HomeMy WebLinkAboutR-2003-150 Contract for Water & Sewer Revenue Bonds Purchase - FUNDING RESOLUTIONCITY OF YAKIMA, WASHINGTON
RESOLUTION NO. R-2003-150
A RESOLUTION authorizing the execution and delivery of a contract
for purchase of the City's Water and Sewer Revenue Bonds,
Series A 2003, in the aggregate principal amount of $7,390,000
and Water and Sewer Revenue Bonds, Series B 2003, in the
aggregate principal amount of $10,155,000, fixing certain terms of
the bonds, approving the form of the official statement and
insurance, and ratifying certain acts and proceedings.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 2003-64
passed October 7, 2003 (the "Bond Ordinance"), authorized the issuance of the City's Water and
Sewer Revenue Bonds, 2003, in one or more series in an amount not to exceed $17,700,000; and
WHEREAS, certain terms of the Bonds were to be determined by subsequent resolution
of the Council; and
WHEREAS, the City finds that it is in the best interest of the City to issue the Bonds in
two series in the aggregate principal amount of $17,545,000; and
WHEREAS, the Director of Finance and Budget of the City, as authorized by the Bond
Ordinance, has negotiated the sale of the City's Water and Sewer Revenue Bonds, 2003 Series A
in the principal amount of $7,390,000 (the "Series A Bonds") and the City's Water and Sewer
Revenue Bonds, 2003 Series B in the principal amount of $10,155,000 (the "Series B Bonds")
(collectively referred to herein as the "Bonds"); and
WHEREAS, the Director of Finance and Budget recommends that the City accept the
offer to purchase the Bonds made by Seattle -Northwest Securities Corporation (the "Purchaser"),
which offer is set forth in the Purchase Contract for the Bonds dated December 16, 2003 (the
"Purchase Contract"), a copy of which has been presented at this meeting and is on file with the
City Clerk; •
NOW, THEREFORE, BE IT RESOLVED by the City of Yakima, Washington, as
follows:
Section 1. Definitions. Capitalized terms used herein and not otherwise defined shall
have the same meanings, respectively, in this resolution as such terms are given in Section 1.1 of
the Bond Ordinance.
Section 2. Acceptance of Offer. The Council hereby finds and determines that the
Purchase Contract is fair and reasonable and in the best interest of the City and that the Bonds
shall be sold to the Purchaser upon the terms and conditions set forth in the Purchase Contact and
upon the basis of the representations therein set forth. The Council further finds and determines
that all conditions precedent to or concurrent with the acceptance of the Purchase Contract by the
Council have been met.
The Council hereby accepts the Purchase Contract and authorizes and directs the Director
of Finance and Budget to execute the Purchase Contract and deliver it to the Purchaser.
The Bonds shall be issued and delivered to the Purchaser upon payment of the purchase
price specified in the Purchase Contract, plus accrued interest from their date to the date of their
delivery.
Section 3. Terms, Schedule of Maturities and Interest Rates. The Series A Bonds
shall be designated the "City of Yakima Water and Sewer Revenue Bonds, 2003 Series A" and
the Series B Bonds shall be designated the "City of Yakima Water and Sewer Revenue Bonds,
2003 Series B." The Bonds shall be dated as of December 15, 2003, shall be fully registered as
to both principal and interest, shall be in the denomination of $5,000 each or any integral
multiple thereof, provided that no Bond shall represent more than one maturity, shall be
numbered separately in such manner and with any additional designation as the Bond Registrar
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deems necessary for purposes of identification and control, and shall bear interest payable on
May 1, 2004, and semiannually thereafter on the first days of November and May.
The Series A Bonds shall mature on November 1 of the following years in the following
amounts and shall bear interest as follows:
Maturity Date Amount Rate
2004 $ 725,000 2.000%
2005 640,000 2.000
2006 655,000 2.500
2007 670,000 2.500
2008 685,000 2.750
2009 705,000 3.000
2010 250,000 3.000
2010 475,000 3.250
2011 750,000 3.500
2012 775,000 3.750
2013 805,000 4.000
2014 255,000 3.625
The Series B Bonds shall mature on November 1 of the following years in the following
amounts and shall bear interest as follows:
Maturity Date Amount Rate
2014 $ 580,000 4.000%
2017* 2,735,000 5.000
2019* 2,060,000 5.000
2021* 2,275,000 5.000
2023* 2,505,000 5.000
*Term Bonds.
Section 4. Redemption.
(a) Optional Redemption. The Series A Bonds maturing on or prior to November 1,
2013 are not subject to redemption prior to their stated maturity dates. The Series A Bonds and
Series B Bonds maturing on or after November 1, 2014 are subject to redemption at the option of
the City on and after November 1, 2013, in whole or in part (within one or more maturities to be
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selected by the City) on any date, at a price of par plus accrued interest, if any, to the date of
redemption.
(b) Mandatory Redemption. The Series B Bonds maturing on November 1, 2017,
November 1, 2019, November 1, 2021, and November 1, 2023 (which shall be deemed to be
Term Bonds), shall be redeemed prior to maturity by lot (or paid at maturity), not later than
November 1 in the years set forth below (to the extent such Series B Bonds have not been
previously redeemed or purchased) and in the principal amounts set forth below, without
premium, together with the interest accrued to the date fixed for redemption.
* Final Maturity
* Final Maturity
* Final Maturity
Series B 2017 Term Bond
Year Amount
2015 $ 870,000
2016 910,000
2017* 955,000
Series B 2019 Term Bond
Year Amount
2018
2019*
$ 1,005,000
1,055,000
Series B 2021 Term Bond
Year Amount
2020 $ 1,110,000
2021* 1,165,000
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Series B 2023 Term Bond
Year Amount
2022 $ 1,220,000
2023* 1,285,000
* Final Maturity
Section 5. Execution and Delivery of the Bonds. The proper officers of the Council
and the Director of Finance and Budget of the City are hereby authorized and directed to do all
things necessary or proper for the printing, execution and delivery of the Bonds to the Purchaser
in accordance with the terms of the Purchase Contract and the Bond Ordinance, as well as this
resolution, and for the proper application and use of the proceeds of such sale.
Section 6. Official Statement; Use of Documents. The Director of Finance and
Budget is authorized and directed to execute and deliver to the Purchaser copies of an Official
Statement in substantially the form of the Preliminary Official Statement dated December 5,
2003; provided, however, that the Director of Finance and Budget is authorized to supplement or
amend the Official Statement as the Director of Finance and Budget, with the approval of bond
counsel to the City, deems necessary or appropriate. The Council represents and warrants to the
Purchaser that the Preliminary Office Statement is "deemed final" by the City as of the date
hereof within the meaning of paragraph 17 C.F.R. § 240.15c2-12 promulgated by the Securities
and Exchange Commission ("Rule 15c2-12"), except for the omission of such information as
may be permitted by Rule 15c2-12. The Council approves and authorizes the use of such
Official Statement (including any such supplements and amendments thereto) in connection with
the public offering and sale of the Bonds by the Purchaser.
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Section 7. Insurance.
(a) Acceptance of Insurance. In accordance with the offer of the Purchaser to
purchase the Bonds, the Council hereby approves the commitment of Financial Guaranty
Insurance Company, a New York stock insurance company, or any successor thereto, (the
"Insurer") to provide a bond insurance policy guaranteeing the payment when due of principal of
and interest on the Bonds (the "Bond Insurance Policy"). The Council further authorizes and
directs all proper officers, agents, attorneys and employees of the City to cooperate with the
Insurer in preparing such additional agreements, certificates, and other documentation on behalf
of the City as shall be necessary or advisable in providing for the Bond Insurance Policy.
(b) Payments Under the Bond Insurance Policy and Rights of the Insurer.
(1) The City shall provide the Insurer with the following information:
(a) Notice of any draw upon or deficiency in the Reserve Fund due to
market fluctuation in the amount, if any, on deposit in the Reserve Fund;
(b) Notice of the redemption, other than mandatory sinking fund
redemption, of any of the Bonds, or of any advance refunding of the Bonds, including the
principal amount, maturities and CUSIP numbers thereof;
(c) Notice of any material events pursuant to the Rule; and
(d) Such additional information as the Insurer may reasonably request
from time to time.
(2) Any credit instrument provided in lieu of a cash deposit into the Reserve
Fund, other than one provided by the Insurer, shall conform to the requirements set forth in
"Reserve Surety Guidelines" in the Insurer's Commitment of Bond Insurance and attached as
Exhibit A.
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(3)
Notice of any redemption of Bonds shall either (i) be conditioned on there
being on deposit in the Bond Fund on the redemption date sufficient money to pay the full
redemption price of the Bonds to be redeemed or (ii) the notice of redemption shall only be sent
if there is sufficient money on deposit in the Bond Fund to pay the full redemption price of the
Bonds to be redeemed.
(4) In determining whether a payment default has occurred or whether a
payment on the Bonds has been made under this resolution, no effect shall be given to payments
made under the Bond Insurance Policy.
(5) Any acceleration of the Bonds (which is not .a permitted remedy) or any
annulment thereof shall be subject to the prior written consent of the Insurer (if it has not failed
to comply with its payment obligations under the Bond Insurance Policy).
(6) The Insurer shall receive immediate notice of any payment default and
notice of any other default known to the Bond Registrar or the City within 30 days of the Bond
Registrar's or the City's knowledge thereof.
(7)
For all purposes of governing events of default and remedies, except the
giving of notice of default to owners of the Bonds, the Insurer shall be deemed to be the sole
holder of the Bonds it has insured for so long as it has not failed to comply with its payment
obligations under the Bond Insurance Policy.
(8)
No resignation or removal of the Bond Registrar shall become effective
until a successor has been appointed and has accepted the duties of Bond Registrar. The Insurer
shall be furnished with written notice of the resignation or removal of the Bond Registrar and the
appointment of any successor thereto other than the appointment of a new State fiscal agent.
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(9) The Insurer shall be included as a party in interest and as a party entitled
to (i) notify the City or Bond Registrar of the occurrence of an event of default and (ii) request
the Bond Registrar to intervene in judicial proceedings that affect the Bonds or the security
therefor. The City or Bond Registrar shall be required to accept notice of default from the
Insurer.
(10) Any amendment or supplement to this resolution shall be subject to the
prior written consent of the Insurer. Any rating agency rating the Bonds must receive notice of
each amendment and a copy thereof at least 15 days in advance of its execution or adoption. The
Insurer shall be provided with a full transcript of all proceedings relating to the execution of any
such supplement or amendment.
(11) Only cash, direct non -callable obligations of the United States of America
and securities fully and unconditionally guaranteed as to the timely payment of principal and
interest by the United States of America, to which direct obligation or guarantee the full faith and
credit of the United States of America has been pledged, Refcorp interest strips, CATS, TIGRS,
STRPS, or defeased municipal bonds rated AAA by S&P or Aaa by Moody's (or any
combination thereof) shall be used to effect defeasance of the Bonds unless the Insurer otherwise
approves. In the event of an advance refunding, the City shall cause to be delivered a
verification report of an independent nationally recognized certified public accountant. If a
forward supply contract is employed in connection with the refunding, (i) such verification report
shall expressly state that the adequacy of the escrow to accomplish the refunding relies solely on
the initial escrowed investments and the maturing principal thereof and interest income thereon
and does not assume performance under or compliance with the forward supply contract, and
(ii) the applicable escrow agreement shall provide that in the event of any discrepancy or
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difference between the terms of the forward supply contract and the escrow agreement, the terms
of the escrow agreement shall be controlling.
(12) If, on the third day preceding any interest payment date for the Bonds
there is not on deposit with the Bond Registrar sufficient money available to pay all principal of
and interest on the Bonds due on such date, the Bond Registrar shall immediately notify the
Insurer and U.S. Bank Trust National Association, New York, New York, or its successor as its
fiscal agent (the "Fiscal Agent") of the amount of such deficiency. If, by said interest payment
date, the City has not provided the amount of such deficiency, the Bond Registrar shall
simultaneously make available to the Insurer and to the Fiscal Agent the registration books for
the Bonds maintained by the Bond Registrar. In addition:
(i) The Bond Registrar shall provide the Insurer with a list of the
registered owners of the Bonds entitled to receive principal or interest payments from the Insurer
under the terms of the Bond Insurance Policy and shall make arrangements for the Insurer and its
Fiscal Agent (1) to mail checks or drafts to registered owners entitled to receive full or partial
interest payments from the Insurer and (2) to pay principal of the Bonds surrendered to the Fiscal
Agent by the registered owners entitled to receive full or partial principal payments from the
Insurer; and
(ii) The Bond Registrar shall, at the time it makes the registration
books available to the Insurer pursuant to (i) above, notify registered owners entitled to receive
the payment of principal of or interest on the Bonds from the Insurer (1) as to the fact of such
entitlement, (2) that the Insurer will remit to them all or part of the interest payments coming due
subject to the terms of the 'Bond . Insurance Policy, (3) that, except as provided in
paragraph (iii) below, in the event that any registered owner is entitled to receive full payment of
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principal from the Insurer, such registered owner must tender his or her Bond with the instrument
of transfer in the form provided on the Bond executed in the name of the Insurer, and (4) that,
except as provided in paragraph (iii) below, in the event that such registered owner is entitled to
receive partial payment of principal from the Insurer, such registered owner must tender his or
her Bond for payment first to the Bond Registrar, which shall note on such Bond the portion of
principal paid by the Bond Registrar, and then, with an acceptable form of assignment executed
in the name of the Insurer, to the Fiscal Agent, which will then pay the unpaid portion of
principal to the bondholder subject to the terms of the Bond Insurance Policy.
(iii) In the event that the Bond Registrar has notice that any payment of
principal of or interest on a Bond has been recovered from a registered owner pursuant to the
United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final,
nonappealable order of a court having competent jurisdiction, the Bond Registrar shall, at the
time it provides notice to the Insurer, notify all registered owners that in the event that any
registered owner's payment is so recovered, such registered owner will be entitled to payment
from the Insurer to the extent of such recovery, and the Bond Registrar shall furnish to the
Insurer its records evidencing the payments of principal of and interest on the Bonds which have
been made by the Bond Registrar and subsequently recovered from registered owners, and the
dates on which such payments were made.
(iv) The Insurer shall, to the extent it makes payment of principal of or
interest on the Bonds, become subrogated to the rights of the recipients of such payments in
accordance with the terms of the Bond Insurance Policy and, to evidence such subrogation, (1) in
the case of subrogation as to claims for past due interest, the Bond Registrar shall note the
Insurer's rights as subrogee on the registration books maintained by the Bond Registrar upon
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receipt from the Insurer of proof of the payment of interest thereon to the registered owners of
such Bonds and (2) in the case of subrogation as to claims for past due principal, the Bond
Registrar shall note the Insurer's rights as subrogee on the registration books for the Bonds
maintained by the Bond Registrar upon receipt of proof of the payment of principal thereof to the
registered owners of such Bonds. Notwithstanding anything herein or in the Bonds to the
contrary, the Bond Registrar shall make payment of such past due interest and past due principal
directly to the Insurer to the extent that the Insurer is a subrogee with respect thereto.
(13) The notice addresses for the Insurer and the Fiscal Agent are:
Financial Guaranty Insurance Company
125 Park Avenue
New York, New York 10017
Attention: Risk Management
U.S. Bank Trust National Association.
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Department
Section 8. Ratification of Past Acts. All actions and proceedings heretofore taken by
the officers, agents, attorneys and employees of the City in connection with the issuance and sale
of the Bonds are hereby ratified, approved and confirmed.
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Section 9. Effective Date. This resolution shall be in effect from and after its
adoption in accordance with law.
ADOPTED at a regular meeting of the City Council of the City of Yakima, Washington,
this 16th day of December, 2003.
ATTEST:
City Clerk
APPROVED AS TO FORM:
N / A
City Attorney
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EXHIBIT A
INSURER'S COMMITMENT OF BOND INSURANCE —
RESERVE FUND SURETY GUIDELINES
The Issuer may satisfy the requirement (the "Reserve Fund Requirement") to deposit a specified amount
in the debt service reserve fund as defined in the Bond Ordinance (the "Reserve Fund") by the deposit of
a surety bond, insurance policy or letter of credit as set forth below. The following requirements shall be
incorporated in the authorizing document for the Bonds (the "Authorizing Document") in the event the
Reserve Fund Requirement is fulfilled by a deposit of a credit instrument (other than a credit instrument
issued by Financial Guaranty) in lieu of cash:
1. A surety bond or insurance policy issued to the entity serving as trustee or paying agent (the
"Fiduciary"), as agent of the bondholders, by a company licensed to issue an insurance policy
guaranteeing the timely payment of debt service on the Bonds (a "municipal bond insurer") may
be deposited in the Reserve Fund to meet the Reserve Fund Requirement if the claims paying
ability of the issuer thereof shall be rated "AAA" or "Aaa" by S&P or Moody's, respectively.
2. A surety bond or insurance policy issued to the Fiduciary, as agent of the bondholders, by an
entity other than a municipal bond insurer may be deposited in the Reserve Fund to meet the
Reserve Fund Requirement if the form and substance of such instrument and the issuer thereof
shall be approved by Financial Guaranty.
3. An unconditional irrevocable letter of credit issued to the Fiduciary, as agent of the bondholders,
by a bank may be deposited in the Reserve Fund to meet the Reserve Fund Requirement if the
issuer thereof is rated at least "AA" by S&P. The letter of credit shall be payable in one or more
draws upon presentation by the beneficiary of a sight draft accompanied by its certificate that it
then holds insufficient funds to make a required payment of principal or interest on the bonds.
The draws shall be payable within two days of presentation of the sight draft. The letter of credit
shall be for a term of not less than three years. The issuer of the letter of 'credit shall be required
to notify the Issuer and the Fiduciary, not later than 30 months prior to the stated expiration date
of the letter of credit, as to whether such expiration date shall be extended, and if so, shall
indicate the new expiration date.
4. If such notice indicates that the expiration date shall not be extended, the Issuer shall deposit in
the Reserve Fund an amount sufficient to cause the cash or permitted investments on deposit in
the Reserve Fund together with any other qualifying credit instruments, to equal the Reserve
Fund Requirement on all outstanding Bonds, such deposit to be paid in equal installments on at
least a semi-annual basis over the remaining term of the letter of credit, unless the Reserve Fund
credit instrument is replaced by a Reserve Fund credit instrument meeting the requirements in any
of 1-3 above. The letter of credit shall permit a draw in full not less than two weeks prior to the
expiration or termination of such letter of credit if the letter of credit has not been replaced or
renewed. The Authorizing Document shall, in turn, direct the Fiduciary to draw upon the letter of
credit prior to its expiration or termination unless an acceptable replacement is in place or the
Reserve Fund is fully funded in its required amount.
5. The use of any Reserve Fund credit instrument pursuant to this Paragraph shall be subject to
receipt of an opinion of counsel. acceptable to Financial Guaranty and in form and substance
satisfactory to Financial Guaranty as to the due authorization, execution, delivery and
enforceability of such instrument in accordance with its terms, subject to applicable laws
affecting creditors' rights generally, and, in the event the issuer of such credit instrument is not a
domestic entity, an opinion of foreign counsel in form and substance satisfactory to Financial
Guaranty. In addition, the use of an irrevocable letter of credit shall be subject to receipt of an
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opinion of counsel acceptable to Financial Guaranty and in form and substance satisfactory to
Financial Guaranty to the effect that payments under such letter of credit would not constitute
avoidable preferences under Section 547 of the U.S. Bankruptcy Code or similar state laws with
avoidable preference provisions in the event of the filing of a petition for relief under the U.S.
Bankruptcy Code or similar state laws by or against the issuer of the bonds (or any other account
party under the letter of credit).
6. The obligation to reimburse the issuer of a Reserve Fund credit instrument for any. fees, expenses,
claims or draws upon such Reserve Fund credit instrument shall be subordinate to the payment of
debt service on the bonds. The right of the issuer of a Reserve Fund credit instrument to payment
or reimbursement of its fees and expenses shall be subordinated to cash replenishment of the.
Reserve Fund, and, subject to the second succeeding sentence, its right to reimbursement for
claims or draws shall be on a parity with the cash replenishment of the Reserve Fund. The
Reserve Fund credit instrument shall provide for a revolving feature under which the amount
available thereunder will be reinstated to the extent of any reimbursement of draws or claims
paid. If the revolving feature is suspended or terminated for any reason, the.right of the issuer of
the Reserve Fund credit instrument to reimbursement will be further subordinated to cash
replenishment of the Reserve Fund to an amount equal to the difference between the full original
amount available under the Reserve Fund credit instrument and the amount then available for
further draws or claims. If (a) the issuer of a Reserve Fund credit instrument becomes insolvent
or (b) the issuer of a Reserve Fund credit instrument defaults in its payment obligations
thereunder or (c) the claims -paying ability of the issuer of the insurance policy or surety bond
falls below a S&P "AAA" or a Moody's "Aaa" or (d) the rating of the issuer of the letter of credit
falls below a S&P "AA", the obligation to reimburse the issuer of the Reserve Fund credit
instrument shall be subordinate to the cash replenishment of the Reserve Fund.
7. If (a) the revolving reinstatement feature described in the preceding paragraph is suspended or
terminated or (b) the rating of the claims paying ability of the issuer of the surety bond or
insurance policy falls below a S&P "AAA" or a Moody's "Aaa" or (c) the rating of the issuer of
the letter of credit falls below a S&P "AA", the Issuer shall either (i) deposit into the Reserve
Fund an amount sufficient to cause the cash or permitted investments on deposit in the Reserve
Fund to equal the Reserve Fund Requirement on all outstanding Bonds, such amount to be paid
over the ensuing five years in equal installments deposited at least semi-annually or (ii) replace
such instrument with a surety bond, insurance policy or letter of credit meeting the requirements
in any of 1-3 above within six months of such occurrence. In the event (a) the rating of the
claims -paying ability of the issuer of the surety bond or insurance policy falls below "A" or (b)
the rating of the issuer of the letter of credit falls below "A" or (c) the issuer, of the Reserve Fund
credit instrument defaults in its payment obligations or (d) the issuer of the Reserve Fund credit
instrument becomes insolvent, the Issuer shall either (i) deposit into the Reserve Fund an amount
sufficient to cause the cash or permitted investments on deposit in the Reserve Fund to equal to
Reserve Fund Requirement on all outstanding Bonds, such amount to be paid over the ensuing
year in equal installments on at least a monthly basis or (ii) replace such instrument with a surety
bond, insurance policy or letter of credit meeting the requirements in any of 1-3 above within six
months of such occurrence.
8. Where applicable, the amount available for draws or claims under. the Reserve Fund credit
instrument may be reduced by the amount of cash or permitted investments deposited in the
Reserve Fund pursuant to clause (i) of the preceding subparagraph 6.
9. If the Issuer chooses the above described alternatives to a cash -funded Reserve Fund, any
amounts owed by the Issuer to the issuer of such credit instrument as a result of a draw thereon or
a claim thereunder, as appropriate, shall be included in any calculation of debt service
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requirements required to be made pursuant to the Authorizing Document for any purpose, e.g.,
rate covenant or additional bonds test.
10. The Authorizing Document shall require the Fiduciary to ascertain the necessity for a claim-- or
draw upon the Reserve Fund credit instrument and to provide notice to the issuer of the Reserve
Fund credit instrument in accordance with its terms not later than three days (or such longer
period as may be necessary depending on the permitted time period for honoring a draw under the
Reserve Fund credit instrument) prior to each interest payment date.
11. Cash on deposit in the Reserve Fund shall be used (or investments purchased with such cash shall
be liquidated and the proceeds applied as required) prior to any drawing on any Reserve Fund
credit instrument. If and to the extent that more than one Reserve Fund credit instrument is
deposited in the Reserve Fund, drawings thereunder and repayments of costs associated therewith
shall be made on a pro rata basis, calculated by reference to the maximum amounts available
thereunder.
template\exhibits\dsrf surety guidelines
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CERTIFICATE
I, the undersigned, Clerk of the City of Yakima, Washington (the "City"), and keeper of
the records of the City Council (the "Council"), DO HEREBY CERTIFY:
1. That the attached Resolution No. is a true and correct copy of a resolution of
the City Council, as finally adopted at a regular meeting of the Council held on the 16th day of
December, 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
legal quorum was present throughout the meeting and a legally sufficient number of members of
the Council voted in the proper manner for the passage of said Resolution; that all other
requirements and proceedings incident to the proper adoption of said Resolution have been fully
fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of December,
2003.
(SEAL)
City Clerk
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December 16, 2003
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$7,390,000 Water and Sewer Revenue Bonds, 2003 Series A
$10,155,000 Water and Sewer Revenue Bonds, 2003 Series B
Dated: December 15, 2003
Honorable Mayor and City Council:
Seattle -Northwest Securities Corporation ("Purchaser") offers to purchase from City of Yakima,
Washington ("Seller") all the above-described bonds (the "Bonds") on the terms and based upon the
covenants, representations and warranties set forth below. Appendix A, which is incorporated into this
Bond Purchase Agreement (the "Agreement") by reference, contains a brief description of the Bonds,
including principal amounts, redemption provisions,. maturities, interest rates, purchase price, and the
proposed date and place ofdelivery and payment (the "Closing"). Other provisions of this Agreement are as
follows:
1. Prior to the Closing, Seller will approve a Preliminary Official Statement, with such changes as are
requested by the Seller and its counsel, and will pass an ordinance authorizing the Bonds (the "Bond
Ordinance"). The Purchaser is authorized by Seller to use these documents and the information
contained in them in connection with the public offering of the Bonds and the final Official Statement
in connection with the sale and delivery of the Bonds.
2. Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) it has and will have at the Closing the power and authority to enter into and perform this
Agreement, to pass the Bond Ordinance and to deliver and sell the Bonds to the Purchaser;
(b) this Agreement and the Bonds do not and will not conflict with, or constitute or create a breach or
default under, any existing law, regulation, order or agreement to which Seller is subject;
(c) no governmental approval or authorization (other than the Bond Ordinance) which has not been
obtained, or will not be obtained prior to Closing, is required in connection with the sale of the
Bonds to the Purchaser;
(d) the Preliminary Official Statement with corrections, if any, noted by the Seller and its counsel, as
of its date and (except as to matters corrected or added in the final Official Statement) as of the
Closing, is accurate and complete in all material respects as of its date to the knowledge and
belief of the officers and employees of the Seller, after due review;
(e) the Seller has previously provided the Purchaser with a copy of its Preliminary Official Statement
dated December 5, 2003. As of its date, the Preliminary Official Statement has been "deemed
final" by the Seller for purposes of Securities and Exchange Commission ("S.E.C.") Rule 15c2 -
12(b)(1), except for the omission of maturity amounts, interest rates, redemption dates and prices,
ratings, underwriter's discount and related terms;
Honorable Mayor and City Council
City of Yakima, Washington
December 16, 2003
Page 2
(f)
(g)
the Seller agrees to cooperate with the Purchaser to permit the Purchaser to deliver or cause to be
delivered, within seven business days after any final agreement to purchase, offer, or sell the
securities and in sufficient time to accompany any confirmation that requests payment from any
customer of the Purchaser, copiesof a final Official Statement in sufficient quantity to comply
with paragraph (b)(4) of the S.E.C. Rule 15c2-12 and the rules of the Municipal Securities
Rulemaking Board ("MSRB"). The Purchaser agrees to deliver the required number of copies of
the final Official Statement to the MSRB and to all nationally recognized municipal securities
information repositories on the business day on which the final Official Statement is available,
and in any event no later than ten business days after the date hereof;
the Seller agrees to enter into a written agreement or contract, constituting an undertaking (the
"Undertaking") to provide ongoing disclosure about the Seller for the benefit of the owners of the
Bonds on or before the Closing as required by Section (b)(5)(i) of S.E.C. Rule 15c2-12 (the
"Rule"), and in the form as summarized by the Preliminary Official Statement, with such changes
as may be agreed to in writing by the Purchaser; and
(h) if, at any time prior to the Closing, any event occurs as a result of which the Preliminary Official
Statement might include an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, the Seller shall promptly notify the Purchaser thereof.
3. The Purchaser shall have the right to cancel this Agreement to purchase the Bonds by notifying the
Seller of its election to do so if, after the execution of this Agreement and prior to the Closing:
(a) a decision by a court of the United States or the United States Tax Court shall be rendered, or a
ruling or a regulation (final, temporary, or proposed) by or on behalf of the Treasury Department
of the United States, the Internal Revenue Service or other governmental agency shall be issued
and in the case of any such regulation, published in the Federal Register, or legislation shall have
been introduced in, enacted by or favorably reported to either the House of Representatives or the
Senate of the United States, with respect to Federal taxation upon interest received on bonds of
the type and character of any of the Bonds which, in the reasonable judgment of the Purchaser,
materially adversely affects the marketability of the Bonds or their sale by the Purchaser, at the
contemplated public offering prices; or
(b) The United States shall have become engaged in hostilities or existing hostilities shall have
escalated or a national emergency or other national or international calamity or other event shall
have occurred, escalated, or accelerated to such an extent as, in the reasonable opinion of the
Purchaser, to have a materially adverse effect on the marketability of the Bonds or the
Purchaser's ability to enforce contracts for the sale of the Bonds; or
(c) there shall have occurred a general suspension of trading on the New York Stock Exchange; or
(d) a general banking moratorium shall have been declared by the United States, New York State or
Washington State authorities; or
(e) legislation shall hereafter be enacted, or actively considered for enactment, with an effective date
prior to the date of the delivery of the Bonds, or a decision by a court of the United States shall
hereafter be rendered, or a ruling or regulation by the S.E.C. or other governmental agency having
jurisdiction of the subject matter shall hereafter be made, the effect of which is that
Honorable Mayor and City Council
City of Yakima, Washington
•December 16, 2003
Page 3
•
•
(i)
the Bonds are not exempt from the registration, qualification or other requirements of the
Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of
1934, as amended and then in effect, or
(ii) the Bond Ordinance is not exempt from the registration, qualification or other requirements
of the Trust Indenture Act of 1939, as amended and as then in effect; or
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the effect of
which is that the issuance, offering or sale of the Bonds, as contemplated herein or in the final
Official Statement, is in violation of any provision of the Securities Act of 1933, as amended and
as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the
Trust Indenture Act of 1939, as amended and as then in effect, and which, in its reasonable
judgment, adversely affects the marketability of the Bonds or the market price thereof.
4. The Purchaser's obligations hereunder are also subject to the condition that at or prior to the Closing
Seller will deliver to the Purchaser all of the following:
(a) the Bonds, fully registered in book -entry form only in the name of Cede & Co., as bond owner
and nominee for The Depository Trust Company;
(b) the approving opinion of Bond Counsel dated the Closing date;
(c) written evidence that Standard & Poor's has issued its underlying rating of "A" and that such
rating is in full force and effect on and as of Closing; evidence that the Bonds have been assigned
a rating of "AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance
policy issued by Financial Guaranty Insurance Company and evidence of Seller's purchase of
such insurance including an opinion of counsel to the Insurance Provider;
(d) the following documents executed by :authorized officers of the Seller: a certificate setting forth
the facts, estimates and circumstances in existence on the date of Closing which establish that it is
not expected that the proceeds of the Bonds will be used in a manner that could cause the Bonds
to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986,
as amended, and any applicable regulations thereunder;
(e) a certified copy of the Bond Ordinance;
(f) such additional certificates, instruments or other evidence as the Purchaser may deem reasonably
necessary or desirable to evidence the due authorization, execution, authentication and delivery of
the Bonds, the truth and accuracy as of the time of the Closing of the Seller's representations and
warranties, and the conformity of the Bonds and Bond Ordinance with the terms thereof as
summarized in the Official Statement, and to cover such other matters as it reasonably requests.
5. Seller will pay the cost of preparing, printing and executing the Bonds; the fees and disbursements of
Bond Counsel; bond registration and rating fees and expenses; bond insurance; the cost of printing and
distributing the Preliminary and final Official Statements; travel and lodging expenses of Seller's
employees and representatives; and other expenses of Seller.
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of preparation and
filing of blue sky and legal investment surveys where necessary, Purchaser's travel expenses, and other
expenses of Purchaser. As a convenience to Seller, Purchaser may from time to time, but only upon
the prior written direction from the Seller, make arrangements for certain items for which Seller is
responsible hereunder, such as printing of the Official Statement and travel or lodging arrangements
for Seller's representatives.
Honorable Mayor and City Council
City of Yakima, Washington
December 16, 2003
Page 4
Purchaser also may advance for Seller's account when appropriate and when directed in advance in
writing by the Seller, the cost of the items for which Seller is responsible by making payments to third -
party vendors. In such cases, Seller shall pay such costs or expenses directly, upon submission of
appropriate invoices by Purchaser, or promptly reimburse Purchaser in the event Purchaser has
advanced such costs or expenses for Seller's account. It is understood that Seller shall be primarily
responsible for payment of all such items and that Purchaser may agree to advance the cost of such
items 'from time to time solely as an accommodation to Seller and on the condition that it shall be
reimbursed in full by Seller.
6. This Agreement is intended to benefit only the parties hereto, and Seller's representations and
warranties shall survive any investigation made by or for the purchase, delivery and payment for the
Bonds, and the termination of this Agreement. Should the Seller fail to satisfy any of the foregoing
conditions or covenants, or if the Purchaser's obligations are terminated for any reasons permitted
under this Agreement, then neither the Purchaser nor the Seller shall have any further obligations under
this Agreement, except that any expenses incurred shall be borne in accordance with 'Section 5.
7. This Agreement may be modified or amended by an instrument in writing executed by the parties
hereto.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Respectfully submitted,
Seattle -Northwest Securities Corporation
By:
Lindsay A. Sovde, Assistant Vice President
Accepted December 16, 2003
City of Yakima, Washington
By:
•
APPENDIX A
City of Yakima, Washington
Water and Sewer Revenue Bonds, 2003 Series A
Water and Sewer Revenue Bonds, 2003 Series B
Description of Bonds
(a) Principal Amounts. $7,390,000 Series A Bonds; $10,155,000 Series B Bonds
Series A Bonds
(b) Purchase Price. $7,401,750.99 ($100.159012 per $100), representing an original issue premium of $72,134.60
and an underwriter's discount of $60,383.61, plus accrued interest from the dated date of December 15, 2003 to
date of Closing.
Series B Bonds
Purchase Price. $10,527,544.26 ($103.668580 per $100), representing an original issue premium of
$455,520.65 and an underwriter's discount of $82,976.39, plus accrued interest from the dated date of
December 15, 2003 to date of Closing.
(c) Denominations. $5,000, or integral multiples thereof.
• (d) Form. Fully registered in book -entry form only in the name of Cede & Co., as bond owner and nominee for The
Depository Trust Company.
(e) Interest Payment Dates. May 1 and November 1, commencing May 1, 2004.
(f) Maturity Schedule. Bonds shall mature and bear interest as follows:
Series A Bonds
Due Interest Prices or Due Interest Prices or
Nov. 1 Amounts Rates Yields CUSIP Nov. 1 Amounts Rates Yields CUSIP
2004 $725,000 2.00% 1.13% 984538GM4 2010 $250,000 3.000% 3.12% 984538GT9
2005 640,000 2.00 1.50 984538GN2 2010 475,000 3.250 3.12 984538GZ5
2006 655,000 2.50 1.86 984538GP7
2007 670,000 2.50 2.23 984538GQ5 2011 750,000 3.500 3.37 984538GU6
2008 685,000 2.75 2.58 984538GR3 2012 775,000 3.750 3.60 984538GV4
2009 705,000 3.00 2.85 984538GS1 2013 805,000 4.000 3.71 984538GW2
2014 255,000 3.625 3.83 984538GX0
Series B Bonds
Interest
Due Amounts Rates Yields CUSIP
November 1, 2014 $580,000 4.00% 3.83% 984538HA9
$2,735,000 5.00% Term Bonds due November 1, 2017 to yield 4.15%; CUSIP: 984538HB7
$2,060,000 5.00% Term Bonds due November 1, 2019 to yield 4.34%; CUSIP: 984538HD3
$2,275,000 5.00% Term Bonds due November 1, 2021 to yield 4.52%; CUSIP: 984538HF8
$2,505,000 5.00% Term Bonds due November 1, 2023 to yield 4.66%; CUSIP: 984538HH4
Optional Redemption. The Series A Bonds maturing on or prior to November 1, 2013 are 'not subject to
redemption prior to their scheduled maturity. The Series A Bonds and Series B Bonds maturing on or after
November 1, 2014 are subject to redemption at the option of the City on and after November 1, 2013, in whole or
in part (within one or more maturities to be selected by the City) on any date, at a price of par plus accrued
interest, if any, to the date of redemption.
(h) Mandatory Redemption. If not previously redeemed as described above, the Term Bonds due on November 1 in
the years 2017, 2019, 2021 and 2023 will be called for redemption (in such manner as DTC will determine) at a
price of par, plus accrued interest on the date of redemption, on November 1 in the years and amounts as follows:
2017 Term Bonds
Years Amounts
2015 $ 870,000
2016 910,000
2017* 955,000
Total $2,735,000
2021 Term Bonds
Years Amounts
2020 $1,110,000
2021* 1,165.000
Total $2,275,000
2019 Term Bonds
Years Amounts
2018 $1,005,000
2019* 1,055,000
Total $2,060,000
2023 Term Bonds
Years Amounts
2022 $1,220,000
2023* 1,285,000
Total $2,505,000
* Final maturity.
(i) Rating/Insurance. Assignment to the Bonds of an underlying rating of "A" by Standard & Poor's and that such
rating is in full force and effect on and as of Closing; evidence that the Bonds have been assigned a rating of
"AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance policy issued by Financial
Guaranty Insurance Company and evidence of Seller's purchase of such insurance including an opinion of counsel
to the Insurance Provider.
(j) Closing Date. With definitive Bonds or a temporary Bond on or about December 22, 2003.
(k) Delivery. It is expected that the Bonds will be available for delivery at the facilities of DTC in New York, New
York, or to the Paying Agent on behalf of DTC by Fast Automated Securities Transfer.
(I)
(m)
Offer Expires. 11:00 p.m., December 16, 2003.
Bond Counsel. Preston Gates & Ellis LLP
For Information Purposes Only:
True Interest Cost (aggregate): 4.370308%
•
•
•
•
BOND DEBT SERVICE
City of Yakima
Water & Sewer Revenue Bonds, 2003 Series A & B
FINAL NUMBERS
Period Annual
Ending Principal Coupon Interest Debt Service Debt Service
12/22/2003
05/01/2004 272,776.81 272,776.81
11/01/2004 725,000 2.000% 361,028.13 1,086,028.13 1,358,804.94
05/01/2005 353,778.13 353,778.13
11/01/2005 640,000 2.000% 353,778.13 993,778.13 1,347,556.26
05/01/2006 347,378.13 347,378.13
11/01/2006 655,000 2.500% 347,378.13 1,002,378.13 1,349,756.26
05/01/2007 339,190.63 339,190.63
11/01/2007 670,000 2.500% 339,190.63 1,009,190.63 1,348,381.26
05/01/2008 330,815.63 330,815.63
11/01/2008 685,000 2.750% 330,815.63 1,015,815.63 1,346,631.26
05/01/2009 321,396.88 321,396.88
11/01/2009 705,000 3.000% 321,396.88 1,026,396.88 1,3 47,793.76
05/01/2010 310,821.88 310,821.88
11/01/2010 725,000 ** 310,821.88 1,035,821.88 1,346,643.76
05/01/2011 299,353.13 299,353.13
11/01/2011 750,000 3.500% 299,353.13 1,049,353.13 1,348,706.26
05/01/2012 286,228.13 286,228.13
11/01/2012 775,000 3.750% 286,228.13 1,061,228.13 1,347,456.26
05/01/2013 271,696.88 271,696.88
11/01/2013 805,000 4.000% 271,696.88 1,076,696.88 1,348,393.76
05/01/2014 255,596.88 255,596.88
11/01/2014 835,000 " 255,596.88 1,090,596.88 1,346,193.76
05/01/2015 239,375.00 239,375.00
11/01/2015 870,000 5.000% 239,375.00 1,109,375.00 1,348,750.00
05/01/2016 217,625.00 217,625.00
11/01/2016 910,000 5.000% 217,625.00 1,127,625.00 1,345,250.00
05/01/2017 194,875.00 194,875.00
11/01/2017 955,000 5.000% 194,875.00 1,149,875.00 1,344,750.00
05/01/2018 171,000.00 171,000.00
11/01/2018 1,005,000 5.000% 171,000.00 1,176,000.00 1,347,000.00
05/01/2019 145,875.00 145,875.00
11/01/2019 1,055,000 5.000% 145,875.00 1,200,875.00 1,346,750.00
05/01/2020 119,500.00 119,500.00
11/01/2020 1,110,000 5.000% 119,500.00 1,229,500.00 1,349,000.00
05/01/2021 91,750.00 91,750.00
11/01/2021 1,165,000 5.000% 91,750.00 1,256,750.00 1,348,500.00
05/01/2022 62,625.00 62,625.00
11/01/2022 1,220,000 5.000% 62,625.00 1,282,625.00 1,345,250.00
05/01/2023 32,125.00 32,125.00
11/01/2023 1,285,000 5.000% 32,125.00 1,317,125.00 1,349,250.00
17,545,000 9,415,817.54 26,960,817.54 26,960,817.54
Dec 15, 2003 11:00 am Prepared by JMW - Seattle -Northwest Securities (Finance 5.003 Yakima:03WSREV) Page 6
of Yakima,, Washington
Presentation to
STANDARD & POOR'S
December 5, 2003
Presenters:
Mr. Paul George Assistant Mayor
Ms. Rita Anson Director of Finance & Budget
Mr. Timothy M. Jensen Treasury Services Officer
Mr. Ray Paolella City Attorney
Ms. Lindsay A. Sovde Seattle -Northwest Securities
Corporation
Presenters:
Mr. Paul George
Ms. Rita Anson
Mr. Timothy M. Jensen
Mr. Ray Paolella
Ms. Lindsay A. Sovde
Presentation to
MBIA
December 5,. 2003
Assistant Mayor
Director of Finance & Budget
Treasury Services Officer
City Attorney
Seattle -Northwest Securities
Corporation
Presentation to
FSA
December 5, 2003
Presenters:
Mr. Paul George Assistant Mayor
Ms. Rita Anson Director of Finance & Budget
Mr. Timothy M. Jensen Treasury Services Officer
Mr. Ray Paolella City Attorney
Ms. Lindsay A. Sovde Seattle -Northwest Securities
Corporation
Table of Contents
Chapter 1- Introduction 1
Chapter 2 - The Bonds 2
Chapter 3 - The City 3
Chapter 4 - System Bonded Debt 6
Chapter 5 - Water and Sewer System 8
Chapter 6 - Utility System Financial Operations 16
Chapter 7 - Capital Improvement Plan 21
Chapter 8 - Conclusion 22
Chapter 9 - Area Ratings 23
Appendix A - The City's Economy
CITY OF YAKIMA, WASHINGTON
Chapter 1
Introduction
Bond sale to take place on December 15, 2003:
• Water and Sewer Revenue Bonds
• Series A Bonds will be used to pay for the settlement of the odor litigation relating to
the wastewater treatment facility and adjacent spray field
• Series B Bonds will be used to finance various projects and capital improvements
involving the City's wastewater treatment plant and to repay an interfund loan
relating to the litigation
Highlights of the City's strengths:
• Strong cash position of the System
• Strong debt service coverage of the System
• Track record of following sound financial guidelines
• Significant investments in infrastructure
• Stable and experienced management and low employee turnover
• Litigation related to wastewater treatment plant facility settled
• Stable performance of Yakima -area economy during recession
CITY OF YAKIMA, WASHINGTON .
Chapter 2
The Bonds
The City expects to bring to market two series of bonds.
• 2003 Bond Sale Plan
✓ $16,920,000 estimated par amount
— $7.92 million—Series A
— $9 million—Series B
✓ Rating desired December 11, 2003
✓ Pricing December 15, 2003
✓ Closing December 22, 2003
• Structure
✓ Series A Bonds matures from 2004 to 2015
✓ Series B Bonds matures from 2015 in 2023
✓ 20 years for entire bond issue
• Security
✓ Water operating revenues
✓ Sewer operating revenues
2
CITY OF YAKIMA, WASHINGTON
Chapter 3
The City
A. General Information
City of Yakima, Washington:
• Incorporated in 1886.
• The City is the Yakima County seat and the largest incorporated community in the
County encompassing 23 square miles.
• Population estimated to be 79,220 according to 2003 State of Washington Office of
Financial Management.
• Water and Sewer services provided to residents and businesses within the City's
boundaries.
• Sewer services also provided to surrounding urban area and reserve urban area.
• 20,079 water customers.
• 24,277 sewer customers.
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3
CITY OF YAKIMA, WASHINGTON
The Council
• The Council is currently comprised of seven elected members who serve four-year
terms. Residents within the City vote for council members; council members elect the
Mayor for a two-year term.
Current Term Tenure
Expires w/City
Mary Place, Mayor Dec -05 6 years
Paul George, Asst. Mayor Dec -05 2 years
Clarence Barnett Dec -03 22 years
Ronald J. Bonlender* Dec -07 First year
John Puccinelli Dec -03 8 years
Bernard J. Sims Dec -05 18 years
Susan J. Whitman* Dec -07 First year
* At an election held on November 4, 2003, Ronald Bonlender and Susan Whitman were elected to fill
currently vacant council positions. The two council positions were vacant due to the former council
members relocating outside their districts. Newly elected council members Dave Edler and Neil
McClure will begin their terms January 6, 2004.
B. Staff
• Approximately 680 full and part-time employees
• The City operates under a council/manager form of government with a full-time city
manager
• The City enjoys good and mature working relationship with its six labor unions
• City staff is active in regional and professional organizations
• Director of Finance and Budget holds CPA designation
C. Legal
• Settlement of the odor litigation is the reason for the issuance of the Series A Bonds
• Litigation settlement details
- 1998, 220 residents of Yakima and Union Gap sought damages related
odor from wastewater treatment plant and adjacent spray field
- Grew to class action status involving 3,700 members
- Filed suit against City of Yakima and Del Monte Corporation
- City has been working on a settlement since 2001
to
4
CITY OF YAKIMA, WASHINGTON
- On November 21, 2003 court approved settlement
• $7,000,000 paid by City
• $6,000,000 sought from sources outside of the City
• Payment to be made on December 22, 2003
• Settlement releases City from future litigation on this matter unless odor
impacts exceed level existing on October 3, 2000 and litigant can prove
decline in market value of property
• Settlement constitutes a covenant running with the land that is binding
on subsequent residential property purchasers
5
CITY OF YAKIMA, WASHINGTON
Chapter 4
System Bonded Debt
Senior Lien Water & Sewer Parity Bonds
1996 Revenue Refunding Bonds
1998 Revenue Refunding Bonds
2003 Revenue Bonds, Series A*
2003 Revenue Bonds, Series B*
* Preliminary, subject to change.
Junior Lien Debt
Public Works Trust Fund Loans
Sewer Treatment Plant Rehabilitation
Domestic Well & Pumphouse
Sewer Collection System Improvements
Wastewater Facility Rehabilitation
Sewer Collection System Improvements
Headworks/Digester Rehabilitation
Sewer Improvements King Street
Fruitvale Neighborhood
2001 Junior Lien Bond (AppleTree)*
Amount of
Original Issue
$ 3,320,000
7,910,000
7,920,000
9,000,000
$ 28,150,000
Amount of
Original Issue
$ 945,000
495,000
1,120,000
3,221,708
1,481,000
3,030,558
209,367
1,466,250
Outstanding After
Bond Issue
$ 1,590,000
6,260,000
7,920,000
9,000,000
$ 25,040,000
Outstanding
Balance
as of 12/15/03
$ 277,895
163,643
555,579
1,705,056
449,890
1,960,493
140,221
1,319,625
$ 11,968,883 $ 6,572,402
$ 600,000
$ 600,000
* The AppleTree Project Bonds are subordinated six percent debentures for the AppleTree Project. The
AppleTree Project Bonds have a lien only on connection charges collected from within the Project
boundaries. If there are not sufficient connection charge revenues collected to pay principal and interest on
the bonds, neither the System nor the City has any obligation to pay.
6
CITY OF YAKIMA, WASHINGTON
Future Debt Needs
• The City plans to issue $3.6 million in irrigation bonds in February 2004 to finance
part of the rebuilding of its domestic irrigation system, which is a system separate
from the Water and Sewer System.
Bond Debt Service
$
$
$1
$1
Outstanding System Parity Debt Service
,uuu,u,,,,
1,500,000
1,000,000
1,500,000
1,000,000
:,500,000
—
,000,000
500,000
—
— — — —
—
—
—
::::::
.
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
01996 W&S Rev Rfdg Bonds ■ 1998 W&S Bonds
02003 W&S Rev Bonds, Series A 02003 W&S Rev Bonds, Series B
• 2004 parity bonded debt service is anticipated to be 13.5% of System operating
revenues.
• 2004 Public Works Trust Fund loan debt service is anticipated to be 3.7% of System
operating revenues.
7
Crn' OF YAKIMA, WASHINGTON
Chapter 5
Water and Sewer System
A. Supply and Facilities
1. Water
• The City's water supply comes from the Naches River and is treated at the water
treatment plant prior to delivery.
• The City has three high production wells to back up its gravity surface supply
system.
• The Nob Hill Water Association (a private utility) serves a portion of the western
part of the urban area and part of the City.
• A number of the commercial and industrial facilities in the City take their source
of cooling water supply directly from shallow wells.
• Residential customers use 55 percent of the total water consumed; within the City,
approximately 75 percent of all residential customers have irrigation water
supplied from a separate irrigation system of the City.
• The water system has approximately 290 miles of transmission and distribution
mains.
• City's 2002 water demands:
Total Capacity: 25.0 MGD*
Average Day Demand: 12.4 MGD
Peak Day Demand: 20.4 MGD
* Three emergency wells provide an additional 11.4 MGD.
8
CITY OF YAKIMA, WASHINGTON
2. Sewer
• City has two sewage collection systems, one for wastewater from food processing
industries and one for other wastewater.
• Beginning in 1974, the City accepted regional responsibility for protecting the
environment by agreeing to provide regional wastewater treatment.
• The investments made in the City's wastewater collection treatment facilities
exceeds $100 million since the systems were implemented.
City's sewage infrastructure:
• Over 310 miles of collection sewers, trunk sewers and force mains ranging in size
from six-inch diameter to 48 -inch diameter pipe.
• Future System capacity (with enhancements made from bond proceeds) is
expected to sustain foreseeable growth for the next 10 years.
• City's 2002 sewage demand:
Plant Permitted Capacity: 22.3 MGD
Average Flow: 10.7 MGD
Peak Flow: 14.2 MGD
9
CITY OF YAKIMA, WASHINGTON
B. Customer Base
1. Water Customers
Water Accounts
Year Residential Commercial Industrial Government Total
2003* 17,570 2,297 130 82 20,079
2002 17,546 2,284 130 82 20,042
2001 16,546 2,154 123 77 18,900
2000 16,356 2,130 122 77 18,685
1999 16,492 2,147 122 77 18,838
5 -Year Growth 6.5% 7.0% 6.6% 6.5% 6.6%
* As of September 2003.
Top Water Customers — 2002*
Annual % of Total
Billing Water Revenue
Ratepayer
Boise Cascade Corp. $ 135,559 2.69%
Yakima Housing Authority 48,909 0.97
Cintas 36,897 0.73
Del Monte Corp. 34,545 0.68
Yakima Memorial Hospital 33,326 0.66
Providence Medical Center 28,537 0.57
Seneca Foods 27,066 0.54
Central Washington Fair Association 21,948 0.43
Yakima Valley Comm. College 21,594 0.43
Gilbert Park 16,162 0.32
Total $ 404,543 8.01%
* Top ten water customers account for 2.51% of total System operating revenue.
Source: City of Yakima
10
CITY OF YAKIMA, WASHINGTON
2. Sewer Customers
Year
2003 (2)
2002
2001
2000
1999
Sewer. Service Accounts
Residential
21,983
21,084
20,560
19,902
19,408
5 -Year Growth 13.3%
Commercial
2,178
2,089
1,970
1,907
1,860
17.1%
Industrial
17
17
16
15
15
13.3%
(1) Includes two additional wholesale accounts in each year.
(2) Actual as of September 2003.
Top Sewer Customers — 2002*
Annual
Billing
Ratepayer
Del Monte Corporation
City of Union Gap
Seneca Foods
Terrace Heights Sewer District
Cintas
Yakima Memorial Hospital
Jewel Apple
Yakima County Dept. of Corrections
Yakima Regional Medical Center
DoubleTree Hotel
Total
* Top ten sewer customers account for 7.30% of total
Source: City of Yakima
Government
99
95
90
87
85
Total (1)
24,279
23,287
22,638
21,913
21,370
16.5% 13.6%
% of Total
Sewer Revenue
$ 283,604
229,388
190,409
121,338
104,516
72,906
66,999
36,653
35,131
34,782
$ 1,175,725
2.56%
2.07
1.72
1.10
0.91
0.66
0.61
0.33
0.32
0.31
10.63%
System operating revenue.
Technical difficulties pertaining to high temperature discharge meters at the Boise
Cascade plant led to billing problems, and this account has not been billed since 1998.
Billing has been re -instated and the City is in the process of determining the amount
of unbilled revenues and is working with Boise Cascade to recover these funds. It is
estimated that the impact on total System revenues is less than 1.5 percent.
11
CITY OF } AKIMA, WASHINGTON
C. Service Rates
1. Water
• Water rates are reviewed on an ongoing basis
• Rates are adjusted as needed after public hearings
• Last rate adjustment in 2001 of 20%
Residential Water Ready -to -Serve Charges
One-month Two-month
Ready -to -serve charges: Period* Period*
Meter Size
3/4" and smaller $ 3.65 $ 3.65
1" 4.24 5.65
11/2" 7.68 12.80
2" 14.17 26.00
3" 34.64 67.00
4" 54.57 107.00
6" 95.95 190.00
8" 156.55 310.00
10" 238.93 475.00
12" 351.40 700.00
* The "one month period" is defined as any period of time from one day up to and including one month and
fourteen days, and the "two month period" is defined as any period of time from one month and fifteen days to
two month and fourteen days.
Residential Water Usage Rates per 100 Cubic Feet ("UOC")
UOC Rate per UOC
0-12 $ 1.13
13-20 1.13
21-250 1.00
251-500 0.75
Over 500 0.75
Source: City of Yakima
12
CITY OF YAKIMA, WASHINGTON
Residential Bimonthly Base Water Ready -to -Serve Charges (per UOC)
Meter Size 2003 2001 1999
3/4 inch $ 3.65 $ 3.65 $ 2.29
1 inch 5.65 5.65 4.61
1 1/2 inch 12.80 12.80 11.47
2 inch 26.00 26.00 25.21
3 inch 67.00 67.00 66.34
4 inch 107.00 107.00 107.52
6 inch 190.00 190.00 244.70
8 inch 310.00 310.00 434.48
10 inch 475.00 475.00 681.39
Source City of Yakima
2. Sewer
• Rates are reviewed on an on-going basis
• Rates are adjusted as needed: Last adjustment in 2003 for 8%
• Sewer system has two rate structures
— Within City limits
— Outside City limits
• Rates are comprised of a ready -to -serve charge and volume charge.
13
CITY OF YAKIMA, WASHINGTON
Residential Sewer Ready -to -Serve Charges (Inside City Limits)
Water
Meter Size
3/4"
1"
11/2"
2"
3"
4"
6"
8"
10"
Monthly Charge*
$ 13.01
16.52
21.34
34.35
130.10
165.62
248.49
342.94
685.89
Bimonthly Charge*
$ 26.02
33.04
42.68
68.70
260.20
331.24
496.98
685.88
1,371.78
* The "one month period" is defined as any period of time from one day up to and including one month and
fourteen days, and the "two month period" is defined as any period of time from one month and fifteen days to
two month and fourteen days.
