summaries of
documents do not purport to be complete statements of the provisions. The information and expressions of opinion herein are
subject to change without notice, and neither the deliveny of this Official Statement nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the affairs of the City since the date hereof
The Underwriter has provided the following sentence for inclusion in this Official Statement The Underwriter has reviewed the
information in this Official Statement in accordance with, and as part of its responsibility to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy
or completeness of such information.
This Preliminary Official Statement has been "deemed final" by the City, pursuant to Rule 15c2 -12 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, except for information which is
permitted to be excluded from this Preliminary Official Statement under said Rule 15c2 -12.
In connection with this offering, the Underwriter may over -allot or effect transactions that stabilize or maintain the market price
of the Bonds at levels above those which might otherwise prevail in the open market Such stabilizing, if commenced, may be
discontinued at any tine.
iii
DRAFT
Table of Contents
Page
Description of the Bonds 1
Principal Amount, Date, Interest Rates and Maturities 1
No Optional Redemption 1
Purchase 1
Bond Registrar and Registration Features 1
Book -Entry Bonds 2
Authorization for Issuance. 2
Purpose and Use of Proceeds 3
Purpose 3
Refunding Procedure 4
Verification of Mathematical Calculations 4
Estimated Sources and Uses of Funds 5
Security for the Bonds • 5
General 5
Bonded Indebtedness 5
Computation of Debt Capacity 6
Outstanding Debt 7
Summary of Limited Tax General Obligation Bonds Debt Service Requirements 8
Summary of Unlimited Tax General Obligation Bonds Debt Service Requirements 8
Summary of Overlapping Debt 9
Net Direct and Overlapping Debt 9
Debt Payment Record 9
Future Financings 9
Taxing Authority 10
Authorized Property Tax Levies 10
The City's Property Tax Levies. 10
Overlapping Taxing Districts 11
Regular Property Tax Limitations 11
Assessed Value 12
Tax Collection Procedure 13
City of Yakima 13
Tax Collection Record 13
City of Yakima 14
Major Property Taxpayers. 14
Authorized Investments 15
Local Government Investment Pool 15
Authorized Investments for Bond Proceeds 15
City of Yakima 16
Comparative General Fund Statement of Revenues, Expenditures and Changes in Fund Balance 16
Comparative General Fund Balance Sheet. 17
The City 18
Labor Relations 18
Pension System 18
Risk Management. 19
Accounting Policies 20
Budgetary Process 21
Cash and Investments 21
Auditing of City Finances 21
Demographic Information 23
Initiative and Referendum 25
State Initiatives 25
Tax Exemption. 26
General. 26
Continuing Requirements 26
Certain Federal Income Tax Consequences 26
Rating 27
Continuing Disclosure Undertaking 27
Legal and Underwriting 29
Approval of Counsel 29
Litigation 29
Official Statement 29
Underwriting 29
Concluding Statement 29
Opinion of Bond Counsel. Appendix A
Book -Entry Transfer System Appendix B
Audited Financial Statements. Appendix C
iv
OFFICIAL STATEMENT
City of Yakima, Washington
Limited Tax General Obligation and Refunding Bonds, 2003
$1,202,242.50 (1)(2)
($2,400,000( Final Maturity Amount)
2003 Series A (New Money)
$4,165,000(
2003 Series B (Refunding)
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 $1,202,242.50( ($2,400,000( Final Maturity Amount) aggregate original principal amount
of Limited Tax General Obligation Bonds, 2003 Series A (the "Series A Bonds "), dated the date of delivery, and
$4,165,000( aggregate principal amount of Limited Tax General Obligation Refunding Bonds, 2003 Series B
(the "Series B" Bonds), dated June 1, 2003 (together the "Bonds ") This Official Statement provides information
concerning the City and the Bonds.
Description of the Bonds
Principal Amount, Date, Interest Rates and Maturities
The Series A Bonds will be issued in the aggregate original principal amount of $1,202,242.50 ($2,400,000(
Final Maturity Amount) and will be dated and bear interest from their date of delivery The Series A Bonds will
mature on the dates and in the maturity amounts and will have approximate yields to maturity as set forth on the
inside cover of this Official Statement. Interest on the Series A Bonds will be payable only at maturity, and will
be compounded semiannually (for the accreted value of the Series A Bonds of each maturity as of each June 1
and December 1, see "Accreted Value Table" herein) The Series B Bonds will be issued in the aggregate
principal amount of $4,165,000( and will be dated and bear interest from June 1, 2003 The Series B Bonds will
mature on the dates and in the principal amounts and will bear interest (payable semiannually on June 1 and
December 1, first interest payable December 1, 2003) until the maturity or earlier redemption of the Bonds at
the rates set forth on the inside cover of this Official Statement. Interest on the Bonds will be computed on the
basis of a 360 -day year consisting of twelve 30 -day months. Interest on the Series A Bonds, which is payable at
maturity, is included in the Final maturity Amount.
No Optional Redemption
The Bonds are not subject to redemption prior to their scheduled maturities.
Purchase
The City reserves the right and option to purchase any or all of the Bonds in the open market at any time and at
any price. All Bonds so purchased will be canceled.
Bond Registrar and Registration Features
The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede &
Co as Bond Owner and as nominee for The Depository Trust Company ( "DTC "), New York, New York. DTC
will act as securities depository for the Bonds. Individual purchases and sales of the Bonds may be made in
(1) Original Principal Amount is estimated at $1,202,242.50.
(2) Preliminary, subject to change.
1
book -entry form only in minimum denominations of $5,000 within a single maturity and integral multiples
thereof. Purchasers ( "Beneficial Owners ") will not receive certificates representing their interest in the Bonds.
Principal of and interest on the Bonds will be payable by the State fiscal agent in New York, New York,
currently The Bank of New York (or such other fiscal agency or agencies as the State may from time to time
designate) 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 State's fiscal agent 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 in Appendix B
Book -Entry Bonds
DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond for each
maturity of the Bonds, as set forth on the cover of this Official Statement, each in the aggregate principal
amount of such maturity, will be registered in the name of Cede & Co., as nominee for DTC. See Appendix B
attached hereto for additional information.
Procedure in the Event of Revisions of Book -Entry Transfer System. If DTC resigns as the securities depository and
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 affected adversely 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
certificated form, in the denomination of $5,000 or any integral multiple thereof within a maturity In the event
the Bonds are transferred by the City to fully certificated form, interest on the Bonds will be paid by the Bond
Registrar by check mailed or, if requested in writing by a registered owner of $1,000,000 or more in principal
amount of Bonds prior to the applicable record date, by wire transfer on the interest payment date to the
persons in whose names such Bonds are registered, at the address appearing upon the registration books on
the 15th day of the month preceding an interest payment date. The principal of the Bonds will be payable upon
due presentment and surrender of the Bond to the Bond Registrar in New York, New York. In addition, under
the terms of the current fiscal agency contract, Bond owners in Washington state may present their Bonds for
payment at redemption or maturity at any office of Wells Fargo Bank Northwest, N.A. The Bonds will be
transferable prior to maturity by delivering the Bonds to the Bond Registrar (currently in New York, New
York) in accordance with the regular procedures of the Bond Registrar
Authorization for Issuance
Under and in accordance with State laws, the Bonds are issued pursuant to Ordinance No passed by the
City Council (the "Council ") on , 2003 and Resolution No adopted by the Council on
, 2003 (collectively, the "Ordinance "), and the authority of RCW chapters 35.57, 39.36, 39 46 and
39.53 The Bonds may be issued without a vote of the people.
Investor Suitability of the Series A Bonds
The Series A Bonds are not suitable for all investors. Investors should consult with qualified advisors to
determine whether the Series A Bonds are a suitable investment. Several important factors must be considered
to determine whether the Series A Bonds are suitable for a particular investor Some of the factors that should
be considered are discussed below The following discussion is not intended to be a complete listing of all
factors that should be considered.
