HomeMy WebLinkAboutR-2005-176 Park Capital Improvements BondsRESOLUTION NO. R-2005-176
A RESOLUTION of the City Council of the City of Yakima,
Washington, authorizing the execution and delivery of a
contract for purchase of the City's Limited Tax General
Obligation Bonds, 2005 in the principal amount of
$755,000, fixing certain terms of the bonds and approving
the form of the official statement.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 2005-63
passed on November 1, 2005 (the "Bond Ordinance"), authorized the issuance of limited tax
general obligation bonds of the City in the aggregate principal amount of not to exceed $825,000
(the "Bonds") to provide funds to finance park capital improvements; and
WHEREAS, Seattle -Northwest Securities Corporation (the "Purchaser") has made an
offer to purchase the Bonds dated November 15, 2005 (the "Bond Purchase Agreement"), a copy
of which has been presented at this meeting and is on file with the City Clerk, and it is in the best
interest of the City that the Bonds be sold on the terms set forth in such Bond Purchase
Agreement and as provided in the Bond Ordinance and this resolution; and
WHEREAS, the Bond Ordinance provides that the City shall approve the interest rates,
maturity amounts, redemption provisions, and certain other terms of such Bonds, by resolution;
NOW, THEREFORE, the City of Yakima does resolve:
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 City Council hereby finds that the Bond
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 Bond Purchase
Agreement and upon the basis of the representations therein set forth. The City Council further
finds that all conditions precedent to or concurrent with the acceptance of the Bond Purchase
Agreement by the City Council have been met.
The City Council hereby accepts the Bond Purchase Agreement and authorizes and
directs the Director of Finance and Budget to execute the Bond 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 Bond 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 in
the principal amount of $755,000 and designated the "City of Yakima Limited Tax General
Obligation Bonds, 2005." The Bonds shall be dated as of December 1, 2005, 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.
The Bonds shall bear interest payable on June 1, 2006 and semiannual thereafter on the
first days of December and June and shall mature on December 1 of the following years in the
following amounts and shall bear interest as follows:
Maturity Date
(December 1)
Principal Amount Interest Rate
2006 $ 60,000 4.00%
2007 65,000 4.00
2008 70,000 4.00
2009 70,000 4.00
2010 75,000 4.00
2011 75,000 4.00
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P \NMN\NMN2N6 11/14/05
Maturity Date
(December 1)
Principal Amount Interest Rate
2012 80,000 4.00
2013 85,000 4.50
2014 85,000 4.50
2015 90,000 4.50
Section 4. Redemption. The Bonds are not subject to redemption prior to their stated
maturities.
Section 5. Execution and Delivery of the Bonds. The proper officers of the City
Council and the Director of Finance and Budget of the City are hereby authorized and directed to
do all things necessary or proper for the printing, execution and delivery of the Bonds to the
Purchaser in accordance with the terms of the Bond 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. The City approves the preliminary official statement,
dated November 8, 2005, presented to the City Council and ratifies the Underwriter's
distribution of the preliminary official statement in connection with the offering of the Bonds.
Pursuant to the Rule, the City deems the preliminary official statement as final as of its date
except for the omission of information dependent upon the pricing of the Bonds and the
completion of the Bond Purchase Agreement. The City agrees to cooperate with the Underwriter
to deliver or cause to be delivered, within seven business days from the date of the sale of the
Bonds and in sufficient time to accompany any confirmation that requests payment from any
customer of the Underwriter, copies of a final official statement in sufficient quantity to comply
with paragraph (b)(4) of the Rule and the rules of the MSRB. The City authorizes the
Underwriter to use the official statement, substantially in the form of the preliminary official
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P\NMN\NMN2N6 11/14/05
statement, in connection with the sale of the Bonds. The City Manager and the Director of
Finance and Budget are hereby authorized to review and approve on behalf of the City the final
Official Statement relative to the Bonds with such additions and changes as may be deemed
necessary or advisable to them.
Section 7. 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 8. Effective Date. This resolution shall take effect immediately.
ADOPTED at a regular meeting of the City Council of the City of Yakima this 15th day
of November, 2005.
ATTEST:
-4-
CITY OF YAKIMA, WASHINGTON
Mayor
P\NMN\NMN2N6 11/14/05
APPENDIX A
BOND PURCHASE AGREEMENT
P \NMN\NMN2N6 11/14/05
EMIT SEATTLE -NORTHWEST
Milli SECURITIES CORPORATION
F«
'I he Kr 7'rcrrucr Irr;te_<trrrrr+f
firrHCrrrp i:+nrr Since 1970
November 15, 2005
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$755,000 Limited Tax General Obligation Bonds, 2005
Dated: December 1, 2005
Honorable Mayor and City Council:
1420 Fifth Avenue
Suite 4300
Seattle, Washington 98101
Seattle -Northwest Securities Corporation ("Purchaser") offers to purchase from the City of Yakima,
Washington ("Seller") all the above-described bonds (the "Bonds") on the terms and based upon the
covenants, representations and warranties set forth below. Appendix A, which is incorporated into this Bond
Purchase Agreement (the "Agreement") by reference, contains a brief description of the Bonds, including
principal amounts, 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 pass an ordinance and adopt a resolution authorizing
the Bonds (together, 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;
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;
the Seller has previously provided the Purchaser with a copy of its Preliminary Official Statement
dated November 8, 2005;
(f) 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.
(c)
(e)
Honorable Mayor and City Council
City of Yakima, Washington
November 15, 2005
Page 2
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
(i)
the Bonds are not exempt from the registration, qualification or other requirements of the
Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of
1934, as amended and then in effect, or
(ii) the Bond Ordinance is not exempt from the registration, qualification or other requirements
of the Trust Indenture Act of 1939, as amended and as then in effect; or
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the effect of
which is that the issuance, offering or sale of the Bonds, as contemplated herein or in the final
Official Statement, is in violation of any provision of the Securities Act of 1933, as amended and
as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the
Trust Indenture Act of 1939, as amended and as then in effect, and which, in its reasonable
judgment, adversely affects the marketability of the Bonds or the market price thereof.
4. The Purchaser's obligations hereunder are also subject to the condition that at or prior to the Closing
Seller will deliver to the Purchaser all of the following:
(a) the Bonds, fully registered in book -entry form only in the name of Cede & Co., as bond owner
and nominee for The Depository Trust Company;
(b) the approving opinion of Bond Counsel dated the Closing date;
(c) written evidence that Standard & Poor's has issued its underlying rating of "A" and that such
rating is in full force and effect on and as of Closing;
Honorable Mayor and City Council
City of Yakima, Washington
November 15, 2005
Page 3
(d) a certified copy of the Bond Ordinance;
(e) 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.
(f)
5. Seller will pay the cost of preparing, printing and executing the Bonds; the fees and disbursements of
Bond Counsel; bond registration and rating fees and expenses; the cost of printing and distributing the
Preliminary and final Official Statements travel and lodging expenses of Seller's employees and
representatives; and other expenses of Seller.
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of preparation and
filing of blue sky and legal investment surveys where necessary, Purchaser's travel expenses, and other
expenses of Purchaser. As a convenience to Seller, Purchaser may from time to time, 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.
Purchaser also may advance for Seller's account when appropriate and when directed in advance in
writing by the Seller, the cost of the items for which Seller is responsible by making payments to third -
party vendors. In such cases, Seller shall pay such costs or expenses directly, upon submission of
appropriate invoices by Purchaser, or promptly reimburse Purchaser in the event Purchaser has
advanced such costs or expenses for Seller's account. It is understood that Seller shall be primarily
responsible for payment of all such items and that Purchaser may agree to advance the cost of such
items from time to time solely as an accommodation to Seller and on the condition that it shall be
reimbursed in full by Seller.
6. This Agreement is intended to benefit only the parties hereto, and Seller's representations and
warranties shall survive any investigation made by or for the purchase, delivery and payment for the
Bonds, and the termination of this Agreement. Should the Seller fail to satisfy any of the foregoing
conditions or covenants, or if the Purchaser's obligations are terminated for any reasons permitted
under this Agreement, then neither the Purchaser nor the Seller shall have any further obligations under
this Agreement, except that any expenses incurred shall be borne in accordance with Section 5.
7. This Agreement may be modified or amended by an instrument in writing executed by the parties
hereto.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Honorable Mayor and City Council
City of Yakima, Washington
November 15, 2005
Page 4
Respectfully submitted,
Seattle -Northwest Securities Corporation
By:
Lindsay A. Sovde, Vice President
Accepted November 15, 2005
City of Yakima, Washington
CITY CONTRAC ! NO:
RESOLUTION NO: ".,..a.Ol S a 1 ? (o
a 00$ /0 6
Time signed
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2005
Description of Bonds
(a) Principal Amount. $755,000
APPENDIX A
(b) Purchase Price $759,596.90 ($100.608861 per $100), representing an original issue premium of $14,596.90
and an underwriter's discount of $10,000.00, plus accrued interest from the dated date of December 1, 2005 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. June 1 and December 1, commencing June 1, 2006.
(f) Maturity Schedule Bonds shall mature and bear interest as follows:
Due interest Due Interest
Dec. 1 Amount Rate Yield CUSIP Dec. 1 Amount Rate Yield CUSIP
2006 $ 60,000 4 00% 3.18% 984521QB3 2011 $ 75,000 4 00% 3 78% 984521QG2
2007 65,000 4 00 3.30 984521QC1 2012 80,000 4 00 3.88 984521QH0
2008 70,000 4 00 3.40 984521QD9 2013 85,000 4.50 3.98 984521QJ6
2009 70,000 4.00 3.53 984521QE7 2014 85,000 4.50 4 07 984521QK3
2010 75,000 4 00 3.67 984521QF4 2015 90,000 4.50 4 15 984521QL1
(g) No Optional Redemption. The Bonds are not subject to redemption prior to their stated maturities
(h) Rating/Insurance. Assignment to the Bonds of an underlying rating of "A" by Standard & Poor's and that such
rating is in full force and effect on and as of Closing.
(i) Closing Date. With definitive Bonds or a temporary Bond on or about December 5, 2005.
(j) Delivery. It is expected that the Bonds will be available for delivery to the Paying Agent on behalf of DTC by
Fast Automated Securities Transfer.
(k) Offer Expires. 11:00 p.m., November 15, 2005
(1) Bond Counsel. Preston Gates & Ellis LLP
For Information Purposes Only:
True Interest Cost: 4.134536%
BOND DEBT SERVICE
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2005
FINAL NUMBERS
Dated Date 12/0112005
Delivery Date 12/05/2005
Annual
Period Debt
Ending Principal Coupon Interest Debt Service Service
l2/05/2005
06/01/2006 15.750.00 15.750.00
12/01/2006 60,000 4.000% 15,750 00 75,750.00 91,500
06/01/2007 14,550 00 14,550.00
12/01/2007 65.000 4 000% 14,550.00 79,550.00 94,100
06/01/2008 13,250.00 13.250.00
12/01/2008 70.000 4.000% 13,250.00 83,250.00 96,500
06/01/2009 11,850 00 11,850.00
12/01/2009 70,000 4.000% 11,850.00 81,850.00 93.700
06/01/2010 10,450 00 10,450.00
12/01/2010 75,000 4.000% 10,450 00 85,450.00 95,900
06/01/2011 8,950 00 8,950.00
12/01/2011 75,000 4 000% 8,950.00 83,950.00 92,900
06/01/2012 7,450.00 7,450 00
12/01/2012 80,000 4 000% 7,450.00 87,450.00 94,900
06/01/2013 5,850.00 5,850.00
12/01/2013 85,000 4.500% 5,850.00 90.850.00 96,700
06/01/2014 3,937.50 3,937.50
12/01/2014 85.000 4.500% 3,937.50 88.937.50 92,875
06/01/2015 2,025.00 2,025 00
12/01/2015 90,000 4.500% 2,025.00 92,025.00 94,050
755.000 188,125.00
943,125 00 943,125
Nov 14. 2005 10.05 am Prepared by Seattle-Nortimest Securities Corp - (k:'....idbc\cit}-Yakima:LTGO-05LTGO) Page 1
STAN DAR D
PO(i)R'S
PUBLIC FINANCE
Publication date: 11 -Nov -2005
Reprinted from RatingsDirect
Summary: Yakima, Washington
Primary Credit Analyst: Chris Morgan, San Francisco (1) 415-371-5032; chris_morgan@standardandpoors.com
Secondary Credit Analyst: Gabriel Petek, San Francisco (1) 415-371-5042; gabriel_petek@standardandpoors.com
Credit Profile
US$.775 mil ltd Tax GO bnds ser 2005 dtd
12/01/2005 due 12/01/2016
A
Sale date: 14-NOV-2005
AFFIRMED
$11.246 mil. Yakima ltd tax GO bnds ser
2002, 2003A, 2003B
AAA/A(SPUR)
OUTLOOK:
STABLE
Rationale
Standard & Poor's Ratings Services assigned its 'A' rating to Yakima,
Wash.'s $775,000 limited -tax GO bonds, series 2005. In addition, Standard &
Poor's affirmed it's 'A' underlying rating (SPUR) on the city's GO debt. The
rating reflects the city's:
• Stable economy with a long-standing role as a marketplace and
manufacturing center for a surrounding agricultural region;
• Track record of strong financial reserves; and
• Low combined direct and overlapping debt burden
Tempering the rating are the city's low income and historically high
unemployment. In addition, the city is experiencing financial pressure that
may result in lower reserves going forward.