Historical Residential Bimonthly Base Sewer Ready -to -Serve Charges (per unit)
Meter Size 2003
3/4 inch $ 26.02
1 inch 33.04
1 1/2 inch 42.68
2 inch 68.70
3 inch 260.20
4 inch 331.24
6 inch 496.98
8 inch 685.88
10 inch 1,371.68
Volume charge 2.28
2001 1999
$ 16.66 $ 16.34
21.16 20.76
27.32 26.80
43.98 43.14
166.60 163.40
212.08 208.00
318.20 312.10
439.16 430.72
878.32 861.44
1.49 1.46
• Multiple -unit Residential Customers. The monthly
$6.77 per account plus $6.24 per dwelling unit.
ready -to -serve charge is
14
CITY OF YAKIMA, WASHINGTON
Residential Sewer Ready -to -Serve Charges (Outside City Limits)
Water
Meter Size
3/411
1"
11/2"
2"
3"
4"
6"
8"
10"
Monthly Charge*
$ 19.78
25.12
32.44
52.22
197.80
251.80
377.80
521.40
1,042.80
Bimonthly Charge*
$ 39.56
50.24
64.88
104.44
395.60
503.60
755.60
1,042.80
2,085.60
* The "one month period" is defined as any period of time from one day up to and including one month and
fourteen days, and the "two month period" is defined as any period of time from one month and fifteen days to
two month and fourteen days.
• Multiple -unit Residential Customers. For multiple -unit residential customers,
the monthly ready -to -serve charge is $10.29 per account plus $9.49 per
dwelling unit.
• Volume Charge. For all customers, the volume charge is $3.53 per one hundred
cubic feet of water consumption.
• Strong Waste Surcharge
- Charged to commercial and industrial customers discharging wastewater
exceeding 300 parts per million of suspended solids and/ or biochemical
oxygen demand.
- Surcharge is calculated using national averages of concentration levels
unless a sampling station is on the premises.
15
CITY OF YAKIMA, WASHINGTON
Chapter 6
Utility System Financial Operations—1998-2002
A. Fiscal Controls
FISCAL CONTROLS, MANAGEMENT GUIDELINES AND INVESTMENT POLICY:
Utility Guidelines:
• Cost of service studies are performed every 2 to 4 years, more often if needed, and
rates are reviewed and adjusted as appropriate.
• Prior to establishing an increase in rates, City Council holds study sessions and public
meeting(s) to discuss the need for, and customer impacts of, the proposed rate
increase.
• Rates will be set at levels that will generate revenue sufficient to ensure payment of
all operating and maintenance expenses, construction work in progress and debt
service and to ensure compliance with all applicable covenants.
• The operating and maintenance budgets will be set at a level sufficient to maintain
facilities in good condition, to provide sufficient staffing to ensure safe and
continuous operation of the system, to implement the construction work in progress
(capital improvement plan) and to meet all debt service payments and other legal
obligations and to ensure a reasonable reserve is maintained.
• A cost/benefit analysis is performed on major capital investments and other
commitments that would significantly affect costs or rates for Utility services before
submitting a recommendation to Council. Such an analysis generally includes
impacts on costs, revenues and cash flow and would address risks and uncertainties
associated with the proposed investment.
• Debt is not used to finance operating and maintenance requirements.
16
CITY OF YAKIMA, WASHINGTON
Management Guidelines:
• Capital projects financed through debt issuance will not be financed for a term longer
than the expected useful life of the project assets.
• Both debt and pay-as-you-go financing may be used to finance utility capital needs.
• With respect to debt issuance:
- Debt financing will be managed to minimize annual volatility in rate
requirements.
- Alternative timing of issuance and amortization structures will be analyzed
to ensure the most cost-efficient financing, given prevailing and forecasted
market conditions.
- As a general rule, fixed rate debt obligations are strongly preferred over
variable rate obligations; however variable rate obligations will be
considered in special circumstances.
- The City will set rates sufficient to provide debt service coverage in excess of
legal minimums. Rates are generally set to provide a 1.4 % to 2 % coverage
ratio for bonded indebtedness.
- The City is careful to comply with applicable SEC disclosure rules and IRS
Arbitrage laws
• To accommodate unanticipated or unforeseen needs, the City maintains an Operating
Reserve equal to approximately 8% of annual operating expenditures.
• The annual operating budget for a utility is generally restricted to 5% or less
dependency on beginning balance for any given year, including capital transfers.
Investment Policy:
• The City's investment policy requires that all excess funds be invested in a manner
that will provide the highest investment return consistent with maximum security
and which will meet the daily cash flow demands of the City (including the utilities).
• Investments shall be made with judgment and care - measured by a "prudent
person" standard.
• Primary objectives of the City's investment activities are (in order of priority): (1)
safety, (2) liquidity and (3) return on investment.
• In general, water rates are set to provide for each customer class to cover their full
cost of service; wastewater rates allow for some allocation of expenses between
customer groups.
17
CITY OF YAKIMA, WASHINGTON
B. Balance Sheet of Water & Sewer Enterprise Funds --1998-2002
Assets
Cash and Equity (1)
Receivables
Accounts
Notes/Contracts
Interest/ Penalties
Other Receivables
Due from other Governments
Inventories
Investments, at amortized cost
Restricted Assets
Cash
Fiscal Agent/Trustee
Investments, at amortized cost
Land
Buildings
Other Improvements
Machinery & Equipment
Accumulated Depreciation
Construction in Progress
Completed Construction
Intangibles
Unamortized Debt Issue Costs
Total Assets
Balance Sheet
Fiscal Years Ended December
Audited
2002
2001 2000 1999 1998
$ 4,515,506 $ 5,993,687 $ 5,724,172 $ 6,142,429 $ 7,411,081
3,105,330 2,926,837 2,944,483 2,562,680 2,291,149
12,203 19,031 25,859 33,063 39,887
63,675 76,655 79,215 119,087 104,311
25,050 25,050 23,900 27,650 28,750
0 0 0 0 78,339
189,270 199,809 183,848 190,503 201,733
5,448,735 5,466,362 4,302,706 4,414,623 3,099,451
2,085,358 1,749,415 2,229,376 2,149,317 2,306,018
425 409,185 425 425 425
0 501,712 0 0 0
780,211 780,211 780,211 780,211 780,211
56,468,565 54,900,207 54,900,207 47,144,172 47,144,172
61,708,099 58,434,669 56,567,254 64,248,796 46,105,173
6,802,453 6,793,571 6,740,532 5,677,766 5,650,934
(57,907,135) (54,481,888) (51,097,020) (47,286,145) (43,816,028)
10,296,049 9,012,487 5,406,423 3,315,243 17,126,405
2,232,245 2,232,245 2,232,245 2,232,245 2,232,245
221,830 221,830 221,830 221,830 221,830
37,553 41,939 46,326 50,713 55,099
96,085,422 95,303,014 91,311,992 92,024,608 91,061,185
Liabilities
Warrants/Accounts Payable 1,355,300 1,403,602 870,943 580,764 452,413
Wages/Benefits Payable 448,811 407,883 424,678 426,340 397,320
Compensated Absences Payable 545,415 517,600 501,039 508,988 496,307
Accrued Payables 192,438 159,622 188,634 206,990 201,789
Deposits Payable 200,676 213,534 192,189 181,698 161,167
Current Portion - Long-term Debt 690,259 684,077 678,135 672,423 652,206
Restricted Payables
Matured Interest Payable - 0 13,760 0 0 0
In Lieu of Construction 0 0 0 14,137 14,137
Current Portion - Long-term Debt 1,045,000 1,110,000 1,105,000 1,055,001 1,055,000
Bonds Payable 8,450,000 9,890,000 10,005,000 11,110,000 12,135,001
Unamortized Bond Discount (61,843) (70,396) (78,947) (87,498)
(96,051)
Deferred Amount on Debt Refunding (291,489) (326,840) (362,192) (397,544) (432,896)
Loans Payable - Long Term 5,472,715 6,319,064 6,933,232 8,105,950 8,307,592
Advance from Other Funds 1,420,000 710,000 0 0 0
Total Liabilities
19,467,282 21,031,906 20,457,711 22,377,249 23,343,985
Fund Equity _
Contributed Capital 68,389,116 68,389,116 69,938,343 68,389,116 65,940,027
Retained Earnings (2)
Reserved 2,085,358 2,251,127 2,229,376 2,149,317 2,306,018
Unreserved 6,143,666 3,630,865 (1,313,438) (891,074) (528,845)
Total Fund Equity 76,618,140 74,271,108 70,854,281 69,647,359 67,717,200
Total Liabilities and Fund Equity $ 96,085,422 $ 95,303,014 $ 91,311,992 $ 92,024,608 $ 91,061,185
(1) Cash decreasing due to legal expenses related to litigation.
(2) Starting in 1998, the City began incurring legal expenses to defend the odor -related litigation related to the wastewater treatment facility
(see "Legal and Underwriting - Litigation" herein). As a result of the size of legal expenses and the uncertainty surrounding the timing
and amount of the final settlement, those costs were accumulated in a work -in -process account on the Balance Sheet. The City is of the
opinion that the proper accounting treatment for the $7 million litigation settlement and the related $6 million of litigation defense costs
is to present it as an "special item" (per APB 30 and GASB 34) on the Income Statement. This method is estimated to reduce retained earnings of
the System to an approximate deficit of $3.93 million at the end of 2003. Since these costs have been paid annually since 1998 and are considered
extraordinary, they are not expected to impact net operating income in 2003, or put Fund Equity in a negative position. It should also be
noted that the System rate structure has been set to rebuild retained earnings over the life of the Series A Bonds.
18
CITI OF 1 AKIMA, WASHINGTON
C. Historical Operating Results of Water and Sewer System
Combined Statement of Revenue and Expenses
(Years Ended December 31)
Audited
2002 2001 2000 1999 1998
Operating Revenues:
Charges for Services $ 16,108,123 $ 14,647,128 $ 13,888,145 $ 13,509,835 $ 13,264,410
Other Operating Revenues 1,130 416 2,392 3,472 4,133
Total Operating Revenues 16,109,253 14,647,544 13,890,537 13,513,307 13,268,543
Operating Expenses:
Operating Expense 8,803,501 7,837,536 7,586,388 7,986,378 7,763,044
Depreciation Expense 3,425,246 3,384,867 3,832,424 3,470,118 3,494,604
In -lieu Taxes 2,017,603 1,798,095 1,739,773 1,707,375 1,678,870
Taxes 922,865 798,013 805,675 721,995 695,080
Total Operating Expenses 15,169,215 13,818,511 13,964,260 13,885,866 13,631,598
Net Operating Income 940,038 829,033 (73,723) (372,559) (363,055)
Other Income:
Gain (Loss) on Sale of Assets 0 0 5,360 0 1,734
Interest Income (1) 164,794 435,903 302,648 237,403 491,607
Other Non -Operating Revenues 15,625 307,016 (2) 309,393 312,631 360,511
Total Other Income 180,419 742,919 617,401 550,034 853,852
Total Income
1,120,457 1,571,952 543,678 177,475 490,797
Available for Debt Service
on First Lien Bonds (3) $ 5,468,568 $ 5,754,832 $ 5,176,417 $ 4,369,588 $ 4,678,747
First Lien Debt Service
Coverage
Available for Debt Service
on Second Lien Bonds (4)
273,653 $ 276,403 $ 278,643 $ 280,373 $ 281,485
19.98 20.82 18.58 15.58 16.62
$ 5,194,916 $ 5,478,430 $ 4,897,775 $ 4,089,216 $ 4,397,262
Second Lien Parity Bonds
1991 Revenue $ 0 $ 443,760 $ 450,435 $ 445,225 $ 748,330
1992 Loan 324,791 324,791 324,791 324,791 324,791
1996 Revenue Refunding 363,875 365,375 360,950 360,738 359,660
1998 Revenue & Refunding 909,210 501,410 503,410 503,192 0
Second Lien Parity Bonds Debt Service $ 1,597,876 $ 1,635,336 $ 1,639,586 $ 1,633,946 $ 1,432,781
Debt Service Coverage
3.25 3.35 2.99 2.50 3.07
(1) Includes interest expense on Public Works Trust Fund loans and debt service charges on wholesale customers; excludes interest on parity debt.
(2) The "Other Non -Operating Revenues" in 2001 was mis-classified in the City's 2001 Audit Report and was re -stated in 2002. The correct amount
is shown.
(3) Net Revenues as defined in the Bond Ordinance which excludes depreciation, municipal taxes and costs capital additions to or replacements
of the System. The First Lien Bonds are the City's 1968 Water and Sewer Revenue Bonds, which matured on March 1, 2003.
(4) Net Revenues less First Lien debt service. For as long as the First Lien Bonds remained outstanding, the Second Lien Bonds included
the City's 1992 State Revolving Fund Loan (which matured on July 1, 2003), 1996 Bonds and 1998 Bonds.
19
CITY OF YAKIMA, WASHINGTON
D. Projected Operating Results -2003-2007
Operating Revenues (1)
Projected Income Statement
(Years Ended December 31)
Budget Estimate Budget Projected
2003 2004 2005 2006 2007
$ 16,826,180 $ 18,120,248 $ 18,210,849 $ 18,301,903 $ 18,942,470
Operating Expenses:
Operating Expense 9,378,457 10,031,171 10,231,794 10,487,589 10,802,217
Depreciation Expense 3,650,947 3,566,020 3,371,511 3,779,441 4,172,372
In -lieu Taxes 2,115,362 2,303,145 2,349,208 2,407,938 2,480,176
Other Taxes 1,087,384 1,092,842 1,114,699 1,142,566 1,176,843
Total Operating Expenses 16,232,150 16,993,178 17,067,212 17,817,534 18,631,608
Net Operating Income
594,030 1,127,070 1,143,637 484,369 310,862
Other Income:
Net Interest Income/(Expense) (2) (38,897) (42,921) (19,871) 5,129 (42,921)
Other Non -Operating Revenues 177,148 320,064 407,064 407,064 301,496
Total Other Income 138,251 277,143 387,193 412,193 258,575
Total Income
Available for Debt Service
on First Lien Bonds (3)
First Lien Debt Service
Coverage (4)
Available for Debt Service
on Second Lien Bonds (5)
732,281 1,404,213 1,530,830 896,562 569,437
$ 5,470,612 $ 6,063,075 $ 6,017,040 $ 5,818,569 $ 5,918,652
$ 276,075 $ 0 $ 0 $ 0 $ 0
19.82 NA NA NA NA
$ 5,194,537 $ 6,063,075 $ 6,017,040 $ 5,818,569 $ 5,918,652
Second Lien Parity Bonds
1996 Revenue Refunding 361,915 369,360 365,585 366,035 370,285
1998 Revenue & Refunding 795,410 790,210 794,410 797,610 789,240
2003 Revenue Series A (6) 0 838,492 879,680 877,080 876,830
2003 Revenue Series B (6) 0 453,981 472,350 472,350 472,350
Second Lien Debt Service $ 1,157,325 $ 2,452,042 $ 2,512,025 $ 2,513,075 $ 2,508,705
Projected Debt Service Coverage 4.49 2.47 2.40 232 2.36
(1) Includes revenues estimated to be collected from Boise Cascade m 2004-2007.
'(2) Includes interest expense on Public Works Trust Fund loans and debt service charges on wholesale customers; excludes interest on parity debt.
(3) Net Revenues as defined in the Bond Ordinance which excludes depreciation, municipal taxes and costs capital additions to or replace-
ments of the System. The First Lien Bonds are the City's 1968 Water and Sewer Revenue Bonds, which matured on March 1, 2003.
(4) Final payment on "First Lien Bonds" made in 2003. "Second Lien Bonds" will be senior lien beginning in fiscal year 2004.
(5) Net Revenues less First Lien debt service. For as long as the First Lien Bonds remained outstanding, the Second Lien Bonds included
the City's 1992 State Revolving Fund Loan (which matured on July 1, 2003), 1996 Bonds and 1998 Bonds. The second Lien Bonds are
now the Parity Bonds.
(6) Preliminary, subject to change.
• All operating expenses, with the exception of depreciation, are increased at a rate of
two percent in 2005, 2.5 percent in 2006 and three percent in 2007. Depreciation is
increased based estimated future capital improvements. Operating revenues are
increased at a rate of 0.5 percent in 2005 and 2006 and 3.5 percent in 2007.
20
CITY OF YAKIMA, WASHINGTON
Chapter 7
Capital Improvement Plan
2003-2008 Capital Improvement Plan
The following five-year plan is based on projects anticipated to be completed. However, the
plan may change based on available funds and System needs. Funding for the water and
sewer projects are expected through sources such as grants, available cash balances and
Public Works Trust Fund loans. Additional funding for some sewer projects are also
expected through parity bonds.
SEWER
Sewer Budgeted Cost
Rehabilitation of solids dewatering centrifuge $ 1,345,000
Installation of solids thickening unit 1,605,600
Installation of secondary clarifier 3,277 800
New RAS/ WAS pump station 1,669,400
Rehabilitation of emergency power generator 1,000,000
Replacement of blower VFDs 245,000
Repayment of interfund loan used for capital purposes 1,400,000
Total Sewer Construction Project Budget: $ 10,542,800
WATER
Water
New 3,000 gpm well
Installation of two ASR wells
Rapid mix/coagulation system
Filter rehabilitation
Filter -to -waste facility improvements
Disinfection facilities
Residual handling facilities
Chemical storage & feed facilities
Storage capacity improvements
Total Water Construction Project Budget:
Budgeted Cost
$ 1,500,000
1,500,000
150,000
1,500,000
500,000
500,000
1,800,000
2,020,000
100,000
$ 9,570,000
21
CITY OF YAKIMA, WASHINGTON
Chapter 8
Conclusion
The City's strengths include:
• Strong cash position of the System
• Strong debt service coverage of the System
• Track record of following sound financial guidelines
• Significant investments in infrastructure
• Stable and experienced management and low employee turnover
• Litigation related to wastewater treatment plant facility settled
• Stable performance of Yakima -area economy during recession
22
CITYOF YAK/NIA, WASHINGTON
Chapter 9
Area Ratings—Standard & Poor's
1. City of Yakima
• LTGO rated "A"
• Water & Sewer Revenue rated "A"
2. City of Centralia
• LTGO rated "A-"
3. Benton County
• LTGO rated"A+"
4. City of Richland
• LTGO rated "A"
• Water and Sewer Revenue rated "A+"
5. City of Walla Walla
• LTGO rated "A"
• Water and Wastewater Revenue rated "A-"
6. City of Moses Lake
• LTGO rated "A-"
7. Kittitas County
• LTGO rated "A"
8. Chelan County
• LTGO rated "A"
9. City of Wenatchee
• LTGO rated "A"
Water and Sewer Revenue rated "A"
23
CITY OF YAKIMA, WASHINGTON
Appendix A
The City's Economy
A-1
CITY OF YAKIMA, WASHINGTON
A. Statistical Review of Economic Indicators
1. Assessed value
The City's assessed value has experienced substantial growth over the past several
years and has grown by over 30 percent since 1998.
Historical Regular Assessed Value
Increase from
Year Assessed Value Previous Year
2003 $3,673,433,781 12.4%*
2002 3,268,615,861 3.6
2001 3,156,055,363 2.6
2000 3,076,532,870 7.9
1999 2,851,139,441 2.1
1998 2,792,000,801
* In March 2002, the Washington State Supreme Court issued an 'opinion in which it found that the
property owner petition method of annexation is unconstitutional because it violates the privileges
and immunities clause of the Washington State Constitution. The City moved for reconsideration
and the Court reheard the case in March 2003. The Court has not issued a new opinion and it is
uncertain as to whether it will find the statutes unconstitutional. The City's counsel believes that,
based on prior case law, it is unlikely in any event 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. The City has used the petition method of
annexation for approximately 50 years.
$5,000,000,000
$4,500,000,000
$4,000,000,000
$3,500,000,000 -
$3,000,000,000
$2,500,000,000 -
$2,000,000,000
$1,500,000,000
$1,000,000,000
$500,000,000
$0
Assessed Value
1998
1999
2000
2001
2002
2003
A-2
CITY OF 1 AKIMA, WASHINGTON
2. Household Income Data
The median household income of the City is comparable to other similarly rated cities
within the area:
2003 Estimated Median Household Income
City of Moses Lake $38,607
City of Walla Walla 35,824
City of Yakima 32,155
City of Sunnyside 30,170
City of Ellensburg 22,692
Source: Claritas
3. Home Values
The median home values of the City compares favorably to other similarly rated cities
within the area and Yakima County:
2003 Median Home Values
City of Ellensburg $138,136
City of Yakima 125,616
City of Walla Walla 120,998
City of Moses Lake 105,421
City of Sunnyside 96,218
Source: Claritas
A-3
CITY OF YAKIMA, WASHINGTON
B. Major Employers
The City is the center of the County's economic activity and top employers.
City of Yakima
Major Employers
Employer
Yakima Valley Memorial Hospital
Yakima School District
Yakima County
Providence Health System*
Snokist Growers
City of Yakima
Yakima Valley Comm. College
Western Recreational Vehicles
Shields Bag & Printing
ClientLogic
Product
Medical
Education
Government
Medical
Fruit canning
Government
College
Trailers, motor homes
Flexible packaging
Inbound call center
* Now owned by Health Management Associates, Inc. and renamed to Yakima Regional
Source: Yakima County Development Association, July 2003.
Number of
Employees
1,100
1,001
1,000
941
851
750
590
550
470
450
Health Center.
A-4
CITY OF YAKIMA, WASHINGTON
C. Area Economy
1. Location
The City is a mix of commercial and suburban residential property with most home
values in the mid -income price ranges:
• 140 miles from Seattle; 200 from Spokane; 185 from Portland
• Rapidly growing wine industry
• Increasing tourism from newly expanded convention center, Sun Dome, and
growing wineries
2. New residential development
The City is growing rapidly although new home construction has slowed.
New Single
City of Yakima, Washington
Residential Building Permits
Family Units New Multi Family Units Total
Year Number
2003 *
2002
2001
2000
1999
1998
Valuation Number Valuation Valuation
61 $ 8,339,864
34 3,655,277
14 1,104,200
18 1,397,477
29 2,150,876
31 2,669,040
* Through September 2003.
Source: U.S. Census Bureau
40
24
68
71
80
257
$ 3,039,461
1,588,309
3,049,736
3,865,711
4,281,696
11,318,345
$ 11,379,325
5,243,586
4,153,936
5,263,188
6,432,572
13,987,385
A-5
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£ $7,920,000*
y t Water and Sewer Revenue Bonds, 2003 Series A
To c
$9,000,000*
° `° Water and Sewer Revenue Bonds, 2003 Series B
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cy
.£ g DATED: December 15, 2003 DUE: November 1, as shown on the inside cover
E N
a c
r E STANDARD AND POOR'S RATING—Applied for (see "Rating" herein).
o N NOT BANK QUALIFIED
c o _
m BOOK -ENTRY ONLY—The Bonds will be issued as fullyregistered bonds in denominations of $5,000, or integral multiples
v �'
a E thereof, and will be registered in the name of Cede & Co., as bond owner and nominee for The Depository Trust
Company ("DTC"). DTC will act as securities depository for the Bonds. Purchasers will not receive certificates
ii co
r m representing their interest in the Bonds purchased.
CD v PRINCIPAL AND INTEREST PAYMENTS —Interest on the Bonds will be payable on May 1, 2004 and semiannually thereafter
NJ
13 on November 1 and May 1 of each year to their maturity or earlier redemption of the Bonds. Principal of and interest
t°, co on the Bonds will be payable by the fiscal agency of the State of Washington in New York, New York, currently The
d
1'o Bank of New York, as further described herein. See "Description of the Bonds." For so long as the Bonds remain in a
2 E "book -entry only" transfer system, the fiscal agent will make such payments only to DTC, which in turn will remit
Po such principal and interest to its Participants for subsequent disbursement to Beneficial Owners of the Bonds as further
described herein in Appendix C.
PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER 5, 2003
City of Yakima, Washington
ai (5m MATURITY SCHEDULES LOCATED ON INSIDE COVER
co c«
tai
D c REDEMPTION
—The Bonds are subject to redemption prior to their stated maturities as further described herein. See
to m° "Description of the Bonds - Redemption Provisions."
c a>
° SECURITY —The principal of and interest on the Bonds are payable solely from and secured by the Gross Revenue of the
E
°m Water and Sewer System after all required PaY ments for the Costs of Maintenance and Operation have been made or
'6a duly provided for. The Bonds are issued on a parity with the City's Water and Sewer Revenue Refunding Bonds, 1996
woutstanding in the amount of $1,860,000 and Water and Sewer Revenue and Refunding Bonds, 1998 outstanding in the
a c amount of $6,260,000. For so long as the Bonds are outstanding, no bonds may be issued with a lien and charge on the
Et a Gross Revenues superior to the lien and charge of the Bonds. Additional bonds may be issued on a parity of lien with
a, = the Bonds and the Parity Bonds, subject to certain conditions described herein. The Bonds are special obligations of the
m m City payable only from the Bond Fund. The Bonds are not general obligations of the City, the State of Washington, or
SE' c any other municipal corporation or political subdivision thereof. See "Security for the Bonds."
uv
i R TAX EXEMPTION—In the opinion of Bond Counsel, interest on the Bonds is excluded from gross income subject to federal income
To e taxation pursuant to the Internal Revenue Code of 1986, as amended, subject to certain conditions and assumptions described
0 t herein under "Tax Exemption." The Bonds are not private activity bonds. Interest on the Bonds is included in the computation of
L. u certain federal taxes on corporations.
dm DELIVERY—The Bonds are offered by the Underwriter when, as and if issued, subject to the approving legal opinion of
Preston Gates & Ellis LLP of Seattle, Washington, Bond Counsel. It is expected that the Bonds will be ready for
E a delivery to the Bond Registrar through the facilities of The Depository Trust Company by Fast Automated Securities
10 c Transfer, on or about December 22, 2003.
to 2
'co a
1- *Preliminary, subject to change.
This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire
Official Statement to obtain information essential to the making of an informed investment decision.
1111 SEATTLE -NORTHWEST
... •SECURITIES CORPORATION
City of Yakima, Washington
$7,920,000*
Water and Sewer Revenue Bonds, 2003 Series A
$9,000,000*
Water and Sewer Revenue Bonds, 2003 Series B
DATED: December 15, 2003 DUE: November 1, as shown below
MATURITY SCHEDULE —
Due
Nov. 1 Amount*
2004 $ 560,000
2005 600,000
2006 610,000
2007 625,000
2008 645,000
2009 665,000
$7,920,000*
Water and Sewer Revenue Bonds, 2003 Series A
Interest Due Interest
Rate Yield CUSIP Nov. 1 Amount* Rate Yield CUSIP
2010 $ 690,000
2011 720,000
2012 750,000
2013 780,000
2014 820,000
2015 455,000
(Plus accrued interest from the Dated Date)
$9,000,000*
Water and Sewer Revenue Bonds, 2003 Series B
MATURITY SCHEDULE —
Due Interest Due Interest
Nov. 1 Amount* Rate Yield CUSIP Nov. 1 Amount* Rate Yield CUSIP
2015 $ 400,000 2020 $1,095,000
2016 895,000 2021 1,150,000
2017 940,000 2022 1,210,000
2018 990,000 2023 1,280,000
2019 1,040,000
(Plus accrued interest from the Dated Date)
* Preliminary, subject to change.
City of Yakima, Washington
129 North Second Street
Yakima, Washington 98901
Phone: (509) 575-6000
Fax: (509) 575-6107
www.ci.yakima.wa.us
Mayor and City Council
Mary Place Mayor
Paul George Assistant Mayor
Clarence Barnett Council Member
Ronald J. Bonlender* Council Member
John Puccinelli Council Member
Bernard J. Sims Council Member
Susan J. Whitman* 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 M. Jensen Treasury Services Officer
Cindy Epperson Financial Services Manager
Ray Paolella City Attorney
Bond Counsel
Preston Gates & Ellis LLP
Seattle, Washington
206-623-7580
Current Bond Registrar
The Bank of New York
New York, New York
1-800-438-5473
* At an election held on November 4, 2003, Ronald Bonlender and Susan Whitman were elected to fill currently
vacant council positions. The two council positions were vacant due to the former council members relocating
outside their districts. Newly elected council members Dave Edler and Neil McClure will begin their terms
January 6, 2004.
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 C— Book Entry Transfer System, which has
been furnished 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 delivery 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 time. •
(This Page Intentionally Left Blank)
Table of Contents
Page
Description of the Bonds 1
Principal Amount, Date, Interest Rates and Maturities ' 1
Redemption Provisions 1
Purchase 2
Bond Registrar and Registration Features 2
Book -Entry Bonds 2
Authorization for Issuance 2
Purpose and Use of Proceeds 3
Purpose 3
Sources and Uses of Funds 3
Security for the Bonds 4
Bond Fund 4
Revenue Fund/Priority of Payments 5
Rate Covenant 5
Certain Other Covenants 6
Additional Bonds 7
Defeasance of the Bonds 7
Events of Default 7
City Indebtedness of the System 8
Outstanding Long -Term Borrowings 8
Water and Sewer Revenue Bonds - Debt Service Requirements 9
Debt Payment Record 9
Future Financings 9
The Water System 9
Description 9
Water Customers 10
Major Accounts of the Water System 11
Water Service Charges within City limits 11
Water System Capital Improvement Plan 12
The Sewer (Wastewater) System 13
Description 13
Sewer Customers 14
Major Accounts of the Sewer System 14
Sewer Service Charges 15
Wastewater Treatment Plant Capital Improvement Plan. 17
Billing and Collection Policy 18
Endangered Species Act 18
Financial Results 18
Comparative Balance Sheet 19
Historical Coverage Table 20
Projected Financial Information 21
Projected Coverage Table 22
The City 23
Key Administrative Staff 23
Labor Relations 24
Pension System 24
Risk Management 25
Accounting Policies 26
Budgetary Process 27
Cash and Investments 27
Auditing of City Finances 28
Demographic Information 29
Tax Exemption 32
General 32
Certain Federal Income Tax Consequences 32
33
Rating
Disclosure 33
Legal and Underwriting 34
Approval of Counsel 34
Litigation 34
Initiative and Referendum 35
Limitation on Remedies 35
Official Statement. 35
Underwriting 36
Concluding Statement 36
Bond Ordinance Appendix A
Form of Opinion of Bond Counsel Appendix B
Book -Entry Transfer System Appendix C
2002 Annual Financial Statements Appendix D
ll
(This Page Intentionally Left Blank)
OFFICIAL STATEMENT
City of Yakima, Washington
$7,920,000*
Water and Sewer Revenue Bonds, 2003 Series A
$9,000,000*
Water and Sewer Revenue Bonds, 2003 Series B
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 $7,920,000* aggregate principal amount of Water and Sewer Revenue
Bonds, 2003 Series A, dated December 15, 2003 (the "Series A Bonds") and $9,000,000* aggregate principal
amount of Water and Sewer Revenue Bonds, 2003 Series B, dated December 15, 2003 (the "Series B
Bonds") (together, the "Bonds"). This Official Statement provides information concerning the City, the
Bonds and the City's combined water and sewerage system (the "Water System" and the "Sewerage
System" and together, the "System"). The Bonds are issued on a parity of lien with the City's $1,860,000
Water and Sewer Revenue Refunding Bonds, 1996 (the "1996 Bonds") and $6,260,000 Water and Sewer
Revenue and Refunding Bonds, 1998 (the "1998 Bonds") (collectively the "Parity Bonds"). Additional
bonds may be issued on a parity of lien with the Outstanding Parity Bonds, subject to certain conditions
described herein.
Certain capitalized words and phrases used in this Official Statement have the meanings as defined in the
Bond Ordinance attached hereto in Appendix A.
Description of the Bonds
Principal Amount, Date, Interest Rates and Maturities
The Bonds will be issued in the aggregate principal amount of $16,920,000* and will be dated and bear
interest from December 15, 2003. The Bonds will mature on the dates and in the principal amounts and
will bear interest (payable semiannually on May 1 and November 1, first interest payable May 1, 2004) at
the respective rates as 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.
Redemption Provisions
Optional Redemption. The Series A Bonds maturing on or prior to November 1, 2013 are not subject to
redemption prior to their scheduled maturity. The Series A Bonds and Series B Bonds maturing on or
after November 1, 2014 are subject to redemption at the option of the City on and after November 1, 2013,
in whole or in part (within one or more maturities to be selected by the City) on any date, at a price of par
plus accrued interest, if any, to the date of redemption.
For as long as the Bonds are in book -entry only form, if fewer than all of the Bonds of a maturity are
called for redemption, the selection of Bonds within a maturity to be redeemed shall be made by DTC in
accordance with its operational procedures then in effect. See Appendix C attached hereto. If the Bonds
are no longer held in book -entry only form, then the Bond Registrar would select Bonds for redemption
using a random selection method.
Notice of Redemption (DTC). So long as the Bonds are in book -entry only form, the Bond Registrar shall
notify DTC of an early redemption not less than 30 days and no more than 60 days prior to the date fixed
* Preliminary, subject to change.
1
for redemption, and shall provide such information as required by a letter of representation submitted to
DTC in connection with the issuance of the Bonds. Neither the City nor the Bond Registrar will provide
notice of redemption to any beneficial owner of Bonds. It is the sole responsibility of the DTC
Participants to provide notice of redemption to individual beneficial owners of the Bonds.
Purchase
The City has reserved the right in the Bond Ordinance to use at any time any surplus Revenue of the
System available after providing for maintenance and operation, debt service, bond redemption and
capital improvements or other available funds, to purchase any of the Bonds at any price deemed
reasonable by the City.
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 book -entry form only in minimum denominations of $5,000 within a single series
and 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 (the "Bond Registrar"). 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 Bond Registrar to
DTC, which, in turn, is obligated to remit such principal and interest to its participants for subsequent
disbursement to the Beneficial Owners of the Bonds, as further described herein in Appendix C.
Book -Entry Bonds
DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond for each
series and maturity of the Bonds, as set forth on the inside 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 C attached hereto for additional information.
Procedures 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 adversely affected if the book -entry system of transfer is continued, the
City will execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their
nominees, Bonds in fully registered form, in the denomination of $5,000 or any integral multiple thereof
within a maturity. In the event the Bonds are transferred by the City to fully registered form, the
payments of principal and interest on the Bonds will be made by the Bond Registrar. Principal of the
Bonds will be payable upon due presentment and surrender thereof at the office designated by the Bond
Registrar. Under the State's current fiscal agency agreement, the Bonds also may be presented for
payment in the State of Washington at any office of Wells Fargo Bank, National Association. Interest on
the Bonds will be payable by check or draft mailed to the owners of the Bonds at the address appearing
on the Bond Register on the 15th day of the month preceding an interest payment date, and the Bonds will
be transferable as provided in the Bond Ordinance (defined below).
Authorization for Issuance
The Bonds are issued pursuant to Ordinance No. 2003-64 passed by the City Council on October 7, 2003
(the "Bond Ordinance"), Resolution No. adopted on December , 2003 and under and in
accordance with the laws and provisions of the State, including chapters 35.92 and 39.46 RCW.
2
Purpose and Use of Proceeds
Purpose
The proceeds from the sale of the Series A Bonds will be used to pay for the settlement of the odor
litigation relating to the sewer system. See "Legal and Underwriting - Litigation."
The proceeds from the sale of the Series B Bonds will be used to (i) finance various projects and capital
improvements involving the City's wastewater treatment plant, including de -watering biosolids, solids
thickening, secondary clarification, construction of a new pump station, construction of a new emergency
power generator and the replacement of blower and various electronic systems and (ii) repay an
interfund loan that was made to improve the plant and enable the City to close the spray field which was
one of the alleged sources of odor leading to the litigation.
The proceeds from the sale of the Bonds will also be used to satisfy the Reserve Requirement and to pay
the costs of issuance.
Sources and Uses of Funds
The proceeds from the Series. A Bonds (less accrued interest) are estimated to be applied as follows:
Sources of Funds
Par Amount of Series A Bonds $ 7,920,000*
Premium/ Discount
Total Sources of Funds $
Uses of Funds
Series A Project Fund $
Series A Debt Service Reserve Fund
Issuance Expenses and Underwriter's Discount (and Bond Insurance)
Total Uses of Funds $
The proceeds from the Series B Bonds (less accrued interest) are estimated to be applied as follows:
Sources of Funds
Par Amount of Series B Bonds $ 9,000,000*
Premium/Discount
Total Sources of Funds $
Uses of Funds
Series B Project Fund $
Series B Debt Service Reserve Fund
Issuance Expenses and Underwriter's Discount (and Bond Insurance)
Total Uses of Funds $
* Preliminary, subject to change.
Security for the Bonds
The principal of and interest on the Bonds are secured by a pledge of Gross Revenues of the System equal
to the pledge for the Parity Bonds, subject only to the payment of the Costs of Maintenance and
Operation of the System and the required payments into the Water and Sewer Revenue Bond Fund (the
"Bond Fund"). The City has covenanted .that, so long as the Bonds are outstanding, no bonds may be
issued subsequent to the issuance of the Bonds with a lien and charge on the Gross Revenues superior to
the lien and charge of the Bonds.
The Bonds are a special limited obligation of the City payable only from the Bond Fund. The Bond Fund
will at all times be completely segregated and set apart from all other funds and accounts of the City for
the security and the payment of the principal of and interest on the Parity Bonds, as they become due.
The Bonds are not general obligations of the City, the State or any political subdivision thereof.
Bond Fund
The Bond Fund will be used solely for the purpose of paying the principal of, premium, if any, and
interest on the Parity Bonds, of retiring the Parity Bonds prior to maturity as specified m the Bond
Ordinance and of paying any reimbursement obligation with respect to any credit enhancement device
providing additional security for any Variable Rate Bonds. The Bond Fund has been divided into three
subaccounts: the Interest Account, the Serial Bond Principal Account and the Term Bond Principal
Account (see "Bond Fund" herein). In addition, the City maintains a Debt Service Reserve Fund.
Interest Account. An Interest Account has been created in the Bond Fund for the purpose of paying the
interest on the Parity Bonds. Upon the issuance of the Bonds, all accrued interest on the Bonds will be
paid into the Interest Account.
In the case of all Parity Bonds other than Variable Rate Bonds, the City will transfer to the Interest
Account amounts sufficient to pay when due the installment of interest next falling due on all Parity
Bonds. In the case of Variable Rate Bonds, not later than on the last day of the month immediately
succeeding the month of closing of such bonds and on or before the last day of each succeeding month,
the City will transfer to the Interest Account an amount equal to the interest on such Variable Rate Bonds
estimated to become due and payable on the due date. If on any date on which an installment of interest
on Variable Rate Bonds falls due there are insufficient amounts in the Interest Account to make such
interest payment, the City will withdraw from the Revenue Fund and transfer to the Interest Account an
amount that when added to other money therein will equal the amount of interest falling due and
payable on such interest payment date. Any amounts credited to the Interest Account representing
accrued interest received on the sale of the Bonds or other Parity Bonds, interest capitalized from the
proceeds of any Parity Bonds and any other transfers and credits otherwise made or required to be made
to the Interest Account will be taken into consideration and allowance made with respect to the full
amount of such transfers and credits.
Serial Bond Principal Account. The City has created a separate account in the Bond Fund known as the
"Serial Bond Principal Account" to provide for the payment of the principal of Serial Bonds as the same
shall mature and become due and payable. The City will transfer to the Serial Bond Principal Account
amounts sufficient to pay when due the installment of principal next falling due on the Serial Bonds.
Tenn Bond Principal Account. The City will create and establish a separate account in the Bond Fund to be
known as the "Term Bond Principal Account" in order to meet the specified Sinking Fund Requirements
of Term Bonds and to otherwise retire the Bonds, if any, and other Parity Bonds prior to maturity. The
City will transfer to the Term Bond Principal Account amounts sufficient to pay when due the Sinking
Fund Requirement next falling due on all Term Bonds.
Additionally, the City will apply the money paid into the Bond Fund for credit to the Term Bond
Principal Account to the redemption of Term Bonds on the next ensuing Sinking Fund Requirement due
4
date (or may so apply such money prior to such Sinking Fund Requirement due date). The City may also
apply the money paid into the Bond Fund for credit to the Term Bond Principal Account for the purpose
of retiring Term Bonds by the purchase of such Term Bonds at a purchase price (including any brokerage
charge) not in excess of the principal amount thereof.
The City will apply such money to the redemption or purchase of Term Bonds in an amount such that the
aggregate principal amount of Term Bonds so purchased or redeemed is at least equal to such next
ensuing Sinking Fund Requirement. Any such purchase of Term Bonds by the City may be made with or
without tenders of Term Bonds in such manner as the City will, in its discretion, deem to be in its best
interest.
Reserve Fund. The City has created the "Reserve Fund" to provide a reserve for the payment of the
principal, premium, if any, and interest on the Parity Bonds. The City has covenanted and agreed that on
the date of issuance of the Bonds the City will have on deposit in the Reserve Fund an amount equal to
the Reserve Fund Requirement. Each ordinance providing for the issuance of Additional Bonds will
provide for payments into the Reserve Fund from any othermoney lawfully available therefor in
amounts that within not less than five years of equal monthly payments, will provide for deposit of the
Reserve Fund Requirement or may provide for the City to obtain Qualified Insurance or a Qualified
Letter of Credit for specific amounts required to be paid into the Reserve Fund. Such Qualified Letter of
Credit or Qualified Insurance will not be cancelable on less than five years notice. In the event of any
cancellation, the Reserve Fund will be funded as if the Parity Bonds which remain Outstanding had been
issued on the date of such notice of cancellation.
The balance in the Reserve Fund as of November 21, 2003 was $1,503,712.
Revenue Fund/Priority of Payments
The City has obligated and bound itself to pay into the Revenue Fund the Gross Revenues of the System.:
Revenues deposited therein will be used only for the following purposes and in the following order of
priority:
First, to pay the Costs of Maintenance and Operation of the System;
Second, to pay the interest on the Parity Bonds;
Third, to pay the principal of and any sinking fund payments for the Parity Bonds;
Fourth, to make all payments required to be made into any Reserve Fund;
Fifth, to make all payments required to be made into any other revenue bond redemption fund or debt
service account or reserve account created to pay and secure the payment of the principal of and interest
on any revenue bonds of the City having a lien upon the Gross Revenues of the System junior and
inferior to the lien thereon for the payment of the principal of and interest on the Parity Bonds;
Sixth, to retire by redemption or purchase in the open market any outstanding revenue bonds of the City,
to make necessary additions, improvements and repairs to or extensions and replacements of the System,
or for any other lawful City purposes.
Rate Covenant
The City has covenanted in the Bond Ordinance to establish, maintain and collect rates and charges for
the use of the services and facilities and all commodities sold, furnished or supplied by the System which
will be fair and nondiscriminatory and will adjust such rates and charges from time to time so that (i) the
Gross Revenues collected (together with Assessments collected) will at all times be sufficient (a) to pay
Costs of Maintenance and Operation of the System, (b) to pay the principal of, premium, if any, and
interest on the Parity Bonds, as and when the same will become due and payable, (c) to make adequate
provision for the payment of any Term Bonds, (d) to make when due all payments which the City is
5
obligated to make into the Reserve Fund and all other payments which the City is obligated to make
pursuant to the Bond Ordinance, and (e) to pay all taxes, assessments or other governmental charges
lawfully imposed on the System or the revenue therefrom or payments in lieu thereof and any and all
other amounts which the City may now or hereafter become obligated to pay from the Gross Revenues
by law or contract; and (ii) the Net Revenues in each Fiscal Year will be at least equal to the Coverage
Requirement calculated as of December 31 of the preceding calendar year.
Certain Other Covenants
Certain other covenants in the Bond Ordinance include:
Maintenance of System. The City will at all times maintain, preserve and keep the properties of the
System in good repair, working order and condition and will from time to time make all necessary and
proper repairs, renewals, replacements, extensions and betterments thereto, so that at all times the
business carried on in connection therewith will be properly and advantageously conducted and the City
will at all times operate or cause to be operated the properties of the System' and the business in
connection therewith in an efficient manner and at a reasonable cost.
Disposition of System. The City will not sell or otherwise dispose of the System in its entirety unless,
simultaneously with such sale or other disposition, provision is made for payment into the Bond Fund of
cash or Government Obligations sufficient to pay the principal of and interest on all then Outstanding
Parity Bonds, nor will it sell or otherwise dispose of any part of the useful operating properties of the
System unless such facilities are replaced or provision is made for payment into the Bond Fund of the
amount set forth in the Bond Ordinance.
Liens or Encumbrances. The City will not at any time create or permit to accrue or to exist any lien or
other encumbrance or indebtedness upon the System or the Gross Revenues or any part thereof, prior or
superior to the lien thereon for the payment of the Parity Bonds, and will pay and discharge, or cause to
be paid and discharged, all lawful claims for labor, material§- or supplies which, if unpaid, might become
a lien or charge upon the Revenues of the System, or any part thereof, or upon any funds in the hands of
the City, prior to or superior to the lien of the Parity Bonds, or which might impair the security of the
Parity Bonds.
Insurance. The City will, to the extent insurance coverage is available at reasonable cost with responsible
insurers, keep, or cause to be kept, the System and the operation thereof insured, with policies payable to
the City, against the risks of direct physical loss, damage to or destruction of the System, or any part
thereof, and against accidents, casualties or negligence, including liability insurance and employer's
liability, at least to the extent that similar insurance is usually carried by utilities operating like properties
as determined by the City Manager. A program of self insurance against certain risks or as to part of the
potential liability for certain risks may be included as part of the City's insurance coverage plan.
Books and Accounts. The City will keep proper books of account which will be kept in accordance with
any applicable rules and regulations prescribed by the State. The City will prepare, and any owner or
holder of Parity Bonds may, upon written request, obtain copies of, balance sheets and profit and loss
statements showing in reasonable detail the financial condition of the System as of the close of each year,
and the income and expenses of such year, including the amounts paid into the Revenue Fund, the Bond
Fund, and into any special funds or accounts created pursuant to the provisions of this ordinance, and the
amounts expended for maintenance, renewals, replacements, and capital additions to the System.
Additions and Improvements. The City will not expend any of the revenues derived by it from the
operation of the System or the proceeds of any indebtedness payable from the Revenues of the system for
any extensions, betterments or improvements to the System which are not legally required or
economically sound, and which will not properly and advantageously contribute to the conduct of the
business of the system in an efficient manner; provided, that to the extent permitted by law, the City may
provide commodities, services or facilities free of charge or at a reduced charge in order to carry out a
plan adopted by the Council for conservation of water or to benefit elderly, handicapped or poor persons.
6
v
Tax Covenants. The City has covenanted to undertake all actions required to maintain the tax-exempt
status of interest on the Bonds as set forth in the Bond Ordinance:,.
Additional Bonds
The City may issue Additional Bonds upon compliance with the following conditions:
1. At the time of the issuance of such Additional Bonds, there will be no deficiency in the Bond Fund.
2. In each ordinance authorizing such Additional Bonds, provision will be made for payments into. the
Reserve Fund in accordance with the Bond Ordinance.
3 At the time of the issuance of such Additional Bonds, the City will have on file a certificate from a
Professional Utility Consultant, an employee of the City, showing that the Net Revenue received
during any consecutive 12 -month period for which financial statements are available within the 24
months preceding the date of delivery of such Additional Bonds equals the Coverage Requirement
in each calendar year or Fiscal Year thereafter on the then Outstanding Parity Bonds and the
Additional Bonds to be issued, and that the Adjusted Net Revenues to be received each calendar
year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt Service each
such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the Additional Bonds to be
issued.
The Adjusted Net Revenues will be the Net Revenues for a period of any 12 consecutive months out
of the 24 months immediately preceding the date of delivery of such proposed Additional Bonds, as
adjusted to take into consideration changes in Net Revenues estimated to occur under certain
conditions designated in the Bond Ordinance for each year after such delivery for so long as any
Bonds, including the additional bonds proposed to be issued, will be outstanding.
Defeasance of the Bonds
In the event that money and/or Governmental Obligations in amounts sufficient to redeem and retire any
Parity Bonds are irrevocably set aside to effect such redemption and retirement, then no further payments
need be made into the Bond Fund for payments On such bonds and the owner of such bonds will cease to
be entitled to any lien, benefit or security of the Bond Ordinance except the right to receive the funds so
set aside and pledged, and such Bonds will be deemed not to be outstanding.
Events of Default
The City has covenanted and agreed with the purchasers and owners from time to time of any Parity
Bonds, in order to protect and safeguard the covenants and obligations undertaken by the City securing
any Parity Bonds, that the following will constitute "Events of Default":
(a) If the City defaults in the performance of any obligation with respect to payments into
the Bond Fund and such default is not remedied within a period of 30 days;
(b) If default is made in the due and punctual payments of the principal of and premium, if
any, on any of the Parity Bonds when the same becomes due and payable, either at
maturity or by proceedings for redemption or otherwise;
(c) If default is made in the due and punctual payment of any installment of interest on any
Parity Bonds;
(d) If the City defaults in the observance and performance of any other of the covenants,
conditions and agreements on the part of the City contained in the Bond Ordinance;
(e) If the City sells, transfers, assigns or conveys any properties constituting the System or
interests therein, or any part or parts thereof, or makes any agreement for such sale or
transfer;
(f) If an order, judgment or decree is entered by a court of competent jurisdiction as set forth
in the Bond Ordinance; and
7
(g)
If the City (a) admits m writing its inability to pay the debts of the System generally as
they become due, (b) files a petition in bankruptcy or seeking a composition of
indebtedness under any state or federal bankruptcy or insolvency law, (c) makes an
assignment for the benefit of its creditors, (d) consents to the appointment of a receiver of
the whole or any substantial part of the System, or (e) consents to the assumption by any
court of competent jurisdiction under the provisions of any other law for the relief or aid
of debtors of custody or control of the whole or any substantial part of the System.
City Indebtedness of the System
Pursuant to the Bond Ordinance, the Bonds will be issued for the purpose of acquiring, constructing and
installing additions and improvements to and extensions of, acquiring necessary equipment for or
making necessary repairs, replacements or other capital improvements or financing costs related to
capital improvements to the System and to pay litigation costs (see Litigation Section herein).
Outstanding Long -Term Borrowings
(As of December 15, 2003)
The City's outstanding long term debt of the System is composed of the following bond issues. The
Public Works Trust Fund loans and the AppleTree Project Bonds are junior to the Parity Bonds:
Date of Maturity Amount of Outstanding
Class and Series of Obligation Issue Date Original Issue at 12/15/03
Water and Sewer Revenue Bonds (Parity Bonds)
1996 Revenue Ref. Bonds
1998 Revenue & Ref. Bonds
2003 Revenue Bonds, Series A (1)
2003 Revenue Bonds, Series B o>
Total Revenue Bonds Outstanding
10/01/96
10/01/98
12/15/03
12/15/03
Public Works Trust Fund Loans (Subordinate Debt)
Sewer Treatment Plant Rehabilitation
Domestic Well & Pumphouse
Sewer Collection System Improvements
Wastewater Facility Rehabilitation'
Sewer Collection System Improvements
Headworks/Digester Rehabilitation
Sewer Improvements King Street
Fruitvale Neighborhood
Total Revenue PWTF Loans Outstanding
06/19/88
06/12/89
09/03/92
06/01/93
05/16/94
08/07/95
06/14/95
06/01/01
12/01/08
09/01/18
11/01/15
11/01/23
07/01/08
07/01/09
07/01/12
07/01/13
07/01/14
07/01/15
07/01/15
07/01/21
$ 3,320;000
7,910,000
7,920,000
9,000,000
$ 28.150.000
$ 945,000
495,000
1,120,000
3,221,708
1,481,000
3,030,558
209,367
1,466,250
$ 1,590,000
6,260,000
7,920,000
9,000,000
$ 24,770.000
$ 277,895
163,643
555,579
1,705,056
449,890
1,960,493
140,221
1,319,625
$ 11.968,883 $ 6,572.402
Junior Lien Bond (Subordinate Debt) (2)
AppleTree Project Bonds 02/27/01 02/27/31 $ 600,000 $ 600,000
(1) Preliminary, subject to change.
(2) The AppleTree Project Bonds are subordinated six percent debentures for the AppleTree Project. The AppleTree
Project Bonds have a lien only on connection charges collected from within the Project boundaries. If there are
not sufficient connection charge revenues collected to pay principal and interest on the bonds, neither the System
nor the City has any obligation to pay.
8
Water and Sewer Revenue Bonds - Debt Service Requirements
(As of December 15, 2003)
CaL Outstanding Parity Bonds The Series A Bonds (1) The Series B Bonds (2) Total Debt
Years Principal Interest Principal Interest Principal Interest Service
2004 $ 810,000 $ 349,570 $ 560,000 $ 278,492 $ - $ 453,981 $ 2,452042
2005 845,000 314,995 600,000 279,680 0 472,350 2,512,025
2006 885,000 278,645 610,000 267,080 0 472350 2,513,075
2007 920,000 239,525 625,000 251,830 0 472,350 2,508,705
2008 960,000 198,455 645,000 233,393 0 472350 2,509,198
2009 640,000 149,755 665,000 212,108 0 472,350 2,139,213
2010 665,000 122,875 690,000 187,835 0 472,350 2,138,060
2011 695,000 94,613 720,000 160,235 0 472,350 2,142,198
2012 180,000 64,728 750,000 129,635 0 472350 1,596,713
2013 185,000 56,718 780,000 96,260 0 472,350 1,590,328
2014 200,000 48,485 820,000 60,380 0 472,350 1,601,215
2015 205,000 39,585 455,000 21,840 400,000 472,350 1,593,775
2016 210,000 30,360 0 0 895,000 453,150 1,588,510
2017 220,000 20,700 0 0 940,000 409,295 1,589,995
2018 230,000 10,580 0 0 990,000 362295 1,592,875
2019 0 0 0 0 1,040,000 311,805 1,351,805
2020 0 0 0 0 1,095,000 257,725 1,352,725
2021 0 0 0 0 1,150,000 199,690 1,349,690
2022 0 0 0 0 1,210,000 137,590 1,347,590
2023 0 0 0 0 1,280,000 71,040 1,351,040
Total $ 7,850,000 $ 2,019,588 $ 7,920,000 $ 2,178,767 $ 9,000,000 $ 7,852,421 $ 36,820,775
(1) Preliminary, subject to change. Interest amounts are estimates only and assume interest rates ranging from
1.80% to 4.80%.
(2) Preliminary, subject to change. Interest amounts are estimates only and assume interest rates ranging from
4.80% to 5.55%.
'n.
Debt Payment Record
The City has promptly met all debt service payments on outstanding obligations. No refunding bonds
have been issued to avoid an impending default.
Future Financings
Other than the Bonds and the Outstanding Parity Bonds, the City does not have any other outstanding
Parity Bonds. The City plans to issue $3.6 million in irrigation bonds in early 2004 to finance part of the
rebuilding of its domestic irrigation system, which is a system separate from the System.
The Water System
Description
The City supplies water to the City and the surrounding urbanized area. The City's water supply comes
from the Naches River. Water is treated at the water treatment plant prior to delivery. The City has three
high production wells to back up its gravity surface supply system. The Nob Hill Water Association (a
private utility) serves a portion of the western part of the urban area, a portion of which is within the
City's boundaries. A number of the commercial and industrial facilities in the City take their source of
cooling water supply directly from shallow wells.
The City's total Water System capacity is 25 million gallons per day ("MGD") plus three emergency wells
which provide an additional 11.4 MGD. The City's historic water demands are shown in the following
table:
9
Water System Demand
2002 2001
Peak Flows (MGD) 20.4 21.1
Annual Average Flows (MGD) 12.4 12.9
Source: City of Yakima
2000
22.0
13.1
1999
19.4
12.4
1998
20.8
13.3
Water Customers
Residential. The residential customer class includes both single-family and multi -family. This class
represents 88 percent of all water customers. Within the City, approximately 75 percent of all residential
customers have irrigation water supplied from a separate irrigation system of the City. Only five percent
of potable residential water use is for irrigation.
Commercial and Industrial. Commercial users include shopping centers, banks, office complexes, motels,
and other businesses. The commercial monthly demand is generally uniform throughout the year.
Industrial customers are primarily the fruit and vegetable processing industries with summer use
generally being twice the monthly average.