After Tax Yield
The value of an investment return may be affected by federal, state and local income taxes. Investments should
be compared for their after -tax return to the investor
2
Income Tax Treatment of Original Issue Discount
The Series A Bonds are being initially offered and sold to the public at a price which will result in original issue
discount for federal income tax purposes. For a description of the federal income tax treatment of original
issue discount, see "Tax Exemption" herein.
No Payment Prior to Maturity; Automatic Reinvestment
The Series A Bonds do not pay interest to the holder prior to maturity Interest accrues and compounds
semiannually over the life of the Series A Bonds. Effectively, the interest is automatically reinvested at the
approximate obligation yield to maturity However, automatic reinvestment prevents an investor from
reinvesting interest earnings at a higher yield if interest rates are higher at the time of reinvestment. Also, if
money is needed for other uses, an investor cannot obtain any funds from a Deferred Interest Bond prior to
maturity without selling the Series A Bonds. See "Market Risk for Bonds" below
Market Risk for Bonds
The original purchase price plus the total amount of interest accrued with respect to an Bond (together, the
"Accreted Value ") will not necessarily equal the market value of that Bond at any time. The market value of a
Bond is determined by a number of factors, including but not limited to the yield on that Bond, yields available
on other taxable and tax - exempt investments, and general market conditions.
Purchasers who may have to sell Bonds prior to maturity should consider the market risk associated with
deferred interest bonds. The stated approximate yield on the Series A Bonds is determined based on the
assumption that the Series A Bonds will be held to maturity The yield would be affected if the Series A Bonds
were sold prior to maturity The resale value of the Series A Bonds will be affected by market factors,
particularly prevailing market interest rates at the time of the sale.
If the Series A Bonds are resold when interest rates are higher than at the time the Series A Bonds were
purchased, the investor may realize a loss on the investment. Long -term deferred interest bonds historically
have been subject to greater market volatility than current interest bonds (this statement is based on historical
market factors and should not be construed as a prediction of future market behavior) A change in interest
rates is likely to have a greater impact on the Series A Bonds than on traditional bonds. In any case, if an
investor wishes to sell the Series A Bonds prior to maturity, the investor should not expect necessarily to
realize an amount reflecting the original principal plus the interest that was accrued to the date of sale of the
Series A Bonds.
It is unlikely that an active secondary market will develop for the Series A Bonds. Lack of an active secondary
market may adversely affect the sale price at which the owner of a Bond is able to sell the Series A Bonds prior
to maturity
Purpose and Use of Proceeds
Purpose
The net proceeds from the sale of the Series A Bonds will be used to finance the expansion of and
improvements to the SunDome. The Series B Bonds are being issued so that the City can obtain the benefit of
savings in total debt service requirements. The proceeds of the Series B Bonds will be used to provide funds to
establish an irrevocable trust escrow to refund $3,870,000 of the City's outstanding Limited Tax General
Obligation Bonds, 1994, dated February 1, 1994, which mature from December 1, 2005 through 2011 and the
Term Bonds maturing on December 1, 2013 (the "Refunded Bonds ") A portion of the proceeds of the Bonds
will also be used to pay the costs of issuance of the Bonds. Proceeds of the Series B Bonds will be escrowed to
the call date of the Refunded Bonds, at which time they will be called at a price of par plus accrued interest to
the date of redemption.
3
Refunding Procedure
From the proceeds of the Bonds, and with other money available, the City will purchase certain direct non -
callable United States government obligations (referred to herein as "Government Obligations ") These
Government Obligations will be deposited in the custody of U.S Bank National Association ( "Escrow
Trustee ") The maturing principal of the Government Obligations, interest earned thereon, and necessary cash
balance, if any, will be used to provide payment of the interest on the Refunded Bonds when due up to and
including December 1, 2004, and to call, pay and redeem on December 1, 2004, all of the outstanding principal
of the Refunded Bonds at a price of par
The Government Obligations, interest earned thereon, and necessary cash balance, if any, will irrevocably be
pledged to and held in trust for the benefit of the owners of the Refunded Bonds by the Escrow Trustee,
pursuant to a refunding trust agreement to be executed by the City and the Escrow Trustee. Information on
the Refunded Bonds is as follows.
Information on the Refunded Bonds is as follows:
Refunded Amount Amount Redemption
Refunded Bonds Maturities Outstanding Refunded Date Price
LTGO, 1994 2005 -2013 $4,530,000 $3,870,000 12/01/04 Par
Refunded Bonds
Maturity Years Principal Interest CUSIP
(December 1) Amounts Rates Numbers
2005 $ 355,000 4.50% 984521JN5
2006 370,000 4.65 984521JP0
2007 385,000 4.80 984521JQ8
2008 405,000 4.90 984521JR6
2009 425,000 510 984521JS4
2010 445,000 515 984521JT2
2011 470,000 5.20 984521JU9
2013 1,015,000 5.20 984521JW5
Verification of Mathematical Calculations
Grant Thornton LLP, Minneapolis, Minnesota, independent certified public accountants, will verify the
accuracy of the mathematical computations concerning the adequacy of the maturing principal amounts of and
interest earned on the government obligations, to be placed together with other escrowed moneys in the
escrow account to pay when due, pursuant to stated maturity or call for redemption, as the case may be, the
principal of, premium, and interest on the Refunded Bonds. The verification will also confirm the
mathematical computations supporting the conclusion of Bond Counsel that the Bonds are not "arbitrage
bonds" as defined by Section 148 of the Code.
4
Estimated Sources and Uses of Funds
The proceeds from the Bonds (less accrued interest) are estimated to be applied as follows:
Sources of Funds Series A Bonds Series B Bonds
Par Amount of Bonds* $ 1,202,243 $ 4,165,000
Net Premium/ Discount
Total Sources of Funds $ $
Uses of Funds*
Escrow Requirements $ $
Project Requirements
Issuance Expenses, Underwriter's Discount, Bond Insurance
and Additional Proceeds
Total Uses of Funds $ $ 3
Security for the Bonds
General
The Bonds are limited tax general obligation bonds of the City The City hereby 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 ad valorem taxes upon all the property within the City subject to taxation in an amount that will be
sufficient, together with all other revenues and money of the City legally available for such purposes, to pay
the principal of and interest on the Bonds as the same shall become due.
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
Bonded Indebtedness
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. 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 Bonds are issued without a vote.
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 or notes within the
constitutional and statutory limitations on indebtedness.
(2) The City may execute conditional sales contracts for the purchase of real or personal property
(3) The City may execute leases with or without an option to purchase.
* Preliminary, subject to change
5
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 (i) 12 percent of the outstanding
obligations guaranteed by the guaranty fund, or (ii) the total amount of delinquent 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)
Computation of Debt Capacity
(As of June 1, 2003)
2003 Collection Year Assessed Valuation (1) $ 3,673,433,781
Nonvoted Debt Capacity
1.5% of Assessed Value $ 55,101,506
Less. Outstanding Nonvoted Debt (2) (13,010,056)
Less. The Series A Bonds (3) (1,202,243)
Less: The Series B Bonds (3) (4,165,000)
Remaining Nonvoted Debt Capacity $ 36,724,207
Voted and Nonvoted Debt Capacity
2.5% of Assessed Value $ 91,835,844
Less. Outstanding Nonvoted Debt (2) (13,010,056)
Less. The Series A Bonds (3) (1,202,243)
Less. The Series B Bonds (3) (4,165,000)
Less: Outstanding Voted Debt (2,710,000)
Total Remaining Voted and Nonvoted Debt Capacity $ 70,748,545
Voted Utility Debt Capacity
2.5% of Assessed Value $ 91,835,844
Less. Outstanding Utility Obligations 0
Total Remaining Utility Debt Capacity $ 91,835,844
Voted Open Space /Park Debt Capacity
2.5% of Assessed Value $ 91,835,844
Less. Outstanding Open Space /Park Obligations 0
Total Remaining Open Space /Park Debt Capacity $ 91,835,844
(1) Provided by the Yakima County Assessor
(2) Includes limited tax general obligation debt and lease purchase agreements.
