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HomeMy WebLinkAbout05/15/2018 09 LTGO Bond to Refinance 2013 LTGO Street BondBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT 1 Item No. 9. For Meeting of: May 15, 2018 ITEM TITLE: Ordinance authorizing the issuance and sale of a Limited Tax General Obligation Bond (LTGO) by the City in a principal amount of $3,500,000 for the purpose of refinancing the 2013 LTGO Street Bond; providing the form of the bond; and authorizing the sale of the bond to North Cascades Bank SUBMITTED BY: Ana Cortez, Assistant City Manager Tara Lewis, Financial Services Manager SUMMARY EXPLANATION: On May 7, 2013, Council passed an Ordinance authorizing the sale of a $5 million LTGO bond for street improvements to repair and resurface more than 28 lane miles of City roads. The bond was privately sold to U.S. Bank National Association and included three 5 -year terms (for a total of 15 years). The structure of the bond allowed for a "reset" provision every 5 years. That reset will occur on June 20, 2018. In anticipation of the reset, several quotes were obtained from various banks that had expressed an interest in financing City projects. The best overall offer was from North Cascades Bank, Chelan, in terms of interest rate, repayment schedule, flexibility of early repayment options, and no issuance fee. North Cascades also offered a full 10 year term which will alleviate need for a future reset of this debt which reduces interest rate risk to the City. ITEM BUDGETED: Yes STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Pass Ordinance 2 BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type ord 5;10/2018 Cover Memo CITY OF YAKIMA, WASHINGTON ORDINANCE NO. 2018 - AN ORDINANCE of the City Council of the City of Yakima, Washington, authorizing the issuance of a Limited Tax General Obligation Refunding Bond of the City in the principal amount of not to exceed $3,500,000 for the purpose of refunding the City's outstanding Limited Tax General Obligation Bond, 2013 and paying costs of issuance of the Bond; providing the form of the Bond; and authorizing the sale of the Bond to North Cascades Bank, Division of Glacier Bank. Passed May 15, 2018 PREPARED BY: PACIFICA LAW GROUP LLP Seattle, Washington 10016 00009 he011d27s7 3 CITY OF YAKIMA ORDINANCE NO. 2018 - TABLE OF CONTENTS* 4 Page Section 1. Definitions and Interpretation of Terms 2 Section 2. Authorization of the Bond 5 Section 3. Bond Details 5 Section 4. Registration, Exchange and Payments 6 Section 5. Form of Bond 7 Section 6. Execution of Bond 7 Section 7. Application of Bond Proceeds; Plan of Refunding 8 Section 8. Tax Covenants 9 Section 9. Pledge of Funds and Credit; General Obligation 10 Section 10. Right of Prepayment 11 Section 11. Issuance of the Bond 11 Section 12. Ongoing Disclosure; Covenants 12 Section 13. Lost, Stolen or Destroyed Bond 12 Section 14. Severability; Ratification 13 Section 15. Effective Date of Ordinance 14 Exhibit A: Form of Bond * This Table of Contents is provided for convenience only and is not a part of this ordinance. 5 ORDINANCE NO. 2018 - AN ORDINANCE of the City Council of the City of Yakima, Washington, authorizing the issuance of a Limited Tax General Obligation Refunding Bond of the City in the principal amount of not to exceed $3,500,000 for the purpose of refunding the City's outstanding Limited Tax General Obligation Bond, 2013 and paying costs of issuance of the Bond; providing the form of the Bond; and authorizing the sale of the Bond to North Cascades Bank, Division of Glacier Bank. WHEREAS, the City of Yakima, Washington (the "City") has outstanding its Limited Tax General Obligation Bond, 2013 (the "2013 Bond"), issued on June 10, 2013 in the original principal amount of $5,000,000 pursuant to Ordinance No. 2013-017 passed by the City Council (the "Council") on May 7, 2013 (the "2013 Bond Ordinance"); and WHEREAS, the 2013 Bond Ordinance provides that the City may prepay the outstanding principal balance of the 2013 Bond, in whole or in part, on each five-year anniversary of the 2013 Bond, at the price of par plus accrued interest, if any, to the date of prepayment; and WHEREAS, after due consideration it appears that the 2013 Bond may be refunded, in whole, by the proceeds of a limited tax general obligation bond at a savings to the City and its taxpayers; and WHEREAS, the Council deems it in the best interest of the City to issue a limited tax general obligation refunding bond in the principal amount of not to exceed $3,500,000 (the "Bond") to redeem the 2013 Bond and to pay costs of issuing the Bond; and WHEREAS, the City has received an offer (the "Proposal") from North Cascades Bank, Division of Glacier Bank (the "Purchaser"), to purchase the Bond from the City; and 6 WHEREAS, it is deemed necessary and advisable that the City accept the Purchaser's Proposal and issue the Bond as set forth herein; NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA as follows: Section 1. Definitions and Interpretation of Terms. (a) Definitions. As used in this ordinance, the following words shall have the following meanings: Assistant City Manager means the Assistant City Manager of the City, or the successor of such office. Bond means the Limited Tax General Obligation Refunding Bond, 2018 authorized to be issued by the City pursuant to this ordinance. Bond Counsel means Pacifica Law Group LLP, Seattle, Washington, or any other attorney or firm