Governmental. The governmental group of users includes state, federal and county facilities.
Number of Water Customers
2003* 2002 2001 2000 1999
Residential
Commercial
Industrial
Government
Total
* As of September 2003.
Source: City of Yakima
Residential
Commercial/ Industrial
Government/Other
Total
17,570
2,297
130
82
17,546
2,284
130
82
16,546
2,154
123
16,356
2,130
122
16,492
2,147
122
77 77 77
20,079 20,042 18,900 18,685 18,838
Water Billing*
2002 2001 2000 1999 1998
$3,090,950 $2,880,410 $2,706,214 $2,771,309 $2,680,524
1,749,554 1,641,694 1,471,763 1,430,371 1,484,581
206,882 245,923 381,860 338,289 277,618
$5,047,386 $4,768,027 $4,559,837 $4,539,%9 $4,442,723
* Decrease in Government/Other billing in 2001 is a result of a reclassification of consumption by the Water
Department to comply with State Department of Health guidelines. Rateincreases in 2001 accounts for the
increase in overall revenue. Revenue amounts in 2002 reflect a full 12 months of the new rates.
Source: City of Yakima
10
Major Accounts of the Water System ,
The following table shows the City's major water customers by amount billed.
Major 2002 Water System Customers*
Total Amount Percent of
Customer Billed Water Revenues
Boise Cascade Corp. $ 135,559 2.69%
Yakima Housing Authority 48,909 0.97
Cintas 36,897 0.73
DelMonte Corp. 34,545 0.68
Yakima Memorial Hospital 33,326 0.66
Providence Medical Center 28,537 0.57
Seneca Foods 27,066 0.54
Central Washington Fair Assn. 21,948 0.43
Yakima Valley Comm. College 21,594 0.43
Gilbert Park 16,162 0.32
Total
$ 404,543 8.01
* Top 10 water customers account for 2.51 percent of total System operating revenue.
Source: City of Yakima
Water Service Charges within City limits
Effective July 2001, the following charges became effective for water service. The City does not currently
have any immediate plans to increase rates and charges. A new rate study will commence in mid -2004.
Residential. The charge for domestic water supplied consists of a ready -to -serve charge and a minimum
charge for water consumed as follows:
One-month Two-month
Ready -to -serve charges: Period* Period*
Meter Size
3/4" and smaller $ 3.65 $ 3.65
1" 424 5.65
11/2" 7.68 12.80
2" 14.17 • 26.00
3" 3464 67.00
4" 54.57 107.00
6" 95.95 190.00
8" 156.55 310.00
10" 238.93 475.00
12" 351.40 700.00
* The "one-month period" is defined as any period of time from one day up to and including one month and
fourteen days, and the "two-month period" is defined as any period of time from one month and fifteen days to
two month and fourteen days.
Charges for water consumed per one hundred cubic feet ("UOC"):
UOC Rate per UOC
0-12 $ 1.13
13-20 1.13
21-250 1.00
251-500 0.75
Over 500 0.75
11
Historical Residential Bi -Monthly Water Base Rates
(By Meter Size)
Meter Size 2003 2002 2001 2000 1999
3/4" $ 3.65 $ 3.65 $ 3.65 $ 2.29 $ 2.29
1" 5.65 5.65 5.65 4.61 4.61
1 1/2" 12.80 12.80 12.80 11.47 11.47
2" 26.00 26.00 26.00 25.21 25.21
3" 67.00 67.00 67.00 66.34 66.34
4" 107.00 107.00 107.00 107.52 107.52
6" 190.00 190.00 190.00 244.70 244.70
8" 310.00 310.00 310.00 434.48 434.48
10" 475.00 475.00 475.00 681.39 681.39
Source: City of Yakima
Water System Capital Improvement Plan
The improvements identified in the City's Water System Plan are described in the following functional
component categories: (i) Source of Supply; (ii) Water Treatment; (iii) Storage; and (iv) Distribution. The
following five-year plan is based on projects anticipated to be completed. However, the plan may change
based on available funds and perceived needs. Funding is expected through sources other than Parity
Bonds, such as rates, reserves, grants, available cash balances and Public Works Trust Fund loans. A new
cost of service study is scheduled to be prepared in 2004 and the results of this study may change the
following projects and priorities.
Source of Supply. The current normal source of supply is the Naches River Water Treatment Plant with a
nominal capacity of 25 MGD. This supply is adequate to meet the projected maximum day demand
("MDD") up until 2008. The three active wells (Kiwanis, Airport and Kissel Park) have been designated
as emergency use supplies.
A proposed new 3,000 gallons per minute ("gpm") deep well located in Elks Park would enable the City
to beneficially use the balance of the Ranney Well water right, and provide the additional year around
source which is needed to meet projected MDD after 2008. The estimated cost of a new well including
well pump, well house and engineering and administrative costs is $1,500,000.
Aquifer storage and recovery ("ASR") is a possible source of additional supply during peak use periods
or under emergency conditions. Two ASR wells have been proposed which would initially be emergency
• only supply sources. If the projected maximum day demands are realized by the year 2015, one of the
proposed ASR wells would be converted from an emergency source of supply status to a normal supply
source. The first ASR well is expected to be installed in 2006. The second ASR well would be installed in
2008. The estimated cost for each of the ASR wells would be the same as the Elks Park Well, or
approximately $1,500,000.
Water Treatment. The recommended improvements in the water treatment facilities are described briefly
below:
Rapid Mix (Coagulation) - A new pump diffusion flash mix system is recommended to replace the
existing rapid mix. The recommended improvements to the rapid mix/coagulation system are scheduled
for installation in 2004. The estimated cost of these improvements is $150,000.
Filter Rehabilitation - The recommended improvements to the filters are scheduled for installation in
2005. The estimated cost of these filter improvements is $1,500,000.
Filter -to -Waste Facilities - Improvements to operation of the existing FTW system as well as upgrades
and modifications to the filter gallery piping are recommended to address various deficiencies. The
'change to the FTW operating period was implemented in March 2003. The filter gallery piping
12
improvements are scheduled for installation in 2004. The estimated cost of these improvements is
$500,000.
Disinfection Facilities - Conversion of the disinfection system from chlorine gas to sodium hypochlorite is
recommended to resolve safety and treatment capability deficiencies. The conversion to sodium
hypochlorite is scheduled for 2004. The estimated cost of the conversion is $500,000.
Residuals Handling - Construction of three concrete lined lagoons with a recycle pump station is
recommended to replace the existing residuals handling process. The recommended improvements to
the residuals handling facilities are scheduled for installation in 2006. The estimated cost of the backwash
lagoon upgrade is $1,800,000.
Chemical Storage and Feed Facilities - Improvements to the chemical storage and feed facilities are
recommended at the WTP to improve operation and maintenance. The recommended improvements to
the chemical storage and feed facilities are scheduled for installation in 2004. The estimated cost for the
new chemical storage and feed facilities is $2,020,000.
Storage. The existing storage capacity is expected to be adequate for the projected supply and demand
conditions through 2022. The only deficiency is the low turnover rate in certain reservoirs during low
demand periods. The recommended improvement to resolve this deficiency is the installation of an
automated flow/pressure control valve interconnection. The recommended improvement is scheduled
for installation in 2004. The estimated cost of the proposed control valve, including the necessary piping
modifications and telemetry, is $100,000.
Distribution. Various distribution projects, while not needed to correct any existing deficiencies, are
included in the capital improvement program as part of the City's on-going efforts to maintain and
upgrade the quality of the system to meet current and future needs. All distribution projects are in the
planning stages and immediate timelines and projected costs have yet to be determined.
Since 1977, the surface water rights that are the primary supply for the City's municipal water treatment
and delivery system have been under review in the Yakitha River general stream adjudication (Ecology v.
Acquavella). In 2002, the City reached a settlement with the State and the United States in the
adjudication. Under the settlement, adequate water quantities are provided to meet expected current and
future demand. On November 21, 2002, the Court issued a Conditional Final Order confirming the terms
of the settlement. No appeals to the Conditional Final Order were filed by any party. The Conditional
Final Order finally resolves all issues regarding the rights under review in the adjudication, subject to
incorporation of the Order into the Court's final decree at the conclusion of the adjudication.
The Sewer (Wastewater) System
Description
The City treats wastewater for City residents and the surrounding urbanized area (a planned annexable
area with expected growth) and reserve urbanized area. (an area with developable land but with no
planned developments in the foreseeable future). The City has two sewage systems, one for wastewater
from food processing industries and one for other wastewater. All wastewater is treated at the Regional
Wastewater Treatment Plant, which is owned by the City.
In 1974 the City accepted regional responsibility for protecting the environment by agreeing to provide
regional wastewater treatment. The investments made to date in the City's wastewater collection
treatment facilities exceeds $100 million. The City has contracts with the City of Union Gap and the
Terrace Heights Sewer District in which the City provides wholesale wastewater treatment and disposal
services.
The City's historic wastewater demands are shown in the following table:
13
Wastewater Treatment Plant Demand
Plant Permitted Capacity (MGD).
Peak Flows (MGD)
Annual Average Flows (MGD)
Source: City of Yakima
2002 2001 2000
22.3
14.2
10.7
22.3
15.4
11.4
22.3
16.8
11.8
1999
22.3
12.9
10.0
1998
22.3
13.9
10.7
Sewer Customers
The City provides sewer service to approximately 24,277 accounts, 90.5 percent of which are residential.
Approximately 98 percent of all residential and commercial customers of the System are within the City.
Customer data and usage by class for the last five years is presented below.
Residential
Commercial
Industrial
Government
Wholesale
Total
* As of September 2003.
Source: City of Yakima
Residential
Commercial/Industrial
Government/Other
Wholesale*
Total
Number of Sewer Customers
2003*
21,983
2,178
17
99
2
2002 2001 2000 1999
21,084
2,089
17
95
2
24,279 23,287
2002
$ 6,878,756
3,518,456
340,556
322,970
$11,060,738
* Includes charges to the communities of Union
Source: City of Yakima
Sewer Billing
2001
$ 6,046,085
3,270,447
258,108
304,460
$ 9,879,100
Gap and Terrace Heights.
20,560
1,970
16
90
2
19,902
1,907
15
87
2
19,408
1,860
15
85
2
22,638 21,913 21,370
2000
$ 5,968,168
2,782,041
242,575
335,524
$ 9,328,308
Major Accounts of the Sewer System
The following table shows the City's major sewer customers by amount billed.
14
1999
$ 5,746,308
2,536,644
236,714
450,200
$ 8,969,866
1998
$ 5,537,334
2,700,539
241,825
343,083
$ 8,882,781
Major 2002 Sewer System Accounts*
Total Amount Percentage of
Customer Billed Sewer Revenues
Del Monte Corporation $ 283,604 2.56%
City of Union Gap 229,388 2.07
Seneca Foods 190,409 1.72
Terrace Heights Sewer District 121,338 1.10
Cintas 104,516 0.94
Yakima Memorial Hospital 72,906 0.66
Jewel Apple 66,999 , 0.61
Yakima County Dept. of Corrections 36,653 0.33
Yakima Regional Medical Center 35,131 0.32
DoubleTree Hotel 34,782 0.31
Total
$1,175,725 10.63%
* Technical difficulties pertaining to high temperature discharge meters at the Boise Cascade plant led to billing
problems, and this account has not been billed since 1998. Billing has been re -instated and the City is in the
process of determining the amount of unbilled revenues and is working with Boise Cascade to recover these funds.
It is estimated that the impact on total System revenues is less than 1.5 percent. The top 10 sewer customers
account for 7.3 percent of total System operating revenue.
Source: City of Yakima
Sewer Service Charges
Effective November 10, 2003, the following charges became effective for sewer service:
Rates to Properties Within City Limits. The domestic sewer service charge consists of a ready -to -serve
charge and a volume charge based on domestic water consumption. The volume charge is $2.28 per one
hundred cubic feet of water consumption, or if metered, quantity discharged. Ready -to -serve charges for
the sewer system are based on water meter size.
Residential Sewer Ready -to -Serve Charges (Inside City Limits)
Water
Meter Size Monthly Charge* Bimonthly Charge*
3/4' $ 13.01 $ 26.02
1" 16.52 33.04
11/2" 21.34 42.68
2" 3435 68.70
3" 130.10 260.20
4" 165.62 331.24
6" 248.49 496.98
8 . 342.94 685.88
10" 685.89 1,371.78
* The "one-month period" is defined as any period of time from one day up to and including one month and
fourteen days, and the "two-month period" is defined as any period of time from one month and fifteen days to
two month and fourteen days.
• Multiple -unit Residential Customers. The monthly ready -to -serve charge is $6.77 per account plus
$6.24 per dwelling unit.
15
Historical Residential Bi -Monthly Sewer Ready -to -Serve Charges
(By Meter Size)
Water
Meter Size 2003* 2002 2001 2000 1999
3/4" $ 26.02 $ 22.96 $ 16.66 $ 16.34 $ 16.34
1" 33.04 29.16 21.16 20.76 20.76
11h" 42.68 37.66 27.32 26.80 26.80
2" 68.70 60.62 43.98 43.14 43.14
3" 260.20 229.60 166.60 163.40 163.40
4" 331.24 292.28 212.08 208.00 208.00
6" 496.98 438.54 318.20 312.10 312.10
8" 685.88 605.22 439.16 430.72 430.72
10" 1,371.78 1,210.46 878.32 861.44 861.44
Volume charge 2.28 2.01 1.49 1.46 1.46
* As of November 10, 2003.
Source: City of Yakima
Rates to Properties Outside City Limits. For customers located outside the City limits, a sewer service
charge is composed of a ready -to -serve charge and a volume charge based on domestic water
consumption. The sewer service ready -to -serve charge for all customers outside City limits other than
multiple -family residential customers is calculated and charged according to the following schedules:
Residential Sewer Ready -to -Serve Charges (Outside City Limits)
Water
Meter Size Monthly Charge* Bimonthly Charge*
3/4" $ 19.78 $ 39.56
1" 25.12 50.24
11/2" 32.44 64.88
2" 52.22 104.44
3" 197.80 395.60
4" 251.80 503.60
6" 377.80 755.60
8" 521.40 1,042.80
10" 1,042.80 2,085.60
* The "one-month period" is defined as any period of time from one day up to and including one month and
fourteen days, and the "two-month period" is defined as any period of time from one month and fifteen days to
two month and fourteen days.
• Multiple -unit Residential Customers. The monthly ready -to -serve charge is $10.29 per account
plus $9.49 per dwelling unit.
• Volume Charge. For all customers, the volume charge is $3.53 per one hundred cubic feet of
water consumption.
Strong Waste Surcharge. For commercial and industrial customers discharging wastewater which
contains more than 300 parts per million of biochemical oxygen demand ("BOD") and/or suspended
solids ("SS") there will be a surcharge, in addition to the ready -to -serve charge and the volume charge,
which will be calculated utilizing the national average values of BOD and SS concentrations typical to
each classification under the Standard Industrial Code or by actual concentrations verified by the City. If
the commercial industrial customer chooses at its expense to install a sampling station, the strong waste
charge is calculated based upon actual concentrations. The following formula is utilized to calculate the
strong waste charge:
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Monthly Surcharge = (Unit costs per pound of BOD or SS) times (weight of one gallon of water)
times (customer's flow in one hundred cubic feet divided by one thousand
three hundred thirty-seven per month) times (customer's concentration of
BOD or SS in parts per million minus three hundred per the national
average values or verified concentrations)
In the above formula: Inside City Outside City
Unit cost per pound for BOD . = $ 0.294/1b. $ 0.537/1b.
Unit cost per pound for SS = 0.241/Ib. 0.522/Ib.
Weight of one gallon of water = 8.34 lbs. 8.34 lbs.
Septage Charge. A charge of $0.337 per gallon is paid for septic tank waste dumped at the wastewater
treatment plant.
Wastewater Treatment Plant Capital Improvement Plan
The City's approved Wastewater Facilities Plan has identified several priorities to be implemented at the
Wastewater Treatment Plant to comply with new and existing environmental rules and regulations.
Compliance is required to meet the Washington Department of Ecology ("WDOE") criteria to provide
adequate capacity and backup operations to major processes of the plant as identified in the City's
National Pollutant Discharge Elimination System ("NPDES") Permit and associated rules and
regulations. Except for item (vii), the following projects and costs are estimates and funding for these
projects is expected to come from proceeds of the Series B Bond and other sources such as Parity Bonds,
rates, reserves, grants, available cash balances and Public Works Trust Fund loans. The following areas
have been identified and prioritized as the Yakima Wastewater Treatment Plant's most important
improvements to be implemented:
(i)
Solids dewatering one of two centrifuges is currently functional for dewatering biosolids and,
requires extensive maintenance to continue operating. A new centrifuge or alternate source of
dewatering the biosolids is required to maintain compliance when the older centrifuge is out of
service. The estimated cost of the project is $1,345,000.
(ii) Solids thickening - the waste activated sludge ("WAS") thickening process reduces the volume of
solids sent to the dewatering processes. There is currently one dissolved air flotation thickener
("DAFT") to thicken secondary sludge. A second thickening unit is needed to meet Department of
Ecology criteria. The estimated cost of the unit is $1,605,600.
(iii) Secondary clarification - the secondary clarifiers are the final sedimentation process prior to
discharge to the Yakima River; an additional secondary clarifier is required to meet Ecology
criteria. The estimated cost of the secondary clarifier is $3,277,800.
(iv) New RAS/WAS Pump Station - the RAS/WAS pump station is used to transport Return Activated
Sludge ("RAS") from the secondary clarifiers back to the aeration basin flow control system
through two constant speed open screw pumps. With the addition of a new secondary clarifier or
future new aeration basins a new RAS/WAS pumping station would be required. The estimated
cost of the new pumping station is $1,669,400.
(v) Emergency Power - the emergency power system supplies a second source of power to assure
minimum treatment is provided under utility power failures. The existing generator set was
installed in 1972 and requires a complete inspection/overhaul. Another generator set is required to
operate the minimum treatment processes at present. The estimated cost of the generator set is
$1,000,000.
(vi)
Replacement of Blower VFDs - the VFDs that operate the four 400 horsepower blowers are at the
end of their useful life and need to be replaced. The estimated cost to replace the blowers is
$245,000.
17
(vii) Repay interfund loan that was borrowed to make the capital improvements necessary to enable the
City to close the sprayfield, which was alleged to be one of the sources of odor leading to the
litigation, $1,400,000
Billing and Collection Policy
Utility bills for the City are sent on a bi-monthly basis. Bills are due 14 days after they are sent and if the
bills are not paid by that date, a reminder notice is sent requesting payment within 14 days. If the bill is
not paid by the end of the 14 day period, a suspension notice is sent to the customer stating that if the bill
is not paid in 7 days, service will be suspended and the account will be turned over to collection. If the
bill is not paid by the suspension date, water service is suspended. If the bill is not paid 90 days after the
original billing date, it is sent to a collection agency. State law grants a statutory lien on property for
unpaid utility bills.
Endangered Species Act
In planning future projects, the City evaluates the construction and operation of the facilities to determine
if there will be any impact on endangered species through the use of site evaluations, special
environmental studies, and preparation of State Environmental Policy Act ("SEPA") checklists or
environmental impact statements, as appropriate. Alternatives are developed to minimize or avoid
impacts on endangered species. Where federal permits or funding are involved, the City also complies
with the Endangered Species Act's "consultation" requirement, which serves to evaluate and address any
potential effect on endangered species. Best management practices are employed during routine
operation and maintenance activities to minimize impacts on the environment.
Litigation Settlement. A class action lawsuit is pending against the City alleging personal and property
damages arising from alleged odors from the City's wastewater treatment plant. The Series A Bonds will
finance a settlement of this litigation. See "Legal and Underwriting - Litigation" herein.
Financial Results
The following tables provide a comparative balance sheet and historical and projected combining
statement of revenues and expenses for the City's Water and Sewer Enterprise Funds.
18
Water and Sewer Enterprise Funds
Comparative Balance Sheet
(Years Ending December 31)
Audited
2002 2001 2000 1999 1998
Assets
Cash and Equity (1) $ 4,515,506 $ 5,993,687 $ 5,724,172 $ 6,142,429 $ 7,411,081
Receivables
Accounts 3,105,330 2,926,837 2,944,483 2,562,680 2,291,149
Notes/Contracts 12,203 19,031 25,859 33,063 39,887
• Interest/Penalties 63,675 76,655 79,215 119,087 104,311
Other Receivables 25,050 25,050 23,900 27,650 28,750
Due from other Governments 0 0 0 0 ' 78,339
Inventories 189,270 199,809 183,848 190,503 201,733
Investments, at amortized cost 5,448,735 5,466,362 4,302,706 4,414,623 3,099,451
Restricted Assets
Cash 2,085,358 1,749,415 2,229,376 2,149,317 2,306,018
Fiscal Agent/Trustee 425 409,185 425 425 425
Investments, at amortized cost 0 501,712 0 0 0
Land 780,211 780,211 780,211 780,211 780,211
Buildings 56,468,565 54,900,207 54,900,207 47,144,172, 47,144,172
Other Improvements 61,708,099 58,434,669 56,567,254 64,248,796 46,105,173
Machinery & Equipment 6,802,453 6,793,571 6,740,532 5,677,766 5,650,934
Accumulated Depreciation (57,907,135) (54,481,888) (51,097,020) (47,286,145) (43,816,028)
Construction in Progress 10,296,049 9,012,487 5,406,423 3,315,243 17,126,405
Completed Construction 2,232,245 2,232,245 2,232,245 2,232,245 2,232,245
Intangibles 221,830 221,830 221,830 221,830 221;830
Unamortized Debt Issue Costs 37,553 41,939 46,326 50,713 55,099
Total Assets
96,085,422 95,303,014 91,311,992 92,024,608 91,061,185
Liabilities -
Warrants/Accounts Payable 1,355,300 1,403,602 870,943 , 580,764 452,413
Wages/Benefits Payable 448,811 407,883 424,678 426,340 397,320
Compensated Absences Payable 545,415 517,600 501,039 508,988 496,307
Accrued Payables 192,438 159,622 188,634 • 206,990 201,789
Deposits Payable 200,676 213,534 192,189 181,698 161,167
Current Portion - Long-term Debt 690,259 684,077 678,135 672,423 .652,206
Restricted Payables
Matured Interest Payable 0 13,760 0 0 0
In Lieu of Construction 0 0 0 14,137 14,137
Current Portion - Long-term Debt 1,045,000 1,110,000 1,105,000 1,055,001 1,055,000
Bonds Payable 8,450,000 9,890,000 10,005,000 11,110,000 12,135,001
Unamortized Bond Discount (61,843) (70,396) (78,947) (87,498) (96,051)
Deferred Amount on Debt Refunding (291,489) (326,840) (362,192) (397,544) (432,896)
Loans Payable - Long Term 5,472,715 6,319,064 6,933,232 8,105,950 8,307,592
Advance from Other Funds 1,420,000 710,000 0 0 0
Total Liabilities
Fund Equity
Contributed Capital
Retained Earnings (2)
Reserved
Unreserved
Total Fund Equity
19,467,282 21,031,906 20,457,711 22,377,249 23,343,985
68,389,116 68,389,116 69,938,343 68,389,116 65,940,027
2,085,358 2,251,127 2,229,376 2,149,317 2,306,018
6,143,666 3,630,865 (1,313,438) (891,074) (528,845)
76,618,140 74,271,108 70,854,281 69,647,359 67,717,200
Total Liabilities and Fund Equity $ 96,085,422
$ 95,303,014
$ 91,311,992 $ 92,024,608 $ 91,061,185
(1) Cash decreasing due to legal expenses related to litigation.
(2) Starting in 1998, the City began incurring legal expenses to defend the odor -related litigation related to the wastewater treatment facility
(see "Legal and Underwriting - Litigation" herein). As a result of the size of legal expenses and the uncertainity surrounding the timing
and amount of the final settlement, those costs were accumulated in a work -in -process accotmt on the Balance Sheet. The City is of the
opinion that the proper accounting treatment for the $7 million litigation settlement and the related $6 million of litigation defense costs
is to present it as an "special item" (per APB 30 and GASB 34) on the Income Statement This method is estimated to reduce retained earnings of
the System to an approximate deficit of $3.93 million at the end of 2003. Since these costs have been paid annually since 1998 and are considered
extraordinary, they are not expected to impact net operating income in 2003, or put Fund Equity in a negative position. It should also be
noted that the System rate structure has been set to rebuild retained earnings over the life of the Series A Bonds.
' Source: City of Yakima
19
Water and Sewer Enterprise Funds
Combining Statement of Revenues and Expenses
Historical Coverage Table
(Years Ending December 31)
Audited
2002
2001 2000 1999 1998
Operating Revenues:
Charges for Services $ 16,108,123 $ 14,647,128 $ 13,888,145 $ 13,509,835 $ 13,264,410
Other Operating Revenues 1,130 416 2,392 3,472 4,133
Total Operating Revenues 16,109,253 14,647,544 13,890,537 13,513,307 13,268,543
Operating Expenses:
Operating Expense 8,803,501 7,837,536 7,586,388 7,986,378 7,763,044
Depreciation Expense 3,425,246 3,384,867 3,832,424 3,470,118 3,494,604
In -lieu Taxes 2,017,603 1,798,095 1,739,773 1,707,375 1,678,870
Taxes 922,865 798,013 805,675 721,995 695,080
Total Operating Expenses 15,169,215 13,818,511 13,964,260 13,885,866 13,631,598
Net Operating Income
940,038 829,033 (73,723) (372,559) (363,055)
Other Income:
Gain (Loss) on Sale of Assets 0 0 5,360 0 1,734
Interest Income (1) 164,794 435,903 302,648 237,403 491,607
Other Non -Operating Revenues 15,625 307,016 (2) 309,393 312,631 360,511
Total Other Income 180,419 742,919 617,401 550,034 853,852
Total Income
1,120,457 1,571,952 543,678 177,475 490,797
Available for Debt Service
on First Lien Bonds (3) $ 5,468,568 $ 5,754,832 $ 5,176,417 $ 4,369,588 $ 4,678,747
First Lien Debt Service
Coverage
$ 273,653 $ 276,403 $ 278,643 $ 280,373 $ 281,485
19.98 20.82 18.58 15.58 16.62
Available for Debt Service
on Second Lien Bonds (4) $ 5,194,916 $ 5,478,430 $ 4,897,775 $ 4,089,216 $ 4,397,262
Second Lien Parity Bonds
1991 Revenue $ 0 $ 443,760 $ 450,435 $ 445,225 $ 748,330
1992 Loan 324,791 324,791 324,791 324,791 324,791
1996 Revenue Refunding 363,875' 365,375 360,950 360,738 359,660
1998 Revenue & Refunding 909,210 501,410 503,410 503,192 0
Second Lien Parity Bonds Debt Service $ 1,597,876 $ 1,635,336 $ 1,639,586 $ 1,633,946 $ 1,432,781
Debt Service Coverage 3.25 335 2.99 2.50 3.07
(1) Includes interest expense on Public Works Trust Fund loans and debt service charges on wholesale customers; excludes interest on parity debt
(2) The "Other Non -Operating Revenues" in 2001 was misclassified in the City's 2001 Audit Report and was re -stated in 2002. The correct amount
is shown.
(3) Net Revenues as defined in the Bond Ordinance which excludes depreciation, municipal taxes and costs capital additions to or replacements
of the System. The First Lien Bonds are the City's 1968 Water and Sewer Revenue Bonds, which matured on March 1, 2003.
(4) Net Revenues less First Lien debt service. For as long as the First Lien Bonds remained outstanding, the Second Lien Bonds included
the City's 1992 State Revolving Fund Loan (which matured on July 1, 2003), 1996 Bonds and 1998 Bonds.
Source: City of Yakima
20
Projected Financial Information
The City does not as a matter of course make public projections as to future sales, earnings, or other
results. However, the City's management has prepared the projected financial information set forth in
this Official Statement. In the preparation of the projects in this Official Statement, the City has made
certain assumptions with respect to conditions that may occur in the future. While the City believes these
assumptions are reasonable for the purpose of the projections, they are dependent upon future events,
and actual conditions may differ from those assumed. To the extent actual future factors differ from
those assumed or provided to the City by others, the actual results will vary from those forecast. This
information is not fact and should not be relied upon as being necessarily indicative of future results, and
readers of this Official Statement are cautioned not to place undue reliance on the projected financial
information.
In the following Projected Coverage Table, all operating expenses, with the exception of depreciation, are
increased at a rate of two percent in 2005, 2.5 percent in 2006 and three percent in 2007. Depreciation is
increased based estimated future capital improvements as described in the City's "Water System Capital
Improvement Plan" and "Wastewater Treatment Plant Capital Improvement Plan" herein. Operating
revenues are increased at a rate of 0.5 percent in 2005 and 2006 and 3.5 percent in 2007.
21
Operating Revenues (1)
Water and Sewer Enterprise Funds
Combining Statement of Revenues and Expenses
Projected Coverage Table
(Years Ending December 31)
Budget Estimate Budget Projected
2003 2004 2005 2006 2007
$ 16,826,180 $ 18,120,248 $ 18,210,849 $ 18,301,903 $ 18,942,470
Operating Expenses:
Operating Expense 9,378,457 10,031,171 10,231,794 10,487,589 10,802,217
Depreciation Expense 3,650,947 3,566,020 3,371,511 3,779,441 4,172,372
In -lieu Taxes 2,115,362 2,303,145 2,349,208 2,407,938 2,480,176
Other Taxes 1,087,384 1,092,842 1,114,699 1,142,566 1,176,843
Total Operating Expenses 16,232,150 16,993,178 17,067,212 17,817,534 18,631,608
Net Operating Income 594,030 1,127,070 1,143,637 484,369 310,862
Other Income:
Net Interest Income/(Expense) (2) (38,897) (42,921) (19,871) 5,129 (42,921)
Other Non -Operating Revenues 177,148 320,064 407,064 407,064 301,496
Total Other Income 138,251 277,143 387,193 412,193 258,575
Total Income 732,281 1,404,213 1,530,830 896,562 569,437
Available for Debt Service
on First Lien Bonds (3)
First Lien Debt Service
Coverage (4)
Available for Debt Service
on Second Lien Bonds (5)
$ 5,470,612 $ 6,063,075 $ 6,017,040 $ 5,818,569 $ 5,918,652
$ 276,075 $ 0 $ 0 $ 0 $ 0
19.82 NA NA NA NA
$ 5,194,537 $ 6,063,075 $ 6,017,040 $ 5,818,569 $ 5,918,652
Second Lien Parity Bonds
1996 Revenue Refunding 361,915 369,360 365,585 366,035 370,285
1998 Revenue & Refunding 795,410 790,210 794,410 797,610 789,240
2003 Revenue Series A (6) 0 838,492 879,680 877,080 876,830
2003 Revenue Series B (6) 0 453,981 472,350 472,350 472,350
Second Lien Debt Service $ 1,157,325 $ 2,452,042 $ 2,512,025 $ 2,513,075 $ 2,508,705
Projected Debt Service Coverage 4A9 2.47 2.40 2.32 2.36
(1) Includes revenues estimated to be collected from Boise C'acrade in 2004-2007.
(2) Includes interest expense on Public Works Trust Fund loans and debt service charges on wholesale customers; excludes interest on parity debt
(3) Net Revenues as defined in the Bond Ordinance which excludes depreciation, municipal taxes and costs capital additions to or replace-
ments of the System. The First Lien Bonds are the City's 1968 Water and Sewer Revenue Bonds, which matured on March 1, 2003.
(4) Final payment on "First Lien Bonds" made in 2003. 'Second Lien Bonds" will be senior lien beginning in fiscal year 2004.
(5) Net Revenues less First Lien debt service. For as long as the First Lien Bonds remained outstanding, the Second Lien Bonds included
the City's 1992 State Revolving Fund Loan (which matured on July 1, 2003), 1996 Bonds and 1998 Bonds. The second Lien Bonds are
now the Parity Bonds.
(6) Preliminary, subject to change.
Source: City of Yakima
22
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 including public
safety (police, fire, building), public improvements (streets, traffic signals, storm sewer, irrigation utility),
sanitation (solid waste disposal, wastewater 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 City Council (the "Council") from within its own
membership every two years.
Elected Officials
City Council
Mary Place, Mayor
Paul George, Asst. Mayor
Clarence Barnett
Ronald J. Bonlender*
John Puccinelli
Bernard J. Sims
Susan J. Whitman*
Term Expires
December 31, 2005
December 31, 2005
December 31, 2003
December 31, 2007
December 31, 2003
December 31, 2005
December 31, 2007
* At an election held on November 4, 2003, Ronald Bonlender and Susan Whitman were elected to fill currently
vacant council positions. The two council positions were vacant due to the former council members relocating
outside their districts. Newly elected council members, Dave Edler and Neil McClure, will begin their terms
January 6, 2004.
Key Administrative Staff
Richard A. Zais, Jr., City Manager. Mr. Zais joined the City in 1973 as Administrative Assistant to the City
Manager and was appointed to the position of City Manager in January 1979. Mr. Zais has held this
position for 25 years and is responsible for the supervision and direction of a full-service city with seven
operating departments. Mr. Zais prepares and administers the $137 million annual City budget with a
$55 million annual payroll for over 700 full-time employees. Mr. Zais serves as the Council's chief
advisor, appoints all administrative officers and employees and executes Council policy and programs.
Mr. Zais' educational background is in public administration with a B.A. and M.P.A. from the University
of Washington.
Rita M. Anson, Director of Finance & Budget. Ms. Anson joined the City in 1999 as the Finance Director,
coming from Puget Sound Energy Corporation. As the Director of Finance and Budget, Ms. Anson is
responsible for all financial and treasury services, budgeting and accounting, utility customer services
and information systems for the City. During her 21 years with Puget Sound Energy, Ms. Anson served
in many capacities including the following key management positions: Manager of District Operations;
Manager of Corporate Budgets; and Manager of Information Systems Project. Ms. Anson has a degree in
Accounting from Central Washington University, is a CPA and is a member of the AICPA, WSCPA and is
currently serving as the Treasurer for the Yakima Sunrise Rotary.
Timothy M. Jensen, Treasury Services Officer. Mr. Jenson joined the City in 1990 as an Accountant, coming
from a national public accounting firm where his primary duties were as a senior auditor. Mr. Jensen
was appointed the City's Treasury Services Officer in 2001 where he oversees the security of the City's
investments, cash management, and debt administration and performs high-level financial analysis. Mr.
Jensen obtained a B.S. in Accounting from Central Washington University in 1986, and studied
Economics at the University of California, Berkeley and the University of Nevada, Reno from 1974
through 1977. Mr. Jensen is an executive officer of the Washington Finance Officers Association and will
be President of that organization in 2008. He has served on the Board of Directors of WFOA since 1998.
23
Mr. Jensen is a past member of the Washington State Local Government Investment Pool Advisory
Committee. He is also currently serving on the Washington State Auditor's Local Government Advisory
Committee and has served two different State Treasurers on select issue committees.
Dave Brown, Water/Irrigation Division Manager. In 1984 Mr. Brown joined the City as its Naches River
Water Treatment Plant Supervisor coming from the City of Fort Benton, Montana where he had served as
Water Superintendent for two years. Mr. Brown became the City's Water/Irrigation Engineer in 1997 and
was appointed as the Manager in August of 2003. Mr. Brown's background is in water and wastewater
treatment with 32 years of experience and over 25 years in supervision. Mr. Brown graduated from
Technical Sciences Group at Sheppard Air Force Base in Texas.
Douglas Mayo P.E., Wastewater Division Manager. Mr. Mayo joined the City in 1991 as the Supervising
Sanitary Engineer with extensive experience in heavy construction and construction management. Mr.
Mayo became the Acting Division Manager in February of 1998 and acquired the permanent position in
April of 1999. Mr. Mayo graduated from Washington State University with a B.S. in Civil Engineering in
1976 and became a Professional Engineer in the State of Washington in 1980: Mr. Mayo also is a Group III
level Wastewater Treatment Plant Operator in Washington State.
Labor Relations
The City currently employs approximately 750 people including part-time and temporary 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.
PERS. 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 unless they exercise an option to transfer
their membership to Plan III. 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. Plans
I and II are defined benefit plans. Plan III consists 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 year. Once employees
transfer to Plan III, they may not return to Plan II membership. In addition, new PERS eligible employees
after September 1, 2002 who do not specify a plan choice will transfer automatically to Plan III.
24
PERS . Plan III became effective on March 1, 2002. Eligible employees 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.
The majority of City employees are covered by 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 $296,485, or
1.32 percent of covered payrolls, represents its full liability under the system, except that future rates may
be adjusted to meet the system needs.
LEOFF. LEOFF includes two plans. 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 $298,373,
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 m that valuation have been the basis for recording the
unfunded pension liability since 1989.
The Police Pension is a department in the General Fund, and is operating on a pay-as-you-go basis. The
unfunded pension liability will be adjusted annually by comparing actual expenditures for pension
benefits to the actuarially determined contribution. The City intends to maintain this plan on a pay-as-
you-go basis.
The Firemen's Pension is a trust fund, and has as its funding sources a portion of local property taxes, a
state tax on fire insurance premiums and interest income. This fund had an unfunded pension liability of
$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 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 -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
25
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 Reinsurance. Under the individual stop -loss portion of the insurance, the
City is liable for the first $500,000 of claims resulting from a specific accident. Charges beyond that
$500,000 are covered by stop -loss insurance up to $25 million.
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, excess liability and other insurance
coverages. Excess liability coverage is provided from Genesis Underwriters Management Company in an
amount of $7.5 million, with a $1.5 million retention.
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; (u) 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. In accordance with GASB 34, the City intends to implement this accounting standard in its
December 31, 2003 financial statement.
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.
26
Governmental Funds. All governmental funds are accounted for on a spending or "financial flow"
measurement focus. This means that only current assets and current liabilities are generally included on
their balance sheets. Their reported fund balance (net current assets) is considered a measure of
"available expendable resources." . Governmental fund operating statements focus on measuring changes
in financial position, rather than net income; they present increases (revenues and other financing
sources) and decreases (expenditures and other financing uses) in net current assets.
Budgetary Process
The City Council annually approves the City's operating budget. The operating budget is designed to
allocate 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.
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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).
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, 2002, attached as
Appendix D, 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
Municipal Repository
P.O. Box 840
Princeton, NJ 08542-0840
Phone: (609) 279-3225
Fax: (609) 279-5962
munis@bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701
Fax: (201) 947-0107
nrmsir@dpcdata.com
Interactive Data
Attn: Repository
100 Williams Street
New York, NY 10038
Phone: (212) 771-6899
Fax: (212) 771-7390
NRMSIR@interactivedata.com
Standard & Poor's Securities Evaluations Inc.
55 Water Street, 45th Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
nrmsir_repository@sandp.com
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Demographic Information
The City lies in central Washington State in Yakima County (the
"County") about 142 miles southeast of Seattle and 188 miles northeast of
Portland, Oregon. Yakima County ranks second in the State in terms of
square miles and seventh in terms of population. The City is the County
seat and the largest incorporated community in the County
encompassing 23 square miles. Population history for both the City and
County in recent years is shown in the following table:
Population
Yakima County and the City of Yakima
Yakima City of
April 1 CountyYakima
2003 226,000 79,220
2002 225,000 . 79,120
2001 224,500 73,040
2000* 222,581 71,845
1999 212,300 65,500
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. The City is the center of the County's economic
activity.
City of Yakima
Major Employers
Number of
Employer Product Employees
Yakima Valley Memorial Hospital Medical 1,100
Yakima School District Education 1,001
Yakima County Government 1,000
Providence Health System* Medical 941
Snokist Growers Fruit canning 851
City of Yakima Government 750
Yakima Valley Community College College 590
Western Recreational Vehicles Trailers, motor homes 550
Shields Bag & Printing, Flexible packaging 470
ClientLogic Inbound call center 450
* Now owned by Health Management Associates, Inc. and renamed to Yakima Regional Health Center.
Source: Yakima County Development Association, July 2003.
29
Income. Historic personal income and per capita income levels for Yakima County and the State are
shown below:
Year
2001
2000
1999
1998
1997
1996
Yakima County and State of Washington
Total Personal and Per Capita Income
Yakima County
Total Personal Per Capita
Income (in millions) Income
$5,108.9
4,933.5
4,605.6
4,550.8
4,333.7
4,176.7
$22,872
22,145
20,786
20,709
19,953
19,431
State of Washington
Total Personal Per Capita
Income (in millions) Income
$191,644.6
186,843.1
174,147.8
163,192.3
150,202.6
139,327.8
$31,976
31,605
29,807
28,285
26,469
25,015
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
Year
2002
2001
2000
1999
1998
1997
Source: Washington State Department of Revenue
City of
Yakima
$ 1,205,189,471
1,176,022,552
1,168,665,601
1,157,451,996
1,162,398,960
1,176,674,146
Yakima
County
$2,178,920,758
2,122,049,462
2,140,980,425
2,057,895,211
2,111,359,113
2,112,094,198
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:
City of Yakima, Washington
Residential Building Permits
New Single Family Units New Multi
Year Number
Family Units
Valuation Number
2003 * 61 $ 8,339,864
2002 34 3,655,277
2001 14 1,104,200
2000 18 1,397,477
1999 29 2,150,876
1998 31 2,669,040
* Through September 2003.
Source: U.S. Census Bureau
30
40
24
68
71
80
257
Valuation
$ 3,039,461
1,588,309
3,049,736
3,865,711
4,281,696
11,318,345
Total
Valuation
$ 11,379,325
5,243,586
4,153,936
5,263,188
6,432,572
13,987,385
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(1) 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
Annual Average
2002(1) 2001(2)
NAICS Industry Title (3)
Total Nonfarm 74,100 74,300
Total Private 57,800 58,300
Goods Producing 13,200 14,000
Construction, Natural Resources & Mining 3,100 3,100
Manufacturing 10,100 10,800
Durable Goods 4,300 4,700
Non -durable Goods 5,800 6,100
Food Manufacturing 3,300 3,600
Service Providing 60,900 60,300
Trade, Transportation and Utilities 15,900 16,200
Wholesale Trade 4,000 4,300
Retail Trade 9,200 9,200
Transportation, Warehousing and Utilities 2,800 2,700
Information & Financial Activities 4,000 3,600
Professional and Business Services 4,500 4,400
Educational and Health Services 11,600 11,400
Government 16,200 16,000
Federal Government. 1,400 1,400
State and Local Government 14,800 14,600
(1) Preliminary
(2) Revised
(3) The North American Industry Classification (NAICS) is replacing the Standard Industrial Classification (SIC)
code system.
Source: Washington State Employment Security Department
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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").
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.
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.
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.
32
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 Service, a Division of The McGraw-Hill Companies. 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
In accordance with Section (b)(5) of Securities and Exchange Commission Rule 15c2-12 under the
Securities Exchange Act of 1934, as the same may be amended from time to time (the "Rule"), the City has
agreed in the Bond Ordinance for the benefit of the 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 ending December 31, 2003): (i) annual financial statements, which statements may
or may not be audited, prepared in accordance with the Budget Accounting and Reporting System
("BARS") prescribed by the State Auditor pursuant to RCW 43.09.200 (or any successor statute);
(ii) Principal amount of Bonds of the System; (iii) Debt service coverage for Outstanding Bonds; (iv) Rates
for the System; and (v) Number of customers of the System.
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'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, if any 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").
If not provided as part of the annual financial information discussed above, the City will provide the
City's audited annual financial statement prepared in accordance with BARS prescribed by the
Washington State Auditor pursuant to the statute cited above (or any successor statutes) when and if
available to each then existing NRMSIR and the SID, if any.
The City further agrees to provide or cause to be provided, in a timely manner, to each NRMSIR or to the
SID, if any, and to the MSRB, notice of the occurrence of any of the following events with respect to the
Bonds, if material: (i) principal and interest payment delinquencies; (ii) non-payment related defaults;
(iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws
on credit enhancements 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 holders; (vii) Bond calls (optional redemption of the Bonds prior
33
to their maturity); (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. This
section, or any provision hereof, 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 this section, 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, if any, of such opinion and the cancellation of this
section. Notwithstanding any other provision of the undertaking, the City may amend the provisions
described in this section and any provision of this section may be waived, with an approving opinion of
nationally recognizedbond counsel and in accordance with the Rule.
In the event of any amendment of or waiver of a provision of this section, 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 described
in this section 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 this undertaking will 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.
Other Continuing Disclosure Undertakings of the City. The City has entered into undertakings to provide
annual information and the notice of the occurrence of certain events with respect to all bonds issued by
the City and is in compliance with all such undertakings.
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 specimen of the opinion of Bond Counsel is attached hereto.
Bond Counsel will be compensated only upon the issuance and sale of the Bonds. Bond Counsel has not
been retained to review and has not reviewed this Official Statement for completeness or accuracy and
will not offer an opinion concerning this Official Statement.
Litigation
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 3,700 plaintiffs sought damages based on negligence,
nuisance and inverse condemnation. The lawsuit has been settled pending the payment of $7 million in
damages. The Series A Bonds are providing for the payment of the settlement.
The City of Union Gap and Terrace Heights Sewer District (the "Participants") receive wholesale
wastewater treatment and disposal services from the City pursuant to agreements entered into in 1976
and 1997. Pursuant to the agreements, the Participants have an 8.1 percent and 4.0 percent capacity
allocation, respectively, and are required to pay a proportionate share of the capital costs of the
wastewater facilities. The Participants have recently made statements that they do not believe that they
34
are required to pay any share of the settlement of the odor litigation. The City believes that the
agreements require the Participants to pay their share of costs olthe system, including litigation expenses
and settlement costs. The Participants' share of debt service on the Series A Bonds, which will finance the
litigation settlement, is approximately $75,000 per year. Although the City expects to vigorously seek to
collect this share from the Participants, if the Participants are not required to pay the City expects that
Revenues will be sufficient to cover all debt service on the Bonds and other expenses of the System.
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.
Initiative and Referendum
Under the State Constitution, the voters of the State have the ability to initiate legislation and require a
public vote on legislation passed by the State Legislature through the powers of initiative and
referendum, respectively. Neither power in Washington may be used to amend the State Constitution.
Initiatives and referenda are submitted to the voters upon certification 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.
Limitation on Remedies
Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the
Bond Ordinance are in many respects dependent upon judicial actions which are in turn often subject to
discretion and delay and could be both expensive and time-consuming to obtain. If the City fails to
comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds,
there can be no assurance that available remedies will be adequate to fully protect the interests of the
owners of the Bonds.
In addition to the limitations on remedies contained in the Bond Ordinance, the rights and obligations
under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws relating to or affecting creditors'
rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate
cases. The opinion to be delivered by Preston, Gates, Ellis LLP, as Bond Counsel, concurrently with the
issuance of the Bonds, will be subject to limitations regarding bankruptcy, insolvency and other laws
relating to or affecting creditors' rights. A copy of the proposed form of the opinion of Bond Counsel is
set forth in Appendix B.
Official Statement
In the Bond 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.
35
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
All estimates, assumptions, statistical information and other statements contained herein, while taken
from sources considered reliable, are not guaranteed by the Underwriter or the City. 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
Bond Ordinance 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 the 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.
36
Appendix A
Bond Ordinance
(This Page Intentionally Left Blank)
ORDINANCE NO.
AN ORDINANCE of the City of Yakima, Washington, authorizing the
issuance and sale of water and sewer revenue bonds of the City in the
principal amount.of not to exceed 517,700,000 in one or more series to
finance the settlement costs of the odor litigation and certain capital
improvements to the City's water and sewer system; and fixing the terms
and covenants of such bonds.
WHEREAS, the City of Yakima, Washington (the "City") now owns, operates and
maintains a water supply and distribution system and a sewerage collection and disposal system,
which water and sewerage systems have been combined for purposes of financing in the manner
provided by law (the "System"); and
WHEREAS, it is in the best interest of the City to finance the settlement of the odor
litigation and to undertake certain capital improvements to the System (as further described
herein, the "Project"); and
WHEREAS, the City Council hereby finds that it is in the best interests of the City that
the Bonds be offered in one or more series as further provided in a resolution of the City; and
WHEREAS, the City has issued its Water and Sewer Revenue Refunding Bonds, 1996
(the "1996 Bonds") and its Water and Sewer Revenue and Refunding Bonds, 1998 (the "1998
Bonds") (collectively, the "Parity Bonds"); and
WHEREAS, each of the ordinances authorizing the Outstanding Parity Bonds provides
that bonds may be issued on a parity with the lien on Gross Revenues of the System of such
Parity Bonds; and
WHEREAS, to finance the odor litigation settlement and pay costs of the Project, it is
deemed necessary and advisable that the City issue its Water and Sewer Revenue Bonds, 2003,
in the aggregate principal amount of not to exceed 517,700,000;
NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this ordinance:
"Accreted Value" means with respect to any Capital Appreciation Bonds (A) as of any
Valuation Date, the amount set forth for such date in any ordinance authorizing such Capital
Appreciation Bonds and (B)as of any date other than a Valuation Date, the sum of (1)the
Accreted Value on the preceding Valuation Date and (2) the product of (a) a fraction, the
numerator of which is the number of days having elapsed from the preceding Valuation Date and
the denominator of which is the number of days from such preceding Valuation Date to the next
succeeding Valuation Date, calculated based on the assumption that Accreted Value accrues
during any semiannual period in equal daily amounts on the basis of a year of 12 30 -day months,
times (b) the difference between the Accreted Values for such Valuation Dates.
"Additional Bonds" means any revenue bonds, revenue warrants or other revenue
obligations that may be issued in the future on a parity of lien with the 1996 Bonds, the 1998
Bonds, the 2003 Bonds and any other Parity Bonds.
"Annual Debt Service" means for any specified Fiscal Year:
(1) with respect to any Outstanding Parity Bonds, the amounts required to be
deposited during that period in the Bond Fund (excluding the Reserve Fund therein);
(2) with respect to any Outstanding Capital Appreciation Bonds, the principal amount
thereof shall be equal to the Accreted Value thereof maturing or scheduled for payment in such
period, and no other interest shall be included;
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(3) with respect to any Outstanding Fixed Rate Bonds, an amount equal to (A) the
principal amount of such Fixed Rate Bonds due or subject to mandatory redemption during such
period and for which no sinking fund installments have been established, (B) the amount of any
payments required to be made during such period into any sinking fund established for the
payment of any such Fixed Rate Bonds, plus (C) all interest payable during such period on any
such Fixed Rate Bonds Outstanding and with respect to Fixed Rate Bonds with mandatory
sinking fund requirements, calculated on the assumption that mandatory sinking fund
installments will be applied to the redemption or retirement of such Fixed Rate Bonds on the
date specified in the ordinance authorizing such Fixed Rate Bonds; and
(4) with respect to Outstanding Variable Rate Bonds, the principal for any period and
interest on such Variable Rate Bonds during such period computed on the assumption that the
amount of Variable Rate Bonds Outstanding as of the date of such computation would be
amortized (i) in accordance with the mandatory redemption provisions, if any, set forth in the
ordinance authorizing the issuance of such Variable Rate Bonds, or if mandatory redemption
provisions are not provided, during a period commencing on the date of computation and ending
on the date 30 years after the date of issuance (ii) at an interest rate equal to the yield to maturity
set forth in the Revenue Bond Index (40 -year Bond) published in the edition of The Bond Buyer
(or comparable publication or such other similar index selected by the City in good faith)
selected by the City and published within ten days prior to the date of calculation or (iii) to
provide for essentially level annual debt service of principal and interest over such period; and
for the purpose of calculating the principal and interest on Variable Rate Bonds in any Fiscal
Year, such Variable Rate Bonds shall be assumed to mature on the stated maturity date or
mandatory redemption date thereof.
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"Assessment Income" means the principal of and interest on special assessments levied
in any local improvement district or utility local improvement district which are pledged to be
paid into the Bond Fund. In the case of assessments payable in installments, Assessment Income
shall be allocated to the years in which it would be received if the unpaid balance of each
assessment roll were paid in the remaining number of installments with interest on the declining
balance at the times and at the rate provided in the ordinance confirming the assessment roll.
"Assessments" means 'any special assessments which may be levied in any local
improvement district or utility local improvement district of the City created for the acquisition,
construction or installation of additions and improvements to or extensions of the System,
including any installment of assessments and any interest or penalties which may be due thereon,
if such assessments are pledged to be paid into the Bond Fund. The word "Assessments" shall
include any installments of assessments and any interest or penalties which may be due thereon.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on outstanding Bonds from the date of determination to the
last maturity date of such Bonds, by (b) the number of Fiscal Years or calendar years from and
including the Fiscal Year or calendar year in which the determination is made to the last Fiscal
Year or calendar year in which the sum of (i) the principal amount of Serial Bonds maturing in
such Fiscal Year plus (ii) the Sinking Fund Requirement for such Fiscal Year, exceeds 4% of the
principal amount of Bonds outstanding as of the date of determination.
"Bond Fund" means the Water and Sewer Revenue Bond Fund created by Ordinance
No. 3380.
"Bond Registrar" means the fiscal agency of the State of Washington in New York, New
York, for the purposes of registering and authenticating the Bonds, maintaining the Bond
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Register, effecting transfer of ownership of the Bonds and paying interest on and principal of the
Bonds.
"Capital Appreciation Bonds" means any Parity Bonds hereafter issued as 10 which
interest is payable only at the maturity or prior redemption of such Bonds. For the purposes of
(i) receiving payment of the redemption price, if any, of a Capital
Appreciation Bond that is redeemed prior to maturity, or
(ii) computing the principal amount of Panty Bonds held by the owner of a
Capital Appreciation Bond in giving to the City or the Bond Registrar any notice, consent,
request, or demand for any purpose whatsoever, the principal amount of a Capital Appreciation
Bond shall be deemed to be its Accreted Value.
"City" means the City of Yakima, Washington, a municipal corporation duly organized
and existing under and by virtue of the laws of the State of Washington.
"Code" means the Internal Revenue Code of 1986, as amended, as the same may be
amended from time to time, and the regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission.
"Costs of Maintenance and Operation" means all normal operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, insurance and administrative
expenses and reasonable pro -rata budget charges for services provided to the System by City
departments, but excluding depreciation, payments for debt service or into reserve accounts,
costs of capital additions to or replacements of the System, municipal taxes, or payments to the
City in lieu of taxes.
"Council" means the legislative body of the City as the same shall be duly and regularly
constituted from time to time.
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";Coverage Requirement" means (a) for any period during which Assessments may be
paid without becoming delinquent, the sum of (i) the product of Average Annual Debt Service
on all Parity Bonds then outstanding times a fraction, the numerator of which is the aggregate
principal amount of nondelinquent Assessments which remain to be paid into the Bond Fund
plus the principal amount of Assessments previously paid into and then on hand in the Bond
Fund, and the- denominator of which is the aggregate principal amount of Parity Bonds then
Outstanding, plus (ii) 1.25 times the product of Average Annual Debt Service on all Parity
Bonds then Outstanding times the difference of one minus the fraction calculated pursuant to
(i) above; or (b) for any other period, the product of 1.25 times Average Annual Debt Service on
all Panty Bonds then Outstanding.
"DTC" means The Depository Trust Company, New York, New York
"Fiscal Year" means the Fiscal Year used by the City at any time. At the time of the
adoption of this ordinance, the Fiscal Year is the I 2 -month period beginning January 1 of each
year.
"Fixed Rate Bonds" means those Parity Bonds other than Capital Appreciation Bonds
issued under an ordinance in which the rate of interest on such Fixed Rate Bonds is fixed and
determinable through their final maturity or for a specified period of time If so provided in the
ordinance authorizing their issuance, Fixed Rate Bonds may bear a fixed and determinable
interest rate for only a portion of their term.
"Government Obligations" has the meaning given in RCW 39.53 as now or hereafter
amended.
"Gross Revenues" means all earnings, revenue and moneys received by the City ,from or
on account of the operations of the System from any source whatsoever.
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"Interest Commencement Date" means, with respect to any Capital Appreciation Bonds,
the date specified in any ordinance authorizing such Capital Appreciation Bonds (which date
must be prior to the maturity date for such Capital Appreciation Bonds) after which interest
accruing on such Capital Appreciation Bonds shall be payable semiannually, with the first such
payment date being the applicable interest payment date immediately succeeding such Interest
Commencement Date.