The city's new and previously rated GO bonds are secured by a pledge of the
city's full faith, credit, and resources for the levy of ad valorem taxes on
property within the city. With the exception of a portion of the previously rated
series 2004 bonds, this pledge is subject to statutory limitations. The limited -
tax portion of series 2004 also includes a pledge of the city's 5% hotel -motel
tax. With respect to debt service supporting its 2003 GO debt, the city seeks
to allocate business license revenues and real estate excise taxes for series
2003A and cable television and gas tax revenues 2003B.
Located 140 miles southeast of Seattle, Yakima is the third-largest city in
Washington's largely rural eastern section and has historically served as the
primary hub for a major orchard, grain, and ranching region. This often
volatile sector contributes to some weak economic indicators, though the
general economic picture is one of stability. The city's average
unemployment rate has ranged from 9%-14% during the past 10 full years,
most recently at 9.4%, and the median household effective buying income is
a very low 74% of the national figure. Recent trends potentially affecting this
economy in the medium term include the prospect of low-cost competition
from China for apple growing, balanced by increased activity in the wine
industry, which can draw tourists. The city's tax base has grown consistently
over the past five years, up an average rate of 5.2% per year to $4.0 billion.
About half of this growth has come from $481 million in annexations following
a 2002 legal challenge that concluded in favor of the city and Yakima expects
to add another $62 million in the coming year.
Yakima's financial position has improved on paper in recent years due to a
Summary: Yakima, Washington
change in accounting principles, yet the city continues to experience financial
pressure. Between 2002 and 2003, the city's unreserved general fund
balance received a $3.4 million boost to its balance sheet in the form of
accruals adopted under GASB 33 rules on nonexchange transactions.
However, during the same period, the city's unreserved balance increased by
only $2.8 million, suggesting a small actual loss. In addition, after -transfer
results were negative in 2003 and 2004, with deficits of 1.3% and 1.1% of
expenditures, respectively, and the city forecasts a 2.5% deficit for 2005. The
city retains a good financial cushion, however. To put these deficits in
context, the city's unreserved general fund balance excluding the GASB 33
accrual has consistently exceeded a strong 10% of expenditures during the
previous five audited fiscal years and the city continues to prepare its
budgets without the accrual adjustment to be conservative. In addition, the
city has maintained a long-standing unofficial reserve minimum goal of one
month's expenditures (about 8% of annual expenditures). Including the
GASB 33 adjustment, the city's unreserved general fund balance stood at
$8.7 million, or 22% of expenditures, at the end of 2004 and is forecasted to
drop to 18% of expenditures for 2005 including the adjustment and about
10% without the adjustment. The city cut 10 positions for 2005 and is
evaluating possible cuts for 2006 in light of a forecasted 3.8% deficit that
management believes may turn out to be too high. Yakima makes regular
transfers to its parks fund from the general fund and has made cuts there as
well, including the recent closure of two swimming pools.
Contributing to these pressures are Initiative 747 restrictions, which limit
property tax revenue growth to 1% per year excluding new construction and
annexations, effectively reducing this revenue source over time in real terms.
Property taxes account for 24% of general fund revenues, the second largest
revenue stream. Sales taxes are the largest single source of general fund
revenues, representing 28% of the annual total. This source has increased at
a moderate average annual rate of about 2% during the previous five years,
as have hotel and motel taxes.
City property taxpayers enjoy a low debt burden that translates into $1,000
per capita and 1.9% of market value. Proceeds of series 2005 will be used to
make park improvements and study the feasibility of a regional aquatics
center. The city has a number of capital projects under way or in the planning
stages, including revenue -supported wastewater and irrigation upgrades as
well as grant and reserve -funded transportation and beautification
improvements for its downtown. However, the city does not expect to issue
additional GO debt in the foreseeable future.
Outlook
The stable outlook reflects Standard & Poor's expectation that the city's long-
standing prominence as the hub of an agricultural region provides stability for
the tax base. Strained financial performance represents a key credit factor
that could eventually contribute to a rating change if the city is unable to bring
its budget back into balance. However, Yakima's currently sound reserve
levels and its recent cuts suggest that the city will be able to stabilize or
reverse this trend.
Complete ratings information is available to subscribers of RatingsDirect,
Standard & Poor's Web -based credit analysis system, at
Summary: Yakima, Washington
www.ratingsdirect.com. All ratings affected by this rating action can be found
on Standard & Poor's public Web site at www.standardandpoors.com; under
Credit Ratings in the left navigation bar, select Find a Rating, then Credit
Ratings Search.
This report was reproduced from Standard & Poor's RatingsDirect, the
premier source of real-time, Web -based credit ratings and research from
an organization that has been a leader in objective credit analysis for more
than 140 years. To preview this dynamic on-line product, visit our
RatingsDirect Web site at www.standardandpoors.com/ratingsdirect.
Published by Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. Executive
offices: 1221 Avenue of the Americas, New York, NY 10020. Editorial offices: 55 Water
Street, New York, NY 10041. Subscriber services: (1) 212-438-7280. Copyright 2005 by The
McGraw-Hill Companies, Inc. Reproduction in whole or in part prohibited except by
permission. All rights reserved. Information has been obtained by Standard & Poor's from
sources believed to be reliable. However, because of the possibility of human or mechanical
error by our sources, Standard & Poor's or others, Standard & Poor's does not guarantee the
accuracy, adequacy, or completeness of any information and is not responsible for any
errors or omissions or the result obtained from the use of such information. Ratings are
statements of opinion, not statements of fact or recommendations to buy, hold, or sell any
securities.
The McGraw-Hill Compures
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.B soppJern.\+-a-I
For Meeting Of 11-15-2005
ITEM TITLE: A Resolution authorizing the execution and delivery of a contract for the purchase
of the City's Limited Tax General Obligation Bonds, 2005, in the aggregate principal amount of
$755,000, fixing terms of the Bonds, and ratifying certain acts and proceedings.
SUBMITTED BY: Finance Department
CONTACT PERSON/TELEPHONE: Rita Anson, Finance Director; #575-6070"
Tim Jensen, Treasury Services Officer; # 575
SUMMARY EXPLANATION: On November 1St, 2005 the City Council passed Ordinance number
2005-63 authorizing the issuance of up to $825,000 Limited Tax General Obligation Bonds (LTGO)
the proceeds from which are to be used for parks projects. At that time, staff was directed and
authorized to perform all proceedings and tasks necessary to accomplish this transaction.
Since then, staff completed a comprehensive credit review with Standard and Poor's, which
resulted in affirmation of the City's "A" credit rating. This review was conducted not only on
these bonds, but also on all outstanding GO debt of the City. This is an investment grade credit
rating, reflecting good management of the City's financial affairs and a stable local economy (See
credit report attached).
Continued...
Resolution _X_ Ordinance Other (Specify) Bond Purchase Agreement from Seattle Northwest
Securities and credit report from Standard and Poor's
Contract X Mail to (name and address). Phone
Funding Source
APPROVED FOR SUBMITTAL:
---"City Manager
STAFF RECOMMENDATION: Adopt Resolution accepting purchase offer
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
Legal/BD
rev effective 7/21/92
Resolution adopted. RESOLUTION NO. R-2005-176
The sale of the bonds took place on November 14th, and resulted in a purchase offer from Seattle
`\.\ Northwest Securities for $755,000 of these ten year, 2005 LTGO's bonds, at an interest cost of
\ 4.34%, including legal and underwriting costs. The average annual debt service is approximately
$94,000 for ten years. (Bond insurance was not purchased, as it was not cost effective for an issue
of this size.) The bonds are being issued to finance Parks Capital improvements, pursuant to
Council direction given to staff on July 27th of this year. If approved, this transaction will produce
$751,897 (net of sales expenses) in proceeds for the Parks Capital Fund, and will close on or about
December 5th.
Items for Council Consideration at the November 15, 2005 regular Council meeting are as
follows:
• Bond Sale Resolution; prepared by the City's Bond Counsel, Preston Gates and Ellis
(enclosed)
• Bond Purchase Agreement from Seattle Northwest Securities (enclosed)
• Preliminary Official Statement (included in your packet on Friday).
Additionally the following documents are enclosed for your information:
• Amortization Schedule
• Credit Report from Standard and Poor's
In today's rising interest rate environment, staff feels this is an acceptable offer and recommends
Council to approve the sale of the 2005 Parks LTGO bonds by adopting the Resolution.
Legal/BD
rev effective 7/21/92
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting Of: 11-15-2005
ITEM TITLE: A Resolution authorizing the execution and delivery of a contract for sale and purchase of
the City's Limited Tax General Obligation Bonds (The Bonds) in the approximate aggregate amount of
$825,000 and fixing the terms of The Bonds, approving the form of the Official Statement and ratifying
certain acts and proceedings.
SUBMITTED BY: Finance Department
CONTACT PERSON/TELEPHONE: Rita Anson, Finance Director; #575-6070°ti (I
Tim Jensen, Treasury Services Officer; #575-60
SUMMARY EXPLANATION: On November 1St, 2005, City Council passed Ordinance #2005-63
authorizing the issuance of up to $825,000 Limited Tax General Obligation Bonds of the City for the
purpose of making certain Parks Capital improvements and directing staff to perform all proceedings and
tasks necessary to accomplish this transaction.
Since that time, staff engaged in a credit rating interview with Standard and Poor's on November 7th and
completed the Preliminary Official Statement, dated November 8, 2005. The actual pricing of the Bonds is
scheduled for Monday, November 14, 2005. Staff anticipates receiving Standard and Poor's rating on
Thursday, November 101h, and that will largely determine whether bond insurance can be purchased at a
cost effective rate. Once these items are known and the pricing is complete, all of the final terms and
conditions of The Bond purchase offer will be known, including the interest rates, discounts/premiums if
any, the final amortization schedule, etc. Assuming a reasonable offer has been made, staff will submit
this offer to Council for your consideration at your regular business meeting on Tuesday, November 15th
Subject to Council's authorization, the transaction is scheduled to close on December 5th, 2005, at which
time the City will receive the bond proceeds.
In order to accept and authorize staff to execute the purchase offer, Council would need to approve: (1)
the purchase offer, (2) The Bond Resolution and (3) the Final Preliminary Official Statement (POS).
Enclosed, you will find the Final POS and draft versions of the Purchase Offer and The Bond resolution for
your review. The draft documents attached provide for bond insurance if it can be obtained at a
reasonable cost. (Final documents will be provided to Council on Tuesday.)
Resolution X Ordinance Other (Specify)
Contract Mail to (name and address): Phone:
Funding Source
APPROVED FOR SUBMITTAL: ‘-''''S‘ City Manager
STAFF RECOMMENDATION:
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
November 15, 2005
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$ Limited Tax General Obligation Bonds, 2005
Dated: December 1, 2005
Honorable Mayor and City Council:
CRAFT
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 pass an ordinance authorizing the Bonds (the "Bond
Ordinance"). The Purchaser is authorized by Seller to use these documents and the information
contained in them in connection with the public offering of the Bonds and the final Official Statement
in connection with the sale and delivery of the Bonds.
2. Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) it has and will have at the Closing the power and authority to enter into and perform this
Agreement, to pass the Bond Ordinance and to deliver and sell the Bonds to the Purchaser;
(b) this Agreement and the Bonds do not and will not conflict with, or constitute or create a breach or
default under, any existing law, regulation, order or agreement to which Seller is subject;
(c) no governmental approval or authorization (other than the Bond Ordinance) which has not been
obtained, or will not be obtained prior to Closing, is required in connection with the sale of the
Bonds to the Purchaser;
(d) the Preliminary Official Statement with corrections, if any, noted by the Seller and its counsel, as
of its date and (except as to matters corrected or added in the final Official Statement) as of the
Closing, is accurate and complete in all material respects as of its date to the knowledge and
belief of the officers and employees of the Seller, after due review;
the Seller has previously provided the Purchaser with a copy of its Preliminary Official Statement
dated November 8, 2005;
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.
(e)
(0
Honorable Mayor and City Council
City of Yakima, Washington
November 15, 2005
Page 2
DRAFT
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
(i)
the Bonds are not exempt from the registration, qualification or other requirements of the
Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of
1934, as amended and then in effect, or
(ii) the Bond Ordinance is not exempt from the registration, qualification or other requirements
of the Trust Indenture Act of 1939, as amended and as then in effect; or
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the effect of
which is that the issuance, offering or sale of the Bonds, as contemplated herein or in the final
Official Statement, is in violation of any provision of the Securities Act of 1933, as amended and
as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the
Trust Indenture Act of 1939, as amended and as then in effect, and which, in its reasonable
judgment, adversely affects the marketability of the Bonds or the market price thereof.
