HomeMy WebLinkAbout05/06/2014 11 Issue and Sale of Limited Tax General Obligation BondsBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting of: 5/6/2014
IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
ITEM TITLE:
SUBMITTED BY:
SUMMARY EXPLANATION:
Ordinance of the City of Yakima, Washington providing for
the issuance and sale of Limited Tax General Obligation
Bonds in the aggregate principal amount of not to exceed
$15,000,000 and Limited Tax General Obligation refunding
bonds in the aggregate principal amount of not to exceed
$2,100,000 to provide funds to finance the costs of street,
road and other improvements, to refund certain outstanding
Limited Tax General Obligations of the City, and to finance
costs of issuance of each series of bonds; providing for the
disposition of the proceeds of sale; and delegating authority
to approve the final terms of the bonds. (Second Reading)
Cindy Epperson, Director of Finance & Budget
Tara Lewis, Financial Services Manager
Historically, the City has deferred many capital upgrades, including street improvements. In
response to the poor average Paving Condition Index (PCI) score of 54 on a 100 point scale for
the City's 802 lane miles of roads, Council placed a City Charter Amendment on the August,
2013 ballot which would require the City to invest at least $2 million annually on the restoration
or reconstruction of Yakima streets. This measure passed with 72% of voters support.
During budget preparation last fall, Council approved a strategic initiative to take advantage of
excellent road rehabilitation pricing with an aggressive 2014 road rehabilitation plan to grind and
overlay 92 lane miles of arterial streets and residential streets with an estimated cost of $16
million by issuing a 10 -year term bond. This plan will prevent having to reconstruct these
critical streets at a much higher cost and will extend their useful life by 10 to 15 years. At the
time, it was estimated that annual debt service on the $16 million would be about $2 million,
which is included for debt service in the 2014 budget.
In reviewing the timing of the bond issuance we recognized that we could accomplish the $16
million project by bonding to net only $14 million, and using the $2 million allocated for street
improvement debt service in 2014 directly on the capital project, and begin bond repayment in
2015.
The attached bond ordinance was prepared by our Bond Counsel, Pacifica Law Group and sets
the parameters for the sale. It is customary to round up for the "not to exceed" amount of
bonds, to provide a cushion for market conditions on the date of the sale. In our current
circumstance the bond ordinance has $15 million as the maximum bonds that can be issued
The second piece of this ordinance is a unique chance to refund bonds issued in 2004 related
to the Convention Center expansion. This bond issue has a "call" provision on or after
November 1, 2014. Since we are wrapping this refund into a "new money" bond ordinance, the
issuance costs are greatly reduced, which increases the estimated savings related to doing the
refunding. The amount of bonds to be refunded is only $1.8 million, but we anticipate annual
savings of as much as $20,000 for the 5 remaining years.
The form and covenants of the proposed bonds are described in the bond ordinance for Council
review and consideration. Other specific details - such as the actual interest rates, the final
structure of the bonds, etc. will not be known until the bonds are placed in the market. Council's
approval of this bond ordinance authorizes staff to set the terms and conditions of the bond
sale, within the parameters set in the ordinance, as we continue through the bond issuing
process. Because the underwriters (Piper Jaffray) require that Council accept or reject their
purchase offer within 24 hours of when the offer is made, the bond ordinance includes a
provision that Council delegates the approval of the purchase offer to the Director of Finance
and Budget, as long as the terms are within the parameters set forth in the ordinance.
Updated for the May 6 meeting: Next steps for the bond issue included preparation of the
Preliminary Official Statement (attached) and an interview with Standard and Poors to update
the City's credit rating, which is scheduled for the afternoon of May 1. The low bid was within
budget at $16 million, so the bond issue as proposed should cover the project. The bond
ordinance requires a second reading, which is on this May 6 agenda, and pricing is tentatively
set for Monday, May 19. We can update Council on the results of the sale at the May 20
meeting.
Resolution: Ordinance: X
Other (Specify):
Contract: Contract Term:
Start Date: End Date:
Item Budgeted: NA Amount:
Funding Source/Fiscal
Impact:
Strategic Priority:
Insurance Required? No
Mail to:
Phone:
APPROVED FOR
SUBMITTAL:
Improve the Built Environment
City Manager
RECOMMENDATION:
Staff respectfully requests Council pass the ordinance upon its second reading on May 6.