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC.
"Maximum Interest Rate" means, with respect to any particular Variable Rate Bond, a
numerical rate of interest, which shall be set forth in any ordinance authorizing such Bond, that
shall be the maximum rate of interest such Bond may at any time bear.
"MSRB" means the Municipal Securities Rulemaking Board or any successors to its
functions.
"Net Revenues" means the Gross Revenues of the System less the Costs of Maintenance
and Operation.
"NRMSIR" means a nationally recognized municipal securities information repository.
"1996 Bonds" means the City's Water and Sewer Revenue Refunding Bonds, 1996,
issued pursuant to Ordinance No. 96-40 and Outstanding in the principal amount of $1,860,000.
"1998 Bonds" means the City's Water and Sewer Revenue and Refunding Bonds, 1998,
issued pursuant to Ordinance No. 98-31 and currently Outstanding in the principal amount of
$6,260,000.
"Outstanding" means, in connection with any Parity Bonds, as of the time in question, all
such bonds issued except bonds theretofore paid and cancelled or having matured or been called
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for redemption, payment has been provided therefor, or bonds that have been defeased in
accordance with their authorizing ordinance and state law.
"Parity Bonds" means any Outstanding revenue bonds, revenue warrants or other revenue
obligations issued by the City that have a lien upon the Gross Revenues of the System to pay and
secure the payment of the principal thereof and interest thereon equal to the lien created upon the
Gross Revenues of the System to pay and secure payment of the principal of and interest on the
2003 Bonds Parity Bonds includes the 1996 Bonds, the 1998 Bonds and the 2003 Bonds.
"Permitted Investments" means any legal investments for funds of the City.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with facilities of comparable size
and character to the System in such of the following as are relevant to the purposes for which
they are retained: (a) engineering and operations and (b) the design of rates.
"Project" means the capital improvements to the System described in Exhibit A, attached
hereto, together with all costs incurred in the issuance of the 2003 Bonds, and all other costs
incurred in connection with the Project.
"Qualified Insurance" means any noncancellable municipal bond insurance policy or
surety bond issued by any insurance company licensed .to conduct an insurance business in any
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies), which insurance company or companies, as of the time of issuance of
such policy or surety bond, are currently rated in the highest rating category by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Service or their comparably recognized
business successors.
"Rate Stabilization Account" means the account authorized to be created by Section 5.1.
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"Rating Agency means, as of any date, Moody's Investors Service, Inc., Standard &
Poor's Ratings Service or any other nationally recognized securities rating agency.
"Reserve Fund" means the Reserve Fund created for the parity bonds.
"Reserve Fund Requirement" means the lesser of (i) the maximum Annual Debt Service
during any Fiscal Year on a series of Parity Bonds; 0) .125% of the Average Annual Debt
Service on all Outstanding Parity Bonds of such series; or (iii) 10% of the stated principal
amount of such series of Parity Bonds. In the case of Variable Rate Bonds, the interest rate
thereon shall be calculated on the assumption that such Variable Rate Bonds will bear interest at
a rate equal to the higher of (a) the rate most recently reported by The Bond Buyer as The Bond
Buyer's Index for Tong -tens revenue bonds or (b) a rate equal to x+y where x represents the
average rate of interest borne by such Variable Rate Bonds in the twelve months preceding the
date of calculation or in the case of newly issued Variable Rate Bonds the initial rate of interest
borne by such Bonds and y represents one-half the difference between the Maximum Interest
Rate applicable to such Variable Rate Bonds and x; provided that in no event shall such assumed
Variable Rate exceed the Maximum Interest Rate and provided further that if on such date of
calculation the interest rate on such Bonds shall then be fixed to maturity, the interest rate used
for such specified period for the purpose of the foregoing calculation shall be such actual interest
rate.
"Revenue Fund" means the Water and Sewer Operating Funds of the City heretofore
established.'
"Rule" means the Commission's Rule 15c2 -I2 under the Securities and Exchange Act of
1934, as the same may be amended from time to time.
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"Sale Resolution" means the resolution or resolutions to be adopted by the Council
setting the final terms of the 2003 Bonds.
"Serial Bonds" means Parity Bonds other than Term Bonds.
"SID" means a state information depository for the State of Washington (if one is
created).
"Sinking Fund Requirement" means, for any Fiscal Year, the principal amount and
premium, if any, of Term Bonds required to be purchased, redeemed or paid at maturity for such
Fiscal Year as established by the ordinance or resolution authorizing the issuance of such Term
Bonds.
"System" means the combined water and sewerage system of the City as it now exists,
and as it may be later added to, extended and improved for as long as any Parity Bonds remain
Outstanding.
"2003 Bonds" means the City's Water and Sewer Revenue Bonds, 2003, in one or more
series in the aggregate principal amount of not to exceed 517,700,000 authorized by„this
ordinance.
"Term Bonds” means Parity Bonds of any principal maturity that are subject to
mandatory redemption or for which mandatory sinking fund payments are required.
"Valuation Date" means with respect to any Capital Appreciation Bonds the date or dates
set forth in any ordinance authorizing such Capital Appreciation Bonds on which specific
Accreted Values are assigned to the Capital Appreciation Bonds.
"Variable Interest Rate" means a variable interest rate or rates to be borne by Parity
Bonds or any one or more maturities within an issue of Parity Bonds. The method of computing
such variable interest rate shall be specified in the ordinance authorizing such Parity Bonds.
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Such variable interest rate shall be subject to a Maximum Interest Rate and there may be an
initial rate specified, in each case as provided in such ordinance, or a stated interest rate that may
be changed from time to time as provided in such ordinance. Such ordinance shall also specify
either (i) the particular period or periods of time or manner of determining such period or periods
of time for which each value of such Variable Interest Rate shall remain in effect or (ii) the time
or times upon which any change in such Variable Interest Rate shall become effective.
"Variable Rate Bonds" for any period of time means Parity Bonds which during such
period bear a Variable Interest Rate; provided that Parity Bonds the interest rate on which shall
have been fixed for the remainder of the term thereof shall no longer be Variable Rate Bonds.
ARTICLE II
FINDINGS
Section 2,1 Approval of Plan and System. The public interest and necessity require
that the City finance (a) the settlement of the odor litigation in the amount of $7,000,000 and
(b) certain improvements to the System described in Exhibit A (the "Project").
Section 2.2 Parity Conditions. The Council hereby finds as required by Section 7.1 of
Ordinance No. 96-40 and Section 7,1 of Ordinance No. 98-31 as follows:
(a) The 2003 Bonds will be issued for the purpose of acquiring, constructing
and installing additions and improvements to and extensions of, acquiring necessary equipment
for or making necessary repairs, replacements or other capital improvements and financing a
settlement of litigation related to capital improvements to the System.
(b) At the times of the issuance of the 2003 Bonds there will be no deficiency
in the Bond Fund.
(c) The City will have on deposit in the Reserve Fund an amount equal to the
Reserve Fund Requirement.
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(d) At the time of the issuance of the 2003 Bonds, the City will have on file a
certificate from an outside Professional Utility Consultant showing that the Net Revenue
received during any consecutive 12 -month period for which financial statements are available
within the 24 months preceding the date of delivery of the 2003 Bonds equals the Coverage
Requirement in each calendar year or Fiscal Year thereafter on the then -Outstanding Parity
Bonds and the 2003 Bonds, and that the Adjusted Net Revenues to be received each calendar
year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt Service
each such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the 2003 Bonds.
ARTICLE 111
ISSUANCE OF 2003 BONDS
Section 3.1 Issuance of the 2003 Bonds. The City shall issue the 2003 Bonds in the
aggregate principal amount of not to exceed $17,700,000 in one or more series for the purpose of
providing the funds necessary to finance the odor litigation settlement, to repay a interfund loan
that was made to improve the spray field which was the source of the odor litigation, to pay costs
of the Project, to satisfy the Reserve Requirement, to capitalize interest, and to pay the expenses
incidental to the issuance of the 2003 Bonds.
The 2003 Bonds shall be designated the "City of Yakima Water and Sewer Revenue
Bonds, 2003," may be issued in one or more series, shall be in fully registered form, shall be in
the denomination of $5,000 each, or any integral multiple thereof, provided that no Bond shall
represent more than one maturity, shall be dated such date, bear interest at the rates per annum,
and be payable in the amounts and dates as shall be determined by a Sale Resolution
The 2003 Bonds shall be obligations only of the Bond Fund and shall be payable and
secured as provided herein. The 2003 Bonds shall not be general obligations of the City.
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The Director of Finance and Budget of the City is hereby authorized to obtain insurance
and a Reserve Fund surety for the payment of principal of and interest on the 2003 Bonds, if she
should determine that it is in the best interests of the City to do so.
Section 3.2 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
agencies of the State of Washington in New York, New York, as registrar, authenticating agent,
paying agent and transfer agent (collectively, 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 2003 Bonds (the "Bond Register"), which shall be open to
inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate
and deliver 2003 Bonds transferred or exchanged in accordance with the provisions of such 2003
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 2003 Bonds.
(b) Registered Ownership. The City and the Bond Registrar may deem and
treat the Registered Owner of each 2003 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 2003 Bond shall be made only as described in Section 3(h) hereof, but such registration
may be transferred as herein provided. All such payments made as described in Section 3(h)
shall be valid and shall satisfy the liability of the City upon such 2003 Bond to the extent of the
amount or amounts so paid.
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(c) DTC Acceptance/Letter of Representations. The 2003 Bonds shall
initially be held in fully immobilized form by DTC acting as depository. To induce DTC to
accept the 2003 Bonds as eligible for deposit at DTC, the City has heretofore 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 2003 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 2003 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 t0 receive payment in the
event of a partial redemption of the 2003 Bonds, or any consent given or other action taken by
DTC as the Registered Owner. For so long as any 2003 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 2003 Bonds.
(d) Use of Depository.
(1) The 2003 Bonds shall be registered initially in the name of
CEDE & Co., as nominee of DTC, with a single 2003 Bond for each maturity in a denomination
equal to the total principal amount of such maturity. Registered ownership of such immobilized
2003 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
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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.
(iii) 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 2003 Bonds,
together with a written request on behalf of the City, issue a single new 2003 Bond for each
maturity then 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
2003 Bonds that the 2003 Bonds be provided in certificated form, the ownership of such 2003
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 2003 Bonds in certificated form, to issue 2003 Bonds in any
authorized denomination. Upon receipt by the Bond Registrar of all then outstanding 2003
Bonds together with a written request on behalf of the City to the Bond Registrar, new 2003
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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 2003 Bond may be transferred or exchanged,
but no transfer of any 2003 Bond shall be valid unless it is surrendered to the Bond Registrar
with the assignment form appearing on such 2003 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 2003 Bond and
shall authenticate and deliver, without charge to the Registered Owner or transferee, a new 2003
Bond (or 2003 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 2003 Bond, in exchange for such surrendered and canceled 2003
Bond. Any 2003 Bond may be surrendered to the Bond Registrar and exchanged, without
charge, for an equal aggregate principal amount of 2003 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 2003 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 2003
Bonds, after the mailing of notice of the call of such 2003 Bonds for redemption.
(f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become
the Registered Owner of any 2003 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
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PCOU Ou 03/,2/03
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 2003 Bonds.
(g) Registration Covenant. The City covenants that, until all 2003 Bonds
have been surrendered and canceled, it will maintain a system for recording the ownership of
each 2003 Bond that complies with the provisions of Section 149 of the Code. The ownership of
each 2003 Bond shall initially be recorded with DTC pursuant to this Section 3.2.
(h) Place and Medium of Payment. Both principal of and interest on the 2003
Bonds shall be payable in lawful money of the United States of America For so long as all 2003
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 2003 Bonds are no longer in fully immobilized form,
interest on the 2003 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 2003 Bonds shall be payable
upon presentation and surrender of such 2003 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 51,000,000 principal amount of 2003 Bonds, interest will be paid by wire
transfer on the date due to an account with a bank located within the United States.
Section 3.3 Execution and Authentication of Bonds. The 2003 Bonds shall be signed
on behalf of the City with the manual or facsimile signature of the Mayor, shall be attested by
the manual or facsimile signature of the City Clerk and shall have the corporate seal of the City
impressed or a facsimile thereof imprinted thereon.
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Only such 2003 Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited and 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 2003 Bonds so authenticated have been duly executed,
authenticated and delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the 2003 Bonds shall cease to be
such officer or officers of the City before the 2003 Bonds so signed shall have been
authenticated or delivered by the Bond Registrar, or issued by the City, such 2003 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 2003 Bond may also be signed and attested on behalf of the
City by such persons as at the actual date of execution of such 2003 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 of the City.
Section 3.4 Lost or Destroyed Bonds. In case any of the 2003 Bonds shall belost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new bond or bonds of like
amount, date, tenor and effect to the registered owner or nominee thereof upon payment to the
City for the expenses and charges in connection therewith and upon his or her filing with the
Bond Registrar evidence satisfactory to said Bond Registrar that such 2003 Bond or 2003 Bonds
were actually lost, stolen or destroyed and of his ownership thereof, and upon furnishing the City
with indemnity satisfactory to them both.
Section 3.5 Form of 2003 Bonds. The 2003 Bonds shall be substantially in the form
of Exhibit B hereto.
_1g_
P'OD'OGa1E DVIVOS
ARTICLE IV
REDEMPTION OF 2003 BONDS
Section 4.1 Redemption Prior to Maturity. The 2003 Bonds may be subject to
redemption in advance of their scheduled maturities as provided in a Sale Resolution to be
adopted by the Council.
Section 4.2 Notice of Redemption Written notice of any redemption of 2003 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 2003 Bonds that are to be redeemed at their last addresses shown on the Bond Register. So
long as the 2003 Bonds are in book -entry fora, notice of redemption shall be given as provided
in the Letter of Representations. The Bond Registrar shall provide additional notice of
redemption (at least 30 days) to each NRMSIR and SID, if any, in accordance with Section 11.1.
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 2003 Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts) of the 2003 Bonds to
be redeemed, (4) that on the redemption date the redemption price will become due and payable
upon each 2003 Bond or portion called for redemption, and that interest shall cease to accrue
from the redemption date, (5) that the 2003 Bonds are to be surrendered for payment at the
principal office of the Bond Registrar, (6) the CUSIP numbers of all 2003 Bonds being
redeemed, (7) the dated date of the 2003 Bonds, (8) the rate of interest for each 2003 Bond being
redeemed, (9) the date of the notice, and (10) any other information needed to identify the 2003
Bonds being redeemed.
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Upon the payment of the redemption price of 2003 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 2003 Bonds being redeemed with the proceeds of such check or other transfer.
Section 4.3 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 2003 Bonds to be redeemed. From the redemption date interest on each 2003 Bond to be
redeemed shall cease to accrue.
Section 4.4 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.
Section 4.5 Purchase of 2003 Bonds. The City reserves the right to use at any time
any surplus Gross Revenues of the System available after providing for the payments required by
paragraphs First through Sixth inclusive of Section 5.1 of this ordinance, or other available
funds, to purchase any of the 2003 Bonds in the open market for retirement.
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ARTICLE V
FUNDS AND ACCOUNTS; DEFEASANCE
Section 5.1 Revenue Fund; Priority of Payments. The City hereby obligates and binds
itself to set aside and pay into the Water and Sewer Operating Funds (the `Revenue Fund") as
collected the Gross Revenues of the System. The Gross Revenues of the System shall be held in
the Revenue Fund separate and apart from all other funds and accounts of the City and used only
for the following purposes and in the following order of priority:
First, to pay the Costs of Maintenance and Operation of the System;
Second to make all required payments into the Bond Fund;
Third to pay the interest on the Parity Bonds;
Fourth to pay the principal of and any sinking fund payments for the Parity Bonds;
Fifth, to make all payments required to be made into the Reserve Fund;
Sixth to make all payments required to be made into any other revenue bond redemption
fund or debt service account or reserve account created to pay and secure the payment of the
principal of and interest on any revenue bonds of the City having a lien upon the Gross Revenues
of the System junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds;
Seventh, to retire by redemption or purchase in the open market any outstanding revenue
bonds of the City, to make necessary additions, improvements and repairs to or extensions and
replacements of the System, or for any other lawful City purposes.
The City may create a Rate Stabilization Account in the Revenue Fund. To the extent
that surplus Gross Revenues remain after the payments so required to be made out of the
Revenue Fund, the City may credit up to the full amount of such surplus to the Rate Stabilization
Account. Any credits from the Revenue Fund to the Rate Stabilization Account and any credits
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to the Revenue Fund from the Rate Stabilization Account made pursuant to Section 6.1 hereof,
shall be made prior toclosing the books and accounts of the City for each Fiscal Year. Money in
the Rate Stabilization Account may be used for any lawful purpose. Money in the Rate
Stabilization Account may be used from time to time to make up any deficiencies in the Bond
Fund, and such money in the Rate Stabilization Account may be pledged as additional payments
to the Bond Fund to the extent required for any such deficiencies. The City may, at any time,
deposit Gross Revenues of the System in and withdraw Gross Revenues of the System from the
Rate Stabilization Account.
Nothing contained in this Section 5.1 shall be construed to require the deposit into the
Revenue Fund of any of the revenues, income, receipts or other moneys of the City derived
through the ownership or operation of any separate utility system hereafter created or established
from funds other than the proceeds of Bonds.
Section 5.2 Bond Fund.
(a) There has been created a special fund of the City designated the Water and Sewer
Revenue Bond Fund (the "Bond Fund"), which shall be used solely for the purpose of paying the
principal, premium, if any, and interest on the Parity Bonds, of retiring the Parity Bonds prior to
maturity, in the manner herein provided, and of paying any reimbursement obligation with
respect to a letter of credit or other credit enhancement device providing additional security for
any Variable Rate Bonds. Each month (or in the case of Variable Rate Bonds, at the times
provided in subsection (i) of this Section 5.2(a)), after applying amounts as required in Section
5.1, the City shall withdraw from the Revenue Fund and (to the extent not otherwise provided)
transfer to the Bond Fund, amounts as follows and in the following order of priority: first, into
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the Interest Account; second, into the Serial Bond Principal Account and Term Bond Principal
Account; and third, into the Reserve Fund.
(i) Interest Account. The City has created a separate account in the Bond
Fund, to be known as the "Interest Account" to provide for the payment of interest on the Parity
Bonds as the same becomes due and payable Upon the issuance of the 2003 Bonds, all accrued
interest on the 2003 Bonds shall be paid into the Interest Account.
In the case of all Parity Bonds other than Variable Rate Bonds, the City shall transfer to
the Interest Account amounts sufficient to pay when due the installment of interest next falling
due on all Parity Bonds. In the case of Variable Rate Bonds, not later than on the last day of the
month immediately succeeding the month of closing of such bonds and on or before the last day
of each succeeding month, the City shall transfer to the Interest Account an amount equal to the
interest on such Variable Rate Bonds estimated to become due and payable on the due date. If
on any date on which an installment of interest on Variable Rate Bonds falls due there are
insufficient amounts in the Interest Account to make such interest payment, the City shall
withdraw from the Revenue Fund and transfer to the Interest Account an amount that when
added to other money therein will equal the amount of interest falling due and payable on such
interest payment date .In making the credits required by this subsection (a) (i), any amounts
credited to the Interest Account representing accrued interest received on the sale of 2003 Bonds
or other Parity Bonds, interest capitalized from the proceeds of any Parity Bonds and any other
transfers and credits otherwise made or required to be made to the Interest Account shall be
taken into consideration and allowance made with respect to the full amount of such transfers
and credits.
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(ii) Serial Bond Principal Account. The City has created a separate account in
the Bond Fund known as the "Serial Bond Principal Account" to provide for the payment of the
principal of Serial Bonds as the same shall mature and become due and payable. The City shall
transfer to the Serial Bond Principal Account amounts sufficient to pay when due the installment
of principal next falling due on the Serial Bonds.
(iii) Term Bond Principal Account.
(A) The City shall create and establish a separate account in the Bond
Fund to be known as the "Term Bond Principal Account" in order to meet the specified Sinking
Fund Requirements of Term Bonds and to otherwise retire 2003 Bonds, if any, and other Parity
Bonds prior to maturity. The City shall transfer to the Term Bond Principal Account amounts
sufficient to pay when due the Sinking Fund Requirement next falling due on all Tenn Bonds.
(B) The City shall apply the money paid into the Bond Fund for credit
to the Term Bond Principal Account to the redemption of Term Bonds on the next ensuing
Sinking Fund Requirement due date (or may so apply such money prior to such Sinking Fund
Requirement due date), pursuant to the terms of the ordinance authorizing the issuance thereof.
The City may also apply the money paid into the Bond Fund for credit to the Term Bond
Principal Account for the purpose of retiring Tenn Bonds by the purchase of such Term Bonds at
a purchase price (including any brokerage charge) not in excess of the principal amount thereof.
The City shall apply such money to the redemption or. purchase of Term Bonds in an
amount such that the aggregate principal amount of Tenn Bonds so purchased or redeemed is at
least equal to such next ensuing Sinking Fund Requirement. Any such purchase of Term Bonds
by the City may be made with or without tenders of Tenn Bonds in such manner as the City
shall, in its discretion, deem to be in its best interest
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(iv) Reserve Fund.
(A) The City has created a separate fund to be known as the "Reserve
Fund" to provide a reserve for the payment of the principal, premium, if any, and interest on the
Parity Bonds. The City hereby covenants and agrees that on the date of issuance of the 2003
Bonds the City will have on deposit in the Reserve Fund an amount equal to the Reserve Fund
Requirement. Each ordinance providing for the issuance of Additional Bonds shall provide for
payments into the Reserve Fund from any other money lawfully available therefor (in which
event, in providing for deposits and credits required by the foregoing provisions of this
paragraph (A), allowance shall be made for any such amounts so paid into such fund) in amounts
that within not less than five years of equal monthly payments will provide for deposit of the
Reserve Fund Requirement or may provide for the City to obtain Qualified Insurance or a
Qualified Letter of Credit for specific amounts required pursuant to this Section to be paid into
the Reserve Fund, such amounts so covered by Qualified Insurance or a Qualified Letter of
Credit shall be credited against the amounts required to be maintained in the Reserve Fund by
this Section to the extent that such payments and credits to be made are insured by an insurance
company, or guaranteed by a letter of credit from a bank. Such Qualified Letter of Credit or
Qualified Insurance shall not be cancelable on less than five years notice. In the event of any
cancellation, the Reserve Fund shall be funded in accordance with this paragraph, as if the Parity
Bonds which remain Outstanding had been issued on the date of such notice of cancellation.
(B) Money in the Bond Fund and Reserve Fund may, at the option of
the City, be invested and reinvested as permitted by law in Permitted Investments maturing, or
which are rentable at the option of the owner, prior to the date needed or prior to the maturity
date of the final installment of principal of.the Parity Bonds payable out of the Bond Fund and
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Reserve Fund. Earnings on investments in the Bond Fund and Reserve Fund shall be transferred
to the Revenue Fund, except that earnings on investments in the Reserve Fund shall first be
applied to remedy any deficiency in such account.
(C) For the purpose of determining the amount credited to the Reserve
Fund, obligations in which money in the Reserve Fund shall have been invested shall be valued
at the market value thereof The term "market value" shall mean, in the case of securities that
are not then currently redeemable at the option of the owner, the current hid quotation for such
securities, as reported in any nationally circulated financial journal, and the current redemption
value in the case of securities that are then redeemable at the option of the owner. For
obligations that mature within six months, the market value shall be the par value thereof The
valuation shall include accrued interest thereon. The valuation of the amount in the Reserve
Fund shall be made by the City as of the close of business on each December 31 (or on the next
preceding business day. if December 31 does not fall on a business day) and after any withdrawal
and may be made on each June 30 (or on the next preceding business day if lune 30 does not fall
on a business day).
(D) If the amount in the Reserve Fund shall be less than the Reserve
Fund Requirement, the City shall transfer from the Revenue Fund, for credit to the Reserve Fund
no later than the 25th day of the sixth succeeding calendar month the amount necessary to restore'
the Reserve Fund to the Reserve Fund Requirement. Prior to such time, such transfer shall come
from money in the Revenue Fund first available after making the current specified payments into
the Interest Account and Principal Accounts If the amount in the Reserve Fund shall be greater
than the Reserve Fund Requirement, then and only then may the City withdraw at any time prior
to the next date of valuation from the Reserve Fund the difference between the amount in the
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Reserve Fund and the Reserve Fund Requirement and deposit such difference in the Revenue
Fund.
(b) Money in the Interest Account, the Serial Bond Principal Account and the Term
Bond Principal Account shall be transmitted to the Bond Registrar in amounts sufficient to meet
the next maturing installments of principal, interest and premium, if any, at or prior to the time
upon which any interest, principal or premium, if any, is to become due. In the event there shall
be a deficiency in the Interest Account, the Serial Bond Principal Account or the Term Bond
Principal Account for such propose, the City shall make up any such deficiency from the
Reserve Fund by the withdrawal of cash therefrom for that purpose, and, if necessary, by sale or
redemption of any authorized investments in such amount as will provide cash in said Reserve
Fund sufficient to make up any such deficiency. If a deficiency still exists immediately prior to
an interest payment date and after the withdrawal of cash, the City shall then draw from any
Qualified Letter of Credit or Qualified Insurance. Such draw shall be made at such times and
under such conditions as the agreement for such Reserve Fund credit facility shall.provide.
(c) Whenever and so long as amounts on deposit in the Bond Fund, including the
Reserve Fund, are sufficient to provide money to pay the Parity Bonds then Outstanding,
including such interest as. may thereafter become due thereon and any premiums upon
redemption, no payments need be made into the Bond Fund pursuant to this ordinance.
(d) Money transferred from the Bond Fund to the Bond Registrar for the Parity Bonds
and the interest thereon shall be held in trust for the owners of such Parity Bonds Until so set
aside for the retirement of principal, payment of sinking fund installments, payment of interest
and premium, if any, as aforesaid, moneys in the Bond Fund shall be held in trust for the benefit
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of the owners of the Parity Bonds then Outstanding and payable equally and ratably and without
preference or distinction as between different installments or maturities.
(e) The amounts so pledged to be paid into the Bond Fund and the Reserve Fund are
hereby declared to be a prior lien and charge upon the Gross Revenues of the System superior to
all other charges of any kind or nature whatsoever (including any transfer of money to other
funds of the City and taxes or payments in lieu of taxes) except the Costs of Maintenance and
Operation, and is equal in priority to the lien and charge which may hereafter be made to pay and
secure the payment of the principal of and interest on any Additional Bonds.
(f) The Council hereby finds and declares that in fixing the amounts to be paid into
the Bond Fund and the Reserve Fund out of the Gross Revenues of the System, it has exercised
due regard for the Costs of Maintenance and Operation and for the amounts required to pay and
secure the payment of the principal of and interest on the currently Outstanding Parity Bonds,
and has not obligated the City to set aside and pay into such Fund and Account a greater amount
of such Gross Revenues than in its judgment will be available over and above the Costs of
Maintenance and Operation and the principal of and interest on the currently Outstanding Parity
Bonds.
Section 5.3 Defeasance. In the event that money and/or Government Obligations
maturing or having guaranteed redemption prices at the option of the holder at such time or times
and bearing interest to be earned thereon in amounts (together with such money, if any)
sufficient to redeem and retire part or all of the 2003 Bonds in accordance with their terms are
irrevocably set aside in a special account and pledged to effect such redemption and retirement,
then no further payments need be made into the Bond Fund for the payment of the principal of
and interest on the 2003 Bonds so provided for, and such 2003 Bonds shall then cease to be
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entitled to any lien, benefit or security of this ordinance, except the right to receive the funds so
set aside and pledged, and such 2003 Bonds shall no longer be deemed to be outstanding
hereunder. Within 30 days of any defeasance of such 2003 Bonds, the City shall provide notice
of defeasance of such 2003 Bonds to registered owners and to each NRMSIR and SID, if any, in
accordance with Section 11.1.
ARTICLE VI
PARTICULAR COVENANTS OF THE CITY
So long as any Parity Bonds remain Outstanding, the City covenants and agrees with the
owners of all Parity Bonds as follows:
Section6.1 Rate Covenant. The City shall establish, maintain and collect rates and
charges for the use of the services and facilities of and all commodities sold, furnished or
supplied by the System, which shall be fair and nondiscriminatory and shall adjust such rates and
charges from time to time so that:
(a) The Gross Revenues collected (together with Assessments collected) will at all
times be sufficient (a) to pay the Costs of Maintenance and Operation of the System, (b) to pay
the principal of, premium, if any, and interest on the Parity Bonds, as and when the same shall
become due and payable, (c) to make adequate provision for the payment of any Term Bonds,
(d) to make when due all payments which the City is obligated to make into the Reserve Fund
and all other payments which the City is obligated to make pursuant to this ordinance, and (e) to
pay all taxes, assessments or other governmental charges lawfully imposed on the System or the
revenue therefrom or payments in lieu thereof and any and all other amounts which the City may
now or hereafter become obligated to pay from the Gross Revenues by law or contract; and
(b) The Net Revenues in each Fiscal Year will be at least equal to the Coverage
Requirement calculated as of December 31 of the preceding calendar year. For the purpose of
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meeting this requirement if the City creates a Rate Stabilization Account pursuant to Section 5.1,
(i) there may be added to Net Revenues for any Fiscal Year such amount, not greater than the
Annual Debt Service for such Fiscal Year, withdrawn from the Rate Stabilization Account and
deposited in the Revenue Fund, and (ii) there must be subtracted from Net Revenues for any
Fiscal Year such amounts as are withdrawn from the Revenue Fund and deposited into the Rate
Stabilization Account for such Fiscal Year.
Section 6.2 Maintenance and Operation. The City shall at all times maintain, preserve
and keep the properties of the System in good repair, working order and condition and will from
time to time make all necessary and proper repairs, renewals, replacements, extensions and
betterments thereto, so that at all times the business carried on in connection therewith will be
properly and advantageously conducted, and the City will at all times operate or cause to be
operated the properties of the System and the business in connection therewith in an efficient
manner and at a reasonable cost.
Section 6.3 Sale or Disposition of the System. The City will not sell or otherwise
dispose of the System in its entirety unless simultaneously with such sale or other disposition,
provision is made for the payment into the Bond Fund of cash or "Government Obligations," as
now or hereafter defined in chapter 39.53 RCW, as amended, or its successor statute, if any,
sufficient together with interest to be earned thereon to pay the principal of and interest on the
then Outstanding Parity, Bonds, nor will it sell or otherwise dispose of any part of the useful
operating properties of the System unless such facilities are replaced or provision is made for
payment into the Bond Fund of the greater of:
(a) An amount which will be in the same proportion to the net amount of Parity
Bonds then Outstanding (defined as the total amount of the Parity Bonds less the amount of cash
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and investments in the Bond Fund and accounts therein) that the Net Revenues from the portion
of the System sold or disposed of for the preceding year bears to the total Net Revenues for such
period; or
(b) An amount which will be in the same proportion to the net principal amount of
Parity Bonds then Outstanding that the book value of the part of the System sold or disposed of
bears to the book value of the entire System immediately prior to such sale or disposition.
The proceeds of any such sale or disposition of a portion of the properties of the System
(to the extent required above) shall be paid into the Bond Fund.
Notwithstanding any other provision of this subsection, the City may sell or otherwise
dispose of any of the works, plant, properties and facilities of the System or any real or personal
property comprising a pall of the same which shall have become unserviceable, inadequate,
obsolete or unfit to be used in the operation of the System, or no longer necessary, material to or
useful in such operation, without making any deposit into the Bond Fund.
Section 6.4 Liens or Encumbrances. The City will not at any time create or permit to
accrue or to exist any lien or other encumbrance or indebtedness upon the System or the Gross
Revenues or any part thereof, prior or superior to the lien thereon for the payment of the Parity
Bonds, and will pay and discharge, or cause to be paid and discharged, any and all lawful claims
for labor, materials or supplies which, if unpaid, might become a lien or charge upon the
Revenues of the System, or any part thereof, or upon any funds in the hands of the City, prior to
or superior to the lien of the Parity Bonds, or which might impair the security of the Parity
Bonds.
Section 6.5 Insurance. The City shall, to the extent insurance coverage is available at
reasonable cost with responsible insurers, keep, or cause to be kept, the System and the operation
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thereof insured, with policies payable to the City, against the risks of direct physical Toss,
damage to or destruction of the System, or any part thereof, and against accidents, casualties or
negligence, including liability insurance and employer's liability, at least to the extent that
similar insurance is usually carried by utilities operating like properties as determined by the
City Manager. A program of self insurance against certain risks or as to part of the potential
liability for certain risks may be included as part of the City's insurance coverage plan.
In the event of any loss or damage to the properties of the System covered by insurance,
the City will (a) with respect to each such loss, promptly repair and reconstruct to the extent
necessary to the proper conduct of the operations of the System the lost or damage portion
thereof and shall apply the proceeds of any insurance policy or policies covering such loss or
damage for that purpose to the extent required therefor, unless in the case of loss or damage
involving an amount less than or equal to 2% of the value of net utility plant of the System or
more, such repair and reconstruction shall not be recommended by the City Manager, and
(b) if the City shall not use the entire proceeds of such insurance to repair or
reconstruct such lost or damaged property, such insurance proceeds thereof not so used shall be
paid into the Revenue Fund, and if greater than 2% of the value of the net utility plant of the
System for any one loss or damage, shall be used to purchase or redeem bonds or to acquire or
construct extensions, betterments and improvements to the System.
Section 6.6 Books and Accounts. The City shall keep proper books of account in
accordance with any applicable rules and regulations prescribed by the State of Washington.
The City shall prepare, and any owner or holder of Parity Bonds may, upon written request,
obtain copies of, balance sheets and profit and loss statements showing in reasonable detail the
financial condition of the System as of the close of each year, and the income and expenses of
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such year, including the amounts paid into the Revenue Fund, the Bond Fund, and into any
special funds or accounts created pursuant to the provisions of this ordinance, and the amounts
expended for maintenance, renewals, replacements, and capital additions to the System.
Section 6.7 Additions and Improvements. The City will not expend any of the
revenues derived by it from the operation of the System or the proceeds of any indebtedness
payable from the Revenues of the System for any extensions, betterments or improvements to the
System which are not legally required or economically sound, and which will not properly and
advantageously contribute to the conduct of the business of the System in an efficient manner;
provided, that to the extent permitted by law, the City may provide commodities, services or
facilities free of charge or at a reduced charge in order to carry out a plan adopted by the Council
for conservation of water or to benefit elderly, handicapped or poor persons.
Section 6.8 Tax Covenants, The City hereby covenants to undertake all actions
required to maintain the tax-exempt status of interest on the 2003 Bonds under Section 103,
' Sections 141 through 149 inclusive, and Section 265 of the Code as set forth in the Arbitrage and
Tax Certification that will be executed at the closing of the 2003 Bonds.
• ARTICLE VII
ADDITIONAL BONDS
Section 7.1 Additional Bonds. Parity Bonds may be issued payable from the Bond
Fund on a parity with the 1996 Bonds, 1998 Bonds, and 2003 Bonds, and secured by an equal
charge and lien on the Gross Revenues pledged to the Bond Fund:
First, for the purpose of acquiring, constructing and installing additions and
improvements to and extensions of, acquiring necessary equipment for or making necessary
repairs; replacements or other capital improvements to the System and other lawful purposes
related to the System, or
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Second, for the purpose of refunding, or purchasing and retiring prior to their maturity,
any outstanding Bonds or other revenue obligations of the System.
(a) The City may issue such Additional Bonds upon compliance with the following
conditions:
(i) At the time of the issuance of such Additional Bonds, there shall be no
deficiency in the Bond Fund.
(ii) In each ordinance authorizing such Additional Bonds, provision shall be
made for payments into the Reserve Fund in accordance with Section 5.2(a) (iv) of this
ordinance.
(iii) At the time of the issuance of such Additional Bonds, the City shall have
on file a certificate from a Professional Utility Consultant, not then employed by the City except
for the purpose of giving such certificate, showing that the Net Revenue received during any
consecutive 12 -month period for which financial statements are available within the 24 months
preceding the date of delivery of such Additional Bonds equals the Coverage Requirement in
each calendar year or Fiscal Year thereafler on the then -Outstanding Parity Bonds and the
Additional Bonds to be issued, and that the Adjusted Net Revenues to be received each calendar
year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt Service
each such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the Additional
Bonds to be issued.
The Adjusted Net Revenues shall be the Net Revenues for a period of any 12 consecutive
months out of The 24 months immediately preceding the date of delivery of such proposed
Additional Bonds, as adjusted to take into consideration changes in Net Revenues estimated to
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occur under one or more of the following conditions for each year after such delivery for so long
as any Bonds, including the Additional Bonds proposed to be issued, shall be outstanding.
(A) Any increase or decrease in Net Revenues that would result if any
change in rates and charges adopted by the Council prior to the date of such certificate and
subsequent to the beginning of such 12 -month period, had been in force during the full 12 -month
period;
(B) The additional Net Revenues from any rate increases that have
been approved by ordinance of the Council but that are not then in effect;
(C) Any increase or decrease in Net Revenues estimated by such
Professional Utility Consultant to result from any additions, betterments and improvements to
and extensions of any facilities of the System that (i) became fully operational during such 12 -
month period, (ii) were under construction at the time of such certificate, or (iii) will be
constructed from the proceeds of the Additional Bonds to be issued;
(D) The additional Net Revenues that would have been received if any
customers added to the System during such 12 -month period were customers for the entire
period.
(E) The additional Net Revenues that may be derived by the City from
any users of the System with whom the City has entered into a contract for utility services to be
furnished, which revenues have not otherwise been included in Net Revenues.
Such Professional Utility Consultant shall base his certification upon, and his certificate
shall have attached thereto, financial statements of the System audited by the State Examiner
(unless such an audit is not available for a 1 2 -month period within the preceding 24 months) and
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certified by the chief financial officer of the City, showing income and expenses for the period
upon which the same is based.
The certificate of such Professional Utility Consultant shall be conclusive and the only
evidence required to show compliance with the provisions and requirements of this subsection.
Notwithstanding the foregoing, if Additional Bonds are to be issued for the purpose of
refunding at or prior to their maturity any part or all of the then Outstanding Bonds and the
issuance of such refunding Additional Bonds results in a debt service savings and does not
require an increase of more than 55,000 in any year for principal and interest on such refunding
Additional Bonds, the certificate required by subsection (a) (3) of this section need not be
obtained.
Once the 1996 and 1998 Bonds are no longer outstanding, in lieu of a certificate from a
Professional Utility Consultant, the Director of Finance and Budget or other financial officer of
the City may certify that the Net Revenues of the System for any 12 consecutive months of the
24 months prior to the date of issuance of such Additional Bonds are at least 125% of the
Average Annual Debt Service due in any fiscal or calendar year thereafter, including in such
calculation debt service on such Additional Bonds.
(b) Nothing herein contained shall prevent the City from issuing revenue bonds or
other obligations which are a charge upon the Gross Revenues of the System junior or inferior to
the payments required by this ordinance to be made out of such Gross Revenues into the Bond
Fund and accounts therein to pay and secure the payment of any Outstanding Bonds.
(c) Nothing herein contained shall prevent the City from issuing revenue bonds to
refund maturing Bonds for the payment of which money is not otherwise available.
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(d) Notwithstanding any other provision of this ordinance, for so long as the 2003
Bonds are Outstanding, no bonds may be issued subsequent to the issuance of the 2003 Bonds
with a lien and charge on the Gross Revenues superior to the lien and charge of the 2003 Bonds.
Section 7.2 Pledge Effected by Ordinance.
(a) The 2003 Bonds are special limited obligations of the City payable from and
secured solely by Gross Revenues, subject to the prior payment of Costs of Maintenance and
Operation of the System and other money and assets specifically pledged hereunder for the
payment thereof. . There are hereby pledged as security for the payment of the principal,
premium, if any, and interest on the 2003 Bonds in accordance with their terms of this ordinance,
subject only to the provisions of this ordinance restricting or permitting the application thereof
for the purposes and on the terms and conditions set forth in this ordinance, (i) the proceeds of
the sale of the 2003 Bonds to the extent held in the funds established by this ordinance, (ii) the
Gross Revenues, and (iii) the money and assets, if any, credited to the Revenue Fund, the Bond
Fund and the Reserve Fund, and the income therefrom. The Gross Revenues and other money
and assets hereby pledged shall immediately be subject to the lien of this pledge without any
physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as
against all parties having claims of any kind in tort, contract or otherwise against the City
regardless of whether such parties have notice thereof.
(b) The 1996 Bonds, the 1998 Bonds, the 2003 Bonds and any Additional Bonds
'shall be' equally and ratably payable and secured hereunder without priority by reason of date of
adoption of the ordinance providing for their issuance or by reason of their series, number or
date of sale, issuance, execution or delivery, and by the liens, pledges, charges, trusts,
assignments and covenants made herein, except as otherwise expressly provided or permitted in
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this ordinance and except as to insurance that may be obtained by the City to insure the
repayment of one or. more series or maturities within a series.
(c) The 1996 Bonds, the 1998 Bonds, the 2003 Bonds and any Additional Bonds
shall not in any manner or to any extent constitute general obligations of the City or of the State
of Washington, or of any political subdivision of the State of Washington, or a charge upon any
general fund or upon any money or other property of the City or of the State of Washington, or
of any political subdivision of the State of Washington, not specifically pledged thereto by this
ordinance, nor shall the fill faith and credit of the City or of the State of Washington, or of any
political subdivision of the State of Washington, he pledged to the payment of principal,
premium, if any, or interest thereon.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1 Events of Default. This ordinance and each ordinance adopted pursuant to
Article X are hereinafter in this Article VIII and in Article IX referred to collectively as' "the
Ordinance."
The City hereby covenants and agrees with the purchasers and owners from time to time
of any Parity Bonds, in order to protect and safeguard the covenants and obligations undertaken
by the City securing any Parity Bonds, that the following shall constitute "Events of Default":
(a) If the City shall default in the performance of any obligation with respect
to payments into the Bond Fund and such default is not remedied within a period of 30 days;
(b) If default shall be made in the due and punctual payments of the principal
of and premium, if any, on any of the Parity Bonds when the sante shall become due and
payable, either at maturity or by proceedings for redemption or otherwise;
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(c) If default shall be made in the due and punctual payment of any
installment of interest on any Parity Bonds;
(d) If the City shall default in the observance and performance of any other of
the covenants, conditions and agreements on the part of the City contained in the Ordinance and
such default or defaults shall have continued for a period of 90 days after the City shall have
received from the Bondowners Committee or from the owners of not less than 20% in principal
amount of the Parity Bonds outstanding, a written notice specifying, and demanding the cure of,
such default;
(e) If the City shall (except as herein permitted) sell, transfer, assign or
convey any properties constituting the System or interests therein, or any part or parts thereof, or
shall make any agreement for such sale or transfer (except as expressly authorized by Section 6.3
hereof);
(f) If an order, judgment or decree shall be entered by a court of competent
jurisdiction (a) appointing a receiver, trustee or liquidator for the whole or any substantial part of
the System, (b) approving a petition filed against the City seeking the bankruptcy, arrangement
or reorganization of the City ander any applicable law of the United States or the State of
Washington, or (c) assuming custody or control of the whole or any substantial part of the
System under the provisions of any other law for the relief or aid of debtors and such order,
judgment or decree shall not be vacated or set aside or stayed (or, in case custody or control is
assumed by such order, such custody or control shall not be otherwise terminated), within 60
days from the date of entry of such order, judgment or decree;
(g) If the City shall (a) admit in writing its inability to pay the debts of the
System generally as they become due, (b) file a petition in bankruptcy or seeking a composition
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of indebtedness under any state or federal bankruptcy or insolvency law, (c) make an assignment
for the benefit of its creditors, (d) consent to the appointment of a receiver of the whole or any
substantial part of the System, or (e) consent to the assumption by any court of competent
jurisdiction under the provisions of any other law for the relief or aid of debtors of custody or
control of the whole or any substantial part of the System.
Section 8.2 Formation of Bondowners Committee. During the continuance of an
Event of Default, the owners of ParityBonds representing 20% in principal amount of the Parity
Bonds then Outstanding may call a bondholders meeting for the purpose of electing a committee
(the "Bondowners Committee") to act on behalf of all Parity Bondowners (the "Bondowners").
Such meeting shall be called and the proceedings thereof shall be conducted in the manner
provided in Article IX hereof.
At such meeting the Bondowners present in person or by proxy may, by a majority of the
votes cast, elect one or more persons, who may or may not be Bondowners, to the Bondowners
Committee, which shall act as trustee for all registered owners of Parity Bonds outstanding, and
the Bondowners Committee as such trustee may have and exercise all the rights and powers
provided for in this ordinance to be exercised by the Bondowners Committee. The Bondowners
present in person or by proxy at said meeting, or at any adjourned meeting thereof, shall
prescribe the manner in which the successors of the persons elected to the Bondowners
Committee at such Bondowners meeting shall be elected or appointed, and may prescribe rules
and regulations governing the exercise by the Bondowners Committee of the powers conferred
upon it herein, and may provide for the termination of the existence of the Bondowners
Committee. The members of the Bondowners Committee elected by the Bondowners in the
manner herein provided, and their successors, as a committee are hereby declared to be trustees
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for the owners of all the Parity Bonds then Outstanding, and are empowered to exercise in the
name of the Bondowners Committee as trustee, all the rights and powers hereinafter conferred on
the Bondowners Committee.
Section 8.3 Books of City Open to Inspection. The City covenants that if an Event of
Default shall have happened and shall not have been remedied, the books of record and account
of the City and all other records relating to the System shall at all times during regular business
hours be subject to the inspection and use of the Bondowners Committee and any person holding
at least 20% of the principal amount of Parity Bonds Outstanding and of their respective agents
and attorneys.
The City covenants that if an Event of Default shall happen and shall not have been
remedied, the City will continue to account, as a trustee of an express trust, for all Gross
Revenues and other money, securities and funds pledged under this ordinance.
Section 8.4 Suits at Law or in Equity. If an Event of Default shall happen and shall
not have been remedied, then and in every such case, the Bondowners Committee by its agents
and attorneys, shall be entitled and empowered to proceed forthwith to take such needful steps
and institute such suits, actions and proceedings at law or in equity for the collection of all sums
in connection with the Parity Bonds and to protect and enforce the rights of Bondowners under
this ordinance for the specific performance of any covenant herein contained or in aid of the
execution of any power herein granted, or for an accounting against the City as trustee of an
express trust, or in the enforcement of any other legal or equitable right as the Bondowners
Committee being advised by counsel, shall deem most effectual to enforce any of the rights of
the owners of the Parity Bonds.
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Any action, suit or other proceedings instituted by the Bondowners Committee hereunder
shall be brought in its name as trustee for the Bondowners and all such rights of action upon or
under any of the Parity Bonds or the provisions of this ordinance may be enforced by the
Bondowners Committee without the possession of any of the Parity Bonds, and without the
production of the same at any trial or proceedings relative thereto except where otherwise
required by law, and the respective owners of said Parity Bonds, by taking and holding the same,
shall be conclusively deemed irrevocably to appoint the Bondowners Committee the true and
lawful trustee for the respective owners of said bonds, with authority to institute any such action,
suit or proceeding; to receive as trustee and deposit in trust any sums becoming distributable for
the receipt of such money, and to do all acts with respect thereto that the Bondowner might have
done in person, provided, however, that nothing herein contained shall be deemed to authorize or
empower the Bondowners Committee to consent to, accept or adopt, on behalf of any
Bondowner, any plan of reorganization or adjustment affecting the Parity Bonds or the City or
any right of any owner thereof, or to authorize or empower the Bondowners Committee to vote
the claims of the owners thereof in any receivership, insolvency, liquidation, bankruptcy,
reorganization or other proceeding to which the City shall be a party, and provided further,
however, that any Bondowner or Bondowners may by mutual agreement transfer title to the
Parity Bonds held by him or them to the Bondowners Committee, or may by agreement with
other Bondowners create or organize a separate trustee or bondowners committee and may
confer or organize a separate trustee or bondowners committee and may confer upon the
Bondowners Committee or such separate trustee or bondholders committee and may confer or
organize a separate trustee or bondowners committee and may confer upon the Bondowners
Committee or such separate trustee or bondholders committee, such powers and duties and such
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agreement or agreements shall provide, and the provisions of this ordinance shall not be
construed as a limitation on the powers and duties which consenting Bondowners may by
agreement confer on the Bondowners Committee or such separate trustee or bondholders
committee. The Bondowners Committee shall have full powers of substitution and delegation in
respect to any of the powers hereby granted.
Section 8.5 Direction of Actions of Bondowners Committee by Majority Owners. The
owners of not Tess than a majority in principal amount of the Parity Bonds at the time
Outstanding, may direct the time, method and place of conducting any proceeding for any
remedy available to the Bondowners Committee, or exercising any trust or power conferred upon
the Bondowners Committee, provided that the Bondowners Committee shall be provided with
reasonable scrutiny and indemnity and shall have the right to decline to follow any such
direction only (i) if the Bondowners Committee shall be advised by counsel that the action or
proceeding so directed may not lawfully be taken; or (ii) if the Bondowners Committee in good
faith shall determine that the .action or proceeding so directed would involve the Bondowners
Committee in personal liability or that the action or proceeding so directed would be unjustly
prejudicial to the owners of Panty Bonds not parties to such direction.
Section 8.6 Suits by Individual Bondowners. No owner of any one or more of the
Panty Bonds shall have any right to institute any action, suit or proceeding at law or in equity for
the enforcement of any provision of the Ordinance or the execution of any trust under the
Ordinance or for any remedy under the Ordinance, unless an Event of Default shall have
happened and be continuing, and unless no Bondowners Committee has been created as herein
provided, but any remedy herein authorized to be exercised by the Bondowners Committee, may
be exercised individually by any Bondowner, in his own name and on his own behalf or for the
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benefit of all Bondowners, in the event no Bondowners Committee has been created, or with the
consent of the Bondowners Committee, if such Bondowners Committee has been created;
provided, however, that nothing in the Ordinance or in the Parity Bonds shall affect or impair the
obligation of the City, which is absolute and unconditional, to pay at the respective dates of
maturity and places therein expressed the principal of and premium, if any, and interest on the
Parity Bonds to the respective owners thereof, or affect or impair the rights of action, which are
also absolute and unconditional, of any owner to enforce the payment of his Parity Bonds, or to
reduce to judgment his claim against the City for the payment of the principal and interest on his
Parity Bonds, without reference to, or consent of, the Bondowners Committee or any other
owner of the Parity Bonds.
Section 8.7 Waivers of Default. No delay or omission of the Bondowners Committee
or of any Bondowner to exercise any right or power arising upon the happening of an Event of
Default shall impair any right or power or shall be construed to be a waiver of any such Event of
Default or to be an acquiescence therein; and every power and remedy given by this Article to
the Bondowners Committee or to the Bondowners may be exercised from time to time and as
often as may be deemed expedient by the Bondowners Committee or by such owners.
The Bondowners Committee or the owners of not less than 50% in principal amount of
the Parity Bonds at the time Outstanding, or their attomeys-in-fact duly authorized, may on
behalf of the owners of all of the Parity Bonds waive any past default under the Ordinance and
its consequences; except a default in the payment of the principal of and premium, if any, and
interest on any of the Parity Bonds. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
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Section 8.8 Remedies Granted in Ordinance Not Exclusive. No remedy by the terms
of the Ordinance conferred upon or reserved to the Bondowners Committee or the Bondowners
is intended to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under the Ordinance or existing
at law or in equity or by statute on or after the date of adoption of the Ordinance.
ARTICLE IX
BONDOWNERS MEETINGS
Section 9.1 Call of Bondowners Meetings. The City, the Bondowners Committee or
the owners of not less than 20% in principal amount of the Parity Bonds then outstanding may at
any time call a meeting of the owners of the Parity Bonds. Every such meeting shall be held at
such place in the City of Yakima, State of Washington, or in the City of Seattle, State of
Washington, as may be specified in the notice calling such meeting. Written notice of such
meeting, stating the place and time of the meeting and in general terms the business to be
transacted, shall be mailed to the Bondowners by the City, the Bondowners Committee or the
Bondowners calling such meeting not less than 30 nor more than 60 days before such meeting,
and shall be published at least once a week for four successive calendar weeks on any day of the
week, the date of first publication to be not less than 30 or more than 60 days preceding the
meeting; provided, however, that the mailing of such notice shall in no case be a condition
precedent to the validity of any action taken at any such meeting. The expenses of publication of
such notice shall be paid or reimbursed by the City. Any meeting of Bondowners shall,
however, be valid without notice if the owners of all Parity Bonds then Outstanding are present
in person or by proxy or if notice is waived before or within 30 days after the meeting by those
not so present. -
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Section 9.2 Notice to Bondowners. Except as otherwise provided in the Ordinance,
any provision in this ordinance for the mailing of a notice or other paper to Bondowners shall be
fully complied with if it is mailed postage prepaid to each registered owner of any of the Parity
Bonds then outstanding at his/her address, if any, appearing upon the Bond Register, and any
provision in this ordinance contained for publication of a notice or other matter shall require the
publication thereof in The Bond Buyer in the City of New York, State of New York (or in lieu of
publication in The Bond Buyer in a daily newspaper printed in the English language and
customarily published on each business day and of general circulation in the Borough of
Manhattan, the City of New York, State of New York), and also in a daily newspaper printed in
the English language and customarily published on each business day and of general circulation
in the City of Seattle, State of Washington.
Section 9.3 Proxies; Proof of Ownership of Parity Bonds. Attendance and voting by
Bondowners at such meetings may be in person or by proxy. Owners of Parity Bonds, by an
instrument in writing under their hands, may appoint any person or persons, with full power of
substitution, as their proxy to vote at any meeting for them.
Any registered owner of Parity Bonds shall be entitled in person or by proxy to attend
and vote at such meeting as owner of the Parity Bonds registered or certified in his/her name
without producing such Parity Bonds, and such persons and their proxies shall, if required,
produce such proof of personal identity as shall be satisfactory to the secretary of the meeting.
All proxies presented at such meeting shall be delivered to the inspectors of votes and filed' with
the secretary of the meeting. All other persons seeking to attend or vote in such meeting must
produce the Parity Bonds claimed to be owned or represented at such meeting.
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The vote at any such meeting of the owner of any Parity Bond entitled to vote thereat
shall be binding upon such owner and upon every such subsequent owner of such Parity Bond
(whether or not such subsequent owner has notice thereof).
Section 9.4 Execution of Instruments by Bondowners. Any request, direction, consent
or other instrument in writing required or permitted by this ordinance to be signed or executed by
Bondowners may be in any number of concurrent instruments of similar tenor, and may be
signed or executed by such Bondowners in person or by agent appointed by an instrument in
writing. Proof of the execution of any such instrument shall be sufficient for any purpose of this
ordinance if the fact and date of the execution by any person of any such instrument may be
proved by either (a) an acknowledgment executed by a notarypublic or other officer empowered
to take acknowledgments of deeds to be recorded in the particular jurisdiction, or (b) an affidavit
of a witness to such execution sworn to before such a notary public or other officer. Where such
execution is by an officer of a corporation or association or a member of a partnership on behalf
of such corporation, association or partnership, such acknowledgment or affidavit shall also
constitute sufficient proof of his/her authority.
The foregoing shall not be construed as limiting the City to such proof, it being intended
that the City may accept any other evidence of the matters herein stated which it may deem
sufficient. Any request or consent of any Bondowner shall bind every future owner of the same
Parity Bond in respect of anything done by the City in pursuance of such request, direction or
consent.
The right of a proxy for a Bondowner to act may be approved (subject to the City's right
to require additional proof) by a written proxy executed by such Bondowner as aforesaid.