(3) Preliminary, subject to change.
Source. Cihj of Yakima
6
Outstanding Debt
(As of June 1, 2003)
Long Term Borrowing
General Obligations: Non -voted (1)
Date of Date of Amount Amount
Limited Tax General Obligations Issue Maturity Issued Outstanding
LTGO 1994 02/01/94 12/01/04 ( $ 6,800,000 $ 4,530,000
Less. Refunded Bonds (3,870,000)
LTGO Convention Center 1996 01/01/96 11/01/19 6,000,000 4,910,000
LTGO 1998 04/01/98 06/01/08 1,430,000 795,000
LTGO Housing 2000 08/01/00 06/01/06 50,000 41,000 (
LTGO 2002 05/01/02 06/01/26 6,735,000 6,565,000
LTGO 2003 Series A (this issue) 06/1 12/01/25 1,202,243 ( 1,202,243 (
LTGO 2003 Series B (this issue) 06/01/03 12/01/12 4,165,000 ( 4,165,000 (
LTGO Bond Total 26,382,243 18,338,243
Lease Purchase Agreements
High Speed Copier 11/01/98 10/01/03 35,649 21,114
Laser Printer 11/01/98 10/01/03 27,566 17,942
Purchase Contract Total 63,215 39,056
Total Non -voted General Obligations $ 26,445,458 $ 18,377,299
General Obligations: Voter Approved
Unlimited Tax General Obligation Bonds
UTGO & Refunding 1995 10/01/95 12/01/14 $ 7,300,000 $ 2,710,000
(1) Does not include special assessment debt outstanding in the amount of $92,000 as of April 1, 2003 Also does not
include City's obligation pursuant to an interlocal agreement with Yakima County to pay approximately $150,000
annually through 2009
(2) The Date of Maturity reflects the redemption of the 1994 Bonds. The December 1, 2003 and 2004 principal payments
remain after this refunding.
(3) Amount outstanding as of May 1, 2003.
(4) Preliminary, subject to change.
7
Summary of Limited Tax General Obligation Bonds Debt Service Requirements
(As of June 1, 2003)
Cal. Outstanding LTGO Bonds (1) The Series A Bonds (2) The Series B Bonds (2) Total Debt
Years Principal Interest Principal Interest Principal Interest Service
2003 $ 515,000 $ 215,788 $ 35,000 $ - $ - $ - $ -
2004 855,000 594,564 60,000 0 0 0 0
2005 540,000 556,856 415,000 0 0 0 0
2006 565,000 532,416 420,000 0 0 0 0
2007 595,000 506,283 425,000 0 0 0 0
2008 620,000 478,051 435,000 0 0 0 0
2009 465,000 453,769 445,000 0 0 0 0
2010 485,000 431,988 460,000 0 112,383 0 0
2011 510,000 408,868 475,000 0 105,902 0 0
2012 535,000 384,499 490,000 0 100,236 0 0
2013 560,000 358,518 505,000 0 95,081 0 0
2014 585,000 331,071 0 0 90,015 0 0
2015 620,000 301,829 0 0 85,053 0 0
2016 645,000 270,704 0 0 80,208 0 0
2017 680,000 237,499 0 0 75,492 0 0
2018 715,000 202,359 0 0 70,916 0 0
2019 675,000 165,106 0 0 66,486 0 0
2020 340,000 129,750 0 0 62,214 0 0
2021 355,000 112,375 0 0 58,628 0 0
2022 375,000 94,125 0 0 54,674 0 0
2023 395,000 74,875 0 0 51,398 0 0
2024 410,000 54,750 0 0 48,270 0 0
2025 435,000 33,625 0 0 45,290 0 0
2026 455,000 11,375 0 0 0 0 0
Total $ 12,930,000 $ 6,941,041 $ 4,165,000 $ 0 $ 1,202,243 $ 0 $ 0
(1) Does not include the 2000 LTGO Housing Bonds (see "Bonded Indebtedness - Outstanding Debt" for details)
(2) Preliminary, subject to change.
Summary of Unlimited Tax General Obligation Bonds Debt Service Requirements
(As of June 1, 2003)
Cal. Outstanding UTGO Bonds Total Debt
Years Principal Interest Service
2003 $ 200,000 $ 72,473 $ 272,473
2004 180,000 133,446 313,446
2005 185,000 123,096 308,096
2006 195,000 114,309 309,309
2007 205,000 104,754 309,754
2008 215,000 94,504 309,504
2009 200,000 83,539 283,539
2010 240,000 73,139 313,139
2011 250,000 60,419 310,419
2012 265,000 46,919 311,919
2013 280,000 32,344 312,344
2014 295,000 16,594 311,594
Total $ 2,710,000 $ 955,534 $ 3,665,534
8
Summary of Overlapping Debt
(As of March 31, 2003)
Estimated
2003 Assessed Percent Outstanding Overlapping
Overlapping Taxing District Value Overlap GO Debt Debt
Yakima School District No 7 $ 3,236,311,193 95 90% $ 44,635,000 $ 42,805,657
West Valley School District No 208 1,388,227,629 40.73 13,925,000 5,671,619
Yakima County 10,197,814,475 36.02 55,210,661 19,887,860
Naches School District No 3 457,818,098 0.35 3,660,000 12,662
Total $ 68,377,798
Source. Yakima Counhy Assessor's and Treasurer's Office
Net Direct and Overlapping Debt
The following tables present information regarding the City's direct debt (including the Bonds) and the
estimated portion of the debt of overlapping taxing districts allocated to the City's residents.
Assessed Value (2003 Collection Year) (1) (3) $ 3,673,433,781
Estimated 2002 Population (2) (3) 79,120
Debt Information
Net Direct Debt (4) $ 21,087,299
Estimated Net Overlapping Debt (as previously detailed herein) 68,377,798
Total Net Direct and Overlapping Debt $ 89,465,097
(1) Provided by the Yakima County Assessor's Office.
(2) Estimate derived from the State of Washington, Office of Financial Management, Forecasting Division.
(3) The assessed value and population figures are subject to change if annexed property lines are invalidated (see "Legal
and Underwriting - Litigation" herein).
(4) Includes the Bonds plus limited and unlimited tax general obligation debt and lease purchase agreements.
Bonded Debt Ratios
Net Direct Debt to Assessed Value 0.57%
Net Direct and Overlapping Debt
to Assessed Value 1.86%
Per Capita Assessed Value $ 46,429
Per Capita Net Direct Debt $ 267
Per Capita Total Net Direct and Net Overlapping Debt $ 1,131
Debt Payment Record
The City has promptly met all debt service payments on outstanding obligations. No refunding bonds have
been issued to prevent an impending default.
Future Financings
Other than the Bonds, the City has no authorized but unissued bonds outstanding. The City is considering
issuing a $10 million irrigation revenue bond in summer 2003 and a capital lease financing for police car video
camera system in the amount of $500,000 in June 2003
9
Taxing Authority
Authorized Property Tax Levies
The City is authorized to impose (i) a regular levy (up to $3 60/$1,000 of assessed value) and (ii) excess levies
(unlimited as to rate or amount) The regular levy is imposed without a vote of the people for general
purposes, including payment of debt service on the Bonds, and is subject to limitations (see "Regular Property
Tax Limitations" herein) Excess levies are imposed, upon voter approval, to pay debt service on unlimited tax
general obligation bonds. An excess levy also may be imposed without a vote to prevent the impairment of a
contract (RCW 84.52.052)
The City's Property Tax Levies
The following table shows the City's levy rates and dollar amounts levied since 1999
Ad Valorem Tax Levies
(Dollars per $1,000 of Assessed Value)
Collection Levy Rates Levy Amounts
Year General Bond* Total General Bond* Total
2003 $3.5214 $0 0957 $3 6171 $12,935,578 $345,000 $13,280,578
2002 3.5264 0.2611 3 7875 11,554,073 836,000 12,390,073
2001 3.5145 0.2809 3 7954 11,098,211 870,000 11,968,211
2000 3 4906 0.2484 3 7390 10,738,967 750,000 11,488,967
1999 3 4491 0 4653 3 9144 9,833,718 1,300,000 11,133,718
* For repayment of voted bonds; not subject to limitation on levy rates or levy amounts.