4. The Purchaser's obligations hereunder are also subject to the condition that at or prior to the Closing
Seller will deliver to the Purchaser all of the following:
(a) the Bonds, fully registered in book -entry form only in the name of Cede & Co., as bond owner
and nominee for The Depository Trust Company;
(b) the approving opinion of Bond Counsel dated the Closing date;
(c) written evidence that Standard & Poor's has issued its underlying rating of "A" and that such
rating is in full force and effect on and as of Closing; evidence that the Bonds have been assigned
a rating of "AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance
policy issued by Financial Security Assurance Inc. and evidence of Seller's purchase of such
insurance including an opinion of counsel to the Insurance Provider;
Honorable Mayor and City Council
City of Yakima, Washington
November 15, 2005
Page 3
DRAFT
(d) a certified copy of the Bond Ordinance;
(e) 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
(f) such additional certificates, instruments or other evidence as the Purchaser may deem reasonably
necessary or desirable to evidence the due authorization, execution, authentication and delivery of
the Bonds, the truth and accuracy as of the time of the Closing of the Seller's representations and
warranties, and the conformity of the Bonds and Bond Ordinance with the terms thereof as
summarized in the Official Statement, and to cover such other matters as it reasonably requests.
5. Seller will pay the cost of preparing, printing and executing the Bonds; the fees and disbursements of
Bond Counsel; bond registration and rating fees and expenses; the bond insurance premium, if any; 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.
Purchaser also may advance for Seller's account when appropriate and when directed in advance in
writing by the Seller, the cost of the items for which Seller is responsible by making payments to third -
party vendors. In such cases, Seller shall pay such costs or expenses directly, upon submission of
appropriate invoices by Purchaser, or promptly reimburse Purchaser in the event Purchaser has
advanced such costs or expenses for Seller's account. It is understood that Seller shall be primarily
responsible for payment of all such items and that Purchaser may agree to advance the cost of such
items from time to time solely as an accommodation to Seller and on the condition that it shall be
reimbursed in full by Seller.
6. This Agreement is intended to benefit only the parties hereto, and Seller's representations and
warranties shall survive any investigation made by or for the purchase, delivery and payment for the
Bonds, and the termination of this Agreement. Should the Seller fail to satisfy any of the foregoing
conditions or covenants, or if the Purchaser's obligations are terminated for any reasons permitted
under this Agreement, then neither the Purchaser nor the Seller shall have any further obligations under
this Agreement, except that any expenses incurred shall be borne in accordance with Section 5.
7. This Agreement may be modified or amended by an instrument in writing executed by the parties
hereto.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Honorable Mayor and City Council
City of Yakima, Washington
November 15, 2005
Page 4
Respectfully submitted,
Seattle -Northwest Securities Corporation
By:
Lindsay A. Sovde, Vice President
Accepted November 15, 2005
City of Yakima, Washington
By:
DRAFT
Time signed
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2005
Description of Bonds
APPENDIX A
DRAFT
(a) Principal Amount $XXXXXXX.
(b) Purchase Price. $ ($ per $100), representing an original issue discount (premium)
of $ and an underwriter's discount of $ , plus accrued interest from the dated date of
December 1, 2005 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. June 1 and December 1, commencing June 1, 2006.
(f) Maturity Schedule. Bonds shall mature and bear interest as follows.
Due Interest
Dec. 1 Amount Rate Yield CUSIP
2006 $ ,000 %
2007 ,000
2008 ,000
2009 ,000
2010 ,000
2011 ,000
(g)
Due Interest
Dec. 1 Amount Rate Yield CUSIP
2012 $ ,000 %
2013 ,000
2014 ,000
2015 ,000
2016 ,000
$ % Term Bonds due
Optional Redemption. [from OS]
(h) Mandatory Redemption. If not previously redeemed as described above, the Term Bonds due on December 1,
20XX will be called for redemption (in such manner as DTC will determine) at a price of par, plus accrued mterest
on the date of redemption, on December 1 in the years and amounts as follows:
Years Amounts
20XX
20XX
(h) Rating/Insurance. Assignment to the Bonds of an underlying rating of "A" by Standard & Poor's and that such
rating is in full force and effect on and as of Closing; evidence that the Bonds have been assigned a rating of
"AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance policy issued by Financial
Security Assurance Inc. and evidence of Seller's purchase of such insurance including an opinion of counsel to the
Insurance Provider.
(i)
(j)
Closing Date With definitive Bonds or a temporary Bond on or about December 5, 2005
Delivery. It is expected that the Bonds will be available for delivery to the Paying Agent on behalf of DTC by
Fast Automated Securities Transfer.
(k) Offer Expires. 11.00 p.m., November 15, 2005.
(1) Bond Counsel. Preston Gates & Ellis LLP
For Information Purposes Only: True Interest Cost:
DRAFT
RESOLUTION NO. R -2005-
A RESOLUTION of the City Council of the City of Yakima,
Washington, authorizing the execution and delivery of a
contract for purchase of the City's Limited Tax General
Obligation Bonds, 2005 in the principal amount of
$[825,000], fixing certain terms of the bonds and approving
the form of the official statement and insurance.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 2005-63
passed on November 1, 2005 (the "Bond Ordinance"), authorized the issuance of limited tax
general obligation bonds of the City in the aggregate principal amount of not to exceed
$[825,000] (the "Bonds") to provide funds to finance park capital improvements; and
WHEREAS, Seattle -Northwest Securities Corporation (the "Purchaser") has made an
offer to purchase the Bonds dated November 15, 2005 (the "Purchase Contract"), a copy of
which has been presented at this meeting and is on file with the City Clerk, and it is in the best
interest of the City that the Bonds be sold on the terms set forth in such Purchase Contract and as
provided in the Bond Ordinance and this resolution; and
WHEREAS, the Bond Ordinance provides that the City shall approve the interest rates,
maturity amounts, redemption provisions, and certain other terms of such Bonds, by resolution;
NOW, THEREFORE, the City of Yakima does resolve:
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 City Council hereby finds that the Purchase
Contract is fair and reasonable and in the best interest of the City and that the Bonds shall be sold
to the Purchaser upon the terms and conditions set forth in the Purchase Contact and upon the
basis of the representations therein set forth. The City Council further finds that all conditions
precedent to or concurrent with the acceptance of the Purchase Contract by the City Council
have been met.
The City Council hereby accepts the Purchase Contract and authorizes and directs the
Director of Finance and Budget to execute the Purchase Contract and deliver it to the Purchaser.
The Bonds shall be issued and delivered to the Purchaser upon payment of the purchase
price specified in the Purchase Contract, plus accrued interest from their date to the date of their
delivery.
Section 3. Terms, Schedule of Maturities and Interest Rates. The Bonds shall be in
the principal amount of $[825,000] and designated the "City of Yakima Limited Tax General
Obligation Bonds, 2005." The Bonds shall be dated as of December 1, 2005, 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.
The Bonds shall bear interest payable on June 1, 2006 and semiannual thereafter on the
first days of December and June and shall mature on December 1 of the following years in the
following amounts and shall bear interest as follows:
Maturity Date
(December 1)
Principal Amount Interest Rate
2006 $
2007
2008
2009
2010
2011
2012
2013
-2-
P \NMN\NMN2N6 11/09/05
Maturity Date
(December 1)
2014
2015
2016
Principal Amount
Interest Rate
Section 4. Redemption. The Bonds are not subject to redemption prior to their stated
maturities.
Section 5. Execution and Delivery of the Bonds. The proper officers of the City
Council and the Director of Finance and Budget of the City are hereby authorized and directed to
do all things necessary or proper for the printing, execution and delivery of the Bonds to the
Purchaser in accordance with the terms of the Purchase Contract and the Bond Ordinance, as
well as this resolution, and for the proper application and use of the proceeds of such sale.
[Section 6. Bond Insurance. The City Council hereby approves the commitment of
(the "Bond Insurer") to provide a policy of municipal bond insurance
guaranteeing the payment when due of principal of and interest on the Bonds (the "Bond
Insurance Policy"). The Director of Finance and Budget is hereby authorized to execute such
commitment on behalf of the City. The City Council further authorizes and directs all proper
officers, agents, attorneys and employees of the City to cooperate with the Bond Insurer in
preparing such additional agreements, certificates, and other documentation on behalf of the
City, consistent with the Bond Ordinance and this resolution, as shall be required by such
commitment or as shall be necessary or advisable in providing for the Bond Insurance Policy.
(a) Payments Under the Bond Insurance Policy.]
Section 7. Official Statement. The City approves the preliminary official statement,
dated November 8, 2005, presented to the City Council and ratifies the Underwriter's
distribution of the preliminary official statement in connection with the offering of the Bonds.
-3-
P-\NMN\NMN2N6 11/09/05
Pursuant to the Rule, the City deems the preliminary official statement as final as of its date
except for the omission of information dependent upon the pricing of the Bonds and the
completion of the purchase contract. The City agrees to cooperate with the Underwriter to
deliver or cause to be delivered, within seven business days from the date of the sale of the
Bonds and in sufficient time to accompany any confirmation that requests payment from any
customer of the Underwriter, copies of a final official statement in sufficient quantity to comply
with paragraph (b)(4) of the Rule and the rules of the MSRB. The City authorizes the
Underwriter to use the official statement, substantially in the form of the preliminary official
statement, in connection with the sale of the Bonds. The City Manager and the Director of
Finance and Budget are hereby authorized to review and approve on behalf of the City the final
Official Statement relative to the Bonds with such additions and changes as may be deemed
necessary or advisable to them.
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 take effect immediately.
ADOPTED at a regular meeting of the City Council of the City of Yakima this 15th day
of November, 2005.
ATTEST:
City Clerk
.4 -
CITY OF YAKIMA, WASHINGTON
By
Mayor
PAWN \NMN2N6 11/09/05
APPENDIX A
[ATTACH BOND PURCHASE AGREEMENT]
P•\NMN\NMN2N6 11/09/05
PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 8, 2005
$775,000*
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2005
DATED: December 1, 2005 DUE: December 1, as shown below
STANDARD & POOR'S RATING—Applied for.
BANK QUALIFIED—The City has designated the Bonds as "qualified tax-exempt obligations" for purposes of section
265(b)(3)(B) of the Code relating to the deductibility of interest expense by certain financial institutions. See "Tax
Exemption" 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 semiannually on each June 1 and
December 1, commencing on June 1, 2006, to maturity or earlier redemption. 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
(the "Bond Registrar"), as further described herein. 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 is obligated to remit such principal and
interest to its Participants for subsequent disbursement to Beneficial Owners of the Bonds as further described herein in
Appendix B —Book -Entry Transfer System.
MATURITY SCHEDULE —
Due Interest Price or Due Interest Price or
Dec 1 Amount* Rate Yield CUSIP Dec 1 Amount* Rate Yield CUSIP
2006 $ 60,000 % 2012 $ 70,000 %
2007 60,000 2013 75,000
2008 65,000 2014 80,000
2009 65,000 2015 80,000
2010 65,000 2016 85,000
2011 70,000
(Plus accrued interest from the Dated Date)
NO OPTIONAL REDEMPTION — The Bonds are not subject to optional redemption prior to their stated maturities.
SECURITY—The Bonds are limited tax general obligations of the City The City hereby irrevocably covenants and agrees for
as long as any of the Bonds are outstanding and unpaid that each year it will include in its budget and levy ad valorem
taxes upon all the property within the City subject to taxation in an amount that will be sufficient and all other revenues
and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same
shall become due. The full faith, credit and resources of the City have been pledged irrevocably for the annual levy and
collection of such taxes and the prompt payment of such principal and interest. The Bonds do not constitute a debt or
indebtedness of the State of Washington, or any political subdivision thereof other than the City (see "Security for the
Bonds" herein).
TAX EXEMPTION— In the opinion of Preston Gates & Ellis LLP, Bond Counsel, assuming compliance with certain covenants of the
City, interest on the Bonds is excluded from the gross income of the owners of the Bonds for federal income tax purposes under
existing law. Interest on the Bonds is not an item of tax preference for purposes of either individual or corporate alternative
minimum tax. Interest on the Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes
imposed on certain corporations. See "Tax Exemption" herein for a discussion of the opinion of Bond Counsel.
DELIVERY— The Bonds are offered for sale to the original purchaser subject to the final approving legal opinion of Preston
Gates & Ellis LLP, Seattle, Washington, Bond Counsel. It is expected that the Bonds will be available for delivery to the
Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, on or about December 5, 2005
* 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 snaking of an informed investment decision.
11 11111 SEATTLE -NORTHWEST
II.. SECURITIES CORPORATION
City of Yakima, Washington
129 North Second Street
Yakima, Washington 98901
Phone: (509) 575-6000
Fax: (509) 576-6614
www. c i.yakima.wa.us *
Mayor and City Council
Paul P. George Mayor
Neil McClure Assistant Mayor
Ron Bonlender Council Member
Dave Edler Council Member
Mary Place Council Member
Bernard J. Sims Council Member
Susan Whitman Council Member
Richard A. Zais, Jr
Dave Zabell
Rita M. Anson, CPA
Timothy Jensen
Ray Paolella
Cindy Epperson
Administrative Officials
City Manager
Assistant City Manager
Director of Finance & Budget
Treasury Services Officer
City Attorney
Financial Services Manager
Bond Counsel
Preston Gates & Ellis LLP
Seattle, Washington
206-623-7580
Bond Registrar
The Bank of New York
New York, New York
1-800-438-5473
* 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 information and expressions of
opinion herein are subject to change zvithout notice, and neither the delivery of this Official Statement nor any sale made
hereunder will, 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 zvith, 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.