ATTACHMENTS:
Description
2014 Street Bond Ordinance
Preliminary Official Statement
Upload Date
4/7/2014
4/30/2014
Type
Ordinance
Exhilblit
CITY OF YAKIMA, WASHINGTON
LIMITED TAX GENERAL OBLIGATION BONDS, 2014A
AND
LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2014B
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF YAKIMA, WASHINGTON,
PROVIDING FOR THE ISSUANCE AND SALE OF LIMITED
TAX GENERAL OBLIGATION BONDS IN THE
AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED
$15,000,000 AND LIMITED TAX GENERAL OBLIGATION
REFUNDING BONDS IN THE AGGREGATE PRINCIPAL
AMOUNT OF NOT TO EXCEED $2,100,000 TO PROVIDE
FUNDS TO FINANCE THE COSTS OF STREET, ROAD AND
OTHER IMPROVEMENTS, TO REFUND CERTAIN
OUTSTANDING LIMITED TAX GENERAL OBLIGATIONS
OF THE CITY, AND TO FINANCE COSTS OF ISSUANCE
OF EACH SERIES OF BONDS; PROVIDING FOR THE
DISPOSITION OF THE PROCEEDS OF SALE; AND
DELEGATING AUTHORITY TO APPROVE THE FINAL
TERMS OF THE BONDS.
APPROVED ON MAY 6, 2014
PREPARED BY:
PACIFICA LAW GROUP LLP
Seattle, Washington
CITY OF YAKIMA
ORDINANCE NO.
TABLE OF CONTENTS*
Page
Section 1. Definitions and Interpretation of Terms 3
Section 2. Authorization of the New Money Project 8
Section 3. Authorization of Bonds and Bond Details 8
Section 4. Registration, Exchange and Payments 10
Section 5. Redemption Prior to Maturity and Purchase of Bonds 15
Section 6. Form of Bonds 19
Section 7. Execution of Bonds 21
Section 8. Application of Bond Proceeds; Plan of Refunding 22
Section 9. Tax Covenants 25
Section 10. Bond Funds and Provision for Tax Levy Payments 25
Section 11. Defeasance 27
Section 12. Sale of Bonds 28
Section 13. Preliminary and Final Official Statements 31
Section 14. Undertaking to Provide Ongoing Disclosure 31
Section 15. Lost, Stolen or Destroyed Bonds 35
Section 16. Severability; Ratification 35
Section 17. Effective Date 36
* This Table of Contents is provided for convenience only and is not a part of this ordinance.
-i-
04/07/14
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF YAKIMA, WASHINGTON,
PROVIDING FOR THE ISSUANCE AND SALE OF LIMITED
TAX GENERAL OBLIGATION BONDS IN THE
AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED
$15,000,000 AND LIMITED TAX GENERAL OBLIGATION
REFUNDING BONDS IN THE AGGREGATE PRINCIPAL
AMOUNT OF NOT TO EXCEED $2,100,000 TO PROVIDE
FUNDS TO FINANCE THE COSTS OF STREET, ROAD AND
OTHER IMPROVEMENTS, TO REFUND CERTAIN
OUTSTANDING LIMITED TAX GENERAL OBLIGATIONS
OF THE CITY, AND TO FINANCE COSTS OF ISSUANCE
OF EACH SERIES OF BONDS; PROVIDING FOR THE
DISPOSITION OF THE PROCEEDS OF SALE; AND
DELEGATING AUTHORITY TO APPROVE THE FINAL
TERMS OF THE BONDS.