Sources. Yakima County Assessor s and Treasurer's Office
10
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
Representative Levy Rates Statutory Levy Authority
Per $1,000 of Per $1,000 of
Assessed Value Assessed Value
Yakima County $ 1.8897 $1.80 (2)
County (Road Levy) n/a (1) 2.25
Library District n/a (1) 0.50
Fire Protection District n/a (1) 1.50
Port District n/a (1) 0 45
The City 3 6171 3 60 (3)
Hospital District n/a (1) 0 75
State Schools 2.9594 3 60 (4)
Yakima School District No 7 4.7561
County Emergency Services 0.2490
Total rate for Yakima County levy code 333 $ 13 4713
(1) Yakima County levy code 333 is included within the incorporated portion of Yakima County and therefore does not
have a road levy Likewise, it does not contain either a fire district, library district, port district or a hospital district.
(2) Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per $1,000 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
Of Yakima County's total levy rate of $1.8897, the nonvoted levy rate is $1.80 and $0.0849 is the voted portion.
(3) RCW 41.16.060 $0.225 of the total $3.60 can be used for pension funding purposes, if required, otherwise this tax may
be levied and used for any other municipal purpose. The total levy includes a regular levy of $3.5214 and a voted bond
levy of $0.0957
(4) RCW 84.52.043(1) The levy by the State shall not exceed $3 60 per $1,000 assessed value adjusted to the State
equalized value in accordance with the indicated ratio fixed by the State Department of Revenue to be used exclusively
for the support of the common schools.
Source. Yakima County Assessor for Levy Code 333
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
Regular property tax levies are subject to rate limitations and amount limitations, as described below, and to
the uniformity requirement of Article VII, Section 1 of the State Constitution, which specifies that a taxing
district must levy the same rate on similarly classified property throughout the district. Aggregate property
taxes vary within the county because of its different overlapping taxing districts. In the event that the
maximum permissible levy varies within the City, the lowest permissible rate for any part of the City would be
applied to the entire city
Maximum Rate Limitation. Title 84 RCW authorizes the imposition of regular tax levies to various statutory
maximums (see "Overlapping Taxing Districts" herein)
The One Percent Aggregate Regular Levy Lintitntion. 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 limitation by statute.
$5 90/$1,000 Aggregate Regular Levy Limitation. Within the one percent limitation 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 value, except levies for any port or public utility district; excess levies
11
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 the statutory maximum prescribed by
RCW 04.52.050 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.
The tax levy for unlimited tax general obligation bonds is a special excess levy approved by the voters, and as
such, is not subject to the limitations on regular levies described above.
The Levy Limitation. The regular property tax increase limitation (Chapter 84.55 RCW), as amended most
recently by Initiative No 747 (which was passed by voters on November 6, 2001), limits the total dollar amount
of regular property taxes levied by an individual local taxing district such as the City to the amount of such
taxes levied in the highest of the three most recent years multiplied by a limit factor, plus an adjustment to
account for taxes on new construction, improvements and State - assessed property at the previous year's rate.
See "Initiative and Referendum." The limit factor is 101 percent, unless a greater amount is approved by a
simple majority of the voters.
With a majority vote of its electors, a taxing district may levy, within the rate limitations described above, more
than what otherwise would be allowed by the tax increase limitation indefinitely or for a limited period or to
satisfy a limited purpose, as allowed by RCW 84.55 050 This is known as a "levy lid lift." A newly created
taxing district can initiate its levy at the maximum permitted statutory levy rate, unless that rate would exceed
any of the limitations described above.
Since the regular property tax increase limitation applies to the total dollar amount levied rather than to levy
rates, increases in the assessed value of all property in the taxing district (excluding new construction,
improvements and State - assessed property) which exceed the rate of growth in taxes allowed by the limit
factor result in decreased regular tax levy rates, unless voters authorize a higher levy Decreases in the
assessed value of all property in the taxing district (including new construction, improvements and State -
assessed property) or increases in such assessed value that are less than the rate of growth in taxes imposed,
among other events, may result in increased regular tax levy rates.
Assessed Value
The County Assessor, or equivalent thereof ( "Assessor "), determines the value of all real and personal
property throughout the County that 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 an annual property valuation and an on -site revaluation 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 Tax Appeals.
12
The provisions relating to assessed value increase limitations enacted by the Property Tax Act, as defined
herein, were declared unconstitutional by the State Supreme Court in July 1998, and are consequently no
longer in effect.
Tax Collection Procedure
Property taxes are levied in specific amounts and the rate for all taxes levied for all taxing districts in the
County is determined, calculated and fixed by the Assessor based upon the assessed value of the property
within the various taxing districts. The Assessor extends the taxes to be levied within each taxing district on 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, or equivalent thereof, by January 15, 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 April 30 of
each year, but if the amount due from a taxpayer exceeds $50, one -half may be paid then and the balance no
later than October 31, of each year Delinquent taxes are subject to interest at the rate of 12 percent per year
computed on a monthly basis from the date of delinquency until paid. In addition, a penalty of three percent
will be assessed on June 1st of the year in which the tax was due and eight percent on December 1st of the year
due. All collections of interest on delinquent taxes will be credited to the County's current expense fund. 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 covered by
detailed statutes. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or
personal property subject to taxation. By law the County Treasurer may not commence foreclosure of a tax lien
on real property until three years have passed since the first delinquency The State's courts have not decided
whether the Homestead Law (chapter 613 RCW) may give the occupying homeowner a right to retain the first
$40,000 of proceeds of the forced sale of the family residence or other "homestead" property for delinquent
general property taxes (See Algona v Sharp, 30 Wn. App 837, 638 P.2d 627 (1982), holding the homestead right
superior to the improvement district assessments) The United States Bankruptcy Court for the Western
District of Washington has held that the Homestead Exemption applies to the lien for property taxes, while the
State Attorney General has taken the position that it does not.
City of Yakima
Tax Collection Record
Tax Collection
Collection Regular Ad Valorem Year As of
Year Assessed Value (1) Tax Levy of Levy 03/31/03
2003 $3,673,433,781 $13,280,578 (2) (2)
2002 3,268,615,861 12,390,073 95.3% 96 7%
2001 3,156,055,363 11,968,211 95 9 98 6
2000 3,076,532,870 11,488,967 94.6 99.3
1999 2,851,139,441 11,133,718 95.5 100 0
1998 2,792,000,801 10,488,549 95 7 100 0
(1) Assessed valuation is based upon 100 percent of estimated actual valuation.
(2) In process of collection.
NOTE. Taxes are due and payable on April 30 of each year of the levy The entire tax or first half must be paid on or
before April 30, otherwise the total amount becomes delinquent on June 1. The second half of the tax is payable on
or before October 31, becoming delinquent November 1.
Source. City of Yakima
13
City of Yakima
Major Property Taxpayers
Percent of
2003 Collection Year City's
Taxpayer Type of Business Assessed Valuation Total A.V.