Table of Contents
Page
Description of the Bonds 1
Principal Amount, Date, Interest Rates and Maturities 1
No Optional Redemption 1
Purchase • .1
Bond Registrar and Registration Features 1
Book -Entry Bonds 1
Authorization for Issuance 2
Purpose and Use of Proceeds 2
Purpose 2
Sources and Uses of Funds 2
Security for the Bonds 2
General 2
The Parks and Recreation Fund 3
Bonded Indebtedness 3
Computation of Debt Capacity 4
Summary of Limiter. Tax General Obligation Bond Debt Service Requirements 6
Net Direct and Overlapping Debt 7
Debt Payment Record 7
Future Financings 7
Taxing Authority ... 8
Authorized Property Tax Levies 8
The City's Property Tax Levies 8
Overlapping Taxing Districts 9
General Property Taxes 9
Regular Property Tax Limitations . 10
Assessed Value 11
Tax Collection Procedure 11
City of Yakima 12
Tax Collection Record 12
City of Yakima 12
Major Property Taxpayers . 12
Authorized Investments 12
Local Government Investment Pool 13
Authorized Investments for Bond Proceeds 13
City of Yakima Comparative General Fund Statement of Revenues, Expenditures
and Changes in Fund Balance 14
City of Yakima Comparative General Fund Balance Sheet 15
City of Yakima Comparative Parks and Recreation Fund Statement of Revenues,
Expenditures and Changes in Fund Balance .16
The City 17
Key Administrative Staff .17
Labor Relations 18
Pension System 18
Risk Management 20
Accounting Policies 21
Budgetary Process 21
Cash and Investments 22
Auditing of City Finances 22
Demographic Information 23
Initiative and Referendum ...25
State Initiatives 25
Tax Exemption 26
Qualified Tax -Exempt Obligations 26
Rating 26
No Continuing Disclosure Undertaking ...26
Legal and Underwriting 27
Approval of Counsel 27
Litigation 27
27
Underwriting 27
Concluding Statement 27
Opinion of Bond Counsel
Official Statement
Appendix A
Book -Entry Transfer System Appendix B
2004 Annual Financial Report Appendix C
iii
OFFICIAL STATEMENT
$775,000*
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2005
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 $775,000* aggregate principal amount of the above -referenced bonds (the "Bonds"), dated
December 1, 2005. This Official Statement provides information concerning the City and the Bonds.
Description of the Bonds
Principal Amount, Date, Interest Rates and Maturities
The Bonds will be issued in the aggregate principal amount of $775,000* and will be dated and bear interest
from December 1, 2005. The Bonds will mature on the dates and in the principal amounts and will bear
interest (payable semiannually on each June 1 and December 1, commencing June 1, 2006) until the maturity or
earlier redemption of the Bonds at the rates set forth on the 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. 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 (the "Bond Registrar").
No Optional Redemption
The Bonds are not subject to redemption prior to their stated maturities.
Purchase
The City reserves the right and option to purchase any or all of the Bonds offered to the City at any time at any
price. All Bonds so purchased shall be canceled.
Bond Registrar and Registration Features
The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede &
Co. as Bond Owner and as nominee for DTC. DTC will act as securities depository for the Bonds. Individual
purchases and sales of the Bonds may be made in book -entry form only in minimum denominations of $5,000
within a single 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 Bond Registrar (or such other fiscal agency or
agencies as the State may from time to time designate) So long as Cede & Co. is the registered owner of the
Bonds, principal of and interest on the Bonds are payable by wire transfer by the Bond Registrar to DTC,
which in turn is obligated to remit such principal and interest to its Participants for subsequent disbursement
to the Beneficial Owners of the Bonds, as further described herein in Appendix B.
Book -Entry Bonds
DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond for each
maturity of the Bonds, as set forth on the cover of this Official Statement, each in the aggregate principal
amount of such maturity, will be registered in the name of Cede & Co., as nominee for DTC. See Appendix B
attached hereto for additional information.
Procedure in the Event of Revisions of Book -Entry Transfer Systezzz. 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
* Preliminary, subject to change.
1
interest of the City not to continue the book -entry system of transfer or that interests of the Beneficial Owners
of the Bonds might be affected adversely if the book -entry system of transfer is continued, the City will
execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their nominees Bonds in
fully 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 Bonds may be payable by the Bond
Registrar or the State's co -fiscal agent, which is currently Wells Fargo Bank, National Association, in Seattle,
Washington. Thereafter, the principal of the Bonds will be payable upon due presentment and surrender
thereof at the principal office of the Bond Registrar; interest on the Bonds will be payable by check or draft
mailed on the interest payment date to the owners of the Bonds at the address appearing on the Bond Register
on the 15th day of the month next preceding the interest payment date, and the Bonds will be transferable as
provided in the Ordinance (defined below).
Authorization for Issuance
Under and in accordance with State laws, the Bonds are issued pursuant to Ordinance No. 2005-63 passed by
the City Council (the "Council") on November 1, 2005 and Resolution No. adopted by the Council on
2005 (collectively, the "Ordinance"), and the authority of RCW chapters 39.36 and 39.46. The
Bonds may be issued without a vote of the people.
Purpose and Use of Proceeds
Purpose
The proceeds from the sale of the Bonds will be used to (i) pay for various parks capital improvements,
including construction of a new softball field at Kiwanis Park and other developments at the park; (ii) pay for
construction of water playgrounds and a feasibility study of a regional aquatics center; and (iii) other parks
capital projects as the Council may deem appropriate; and (iv) pay the costs of issuance of the Bonds.
Sources and Uses of Funds
The proceeds of the Bonds (less accrued interest) will be applied as follows:
Sources of Funds
Par Amount of Bonds*
Net Premium/ (Discount)
Total Sources of Funds
$ 775,000
Use of Funds
Funds Available for Construction $
Issuance Costs, Underwriter's Discount
Total Use of Funds $
Security for the Bonds
General
The Bonds are limited tax general obligation bonds of the City. The City, as authorized by law and an
ordinance of its Council duly and regularly passed, has irrevocably pledged that, unless the principal of and
interest on the Bonds are paid from other sources, it will make annual levies of taxes, within the constitutional
and statutory tax limitations provided by law without a vote of the electors of the City, upon all of the
property in the City subject to taxation in amounts sufficient to pay such principal and interest as the same
shall become due.
Subject to applicable laws, the City may apply other funds available to make payments with respect to the
Bonds and thereby reduce the amount of future tax levies for such purpose.
* Preliminary, subject to change.
2
The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than
the City.
The Parks and Recreation Fund
Debt service on the Bonds is expected to be paid from the Parks and Recreation Fund. The Parks and
Recreation Fund is primarily supported by property tax transfers from the General Fund, utility taxes, user
fees and grants. Savings from the closure of three swimming pools is providing the majority of debt service
payments from the Parks and Recreation Fund. See "City of Yakima - Comparative Parks and Recreation
Fund Statement of Revenues, Expenditures and Changes in Fund Balance" herein for the historical financial
activity of the Parks and Recreation Fund.
Bonded Indebtedness
As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to
a 60 percent majority vote of registered voters, is limited to 2.5 percent of assessed value for general purposes, 2.5
percent for utilities and 2.5 percent for open space/park facilities. Within the 2.5 percent of assessed value for
general purposes, the City may, without a vote of the electors, incur general obligation indebtedness in an
amount not to exceed 1.5 percent of assessed value. Additionally, within the 2.5 percent of assessed value for
general purposes, the City may, also without a vote of the electors, enter into leases if the total principal
component of the lease payments, together with the other nonvoted general obligation indebtedness of the
City, does not exceed 1.5 percent of assessed value. The combination of unlimited tax and limited tax general
obligation debt for general purposes, including leases, cannot exceed 2.5 percent of assessed value and for all
purposes cannot exceed 7.5 percent of assessed value.
The City may, without a vote of the electorate, issue debt as follows:
(1) Pursuant to an ordinance specifying the amount and object of the expenditure of the proceeds,
the City Council may borrow money for corporate purposes and issue bonds and notes within
the constitutional and statutory limitations on indebtedness.
(2) The City may execute conditional sales contracts for the purchase of real or personal property.
(3) The City may execute leases with or without an option to purchase.
3
Computation of Debt Capacity
(As of November 1, 2005)
2005 Collection Year Assessed Value (1) $ 3,971,667,847
Nonvoted Debt Capacity
1.5% of Assessed Value $ 59,575,017
Less: Outstanding Nonvoted Debt (2) (17,818,088)
Less: The Bonds (3) (775,000)
Remaining Nonvoted Debt Capacity $ 40,981,929
Voted and Nonvoted Debt Capacity
2.5% of Assessed Value $ 99,291,696
Less: Outstanding Nonvoted Debt (2) (17,818,088)
Less. The Bonds (3) (775,000)
Less: Outstanding Voted Debt (2,235,000)
Total Remaining Voted and Nonvoted Debt Capacity $ 78,463,608
Voted Utility Debt Capacity
2.5% of Assessed Value $ 99,291,696
Less: Outstanding Utility Obligations 0
Total Remaining Utility Debt Capacity $ 99,291,696
Voted Open Space/Park Debt Capacity
2.5% of Assessed Value $ 99,291,696
Less: Outstanding Open Space/Park Obligations 0
Total Remaining Open Space/Park Debt Capacity $ 99,291,696
(1) Provided by the Yakima County Assessor
(2) Includes limited tax general obligation debt, lease purchase agreements, and special assessment notes and warrants.
(3) Preliminary, subject to change.
Source: City of Yakima.
4
Outstanding Debt
(As of December 1, 2005)
Long Term Borrowing
General Obligations: Non -voted (1)
Date of Date of Amount Amount
Limited Tax General Obligations Issue Maturity Issued Outstanding
LTGO 1996 01/01/96 11/01/07 $ 6,000,000 $ 455,000
LTGO 1998 04/01/98 06/01/08 1,430,000 500,000
LTGO 2002 05/01/02 06/01/26 6,735,000 6,210,000
LTGO 2002 Line of Credit 06/01/02 06/01/07 5,000,000 64,569
LTGO 2003 Series A 06/01/03 12/01/23 1,430,528 1,430,528
LTGO 2003 Series B 06/01/03 12/01/13 4,155,000 3,645,000
LTGO Refunding 2004 09/01/04 11/01/19 4,175,000 4,070,000
The Bonds (this issue) 12/01/05 12/01/16 775,000 (2) 775,000 (2)
LTGO Bond Total
Lease Purchase Agreements
Police Video
Printer/copier
Mobile Wireless Data Network
Printer/copier
Purchase Contract Total
Total Non -voted General Obligations
11/03/03 11/03/08
06/01/04 03/01/09
07/09/04 04/09/09
10/15/04 07/15/09
General Obligations: Voter Approved
Unlimited Tax General Obligation Bonds
UTGO Refunding 2004 09/01/04 12/01/14
UTGO Bond Total
(1) Does not include special assessment notes and warrants outstanding in
respectively, as of December 1, 2005 Also does not include City's obligation
Yakima County to pay approximately $150,000 annually through 2008
(2) Preliminary, subject to change.
5
29,700,000 17,150,097
491,838
93,414
325,000
54,255
964,507
$ 30,664,507
$ 2,300,000
$ 2,300,000
302,694
62,424
232,862
41,679
639,659
$ 17,789,756
$ 2,235,000
$ 2,235,000
the amount of $53,000 and $750,332,
pursuant to an interlocal agreement with
Summary of Limited Tax General Obligation Bond Debt Service Requirements
(As of December 1, 2005)
Cal. Outstanding LTGO Bonds (1) The Bonds (2) Total Debt
Years Principal Interest Principal Interest Service
2006 $ 1,020,000 $ 576,215 $ 60,000 $ 30,993 $ 1,687,208
2007 1,122,615 548,367 60,000 28,923 1,759,904
2008 1,159,861 513,602 65,000 26,793 1,765,255
2009 1,084,241 499,642 65,000 24,420 1,673,303
2010 1,083,125 476,926 65,000 21,983 1,647,034
2011 1,112,419 449,707 70,000 19,480 1,651,606
2012 1,141,614 421,958 70,000 16,680 1,650,252
2013 1,173,534 389,307 75,000 13,810 1,651,651
2014 690,455 354,384 80,000 10,660 1,135,500
2015 717,376 333,549 80,000 7,220 1,138,145
2016 728,196 315,548 85,000 3,740 1,132,485
2017 753,302 290,076 0 0 1,043,378
2018 780,855 264,600 0 0 1,045,455
2019 733,409 236,955 0 0 970,364
2020 405,464 212,083 0 0 617,546
2021 416,613 196,508 0 0 613,121
2022 434,687 182,371 0 0 617,059
2023 452,762 167,113 0 0 619,875
2024 410,000 54,750 0 0 464,750
2025 435,000 33,625 0 0 468,625
2026 455,000 11,375 0 0 466,375
Total $ 16,310,528 $ 6,528,661 $ 775,000 $ 204,700 $ 23,818,889
(1) Does not include the 2002 LTGO Line of Credit (see "Bonded Indebtedness -Outstanding Debt" for details).