WHEREAS, the City Council (the "Council") of the City of Yakima, Washington
(the "City"), has deemed it in the best interest of the City and its citizens that the City make certain
street, road and other capital improvements in the City (the "New Money Project"); and
WHEREAS, the City is authorized by chapters 35.22, 39.36 and 39.46 RCW to issue limited
tax general obligation bonds to pay costs of the New Money Project; and
WHEREAS, the City has outstanding its Limited Tax General Obligation Refunding
Bonds, 2004, issued on September 1, 2004 pursuant to Ordinance No. 2004-43 passed by the
Council on July 20, 2004 and Resolution No. R-2004-124 adopted by the Council on August 10,
2004 (together, the "2004 Bond Ordinance"), which remain outstanding as follows:
Maturity Dates
(November 1) Principal Amounts Interest Rates
2014 $ 340,000 3.75%
2015 355,000 3.80
2016 365,000 3.90
2017 380,000 4.00
Maturity Dates
(November 1)
2018
2019
Principal Amounts
395,000
335,000
Interest Rates
4.10
4.20
(the "2004 Bonds"); and
WHEREAS, the 2004 Bond Ordinance provides that the City may call the 2004 Bonds
maturing on or after November 1, 2015 (the "2004 Refunding Candidates") for redemption on or
after November 1, 2014, in whole or in part on any date, at a price of par plus accrued interest, if
any, to the date of redemption; and
WHEREAS, after due consideration it appears to the Council that all or a portion of the
2004 Refunding Candidates (the "Refunded Bonds") may be defeased and refunded by proceeds
of limited tax general obligation bonds at a savings to the City and its taxpayers; and
WHEREAS, the Council deems it in the best interest of the City to issue two series of
limited tax general obligation bonds pursuant to the terms of this ordinance to provide financing
for the New Money Project, to redeem and defease the Refunded Bonds, and to pay costs of
issuing each series of bonds; and
WHEREAS, the Council wishes to delegate authority to the Director of Finance and
Budget (the "Designated Representative"), for a limited time, to approve the interest rates,
maturity dates, redemption terms and principal maturities for each series of bonds within the
parameters set by this ordinance; and
WHEREAS, the City expects to receive a proposal from Piper Jaffray & Co.
(the "Underwriter") and now desires to issue and sell the bonds to the Underwriter as set forth
herein;
-2-
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YAKIMA,
WASHINGTON, DOES ORDAIN AS FOLLOWS:
Section 1. Definitions and Interpretation of Terms.
(a) Definitions. As used in this ordinance, the following words shall have the
following meanings:
Acquired Obligations means the Government Obligations acquired by the City under the
terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the
Refunded Bonds.
Beneficial Owner means any person that has or shares the power, directly or indirectly to
make investment decisions concerning ownership of any Bonds (including persons holding
Bonds through nominees, depositories or other intermediaries).
Bond Purchase Contracts means the contracts for the purchase of the Bonds between the
Underwriter and the City, each executed pursuant to Section 12 of this ordinance.
Bond Register means the registration books showing the name, address and tax
identification number of each Registered Owner of the Bonds, maintained pursuant to
Section 149(a) of the Code.
Bond Registrar means, initially, the fiscal agency of the State of Washington, for the
purposes of registering and authenticating each series of Bonds, maintaining the Bond Register,
effecting transfer of ownership of the Bonds and paying interest on and principal of the Bonds.
Bond Year means each one-year period that ends on the date selected by the City. The
first and last Bond Years may be short periods. If no day is selected by the City before the earlier
of the final maturity date of a series of Bonds or the date that is five years after the date of
-3-
issuance of a series of Bonds, Bond Years end on each anniversary of the date of issue and on the
final maturity date of a series of Bonds.
Bonds mean the 2014A Bonds and the 2014B Bonds.
Call Date means the date selected by the City and set forth in the Escrow Agreement for
redemption of the Refunded Bonds which shall be on or after November 1, 2014.
City means the City of Yakima, Washington, a municipal corporation duly organized and
existing by virtue of the laws of the State of Washington.
City Manager means the duly appointed City Manager of the City or the officer of the
City authorized to succeed to the duties of such office.
Code means the Internal Revenue Code of 1986, as amended, and shall include all
applicable regulations and rulings relating thereto.
Commission means the Securities and Exchange Commission.
Council means the City Council as the general legislative authority of the City, as the
same shall be duly and regularly constituted from time to time.
Designated Representative means the Director of Finance and Budget of the City, or any
successor to the functions of such office.
Director of Finance and Budget means the duly appointed Director of Finance and
Budget of the City or the officer of the City authorized to succeed to the duties of such office.