of attorneys, which is admitted to practice law before the highest court of any state in the United States of America or the District of Columbia and nationally recognized and experienced in legal work relating to the issuance of tax-exempt bonds who is or are selected by the City. Bond Fund means the "Bond Redemption Fund" authorized to be created pursuant to Section 9 of this ordinance. Bond Register means the registration records for the Bond maintained by the Bond Regi strar. Bond Registrar means a Designated Representative of the City, whose duties include registering and authenticating the Bond, maintaining the Bond Register, transferring ownership of the Bond, and paying the principal of and interest on the Bond. City means the City of Yakima, Washington, a municipal corporation duly organized and existing under the laws of the State of Washington. -2- 10016 00009 he011d27s7 7 City Council or Council means the City Council of the City as the general legislative authority of the City, as the same shall be duly and regularly constituted from time to time. Code means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bond or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bond, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code. Date of Issue means the date of original issuance and delivery of the Bond to the initial Purchaser. Designated Representative means the Assistant City Manager and the Financial Services Manager of the City, and his or her designee. The signature of one Designated Representative shall be sufficient to bind the City. Fair Market Value means the price at which a willing buyer would purchase an investment from a willing seller in a bona fide, arms -length transaction, except for specified investments as described in Treasury Regulation § 1.148-5(d)(6), including United States Treasury obligations, certificates of deposit, guaranteed investment contracts, and investments for yield restricted defeasance escrows. Fair Market Value is generally determined on the date on which a contract to purchase or sell an investment becomes binding, and, to the extent required by the applicable regulations under the Code, the term "investment" will include a hedge. Federal Tax Certificate means the certificate executed by a Designated Representative setting forth the requirements of the Code for maintaining the tax exemption of interest on the Bond, and attachments thereto. Financial Services Manager means the Financial Services Manager of the City, or the successor of such office. -3- 10016 00009 he011d27s7 8 Interest Rate means a rate of interest determined pursuant to this ordinance as the same shall be adjusted as provided herein and set forth in the Bond. Proposal means the offer letter submitted by the Purchaser substantially in the form provided to the Council and on file with the Designated Representatives. Purchaser means North Cascades Bank, Division of Glacier Bank, as initial purchaser and Registered Owner of the Bond. Registered Owner means the person in whose name the Bond is registered on the Bond Register. Rule means the Securities and Exchange Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. 2013 Bond means the Limited Tax General Obligation Bond, 2013 of the City, issued pursuant to the 2013 Bond Ordinance as described in the recitals of this ordinance. 2013 Bond Fund means the "Bond Redemption Fund" created under the terms of the 2013 Bond Ordinance. 2013 Bond Ordinance means Ordinance No. 2013-017 passed by the Council on May 7, 2013, authorizing the issuance of the 2013 Bond. (b) Interpretation. In this ordinance, unless the context otherwise requires: (1) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of this ordinance; -4- 10016 00009 he011d27s7 9 (2) Words of the masculine or feminine gender shall mean and include correlative words of any genders and words importing the singular number shall mean and include the plural number and vice versa; (3) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (4) Any headings preceding the text of the several articles and sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (5) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of the Bond. For the purpose of refunding, in whole, on a current basis the outstanding 2013 Bond and paying costs of issuance and the costs of the refunding, the City is hereby authorized to issue and sell a limited tax general obligation refunding bond in the principal amount of not to exceed $3,500,000 (the "Bond"). Section 3. Bond Details. The Bond shall be designated the "City of Yakima, Washington, Limited Tax General Obligation Refunding Bond, 2018," or other such designation as set forth in the Bond and approved by a Designated Representative. The Bond shall be dated as of the Date of Issue, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature on the date set forth in the Bond. The Bond shall bear interest from its Date of Issue or the most recent date to which interest has been paid at the applicable Interest Rate. The Interest Rate on the then -outstanding principal amount of -5- 10016 00009 he011d27s7 10 the Bond shall be determined as set forth in the Bond and generally described as follows: (a) From the Date of Issue to and including May 31, 2021, the Interest Rate shall be 3.25% per annum; (b) From June 1, 2021 to and including May 31, 2024, the Interest Rate shall be 3.55% per annum; and (c) From and after June 1, 2024, the Interest Rate shall be 3.85% per annum. Interest on the principal amount of the Bond shall be calculated per annum on a 30/360 basis. Principal of and interest on the Bond shall be payable at the times and in the amounts as set forth in the payment schedule attached to the Bond. Section 4. Registration, Exchange and Payments. (a) Registrar/Bond Registrar. Each Designated Representative of the City is hereby authorized to act as Bond Registrar. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bond if transferred or exchanged in accordance with the provisions of the Bond and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. (b) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered Owner of the Bond as the absolute owner for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of the Bond shall be made only as described in subsection (d) below. All such payments made as described in subsection (d) below shall be valid and shall satisfy the liability of the City upon the Bond to the extent of the amount so paid. (c) No Transfer or Exchange of Registered Ownership. The Bond shall not be transferrable without the consent of the City unless (i) the Purchaser's corporate name is changed -6- 10016 00009 he011d27s7 11 and the transfer is necessary to reflect such change; or (ii) the transferee is a successor in interest of the Purchaser by means of a corporate merger, an exchange of stock, or a sale of assets. Notwithstanding the foregoing, the Bond may be transferred upon satisfaction of the requirements, if any, set forth in the Bond. (d) Place and Medium of Payment. Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. Principal and interest on the Bond shall be payable by check, warrant, Automated Clearing House/electronic funds transfer or by other means mutually acceptable to the Registered Owner and the City. Payment of principal of and interest on the Bond will be made by the City directly to the Registered Owner and not through a third party paying agent. Upon final payment of principal and interest of the Bond, the Registered Owner shall surrender the Bond for cancellation at the office of the Bond Registrar in accordance with this Section 4 and Section 13. (e) Additional Provisions. The Bond will not be registered with The Depository Trust Company, New York, New York, or any other securities depository. No official statement, prospectus, offering circular or other offering statement containing material information with respect to the City or the Bond will be provided in connection with the issuance of the Bond, the Bond will be unrated, and the Bond will not be assigned a CUSIP number. Section 5. Form of Bond. The Bond shall be in substantially the form set forth in Exhibit A, which is incorporated herein by this reference. Section 6. Execution of Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor, and shall be attested by the manual or facsimile signature of the Clerk. -7- 10016 00009 he011d27s7 12 Only such Bond as shall bear thereon a Certificate of Authentication in the form set forth in Exhibit A, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered hereunder and is entitled to the benefits of this ordinance. In case either of the officers who shall have executed the Bond shall cease to be an officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. The Bond may also be signed and attested on behalf of the City by such persons who at the date of the actual execution of the Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. Section 7. Application of Bond Proceeds; Plan of Refunding. For the purpose of debt service savings, the City proposes to refund the 2013 Bond as set forth herein. Proceeds of the Bond shall be disbursed as follows: (a) A portion of the proceeds of the Bond in the amount necessary to prepay the 2013 Bond, in whole, plus any prepayment premium, fee or penalty, shall be deposited into the 2013 Bond Fund and used within 15 days of the Date of Issue of the Bond to prepay the 2013 Bond in whole. (b) The remaining proceeds of the Bond shall be used to pay costs of issuance of the Bond. -8- 10016 00009 he011d27s7 13 The City is hereby authorized to give notice of prepayment of the 2013 Bond in accordance with the terms of the 2013 Bond Ordinance. Section 8. Tax Covenants. The City will take all actions necessary to assure the exclusion of interest on the Bond from the gross income of the owners of the Bond to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bond, including but not limited to the following: (a) Private Activity Bond Limitation. The City will assure that the proceeds of the Bond are not so used as to cause the Bond to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. (b) Limitations on Disposition of Project. The City will not sell or otherwise transfer or dispose of (i) any personal property components of the projects financed with proceeds of the 2013 Bond (the "Project") other than in the ordinary course of an established government program under Treasury Regulation 1.141-2(d)(4) or (ii) any real property components of the Project, unless it has received an opinion of Bond Counsel to the effect that such disposition will not adversely affect the treatment of interest on the Bond as excludable from gross income for federal income tax purposes. (c) Federal Guarantee Prohibition. The City will not take any action or permit or suffer any action to be taken if the result of such action would be to cause the Bond