(2) Preliminary, subject to change, assumed interest rates range from 3.55% to 4.50%
6
Overlapping Taxing District
Yakima School District No. 7
West Valley School District No. 208
Yakima County
Naches School District No. 3
Total
Summary of Overlapping Debt
(As of December 1, 2005)
2005 Assessed
Value
$ 3,534,425,769
1,613,331,344
11,062,056,969
508,877,906
Percent
Overlap
96.11 %
40.51
36 02
0.34
Source: Yakima County Assessor and Treasurer and individual taxing districts.
Outstanding
GO Debt
$ 34,775,000
8,435,000
49,315,935
2,940,000
Estimated
Overlapping
Debt
$ 33,420,602
3,416,703
17,762,797
9,993
$ 54,610,095
Net Direct and Overlapping Debt
The following tables present information regarding the City's direct debt (including the Bonds) and the
estimated portion of the debt of overlapping taxing district allocated to the City's residents.
Assessed Value (2005 Collection Year) (1) $ 3,971,667,847
Estimated 2005 Population (2) 79,480
Debt Information
Net Direct Debt (3) $ 20,828,088
Estimated Net Overlapping Debt (as previously detailed herein) 54,610,095
Total Net Direct and Overlapping Debt $ 75,438,183
(1)
(2)
(3)
Provided by the Yakima County Assessor's Office.
Estimate derived from the State of Washington, Office of Financial Management, Forecasting Division.
Includes the Bonds plus limited and unlimited tax general obligation debt, lease purchase agreements, and special
assessment notes and warrants.
Bonded Debt Ratios
Net Direct Debt to Assessed Value
Net Direct and Overlapping Debt
to Assessed Value
Per Capita Assessed Value
Per Capita Net Direct Debt
Per Capita Total Net Direct and Net Overlapping Debt
0.52%
1.90%
$ 49,971
$ 262
$ 949
Debt Payment Record
The City has promptly met all debt service payments on outstanding obligations. No refunding bonds have
been issued to prevent an impending default.
Future Financings
Other than the Bonds, the City has no authorized but unissued general obligation bonds outstanding. In
spring 2006, the City intends to borrow approximately $610,000 for a fire station remodel, most likely to be
paid for from a line of credit.
7
Taxing Authority
Authorized Property Tax Levies
The City is authorized to impose (1) a regular levy (up to $3.60/$1,000 of assessed value) and (2) excess levies
(unlimited as to rate or amount). The City's regular levy for the 2005 collection year is $3.43952 /$1,000. The
regular levy is imposed without a vote of the people for general purposes, including payment of debt service
on the Bonds, and is subject to limitations (see "General Property Taxes—Regular Property Tax Limitations"
herein). Excess levies are imposed, upon voter approval, to pay debt service on unlimited tax general
obligation bonds. An excess levy also may be imposed without a vote to prevent the impairment of a contract
(RCW 84.52.052).
The City's Property Tax Levies
The following table shows the City's levy rates and dollar amounts levied since 2001.
Ad Valorem Tax Levies
(Dollars per $1,000 of Assessed Value)
Collection
Year General Bond* Total
2005 $3.4395 $0.0763 $3.5158
2004 3.4718 0.0841 3.5559
2003 3.5214 0.0957 3.6171
2002 3.5264 0.2611 3.7875
2001 3.5145 0.2809 3 7954
Levy Rates Levy Amounts
General Bond* Total
$13,660,632 $ 300,000 $13,960,632
13,276,452 315,833 13,592,285
12,935,578 345,000 13,280,578
11,554,073 836,000 12,390,073
11,098,211 870,000 11,968,211
* For repayment of voted bonds; not subject to limitation on levy rates or levy amounts.
Sources: Yakima County Assessor's and Treasurer's Office.
8
Overlapping Taxing Districts
The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the
following rates subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved
property taxes. For purposes of demonstration, representative levy rates for "levy code 333" of Yakima
County (the "County"), as well as the statutory levy authority of each type of potential overlapping district,
are listed below.
Yakima County
County (Road Levy)
Library District
Fire Protection District
Port District
The City
Hospital District
State Schools
Yakima School District No. 7
County Emergency Services
Total rate for Yakima County levy code 333:
(1)
(2)
(3)
Total Representative
Levy Rates
Per $1,000 of
Assessed Value
$ 1.8462
n/a
n/a
n/ a
n/ a
3.5158
n/ a
2.7364
4.7368
0.2441
$ 13.0793
(1)
(1)
(1)
(1)
(1)
Total Statutory
Levy Authority
Per $1,000 of
Assessed Value
$1.80 (2)
2.25
0.50
1.50
0.45
3.60 (3)
0.75
3.60 (4)
Yakima County levy code 333 is included within the incorporated portion of Yakima County and therefore does not
have a road levy Likewise, it does not contain either a fire district, library district, port district or a hospital district.
Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per $1,000 to a rate not to exceed $2.475 per
$1,000 for general county purposes if (i) the total levies for both the county and any road district within the county do
not exceed $4.05 per $1,000 and (ii) no other taxing district has its levy reduced as a result of the increased county levy.
Of Yakima County's total levy rate of $1.8462, the nonvoted levy rate is $1.7690 and $0.0772 is the voted portion.
RCW 41.16.060 $0.225 of the total $3.60 can be used for pension funding purposes, if required, otherwise this tax may
be levied and used for any other municipal purpose. The total levy includes a regular levy of $3 4395 and a voted
bond levy of $0.0763
(4) RCW 84.52.043(1). The levy by the State shall not exceed $3.60 per $1,000 assessed value adjusted to the State
equalized value in accordance with the indicated ratio fixed by the State Department of Revenue to be used
exclusively for the support of the common schools.
Source: Yakima County Assessor for Levy Code 333.
General Property Taxes
The following provides a general description of the City's taxing authority and limitations thereon, the method
of determining the assessed value of real and personal property, tax collection procedures, and tax collection
information.
Authorized Property Taxes. The City is authorized to levy both "regular" property taxes and "excess" property
taxes.
(1)
Regular Property Taxes. Regular property taxes are subject to constitutional and statutory limitations
as to rates and amounts and commonly are imposed by taxing districts for general municipal
purposes, including the payment of debt service on limited tax general obligation indebtedness, such
as the Bonds. Regular property taxes do not require voter approval except as described below.
(2) Excess Property Taxes. Excess property taxes are not subject to limitation as to rates or amounts but
must be authorized by a 60 percent approving popular vote, as provided in Article VII, Section 2, of
the State Constitution and RCW 84.52.052. To be valid, such popular vote must have a minimum
voter turnout of 40 percent of the number who voted at the last City general election, except that one-
year excess tax levies also are valid if the turnout is less than 40 percent and the measure receives a
number of affirmative votes equal to or greater than 24 percent of the number who voted at the last
9
City general election. Excess levies may be imposed without a popular vote when necessary to
prevent impairment of the obligations of contracts.
Regular Property Tax Limitations
The authority of a City to levy taxes without a vote of the people for general City purposes, including the
payment of debt service on limited tax general obligation indebtedness, is subject to the limitations described
below. Information relating to regular property tax limitations is based on existing statutes and constitutional
provisions. Changes in such laws could alter the impact of other interrelated tax limitations on the City.
Regular property tax levies are subject to rate limitations and amount limitations, as described below, and to
the uniformity requirement of Article VII, Section 1 of the State Constitution, which specifies that a taxing
district must levy the same rate on similarly classified property throughout the district. Aggregate property
taxes vary within the county because of its different overlapping taxing districts. In the event that the
maximum permissible levy varies within the City, the lowest permissible rate for any part of the City would be
applied to the entire City.
Maximum Rate Limitation. Title 84 RCW authorizes the imposition of regular tax levies to various statutory
maximums (see "Overlapping Taxing Districts" herein).
The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of the Washington Constitution, as
amended in 1973, limits aggregate regular property tax levies by the State and all taxing districts, except port
districts and public utility districts, to one percent of the true and fair value of property. RCW 84.52.050
provides the same limitation by statute.
$5.90/$1,000 Aggregate Regular Levy Limitation. Within the one percent limitation described above,
RCW 84.52.043(2) imposes an aggregate limitation on regular tax levies by all taxing districts, other than the
State, of $5.90/$1,000 of assessed value, except levies for any port or public utility district; excess levies
authorized in Article VII, Section 2 of the State Constitution, and certain levies for acquiring conservation
futures, for emergency medical services or care, and to finance affordable housing.
Uniformity Requirement. Article VII, Section 1 of the Washington Constitution requires that property taxes be
levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying
such taxes. It is possible because of different overlapping taxing districts in different areas of the City that the
maximum permissible levy might vary within the City. In that event, to comply with the constitutional
requirement for uniformity of taxation, the lowest permissible rate for any part of the City would be applied to
the entire City
Prioritization of Levies. RCW 84.52.010 provides that if aggregate levies certified by all taxing districts exceed
the aggregate levy limitations described above, levies certified by junior taxing districts are reduced or
eliminated in order to bring the aggregate levy into compliance with the statutory maximum prescribed by
RCW 04.52.050 and 84.52.043. RCW 84.52.043 defines "junior taxing districts" as all taxing districts other than
the state, counties, road districts, cities, towns, port districts, and public utility districts.
The tax levy for unlimited tax general obligation bonds is a special excess levy approved by the voters, and as
such, is not subject to the limitations on regular levies described above.
The Levy Limitation. The regular property tax increase limitation (Chapter 84.55 RCW), as amended most
recently by Initiative No. 747 (which was passed by voters on November 6, 2001), limits the total dollar
amount of regular property taxes levied by an individual local taxing district such as the City to the amount of
such taxes levied in the highest of the three most recent years multiplied by a limit factor, plus an adjustment
to account for taxes on new construction, annexations, improvements and State -assessed property at the
previous year's rate. The limit factor is the lesser of 101 percent of the highest levy in the three previous years
(excluding new construction, improvements, and State -assessed property) or 100 percent plus inflation, unless
a greater amount is approved by a simple majority of the voters.
10
RCW 84.55.092 allows the property tax levy to be set at the amount that would be allowed if the tax levy for
taxes due in each year since 1986 had been set at the full amount allowed under Chapter 84.55 RCW. This is
sometimes referred to as "banked" levy capacity.
With a majority vote of its electors, a taxing district may levy, within the rate limitations described above,
more than what otherwise would be allowed by the tax increase limitation indefinitely or for a limited period
or to satisfy a limited purpose, as allowed by RCW 84.55.050. This is known as a "levy lid lift." A newly
created taxing district can initiate its levy at the maximum permitted statutory levy rate, unless that rate would
exceed any of the limitations described above.
Since the regular property tax increase limitation applies to the total dollar amount levied rather than to levy
rates, increases in the assessed value of all property in the taxing district (excluding new construction,
improvements and State -assessed property) which exceed the rate of growth in taxes allowed by the limit
factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses
banked levy capacity. Decreases in the assessed value of all property in the taxing district (including new
construction, improvements and State -assessed property) or increases in such assessed value that are less than
the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates.
Assessed Value
The County Assessor, or equivalent thereof ("Assessor"), determines the value of all real and personal
property throughout the County that is subject to ad valorem taxation, except certain utility properties which
are valued by the State Department of Revenue. The Assessor is an elected official whose duties and methods
of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the
State Department of Revenue.
For tax purposes, the assessed value of property is 100 percent of its market value. Three approaches may be
used to determine real property value: market data, replacement cost and income generating capacity In
Yakima County, all property is subject to an annual property valuation and an on-site revaluation every six
years. The property is listed by the Assessor on a roll at its current assessed value and the roll is filed in the
Assessor's office. The Assessor's determinations are subject to revisions by the County Board of Equalization
and, for certain property, subject to further revisions by the State Board of Tax Appeals.
Tax Collection Procedure
Property taxes are levied in specific amounts and the rate for all taxes levied for all taxing districts in the
County is determined, calculated and fixed by the Assessor based upon the assessed value of the property
within the various taxing districts. The Assessor extends the taxes to be levied within each taxing district on a
tax roll that contains the total amount of taxes to be so levied and collected. By January 15 of each year, the tax
roll is delivered to the County Treasurer, or equivalent thereof, who creates a tax account for each taxpayer
and is responsible for the collection of taxes due to each account. All such taxes are due and payable on April
30 of each year, but if the amount due from a taxpayer exceeds $50, one-half may be paid then and the balance
no later than October 31 of that year. Delinquent taxes are subject to interest at the rate of 12 percent per year
computed on a monthly basis from the date of delinquency until paid. In addition, a penalty of three percent
is assessed on June 1st of the year in which the tax was due and eight percent on December 1st of the year due.