DTC means The Depository Trust Company, New York, New York, a limited purpose
trust company organized under the laws of the State of New York, as depository for the Bonds
pursuant to Section 4 of this ordinance.
Escrow Agent means U.S. Bank National Association, Seattle, Washington.
-4-
Escrow Agreement means the Escrow Deposit Agreement between the City and the
Escrow Agent providing for the redemption and defeasance of the Refunded Bonds.
Government Obligations mean those obligations now or hereafter defined as such in
chapter 39.53 RCW.
Letter of Representations means the blanket issuer letter of representations from the City
to DTC.
MSRB means the Municipal Securities Rulemaking Board or any successors to its
functions.
Net Proceeds, when used with reference with the Bonds, mean the principal amount of a
series of Bonds, plus accrued interest and original issue premium, if any, and less original issue
discount, if any.
New Money Project means the capital projects described in Section 2 of this ordinance.
Private Person means any natural person engaged in a trade or business or any trust,
estate, partnership, association, company or corporation.
Private Person Use means the use of property in a trade or business by a Private Person if
such use is other than as a member of the general public. Private Person Use includes ownership
of the property by the Private Person as well as other arrangements that transfer to the Private
Person the actual or beneficial use of the property (such as a lease, management or incentive
payment contract or other special arrangement) in such a manner as to set the Private Person
apart from the general public. Use of property as a member of the general public includes
attendance by the Private Person at municipal meetings or business rental of property to the
Private Person on a day-to-day basis if the rental paid by such Private Person is the same as the
rental paid by any Private Person who desires to rent the property. Use of property by nonprofit
-5-
community groups or community recreational groups is not treated as Private Person Use if such
use is incidental to the governmental uses of property, the property is made available for such use
by all such community groups on an equal basis and such community groups are charged only a
de minimis fee to cover custodial expenses.
Project Fund means the "Project Fund" as described in Section 8 of this ordinance.
Refunded Bonds mean all or a portion of the Refunding Candidates designated by the
Designated Representative for refunding pursuant to this ordinance.
Refunding Account means the account by that name established pursuant to Section 8 of
this ordinance.
Refunding Candidates mean the 2004 Bonds maturing on or after November 1, 2015.
Registered Owner means the person named as the registered owner of a Bond in the Bond
Register. For so long as the Bonds are held in book -entry only form, DTC shall be deemed to be
the sole Registered Owner.
Rule means the Commission's Rule 15c2-12 under the Securities Exchange Act of 1934,
as the same may be amended from time to time.
2004 Bond Ordinance means together, Ordinance No. 2004-43 passed by the Council on
July 20, 2004 and Resolution No. R-2004-124 adopted by the Council on August 10, 2004,
authorizing the issuance of the 2004 Bonds.
2004 Bonds mean the City of Yakima, Washington, Limited Tax General Obligation
Refunding Bonds, 2004, with a dated date of September 1, 2004 pursuant to the 2004 Bond
Ordinance as described in the recitals of this ordinance.
-6-
2014A Bond Fund means the "City of Yakima, Washington, General Obligation 2014A
Bond Fund" and the accounts therein authorized to be created pursuant to Section 10 of this
ordinance.
2014B Bond Fund means the "City of Yakima, Washington, General Obligation 2014B
Bond Fund" and the accounts therein authorized to be created pursuant to Section 10 of this
ordinance.
2014A Bonds mean the City's Limited Tax General Obligation Bonds, 2014A authorized
to be issued pursuant to this ordinance in the aggregate principal amount of not to exceed
$15,000,000.
2014B Bonds mean the City's Limited Tax General Obligation Refunding Bonds, 2014B
authorized to be issued pursuant to this ordinance in the aggregate principal amount of not to
exceed $2,100,000.
Underwriter means Piper Jaffray & Co., or its successors.
(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;
(2) Words of the masculine gender shall mean and include correlative words
of the feminine and neuter genders and words importing the singular number shall mean and
include the plural number and vice versa;
-7-
(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 New Money Project. The 2014A Bonds are being
issued, in part, to finance the costs of certain street and road improvements in the City and other
capital improvements approved by the Council (together, the "New Money Project"). Any
remaining costs of the New Money Project shall be paid from other City funds legally available
for such purposes.
