HomeMy WebLinkAboutR-2004-134 Irrigation System Revenue BondsCITY OF YAKIIVIA, WASHINGTON
RESOLUTION NO. R-2004-134
A RESOLUTION authorizing the execution and delivery of a contract
for purchase of the City's Irrigation System Revenue Bonds, 2004,
in the aggregate principal amount of $5,215,000, fixing certain
terms of the bonds, and approving the form of the official
statement, insurance and surety bond.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 2003-68
passed November 4, 2003 (the "Bond Ordinance"), authorized the issuance of the City's
Irrigation System Revenue Bonds, 2004, in one or more series in an amount not to exceed
$10,000,000; 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
the aggregate principal amount of $5,215,000; 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 Irrigation System Revenue Bonds, 2004 in the
principal amount of $5,215,000 (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 Agreement for the Bonds dated August 24, 2004 (the
"Purchase Agreement"), 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 of
the Bond Ordinance.
Section 2. Acceptance of Offer. The Council hereby finds that the Purchase
Agreement 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 that all conditions
precedent to or concurrent with the acceptance of the Purchase Agreement by the Council have
been met.
The Council hereby accepts the Purchase Agreement and authorizes and directs the
Director of Finance and Budget to execute the Purchase Agreement 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 Agreement, plus accrued interest from their date to the date of
their delivery.
Section 3. Terms, Schedule of Maturities and Interest Rates. The Bonds shall be
designated the "City of Yakima Irrigation System Revenue Bonds, 2004." The Bonds shall be
dated as of September 1, 2004, 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 deems necessary for purposes of identification and
control, and shall bear interest payable on March 1, 2005, and semiannually thereafter on the first
days of September and March.
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The Bonds shall mature on September 1 of the following years in the following amounts
and shall bear interest as follows:
Maturity Date Amount Rate
2005 $ 95,000 2.00 %
2006 105,000 2.00
2007 105,000 2.25
2008 105,000 2.375
2009 110,000 2.75
2010 115,000 3.00
2011 115,000 3.20
2012 120,000 3.375
2013 125,000 3.50
2014 130,000 3.375
2017 410,000 4.00
2020 465,000 4.125
2024 720,000 4.50
2034 2,495,000 4.80
Section 4. Redemption.
(a). Optional Redemption. The Bonds maturing on or prior to September 1, 2014 are
not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after
September 1, 2017 are subject to redemption at the option of the City on and after September 1,
2014, 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.
(b) Mandatory Redemption. The Bonds maturing on September 1, 2017,
September 1, 2020, September 1, 2024 and September 1, 2034, (which shall be deemed to be
Term Bonds), shall be redeemed prior to maturity by lot (or paid at maturity), not later than
September 1 in the years set forth below (to the extent such Bonds have not been previously
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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
* Final Maturity
2017 Term Bond
Year Amount
2015 $ 130,000
2016 135,000
2017* 145,000
2020 Term Bond
Year Amount
2018 $ 150,000
2019 155,000
2020* 160,000
2024 Term Bond
Year Amount
2021 $ 170,000
2022 175,000
2023 185,000
2024* 190,000
2034 Term Bond
Year Amount
2025 $ 200,000
2026 210,000
2027 220,000
2028 230,000
2029 240,000
2030 255,000
2031 265,000
2032 280,000
2033 290,000
2034* 305,000
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Section 5. Execution and Delivery of the Bonds. The Director of Finance and
Budget of the City and other appropriate officers 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 Agreement 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 August 16, 2004;
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 the Official Statement (including any
such supplements and amendments thereto) in connection with the public offering and sale of the
Bonds by the Purchaser.
Section 7. Bond Insurance and Surety Policy.
(a) Acceptance of Insurance. In accordance with the offer of the Purchaser to
purchase the Bonds, the Council hereby approves the commitments of Financial Security
Assurance Inc., a New York stock insurance company, or any successor thereto or assignee
thereof (the "Insurer") to provide a bond insurance policy guaranteeing the payment when due of
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principal of and interest on the Bonds (the "Bond Insurance Policy") and a debt service reserve
insurance policy to satisfy the Reserve Account Requirement (the "Reserve Surety 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 and the Reserve Surety Policy.
(b) Payments Under the Bond Insurance Policy and Rights of the Insurer.
The provisions of this section shall govern, notwithstanding anything to the contrary set forth in
this resolution or the Bond Ordinance.
(1) The prior written consent of the Insurer shall be a condition
precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the
Reserve Account. Notwithstanding anything to the contrary set forth in this resolution or the
Bond Ordinance, amounts on deposit in the Reserve Account shall be applied solely to the
payment of debt service on the Parity Bonds.
(2) No contract shall be entered into nor any action taken by which the
rights of the Insurer or security for or sources of payment on the Bonds may be impaired or
prejudiced except upon obtaining the prior written consent of the Insurer.
(3) The Insurer shall be deemed to be the sole holder of the Bonds
insured by it for the purpose of exercising any voting right or privilege or giving any consent or
direction or taking any other action that the holders of the Bonds insured by it are entitled to take
pursuant to this resolution and the Bond Ordinance
(4) Any maturity of the Bonds shall not be accelerated without the
consent of the Insurer. In the event the maturity of the Bonds is accelerated, the Insurer may
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elect, in its sole discretion, to pay accelerated principal and interest accrued on such principal to
the date of acceleration (to the extent unpaid by the City) and the Bond Registrar shall be
required to accept such amounts. Upon payment of such accelerated principal and interest
accrued to the acceleration date as provided above, the Insurer's obligations under the Bond
Insurance Policy with respect to such Bonds shall be fully discharged.
(5)
No grace period for a covenant default shall exceed 30 days, nor be
extended for more than 60 days, without the prior written consent of the Insurer. No grace
period shall be permitted for payment defaults.
(6) The Insurer shall be included as a third party beneficiary to this
resolution or the Bond Ordinance.
(7)
This resolution or the Bond Ordinance may not be amended or
modified without the prior written consent of the Insurer. Copies of any modification or
amendment to this resolution or the Bond Ordinance shall be sent to Standard & Poor's Credit
Market Services and Moody's Investors Service, Inc. at least 10 days prior to the effective date
thereof.
(8) Unless the Insurer otherwise directs, upon the occurrence and
continuance of an event of default or the occurrence and continuance of an event which with
notice or lapse of time or both would constitute an event of default amounts on deposit in the
Bond Account shall not be disbursed but shall instead be applied to the payment of debt service
or redemption price of the Bonds.
(9) Rights of the Insurer to direct or consent to City or Bondholder
actions under this resolution or the Bond Ordinance shall be suspended during any period in
which the Insurer is in default in its payment obligations under the Bond Insurance Policy
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(except to the extent of amounts previously paid by the Insurer and due and owing to the Insurer)
and shall be of no force or effect in the event the Bond Insurance Policy is no longer in effect or
the Insurer asserts that the Bond Insurance Policy is not in effect or the Insurer shall have
provided written notice that it waives such rights.
(10) The rights granted to the Insurer under this section to request,
consent to or direct any action are rights granted to the Insurer in consideration of its issuance of
the Bond Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of
the Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit
or on behalf of the Bondholder nor does such action evidence any position of the Insurer,
positive or negative, as to whether Bondholder consent is required in addition to consent of the
Insurer.
(11) Only (1) cash, (2) non -callable direct obligations of the United
States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in future
interest and principal payments on Treasuries held by a bank or trust company as custodian,
under which the owner of the investment is the real party in interest and has the right to proceed
directly and individually against the obligor and the underlying Treasuries are not available to
any person claiming through the custodian or to whom the custodian may be obligated, (4)
pre -funded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively or
(5) securities eligible for "AAA" defeasance under then existing criteria of S&P (or any
combination thereof) shall be authorized to be used to effect defeasance of the Bonds unless the
Insurer otherwise approves.
To accomplish defeasance of the Bonds, the City shall cause to be delivered (i) a report
of an independent firm of nationally recognized certified public accountants or such other
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accountant as shall be acceptable to the Insurer ("Accountant") verifying the sufficiency of the
escrow established to pay the Bonds in full on the maturity date ("Verification"), (ii) an escrow
deposit agreement (which shall be acceptable in form and substance to the Insurer), and (iii) an
opinion of nationally recognized bond counsel to the effect that the Bonds are no longer
"Outstanding" under this resolution or the Bond Ordinance, each Verification and defeasance
opinion shall be acceptable in form and substance, and addressed to the City, the Bond Registrar
and the Insurer. The Insurer shall be provided with final drafts of the above -referenced
documentation not less than five business days prior to the funding of the escrow.
Bonds shall be deemed "Outstanding" under this resolution or the Bond Ordinance unless
and until they are in fact paid and retired or the above criteria are met.
(12) Amounts paid by the Insurer under the Bond Insurance Policy shall
not be deemed paid for purposes of this resolution or the Bond Ordinance and shall remain
Outstanding and continue to be due and owing until paid by the City in accordance with this
resolution and the Bond Ordinance. This resolution or the Bond Ordinance shall not be
discharged unless all amounts due or to become due to the Insurer have been paid in full or duly
provided for.
(13) Claims upon the Bond Insurance Policy and payments by and to
the Insurer:
(i) If, on the third business day prior to the related scheduled
interest payment date or principal payment date ("Payment Date") there is not on deposit with
the Bond Registrar, after making all transfers and deposits required under this resolution or the
Bond Ordinance, moneys sufficient to pay the principal of and interest on the Bonds due on such
Payment Date, the Bond Registrar shall give notice to the Insurer and to its designated agent (if
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any) (the "Insurers Fiscal Agent") by telephone or telecopy of the amount of such deficiency by
12:00 noon, New York City time, on such business day. If, on the second business day prior to
the related Payment Date, there continues to be a deficiency in the amount available to pay the
principal of and interest on the Bonds due on such Payment Date, the Bond Registrar shall make
a claim under the Bond Insurance Policy and give notice to the Insurer and the Insurer's Fiscal
Agent (if any) by telephone of the amount of such deficiency, and the allocation of such
deficiency between the amount required to pay interest on the Bonds and the amount required to
pay principal of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by
12:00 noon, New York City time, on such second business day by filling in a form of Notice of
Claim and Certificate delivered with the Bond Insurance Policy.
(ii) In the event the claim to be made is for a mandatory
sinking fund redemption installment, upon receipt of the money due, the Bond Registrar shall
authenticate and deliver to affected Bondholders who surrender their Bonds, a new Bond or
Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond
surrendered. The Bond Registrar shall designate any portion of payment of principal on Bonds
paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other
advancement of maturity, on its books as a reduction in the principal amount of Bonds registered
to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a
replacement Bond to the Insurer, registered in the name of Financial Security Assurance Inc., in
a principal amount equal to the amount of principal so paid (without regard to authorized
denominations); provided that the Bond Registrar's failure to so designate any payment or issue
any replacement Bond shall have no effect of the amount of principal or interest payable by the
City of any Bond or the subrogation rights of the Insurer.
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(iii) The Bond Registrar shall keep a complete and accurate
record of all funds deposited by the Insurer into the Policy Payments Account and the allocation
of such funds to payment of interest on and principal paid in respect to any Bond. The Insurer
shall have the right to inspect such records at reasonable times upon reasonable notice to the
Bond Registrar.
(iv) Upon payment of a claim under the Bond Insurance Policy
the Bond Registrar shall establish a separate special purpose trust account for the benefit of
Bondholders referred to herein as the "Policy Payments Account" and over which the Bond
Registrar shall have exclusive control and sole right of withdrawal. The Bond Registrar shall
receive any amount paid under the Bond Insurance Policy in trust on behalf of Bondholders and
shall deposit any such amount in the Policy Payments Account and distribute such amount only
for purposes of making the payments for which a claim was made. Such amounts shall be
disbursed by the Bond Registrar to Bondholders in the same manner as principal and interest
payments are to be made with respect to the Bonds under the sections hereof regarding payment
of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers
separate from the check or wire transfer used to pay debt service with other funds available to
make such payments. Notwithstanding anything to the contrary otherwise set forth in this
resolution or the Bond Ordinance, and to the extent permitted by law, in the event amounts paid
under the Bond Insurance Policy are applied to claims for payment of principal of or interest on
the Bonds, interest on such principal of or interest on such Bonds shall accrue and be payable
from the date of such payment at the greater of (i) the per annum rate of interest, publicly
announced from time to time by JPMorgan Chase Bank or its successor at its principal office in
the City of New York, as its prime base lending rate plus 3 percent and (ii) the then applicable
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rate of interest on the Bonds provided that in no event shall such rate exceed the maximum rate
permissible under applicable usury or similar laws limiting interest rates.
(v) Funds held in the Policy Payments Account shall not be
invested.
(vi) Any funds remaining in the Policy Payments Account
following a Bond payment date shall promptly be remitted to the Insurer.
(14) The Insurer shall, to the extent it makes any payment of principal
of (or, in the case of capital appreciation bonds, accreted value) 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. The obligations to the Insurer shall survive discharge or termination of
this resolution or the Bond Ordinance.
(15) The City shall agree to pay or reimburse the Insurer any and all
charges, fees, costs and expenses which the Insurer may reasonably pay or incur in connection
with (i) the administration, enforcement, defense or preservation of any rights or security in
respect to this resolution or the Bond Ordinance, (ii) the pursuit of any remedies under this
resolution or the Bond Ordinance or otherwise afforded by law or equity, (iii) any material
amendment, waiver or other action with respect to, or related to, this resolution or the Bond
Ordinance, (iv) the violation by the City of any law, rule or regulation, or any judgment, order or
decree applicable to it or (v) any litigation or other dispute in connection with this resolution or
the Bond Ordinance or the transactions contemplated thereby, other than amounts resulting from
the failure of the Insurer to honor its obligations under the Bond Insurance Policy. The Insurer
reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver
or consent proposed in respect to this resolution or the Bond Ordinance.
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(16) After payment of reasonably expenses of the Bond Registrar, the
application of funds realized upon default shall be applied to the payment of expenses of the City
or rebate only after the payment of debt service due and past due on the Bonds, together with the
replenishment of the Reserve Account.
(17) The Insurer shall be entitled to pay principal (or, in the case of
capital appreciation bonds, accreted value) or interest on the Bonds that shall become Due for
Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in
the Bond Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the
maturity thereof in accordance with this resolution or the Bond Ordinance, whether or not the
Insurer has received a Notice (as defined in the Bond Insurance Policy) of Nonpayment or a
claim upon the Bond Insurance Policy.
(18) The notice address of the Insurer is: Financial Security Assurance
Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director --
Surveillance -- Re: Policy No. _. Telephone: (212) 826-0100; Telecopier: (212) 339-3529. In
each case in which notice or other communication refers to an Event of Default or with respect to
which failure on the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication shall also be sent to the attention
of General Counsel and shall be marked to indicate "URGENT MAI'hRIAL ENCLOSED."
(19) The Insurer shall be provided with the following information:
(i)
Annual audited financial statements when they are received
from the Washington State Auditor (together with a certification of the City that it is not aware
of any default or event of default under the Bond Ordinance) and the City's annual budget within
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30 days after the approval thereof together with such other information, data or reports as the
Insurer shall reasonably request from time to time;
(ii) Notice of any draw upon the Reserve Account within two
business days after knowledge thereof other than (a) withdrawals or amounts in excess of the
Reserve Account Requirement and (b) withdrawals in connection with a refunding of Bonds;
(iii) Notice of any default within five business days after
knowledge thereof;
(iv) Prior notice of the advance refunding or redemption of any
of the Bonds, including the principal amount, maturities and CUSIP numbers thereof;
(v) Notice of the resignation or removal of the Paying Agent
and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto
other than a change of state fiscal agents;
(vi) The commencement of any proceeding by or against the
City commenced under the United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding");
(vii) The making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of
principal of, or interest on, the Bonds;
(viii) A full original transcript of all proceedings relating to the
execution of any amendment or supplement to this resolution or the Bond Ordinance; and
(ix) All reports, notices and correspondence to be delivered
under the terms of this resolution or the Bond Ordinance.
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(20) Notwithstanding satisfaction of other conditions to the issuance of
additional bonds contained in this resolution or the Bond Ordinance, no such issuance may occur
(1) should any event of default (or any event which, once all notice or grace periods have passed,
would constitute an event of default) have occurred and be continuing unless such default shall
be cured upon issuance and (2) unless the Reserve Account is fully funded at its requirement
(including the new issue) upon the issuance of such additional bonds, in either case unless
otherwise permitted by the Insurer.
(21) In determining whether any amendment, consent or other action to
be taken, or any failure to act, under this resolution or the Bond Ordinance would adversely
affect the security for the Bonds or the rights of Bondholders, consideration shall be given to the
effect of any such amendment, consent, action or inaction as if there were no Bond Insurance
Policy.
(c) Reserve Surely Policy.
The following provisions shall apply so long as the Reserve Surety Policy is in effect.
(1) The City shall repay any draws under the Reserve Surety Policy
and pay all related reasonable expenses incurred by the Insurer. Interest shall accrue and be
payable on such draws and expenses from the date of payment by the Insurer at the Late
Payment Rate. "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate
of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office
in the City of New York, as its prime or base lending rate ("Prime Rate") (any change in such
Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus
3 percent, and (ii) the then applicable highest rate of interest on the Bonds; and (b) the maximum
rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment
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Rate shall be computed on the basis of the actual number of days elapsed over a year of
360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime
Rate shall be the publicly announced prime or base lending rate of such national bank as the
Insurer shall specify.
Repayment of draws and payment of expenses and accrued interest thereon at the Late
Payment Rate (collectively, "Policy Costs") shall commence in the first month following each
draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the
aggregate of Policy Costs related to such draw.
Amounts in respect of Policy Costs paid to the Insurer shall be credited first to interest
due, then to the expenses due and then to principal due. As and to the extent that payments are
made to the Insurer on account of principal due, the coverage under the Reserve Surety Policy
will be increased by a like amount, subject to the terms of the Reserve Surety Policy. In
calculating the Future Parity Bonds test in Section 14 of the Bond Ordinance and the rate
covenant in Section 13 of the Bond Ordinance, the City shall include any Policy Costs then due
and owing.
All cash and investments in the Reserve Account for the Bonds shall be transferred to the
Bond Fund for payment of debt service on Bonds before any drawing may be made on the
Reserve Surety Policy or any other credit facility credited to the Reserve Account in lieu of cash
("Credit Facility"). Payment of any Policy Costs shall be made prior to replenishment of any
such cash amounts. Draws on all Credit Facilities (including the Reserve Surety Policy) on
which there is available coverage shall be made on a pro -rata basis (calculated by reference to
the coverage then available thereunder) after applying all available cash and investments in the
Reserve Account. Payment of Policy Costs and reimbursement amounts with respect to other
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credit facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from
the Reserve Account.
(2) If the City shall fail to pay any Policy Costs in accordance with the
requirements of this section, the Insurer shall be entitled to exercise any and all legal and
equitable remedies available to it, including those provided under the Bond Ordinance other than
(a) acceleration of the maturity of the Bonds or (b) remedies which would adversely affect
owners of the Parity Bonds.
(3) This resolution or the Bond Ordinance shall not be discharged until
all Policy Costs owing to the Insurer shall have been paid in full. The City's obligation to pay
such amounts shall expressly survive payment in full of the Bonds.
(4) The Bond Registrar shall ascertain the necessity for a claim upon
the Reserve Surety Policy and shall provide notice to the Insurer in accordance with the terms of
the Reserve Surety Policy at least five business days prior to each date upon which interest or
principal is due on the Bonds. Where deposits are required to be made by the City to the Reserve
Account for the Bonds more often than semi-annually, the Bond Registrar shall be instructed to
give notice to the Insurer of any failure of the City to make timely payment in full of such
deposits within two business days of the date due.
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.
Section 9. Effective Date. This resolution shall be in effect from and after its
adoption in accordance with law.
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ADOPTED at a meeting of the City Council of the City of Yakima, Washington, this 24th
day of August, 2004.
ATTEST:
Kcutz-v.-
City Clerk
APPROVED AS TO FORM:
City Attorney
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CITY OF YAKIMA, WASHINGTON
By
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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 meeting of the Council held on the 24th day of August,
2004, 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 24th day of August, 2004.
(SEAL)
City Clerk
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting Of 8/24/2004
ITEM TITLE: A Resolution authorizing the execution and delivery of a contract for purchase
of the City's Irrigation System Revenue Bonds, 2004, in the principal amount of
approximately $5.45 million,* fixing certain terms of the bonds, and approving the form of
the official statement and insurance. (*Preliminary, subject to change)
SUBMITTED BY: Finance Department
CONTACT PERSON/TELEPHONE: Tim Jensen, Treasury Services Officer #575-60
Rita Anson, Finance Director #575-6070
SUMMARY EXPLANATION:
Background:
Last November, the Council passed Ordinance #2003-68 authorizing the issuance of Irrigation
System Revenue bonds in an amount not to exceed ten million dollars. This transaction of
approximately $5.45 million is the first issuance of that total authorization. The bonds are to
finance the first phase of reconstruction of the City's Irrigation System. Preliminary design for the
project is complete and construction is scheduled to begin in late October 2004.
The Bonds:
These will be 30 -year revenue bonds and we estimate (as of late Thursday) the total interest cost
to be approximately 5% including bond insurance and issuance costs. Approximate annual debt
Continued...
Resolution X Ordinance — Other (Specify) Draft Purchase Offer, Preliminary Official Statement
and draft amortization schedule
Contract Mail to (name and address):
Phone
Funding Source �--�
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Adopt Resolution
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION Resolution adopted. RESOLUTION NO. R-2004-134
Legal/BD
rev. effective 7/21/92
service at that rate will be $345,000. The capital portion of the Irrigation rate structure is
adequate to support this level of debt. (it should be noted that market conditions cot,id change before
Monday, August 23rd when the bonds are priced, and that rate could be affected).
Staff recently held interviews with three top bond insurers and have to date received one
favorable bid to insure the bonds. (That bid is incorporated in the rate mentioned earlier). Bond
insurance with one of the top insurers makes the issue more attractive to investors and therefore
Tess expensive to market. We did not seek a credit rating on this issue because it was felt that
the cost of obtaining the rating would not justify any savings that could result from the rating we
would probably receive. Bond insurance gives the bonds a AAA rating.
Included in this packet are:
• Draft Sale Resolution (blank as to terms)
• Draft Purchase Offer from Seattle Northwest Securities (blank as to terms)
• Draft amortization schedule
• Preliminary Official Statement (as submitted to insurers and investors)
Note: We will not have final documents until after pricing is completed and the underwriters have
made the City a formal purchase offer on Monday, August 23rd. Therefore the final documents
will be provided to Council at the Council meeting scheduled for 9:00 AM on Tuesday, August 24th
in Council Chambers
Legal/BO
rev. effective 7/21/92
MEMORANDUM
August 24, 2004
To: Honorable Mayor and Members of the City Council
Dick Zais, City Manager
From: Rita Anson, Finance Directo
Tim Jensen Treasury Services Offi er
U
Subject: Agenda item #2 (2004 Irrigation bonds)
We pleased
y Council,
r y rmr ny � nnn 30
are pleased to submit to Council, for your ratification, the issuance of $5,215,000 30 -
year Irrigation System Revenue Bonds. Orders were subscribed on Monday, August 23rd
in the offices of Seattle Northwest Securities, in Seattle. The bond proceeds are for phase
1 of the Irrigation System refurbishment. Total interest cost on the bonds is 4.85%,
including bond issuance and insurance costs. Debt service is flat, at approximately
$320,000 a year. The transaction will result in just over $5 million cash for the
refurbishment project after payment of issuance costs.
The bonds will be insured. The expected savings in interest cost by having bond
insurance on this issue is estimated to be almost $345,000 at present value. Having bond
insurance gives the bonds a AAA credit rating in the market.
In order to consummate the transaction the following documents require Council
adoption/approval:
• Resolution ratifying all terms and fixing rates, maturities and bond insurance
• Bond Purchase Agreement from Seattle Northwest Securities
Staff recommends approval of the above documents.
• An amortization schedule is also included for your review.
August 24, 2004
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$5,215,000 Irrigation System Revenue Bonds, 2004
Dated: September 1, 2004
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 of delivery 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 adopt a resolution and pass an ordinance authorizing
the Bonds (collectively, 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 August 16, 2004. 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 twins;
Honorable Mayor and City Council
City of Yakima, Washington
August 24, 2004
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, copies of 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 huslness 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
August 24, 2004
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
(0 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.
-r. 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) issuance of a municipal bond insurance policy by Financial Security Assurance Inc. and
assignment to the Bonds of a rating of AAA by Standard & Poor's;
(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) designation of the Bonds as "qualified tax-exempt obligations" for banks, thrift institutions and
other financial institutions, as defined in Section 265 of the Internal Revenue Code of 1986, as
amended; and
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.
(g)
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
August 24, 2004
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
reimbur&ed in fill by Celler.
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 Seiler 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, Vice President
Accepted August 24, 2004
City of Yakima, Washington
By:
APPENDIX A
City of Yakima, Washington
Irrigation System Revenue Bonds, 2004
Description of Bonds
(a) Principal Amount. $5,215,000
(b) Purchase Price. $5,072,839.35 ($97.274005 per $100), representing an original issue discount of $90,010.65
and an underwriter's discount of $52,150.00, plus accrued interest from the dated date of September 1, 2004 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. March 1 and September 1, commencing March 1, 2005.
(f) Maturity Schedule. Bonds shall mature and bear interest as follows:
Due Interest Due Interest
Sept. 1 Amount Rate Yield CUSIP Sept. 1 Amount Rate Yield CUSIP
2005 $ 95,000 2.000% 1.60% 98453PAA8 2010 $ 115,000 3.000% 3.07% 98453PAF7
2006 105,000 2.000 1.81 98453PAB6 2011 115,000 3.200 3.30 98453PAG5
2007 105,000 2.250 2.18 98453PAC4 2012 120,000 3.375 3.47 98453PAH3
2008 105,000 2.375 2.56 98453PAD2 2013 125,000 3.500 3.63 98453PAJ9
2009 110,000 2.750 2.85 98453PAE0 2014 130,000 3.375 3 74 98453PAK6
$410,000 4.00% Term Bonds due September 1, 2017 to yield 4.05%; CUSIP: 98453PAN0
$465,000 4.125% Term Bonds due September 1, 2020 to yield 4.32%; CUSIP: 98453PAR1
$720,000 4.50% Term Bonds due September 1, 2024 to yield 4.67%; CUSIP: 98453PAV2
$2,495,000 4.80% Term Bonds due September 1, 2034 to yield 4.94%; CUSIP: 98453PAF6
(g)
Optional Redemption. The Bonds maturing on or prior to September 1, 2014 are not subject to redemption prior
to their scheduled maturity. The Bonds maturing on or after September 1, 2017 are subject to redemption at the
option of the City on and after September 1, 2014, 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 September 1 in
the years 2017, 2020, 2024 and 2034 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 September 1 in the years and amounts as follows:
* Final maturity.