All collections of interest on delinquent taxes are credited to the County's current expense fund. The method
of giving notice of payment of taxes due, the accounting for the money collected, the division of the taxes
among the various taxing districts, notices of delinquency, and collection procedures are covered by detailed
statutes. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal
property subject to taxation. By law the County Treasurer may not commence foreclosure of a tax lien on real
property until three years have passed since the first delinquency. The State's courts have not decided
whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain the first
$40,000 of proceeds of the forced sale of the family residence or other "homestead" property for delinquent
general property taxes. (See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982), holding the homestead
right superior to the improvement district assessments.) The United States Bankruptcy Court for the Western
District of Washington has held that the Homestead Exemption applies to the lien for property taxes, while the
State Attorney General has taken the position that it does not.
11
Collection
Year
2005
2004
2003
2002
2001
2000
City of Yakima
Tax Collection Record
Regular Ad Valorem
Assessed Value (1) Tax Levy
$3,971,667,847 $13,960,632
3,824,096,823 13,592,285
3,673,433,781 13,280,578
3,268,615,861 12,390,073
3,156,055,363 11,968,211
3,076,532,870 11,488,967
Tax Collection
Year As of
of Levy 09/30/05
(2)
96.8%
96.7
95.4
95.8
94.4
(2)
98.4%
99.2
99.7
99.9
100.0
(1) Assessed valuation is based upon 100 percent of actual valuation.
(2) In process of collection.
NOTE. Taxes are due and payable on April 30 of each year of the levy. The entire tax or first half must be paid on or
before April 30, otherwise the total amount becomes delinquent on May 1. The second half of the tax is payable
on or before October 31, becoming delinquent November 1.
Source: City of Yakima and Yakima Counhj Assessor's Office.
Taxpayer
Yakima HMA Inc. (1)
Shields Bag & Printing Co.
Qwest Corporation
Longview Fibre Co.
Leelynn Inc. and Wiley Mountain Inc.
John I. Haas, Inc.
Washington Fruit & Produce
Yakima Valley Memorial Hospital
Snokist Growers Inc.
Yakima Mall Shopping Center
City of Yakima
Major Property Taxpayers
Type of Business
Hospital
Manufacturing
Telecommunications
Manufacturing
Lumber
Hop processing
Fruit processing
Hospital
Fruit processing
Retail
Subtotal - Ten of the City's Largest Taxpayers
All Other City Taxpayers
Total City Taxpayers
(1) Formerly Providence Health Systems, a non-profit medical facility
Regional Medical and Cardiac Center.
Source: Yakima Counhj Assessor's Office.
Percent of
2005 Collection Year City's
Assessed Valuation Total A.V.
$ 53,075,420 1.34%
41,086,084 1.03
33,237,065 0.84
24,337,472 0.61
21,031,850 0.53
20,420,992 0.51
16,965,493 0.43
16,687,200 0.42
16,495,712 0.42
15,969,997 0.40
259,307,285 6.53
3,712,360,562 93.47
$ 3,97L667,847 100.00%
. Yakima HMA Inc. is doing business as Yakima
Authorized Investments
Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess of
current needs to the following authorized investments: United States bonds; United States certificates of
indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or warrants
of a local improvement district which are within the protection of the local improvement guaranty fund law;
and any other investment authorized by law for any other taxing district or the State Treasurer. Under chapter
43.84 RCW, the State Treasurer may invest in non-negotiable certificates of deposit in designated qualified
public depositories; in obligations of the US government, its agencies and wholly owned corporations; in
bankers' acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national
mortgage association and other government corporations subject to statutory provisions and may enter into
repurchase agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local
improvement district are also eligible investments (RCW 35.39.030).
12
Money available for investment may be invested on an individual fund basis or may, unless otherwise
restricted by law, be commingled within one common investment portfolio. All income derived from such
investment may be either apportioned to and used by the various participating funds or for the benefit of the
general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds
or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances,
resolutions or bond covenants may lawfully prescribe.
Local Government Investment Pool
The State Treasurer's Office administers the Washington State Local Government Investment Pool (the
"LGIP"), a $5.1 billion dollar fund that invests money on behalf of more than 350 cities, counties and special
taxing districts. In its management of LGIP, the State Treasurer is required to adhere, at all times, to the
principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the safety of
principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest
possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to
meet all cash flow demands.
The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the
opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants
increased safety of principal and the ability to achieve a higher investment yield than would otherwise be
available to them. The pool is restricted to investments with maturities of one year or less, and the average life
typically is less than 90 days. Investments permitted under the pool's guidelines include U.S. government and
agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase
agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified Washington State
depositories.
Authorized Investments for Bond Proceeds
In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds
with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less
than four years; municipal securities rated in one of the four highest categories; and money market funds
consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating
categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money
market funds with portfolios of securities otherwise authorized by law for investment by local governments
(RCW 39.59.030). See "The City - Cash and Investments" for more information regarding the City's
investment practices.
13
City of Yakima
Comparative General Fund Statement
of Revenues, Expenditures and Changes in Fund Balance
(Fiscal Years Ended December 31)
Audited
2004 2003
2002 2001 2000
Revenues
Taxes and Special Assessments $ 30,119,323 $ 28,294,713 $ 26,565,287 $ 25,438,932 $ 24,285,034
Licenses and Permits 529,767 469,716 405,856 408,688 331,190
Intergovernmental 1,605,395 1,739,409 1,749,790 1,829,708 1,669,192
Charges for Services 4,201,981 3,861,959 3,723,724 3,466,615 3,407,465
Fines and Forfeitures 1,363,565 1,396,796 1,631,877 1,553,036 1,608,584
Interest 414,847 425,786 558,359 893,688 950,269
Other 40,518 (259,859) (1) 56,453 51,885 52,050
Total Revenues $ 38,275,396 $ 35,928,520 $ 34,691,346 $ 33,642,552 $ 32,303,784
Expenditures
General Government 9,783,461 8,963,242 8,662,004 8,053,234 7,997,793
Security of Persons and Property 23,297,962 22,262,081 20,794,442 19,490,986 18,993,558
Physical Environment 1,326,367 1,230,396 1,242,009 1,086,178 1,048,394
Economic Environment 582,593 503,422 419,434 372,629 425,484
Mental and Physical Health 16,952 15,327 23,219 22,608 21,510
Culture and Recreation 1,421,107 1,405,448 1,251,178 1,214,139 1,190,468
Capital Outlay 200,122 56,641 93,030 89,068 157,526
Debt Service 357,374 211,843 212,403 212,754 214,314
Total Expenditures 36,985,938 34,648,400 32,697,719 30,541,596 30,049,047
Excess of Revenues
Over (Under) Expenditures
1,289,458 1,280,120 1,993,627 3,100,956 2,254,737
Other Financing Sources (Uses)
Proceeds from Capital Lease Financing 147,669 0 0 0 0
Operating Transfers In 145,000 110,000 110,000 110,000 110,000
Operating Transfers (Out) (2) (2,005,430) (1,845,427) (1,919,371) (1,910,660) (1,862,966)
Comp For Loss of Gen. Fixed Assets 779 1,143 2,774 989 12,040
Total Other Financing Sources (Uses) (1,711,982) (1,734,284) (1,806,597) (1,799,671) (1,740,926)
Excess of Revenues and Other Sources
Over (Under) Expenditures/Other Uses (422,524) (454,164) 187,030 1,301,285 513,811
Fund Balance, January 1
Change in Reserve for Inventory
Ending Fund Balance
9,256,841 9,709,874 (3) 6,191,466 4,903,996 4,401,093
16,217 1,131 (3,280) (13,815) (10,908)
$ 8,850,534 $ 9,256,841 $ 6,375,216 $ 6,191,466 $ 4,903,996
(1) Prior period adjustment.
(2) The majority of operating funds transferred out of the general fund are used to fund parks programs, bonded debt
service, contingency funds and the City's public safety communications network.
(3) In conjunction with GASB 34, the City also implemented GASB 33, which defines revenue recognition for "no
exchange" (i.e. tax) transactions. As a result of the implementation of GASB 33, a change in accounting principle was
determined to have occurred. This change caused a restatement of $3,334,658 in the General Fund beginning fund
balance to comply with the pronouncement.
Source: City of Yakima.
14
City of Yakima
Comparative General Fund Balance Sheet
(Fiscal Years Ended December 31)
Audited
2004 2003 2002 2001 2000
Assets and Other Debits
Cash & Equity in Pooled Investments $ 2,351,707 $ 1,050,215 $ 7,704,560 $ 8,890,037 $ 7,372,158
Receivables:
Taxes 3,684,741 3,363,202 862,274 727,573 827,451
Accounts 153,443 174,206 174,086 166,865 176,765
Interest/Penalties 70,611 89,499 287,596 287,633 366,448
Other 6,397 0 0 0 0
Due from Other Funds 242,101 584,875 1,066,233 153,003 63,818
Due from Other Gov't Units 28,880 73,368 26,964 26,964 51,116
Inventories 44,150 27,933 26,802 30,082 43,897
Investments, at amortized cost 5,670,001 7,500,000 0 0 (15,523)
Total Assets 12,252,031 12,863,298 10,148,515 10,282,157 8,886,130
Liabilities
Warrants/Accounts Payable
Wages/Benefits Payable
Due to Governments
Deposits Payable
Deferred Revenues
503,264
2,655,805
37,258
68,183
136,987
606,871
2,551,753
22,399
271,744
153,690
389,798
2,246,608
24,585
214,524
897,784
642,513 517,171
2,054,005 2,035,914
25,083 23,129
10,963 39,459
1,358,127 1,366,461
Total Liabilities 3,401,497 3,606,457 3,773,299 4,090,691 3,982,134
Fund Equity and Other Credits
Fund Balance:
Reserved 383,582 781,001 788,694 771,777 714,745
Unreserved 8,466,952 8,475,840 5,586,522 5,419,689 4,189,251
Total Fund Equity and Other Credits 8,850,534 9,256,841 6,375,216 6,191,466 4,903,996
Total Liabilities, Equity and Other Credits $ 12,252,031 $ 12,863,298 $ 10,148,515 $ 10,282,157 $ 8,886,130
Source: City of Yakima.
15
City of Yakima
Comparative Parks and Recreation Fund Statement
of Revenues, Expenditures and Changes in Fund Balance
(Fiscal Years Ended December 31)
Audited
2004 2003 2002 2001 2000
Revenues
Taxes and Special Assessments $ 1,741,985 $ 1,841,750 $ 1,726,790 $ 1,690,515 $ 1,567,485
Intergovernmental 49,519 61,680 50,503 39,678 25,887
Charges for Services 794,244 702,346 753,300 723,601 776,716
Interest 944 (6,754) 1,106 6,872 41,096
Other 133,143 117,302 114,869 126,757 149,819
Total Revenues $ 2,719,835 $ 2,716,324 $ 2,646,568 $ 2,587,423 $ 2,561,003
Expenditures
Economic Environment 443,912 288,916 278,796 262,923 287,364
Culture and Recreation 3,070,340 2,991,227 2,910,227 2,807,905 2,773,226
Capital Outlay 5,158 51,858 26,766 2,676 2,629
Total Expenditures 3,519,410 3,332,001 3,215,789 3,073,504 3,063,219
Excess of Revenues
over (under) Expenditures (799,575) (615,677) (569,221) (486,081) (502,216)
Other Financing Sources (Uses)
Operating Transfers In 980,695 858,955 794,175 680,097 658,139
Operating Transfers (Out) (221,000) (235,000) (235,000) (155,000) (135,000)
Comp. For Loss of Gen. Fixed Assets 29,439 31,487 13,870 14,987 12,131
Total other Financing Sources (Uses) 789,134 655,442 573,045 540,084 535,270
Excess of Revenues and Other Sources
Over (Under) Expenditures/Other Uses (10,441) 39,765 3,824 54,003 33,054
Fund Balance, January 1 482,724 442,959 439,135 430,132 397,078
Residual Equity Transfer In (Out) 0 0 0 (45,000) 0
Ending Fund Balance $ 472,283 $ 482,724 $ 442,959 $ 439,135 $ 430,132
Source: City of Yakima
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The City
The City of Yakima was incorporated in 1886. It is the tenth largest city in the State of Washington (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
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 is responsible for the
supervision and direction of a full-service city with seven operating departments. Mr. Zais prepares and
administers the $164 million annual City budget with a $55 million annual payroll for over 600 full-time
employees. Mr. Zais serves as the Council's chief advisor, appoints all administrative officers and employees
and executes Council policy and programs. Mr Zais' educational background is in public administration with
a B.A. and M.P.A. from the University of Washington.
Rita M. Anson, Director of Finance & Budget. Ms. Anson joined the City in 1999 as the Finance Director, coming
from Puget Sound Energy Corporation. Ms. Anson is responsible for all financial and treasury services,
budgeting and accounting, utility customer services and information systems for the City. During her 21
years with Puget Sound Energy, Ms. Anson served in many capacities including the following key
management positions: Manager of District Operations, Manager of Corporate Budgets; and Manager of
Information Systems Project. Ms. Anson has a degree in Accounting from Central Washington University, is a
CPA and is a member of the AICPA, WSCPA.