Section 3. Authorization of Bonds and Bond Details.
(a) 2014A Bonds. For the purpose of paying the costs of the New Money Project and
paying costs of issuance of the 2014A Bonds, the City shall issue and sell its limited tax general
obligation bonds as set forth herein.
The 2014A Bonds shall be general obligations of the City, shall be designated "City of
Yakima, Washington, Limited Tax General Obligation Bonds, 2014A" with such designation as
determined to be necessary by the Designated Representative; shall be issued in the aggregate
principal amount of not to exceed $15,000,000; shall be dated as of their date of delivery; shall
be fully registered as to both principal and interest; shall be in the denomination of $5,000 each,
-8-
or any integral multiple thereof, provided that no 2014A 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 shall bear interest from their
date payable on the days and at the rates set forth in the applicable Bond Purchase Contract; and
shall mature on the dates and in the principal amounts set forth in such Bond Purchase Contract
and as approved by the Designated Representative pursuant to Section 12 of this ordinance. The
2014A Bonds of any of the maturities may be combined and issued as term bonds, subject to
mandatory redemption as provided in the applicable Bond Purchase Contract.
(b) 2014E Bonds. For the purpose of refunding and defeasing the Refunded Bonds
and paying costs of issuance of the 2014B Bonds, the City shall issue and sell its limited tax
general obligation bonds as set forth herein.
The 2014B Bonds shall be general obligations of the City, shall be designated "City of
Yakima, Washington, Limited Tax General Obligation Refunding Bonds, 2014B" with such
designation as determined to be necessary by the Designated Representative; shall be issued in
the aggregate principal amount of not to exceed $2,100,000; shall be dated as of their date of
delivery; 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 2014B 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 shall bear
interest from their date payable on the days and at the rates set forth in the applicable Bond
Purchase Contract; and shall mature on the dates and in the principal amounts set forth in such
Bond Purchase Contract and as approved by the Designated Representative pursuant to
Section 12 of this ordinance. The 2014B Bonds of any of the maturities may be combined and
-9-
issued as term bonds, subject to mandatory redemption as provided in the applicable Bond
Purchase Contract.
Section 4. Registration, Exchange and Payments.
(a) Bond Registrar/Bond Register. The City hereby adopts the system of registration
for the Bonds approved by the Washington State Finance Committee from time to time through
the appointment of state fiscal agency or agencies pursuant to RCW 39.46.030 and chapter 43.80
RCW. The state fiscal agency or agencies shall serve as Bond Registrar for the Bonds (except as
otherwise provided herein) and shall maintain the Bond Register for the Bonds. So long as any
Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the
exchange or registration or transfer of Bonds at its principal corporate trust office. The Bond
Registrar may be removed at any time at the option of the Director of Finance and Budget upon
prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Director of
Finance and Budget. No resignation or removal of the Bond Registrar shall be effective until a
successor shall have been appointed and until the successor Bond Registrar shall have accepted
the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the
City, to authenticate and deliver Bonds transferred or exchanged in accordance with the
provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar's powers
and duties under this ordinance. The Bond Registrar shall be responsible for its representations
contained in the Certificate of Authentication of the Bonds.
(b) Registered Ownership. The City and the Bond Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond of each series as the absolute owner
thereof for all purposes (except as provided in Section 14 of this ordinance), and neither the City
nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond
-10-
shall be made only as described in Section 4(h) hereof, but such Bond may be transferred as
herein provided. All such payments made as described in Section 4(h) hereof shall be valid and
shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or
amounts so paid.
(c) DTC Acceptance/Letters of Representations. The Bonds initially shall be held in
fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as
eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter
of Representations. Neither the City nor the Bond Registrar will have any responsibility or
obligation to DTC participants or the persons for whom they act as nominees (or any successor
depository) with respect to the Bonds in respect of the accuracy of any records maintained by
DTC (or any successor depository) or any DTC participant, the payment by DTC (or any
successor depository) or any DTC participant of any amount in respect of the principal of or
interest on Bonds, any notice which is permitted or required to be given to Registered Owners
under this ordinance (except such notices as shall be required to be given by the City to the Bond
Registrar or to DTC (or any successor depository)), or any consent given or other action taken by
DTC (or any successor depository) as the Registered Owner. For so long as any Bonds are held
in fully -immobilized form hereunder, DTC or its successor depository shall be deemed to be the
Registered Owner for all purposes hereunder, and all references herein to the Registered Owners
shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of
any beneficial interest in such Bonds.