Shields Bag & Printing Co Manufacturing $ 32,766,818 0.89%
Boise Cascade Corp Lumber 32,222,697 0.88
Qwest Corporation Telecommunications 27,622,733 0 75
Longview Fibre Co Manufacturing 25,765,493 0 70
John I. Haas, Inc. Hop processing 18,682,409 0.51
Yakima Mall Shopping Center Retail 18,186,323 0 49
Pacific Power & Light Power utility 15,559,725 0 42
Washington Fruit & Produce Fruit processing 14,900,321 0 41
Ace Hardware Hardware retail 14,173,066 0.39
Snokist Growers Fruit processing 13,156,980 0.36
Subtotal - Ten of the City's Largest Taxpayers 213,036,565 5.80
All Other City Taxpayers 3,460,397,216 94.20
Total City Taxpayers $ 3,673,433,781 100.00%
Source: Yakima County Assessor's Office
14
Authorized Investments
Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess of
current needs to the following authorized investments: United States bonds, United States certificates of
indebtedness, bonds or warrants of the State and any local government 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 or the State Treasurer Under chapter
43.84 RCW, the State Treasurer may invest in non - negotiable certificates of deposit in designated qualified
public depositories, in obligations of the US government, its agencies and wholly owned corporations, in
bankers' acceptances, in commercial paper; in the obligations of the federal home loan bank, federal national
mortgage association and other government corporations subject to statutory provisions and may enter into
repurchase agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local
improvement district are also eligible investments (RCW 35.39 030)
Money 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. Funds derived from the sale of bonds
or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances,
resolutions or bond covenants may lawfully prescribe.
Local Government Investment Pool
The State Treasurer's Office administers the Washington State Local Government Investment Pool (the
"LGIP "), a $5 1 billion dollar fund that invests money on behalf of more than 350 cities, counties and 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 satety of
principal, (ii) the assurance of sufficient liquidity to meet cash flow demands, and (iii) 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 one year 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.
Authorized Investments for Bond Proceeds
In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds
with portfolios consisting of U.S government and guaranteed 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 of a nationally recognized rating agency 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
(RCW 39.59 030)
15
City of Yakima
Comparative General Fund Statement
of Revenues, Expenditures and Changes in Fund Balance
(Fiscal Years Ended December 31)
Unaudited Audited
2002 2001 2000 1999 1998
Revenues
Taxes and Special Assessments $ 26,570,484 $ 25,438,932 $ 24,285,034 $ 23,032,920 $ 22,393,755
Licenses and Permits 405,856 408,688 331,190 432,738 535,597
Intergovernmental 1,749,790 1,829,708 1,669,192 2,770,209 2,526,145
Charges for Services 3,723,724 3,466,615 3,407,465 3,344,377 3,440,235
Fines and Forfeitures 1,631,877 1,553,036 1,608,584 1,399,613 1,248,052
Interest 558,359 893,688 950,269 850,323 933,140
Other 58,363 51,885 52,050 55,969 49,382
Total Revenues $ 34,698,453 $ 33,642,552 $ 32,303,784 $ 31,886,149 $ 31,126,306
Expenditures
General Government 8,665,775 8,053,234 7,997,793 8,109,634 8,108,495
Security of Persons and Property 20,794,442 19,490,986 18,993,558 18,764,498 18,202,589
Physical Environment 1,242,009 1,086,178 1,048,394 1,231,915 1,299,217
Economic Environment 419,434 372,629 425,484 480,145 538,538
Mental and Physical Health 23,219 22,608 21,510 26,473 27,229
Culture and Recreation 1,251,178 1,214,139 1,190,468 1,166,995 1,147,983
Capital Outlay 89,259 89,068 157,526 237,937 370,112
Debt Service 212,403 212,754 214,314 201,461 211,250
Total Expenditures 32,697,719 30,541,596 30,049,047 30,219,058 29,905,413
Excess of Revenues
over (under) Expenditures 2,000,734 3,100,956 2,254,737 1,667,091 1,220,893
Other Financing Sources (Uses)
Proceeds from Capital Lease Financing 0 0 0 46,125 77,165
Operating Transfers In 110,000 110,000 110,000 110,000 110,000
Operating Transfers (Out)* (1,906,771) (1,910,660) (1,862,966) (1,789,075) (1,879,868)
Comp. For Loss of Gen. Fixed Assets 2,774 989 12,040 2,248 1,745
Total other Financing Sources (Uses) (1,793,997) (1,799,671) (1,740,926) (1,630,702) (1,690,958)
Excess of Revenues and Other Sources
Over (Under) Expenditures /Other Use 206,737 1,301,285 513,811 36,389 (470,065)
Fund Balance, January 1 6,191,466 4,903,996 4,401,093 4,366,601 4,670,490
Change in Reserve for Inventory (3,280) (13,815) (10,908) (1,897) (3,824)
Residual Equity Transfer In 0 0 0 0 170,000
Residual Transfer Equity Out (12,600) 0 0 0 0
Ending Fund Balance $ 6,382,323 $ 6,191,466 $ 4,903,996 $ 4,401,093 $ 4,366,601
* The majority of operating funds transferred out of the general fund are used to fund parks programs, debt service for prior
bonds, contingency funds and the City's public safety communications network.
Source. Cihj of Yakima
16
City of Yakima
Comparative General Fund Balance Sheet
(Fiscal Years Ended December 31)
Unaudited Audited
2002 2001 2000 1999 1998
Assets and Other Debits
Cash & Equity in Pooled Investments $ 7,706,470 $ 8,890,037 $ 7,372,158 $ 6,419,246 $ 6,342,268
Receivables:
Taxes 862,274 727,573 827,451 612,937 595,420
Accounts 174,086 166,865 176,765 108,451 24,201
Interest/ Penalties 287,596 287,633 366,448 240,162 454,078
Due from Other Funds 1,066,233 153,003 63,818 152,431 76,891
Due from Other Gov't Units 26,964 26,964 51,116 37 423 29 455
Inventories 26,802 30,082 43,897 54,805 56,702
Investments, at amortized cost 0 0 (15,523) 0 0
Total Assets 10,150,425 10,282,157 8,886,130 7,625,455 7,579,015
Liabilities
Warrants/ Accounts Payable 389,798 642,513 517,171 446,799 597,775
Wages /Benefits Payable 2,246,608 2,054,005 2,035,914 2,040,779 2,014,115
Due to Governments 19,388 25,083 23,129 26,293 39,406
Deposits Payable 214,524 10,963 39,459 41,146 34,393
Deferred Revenues 897,784 1,358,127 1,366,461 669,345 526,725
Total Liabilities 3,768,102 4,090,691 3,982,134 3,224,362 3,212,414
Fund Equity and Other Credits
Fund Balance:
Reserved 788,694 771,777 714,745 276,465 476,257
Unreserved 5,593,629 5,419,689 4,189,251 4,124,628 3,890,344
Total Fund Equity and Other Credits 6,382,323 6,191,466 4,903,996 4,401,093 4,366,601
Total Liabilities, Equity and Other Credits $ 10,150,425 $ 10,282,157 $ 8,886,130 $ 7,625,455 $ 7,579,015
Source. City of Yakima
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The City
The City of Yakima was incorporated in 1886. It is the ninth largest city in the State, and encompasses
approximately 23 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 utility), water utility, community 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 Term Expires
Mary Place, Mayor December 31, 2005
Paul George, Asst. Mayor December 31, 2005
Clarence Barnett December 31, 2003
Lynn K. Buchanan December 31, 2003
Larry Mattson December 31, 2003
John Puccinelli December 31, 2003
Bernard J Sims December 31, 2005
Labor Relations
The City employs approximately 635 people including part -time employees. A majority of the City's
employees are represented by bargaining units as follows.
Number
Bargaining Unit of Employees Contract Expiration Date
AFSCME Municipal 265 December 31, 2004
YPPA 105 December 31, 2003
Fire Suppression 63 December 31, 2003
AFSCME Transit 42 December 31, 2003
Fire Communications 13 December 31, 2003
Fire PERS 16 December 31, 2003
The City has a long history of good working relationships with its employee groups and bargaining units.