(i)
2017 Term Bonds
Years Amounts
2015 $ 130,000
2016 135,000
2017* 145,000
Total $ 410,000
2024 Term Bonds
Years Amounts
2021 $ 17n,99n
2022 175,000
2023 185,000
2024* 190,000
Total
$ 720,000
2020 Term Bonds
Years Amounts
2018 $ 150,000
2019 155,000
2020* 160,000
Total $ 465,000
2034 Term Bonds
Years Amounts
2025 $ /00,000
2026 210,000
2027 220,000
2028 230,000
2029 240,000
2030 255,000
2031 265,000
2032 /80,n00
2033 290,000
2034* 305,000
Total $2,495,000
Rating/Insurance. Issuance of a municipal bond insurance policy by Financial Security Assurance Inc. and
assignment to the Bonds a rating of AAA by Standard & Poor's Ratings Services.
Closing Date. With definitive Bonds or a temporary Bond on or about September 14, 2004.
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.
Offer Expires. 11:00 p.m., August 24, 2004.
Bond Counsel. Preston Gates & Ellis LLP
For Information Purposes Only:
True Interest Cost: 4.803550%
Period
Ending
Principal
BOND DEBT SERVICE
City of Yakima, Washington
Irrigation System Revenue Bonds, 2004
FINAL NUMBERS
Dated Date 09/01/2004
Delivery Date 09/14/2004
Annual
Coupon Interest Debt Service Debt Service
09/14/2004
03/01/2005 109,782.50 109,782.50
09/01/2005 95,000 2.000% 109,782.50 204,782.50 314,565 00
03/01/2006 108,832.50 108,832.50
09/01/2006 105,000 2.000% 108,832.50 213,832.50 322,665.00
03/01/2007 107,782.50 107,782.50
09/01/2007 105,000 2.250% 107,782.50 212,782.50 320,565.00
03/01/2008 106,601.25 106,601.25
09/01/2008 105,000 2.375% 106,601.25 211,601.25 318,202.50
03/01/2009 105,354.38 105,354.38
09/01/2009 110,000 2.750% 105,354.38 215,354.38 320,708.76
03/01/2010 103,841.88 103,841.88
09/01/2010 115,000 3.000% 103,841.88 218,841.88 322,683 76
03/01/2011 102,116.88 102,116.88
09/01/2011 115,000 3.200% 102,116.88 217,116.88 319,233 76
03/01/2012 100,276.88 100,276.88
09/01/2012 120,000 3.375% 100,276.88 220,276.88 320,553.76
03/01/2013 98,251.88 98,251.88
09/01/2013 125,000 3.500% 98,251.88 223,251.88 321,503 76
03/01/2014 96,064.38 96,064.38
09/01/2014 130,000 3.375% 96,064.38 226,064.38 322,128.76
03/01/2015 93,870.63 93,870.63
09/01/2015 130,000 4.000% 93,870.63 223,870.63 317,741.26
03/01/2016 91,270.63 91,270.63
09/01/2016 135,000 4 000% 91,270.63 226,270.63 317,541.26
03/01/2017 88,570.63 88,570.63
09/01/2017 145,000 4.000% 88,570 63 233,570.63 322,141.26
03/01/2018 85,670.63 85,670.63
09/01/2018 150,000 4 125% 85,670.63 235,670.63 321,341.26
03/01/2019 82,576.88 82,576.88
09/01/2019 155,000 4.125% 82,576.88 237,576.88 320,153.76
03/01/2020 79,380.00 79,380.00
09/01/2020 160,000 4 125% 79,380.00 239,380.00 318,760.00
03/01/2021 76,080 00 76,080.00
09/01/2021 170,000 4.500% 76,080 00 246,080.00 322,160.00
03/01/2022 72,255 00 72,255.00
09/01/2022 175,000 4.500% 72,255 00 247,255.00 319,510.00
03/01/2023 68,317.50 68,317.50
09/01/2023 185,000 4.500% 68,317.50 253,317.50 321,635.00
03/01/2024 64,155.00 64,155 00
09/01/2024 190,000 4.500% 64,155 00 254,155.00 318,310.00
03/01/2025 59,880 00 59,880.00
09/01/2025 200,000 4.800% 59,880.00 259,880.00 319,760.00
03/01/2026 55,080.00 55,080 00
09/01/2026 210,000 4.800% 55,080.00 265,080.00 320,160.00
03/01/2027 50,040 00 50,040.00
09/01/2027 220,000 4.800% 50,040.00 270,040.00 320,080.00
03/01/2028 44,760 00 44,760.00
09/01/2028 230,000 4 800% 44,760.00 274,760.00 319,520.00
03/01/2029 39,240 00 39,240.00
Aug 23, 2004 10:07 am Prepared by 7MW - Seattle -Northwest Securities Corp. (Finance 5.007a Yakima.IRRIG-04IRR) Page 1
BOND DEBT SERVICE
City of Yakima, Washington
Irrigation System Revenue Bonds, 2004
FINAL NUMBERS
Period Annual
Ending Principal Coupon Interest Debt Service Debt Service
09/01/2029 240,000 4.800% 39,240.00 279,240.00 318,480.00
03/01/2030 33,480.00 33,480.00
09/01/2030 255,000 4.800% 33,480.00 288,480.00 321,960.00
03/01/2031 27,360.00 27,360.00
09/01/2031 265,000 4.800% 27,360.00 292,360.00 319,720.00
03/01/2032 21,000.00 21,000.00
09/01/2032 280,000 4.800% 21,000.00 301,000.00 322,000.00
03/01/2033 14,280.00 14,280.00
09/01/2033 290,000 4.800% 14,280.00 304,280.00 318,560.00
03/01/2034 7,320.00 7,320.00
09/01/2034 305,000 4.800% 7,320,00 312,370.00 319,640.00
5,215,000 4,386,983.86 9,601,983.86 9,601,983.86
Aug 23, 2004 1007 am Prepared by JMW - Seattle -Northwest Securities Corp. (Finance 5.007a Yakima:IRRIG-04IRR) Page 2
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PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 16, 2004
$5,545,000*
City of Yakima, Washington
Irrigation System Revenue Bonds, 2004
DATED: September 1, 2004 DUE:'September 1, as shown below
NO UNDERLYING RATING—Municipal Bond Insurance applied for.
BANK QUALIFIED—The City has designated the Bonds as "qualified tax-exempt obligations" for banks, thrift
institutions and other financial institutions. See "Certain Federal Tax Income Consequences" herein for a discussion
of this designation.
BOOK -ENTRY ONLY—The Bonds will 'be issued as fully registered bonds in denominations of $5,000, or integral multiples
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
representing their interest in the Bonds purchased.
PRINCIPAL AND INTEREST PAYMENTS—Interest on the Bonds will be payable on March 1, 2005 and semiannually
thereafter on September 1 and March 1 of each year to their maturity or earlier redemption of the Bonds. Principal of
and interest on the Bonds will be payable by the fiscal agency of the State of Washington in New York, New York,
currently The Bank of New York, as further described herein. See "Description of the Bonds." For so long as the Bonds
remain in a "book -entry only" transfer system, the fiscal agent will make such payments only to DTC, which in turn will
remit such principal and interest to its Participants for subsequent disbursement to Beneficial Owners of the Bonds 'as
further described herein in Appendix C.
MATURITY SCHEDULE—
Due Interest Prices or Due Interest Prices or
Sept. 1 Amounts* Rates Yields CUSIPSept.1 Amounts* Rates Yields CUSIP
2005 $ 100,000 2020 $ 170,000
2006 100,000 2021 180,000
2007 105,000 2022 185,000
2008 110,000 2023 195,000
2009 110,000 2024 205,000
2010 115,000 2025 215,000
2011 120,000 2026 225,000
2012 125,000 2027 235,000
2013 125,000 2028 250,000
2014 130,000 , 2029 260,000
2015 140,000 2030 275,000
2016 145,000 2031 290,000
2017 150,000 2032 305,000
2018 155,000 2033 320,000
2019 165,000 2034 340,000
(Plus accrued interest from the Dated Date)
REDEMPTION—The Bonds are subject to redemption prior to their stated maturities as further described herein. See
"Description of the Bonds – Redemption Provisions."
SECURITY The Net Revenue of the System is pledged irrevocably to the payment of the Bonds. This pledge shall
constitute a lien and charge upon the Net Revenue of the System. Additional bonds may be issued on a parity of lien
with the Bonds, subject to certain conditions described herein. The Bonds are special obligations of the City payable
only from the Bond Account. The Bonds are not general obligations of the City, the State of Washington, or any other
municipal corporation or political subdivision thereof. See "Security for the Bonds."
TAX EXEMPTION—In the opinion of Bond Counsel, interest on the Bonds is excluded from gross income subject to federal income
taxation pursuant to the Internal Revenue Code of 1986, as amended, subject to certain conditions and assumptions described herein
under "Tax Exemption." The Bonds are not private activity bonds. Interest on the Bonds is included in the computation of certain
federal taxes on corporations.
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 delivery
to the Bond Registrar through the facilities of The Depository Trust Company by Fast Automated Securities Transfer, on
or about September 14, 2004.
* 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.
111111 SEATTLE -NORTHWEST
Milli SECURITIES CORPORATION
(This Page Intentionally Left Blank)
City of Yakima, Washington
129 North Second Street
Yakima, Washington 98901
Phone: (509) 575-6000
Fax: (509) 575-6107 '
www.ci.yakima.wa.us*
Paull'. George
Neil McClure
Ronald J. Bonlender
Dave Edler
Mary Place
Bernard J. Sims
Susan J. Whitman
Richard A. Zais, Jr.
Glenn K. Rice
Rita M. Anson, CPA
Timothy M. Jensen
Cindy Epperson
Dave Brown
Ray Paolella
Mayor and City Council
Mayor
Assistant Mayor
Council Member
Council Member
Council Member
Council Member
Council Member
Administrative Officials
City Manager
Assistant City Manager
Director of Finance & Budget
Treasury Services Officer
Financial Services Manager
Water/Irrigation Manager
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
* The City's website is not part of this Official Statement, and investors should not rely on information presented in
the City's website in determining whether to purchase the Bonds. This inactive textual reference to the City's
website is not a hyperlink and does not incorporate the City's website by reference.
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.
i
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Table of Contents
Page
Description of the Bonds 1
Principal Amount, Date, Interest Rates and Maturities 1
Redemption Provisions 1
Purchase 1
Bond Registrar and Registration Features 2
Book -Entry Bonds L 2
Authorization for Issuance 2
Purpose and Use of Proceeds 2
Purpose 2
Sources and Uses of Funds 3
Security for the Bonds 3
Bond Account 3
Revenue Fund/Priority of Payments 4
Rate Covenant 4
Certain Other Covenants 1 5
Future Parity Bonds 5
Defeasance 6
Indebtedness of the System 7
Parity Bonds 7
Irrigation Revenue Bonds — Debt Service Requirements ,, 7
Debt Payment Record 7
Future Financings 8
The Irrigation System 8
Description 8
Water Supply 8
Irrigation Customers 10
Major Accounts of the System 11
Irrigation Rates and Charges 11
Capital Improvement Plan 11
Billing and Collection Practices 12
Endangered Species Act 12
Financial Results 12
Statement of Net Assets/Comparative Balance Sheet 13
Projected Financial Information 14
Projected Coverage Table 15
The City 15
Key Administrative Staff 16
Labor Relations 16
Pension System 17
Risk Management 17
Accounting Policies 19
Budgetary Process 19
Cash and Investments 19
Auditing of City Finances 20
Demographic Information 21
Tax Exemption 24
General 24
Certain Federal Income Tax Consequences 24
Continuing Disclosure 25
Legal and Underwriting
26
Approval of Counsel 26
Litigation 26
Limitation on Remedies 26
Official Statement 1 27
Underwriting 27
Concluding Statement 27
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
$5,545,000*
Irrigation System Revenue Bonds, 2004
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 $5,545,000* aggregate principal amount of Irrigation System Revenue
e
Bonds, 2004, dated September 1, 2004 (the "Bonds"). This Official Statement provides information
concerning the City, the Bonds and the City's irrigation system (the "System"). Additional bonds may be
issued on a parity of lien with the Bonds, subject to, certain conditions described herein (the Bonds and
any Future Parity Bonds are hereinafter referred to as the "Parity Bonds").
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 $5,545,000* and will be dated and bear
interest from September 1, 2004. The Bonds will mature on the dates and in the principal amounts and
will bear interest (payable semiannually on March 1 and September 1, first interest payable March 1,
2005) 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 Bonds maturing on or prior to September 1, 2014 are not subject to redemption
prior to their scheduled maturity. The Bonds maturing on or after September 1, 2015 are subject to
redemption at the option of the City on and after September 1, 2014, 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
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 (defined herein) to use at any time any surplus
Revenue of the System available after providing for maintenance and operation, debt service, bond
* Preliminary, subject to change.
1
redemption and,capitai 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 w ll be issued as fully r stcrcd bonds and, when n
__�.. ..___ ,,.. ....� ..�.b�«,icu atiu, issued, will be registered in the name OI
Cede & Co. as Bondy 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 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"). Sp 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,obligated remit such _,
.,, is vvaabun�a.n. to 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 cover of this Official Statement; each in the aggregate
aa- -a--
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 presentedfor
payment in the State of Washington at any office off 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 herein).
Authorization for Issuance
The Bonds are issued pursuant to Ordinance No. 2003-68 passed by the City Council on November 4,
2003 (the "Bond Ordinance"), Resolution No. adopted on August 24, 2004 and under and in
accordance with the laws and provisions of the State, including chapters 35.92 and 39.46 RCW.
The Bonds are the first series of the City Council's total authorization of $10 million. The City expects to
issue the remaining $4.455 million in 2007 or 2008.
Purpose and Use of Proceeds
Purpose
The proceeds from the sale of the Bonds will be used to (i) design and replace portions of the System,
including laying new pipe (the "Project") as further defined herein under "The irrigation System —
Capital Improvement Plan;" (ii) satisfy the Reserve Account Requirement with cash or authorized
Qualified Insurance; and (iii) pay for the costs of issuance of the Bonds.
2
Sources and Uses of Funds
The proceeds from the Bonds (less accrued interest) are estimated to be applied as follows:
Sources of Funds
Par Amount of Bonds
Premium/Discount
Total Sources of Funds $
Uses of Funds
Project Fund $
Reserve Fund
Issuance Expenses and Underwriter's Discount (and Bond Insurance)
Total Uses of Funds
$ 5,545,000*
Security for the Bonds
The principal of and interest on the Bonds are secured by a pledge of Net Revenues of the System equal
to the pledge for any future Parity Bonds, subject only to the payment of the Costs of Maintenance and
Operation of the System and the required payments into the Irrigation System Bond Account (the "Bond
Account"). 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 Net 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 Account. The Bond
Account 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 Account
The Bond Account will be used solely for the purpose of paying and securing the payment of Parity
Bonds. The City will deposit the System Revenues or Assessments into the Bond Account for payment of
the principal of and interest on Parity Bonds without allocation to any particular series of bonds payable
from the Bond Account. All accrued interest received by the City at the, time of delivery of the Bonds will
be paid into the Bond Account. As long as any of the Parity Bonds emain outstanding, the City has
obligated itself to set aside and pay from the Revenue Account into the Bond Account, on or before the
date due,.those amounts necessary, together with Revenue of the System, to pay the interest or principal
and interest next coming due on the outstanding Parity Bonds
Reserve Account. The City has created a Reserve Account for the purpose of securing the payment of the
principal of and interest on all Parity Bonds. The City has covenanted that on the date of issuance of the
Bonds it will have on deposit an amount or Qualified Insurance in an amount equal to the Reserve
Account Requirement. Each ordinance providing for the issuance of Future Parity Bonds will provide for
payments into the Reserve Account from any other money lawfully available therefor in amounts that
within not less than five years of equal monthly payments, will provide for deposit of the Reserve
Account 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 Account. 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 Account will be funded as if the Parity Bonds which remain outstanding had
been issued on the date of such notice of cancellation.
* Preliminary, subject to change.
3
In the event there is. a'deficiency in the Bond Account to meet maturing installments of either interest on
or principal of and interest on the outstanding Parity Bonds payable out of such Account, such deficiency
will be made up from the Reserve Account by the withdrawal of money therefrom and by the sale or
redemption of obligations held in the Reserve Account, if necessary, in such amounts as will provide cash
in the Reserve Account sufficient to make up anv such deficiency, and if a' defieiPney s+;lt exists
immediately prior to an interest payment date and after the withdrawal of cash, the City will then draw
from any Qualified Letter of Credit or Qualified Insurance to, make up the deficiency. Such draw will be
made at such times and under such conditions as the agreement for such Qualified Letter of Credit or
such Qualified Insurance provides. If more than one Qualified Letter of Credit or Qualified Insurance is
available, draws will be made ratably to make up the deficiency.
Revenue Fund/Priority of Payments
The City has obligated and bound itself to deposit the Revenues of the System into the Revenue Fund.
Revenues of the System deposited therein will be used only for the following purposes and in the
fnliow ng priority.
_.,....... ,� order of gsxx_xxx! .
First, to pay the Costs of Maintenance and Operation of the System;
Second, to make all payments required to be made into the Bond Account to pay the interest on any Parity
Bonds and amounts to repay any bond insurer for interest payments on Parity Bonds;
Third, to pay the principal of and any sinking fund payments for the Parity Bonds and amounts to repay
any bond insurer for principal and sinking fund installments for any Parity Bonds;
Fourth, to make all payments required to be made into any Reserve Account to secure the payment of any
Parity Bonds;
Fifth, to make all payments required to be made into any other revenue bond redemption fund or revenue
warrant or note redemption fund and Bond Account or reserve account created to pay and secure the
payment of the principal of and interest on any revenue bonds or revenue warrants or notes of the City
having a lien upon the Revenue of the System and the money in the Revenue Fund junior and inferior to
the lien thereon for the payment of the principal of and interest on Parity Bonds; and
Sixth, to retire by redemption or purchase any outstanding revenue bonds or revenue warrants or notes
of the City or to make necessary additions, betterments, improvements, extraordinary repairs, extensions
and replacements of the System or any other lawful City purposes.
Rate Stabilization Account. The Rate Stabilization Account has been created within the Revenue Fund to
cope with future increases in revenue requirements of the System. The City may from time to time
appropriate or budget amounts in the Revenue Fund for deposit in the Rate Stabilization Account and
may from time to time withdraw amounts therefrom to prevent or mitigate irrigation rate increases or for
other lawful purposes of the City related to the System. Amounts withdrawn from the Rate Stabilization
Account will increase Revenue of the System for the period for which they are withdrawn, and amounts
deposited in the Rate Stabilization Account will reduce Gross Revenue of the System for the period for
which they are deposited. Credits to or from the Rate Stabilization Account that occur within 90 days
after the end of a fiscal year may be treated as occurring within such fiscal year. Earnings on the Rate
Stabilization Account will be credited to the Revenue Fund
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
Revenue of the System collected (together with Assessments collected) will at all times be sufficient (a) to
pay all the costs of charges and expenses in connection with the proper operation and maintenance of the
System, (b) to pay the principal of and interest on the outstanding Parity Bonds, as and when the same
4
will become due and payable, (c) to make when due all payments which the City is obligated to make
into the Bond Account and Reserve Account and all other payments which the City is obligated to make
pursuant to the Bond Ordinance, and (d) 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 Revenue of the
System by law or contract; and (ii) the Net Revenues in each calendar year will be at least equal to
1.40 times Annual Debt Service for such year (after deducting Assessments actually collected for such
year).
Certain Other Covenants
Certain other covenants in the Bond Ordinance include:
Sale or Disposition of System. The City will not sell, mortgage„lease 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 Account of cash or Government Obligations sufficient together with interest 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 in excess of five percent of the value of the net utility plant of
the System unless (i) a certificate of a Professional Utility Consultant is filed with the City stating that
such sale, mortgage, lease or other disposition will not impair the rate covenants of the City; or (ii) a
provision is made for payment into the Bond Account of the amount set forth in the Bond Ordinance.
Collection of Assessments. The City will promptly collect all Assessments levied in any utility local
improvement district now or hereafter created to secure the payment of the principal of and interest on
arty Parity Bonds and will pay the same into the Bond Account without allocation of such Assessments to
any particular series of Parity Bonds. However, nothing in the Bond Ordinance will be construed to
prohibit the City from issuing revenue bonds having a lien on Gross Revenue junior to the lien on such
revenue for the payment of the principal of and interest on Parity Bonds and pledging as security for the
payments of such junior lien bonds assessments levied in any utility local improvement district that may
have been created to pay part or all the cost of improvements to the System for which such junior lien
revenue bonds were specifically issued.
Books and Accounts. The City will maintain complete, books and records relating to the operation of the
System and its financial affairs, and will cause such books and records to be audited annually, and cause
to be prepared an annual financial and operating statement, which statement will be mailed to any owner
of Parity Bonds upon request.
Insurance. The City will carry extended coverage insurance on the System as is ordinarily carried on the
property of similar public utilities by other municipal corporations engaged in the operation of the same
if such insurance can be obtained at a reasonable cost and will also carry adequate public liability
insurance and other kinds of insurance as under good practices are ordinarily carried on the properties of
similar public utilities; provided, however, that the City may, if deemed necessary and advisable by the
Council, institute or continue a self-insurance program with respect to any or all of the aforementioned
risks. The premiums paid for all such insurance shall be regarded and paid as a Cost of Maintenance and
Operation.
No Free Service. Except as permitted by law, the City will not furnish any service of the System to any
customer free of charge.
Future Parity Bonds
For as long as any Bonds remain outstanding, the City will not issue any bonds having a greater or equal
priority of lien upon the Revenue of the System to pay and secure the payment of the principal of and
interest on the Bonds than the priority of lien created on such Revenue to pay and secure the payment of
the principal of and interest on the Bonds or any outstanding Parity Bonds. The City reserves the right to
issue Future Parity Bonds for the purposes of (i) providing funds to acquire, construct, reconstruct,
install, or replace any equipment, facilities, additions, betterments, or other capital improvements to the
System for which it is authorized by law to issue revenue bonds or for other lawful purposes of the
System, or (ii) refunding at or prior to their maturity any revenue bond anticipation notes or outstanding
5
revenue bonds or other obligations payable out of the Revenue of the System and to pledge that
payments will be made out of the Revenue of the System and into the Bond Account to pay and secure
the payment of the principal of and interest on such Future Parity Bonds on a parity with required
payments to be made out of such Revenue into such account to pay and secure the payment of the
principal of and interest on any Parity Bonds then outstanding, upon compliar, the following
- --_-_-�___�__��.�, ...t..,,,,.. �.....rwaa.c with
conditions:
a) At the time of the issuance of any Future Parity Bonds there is no deficiently in the Bond
Account or the Reserve Account.
b) If there are Assessments levied in any utility local improvement district in which additions
and improvements to and extensions of the System will be constructed from the proceeds of
such Future Parity Bonds, the ordinance authorizing such Future Parity Bonds will require
that such Assessments be paid into the Bond Account.
c) If there are Assessments pledged to be paid into a warrant or bond redemption fund for
revenue bonds or warrants being refunded by Future Parity Bonds, the ordinance
authorizing such Future Parity Bonds will require such Assessments to be paid into the Bond
Account.
d) The principal of and interest on any Future Parity Bonds will be payable out of the Bond
Account and the requirements for Reserve Account payments as set forth 'in the Bond
Ordinance will be met.
e) Prior to the delivery of any Future Parity Bonds, with limited exception, the City will have on
file in the office of the City Clerk, as further provided in the Bond Ordinance, either: (i) a
certificate of the Director of Finance and Budget showing that the Net Revenue determined
as hereafter provided for each calendar or fiscal year after the issuance of such Future Parity
Bonds will .equal at least 1.40 times Annual Debt Service (defined as maximum Annual Debt
Service) during any calendar or fiscal year for all Parity Bonds plus the Future Parity Bonds
proposed to be issued; or (ii) a certificate of a Professional Utility Consultant showing that
the Net Revenue determined and adjusted as provided in the Bond Ordinance for each
calendar or fiscal year after the issuance of such Future Parity Bonds (the "Adjusted Net
Revenue") will equal at least 1.40 times the Annual Debt Service for each such calendar or
fiscal year for all Parity Bonds plus the Future Parity Bonds proposed to be issued.
The City may issue any revenue bonds, warrants or other obligations that are a charge upon the
(i) money in the Revenue Fund junior or inferior to the payments required to be made into the Bond
Account and the Reserve Account; and (ii) Revenue of the System junior or inferior to the payments
required td be made out of such Revenue into the Bond Account and accounts therein to pay and secure
the payment of any outstanding Parity Bonds.
The City may issue revenue bonds to refund maturing Parity Bonds for the payment of which money is
not otherwise available.
Defeasance
In the event that money and/or Governmental Obligations in amounts sufficient to redeem and retire any
Bonds are irrevocably set aside to effect such redemption and retirement, then no further payments need
be made into the Bond Account 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.
6
Indebtedness of the System
The Bonds will be the only outstanding Parity Bonds of the System. The City currently has a subordinate
lien Public Works Trust Fund loan (the "Loan") outstanding in the amount of $485,350 and maturing on
July 1, 2011. A portion of the Loan (approximately 56 percent), is paid for out of the Irrigation Utility
Enterprise Fund for the refurbishment of the Fruitvale Canal. The Loan is not on a parity lien with the
Bonds.
Irrigation Revenue Bonds - Debt Service Requirements
Due
The Bonds*
Sept. 1 Principal
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
3034
$ 100,000
100,000
105,000
110,000
110,000
115,000
120,000
125,000
125,000
130,000
140,000
145,000
150,000
155,000
165,000
170,000
180,000
185,000
195,000
205,000
215,000
225,000
235,000
250,000
260,000
275,000
290,000
305,000
320,000
340,000
Total $ 5,545,000
Interest
$ 255,248
253,198
250,798
247,910
244,555
240,925
236,900
232,520
227,770
222,833
217,568
211,758
205,595
199,070
192,250
184,825
177,005
168,545
159,758
150,300
140,153
129,403
117,928
105,825
92,950
79,560
65,260
50,180
34,320
17,680
Total Debt
Service*
$ 355,248
353,198
355,798
357,910
354,555
355,925
356,900
357,520
352,770
352,833
357,568
356,758
355,595
354,070
357,250
354,825
357,005
353,545
354,758
355,300
355,153
354,403
352,928
355,825
352,950
354,560
355,260
355,180
354,320
357,680
$ 5,112,585 $ 10,657,585
* Preliminary, subject to change. Interest amounts are estimates only and assume interest rates ranging from 2.05%
to 5.20%.