If any Bond shall be duly presented for payment and funds have not been duly provided
by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid
principal thereof at the rate stated on such Bond until it is paid.
-11-
(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of "Cede & Co.", as
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds within a
series in a denomination corresponding to the total principal therein designated to mature on such
date. Registered ownership of such immobilized Bonds, or any portions thereof, may not
thereafter be transferred except (A) to any successor of DTC or its nominee, provided that any
such successor shall be qualified under any applicable laws to provide the service proposed to be
provided by it; (B) to any substitute depository appointed by the Director of Finance and Budget
pursuant to subsection (2) below or such substitute depository's successor; or (C) to any person
as provided in subsection (4) below.
(2) Upon the resignation of DTC or its successor (or any substitute depository
or its successor) from its functions as depository or a determination by the Director of Finance
and Budget to discontinue the system of book entry transfers through DTC or its successor (or
any substitute depository or its successor), the Director of Finance and Budget may hereafter
appoint a substitute depository. Any such substitute depository shall be qualified under any
applicable laws to provide the services proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1)
above, the Bond Registrar shall, upon receipt of all outstanding Bonds of a series, together with a
written request on behalf of the Director of Finance and Budget, issue a single new Bond for each
maturity of a series then outstanding, registered in the name of such successor or such substitute
depository, or their nominees, as the case may be, all as specified in such written request of the
Director of Finance and Budget.
-12-
(4) In the event that (A) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be obtained,
or (B) the Director of Finance and Budget determines that it is in the best interest of the
beneficial owners of the Bonds that such owners be able to obtain such bonds in the form of
Bond certificates, the ownership of such Bonds may then be transferred to any person or entity as
herein provided, and shall no longer be held in fully -immobilized form. The Director of Finance
and Budget shall deliver a written request to the Bond Registrar, together with a supply of
definitive Bonds, to issue Bonds as herein provided in any authorized denomination. Upon
receipt by the Bond Registrar of all then outstanding Bonds of a series together with a written
request on behalf of the Director of Finance and Budget to the Bond Registrar, new Bonds of
such series shall be issued in the appropriate denominations and registered in the names of such
persons as are requested in such written request.
(e) Registration of Transfer of Ownership or Exchange; Change in Denominations.
The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any
such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form
appearing on such Bond duly executed by the Registered Owner or such Registered Owner's duly
authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond
Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to
the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new
Registered Owner) of the same date, maturity, series, and interest rate and for the same aggregate
principal amount in any authorized denomination, naming as Registered Owner the person or
persons listed as the assignee on the assignment form appearing on the surrendered Bond, in
exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond
-13-
Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of
the same date, maturity, series, and interest rate, in any authorized denomination. The Bond
Registrar shall not be obligated to register the transfer or to exchange any Bond during the
15 days preceding any interest payment or principal payment date any such Bond is to be
redeemed.
(f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the
Registered Owner of any Bond with the same rights it would have if it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as member of, or in any other capacity with respect to, any committee
formed to protect the right of the Registered Owners of Bonds.
(g)
Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
(h) Place and Medium of Payment. Both principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. Interest on the Bonds shall be
calculated on the basis of a year of 360 days and twelve 30 -day months. For so long as all Bonds
are in fully immobilized form, payments of principal and interest thereon shall be made as
provided in accordance with the operational arrangements of DTC referred to in the Letter of
Representations. In the event that the Bonds are no longer in fully immobilized form, interest on
the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners appearing on the Bond Register on the fifteenth day of the month
preceding the interest payment date, or upon the written request of a Registered Owner of more
than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the applicable
-14-
payment date), such payment shall be made by the Bond Registrar by wire transfer to the account
within the continental United States designated by the Registered Owner. Principal of the Bonds
shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the
principal office of the Bond Registrar.