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 Washington State 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. Police officers and
firefighters are covered by the Law Enforcement Officers and Firefighters Retirement Fund ( "LEOFF ") Other
City employees are covered by the Public Employees' Retirement System ( "PERS ") Contributions to the
systems by both employee and employer are based upon gross wages covered by plan benefits.
LEOFF includes two plans and PERS includes three 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 eligible service. PERS Plan III members
are vested after ten years of eligible service. All Plans I and II are defined benefit plans. Plan III consist of two
separate elements. a defined benefit and a defined contribution portion. Participants enrolled in PERS Plan II
may elect to transfer to Plan III, during the specified transfer window period that occurs in January of each
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year Once employees transfer to Plan III, they may not return to Plan II membership In addition, employees
who do not specify a plan choice will transfer automatically to Plan III.
PERS City employees are covered by the PERS. Retirement benefits are financed from both employee and
employer contributions and investment earnings and are vested after completion of five years of eligible
service. For the year ending December 31, 2002, the City's contribution of $196,485, or 1.44 percent of covered
payroll, represents its full liability under the system, except that future rates may be adjusted to meet the
system need.
PERS Plan III became effective on March 1, 2002. Local government employees, such as those within the City,
may choose to transfer from PERS Plan II to PERS Plan III between September 1, 2002 and May 31, 2003
Eligible employees hired after September 1, 2002 may choose to join either PERS Plan II or III. PERS Plan II
members who do not transfer plans during the initial transfer period will be given an annual opportunity to
transfer to PERS Plan III in January of each year
LEOFF For the year ending December 31, 2002, the City's contribution to LEOFF I (for participants who
joined the system by September 30, 1977) of 0.2 percent and to LEOFF II (participants who joined after
September 30, 1977) of 2.9 percent of covered payroll totaled $10,272,486, representing 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 unfounded pension liability of $449,768
at December 31, 2002.
Risk Management
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 and employees hired to work less than half -time. The City's
Human Resources Office administers the self - insured program and claims payment services are provided by
Health Care Management Administration, Inc.
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 2002 were
$4,689,515 Incurred but not reported claims of $877,000 were accrued as a liability
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 -
19
loss insurance, the City pays the first $150,000 of claims for an individual employee or dependent. Any charges
accrued by an individual in excess of $150,000 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 $150,000 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 administered by the City's
Personnel Office with claims administration and safety services provided by Ward North America (formerly
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 Fund is reviewed to determine a contribution rate which
provides for an appropriate reserve. Interfund premiums to the Workers' Compensation Fund for 2002 were
$1,294,368
In order to avoid catastrophic losses, the City "reinsures" the program by purchasing insurance known as
"stop -loss insurance." This insurance is provided through Marsh Advantage America 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
2002 were $1,094,558 The Fund provides for administration, legal services, claims adjustment, and for the
purchase of property and other insurance coverages.
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,
(ii) 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 expenditures 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
20
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.
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 39.59 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 Local Government Investment Pool (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, 2002 was $49.7 million. Of that amount, 51 percent was in the LGIP,
40 percent was in agency securities, five percent was invested in U.S. Treasuries, and three percent was
invested in municipal securities.
Auditing of City Finances
Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance
with RCW 43 09.200 and RCW 43 09.230 The City complies with the systems and controls prescribed by the
Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of
assets and the reliability of financial reporting (see "Authorized Investments" herein)
21
The State Auditor is required to examine the affairs of cities at least once every two years. The City is audited
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 finance department of the City
The audited financial statements of the City for the year ended December 31, 2001, attached as Appendix C, are
incorporated by reference to this Official Statement and will be filed with the current nationally recognized
municipal securities information repositories ( "NRMSIR ") Future financial statements may be ordered by
contacting the individual NRMSIRs or by accessing the NRMSIR website, located at:
http: / / www. sec. gov/ info /municipal / nrmsir.htm.
Bloomberg Financial Markets Interactive Data
Municipal Repository Attn. Repository
P 0 Box 840 100 Williams Street
Princeton, NJ 08542 -0840 New York, NY 10038
Phone: (609) 279 -3225 Phone: (212) 771 -6899
Fax: (609) 279 -5962 Fax: (212) 771 -7390
munis@bloomberg.com NRMSIR @interactivedata.com
DPC Data Inc. Standard & Poor's J J Kenny Repository
One Executive Drive 55 Water Street, 45th Floor
Fort Lee, NJ 07024 New York, NY 10041
Phone: (201) 346 -0701 Phone: (212) 438 -4595
Fax: (201) 947 -0107 Fax: (212) 438 -3975
nrmsir @dpcdata.com nrmsir_repository @sandp.com
22
Demographic Information
The City lies 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 ti o.
��
seventh in terms of population. The City is the County seat and the largest fr '
incorporated community in the County encompassing 23 square miles.
history for both the City and County in recent years is shown in the
W
following table: Yakima County
Washington
Population
Yakima County and the City of Yakima
Yakima City of
April 1 County Yakima
2002 225,000 79,120
2001 224,500 73,040
2000* 222,581 71,845
1999 212,300 65,500
1998 210,500 64,290
April 1
1990* 188,823 54,843
* U.S. Census Count
Source. Washington State Office of Financial Management
Employment
The economy of the City is based primarily on agriculture that produces and processes tree fruits, hops, mint,
vegetables, livestock, dairy and grapes for wine. Additionally, the City's economy is also based on
manufacturing aircraft parts and supplies and machinery used in food product packaging. The City is the
center of the County's economic activity
City of Yakima
Major Employers
Number of
Employer Product Employees
Snokist Growers Fruit canning 1,275
City of Yakima Government 635
Western Recreational Vehicles Trailers, motor homes 600
Shields Bag & Printing Flexible packaging 530
Boise Cascade Corp Lumber & plywood mill 421
Snokist Growers Headquarters Canned fruit 375
Irwin Research & Development Thermoformers, trim presses 280
Dowty Aerospace Yakima Flight & engine control systems 220
Smith Aerospace Yakima Aircraft equipment 220
Hansen Fruit & Cold Storage Fresh fruit distributors 200
Yakima Herald Republic Daily newspaper 200
Summit Window & Patio Door Windows and patio doors 160
MARQ Packaging Systems Inc. Packaging machinery 150
Trail Wagons Inc. Custom van & RV conversions 150
Longview Fibre Co. Corrugated containers 125
Source. 2002 Washington Manufacturers Register
23
Income. Historic personal income and per capita income levels for Yakima County and the state are
shown below.
Yakima County and State of Washington
Total Personal and Per Capita Income
Yakima County State of Washington
Total Personal Per Capita Total Personal Per Capita
Year Income (in millions) Income Income (in millions) Income
2001 N/A N/A $189,111.3 * $31,582 *
2000 $4,906 1 $22,022 184,517 7 31,230
1999 4,593.3 20,730 174,220 7 29,819
1998 4,550.8 20,709 163,192.3 28,285
1997 4,333 7 19,953 150,202.6 26,469
1996 4,176.7 19,431 139,327.8 25,015
* Preliminary estimate.
Source: U S Department of Commerce, Bureau of Economic Analysis, Annual Personal Income Report, April 2002.
Taxable Retail Sales. Taxable retail sales reflect only those sales subject to retail sales tax. Historic taxable retail
sales for the City of Yakima and Yakima County are shown below.
City of Yakima and Yakima County
Taxable Retail Sales
City of Yakima
Year Yakima County
2002 $ 1,205,189,471 $2,178,920,758
2001 1,176,022,552 2,122,049,462
2000 1,168,665,601 2,140,980,425
1999 1,157,451,996 2,057,895,211
1998 1,162,398,960 2,111,359,113
1997 1,176,674,146 2,112,094,198
Source: Washington State Department of Revenue
Building Permits. Residential building permits are an indicator of growth within a region. The number and
valuation of new single- family and multi - family residential building permits in Yakima County are
listed below.