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.
7
Future Financings
Other than the Bonds, the System does not have any ,other outstanding Parity Bonds. The City does not
anticipate issuing additional long-term System debt within the next 12 months. The Bonds are the first
portion of the City Council's total authorization of $10 million. The City expects to' issue the second series
of $4455 million in 2007 2008 (see "The Irrigation System Capital Improvement -- T --or -....... ��.... - �,aYuai tatIlan" herein for a
description of the second portion of the Project).
The Irrigation System
Description
The City was originally developed on irrigated farmland, with irrigation water provided by several
irrigation districts and private irrigation companies (the ,"Irrigation Companies"). Eventually, urban
development replaced the farming activities. The existing irrigation systems remained and are now used
irrigate lawns, gardens and all farm The City -owned
_
to __.��._ gardens oli;all x'311;:7. a 3!!-i;w(s!'.xmi C]S3d maintained irrigation system (the
"System") now consists of (i) the diversion, transmission and delivery systems for irrigation water in the
General Sub -System (as described below) and (11) portions of several other transmission and delivery
systems that also provide water to City residents ("non -General Sub -Systems"). The City owns all of the
transmission and delivery infrastructure for transporting water from its point of supply to residences
within the System. The System currently serves over 10,500 parcels/accounts (generally, one parcel
equals one account), totaling 2,055 irrigated acres. The piping networks, which make up the System, are
primarily wood stave, while more recent additions are cast iron, high-density polyethylene ("HDPE") or
polyvinyl chloride ("PVC"). The System typically operates only from April through October annually,
although users are billed bi-monthly throughout the year.
The System is supplied by City -owned water rights and by water provided under long-term water
supply contracts from the following Irrigation Companies: (i) Naches and Cowiche Canal Company;
(ii) Yakima Valley Canal Company; (iii) New Schanno Ditch Company; and (iv) Old Union Ditch
Company. For over 50 years, the Irrigation Companies have provided water supply to the System based
on the City's ownership of i.rnn
of water shares in the companies. e long-term water supply contracts
supplement and clarify the City's continued entitlement to water supply in the future. The contracts with
each of the Irrigation Companies have terms ending in 2054 and provide for automatic renewal for
successive 50 -year terms unless one of the parties opts out. In addition, the System receives a small
portion of its supply from the Yakima-Tieton Irrigation District (the "District"). The Irrigation
Companies and the District are responsible for delivering supply water to the System, including its
pumping stations.
For the General Sub -System, the City's largest Sub -System, the City owns the water rights in its own
name. The City diverts water under these water rights at the City -owned and operated Nelson Bridge
Diversion Dam on the Naches River. The General Sub -System supplies 40 to 50 percent of the water flow
of the System, depending on the season. For the non -General Sub -Systems, as described above, the City
purchases water from the Irrigation Companies and the District who deliver the water to the System to
then deliver to its customers.
Water Supply
The water supply for the System is diverted from the Naches River. As discussed above, the City diverts
the water authorized by its water rights and the Irrigation Companies and the District are responsible for
diverting and delivering the water the City acquires from them under water rights held in their names.
The following table shows the areas served by the General and non -General Sub Systems. It also shows
the maximum quantities of surface water the City is authorized to divert under the General Sub -System
water rights, and the maximum quantities the System is contractually entitled to receive from the
Irrigation Companies and the District. Under the City's and Irrigation Companies' water rights, the
maximum authorized quantities vary at different times in the irrigation season (April - August;
September and October). These variations in authorized quantities are also shown in the table. Finally,
the table indicates the priority dates of the water rights held by the City, the Irrigation Companies and the
8
District. Because the ,priority dates of the majority of the water rights predate the United States' 1905
development of the Yakima Irrigation Project, they are not subject to "pro -ration" or automatic reduction
during times of drought.
System, Company or District
City General Sub -System
Yakima Valley Canal Co.
Naches-Cowiche Canal Co.
New Schanno Ditch Co.
Old Union Canal Co.
Yakima-Tieton Irrigation District
Total
, Water Supply
Priority
Date (1)
1869, 1878, 1905
],893,1894,1905
1880
1871, 1873, 1885
1878
1905
Acres Parcels
Served Served (2)
580 3,296
590 2,545
476 2,754
369 1,773
36 169
4 16
Maximum Daily Flows (MGD)
Apr. - Aug. Sept. Oct.
24.95 18.65 15.56
8.38 5.47 4.19
8.92 5.89 4.46
5.75 3.81 2.89
5.99 3.96 2.99
0.04 0.04 0.04
2,055 10,553 54.03 37.82 30.13
(1) Priority dates indicate the seniority of the underlying water rights for each entity. Multiple dates for an entity
indicate multiple water rights.
(2) Number of parcels is approximate as parcels are combined and divided over time.
Source: City of Yakima
The General and non -General Sub -Systems have the capacity to and regularly do transmit the maximum
quantities authorized under the City's water rights and under its contracts with the Irrigation Companies
and the District.
Since 1977, all rights to surface water within the Yakima River watershed, including the surface water
rights that are the supply for the System, have been under review in the Yakima River general stream
adjudication (Ecology v. Acquavella). In 2002, the City reached a settlement with the State and the United
States in the adjudication quantifying the City's water rights. On November 21, 2002, the Court issued a
Conditional Final Order confirming the terms of the settlement, which include a reduction of water rights
as described in the following paragraphs. No appeals to the Conditional Final Order were filed by any
party. The water rights of the Irrigation Companies and the District that provide water to the System are
also reflected in Conditional Final Orders that were not appealed and do not include water right
reductions such as the City's. At the conclusion of the Acquavella adjudication, the Court will combine all
of the rulings reflected in the Conditional Final Orders into a single Final Decree that may be subject to
appeal by any of the litigants. The Conditional Final Orders resolve all issues regarding the rights under
review in the adjudication, subject to their incorporation into the Court's Final Decree at the conclusion of
the adjudication.
The quantity of water rights confirmed in the adjudication in the City's own name for use in the General
Sub -System is 8,030 acre feet until January 21, 2013. After January 21, 2013, the rights are reduced to 4,741
acre feet. Based on engineering studies, these amounts are fully expected to be sufficient to meet the Sub -
System's current and future needs. The General Sub -System is currently considered inefficient (i.e., a
significant portion of the water diverted from the Naches River is lost through leakage during
conveyance and is not available to deliver to System customers). As described in the "C pital
Improvement Plan" section below, the purpose of the Bonds is to provide a portion of the capital
necessary to rehabilitate parts of the System, including the General Sub -System, to improve its efficiency.
The City hired Carollo Engineers (the "Engineers") to provide information regarding the efficiency of the
General Sub -System. Based on their findings and conclusions developed during previous investigations,
the System appears to be losing between 50 and 60 percent of its water due to leakage. The Engineers
estimate that pipeline improvements constructed during the Project should reduce the loss rate from
60 percent to between five and 10 percent of the total diversion rate, which is consistent with industry
standards for a well -constructed system. Based on these findings, the City believes that the
improvements to the General Sub -System through the improvements described in "Capital Improvement
Plan" should increase System efficiency sufficiently to offset the reduction in water rights contained in
the Conditional Final Orders.
9
A rehabilitation schedule has been developed for the System. The schedule will stage pipeline upgrade
projects over an eight-year period. Projects will be prioritized so that larger transmission pipes that
convey the majority of system flows will be upgraded early in the Project. This will' improve System
performance, and should lead to greater improvements in efficiency sooner rather than later during the
eight-year improvement window.
It is possible that the quantities of water confirmed to the Irrigation Companies and the District that
supply the System could in the future be reduced through statutory relinquishment under State law. In
order for this to occur, the State would need to demonstrate that a company or district had voluntarily
failed to use some of the water to which it is entitled for a consecutive period of five years or longer.
Such non-use would have to be without "sufficient cause." Weather conditions that result in lower water
demand are "sufficient cause," i.e., if demonstrated, they would prevent relinquishment from occurring.
It should be noted that if relinquishment occurs after a five-year period it will have been demonstrated
that the Irrigation Companies or the District did not need that supply for their customers, and there is
therefore no adverse effect to the System. The water rights the City holds in its own name are for
"municipal supply purposes" and are therefore not subject to statutory relinquishment.
Irrigation Customers
The following is a five-year history of the number of irrigation customers and annual amounts billed.
The City does not make distinctions between residential and commercial customers.
Irrigation Billing
Total No. of Total
Year Accounts Amount Billed
2003 10,542 $1,789,852
2002 10,563 1,733,767
2001 10,488 1,729,091
2000 10,296* 1,739,361
1999 10,733 1,693,703
* Number of accounts fluctuate over time as parcels are merged and/or divided, creating fewer or greater numbers
of accounts for the same area; however the square footage served remains the same.
Source: City ofYakimn
10
Major Accounts of the System
The following table shows the City's major irrigation customers by amount billed in 2003.
Major 2003 Irrigation System Customers
Total Amount Percent of 2003
Customer Billed, System Revenues
Yakima School District No. 7 $ 42,076 2.35%
Yakima Housing Authority 13,295 0.74
Yakima Valley Memorial Hospital 12,865 0.72
Doug Lemon 5,927 0.33
City of Yakima Parks 4,693 0.26
Yakima Resources (1) 3,516 0.20
Opportunities Industrialization Center 3,208 0:18
Yakima Medical Enterprises 2,639 0.15
Yakima HMA Inc. (2) 2,381 0.13
Sheridan Folsom 2,328 0.13
Total $ 92,928 5.19%
(1) Formerly Boise Cascade Corporation.
(2) Formerly Providence Health Systems, a non-profit medical facility. Yakima HMA Inc. is doing business as
Yakima Regional Medical and Cardiac Center.
Source: City of Yakima
Irrigation Rates and Charges
Annual charges are established by the City Council and are calculated as a function of the total square
footage of each lot, tract or parcel served. Rates and charges are not based on consumption because there
are no customer meters.
The billing rate effective September 2003 is $0.0277 per square foot annually, or an approximate projected
amount of $2,513,787 in 2004. The System operates each year from April 19t through October 15th. All
parcels/accounts are billed on a bi-monthly basis annually, so revenue recognition is even throughout the
entire year. Previous rates were effective from 1998 through September 2003. No rate increases are
planned at this time.
The City charges a connection fee for new users of the System. The connection fee is based on actual cost
of materials and labor for hook-up so there is no standard fee. Although there were no new users added
in 2003, the City expects that some new users could be added as the Project nears completion.
In 2003, the City passed an ordinance that prevents the users of the System from voluntarily withdrawing
from the System unless the user can prove that water cannot be delivered to their property.
Capital Improvement Plan
The City's primary capital improvement plan is to rebuild all of the System, with the General Sub -System
being the first priority (the "Project") and the non -General Sub -Systems as the second priority.
General Sub -System. The General Sub -System improvements in the amount of approximately $13.45
million will be funded with revenue bonds (including the Bonds), revenues of the System and funds from
the Community Development Block Grant ("CDBG"), as available. Completion of the Project is estimated
to take seven to ten years. In 2004, the City plans to (i) complete the pre -design for irrigation
refurbishment and (ii) design the first phase of rebuild at a design cost of approximately $200,000. In
2004 and 2005, the City plans to (i) begin the first phase of actual construction in the amount of
approximately $4.3 million and (ii) start designing the next phase of construction at a design cost of
between $350,000 to $450,000.
11
The remainder of the Project will be funded with the second series of the irrigation bond authorization in
the amount of $4.455 million expected in late 2007 or 2008. It will completely replace/refurbish the
remainder of the General Sub -System and will include completing the replacement of 169,000 feet of pipe;
two new pump stations; new water measurement device; new residential services including valves for
each property in the General Sub -System; modifications to debris screening facilities; and other capital
improvements.
Other Systems. improvements to, the non -General Sub -Systems are estimated to cost $6.5 million and are
anticipated to take place over the next 18 years. Funding will come from existing capital improvement
rates and possibly from Future Parity Bonds.
Billing and Collection Practices
There are two general procedures for collections of irrigation accounts:
Accounts which have _t__ ��
,.••.. charges for both domestic water and irrigation water generally r.prGseni,
approximately 66 percent of all irrigation accounts. Bills are sent on a bi-monthly basis and are due 14
days after they are sent. If the bills are not paid by that date, a reminder notice is sent requesting
payment within 10 days. If the bill is not paid by the end of the 10 day period, a suspension notice is sent
to the customer. If the bill is not paid by the end date of the suspension notice (day 35), domestic water
service may be suspended until the balance is paid. If the balance remains unpaid for three ,weeks after
the service suspension (day 56), the account is closed and turned over to a collection agency.
Accounts which are billed for irrigation water only generally represent approximately 33 percent of all
irrigation accounts. If the account is not paid by the due date (day 14), the customer is sent a reminder
notice. Ten days after the reminder notice, a suspension notice is sent out. If the balance is not paid by
the end date of the suspension notice (day 35), irrigation water service can be suspended until the balance
is paid. Any unpaid balance is sent to a collection agency 90 days after the bill is sent.
Endangered Species Act
In planning 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, biological assessments, consultations with NOAA-Fisheries_ U.S. Fish and Wildlife and
Washington Department of Fish and Wildlife, preparation of Joint Aquatic Resources Permit Application
Form, Shoreline assessments 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 ("ESA") "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.
It is possible that all users of surface water from the Naches River, including the City and the Irrigation
Companies and the District that provide water to the System, regardless of their state -issued water rights,
may have to reduce their use of surface water in order to protect listed species under the Endangered
Species Act. While some courts have concluded that restrictions on the exercise of state -issued water
rights do not constitute a taking of property, a recent decision from the United States Court of Federal
Claims holds the United States responsible for providing just compensation for the value of the water
rights restricted for ESA purposes.
Financial Results
The following tables provide a historical comparative balance sheet and historical and projected
combining statement of revenues and expenses for the City's Irrigation Utility Enterprise Fund.
12
Irrigation Utility Enterprise Fund
Statement of Net Assets/Comparative Balance Sheet
(Years Ending December 31)
Unaudited (1) Audited
2003 2002 2001 2000 1999
ASSETS ASSETS
Current Assets Cash and Equity (2) $ 1,948,047 $ 899,824 $ 1,179,085 $ 920,905
Cash and Equity (2) $ 512,611 Receivables
Receivables Accounts ' 142,705 127,794 112,670 102,236
Accounts 117,935 Interest/Penalties 1,110 2,109 5,448 0
Interest/Penalties 1,110 Due from other Gov't Units 0 0 0 0
Due from other Gov't Units 8,951 Investments, at amortized cost • I 49,607 682,455 298,874 0
Investments, at amortized cost 1,549,957 Land 98,500 98,500 98,500 98,500
Total Current Assets 2,190,564 Other Improvements 4,684,462 4,674,462 4,674,462 4,674,462
Noncurrent Assets Machinery & Equipment 42,531 42,531 33,639 33,639
Land 98,500 Accumulated Depreciation (2,281,374) (2,23(464) (2,180,354) (2,130,244)
Other Improvements 4,684,462 Construction in Progress 785,403 729,476 229,682 172,867
Machinery & Equipment 55,614 Total Assets 5,470,991 5,026,687 4,452,006 3,872,365
Accumulated Deprecation (2,333,462)
Construction in Progress 1,370,532 LIABILITIES
Total Noncurrent Assets 3,875,646 Warrants/Accounts Payable 18,471 35,396 17,856 24,527
Total Assets 6,066,210 Wages/Benefits Payable 38,996 35,005 33,622 31,813
Compensated Absences Payable 56,505 52,277 47,230 43,791
LIABILITIES Total Liabilities 113,972 122,678 98,708 100,131
Warrants/Accounts Payable 28,838
Wages/Benefits Payable 38,265 FUND EQUITY
Compensated Absences Payable 50,541 Contributed Capital 2,408,324 2,408,324 2,408,324 2,408,324
Total Liabilities 117,644 Unreserved Retained Earnings 2,948,695 2,495,685 ' 1,944,974 1,363,910
Total Fund Equity 5,357,019 4,904,009 4,353,298 3,772,234
NET ASSETS Total Liabilities and Fund Equity $ 5,470,991 $ 5,026,687 $ 4,452,006 $ 3,872,365
Inv. In Capital Assets
Unrestricted Retained Earnings
Total Net Assets
3,875,646
2,072,920
$ 5,948,566
(1) Reported in accordance with GASB 34 and subsequent pronouncements.
(2) Increase of cash and equity from 2001 to 2002 primarily due to matured investments combined with the standard
annual growth in equity.
Source: City of Yakima
13
Irrigation Utility Enterprise Fund
Combining Statement of Revenues and Expenses
(Years Ending December 31)
Unaudifpd (1)
2003
Operating Revenues:
Charges for Services $ 1,789,852 $ 1,731,879 $ 1,729,091 $ 1,739,361 $ 1,693,703
Other Operating Revenues 1,863 1;888 0 0 0
Total Operating Revenues 1,791,715 1733,767 1,799,091 1,739,361 1,693,703
Operating Expenses:
Operating Expense 980,981 916,193, 839,045 844,350 822,952
Administration/Overhead 143,925 181,796 , 162,550 133,315 90,153
Depreciation Expense 52,088 50,910 50,110 50,110 50,055
State Excise Taxes 48,226 43,580 39,381 34,752 33,567
r�uuaacu
2002 2001 2000 1999
Total Operating Expenses 1,225,220 1,192,479 1,091,086 1,062,527 996,727
Net Operating Income 566,495 541,288 638,005 676,834 696,976,
Other Income:
Interest Revenue
Other Non -Operating Revenues
Total Other Income
Total Income
Available for Debt Service (2)
7,127
303
29,001 39,665 32,227 ,
20 1
0
7,697
7,430 29,021 39,666 32,227 7,697
573,925 570,309 677,671 709,061 704,673
$ 769,938 $ 803,015 $ 890,331 $ 892,486 $ 844,881
(1) Reported in accordance with GASB 34 and subsequent pronouncements.
(2) Net Revenues as defined in Bond Ordinance.
Source: City of Yakima
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.
All operating expenses, except depreciation, are increased two percent for 2005, 2.5 percent for 200, and
three percent for 2007 and 2008. Operating revenues include no factor for growth since the number of
accounts existing fully penetrates the System. Only rate increases will significantly affect the revenue
estimates. Rates are reviewed annually and will be adjusted for inflation as needed, however no rate
increases are currently planned.
Debt service on the expected Future Parity Bonds is expected to begin in 2008.
14
Total Operating Revenues
Irrigation Utility Enterprise Fund
Combining Statement of, Revenues and Expenses
Projected Coverage Table
(Years Ending December 31)
Budget Projected
2004 2005 1 2006 2007 2008
' $ 2,513,787 $ 2,513,787 $ 2,513,787 $ 2,513,787 $ 2,513,787
Operating Expenses:
Operating Expense 1,206,672 1,230,805 1,261,576 1,299,423 1,338,406
Depreciation Expense 102,088 102,088 102,088 142,088 142,088
Total Operating Expenses 1,308,760 1,332,893 1,363,664 1,441,511 1,480,494
Net Operating Income 1,205,027 1,180,894 1,150,123 1,072,276 1,033,293
Other Income:
Interest Revenue 7,127 7,127 7,127 7,127 7,127
Other Non -Operating Revenues 302 302 302 302 302
Total Other Income 7,429 7,429 7,429 7,429 7,429
Total Income 1,212,456 1,188,323 1,157,552 1,079,705 1,040,722
Available for Debt Service (1) $ 1,314,544 $ 1,290,411 $ 1,259,640 $ 1,221,793 $ 1,182,810
Parity Bond Debt Service (the Bonds) $ 0 $ 355,248 $ 353,198 $ 355,798 $ 690,683 (2)
Debt Service Coverage N/A 3.63 3.57 3.43 1.71 (2)
(1) Net Revenues as defined in the Bond Ordinance.
(2) 2008 debt service increases and debt service coverage declines in anticipation of issuing remaining portion of the
total $10 million bond authorization.
Source: City of Yakima
The City
The City of Yakima was incorporated in 1886. It is the tenth 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, irrigation 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
Paul P. George, Mayor
Neil McClure, Asst. Mayor
Ronald J. Bonlender
Dave Edler
Mary Place
Bernard J. Sims
Susan J. Whitman
15
Term Expires
December 31, 2005
December 31, 2007
December 31, 2007
December 31, 2007
December 31, 2005
December 31, 2005
December 31, 2007
Key Administrative Staff
Richard A. Zais, Jr., City Manager. Mr. Zais joined the City in 1973 as the 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 .-d administers the
operating aliu au11u1uJter3 $140 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 ftrid 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 Director of Finance
and Budget, coming from Puget Sound Energy Corporation. 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
following key management positions: Manager of District
_. ..
the following �.� .... � ....... ..... ewe, a.a.s.s ee 1.rvoAltilS tom, ° °�^'ii: °...3pL3ra�Y ��'i:.� 1'Li ilatii�g�'i 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 just completed a two-year
term serving as the Treasurer for the Yakima Sunrise Rotary.
Timothy M. Jensen, Treasury Services Officer. Mr. Jensen 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.
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.
LaboiRelations
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
of Employees
265
105
63
51
13
16
Bargaining Unit
AFSCME Municipal
YPPA
Fire Suppression
AFSCME Transit
Fire Communications
Fire PERS
*Currently under negotiation.
Contract Expiration Date
December 31, 2004
December 31, 2005
December 31, 2003*
December 31, 2005
December 31, 2003*
December 31, 2003*
The City has a long history of good working relationships with its employee groups and bargaining units.
16
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. City employees are covered by the Public Employees' Retirement System ("PERS"). Police
officers and firefighters are covered by the Law Enforcement Officers and Firefighters Retirement Fund
("LEOFF"). Contributions to the systems by both employee and employer are based upon gross wages
covered by plan benefits.
LEOFF includes two plans and PERS includes three plans: Plans I and II are defined benefit plans
and Plan III is a combination defined benefit/defined contribution plan. PERS 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. Plan III
became effective March 1, 2003. Retirement benefits are financed from both employee and employer
contributions and investment earnings. Retirement benefits under Plans I and II are vested after
completion of five years of eligible service. Plan III members are vested after ten years of eligible
service. Participants enrolled in 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.
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, 2003, the City's contribution of $295,010, or 1.36 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, 2003, 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'.8 percent of covered payroll totaled
$335,586, representing its full liability under the system, except that future rates may be adjusted to
meet the system needs.
Unfunded Pension Liabilities. The City maintains two single employer defined benefit pension plans,
Firemen's Pension and Police Pension, which are closed systems covering Firemen and Police Officers
hired prior to March 1, 1970. Both plans had their first annual actuarial valuation as of March 31, 1989,
and the required contributions identified in that valuation have been the basis for recording the
unfunded pension liability since 1989.
The Police Pension is a 'department in the General Fund, and is operating on a pay-as-you-go basis.
The unfunded pension liability will be adjusted annually by comparing actual expenditures for
pension benefits to the actuarially determined contribution. The City intends to maintain this plan on
a pay-as-you-go basis.
The Firemen's Relief and Pension Fund 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. An actuarial study is currently
underway to determine unfunded liability for December 31, 2003. Actuarial studies are performed
every five years.
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.
17
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 prograni 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 2003 were
$5,366,130. Incurred but not reported claims of $993,143 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 $1 c0 000 in a ` lendar thereafter bused
� v� w�....,.,.... a year are rcuiivut ecu
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 2003 were $1,380,154.
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 beyon 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 2003 were $1,384,310. 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 $8 million, with a $1 million retention.
18
Accounting Policies
Accounting records for the City are maintained in ' accordance with methods prescribed by the State
Auditor under the authority of Washington State law. The City financially reports on the calendar year
basis and employs a double -entry modified' accrual system for all fund categories with the exception of
proprietary, nonexpendable and pension trust funds which require full accrual reporting. The modified
accrual basis differs from the accrual basis in the following ways: (i) purchases of capital assets are
considered expenditures; (ii) redemption of long-term debt is considered an expenditure when due;
(iii) revenues are recognized only when they become both measurable and available to finance
expenditures of the current period, revenues that are measurable but not available are recorded as
receivable and offset by deferred revenues; (iv) inventories and prepaid items are reported as
expenditures when purchased; (v) interest on long-term debt is not accrued but is recorded as an
expenditure when due; and (vi) accumulated unpaid vacation and sick pay are considered expenditures
when paid. In accordance with GASB 34, the City has implemented this accounting standard in its
December 31, 2003 financial statement.
Fund Accounting. The accounts of the City are organized on the basis of funds, 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 btasinesses in
the private sector. The City's resources are allocated to and accounted for in individual funds depending
on what they are to be spent for and how they are controlled.
Governmental Funds. All governmental funds are accounted for on a spending or "financial flow"
measurement focus. This means that only current assets and ,current liabilities are generally included on
their balance sheets. Their reported fund balance (net current assets) is considered a measure of
"available expendable resources." Governmental fund operating statements focus on measuring changes
in financial position, rather than net income; they present increases (revenues and other financing
sources) and decreases (expenditures and other financing uses) in net current assets.
Budgetary Process
The City Council annually approves the City's operating budget. The operating budget is designed to
allocate 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
19
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, 2003 was $54.7 million. Of that amount, 58 percent was in the
LGIP; 35 percent was in agency securities, five percent was invested in U.S.
.J. T_e
asAIAeS, and two percent
was invested in municipal securities.
Auditing of City Finances
Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in
accordance with RCW 43.09.200 and RCW 43.09.230. The City complies with the systems and controls
prescribed by the Office of the State Auditor and establishes procedures and records which reasonably
assure safeguarding of assets and the reliability of financial reporting.
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 have been 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
20
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
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
April 1
2004
2003
2002
2001
2000*
Yakima
County
227,500
226,000
225,000
224,500
222,581
City of
Yakima
79,480
79,220
79,120
73,040
71,845
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 on government -related jobs and 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.
Employer
Dept. of Social & Health Services
Yakima Valley Memorial Hospital
Yakima School District
Yaki to County
Yakima HMA Inc.*
Snokist Growers
City of Yakima
Yakima Valley Community College
Western Recreational Vehicles
Shields Bag & Printing
City of Yakima
Major Employers
Product
Government
Medical
Education
Government
Medical
Fruit canning
Government
College
Trailers, motor homes
Flexible packaging
Number of
Employees
1,439
1,100
1,001
1,000
941
851
750
•590
550
470
* Formerly Providence Health Systems, a non-profit medical facility. Yakima HMA Inc. is doing business as Yakima
Regional Medical and Cardiac Center.