Section 5. Redemption Prior to Maturity and Purchase of Bonds.
(a) Mandatory Redemption of Term Bonds and Optional Redemption, if any. Each
series of Bonds shall be subject to optional redemption on the dates, at the prices and under the
terms set forth in applicable Bond Purchase Contract approved by the Designated Representative
pursuant to Section 12 of this ordinance. Each series of Bonds shall be subject to mandatory
redemption to the extent, if any, set forth in the applicable Bond Purchase Contract and as
approved by the Designated Representative pursuant to Section 12 of this ordinance.
(b) Purchase of Bonds. The City reserves the right to purchase any of the Bonds
offered to it at any time at a price deemed reasonable by the Director of Finance and Budget.
(c) Selection of Bonds for Redemption. For as long as the Bonds are held in
book -entry only form, the selection of particular Bonds within a series and maturity to be
redeemed shall be made in accordance with the operational arrangements then in effect at DTC.
If the Bonds are no longer held in uncertificated form, the selection of such Bonds to be
redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in
the following provisions of this subsection (c). If the City redeems at any one time fewer than all
of the Bonds having the same maturity date within a series, the particular Bonds or portions of
Bonds of such series and maturity to be redeemed shall be selected by lot (or in such manner
determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a
denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond of such
-15-
series and maturity as representing such number of separate Bonds each of the denomination of
$5,000 as is obtained by dividing the actual principal amount of such Bond of such series and
maturity by $5,000. In the event that only a portion of the principal sum of a Bond is redeemed,
upon surrender of such Bond at the principal office of the Bond Registrar there shall be issued to
the Registered Owner, without charge therefor, for the then unredeemed balance of the principal
sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity, series, and
interest rate in any of the denominations herein authorized.
(d) Notice of Redemption.
(1) Official Notice. For so long as the Bonds are held in uncertificated form,
notice of redemption (which notice may be conditional on the receipt of sufficient funds for
redemption or otherwise) shall be given in accordance with the operational arrangements of DTC
as then in effect, and neither the City nor the Bond Registrar will provide any notice of
redemption to any Beneficial Owners. Thereafter (if the Bonds are no longer held in
uncertificated form), notice of redemption shall be given in the manner hereinafter provided.
Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption
(which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds
for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by
mailing a copy of an official redemption notice by first class mail at least 20 days and not more
than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds
to be redeemed at the address shown on the Register or at such other address as is furnished in
writing by such Registered Owner to the Bond Registrar.
All official notices of redemption shall be dated and shall state:
(A) the redemption date,
-16-
(B) the redemption price,
(C) if fewer than all outstanding Bonds are to be redeemed, the
identification by series and maturity (and, in the case of partial redemption, the respective
principal amounts) of the Bonds to be redeemed,
(D) that on the redemption date the redemption price will become due
and payable upon each such Bond or portion thereof called for redemption, and that interest
thereon shall cease to accrue from and after said date,
(E) any conditions to redemption, and
(F) the place where such Bonds are to be surrendered for payment of
the redemption price, which place of payment shall be the principal office of the Bond Registrar.
On or prior to any redemption date, unless such redemption has been rescinded or
revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the
redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date.
The City retains the right to rescind any redemption notice and the related optional redemption of
Bonds by giving notice of rescission to the affected registered owners at any time on or prior to
the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of
no effect, and the Bonds for which the notice of optional redemption has been rescinded shall
remain outstanding.
(2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has
been given as aforesaid, or if the conditions to redemption have been satisfied or waived, the
Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and
payable at the redemption price therein specified, and from and after such date such Bonds or
portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in
-17-
accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption
price. Installments of interest due on or prior to the redemption date shall be payable as herein
provided for payment of interest. All Bonds which have been redeemed shall be canceled and
destroyed by the Bond Registrar and shall not be reissued.