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Section 9.5 Appointment of Officers at Bondowners Meetings. Persons named by the
City or elected by the owners of a majority in principal amount of the Parity Bonds represented
at the meeting in person or by proxy in the event the City is not represented at such meeting,
shall act as temporary chairperson and temporary secretary of any meeting of Bondowners. A
permanent chairperson and a permanent secretaryof such meeting shall be elected by the owners
of a majority in principal amount of the Parity Bonds represented at such meeting in person or by
proxy. The permanent Chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at such meeting, except votes on the election of chairperson and
secretary as aforesaid, and who shall make and file with the secretary of the meeting and with the
City their verified report of all such votes cast at the meeting.
Section 9.6 Quorum at Bondowners Meetings. The owners of not less than the
principal amount of the Parity Bonds required for any action to be taken at such meeting must be
present at such meeting in person or by proxy in order to constitute a quorum for the transaction
of business, less than a quorum, however, having power to adjourn from time to time without •
any other notice than the announcement thereof at the meeting; provided, however, that, if such
meeting is adjourned by less than a quorum for more Than ten days, notice thereof shall be
published by the City at least five days prior to the adjourned date of the meeting.
ARTICLE X
AMENDMENTS TO ORDINANCE
Section 10.1 Amendments.
(a) The Council from time to time and at any time may pass an ordinance or
ordinances amending this ordinance, which ordinance or ordinances thereafter shall become a
part of this ordinance, for any one or more or all of the following purposes:
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(I) To add to the covenants and agreements of the City in (his ordinance,
other covenants and agreements thereafter to be observed, which shall not adversely affect the
interests of the owners of any Parity Bonds, or to surrender any right or power herein reserved.
(2) To make such provisions for the purpose of curing any ambiguities or of
curing, correcting or supplementing any defective provision contained in this ordinance or any
ordinance authorizing Additional Bonds in regard to matters or questions arising under such
ordinances as the Council may deem necessary or desirable and not inconsistent with such
ordinances and which shall not adversely affect, in any material respect, the interest of the
owners of Parity Bonds.
Any such amending ordinance may be adopted without the consent of the owners of any
Parity Bonds outstanding, notwithstanding subsection (b) of this section.
(b) With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bond at the time Outstanding, the Council may pass an ordinance or
ordinances supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this ordinance or of any amending ordinance;
provided, however, that no such amending ordinance shall:
(1) Extend the fixed maturity of any Parity Bonds, or reduce the rate of
interest thereon, or extend the time of payment of interest from their due date, or reduce the
amount of the principal thereof, or reduce any premium payable on the redemption thereof,
without the consent of the owner of each bond so affected; or
(2) Reduce the aforesaid percentage of Bondowners required to approve any
such amending ordinance, without the consent of the owners of all of the Parity Bonds then
Outstanding.
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1t shall not be necessary for the consent of Bondowners under this subsection (b) to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof.
(c) Upon the adoption of any ordinance pursuant to the provisions of this Section,
this ordinance shall be deemed to be modified and amended in accordance therewith, and the
respective rights, duties and obligations of the City under this ordinance and all owners of Parity
Bonds outstanding hereunder shall thereafter be determined, exercised and enforced thereunder,
subject in all respects to such modification and amendments, and all terms and conditions of any
such supplemental ordinance shall be deemed to be part of the terms and conditions of this
ordinance for any and all purposes.
(d) Parity Bonds executed and delivered after the execution of any amending
ordinance passed pursuant to the provisions of this section may have a notation as to any matter
provided for in such amending ordinance, and if such supplemental ordinance shall so provide,
new bonds so modified as to conform, in the opinion of the Council, to any modification of this
ordinance contained in any such supplemental ordinance, may be prepared and delivered without
cost to the owners of any affected Parity Bonds then outstanding, upon surrender for cancellation
of such bonds with all unmatured coupons and all matured coupons not fully paid, in equal
aggregate principal amounts.
Section 10.2 Obtaining Approval of Amendments at Bondowners Meeting. The City
may at any time adopt an ordinance amending the provisions of this ordinance to the extent that
such amendment is pernitted by the provisions of this Article X, to take effect when and as
provided in this Section. At any time thereafter such ordinance may be submitted by the City for
approval to a meeting of the bondowner duly convened and held in accordance with the
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provisions of this ordinance. A record in duplicate of the proceedings of each meeting of the
Bondowners shall be prepared by the permanent secretary of the meeting and shall have attached
thereto the original reports of the inspectors of votes and affidavits by a person or persons having
knowledge of the facts, showing a copy of the notice of the meeting and setting forth the facts
with respect to the mailing and publication thereof under the provisions of this ordinance. Such
a record shall be signed and verified by the affidavits of the permanent chairperson and the
permanent secretary of the meeting, and one duplicate thereof shall be delivered to the City.
Any record so signed and verified shall be proof of the matter therein stated. If the ordinance of
the City making such amendment shall be approved by a resolution duly adopted at such meeting
of bondowners by the affirmative vote of the owners of the required percentages of Parity Bonds,
a notice stating that a resolution approving such amendment has been so adopted shall be mailed
by the City to each bondholder who has requested such notice (but failure so to mail copies of
such notice shall not affect the validity of such resolution) and shall be published at lest once in
the manner provided in Section 9.2 hereof. Proof of such mailing and publication by the
affidavit or affidavits of a person or persons having knowledge of the facts shall be filed with the
City. Such ordinance of the City making such amendment shall be deemed conclusively to be
binding upon the City, the paying agents, and the owners of all Parity Bonds at the expiration of
30 days after the publication of the notice provided for in this Section, except in the event of a
final decree of a court of competent jurisdiction setting aside such ordinance or annulling the
action taken thereby in a legal action or equitable proceeding for such purpose commenced
within such period; provided that the City and any paying agents during such 30 day period and
any such further period during which such action or proceeding may be pending shall be entitled
in their absolute discretion to take such action, or to refrain from taking such action, with respect
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to such ordinance as they may deem expedient. .Nothing in this ordinance contained shall be
deemed or construed to authorize or permit, by reason of any call of a meeting of Bondowners or
of any right conferred hereunder to make such a call, any hindrance or delay in the exercise of
any rights conferred upon or reserved to the paying agents or the Bondowners under any of the
provisions of this ordinance.
Section 10.3 Alternate Method of Obtaining Approval of Amendments. The City may
at any time adopt an ordinance amending the provisions of this ordinance, or of any Parity
Bonds, to the extent that such amendment is permitted by the provisions of this Article, to take
effect when and as provided in this Section. Upon adoption of such ordinance, a request that
Bondowners consent thereto shall be mailed by the City to the Bondowners and notice that the
City is requesting Bondowners to consent to such amendment shall be published at least once in
the manner provided in Section 9.2 hereof. Such ordinance shall not be effective unless and until
there shall have been filed with the City the written consents of the percentages of owners of
outstanding Bonds specified herein and a notice shall have been published as hereinafter in this
Section provided. Each such consent shall be effective only if accompanied by proof of
ownership of the Parity Bond for which such consent is given. A certificate or certificates of the
Clerk of the City that he/she has examined such proof and that such proof is sufficient shall be
conclusive that the consents have been given by the owners of the Parity Bonds described in
such certificate or certificates. Any such consent shall be binding upon the owner of the Parity
Bonds giving such consent and on every subsequent owner of such Panty Bonds (whether or not
such subsequent owner has notice thereof). A notice stating that the ordinance has been
consented to by the owners of the required percentages of Bonds and will be effective as
provided in this Section, may. be given to the Bondowners by mailing such notice to the
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bondholders, and shall be given by publishing the same at least once in the manner provided in
Section 9.2 hereof A record, consisting of the papers required by this Section to be filed with
the City shall be proof of the matters therein stated, and this ordinance shall be deemed
conclusively to be binding upon the City and the owners of all Parity Bonds at the expiration of
30 days after the notice last provided for in this Section, except in the event of a final decree of a
court of competent jurisdiction setting aide such consent or annulling the action taken thereby in
a legal action or equitable proceeding for such purpose commenced within such period.
Section 10.4 Amendment of Ordinance in Any Respect by Approval of All
Bondowners. Notwithstanding anything contained in the foregoing provisions of this Article, the
rights and obligations of the City and of the owners of the Parity Bonds, and the terms and
provisions of the Parity Bonds and of this ordinance, may be amended in any respect with the
consent of the City, by the affirmative vote of the owners of all said Bonds then Outstanding at a
meeting of Bondowners called and held as hereinabove provided, or upon the adoption of an
ordinance by the City and the consent of the owners of all the Parity Bonds then Outstanding,
'such consent to be given as provided in Section 10.3 except that no notice to bondowners either
by mailing or publication shall be required, and the amendment shall be effective immediately
upon such unanimous vote or written consent of all of the Bondowners.
Section 10.5 Exclusion of Bonds Owned by City. Parity Bonds owned or held by or for
the account of the City shall not be deemed Outstanding for the purpose of any vote or consent
or other action or any calculation of Outstanding Bonds in this ordinance provided for,, and shall
not be entitled to vote or consent or take any other action in this ordinance provided for. • --
Section 10.6 Endorsement of Amendment on Bonds. Parity Bonds delivered after the
effective date of any action amending this ordinance may bear a notation by endorsement or
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otherwise as to such action, and in that case upon demand of the owner of any Parity Bond
Outstanding at such effective date and presentation of his/her Parity Bond for that purpose at the
principal office of the paying agents, suitable notation shall be made on such Parity Bond by the
paying agent as to any such action. If the City shall so determine, new Parity Bonds so modified
as in the opinion of the City and its counsel to conform to such action shall be prepared,
delivered and upon demand of the owner of any Parity Bond then outstanding shall be exchanged
without cost to such Bondowner for Parity Bonds then outstanding hereunder, upon surrender of
such Bonds with any unmatured coupons pertaining thereto.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Undertaking to Provide Ongoing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's written undertaking for
the benefit of the owners of the 2003 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 retained earnings for the
System prepared in accordance with the Budget Accounting and Reporting System prescribed by
the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and
generally of the type included in the official statement for the 2003 Bonds under the heading
"Water and Sewer Operating Statement";
(2) Principal amount of Bonds of the System;
(3) Debt service coverage for Outstanding Bonds; •
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P UPOocn I ML06
(4) Rates for the System; and
(5) Number of customers of the System.
Such annual information and operating data described above shall be provided on or
before nine months after the end of the City's Fiscal Year. The City's current Fiscal Year ends
December 31. The City may adjust such Fiscal Year by providing written notice of the change
of Fiscal Year 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 NRMSIR, 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 pari of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement for the System prepared in accordance with
the Budget Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09.200 (or any successor statute) 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 2003 Bonds, if material:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties;
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P 000001E oNlvro
Bonds;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions or events affecting the tax-exempt status of the 2003
(7)
Modifications to the rights of 2003 Bond owners;
(8) Bond calls (optional, contingent or unscheduled Bond calls other than
scheduled sinking fund redemptions for which notice is given pursuant to the Commission's
Exchange Act Release 34-23856);
(9) Defeasances;
(10) Release, substitution or sale of property securing repayment of the 2003
Bonds; and
(11) Rating changes.
Solely for purposes of disclosure and not intending to modify this undertaking, the City
advises that no property secures repayment of the 2003 Bonds.
(d) Notification Upon Failure to Provide Financial Data. 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.
(e) Termination/Modification. The City's obligations to provide annual financial
information and notices of material events shall tenninate upon the legal defeasance, prior
redemption or payment in full of all of the 2003 Bonds. This section, or any provision hereof,
shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to
the effect that those portions of the Rule which require this section, or any such provision, are
invalid, have been repealed retroactively or otherwise do not apply to the 2003 Bonds; and
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P Ma0P0001E 03/I7/01
(2) notifies each then existing NRMSIR and the SID, if any, of such opinion and the cancellation
of this section.
Notwithstanding any other provision of this motion, the City may amend this
Section 1 1.1, and any provision of this Section 11.1 may be waived, with an approving opinion
of nationally recognized bond counsel in accordance with the Rule. In the event of any
amendment or waiver of a provision of this Section 11.1, the City shall describe such amendment
in the next annual report, and shall 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 shall be given in the same manner as for
a material event under subsection (c), and (ii) the annual report for the year in which the change
is made should 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.
(f) Bond Owner's Remedies Under This Section. The right of any Bond Owner or
Beneficial Owner of 2003 Bonds to enforce the provisions of this section shall be limited to a
right to obtain specific enforcement of the City's obligations hereunder, 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 2003 Bonds hereunder. 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 2003 Bonds, including persons holding 2003 Bonds through
nominees or depositories.
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P.M:O'OOM! 03/12/06
0.
Section 11.2 Severability. If any one or more of the covenants or agreements provided
in this ordinance to be performed on the part of the City shall be declared by any court of
competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of any Parity Bonds.
. Section 11.3 General Authorization. The Mayor and Director of Finance and Budget,
and each of the other appropriate officers, agents and representatives of the City are each hereby
authorized and directed to take such steps, to do such other acts and things, and to execute such
letters, certificates, agreements, papers, financing statements, assignments or instruments as in
their judgment may be necessary, appropriate or desirable in order to carry out the terms and
provisions of, and complete the transactions contemplated by this ordinance.
Section 11.4 Prior Acts. All acts taken pursuant to the authority of this ordinance but
prior to its effective date are hereby ratified and confirmed.
•
Section 11.5 Effective Date. This ordinance shall be effective 30 days after its passage,
approval and publication as provided by law.
PASSED by the Council of the City of Yakima at a regular meeting thereof, held
this th day of October, 2003,
ATTEST
City Clerk
-58-
CITY OF YAKIMA, WASHINGTON
By
Mayor
P10000021 63/12/06
APPROVED AS TO FORM.
City Attorney
First Reading:
Publication Date:
Effective Date:
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P,a)aioaair 011v0
EXHIBIT A
DESCRIPTION OF PROJECT
The Project includes the following improvements to the City's treatment plant.
City of Yakima
Wastewater Treatment plant improvements
To provide redundancy to several operations of the treatment plant. Redundancy is required to meet the
Washington Department of Ecology (WDOE) criteria to provide backup operations to major processes of the plant
to assure compliance with the City's NPDES Permit and associated rules and regulations
Solids dewatering -only one of two centrifuges'is functional any longer for dewatering Biosolids and it requires
extensive maintenance to continue operating A new centrifuge or alternate source of
dewatering the biosolids is required to maintain compliance when the older centrifuge is out of
service
Solids thickening - the waste activated sludge (WAS) thickening process reduces the volume of solids sent to the
dewatering processes There is currently only one dissolved air flotation thickener (DAFT) to
thicken secondary sludge. A second thickening unit is needed to meet Ecology redundancy
criteria.
Secondary clarification - the secondary clarifiers are the final sedimentation process prior to discharge to the
Yakima River Reliability standards for WDOE require that 75% of the design flow for this
final process should be handled with one unit off line Based on this the two existing secondary
clarifiers are at or near hydraulic capacity and an additional secondary clarifier is required to
meet Ecology redundancy criteria.,
New RAS/WAS Pump Station -the RAS/WAS pump station is used to transport Retum Activated Sludge (RAS)
from the secondary clarifiers back to the aeration basin flow control system through two
constant speed open screw pumps. Waste activated sludge is pumped from the two existing
secondary clarifiers through two pumping systems With the addition of a new secondary
clarifier or future new aeration basins a new RAS/WAS pumping station would be required.
With a new RAS/WAS pumping station current problems with the control of the RAS pumping
flow split would be resolved as well as having sufficient capacity to handle peak hour flow
conditions
Emergency Power - the emergency power system supplies a second source of power to assure minimum
treatment is provided under utility power failures The existing generator set was installed in
1972 and at a minimum requires a complete inspection/overhaul Another generator set is
required to operate the minimum treatment processes at present.
Replacement of Blower VFDs - the VFDs that operate the four 400 horsepower blowers are far less efficient and
generate more harmonic distortion on the electrical power system than newer technology They
are at the end of their useful life and are hard to find parts for All four need to be replaced
S 245,000
The total cost for these improvements is estimated to be $ 9,142,800
A-1
P.sroaxune avivaa
EXHIBIT B
UNITED STATES OF AMERICA
NO. $
STATE OF WASHINGTON
CITY OF YAKIMA
WATER AND SEWER REVENUE BOND, 2003
INTEREST RATE: _% MATURITY DATE: CUSIP NO.:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Yakima, 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 indicated above and to pay interest
from , 2003, until payment of this bond at the Interest Rate set forth above, payable
on I, 2004, and semiannually thereafter on the first days of each succeeding
and . 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 liilly 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 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 authorized issue of bonds of like date and tenor,'except as to
number, amount, rate of interest and date of maturity, in the aggregate principal amount of
$ (the `Bonds"), and is issued pursuant to Ordinance No. 2003-_, passed by the
City Council on October 7 , 2003, and Resolution No. of the City Council adopted on
, 2003 (collectively, the "Bond Ordinance"), to finance certain improvements to the
City's water and sewer system and pay costs of settling a lawsuit. Capitalized terms used in this
bond and not otherwise defined shall have the meanings given them in the Bond Ordinance.
The Bonds are subject to optional [and mandatory] redemption as set forth in the Bond
Ordinance.
B-1
PwDOnDOOcE o,12/08
The Bonds are payable solely from the special fund of the City known as the Water and
Sewer Revenue Bond Fund" (the "Bond Fund"). The City has irrevocably obligated and bound
itself to pay into the Bond Fund out of Revenue of the System or from such other money as may
be provided for such purpose certain amounts necessary to pay and secure the payment of the
principal and interest on such bonds.
The City has pledged to set aside from the Revenue Fund out of the Revenue of the
System and to pay into the Bond Fund the various amounts required by the Bond Ordinance to
be paid into and maintained in such Fund within the times provided by the Bond Ordinance.
To the extent more particularly provided by the Bond Ordinance, the amounts so pledged
to be paid from the Revenue Fund out of Gross Revenues into the Bond Fund shall be a lien and
charge thereon equal in rank to the lien and charge upon Gross Revenues of the amounts
required to pay and secure the payment of the City's Outstanding Parity Bonds, and any
Additional Bonds hereafter issued and superior to all other liens and charges of any kind or
nature, except the Costs of Maintenance and Operation of the System.
The City has further bound itself to maintain the System in good repair, working order
and condition, to operate the same in an efficient manner and al a reasonable cost, and to
establish, maintain and collect rates and charges in each calendar year that will make available,
for the payment of the principal of and interest on Outstanding Bonds, Net Revenue in an
amount that will be equal to the.Coverage Requirement.
The pledge of Gross Revenues and other obligations of the City under the Bond
Ordinance may be discharged at or prior to the maturity or redemption of the bonds of this issue
upon the making of provision for the payment thereof on the terns and conditions set forth in the
Bond Ordinance.
This Bond is a special limited obligation of the City and is not an obligation of the State
of Washington or any political subdivision thereof other than the City, and neither the full faith
and credit nor the taxing power of the City or the State of Washington is pledged to the payment
of this Bond.
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 has been
manually signed by the Bond Registrar.
This Bond is transferable only on the records maintained by the Bond Registrar for that
purpose upon the surrender of this Bond by the Registered Owner or his/her duly authorized
agent and only if endorsed in the manner provided hereon, and a new fully registered Bond of
like principal amount, maturity and interest rate shall be issued to the transferee in exchange.
Such exchange or transfer shall be without cost to the Registered Owner or transferee. The City
and Bond Registrar may deem the person in whose name this Bond is registered to be the
absolute owner for the purpose of receiving payment of the principal of and interest on this Bond
and for all other purposes.
13-2
P 100,C002E 03112105
The Bond Registrar is not required to issue, register, transfer or exchange any Bonds
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 the 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.
It is hereby certified that all acts, conditions and things required by the Constitution and
statutes of the State of Washington and the Charter and ordinances of the City to exist, to have
happened, been done and performed precedent to and in the issuance of this•Bond have
happened, been done and performed and that the issuance of this bond and the bonds of this
series does not violate any constitutional, statutory or other limitation upon the amount of
bonded indebtedness that the City may incur.
The City has caused this Bond to be executed by the manual or facsimile signature of the
Mayor and to be attested by the manual or facsimile signature of the Clerk, and has caused the
seal of the City to be impressed or imprinted on this bond, as of this _ day of , 2003.
ATTEST:
CITY OF YAKIMA, WASHINGTON
By /s/ manual or facsimile signature
Mayor
/s/ manual or facsimile signature
Clerk
The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially
the following form:
B-3
P 030001E 03/12/06
CERTIFICATE OF AUTHENTICATION
This is one of the Water and Sewer Revenue Bonds, 2003, of the City of Yakima,
Washington, dated I, 2003, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY, as
Bond Registrar
By
Authorized Signatory
ASSIGNMENT
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 does hereby irrevocably constitute and appoint
as attorney-in-fact to transfer
said bond on the books kept 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
13-4
P 11:0t0002E 03/iVOS
k. :
Appendix B
Form of Opinion of Bond Counsel
(This Page Intentionally Left Blank)
Preston !Gates' Ellis LLP
December , 2003
City of Yakima
Yakima, Washington
Seattle -Northwest Securities Corporation
Seattle, Washington
Re: City of Yakima, Washington,
Water and Sewer Revenue Bonds, 2003 Series A — $7,920,000
Water and Sewer Revenue Bonds, 2003 Series B — $9,000,000
Ladies and Gentlemen:
We have acted as bond counsel to the City of Yakima, Washington (the "City") and have
examined a certified transcript of the proceedings taken in the matter of the issuance by the City
of its Water and Sewer Revenue Bonds, 2003 Series A in the amount of $7,920,000 and its
Water and Sewer Revenue Bonds, 2003 Series B in the amount of $9,000,000 (together, the
`Bonds"), dated December 15, 2003 in the aggregate principal amount of $16,920,000. The
Bonds are issued pursuant to Ordinance No. 2003-64 of the City, passed on October 7, 2003 (the
"Bond Ordinance") and Resolution No. passed on December _, 2003, for the purpose of
financing the odor litigation settlement relating to the sewer system, repaying an interfund loan
made to the City, paying the costs of the Project, satisfying the Reserve Requirement,
capitalizing interest and paying costs associated with issuance of the Bonds. Capitalized terms
not otherwise defined in this opinion shall have the meanings given to such terms in the Bond
Ordinance.
The Bonds are subject to optional redemption as provided in the Bond Ordinance.
We have not been engaged nor have we undertaken to review the accuracy, completeness
or sufficiency of the official statement or other offering material related to the Bonds (except to
the extent, if any, stated in our supplemental opinion), and we express no opinion relating
thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to SEC
Rule 15c2-12.
As to questions of fact material to our opinion, we have relied upon representations of the
City contained in the Bond Ordinance and in the certified.proceedings and other certifications of
public officials and others furnished to us without undertaking to verify the same by independent
investigation.
A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES
925 FOURTH AVENUE SUITE 2900 SEATTLE, WA 98104.1158 TEL: (206) 623.7580 FAX: (206) 623-7022 WWW.PRESTONGATES.COM
Anchorage Coeur d'Alene Hong Kong Orange County Portland San Francisco Seattle Spokane Washington, DC
From such examination it is our opinion, as of this date and under existing law, that:
1. The Bonds have been legally issued and constitute valid special obligations of the
City, both principal thereof and interest thereon being payable solely out of a special fund of the
City known as the "Water and Sewer Revenue Bond Fund" (the "Bond Fund"), except to the
extent that the enforcement of the rights and remedies of the holders and owners of the Bonds
may be subject to the laws relating to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors heretofore or hereinafter enacted, to the extent
constitutionally applicable, and that their enforcement may also be subject to the exercise of
judicial discretion in appropriate cases.
2. The City has irrevocably bound itself to set aside and pay into said Bond Fund out
of the earnings and revenue of the water and sewer system of the City (the "System"), certain
fixed amounts necessary to pay the principal of and interest on the Bonds as the same become
due.
3. The City has further pledged that the payments to be made into said Bond Fund
out of the Gross Revenues of the System shall constitute a lien and charge upon such Gross
Revenues of the System superior to all other charges of any kind or nature whatsoever, except
for Costs of Maintenance and Operation and equal in rank to the lien and charge on such
earnings and revenue to secure the payment of the principal of and interest on the 1996 Bonds,
the 1998 Bonds, and any water and sewer revenue bonds of the City hereafter issued on a parity
with the Bonds. The City has reserved the right to issue such parity bonds on terms and
conditions set forth in the Bond Ordinance.
4. Interest on the Bonds is excluded from gross income for purposes of federal
income taxation pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the
"Code"). The Bonds are not private activity bonds. Interest on the Bonds is not an item of tax
preference for purposes of the federal alternative minimum tax imposed on individuals or
corporations, but is taken into account in the computation of adjusted current earnings for
purposes of the corporate alternative minimum tax under Section 55 of the Code. The opinions
stated in this paragraph are subject to the condition that the City comply with all requirements of
the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest
thereon be, or continue to be, excluded from gross income for federal income tax purposes. The
City has covenanted to comply with all such requirements. Failure to comply with certain of
such requirements may cause the interest on the Bonds to be included in gross income for federal
income tax purposes retroactive to the date of issuance of the Bonds.
The City has not designated the Bonds as "qualified tax-exempt obligations" pursuant to
Section 265(b)(3) of the Code. We express no opinion regarding any other federal, state or local
tax consequences arising with respect to ownership of the Bonds.
This opinion is given as of the date hereof, and we assume no obligation to update, revise
or supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention or any changes in law that may hereafter occur.
Very truly yours,
PRESTON GATES & ELLIS LLP
By
Nancy M. Neraas
K:125739\000671DG\DG L2048
DG:wp
(This Page Intentionally Left Blank)
Appendix C
Book -Entry Transfer System
(This Page Intentionally Left Blank)
THE DEPOSITORY TRUST COMPANY
Sample Official Statement Language
Describing Book -Entry -Only Issuance
(Prepared by DTC—bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the
securities (the "Securities"). The Securities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully registered Security certificate will be issued for [each issue
of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC.
[If, however, the aggregate principal amount of [any] issue exceeds $400 million, one certificate will be
issued with respect to each $400 million of principal amount and an additional certificate will be issued
with respect to any remaining principal amount of such issue.]
2. DTC is a limited -purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book -entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations, and certain ' other
organizations. DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks,
and trust companies that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Securities on DTC's records. The ownership interest of each actual
purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
.through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Securities are to be accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests
in Securities, except in the event that use of the book -entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Participants with DTC are registered
in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an
authorized representative of DTC. The deposit of Securities with DTC and their registration in the name
of Cede & Co., or such other DTC nominee, do not effect any change in beneficial ownership. DTC has
no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of
the Direct Participants to whose accounts such Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyances of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the
Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents.
Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their
benefit has agreed to obtain and transmit notices to Beneficial Owners, or in the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices
be provided directly to them.]
[6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.]
7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after
the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts Securities are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to Cede & Co., or such other"
nominee as may be requested, by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipts of funds and corresponding detail information from Issuer or
Agent on payable date in accordance with their respective holdings shown on DTC's records. Payments
by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any
statutory or regulatory requirements as may, be in effect from time to time. Payment of principal and
interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of
DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants shall
be the responsibility of DTC, and disbursement of such payments to Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through
its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the
Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the
Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of
tendered Securities to [Tender/Remarketing] Agent's DTC account.]
10. DTC may discontinue providing its services as securities depository with respect to the Securities
at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a
successor securities depository is not obtained, Security certificates are required to be printed and
delivered.
11. Issuer may decide to discontinue use of the system of book -entry transfers through DTC (or a
successor securities depository). In that event, Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
Appendix D
2002 Annual Financial Statements
(This Page Intentionally Left Blank)
Legislative Building Washington State Auditor
PO Box 40021
Olympia, Washington 98504-0021 Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
September 17, 2003
The Honorable Mayor and City Council
(360)902-0370
FAX (360) 753-0646
TDD Relay 1-800-833-6;
www•.wa govIsar
We have audited the accompanying general purpose financial statements of the City of Yakima, Yakima
County, Washington, as 01 and for the year ended December 31, 2002 end 2001, as listed in the table of
contents. These financial statements are the responsibility of the City's management. Our responsibility is
to express en opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
Our audits were performed pursuant to, the Revised Code of Washington 43 09.260, under which a full
report on the results of these audits will be issued. This report may include findings end recommendations
on compliance matters, intemal control procedures, and questionable costs or contingencies that would
not be material in relation to the City's general purpose financial statements taken as a whole.
In our opinion, the general purpose financial statements referred to above present fairly, in all material
respects, the financial position of the City of Yakima, Yakima County, Washington, as of December 31.
2002 and 2001, and the results of its operations and cash flows of its proprietary fund types and similar
nonexpendable trust funds for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the general purpose financial statements
taken as a whole. The combining, individual fund, and account group financial statements and schedules
listed in the table of contents are presented for purposes of additional analysis and are not a required part
of the general purpose financial statements of the City of Yakima, Yakima County, Washington. Such
information has been subjected to the auditing procedures applied in the audit of the general purpose
financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general
purpose financial statements taken as a whole.
The other data included in this report. designated as the statistical section in the table of contents, has not
been audited by us and, accordingly, we express no opinion on such data.
Sincerely,
BRIAN SONNTAG, CGFM
STATE AUDITOR
0 o 1
(This Page Intentionally Left Blank)
City of Yakima
Combined Balance Sheet
December 37, 2002
with comparatnx totals for Drcrmber 31, 2001
Page 1 of 4
GOVERNMENTAL FUND TYPES
Special Debt Capital
General Revenue Service Projects
ASSETS AND OTHER DEBITS
Cash & Equity in Pooled Investm'ts 57,704,560 $4,143,610 5790,627 59,043,759
Deposits w/ Fiscal Agent/Trustee 0 100 0 0
Receivables -
Taves 862,274 80,798 56,536 0
Accounts 174,086 160,777 0 8,248
Special Assessments 0 1,830 0 0
UD Assessments • Current 0 0 0 0
LID Assessments • Delinquent 0 0 4,619 0
LID Assessments • Deferred 0 0 249,266 0
Notes/Contracts 0 7,786,823 0 0
Interest/Penalties 287,596 70,630 0 66,866
Other Receivables 0 0 0 0
Due from other Funds 1,066,233 0 0 0
Interfund Loans Receivable 0 0 0 0
Due from other Government Units 26,964 505,424 0 415,556
lnvenlones 26,802 0 0 0
Investments, at amortized cost 0 2,710,492 9,370 1,527,201
Restncted Assets:
Cash 0 0 0 0
Fiscal Agent 0 0 0 0
Investments, at amortized cost 0 0 0 0
Property, Plant, and Equipment:
Land 0 0 0 0
Buildings 0 0 0 0
Other improvements 0 0 0 0
Machinery & Equipment 0 0 0 0
Accumulated Depreciation 0 0 0 0
Construction m Progress 0 0 0 0
Completed Const. • not Classif'd 0 0 0 0
Intangibles 0 0 0 0
Advances to other Funds 0 0 0 0
Unamortized Debt Issue Costs 0 0 0 0
Available in Debt Service • 0 0 . 0 0
To be Provided for Longterm Debt 0 0 0 0
TOTAL ASSETS AND OTHER DEBITS
510,148,515 515,460,484 51,110,418 511,061,630
The notes to the financial statements are an integral part of this statement.
2
am 0/29/X033 1132 All
FIDUCIARY
PROPRIETARY FUND TYPES FUND TYPES
Page 2 of 4
TOTALS
ACCOUNT GROUPS (MEMORANDUM ONLY)
Internal Trust General General December December
Enterprise Service and Agency Fised Assets 1!f Debt 31, 2002 31, 2001
57,788,160 54,721,234 51,794.634 30 50 535,986,584 527,292,179
O 10,620 0 0 0 10,720 336,001
O 0 0 0 0 999.608 786,028
3,333,242 485,729 ' 0 0 0 4,162,082 4,041,122
O 0 0 0 0 1,830 2,498
O 0 0 0 0• 0 5,520
O 0 0 0 0 4,619 7,321
0 0 0 0 0 249,266 309,782
12,203 0 0 0 0 7,799,026 8,022,185
81,257 149,410 1,293 0 0 657,052 601,677
25,050 0 0 0 0 25,050 25,050
0 0 0 0 0 1,066,233 153,003
O 1,420,000 0 0 0 1,420,000 710,000
1,220,858 0 0 0 0 2.168,802 2,800.466
189.270 140,895 0 0 0 356,967 369,768
6,653,403 3,149,663 58,318 0 0 14,108,447 17.291,398
2.085.356 0 0 0 0 2,085,358 1,749,415
425 0 0 0 0 425 409,185
0 0 0 0 0 0 501,712
2,186,700 0 0 8,480,732 0 10,667,432 10,429,922
62,694,835 16.984 0 34,378.629 0 97,090,448 95,255,520
67,308,535 0 0 5,958,663 0 73,267,198 68,677,939
12,513,665 12,250,535 0 8,279,693 0 33,043,893 32,456,618
-64,953,369 -7,153,229 0 0 0 -72,106,598 -68,403,654
11,081,452 0 0 1,678,280 0 12,759,732 9,949,446
2,232,245 0 0 0 0 2.232,245 2,232,245
221,830 0 0 0 0 221,830 221,830
0 0 0 0 0 0 0
37,553 0 0 0 0 37,553 41,939
0 0 0 0 804,211 804,211 930,386
0 0 0 0 30,123,456 30,123,456 25,163,890
5114,712,672 515,191,841 51,854,245 558,775,997 530,927,667 5259,243,469 5242,370,391
3
9ry 6 /29 /2003 932 AM
City of Yakima Page 3 of 4 Page 4 01 4
Combined Balance Sheet
December 31, 2002
with comparative totals for December 31, 2001 GOVERNMENTAL FUND TYPES PROPRIETARY FUND TYPES FUND TYPES ACCOUNT GROUPS (MEMORANDUM ONLY)
Special Debt Capital Internal Trust General General December December
General Revenue Service Projects Enterprise Service and Aaency Fixed Assets UT Debt 31, 2002 31, 2001
LIABILITIES
Warrants/Accounts Payable 5389,798 8358,750 s0 8515,565 52,655,910 5280.907 5711,042 SO SO 54.911,972 54,221,370
Wages/Benefsts Payable 2246,608 570,612 0 0 773.490 144,313 0 0 0 3,735,023 3.418.893
Compensated Absences Payable 0 0 0 0 860,167 162.033 0 0 3,547,165 4.569,365 4436.584
Claims and Judgements Payable 0 0 0 0 0 2,485.886 0 0 0 2,485,886 2,759,137
Unfunded Pension Liability 0 0 0 0 0 0 0 0 2,654,020 2,654.020 2280,260
Contracts Payable 0 28,086 0 84,956 0 0 0 0 0 113.042 114,980
Arbitrage Rebate Tax Payable 0 0 0 0 0 0
Due to other Funds 0 87,274 0 29,432 0 949,527 0 0 0 1,066,233 153.003
Interfund Loans Payable 0 0 0 0 0 0 0 0 0 0
Due to other Government Units 24,585 14,266 0 12,867 0 0 0 0 0 51,718 55.609
Mature Interest Payable 0 0 0 0 0 0 _ 0 0 0 0 0
Mature Bonds Payable 0 0 0 0 0 0 0 0 0 0 10,000
Accrued Payables 0 0 0 0 192.438 0 12.015 0 0 204,453 170,659
Deferred Compensation 0 0 0 0 0 0 0 0 0 0 0
Deposits Payable 214,524 8,707 404 0 206,776 0 0 0 0 430,411 503,281
Deferred Revenue 897,784 7,875,328 305,802 10,061 0 0 0 0 0 9.088,975 9,982,893
Custodial Accounts 0 0 0 0 0 0 0 0 0 0 -5.182
Current Portion Long-term Debt 0 0 0 0 690,259 0 0 0 0 690,259 684,077
Restricted Payables:
Matured Interest Payable 0 0 0 0 0 0 0 0 0 0 13,760
In Lieu of LID 0 0 0 0 0 0 0 0 0 0 0
Current Portion LT Debt 0 0 0 0 1.045.000 0 0 0 0 1,045,000 1.110,000
Bonds Payable 0 0 0 0 8,450,000 0 0 0 20020,000 28,470,000 24,880,000
Unamortized Bond Discount 0 0 0 0 -61,843 0 0 0 0 -61,843 -70,396
Deferred Amount On debt Refunding 0 0 0 0 -291,489 0 0 0 0 -291,489 -326,840
Capital Leases Payable - LT 0 0 0 0 0 0 0 0 39,057 39,057 63,215
Special Assessments Debt with
Government Commitment 0 0 0 0 0 00 0 92,000 92.000 141,330
Loans Payable - Long Term 0 0 0 0 5,472,715 0 0 0 3,770,374 9,243,089 10515,781
Notes Payable - Long Term 0 0 0 0 0 0 0 0 805,051 805,051 973,343
Advances from other Funds 0 0 0 0 1,420.000 0 0 0 0 1.920,000 710.000
Total Liabilities 3,773,299 8,943,023 306,206 652,881 21,413,423 4,022,666 723.057 0 30,927,667 70,762.222 66,795,757
FUND EQUITY AND OTHER CREDITS
FUND BALANCE
Reserved:
' Restricted Donations 0 1,514 0 0
Inventory 26,802 0 0 0
Encumbrances 522,005 1,004,139 0 787,996
Continuing Appropriations 0 0 0 6,948,742
Debt Service 0 0 804,212 0
Endowment 0 0 0 0
Probation Center 189,075
Active Employees Credited Reserves 50,812
Employee Retirem't System 0 0 0 0
Unreserved Designated 0 1,193,525 0 1,902,719
Unreserved 5,586,522 4,318,283 0 769,292
CONTRIBUTED CAPITAL 0 0 0 0
RETAINED EARNINGS
Reserved:
Debt Service 0 0 0 0
Replacement 0 0 0 0
Unreserved 0 0 0 0
INVESTMENT IN GEN. FIXED ASSETS 0 0 0 0
Total Equity and other Credits 6,375,216 6,517,461 804,212 10,408,749
TOTAL LIABILITIES, EQUITY AND OTHER CREDITS 510,148,515 515,460,484 51,110,418 511,061,630
The notes to the financial statements are an integral part of this statement.
4
erp a/fl/Lim 932 AM
00 0 0 0 1,514 1,514
0 0 0 0 0 26,802 30,082
0 0 0 0 0 2.314,140 2,141,669
00 0 0 0 6,948,742 1,1777,716
0 0 0 0 0 804,212 930,384
o ' 0 473,299 0 ' 0 473,299 467,878
189,075 239,096
50,812 48,307
0 0 657,889 0 0 657,889 538,436
0 0 0 0 0 3,096,244 2,570,799
0 0 0 0 0 10,674,097 10,544,166
74,178,880 1,044,233 0 0 0 75,223,113 75,223,113
2,085,358 0 0 0 0 2,085,358 2,251,127
0 8,738,074 0 0 0 8,738,074 8,121,844
17,035,011 1,386,868 0 0 0 18,421,879 19,570,607
0 0 0 58,775,997 -0 58,775,997 56,717,945
93,299,249 11,169,175 1,131,188 58,775,997 0 188,481,247 175,579,633
5119,712,672 515,191,841 51,854,245 558,775,997 530,927,667 5259,243,469 5242,370,390
5
cry a/29/2® 937 AM
City of Yakima
Combined Statement of Revenues, Expenditures, and Changes in Fund Balance
All Governmental Fund Types
for the year ended December 31, 2002
with comparative totals for the year ended December 31, 2001
Pagel of 2 Page 2 of 2
TOTAL
GOVERNMENTAL FUND TYPES (MEMORANDUM ONLY)
Special Debt Capital
General Revenue Service Prolecs 2002 2001
REVENUES
Taxes and Special Assessments 026,565,287 06,450,283 01,700,355 $1,244,146 535,960,071 533,251211
licenses and Permits 405,856 0 0 0 405,856 408,688
Intergovernmental Revenues 1,749,790 8,176,651 33,476 2,035,745 11,995,662 10,297,729
Charges for Services 3,723,724 1,356,745 0 0 5,080,469 4,754,505
Fines and Forfeits 1,631,877 0 0 0 1,631,877 1,553.036
Interest 558,359 178,532 887 268,141 1,005,919 1,592,005
Other Revenues 56,453 793,203 56,003 238,154 1,143,813 1,247,473
Total Revenues 34,691,346 16,955,414 1,790,721 3,786,186 57223,667 53,104,647
EXPENDITURES
CURRENT
General Government 8,662,004 81,895 0 0 8,743,899 8,123,493
Security of Persons and Property 20,794,442 2,672,667 0 253,798 23,720,907 22,094,466
Physical Environment 1,242,009 337,656 0 0 1,579,665 1,406,572
Transportation 0 6,525,012 0 787,114 7,312,126 6,693,929
Economic Environment 419.434 2,416,355 0 651 2,836,440 2.766,878
Mental 4i Physical Health 23.219 0 0 0 23,219 22,608
Cultural & Recreational Envmt 1,251,178 4,404,400 0 29,836 5,685,414 5,440,092
CAPITAL OUTLAY 93,030 476,960 0 3,421,149 3,991,139 2,568,115
DEBT SERVICE
• Principal retirement 131,390 259,984 1,824.330 157,418 2.373,122 2.255,895
Interest 81,013 34,533 925,924 27,571 1,069.041 1,072.147
Total Expenditures 32,697,719 17,209,462 2,750,254 4,677,537 57,334,972 52.444,195
Excess of Revenues over hinder) Expenditures 1,993,627 -254,048 •959,533 •891,351 •111,305 660,452
OTHER FINANCING SOURCES (USES)
Proceeds hom Capital lease Financing 0 0 0 0 0 0
• Proceeds from LT Debt -G.0 Bonds, 0 0 0 6,620,189 6,620,189 0
Proceeds from Intergovernmental Loans 0 0 '0 0 0 44,000
Other Note Proceeds 0 0 0 0 0 0
Operating Transfers In 110.000 2.320,132 850.549 529,861 3,810,542 3,377,996
Operating Transfers (Out) -1,919,371 -1,582,511 -17,188 •435,000 -3,954,070 -3,357,981
Sale of Fixed Assets 0 0 0 25,915 25,915 16,582
Comp. For Loss of Gen. Fixed Assets 2,774 31,190 0 0 33,964 34,919
Total other Financing Sources (Uses) -1,806,597 768,811 833,361 6,740,965 6,536,540 115,516
Excess of Revenues and Other Sources Over
(Under) Expenditures and Other Uses 187,030 514,763 -126,172 5,849,614 6,425,235 . 775,968
FUND BALANCES, January 1 6,191.466 6,002,698 930,384 4,559,135 17,683,683 16,853,603
Change in Reserve for Inventory -3,280 0 0 0 -3,280 •13,815
Prior Period Adjustment 0 0. 0 0 0 0
Residual Equity Transfer In 0 0 0 0 0 208,534
Residual Equity Transfer (Out) 0 0 0 0 0 •140.607
FUND BALANCES, December 31 06,375,216 56,517,461 0804,212 010,408,749 824,105,638 517,683,683
The notes to the financial statements are an integral Dart of this statement 6
we urermto eas AM
7
City of Yakima Page 1 of 2
Combined Statement of Revenues, Expenditures, and Changes in Fund Balance
Actual and Budget --General fund and Special Revenue Fund Types
for the year ended December 31, 2002
GENERAL FUND
Variance
Favorable
Actual Budget , IUnlavorable)
REVENUES
Taxes and Special Assessments 826,565,287 525,556,850 92008,437
Licenses and Permits 405,856 448,627 42,771
Intergovernmental Revenues 1.749,790 2,074,085 -324,295
Charges for Services 3,723,724 3,542,975 180,749
Fines and Forfeits 1,631,877 1,518,590 113.287
Interest 558,359 " 741,000 -182,641
Other Revenues 56.453 29,050 27,403
Total Revenues 34,691,346 33,911,177 780,169
EXPENDITURES
CURRENT
General Government . 8,662,004 9,369,572 707,568
Security of Persons and Property 20,794,442 21,476,669 682,227
Physical Environment 1,292,009 1,197,730 -44,279
Transportation 0 0 0
Economic Environment 419,434 420,910 1.476
Mental & Physical Health 23,219 21,659 -1,560
Cultural & Recreational Envmt 1,251,178 1,251.211 33
CAPITAL OUTLAY 93,030 115,117 22,087
DEBT SERVICE
Principal retirement 131.390 130,326 -1,064
Interest 81,013 80,909 -104
Total Expenditures 32,697,719 34,064,103 1,366,384
Excess of Revenues over /under) Expenditures 1,993,627 -152,926 2,146,553
OTHER FINANCING SOURCES (USES)
Proceeds from Intergovernmental Loans 0 0 0
Proceeds from LT Debt--G.O. Bonds 0 0 0
Operating Transfers In 110,000 110,000 0
Operating Transfers )Out) -1,919,371 -1,837,000 -82,371
Sale of Fixed Assets 0 0 0
Comp. For Loss of Gen. Fixed Assets 2,774 2.000 774
Total other Financing Sources (Uses) -1,806,597 -1,725,000 -81,597
Excess of Revenues and Other Sources Over
(Under) Expenditures and Other Uses 187,030 4,877.926 2,064,956
FUND BALANCES, January 1 6,191,466 4,273,072 1,918,394
Change in Reserve for Inventory -3,280 0 -3,280
Residual Equity Transfer In 0 0 0
Residual Equity Transfer (Out) 0 0 0
FUND BALANCES, December 31 56,375,216 52,395,146 93,980,070
The notes to the financial statements are an integral pan of this statement.
R
ary 1/29/2033 931 AM
Page 2 of 2
TOTAL
SPECIAL REVENUE FUNDS (MEMORANDUM ONLY)
Actual
Variance
Favorable
Budget (Unfavorable)
Variance
Favorable
Actual Budget (Unfavorable)
96,450,283 96265,287 8184,996 933,015,570 931,822,137
O 0 0 405,856 448,627
8,176,651 10,928,441 -2,751,790 9,926,441 13,002,526
1,356,745 1,431,608 -74,863 5,080,469 4,974,583
O 0 0 1,631,877 1,518,590
178,532 216,127 -37,595 736,891 957,127
793,203 712,594 80,609 849.656 741,644
91,193,433
42.771
-3,076.085
105,886
113,287
-220,236
108,012
16,955,414 19,554,057 -2,598,643 51,646,760 53.465,234 -1,818,474
81,895 105,712 23,817 6,743,899
2,672,667 2,738,729 66,062 23,467,109
337,656 376,366 38,710 1,579,665
6,525,012 10,112,595 3,587,583 6,525,017
2.416355 3,380,112 963,757 2,835,789
O 0 0 23,219
4.404,400 4,612,001 207,601 5,655,578
476,960 898,078 421,118 569,990
9,475,284
24215,398
1,574,096
10,112,595
3,801,022
21,659
5,863,212
1,013,195
731,385
798,289
-5,569
3,587,583
965,233
-1,560
207,634
443,205
259,984 259,789 -195 391,374 390,115 -1,259
34,533 34,728 195 115,546 115,637 91
17,209,462 22,518,110 5,308,648 49,907,181 56,582,213 6,675.032
-254,048 -2,964,053 2,710,005 1,739379 -3.116,979 4,856,558
O 0 0 0 0 0
0 2,205,772 -2,205,772 0 2.205,772 •2,205,772
2,320,132 -1,870,429 4,190,561 - 2,430,132 •1,760.429 4,190,561
-1,582,511 0 -1,582,511 -3,501,882 -1,837,000 -1,664,882
0 0 0 0 0 0
31,190 20,000 11.190 33,964 22,000 11,964
768,811 355,343 413468 -1,037,786 •1,369,657 331,871
514,763 -2,608,710 3,123.473 701,793 -4,486,636 5,188.429
6,002,698 5,038,498 964,200 12,194,164 9,311,570 2,882,594
0 0 0 -3,280 0 -3.280
0 0 0 0 0 0
0 0 0 0 0 0
56517,461 52,429,788 54.087.673 512,892,677 84,824,934 98,067,743
9
rep 8/)9 /1001 934 AM
City of Yakima
Page 1 of e
Combined Statement of Revenues, Expenses, and Changes in Fund Equities -
AII Proprietary Fund Types and Similar
Trust Funds
for the fiscal year ended December 31,
2002
roifh comparative totais for the year ended December
31, 2007
TOTAL
PROPRIETARY FUND TYPE' FIDUCIARY FUND TYPES
(MEMORANDUM ONLY)
tnlemal Non
-Expendable
Pension
Enterprise
Service
Trust
Trust
2002
2001
OPERATING REVENUES
Charges for insurance
50
$1,181,514
50
s0
$1,181,514
5883,904
Charges for Services
21,211,421
4,137579
7,455
0
25,356,455
23,343,634
Employer Contributions
0
6,237,098
0
1,325,372
7,562,470
6,879,874
Employee Contributions
0
1,661,734
0
0
1,661,734
1,399,924
Interest Revmue
0
0
12,465
5,260
17,725
25,504
Other Operating Revenues
3,018
69,589
0
0
72,607
55,043
Total Operating Revenues
212]4,439
13287,514
19,920
1,330,632
35,652.505
32,587,883
OPERATING EXPENSES
Operations and Maintenance
13,827,102
3,634233
0
0
17,461,335
16,651,199
Administration/Overhead
3,533.559
1,871,452
0
23,363
5,428,374
4.295,439
Taxes
2,940,468
0
0
0
2,940,466
2,596,108
Depreciation/Amortization
3,933,131
1,003,401
0
0
4,936,532
4,677,002
Pension Benefits
0
0
0
680,448
680,448
675,228
Other Benefits
0
6,761,670
0
507,368
7.269.038
7,337,490
Total Operating Expenses
24234260
13270,756
0
1,211,179
3$716.195 36,232,466
Operating Income (Loss)
•3,019,821
16,758
19,920
119,453
-2,863,690
-3,644,583
NON-OPERATING REVENUES (EXPENSES)
Operating Grants and Subsidies
5,037,323
0
0
0
5,037,323
5,405,132
Proceeds of Long -Term Debt
0
0
0
0
0
0
Interest Revenue
414,773
446,318
0
0
861,091
1,120,898
Other Non -Operating Revenues
15,695
0
0
0
15,695
307,172
Interest Expenses
•541,993
0
0
0
-541,993
.567,732
Amortization of Bond Pay Discount
48,290
0
0
0
48.290
48,290
Gain (Loss) on Sale of Investments
0
0
0
0
0
0
Gain (Loss) on Fixed Assets Disposition
0
11,129
0
0
11,129
44,086
Non -Operating Revenue Nei of Expenses
4,8711,508
457,447
0
0
5,334,955
6,261,266
Income Before Operating Transfers
1,857,687
474,205
19,920
119,453
2,471,265
2.616,683
Capital Contributions
2,064,622
379,898
0
0
2,444,520
2,631,941
Operating Transfers In
356
0
0
0
356
0
Operating Transfers (Out)
•222.227
0
-]4,499
0
-236,726
•261,949
NET INCOME (LOSS)
3,700,438
854,103
5,421
119,453
4,679,415
4,986,675
TRUST FUND EQUITY CHANGES
Fund Balances, January 1
0
0
467,878
538,436
1,006,314
819,626
Fund Balance, December 31
0
0
473,299
657,889
1,131,188
1,006,314
PROPRIETARY FUND EQUITY CHANGES
Retained Earnings Balance, January 1
15,672,739
9,270,839
0
0
24,943,578
20,143,591
Prior Period Corrections
-25208
0
0
0
-252,808
0
Residual Equity Transfer In
0
0
0
0
0
0
Residual Equity Transfer (Out)
0
0
0
0
0
0
Retained Earnings Balance, December 31
19,120,369
10,124,942
0
0
29,245,311
24,943,578
Contributed Capital, January 1
74,178,880
1,044,233
0
0
75,223,113
75,223,113
Capital Grants Received
0
0
0
0
0
0
Other Contributed Capita
0
0
0
0
0
0
Residual Equity Transfer In
0
0
0
0
0
0
Residual Equity Transfer Out
0
0
0
0
0
0
Contributed Capital, December 31
74,178,880
1A44,233
0
0
75.221.113
752]3,113
Proprielary and Similar Trust Funds
Equities, December 31
593 299 49
511269275 5173299
5657,689
$105,599,612
$101,173,005
The notes to the financial statements are an integral part of this statement. 10
e,p snenomeis at4
11
Page 2 of.,
npa/7912aa]935 a
City of Yakima Page 1014
Combined Statement of Cash Flows- Page 2 of 4
All Proprietary Fund Types and Similar Trust Funds
for the year ended December 31, 2002
.nth c-paratiw toruli for the um. ended Decmi6er 31, 2001 -
Cash flows from operating activities:
Cash received from customers
Contributions received - employer and employee
Cash paid to suppliers for goods and services
Cash paid for salaries and benefits
Other operating revenues collected
Cash paid to claimants and benehcianes
Interest received on investrnents
Cash paid in It,. of I..
Net ash provided by operating activities
Cash flows from nonuplW financing activities:
Cash received from other Funds(lntertund Loans Receivable)
Cash advances to other Funds
Operating grants received
Operating transfers in from other funds
Operating transfers out to other funds
Residual Equity trawlers in from other funds
Residual Equiry transfers out to other funds
Net cash provided by noncapitl financing activities
Cash flows (Tom capital financing activities:
Proceeds from Public Works Trust Loan/Interfund loan
Proceeds for Debt Service from other governments
Cash contributions in aid of construction
Lid Contributions
Cash received from disposal of capital assets
Principal paid on revenue bonds
Principal paid on Public Works Trust Loan
Principal paid on Advances from other funds
Capital expenditures paid
Interest and other debt service paid
Capital grants received
Residual equity tansfer in
Residual equity transfer out
Nei cash used for capital financing activities
Cash flows from investing activities:
Proceeds Irom sale and maturity of investment securities
Interest received on investment '
Purchase of investment securities
Net cash provided by investing activities
Nei increase(decrease) in cash and cash equivalent
Cash and cash equivalent •i beginning of year
Cash and cash equivalent at end of year
Cash a1 the End of the Year Consist of:
Operating Fund Cash
Revenue bond reserve account cash
Revenue bond redemption account cash
Total cash at the end of the year
PROPRIETARY FUND TYPES
FIDUCIARY FUND TYPES
TOTAL
Internal
Non -Expendable
Pension
(MEMORANDUM ONLY)
Enterprise
Service
Trust
Trus(
2002
2001
520,757,786
5422035
- $7,455
s0
0
8.972525
0
1,32SX1
524,989,776
523,409,661
-9,338,382
-3,041,870
0
-22,757
10,297,897
9,082548
-8.635,534
-1,603,478
0
0
-12,403,009
-10.926517
3,018
69,569
0
0
-10,239,012
-9,859,767
0
-7,397210
0
•1,187,616
72,607
24,349
0
0
13,076
5,115
-8585,026
-7,664,915
-2286,188
0
0
0
18,191
26,131
500,700
1224,091
20,531
119,914
- -2286.188
-2,069,241
1,865236
2,022249
0
0
0
0
0
-710,000
0
0
0
0
5569,674
0
0
0
-710,000
-710,000
356
0
0
0
5569,674
3,692.190
0
0
-14,499
0
356
0
0
0
0
0
-14.499
-70,015
0
0
0
0
0
0
5570,030
-710,000
-14,499
0
0
0
4,845531
2.962,175
710,000
0
0
0
15,625
0
0
0
710.000
1529,937
1,678591
0
0
0
15.625
307,016
0
0
0
0
1,678591
925,912
70
41,098
0
0
0
0
-1,148,177
0
0
0
41,168
44241-1,148,177
-840,167
0
0
0
-1.105,000
0
0
0
0
-840,167
-628,163
-7,195,921
-673,065
0
0
0
0
-477,001
0
0
0
-7,868,986
-6,618251
86,265
0
0
0
-471,001
-5%,743
0
379,898
0
0
86265
0
-222227
0
0
0
379,898
174,007
-7,386,942
-252,069
0
0
•222227
-241,934
-7,639,011
-6,408,984
1554,017
1,613,460
253,309
0
444,171
400264
0
0
3,420,781
2.944,695
0
0
0
-1,022
644,435
1,187,691
1,998,188
2,013,724
33,344
-1,022
_ -1,022
-2.081,304
4264,194
2,051,082
681,976
2,275,746
259,336
118,892
3,335,950
626522
9,191542
2,445,488
204,593
489,653
12,333,I76
11,704,754
$9.673518
54,711234
$463,929
5608,545
Slc 5,7226
512,331276
$7,788,160
$4,721,234
$463,929
5608,545
513.581,868
$10581,861
1,694,473
390AM
0
0
0
0
0
0
1,694,473
1288,629
390,885
460,786
59,873518
14,721234
$461,929
5606545
®
$1�, 076$12,331,276
The notes to the financial statement art an integral pan of this statement 12 '
ary a/r1/20a1 aJ! AM
13
City of Yakima
Combined Statement of Cash Flows—
All Proprietary Fund Types and Similar Trust Funds
for the year ended December 31, 2002
unfh compamilm lofals for the year mdrd Drcembrr, 31, 2001
Reconciliation of net operating income(loss) to net cash
pnevidediused) by operating activities:
Net operating income(loss)
Adjustments to reconcile operating income(loss).lo net
cash provided by operating activities:
Depreciation
Change in assets and liabilities:
(Inaesse)decrease in deposits w/ Fiscal Agent/Trustee
(Inaease)decrease in accounts receivable
(Inaeas0clecresse in interest receivable
(Increase)decresse in inventory
Increase(decresse) in wanants/accounts payable
Incresse(decre;w) in wages/benefits payable
Inaease(decrease) in cumpeneted absences payable
(Inaease)decrease in contracts payable
Incresse(decrease) in claims and judgements payable
Increase(decrease) in unfunded peruion liability
Increase(decrease) in due to other funds
Total Adjustments
Net cash provided by operating activities
Page 3 of 4
PROPRIETARY FUND TYPES
FIDUCIARY FIND TYPES
Internal
Non-Ercpendable
Pension
Enterprise
Service
Trus!