Source: Yakima County Development Association, July 2003
21
Income. Historic personal income and per capita income levels for Yakima County and the State are
shown below:
Yakima County and State of Washington
Total Personal and Per Capita Income
Yakima County '
Total Personal Per Capita
Year Income (in millions) Income
2003 N/ N/A
2002 $5,323.7 $23,714
2001 5,108.9 22,872
2000 4,933.5 22,145
1999 4,605.6 20,786
1998 4,550.8 20,709
Source: U.S. Department of Commerce, Bureau of Economic Analysis
State of Washington
Total Personal Per Capita
Income (in millions) Income
$204,3732
198,317.3
191,644.6
186,843.1
174,147.8
163,192.3
$33,332
32,677
31,976
31,605
29,807
28,285
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
2003
2002
2001
2000
1999
City of
Yakima
$ 1,246,026,347
1,205,189,471
1,176,022,552
1,168,665,601
1,157,451,996
Yakima
County
$ 2,294,202,221
2,178,920,758
2,122,049,462
2,140,980,425
2,057,895,211
Sn urce: Washington State Department of Revenue
Building Permits. Residential building permits are an indicator of growth within a region. The number
and valuation of new single-family and multi -family residential building permits in Yakima County are
listed in the following table:
City of Yakima, Washington
Residential Building Permits
New Single Family Units New Multi
Year Number
Family Units
Valuation Number
2003 72 $ 9,377,031
2002 34 3,690,494
2001 13 997,460
2000 18 1,291,524
1999 26 1,919,800
1998 28 2,523,785
Source: City of Yakima Codes Division
22
45
31
71
75
79
247
Valuation
$ 3,992,851
1;874,833
3,156,466
3,865,711
3,951,413
11,409,511
Total
Valuation
$ 13,369,882
5,565,327
4,153,923
5,157,235
5,871,213
13,933,296
Employment within the County is described in the following table:
Yakima County
Nonagricultural Wage & Salary Workers
and Labor Force and Employment Data
Civilian Labor Force
Employment
Unemployment
Percent of labor force
Total Nonagricultural Wage and Salary Earners
Manufacturing
Construction and mining
Transportation and public utilities
Wholesale trade
Retail trade
Finance, insurance and real estate
Services and miscellaneous
Government
NAICS Industry Title (1)
Civilian Labor Force
Employment
Unemployment
Percent of labor force
Total Nonfarm
Total Private
Goods Producing
Construction, Natural Resources & Mining
Manufacturing
Durable Goods
Non -durable Goods
Food Manufacturing
Service Providing
Trade, Transportation and Utilities
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information & Financial Activities
Professional and Business Services
Educational and Health Services
Government
Federal Government
State and Local Government
Annual Average
2001 2000 1999
108,000 109,700 111,500
95,800 98300 100,400
12,200 11,400 11,100
11.3% 10.4% 10.0%
74,600
11,500
3,000
3,000
5,300
13,200
2,300
20,600
15,800
75,300
11,800
3,100
2,700
6,500
13,500
2,300
21,300
14,100
Annual Average
2003 2002
112,200
100,300
11,800
10.6%
74,742
58,325
13,108
3,150
9,958
4,267
5,683
5,308
61,642
15,892
3,742
9,592
2,558
3,875
4,675
10,842
16,417
1,350
15,066
109,800
98,500
11,300
10.3%
74;025
57,792
13,267
3,125
10,142
4,342
5,817
5,317
60,750
15,792
3,925
9,175
2,692
1,275
4,508
10,667
16,242
1,375
14,833
74,70Q
11,300
3,300
2,700
7,200
13,700
2,400
20,300
13,900
1998 1997
1'15,000 114,700
103,000 103,300
12,000 11,400
10.4% 9.9%
75,200 75,100
10,900 11,000
3,500 3,500
3,000 2,900
7,400 8,400
14,000 13,800
2,600 2,500
20,100 '19,500
13,700 13,600
(1) The North American Industry Classification (NAICS) is replacing the Standard Industrial Classification (SIC)
code system.
Source: Washington State Employment Security Department
23
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
pmposes 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 exnreaaec nn opinion o federal, state or ,___, 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 bbndowners.
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.
24
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.
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
2005 for the fiscal year ending December 31, 2004 ): (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
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 recognized bond counsel and in accordance with the Rule.
25
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 Olficial Statement.
Litigation
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.
Since 1977, all rights to surface water within the Yakima River watershed, including the surface water
rights,; that are the supply for the System, have been under review in the Yakima River general stream
adjudication. See "The Irrigation System - Water Supply" herein for a discussion of Ecology v. Acquavella.
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.
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'
26
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.
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 maybe 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.
27
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Appendix A
Bond Ordinance
(This Page intentionally Left Blank)
CITY OF YAKIMA, WASHINGTON
IRRIGATION SYSTEM REVENUE BONDS
$10,000,000
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF YAKIMA, WASHINGTON,
AUTHORIZING THE ISSUANCE AND SALE OF IRRIGATION
SYSTEM REVENUE BONDS OF THE CITY IN THE PRINCIPAL
AMOUNT OF NOT TO EXCEED $10,000,000 IN ONE OR MORE
SERIES AND FIXING THE TERMS AND COVENANTS OF THE
BONDS.
PASSED: November 4, 2003
Prepared by:
PRESTON GATES & ELLIS LLP
Seattle, Washington
TABLE OF CONTENTS
Section 1. Definitions 1
Section 2. Approval of Plan and System 6
Section 3. Authorization of Bonds 6
Section 4. Registration, Exchange and Payments 7
Section 5. Redemption; Purchases 11
Section 6. Form of Bonds 12
Section 7. Execution of Bonds 15
Section 8. Bond Registrar 16
Section 9. Priority of Payments From Revenue of the System; Rate Stabilization
Account 16
Section 10. Bond Account 18
Section 11. Payments Into Bond Proceeds Account 21
Section 12. Defeasance 22
Section 13. General Covenants 22
Section 14. Issuance of Future Parity Bonds 25
Section 15. Disposition of Bond Proceeds 29
Section 16. Tax Covenants 30
Section 17. Amendments 30
Section 18. Severability - _ 32
Section 19. Sale of Bonds 32
Section 20. Undertaking to Provide Ongoing Disclosure - 32
Section 21. General Authorization - 36
Section 22. Effective Date 36
Exhibit A Description of the Projects
-i-
r:wceGO18 owls.
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF YAKIMA, WASHINGTON,
AUTHORIZING THE ISSUANCE AND SALE OF IRRIGATION
SYSTEM REVENUE BONDS OF THE CITY IN THE PRINCIPAL
AMOUNT OF NOT TO EXCEED $10,000,000 IN ONE OR MORE
SERIES AND FIXING THE TERMS AND COVENANTS OF THE
BONDS.
WHEREAS, the City of Yakima, Washington (the "City") now operates and maintains an
irrigation system (the "System"); and
WHEREAS, it is in the best interest of the City to undertake certain capital improvements
to the System (as further described herein, the "Projects"); and
WHEREAS, the 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;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YAKIMA,
WASHINGTON, DO ORDAIN as follows:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
"Annual Debt Service" for any fiscal year or calendar year means the sum of
(a) the interest due in such year on all outstanding Panty Bonds excluding,
however, interest to be paid from the proceeds of Parity Bonds,
(b)
the principal of all outstanding serial bonds due in such year, and
(c) the sinking fund requirement, if any, for such year.
If the interest rate on any such bonds is other than a fixed rate, the rate applicable at the
time of the computation shall be used.
"Assessments" means all assessments levied in any utility local improvement district of
the City created for the acquisition or construction of additions and improvements to and
extensions of the System, if such assessments are pledged to be paid into the Bond Account
"Assessments" 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 all Parity Bonds from the date of determination to the last
maturity date of such Parity Bond, 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 any of such Parity Bonds will be outstanding.
"Bond Account" means the account or fund created herein within the Revenue Fund to
pay debt service on parity bonds. -
"Bond Proceeds Account" means the account created herein within the Revenue Fund.
"Bond Register" means the records maintained on behalf of the City by the Bond
Registrar containing the name and mailing address of each owner of the Bonds or the nominee of
such owner, and such other information as the Bond Registrar shall determine.
"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
Register, effecting transfer of ownership of the Bonds, and paying the principal of and interest on
the Bonds.
"Bonds" means the City of Yakima Irrigation System Revenue Bonds, 2003, issued
pursuant to this ordinance in one or more series in the aggregate principal amount of not to
exceed $10,000,000.
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Pmuwco1a uenaros
"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 Federal Intemal Revenue Code of 1986, as amended, together with
applicable regulations and revenue rulings issued or amended with respect thereto by the United
States Treasury Department or the Internal Revenue Service, to the extent applicable to the
Bonds. -
"Cost of Maintenance and Operation" means all necessary operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, and insurance and
administrative expenses with respect to the System, but excludes depreciation, payments for debt
service or into reserve accounts, costs of capital additions to or replacements of the System, but
not including municipal taxes, payments to the City in lieu of taxes or depreciation.
"Council" means the Council of the City as the same shall be duly and regularly
constituted from time to time.
"DTC" means The Depository Trust Company.
"Finance Director" means the duly qualified and acting Director of Finance and Budget
of the City.
"Future Parity Bonds" means all the series or issues of irrigation revenue bonds of the
City issued after the date of issuance of the Bonds and having a lien upon the money in the
Revenue Fund for the payment of the principal of and interest thereon equal to the lien upon the
money in such fund for the payment of the principal of and interest on the Bonds.
"Government Obligations" has the meaning given to such term in RCW Chapter 39.53,
as the same may be amended from time to time. -
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P:836100018 08/18101
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC.
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
"Net Revenue" means the Revenue of the System less the Cost of Maintenance and
Operation.
"NRMSIR" means a nationally recognized municipal securities information repository.
"Parity Bonds" means any revenue bonds, notes, warrants or obligations issued by the
City which have a lien upon the Revenue of the System to pay and secure the payment of the
principal thereof and interest thereon equal to the lien created upon the Revenue of the System to
pay and secure the payment of the principal of and interest on the Bonds. The words "Parity
Bonds" include the Bonds and any Future Parity Bonds.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with irrigation systems of
comparable size and character to the System in such areas as are relevant to the purposes for
which they are retained.
"Qualified Letter of Credit" means any irrevocable letter of credit issued by a financial
institution for the account of the City on behalf of the owners of any Parity Bonds, which
institution maintains an office, agency or branch in the United States and as of the time of
issuance of such letter of credit, is currently rated in one of the two highest rating categories by
Moody's Investors Service and Standard & Poor's Ratings Services, a Division of the
McGraw-Hill Companies, or their comparably recognized business successors.
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P:10G8]G018 08/18/01
"Qualified Insurance" means any noncancelable 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 one of the two highest rating categories by
Moody's Investors Service and Standard & Poor's Ratings Services, a Division of the
McGraw-Hill Companies, or their comparably recognized business successors.
"Rate Stabilization Account" means the account or fund of that name authorized to be
created within the Revenue Fund pursuant to Section 9.
"Reserve Account" means the account of that name created in the Bond Account.
"Reserve Account Requirement" means with respect to each series of outstanding Parity
Bonds the lesser of (a) 125% of Average Annual Debt Service or (b) maximum Annual Debt
Service; provided, however, that at the time of issuance of any series of Parity Bonds, the
Reserve Account Requirement allocable to a series of Parity Bonds shall not exceed 10% of the
initial principal amount of that series of Parity Bonds.
"Revenue Fund" means the "City of Yakima Irrigation System Operating Fund."
"Revenue of the System" means all earnings, revenue and money, except Assessments,
received by the City from or on account of the operation of the System, including income from
investments of money in the Revenue Fund or from any other investment of such earnings and
revenue except the income from investments irrevocably pledged to the payment of any
irrigation revenue bonds pursuant to a plan of refunding or retirement. The words "Revenue of
the System" shall also include federal, state or municipal reimbursements of operating expenses
to the extent such expenses are part of the Cost of Maintenance and Operation of the System.
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P:IDGDG018 08118104
"Rule" means the SEC's Rule 15c2-12 under the Securities and Exchange Act of 1934, as
the same may be amended from time to time.
"Sale Resolution" means the resolution or resolutions to be adopted by the Council
setting the final terms of the Bonds.
"SEC" means the U.S. Securities and Exchange Commission -
"SID" means a state information depository for the State of Washington (if one is
created).
"System" means the City's existing irrigation system as the same may be added to,
improved, and extended from time to time.
"Tenn Bonds" means any Parity Bonds identified as Term Bonds .in the ordinance
authorizing the issuance thereof, the payment of the principal of which is (provided for by a
mandatory schedule of deposits of money equal (in the aggregate) to the full principal amount of
such Term Bonds, into the Bond Account, and by a mandatory redemption schedule
corresponding (as to time and amounts) to such mandatory schedule ofdeposits.
Secticlg 2. Approval of Plan and System. The public interest and necessity require
that the City finance certain improvements to the System described in Exhibit A (the "Projects").
The City hereby adopts such Projects as a plan and system. The estimated cost of the Projects is
$10,000,000.
Section 3. Authorization of Bonds. The City shall issue the Bonds in the aggregate
principal amount of not to exceed $10,000,000 in one or more series for the purpose of providing
the funds necessary to pay costs of the Projects, to satisfy the Reserve Requirement, and to pay
the expenses incidental to the issuance of the Bonds.
The Bonds shall be designated the "City of Yakima Irrigation System Revenue Bonds,
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P:43GDG01a 08/18104
200j" shall be in fully registered form, shall be in the denomination of 85,000 each, provided
that no Bond shall represent more than one maturity. The Bonds may be issued in one or more
series, shall be numbered separately and in such manner and with any additional designation as
the Bond Registrar deems necessary for purposes of identification and control; shall 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 Bonds shall be obligations only of the Bond Account and shall be payable and
secured as provided herein. The Bonds shall not be general obligations of the City
The Finance Director of the City is hereby authorized to obtain insurance for the payment
of principal of and interest on the Bonds, if she should determine that it is in the best interests of
the City to do so.
The City hereby authorizes the preparation and execution of the preliminary official
statement describing, among other things, the terms of the Bonds.
Section 4. Registration, Exchange and Payments.
A. Registrar/Bond Register. The City hereby adopts the system of registration
approved by the Washington State Finance Committee, which utilizes the fiscal agency of the
State of Washington in New York, New York, as registrar, authenticating agent, paying agent
and transfer agent (the "Bond Registrar"). The Bond Registrar shall keep, or cause to be kept, at
its principal corporate trust office, sufficient records for the registration and transfer of the Bonds
(the "Bond Register"), which shall be open to inspection by the City. The Bond Registrar is
authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of such Bonds and this ordinance and to cavy out all of the Bond
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P:/D01DG018 08/18/04
Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for
its representations contained in the Certificate of Authentication on the Bonds.
B. Registered Ownership. The City and the Bond Registrar may deem and treat the
Registered Owner of each Bond as the absolute owner for all purposes, and neither the City nor
the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond
shall be made only as described in Section 4(H) hereof, but such registration may be transferred
as herein provided. All such payments made as described in Section 4(H) shall be valid and shall
satisfy the liability of the City upon such Bond to the extent of the amount or amounts so paid.
C. DTC Acceptance/Letter of Representations. The Bonds shall initially be held in
fully immobilized form by DTC acting as depository To induce DTC to accept the Bonds as
eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter
of Representations (the "Letter of Representations"). -
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees with respect to the Bonds for the
accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or any
DTC participant of any amount in respect -of the principal of or interest on Bonds, any notice that
is permitted or required to be given to Registered Owners under this ordinance (except such
notices as shall be required to be given by the City to the Bond Registrar or to DTC), or any
consent given or other action taken by DTC as the Registered Owner. For so long as any Bonds
are held in fully immobilized form hereunder, DTC or its successor depository shall be deemed
to be the Registered Owner for all purposes, and all references in this ordinance to the Registered
Owners shall mean DTC or its nominee and shall not mean the owners of any beneficial interest
in any Bonds.
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P// avasOIe 08/18.04
D. Use of Depository.
(i) The Bonds shall be registered initially in the name of CEDE & Co., as
nominee of DTC, with a single Bond for each maturity in a denomination equal to the total
principal amount of such maturity. Registered ownership of such immobilized Bonds, or any
portions thereof, may not thereafter be transferred except (A) to any successor of DTC or its
nominee, provided that any such successor shall be qualified under any applicable laws to
provide the service proposed to be provided by it; (B) to any substitute depository appointed by
the City pursuant to subsection (ii) below or such substitute depository's successor; or (C) to any
person as provided in subsection (iv) below.
(ii) Upon the resignation of DTC or its successor (or any substitute depository
or its successor) from its functions as depository or a determination by the City to discontinue the
system of book entry transfers through DTC or its successor (or any substitute depository or its
successor), the City may appoint a substitute depository. Any such substitute depository shall be
qualified under any applicable laws to provide the services proposed to be provided by it.
(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 Bonds, together with a written
request on behalf of the City, issue a single new 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 it,
successor) resigns from its functions as depository, and no substitute depository can be obtained,
or (B) the City determines that it is in the best interest of the beneficial_owners of the Bonds that
the Bonds be provided in certificated form, the ownership of such Bonds may then be transferred
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P OGIDG015 08/1681
to any person or entity as herein provided, and shall no longer be held in fully immobilized form.
The City shall deliver a written request to the Bond Registrar, together with a supply of
definitive Bonds in certificated form, to issue Bonds in any authorized denomination. Upon
receipt by the Bond Registrar of al then outstanding Bonds, together with a written request on
behalf of the City to the Bond Registrar, new Bonds shall be issued in the appropriate
denominations and registered in the names of such persons as are provided in such written
request.
E. Transfer or Exchange of Registered Ownership: Change in Denominations. The
registered ownership of any Bond may be transferred or exchanged, but no tnmsfer of any Bond
shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing
on such Bond duly executed by the Registered Owner or such Registered Owner's duly
authorized agent in a manner satisfu;tory to the Bond Registrar. Upon such surrender, the Bond
Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to
the Registered Owner or transferee, a new Bond (or Bonds at the option of the new Registered
Owner) of the same date, maturity and interest rate and for the same aggregate principal amount
in any authorized denomination, naming as Registered Owner the person or persons listed as the
assignee on the assignment form appearing on the surrendered Bond, in exchange for such
surrendered and canceled Bond. Any Bond may be surrendered to the Bond Registrar and
exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date,
maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be
obligated to transfer or exchange any Bond during a period beginning at the opening of business
on the 15th day of the month next peceding any interest payment date and ending at the close of
business on such interest payment date. _
e:mcnc018 08/1504
F. Bond Registrar's Ownership of Bonds. The Bond Registrar may become the
Registered Owner of any Bond with the same rights it would have if it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as member of, or m any other capacity with respect to, any committee
formed to protect the rights of the Registered Owners of the Bonds.
G. Registration Covenant. The City covenants -that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
H. Place and Medium of Payment. Both principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. For so long as all Bonds are in
fully immobilized form, payments of principal and interest shall be made as provided in
accordance with the operational arrangements of DTC referred to in the Letter of
Representations. In the event that the Bonds are no longer in fully immobilized form, interest on
the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners appearing on the Bond Register on the 15th day of the month preceding
the interest payment date, and principal of the Bonds shall be payable upon presentation and
surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar.
Section 5. Redemption; Purchases. The Bonds may be subject to redemption prior to
their scheduled maturities as provided further in a Sale Resolution. The City reserves the right to
use, at any time, any surplus Revenue of the System available, after satisfaction of the
requirements of paragraphs First through Fifth of Section 9, to purchase for retirement any of the
Bonds offered to the City at any price deemed reasonable by the City.
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PAncmGOt5 08/10'01
Section 6.
Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
NO. $
[STATEMENT OF INSURANCE]
STATE OF WASHINGTON
CITY OF YAKIMA
IRRIGATION SYSTEM REVENUE BOND, 200_
INTEREST RATE:
REGISTERED OWNER.
PRINCIPAL AMOUNT.
MATURITY DATE:
DOLLARS
CUSIP NO.:
The City of Yakima, Washington, a municipal corporation organized and existing under
and by virtue of the laws and Constitution of the State of Washington (the "City"), hereby
acknowledges itself to owe and for value received promises to pay to the Registered Owner
identified above, or registered assigns, on the Maturity Date identified above, but solely from the
sources identified herein, the Principal Amount specified above, unless redeemed prior thereto as
provided herein, together with interest on such Principal Amount from the date hereof or the
most recent date to which interest has been paid or duly provided for at the Interest Rate set forth
above payable , and semiannually thereafter on each 1 and
1 until payment of the principal sum has been made or duly provided for. Both
principal of and interest on this bond are payable in lawful money of the United States of
America. For so long as the bonds of this issue are held in fully immobilized form, payments of
principal and interest thereon shall be made as provided in accordance with the operational
arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter
of Representations from the City to DTC. In the event that the bonds of this issue are no longer
held in fully immobilized form, interest on this bond shall -be paid by check or draft mailed to the
Registered Owner at the address appearing on the Bond Register on the 15th day of the month
preceding the interest payment date, and principal of this bond shall be payable upon
presentation and surrender of this bond by the Registered Owner at the principal office of the
fiscal agency of the State of Washington in New York, New York (the "Bond Registrar").
This bond is one of an issue of irrigation system revenue bonds in the aggregate principal
amount of $_,000,000 issued pursuant to Ordinance No. of the City passed on
November 4, 2003 (the "Bond Ordinance'), for the purpose of financing certain capital
improvements to the irrigation system. This bond is payable solely from the City of Yakima
Irrigation System Revenue Fund (the "Revenue Fund") created pursuant to Ordinance
No. of the City. The bonds of this issue are not general obligations of the City.
The bonds of this issue are subject to redemption prior to maturity.
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P:DGwroie 05111
The bonds of this issue are interchangeable for bonds of any authorized denomination of
equal aggregate principal amount and of the same interest rate and maturity upon presentation
and surrender to the Bond Registrar.
The City has irrevocably obligated and bound itself to set aside from the Revenue Fund
out of the Revenue of the System into the Bond Account and the accounts created therein the
various amounts required by the Bond Ordinance to be paid into and maintained in such fund and
accounts, all within the times provided in the Bond Ordinance.
[The bonds of this issue have been designated as "qualified tax-exempt obligations"
pursuant to Section 265(6)(3) of the Code.]
To the extent more particularly provided by the Bond Ordinance, the amounts so pledged
to be paid into the Bond Account and the accounts therein shall be a lien and charge upon the
Revenue of the System superior to all other charges of any kind or nature except the Costs of
Maintenance and Operation of the System and equal in rank to the charges upon such Revenue o:f
the System to pay and secure the payment of the principal of and interest on such bonds.
Reference also is made to the Bond Ordinance as more fully describing the covenants
with and the rights of Registered Owners of the bonds or registered assigns and the meanings of
capitalized terms appearing on this bond which are defined in such ordinance.
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 at a reasonable cost, to establish,
maintain and collect rates and charges, for as long as any of the bonds are outstanding, that will
make available for the payment of the principal of and the interest on all of such bonds as the
same shall become due Net Revenue in an amount which, together with Assessments, will be
equal to at least 140 times the average amount required in any year hereafter to be paid out off
the Bond Account to pay the principal of and interest on all of such bonds and any bonds then
outstanding (which average amount shall be determined as set forth in the Bond Ordinance).
The pledge of revenues and other obligations of the City under the Bond Ordinance may
be discharged at or prior to the maturity of the bonds upon the making of provision for the
payment thereof on the terms and conditions set forth in the Bond Ordinance.
Reference to the Bond Ordinance and any and all modifications and amendments thereto
is made for a description of the nature and extent of the security for the Bonds, the funds or
revenues pledged, and the terms and conditions upon which the bonds are issued.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall
have been manually signed by the Bond Registrar.
It is hereby certified that the bonds of this issue are issued pursuant to and in stricl.
compliance with the Constitution and laws of the State of Washington and ordinances of the
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P:10G10G018 08118/01
City, and that all acts, conditions and things required to have happened, been done and
performed precedent to and in the issuance of this bond have happened, been done and
performed.
IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be
executed with the facsimile signature of the Mayor, to be attested with the facsimile signature of
the City Clerk, and the seal of the City to be imprinted hereon, as of this day of
200
ATTEST:
/s/ manual or facsimile
City Clerk
CITY OF YAKIMA, WASHINGTON
By /s/ manual or facsimile
- - Mayor
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This bond is one of the bonds described in the within -mentioned Bond Ordinance and is
one of the Irrigation System Revenue Bonds, 200_, of the City of Yakima, Washington, dated
200_. - -
- WASHINGTON STATE FISCAL
AGENCY, as Bond Registrar
By
ASSIGNMENT
Authorized S igner
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)
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P.10G11G018 08118101
the within bond and does hereby irrevocably constitute and appoint of
, or its successor, as agent to transfer said bond on the books kept
for registration thereof with full power of substitution in the premises.
DATED:
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.
SIGNATURE GUARANTEED:
NOTICE: Signature(s) must be guaranteed
pursuant to law
Section 7. Execution of Bonds. The Bonds shall be signed on behalf of the City by
the facsimile or manual signature of the Mayor, shall be attested by the facsimile or manual
signature of the City Clerk, and shall have the corporate seal of the City impressed or imprinted
thereon.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form recited
above, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or
entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive
evidence that the Bonds so authenticated have been duly executed, authenticated and delivered
hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bonds shall cease to be such
officer of the City before the Bonds so signed shall have been authenticated or delivered by the
Bond Registrar, or issued by the City, such Bonds may nevertheless be authenticated, delivered
and issued and upon such authentication, delivery and issuance, shall be as binding upon the City
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P:1GG10G018 08/10/06
as though those who signed the same had continued to be such officers of the City. Any Bond
may also be signed and attested on behalf of the City by such persons as at the actual date of
execution of such Bond shall be the proper officers of the City although at the original date of
such Bond any such person shall not have been such officer of the City.
Section 8. Bond Registrar. The Bond Registrar shall -keep, or cause to be kept, at its
principal corporate trust office, sufficient books for the registration and transfer of the Bonds
which shall at all times be open to inspection by the City. The Bond Registrar is authorized, on
behalf of the City, to authenticate and deliver the Bonds transferred or exchanged in accordance
with the provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar's
powers and duties under this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of
Bonds with the same rights it would have if it were not the Bond Registrar, and to -the extent
permitted by law, may act as depositary for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights
of owners of the Bonds.
