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HomeMy WebLinkAbout08/21/2018 11 Limited Tax General Obligation Bond Refunding; Aquatic Center; Sports Complex BondITEM TITLE: SUBMITTED BY: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT 1 Item No. 11. For Meeting of: August 21, 2018 Ordinance authorizing the issuance and sale of a Limited Tax General Obligation (LTGO) and Refunding Bond by the City related to the construction of an aquatic facility; and refunding the City's outstanding 2015 LTGO Sports Complex Bond; and paying costs of issuance of the Bond; and providing the form of the bond; and authorizing the sale of the bond to Banner Bank Ana Cortez, Assistant City Manager Tara Lewis, Financial Services Manager SUMMARY EXPLANATION: On October 27, 2015, Council adopted Resolution No. R-2015-128 and on May 1, 2018 Council adopted Resolution R-2018-042 (amending the 2015 Resolution) to participate with the Yakima YMCA in the development, operation and maintenance of an Aquatic Center. Under the terms of the agreements, the City has committed $8 million toward the construction of the Aquatic Center. Construction of the facility has begun and on June 5, 2018, Council approved an I nterfund Loan to the Parks Capital fund from the Wastewater Capital fund to begin paying the City's share of the construction until external financing could be obtained. Several proposals were obtained from various banks that had expressed an interest in financing City projects. The best overall offer was from Banner Bank, in terms of interest rate, repayment schedule, flexibility of early repayment options, no issuance fee and a small legal fee. Banner Bank offered a full 26 -year fixed rate term that, when combined with the early repayment options, greatly reduces the interest rate risk to the City associated with a long term financing. Banner Bank's proposal also included the refinancing of the 2015 LTGO Bond currently held by Cashmere Valley Bank on the City's share of the SOZO Sports Complex soccer fields. The 2015 Bond is currently subject to a reset of the interest rate every 5 years and will mature in 2035. These interest rate reset dates expose the City to a certain amount of interest rate risk each time the rate is reset. Banner's fixed rate proposal will alleviate this risk by fixing the interest rate for the remaining term of the debt. 2 To alleviate the risk that interest rates may go down in the future, the proposal allows for the City to refinance the Bond at any time without a penalty. The financing offer by Banner Bank is an optimal financing solution for the City's commitment to the Aquatic Center and it contains the added benefit of refinancing the 2015 Bond at more favorable terms than the current debt. The terms of the proposal are included in the Bond Ordinance. Upon passage, the Bond Ordinance would become effective in 30 days. Closing will be scheduled for September 20, 2018 upon which date the 2015 bond will be refunded, the interfund loan will be repaid, bond closing costs will be paid and the remaining bond funds will be held for disbursement to the contractor as invoices become due and are approved for payment. ITEM BUDGETED: Yes STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: STAFF RECOMMENDATION: Pass Ordinance BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date 0 bond ord 8.%8/2018 Type Co\,er 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 AND REFUNDING BOND OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $12,600,000 TO FINANCE COSTS RELATED TO CONSTRUCTING AN AQUATIC FACILITY, REFUNDING THE CITY'S OUTSTANDING LIMITED TAX GENERAL OBLIGATION BOND, 2015 (TAXABLE), AND PAYING COSTS OF ISSUANCE OF THE BOND; PROVIDING THE FORM OF THE BOND; AND AUTHORIZING THE SALE OF THE BOND TO BANNER BANK. Passed: August 21, 2018 PREPARED BY: PACIFICA LAW GROUP LLP Seattle, Washington 10016 00010 hg06eh27se 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 and Project 4 Section 3. Bond Details 4 Section 4. Registration, Exchange and Payments 5 Section 5. Form of Bond 5 Section 6. Execution of Bond 5 Section 7. Application of Bond Proceeds; Plan of Refunding 6 Section 8. Pledge of Funds and Credit; General Obligation 6 Section 9. Right of Prepayment 7 Section 10. Sale of the Bond 7 Section 11. Ongoing Disclosure; Covenants 7 Section 12. Lost, Stolen or Destroyed Bond 7 Section 13. Severability; Ratification 8 Section 14. Effective Date of Ordinance 8 Exhibit A: Form of Bond * This Table of Contents is provided for convenience only and is not a part of this ordinance. ORDINANCE NO. 2018- 5 AN ORDINANCE of the City Council of the City of Yakima, Washington, authorizing the issuance of a Limited Tax General Obligation and Refunding Bond of the City in the principal amount of not to exceed $12,600,000 to finance costs related to constructing an aquatic facility, refunding the City's outstanding Limited Tax General Obligation Bond, 2015 (Taxable), and paying costs of issuance of the bond; providing the form of the Bond; and authorizing the sale of the Bond to Banner Bank. WHEREAS, pursuant to Resolution No. R-2015-128 adopted by the City Council (the "Council") on October 27, 2015 and Resolution No. R-2018-042 adopted by the Council on May 1, 2018, the City of Yakima, Washington (the "City") authorized the execution of a Master Aquatic Center Agreement and associated Ground Lease, Development Agreement and Operating Agreement and the amendment thereof pursuant to the First Amendment to Ground Lease, First Amendment to Development Agreement and First Amendment to Operating Agreement, respectively (as so amended, and collectively with the Master Aquatic Center Agreement, the "Development Agreements"), providing for the City's participation in the development, construction, operation, and maintenance of a multi -pool aquatic and recreational center (the "Aquatic Center") in cooperation with the Young Men's Christian Association of Yakima (d/b/a the Yakima Family YMCA); and WHEREAS, the Aquatic Center will be constructed on land owned by the City, and will be available to the public for