Yakima County
Residential Building Permits
New Single Family Units New Multi Family Units Total
Year Number Valuation Number Valuation Valuation
2001 * 204 $ 25,473,090 91 $ 5,824,615 $ 31,297,705
2000 260 36,497,963 91 4,722,241 41,220,204
1999 357 43,534,596 143 7,960,793 51,495,389
1998 325 38,502,498 300 14,380,009 52,882,507
1997 332 40,235,796 155 6,171,555 46,407,351
1996 336 39,195,751 159 8,359,980 47,555,731
* Through October 2001.
Source: Building Permit Activity by City and County in the State of Washington, BP Logistics.
24
Employment within the County is described in the following table:
Yakima County
Nonagricultural Wage & Salary Workers
and Labor Force and Employment Data
Annual Average
2001( 2000( 1999 1998 1997
Civilian Labor Force 108,000 109,700 111,500 115,000 114,700
Employment 95,800 98,300 100,400 103,000 103,300
Unemployment 12,200 11,400 11,100 12,000 11,400
Percent of labor force 11.3% 10 4% 10 0% 10 4% 9 9%
Total Nonagricultural Wage and Salary Earners 74,600 75,300 74,700 75,200 75,100
Manufacturing 11,500 11,800 11,300 10,900 11,000
Construction and mining 3,000 3,100 3,300 3,500 3,500
Transportation and public utilities 3,000 2,700 2,700 3,000 2,900
Wholesale trade 5,300 6,500 7,200 7,400 8,400
Retail trade 13,200 13,500 13,700 14,000 13,800
Finance, insurance and real estate 2,300 2,300 2,400 2,600 2,500
Services and miscellaneous 20,600 21,300 20,300 20,100 19,500
Government 15,800 14,100 13,900 13,700 13,600
(1) Preliminary
(2) Revised
Source. Washington State Employment Securihj Department
Initiative and Referendum
State Initiatives
Under the State Constitution, the voters of the State have the ability to initiate legislation and require the
Legislature to refer legislation to the voters through the powers of initiative and referendum, respectively The
initiative power in Washington may not be used to amend the State Constitution. Initiatives and referenda are
submitted to the voters upon receipt of a petition signed by at least eight percent (initiative) and four percent
(referenda) of the number of voters registered and voting for the office of Governor at the preceding regular
gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or
repealed by the Legislature within a period of two years following enactment, except by a vote of two- thirds of
all the members elected to each house of the Legislature. After two years, the law is subject to amendment or
repeal by the Legislature in the same manner as other laws.
Initiative 747 Initiative Measure No. 747 ( "I- 747 ") was approved by the voters on November 6, 2001. 1 -747
reduces the limit on the maximum total dollar amount of regular property taxes that may be levied annually by
a taxing district (including the City) without a vote of its electors from 106 percent to 101 percent of the highest
levy in the three previous years (excluding increases due to the addition of new construction, improvements
and value increases in State - assessed property to the tax rolls) I -747 is expected to reduce increases in future
property tax revenue to the City, and that reduction will have an effect on budgeted general fund
expenditures. However, the full impact of I -747 cannot be predicted at this time. The City does not anticipate
I -747 affecting its ability to pay the Bonds.
Future Initiative Legislation. Other tax and fee initiative measures have been and may be filed, but it cannot be
predicted whether any such initiatives might gain sufficient signatures to qualify for submission to the
Legislature and /or the voters or, if submitted, whether they ultimately would be approved.
25
Tax Exemption
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 complied 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 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.
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 Series B 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 Series B 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 Series B Bonds.
26
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 will apply for a rating for the Bonds from
Standard & Poor's Ratings Services. When and if obtained, the rating will reflect only the views of the rating
agency and an explanation of the significance of the rating may be obtained from the rating agency There is
no assurance that the rating, once obtained, 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.
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
Ordinance 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 "Commission ") in accordance with the Rule, the following
annual financial information and operating data for the prior fiscal year (commencing in 2004 for the fiscal year
ended December 31, 2003) (i) annual financial statements, which statements may or may not be audited
showing ending fund balances, prepared in accordance with regulations prescribed by the State Auditor
pursuant to RCW 43 09.200 (or any successor statutes) and generally of the type included in this Official
Statement for the Bonds under the heading "Comparative General Fund Statement of Revenues, Expenditures
and Changes in Fund Balance," (ii) the assessed valuation of taxable property in the City; (iii) property taxes
due, percentage of taxes collected and property taxes delinquent; (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 ")
27
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- 238560), (ix) defeasances, (x) release, substitution or sale of property securing
repayment of the Bonds, and (xi) rating changes.
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
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Legal and Underwriting
Approval of Counsel
Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the
approving legal opinion of Bond Counsel. A form of the opinion of Bond Counsel is attached hereto in
Appendix A. Bond Counsel will be compensated only upon the issuance and sale of the Bonds. Bond Counsel
will not offer an opinion on the Official Statement.
Litigation
The Washington State Supreme Court recently found that the petition method of annexation is unconstitutional
because it violates the privileges and immunities clause of the Washington State Constitution. The City has
used the petition method of annexation for approximately 50 years. The court remanded the decision to the
trial court, but did not specify whether the decision should be applied retrospectively to petition- method
annexations that were initiated or completed before the decision was issued. The City's counsel believes that,
based on prior case law, it is unlikely that the court would retroactively invalidate any annexations completed
prior to January 1, 1999 The City has annexed eight areas since January 1, 1999 with a total assessed value of
$398,325,090; provided, however, that only five of these areas have been included in the assessed values shown
under "Bonded Indebtedness - Computation of Debt Capacity" with a total assessed value of $70,459,640
A class action lawsuit (Murphy et al v City of Yakima, Yakima County Case No 99 -2- 00611 -8) is pending
against the City alleging personal and property damages arising from alleged odors from the City's
wastewater treatment plant. The approximately 3,500 plaintiffs are seeking damages based on negligence,
nuisance and inverse condemnation. The lawsuit is pending the scheduling of a trial date, which is not likely
to be set prior to October 2003 Any judgment in the lawsuit would be an obligation of the City's wastewater
utility and is anticipated to be paid from the revenues of the wastewater utility
There is no litigation pending or threatened questioning the validity of the Bonds nor the power and authority
of the City to issue the Bonds. There is no litigation pending or threatened which would materially affect the
City's ability to meet debt service requirements on the Bonds.
Because of the nature of its activities, the City is subject to certain pending legal actions which arise in the
ordinary course of business. The City believes, based on the information presently known, that the ultimate
liability for any of such legal actions will not be material to the financial position of the City
Official Statement
In the Ordinance the City will deem final this Preliminary Official Statement as of its date for the purpose of
Securities and Exchange Commission Rule 15c2 -12.
Underwriting
The Bonds are being purchased by Seattle - Northwest Securities Corporation, 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.
Concluding Statement
The information set forth herein has been obtained from the City and other sources that are believed to be
reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation,
warranty or guarantee by the Underwriter So far as any statement herein includes matters of opinion, or
estimates of future expenses and income, whether or not expressly so stated, they are intended merely as such
and not as representations of fact.
The information contained herein should not be construed as representing all conditions affecting the City or
the Bonds. Additional information may be obtained from the City The statements relating to the Ordinance
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are in summarized form, and in all respects are subject to and qualified in their entirety by express reference to
the provisions of such document in its complete form.
The agreements of the City are set forth in such documents, and the information assembled herein is not to be
construed as a contract with Owners of the Bonds. Information with respect to the City set forth in this Official
Statement has been supplied by the City, and the Underwriter has relied on the City with respect to the
accuracy and sufficiency of such information.