Section 9. Priority of Payments From Revenue of the System; Rate Stabilization
Account. There has heretofore been established in the office of the Finance Director of the City a
special fund of the City known as the "City of Yakima Irrigation System Revenue Fund" (the
"Revenue Fund"). The Revenue of the System, except income from the investment of money in
the Bond Account, shall be deposited in the Revenue Fund as collected and- the Revenue Fund
shall be held separate and apart from all other funds and accounts of the City The Revenue of
the System shall be used only for the following purposes and in the following order of priority:
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P.10G10G018 08/16101
First to pay the Cost of Maintenance and Operation of the System;
Second, to make all payments required to be made into the Bond Account to pay
the interest on any Parity Bonds and amounts to repay any bond insurer for interest payments on
Parity Bonds;
Third, to make all payments required to be made into the Bond Account to pay the
principal or sinking fund installments for any Parity Bonds and amounts to repay any bond
insurer for principal and sinking fund installments for any Parity Bonds;
Fourth, to make all payments required to be made into the Reserve Account to
secure the payment of any Parity Bonds;
Fifth, to make all payments required to be made into any other revenue bond
redemption fund or revenue warrant or note redemption fund and Bond Account or reserve
account created to pay and secure the payment of the principal of and interest on any revenue
bonds or revenue warrants or notes of the City having a lien upon the Revenue of the System and
the money in the Revenue Fund junior and inferior to the lien thereon for the payment of the
principal of and interest on Parity Bonds; and
Sixth, to retire by redemption or purchase any outstanding revenue bonds or
revenue warrants or notes of the City or to make necessary additions, betterments,
improvements, extraordinary repairs, extensions and replacements of the System or any other
lawful City purposes.
A special account of the City to be designated the "Irrigation Rate Stabilization Account"
(the "Rate Stabilization Account") is hereby authorized to be created within the Revenue Fund,
at the discretion of the Finance Director, to cope with future increases in revenue requirements of
the System. The City may from time to time appropriate or budget amounts in the Revenue Fund
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P.43013G0111 08/10104
for deposit in the Rate Stabilization Account and may from time to time withdraw amounts
therefrom to prevent or mitigate irrigation rate increases or for other lawful purposes of the City
related to the System. Amounts withdrawn from the Rate Stabilization Account shall increase
Revenue of the System for the period for which they are withdrawn, and amounts deposited in
the Rate Stabilization Account shall reduce Gross Revenue of the System lbr the period for
which they are deposited. Credits to or from the Rate Stabilization Account that occur within
90 days after the end of a fiscal year may be treated as occurring within such fiscal year.
Earnings on the Rate Stabilization Account shall be credited to the Revenue Fund.
Section 10. Bond Account. A special account of the City known as the "City of
Yakima Irrigation System Bond Account" (the "Bond Account") is hereby created and shall be
drawn upon for the sole purpose of paying and securing the payment of Parity Bonds. The City
shall deposit the Assessments into the Bond Account for payment of the principal of and interest
on Parity Bonds without allocation to -any particular series of bonds payable from the Bond
Account.
A. Payments Into Bond Account. All accrued interest received by the City at
the time of delivery, of the Bonds shall be paid into the Bond Account._ As long as any of the
Parity Bonds remain outstanding, the City hereby irrevocably obligates and binds itself to set
aside and pay from the Revenue Fund into the Bond Account, on or before the date due, those
amounts necessary, together with Revenue of the System collected and deposited and such other
money as is on hand and available therefor in the Bond Account, to pay the irn:erest or principal
and interest next coming due on the outstanding Parity Bonds.
The City covenants that in the event it issues any Future Parity Bonds that are Term
Bonds, it will provide in each ordinance authorizing the issuance of the same for annual
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payments to be made from the Revenue Fund into the Bond Account sufficient, together with
Revenue collected and deposited and such other money as is on hand and available therefor in
such account, to satisfy the Sinking Fund Requirement with respect to such Term Bonds.
B. Reserve Account. A Reserve Account is hereby created for the purpose of
securing the payment of the principal of and interest on all Parity Bonds. The City covenants
that it will upon delivery of the Bonds have on deposit an amount or Qualified Insurance in an
amount equal to the Reserve Account Requirement. The City further covenants that in the event
it issues any Future Parity Bonds it will provide in each ordinance authorizing the issuance of the
same that approximately equal monthly payments will be made into the Reserve Account out of
the Revenue Fund so that within five years or less from the date of the issuance of such Parity
Bonds the total amount of such payments, with the amount already in the Reserve Account, will
be at least equal to the Reserve Account Requirement.
The City further covenants that when the required deposits have been made into the
Reserve Account, it will at all times maintain therein an amount at least equal to such Reserve
Account Requirement. Whenever there is a sufficient amount in the Bond Account and Reserve
Account to pay the principal of, premium, if any, and interest on all Parity Bonds then
outstanding, the money in the Reserve Account may be used to pay such principal, premium, if
any, and interest. Money in the Reserve Account may be withdrawn to redeem and retire, and to
pay the interest due to such date of redemption and premium, if any, on the outstanding Parity
Bonds so long as the money remaining on deposit in the Reserve Account is at least equal to the
Reserve Account Requirements for all of the Parity Bonds then outstanding.
In the event there shall be a deficiency in the Bond -Account to meet maturing
installments of either interest on or principal of and interest on any Parity Bonds, such deficiency
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shall be made up from the Reserve Account by the withdrawal of money therefrom. Any
deficiency created in the Reserve Account by reason of any such withdrawal shall be made up
within 12 months of the deficiency out of Assessments and Revenue of the System after making
necessary provision for the payments required to be made by subparagraphs First, Second, and
Third of Section 9 hereof.
The City may substitute or deposit Qualified Insurance or a Qualified Letter of Credit for
amounts required to be deposited into the Reserve Account. 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 Account shall be funded in accordance with the provisions of this
section providing for payment in the event of a deficiency therein, as if the Parity Bonds that
remain outstanding had been issued on the date of such notice of cancellation.
In the event there is a deficiency in the Bond Account to meet maturing installments of
either interest on or principal of and interest on the outstanding Parity Bonds payable out of such
Account, such deficiency shall be made up from the Reserve Account by the withdrawal of
money therefrom and by the sale or redemption of obligations held in the Reserve Account, if
necessary, in such amounts as will provide cash in the Reserve Account sufficient to make up
any such deficiency, and 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 to make up the deficiency. Such draw shall be made at such times and under
such conditions as the agreement for such Qualified Letter of Credit or such Qualified Insurance
shall provide. If more than one Qualified Letter of Credit or Qualified insurance is available,
draws shall be made ratably to make up the deficiency.
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C. Priority of Lien of Payments Into Bond Account. The amounts so pledged to be
paid into the Bond Account and the Reserve Account from the Revenue Fund are hereby
declared to be a prior lien and charge upon the Revenue of the System superior to all other
charges of any kind or nature whatsoever except the Costs of Maintenance and Operation of the
System and except that the amounts so pledged are of equal lien to the charges upon such
Revenue heretofore made and which may hereafter be made to pay and secure the payment of the
principal of and interest on any outstanding Parity Bonds.
D. Application and Investment of Money in Bond Account. Money in the Bond
Account not needed to pay the interest or principal and interest next coming due on any
outstanding Parity Bonds or to maintain required reserves therefor may be used to redeem and
retire such bonds. Money in the Bond Account and Reserve Account may be invested as
permitted by law. Investments in the Bond Account shall mature prior to the date on which such
money shall be needed for required interest or principal payments. Investments in the Reserve
Account shall mature not later than the last maturity of any then outstanding Parity Bonds. All
interest earned and income derived by virtue of such investments shall remain in the Bond
Account and be used to meet the required deposits into any account therein.
E. Sufficiency of Revenues. The Council hereby finds that in fixing the amounts to
be paid into the Bond Account out of the Revenue of the System, it has exercised due regard for
the Cost of Maintenance and Operation and has not obligated the City to set aside and pay into
such Fund a greater amount of such Revenue than in its judgment will be available over and
above the Cost of Maintenance and Operation.
Section 11. Payments Into Bond Proceeds Account. A Bond Proceeds Account is
hereby authorized to be created within the Irrigation Fund, at the discretion of the Finance
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P.DGDG018 08118I06
Director, for the deposit of a portion of the proceeds of the Bonds received by the City at the
time of delivery of the Bonds as stated in Section 15.
Section 12. Defeasance. In the event that money and/or Government Obligations
maturing at such time or times and bearing interest to be earned thereon in amounts (together
with such money if necessary) sufficient to redeem and retire the Bonds or any of them in
accordance with their terms are set aside in a special account to effect such redemption or
retirement and such money and/or the principal of and interest on such obligations are
irrevocably set aside and pledged for such purpose, then no further payments need be made into
the Bond Account for the payment of the principal of and the interest on the 13onds so provided
for, and the owners of such Bonds shall. cease to be entitled to any lien, benefit or security of this
ordinance except the right to receive the funds so set aside and pledged, and such Bonds shall be
deemed not to be outstanding hereunder. -
Section 13. General Covenants. The City hereby covenants with the owner of each of
the Bonds for as long as any of the same remain outstanding as follows:
A. System Rates. The City shall establish, maintain and collect rates and charges for
the use of the services and facilities of the System and all commodities ;old, 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:
1. The Revenue of the System, together with Assessments collected, will at
all times be sufficient (a) to pay all costs of and charges and expenses in connection with the
proper operation and maintenance of the System, (b) to pay the principal off and interest on the
outstanding Parity Bonds, as and when the same shall become due and payable, (c) to make
when due all payments which the City is obligated to make into the Bond Account and Reserve
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F:1DODGOl8 08118/04
Account and all other payments which the City is obligated to make pursuant to this ordinance,
and (d) 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 and hereafter become obligated to pay from the Revenue of the System
by law or contract; and
2. the Net Revenue in each calendar year will equal at least 1.40 times
Annual Debt Service for such year (after deducting Assessments actually collected for such
year). For the purpose of meeting the requirement of this paragraph there may be added to Net
Revenue for any calendar year any amount withdrawn from the Rate Stabilization Account and
credited to Revenue as provided in Section 9. There shall be subtracted from Net Revenue for
any calendar year any amounts in such year withdrawn from the Revenue Fund and deposited
into the Rate Stabilization Account in such calendar year.
B. Sale or Disposition of the System. The City will not sell, mortgage, lease or
otherwise dispose of or encumber all or any portion of the System, except as follows:
(1) The City may sell, mortgage, lease or otherwise dispose of all or
substantially all of the System if, simultaneously with such sale, mortgage, lease or other
disposition or encumbrance, provision is made for the payment into the Bond Account of cash or
Government Obligations sufficient together with interest to be earned thereon to pay the
principal of and interest on all then outstanding Parity Bonds.
(2) Except as provided in subsection (3) below, the City will not sell,
mortgage, lease or otherwise dispose of or encumber any part of the useful operating properties
of the System in excess of 5% of the value of the net utility plant of the System unless prior to
such sale, mortgage, lease or other disposition or encumbrance:
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P:1DGADGOIa mum
(i) there shall have been filed with the Finance Director a certificate
of a Professional Utility Consultant stating that such sale, mortgage, lease or other disposition or
encumbrance will not impair the ability of the City to comply with the rate covenants set forth in
Section 13 of this ordinance; or
(ii) provision is made for the payment, redemption or other retirement
of a principal amount of outstanding Parity Bonds equal to the greater of the following amounts:
(X) an amount that will be in the same proportion to the net principal amount of Parity Bonds
then outstanding (defined as the total principal amount of the Parity Bonds less the amount of
cash and investments in the Bond Account and accounts therein) that the Net Revenue from the
portion of the System sold or disposed of for the 12 preceding months bears to the total Net
Revenue for such period; or (Y) an amount that 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.
(3) 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 part of the
same with a value less than 5% of the net utility plant of the System or 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 Account.
C. Collection of Assessments. The City shall promptly collect all Assessments
levied in any utility local improvement district now or hereafter created to secure the payment of
the principal of and interest on any Parity Bonds and shall pay the same into the Bond Account
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PAD(TDGOI8 01110.04
without allocation of such Assessments to any particular series of Parity Bonds. It is hereby
provided further, however, that nothing in this ordinance or in this subsection shall be construed
to prohibit the City from issuing revenue bonds having a lien on Gross Revenue junior to the lien
on such revenue for the payment of the principal of and interest on Parity Bonds and pledging as
security for the payments of such junior ben bonds assessments levied in any utility local
improvement district that may have been created to pay part or all the cost of improvements to
the System for which such junior lien revenue bonds were specifically issued.
D. Books and Accounts. The City covenants that it will maintain complete books
and records relating to the operation of the System and its financial affairs, and will cause such
books and records to be audited annually, and cause to be prepared an annual financial and
operating statement, which statement shall be mailed to any owner of Parity Bonds upon request.
E. Insurance. The City covenants that it will carry insurance on the System as is
ordinarily carried on the property of similar public utilities by other municipal corporations
engaged in the operation of the same if such insurance can be obtained at a reasonable cost and
will also carry adequate public liability insurance and other kinds of insurance as under good
practices are ordinarily carried on the properties of similar public utilities; provided, however,
that the City may, if deemed necessary and advisable by the Council, institute or continue a self-
insurance program with respect to any or all of the aforementioned risks. The premiums paid for
all such insurance shall be regarded and paid as a Cost of Maintenance and Operation.
F No Free Service. Except as permitted by law, the City will not furnish any
service of the System to any customer free of charge.
Section 14. Issuance of Future Parity Bonds. The City hereby covenants and agrees
with the owners of each of the Bonds for as long as any of the same remain outstanding as
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P.YIGIDG018 08/18104
follows: The City will not issue any bonds having a greater or equal priority of lien upon the
Revenue of the System to pay and secure the payment of the principal of and interest on the
Bonds than the priority of lien created on such Revenue to pay and secure the payment of the.
principal of and interest on the Bonds or any outstanding Parity Bonds except as follows:
A. The City reserves the right to issue Future Parity Bonds for the purposes of:
First, providing funds to acquire, construct, reconstruct, install, or replace any
equipment, facilities, additions, betterments, or other capital improvements eo the System for
which it is authorized by law to issue revenue bonds or for other lawful purposes of the System;
or
Second refunding at or prior to their maturity any revenue bond anticipation
notes or outstanding revenue bonds or other obligations payable out of the Revenue of the
System and to pledge that payments will be made out of the Revenue of the System and into the
Bond Account to pay and secure the payment of the principal of and interest on such Future
Parity Bonds on a parity with the payments required herein to be made out of such Revenue into
such account to pay and secure the payment of the principal) of and interest on any Parity Bonds
then outstandiing, upon compliance with the following conditions:
(1) At the time of the issuance of any Future Parity Bonds there is no
deficiency in the Bond Account or the Reserve Account.
(2) If there are Assessments levied in any utility local improvement
district in which additions and improvements to and extensions of the System will be constructed
from the proceeds of such Future Parity Bonds, the ordinance authorizing such Future Parity
Bonds shall require that such Assessments be paid into the Bond Account.
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(3) If there are Assessments pledged to be paid into a warrant or bond
redemption fund for revenue bonds or warrants being refunded by Future Parity Bonds, the
ordinance authorizing such Future Parity Bonds shall require such Assessments to be paid into
the Bond Account.
(4) The principal of and interest on any Future Parity Bonds shall be
payable out of the Bond Account and the requirements for Reserve Account payments in
Section 10 hereof shall be met.
(5) Prior to the delivery of any Future Parity Bonds, the City shall
have on file in the office of the City Clerk either:
(i) a certificate of the Finance Director showing that the Net
Revenue determined as hereafter provided for each calendar or fiscal year after the issuance of
such Future Parity Bonds will equal at least 1.40 times Annual Debt Service (after deducting
Assessments allocated to the years in which they 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)
during any calendar or fiscal year for all Parity Bonds plus the Future Parity Bonds proposed to
be issued. For purposes of this certificate, "Net Revenue" shall be the Net Revenue for a period
of any 12 consecutive months (which may include amounts withdrawn from the Rate
Stabilization Account, as provided in Section 9 of this ordinance) out of the 24 months
immediately preceding the date of delivery of such proposed Future Parity Bonds; or
(ii) a certificate of a Professional Utility Consultant showing
that the Net Revenue determined and adjusted as hereafter provided for each calendar or fiscal
year after the issuance of such Future Parity Bonds (the "Adjusted Net Revenue") will equal at
_ 2L
P:100100018 09110101
least 1.40 times the Annual Debt Service (after deducting Assessments allocated to the years in
which they 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) for each such calendar or fiscal
year for all Parity Bonds plus the Future Parity Bonds proposed to be issued.
The Adjusted Net Revenue shall be the Net Revenue for a period of any 12 consecutive
months (which may include amounts withdrawn from the Rate Stabilization Account, as
provided in Section 9 of this ordinance) out of the 24 months immediately preceding the date of
delivery of such proposed Future Parity Bonds as adjusted by such Professional Utility
Consultant to take into consideration changes in Net Revenue estimated to occur under the
following conditions for each year after such delivery for so long as any Parity Bonds, including
the Future Parity Bonds proposed to be issued, shall be outstanding: -
(i) the additional Net Revenue that would have been received
if any change in rates and charges adopted 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;
(ii) the additional Net Revenue that would have been received
if any facility of the System that became fully operational after the beginning of such 12 -month
period had been so operating for the entire period; and
(iii) the additional Net Revenue estimated by such Professional
Utility Consultant to be received as a result of any additions, betterments and improvements to
and extensions of any facilities of the System that are (a) under construction at the time of such
certificate or (b) will be constructed from the proceeds of the Future Parity Bonds to be issued.
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Such Professional Utility Consultant may rely upon, and his or her certificate shall have.
attached thereto, financial statements of the System certified by the Finance Director showing
income and expenses for the period upon which the same is based.
B. Notwithstanding the foregoing requirement, if Future _Parity Bonds are to be
issued for the purpose of (1) refunding at or prior to their maturity any part or all of the then
outstanding Parity Bonds and the issuance of such refunding Future Parity Bonds will result in a,
debt service savings and does not require an increase of more than 55,000 in any fiscal or
calendar year for principal of and interest on such refunding Future Parity Bonds over and above.
the amount required in such year for the principal of and interest on the bonds being refunded.
thereby or (2) avoiding a pending default of debt of the System, the condition stated in
subsection A(5) of this section need not be met.
C. Nothing herein contained shall prevent the City from issuing any revenue bonds,
warrants or other obligations that are a charge upon the money in the Revenue Fund junior or
inferior to the payments required by this ordinance to be made into the Bond Account and the
Reserve Account.
D. Nothing herein contained shall prevent the City from issuing revenue bonds or
other obligations which are a charge upon the Revenue of the System junior or inferior to the
payments required by this ordinance to be made out of such Revenue into the Bond Account and
accounts therein to pay and secure the payment of any outstanding Parity Bonds.
E. Nothing herein contained shall prevent the City from issuing revenue bonds to
refund maturing Parity Bonds for the payment of which money is not otherwise available.
Section 15. Disposition of Bond Proceeds. The Bond proceeds shall be deposited as
follows:
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P.,OG,.oGa1a 03/99/01
(1)
Accrued interest shall be deposited into the Bond Account.
(2) The amount necessary to fund the Reserve Account Requirement shall be
deposited in the Reserve Account.
(3) The remaining proceeds shall be deposited into the account designated by
the Finance Director and used for the Projects and to pay costs of issuance of the Bonds.
Section 16. Tax Covenant The City covenants to undertake all actions required to
maintain the tax-exempt status of interest on the Bonds under Section 103 of the Code.
Section 17. Amendments.
A. The Council may adopt an ordinance or ordinances supplemental hereto, which
ordinance or ordinances thereafter shall become a part of this ordinance, for any one or more of
the following purposes:
1. To add to the covenants and agreements of the City contained in this
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 to or conferred upon the City.
2. To make such provisions for the purpose of curing any ambiguities or of
curing, correcting or supplementing any defective provisiottcontained in this ordinance or any
ordinance authorizing Parity Bonds in regard to matters or questions arising under such
ordinances as the Council may dean necessary or desirable and not inconsistent with such
ordinances and which shall not adversely affect the interests of the owners of Parity Bonds.
Any such supplemental ordinance of the City may be adopted without the consent of the
owners of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of
subsection B of this Section.
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P.DWOGa1e 0811604
13. With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bonds at the time outstanding, the Council may adopt 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 supplemental ordinance;
provided, however, that no such supplemental ordinance shall:
1. Extend the fixed maturity of any Parity Bonds, or reduce the rate of
interest thereon, or extend the times of payment of interest from their respective due dates, 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 supplemental ordinance, without the consent of the owners of all of the Parity Bonds then
outstanding.
It 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 supplemental 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 the
terms and conditions of any such supplemental ordinance shall be deemed to be a part of the
terms and conditions of this ordinance for any and all purposes. -
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P:*G10001e 08/18/04
D. Parity Bonds executed and delivered after the execution of any supplemental
ordinance adopted pursuant to the provisions of this Section may have a notation as to any matter
provided for in such supplemental 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 by the City and
delivered without cost to the owners of any affected Parity Bonds then outstanding, upon
surrender for cancellation of such bonds in equal aggregate principal amounts.
Section 18. 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 19. Sale of Bonds. The Council shall adopt a Sale Resolution, which will set
the interest rates, maturity amounts and years of the Bonds and approve the purchase contract
and official statement for the Bonds. The Sale Resolution also -may establish redemption
provisions, approve bond insurance and set any other terms for the Bonds.
Section 20. Undertaking to Provide Ongoing Disclosure.
A. Contract/Undertaking. This Section constitutes the City's written undertaking for
the benefit of the owners and Beneficial Owners of the Bonds as required by Section (b)(5) of
the Rule.
13. 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 SEC in
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P:/ncerme oeneua
accordance with the Rule, the following annual financial information and operating data for the
prior fiscal year (commencing in 2004 for the fiscal year ended December 31, 2003):
1. Annual financial statements showing ending fund balances for the System
prepared in accordance with generally accepted accounting principles applicable to government
entities (and modified as may be required by the Washington State Auditor pursuant to
RCW 43.09.200 (or any successor statute);
2. The principal amount of Parity Bonds;
3. Debt service coverage for Parity Bonds;
4. Number of customers of the System; and
5. Rates of the System.
Items 2-5 shall be required only to the extent that such information is not included in the
information provided pursuant to item 1 above.
Such annual financial 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 fiscal year currently
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 NRMSIRs and the SID, or filed with the SEC and, if such document
is a final official statement within the meaning of the Rule, available from the MSRB.
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement prepared in accordance with generally
accepted accounting principles (and modified as may be required by the Washington State
P:1DG'11GD18 OBI18)01
Auditor pursuant to RCW 43.09.200 (or any successor statute)), when and if available, to each
then existing NRMSIR and the SID., Wang.
C. Material Events. The City agrees to provide or cause to be provided, in a timely
manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any
of the following events with respect to the Bonds, if material:
I. Principal and interest payment delinquencies;
2. Nonpayment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial
difficulties;
4. Unscheduled draws on credit enhancements reflecting financial
difficulties;
5. Substitution cfcredit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exe mpt status -of the
Bonds;
7. Modifications to the rights of Bond owners;
8. Optional, contingent br unscheduled calls of any Bonds other than
scheduled sinking fund redemptions for which notice is given pursuant to
Exchange Act Release 34-23856;
9. Defeasances;
10. Release, substitution or sale of property securing repayment of the Bonds;
and
11. Rating changes.
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P IDG➢G018 08)18/01
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 and operating data 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 terminate upon the legal defeasance, prior
redemption or payment in full of all of the 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 Bonds; and (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 ordinance, the City may amend this
Section 20, and any provision of this Section 20 may be waived, with an approving opinion of
nationally recognized bond counsel.
In the event of any amendment or waiver of a provision of this Section 20, 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 of this Section 20, and
(ii) the annual report for the year in which the change is made should present a comparison (in
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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. Notwithstanding any other
provisions of this ordinance, the right of any Bond owner or Beneficial Owner of the Bonds to
enforce the provisions of this Section 20 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 Section shall not be an event of default with respect to the Bonds under this ordinance. For
purposes of this Section 20, "Beneficial Owner" means any person who has the power, directly
or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds,
including persons holding Bonds through nominees or depositories.
Section 21. General Authorization. The Mayor, the Finance Director, the City
Manager and the Clerk of the City and each of the other appropriate officers 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. All
acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby
ratified and confirmed.
Section 22. Effective Date. This ordinance shall be effective five days from and after
its passage, approval and publication as required by law. - - -
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PODGIDG018 08/1604
PASSED by the Council of the City of Yakima, Washington, and. approved by its Mayor
at a regular meeting thereof held this 4th day of November, 2003
CITY OF YAKIMA, WASHINGTON
ATTEST
City Clerk
APPROVED AS TO FORM:
City Attorney
37•
By
Mayor
r:eGGncaie 0811861
Exhibit A
Description of the Project
CERTIFICATE
I, the undersigned, City 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 ordinance is a true and correct copy of Ordinance No.
of the Council (the "Ordinance"), duly passed at a regular meeting thereof held on the 4th day of
November, 2003.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
quorum 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 Ordinance; that all other requirements
and proceedings incident to the proper passage of said Ordinance have been duly fulfilled,
carried out and otherwise observed; and that I am authorized to execute this certificate.
Dated this 4th day of November, 2003.
City Clerk
P:IO.MGO1B 0811B0I
(This Page Intentionally Left Blank)
Appendix B
Form of Opinion of Bond Counsel
(This Page Intentionally Left Blanc)
Preston I Gates I Ellis LLP
September 1, 2004
City of Yakima
Yakima, Washington
Seattle -Northwest Securities Corporation
Seattle, Washington
Re: City of Yakima, Washington,
Irrigation System Revenue Bonds, 2004 — $
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 Irrigation System Revenue Bonds, 2004 in the aggregate principal amount of
$ (the `Bonds"). The Bonds are dated September 1, 2004 and are issued pursuant
to Ordinance No. 2003-68 of the City, adopted on November 4, 2003 and Resolution
No. adopted on , 2004 (together, the "Bond Ordinance"). The Bonds are
issued for the purpose of financing various projects and capital improvements relating to the
City's irrigation system. Capitalized terms not otherwise defined in this opinion shall have the
meanings given such terms in the Bond Ordinance.
The Bonds are subject to 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 the official statement), 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.
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 "City of Yakima Irrigation System Bond Account" (the "Bond Account"),
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
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 Beijing Coeur d'Alene Hong Kong Orange County Portland San Francisco Seattle Spokane Taipei Washington, DC
City of Yakima
Seattle -Northwest Securities Corporation
September 1, 2004
Page 2
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 Account
out of the earnings and revenue of the irrigation System of the City (the "System") and out of all
utility local improvement district assessments required by law and ordinances of the City to be
paid into said Bond Account, 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
Account out of the Assessments shall constitute a lien and charge upon such Assessments
superior to all other charges of any kind or nature whatsoever, except for Costs of Maintenance
and Operation and equal in rank to any irrigation system 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 num 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 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.
K:\25739\00066\NMN\NMN L31 B7
Very truly yours,
PRESTON GATES & ELLIS LLP
By
Nancy M. Neraas
Appendix t
Book -Entry Transfer System
(This Page Intentionally Left Blank)
TIE. DEPOSITORY TR.U.ST 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, ohe 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, D i els 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, T'ne 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 ',molds and followed by a book -entry credit of
tendered Securities to [Tender/Remarketing] Agent's DTC account.]