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.
Cindy J. Epperson, Financial Services Manager. Ms. Epperson joined the City in 1990 as an accountant and was
promoted to Financial Services Manager in 1998, where she has the responsibility for the City's accounting
systems and processes, and financial statement preparation. Ms. Epperson works closely with the City
Manager and Finance Director to prepare the City's budget. Prior to joining the City, Ms. Epperson was
17
Accounting Manager for two local agricultural businesses. Prior to her experience in the agricultural industry,
Ms. Epperson was Senior Auditor for an international accounting firm. She obtained a B.S. degree in
Accounting from the University of Arkansas in Little Rock.
Labor Relations
The City currently employs approximately 662 full-time and 25 part-time and temporary employees. A
majority of the City's employees are represented by bargaining units as follows:
Bargaining Unit
AFSCME Municipal
YPPA
Fire Suppression
AFSCME Transit
Fire Communications
Fire PERS
Number
of Employees
281
113
76
42
13
15
(1) Benefit terms and adjustments are still under negotiation.
(2) Currently under negotiation.
Contract Expiration Date
December 31, 2007 (1)
December 31, 2005 (2)
December 31, 2006 (2)
December 31, 2005 (2)
December 31, 2006 (2)
December 31, 2006 (2)
The City has a long history of good working relationships with its employee groups and bargaining units.
Pension System
Substantially all full-time and qualifying part-time employees participate in one of the following statewide
local government retirement systems administered by the Washington State Department of Retirement
Systems, under cost-sharing, multiple -employer public employee retirement systems. Actuarial information is
on a system -wide basis and is not considered pertinent to the City's financial statements. 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.
For the year ending December 31, 2004, the City's contribution of $312,754, or 1.38 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, 2004, the City's contribution to
LEOFF I (for participants who joined the system by September 30, 1977) of 0.19 percent and to LEOFF II
(participants who joined after September 30, 1977) of 3.25 percent of covered payroll totaled $413,337,
representing its full liability under the system, except that future rates may be adjusted to meet the system
needs.
LEOFF and PERS employer and employee contributions rates will rise over the next four to six years to make
up for recent State pension fund losses. The Select Committee on Pension Policy ("SCPP") studies pension
policy and makes recommendations to the Legislature on benefit changes for most State retirement systems,
including PERS and Plan 1 of LEOFF Because of the financial hardship significant rate increases impose on
18
both employers and employees alike, the Legislature explored a variety of proposals to soften that budgetary
impact.
The last actuarial value of assets in the State -administered retirement systems was done for the year ended
September 30, 2003, which showed actuarial assets of $43.869 million and accrued liability of $47.130 million.
This could result in increased contribution rates for the City.
When the legislative session ended in April 2005, the Legislature had passed a compromise on pension
funding (ESHB 1044). In a departure from previous pension funding policy, the bill phases in the needed
2005-2007 rate increase over a four- year period. It also makes other changes designed primarily to save the
State money. The following is a brief summary of the bill's major provisions:
• Begins a four-year phase-in of annual pension contribution rates, with a 2.25 percent PERS employer
contribution rate effective July 1, 2005, increasing to 3.5 percent effective July 1, 2006.
• Directs the Pension Funding Council to adopt annual contribution rates for the 2007-2009 biennium
that would complete the four-year phase-in schedule by September 30, 2006.
• Continues to suspend contribution rates for the State's unfunded liabilities in PERS Plan I during the
2005-2007 biennium.
• Delays recognition of the cost associated with future gain -sharing benefit distributions until the 2007-
2009 biennium.
• Directs the Select Committee on Pension Policy to study the options available to address the liability
associated with future gain -sharing distributions during the 2005 interim, and report the findings and
recommendations of the study to the fiscal committees of the Legislature.
The following chart shows PERS employer and PERS Plan II employee contribution rates for the 2005-2007
biennium:
Contribution Rate Period
Employer Rate
(PERS 1/2/3)
Member Rate
(PERS 2)*
7-1-05 through 6-30-06
2.25%
2.25%
7-1-06 through 6-30-07
3.50%
3.50%
* PERS Plan 1 employees pay a statute set six percent; PERS Plan 3 employees individually select their rate, so there is not
uniformity
On December 9, 2004 the LEOFF 2 Board, which governs Plan 2 of LEOFF, approved a proposal to provide for
contribution rate increases for the years 2005 through 2009 on an annual basis (rather than biennially) as
shown in the following chart:
Contribution Rate Beginning
Date
LEOFF 2 Member
Contribution Rate*
Employer
Contribution Rate
July 1, 2005
6.75%
4.05%
July 1, 2006
7.55%
4.53%
July 1, 2007
8.30%
4.98%
July 1, 2008
8.49%
5.09%
* LEOFF Plan 1 employers and employees currently do not pay retirement contributions due to a surplus in the fund.
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. This
fund had an unfunded pension liability of $3,367,806 at December 31, 2004.
19
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 $850,170 at December 31, 2004. An actuarial study was completed January 1, 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.
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 Prograin. The City, in 1979, self-insured its medical and dental programs for all
employees other than temporary employees and employees hired to work less than half-time. The City's
Human Resources Office administers the self-insured program and claims payment services are provided by
Health Care Management Administration, Inc.
Each operating fund is charged an amount per covered employee which would otherwise have been paid to
an insurance carrier. Interfund premiums to the Employee Health Benefit Reserve Fund for 2004 were
$6,160,969. Incurred but not reported claims of $947,411 were accrued as a liability.
In order to avoid catastrophic losses, the City "reinsures" the program by purchasing insurance known as
"stop -loss insurance." Two types of "stop -loss" insurance are purchased: (i) individual stop -loss, and
(ii) aggregate stop -loss, with both provided through Safeco Insurance Company. Under the individual stop-
loss insurance, the City pays the first $150,000 of claims for an individual employee or dependent. Any
charges accrued by an individual in excess of $150,000 in a calendar year are thereafter reimbursed 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 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 2004 were
$1,249,258. Based on the claim manager's estimate, the City has accrued incurred but not reported claims of
$569,539 at December 31, 2004.
In order to avoid catastrophic losses, the City "reinsures" the program by purchasing insurance known as
"stop -loss insurance." This insurance is provided through Marsh Advantage America under a policy
purchased from Employers Reinsurance. Under the individual stop -loss portion of the insurance, the City is
liable for the first $500,000 of claims resulting from a specific accident. Charges beyond that $500,000 are
covered by stop -loss insurance up to $25 million.
Risk Management Program. The Risk Management Reserve Fund was established in 1986 when the City
elected to self -insure the liability exposure portion of its insurance program. Resources accrue to the fund
through interfund premiums to Operating Funds for appropriate insurance coverage and the replenishment
20
and building of reserves for potential liability claims. City contributions to the Risk Management Reserve
Fund for 2004 were $1,635,745. The Fund provides for administration, legal services, claims adjustment, and
for the purchase of property, excess liability and other insurance coverage.
Liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can
be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported.
The result of the process to estimate the claims liability is not an exact amount as it depends on many complex
factors, such as inflation, changes in legal doctrines and damage awards. Accordingly, claims are reevaluated
periodically to consider recent claim settlement trends, inflation and other economic and social factors. The
estimate of the claims liability also includes amounts for incremental claims adjustment expenses related to
specific claims. Based on these factors, the claims manager's estimate of claims liability was $1.2 million as of
December 31, 2004. Excess liability coverage is provided from Genesis Underwriters Management Company
in an amount of $8 million, with a $1 million retention.
Accounting Policies
Accounting records for the City are maintained in accordance with methods prescribed by the State Auditor
under the authority of Washington State law. The City financially reports on the calendar year basis and
employs a double -entry modified accrual system for all fund categories with the exception of proprietary,
nonexpendable and pension trust funds which require full accrual reporting. The modified accrual basis
differs from the accrual basis in the following ways: (i) purchases of capital assets are considered
expenditures; (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, 2004 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 businesses in the private sector. The City's resources
are allocated to and accounted for in individual funds depending on what they are to be spent for and how
they are controlled.
Governmental Funds. All governmental funds are accounted for on a spending or "financial flow"
measurement focus. This means that only current assets and current liabilities are generally included on their
balance sheets. Their reported fund balance (net current assets) is considered a measure of "available
expendable resources." Governmental fund operating statements focus on measuring changes in financial
position, rather than net income; they present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
Budgetary Process
The City Council annually approves the City's operating budget. The operating budget is designed to allocate
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.
21
The City Manager is authorized to transfer budgeted appropriations between departments within any fund;
however, any revisions that alter the total expenditures of a fund, or that affect the number of permanently
authorized employee positions, salary ranges, or other conditions of employment must be approved by the
City Council.
Cash and Investments
Cash and investments are managed under the guidance of the City's Investment Policy adopted by a
resolution of the City Council. The policy was based on the Model Investment Policy prepared by the
Municipal Treasurers' Association of the United States and Canada and applies to all financial assets of the
City.
Investments are made using the "prudent person" standard with primary objectives being safety of principal,
liquidity enabling the City to meet all operating requirements and a return on investment objective of attaining
a market rate of return through budgetary and economic cycles. City policies require the City to minimize
counterparty risks by safekeeping all purchased securities and conducting all trades on a delivery versus
payment basis. A report on the performance of the Treasury Division is prepared quarterly for review by the
City Council and City Manager.
Investments of City funds except those of the Firemen's Relief and Pension Fund are limited to: (i) investment
deposits, including certificates of deposit with qualified public depositories as defined in chapter 39.59 RCW;
(ii) certificates, notes or bonds of the United States, or other obligations of the United States, or its agencies, or
of any corporation wholly owned by the government of the United States; (iii) obligations of government-
sponsored corporations which are eligible as collateral for advances to member banks as determined by the
Board of Governors of the Federal Reserve System, (iv) banker's acceptances sold on the secondary market;
and (v) the 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, 2004 was $58.9 million. Of that amount, 52 percent was in agency
securities, 42 percent was in the LGIP, four percent was invested in U.S. Treasuries, and two percent was
invested in municipal securities. See "Appendix C - 2004 Annual Financial Report" for a breakdown of
investments.
Auditing of City Finances
Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance
with RCW 43.09.200 and RCW 43.09.230. The City complies with the systems and controls prescribed by the
Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of
assets and the reliability of financial reporting (see "Authorized Investments" herein).
The State Auditor is required to examine the affairs of cities at least once every two years. The City is audited
annually. The examination must include, among other things, the financial condition and resources of the
City, whether the laws and constitution of the State are being complied with, and the methods and accuracy of
the accounts and reports of the City. Reports of the auditor's examinations are required to be filed in the office
of the State Auditor and in the finance department of the City.
The audited financial statements of the City for the year ended December 31, 2004, attached as Appendix C,
are incorporated by reference to this Official Statement and have been filed with the current nationally
recognized municipal securities information repositories ("NRMSIR").
22
Demographic Information
The City lies in central Washington State in the County about 142 miles
southeast of Seattle and 188 miles northeast of Portland, Oregon. The 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
2005
2004
2003
2002
2001
Yakima
County
229,300
227,500
226,000
225,000
224,500
*The City completed an annexation of 1,990 citizens in June 2005
Source: Washington State Office of Financial Management, October 2005
City of
Yakima
79,480*
79,480
79,220
79,120
73,040
Recent Developments
The Yakima Mall Shopping Center closed as of December 31, 2003. The owner is building a new Hilton
Garden Inn hotel on the site, which is expected to be surrounded by some new retail. The hotel is scheduled to
open in late 2005 or early 2006.
Economic Indicators
Major Employers. 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
Yakima County
Yakima Regional Medical Center
Snokist Growers
City of Yakima
Western Recreational Vehicles Inc.
Yakima Valley Community College
Shields Bag & Printing
Quality Transportation
City of Yakima
Maj or Employers
Product
Government
Medical
Education
Government
Medical
Fruit canning
Government
RV manufacturing
College
Flexible packaging
Trucking/transportation brokers
Source: Yakima County Development Association 2005
23
Number of
Employees
1,500
1,500
1,001
1,000
941
851
716
600
590
470
410
Income. Historic personal income and per capita income levels for the County and the State are shown below:
Year
2004
2003
2002
2001
2000
1999
Yakima County and State of Washington
Total Personal and Per Capita Income
Yakima County
Total Personal Per Capita
Income (in millions) Income
N/A
$5,425.6
5,258.0
5,151.7
4,916.1
4,625.4
N/A
$23,916
23,416
23,062
22,070
20,875
State of Washington
Total Personal Per Capita
Income (in millions) Income
Source: U.S. Department of Commerce, Bureau of Economic Analysis, October 2005.