to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) Rebate Requirement. The City will take any and all actions necessary to assure compliance with Section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Bond. -9- 10016 00009 he011d27s7 14 (e) No Arbitrage. The City will not take, or permit or suffer to be taken, any action with respect to the proceeds of the Bond which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bond would have caused the Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code. (f) Registration Covenant. The City will maintain a system for recording the ownership of the Bond that complies with the provisions of Section 149 of the Code until the Bond has been surrendered and canceled. (g) Record Retention. The City will retain its records of all accounting and monitoring it carries out with respect to the Bond for at least three years after the Bond matures or is redeemed (whichever is earlier); however, if the Bond is redeemed and refunded, the City will retain its records of accounting and monitoring at least three years after the earlier of the maturity or redemption of the obligations that refunded the Bond. (h) Compliance with Federal Tax Certificate. The City will comply with the provisions of the Federal Tax Certificate with respect to the Bond, which are incorporated herein as if fully set forth herein. The covenants of this Section will survive payment in full or defeasance of the Bond. (i) Bank Qualification. Each Designated Representative is hereby authorized to designate the Bond as a "qualified tax-exempt obligation" under Section 265(b)(3) of the Code for investment by financial institutions if the City does not reasonably expect to issue more than $10,000,000 of qualified tax-exempt obligations in the calendar year in which the Bond is issued. Section 9. Pledge of Funds and Credit; General Obligation. The City hereby authorizes the creation of a fund to be used for the payment of debt service on the Bond, designated -10- 10016 00009 he011d27s7 15 as the "Bond Redemption Fund" (the "Bond Fund"). No later than the date each payment of principal of or interest on the Bond becomes due, the City shall transmit sufficient funds, from the Bond Fund or from other legally available sources, to the Bond Registrar for the payment of such principal or interest. Money in the Bond Fund may be invested in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as the Bond is outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bond when due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bond will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bond. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bond when due. Section 10. Right of Prepayment. The City may prepay the Bond in whole or in part on any date, without prepayment penalty or fee, from and after June 1, 2023, as provided in the Bond. If the Bond is prepaid in full, interest shall cease to accrue on the date such prepayment occurs. The City shall give the Registered Owner at least 10 business days' notice of any such prepayment. Section 11. Sale of the Bond. The Bond shall be sold to the Purchaser pursuant to the terms of this ordinance and the Purchaser's Proposal. The City hereby accepts the Purchaser's -11- 10016 00009 he011d27s7 16 Proposal. Each Designated Representative is hereby authorized to execute the Proposal on behalf of the City and is further authorized to approve to the final principal amount of the Bond and to agree to any other terms, conditions and covenants that are in the best interest of the City and in accordance with this ordinance so long as (a) the principal amount of the Bond does not exceed $3,500,000 and (b) the final maturity of the Bond is no later than December 1, 2028. The appropriate City officials, including but not limited to the City Clerk, the City Mayor, the City Manager, the Assistant City Manager, the City Financial Services Manager, and the Director of Finance and Budget (including any Acting or Interim Director of Finance and Budget), are hereby authorized and directed to sign such documents, certificates and agreements and to do everything necessary for the prompt issuance, execution and delivery of the Bond, the prepayment of the 2013 Bond, and for the proper application and use of the proceeds thereof to carry out the purpose of this ordinance. Section 12. Ongoing Disclosure; Covenants. (a) Ongoing Disclosure. The Bond is exempt from ongoing disclosure requirements of the Rule. (b) Covenants. So long as the Bond is outstanding, the City hereby covenants and agrees as follows: (1) To provide the Purchaser copies of the City's audited financial statements within a reasonable time after it becomes available; and (2) Financial or other information as may be reasonably requested from time to time. Section 13. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or destroyed while in the Registered Owner's possession, the Bond Registrar may at the request of -12- 10016 00009 he011d27s7 17 the Registered Owner execute and deliver a new Bond of like date, number and tenor to the Registered Owner thereof upon the Registered Owner' s paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon its filing with the City written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. In the case the Bond shall be lost, stolen, or destroyed while in the Registered Owner's possession, the Registered Owner may elect upon final payment of principal and interest of the Bond to surrender a photocopy of the Bond for cancellation at the office of the Bond Registrar together with written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. Section 14. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bond. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. -13- 10016 00009 he011d27s7 18 Section 15. Effective Date of Ordinance. As provided in Article VI, Section 2 of the Yakima City Charter, this ordinance shall become effective 30 days after the date of its passage and publication. PASSED by the City Council of the City of Yakima, Washington, at a regular meeting of the City Council held on May 15, 2018. CITY OF YAKIMA, WASHINGTON ATTEST: Sonya Claar Tee, City Clerk Publication Date: Effective Date: APPROVED AS TO FORM: Pacifica Law Group LLP, Bond Counsel -14- 10016 00009 he011d27s7 Kathy Coffey, Mayor 19 CERTIFICATE I, the undersigned, City Clerk of the City of Yakima, Washington, DO HEREBY CERTIFY: 1. That the attached is a true and correct copy of Ordinance No. (the "Ordinance") of the City, duly passed at a regular meeting of the City Council (the "Council") of the City held on May 15, 2018. 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been fully fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of May, 2018. City Clerk 10016 00009 he011d27s7 Exhibit A Form of Bond [TRANSFER RESTRICTIONS] UNITED STATES OF AMERICA NO. R-1 $ 20 STATE OF WASHINGTON CITY OF YAKIMA LIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2018 INTEREST RATE: MATURITY DATE: REGISTERED OWNER: PRINCIPAL AMOUNT: MILLION AND NO/100 DOLLARS The City of Yakima, Washington, a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, on or before the Maturity Date identified above, the Principal Amount identified above. This bond shall bear interest at the step up rate stated above (the "Interest Rate"). Interest on this bond shall accrue from its dated date until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. Principal of and accrued interest on this bond shall be payable on the dates set forth in the payment schedule attached hereto. Both principal of and interest on this bond shall be payable in lawful money of the United States of America. Principal and interest on this bond shall be payable by check or warrant or by other means mutually acceptable to the Registered Owner and the City. Upon final payment of principal and interest of this bond, the Registered Owner shall surrender this bond for cancellation at the office of the Bond Registrar in accordance with Ordinance No. of the City (the "Bond Ordinance"). This bond is issued pursuant to the Bond Ordinance, to refund a certain outstanding limited tax general obligation bond of the City and to pay costs of issuance and costs associated with the refunding. Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. The City may prepay this bond, in whole or in part, without penalty or fee, on any date on or after June 1, 2023. Notice of any such prepayment shall be provided to the Registered Owner as provided in the Bond Ordinance. This bond has been designated by the City as a "qualified tax-exempt obligation" within the meaning of Section 265(b) of the Code. A-1 21 The City has in the Bond Ordinance authorized the creation of a fund to be used for the payment of debt service on this bond, designated as the "Bond Redemption Fund" (the "Bond Fund"). The Bond Fund shall be drawn upon for the sole purpose of paying the principal of and interest on this bond. The City has irrevocably covenanted with the owner of this bond that it shall include in its annual budget and levy taxes annually, within and a part of the tax levy permitted to the City without a vote of the electorate, upon all the taxable property in the City in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond when due. The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. Owners of this bond do not have a security interest in particular revenues or assets of the City. This bond is not a debt or indebtedness of the State of Washington, or any political subdivision thereof other than the City. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is issued pursuant to the Constitution and laws of the State of Washington, and duly adopted ordinances of the City. This bond is transferable upon compliance with the conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond exist, have happened, been done and performed and that the issuance of this bond does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be executed by the manual or facsimile signature of the Mayor of the City Council and attested by the manual or facsimile signature of the Clerk, as of this day of , 2018. [SEAL] CITY OF YAKIMA, WASHINGTON ATTEST: /s/ City Clerk By /s/ Mayor A-2 22 CERTIFICATE OF AUTHENTICATION This is the Limited Tax General Obligation Refunding Bond, 2018, of the City of Yakima, Washington, described in the within -mentioned Bond Ordinance. , Bond Registrar REGISTRATION CERTIFICATE This bond is registered in the name of the Registered Owner on the books of the City as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City from the Bond Fund. Date of Registration , 2018 Name and Address of Registered Owner North Cascades Bank Division of Glacier Bank P.O. Box 1648 Chelan, WA 98816 Signature of Bond Registrar PAYMENT SCHEDULE Principal of and interest on this bond shall be payable as set forth in the following schedule: Date Principal Interest Total Payment A-3