10. DTC may discontinue its --•�, providing sci diCcs 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.
i
Appendix D
2002 Annual Financial Statements
('This Page Intentionally Left Blank)
Legislative Building
PO Box 40021
Olympia, Washington 98504-0021
0
Washington State Auditor
Brian Sonntag
INDEPENDENT AUDITOR'S REPORT
September 17, 2003
The Honorable Mayor and City Council
(360) 902-0370
FAX (360) 753-0646
TDD Relay 1-800-833-6388
http: //www.wa.gov /sao/
We have audited -the accompanying general purpose financial statements of the City of Yakima Yakima
County, Washington, as of and for the year ended December 31, 2002 and 2001, as listed in the table of
contents. These financial statements are the responsibility of the City's management. Our responsibility is
to express an 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 and recommendations
on compliance matters, internal 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
1
City of Yakima
Combined Balance Sheet
December 31, 2002
with comparative totals for December 31, 2001
Page 1 of 4
GOVERNMENTAL FUND TYPES
Special Debt Capital
General Revenue Service Prolecto
ASSETS AND OTHER DEBITS
Cash & Equity in Pooled Invesbn'ts 57,704,560 54,143,610 $790,627 59.043,7591
Deposits w/ Fiscal Agent/Trustee 0 100 0 0
Receivables:
Taxes 862,274 0,798 56,536 0
Accounts 174,086 160.777 0 8,248
Special Assessments 0 1,830 0 0
IJDAssessments -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 1,066,733 0 0 0
Interfund Loans Receivable 0 0 0 0
Due from other Government Units 26,964 505,424 0 415,56
Inventories 26,802 0 0 0
Investments, at amortized cost 0 2,710,492 9,370 1,527,201
Restricted 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 Depredation 0 0 0 0
Canstnution in Progress 0 0 0 0
Completed Const. - not Classifd 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 Long -tens Debt 0 0 0 0
TOTAL ASSETS AND OTHER DEBITS 510,148515 515,460,484 51,110,418 511.061,630
The notes to the finandal statements are an Integral part of this statement.
2
reparesnosessr
Page 2 of 4
FIDUCIARY TOTALS
PROPRIETARY RIND TYPES FUND TYPES ACCOUNT GROUPS (MEMORANDUM ONLY)
Internal Trust General General December December
Enterprise Service and Agency Fixed Assets 1JT Debt 332002 31, 2001
57,788,160 54,721,234 51,794,634
O 10,620 0
s°0
50 535,986584 527,292,179
0 10,720 336,001
0 0 0 0 0 999,608 786,028
3,333,242 485,729 0 0 0 4,1162,082 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
O 0 0 0 0 249266 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 257350
O 0 0 0 0 1,056,233 153,003
O 1,420,000 0 0 .0 1,420,000 710,000
1,220,858 0 0 0 0 2168,802 2,800.466
189,270 140,895 O 0 0 356,967 369,768
6453,403 3,149,663 58,318 0 0 14.308.447 17.291,398
2085,358 0 0 0 0 2,085,358 1,749,415
425 0 0 0 0 425 409,185
O . 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 73267,198 68477,939
12,513,665 12730,535 0 8,279,693 0 33J43,893 32,456,618
-64,953,369 -7,153,229 0 0 0 -72,106598 -68,603,654
111181,452 0 0 1,678280 0 12,759,732 9,949,446
2,232,245 0 0 0 0 - 2.232,245 2232,245
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
O 0 0 0 804,211 804211 930,386
O 0 0 0 30,123,456 30,123,456 25,163,890
5114,712,672 515,191,841 51,854245 558,775,997 530,927,667 5259243,469 5242370,391
.®.o_.�x>: ami seams®.oma
3
np1/29/201r933 wv
City of Yakima Page 3 of 4 Page 4 of 4
Combined Balance Sheet
December 31, 2002 PROPRIETARY FUND TYPES FUND TYPES ACCOUNT GROUPS (MEMORANDUM ONLY)
with comparative totals for December 31, 2001 GOVERNMENTAL FUND TYPES Interval 7taot General General December December
Special Debt Capital Enterprise Service and Aaenev Fixed Assets UT Debt 3541,$200112,972, 31, 2001
General Revenue - Service Protects LIABILITIES 52,655,910 5280,907 5711,042 50 50 54,221,370
Warrants/Accounts Payable 5389,798 5358,750 50
5515.565 773,490 744373 0 0 0 3,735,023 3,418,893
Wages/BnsnefitsPayable 2,296,608 570,672 0 0 860,367 162,033 0 0 3,547,165 4,569,365 4,436,584
Compensated Absences Payable 0 0 0 0 0 2,485,886 0 0 0 2,485,866 2,759,980137
Claims and Judgements Payable 0 0 0 0 0 0 0 0 2,654,020 2,654,020 2,780,260
Unfunded Pension Liability 0 0 0 0 0 0 0 0 0 113,042 114,
Contracts Payable 0 28,086- 0 84,956 0 0
Arbitrage Rebate Tax Payable 0 0 0 0
Due to other Funds 0 87,274 0 29,432 0 949527 0 0 0 1,066233 153,003
Interfund Loans Payable 0 0 0 0 - 0 0 0 0 0 0
Due to otherGovernment Units 24,585_ 14,266 0 12,8117 0 0 0 0 0 -51,718 55,609
Mature Interest Payable 0 0 0 0 0 0 0 0 0 0 0
Mature Bands 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 0 204,053 170,659
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 D 0 690259 684,077
Restricted Payables: 0 0 0 0 0 0 11760
Matured Interest Payable 0 0 0 0 p 0 0 0 0 0 0
In Lieu of LID 0 0 0 01045,000 0 0 0 . 0 1,045,000 1,110,000
Current Portion LT Debt 0 0 0 0 8,,450,000 0 0 0 20,020,000 28,470,000 24,880.000
Bonds Payable 0 0 0 0 -61,843 0 0 0 0 61,843 -70,396
Unamortized Bond Discount 0 0 0 0 -291,489 0 0 0 0 -291,489 -326,840
Deferred Amount On debt Refunding 0 0 0 0 .0 0 0 - 0 39,057 39,057 63,215
Capital Leases Payable - LT 0 0 0 0
Special Assessments Debt with 0 - 0 0 0 92,000 92,000 141,330
Govemmer# Conunimrem 0 0 0 0 5,472,715 0 0 0 3,770,374 9,213,089 30,515,783
Loans Payable - Long Term 0 0 0 0 0 0 0 0 805,051 805,051 973,343
Notes Payable -Long Tenn 0 0 0 0 1420,000 0 0 0 0 1,420,000 710,000
Advances from other Funds 0 0 0 0 21,413,423 4,022,666 723,057 0 30,927,667 7)9,762222 66,795,757
Total Liabilities 3,773,299 8,943,023 306,206 652,881 -
FUND EQUITY AND OTHER CREDITS
FUND BALANCE _
Reserved: - 0 0 0 0 0 1514 1,514
Restricted Donations 0 1,514 0 - 0 0 0 0 0 0 26,802 30,082
Inventory 26,802 0 -0 0 0 0 0 0 02,314,940 2.141,669
Encumbrances 522,005 1,004,139 0 787,996 0 0 0 0 0 6,948,742 1,177,716
Continuing Appropriations 0 0 0 6,948,742 0 0 0 0 0 804,212 930,384
Debt Service 0 0 804,212 0 0 0 473,299 0 0 473,299 467,878
Endowment 0 0 0 0 189,075 239,096
Probation Center 189,075 50832 48,307
Active Employees Credited Reserves 50,812 0 0 657,889 0 0 657,889 538436
Employee Retirem't System 0 0 0 0 0 0 0 -0 0 3,096,2442,570,749
Unreserved Designated 0 1.193,525 0 1,902,719 0 0 0 0 0 10,674,097 10,544,166
Unreserved 5,586,522 4,318,283 _ 0 769.292 74,178,880 1,044,233 0 0 0 75.223,113 75223;113
CONTRIBUTED CAPITAL 0 0 0 0 _ -
RETAINED EARNINGS -
Reserved: 2,085,358 - 0 0 0 0 2.065.358 2,751,127
Deb! Service 0 0 0 0 0 8.738;074 0 0 0 8,738,074 8,121,844
Replacement 0 0 0 0 17035,011 1,386.868 0 0 0 18,421,879 14,570,607
Unreserved 0 0 0 0 0 0 0 58,775,997 -0 58.775,997 56,717,945
VESTMENT IN GEN, FIXED ASSETS 0 - 0 0 0 93,299,249 11,169,175 1,131,188 58.775.997 0 188,481,247 3755'74,633
IN
Total Equity and other Credib 6,375,216 6,517,461 804212 10,408,749 evo
5114,712,672 535,191,841 51,854,245 m.
558.775,997 530oss ,927.667 5259243,469 5242,370,390
TOTAL LIAB1LrrIES, EQUITY AND OTHER CREDITS 510,148,515 515mi.am.460484 51cooliema ,110.418 511,061,630, --
The notes to the financial statements are an integral part of this statanent.
4
aper/71/2om932 AM
5
apa/20/200t32 aa1
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 totalsfor the year ended Detember31, 2001
GOVERNMENTAL FUND TYPES
Page 1 of 2
TOTAL
(MEMORANDUM ONLY)
Spedal Debt Capital 2002 2001
General Revenue Service Protects
REVENUES 435,960,071 533,251,211
Taxes and Special Assessments 526,565,287 56,450,283 51209355 51,244,146 405,856 408,688
Licenses and Permits 405,856 0 0 0 11,995,662 10,297,729
Intergovernmental Revenues 1,749290 8,176,651 33,476 2,035,745 5,080,469 4,754,505
Charges for Services 3,723,724 1,356245 0 0 1,631,877 1,553036
Fines and Forfeits 1,631,877 0 0 0 1005,919 1,592,005
Interest 558,359 178,532 887 268,141 1,143,813 1,247,473,
Other Revenues 56,453 793,203 56,003 238,154 57,223,667 53,104,647
Total Revenues 34,691,346 16,955,414 1,790,721 3,786,186
EXPENDITURES
CURRENT - 8,743,899 13,123,493
General Government 8,662,004 81,895 0 0 23,720,907 22094,466
Security of Persons and Property 20,794,442 2,672,667 0 253,798 1579,665 1,406,572
Physical Environment 1242,009 337,656 0 0 7,312.126 6,693,929
Transportation 0 6.525,612 0 787,114 2,836,440 2266,878
Economic Environment 419,434 2,416,355 0 651 23,219 22,608
Mental & Physical Health 23,219 0 0 0 5,685,414 5,440,092
Cultural & Recreational Envmt 1,251,178 4,404,400 0 29,836 3,991,139 2568,115
CAPITAL OUTLAY 93,030 476,960 0 3,421,149
DEBT SERVICE 2,373,122 2.255,895
Principal retirement 131,390 259,984 1,824,330 157,418 1,069041 1072,147
Interest 81,013 34,533 925,924 27,573 57.334,972 52,444,195
Total Expenditures 32,697,719 17,209,462 2.750,254 4,677,537 - -111,305 660,452
Excess of Revenues overfunded Expenditures 1,993,627 -254,048 -959533 -891,351
OTHER FINANCING SOURCES (USES)
Proceeds from Capital lease Financing 0 0 0 0
Proceeds from LT Debt -GA. Bonds 0 0 0 6,620,189
Proceeds from intergovernmental Loans 0 0 0 0
Other Note Proceeds 0 0 0 0
Operating Transfers In 110,000 2.320,132 850,549 529,861
Operating Transfers (Out) -1,919,371 -1,582.5511 -17,188 435,000
Sale of Fixed Assets 0 0 0 25,915
Comp. For Loss of Gen. Fixed Assets 2774 31190 0 0
Total ether Finandng Sources (Uses) -1,806,597 768,811 833,361 6,740,965
Excess of Revenues and Other Sources Over
(Under) Expenditures and Other Uses 187,030 514,763 -126,172 5,849,614
FUND BALANCES, January 1 6,191.466 6,002,690 930,384 4,559,135
Change in Reserve for Inventory -3,280 0 0 0
Prior Period Adjustment 0 0 0 0
Residual Equity Transfer In 0 0 0 0
Residual Equity Transfer (Out) o a 0 0
FUND BALANCES, December 31 56,375,216 $6517,461 5804,212 510,408,749
The notes to the financial statements are an integral part of this statement. 6 ep 1/29/2003 933 AM
O 0
6,620,189 0
O 44.000
O 0
3,810,542 3,377,996
3,954,070 -3,357,981
25,915 16,582
33,964 34919
6,536,540 115,516
6,425,235 775,968
17,683,683 16,853,603
- -3,280 -13,815
O 0
O 208,534
O -_�-,-11 J0 /A7
424305,638 417,610,683new
Page 2 of 2
7
le" a/r9n=9.3s aM
City of Yakima Page 1 oft
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 (Unfavorable)
REVENUES
Taxes and Special Assessments 526,565,287 525,556,850 51,008,437
Licenses and Permits 405,856 448,627 -42,771
Intergovenunental Revenues 1,749,790 2,074085 -324,295
Charges for Services 3,723,724 3542,975 180,749
Fines and Forfeits 1,631,877 1,516.590 113,287
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 687777
Physical Environunent 1,242,009 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
Page 2 of 2
TOTAL
SPECIAL REVENUE FUNDS (MEMORANDUM ONLY)
Variance Variance
Favorable Favorable
Actual Budget (Unfavorable) Actual Budget (Unfavorable)
56,450,283 56,265,287 5184,996 533,015,570 537,822337 51,193,433
0 0 0 405,856 448,627 42,771
8,176,651 10928,441 -2,751,790 9,926,441 13,002,526 -3,076,085
1,356,745 1,431,608 -74,863 5,080,469 4.974,583 105,886
0 0 0 1,631,877 1,518,590 113,287
178,532 216,127 -37,595 736,891 - - 957,127 -220,736
793,203 712,594 80,609 849,656 741,644 108,012
16,955,414 19,554,057 -2,598,643 51,646,760 53,465,234 -1,818,474
81,895 105,712 23,817 8,743,899 9,475,284 731,385
2,672,667 2,738,729 66,062 23,467,109 24,215,398 -748,289
337,656 376,366 38,710 1,579,665 1,574,096 -5,569
6,525,012 10,112,595 3,587,583 6,525,012 10,112,595 3,587,583
2,416,355 3,380,112 963,757 2,635789 3,801,022 965,233
0 0 0 23,219 21,659 -1,560
4,404,400 4,612,001 207,601 5,655,578 5,863212 207,634 _
476,960 898,078 421.118 569,990 1,013,195 443,205
259.984 259,789 -195 391,374 390,115 -1,259
34.513 34,728 195 115,546 115,637 91
17,209,462 22,518,110 5,308;648 49,907,181 56,582213 6,675,032
-254,048 -2,964,053 2710,0115_ 1,739,579 -3,116,979 4,856,558
OTHER FINANCING SOURCES (USES) 0 0 0 0 0 0
Proceeds from Intergovernmental Loans 0 0 0 0 2205,772 -2,205,772 0 2,205772 -2,205,772
Proceeds from LT Debt-G.O. Bonds 0 0 0 - 2,320,132 -1,870,429 4,190,561 2,430,132 -1,760,429 4,190,561
Operating Transfers In 110,000 110,000 0 -1582511 0 -1,582,511 -3,501,882 -1,837,000 -1.664,882
OperatingTransfers(Out) -1,919,371 -1,837,000 -82,371 0 0 0 . 0 0 0
Sale of Fixed Assets 0 0 0 31,
Fixed 190 20,000 11,190 33,964 22,000 11,964
Comp. For Loss of Gen. xed Assets 2,774 2,000 774 768,811 355.343 413,468 -7,037,786 -1,369,657 331,871
Total other Finandng Sources (Uses) -1,806,597 -1,725,000 -81,597
Excess of Revenues and Other Sources Over . 514,763 -2,608,710 3,173,473 701,793 - -4,486,636 5,788,429
(Under) Expenditures and Other Uses 187,030 -1,877926 2,064,956
6,002,698 5,038,498 964,200 12,794,764 9,311,570 2,882,594
FUND BALANCES, January 1 6,191,466 4,273,072 1,918,394 0 0 0 -3,280 0 -3,280
Change in Reserve for Inventory -3,280 0 -3,780 0 0 0 0 0 0
Residual Equity Transfer In 0 0 0 0 0 0 0 0 0
Residual Equity Transfer (Out) 0 0 0,51746152,429,a 54,087,673512,89®,677 54,824,934 58,067,743
FUND BALANCES, December 37 56,375,216 52395,146 53,980,070
The notes to the fuuuxial statements are an integral part of this statement. 9
ap
1r9/2003?.1 AM
8
•ma/29/2003SUs w
City of Yakima Page 1 of 2
Combined Statement of Revenues, Expenses, and Changes in Fund Equities -
All Proprietary Fund Types and Similar Trust Funds
for the fiscal year ended December 31, 2002
with comparative totals for Ow year ended December 31, 2001
PROPRIETARY FUND TYPES FIDUCIARY FUND TYPES
Internal Noo.Expendable Pension
Enterprise Cs, de Tent Trust
OPERATING REVENUES
Charge for lnsurance SO 51,181,514 50 S0
Charges for Services 21,211,421 4,137,579 7,455 0
Employer Contributions 0 6,237,098 0 1,325,372
Employee Contributions 0 1,661,734 0 0
Interest Revenue 0 0 -12,465 5,260
Other Operating Revenues 3,018 69,589 0 0
Total Operating Revenues 21,214,439 13,287,514 19,920 1,330,632
OPERATING EXPENSES -
Operations and Maintenance 13,877,102 3,6941.:3 0 0
Administration/Overhead3533,559 1,871,452 0 23,363
Taxes 2,940,468 0 0 0
Depredation/Amortization 3,933,131 1,003,401 0 0
Pension Benefits 0 0 0 680,448
Other Benefits 0 6,761,670 0 507,368
Total Operating Expenses 24,234,260 13,270,756 0 1,211,179
Operating Income (Loss) 3,019,021 16,758 19,920 119,453
NON-OPERATING REVENUES (EXPENSES)
Operating Grants and Subsidies 5,037,33233 0 0 0
Proceeds of Long -Term Debt 0 0 0 0
Interest Revenue 414,773446,318 0 0
Other Non -.Operating Revenues 15,695 0 0 0
Interest Expenses -541593 0 0 0
Amortization of Bond Pay. Discount -48,290 0 0 0
Gain (Loss) on Sale of Investments 0 0 0 0
Gain (Loss) on Fixed Assets Disposition 0 11,129 0 0
Non -Operating Revenue Net of Expenses 4,877,508
457,447 0 0
Income Before Operating Transfers 1,857,687 4741,205 19,920 119,453
Capital Contributions 2,064,622 379,898 0 0
Operating Transfers In 356 0 0 0
Operating Transfers (Out) 222,227 0 -14,499 0
NETINCOME(LOSS) 3,700,438 856103 5,421 119,453
TRUST FUND EQUITY CHANGES
Fund Balances,January 1
0
0 467,878 538,436
Fund Balance, December 31 0 0 473,299 657,889
PROPRIETARY FUND EQUITY CHANGES
Retained Eandnga Balance, January 1 15,672,739 9,270,839 0 0
Prior Period Corrections -252,808 0 0 0
Residual Equity Transfer In 0 0 0 0
Residual Equity Transfer (Out) 0 0 0 0
Retained Earnings Balance, December31 19,120,369 10,124,942 0 0
Contributed Capital, January 1 74,178,880 - 1,044,233 0 0
Capital Grants Received 0 0 0 0
Other Contributed Capital 0 0 0 0
Residual Equity Transfer In 0 0 0 0
Residual Equity Transfer Out 0 0 0 0
Contributed Capital, December 31. 74,178,880 1,044&33 0 0
Proprietary and Similar Trust Funds
Equities, December 31
593,299,249 511,16,9,975 3473,299 5657,889
The notes to the financial statements are an integral part of this statement. 10
ey11/79/2013935.04
TOTAL
(MEMORANDUM ONLY)
2002 2001
51,181,514 5883,904
25,356,455 23,343,634
7,562,470 6,879,874
1,661,734 1,399,924
17,725 25,501
72,607 55,043
35.852,505 32,587,883
17,461.335 16,651,199
5,428,374 4,295,439
2,940,468 2596,108
4,936,532 4,677,002
680,448 675,228
7269,038 7,337,490
38,716,195 36,232,466
-2,863,690 -3,644,583
5,037,323 5,405,132
O 0
861,091 1,120,898
15,695 307,172
-541,993 -567,732
-48,290 48,290
0 _ 0
.11129 44.086
5,334,955 6,261,266
2,471,265 2,616,683
2,444,520 2,631,941
356 0
-236,726 -261,949
4,679,415 4,986,675
1,006,314 819,626
1,131,188 1,006,314
24,943578 20,143591
-252,808 0
O 0
O 0
29,245,311 24,943.578
75223,113 75,223,113
O 0
0_ 0
O 0
0 0
75,223,113 75,223,113
5105,599.612 5101,173,005
11
Page 2 of 2
cpBM/rrar 495:001
City of Yakima
Combined Statement of Cash Flows -
All Proprietary Fund Types and Similar Trust Funds
for the year ended December 31, 2002
with comparative totals for the year ended December 31, 2001
Page 1 of
PROPRIETARY FUND TYPES FIDUCIARY FUND TYPES
Internal Non -Expendable Pension
Enterprise Service Tnnt Trust
Cash flows from operating activities:
Cash received from customers 520,757,786 54224535 57,455 SO
Contributions received - employer and employee 0 8,972525 0 1,325,372
Cash paid to suppliers for goods and services -9538,382 13,041,870 0 -22,757
Cash paid for salaries and benefits -8,635,534 -1.603,478 0 0
Other operating revenues collected 3,018 69589 0 0
Cash paid to claimants and beneficiaries 0 -7,397,210 0 -1,187,816
Interest received on invesbnents 0 0 13,076 5,115
Cash paid in lieu of tares -2,286,188 0 0 0
Net cash provided by operating activities 500,700 1,224,091 20,531 119,914
Cash flows from noncapilal financing activities:
Cash received from other Fundallnterhmd Loans Receivable) 0 0 0 0
Cash advances to other Funds 0 -710,000 0 0
Operating grants received 5569574 0 0 0
Operating transfers in from other funds 356 0 0 0
Operating transfers out to other funds 0 0 -14,499 0
Residual Equity transfers In from other funds 0 0 0 0
Residual Equity transfers out to other funds 0 0 0 0
Net cash pnrvlded by noncapital tlnandng activities 5,570,030 -710500 -14,499 0
Cash flown from capital flnandng act ides:
Proceeds from Public Works Trust Loan/Interfund loan 710,000 0 0 0
Proceeds for Debt Service from other governments 15,625 0 0 0
Cash contributions in aid of construction 1578591 0 0 0
Lid Contributions 0 0 0 0
Cash received from disposal of capital assets 70 41,098 0 0
Principal paid on revenue fronds -1,148177 0 0 0
Principal paid on Public Works Trust Loan -840,167 0 0 0
Principal paid on Advances from other lands 0 0 0 0
Capital expenditures paid -7,195,921 -6735065 0 0
interest and other debt service paid 471,001 0 0 0
Capital grants received 86,265 0 0 0
Residual equity transfer in 0 379,898 0 0
Residual equity transfer out -222227 0 0 - 0
Net cash used for upltal financing activities -7,386,942 -252,069 _ 0 0
Cash flows from investing activities:
Proceeds from sale and maturity of investment securities 1554,017 1513,460 253,304 0
Interest received on investment 444,171 400,264 0 0
Purchase of investment securities 0 0 0 -1,022
Net cash provided by investing acdvides 1,998.188 2.013,724 253,304 -1522
Net increaaeldecrease) in cash and cash equivalents 681,976 2.275,746 259,336 118,892
Cash and cash equivalents at beginning of year
Cash and cash equivalents al end of year
9,191542 2 445,488 201,593 489,653
59503518 54,7212334 5463,929 5608545
TOTAL
IMEMORANDUM ONLY)
2002 2001
124,989,776 523,409461
10,297,897 9,082,548
-12,403,009 -10,926517
-10,239,012 -9,859,767
72,607 24349
4585526 -7,664,915
18,191 26,131
-2,286,188 -2,069,241
1,865,236 2,022,249
O 0
-710,000 -710,000
5569,674 3592,190
356 0
-14,499 -20,015
O 0
O 0
4,845531 2,962,175
710,000 1529,937
15425 307,016
1478591 925,912
O 0
41,168 44.241
-1348.177 -1,105.000
-840,167 -828,163
O 0
-7568,986 4518,257
471,001 -596,743
86.265 0
379,898 174,007
-222,227 -N1,934
-7439,011 4,408,984
3,420,781 2,944,695
844,435 1,187,691
-1522 -2,081,304
4,264,194 2551,082
3,335,950 626,522
12,331,276 11,704,754
515467.226 512,331,276
Cash al the End of the Year Consist of
Operating Fund Cuh 57,788,160 54,721,234 5463,929 5608515 511591,468 57158,82
Revenue bond reserve account cash 1494A730 0 0 7 390,885 90,885 1,46805869
Revenue bond redemption account cash 390,885 0 0 0 460,786
Total cash at the end of the year
$9,473518 56,721.234 5463,929 $606545
The notes to the financial statements are an integral part of this statement 12
spa/irtams:isaw
515,667,726 512.331,276
13
Page 2of4
City of Yakima
Combined Statement of Cash Flows—
Proprietary Fund Types and Similar Trust Fun s
for the year ended December 31, 2002
with comparative Mtgs./or the year noted December 31, 2001
Recondliation of net operating income(loss) to net ash
provided(used) by operating activities:
Page 3 of 4
TOTAL
(MEMORANDUM ONLY)
PROPRIETARY FUND 77PE5 FIDUCIARY FU140 TYPES
Internal Non -Expendable Pension 2002 2001
Fnte se Service Trust Trust
-52,863,690 -53,644,583
Net operating Income(loss) 33,019021 506,758 519,920 5119,453
Adjustments to reconcile operating income(loss) to net
ash provided by operating activities: 4036532 4,677,002
Depredation 3,933,131 10(0,401 0 0
Change in assets and liabilities: 0 0
(Increase)decrease in deposits w/ Fiscal Agent/Trustee 0 0 0 0 474,499 -45,821
(lnaease)decrease in accounts receivable 453434 40,865 0 0 466 627
(Increase)decrease in interest receivable -0 0 611 -145 9,521 5,884
Uncrease)deaease in inventory 10.539 -1,018 0 0 -518,700 945317
Increase(decrease) in warrants/accounts payable 66,749 -451,557 0 606 64,303 16,176
lncrease(decrease) in wages/benefits payable 60,776 3,527 0 35,027 34,071
increase(decrease) in compensated absences payable 36,458 -0.431 0 0 0 -10519
(Inaease)decrease in contracts payable 0 0 _273,251 48,350
lncrease(decrease) in claims and judgements payable 0 -215.251 0 0 0 0
Increase(decrease) in unfunded pension liability 0 0 0 499,527 -4055
lncrease(dectease) in due to other funds 0 949527 0 0 4,728,926 5,666032
Total Adjustments 3,520,571 1,207,333 611 461
51265]36- 52022,249
Net cash provided by operating activities
Schedule of Noncash Capital and Related Financing Activities
Capital Assets Acquired by:
Noncash contributions
5500,700 S1,224,091 520,531, v 5119,914
5248.388 � 0 50 ®®,moi
The notes to the financial statements are an integral pan of this statement
14
nay1/21/som9.5Ata
5248,388 SI 10,161
15
Page 4 of 4
sp1/29/200935A1.1
NOTE 1 -
NOTE 2 -
NOTE 3 -
NOTE 4 -
NOTE 5 -
NOTE 6 -
NOTE 7 -
FINRPI CAFR Now 2002
I — 92303
NOTES TO THE FINANCIAL STATEMENTS
- CONTENTS OF THE NOTES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 18
A- Reporting Entity 18
B - Basis of Presentation - Fund Accounting 19
C - Basis of Accounting 21
D - Budgets and Budgetary Accounting 22
E - Assets, Liabilities and Equities 23
F - Revenues, Expenditures and Expenses 26
G - Memorandum Only Total Columns 26
H - Comparative Data 26
COMPLIANCE AND ACCOUNTABILITY 27
DEPOSITS AND INVESTMENTS 28
PROPERTY TAXES 29
FIXED ASSETS AND DEPRECIATION 30
A - General Policies 30
B - General Fixed Assets 3Q
C - Proprietary Fund Assets 31
PENSION PLANS 32
A - Public Employees' Retirement System (PERS) 32
B - Law Enforcement Officers' and Firefighters' Retirement
System (LEOFF) 34
C - Other Retirement Systems — Volunteer Firefighters
Relief and Pension Fund 35
D - Firemen's Pension 36
E - Police Pension 37
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
16
NOTE 8 - LONG-TERM DEBT AND CAPITAL LEASES 40
A - -General Obligation Debt 40
B - Revenue Bonds 41
C - Intergovernmental Loans and
Contractual Agreements 41
D - Special Assessment Debt with
Governmental Commitment 43
E - Lease Purchase Agreements 44
F - Unfunded Pension Liabilities - 44
NOTE 9 - CONTINGENCIES 45
NOTE 10 - INTERFUND TRANSACTIONS AND BALANCES 46
A - Classification of Interfund Transactions _ 46
B - Interfund Loans and Receivables 46
C - Interfund Operating Transfers 47
NOTE 11- FUND EQUITIES 48
A - Government Fund Types _ 48
B - Proprietary Fund Types 48
C - Designated Fund Balances 49
D - Reserved Fund Balance in Trust Funds - 49
NOTE 12 - SEGMENT INFORMATION 50
NOTE 13 - JOINT VENTURES - 51
NOTE 14 - POST RETIREMENT BENEFITS OTHER THAN PENSION BENEFIT 52
NOTE 15 - OTHER DISCLOSURES
A - Accounting and Reporting Changes 52
B - Subsequent Events 52
FINRPI -CAFR Now 2002
2 — 92303
17
CITY OF YAKIMA
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the City of Yakinia, 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 part 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 #13.