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No ac
For Meeting Of May 6` 2003
ITEM TITLE An Ordinance providing (a) for the issuance of limited tax general obligation bonds
in a sum not to exceed $1,500,000 to finance improvements to the SunDome
(series A) and for the purpose of providing funds to refund certain outstanding
bonds in a sum not to exceed $4,500,000 (Series B), and (b) authorization to the
City Manager to execute an Inter -local agreement with Yakima County governing
the use of bond proceeds
SUBMITTED BY Finance Department
CONTACT PERSON Tim Jensen, Treasury Services Officer, # 575 -60
Rita Anson, Finance Director, # 575 -6070
SUMMARY EXPLANATION
Overview The enclosed Ordinance reflects staff's proposal to issue bonds in an aggregate
principal amount not to exceed $6 million This proposed bond issue would provide
(a) Up to $1 5 million to pay for a portion of the cost of Phase 1 of the SunDome expansion
project, and
(b) Up to $4 5 million to provide funding to refinance (referred to as refunding) the bonds
issued in 1994, which provided funding for construction of the Law and Justice Center and
certain improvements to the 1 -82 interchange on Yakima Avenue
Given that the timing of the SunDome expansion project has occurred at the same time that
market conditions have provided the City with an opportunity to refund its existing 1994 bonds in
an effort to lower interest costs, staff recommends that these two separate and distinct financings
be packaged into one bond issue for purposes of efficiencies and cost savings The background,
issues, terms and conditions of these two financing are outlined below
Continued on next page
Resolution _ Ordinance _X_ Other (Specify)
Contract Mail to (name and address):
Funding Source
APPROVED FOR SUBMITTAL / A ' _L
City Manager
STAFF RECOMMENDATION Pass Ordinance and Authorize the City Manager to enter into an
Inter -Local agreement with the County governing the use of bond proceeds
BOARD /COMMISSION RECOMMENDATION
COUNCIL ACTION Ordinance passed ORDINANCE NO 2003 -24
The City Manager was authorized to enter into an Interlocal
Agreement with the County governing the municipal bond proceedings.
Page - 2 —
A. SunDome Expansion Bonds (Series A) On February 4, 2003, Council passed Ordinance
#2003 -06 authorizing the City to enter into an inter -local agreement with the County for the
purposes of providing funding to the County for construction of a portion of Phase 1 of the
SunDome expansion project. At that time, it was anticipated that the County would issue bonds
(as they are the legal owner of the SunDome) and the City would agree (by way of an inter -local
agreement) to provide funding for the debt service payments on the bonds to the County The only
viable option available to the City for providing the requested funds for the SunDome expansion is
to utilize the same revenues currently used to make debt service payments on the existing bonds
to repay the new bonds The finance staff identified a debt structure that would accommodate the
City's need to postpone any /all payments of principal and interest on the new financing until after
2009, when the existing SunDome bonds will be paid off Additionally, in passing Ordinance
#2003 -06 Council authorized, among other things, the existing business license fee to remain at
the current level until the new bonds are paid in full (rather than being reduced when the existing
SunDome bonds are paid off )
Subsequent to the February 4, 2003 Council meeting, City and County staff have been in
discussions and come to the mutual conclusion that it would be in the best interest of both parties
if the City issued these bonds, rather than the County as previously anticipated and discussed
with Council City staff has discussed this option in detail with the City's bond counsel who have
stated that the City has the legal authority to issue the bonds for the intended purpose of providing
funding for the SunDome expansion even though the City does not own this facility The balance
of the financing structure remains the same as previously outlined to Council, i e the new bonds
will be structured so that no payment of principal or interest will be due until after the City's
obligations to the County for funding of debt service payments on the existing SunDome bonds is
satisfied
Notes
(a) the City and the County are negotiating a final settlement regarding both the amount and the
form of a credit the County may provide to the City to compensate the City for their
propionate share of the savings generated as a result of the two refundings of the 1987 and
1989 bonds issued for the original construction of the SunDome The final terms of this
agreement could have an impact on the terms of the financing of the new bonds, i e if the
date of the last payment obligation to the County for the existing bonds is adjusted, allowing
the City to satisfy its' obligations to the County earlier than scheduled, the City could then
begin making debt service payments on the new bonds that much sooner This would likely
increase the amount of bond proceeds, which could be made available for the SunDome
expansion project.
(b) At the February 4, 2003 Council meeting, Council authorized the City Manager to execute an
Inter -local Agreement with the County for the purpose of establishing the terms and
conditions by which the City would commit to provide debt service payments to the County in
consideration of the County issuing debt to fund at least $1 1 million of the SunDome
expansion project. An Inter -local agreement with the County will still be necessary; however
the purpose of this agreement is now changed to provide for the terms and conditions under
which the City would be amenable to issuing bonds and providing the proceeds to the County
for use in funding the SunDome expansion (Note finance staff, with the assistance of
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outside legal counsel, is drafting this Inter -local Agreement and will provide a copy to Council
and to the County for review and consideration in the near future)
It is recommended that the settlement agreement discussed in (a) above and the Inter -Local
Agreement, (b) above should both be fully executed prior to the issuance of the Series A,
SunDome expansion bonds
The Fair Association has received $1 25 million from the State and a commitment of $200,000
from Union Gap in addition to the $1 1 million (minimum) previously authorized by the City Council
for Phase I of the SunDome expansion This expansion includes a two -story 16,000 square foot
addition for extra locker rooms and showers, and additional seating that will increase capacity
from 5,200 to over 7,000 The Central Washington Fair Association has determined that these
modifications are necessary to retain sports tournaments and associated tourism benefits for the
community
The attached Ordinance, if passed by Council, would authorize the City to issue bonds for the
purpose of providing a portion of the funding for Phase I of the SunDome expansion project with a
maximum of $1 5 million in net proceeds
• The bonds would be zero coupon bonds (e g pay interest and principal at maturity), and
sold at a discount to investors, (similar to a US Government savings bonds where the buyer
pay less than the face value for the bond and it matures at the face amount)
• That portion of the proposed total bond issue that would fund the SunDome expansion would
be identified as Series A, to distinguish it from that portion of the overall bond issue related to
the refinancing of the 1994 bonds,
• The new series A bonds would not be bank - qualified (Bank qualification makes municipal
securities more attractive to banks for tax reasons, and therefore receives lower interest
rates A municipality can only issue $10 million per year, or less, in bank qualified debt. The
City is contemplating the issuance of irrigation bonds later in the year, which would likely
push the City's total bond issuance's for 2003 over the $10 million limit; thus, the City is not
eligible to issue any new bank qualified debt this year) However, given current market
conditions, the City anticipates receiving a reasonable interest rate on this bond issue even
without the bank qualification incentive
B. 1994 Refunding (refinancina) Bonds (Series B).
The 1994 LTGO $6 6 million par value bonds were sold at an interest rate of 5 41% The par value
of the outstanding bonds is approximately $3 9 million Staff proposes to issue approximately,
$4.2 million in advanced refunding (new) bonds to establish the required escrow account for the
future principal and interest payments on the refunded (existing) bonds and to cover bond
issuance costs Based on market rates as of May 1, 2003 the interest rate on the refunding bonds
is 3 8% Based on current market conditions, the present value of the interest savings is
approximately $206,000 Note unlike the SunDome bonds discussed above, the 1994 refunding
bonds would be bank qualified based on the fact that the original issue was bank qualified Of
course, the amount of actual savings, if any, can not be determined until the sale date
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Summary The attached ordinance is written to authorize the City to (a) issue the SunDome
bonds, series A, as described above or (b) issue the 1994 Refunding bonds, Series B, as
described above, or (c) issue both Series of bonds The final decision as to which Series of
Bonds, if any, will be sold will be based on market conditions at the time of sale
Recommendation
(a) Pass the Ordinance
(b) Authorize the City Manager to negotiate and execute an Inter -Local Agreement with
Yakima County governing the use of bond proceeds transferred to the county from the sale
of the SunDome Series A bonds
Enclosed you'll find the following documents
• Bond Ordinance, prepared by finance staff and legal counsel
• Draft Preliminary Official Statement; prepared by finance staff and investment bankers
(the Official Statement will be completed after the bond sale but prior to the settlement
date )
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