recreation, instruction, fitness and therapeutic uses; and WHEREAS, under the terms of the Development Agreements, the City has agreed to contribute funds toward the construction of the Aquatic Center in exchange for the Yakima Family YMCA's commitment to procure all other funds needed to construct the Aquatic Center and obligation to operate and maintain the Aquatic Center with limited financial support from the City, and for other good and valuable consideration as stated therein; and WHEREAS, the City has outstanding its Limited Tax General Obligation Bond, 2015 (Taxable) (the "2015 Bond"), issued on December 22, 2015 in the original principal amount of $5,000,000 pursuant to Ordinance No. 2015-033 passed by the Council on November 17, 2015 (the "2015 Bond Ordinance"); and WHEREAS, proceeds of the 2015 Bond were used to acquire, develop, construct and improve a portion of a soccer/multi-sports campus and indoor sports facility to serve the citizens of the City and the surrounding communities; and WHEREAS, the 2015 Bond Ordinance provides that the City may prepay the outstanding principal balance of the 2015 Bond, in whole or in part, on any business day, upon at least 15 days written notice, at the price of par plus accrued interest, if any, to the date of prepayment; and WHEREAS, after due consideration it appears that the 2015 Bond may be prepaid, 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 combined limited tax general obligation and refunding bond in the principal amount of not to exceed 6 $12,600,000 (the "Bond") to provide funds necessary to construct and develop a portion of the Aquatic Center as described in the Development Agreements (the "Project"), to prepay the 2015 Bond for debt service savings, and to pay costs of issuing the Bond; and WHEREAS, the City has received an offer (the "Proposal") from Banner Bank (the "Purchaser"), to purchase the Bond from the City; and 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: Aquatic Center means the multi -pool aquatic and recreational center to be developed, constructed, maintained and operated on City property in cooperation with the Young Men's Christian Association of Yakima (d/b/a the Yakima Family YMCA) under the terms of the Development Agreements. Assistant City Manager means the Assistant City Manager of the City, or the successor of such office. Bond means the Limited Tax General Obligation and Refunding Bond, 2018 (Taxable) 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 8 of this ordinance. Bond Register means the registration records for the Bond maintained by the Bond Registrar. 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. 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. -2- 10016 00010 hg06eh27se 7 Date of Issue means the date of original issuance and delivery of the Bond to the 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. Development Agreements mean, collectively, the Master Aquatic Center Agreement and associated Ground Lease, Development Agreement and Operating Agreement authorized pursuant to Resolution No. R-2015-128 adopted by the Council on October 27, 2015, as amended by the First Amendment to Ground Lease, First Amendment to Development Agreement and First Amendment to Operating Agreement, respectively, authorized pursuant to Resolution R-2018-042 adopted by the Council on May 1, 2018, as such agreements may be further amended, modified and supplemented from time to time. Financial Services Manager means the Financial Services Manager of the City, or the successor of such office. Interest Rate means a fixed rate of 4.85% per annum. Project means the capital projects described in Section 2 of this ordinance. Proposal means the offer letter submitted by the Purchaser substantially in the form on file with the Designated Representatives. Purchaser means Banner Bank, as 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. 2015 Bond means the Limited Tax General Obligation Bond, 2015 (Taxable) of the City, issued pursuant to the 2015 Bond Ordinance as described in the recitals of this ordinance. 2015 Bond Fund means the "Bond Redemption Fund" created under the terms of the 2015 Bond Ordinance. 2015 Bond Ordinance means Ordinance No. 2015-033 passed by the Council on November 17, 2015, authorizing the issuance of the 2015 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; -3- 10016 00010 hg06eh27se 8 (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 and Project. The Council hereby authorizes the issuance of a limited tax general obligation and refunding bond of the City in the principal amount of not to exceed $12,600,000 (the "Bond"). Proceeds of the Bond will be used to provide a portion of the funds necessary to construct and develop the Aquatic Center as provided for in the Development Agreements (the "Project"), to prepay the 2015 Bond for debt service savings, and to pay costs of issuing the Bond. The Council hereby authorizes the Project, the prepayment of the 2015 Bond, and the use of the proceeds of the Bond for such purposes. Section 3. Bond Details. The Bond shall be designated the "City of Yakima, Washington, Limited Tax General Obligation and Refunding Bond, 2018 (Taxable)," 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 approximately 26 years from the Date of Issue 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 Interest Rate. Interest on the principal amount of the Bond shall be calculated per annum on the basis of actual number of days elapsed over a year of 360 days. All interest then accrued shall be paid on December 1, 2018. Thereafter, combined principal and interest payments shall be payable semiannually on each December 1 and June 1, beginning on June 1, 2019 to maturity or prior prepayment. Unless principal and accrued interest on the Bond shall have been prepaid prior to the following dates pursuant to Section 9 of this ordinance such that any semiannual payment would be greater than the remaining principal balance and accrued interest of the Bond (in which case such semiannual payment will instead be in the amount of such remaining principal and accrued