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 SCHOOL DISTRICT NO. 208;
UNION GAP SCHOOL DISTRICT _NO. Z. 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 -d the County.
F!HRPI CAFR Nae 2002
3 - 1!29/03
13
YAKIMA VALLEY REGIQNAL LIBRARY. The Yakima Valley Regional Library is a
separate county -wide municipal corporation with its own taxing authority. It provides
library services, under contract, for the City of Yakima, Yakima County 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 rio legal interest in or
responsibility for the assets or liabilities of the Yakima Health District.
YAKIMA CONFERENCE QF 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, Fut 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 theCity.
Yet, it is an independent entity with distinct governmental -character and organization. The
City of Yalkima 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. -
YAKIIMILEEQHMAILLUBLIC FACILITIES DISIBICI. 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 forCcnter 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 ACCOUN'T'ING
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. The following are the fund types and
account groups used by the City:
FINRPI CAFR Nass 2002
4 - V29/03
19
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".
Govemmental 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 teen debt.
Capital 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
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 #12 for segmented information on enterprise funds.
Jnternal 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 CAR Na., 2002
5 - 42953
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
parties 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 Fund, - Agency funds are custodial in nature (assets equal liabilities) and do not
involve the measurement of results of operations. -
ACCOUNT GROUPS
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 account control 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 Long -Term Debt Account Group - The general Tong -tern debt acoount group
accounts for all urunatured principal of general obligation bonds and other debt of a long-term
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 reporting. The modified
accrual basis differs from the accrual basis in the following ways:
FINRPI CAFR Nan 2092
6-42953
21
1. 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 #1, 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 a§ an expenditure when due.
6. Accumulated unpaid vacation and sick pay are considered expenditures when paid.
D.
JI
►lt t11° 11 1 #IIIc
1. ,Scope of Bpda_et
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. frisaufahrAdmingihrakiginaundget
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.
FINRPI CAFR Nan 2002
7 - 7129103
3. &pending the Budget
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 City 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 pm public hearings.
The budget amounts shown in the financial statements represent the original budgeted amounts and all
supplemental appropriations. Supplemental appropriations totaled $11,618,.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 53,475,519; 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 finds. 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. LIABILITIES AND ]y0U1T1ES
1. Casb and Investments
Cash and investments are managed under the guidance of the City's Investment Policy adopted
by Resolution No. 1D-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 printery 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.
Investments of City funds except those of the Firemen's Relief and Pension Fund are
limited to:
1) 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 any corporation wholly owned by the
government of the lJnited 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,
FINRpa CAFR Nan 8002
0 - 1'2953
23
Federal National Mortgage Association notes, debentures, and guaranteed
certificates of participation).
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 #9, 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 part 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 #4). 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 54,619 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: Interfund Loans and Advances Receivable
These accounts include all interfund receivables and payables. A separate schedule of interfund
loans receivable and payable is furnished in Note #10. Long-term interfund loans are separately
identified as "Advances".
4. Amounts Due To and From Other Governmental 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.
FINRPI CAFR Nan 2002
9 - l2953
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 #8. _
The restricted assets of the enterprise funds are composed of the following:
Cash - Debt Service
Deposits with Fiscal Agent
Investments - Debt Service
$2,085,358
425
0
S2lenent.0
7. Custodial Accountti
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 employees 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 -
eamed 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 Accrued Liabilities
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 Funds.
10. Deferred Revenues
This account includes amounts recognized as receivables but not as revenue in governmental
funds because the revenue recognition criteria has not been met. (See Note #1-F)
FINRPI CAFR Naas 2002
10 - V2953
F. REVENUES. EXPENDITURES AND EXPO
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 #1-C)
NOTE 2_=_COMPLJANCE A.,J W 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.
Limit by Cumulative
Section Limit
1. Genal Puepooe
Without a Vote
(includes capital leases) 1.50%
With a Vote 1.00% 2.50% 2.50%
11. Utilities Purpose 2:50% 5.00%
10. Open Space and Parks Facilities _ 2.50% 7.50%
TOTAL LEGAL LIMIT 7;__50%
The basic percentages for Section I are Phe maximum levels off 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 53,673,433,731•
resulting in the debt limits, as of December 31, 2002, for the City as follows:
Under the Full Accrual Basis of Accounting: Without Vote with a Vac
Open Space
Revenues are recognized when earned, if measurable, and expenses are recognized when incurred, if General Purpose General Purpose —Utilities and Parks
measurable. 1.5% - 2.5% 5.0% 7.5%
G. MEMORANDUM ONLY TOTAL COLUMNA
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 not 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.
FINRPJ CAFR No[,, 2002
11 — maim
26
Legal Limit $55,101,507 $91,835,845 5183,671,590 5275,507,535
Net Outstanding Indebtedness* 16,769,214 19.267.894 19.267.894 19.267.894
Margin Available S38.332.293 572.567,951 3164.403:'96 5256.239.64411
t=====..ammse ,==eameeiieive==
• 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 Now 2002
12 — 8229/03
27
NOTE 3 - DEPOSITS AND INVESTMENTS
The following table.presents the components of "Cash and Equity in Pooled Investments."
Cash and Equity In Pooled investments
Cash Deposits
U.S. Treasuries
US Agency Obligations, net
State & Local Securities, net
Local Govt. Investment Pool
Total (includes 52,085,358 restricted cash)
Carrying Amount
S 2,512,392
1,000,381
8,743,150
400,000
25,427,164
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
unamortized 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.
leposits
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 520,000
are included on the Combined Balance Sheet as investments. Deposits with Fiscal Agent at
December 31, total 511,145 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 I 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
Category 1
U.S. Treasuries S 2,650,965
Agencies 20,085,042
Municipal Securities 1,515,971
Commerical Paper 0
Category 2 Carrying Value Markel Value
S 0 S 2,650,965 S 2,700,719
0 .20,085,042 20,236,739
0 1,515,971 1,543,885
0 0 0
524,251,978 S 0 524,251,978 524,481,343
State Investment Pool 25,427,164 25.427,164
Total Investments 549.679,142 549,908,507
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)
549,679,142
smamemoaceoolocesser
In accordance with GAAP applicable to regulated industries and GASB Statement #31, 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.
FRORP1 CAFR Nan 2002
13 — //29/03
NOTE 4 - PROPERTY TAXES
The County Treasurer acts as an agent to collect property taxes levied within the county for all taxing
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 property is established for next year's levy at 100 percent of market value.
October 31 Second installment is due.
During the year, property 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 53.60 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 1 percent of
assessed valuation or 510 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 1 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 I -747's 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 53.5177 per $1,000 on a total assessed valuation of
53,272,221,573 for a total regular levy of 511,510,648. Included in the City's regular levy is an
authorization to levy for the Firemen's Relief and Pension Fund (see Note #6). This levy is subject to
the same limitations as the levy for general government services. The Firemen's Relief and Pension
portion of the regular tax levy for 2002 was 5.394 per 51,000, or 51,289,280. Additionally, special
levies for G.O. bond obligations totaled 5836,000.
FMR% CAFR Noes 2002
14 — 1/29/03
LIOILiz-f.:DiED-ASSEIEANDJELERECIATION
A. GENERAL POL.ICIF_N
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 #8 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:
Land
Buildings 34,117,099 281,173 (19,643) 0 34,378,629
1mpn3vements Other Than Buildings 4,652,835 1,551,891 (246,063) 0 5,958,663
Equipment
Construction in Progress
Capitalized Leases 1 364,883 0 (76,864) 0 1,2811019 -
Total Assets $56,717,945 $3,991,138 (51,933,086) $ 0 558,775,997
Beginning Endling
Balance Balance
01/01/2002 Additions Deletions Adjustments 12/31/2002
$ 8,243,222 S 237,510 S 0 S 0 S 8,480,732
8,159,749 422,441 (1,590,516) 0 6,991,674
180,157 1,498,123 0 0 1,678280
FINRPI CAFR Nan 2002
15 - L29n3
C. PROPRj1ETARY FUND FIX1 P 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
Buildings 25 - 40 Years
7 - 50 Years
33 - 50 Years
2 - 25 Years
Improvements Other Than Buildings
Utility Plant
Equipment
intangibles (organization costs,
75 - 100 Years
water rights, and goodwill)
A summary off proprietary fund type property, plant, and equipment at December 31, 2002 follows:
Enterprise internal Service
Land 5 2,186,700 -S 0
Buildings_ 62,694,835 16,984
Improvement; Other Than Buildings 67,08,535 0
Equipment 12,513,665 12,250,535
Construction lin Progress 11,081,452 0
Completed Construction — Not Classified 2,232,245 0
Intangibles 221 830 0
Total 5158,239,262 512,267,519
Less Accumulated Depreciation and Amanizat on _ (64,953,369) _ (7,153,229)
Net $ 93,285.893 S 5,114,290
fINRPI CAFR Now 2002
16 - 129/03
31
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 De_paitment 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 primary
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. PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERM PLANS 1. 2 AND 3
Plan Description
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 Nous 2002
17 .. 529/03
32
Plan 2 retirement benefits are vested after an employee completes five years of eligible service.
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 service;
or live 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 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 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 Members Vested
97,777
Active Plan Members Nonvested
55,159
Total
233,537
Funding Policy
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 1 are established by statute at 6 percent and do not vary from year 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 RC W.
The required contribution rates expressed as a percentage of current -year covered payroll, as of
December 31, 2002, were as follows: -
FINRPI CAFR Nae 2002
It - U39/03
33
•
Employer +
Employee
PERS Plan 1
1.32%
6.00%
EIR Plan 2 PERS Plan 3
1.32% L32%*
0.65% •O•
The employer rates include the employer administrative expense fee currently set at 0.22%.
Plan 3 defined 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:
PIERS Plan 1 PERS Plain 2 PERS Plan 3
2002 $50,468 $220,393 $1,043
2001 $69,782 5270,001
2000 5198,985 $673,093
B. LAW ENFORCEMENT OFFICERS' AM) FIREFIGHTERS RETIREMENT SYSTEM
(1:EOFF1 PLANS 1 AND 2
Plan Description
LEOFF is a cost-sharing multiple employer retirement system comprised of two separate dlefined
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. L.EOFF
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 1 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 Average
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, proviided 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 5.3 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. -
FINRPr CAFR Nan 2002
19 - V29/03
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,
23,310
Total
Funding Poky
Starting on July 1, 2000, Plan 1 +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 Fuuid 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: _
LE 1)FF Plan 1 LES2EF Plan 11
Ernployer+ 0.22% 2.86%** _
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 ports and universities is 4.69%. —
Both the City and the employees made the required contributions. The City's required contributions for
the years ending December 31 were as follows:
LE,DFF Plan 1 LEOFF Plan 11
2002 52,631 5293,793
2001 53,629 - 5267,337
2000 55,203 5343,112
C. OT�RETZ MENT SYSTEIIIIS - VOLUNTEER FIRE FIGHTER' RELIEF AND
PENSION FUND - - -
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 530 per year; employer contributions of 530 -per
year; and 40 percent of the Fire Insurance Premium Tax; and earnings from the investment of moneys by
the Washington State Investment Board. However, members may elect to withdraw their contribution
upon termination.
FINRPI CAFR Non 5002
20 - V29 03
35
SUMMARY OF FIREMEN'S PENSION AND
Schedule of Funding Progress:
Fire Pension
Single Employer
Defined Benefit
POLICE PENSION
Police Pension
Single Employer
Defined Benefit Total
Valuation Date
Actual Value of Plan Assets
Actuarial Accrued Liabilities
Total Unfunded Actuarial Liabilities (UAL)
Funded Ratio
Annual Covered Payroll
UAL as percentage of covered payroll
Schedule of Employer Contributions:
January 1, 1998
S 658,786
10,445,000
January 1, 1998
S 0 S 658,786
8.277.000 18.722.000
Annual Required Contribution (ARC)
Actual Fire Insurance Premiums
Total Actual Employer Contribution
Percentage of ARC Contributed
Significant Actuarial Assumptions:
Salary increases (inflation only)
Investment Earnings
Post -Retirement Benefit Increases:
1. Related to Salaries
2. Related to Consumer Price Index
59,786,214
6.7%
S 0
0.0%
5840,067
536,092
5799,901
95.2%
58,277,000 518,063,214
0.0% 3.6%
5133,938 5133,938
6179.7% 13486.2%
5671,522 51,511,589
SO S36,092
5512,241 51,312,142
763% 86.8%
5.0%/Year 5.0'54/Year
7.0%/Year 7.0%/Year
5.0%/Year
4.0%/Year
5.0°A/Year
4.08/./Year
D. FIREMEN'S PENSION
The City has a single employer, defined benefit pension plan for Firefighters employed prior to
March 1, 1970 and govemed by Washington State Law RCW 41.26. Under the terms of 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'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 5.45 per 51,000 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 earnings.
During the year ended December 31, 2002, there were no plan amendments.
FINRPI CAFR No,,. 2002
21 - //29/03
Contributions Required and Contributions Made
The City's funding policy is to provide for periodic employer 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.) -
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 FOLICE PENSION
The City has a single employer, defined benefit pension plan for Police Officers employed prior
to March I, 1970 and governed by Washington State Law-RCW 4120 and 41.26. Under 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 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 permitted. Employees who
have completed 25 years or more 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
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
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.
Contributions Required and Contributions Made
The Police Pension is a department within the General Fund. The City engaged Milliman 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 -gni 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 2002
22 - 9/23/03
37
NOTE 7 - SELF-INSURANCE FUNDS
The City maintains Reserve Funds to provide for self-insurance coverage fn the areas of Unemployment
Compensation, MedicaVDental 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. Interfund premiums are based primarily upon the
insured funds claims experience and are reported as quasi -external 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 SELEM511REDBEDICALMENTALERSraRAM
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.
FINRP€ CAFR Neo 2002
23 - S/29/03
38
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 clairns 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. WORKERS' COMPENSATION PROGRAM
The City :self-insured hs workers' compensation program for all employees except those covered
by the LEOFF 1 Retirement System in July, 1984. This workers' compensation program provides cov-
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. Interfund 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 aro 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 repotted claims of $1,050,000 at December 31,
2002.
FINRPI CAFR Nolo 2002
24 - ®49/03
39
NOTE 8 - LONG-TERM DEBT AND CAPITAL LEASES
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.
General Obligation Debt:
Notes
Line of Credit
Bonds
Intergovernmental Loans
Contractual Agreement - Yakima County
Special Assessment
Notes
Bonds
Lease Purchase Agreements
Unfunded Pension Liability
Vacation/Sick Leave Accrual
Total General Long -Term Debt Payable
Revenue Debt Payable
Revenue Bonds
Intergovernmental Loans
Unfunded Pension Liability
Total Revenue Debt Payable
Total Long Term Debt
LONG-TERM DEBT
Balance Payments/ Balance
01/01/2002 Additions Retirements 12/312002
S 45,587 5 0 S 3,357 S 42,230
88,500 0 70,000 18,500
14,990,000 6,735,000 1 705,000 10.020.000
15,124,087 6,735,000 1,778,357 20,080,730
4,196,717 0 426,343 3,770,374
839,256 0 94,935 744,321
141,330 0 49,330 92,000
0 0 0 0
63,215 0 24,158 39,057
2,280,260 373,760 0 2,654,020
3,449,411 97,754 0 3,547,165
526,094,276 57,206,514 52,373,123 530,927,667
510,605,000 $ 0 $1,110,000 59,495,000
7,003,141 0 840,167 6,162,974
339,669 110,099 0 449,768
517,947,810 5110,099 51,950,167 516,107,742
544,042,086 57,316,613 5443323 547,035,409
A. GEN2AL OBLIGATION DEBT
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 utility 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.
FINRPI CAFR Non 2002
25 - ar29a3
Special Property Tax Levy:
1995 Fire Improvement Bonds
Regular Property Tax Levy/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
Outstanding
Interest Rate Original Issue 12/31/2002
3.7% - 5.4% 53,700,000
4.0% -4.5% 1,430,000
5.29% 6,000,000
Variable 325,000
Public Facilities District (State Sales Tax Credit):
2002 Convention Center Addition 3.0%- 5.0% 6,735,000
Home Ownership:
1993 Single Family Rehab Bonds
2000 Notes
7.25%
6.00%
Utility Tax:
1994 Criminal Justice/1-82 Bonds 4.35% - 5.25%
52,710,000
935,000
4,910,000
18,500
6,735,000
200,000 200,000
50,000 42,230
-6.800.000 4.530.000
525,240.000 520�080,730a
B. REVENUE BONDS
Water/Sewer revenue bonds are all serial bonds, to be retired through the fiscal year ending
December 31, 2018, with the exception of the Apple Tree Bond which will mature June 1, 2041. 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
Interest Rate Original Issue
5.0% - 5.5% 52,800,000
4.0%- 5.2% 3,320,000
4.0% - 4.3%
4.0% - 5.0%
6.00%-
4,715,000
.00%
4,715,000
3,195,000
600.006
514,630.000
Outstanding
12/31/2002
5 270,000
1,860,000
4,030,000
2,735,000
600,000
59,495,000
C. INTERGOVERNMENTAL LOANS AND CONTRACTUAL AGREEMENTS
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 Nope 2002
26 - W9xl3
41
Real Estate Transfer Tax:
PW -86-040
Tieton Drive, 40th Ave. to 65th Ave.
PW -87-002
Nob Hill Overpass
PW -5-89-962-0056
Resignalization and Lighting
PW -5-89-962-0057
Fruitvale Canal Wasteway Piping
PW -5-91-280-071
Fruitvale Canal Wasteway
Arterial Street Gas Tax:
PW -5-90-280-050
Tieton Drive, 5th Ave. to 16th Ave.
PW -5-91-280-070
N. 1st Avenue, Yakima Ave. to "7" St.
PW -5-95-791-052
Fair Avenue Improvements
PW -00-691-062
Downtown Yakima Rehabilitation Project
General Fund Sales Tax:
CERB Loan #C95-107
Utilities -Madison Ave. & 8th, "3" St. & 8th
Sub -Total - General Long -Term Debt
Sewer Operating Revenue:
PW -88-962-54
Treatment Plant Rehabilitation
PW -5-92-280-046
Sewer Collection System Improvements
PW -5-93-280-054
Wastewater Facility Rehabilitation
PW -5-94-784-049
Sewer Collection System Imprdvements
PW -5-95-791-053
Headworks/Digester Rehabilitation
PW -5-95-791-054
Sewer Improvements King Street Collector
PW -0I.691-071
Fruitvale Neighborhood
Sewer -Water Project Phase I
L9200018 - State •
Revolving Fund Loan
WaterOpemting Revenue:
PW -5-89-962-0058
Domestic Well and Pumphouse
Sub -Total -- Revenue Debt
Total Intergovernmental Loans
Maximum Outstanding
Interest_ Maturity Dale - Authorized 12/31/2002
3% 07/01/2006
1% 07/01/2007
1% 07/012009
3% 07/01/2009
3% 07/01/2011
3% 07/01/2010
1% 07/01/2011
I% 07/01/2015
1% 06/10/2010
6% 07/01/2016
1% 07/01/2008
1% 07/01/2012
1% 07/01/2013
I% 07/01/2014
1% 07/01/2015
1% 07/01/2015
.5% 07/01/2021
1720,000
213,454
765,000
174,879
1,188,000
803,157
1,155,000
1,000,000
1,180,000
1151,579
51,634
295,053
44,639
546,019
254,049
449,738
1592,260
944,000
425,448 141 403
13,770,374
945,000
1,120,000
3,221,708
1,481,000
3,030,558
209,367
1,466,250
333,475
617,310
1,875,561
490,789
2,123,868
151,906
219,937
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 teen of County bonds issued for this
purpose. The County issued bonds in the amount of 51,280,000 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 year bond
redemption schedule. In 2002, the City entered into a contractual agreement with Yakima -County for a
Supporting Investments in Economic Development (SIED) Loan for $44,000 to fund public
infrastructure improvements related to Cascade Quality Molding.
Outstanding
JENnding Source Maturity Date Original Issue 12/31/2002
1988 Issue Business Licenses I1/1/2007 - 1780,000 5304,687-
1989 Issue
304,6871989Issue Real Estate Excise Taxes 11/1/2009 781,518 399,283
2001 Issue Contacted Assessment 06/1/2011 44,000 40,351 _
11.605518 5744,321
The following schedule sets forth the general obligation debt, intergovernmental loans and contracts, and
revenue bond indebtedness service requirements (in thousands); including interest, to maturity:
- General O$UPation --
Bonded Notes and
Debt Contracts
- Revenue ----
Bonded
_Bonded Notes and
Debt Contracts Total Debt
2003 5 2,201 $ 620 $ 1,596 5 675 $ 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
$30,113 54,517 511.465 S6.375 152,470
At December 31, 2002, the City had 5304,212 available in debt service funds to service the general
Obligation Bonds and notes. Additionallly, there is 52,085,358 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 hmitations and restrictions.
D. SPECIAL ASSESSMENT DEBT WITH (",OVERNMENTAL COMMITMENT
Debt -service requirements for special assessment notes are met by assessments levied against
4% 05/28/2002 2,550,559 159,211 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:
3% 07/01/2009
495,000 190,917
6,162,974
59,933,348
»a»azwz�
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.
FINRPI CAFR Nan 2002
27 - 1/29/03
spedal Asses100ent Notes
LID 51052; 10/23/05 Water - Willow Street Installment Note; 9.75% Interest 511,000
LID 51053; 02/10/07 Sewer -- Alpine Crum Installment Note; 9.25%, Interest 10,000
LID 51054; 10/01/07 Sewer --'South 70th Ave. and Lindgrenflr.Installment Note; 9.21% Interest 27,000
LID 51055; 06/05/10 Sewer - North 85th Avenue Sewer Installment Note; 111.75% Interest 44,000
592,000
FtPRPI CAFR Nan 2002
28 - V29/03
43
Debt service requirements for special assessment notes/bonds are met by assessments levied against
property owners. At December 31, 2002, outstanding assessments tgtaled 8253,885 of which 84,619
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 843,568.
LEASE P 1RCAASE A F NT :
General Fixed Assets
As part 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 year 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
23
24
Equipment
High Speed Copier
Laser Printer
Effective Date Term
11/98 60 Monthly Payments
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
1999 Laser Printer
Total Minimum Lease Payments
Less: Amount Representing Interest
Present Value of Net Minimum Lease Payments
537,622
22,290
559,912
20,856
839.056
F. 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 toMarch1;
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 8373,760 in 2002, and the outstanding balance at December 31,
2002 is 82,654,020.
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
8449,768 at December 31, 2002.
See Note #6 for additional information on the pension funds._
FINRPI CAFR Nan 2002
29 — 329/03
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 City 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 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 8398,325,090. 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.