$217,240.1
203,889.7
198,371.3
193,498.3
187,853.4
175,491.3
$35,017
33,254
32,696
32,289
31,779
30,037
Taxable Retail Sales. Taxable retail sales reflect only those sales subject to retail sales tax. Historic taxable retail
sales for the City and the County are shown below:
City of Yakima and Yakima County
Taxable Retail Sales
Year
2005*
2004
2003
2002
2001
2000
City of Yakima
Yakima County
$ 306,753,810 $ 557,949,458
1,307,845,725 2,411,522,348
1,246,026,347 2,294,202,221
1,205,189,471 2,178,920,758
1,176,022,552 2,122,049,462
1,168,665,601 2,140,980,425
*Data through 1St quarter only.
Source: Washington State Department of Revenue, October 2005.
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 the County are listed below:
Year
2005 *
2004
2003
2002
2001
2000
1999
Yakima County
Residential Building Permits
New Single Family Units New Multi Family Units
Number Valuation
68
372
333
261
218
220
323
$ 13,883,921
76,608,218
56,530,404
39,372,449
31,260,016
31,372,650
41,818,791
Number
N/A
N/A
3
17
7
1
7
* Through March 31, 2005
Source: Greater Yakima Valley Chamber of Commerce, October 2005.
24
Total
Valuation Valuation
N/A N/A
N/A N/A
$ 575,332 $ 57,105,736
4,082,973 43,455,422
3,341,679 34,601,695
136,395 31,509,045
1,230,362 43,049,153
Employment. Employment within the County is described in the following tables. Civilian Labor Force data
is based on household surveys of residents. NAICS data are estimates based on surveys of employers and
benchmarked based on covered employment as reported by all employers.
Civilian Labor Force
Total Employment
Total Unemployment
Percent of Labor Force
Yakima MSA
Nonagricultural Wage & Salary Workers
and Labor Force and Employment Data
Annual Average
2005 2004 2003 2002 2001
117,800 119,800 115,700 113,300 110,200
108,300 109,500 104,500 102,300 99,800
9,500 10,300 11,200 11,000 10,400
8.1 8.6 9.7 9.7 9.4
NAICS INDUSTRY (in thousands) 2005 2004 2003 2002 2001
TOTAL NONFARM 75,686 75,442 75,200 74,000 74,300
TOTAL PRIVATE 58,643 58,742 58,600 57,800 58,300
GOODS PRODUCING 12,271 12,742 12,900 13,300 13,900
NAT. RESOURCES, MINING, & CONSTR. 3,457 3,425 3,200 3,100 3,100
MANUFACTURING 8,814 9,317 9,800 10,100 10,800
Non -Durable Goods 4,743 5,025 5,500 5,800 6,100
SERVICES PROVIDING 63,414 62,700 62,300 60,800 60,400
PRIVATE SERVICES PROVIDING 46,371 46,000 45,700 44,600 44,400
Trade, Transportation, and Utilities 16,386 16,308 15,700 15,800 16,200
Wholesale Trade 3,900 4,033 3,800 3,900 4,300
Retail Trade 9,443 9,400 9,500 9,200 9,200
Transportation, Warehousing, and Utilities 3,043 2,875 2,400 2,700 2,700
Professional and Business Services 4,429 4,567 4,900 4,500 4,400
Educational and Health Services 12,429 12,208 11,800 11,600 11,400
Health Services 11,271 11,100 10,800 10,700 10,500
Leisure and Hospitality 6,557 6,425 6,400 6,300 6,000
Food Services 4,871 4,608 4,600 4,500 4,400
GOVERNMENT 17,043 16,700 16,600 16,200 16,000
Federal Government 1,329 1,308 1,400 1,400 1,400
Total State Government 3,000 3,000 2,900 2,900 2,900
Total Local Government 12,714 12,392 12,300 11,900 11,700
Workers in Labor/Management Disputes 0 33 0 0 0
Source• Washington State Employment Security Department, October 2005.
Initiative and Referendum
State Initiatives
Under the State Constitution, the voters of the State have the ability to initiate legislation and require the
Legislature to refer legislation to the voters through the powers of initiative and referendum, respectively. The
initiative power in Washington may not be used to amend the State Constitution. Initiatives and referenda are
submitted to the voters upon receipt of a petition signed by at least eight percent (initiative) and four percent
(referenda) of the number of voters registered and voting for the office of Governor at the preceding regular
gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or
repealed by the Legislature within a period of two years following enactment, except by a vote of two-thirds of
all the members elected to each house of the Legislature. After two years, the law is subject to amendment or
repeal by the Legislature in the same manner as other laws.
25
Future Initiative Legislation. Other tax and fee initiative measures have been and may be filed, but it cannot be
predicted whether any such initiatives might gain sufficient signatures to qualify for submission to the
Legislature and/or the voters or, if submitted, whether they ultimately would be approved.
Tax Exemption
In the opinion of Bond Counsel, assuming compliance with certain covenants of the City, interest on the Bonds
is excluded from gross income for federal income tax purposes under existing law. Interest on the Bonds is not
an item of tax preference under the Internal Revenue Code of 1986, as amended (the "Code"), for purposes of
determining the alternative minimum tax imposed on individuals and corporations. Interest on a Bond owned
by a corporation (other than an S corporation, regulated investment company, real estate investment trust or
real estate mortgage investment conduit) may be indirectly subject to alternative minimum tax because of its
inclusion in the earnings and profits of the corporate owner.
The Code sets forth certain requirements that must be met subsequent to the issuance and delivery of the
Bonds for interest on the Bonds to remain excluded from gross income for federal income tax purposes. The
City has covenanted to comply with such requirements. Noncompliance with such requirements may cause
the interest on the Bonds to be included in gross income of the owners of the Bonds for federal income tax
purposes, retroactive to the date of issue of the Bonds. Bond Counsel's opinion assumes compliance with
these covenants, and Bond Counsel has not undertaken to determine, or to inform any person, whether any
actions taken or not taken, or events occurring or not occurring, after the date of issuance of the Bonds may
affect the tax status of interest on the Bonds.
Interest on a Bond owned by a foreign corporation may be subject to the branch profits tax imposed by the
Code. Ownership of the Bonds may give rise to collateral federal income tax consequences to certain
taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, S
corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad
Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to
purchase or carry the Bonds. Bond Counsel expresses no opinion as to any such collateral federal income tax
consequences. Purchasers of the Bonds should seek advice based on the purchaser's particular circumstances
from their own tax advisor.
Qualified Tax -Exempt Obligations
The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section
265(b)(3)(B) of the Code.
Rating
As noted on the cover page of this Official Statement, the City will apply for ratings for the Bonds from
Standard & Poor's Ratings Services. When and if obtained, the rating will reflect only the views of the rating
agency and an explanation of the significance of the rating may be obtained from the rating agency. There is
no assurance that the ratings, once obtained, will be retained for any given period of time or that the rating
will not be revised downward or withdrawn entirely by the rating agency if, in its judgment, circumstances so
warrant. Any such downward revision or withdrawal of the rating will be likely to have an adverse effect on
the market price of the Bonds.
No Continuing Disclosure Undertaking
The aggregate principal amount of the Bonds is less than $1 million, therefore the issuance of the Bonds does
not constitute an "Offering" under Securities and Exchange Commission Rule 15c2-12 (the "Rule").
Consequently, the City does not undertake to provide financial information or operating data or notices of
material events with respect to the Bonds pursuant to the Rule.
26
Legal and Underwriting
Approval of Counsel
Legal matters incident to the authorization, issuance and sale of Bonds by the City are subject to the approving
legal opinion of Preston Gates & Ellis LLP, Bond Counsel. A form of the opinion of Bond Counsel is attached
hereto. Bond Counsel will be compensated only upon the issuance and sale of the Bonds. Bond Counsel has
not been retained to review and has not reviewed this Official Statement for completeness or accuracy and will
not offer an opinion concerning this Official Statement. All or a portion of the fees of Bond Counsel are
contingent upon the issuance and sale of the Bonds.
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.
Because of the nature of its activities, the City is subject to certain pending legal actions which arise in the
ordinary course of business. The City believes, based on the information presently known, that the ultimate
liability for any of such legal actions will not be material to the financial position of the City.
Official Statement
In the Ordinance the City will deem final this Preliminary Official Statement as of its date for the purpose of
Securities and Exchange Commission Rule 15c2-12.
Underwriting
The Bonds are being purchased by Seattle -Northwest Securities Corporation, the Underwriter. The purchase
contract provides that the Underwriter will purchase all of the Bonds, if any are purchased, at a price of
percent of the par value of the Bonds, plus accrued interest. The Bonds will be reoffered at an average price of
percent of the par value of the Bonds. After the initial public offering, the public offering prices may be
varied from time to time.
Concluding Statement
All estimates, assumptions, statistical information and other statements contained herein, while taken from
sources considered reliable, are not guaranteed by the Underwriter or the City. So far as any statement herein
includes matters of opinion, or estimates of future expenses and income, whether or not expressly so stated,
they are intended merely as such and not as representations of fact.
The information contained herein should not be construed as representing all conditions affecting the City or
the Bonds. Additional information may be obtained from the City. The statements relating to the 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
Preston l Gates l Ellis LLP
, 2005
City of Yakima
Yakima, Washington
Seattle -Northwest Securities Corporation
Seattle, Washington
Re: City of Yakima, Washington
Limited Tax General Obligation Bonds, 2005 $
Ladies and Gentlemen:
We have acted as bond counsel to City of Yakima, Washington (the "City") and have
examined a certified transcript of all of the proceedings taken in the matter of the issuance by the
City of its Limited Tax General Obligating Bonds, 2005, dated December 1, 2005, in the
aggregate principal amount of $ (the "Bonds"), issued for the purpose of financing
various park improvements to City facilities and to pay costs of issuing the Bonds. The Bonds
are issued pursuant to Ordinance No. and Resolution No. of the City
(together, the "Bond Ordinance"). Capitalized terms used herein and not otherwise defined shall
have the meanings given to them in the Bond Ordinance.
The Bonds are not subject to redemption prior to their stated maturities.
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 Securities and
Exchange Commission 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 general obligations of the
City, except to the extent that the enforcement of the rights and remedies of the holders and
owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium,
reorganization or other similar laws of general application affecting the rights of creditors, by the
application of equitable principles and the exercise of judicial discretion.
2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been
duly authorized, executed and delivered and is enforceable in accordance with its terms, except
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
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City of Yakima
Seattle -Northwest Securities Corporation
, 2005
Page 2
to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency,
moratorium, reorganization or other similar laws of general application affecting the rights of
creditors, by the application of equitable principles and the exercise of judicial discretion.
3. Both principal of and interest on the Bonds are payable out of annual levies of
ad valorem taxes to be made upon all of the taxable property within the City permitted to be
levied without a vote of the electorate in amounts that, together with other available funds, will
be sufficient to pay such principal and interest as the same shall become due.
4. Interest on the Bonds is excluded from gross income for purposes of federal
income taxation pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the
"Code"). The Bonds are not private activity bonds. Interest on the Bonds is not an item of tax
preference for purposes of the federal alternative minimum tax imposed on individuals or
corporations, but is taken into account in the computation of adjusted current earnings for
purposes of the corporate alternative minimum tax under Section 55 of the Code. The opinions
stated in this paragraph are subject to the condition that the City comply with all requirements of
the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest
thereon be, or continue to be, excluded from gross income for federal income tax purposes. The
City has covenanted to comply with all such requirements. Failure to comply with certain of
such requirements may cause the interest on the Bonds to be included in gross income for federal
income tax purposes retroactive to the date of issuance of the Bonds.
The City has designated the Bonds as "qualified tax-exempt obligations" pursuant to
Section 265(b)(3) of the Code. We express no opinion regarding any other federal, state or local
tax consequences arising with respect to ownership of the Bonds.
This opinion is given as of the date hereof and we assume no obligation to update, revise
or supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention or any changes in law that may hereafter occur.
Very truly yours,
PRESTON GATES & ELLIS LLP
By
Nancy M. Neraas
K'\25739\00077\NMN\NMN L31 KC
THE DEPOSITORY TRUST COMPANY
SAMPLE OFFERING DOCUMENT 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 $500 million, one certificate will be
issued with respect to each $500 million of principal amount, and an additional certificate will be issued
with respect to any remaining principal amount of such issue.]
2. DTC, the world's largest securities depository, 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 and provides asset servicing for over 2.2 million issues
of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments
from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facil-
itates the post -trade settlement among Direct Participants of sales and other securities transactions in
deposited securities, through electronic computerized book -entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct
Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clear-
ing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository
Trust & Clearing Corporation ("DTCC") DTCC, in turn, is owned by a number of Direct Participants of
DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation
and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as
well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both
U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC
can be found at www dtcc.com and www.dtc.org.
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. Beneficial Owners are, however, 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 Direct and Indirect 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 Direct 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 Direct and Indirect Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. [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.
For example, 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. In the
alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and
request that copies of notices be provided directly to them.]
[6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.]
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend 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 receipt 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 redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, dis-
bursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through
its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the
Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the
Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of
tendered Securities to [Tender/Remarketing] Agent's DTC account.]
10. DTC may discontinue providing its services as 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 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 -only transfers through DTC (or
a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
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.
[3/04]
Appendix C
2004 Annual Financial Report
(On file with City Clerk)