interest), semiannual payments, including interest, due in years 2019 through 2023 will be in the amount of $410,000.00 each; semiannual payments, including interest, due in years 2024 through 2035 will be in the amount of $450,000.00 each; and semiannual payments, including interest, due in years 2036 through December 1, 2043 will be in the amount of $500,000.00 each. The final payment at maturity will be for the principal and accrued interest still outstanding on such date. Payments will be applied first to accrued interest and then to principal as of the actual date payment is received by the Registered Owner. Approximately 10 days before each -4- 10016 00010 hg06eh27se 9 semiannual payment is due, the Registered Owner will provide an invoice to the City that will reflect the payment amount, the principal balance outstanding before the payment is made and the projected principal payment amount assuming the payment is actually received by the Registered Owner on the exact date the payment is due. 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 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 12. (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. 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 -5- 10016 00010 hg06eh27se 10 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. (a) The City shall establish a fund designated the Project Fund (the "Project Fund") into which a portion of the proceeds of the Bond shall be deposited. Money in the Project Fund shall be used to pay the costs of the Project and costs of issuance for the Bond (including legal fees of the Purchaser in the amount of $3,000). (b) For the purpose of debt service savings, the City proposes to refund the 2015 Bond as set forth herein. A portion of the proceeds of the Bond in the amount necessary to prepay the 2015 Bond, in whole, plus any prepayment premium, fee or penalty, shall be deposited into the 2015 Bond Fund and used within 15 days of the Date of Issue of the Bond to prepay the 2015 Bond in whole. The City is hereby authorized to give notice of prepayment of the 2015 Bond in accordance with the terms of the 2015 Bond Ordinance. Section 8. 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 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 transfer to the Registered Owner 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 -6- 10016 00010 hg06eh27se 11 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 9. Right of Prepayment. The City may prepay the Bond in whole or in part on any date, upon at least 15 days written notice to the Purchaser, without payment of any prepayment fee, penalty, additional interest or charges. A partial prepayment shall not change the semiannual payment amount due, but such amount will be applied to the final maturity of the Bond which may result in an earlier final maturity date. Section 10. 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 Proposal, and selects "Option 1" as described in such Proposal. Each Designated Representative is hereby authorized to execute the Proposal on behalf of the City and is further authorized to approve 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 the principal amount of the Bond does not exceed $12,600,000. 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 2015 Bond, and for the proper application and use of the proceeds thereof to carry out the purpose of this ordinance. Section 11. 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) To provide the Purchaser such other financial or other information as may be reasonably requested from time to time. Section 12. 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 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. If 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. -7- 10016 00010 hg06eh27se 12 Section 13. 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. Section 14. 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. ADOPTED by the City Council of the City of Yakima, Washington, at a regular meeting of the City Council held on August 21, 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 -8- 10016 00010 hg06eh27se Kathy Coffey, Mayor 13 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 August 21, 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 21st day of August, 2018. Sonya Claar Tee, City Clerk 10016 00010 hg06eh27se 14 Exhibit A Form of Bond [TRANSFER RESTRICTIONS] UNITED STATES OF AMERICA NO. R-1 $ STATE OF WASHINGTON CITY OF YAKIMA LIMITED TAX GENERAL OBLIGATION AND REFUNDING BOND, 2018 (TAXABLE) INTEREST RATE: MATURITY DATE: REGISTERED OWNER: PRINCIPAL AMOUNT: 4.85% BANNER BANK 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 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 the basis of actual number of days elapsed over a year of 360 days. Principal of and accrued interest on this bond shall be payable on the dates and in the amounts set forth in Section 3 of the Bond Ordinance. 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"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond is issued pursuant to the Bond Ordinance, to pay costs of the Project, 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. The City may prepay this bond, in whole or in part, without penalty or fee, on any date on with 15 days written notice as provided in the Bond Ordinance. Notice of any such prepayment shall be provided to the Registered Owner as provided in the Bond Ordinance. 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. A-1 10016 00010 hg06eh27se 15 The City has irrevocably covenanted with the Registered 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. Registered 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 By /s/ Kathy Coffey, Mayor ATTEST: /s/ Sonya Claar Tee, City Clerk A-2 10016 00010 hg06eh27se 16 CERTIFICATE OF AUTHENTICATION This is the Limited Tax General Obligation and Refunding Bond, 2018 (Taxable), 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 Name and Address of Signature of Registration Registered Owner Bond Registrar , 2018 10016 00010 hg06eh27se Banner Bank P.O. Box 183 Yakima, WA 98907 A-3