FINRPI CAFR Notes 2002
30 — 029/03
45
NOTE 10 - INTERFUND TRANSACTIONS AND BALANCES
A. CLASSIFICATION OF INTERFUND TRANSACTIONS
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. INTERFUNI) LOANS AND RECEIVABLES
The following table depicts interfund loan activity during 2002:
Loan Activity
Balance Balance:
Sorrowing Fund LendingTo 12/31/01 Nraigans Repayments .1.2L)1/02
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 Notes 2002
31 - 629/03
Due From Due to Other
Other Funds Funds
51,066,233 $ 0
87,274
29,432
949,527
51,066,233 $1,066,233
C. I ITERFUND OPERATINGTRANSFERS
The following table depicts interfund operating transfer activity during 2002:
JEtwd
General Fund
Special Revenue Funds:
Economic Developmen€
Community Development
Parks and Recreation
Streets
Arterial Street
Cemetery
Emergency Services
Public Safety Communication
Parking and Business Improvement
Tourist Promotion
Capitol Theatre
Public Facilities District
Contingency
Capitol Theatre Reserve
Debt Service Funds:
Housing G.O. Notes
2002 G.O. Convention Center - PFD
'85 L.G.O. Diversion Dams
'98 G.O. Street Overlay
'94 L.G.O. Criminal Justice/I-82
'97 G.O. Line of Credit
LID Debt Control
Capital Projects Funds:
Parks and Recreation
(Law and Justice
Public WorksConstructic.m
Convention Center
Cumulative Reserve
Enterprise Funds:
Transit
Refuse
Sewer
%Vater
Irrigation
Internal Service Funds:
Equipment Rental
Non -Expendable Trust Funds:
Cemetery Trust
FINRPI CAFR Notes 2002
32 - 629/03
47
Transfer In Transfer Out
5 110,000 SI.919,371
95,00(1
794,17!1
_ 0
94,031
166,499'
886,000
0
0
159,427
0
125,000
0
205,000
250,000
13:549
182,000
120,000
80,000
0
100,000
105,596
75,000
49,265
200,000
356
0
0
0
0
379,898
0
$4.190.796
0
205.000
235,000
427,819
70,000
0
166,000
0
20,000
30,000
0
269,265
0
159,427
0
0
0
0
0
0
17,188
0
- 0
100,000
0
335,000
0
0
55,870
39;058
127,299
0
14,499
54.1902796
NOTE 11 - FUND EOUITIES
A. GOVERNMENT FUND TYPES
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
Employees' Retirement Contribution
Reserve for Restricted Donations
Reserve for Probation Center/Programs
Reserve for Continuing Appropriations
B. PROPRIETARY FUND TYPES
General Fund
5522,005
26,802
50,812
0
189,075
0
Special Revenue Capital Project
Funds Funds
51,004,139 $ 787,996
0 0
0
1,514
0
0
0
0
0
6.948.742
5788.694 51.005.653 = 57.736.738
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:
Enterprise Funds Internal Service
Reserve for Debt Service 52,085,358 $ 0
Reserve for Replacement 0 8,738,074
52.085,358 58,738,074
FR1RPI CAFR Naos 2002
33 — 1!29/03
Deficit Retained Earnipj;I:
The Sewer Fund unreserved retained earnings deficit of $2,500,616 is a result of a change 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 earnings. 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.
C. DESIGNATED FUND BALANCES
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
will be required to authorize the actual expenditures. Special Revenue Funds have a designated fund
balance of $1,193,525 for the Capitol Theatre Reserve Fund for replacement of the Capitol Theatre. The
Capital Project Funds have a designated fund balance of $565,911 in the Fire Capital Fund for
replacement of fire equipment.
D. RESERVED FUND BALANCE IN TRUST FUNDS
The reserve of $473,299 in the Cemetery Trust 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 #4) plus interest earnings and state fire insurance premium tax .proceeds.
FINRPI CAFR Nodes 2002
31 — 5/29/03
49
LvOTE 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:
Transit Refuse Sew
Water 1r ' tion Total
Total operating revenues S 382,351 32,989,068 511,061,537 35,047,716 31,733,767 521,214,439
Operating expenses:
Operations and
maintenance
Taxes
Depreciation/
amortization
Total operating expenses
Operating income (loss)
Non-operating
revenues (expenses):
Operating grants and
subsidies
Miscellaneous interest
(net)
Other(net)
Total non-operating
revenues (expenses)
Operating transfers (net)
Net income (loss)
Current capital:
Capital grants received
Other capital contributed
Properry/plant/equipment:
Increases (decreases), net
Net working capital
Total assets
Bonds and other long term
liabilities: Payable from
operating revenues
Fund equity
FINRPI CAFR Nan 2002
35 - 11/29/03
4,529,516 2,886,075 5,989,079 2,814,422 1,141,569 17,360,661
0 0 1,858,498 1,081,970 0 2,940,468
456.975 0 2,725,912 699,334 50,910
34,986,491 32,886,075 310,573,489 54,595,726 31,192,479
(4,604,140) 102,993 488,048 451,990 541,288
5,037,323
0
0
0
3,933.131
324,234,260
(3,019,821)
0 5,037,323
82,351 754 (233,978) (53,638) 29,001 (175,510)
86.315 0 618.146 1365.836 10.020 2.030.317
5,205,989
356
754 384,168 1,312,198
0 55 870
39,021 6,942,130
39 058 127 99 11,8711
S 602.205 5 103 747 S 816 346 31.725 130 $
453 010
S3 71x1 ,433
0
0
1,934,564
1,840,905
12,753,489
0
0
0
0
0
0 1,558,894
129,131 5,859,378
402,770 65,249,660
0
0
1,150,091
5,368,275
31,147,699
0 12,235,821 3,013,562
0
0
0
0
15,017 4,658,566
2,005,573 15,203,262
5,470,991 115.024,609
0 15,249,383
511,194,959 3129,131 349,970,933 326,647,207 55,357,019 393,299,249
NOTE 13 L ,1OINT VENTURF -
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 Country 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 M
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 :ale 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 $ 910,376
Property, plant and equipment, net 11,022,808
Other assets -d-
Total assets
Current liabilities
Other liabilities
Total Liabilities
Retained earnings
Contributed capital
Total fund equity
Total liabilities and equity
Total operating revenues
Operationstmaintenance
Depreciation
Taal operating expenses
Operating income (loss)
Non-operating rev= i es (expenses)
Misc. interest reveal
Engineering study
Disposal of equipment
Other
Total nit -operating avenues (expenses)
Net income' floss)
Fund equity, January 1
Contributed capital
Fund equity, December 31
�511.933a84
$94,236
0
394,236
2,205,658
9.633.290
11.838.,948
-:11®�1 9333184
$ 980,805
986,844-
1.670.446
2,657,290
(1,676,485)
9,139
0
0
8.730
17,869
(1,658,616)
12,861,424
636,140
311.838,9488
Complete financial statements for the Airport can be obtained from the Yakima Air Terminal at 23
West Washington Avenue, Yakima, WA, 98903.
FINRPt CAFR Nan 2002
36 -• /49/03
51
11
NOTE 14 - POST RETIREMENT BENEFITS OTHER THAN PENSION BENEFIT
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 they 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.
NOTE 15 - OTHER DISCLOSURES
A. ACCOUNTING AND REPORTING CHANGES
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.
Page 1 of 2
CITY OF YAKIMA
Required Supplementary Information
Police Pension
December 31, 2002
Analysis of Funding Progress (Dollars io Thousands)
(6)
Unfunded
Pension Benefit
Obligation
(1) (2) (3) (4) (5) Asa Percentage
Net Assets Pension Percentage Unfunded Annual of Covered
Fiscal Available For Benefit Funded Pension Benefit Covered Payroll
Yet Benefits Obligation 11) / (2) Obligation yavrolt (4)+ 15)
2002 -0- n/a 0.0% n/a 5134 n/a
2001 -0- n/a 0.0% n/a 139 n/a
2000 -0- n/a 0.0% n/a 153 n/a
1999 -0- nia 0.0% nia 189 nia
1998 -0- n/a 0.0% n/a 186 n/4
1997 -0- n/a 0.0% n/a 276 n/a
1996 -0- n/a 0.0% n/a 379 n/a
1995 -0- n/a 0.0% n/a 513 n/a
1994 -0- 9,695 0.0% 9,695 506 1,916%
1993 -0- 9,292 0.0% 9,292 575 1,616%
Revenues by Source and Other Financing Sources
PFD/Convention Center 2002 Bonds - A new Debt Service Fund was created to account for the Fiscal Operating
repayment of the 2002 Limited Tax General Obligation Bond for the expansion of the Convention Year Transfer lri 35181
Center. Debt service will be supported by the PFD state sales tax credit, described above. 2002 S 991,009 S 991,009
2001 933,831 933,831
B. 5UBSEOUENT EVENTS 2000 1,147,5601,147,560
1999 1,090,8011 1,090,8011
In June 2003, the City issued $1.43 million in Limited Tax General Obligation (LTGO) Bonds to 1998 986,878 986,878
provide moneys to expand and remodel the SunDome, a sports/multi-purpose facility owned by Yakima 1997 900,713 900,713
County. Additionally, in the same issue, the Ci refunded one LTGO issue with a $3.87 millionpar 1996 894,360 894,360
y y City 1995 749,034 749,034
value. Total debt issued amounts to S5.6 million. The bonds bear interest rates from 2.34% to 4.72%, 1994 698,357 698,357
and will be redeemed over the next 20 years. Debt service for the new money will be supported by- 1993 706,437 - 706,437
Business License revenues and Real Estate Excise Taxes, while the refunded issue will continue to be
supported by Cable Television Utility Tax and Gas Tax revenues. Expenses by Type
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.
Fiscal Benefits- -- Administrative
Year Erasion Medical Exesatst Islai
2002 5512,241 5478,507 5 262 $ 991,009
2001 490,953 442,565 313 933,831
2000 633,782 512,914 _ 864 1,147,660
1999 629,492 456,871 - 4.438 1,090,801
1998 596,066 389,997 815 986,878
1997 563,035 335,275 2403 900,713
1996 550,215 343,698 447 -894,360
1995 - 485,515 262,495 1.024 - 749,034
1994 - 437,535 255,294 5.528 698,357
1993 466,813 238,401 1,223 706,437
FINRPI x
FINRPI CAFR Notes 2002
1 •- 5/23/03
37 - 1149/01
52
53
Page 2 of 2
CITY OF YAKIMA
Required Supplementary Information
Fire Pension
December 31, 2002
Analysis of Funding Progress {Dollars in 'Thousands)
(1)
Net Assets
Fiscal Available For
XetE Benefits
2002 n/a
2001 n/a
2000 n/a
1999 ry'a
19913 n/a
1997 n/3
1996 n/a
1995 n/a
1994 25
8993 (129)
(2) (3) (4)
Pension Percentage Unfunded
Benefit Funded Pension Benefit
Obligation (111(2) Obi gangs
n/a n/a n/a
n/a n/a n/a
n/a n/a -n/a
n/a n/a n/a
11/3 n/a n/a
n/a n/a n/a
n/a n/a n/a
n/a n/a n/a
12,911 .2% 12,886
12,453 (1.0%) 12,582
Revenues b Source and Other Fin
nein
(6)
Unfunded
Pension Benefit
Obligation
(5) As a Percentage
Annual of Covered
Covered Payroll
Payroll 141+(5)
S -0- n/8
0- n/a
19 11/3
144 n/a
215 0/a
292 1 /8
371 n/3
495 11/8
434 2,969%
471 2,671%
Sources
Fiscal
Yea
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
Taxes
$1,325,372
1,332,816
1,256,578
1,221,698
1,170,318
1.025,782
887,689
800,628
949,588
949,047
Other Income
$5,2.60
5,489
4,982
1,232
602
272
1,368
4,672
2,873
1,262
Total
81,330,632
1,338,305
1,261,560
1,222,930
1,170,920
1,026,054
889,057
805,300
952,461
950,309
Expenses by Type _
Fiscal -----Benefits Actuarial Administrative
Ysat Pension Medical Contributions &PS= Total
2002 S680,448 8507,369 $ -0- $23,363 81,211,180
2001 675,229 458,557 -0- 22,997 1,156,783
2000 749,239 425,215 -0- 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
Fn4RPI X
2 -- 5/23/03
(This Page Intentionally Left Blank)
The Traeslt Fend was created on Septanber 26, 1966, pursuant to the reauk of a special election on September 20.
1966, ratifying Ordinance 121, which proposed that the City of Yakima lease, operate end subsidize aCky trunk system.
On October I, 1970, the City assumed full maoagememt of the City transit system. The system is subsidized by • .03%
sales tax which became effective in November 1910 by the vote of the citizens ratifying Ordinance 2469.
The Refuse Feed is a self supporting fiord. This fiord was established for the purpose of m:cumulating 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 collation and disposal of
refuse.
The Water and Sewer Funds account for the provision of wata and sewer services to the residents of the City and other
outside utility agreements. MI activities ueca sty to provide such servkes are accounted for in these finds, including,
but not limited to, administration, financing and related debt sella, billing end collection.
The Irrigation utility Feed was established in 1991 to replace the Special Revenue Fund titled Irrigation. This fiend is
responsible for the operation, maintenance and reconstruction of the existing ieigation syahsn.
101
City of Yakima.
Combining Balance Sheet -Enterprise Funds
December 31, 2002
ugh aonip rot itc t0WsJbr &&coin 31,2001
A55E15
Cash &Equity in Pooled inveatm'ts 51,007,014 5317563 53,048,437 51,467,069 51948/00
Raoefvabls:
Amounts 0 85207 724,886 2380,444 1423705
Notes/Contracts 0, 0 12240 0 0
In a est/Penalties 16,472 1) 44690 16,977 1,110
OOrrRaodvables 0 Il18,000 7,050 0
Due from otlrQGoveamtentUnits 1,275858 0 0 0 0
Inventories 0 0 - 11,0228176247 0
8nvestmenb, at amortized mat 1,155,061 0 3,143,713 2.35,( 49,8107
Restricted Meet&
Cash 0 0 1586487 499,971 0
Find Aged/Trustee 0 fl 0 425 0
investments. atamortized oast 0 0 0 0 0
Land 1,307,909 0 588,454 191,757 98.00
Buildings 6.426,270 0 54,529,0161,939549 0
Otherlmpnovnn fls 915,974 0 30,710,685 90,997,414 4,664062
Machinery & Equipment 5,619,796 48,803 3034099 2,964.354 42,533
Accumulated Depredation 4715977 44683 42,476,160 45,430975 X81,374
'Cana aim he Program 0 0 9,132,662 1,163,351 78.103
Caotpkled Crest.- not ClaWl'd 0 00 2232245 • 0
Intangibles 0 0 0 221,830 0
Uaamartlard Debt issue Coon 0 0 24,620 12,933 0
TOTAL ASSETS 812,753,489,fidag772 564,937,723331147® 55,470,91
Page 1of2
4462 & 4364 8671 11973 4974 4975
Transit Rehm Steer Water 1114528160
-- TOTAL
3005
2001
57789,140 57,447127
3.33,242 3;139445
12203 19,031
61,237 110,656
23,050 25950
1220556 1,753,209
189,270 199909
63553,403 7,705,719
2.085,358 1,749,415
425 409,185
0 531,712
3296700 2.186,700
62691835 61,126,477
67508,535 64025,104
12513,665 10085,918
64,953369 -44.020237
12.081,452 9,769269
2.732,245 7232245
221,830 221,830
37,533 41,939
V14.712,672®1111723612
]dAHII.T1115
Wsnrania/AccoPayabk 81,177,266 8104673 8915,171 5440,129 516.471 9,723490 81,676,648
ask
Wages/Benefits Payable 193,679 92,004 304071 146,760 38,996 T�•'� 712,714
860,167 523,709
CaotpsrwtdAbsalom Payable 181,465 76,762 21141,005 185.410 56,535 192,430 159,622
Accrued Payables 0 0 129587 62,851 0 206,,776 289,634
Deposits Payer 4100 0 4500 196,176 0
694259 684197
CYemtt Ration Lai - nm Debt 0 0 662965 47,274 0
Restricted Payable=
mud Interest Payable 0 0 0 0 0 0 13,760
Nsl
In Lieu otCalstrrtdiorr 0 0 0 0 0 0 0
lament Puniest LT Debt 0 0 618,650 426,380 - 0 1.04.5900 2.330900
Bonds 400900 9590000
Payable 0 0 5538,875 2911,175 0 -41,843 70596
Urumatlmd Bad Discount 0 0 -33690 24133 0 791.469 406,840
Deigned AmamtOn Debt Refunding 0 0 -258,436 -33,058 0 5,472715 6319,064
Loom Payable -Iutg Tem 0 0 3,309.072 163,643 0 1470940 710000
Advance, From Other Funds 0 0 1,470.000 0 0 21,413513 74671,992
TOTAL UASRy'?ES 1,556530 24639 14,966.790 4,504492 113,972
2.88143 BQUI'1Y 74,1783080 74,178,860
CONTRIBUTED CAPITAL 3,961,440 0 32,473549 15917567 2,406,38864
ROAMED EARNINGS
Reserved: -
Debt Service 0 0 15 0
85,387 499,971 0 7985558 2257,17)
Replacement 0
0 0 0 0 0 17,035,011 13,421,612
Unreserved 7)313519 129,131 -4,086003 10,279669 2,948495 93,299,249. :39,651,619
TOTAL FUND EQUITY 11,194959 129,131 49970,933 26,60297 4357,019
'TOTAL LUADIUTIES AND EQUITY 512753M9 5407.770 - 964537,773 533,547,699 s,...2=1,
Themes to the (Mandel al sialemeb are an integral pen of ells pumlud '2.02
tor SM/Min RIC sr
5114,712,672 61112a&
103
865882 of 2
yvare2011111tUare
City of Yakima Page 1 of 2 Page 2 of 2
Combining Statement of Revenues, Expenses, and Changes in Fetid
Equities - Enterprise Funds
for the year ended December 31, 2002
sofa mopamUae Mals for O eyen node December 31, 2001
896268364 8471 4973 . 4974
Transit ideas Server • Water
OPERATING REVENUES
Charges for Services 5981.351 82,989.068 511.060737 15,047.386
Other Operating Revenues 0 0 goo 330
Total Operaneg Revenues 382,361 2989968 11,061237 5,047.716
'
OPERATING EXPENSES
Operations and Maintenance 3,759,90 2,613367 4814,402 1,679,411
Admhdstration/Ovadved 769567 214508 1274677 1,135,011
Taxa 0 0 1.858,498 1,081.970
Depradatlm/Amatl7Jtion 456,975 0 2725912 699,334
Total Operating Expenses 4986,491 2,886,075 .10,573489 4.595726
°pastingIncome !!.Oral -1,601,140 102,9913 488,048 451,990
NON-OPERATING REVENUES 07(PEN5ES)
Operating Grants and Subsidies 5037323 0 0 0
Proceeds of Ling Term Ode 0 0 0 0
Interest Revenue 82,351 754 175909 126,758
Oiler Non -Operating Revenues 50 0 15,625 0
Interest Expenses 0 0 469993 -172900
Amortization of Hood Pay.Disc ant 0 0 49,894 4,396
Gain (los) an Sale of Investments 0 0 0 0
Gain (Loss) on Fixed Anew Disposition 0 0 0 0
Non•Operattng Revenue Net of Expenses 5,119324 754 -218263 41.618
Initiate Before Contributions sad Trausfs 515,584 103747 269,695 998252
Capital Conhtudau 86,265 0 69.521 1,365236
Operating Transfers In 356 0 0 0
Op.rsthg Transfers (but) 0 0 -810 99,058
NET INCOME 0.055) 602.216 103,70 816,346 1.725330
PROPRIETARY 9)3840 EQUf1YCHANGES
ReWnedEarninga,paesy1 7211,314 83948 9,191,558 9,073250
Pam Period Adjustments 0 58,364 425,604 48,840
Residual Equity Transfers In 0 0 0 0
Residual Equity Trandsra (Out) 0 O 0 0
Retained Earnings, December 31 7,813319 129,131 -2,500.616 10229440
Contributed Capital. January 1 3,381,440 0 52.471,589 15,917,567
Capital Grants Received 0 O 0 0
Other Contributed Capital 0 0 0 0
Coetsibated Capita, December31 3,381,440 0 52,471,549 15,917,567
PROPRIETARY FUND EQUITIES, DECEMBER 31 511,194,959 519,131 549,970,933 12.4647,207
The notes tthe fhunciaiMainmasts are =integral partofthiastatement
104
ga/71/31101LMr I
4975 TOTAL
Ini cion 2002 2001
51,731,879 62131121 519,465,667
1888 3,018 416
1733,767 21,214,439 19,466,063
959,773 13,827,102 13,228,158
181,796 3533,559 2749,463
O 2.940.468 2996,106
83.910 3,933,131 3853,573
1,192,479 24.234,260 22,27322
• 561,88 -3,019221 2,961339
O 5,097323 5,405,132
0 0 0
29,001 414773 694.037
20 15,695 307,172
o -50,993 -567,732
o .48,290 -48790
O 0 0
o 0 401
29,811 4,877,508 5,790,720
570,309 1238487 2229,481
10,000 2.064422 2,457,934 -
O 356 0
-127,299 222.227 -241934
453,010 3300.438 5945,481
2,49505 15,672.739 10,627,758
O -291308 0
O 0 0
O 0 0
2340495 19,120369 15,672,739
2408,324 74178,880 74,178,880
O -0 0
O 0 0
2408,324 74178,880 74178,880
5457419 5932999749 889251419
105
..van..au111
City of Yakima
Combining Statement of Cash Flows-Entapeise Funds
for the year ended December 31, 2002
with a wishjwreser ended Deco* x31,2011
Cash flaws ham operating Writhe
Cath rewired ham customers
Cash paid b supplies for goods and services
Cash paid for salaries and beefs
Oder operating revenues sanded
Cash paid inlieu dtor
Net cash provided by operating activities
Cash flows from nanrapitai fraudag activities;
Operating grants received
Operating tanners in hon other funds
Operating transfers ororootherfronds
Net cash provided by amnpitd frauds olivine" 5,574130
Cash flows foam appal finschog activineu
Proceeds from Public Works Trutt Loan/Refunding on Debt
Proceeds for Debt Service from other goverrussds
Cash received ham dispsd of ford ares
Cash contributions in old of contrails
ild Contribution
Principal paid o revenue bands
Principal paid an Public Wars Trust Loan
Pdncipd paid an Advances horn other bads
Capital aspanditwas sal
boost and other debt service paid
Capdbl grans revived
Residual equity amain In
Residual equity transfer out
Net cash used farcapiral 6oandog activities
Cash fleas Pram investing stria=
Prorscbfrom sale ofinvslnent4aaltis 401,830 0 20919 236.435
breast waived o increments 97,710 753 177893 137753
Purchase of brvaemtoane securities 0 0 0 0
Net orb pwlda4byhasstloga/tivities 499600 753 458,812 - 576375
0460 di 6364
Tart
5332,351
-2250,896
-2283902
0
0
0471
Adam/
Page l d4
078
Sews
074
Waw
5092901 510,89064 54814292
-1,624,403 -306,575 -1,733.098
94005 5911427 4,614,285
O 800 390
,26805 4,322,373 495230
4151,847 64668 , 32219 792009
5,,50676
356
0
0
0
50
0
0
0
0
0
405,528
0
86,263
0
0
-120903
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
710,000
• 85.625
0
457,638
-735,125
412,893
0
4,139,923
-283,876
0
0
45,870
0 -480424
0
0
0
0
0
0
0
1.124963
0
-413,0.4
-27,274
0
-104543
-1,125
0
0
.19.058
-1,150,099
Net leaeueefdeaam) hoods and ash egoisluds
C66k and cash sodomises at horsing of year
ties and ash agdsalsb at wit dyes
-Cash at the Pad ed nue Yoart_omabb ok
Cpeeti gFundCash
Revenue bad serve account cash
Reams band ratemption aasamt cash
Total ash at the sad of the year
708,570
67,421
298,474 251]42
$1,007.044 .3317,563
-1,160333 58085
5,794.347 1948965
®�
51317,044 8317963 $3044437 51467069
O 0 1,299;434 368,639
O 0 _ 2859553 ISS
51.00704 017,563 14.633.53424 51,56700
Meares to tefinnoin statements wean fes degeal pan of t is Orso t
1106
0769941X1 SEISM
9975 TOTAL
Weans 21108 2001
51716068 $00737,786 519,442,132
495410 4334382 -704566
-456,865 -8,635,534 -6,304,635
1,048 3,018 416
O �._ 188 •2,069,241
568.587 510,700 1A65,106
0 504674 3,692,190
O 356 0
O 0 0
O 5,574030 3,692190
O 710,000 1,529,937
O 15,675 307,016
20 Al 556
O 1,478591 92.912
O 0 0
O -1340377 -1,305,400
O -804.167 5$163
O 0 0
45,977 -7195921 -6496808
O 471,001 -596,743
O 86.76_ 0
O 0 0
-127299 - 222.272 -241,934
-183,206 -7,386,942 4.705,127
632868 1556017 302,186
30000 444,171 709,648
O 0 -2.048,949
662.846 1,994104 -1037,115
1,06&223 651976 365.016
899049.. .19MRt _ 9774585
51,90047003511 19.191.542
51,940,117 62.784100 57.442.127
0 1.48,473 1.288,628
0, 3906 _460.786
1 0.191942
107 -
Page 2 a14
Qty of Yakima
Combining Statement of Cash Flows—Enterprise Funds
for the year ended December 31, 2002
talk ospardigr to4afefatlteyarrended Decanber.31,2001
Reosadliation of Ret operating ineome0ou) W net each
paonWedlaieed) by operating aetfdtine
Page 3of4
0462 & 1366 0471 1973 1974
Transit Refuge Shaer Water
Net operating b me) 44,401,140 : ' $102,993 5488,048 $451,990
Adjwfatmtb lo madk uprating itcoute(lom) to net
cub provided by operaiing aci2vibet
Depaedatim 456.975 0 , 2.725.912 699,334
Change in amen and liabilities:
(btamse)deauee in acantmb receivable 0 -59,757 -165,873 -213,093
(htasm)deaseeininventory 0 0 -13 10,552
Ltaaretdaaaaee) in warnote/ano ntspayable 40.136 18,614 132.914 -181.216
lnamee(dscroam) in wags/bbteftspayable 10,148 5,709 25.467 15.461
1ncteese(dwvaee)inamputated abantcmpayable 5306 -891 18,834 8,981
w
Total &Quitmb ' 40 /93 -36,323 2,737241 340,019
•
Net at& provided by operating activities
Schedule of Naradt Capital and Related Rnardng Activities
Capital Amen Acgoied by:
Nomad&eanibutlar
44,151,847 566,668 53225.289 5792309
1166011•IO 0 50 5144,893 $103.505
Mendes to Ow&tmedal statements are an integral pert of Ode Oakum*
100 werbaieraeani
1976 TOTAL
kr4Pdao 2002 2001
5541,268 43,019,821 42.961,239
50,910 3,933,131 3243,573
-14,911 -453,631 43,535
0 10,539 -16,711
-16.925 -66,749 586245
3,991 60776 596
4, 36,458 19,737
27293 .e4,'a1 4,426945
i®1�� 51465,106
SO 5248.388 91510161
Page 4of4
109 .Ianvmmta.tm