Trust
-63,019,821
516,758
$19,920
$119,453
3,933,131
1,003,401
0
0
0
0
0
0
453,634
-20,865
0
0
•0
0
611
-145
10,539
-1,018
0
0
.66,749
452557
0
606
60,776
3527
0
36,458
-1,431
0
0
0
0
0
-273251
0
0
0
0
0
0
949,527
0
0
3520,521
1207333
611
461
5500,700
51,224,091
$20531
5119,914
Schedule of Noncash Capital and Related Financing Activities
Capital Asset Arquired by:
Noncash contribution 5248388 s0 s0 s0
The notes to the financial statements are an integral part of this statement
14
TOTAL
(MEMORANDUM ONLY)
2002 2001
-$2.863,690 -53,644,583
4,936,532 4,677,002
0 0
-474,499 45,821
466 627
9,521 5,884
-518,700 945,117
64,303 16,176
35,027 34,071
0 -10,519
-273551 48,350
0 0
949,527 -4,055
4,728,926 5,666,832
$1,865,236 52.022,249
$248,388 51510,161
1.5
Page 4 of 4
..oainrms•»,w
FINRPI CAM Naa 2002
1 - 9OM3
FINRPI CAFR N— 2002
2 -" 927/03
16 17
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8 -
LONG-TERM DEBT AND CAPITAL LEASES.............................................40
CONTENTS OF TOE NOTES
A - General Obligation Debt..........................................................................40
B- Revenue Bonds........................................................................................41
C - Intergovernmental Loans and
Contractual Agreements..........................................................................41
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ......................
18
D - Special Assessment Debt with
A- Reporting Entity.................................................................18
Governmental Commitment ....................................................................
43
B - Basis of Presentation - Fund Accounting................................................19
E - Lease Purchase Agreements.............................:......................................44
C - Basis of Accounting................................................................................21
F - Unfunded Pension Liabilities..................................................................44
D - Budgets and Budgetary Accounting........................................................22
E Assets, Liabilities and Equities...............................................................23
NOTE 9 -
CONTINGENCIES .......................................................................................................
45
F - Revenues, Expenditures and Expenses....................................................26
G - Memorandum Only Total Columns........................................................26
NOTE 10 -
INTERFUND TRANSACTIONS AND BALANCES................................................46
N - Comparative Data...................................................................................26
A - Classification of Interfund Transactions.. ...............................................
46
B - Interfund Loans and Receivables.............................................................46
NOTE 2 -
COMPLIANCE AND ACCOUNTABILITY...................................................27
C - Interfund Operating Transfers................................................................47
NOTE 3 -
DEPOSITS AND INVESTMENTS.................................................................28
NOTE 11 -
FUND EQUITIES..........................................................................................................48
A - Government Fund Types........................................................................48
NOTE 4 -
PROPERTY TAXES......................................................................................:...29
B - Proprietary Fund Types.........................................................................48
NOTE 5 -
FIXED ASSETS AND DEPRECIATION........................................................30
C - Designated Fund Balances.......................................................................49
D - Reserved Fund Balance in Trust Funds..................................................49
A- General Policies................:......................................................................30
.
B - General Fixed Assets...............................................................................30
NOTE 12 -
SEGMENT INFORMATION .......................................................................................
50
C -.. Proprietary Fund Assets.........................................................................31
NOTE13 -
JOINT VENTURES......................................................................................................51
NOTE6 -
PENSION PLANS.............................................................................................32
A - Public Employees' Retirement System (PERS)......................................32
NOTE 14 -
POST RETIREMENT BENEFITS OTHER THAN PENSION BENEFIT ...............
52
B- Law Enforcement Officers' and Firefighters' Retirement
System(LEOFF).....................................................................................34
NOTE 15 -
OTHER DISCLOSURES
C - Other Retirement Systems -- Volunteer Firefighters
A - Accounting and Reporting Changes....................................:...................52
Relief and Pension Fund............................................................
B - Subsequent Events.................:................................................................52
D- Firemen's Pension...................................................................................36
E- Police Pension.........................................................................................37
NOTE 7 -
SELF-INSURANCE FUNDS............................................................................38
A - Unemployment Compensation...............................................................38
B - Self -Insured Medical/Dental Program.....................................................38
C - Workers' Compensation Program...........................................................39
D- Risk Management Program.............................:.......................................39
FINRPI CAM Naa 2002
1 - 9OM3
FINRPI CAFR N— 2002
2 -" 927/03
16 17
CITY OF YAKIMA
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2002
The accounting policies of the City of Yakima, Washington, conform to generally accepted accounting
principles (GAAP) as applicable to governmental units. The City has adopted the pronouncements of
the Governmental Accounting Standards Board (GASB) which is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles nationally. The following is a
summary of the more significant policies. The policies should be reviewed as an integral pan of the
financial statements and are presented to assist the reader in interpreting the financial statements and
other data in this report.
A. REPORTING ENTITY
The City of Yakima was incorporated in 1886, and operates under a Council/Manager form of
government with a full time city manager. The City of Yakima provides a full range of municipal
services, which include: police, fire, engineering. parks, cemetery, street, and administrative services.
Included in the City's Enterprise Fund financial reports are: water, sanitary sewer, solid waste, and
transit. The Yakima Air Terminal is operated under a joint venture agreement with Yakima County, see
Note H13.
The City's financial statements include all funds, account groups, agencies and boards which are
financially accountable to the City. Financial accountability is manifest when the primary government
appoints the majority of an organization's governing body and is able to impose its will on that
organization or there is a potential for the organization to provide specific financial burdens on the
primary government. The primary government may be financially accountable if an organization is
fiscally dependent on the primary government regardless of whether the organization has a separately
elected governing board, a governing board appointed by a higher level of government, or a jointly
appointed board. An organization is fiscally dependent if it is unable to determine its budget without
another government having the substantive authority to approve or'modify the budget, to levy taxes or
set rates or charges without substantive approval by another government, or to issue bonded debt
without substantive approval by another government. Applying these criteria, the combined financial
statements do not include the financial position or results of operations of:
YAKIMA SCHOOL DISTRICT NO 7•
WEST VALLEY SCH001, DISTRICT NO, 208;
UNION GAP SCHOOL D1STR1 T NO 2. These school districts are municipal
corporations empowered by the state to educate the children of the City of Yakima. These
school districts have independently elected boards of directors, adopt and control their own
budgets and have their own taxing authority.
YAKIMA COUNTY. The County of Yakima was incorporated in 1865 under the authority
of the Revised Code of Washington. The County has an elected board of commissioners,
adopts and controls its own budget, and has its own taxing authority. The City has no legal
interest in or responsibility for the assets or liabilities of the County.
rINRPI CAR Nan 2002
r - W9Nr
18
YAKIMA VALLEY REGIONAL LIBRARY. The Yakima Valley Regional Library is a
separate county -wide municipal corporation with its own taxing authority. h provides
library services, under contract, for the City of Yakima, Yakima Counry and its other cities.
The City has no legal interest in or responsibility for the assets, or liabilities of the Library.
YAKIMA HEALTH DISTRICT. The Yakima Health District has its own board of
directors, and adopts and controls its own budget. The City has no legal interest in or
responsibility for the assets or liabilities of the Yakima Health District.
YAKIMA CONFERENCE OF GOVERNMENTS. The Yakima Conference of Gov-
ernments is an agency comprised of the County, cities, and other boards which assists in long
range planning for the member entities. The City has no legal interest in or responsibility for
its assets or liabilities.
RELATED ORGANIZATION. The City's officials are also responsible for appointing the
members of the boards of another organization, but the City's accountability for this
organization does not extend beyond making the appointments.
YAKIMA HOUSING AUTHORITY. The Yakima Housing Authority was created by
Resolution No. D-1575, in 1971, and, under certain conditions, can be dissolved by the City.
Yet, it is an independent entity with distinct governmental character and organization. The
City of Yakima created the Housing Authority per Washington State Revised Code Chapter
35.82 which provides that liabilities incurred by the Housing Authority will be satisfied from
its assets, and that no person shall have any right of action against the City on account of its
debts, obligations, and liabilities.
YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT. The cities of Yakima, Selah
and Union Gap formed a Public Facilities District (PFD) for the purpose of expanding the
Yakima Convention Center. The City appoints a majority of the board members, and must
approve the annual budget. The financial agreement stipulates that all revenue derived by the
PFD (primarily a state sales tax credit) be transferred to the City, and the City will use these
funds for Center debt service and operations, and reimbursement of adminstrative costs of the
PFD. A special revenue fund was established in the City's records to account for activity of
the PFD.
B. BASIS OF PRESENTATION - 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 goverrtmental, 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. The following are the fund types and
account groups used by the City:
FINRPI CAFR Nan 2002
.- V29Nr
19
All governmental funds are accounted for on a spending or "financial flow" measurement focus. This
means that only current assets and current liabilities are generally included on their balance sheets. Their
reported fund balance (net current assets) is considered a measure of "available expendable resources".
Governmental fund operating statements focus on measuring changes in financial position, rather than
net income: they present increases (revenues and other financing sources) and decreases (expenditures
and other financing uses) in net current assets.
General Fund - The General Fund is the operating fund of the City. It accounts for all of
the financial resources of the City except those required to be accounted for in a separate
fund.
Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of
specific revenue sources or to finance specified activities as required by law or administrative
regulation.
Debt Service Funds - Debt Service Funds account for accumulation of resources for and
payment of principal, interest and related costs on general long term debt.
Canital Projects Funds - Capital Project Funds account for financial resources to be used
for the acquisition or construction of major capital facilities other than those financed by
proprietary funds.
Proprietary funds are accounted for on a cost of services or "economic resources" measurement focus.
This means that all assets and all liabilities (whether current or noncurrent) associated with their activity
are included on their balance sheets. Their reported fund equity (net total assets) is segregated into
contributed capital and retained earnings components. Proprietary fund operating statements present in-
creases (revenues and gains) and decreases (expenses and losses) in net total assets. Proprietary funds
disclose changes in cash flows by a separate statement that presents their investing and financing
activities. The City applies all applicable GASB pronouncements as well as all FASB Statements and
Interpretations, APB Opinions and ARB's issued on or before November 30, 1989, unless those
pronouncements conflict with or contradict GASB pronouncements. The City has elected to implement
GASB Statement 20, Accounting and Financial Reporting for Proprietary Funds and Other
Governmental Entities that Use Proprietary Fund Accounting, with regard to the application of FASB
pronouncements to its propriety funds. In accordance with the provisions of GASB Statement 20, the
City has elected not to apply those FASB Statements and Interpretations issued after November 30,
1989.
Enterprise Funds - Enterprise funds account for services to the general public where all or
most of the expenses, including depreciation, are intended to be financed or recovered from
users of such services. See Note 912 for segmented information on enterprise funds.
Internal Service Funds - Internal service funds account for the financing of goods or
services provided by one department or fund to other funds, departments, or governments on
a cost -reimbursement basis. The City maintains an Equipment Rental Fund for all vehicles
and equipment except those relating to fire suppression and transit.
FINRPI CAFR Nan 2002
5 -- 9129107
20
FIDUCIARY FUNDS
Fiduciary funds account for assets held by the City on behalf of individuals, private organizations, other
governments and other funds.
Expendable Trust Funds - Expendable trust funds earn revenue and make expenditures on
behalf of the parties for which a trust was established. The entire income and principal of an
expendable trust may be disbursed in the course of its operations: accordingly, expendable
trust funds are accounted for in essentially the same manner as governmental funds.
Nonexpendable Trust Funds - Nonexpendable trust funds earn revenue on behalf of the
panics for which the trust was established, but the principal of the trust must remain intact.
Nonexpendable trust funds are accounted for in essentially the same manner as proprietary
funds; since capital maintenance is a primary consideration.
Pension Trust Funds - Pension trust funds are used to account for the operations of trust
established for employee retirement benefits. They are accounted for in essentially the same
manner as proprietary funds because of the need for determining the periodic income of the
trust.
Agency Funds - Agency funds are custodial in nature (assets equal liabilities) and do not
involve the measurement of results of operations.
ACCOUNT GROUPSy; r ,q
The City uses two self -balancing account groups to account for fixed assets and general long-term debt...
General Fixed Asset Account Group - This account group establishes accounbcontrol over
all the general fixed assets used in general government operations. Assets acquired by
proprietary and trust funds are accounted for in the appropriate fund.
General Lone -Term Debt Account Group - The general long-term debt account group
accounts for all unmatured principal of general obligation bonds and other debt of a long -tern
nature of the City except that accounted for in proprietary funds and trust funds. This
includes special assessment debt for which the City is obligated in some manner, as defined in
GASB Statement 6.
C. BASIS OF ACCOUNTING
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the
accounts and reported in the financial statements. Basis of accounting relates to the timing of the
measurements made, regardless of the measurement focus applied.
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 reponing. The modified
accrual basis differs from the accrual basis in the following ways:
FINRPI CArR Noire 2002
e - !129102
21
I . Purchases of capital assets are considered expenditures.
2. Redemption of long-term debt is considered an expenditure when due.
3. Revenues are recognized only when they become both measurable and available to
finance expenditures of the current period. Note ill, F identifies which revenue sources have been
treated as susceptible to accrual. Revenues that are measurable but not available are recorded as
receivable and offset.by deferred revenues.
4. Inventories and prepaid items are reported as expenditures when purchased.
5. Interest on long-term debt is not accrued but is recorded as an expenditure when due.
6. Accumulated unpaid vacation and sick pay are considered expenditures when paid.
1 I 1 I"Iff.1111011jallm
1. Scope of Budget
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. Budgetary comparisons for proprietary
funds, although not legally required, may be requested from the Department of Finance and Budget.
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.
2. Procedures for Adopting the Original Budget
The City's budget procedures are mandated by Washington State Law, The steps in the budget
process are as follows:
a. Prior to November 1, the City Manager submits a proposed budget to the City Council.
This budget is based on priorities established by the Council and estimates provided by
City departments during the proceeding months, and balanced with revenue estimates.
b.. The Council conducts public hearings on the proposed budget in November to obtain
taxpayer comments.
C. During mid-December, the budget is legally enacted through passage of an ordinance.
FIN"I CAR Nae 7007
7 - 9129001
3. Amendine the BudYet
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.
When the City Council determines that it is in the best interest of the Cite to increase or decrease the
appropriation for a particular fund. it may do so by an ordinance approved by a one more than simple
majority of those present after holding two public hearings.
The budget amounts shown in the financial statements represent the original budgeted amounts and all
supplemental appropriations. Supplemental appropriations totaled $1 1.618.303. The principal three
amendments were to reappropriate 2001 outstanding encumbrances in the amount of 52.440.422: the
reappropriation of non -lapsing appropriations in the amount of $3.475,519: and to implement a
Wastewater Cost -of -Service and Rate Study and corresponding operational and capital adjustments in
the amount of $1.344.736.
4. Encumbrances
Encumbrance accounting. under which purchase orders. contracts, and other commitments for the
expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is
employed as an extension of formal budgetary integration in the governmental funds. Encumbrances are
reported as reservations of fund balances since they do not constitute expenditures or liabilities. The
City reappropriates outstanding encumbrances in the subsequent year.
E ASSETS LIABILIDES AND EQUITIEc
1. Cash and Investments
Cash and investments are managed under the guidance of the City's Investment Policy adopted
by Resolution No. D-5642 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 of Yakima.
Investments are made using the "prudent person" standard with primary objectives being safety of
principal, liquidity enabling the Citv to meet all operating requirements and a return on investment
objective of anaining a market rate of return through budgetary and economic cvcles.
Investments of City funds except those of the Firemen's Relief and Pension Fund are
limited to:
I) Investment deposits, including certificates of deposit with qualified public
depositories as defined in Chapter 39.58 Revised Code of Washington.
2) Certificates. notes or bonds of the United States, or other obligations of the
United States, or its agencies, or of an, corporation wholly owned by the
government of the United States (such as the Government National Mortgage
Association).
3) 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. (These include but are not limited to Federal Home Loan
Bank notes and bonds. Federal Farm Credit Bank consolidated notes and bonds,
FINRVI CAFR N." 2002
1 -- 129103
22 23
Federal National Mortgage Association notes. debentures, and guaranteed
certificates of panicipation).
4) Bankers Acceptances and Commercial Paper purchased on the secondary market
5) Washington State Local Government Investment Pool.
6) General obligation bonds of any state or local government in the United States and
revenue bonds from jurisdiction in Washington state having a long-term credit
rating of no less than A3 as rated by Moodys and A- by Standard and Poor's.
Repurchase and reverse repurchase agreements are excluded as eligible investments
Resources of the Firemen's Relief and Pension Fund may be invested in high quality
corporate bonds in addition to instruments listed above.
• The City purchases investments from SEC registered security broker- dealers and banks
having offices within Washington State.
The City's Investment Officer under the direction of the Director of Finance and Budget invests or
deposits all temporary cash. These investments and time deposits do not result in reductions to the cash
balances of the various funds and are considered to be cash equivalents to the funds under the definition
Promulgated in GASB. Statement 99, which states that investments purchased within 90 days of
maturity are considered to be cash equivalents. These amounts are reported on the Combined Balance
Sheet as pan of "Cash and Equity in Pooled Investments." Earnings from state pool deposits are
allocated to the funds owning the cash. while interest on the remaining investments is allocated to the
General Fund.
2. Receivables
Taxes receivable consist of property and other taxes including related interest and penalties (See
Note 44). Accrued interest receivable consists of amounts earned on investments, notes, and contracts
as of year- end.
Special assessments are recorded when levied. Special assessments receivable consists of current and
delinquent assessments. Deferred assessments consist of unbilled special assessments that are liens
against the property benefited. As of December 31, 2002 $4,619 of special assessments receivables
were delinquent. Customer accounts receivable consist of amounts due from private individuals or
organizations for goods and services including amounts due for billings which have not been prepared.
Notes and contracts receivable consist of amounts owed on open account from private individuals or
organizations for goods and services rendered.
3. Amounts Due To and From Other Funds: Imerfund 1 oanc and Advancea Hucivable
These accounts Include all Interfund receivables and payables. A separate schedule of interfund
loans receivable and payable is furnished in Note 1110. Long-term interfund loans are separately
identified as "Advances".
4. Amounts Due To and Earn Otho r sernmental Units
These accounts include amounts due to or from other governments for grants, entitlements,
temporary loans. taxes and charges for services, except amounts billed for utility usage which is included
in customer receivables.
FINRDI CAFR Nan 7007
9 - //29103
24
5. Inventories
Inventories in governmental funds consist of expendable supplies held for consumption. The
cost is recorded as an expenditure at the time individual inventory items are purchased. The reserve for
inventory is equal to the ending amount of inventory to indicate that a portion of the fund balance is not
available for future expenditure.
Inventories in the General Fund. Enterprise Funds and Internal Service Funds are valued at cost on a
moving average method.
6. Restricted Assets and Liabilities
These accounts may contain resources for construction, capital purchases and debt service in the
enterprise funds. The current portion of related liabilities is shown as Payables from Restricted Assets.
Specific debt service reserve requirements are described in Note N8.
The restricted assets of the enterprise funds are composed of the following:
Cash - Debt Service $2,085,358
Deposits with Fiscal Agent 425
Investments - Debt Service 0
32.085.783
7. Custodial Accounts
These accounts reflect the liability for net monetary assets being held by the City in its trustee or
agency capacity.,
8. Accumulated Unpaid Employee Leave Benefits _
The contract with emplovees calls for the accumulation of vacation and sick leave. At termination
of employment, employees may receive cash payment for all accumulated vacation up to a maximum of
352 hours and a percentage of sick leave. The payment is based on current wage at termination.
The amounts of unpaid vacation and sick leave accumulated by City employees are accrued as expenses
when incurred in proprietary funds, which use the accrual basis of accounting. In the governmental
funds, only the amounts that normally would be liquidated with expendable available financial resources
are accrued as current -year expenditures. The City uses the last -in, first -out method of recognizing the
hours used of compensated absences. Employees are charged for the last day of vacation or sick leave
earned when the leave is used. Thus, unless it is anticipated that compensated absences will be used in
excess of a normal year's accumulation, no additional expenditures are accrued. Therefore, the entire
unpaid liability for the governmental funds is recorded in the General Long -Term Debt Account Group.
9. Other Accruediabilities
Other accrued liabilities include primarily interest payable on long-term debt. Public Works Trust
Loans and small miscellaneous payables not classified in other categories in Enterprise f=unds.
10. Deferred Revenues
This account includes amounts recognized as receivables but not as revenue in governmental l
funds because the revenue recognition criteria has not been met. (See Note 41-F) I
rMRPI CAFR Nan 7007
10 - 2/29/03
25
F. REMENUES, EXPENDITURES AND EXPENSES
Under the Modified -Accrual Basis of Accounting, revenues are recognized when susceptible to
accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the
transaction can be determined and "available" means collectible within the current period or soon enough
thereafter to be used to pay liabilities of the current period.
Charges for services. interest on investments, and rents are generally considered measurable and available
when earned in governmental funds.
Taxes and federal or state entitlements or shared revenues that have been collected but not remitted by an
intermediary collection agency to the City are considered measurable and available.
Special assessments are considered measurable and available when they become current.
Grants are considered measurable and available to the extent that expenditures have been made. Other
intergovernmental revenues are considered measurable and available when earned.
Interfund revenues for goods and services are considered measurable and available when earned.
Proceeds from the sale or loss of fixed assets are recognized as an other financing source.
All other revenues are either not measurable or considered not available until collected.
Expenditures are generally recognized when the related fund liability is incurred. (See Note #I -C)
Under the Full Accrual Basic of Accountin :
Revenues are recognized when earned, if measurable, and expenses are recognized when incurred, if
measurable.
G. MEMORANDUM ONLY TOTAL COLUMNS
Total columns on the combined statements are captioned memorandum totals to indicate that
they are presented only for financial analysis. Data in these columns do no present financial position,
results of operations. or changes in cash flows in conformity with generally accepted accounting
principles. Neither is such data comparable to a consolidation because interfund eliminations have not
been made.
H. COMPARATIVE DATA
Comparative total data for the prior year has been presented in the accompanying financial
statements in order to provide an understanding of changes in the City's cash flow and operations. Such
data is not comparable to a consolidation because interfund eliminations have not been made.
F3NItPI CA"
Non 2007
I I - 1.103
26
NOTE 2 - COMPLIANCE AND ACCOUNTABILITY
The State law provides that debt cannot be incurred in excess of the following percentages of the value of
the taxable property of the City.
I. General Purpose
Without a Vote
(includes capital leases)
With a Vote
IL Utilities Purpose
111. Open Space and Parks Facilities
TOTAL LEGAL LIMIT
Limit by Cumulative
Section Limit
1.5091.
1.00% 2.5091 2.50%
2.50% 5.0091.
2.50% 7.5091.
7.50%
The basic percentages for Section 1 are the maximum levels of indebtedness those sections may incur.
However, utility or parks indebtedness may each exceed 2.50% and reduce the general indebtedness
margin. The percentages are applied to the taxable assessed value (regular levies) of $3.673.433,781
resulting in the debt limits, as of December 31. 2002, for the City as follows:
Without a Vote
With a Vote
Open Space
General Purpose General Purpose Utilities and Parks
1.5% 2.5% 5.0% 7.5
Legal Limit 555,101,507 591,835.845 5183.671.690 $275.507,535
Net Outstanding Indebtedness* 16.769.214 19.267.894 19.267,894 19.267.894
Margin Available $38.332.293 $72.567.951 5164.403.796 $256.239.641
e Indebtedness is the outstanding debt less cash, investments, and tax receivables available to redeem debt.
There have been no material violations of finance -related legal or contractual provisions in any of the
funds of the City.
FINRPI CAFR Non 2001
12 - 1/29/03
27
NOTE 3 - DEPOSITS AND INVE TMENTS
The following table presents the components of "Cash and Equiq in Pooled Investments."
Cash and Equity in Pooled Investments
Carrvine Amount
Cash Deposits
S 2,512,392
U.S. Treasuries
1,000,381
US Agency Obligations, net
8,743,150
State & Local Securities, net
400,000
Local Govt. Investment Pool
25,427,164
Total (includes 52,085,358 restricted cash)
538.083.087
Non -pooled investments are held by several of the City's funds and are separately classified on the
Combined Balance Sheet. These investments are shown on the Combined Balance Sheet at par, net of
unamonized premium or discount which approximates market. Premiums and discounts on investment
purchases are amortized on a straight-line basis. Gains or losses on all investments sold or exchanged are
recognized at the time the transactions are completed.
Deposits
All deposits of the City are insured by the FDIC up to $100,000 and by the Washington Public Deposit
Protection Commission for amounts over $100.000. Interest bearing savings accounts totaling $20,000
are included on the Combined Balance Sheet as investments. Deposits with Fiscal Agent at
December 31, total $11,145 and are also FDIC & PDPC insured.
investments
The following schedule categorizes the City's investments to provide an indication of the degree of risk
assumed as of year-end. Category 1 investments are insured or registered in the City's name and held by
the City or its agent in the City's name. Category 2 investments include uninsured and unregistered
securities that are held by the counterparty's trust department or agent in the City's name. At the
balance sheet date the City held no category 2 investments. The State Investment Pool cannot be
categorized because it is a government pool, and as such, is not evidenced by securities that exist in
physical or book entry form, either in the City or counterparty's name.
Investments by Category of Risk
With Carrying and Market Values
Cateeory I _ Cateeory 2 _ Carrvine Value Market Value
U.S. Treasuries $ 2,650,965 $ 0 S 2,650,965 S 2,700,719
Agencies 20,085,042 0 20,085,042 20,236,739
Municipal Securities 1,515,971 0 1,515,971 1,543,885
Commerical Paper 0 0 0 0
$24,251,978 $ 0 S24.25 1,978 524,481,343
Stale Investment Pool 25.427,164 25.427,164
Total Investments 549.679.142 549.9�08,507-�
The carrying value of total investments relates to the Combined Balance Sheet totals as follows:
Cash and Equity in Pooled Investments
Investments, Net
Less: Cash Deposits
Total Investments
538,083,087
14,108,447
(2.512.392)
549 679,1
In accordance with GAAP applicable to regulated industries and GASB Statement 1131, changes in fair
value are reflected as unrealized income in the financial statements. Other gains or losses on investments
sold or exchanged are recognized at the time transactions are completed.
FINRPI CAFR Nan 1907
I3 - 8/19103
0
NOTE 4 - PROPERTY TAXES
The County Treasurer acts as an agent to collect prop", taxes levied within the county for all taxine
authorities. Collections are distributed after the end of each month, on the tenth day of the following
month.
PROPERTY TAX CALENDAR
January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of propeny is established for next year's levy at 100 percent of market value
October 31 Second installment is due.
During the year, propeny tax revenues are recognized when cash is collected. At year-end, property tax
revenues are recognized for collections in the hands of the County Treasurer at December 31st. No
allowance for uncollectable taxes is established because delinquent taxes are considered fully collectable.
The City is permitted by law to levy up to $3.60 per $1.000 of assessed valuation for general-
government services. This amount may be reduced for any of the following reasons:
(a) The Washington State Constitution limits total regular property tax levies to I percent of
assessed valuation or $10 per $1,000 of value. If the tax levies of all districts exceed this amount,
each is proportionately reduced until the total is at or below the I percent limit.
(b) On November 6, 2001, the voters approved Initiative 747 (1-747"). 1-747 amended RCW
84.55.010 by reducing the limit on the 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 the lesser of inflation or 101 percent of the highest levy in the three previous years
(excluding new construction, improvements, and State -assessed property). Because 1-747'5 101
percent limitation applies to the dollar amount levied rather than to levy rates. increases in the
value of existing property exceeding one percent per year would result in decreasing tax levy
rates.
Special levies approved by the voters are not subject to the above limitations.
For 2002, the City's regular tax levy was $3.5177 per $1,000 on a total assessed valuation of
$3.272,221,573 for a total regular levy of $11,510.648. Included in the City's regular levy is an
authorization to levy for the Firemen's Relief and Pension Fund (see Note tl6). This levy is subject to
the same limitations as the levy for general government services. The Firemen's Relief and Pension
ponion of the regular tax levy for 2002 was $.394 per $1,000, or $1,289,280. Additionally, special
levies for G.O. bond obligations totaled $836,000.
FINRPI CAFR N.- 2002
14 .. V29/03
29
A. • GENERAL POLICIES
Major expenditures for fixed assets, including capital leases and major repairs that increase useful
lives, are capitalized. Maintenance, repairs and minor renewals are accounted for as expenditures or
expenses when incurred. Obligations under capital leases are disclosed in Note 118 E.
All fixed assets are valued at historical cost or estimated historical cost if actual cost information is not
available. Donated assets are valued at their estimated fair market value on the date of the gift.
B. GENERAL FIXED ASSETS
General fixed assets are long-lived assets of the City as a whole. When purchased, leased, or
constructed, such assets are recorded as capital outlay expenditures in the governmental funds and
capitalized in the general fixed assets account group. No depreciation has been provided on general fixed
assets, nor has interest been capitalized.
General fixed assets purchased or constructed from special assessment funds, and all infrastructure
assets (such as roads, bridges, curbs and sidewalks) are considered public property and are not accounted
for in the general fixed assets account group.
A summary of changes in General fixed assets follows:
FINRPI CAFR Non 7007
IS - 8129103
C. PROPRIETARY FUN) FIXED ASSETS
Fixed assets of proprietary funds are capitalized in their respective balance sheets.
Depreciation expense is charged to operations of proprietary funds to allocate the cost of fixed assets
over their estimated useful lives, using the straight-line method with useful lives as follows:
Estimated Service Life
Beginning
Buildings.............................................................................
25 - 40 Years
Improvements Other Than Buildings ...................................
Ending
UtilityPlant.......................................................................
Balance
Equipment...........................................................................
2 - 25 Years
Intangibles (organization costs,
Balance
water rights, and goodwill) ............................................
01/01/2002
Additions
Deletions
Adjustments
12/31/2002
Land
S 8,243,222
S 237,510
$ 0
S 0
S 8,480,732
Buildings
34,117,099
281,173
(19,643)
0
34,378,629
Improvements Other Than Buildings
4,652,835
1,551,891
(246,063)
0
5,958,663
Equipment
8,159,749
422,441
(1,590,516)
0
6,991,674
Construction in Progress
180,157
1,498,123
0
0
1,678,280
Capitalized Leases
1.364,883
0
(76.864)
0
1.288,019
Total Assets
$56,717,945
$3,991,138
(51,933,086)
S 0
$58,775,997
FINRPI CAFR Non 7007
IS - 8129103
C. PROPRIETARY FUN) FIXED ASSETS
Fixed assets of proprietary funds are capitalized in their respective balance sheets.
Depreciation expense is charged to operations of proprietary funds to allocate the cost of fixed assets
over their estimated useful lives, using the straight-line method with useful lives as follows:
Estimated Service Life
Internal Service
Buildings.............................................................................
25 - 40 Years
Improvements Other Than Buildings ...................................
7 - 50 Years
UtilityPlant.......................................................................
33 - 50 Years
Equipment...........................................................................
2 - 25 Years
Intangibles (organization costs,
0
water rights, and goodwill) ............................................
75 - 100 Years
A summary of proprietary fund type property, plant, and equipment at December 31, 2002 follows:
Land
Buildings
Improvements Other Than Buildings
Equipment
Construction in Progress
Completed Construction -- Not Classified
Intangibles
Total
Less Accumulated Depreciation and Amortization
Net
FINRPI CAF' Nm 7002
16 - In9107
31
Enterprise
Internal Service
S 2,186,700
S 0
62,694,835
16,984
67,308,535
0
12,513,665
12,250,535
11,081,452
0
2,232,245
0
221.830
0
5158,239,262
512,267,519
(64,953.369)
(7.153.229)
S 93,285.893
S 5,114,290
NOTE 6 - PENSION PLANS
Substantially all City full-time and qualifying part-time employees participate in one of the following
statewide retirement systems administered by the Washington State Department of Retirement Systems,
under cost-sharing multiple -employer public employee defined benefit and defined contribution
retirement plans. The Department of Retirement Systems (DRS), a department within the primas
government of the State of Washington, issues a publicly available comprehensive annual financial report
(CAFR) that includes financial statements and required supplementary information for each plan. The
DRS CAFR may be obtained by writing to:
Department of Retirement Systems
Communications Unit
P.O. Box 48380
Olympia, WA 98504-8380
The following disclosures are made pursuant to GASB Statement 27, Accounting for Pensions by State
and Local Government Employers.
A. PUB
PERS is a cost-sharing multiple employer retirement system comprised of three separate plans
for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a combination defined
benefit/defined contribution plan. Membership in the system includes: elected officials; state
employees: employees of the Supreme, Appeals, and Superior courts (other than judges in a judicial
retirement system); employees of legislative committees; community and technical colleges, college and
university employees (not in national higher education retirement programs); judges of district and
municipal courts; and employees of local governments. PERS participants who joined the system by
September 30. 1977, are Plan I members. Those who joined on or after October 1, 1977 and by either,
February 28, 2002 for state and higher education employees, or August 31, 2002 for local government
employees. are Plan 2 members unless they exercise an option to transfer their membership to Plan 3.
PERS participants joining the system on or after March 1, 2002 for state and higher education
employees, or September 1, 2002 for local government employees have the option of choosing
membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of
employment. An employee is reported in Plan 2 until a choice is made. Employees who fail to choose
within 90 days default to PERS Plan 3. PERS defined benefit retirement benefits are financed from a
combination of investment earnings and employer and employee contributions. PERS retirement benefit
provisions are established in state statute and may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service.
Plan 1 members are eligible for retirement at any age after 30 years of service, or at the age of 60 with 5
years of service, or at age of 55 with 25 years of service. The annual pension is 2 percent of the average
final compensation per year of service, capped at 60 percent. The average final compensation is based
on the greatest compensation during any 24 eligible consecutive compensation months. If qualified, after
reaching the age of 66 a cost -of -living allowance is granted based on years of service credit and is capped
at 3 percent annually.
FINRPI CAFR Np 2002
17 .. 8
.'29/03
32
Plan 2 retirement benefits are vested after an employee completes five years of eligible sen ice.
Plan 2 members may retire at the age of 65 with five years of service, or at age 55 with 20 years of
service, with an allowance of 2 percent of the average final compensation per year of service. The
average final compensation is based on the greatest compensation during any eligible consecutive 60 -
month period. Plan 2 retirements prior to the age of 65 receive reduced benefits. if retirement is at age
55 or older with at least 30 years of service, a 3 percent per year reduction applies; otherwise an
actuarial reduction will apply. There is no cap on years of service credit: and a cost -of -living allowance
is granted (indexed to the Seattle Consumer Price Index), capped at 3. percent annually.
Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component.
and member contributions finance a defined contribution component. The defined benefit portion'
provides a benefit calculated at 1 percent of the average final compensation per year of service. The
average final compensation is based on the greatest compensation during any eligible consecutive 60 -
month period. Plan 3 members become eligible for retirement if they have: at least ten years of seryice:
or five years including twelve months that were earned after age 54; or five service credit years earned in
PERS Plan 2 prior to June 1. 2003. Plan 3 retirements prior to the age of 65 receive reduced benefits. if
retirement is at age 55 or older with at least 30 vears of service. a 3 percent per year reduction applies;
otherwise an actuarial reduction will apply. There is no cap on years of service credit; and Plan 3
provides the same cost -of -living allowance as Plan 2. The defined contribution portion can be
distributed in accordance with an option selected by the member. either as a lump sum or pursuant to
other options authorized by the Employee Retirement Benefits Board.
There are 1.155 participating employers in PERS. Membership in PERS consisted of the
following as of the latest actuarial valuation date for the plans of September 30, 2001:
Retirees and Beneficiaries Receiving Benefits
62.189
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
18.412
Active Plan Mernbers Vested
97.777
Active Plan Members Nonvested
55.159
Total
233,537
Fundis PR olicv
Each biennium. the state Pension Funding Council adopts Plan 1 employer contribution rates,
Plan 2 employer and employee contribution rates: and Plan 3 employer contribution rates. Employee
contribution rates for Plan I are established by statute at 6 percent and do not vary from vear to year.
The employer and employee contribution rates for Plan 2 and.the employer contribution rate for Plan 3
are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of
Plan 3. All employers are required to contribute at the level established by the Legislature. PERS Plan 3
defined contribution is a non-contributing plan for employers. Employees who participate in the defined
contribution portion of PERS Plan 3 do not contribute to the defined benefit portion of PERS Plan 3.
The Employee Retirement Benefits Board sets Plan 3 employee contribution rates. Six rate options are
available ranging from 5 to 15 percent: two of the options are graduated rates dependent on the
employee's age. The methods used to determine the contribution requirements are established under
state statute in accordance with Chapters 41.40 and 41.45 RCW.
The required contribution rates expressed as a percentage of current -year covered payroll, as of
December 31, 2002, were as follows:
FINRPI CAFR Nan 2002
It - 8129103
33
PERS Plan 1 PERS Plan 2 PERS Plan 3
Employer • 1.32% 1.32% 1.32%`•
Employee 6.00% 0.65% •`•
' The employer rates include the emplover administrative expense fee currently set at 0.22%.
• • Plan 3 defrted benefit portion only.
••• Variable from 5.0%minimum to 15.0% maximum based on rate selected by the PERS 3 member.
Both the City and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows:
PERS Plan 1 PERS Plan 2 PERS Plan 3
2002 $50,468 $220,393 $1,043
2001 $69,782 $270,001
2000 $198,985 $673,093
B. LAW
LEOFF is a cost-sharing multiple employer retirement system comprised of two separate defined
benefit plans. Membership in the system includes all full-time, fully compensated, local law
enforcement officers and firefighters. LEOFF is comprised primarily of non -state employees. LEOFF
participants who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or
after October 1. 1977 are Plan 2 members. LEOFF retirement benefits are financed from a combination
of investment earnings, employer and employee contributions, and a special funding situation in which
the state pays the remainder through state legislative appropriations. LEOFF retirement benefit
provisions are established in state statute and may be amended only by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service.
Plan I members are eligible for retirement with five years of service at age 50. The benefit per year of
service calculated as a percent of final average salary is as follows:
Term of Service Percent of Final AveraLe
20 or more years 2.0%
10 but less than 20 years 1.5%
5 but less than 10 1.0%
The final average salary is the basic monthly salary received at the time of retirement, provided a
member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it
is the average of the highest consecutive 24 months' salary within the last 10 years of service. If
membership was established in LEOFF after February 18, 1974, the service retirement benefit is capped
at 60 percent of final average salary. A. cost -of -living allowance is granted (indexed to the Seattle
Consumer Price Index).
Plan 2 retirement benefits are vested after an employee completes five years of eligible service.
Plan 2 members may retire at the age of 50 with 20 years of service, or at the age of 53 with five years of
service, with an allowance of 2 percent of the final average salary per year of service. The final average
salary is based on the highest consecutive 60 months. Plan 2 retirements prior to the age of 53 are
reduced 3 percent for each year that the benefit commences prior to age 53. There is no cap on years of
service credit; and a cost -of -living allowance is granted (indexed to the Seattle Consumer Price Index),
capped at 3 percent annually.
FINRPI CAFR Nan 2002
19 - 8/29103
There are 359 participating employers in LEOFF. Membership in LEOFF consisted of the
following as of the latest actuarial valuation date for the plans of September 30. 2001:
Retirees and Beneficiaries Receiving Benefits
8,078
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
332
Active Plan Members Vested
10.894
Active Plan Members Nonvested
4.006
Total 1
23.310
Funding Policy
Starting on July 1. 2000. Plan I employers and employees will contribute zero percent as long as
the plan remains fully funded. Employer and employee contribution rates are developed by the Office
of the State Actuary to fully fund the plan. Plan 2 employers and employees are required to pay at the
level adopted by the Department of Retirement Systems in accordance with 41.45 RCW. All employers
are required to contribute at the level required by state law. The Legislature. by means of a special
funding arrangement, appropriated money from the state General Fund to supplement the current service
liability and fund the prior service costs of Plan 1 in accordance with the requirements of the Pension
Funding Council. However, this special funding situation is not mandated by the state constitution and
this funding requirement could be returned to the employers by a change of statute. The methods used
to determine the contribution rates are established under state statute- in accordance with chapters 41.26
and 41.45 RCW'.
The required contribution rates expressed as a percentage of current -year covered payroll, as of
December 31. 2002, were as follows:
LEOFF Plan I LEOFF Plan Il
Employer* 0.22% 2.86°/x••
Employee 0.00% 4.39%
State n/a 1.75%
' The employer rates include the employer administrative expense fee currently set at 0.23%.
" The employer rate for pons and universities is 4.61%.
Both the City and the employees made the required contributions. The City's required contributions for
the years ending December 31 were as follows:
LEOFF Plan I
LEOFF Plan 11
2002 $2.631
$293,793
2001 $3.629
$267,337
2000 $5.203
$343,112
C. OTHER RETIREMENT SYSTEMS - V
The Volunteer Fire Fighters' Relief and Pension Fund System is a cost-sharing multiple -
employer retirement system which was created by the Legislature in 1945 under Chapter 41.16 RCW. It
provides pension. disability and survivor benefits. Membership in the system requires service with a
fire department of an electing municipality of Washington State except those covered by LEOFF. The
system is funded through member contributions of $30 per year; employer contributions of $30 per
year; and 40 percent of the Fire Insurance Premium Tax; and eamings from the investment of moneys by
the Washington State Investment Board. However, members may elect to'.withdraw their contribution
upon termination.
FINRPI CAFR Nae, 2002
20 — 8/29/03
35
SUMMARY OF FIREMEN'S PENSION AND POLICE PENSION
D. EIREMEN'S PENSION
The City has a single emplover, defined benefit pension plan for Firefighters employed prior to
March 1, 1970 and governed by Washington State Law RCW 41.26. Under the terms of the goveming
law, the pension member is entitled to payment from the City's pension plan for those benefits in excess
of those calculated under the LEOFF plan.
The City's Firemen's Pension Fund is a closed group. No new members are permitted.
Employees attaining the age of 50 who have completed 25 or more years of service are entitled to annual
benefits of 50% of their salary plus an additional 2% for each year of service in excess of 25 years -- up
to a maximum of 60% of salary. The pension plan also provides death and disability pension benefits
plus sick benefits for eligible active and retired employees.
If the employee terminates his employment with the Fire Department and is not eligible for any
other benefit under the Firemen's Pension, the employee is entitled to the following:
Return of accumulated contributions less any benefits paid.
When Firefighter would have had 25 years of service, 2% of salary for each year of service.
Firefighters are no longer required to contribute to the Firemen's Pension. The City is required to
contribute the amount necessary to fund the Firemen's Pension, using the aggregate projected benefit
method. Under state law, partial funding of the Firemen's Pension Fund may be provided by an annual
tax levy of up to $.45 per $1,000 of assessed valuation of all taxable property of the City. The
Firemen's Pension Fund also receives a proportionate share of the 25 percent of the tax on fire insurance
premiums set aside by the state for all paid firemen in the state. Additional funding is provided by
investment interest eamings.
During the year ended December 31, 2002, there were no plan amendments.
FINRPI CAFR Nan 2002
21 - 1/19,01
36
Contributions Required and Contributions Made
The City's funding policy is to provide for periodic emplover contributions at actuarially determined
rates that, expressed as percentages of annual covered payroll, are designed to accumulate sufficient
assets to pay benefits when due. The required contributions are determined using an aggregate projected
benefit funding method with the annual cost increasing 6% per year over the period ending December 31.
2012.
Under this method. the normal cost is a portion of the actuarial present value of benefits allocated to a
valuation year. The actuarial accrued liability is equal to the actuarial value of assets. (Thus. there is no
unfunded actuarial accrued liability under this method.) M
Significant actuarial assumptions used to compute contribution requirements were the same as those
used to compute the standardized measure of the pension benefit obligation.
E EOLICE P • NSION
The City, has a single employer, defined benefit pension plan for Police Officers emploved prior
to March 1. 1970 and governed by Washington State Lam, RCWI 41.20 and 41.26. Under the governing
law, the pension member is entitled to payment from the City's pension plan for those benefits in excess
of those calculated under the LEOFF plan. The City also covers four members who were ineligible under
the State Law Enforcement Officers and Fire Fighters (LEOFF) Program.
The City's Police Pension Fund is a closed group. No new members are permined. Emplovees who
have completed 25 years or more of service are entitled to annual benefits of 50% of theii salary plus an
additional 2% for each year of service in excess of 25 vears -- up to a maximum of 60% of salary. The
plan provides death and disability pension benefits plus sick benefits for eligible active and retired
employees.
If the employee terminates his employment with the Police Department and is not eligible for any other'3
benefit under the Police Pension, the employee is entitled to the following:
Return of 75% of contributions made after June 8, 1955. less any benefits paid.
When Police Officer would have had 25 years of service, 2% of salary for each
year of service.
One 'individual who is ineligible for LEOFF is contributing 6 percent. The remaining members are no
longer required to contribute to the Police Pension. The City is operating on a pay-as-you-go basis.
During the year ended December 31, 2002. there were no plan amendments.
f ontributions Required and Contrihutinns nirl
The Police Pension is a department within the General Fund. The Cit- engaged Millimen and
Robertson, Inc. to perform the pension's actuarial study. They issued a valuation dated January 1,
1998. The valuation provided actuarially determined rates to accumulate sufficient assets to pay
benefits when due rather than the current pay-as-you-go basis. The required contributions are
determined using an aggregate projected benefit method with the annual cost increasing 6% per year over
the period ending December 31. 2010.
Under this method, the normal cost is a portion of the actuarial present value of benefits allocated to a
valuation year. The actuarial accrued liability, is equal to the actuarial value of assets. (Thus, there is no
unfunded actuarial accrued liability under this method.)
Significant actuarial assumptions used to compute contribution requirements were the same as those
used to compute the standardized measure of the pension benefit obligation.
FINRPI CAFR Nan 2001
22 - 9/17,03
37
Fire Pension
Police Pension
Single Employer
Single Employer
Defined Benefit
Defined Benefit
Total
Schedule of Fundine Proeress:
Valuation Date
January 1, 1998
January 1, 1998
Actual Value of Plan Assets
S 658,786
S 0
S 658,786
Actuarial Accrued Liabilities
10.445.000
8.277.000
I8.722.000
Total Unfunded Actuarial Liabilities (UAL)
59,786,214
58,277,000
$18.063,214
Funded Ratio
6.7%
00%
3.6%
Annual Covered Payroll
S 0
E133,938
5133,938
UAL as percentage of covered payroll
0.0%
6179.7%
13486.20/
Schedule of Emplover Contributions:
Annual Required Contribution (ARC)
5840,067
5671,522
51,511,589
Actual Fire Insurance Premiums
$36,092
s0
S36,092
Total Actual Employer Contribution
6799,901
5312,241
51,312,142
Percentage of ARC Contributed
95.2%
76.3%
86.8%
Significant Actuarial Assumptions'
Salary increases (inflation only)
5.0%/Year
5.01/6/Year
Investment Eamings
7.0%Wear
7.01/./Year
Post -Retirement Benefit Increases:
1. Related to Salaries
5.00/0/Year
5.0%./Year
2. Related to Consumer Price Index
4.00/i/Year
4.0%./Year
D. EIREMEN'S PENSION
The City has a single emplover, defined benefit pension plan for Firefighters employed prior to
March 1, 1970 and governed by Washington State Law RCW 41.26. Under the terms of the goveming
law, the pension member is entitled to payment from the City's pension plan for those benefits in excess
of those calculated under the LEOFF plan.
The City's Firemen's Pension Fund is a closed group. No new members are permitted.
Employees attaining the age of 50 who have completed 25 or more years of service are entitled to annual
benefits of 50% of their salary plus an additional 2% for each year of service in excess of 25 years -- up
to a maximum of 60% of salary. The pension plan also provides death and disability pension benefits
plus sick benefits for eligible active and retired employees.
If the employee terminates his employment with the Fire Department and is not eligible for any
other benefit under the Firemen's Pension, the employee is entitled to the following:
Return of accumulated contributions less any benefits paid.
When Firefighter would have had 25 years of service, 2% of salary for each year of service.
Firefighters are no longer required to contribute to the Firemen's Pension. The City is required to
contribute the amount necessary to fund the Firemen's Pension, using the aggregate projected benefit
method. Under state law, partial funding of the Firemen's Pension Fund may be provided by an annual
tax levy of up to $.45 per $1,000 of assessed valuation of all taxable property of the City. The
Firemen's Pension Fund also receives a proportionate share of the 25 percent of the tax on fire insurance
premiums set aside by the state for all paid firemen in the state. Additional funding is provided by
investment interest eamings.
During the year ended December 31, 2002, there were no plan amendments.
FINRPI CAFR Nan 2002
21 - 1/19,01
36
Contributions Required and Contributions Made
The City's funding policy is to provide for periodic emplover contributions at actuarially determined
rates that, expressed as percentages of annual covered payroll, are designed to accumulate sufficient
assets to pay benefits when due. The required contributions are determined using an aggregate projected
benefit funding method with the annual cost increasing 6% per year over the period ending December 31.
2012.
Under this method. the normal cost is a portion of the actuarial present value of benefits allocated to a
valuation year. The actuarial accrued liability is equal to the actuarial value of assets. (Thus. there is no
unfunded actuarial accrued liability under this method.) M
Significant actuarial assumptions used to compute contribution requirements were the same as those
used to compute the standardized measure of the pension benefit obligation.
E EOLICE P • NSION
The City, has a single employer, defined benefit pension plan for Police Officers emploved prior
to March 1. 1970 and governed by Washington State Lam, RCWI 41.20 and 41.26. Under the governing
law, the pension member is entitled to payment from the City's pension plan for those benefits in excess
of those calculated under the LEOFF plan. The City also covers four members who were ineligible under
the State Law Enforcement Officers and Fire Fighters (LEOFF) Program.
The City's Police Pension Fund is a closed group. No new members are permined. Emplovees who
have completed 25 years or more of service are entitled to annual benefits of 50% of theii salary plus an
additional 2% for each year of service in excess of 25 vears -- up to a maximum of 60% of salary. The
plan provides death and disability pension benefits plus sick benefits for eligible active and retired
employees.
If the employee terminates his employment with the Police Department and is not eligible for any other'3
benefit under the Police Pension, the employee is entitled to the following:
Return of 75% of contributions made after June 8, 1955. less any benefits paid.
When Police Officer would have had 25 years of service, 2% of salary for each
year of service.
One 'individual who is ineligible for LEOFF is contributing 6 percent. The remaining members are no
longer required to contribute to the Police Pension. The City is operating on a pay-as-you-go basis.
During the year ended December 31, 2002. there were no plan amendments.
f ontributions Required and Contrihutinns nirl
The Police Pension is a department within the General Fund. The Cit- engaged Millimen and
Robertson, Inc. to perform the pension's actuarial study. They issued a valuation dated January 1,
1998. The valuation provided actuarially determined rates to accumulate sufficient assets to pay
benefits when due rather than the current pay-as-you-go basis. The required contributions are
determined using an aggregate projected benefit method with the annual cost increasing 6% per year over
the period ending December 31. 2010.
Under this method, the normal cost is a portion of the actuarial present value of benefits allocated to a
valuation year. The actuarial accrued liability, is equal to the actuarial value of assets. (Thus, there is no
unfunded actuarial accrued liability under this method.)
Significant actuarial assumptions used to compute contribution requirements were the same as those
used to compute the standardized measure of the pension benefit obligation.
FINRPI CAFR Nan 2001
22 - 9/17,03
37
f.`[i3u��r�9����7J�`►Li1��1��►l��
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.
A UNEMPLOYMENT COMPENSATION
In 1978, the City of Yakima established an Unemployment Compensation Reserve Fund to
provide unemployment compensation coverage for its employees, and thereby elected to participate
with the State of Washington 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.
The City has contracted with U.C. Express to represent the City in appeal hearings. and to provide
audits of state awards.
The State of Washington invoices the City on a quarterly basis for reimbursement of claims which
represent payment of unemployment compensation and related administrative costs. Resources accrue
to the Unemployment Compensation Reserve Fund through monthly charges made to each Operating
Fund based on employee earnings. Normal accrual rates have been between .5 and .75 percent of gross
Payroll. while costs under the monthly premium program would have been approximately 3 percent of
payroll. The City has achieved considerable savings. lnterfund premiums are based primarily upon the
insured funds claims experience and are reported as quasi-extemal interfund transactions, a total for 2002
of $141.405. Incurred but not reported claims of $37,677 have been accrued as a liability.
B. SELF-INSURED MEDICALMENTAL PROGRAM
The City, in August, 1979, self-insured its medical and dental programs for all employees other
than temporary employees, employees hired to work less than half-time. The City's 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. These amounts are determined by the City based upon recom-
mendations made by Fisher Consulting. Factors considered by Fisher Consulting include the amount of
claims paid the previous year, increases over prior years, claims administration costs, projected
insurance industry inflation rates and the status of the Fund's Reserve. Interfund premiums to the
Employee Health Benefit Reserve Fund for 2002 were $4,741,325. Incurred but not reported claims of
$876,505 have been accrued as a liability.
FINRPI CAFR Noes 7002
23 — 1/29/07
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: 1) individual stop -loss:
and. 2) aggregate stop -loss, with both provided through SAFECO Insurance Co. Under the individual
stop -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 ($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% of that amount (125% of projected claims.)
C. NNIORKERS' COMPENSATION PROGRAM
The City self-insured its workers' compensation program for all employees except those covered
by the LEOFF 1 Retirement System in July, 1984. This workers' compensation program provides coy
erage 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.
Each Operating Fund is charged an appropriate accrual amount, per employee, based on rate
requirements prescribed by the State of Washington. Each year the Reserve Fund is reviewed to deter-
mine a contribution rate which provides for an appropriate reserve. lnterfund premiums to the Workers'
Compensation Fund for 2002 were $1.294.368. Based on the claims manager's estimate. the City has
accrued incurred but not reported claims of $521,704 at December 31. 2002.
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 Reinsurance Corporation. Under the individual stop -loss portion of the
insurance, the City is liable for the first $500,000 of claims resulting from a specific accident. Charges
beyond that $500,000 are covered by the stop -loss insurance. The City's maximum exposure for all
claims in a year is $1,000,000.
D. 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. Based on the claims
manager's estimate, the City has accrued incurred but not reported claims of $1,050,000 at December 31,
2002.
F INRPI CAFR Nae 7007
24 1/29/03
39
The accompanying schedule of long-term debt provides a listing of the outstanding debt of the City and
summarizes the City's debt transactions for 2002.
LONG-TERM DEBT
A. GENERAL OB 1 AMB D BT
General obligation bonds are all. serial bonds, to be retired through the fiscal year ending
December 31, 2026 with the exception of the Housing Bonds which mature in one lump sum 10 years
from issuance (interest is paid semi-annually). The City levies a special property tax; collected
motel/hotel and utiliry taxes; and special assessments for the principal and interest payments due Within
a fiscal year and provides the amounts in the respective Debt Service Fund.
FFNRPI CAFR Nwa 700?
25 - V29103
40
Special Prop", Tax Levy:
1995 Fire Improvement Bonds
Regular Prop"- Tax Lev�•/Real Excise Tax:
1998 Street Overlay Program Bonds
Motel/Hotel Tax: .
1996 Convention Center Expansion Bonds
Special Assessment:
G.O. Line of Credit - Irrigation Main Replacement
Public Facilities District (State Sales Tax Credit):
2002 Convention Center Addition
Home Ownership:
1993 Sinele Family Rehab Bonds
2000 Notes
Utility Tax:
1994 Criminal Justice/1-82 Bonds
Outstanding
Interest Rate Original Issue 12/31/2002
3.7% - 5.4%
Balance
$2,710,000
Payments/
Balance
935.000
01/01/2002
Additions
Retirements
12/31/2002
General Obligation Debt:
18.500
3.0%- 5.0°16
6,735,000
6,735,000
Notes
S 45,587
$ 0
$ 3,357
S 42,230
Line of Credit
88,500
0
70,000
18,500
Bonds
14.990.000
6.735.000
1.705.000
20.020.000
15,124,087
6,735,000
1,778,357
20,080,730
Intergovernmental Loans
4,196,717
0
426,343
3,770,374
Contractual Agreement - Yakima County
839,256
0
94,935
744,321
Special Assessment
Notes
141,330
0
49,330
92,000
Bonds
0
0
0
0
Lease Purchase Agreements
63,215
0
24,158
39,057
Unfunded Pension Liability
2,280,260
373,760
0
2,654,020
Vacation/Sick Leave Accrual
3.449.411
97,754
0
3.547.165
Total General Long -Term Debt Payable
$26,094,276
57,206,514
$2,373,123
530,927,667
Revenue Debt Payable
Revenue Bonds
$10,605,000
S 0
51,110,000
59,495,000
IntergovernmentalLoans
7,003,141
0
840,167
6,162,974
Unfunded Pension Liability
339.669
110.099
0
449,768
Total Revenue Debt Payable
$17,947,810
$110.099
51.950,167
516.107.742
Total Long Term Debt
$44.0
S7.316.613
S4.323.290
$47,035.409
A. GENERAL OB 1 AMB D BT
General obligation bonds are all. serial bonds, to be retired through the fiscal year ending
December 31, 2026 with the exception of the Housing Bonds which mature in one lump sum 10 years
from issuance (interest is paid semi-annually). The City levies a special property tax; collected
motel/hotel and utiliry taxes; and special assessments for the principal and interest payments due Within
a fiscal year and provides the amounts in the respective Debt Service Fund.
FFNRPI CAFR Nwa 700?
25 - V29103
40
Special Prop", Tax Levy:
1995 Fire Improvement Bonds
Regular Prop"- Tax Lev�•/Real Excise Tax:
1998 Street Overlay Program Bonds
Motel/Hotel Tax: .
1996 Convention Center Expansion Bonds
Special Assessment:
G.O. Line of Credit - Irrigation Main Replacement
Public Facilities District (State Sales Tax Credit):
2002 Convention Center Addition
Home Ownership:
1993 Sinele Family Rehab Bonds
2000 Notes
Utility Tax:
1994 Criminal Justice/1-82 Bonds
Outstanding
Interest Rate Original Issue 12/31/2002
3.7% - 5.4%
S3,700,000
$2,710,000
4.0%- 4.5%
1.430.000
935.000
5.29%
6.000.000
4,910.000
variable
325.000
18.500
3.0%- 5.0°16
6,735,000
6,735,000
7.25%
200.000
200,000
6.00%
50,000
42,230
4.-'5% - 5.25%
6.800.000
4.530.000
$25.240.000
$20.080.730
B. REVENUE BONDS
Water/Sewer revenue bonds are all serial bonds. to be retired through the. fiscal ear ending
December 31, 20181 vrith the exception of the Apple Tree Bond which will mature June l,'204 1. The
City shall have no obligation to make any payment into this Apple Tree Bond from any other source
other than the Ahtanum connection charges. The principal and interest for the water/sewer revenue
bonds are provided by the results of operations and hook -on fees initiated to primarily finance specific
capital improvements.
1968 Series B Water/Sewer Revenue Bonds
1996 Water/Sewer Revenue Bonds
(Refund of 1978 Issue)
1998 Water/Sewer Revenue Bonds
(Refund of 1991 Issue)
1998 Water Revenue Bonds
2001 Apple Tree Bond
C. INTERGOVFRNtNIVNTAI 1 nANIZ
The City participated in a program administered by the State's Department of Community
Development on behalf of the Public Works Board. The program provides financial assistance for
general government activities, such as street, bridge, water or proprietary activities, such as water or
sewage projects. The City has 17 loans through the Public Works Trust Fund as described below:
FINRPI CAFR Nae, 2002
'?D - 1/3910'
41
Outstanding
Interest Rate
Original Issue
12/31/2002
5.0% - 5.5%
S2,800,000
S 270,000
4.0%- 5.2%
3,320.000
1,860,000
4.0%-4.3%
4,715.000
4,030,000
4.0% - 5.01/6
3,195,000
2,735,000
6.000,0
600.000
600,000
S14.630.000
59495,000
C. INTERGOVFRNtNIVNTAI 1 nANIZ
The City participated in a program administered by the State's Department of Community
Development on behalf of the Public Works Board. The program provides financial assistance for
general government activities, such as street, bridge, water or proprietary activities, such as water or
sewage projects. The City has 17 loans through the Public Works Trust Fund as described below:
FINRPI CAFR Nae, 2002
'?D - 1/3910'
41
The City entered into a contractual agreement with Yakima County for financing an agricultural trade and
convention facility, the SunDome. The agreement will run over the term of County bonds issued for this
purpose. The County issued bonds in the amount of $1,280.000 in 1988, and $3.000.000 in 1989. The
City of Yakima is contractually responsible for the repayment of a portion of the issues plus
corresponding interest and will make semi-annual payments to the County over the 20 vear bond
redemption schedule. In 2002, the City entered into a contractual agreement with Yakima County for a
Supporting Investments in Economic Development (SLED) Loan for $44.000 to fund public
infrastructure improvements related to Cascade Quality Molding.
Outstanding
Fundinn Source Maturity Date Original Issue 12/31/2002
1988 Issue Business Licenses 11/1/2007 5780,000 $304,687
1989 Issue Real Estate Excise Taxes I1/1/2009 781,518 399.283
2001 Issue Contracted Assessment 06/1/2011 44.000 40.351
$1.605.518 $744.321
The following schedule sets forth the general obligation debt. intergovernmental loans and contracts, and
revenue bond indebtedness service requirements (in thousands). including interest, to maturity:
-- General Oblieation — — Revenut —
Bonded Notes and Bonded Notes and
Debt Contracts Debt Contracts Total Debt
2003 S 2,201 S 620 S 1,596 S 675 S 5,092
2004 1.956 615 1,160 669 4,400
2005 1,953 607 1.160 639 4,359
2006 1.954 598 1.164 575 4,291
2007 1.956 555 1,159 569 4,239
2008 1,954 464 1,158 563 4,139
2009-2013 8.898 950 2,855 2,289 14,992
2014.2025 9.241 108 1.213 396 10,958
S30.113 $4.517 $11.465 $6.375 $52.470
At December 31, 2002. the City had $804.212 available in debt service funds to service the General
Obligation Bonds and notes. Additionally, there is $2.085,358 in reserved retained earnings for debt
service for the enterprise funds. These represent sinking funds and reserve requirements as contained in
the various indentures.
There are a number of other limitations and restrictions contained in the various bond indentures. The
City is in compliance with all significant limitations and restrictions.
D. SPECIAL ASSESSMENT DEBT WITH GOVERNMENT L COMMITM .NT
Debt service requirements for special assessment notes are met by assessments levied against
property owners. The special assessment debt are notes. that are due as moneys become available from
payments on individual assessments. Special assessment debts currently outstanding are as follows:
Special Assessment Notes
LID 91052; 10/23/05 Water -- Willow Street Installment Note; 9.75% Interest
S11,000
LID 91053; 02/10/07 Sewer -- Alpine Court Installment Note; 9.25% Interest
Maximum
Outstanding
27,000
Interest
Maturitv Date
Authorized
12/31/2002
Real Estate Transfer Tax:
P W-86-040
Tieton Drive, 40th Ave. to 65th Ave.
3%
07/01/2006
$720,000
5151,579
PW -87-002
Nob Hill Overpass
1%
07/01/2007
213.454
51.634
PW -5-89-962-0056
Resignalization and Lighting
1%
07/01/2009
765.000
295,053
PW -5.89-962-0057
Fruitvale Canal Wasteway Piping
3%
07/01/2009
174,879
44.639
PW -5-91-280-071
Fruirvale Canal Wasteway
3%
07/01/2011
1,188.000
546,019
Arterial Street Gas Tax:
PW -5-90.280-050
Tieton Drive, 5th Ave. to 16th Ave.
3%
07/01/2010
803,157
254,049
PW -5-91.280-070
N. Ist Avenue, Yakima Ave. to "I" St.
1%
07/01/2011
1,155,000
449,738
PW -5-95-791-052
Fav Avenue Improvements
1%
07/01/2015
1,000,000
692,260
PW -00-691-062
Downtown Yakima Rehabilitation Project
1%
06/10/2010
1,180.000
944,000
General Fund Sales Tax:
CERB Loan 9C95-107
Utilities -Madison Ave. B 8th, "I" St. B 8th
6%
07/01/2016
425,448
341.403
Sub -Total -- General Long -Term Debt
$3,770,374
Sewer Operating Revenue:
PW -88-962-54
Treatment Plant Rehabilitation
1%
07/01/2008
945,000
333,475
PW -5.92.280-046
Sewer Collection System Improvements
1%
07/01/2012
1,120,000
617,310
PW -5-93-280.054
Wastewater Faciliry Rehabilitation
1%
07/01/2013
3,221,708
1,875,561
PW -5-94-784-049
Sewer Collection System Improvements
1%
07/01/2014
1,481,000
490,789
PW -5-95-791-053
Headworks/DigesterRehabilitation
1%
07/01/2015
3,030,558
2,123,868
PW -5-95-791-054
Sewer Improvements King Street Collector
1%
07/01/2015
209,367
151,906
PW -0I-691-071
Fruitvale Neighborhood
.5%
07/01/2021
1,466,250
219,937
Sewer -Water Project Phase 1
L9200018 -- State
Revolving Fund Loan
4%
05/28/2002
2,550,559
159,211
Water Operating Revenue:
PW -5-89.962-0058
Domestic Well and Pumphouse
3%
07/01/2009
495.000
190.917
Sub-Total..Revenue Debt
6,162,974
Total Intergovernmental Loans
59,933.348
The loans have a term not to exceed 20 years and require 1/19th of the
original principal
plus interest to
be paid each July 1st.
The City entered into a contractual agreement with Yakima County for financing an agricultural trade and
convention facility, the SunDome. The agreement will run over the term of County bonds issued for this
purpose. The County issued bonds in the amount of $1,280.000 in 1988, and $3.000.000 in 1989. The
City of Yakima is contractually responsible for the repayment of a portion of the issues plus
corresponding interest and will make semi-annual payments to the County over the 20 vear bond
redemption schedule. In 2002, the City entered into a contractual agreement with Yakima County for a
Supporting Investments in Economic Development (SLED) Loan for $44.000 to fund public
infrastructure improvements related to Cascade Quality Molding.
Outstanding
Fundinn Source Maturity Date Original Issue 12/31/2002
1988 Issue Business Licenses 11/1/2007 5780,000 $304,687
1989 Issue Real Estate Excise Taxes I1/1/2009 781,518 399.283
2001 Issue Contracted Assessment 06/1/2011 44.000 40.351
$1.605.518 $744.321
The following schedule sets forth the general obligation debt. intergovernmental loans and contracts, and
revenue bond indebtedness service requirements (in thousands). including interest, to maturity:
-- General Oblieation — — Revenut —
Bonded Notes and Bonded Notes and
Debt Contracts Debt Contracts Total Debt
2003 S 2,201 S 620 S 1,596 S 675 S 5,092
2004 1.956 615 1,160 669 4,400
2005 1,953 607 1.160 639 4,359
2006 1.954 598 1.164 575 4,291
2007 1.956 555 1,159 569 4,239
2008 1,954 464 1,158 563 4,139
2009-2013 8.898 950 2,855 2,289 14,992
2014.2025 9.241 108 1.213 396 10,958
S30.113 $4.517 $11.465 $6.375 $52.470
At December 31, 2002. the City had $804.212 available in debt service funds to service the General
Obligation Bonds and notes. Additionally, there is $2.085,358 in reserved retained earnings for debt
service for the enterprise funds. These represent sinking funds and reserve requirements as contained in
the various indentures.
There are a number of other limitations and restrictions contained in the various bond indentures. The
City is in compliance with all significant limitations and restrictions.
D. SPECIAL ASSESSMENT DEBT WITH GOVERNMENT L COMMITM .NT
Debt service requirements for special assessment notes are met by assessments levied against
property owners. The special assessment debt are notes. that are due as moneys become available from
payments on individual assessments. Special assessment debts currently outstanding are as follows:
Special Assessment Notes
LID 91052; 10/23/05 Water -- Willow Street Installment Note; 9.75% Interest
S11,000
LID 91053; 02/10/07 Sewer -- Alpine Court Installment Note; 9.25% Interest
10,000
LID 41054; 10/01/07 Sewer -- South 70th Ave. and Lindgren Dr.lnstallment Note; 9.25% Interest
27,000
LID 91055; 06/05/10 Sewer -- North 85th Avenue Sewer Installment Note; 10.75% Interest
44,000
$92,000
FINFIN CAFR Noir 2002
FINRPI CAFR Nan 2002 2,
-- r/29105
27 - 8419103
42
43
Debt service requirements for special assessment notes bonds are met by assessments levied against
property owners. At December 31. 2002. outstanding assessments totaled $253.885 of which $4.619
are delinquent. (The assessments are liens against the property and are subject to foreclosure.) Pursuant
to RCW 35.54. the City maintains a Local Improvement Guarantee Fund for the purpose of
guaranteeing, to the extent of the fund, the payments of its LID bonds. The fund balance at December
31, 2002 of the LID Guarantee Fund totaled $43,568.
E LEASE PURCHASE AGREEMENTS:
General Fixed Assets
As pan of the City's capital equipment budgeting program, selected items are obtained via lease
purchase and municipal lease/deferred purchase plans. Since the leases are financing agreements which
transfer ownership to the City at the end of the lease term, the City records the present value of future
lease payments as a capital outlay expenditure and as an offset to other financial sources in the vew that
the asset is received. The present value of payments due in future periods is shown as a liability in the
general long-term debt account group and the cost of the asset is recorded in the general fixed asset
account group. A summary of the leased equipment is detailed below.
Lease N Equipment Effective Date Term
23 High Speed Copier 11/98 60 Monthly Payments
24 Laser Printer 07/99 60 Monthly Payments
The following is a schedule of the future minimum lease payments under the above capital leases, and the
present value of net minimum lease payments at December 31, 2002.
Fiscal Year
1998 High Speed Copier
$37,622
1999 Laser Printer
22.290
Total Minimum Lease Payments
359,912
Less: Amount Representing Interest
20.856
Present Value of Net Minimum Lease Payments
$39.056
F. UNFUND D PENSION IARII 1TIES:
The Citv 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 these studies were 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 liability incurred is $373,760 in 2002, and the outstanding balance at December 31,
2002 is $2.654.020.
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 has an unfunded pension liability of
$449,768 at December 31, 2002.
See Note #6 for additional information on the pension funds.
FINFLN CAFR Nars 2002
29 .. 812910)
44
NOTE 9 - CONTINGENCIES
In March 2002. the Washington State Supreme Court issued an opinion in which it found that the
petition method of annexation is unconstitutional because it violates the privileges and immunities clause
of the Washington State Constitution. The Citv moved for reconsideration and the Court withdrew the
opinion and. in March 2003. heard oral argument. The Court has not issued a new opinion and itis
uncertain as to whether it will find the statutes unconstitutional. The City's counsel believes that. based
on prior case law, it is unlikely in any event 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. The City has used the petition method of annexation for
approximately 50 years.
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. The City cannot reasonably estimate the loss, if any. at this time.
The City participates in a number of federal and state assisted programs. These grants are subject to
audit by the grantors or their representatives. Such audits could result in requests for reimbursement to
grantor agencies for expenditures disallowed under the terms of the grants. City management believes
that such disallowances, if any, will be immaterial.
FINUI CAFR Narr 2007
30 -- 809103
45
NOTE 10 - INTERFUND TRANSACTIONS AND BALANCES
A. CLASSIFICATION OF INTERF T1V T ANA TIONS
Interfund transactions are classified as follows:
1. Transactions that would be treated as revenues, expenditures or expenses if they involved
external organizations. such as buying goods and services or payments in lieu of taxes, are similarly
treated when they involve other funds of the City.
2. Transfers to support the operations of other funds are recorded as "Operating Transfers"
and classified with "Other Financing Sources or Uses."
3. Contributions to the capital of enterprise or internal service funds, (transfers between
those funds and the general fixed assets account group,) transfers to establish or reduce working capital
in other funds, and transfers of remaining balances when funds are closed are classified as operating
transfers and reported as non-operating revenues.
4. Loans between funds are classified as interfund loans receivable and payable or as
advances to and from other funds on the combined balance sheet depending on the time period for which
the loan was made. Interfund loans do not affect total fund equity, but advances to other funds are
offset by a reservation of fund equity.
B. INTERFUND LOANS AND RECEIVABLES
The following table depicts interfund loan activity during 2002:
Loan Activity
Balance Balance
Borrowing Fund Lending To 12/31/01 New Loans Repayments 12/31/02
551 -Equipment Rental 973 -Wastewater $710.000 $710,000 $ 0 $1,420,000
The following table depicts the total due from other funds presented on the Combined Balance
Sheet -- All Fund Types and Account Groups during 2002, and represents temporary cash overdrafts
(i.e. over -investment) in individual funds:
General Fund
Special Revenue Funds:
Tourist Promotion
Capital Project Funds:
Fire Capital
Internal Service Funds:
Risk Management
FINRPI CAFR Nan 7002
31 - 8/29103
Due From
Due to Other
Other Funds
Funds
$1,066,233
$ 0
Special Revenue Funds:
87,274
29,432
95.000
949,527
51066,233
$1,066,233
46
Parks and Recreation
C. INTERFUND OPERATING TRANSFERS
The following table depicts interfund operating transfer activity during 2002:
Egad
Transfer In
Transfer Out
General Fund
S 110.000
$1.919.371
Special Revenue Funds:
Economic Development
95.000
0
Community Development
0
205.000
Parks and Recreation
794,175
235,000
Streets
0
427.819
Arterial Street
94.031
70.000
Cemetery
166,499
0
Emergency Services
0
166.000
Public Safety Communication
886,000
0
Parking and Business Improvement
0
20.000
Tourist Promotion
0
30,000
Capitol Theatre
159,427
0
Public Facilities District
0
269.265
Contingency
125.000
0
Capitol Theatre Reserve
0
159,427
Debt Service Funds,
Housing G.O. Notes
205.000
0
2002 GO Convention Center, PFD
250,000
0
'85 L.G.O Diversion Dams
13.549
0
'98 G.O. Street Overlay
182.000
0
'94 L.G.O. Criminal Justice/1-82
120,000
0
'97 G.O. Line of Credit
80.000
0
LID Debt Control
0
17,188
Capital Projects Funds:
Parks and Recreation
100,000
0
Law and Justice
105,596
0
Public Works Construction
75.000
100,000
Convention Center
49,265
0
Cumulative Reserve
200.000
335,000
Enterprise Funds.
Transit
356
0
Refuse
0
0
Sewer
0
55.870
Water
0
39,058
Irrigation
0
127.299
Internal Service Funds
Equipment Rental
379,898
0
Non -Expendable Trust Funds
Cemetery Trust
0
14.499
$4.190.796
$4.119.796
FINRPI CAFR Nmn 2002
32 - e/29/03
47
� __ i_ u!_ 1►Lt � '
Reservations of Fund Balance:
Fund balance in governmental fund types is reserved for two purposes: (1) where certain
amounts are legally committed for specific future uses, such as outstanding purchase orders
(encumbrances), continuing appropriations, capital projects, debt service, or by State mandate: and
(2) where assets are not available for appropriation, because they have been advanced to another fund.
because they are non-current receivables, or because they have been expended as inventories or
prepayments.
Reserve for Encumbrances
Reserve for Inventory
Reserve for Active
Emplovices' Retirement Contribution
Reserve for Restricted Donations
Reserve for Probation Center/Programs
Reserve for Continuing Appropriations
Deficit Retained Earninis:
The Sewer Fund unreserved retained eamings deficit of $2.500,616 is a result of a chance in
estimated useful lives used to calculate depreciation to better match expense with useful asset life. This
change (implemented in 1993) resulted in additional depreciation of approximately $1,300,000 in the
first year and has continued to negatively affect unreserved retained eamings. A cost of service study
was completed in 2001, that resulted in 37% rate increase to adequately provide for future capital and
operational needs. Accordingly, the deficit retained earnings will be replenished over the next several
years.
The Workers Compensation Reserve Fund has a retained earnings deficit of $237.762 due to an
extraordinary increase in claims benefits. A 20% rate increase for operating funds contribution has been
implemented in 2003, plus an additional 20% surcharge for the divisions experiencing exceptionally high
claims.
Contributed Capital:
Contributed capital of the internal service funds records the amounts of working capital and fixed
assets received from other funds. Contributed capital in enterprise funds consists of contributed fixed
assets or contributions for fixed asset acquisition from other funds. governments, customers, developers
and other sources. Proprietary funds of the City do not amortize contributed capital.
Reservations of Retained Earnings:
Retained earnings in proprietary fund types is generally reserved to indicate that a portion of
retained earnings is being held or set aside for a specific purposes. The amount reserved for debt service
and replacement of rolling stock are:
Reserve for Debt Service
Reserve for Replacement
FINRPI CAFR Na 7007
33 — a/29M
48
Enterprise Funds Internal Service
52,085,358 $ 0
0 8.738,074
$2.085.358 $8.738.074
D. RESERVED FUND BALANCE IN TRUST F TNne
The reserve of $473,299 in the Cemetery 7 -rust Fund represents a portion of the amounts paid
for cemetery plots. Provisions of these sales require $120 of the sales price be held in trust and that the
income on the investment of these amounts be used to maintain the plots. The Reserve for Endowments
represents an endowment for cemetery beautification. The provisions of the endowment stipulate that
income from the endowment be used only for grounds improvements.
The $657,889 Reserve for Employees' Retirement System is the Firemen's Relief and Pension Fund
balance which represents the accumulated contributions -made by the government through property taxes
(see Note t!4) plus interest earnings and state fire insurance premium tax proceeds.
FINRPI CAFR Nm 7007
3e •. 8"29103
�J
49
special Revenue
Capital Project
General Fund
Funds
Funds
5522.005
$1,004,139
$ 787.996
26.802
0
0
AN
C. DESIGNATED FUND BALANCES
50.812
0
0
This category is used to set aside governmental fund balances when city management has plans or
tentative commitments to expend resources for certain purposes in future periods. Further legal action
0
1,514
0
will be required to authorize the actual expenditures. Special Revenue Funds have a designated fund
189.075
0
o
balance of $1.193.525 for the Capitol Theatre Reserve Fund for replacement of the Capitol Theatre. The
0
0
6.948.742
Capital Project Funds have a designated fund balance of $565,911 in the Fire Capital Fund for
$788.694
51.005.653
57.736.738
replacement of fire equipment. -
Contributed Capital:
Contributed capital of the internal service funds records the amounts of working capital and fixed
assets received from other funds. Contributed capital in enterprise funds consists of contributed fixed
assets or contributions for fixed asset acquisition from other funds. governments, customers, developers
and other sources. Proprietary funds of the City do not amortize contributed capital.
Reservations of Retained Earnings:
Retained earnings in proprietary fund types is generally reserved to indicate that a portion of
retained earnings is being held or set aside for a specific purposes. The amount reserved for debt service
and replacement of rolling stock are:
Reserve for Debt Service
Reserve for Replacement
FINRPI CAFR Na 7007
33 — a/29M
48
Enterprise Funds Internal Service
52,085,358 $ 0
0 8.738,074
$2.085.358 $8.738.074
D. RESERVED FUND BALANCE IN TRUST F TNne
The reserve of $473,299 in the Cemetery 7 -rust Fund represents a portion of the amounts paid
for cemetery plots. Provisions of these sales require $120 of the sales price be held in trust and that the
income on the investment of these amounts be used to maintain the plots. The Reserve for Endowments
represents an endowment for cemetery beautification. The provisions of the endowment stipulate that
income from the endowment be used only for grounds improvements.
The $657,889 Reserve for Employees' Retirement System is the Firemen's Relief and Pension Fund
balance which represents the accumulated contributions -made by the government through property taxes
(see Note t!4) plus interest earnings and state fire insurance premium tax proceeds.
FINRPI CAFR Nm 7007
3e •. 8"29103
�J
49
NOTE 12 - SEGMENT INFORMATION
The City maintains four Enterprise Funds. These funds provide bus transportation, refuse.
water/irrigation and sewer services. It is the intention of the City to maintain adequate rate structures or
provide operating subsidies to sustain the operations of its Enterprise funds. The key financial data for
the year ended December 31. 2002, for these utilities are as follows:
Current capital.
Transit
Refuse
Sewer
Walter
Irrigation
Total
Total operating revenues
S 382.351
52,989,068
711,061,537
55,047,716
$1,733,767
$21,214,439
Operating expenses:
0
0
0
0
0
0
Operations and
Engineering study
0
Disposal of equipment
0
Other
8.730
maintenance
4,529,516
2,886,075
5,989,079
2,814,422
1,141,569
17,360,661
Taxes
0
0
1,858,498
1,081,970
0
2,940,468
Depreciation/
12.753,489
402,770
65,249,660
31,147,699
-
115,024,609
amortization
456.975
0
2.725,912
699.334
50.910
3.933.131
Total operating expenses
54,986,491
52,886,075
510,573,489
54,595,726
51,192,479
524,234,260
Operating income (loss)
(4,604,140)
102,993
488,048
451,990
541,288
(3,019,821)
Non-operating
revenues (expenses)
Operating grants and
subsidies
5,037,323
0
0
0
0
5,037,323
Miscellaneous interest
(net)
82,351
754
(233,978)
(53,638)
29,001
(175,510)
Other (net)
86.315
0
618.146
1.365,836
10.020
2.080.317
Total non-operating
revenues (expenses)
5,205,989
754
384,168
1,312,198
39,021
6,942,130
Operating transfers (net)
356
0
(55.870)
(39,058)
(127,299)
(221.871)
Net income (loss)
5 602.205
5 103.747
S 816.346
51.725.130
S 453.010
53.700.438
Current capital.
2,205,658
Contributed capital
9.633.290
Total fund equity
11.838.948
Total liabilities and equity
Capital grants received
0
0
0
0
0
0
Other capital contributed
0
0
0
0
0
0
Property/p lant/eq u i pmt nt:
Engineering study
0
Disposal of equipment
0
Other
8.730
Increases (decreases), net
1.934,564
0
1,558.894
1,150,091
15,017
4,658,566
Net working capital
1.840,905
129,131
5,859,378
5,368,275
2,005,573
15,203,262
Total assets
12.753,489
402,770
65,249,660
31,147,699
5,470,991
115,024,609
Bonds and other long tern
liabilities: Parable from
operating revenues
0
0
12,235,821
3,013,562
0
15,249,383
Fund equity 511,194,959 $129,131 $49,970,933 $26,647,207 $5,357,019 $93,299,249
NOTE 13 - JOINT VENTURES
The City and the County of Yakima entered into a joint venture for operation of the Yakima Air
Terminal on July 1, 1982. The Yakima Air Terminal Board is comprised of five individuals: two
appointed by the City, two by the County. and one selected by the four appointees. Annually. the
governing bodies of the City and County each designate one of its members as an advisory ex -officio
member of the Air Terminal Board.
The City and the County contribute equally to the joint venture. share equally all profits and losses. and
own jointly, in equal shares, all properties or facilities. The Yakima Air Terminal is presently
self-sustaining. We have considered disclosure requirements promulgated in GASB 14 and have elected
to continue to disclose the joint venture in a manner consistent with prior years. We feel the effects of
the joint venture on the combined Financial statements taken as a whole is immaterial.
The Air Terminal budget is approved, amended and/or supplemented by joint resolution of the City and
County. Real property acquisition and sale in excess of $50.000 must be approyed by both the City and
County. Issuance of bonds for Airport purposes by the City or County requires the other party's
approval. Key financial data for the year ended December 31, 2002, is as follows:
Current assets S 910,376
Property, plant and equipment, net 11,022,808
Other assets -)-
Total assets $11.933.184
Current liabilities $94,236
Other liabilities 0
Total liabilities $94.236
Retained earnings
2,205,658
Contributed capital
9.633.290
Total fund equity
11.838.948
Total liabilities and equity
SI 1.933.184
Total operating revenues
5 980,805
Operations/maintenance
986,844
Depreciation
1.670.446
Total operating expenses
2,657,290
Operating income (loss)
(1,676,485)
Non-operating revenues (expenses)
Misc. interest revenue
9,139
Engineering study
0
Disposal of equipment
0
Other
8.730
Total non-operating revenues (expenses)
17,869
Net income (loss) (1.658.616)
Fund equity, January 1 12.861,424
Contributed capital 636.140
Fund equity, December 31 $11.838,948
Complete financial statements for the Airport can be obtained from the Yakima Air Terminal at 2300
West Washington Avenue. Yakima. WA, 98903.
FINRPI CAFR Nd 7001 FINRPI CAFR Na 2002
35 -- 3/29/02 56 .. 1.79,03
50
51
NOTE 14 - POST RETIREMENT BENEFITS OTHER T ANPENSION B N FIT
In addition to providing pension benefits, the City provides certain health care (100% of medically
necessary costs) and life insurance benefits for retired employees under the City's Firemen's and Police
Pensions as prescribed by state statutes. Current employees under these two pensions become eligible
for those benefits if the)' reach normal retirement age while working for the City. The cost of retiree
health care insurance and life insurance benefits is recognized as an expenditure as claims are paid. Both
plans are being funded 100% by the City on a pay-as-you-go basis. For 2002, the costs totaled
$507.369 for the Firemen's Pension which has a total of 77 participants currently eligible to receive
benefits and $478,507 for the Police Pension which has a total of 60 participants currently eligible to
receive benefits.
I►11�Ji��1
A- ACCOUNTING AND REPORTING N
A new Special Revenue Fund titled Public Facilities District Fund was established to account for
the revenues received from the Yakima Regional Public Facilities District (PFD) which was created in
2001 by the cities of Yakima, Union Gap and Selah. The primary revenue to the PFD is a 0.033% state
sales tax credit, which is remitted by the PFD to the City of Yakima in accordance with an interlocal
agreement. The primary use of these funds is debt service for an expansion of the Yakima Convention
Center.
PFD/Convention Center 2002 Bonds -- A new Debt Service Fund was created to account for the
repayment of the 2002 Limited Tax General Obligation Bond for the expansion of the Convention
Center. Debt service will be supported by the PFD state sales tax credit, described above.
B. SUBSEQUENT EVENTS
In June 2003, the City issued $1.43 million in Limited Tax General Obligation (LTGO) Bonds to
provide moneys to expand and remodel the SunDome, a sports/multi-purpose facility owned by Yakima
County. Additionally, in the same issue, the City refunded one LTGO issue with a $3.87 million par
value. Total debt issued amounts to $5.6 million. The bonds bear interest rates from 2.34% to 4.72%,
and will be redeemed over the next 20 years. Debt service for the new money will be supported by
Business License revenues and Real Estate Excise Taxes; while the refunded issue will continue to be
supponed by Cable Television Utility Tax and Gas Tax revenues.
There have been no'other events involving the City which have taken place between year-end
2002 and the printing of this CAFR which would significantly alter the information presented in this
document.
FINRPI CAFR Npn 2007
72 _ 1/29N3
52
Pape I of
CITY OF YAKIMA
Required Supplementary Information
Police Pension
December 31, 2002
Analysis of Funding Progress (Dollars in Thousands)
rl\'RPI X
1 -- 5/23/03
53
Revenues by
Source and Other Financing
Sources
Fiscal
liar
(6)
Operating
1002
Unfunded
Transferin
2001
Pension Benefit
$ 991.009
9;;.631
(1)
(2)
99 09
_000
Oblleation
1.14^..560
Net Assets
Pension
(3)
Percentage
(4)
Unfunded
(5)
Annual
As aPercemage
of Covered
Fiscal
Available For
Benefit
Funded
Pension Benefit
Covered
Pavroll
YM
Benefits
4blipat o
(1)11:]
Obligation
Pavroll
(J1=(51
2002
?001
4
n/a
0.0%
Na
$134
n/a
894,360
•G
We
0.0%
n'a
139
n!a
2000
-0-
n/a
0.0%
n a
153
n/a
;999
G
n a
0.0%
n: a189
1998
1997
-G
nra
0 01/b
n;a
.166
rue
n/a
1996
-0-
Wit
0.0%
n/a
276
Na
1995
-0-
-0-
n/a
0.0%
n/a
379
Na
1994
G
rya
9.695
0.0%
0.0%
n1a,
9.695
513
506
Ne
199_
-0-
9,292
0.0%
9.292
575
1,916%
1,616%
rl\'RPI X
1 -- 5/23/03
53
Revenues by
Source and Other Financing
Sources
Fiscal
liar
Operating
1002
Transferin
2001
$ 991.009
9;;.631
$
99 09
_000
1.14^..560
933.831
1999
1.090.801
1,147,560
1998
986.678
1.090.801
1991
900.713
986.878
1996
894,360
900,710
1995
749.034
894.360
1994
698.;57
749,034
1993
706,437
698,357
706,437
Expenses
by Type
Fiscal
--------------
Administrative
isx
200-'
Pension
$512.241
Medica
$478.507
Expensec
$ 262
J�1
2001
490.953
442.565
$
313
991.009
9;;,831
000
1999
63;,78?
629.492
512.914
864 1.147.660
1998
596.066
456.871
389.997
4 438
815 1.090,801
1997
563,035
335,275
,40;
986,878
900,713
1996
1995
550,215
485.515
34;.698
447
894.360
1994
437.535
262.495
255,294
1.024
5 5'6
749,034
1993
466.81;
238,401
1.2?;
698,357
706,437
rl\'RPI X
1 -- 5/23/03
53
Pace 2 of 2
CITY OF YAKIMA
Required Supplementary Information
Fire Pension
December 31, 2002
Analvsis of Fundine Progress (Dollars in Thousands)
Revenues by Source and Other Financine Sources
Fiscal
----------Benefits---------
Actuarial
Yli
7112Lcy
(6)
Tote1
2002
$1.325,372
$5.260
51.330.632
2001
Unfunded
5,489
1,338,305
2000
1.256.578
4.982
1.261.560
Pension Benefit
1.221.698
1,232
1.222,930
1998'
1.170.318
602
Obligation
1997
(1)
(2)
(3)
(4)
(5)
As a Percentaee
889,057
Net Assets
Pension
Percentaee
Unfunded
Annual
of Covered
Fiscal
Available For
Benefit
Funded
Pension Benefit
Covered
- Pavroll
.YS81.
Benefit
Obligation
f l l / f21
1 b1i anon
Pavr411
I.4)_ (5
2002
rva
n/a
nia
n/a
$ -0-
n/a
2001
nya
n/a
n/a
nta
4
n/a
2000
n/a
n/a
n/a
n/a
19
nt
1999
ilia
tt/a
rua
nia
144
nia
1998
n/a
nia
wa
rva
215
n/a
1997
n/a
n/a
n1a
Na
292
n/a
1996
n/a
n/a
n/a
n/a
371
n/a
1995
Na
n/a
n/a
n/a
495
n/a
1994
25
12,911
.2 %
12,886
434
2,969%
1993
(129)
12,453
(1.0%)
12,582
471
2,671
Revenues by Source and Other Financine Sources
Fiscal
----------Benefits---------
Actuarial
Yli
7112Lcy
Other Income
Tote1
2002
$1.325,372
$5.260
51.330.632
2001
1.332.816
5,489
1,338,305
2000
1.256.578
4.982
1.261.560
i99y
1.221.698
1,232
1.222,930
1998'
1.170.318
602
1,170,920
1997
1.025.782
272
1.026,054
1996
887.689
1,368
889,057
1995
800.628
4.672
805,300
1994
949.588
2,873
952,461
1993
949.047
1,262
950,309
Expenses by Tvne
Fiscal
----------Benefits---------
Actuarial
Administrative
YM
Pension
Medical
Contributions
1 NDense
jQW
2002
5680448
5507.369
$ -0-
$23.363
S1.21 1,180
2001
675.229
458,557
-0-
22.997
1,156,783
2000
749.239
425.215
-4
20.278
1,194,732
1999
746.720
358.192
-0-
22.268
1,127,180
1998
721,919
304.079
-0-
17.110
1,043,108
1997
703.739
278,736
-0-
16.489
998,964
1996
719,124
284.570
-0-
20.961
1,024,655
1995
743,721
191.616
172.067
10.751
1,118,155
1994
615.698
198,852
-0-
14,687
829,237
1993
654.888
135,122
(79,724)
12.788
723,074
The Transit Fund was created on September 26, 1966, pursuant to the result of a special election on September 20,
1966, ratifying Ordinance 821, which proposed that the City of Yakima lease, operate and subsidize a Ciry transit system.
On October 1. 1970, the City assumed full management of the City transit system. The system is subsidized by a .03%
sales tax which became effective in November 1980 by the vote of the citizens ratifying Ordinance 2469.
The Refuse Fund is a self supporting fund. This fund was established for the purpose of accumulating moneys derived
from the operation and maintenance of the garbage collection and disposal service of the City, and for the purpose of
defraying all of the operating and maintenance expenses and costs incurred by the City in the collection and disposal of
refuse
The Water and Sewer Funds account for the provision of water and sewer services to the residents of the City and other
outside utility agreements. All activities necessary to provide such services are accounted for in these funds, including,
but not limited to, administration, financing and related debt service, billing and collection.
The Irrigation Uillity Fund was established in 1998 to replace the Special Revenue Fund titled Irrigation. This fund is
responsible for the operation, maintenance and reconstruction of the existing irrigation system.
I'Min K I
rrNm X 9--8/21/03
2 - 8/23/03
54
101
City of Yakima
Combining Balance Sheet -Enterprise Funds
December 31, 2002
with romparafiur totals for Dcc-b" 31, 2001
Page 1 of 2
'
W62 & 4364
$471
0973
0974
0975
TOTAL
Transit
Refuse
Sewer
Walt,
Irrigation
1001
2001
ASSETS
Cash & Equity in Pooled Investrn'ts
$1,007,044
5317,563
$3,648,437
57,467,069
$1,948,047
$7,788,160
$7,442,127
Receivables:
-
Accounts,
0
85,207
724,886
2,380,444
142,705
3,333,242
3,138,445
Noles/Contracts
0
0
12,203
0
0
12.203
19,031
Interest/Penalties
16,472
0
46,698
16,977
1,110
81,257
110,656
Other Receivables
0
0
38,000
7,050
0
25,050
25,050
Due from other Govemment Units
1,220,858
0
0
0
0
1,210,858
1,753,209
Inventories
0
0
11,073
178,247
0
189,270
199,809
Investments, at amortized cost
1,155,061
0
3,143,713
2,305,021
49.607
6,653,403
7,705,708
Restricted Assets:
Cash
0
0
1,585,387
499,971
. 0
2,085,358
1,749,415
Fiscal Agent/7rustee
0
0
0
425
0
425
409,185
Investments, at MGF112ed cost
0
0
0
0
0
0
501,712
Land
1,307,989
0
588,454
191,757
98,500
2,186,700
2,186,700
Buildings
6,226,270
0
54,529,016
1,939,549
0
62,694,835
61,126,477
Other Improvements
915,974
0
30,710,685
30,997,414
4,684,462
67,308,535
64,025,104
Machinery & Equipment
5,619,798
48,883
3,638,099
2,964,354
42,531
12,513,665
10,085,918
Accumulated Depreciation
4,715,977
48,883
-02,476,160
-15,430,975
-2,281,374
-64.953,369
-61,020,237
Construction in Progress
0
0
9,132,662
1,163,387
785.403
11,081.452
9,769,289
Completed Const. -not Classifd.
0
0
0
2.232,245
0
2,232.245
2,232,245
Intangibles
0
0
0
221,830
0
221,830
221,830
Unamortized Debt Issue Costs
0
0
24,620
12,933
0
37,553
41,939
TOTAL ASSETS
512,753,489
5402,770
$64,937,723
531,147,699
$5,470,991
$114.712.672
SI 11,723,612
LIABILITIES
Warrants/Accounts Payable
$1,177,266
$104,873
$915,171
$440,129 '
$18,471
$2.655,910
$1,626,648
Wages/Benefits Payable
193,679
92,004
300,071
148,740.
38,996
773,490
712,714
Compensated Absences Payable
181,485
76,762
360,005
1 85,41 0
56,505
860.167
823,709
Accrued Payables
0
0
129,587
62,851
0
191.438
159,622
Deposits Payable
6,100
0
4,500
196,176
0
206,776
219,634
Current Portion Long-term Debt
0
0
662,985
27,274
0
690,259
684,0777
Restricted Payables:
Matured Interest Payable
0
0
0
0
0
- 0
13,760
In Lieu of Construction
0
0
0
0
0
0
0 '
Current Portion LT Debt
0
0
618,650
426,350
0
1.045,000
1,110,000
Bonds Payable
0
0
5,538,875
2,911,125
0
8,450,000
9,890,000
Unamortized Bond Discount
0
0
-33,690
-28,153
0
-63,843
-70,396
Deferred Amount On Debt Refundmg
0
0
-258,436
•33,053
0
-291,489
-326,840
Loans Payable - Long Tenn
0
0
5,309,072
163,643
0
5,472,715
6,319,064
Advances From Other Funds
0
0
1,420,000
0
0
1.420.000
710,000
TOTAL LIABILITIES
1,558,530
273,639
14.966,790
4,500,492
113,972
21.413,423
21,871,992
FUND EQUITY
CONTRIBUTED CAPITAL
3,381,440
0
52,471,549
15,917,567
2,408,324
74,178,880
74,178,880
RETAINED EARNINGS
Reserved:
Debt Service
0
0
1.585,387
499,971
0
- 2,085,358
2,251.127
Replacement
0
0
0
0
0
0
0
Unreserved
7,813,519
129,131
4,086,003
10,229,669
2,948,695
17,035,011
13,421,612
TOTAL FUND EQUITY
11,194,959
129,131
49,970,933
26,647,207
5,357,019
93,299,249
89,851,619
TOTAL LIABILPFIES AND EQUITY
$12,753,489
$402,770
- $64,937,723
531,147,699
$5,470,991
5114.712,672
$111,723,611
The notes to the financial statements are an integral pan of this
statement 102
.1p srrsrmm tau aat
Page 2 of 2
. a/n/)oaf TO 42 -1
City of Yakima Page 1 of 2
Combining Statement of Revenues, Expenses, and Changes in Fund
Equities - Enterprise Funds
for the vear ended December 31, 2002
with compamfim totals for the year ended December 31, 2007
The notes to the financial statements are an integral part of this statement.
104
.r0 ainiwro 1119 nn
105
Page 2 of 2
.rvanvizom it nrM
#462 ✓v #364
# 471
#973
0974
0975
TOTAL
Transit
Refuse
Sewer
Water
Irrigation
2002
2001
OPERATING REVENUES
Charges_ for Services
S382,351
52,989,069
511,060,737
$5,047,386
51,731,879
521,211,421
$19,465,667
Other Operating Revenues
0
0
800
330
1,886
3,018
416
Total Operating Revenues
382 ,351
2,989,068
061
]1,,537
5,047,716
1,733,767
21,214,439
19,466,083
OPERATING EXPENSES
Operations and Maintenance
3,759,949
2,613,567
4,814,402
1,679,411
- 959,773
13,827,102
13,228,158
Admuustiation/Overhead
769,567
272,508
1,174,677
1,135,011
)81,796
3,533,559
2.749,483
Taxes
0
0
1,858,498
1,081,970
0
2,940,468
2,596,108
Depreciation/ Amortization
456,975
0
2,725,912
699,334
50,910
3.933,131
3,853,573
Total Operating Expenses
4,986,491
2,886,075
10,573,489
4,595,726
1,192,479
24234,260
22,427.322
Operating Income (Loss)
-4,604,140
102,993
488,048
451,990
541,286
-3,019,821
4,961,239
NON-OPERATING REVENUES (EXPENSES)
Operating Grants and Subsidies
5,037,323
0
0
0
0
5,037,323
5,405,132
Proceeds of Long -Term Debt
0
0
0
0
0
0
0
Interest Revenue
92,351
754
175,909
726,758
29,001
414,773
694,037
Other Non -Operating Revenues
50
0
15,625
0
20
. 15,695
307,172
Interest Expenses
0
0
-369,993
-172,000
0
-541,993
-567,732
Amortization of Bond Pay. Discount
0
0
-39,894
-8,396
0
46,290
48,290
Gain (Loss) on Sale of Investments
0
0
0
0
0
0
0
Gain (Loss) on Fixed Assets Disposition
0
0
0
0
0
0
401
Non -Operating Revenue Net of Expenses
5,119,724
754
-218,353
-53,638
29,021
4,677,506
5,790.720
Income Before Contributions and Transfers
515,584
103,747
269,695
398,352
570,309
1,857,687
2,829,481
Capital Connibuhons
86,265
0
602,521
1,365,836
10,000
2,064,622
2,457,934
Operating Transfers In
356
0
0
0
0
356
0
Operating Transfers (Out)
0
0
-55,870
-39,058
-127,299
-222,227
-241,934
NET INCOME ILOSS)
602,205
103,747
816,346
1,725,130
453,010
3,700,438
5,045,481
PROPRIETARY FUND EQUITY CHANGES
Retained Earnings, January 1
7,211314
83,748
-3,191,358
9,073,350
2,495,685
15,672,739
10,627,258
Prior Period Adjustments
0
-58,364
-175,604
-68,840
0
-252,808
0
Residual Equity i Transfers In
0
0
0
0
0
0
0
Residual Equity Transfers (Out)
0
D
0
0
0
0
0
Retained Earnings, December 31
7,813,519
129,131
-2,SW,616
10,729,640
2,948,695
79,120,369
15,672,739
Contributed Capital, January 1
3,381,440
0
52,471,549
15,917,567
2,408,324
74.178,880
74,178,880
Capital Grants Received
0
0
0
0
0
0
0
Other Contributed Capita)
0
0
0
0
0
0
0
Contributed Capital, Decembet 31
3,391,440
0
52,471,549
15,917,567
2.408,324
74,178,880
74,178,880
PROPRIETARY FUND EQUITIES, DECEMBER 31
$11,194,959
$129,131
$49,970,933
526,647207
$5,357,019
S93299,249
589,851,619
The notes to the financial statements are an integral part of this statement.
104
.r0 ainiwro 1119 nn
105
Page 2 of 2
.rvanvizom it nrM
City of Yakima
TOTAL
3,692,190
Irrigation
2002
2001
$1,716,968
$20,757,786
Page 1 of 4
-693,410
Combining Statement of Cash Flows -Enterprise Funds
-7,603,566
-456,865
-8,635,534
-8,304,635
for the year ended December 31, 2002
3,018
41E
0
-2,286,188
with comparalitx totals for the year ndtd December 37, 2001
%8.581
500, 700
1,465,106
0
0
0
41471
-1,148,177
01974
M462 k 061
*973
-828,163
0
Refuse
Sewer
Waterom
Cash flows fromoperating activities:
-4,696,808
-
-471,001
-596,743
Cash received from customers
$382,351
52,929,311
$10,894,869
$4.834,292
Cash paid to suppliers for goods and services
-2,250,896
-1,624,403
-3,036575
-1,733,098
Cash paid for salaries and benefit
-2,283,302
-969,655
-3,311,427
-1,614,285
Other operating revenuescollected
0
0
800
330
Cash paid in lieu of taxes
-0
-268,585
-1,322,373
-695,230
Net cash provided by operating activities
-4,151,847
66,668
3,225,289
792,009
Cash flows from noncapital financing activities:
Operating grants received
5,569,674
0
0
0
Operating transfers in from other funds
356
0
0
0
Operating transfers out to other funds
0
0
0
0
Net cash provided by noncapiW financing activities
5.570,030
0
0
0
Cash flows from capital financing activities:
Proceeds from Public Works Trust Loan/Refunding on Debt
0
0
710,000
0
Proceeds for Debt Service from other governments
0
0
15.625
0
Cash received from disposal of feed assets
50
0
0
0
Cash contributions in aid of construction
0
0
457,638
1,220,953
Lid Contributions
0
0
0
Principal paid on revenue bonds
0
0
-735,125
-713,052
Principal paid on Public Works Trust Loan
0
0
-812,893
-27,274
Principal paid on Advances from other funds
0
0
0
0
Capital expenditures paid
-1,295,528
0
4,139,923
-1,704,543
Interest and other debt service paid
0
0
-283,876
-187,125
Capital grants received
86,265
0
0
0
Residual equity transfer In
0
0
0
0
Residual equity transfer out
0
0
-55,870
-39,058
Vet cash used for capital financing activities
4,209,213
0
11,844,424
-1,150,099
_ash flows from investing activities:
Proceeds hom sale of investment securities
401,830
0
280,919
238,420
Interest received on investments
97,770
753
177,893
137,755
Purchase of investment securities
0
0
0
Jet cash provided by investing activities
999,600
753
458,812
0
376,175
Jet Increase(decrease) in cash and cash equivalents
708,570
67,42]
4,160,323
18,085
:ash and cash equivalents at beginning of year
298,474
250,142
5,794,147
1,948,955
:ash and cash equivalents at end of year
51,007,044
$317,563
$4,633,824
$1,967,040
'ash al the End of the Year Consists of:
Operating Fund Cash
$1,007,044
$317,563
$3.048,437
$1,467,069
Revenue bond reserve account cash
0
- 0
1,299,434
395,039
Revenue bond redemption account cash
0
0
285,953
104,932
otal cash at the end of the year
$1,007,044
$317,563
$4,633,824
$1,967,040
to notes to the financial statements are an integral part of this statement
106
e,r atretmm 12:1) rw
#975
TOTAL
3,692,190
Irrigation
2002
2001
$1,716,968
$20,757,786
519,442,132
-693,410
-9,338,382
-7,603,566
-456,865
-8,635,534
-8,304,635
1,888
3,018
41E
0
-2,286,188
-2,069.241
%8.581
500, 700
1,465,106
0
5,569,674
3,692,190
0
356
0
0
0
0
0
5,570,030
3,692,190
0
710,000
1,529,937
0
15,625
307,016
20
70
556
0
1,678,591
925,912
0
0
0
0
-1,148,177
-1,105.000
0
-840,167
-828,163
0
0
0
-55,927
-7,195.921
-4,696,808
0
-471,001
-596,743
0
86,265
0
0
0
0
-127,299
-222,227
-241,934
-183,206
-7,386,942
-4,705,227
632,848
1,554,017
302,186
30,000
- 444,171
709,648
0
0
-2,048,949
662,848
1,998,188
-1,037.115
1,048,223
681,976
-585,046
899,824 _ 9,191,542 9,776,588
51,948,047 $9,873,518 59,197,542
$1,948,047
$7,788,160
$7,442,127
0
1,694,473
1,288,629
0
390,885
460,786
$1;948.047
$9,873,518
$9,197,542
107
Page 2 of 4
. atntrom 12 2o
City of Yakima Page 3 of 4
Combining Statement of Cash Flows -Enterprise Funds
for the year ended December 31, 2002
with comparatim totals for the year ended December 31,1001
Schedule of Noncash Capital and Related Financing Activities
Zapital Assets Acquired by:
Noncash contribution s0 s0 $144,883 $103,505
e notes to the financial statements are an integral part of this statement
108
r.y 8/29/20M 12.20 PM
#975 TOTAL
Irrigation 2002 2001
$541,288 -53,019,821 12,961,239
50,910 3,933,131 3,853,573
-14,911 "
04621h 0364
0471
0973
1974
-16,711
Transit
Refuse
Sewer
Water
Reconciliation of net operating income(loss) to net cash
5,536
4,228
X458
19,237
providediused) by operating activities:
3,524521
4,426,345
$568,581
$500,700
Nei operating income(loss)
54,604,140
$102,993
5488,048
$451,990
Adjustments to reconcile operating income(loss) to net
cash provided by operating activities:
Depreciation
456,975
0
2,725,912
699,334
Change in assets and liabilities:
(Increase)decrease in accounts receivable
0
-59,757
-165,873
213,093
(Increase)decrease in inventory
0
0
-13
10,552
Increase(decrease) in warrants/accounts payable
-20,136
18,614
132,914
-181,216
Increase(decrease) in wages/benefits payable
10,148
5,709
25,467
15,461
Increase(decrease) in compensated absences pavable
5,306
-891
18,834
8,981
Total Adjustments
452,293
-36,325
2.737,241
340,019
Net cash provided by operating activities
-$4,151,847
$66,668
53225,289
5792,009
Schedule of Noncash Capital and Related Financing Activities
Zapital Assets Acquired by:
Noncash contribution s0 s0 $144,883 $103,505
e notes to the financial statements are an integral part of this statement
108
r.y 8/29/20M 12.20 PM
#975 TOTAL
Irrigation 2002 2001
$541,288 -53,019,821 12,961,239
50,910 3,933,131 3,853,573
-14,911 "
-453,634
-23,535
0
10,539
-16,711
-16,925
-66,749
588,245
3,991
60,776
5,536
4,228
X458
19,237
27,293
3,524521
4,426,345
$568,581
$500,700
51,465,106
s0 $248,388 $1,510,161
109
Page 4 of 4
rep a/2Y/M 12 MM
(This Page Intentionally Left Blank)
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 9
For Meeting Of 12-16-2003
ITEM TITLE: A Resolution authorizing the execution and delivery of a contract for purchase of
the City's Water and Sewer Revenue Bonds, Series A 2003, in the approximate aggregate amount
of 7,445,000, including necessary reserves, and Series B bonds in the approximate aggregate
amount of 10,255,000, including necessary reserves, fixing certain terms of the Bonds, approving
the form of the Official Statement,(and insurance), and ratifying certain acts and proceedings.
SUBMITTED BY: Department of Finance and Budget
CONTACT PERSON/ TELEPHONE: Rita Anson, Director of Finance and Budge<30--
Tim JenwfTrea ury Services Officer 575-6070
SUMMARY EXPLANATION: On October 7h, 2003 the City Council passed Ordinance number
2003-64 authorizing the issuance of up to $17,700,000 Water Sewer Revenue Bonds. At that time,
Staff was directed and authorized to perform all proceedings and tasks necessary to accomplish
that transaction. The actttal sale of the securities is scheduled for December 15th. The purpose of
the issuance of the debt is two -fold; first, Series A bonds, to pay a seven million dollar settlement
related to a class action lawsuit begun five years ago due to alleged odors emitted from the
wastewater treatment plant and; Series B bonds, to acquire funds for certain capital improvements
to be made to the wastewater treatment plant, and to repay an interfund loan borrowed for the
purpose of paying litigation expenses in defense of the odor allegations.
Continued...
Resolution _ Ordinance _ Other (Specify
Contract Mail to (name and address):
Funding Source
PROVED FOR SUBMITTAL:
ty Manager
STAFF RECOMMENDATION: Authorize execution of purchase offer
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2003-150
Legal/BD
rev. effective 7/21/92
Since that direction, Staff has engaged in two major processes to accomplish this bond sale:
1. Engaged the City's investment bankers and underwriters, Seattle Northwest Securities
Corporation, to prepare a detailed and comprehensive Preliminary Official Statement
for the purpose of obtaining a credit rating on the bonds and to market the bonds to
public investors. The City's bond Counsel, Preston Gates and Ellis was integrally
involved with preparation of this document, as were numerous members of City Staff
who devoted a substantial number of hours to its completion. This document is a
requirement under Securities and Exchange Commission laws.
2. Prepared and performed a detailed presentation of the City's Water and Sewer System
credit worthiness that included information of the City of Yakima. This presentation
was performed by Assistant Mayor, Paul George; Finance Director, Rita Anson;
Treasury Services Officer, Tim Jensen; City Attorney Ray Paolella and Lindsay Sovde
from Seattle Northwest Securities Corporation, in person, in San Francisco on December
5th- This group met with Standard and Poor's , the credit rating agency selected by the
City, and two prospective bond insurers, MBIA and FSA. The meetings went very well;
most of the questions related to the litigation settlement and the financial stability of the
Water/ Waste Water system (ex: stability of revenue base, impact of annexations, water
rights, system capacity and potential competitors). (At the time of preparation of this
Council Packet, the outcome of the rating interview is not yet known, but Staff believes
that the Systems "A" credit rating will be affirmed).
Market conditions preceding the sale on the 15th appear favorable, and Staff expects to issue
the entire $17.7 million authorized and remain within the $1,350,000 annual debt service
constraint set by Council. We anticipate an interest rate of approximately less than five
percent. The par amount of the bonds will include mandatory reserves, legal and
underwriting expenses and other miscellaneous expenses, leaving a net $7 million for the
series A bonds and an estimated net $9.6 million for the Series B bonds. The Bonds will settle
on December 22nd, a very short closing time that will require a high level of attention by Staff
and Bond Counsel to accomplish, but we feel is achievable. (Payment of the odor litigation
settlement is scheduled to occur via wire transfer on December 23rd, per the plaintiff's request.)
Staff, Investment Bankers and Bond Counsel will be at the Council meeting on the 161h with a
completed purchase offer and Sale Resolution for Council's review and acceptance. Note;
these documents cannot be completed at this time, as the bond sale has not taken place yet;
however a draft version of these documents is included for your review. We look forward to
seeing you on the 16th with good news!
Attached for Council review are:
• Draft Sale Resolution prepared by Preston Gates and Ellis, blank as to specific terms
• Draft Bond Purchase offer from Seattle Northwest Securities, also blank as to specifics
• Draft amortization schedule, final to be determined after the sale
• Copy of credit rating presentation given to Standard & Poor's and potential insurers
• Final Preliminary Official Statement
Legal/BD
rev. effective 7/21/92
DEPARTMENT OF FINANCE & BUDGET
129 North Second Street
Yakima, Washington 98901
December 16, 2003
To: The Honorable Mayor and City Council Members
Dick Zais, City Manager
From: Rita Anson, Finance Director0✓
Tim Jensen, Treasury ServiM-0 i er
Subject: 2003 Wastewater/Water Revenue Bond Sale
The Council packet you received on Thursday included draft versions of several bond
sale documents due to the fact that these documents cannot be completed until after the
bonds have been offered for sale and we have a purchase offer.
Our underwriters, Seattle Northwest Securities, Inc., placed the bonds on the market
yesterday, Monday, December 15, 2003 and we have received a formal purchase offer
from them. The final Bond Sale Resolution and the Bond Purchase Offer documents are
enclosed. These are the same in all material respects to the draft documents you received
last Thursday except that the terms of the actual sale (rather than estimates) have been
identified in the documents (this includes; the par amount of the bonds, interest rates,
insurance costs, final bond structure, debt service payments, etc.). Staff believes we
received good terms and the purchase offer to be favorable to the City.
Bond Issue Highlights:
Bond Rating & Insurance: On Thursday of last week the City received word that
Standard and Poor's rating agency had given an "A" rating to this revenue bond
issue and had further enhanced the rating by also giving the City a "stable outlook".
(Insurance was purchased on these bonds, which effectively increased this to a
"AAA" rating for pricing purposes.)
(Over the past two years, the City has issued three major bond issues (two general
obligation bonds and these wastewater revenue bonds) and has received an "A"
rating with a stable outlook on all three issues. These "A" ratings were an upgrade
from the City's previous general obligation bonds issued in 1998. Note: an "A"
rating on a revenue bond issue is a stronger and more difficult rating to achieve than
the same rating on.a general obligation bond.)
� Par amount of Bonds is $17,545,000 ($7,390,000 Series A; $10,155,000 Series B)
Yakima
bVIVA
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IIIII�
Customer Service (509) 575-6080 • Finance (509) 575-6070 • Information Systems (509) 575-6098 1994
Page 2 of 2
4 Bond Proceeds are $18,086,695.23
(includes: bond par amount plus bonds sold at a premium of $527,655.25 and
accrued interest of $14,039.98)
4 Funds Available for Project: Series A: $7 million; Series B: $9,976,000 (rounded)
4 Bond Issuance Costs are approximately $281,500 (includes cost of issuance,
underwriters discount and bond insurance).
Interest Rate: True Interest Costs (TIC) for the entire issue is 4.37% (this goes up to
4.4% when issuance costs are added in); interest rates range from a low of 2% to a high
of 5% for various series over the life of the bonds (amortization schedule enclosed).
Annual Debt Service is below $1,350,000 in each of the 20 years of this bond issue
with the exception of the first year,; which has a debt payment of $1,358,804.94.
Bond Closing is scheduled for Monday, December 22, 2003; the City will receive
the bond proceeds on the closing date, via wire transfer.
If adopted by Council, the enclosed final Bond Sale Resolution will:
(a) Authorize the sale of both the Series A and the Series B bonds with the terms
and conditions as stated therein,
(b) Accept the Bond Purchase Offer from Seattle Northwest Securities, Inc. (the
bond underwriters),
(c) Accept the bond insurance,
(d) Approve the preliminary official statement (as included in your Council
packet on Thursday),
(e) Ratify all actions taken by officers, employees and agents of the City with
respect to the sale, issuance and delivery of the bonds.
Enclosed -you'll find:
Final Amortization Schedule
Final Bond Sale Resolution ,
Bond Sale Purchase Offer from Seattle Northwest Securities, Inc.
Staff Recommendation: Adopt Resolution
AGREEMENT
BETWEEN
CITY OF YAKIMA, WASHINGTON
AND
HUIBREGTSE, LOUMAN ASSOCIATES, INC.
FOR PROFESSIONAL SERVICES
THIS AGREEMENT, made and entered into on this �^_ day of;?,o�_, 2006, by and
between the City of Yakima, Washington, with principal offices at 129 North Second Street, Yakima, WA
98901, hereinafter referred to as "CITY", and HUIBREGTSE, LOUMAN ASSOCIATES, INC., 801 North
391h Avenue, Yakima, WA 98902 and which corporation and its principal engineers performing this
Agreement are licensed and registered to do business in the State of Washington, hereinafter referred to
as "ENGINEER," for GLENN DRIVE AND MACLAREN RESERVOIRS IMPROVEMENT PROJECT
Professional Services, herein called the "PROJECT."
WITNESSETH:
RECITALS
WHEREAS, CITY desires to retain the ENGINEER to provide engineering services for design and
construction of GLENN DRIVE AND MACLAREN RESERVOIRS IMPROVEMENT PROJECT, as
described in this Agreement and subsequent Amendments thereto; and
WHEREAS, ENGINEER represents that it has available and offers to provide personnel with
expertise and experience necessary to satisfactorily accomplish the work within the required time and that
it has no conflicts of interest prohibited by law from entering into this Agreement;
NOW, THEREFORE, CITY and ENGINEER agree as follows:
SECTION 1 INCORPORATION OF RECITALS
1.1 The above recitals are incorporated into these operative provisions of the Agreement.
SECTION 2 SCOPE OF SERVICES
2.0.1 ENGINEER agrees to perform those services described hereafter. Unless modified in
writing by both parties, duties of ENGINEER shall not be construed to exceed those
services specifically set forth herein.
2.0.2 ENGINEER shall use its best efforts to maintain continuity in personnel and shall assign
Michael T. Battle, PE, as Project Manager and Principal -in -Charge throughout the term of
this Agreement unless other personnel are approved by the CITY.
2.1 Basic Services: ENGINEER agrees to perform those tasks described in Exhibit A, entitled "CITY
OF YAKIMA - GLENN DRIVE AND MACLAREN RESERVOIRS IMPROVEMENT PROJECT"
(WORK) which is part of this Agreement as if fully set forth herein. The Maximum amount of
compensation to the Engineer for all work as shown in Exhibit B will be $92,267.00.
2.2 Additional Services: CITY and ENGINEER agree that not all WORK to be performed by
ENGINEER can be defined in detail at the time this Agreement is executed, and that additional
WORK related to Project and not covered in Exhibit A may be needed during performance of this
Agreement. CITY may, at any time, by written order, direct the ENGINEER to revise portions of
the PROJECT WORK previously completed in a satisfactory manner, delete portions of the
PROJECT, or request that the ENGINEER perform additional WORK beyond the scope of the
PROJECT WORK. Such changes hereinafter shall be referred to as "Additional Services."
2.2.1 If such Additional Services cause an increase or decrease in the ENGINEER'S cost of, or
time required for, performance of any services under this Agreement, a contract price
and/or completion time adjustment pursuant to this Agreement shall be made and this
Agreement shall be modified in writing accordingly.
2.2.2 Compensation for each such request for Additional Services will be negotiated by the
CITY and the ENGINEER according to the provisions set forth in Exhibit C and, if so
authorized, shall be considered part of the PROJECT WORK. The ENGINEER shall not
perform any Additional Services until so authorized by CITY and agreed to by the
ENGINEER in writing.
2.3 The ENGINEER must assert any claim for adjustment in writing within thirty (30) days from the
date of receipt by the ENGINEER of the written notification of change or of providing services
related to an asserted change, whichever is earliest.
SECTION 3 CITY'S RESPONSIBILITIES
3.1 CITY -FURNISHED DATA: The CITY will provide to the ENGINEER all technical data in the
CITY's possession relating to the ENGINEER's services on the PROJECT including information
on any pre-existing conditions known to the CITY that constitute hazardous waste contamination
on the PROJECT site as determined by an authorized regulatory agency.
3.2 ACCESS TO FACILITIES AND PROPERTY: The CITY will make its facilities reasonably
accessible to ENGINEER as required for ENGINEER'S performance of its services and will
provide labor and safety equipment as reasonably required by ENGINEER for such access.
3.3 TIMELY REVIEW: The CITY will examine the ENGINEER'S studies, reports, sketches, drawings,
specifications, proposals, and other documents; obtain advice of an attorney, insurance
counselor, accountant, auditor, bond and financial advisors, and other consultants as CITY
deems appropriate; and render in writing decisions required of CITY in a timely manner. Such
examinations and decisions, however, shall not relieve the ENGINEER of any contractual
obligations nor of its duty to render professional services meeting the standards of care for its
profession.
3.4 CITY shall appoint a CITY's Representative with respect to WORK to be performed under this
Agreement. CITY's Representative shall have complete authority to transmit ;instructions and
receive information. ENGINEER shall be entitled to reasonably rely on such instructions made by
the CITY's Representative unless otherwise directed in writing by the CITY, but ENGINEER shall
be responsible for bringing to the attention of the CITY's Representative any instructions which
the ENGINEER believes are inadequate, incomplete, or inaccurate based upon the ENGINEER's
knowledge.
3.5 Any documents, services, and reports provided by the CITY to the ENGINEER are available
solely as additional information to the ENGINEER and will not relieve the ENGINEER of its duties
and obligations under this Agreement or at law. The ENGINEER shall be entitled to reasonably
rely upon the accuracy and the completeness of such documents, services and reports, but shall
be responsible for exercising customary professional care in using and reviewing such
documents, services, and reports and drawing conclusions therefrom.
SECTION 4 AUTHORIZATION, PROGRESS, AND COMPLETION
4.1 In signing this Agreement, CITY grants ENGINEER specific authorization to proceed with WORK
described in Exhibit A. The time for completion is defined in Exhibit A, or as amended.
SECTION 5 COMPENSATION
5.1 COMPENSATION ON A TIME SPENT BASIS AT SPECIFIC HOURLY RATES: For the services
described in Exhibit A, compensation shall be according to Exhibit C - Schedule of Specific
Hourly Rates on a time spent basis plus reimbursement for direct non -salary expenses.
5.1.1 DIRECT NON -SALARY EXPENSES: Direct Non -Salary Expenses are those costs
incurred on or directly for the PROJECT including, but not limited to, necessary
G:\PROP0SA1_SQ0MC0Y GLENN DR x MAC1 ARFN A( -Pi-
transportation costs, including current rates for ENGINEER's vehicles; meals and lodging;
laboratory tests and analyses; printing, binding and reproduction charges; all costs
associated with other outside nonprofessional services and facilities; special CITY -
requested and PROJECT -related insurance and performance warranty costs; and other
similar costs. Reimbursement for Direct Non -Salary Expenses will be on the basis of
actual charges when furnished by commercial sources and on the basis of current rates
when furnished by ENGINEER. Estimated Direct Non -Salary Expenses are shown in
Exhibit B.
5.1.1.2 Travel costs, including transportation, lodging, subsistence, and incidental
expenses incurred by employees of the ENGINEER and each of the
Subconsultants in connection with PROJECT WORK; provided, as follows:
• That a maximum of U.S. INTERNAL REVENUE SERVICE allowed cents
per mile will be paid for the operation, maintenance, and depreciation costs
of company or individually owned vehicles for that portion of time they are
used for PROJECT WORK. ENGINEER, whenever possible, will use the
least expensive form of ground transportation.
• That reimbursement for meals inclusive of tips shall not exceed a maximum
of $40 per day per person This rate may be adjusted on a yearly basis.
• That accommodation shall be at a reasonably priced hotel/motel.
• That air travel shall be by coach class, and shall be used only when
absolutely necessary.
5.1.2 Telephone charges, computer charges, in-house reproduction charges, first class
postage, and FAX charges are not included in the direct expense costs, but are
considered included in the Schedule of Specific Hourly Billing Rates.
5.1.3 Professional Subconsultants. Professional Subconsultants are those costs for
engineering, architecture, geotechnical services and similar professional services
approved by the CITY. Reimbursement for Professional Subconsultants will be on the
basis of 1.10 times the actual costs billed by the Professional Subconsultant for services
provided to the CITY through this Agreement. Estimated Subconsultant costs are shown
in Exhibit B.
5.2 Unless specifically authorized in writing by the CITY, the total budgetary amount for this
PROJECT shall not exceed that amount set forth in Exhibit B. The ENGINEER will make
reasonable efforts to complete the WORK within the budget and will keep CITY informed of
progress toward that end so that the budget or WORK effort can be adjusted if found necessary.
The ENGINEER is not obligated to incur costs beyond the indicated budget, as may be adjusted,
nor is the CITY obligated to pay the ENGINEER beyond these limits. When any budget has been
increased, the ENGINEER's excess costs expended prior to such increase will be allowable to
the same extent as if such costs had been incurred after the approved increase, and provided
that the CITY was informed in writing at the time such costs were incurred.
5.3 The ENGINEER will use its best efforts to submit to the CITY's Representative by the 10th day of
each calendar month an invoice for payment for PROJECT services completed through the
accounting cut-off day of the previous month. Such invoices shall be for PROJECT services and
WORK performed and costs incurred prior to the date of the invoice and not covered by
previously submitted invoices. The ENGINEER shall submit with each invoice a summary of time
expended on the PROJECT for the current billing period, copies of subconsultant invoices, and
any other supporting materials determined by the CITY necessary to substantiate the costs
incurred. CITY will use its best efforts to pay such invoices within thirty (30) days of receipt and
upon approval of the WORK done and amount billed. CITY will notify the ENGINEER promptly if
any problems are noted with the invoice. CITY may question any item in an invoice, noting to
ENGINEER the questionable item(s) and withholding payment for such item(s). The ENGINEER
may resubmit such item(s) in a subsequent invoice together with additional supporting information
required.
5.4 If payment is not made within sixty (60) days following receipt of approved invoices, interest on
the unpaid balance shall accrue beginning with the sixty-first (61) day at the rate of 1.0% per
month or the maximum interest rate permitted by law, whichever is less; provided, however, that
no interest shall accrue pursuant to Chapter 39.76 RCW when before the date of timely payment
a notice of dispute is issued in good faith by the CITY to the ENGINEER pursuant to the terms of
RCW 39.76.020(4).
5.5 Final payment of any balance due the ENGINEER for PROJECT services will be made within
forty-five (45) days after satisfactory completion of the services required by this Agreement as
evidenced by written acceptance by CITY and after such audit or verification as CITY may deem
necessary and execution and delivery by the ENGINEER of a release of all known claims against
CITY arising under or by virtue of this Agreement, other than such claims, if any, as may be
specifically exempted by the ENGINEER from the operation of the release in stated amounts to
be set forth therein.
5.6 Payment for any PROJECT services and WORK shall not constitute a waiver or release by CITY
of any claims, right, or remedy it may have against the ENGINEER under this Agreement or by
law, nor shall such payment constitute a waiver, remission, or discharge by CITY of any failure or
fault of the ENGINEER to satisfactorily perform the PROJECT WORK as required under this
Agreement.
SECTION 6 RESPONSIBILITY OF ENGINEER
6.1 The ENGINEER shall be responsible for the professional quality, technical adequacy and
accuracy, timely completion, and the coordination of all plans, design, drawings, specifications,
reports, and other services furnished by the ENGINEER under this Agreement. The ENGINEER
shall, without additional compensation, correct or review any errors, omissions, or other
deficiencies in its plans, designs, drawings, specifications, reports, and other services. The
ENGINEER shall perform its WORK according to generally accepted civil engineering standards
of care and consistent with achieving the PROJECT WORK within budget, on time, and in
compliance with applicable laws, regulations, and permits.
6.2 CITY's review or approval of, or payment for, any plans, drawings, designs, specifications,
reports, and incidental WORK or services furnished hereunder shall not in any way relieve the
ENGINEER of responsibility for the technical adequacy, completeness, or accuracy of its WORK
and the PROJECT WORK. CITY's review, approval, or payment for any of the services shall not
be construed to operate as a waiver of any rights under this Agreement or at law or any cause of
action arising out of the performance of this Agreement.
6.3 In performing WORK and services hereunder, the ENGINEER and its subcontractors,
subconsultants, employees, agents, and representatives shall be acting as independent
contractors and shall not be deemed or construed to be employees or agents of CITY in any
manner whatsoever. The ENGINEER shall not hold itself out as, nor claim to be, an officer or
employee of CITY by reason hereof and will not make any claim, demand, or application to or for
any right or privilege applicable to an officer or employee of CITY. The ENGINEER shall be
solely responsible for any claims for wages or compensation by ENGINEER employees, agents,
and representatives, including subconsultants and subcontractors, and shall save and hold CITY
harmless therefrom.
6.4 INDEMNIFICATION:
(a) ENGINEER agrees to indemnify, defend, and hold the CITY harmless from loss, cost, or
expense, including legal fees, of any kind claimed by third parties, including without
limitation such loss, cost, .or expense resulting from injuries to persons or damages to
property, caused solely by the negligence or willful misconduct of the ENGINEER, its
employees, officers, and subconsultants in connection with the PROJECT. In the event
that any lien is placed upon the property of the CITY or any of the CITY's officers,
G \PROPOSAL S\2006\COY GLENN DR & MACLAREN AGR.doc PaaP 4 of 24
employees, or agents as a result of the negligence or willful misconduct of the
ENGINEER, the ENGINEER shall at -once cause the same to be dissolved and
discharged by giving bond or otherwise.
(b) CITY agrees to indemnify, defend, and hold the ENGINEER harmless from loss, cost, or
expense, including legal fees, of any kind claimed by third parties, including without
limitation such loss, cost, or expense resulting from injuries to persons or damages to
property, caused solely by the negligence or willful misconduct of the CITY, its
employees, or agents in connection with the PROJECT.
(c) If the negligence or willful misconduct of both the ENGINEER and the CITY (or a person
identified above for whom each is liable) is a cause of such third party claim, the loss,
cost, or expense shall be shared between the ENGINEER and the CITY in proportion to
their relative degrees of negligence or willful misconduct and the right of indemnity will
apply for such proportion.
6.5 In any and all claims by an employee of the ENGINEER, any subcontractor, anyone directly or
indirectly employed by any of them or anyone for whose acts any of them may be liable, the
indemnification obligations under this Agreement shall not be limited, in any way by any limitation
on the amount or types of damages, compensation, or benefits payable by or for the ENGINEER
or a subcontractor under workers' or workmens' compensation acts, disability benefit acts, or
other employee benefit acts. The ENGINEER waives its immunity under the Industrial Insurance
Act, Title 51, RCW. Such waiver has been mutually negotiated by the ENGINEER and the CITY
as evidenced by their specific and express initialing of this paragra h.
ENGINEER's INITIALS CITY's INITIALS
6.6 It is understood that any resident engineering or Construction Observation provided by
ENGINEER is for the purpose of determining compliance with the technical provisions of
PROJECT specifications and does not constitute any form of guarantee or insurance with respect
to the performance of a contractor. ENGINEER does not assume responsibility for methods or
appliances used by a contractor, for the safety of construction work, or for compliance by
contractors with laws and regulations. CITY shall use its best efforts to ensure that the
construction contract requires that the contractor(s) indemnify and name CITY, the CITY's and
the ENGINEER's officers, principals, employees, agents, representatives, and engineers as
additional insureds on contractor's insurance policies covering PROJECT, exclusive of insurance
for ENGINEER professional liability.
6.7 SUBSURFACE INVESTIGATIONS: In soils, foundation, groundwater, and other subsurface
investigations, the actual characteristics may vary significantly between successive test points
and sample intervals and at locations other than where observation, exploration, and
investigations have been made. Because of the inherent uncertainties in subsurface evaluations,
changed or unanticipated underground conditions may occur that could affect total PROJECT
cost and/or execution. These conditions and cost/execution effects are not the responsibility of
the ENGINEER, to the extent that ENGINEER has exercised the applicable standard of
professional care and judgment in such investigations.
SECTION 7. PROJECT SCHEDULE AND BUDGET
7.1 The general PROJECT schedule and the budget for both the entire PROJECT and its component
tasks shall be as set forth in this Agreement and attachments. The project schedule and
performance dates for the individual tasks shall be mutually agreed to by the CITY and the
ENGINEER within, fifteen days after execution of this Agreement. The performance dates and
budgets for tasks may be modified only upon written agreement of the parties hereto. The
performance date for tasks and the completion date for the entire PROJECT shall not be
extended nor the budget increased because of any unwarranted delays attributable to the
ENGINEER but may be extended or increased by the CITY in the event of a delay caused by
special services requested by the CITY or because of unavoidable delay caused by any
governmental action or other conditions beyond the control of the ENGINEER which could not be
reasonably anticipated.
7.2 Not later than the tenth day of each calendar month during the performance of the PROJECT, the
ENGINEER shall submit to the CITY's Representative a copy of the current schedule and a
written narrative description of the WORK accomplished by the ENGINEER and subconsultants
on each task, indicating a good faith estimate of the percentage completion thereof on the last
day of the previous month. Additional oral or written reports shall be.prepared at the request of
the CITY for presentation to other governmental agencies and/or to the public.
SECTION 8 REUSE OF DOCUMENTS
8.1 All internal WORK products of the ENGINEER are instruments or service of this PROJECT.
There shall be no reuse, change, or alteration by the CITY or others acting through or in behalf of
the CITY without written permission of the ENGINEER, which shall not be unreasonably withheld,
and will be at the CITY's sole risk. The CITY agrees to indemnify the ENGINEER and its officers,
employees, subcontractors, and affiliated corporations from all claims, damages, losses, and
costs, including, but not limited to, litigation expenses and attorney's fees, arising out of or related
to such unauthorized reuse, change, or alteration; provided, however, that the ENGINEER will not
be indemnified for such claims, damages, losses, and costs including without limitations litigation
expenses and attorney fees where caused by the ENGINEER's own acts or omissions.
8.2 The ENGINEER agrees that ownership of any plans, drawings, designs, specifications, computer
programs, technical reports, operating manuals, calculations, notes, and other WORK submitted
or which are specified to be delivered under this Agreement or which are developed or produced
and paid for under this Agreement, whether or not complete, shall be vested in the CITY.
SECTION 9 AUDIT AND ACCESS TO RECORDS
9.1 The ENGINEER, including its subconsultants, shall maintain books, records, documents and
other evidence directly pertinent to performance of the WORK under this Agreement in
accordance with generally accepted accounting principles and practices consistently applied.
The CITY or the CITY's duly authorized representative, shall have access to, such books, records,
documents, and other evidence for inspection, audit, and copying for a period of three years after
completion of the PROJECT. The CITY shall also have access to such books, records, and
documents during the performance of the PROJECT WORK if deemed necessary by the CITY to
verify the ENGINEER's WORK and invoices.
9.2 Audits conducted pursuant to this section shall be in accordance with generally accepted auditing
standards and established procedures and guidelines of the reviewing or auditing agency.
9.3 The ENGINEER agrees to the disclosure of all information and reports resulting from access to
records pursuant to this section provided that the ENGINEER is afforded the opportunity for an
audit exit conference and an opportunity to comment and submit any supporting documentation
on the pertinent portions of the draft audit report and that the final audit report will include written
comments, if any, of the ENGINEER.
9.4 The ENGINEER shall ensure the foregoing paragraphs are included in each subcontract for
WORK on the Project.
9.5 Any charges of the ENGINEER paid by the CITY found by an audit to be inadequately
substantiated shall be reimbursed to the CITY.
SECTION 10 INSURANCE
10.1 Prior to beginning WORK under this Agreement, the ENGINEER shall provide Certificates of
Insurance satisfactory to the CITY as evidence that policies providing the following coverage and
limits of insurance are in full force and effect. The CITY and the CITY's officers, principals,
employees, representatives, and agents shall be designated as additional insured on all such
policies except for professional liability and Worker's Compensation. Such insurance shall be
primary to the extent covered as additional insureds and other insurance maintained or carried by
G.\PROPOSALS\2006\COY GLENN DR 8 MACLAREN AGR doc 0111 a „a —
the CITY shall be separate and distinct and shall not be contributing with the insurance listed
hereunder.
10.1.1 Comprehensive general liability insurance, including personal injury liability, blanket
contractual liability, and broad -form property damage liability coverage. The combined
single limit for bodily injury and property damage shall be not less than $1,000,000 per
occurrence.
10.1.2. Automobile bodily injury and property damage liability insurance covering owned, non -
owned, rented, and hired cars. The combined single limit for bodily injury and property
damage shall be not less than $1,000,000 per occurrence.
10.1.3. Statutory workers' compensation and employer's liability insurance as required by state
law.
10.1.4. Professional liability insurance. The limit of liability shall be not less than $1,000,000.
Failure of either or all of the additional insureds to report a claim under such insurance
shall not prejudice the rights of the CITY, its officers, employees, agents, and
representatives thereunder. The CITY and the CITY's officers, principals, employees,
representatives, and agents shall have no obligation for payment of premiums because of
being named as additional insureds under such insurance. None of the policies issued
pursuant to the requirements contained herein shall be canceled, allowed to expire, or
changed in any manner so as to affect the rights of the CITY thereunder until thirty (30)
days after written notice to the CITY of such intended cancellation, expiration, or change.
SECTION 11 SUBCONTRACTS
11.1 ENGINEER shall be entitled, to the extent determined appropriate by ENGINEER, to subcontract
any portion of the WORK to be performed under this Agreement.
11.2 Any subconsultarits or subcontractors to the ENGINEER utilized on this PROJECT, including any
substitutions thereof, will be subject to prior approval by CITY, which approval shall not be
unreasonably withheld. Each subcontract shall be subject to review by the CITY's
Representative, if requested, prior to the subconsultant or subcontractor proceeding with the
WORK. Such review shall not constitute an approval as to the legal form or content of such
subcontract. The ENGINEER shall be responsible for the architectural and engineering
performance, acts, and omissions of all persons and firms performing subcontract WORK.
11.3 CITY hereby authorizes the ENGINEER to subcontract with the persons and firms listed below:
• Conley Engineering, Inc.
• Structural Research Company
11.4 The ENGINEER shall submit, along with its monthly invoices, a description of all WORK
completed by subconsultants and subcontractors during the preceding month and copies of all
invoices thereto.
SECTION 12 ASSIGNMENT
12.1 This Agreement is binding on the heirs, successors, and assigns of the parties hereto. This
Agreement may not be assigned by CITY or ENGINEER without prior, written consent of the
other, which consent will not be unreasonably withheld.
SECTION 13 INTEGRATION
13.1 This Agreement represents the entire understanding of CITY and ENGINEER as to those matters
contained herein. No prior oral or written understanding shall be of any force or effect with
respect to those matters covered herein. This Agreement may not be modified or altered except
in writing signed by both parties.
SECTION 14 JURISDICTION AND VENUE
14.1 This Agreement shall be administered and interpreted under the laws of the State of Washington.
Jurisdiction of litigation arising from this Agreement shall be in that state. If any part of this
Agreement is found to conflict with applicable laws, such part shall be inoperative, null, and void
insofar as it conflicts with said laws, but the remainder of this Agreement shall be in full force and
effect. Venue of all disputes shall be Yakima County, State of Washington.
SECTION 15 EQUAL EMPLOYMENT and NONDISCRIMINATION
15.1 In connection with the Services under this Agreement, ENGINEER agrees to comply with the
applicable provisions of State and Federal Equal Employment Opportunity and Nondiscrimination
statutes and regulations.
SECTION 16 SUSPENSION OF WORK
16.1 CITY may suspend, in writing by certified mail, all or a portion of the WORK under this Agreement
if unforeseen circumstances beyond CITY's control are interfering with normal progress of the
WORK. ENGINEER may suspend, in writing by certified mail, all or a portion of the WORK under
this Agreement if unforeseen circumstances beyond ENGINEER's control are interfering with
normal progress of the WORK. ENGINEER may suspend WORK on PROJECT in the event
CITY does not pay invoices when due, except where otherwise provided by this Agreement. The
time for completion of the WORK shall be extended by the number of days WORK is suspended.
If the period of suspension exceeds 90 days, the terms of this Agreement are subject to
renegotiation, and both parties are granted the option to terminate WORK on the suspended
portion of Project in accordance with SECTION 17.
SECTION 17 TERMINATION OF WORK
17.1 Either party may terminate this Agreement, in whole or in part, if the other party materially
breaches its obligations under this Agreement and is in default through no fault of the terminating
party. However, no such termination may be effected unless the other party is given: (1) not less
than fifteen (15) calendar days written notice delivered by certified mail, return receipt requested,
of intent to terminate; and (2) an opportunity for consultation and for cure with the terminating
party before termination. Notice shall be considered issued within seventy-two (72) hours of
mailing by certified mail to the place of business of either party as set forth in this Agreement.
17.2 In addition to termination under subparagraph A of this Section, CITY may terminate this
Agreement for its convenience, in whole or in part, provided the ENGINEER is given: (1) not less
than fifteen (15) calendar days written notice delivered by certified mail, return receipt requested,
of intent to terminate; and (2) an opportunity for consultation with CITY before termination.
17.3 If CITY terminates for default on the part of the ENGINEER, an adjustment in the contract price
pursuant to the Agreement shall be made, but (1) no amount shall be allowed for anticipated
profit on unperformed services or other WORK, and (2) any payment due to the ENGINEER at
the time of termination may be adjusted to the extent of any additional costs or damages CITY
has incurred, or is likely to incur, because of the ENGINEER's breach. In such event, CITY shall
consider the amount of WORK originally required which was satisfactorily completed to date of
termination, whether that WORK is in a form or of a type which is usable and suitable to CITY at
the date of termination and the cost to CITY of completing the WORK itself or of employing
another firm to complete it. Under no circumstances shall payments made under this provision
exceed the contract price. In the event of default, the ENGINEER agrees to pay CITY for any
and all damages, costs, and expenses whether directly, indirectly, or consequentially caused by
said default. This provision shall not preclude CITY from filing claims and/or commencing
litigation to secure compensation for damages incurred beyond that covered by contract
retainage or other withheld payments.
17.4 If the ENGINEER terminates for default on the part of CITY or if.CITY terminates for convenience,
the adjustment pursuant to the Agreement shall include payment for services satisfactorily
performed to the date of termination, in addition to termination settlement costs the ENGINEER
reasonably incurs relating to commitments which had become firm before the termination, unless
CITY determines to assume said commitments.
17.5 Upon receipt of a termination notice under subsections 17.1 or 17.2 above, the ENGINEER shall
(1) promptly discontinue all services affected (unless the notice directs otherwise), and (2) deliver
or otherwise make, available to CITY all originals of data, drawings, specifications, calculations,
reports, estimates, summaries, and such other information, documents, and materials as the
ENGINEER or its subconsultants may have accumulated or prepared in performing this
Agreement, whether completed or in progress, with the ENGINEER retaining copies of the same.
17.6 Upon termination under any subparagraph above, CITY reserves the right to prosecute the
WORK to completion utilizing other qualified firms or individuals; provided, the ENGINEER shall
have no responsibility to prosecute further WORK thereon.
17.7 If, after termination for failure of the ENGINEER to fulfill contractual obligations, it is determined
that the ENGINEER has not so failed, the termination shall be deemed to have been effected for
the convenience of CITY. In such event, the adjustment pursuant to the Agreement shall be
determined as set forth in subparagraph 17.4 of this Section.
17.8 If, because of death, unavailability or any other occurrence, it becomes impossible for any key
personnel employed by the ENGINEER in PROJECT WORK or for any corporate officer of the
ENGINEER to render his services to the PROJECT, the ENGINEER shall not be relieved of its
obligations to complete performance under this Agreement without the concurrence and written
approval of CITY. If CITY agrees to termination of this Agreement under this provision, payment
shall be made as set forth in subparagraph 17.3 of this Section.
SECTION 18' ARBITRATION
18.1 All claims, counterclaims, disputes, and other matters in question arising out of, or relating to, this
AGREEMENT or the breach thereof may be decided by arbitration in accordance with the
Construction Industry Arbitration Rules of the American Arbitration Association then obtaining.
Either CITY or ENGINEER may initiate a request for such arbitration, but consent of the other
party to such arbitration shall be a necessary precondition to arbitration.
SECTION 19 NOTICE
19.1 Any notice required to be given under the terms of this Agreement shall be directed to the party at
the address set forth below. Notice shall be considered issued and effective upon receipt thereof
by the addressee -party, or seventy-two hours after. mailing by certified mail to the place of
business set forth below, whichever is earlier.
CITY: City of Yakima
2301 Fruitvale Boulevard
Yakima, WA 98902
Attn: Mr. David Brown, Water and Irrigation Manager
ENGINEER: HUIBREGTSE, LOUMAN ASSOCIATES, INC.
801 North 39`h Avenue
Yakima, WA 98902
Attn: Jeffrey T. Louman, PE, President
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by their
respective authorized officers or representatives as of the day and year first above written.
CITY OF YAKIMA
Signature
Printed Name:
Richard A. Zais Jr.
Title:
City Manager
Date:
/2- `f-a�
Attest �--
City Clerk
HUIBREGTSE, LOUMAN ASSOCIATES, INC.
a'4 m
Signa e
Printed Name:
Jeffrey T. Louman
Title:
President
Date:
i SEAL
*— t
ID- In of 7d
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that Richard A. Zais, Jr. is the person who appeared
before me, and said person acknowledged that he signed this instrument, on oath stated that he was
authorized to execute the instrument, and acknowledged it as the City Manager of the City of Yakima, to
be the free and voluntary act of such party for the uses and purposes mentioned in the instrument.
Dated: I a ` -6,-
Seal or Stamp
\55�0N
Co 4+ ���
" N10TARY
PUBLIC z
Y 9 s
\OFGl W AS��
O WZ
(Signature)
Title nn /J J
cSov,, l2. l�iaoA—
Printed Name
My commission expires
-7 — 1g'. 10
GAPR0P0SALS\2006\C0Y GLENN DR & MACLAREN AGR doc Pana 11 of 94
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that Jeffrey T. Louman, PE, is the person who appeared
before me, and said person acknowledged that he signed this instrument, on oath stated that he was
authorized to execute the instrument, and acknowledged it as the President of Huibregtse, Louman
Associates, Inc., to be the free and voluntary act of such party for the uses and purposes mentioned in
the instrument.
Dated: Nc7J t7 2ODlo
Seal or Stamp
Cj c, A �4
0
\SS\ON EXp� S
er " NOTARY
pUBLIC z
t1RCH it
\
Or A'S
Le�e---4--
(Sign ure)
Title
-A . Vi�4-i�oYl
Printed Name
My commission expires: 3 to ioq
G TROPOSALS\20MCOY GLENN DR & MACLAREN AGR doc Q- I) .-.F')n
EXHIBIT A
CITY OF YAKIMA - GLENN DRIVE AND MACLAREN RESERVOIRS IMPROVEMENT PROJECT
SCOPE OF WORK
During the term of this AGREEMENT, the ENGINEER shall perform professional services in connection
with the following project:
City of Yakima - GLENN DRIVE AND MACLAREN RESERVOIRS IMPROVEMENT PROJECT
This scope of work shall include the furnishing of all services, labor, materials, equipment, supplies, and
incidentals necessary to conduct and complete the work as indicated hereinafter. The work to be
performed involves design engineering, including preparation of plans, specifications and estimate; and
services during construction including observation and administration; for a total of two (2) reservoir
locations as follows:
• Glenn Drive Reservoir - Pump Station Improvements
• Maclaren Reservoir - Concrete Surface Repair Improvements
1. PROJECT MANAGEMENT
A. Project Management. The project manager will coordinate ENGINEER's design team to
ensure that the work is completed on schedule, is technically competent, and meets the
CITY's needs. The project manager will provide overall project management for
ENGINEER's work elements, including coordination with subconsultants, progress
reports, and invoicing.
B. Project Meetings. Attend up to two (2) project meetings in Yakima with CITY Staff to
coordinate the design aspects of each reservoir project with the CITY.
2. DESIGN AND FINAL PLANS AND SPECIFICATIONS
A. Perform field investigations and field surveying necessary for the design of identified
improvements.
B. Perform the preliminary design and present preliminary plans to the CITY prior to
detailing final Plans.
C. On the basis of approved preliminary plans, perform the final design and prepare
complete Plans and Specifications for each reservoir for bid call on the proposed work,
as authorized by the CITY.
D. Furnish the CITY thirty (30) copies of the final Plans and Specifications for each reservoir
for bidding and construction. It is anticipated that the ENGINEER will prepare plans and
specifications for this GLENN DRIVE AND MACLAREN RESERVOIRS IMPROVEMENT
PROJECT, ready for bidding as follows:
• Glenn Drive Reservoir - September 2007
• Maclaren Reservoir - February 2007
E. Furnish to the CITY engineering data for and assist in the preparation of the required
documents so that the CITY may secure approval of such governmental authorities as
have jurisdiction over design criteria applicable to the Project.
F. Answer and supply such information as is requested by prospective bidders.
G. Prepare and issue addenda, if necessary.
GAPR0P0SALS120061C0Y GLENN DR & MACLAREN AGR.doc P— 11 ref 7A
H. Prepare the ENGINEER's Estimate of construction cost.
I. Attend bid opening and participate in the bid opening and evaluation process.
J. Prepare tabulation of all bids received by the CITY and review bidder's qualifications.
K. Make recommendation of construction contract award to the lowest responsible bidder.
3. SERVICES DURING CONSTRUCTION
A. Furnish a qualified resident engineer who shall make necessary construction
observations, and whose duty it shall be to provide surveillance of project construction for
substantial compliance with Plans and Specifications.
B. Prepare progress reports on the Project and file same with the CITY and provide monthly
progress estimates to the CITY.
C. Consult and advise the CITY during construction and make a final report of the
completed work.
D. Monitor the construction contractor's compliance with State labor standards.
E. Review Contractor's submission of samples and shop drawings, where applicable.
F. Recommend progress payments for the construction contractor to the CITY.
G. Prepare and submit proposed contract change orders when applicable.
H. Prepare and furnish reproducible record drawings of all completed work from as -built
drawings furnished by the CITY's construction contractor.
G \PROPOSALS\2006\COY GLENN OR 8 MACLAREN AGR.doc
EXHIBIT B
GLENN DRIVE RESERVOIR IMPROVEMENT PROJECT
Professional Fees
Compensation for professional services will be on a time spent basis at the specific hourly rates shown on
Exhibit C, plus reimbursement for direct non -salary expenses.
The following spreadsheet shows the estimated time and expenses to perform design engineering, plans,
specifications, and estimate for this GLENN DRIVE RESERVOIR IRRIGATION PUMP STATION
IMPROVEMENT PROJECT work. The maximum amount of compensation to the ENGINEER for this
work will be $39,364. This maximum amount will not be exceeded without the written agreement of the
CITY and the ENGINEER.
DESIGN AND FINAL PLANS AND SPECIFICATIONS
PROJECT TITLE: GLENN DRIVE RESERVOIR IRRIGATION PUMP STATION IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
JOB NUMBER: 06104 Huibregtse, Louman Associates, Inc.
DATE: November 7, 2006
ENGINEER'S HOURLY ESTIMATE
TASK
NO
PROJECT TASK
Principal
Engineer
Project
Engineer
Principal
Land
Surveyor
CAD
Tech-
nician
2 -Man
Survey
Party
Clerical
TOTAL
HRS
TASK
DIRECT
COSTS
$136
$94
$126
$82
$150
$55
1
PROJECT MANAGEMENT
A
Project Management
10
1
11
1,415.00
B
Project Meetings
4
4
1
9
975.00
2
DESIGN AND FINAL PLANS, SPECIFICATIONS, & ESTIMATE
A
Field investigations and field
surveying
2
8
2
6
18
2,176.00
B
Perform the preliminary design
2
36
40
8
86
7,376.00
C
In-house project review, quality
control
2
2
2
2
8
734.00
D
Incorporate Agency Review
comments
4
8
2
14
1,142.00
E
Final design, Plans, and
Specifications
2
18
24
4
48
4,152.00
F
Furnish 30 copies of Plans and
Specifications
1
4
5
314.00
G
Furnish engineering data for
approvals
2
2
188.00
H
Answer bidders questions
2
4
6
648.00
1
Prepare and issue addenda
2
6
8
16
1,492.00
J
Prepare estimate of construc-
tion cost
2
4
2
8
758.00
K
Attend bid opening
1
1
2
230.00
L
Prepare tabulation of bids
2
2
4
298.00
.M
Make recommendation of
construction contract award
1
1
2
191.00
Labor Subtotal
30
92
2
82
6
27
239
$22,089.00
G:\PROPOSALS\2006\COY GLENN DR & MACLAREN AGR.doc Pa 1 F of W
PROJECT TITLE: GLENN DRIVE RESERVOIR IRRIGATION PUMP STATION IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
EXPENSES:
hours
$/hr
Computers:
0.00
Travel:
Cost/
Unit
Air Trips
Ground
Trp.
Days_
Trip
Miles
Air Travel
$0.00
0.00
Mileage
$0.00
0.00
Meals/Lodging
$0.00
0.00
Misc. expenses:
Advertisement
1,500.00
FAX
0.00
TELEPHONE
0.00
POSTAGE
0.00
PRINTING
1,200.00
SUB -CONSULTANTS:
1. Conley Engineering, Inc.
9,750
1.1
$10,725.00
2. Structural Research
Company
3,500
1.1
$3,850.00
Subtotal - Labor
$22,089.00
Subtotal - Expenses
$2,700.00
Subtotal - Subconsultants
$14,575.00
Total - DESIGN AND FINAL PLANS AND SPECIFICATIONS
$39,364.00
G \PROPOSALS\2006\COY GLENN DR & MACLAREN AGR.doc Pana IF; of 74
EXHIBIT B
GLENN DRIVE RESERVOIR IMPROVEMENT PROJECT
Professional Fees
Compensation for professional services will be on a time spent basis at the specific hourly rates shown on
Exhibit C, plus reimbursement for direct non -salary expenses.
The following spreadsheet shows the estimated time and expenses to perform Construction
Administration and Observation for this GLENN DRIVE RESERVOIR IRRIGATION PUMP STATION
IMPROVEMENT PROJECT work. The maximum amount of compensation to the ENGINEER for this
work will be $25,682.00. This maximum amount will not be exceeded without the written agreement of
the CITY and the ENGINEER.
CONSTRUCTION ADMINISTRATION AND OBSERVATION
PROJECT TITLE: GLENN DRIVE RESERVOIR IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA `
JOB NUMBER: 06104 Huibregtse, Louman Associates, Inc.
DATE: November 7, 2006
ENGINEER'S HOURLY ESTIMATE
TASK
NO
PROJECT TASK
Principal
Engineer
Project
Engineer
Principal
Land
Surveyor
CAD
Tech-
nician
2 -Man
Survey
Party
Clerical
TOTAL
HRS
TASK
DIRECT
COSTS
$136
$94
$126
$82
$150
$55
1
CONSTRUCTION ADMINISTRATION AND OBSERVATION
A
Award and Contract Execution
1
4
2
7
622.00
B
Preconstruction Conference
2
2
1
5
515.00
C
Review Submittals
1
8
1
10
943.00
D
Constructions Meetings
4
4
8
920.00
E
Construction Observation
(15 days)
8
120
128
12,368.00
F
Pay Estimates
1
2
8
11
764.00
G
Evaluate and Prepare Change
Orders
1
4
2
7
622.00
H
Final Review Meeting
2
2
4
460.00
I
Record Drawings
1
2
8
11
980.00
J
Project Closeout
1
8
9
888.00
K
L
Labor Subtotal
22
156
8
14
200
$19,082.00
EXPENSES:
hours
$/hr
Computers:
0.00
Travel:
Cost/
Unit
Air Trips
Ground
Trp.
Days
Trip
Miles
Air Travel
$0.00
0.00
Mileage
$0.00
0.00
Meals/Lodging
$0.00
0.00
G:\PROPOSALS\2006\COY GLENN DR & MACLARFN AGR doc __
PROJECT TITLE: GLENN DRIVE RESERVOIR IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
Misc. expenses:
FAX
0.00
TELEPHONE
0.00
POSTAGE
0.00
PRINTING
0.00
SUB -CONSULTANTS:
1. Conley Engineering
6,000
1.1
$6,600.00
Subtotal - Labor
$19,082.00
Subtotal - Expenses
0.00
Subtotal - Subconsultants
$6,600.00
Total - CONSTRUCTION OBSERVATION AND ADMINISTRATION
$25,682.00
GAPROPOSALS00061COY GLENN DR & MACLAREN AGR doc o-,,.,. IQ ,.a —
EXHIBIT B
MACLAREN RESERVOIR IMPROVEMENT PROJECT
Professional Fees
Compensation for professional services will be on a time spent basis at the specific hourly rates shown on
Exhibit C, plus reimbursement for direct non -salary expenses.
The following spreadsheet shows the estimated time and expenses to perform design engineering, plans,
specifications, and estimate for this MACLAREN RESERVOIR IMPROVEMENT PROJECT work. The
maximum amount of compensation to the ENGINEER for this work will be $17,179.00. This maximum
amount will not be exceeded without the written agreement of the CITY and the ENGINEER.
DESIGN AND FINAL PLANS AND SPECIFICATIONS
PROJECT TITLE: MACLAREN RESERVOIR IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
JOB NUMBER: 06105 Huibregtse, Louman Associates, Inc.
DATE: November 7, 2006
ENGINEER'S HOURLY ESTIMATE
TASK
Principal
Project
Principal
CAD
2 -Man
TASK
NO
PROJECT TASK
Engineer
Engineer
Land
Tech-
Survey
Clerical
TOTAL
DIRECT
Surveyor
nician
Party
HRS
COSTS
$136
$94
$126
$82
$150
$55
1
PROJECT MANAGEMENT
A
Project Management
10
1
11
1,415.00
B
Project Meetings
4
4
1
9
975.00
2
DESIGN AND FINAL PLANS, SPECIFICATIONS, & ESTIMATE
A
Field investigations and field
1
2
2
4
surveying
9
1,176.00
B
Perform the preliminary design
8
24
16
4
52
4,876.00
C
In-house project review, quality
2
2
control
4
460.00
D
Incorporate Agency Review
2
comments
2
4
298.00
E
Final design, Plans, and
6
16
8
Specifications
30
2,976.00
F
Furnish 30 copies of Plans and
1
Specifications
4
5
314.00
G
Furnish engineering data for
2
approvals
2
188 00
H
Answer bidders questions
1
2
3
324.00
1
Prepare and issue addenda
1
2
1
4
379.00
J
Prepare estimate of construc-
1
2
tion cost
1
4
379.00
K
Attend bid opening
1
1
2
230.00
L
Prepare tabulation of bids
2
2
4
298.00
M
Make recommendation of
of
1
construction contract
1
2
191.00
Labor Subtotal
36
62
2
24
4
17
145
$14,479.00
GAPROPOSALS00061COY GLENN DR & MACLARFN A(]R M,
PROJECT TITLE: MACLAREN RESERVOIR IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
EXPENSES:
hours
$/hr
Computers:
0.00
Travel:
Cost/
Unit
Air Trips
Ground
Trp.
Days
Trip
Miles
Air Travel
$0.00
0.00
Mileage
$0.00
0.00
Meals/Lodging
$0.00
0.00
Misc. expenses:
Advertisement
$1,500.00
FAX
0.00
TELEPHONE
0.00
POSTAGE
0.00
PRINTING
$1,200.00
SUB -CONSULTANTS:
1. None
Subtotal - Labor
$14,479.00
Subtotal - Expenses
$2,700.00
Subtotal - Subconsultants
0.00
Total - DESIGN AND FINAL PLANS AND SPECIFICATIONS
$17,179.00
GAPR0P0SALS\2006\C0Y GLENN DR A MA( -.1 ARFN Af;R to
EXHIBIT B
MACLAREN RESERVOIR IMPROVEMENT PROJECT
Professional Fees
Compensation for professional services will be on a time spent basis at the specific hourly rates shown on
Exhibit C, plus reimbursement for direct non -salary expenses.
The following spreadsheet shows the estimated time and expenses to perform Construction
Administration and Observation for this MACLAREN RESERVOIR IMPROVEMENT PROJECT work.
The maximum amount of compensation to the ENGINEER for this work will be $10,042.00. This
maximum amount will not be exceeded without the written agreement of the CITY and the ENGINEER.
CONSTRUCTION ADMINISTRATION AND OBSERVATION
PROJECT TITLE: MACLAREN RESERVOIR IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
JOB NUMBER: 06105 Huibregtse, Louman Associates, Inc.
DATE: November 7, 2006
ENGINEER'S HOURLY ESTIMATE
TASK
NO
PROJECT TASK
Principal
Engineer
Project
Engineer
Principal
Land
Surveyor
CAD
Tech-
nician
2 -Man
Survey
Party
Clerical
TOTAL
HRS
TASK
DIRECT
COSTS
$136
$94
$126
$82
$150
$55
1
CONSTRUCTION ADMINISTRATION AND OBSERVATION
A
Award and Contract Execution
1
4
2
7
622.00
B
Preconstruction Conference
2
2
1
5
515.00
C
Review Submittals
1
4
1
6
567.00
D
Constructions Meetings
2
4
6
648.00
E
Part-time Construction
Observation (5 days total)
4
40
44
4,304.00
F
Pay Estimates
1
2
8
11
764.00
G
Evaluate and Prepare Change
Orders
1
4
2
7
622.00
H
Final Review Meeting
2
2
4
460.00
1
Record Drawings
1
2
4
7
652.00
J
Project Closeout
1
8
9
888.00
Labor Subtotal
16
72
4
14
106
$10,042.00
EXPENSES:
hours
$/hr
Computers:
0.00
Travel:
Cosu
Unit
Air Trips
Ground
Trp.
Days
Trip
Miles
Air Travel
$0.00
0.00
Mileage
$0.00
0.00
Meals/Lodging
$0.00
0.00
Misc. expenses:
PROJECT TITLE: MACLAREN RESERVOIR IMPROVEMENT PROJECT
CLIENT: CITY OF YAKIMA
FAX
0.00
TELEPHONE
0.00
POSTAGE
0.00
PRINTING
0.00
SUB -CONSULTANTS:
1.
Subtotal - Labor
$10,042.00
Subtotal - Expenses
0.00
Subtotal - Subconsultants
0.00
Total - CONSTRUCTION OBSERVATION AND ADMINISTRATION
$10,042.00
rn1-1.1-1 ai Frani nn z r.enri APPM nra Hr Pana i? of 94
EXHIBIT C
SCHEDULE OF RATES
FOR
HUIBREGTSE, LOUMAN ASSOCIATES, INC.
(January 1, 2006, Through December 31, 2006)
Licensed Principal Engineer
$131.00 per hour
Licensed Principal Land Surveyor
$122.00 per hour
Licensed Professional Engineer
$109.00 per hour
Licensed Professional Land Surveyor
$100.00 per hour
Project Engineer
$91.00 per hour
CAD Technician
$79.00 per hour
Resident Engineer/Inspector
$75.00 per hour
Surveyor
$75.00 per hour
Senior Engineering Technician
$75.00 per hour
Engineering Technician
$53.00 per hour
Word Processing Technician
$53.00 per hour
Two Man Survey Party
$145.00 per hour
Three Man Survey Party
$188.00 per hour
Vehicle Mileage
$0.34 per mile
Global Positioning Survey System Fee
$75.00 per hour
EXHIBIT C
SCHEDULE OF RATES
FOR
HUIBREGTSE, LOUMAN ASSOCIATES, INC.
(January 1, 2007, Through December 31, 2007)
Principal Engineer
$136.00 per hour
Licensed Principal Land Surveyor
$126.00 per hour
Licensed Professional Engineer
$113.00 per hour
Licensed Professional Land Surveyor
$104.00 per hour
Project Engineer
$94.00 per hour
CAD Technician
$82.00 per hour
Resident Engineer/Inspector
$78.00 per hour
Surveyor
$78.00 per hour
Senior Engineering Technician
$78.00 per hour
Engineering Technician
$55.00 per hour
Word Processing Technician
$55.00 per hour
Two Man Survey Party
$150.00 per hour
Three Man Survey Party
$195.00 per hour
Vehicle Mileage
$0.34 per mile
Global Positioning Survey System Fee
$75.00 per hour
D- ')A of ?d
DATE:
TO:
FROM
RE
November 29, 2006
Dick Zais, City Manager
Water / Irrigation Division
Working Together Toward Excellence in Service and Quality
Mike Shane, Water/irrigation Engineer -
Dave Brown, Waterfirrigation Division Manager
2301 Fruitvale Blvd.
Yakima, WA 98902
Glenn Drive and Maclaren Irrigation Reservoirs — Consultant Agreements
Attached for your signature are four consultant agreements for Huibregtse, Louman
Associates, Inc. to perform design and construction administration services for the above
referenced projects. The authorization for your signature falls under the omni resolution
Council passed allowing you to sign all documents related to the refurbishment —
replacement of the Irrigation Systems
Briefly, the Glenn Drive Reservoir project will replace an existing pump station building that
is undersized and over the years has deteriorated to the point where it no longer provides
adequate protection for our irrigation pumping facilities. In addition, a portion of the
structure is not adequate to properly support or secure the existing pumps and motors. A
new building will be constructed to provide adequate room for all pumps and electrical
equipment, provide a more neighborhood friendly structure, provide protection for the
equipment from the elements and vandalism, as well as provide the necessary room for
employees to operate and maintain the facilities.
Mike Shane - Water/Irrigation Engineer
(509) 576-6480 Fax (509) 575-6187
mshane@ci.yakima.wa.us