(3)
Additional Notice. In addition to the foregoing notice, further notice shall
be given by the City as set out below, but no defect in said further notice nor any failure to give
all or any portion of such further notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as above prescribed. Each further notice of redemption
given hereunder shall contain the information required above for an official notice of redemption
plus (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of the Bonds as
originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the series and
maturity date of each Bond being redeemed; and (E) any other descriptive information needed to
identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at
least 20 days before the redemption date to each party entitled to receive notice pursuant to
Section 14 of this ordinance and to the Underwriter and with such additional information as the
City shall deem appropriate, but such mailings shall not be a condition precedent to the
redemption of such Bonds.
(4) Amendment of Notice Provisions. The foregoing notice provisions of this
Section 5 of this ordinance, including but not limited to the information to be included in
redemption notices and the persons designated to receive notices, may be amended by additions,
deletions and changes in order to maintain compliance with duly promulgated regulations and
recommendations regarding notices of redemption of municipal securities.
-18-
Section 6. Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF YAKIMA
LIMITED TAX GENERAL OBLIGATION [REFUNDING] BOND, 2014[AB]
INTEREST RATE: % MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The City of Yakima, Washington (the "City"), hereby acknowledges itself to owe and for
value received promises to pay to the Registered Owner identified above, or registered assigns,
on the Maturity Date identified above, the Principal Amount indicated above and to pay interest
thereon from , 20 , or the most recent date to which interest has been paid or
duly provided for until payment of this bond at the Interest Rate set forth above, payable on
, and semiannually thereafter on the first days of each succeeding
and . Both principal of and interest on this bond are payable in lawful money of the
United States of America. The fiscal agency of the State of Washington has been appointed by
the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the
"Bond Registrar"). For so long as the bonds of this issue are held in fully immobilized form,
payments of principal and interest thereon shall be made as provided in accordance with the
operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket
Issuer Letter of Representations (the "Letter of Representations") from the City to DTC.
The bonds of this issue are issued under and in accordance with the provisions of the
Constitution and applicable statutes of the State of Washington and Ordinance No.
duly passed by the City Council on May 6, 2014 (the "Bond Ordinance"). Capitalized terms used
in this bond have the meanings given such terms in the Bond Ordinance.
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 one of an authorized issue of bonds of like date, tenor, rate of interest and
date of maturity, except as to number and amount in the aggregate principal amount of
$ and is issued pursuant to the Bond Ordinance to provide funds to pay the cost of
[certain street, road and other improvements in the City] [defeasing and refunding certain limited
tax general obligation bonds of the City] and paying costs of issuance for the Bonds.
-19-
The bonds of this issue are [not] subject to redemption prior to their stated dates of
maturity.
The City hereby irrevocably covenants and agrees with the owner of this bond that it will
include in its annual budget and levy taxes annually, within and as a part of the tax levy
permitted to the City without a vote of the electorate, upon all the property subject to taxation in
amounts sufficient, together with other money legally available therefor, to pay the principal of
and interest on this bond as the same shall become due. The full faith, credit and resources of the
City are hereby irrevocably pledged for the annual levy and collection of such taxes and the
prompt payment of such principal and interest.
The bonds of this issue have not been designated by the City as "qualified tax-exempt
obligations" for investment by financial institutions under Section 265(b) of the Code.
The pledge of tax levies for payment of principal of and interest on the bonds may be
discharged prior to maturity of the bonds by making provision for the payment thereof on the
terms and 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 have happened, been done and performed and that
the issuance of this bond and the bonds of this issue 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 signatures of the Mayor and City Clerk and the seal of the
City imprinted, impressed or otherwise reproduced hereon as of this day of
20
ATTEST:
/s/ manual or facsimile
City Clerk
[SEAL]
CITY OF YAKIMA, WASHINGTON
By /s/ manual or facsimile
Mayor
The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially
the following form:
-20-
CERTIFICATE OF AUTHENTICATION
Date of Authentication: , 2014
This is one of the Limited Tax General Obligation [Refunding] Bonds, 20 of the City of
Yakima, Washington, dated , 20
WASHINGTON STATE FISCAL AGENT,
as Registrar
By THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as subcontractor
to The Bank of New York Mellon, fiscal
agent for the State of Washington
By
Authorized Signer
Section 7. Execution of Bonds. The Bonds of each series shall be executed on behalf
of the City with the manual or facsimile signatures of the Mayor and City Clerk of the City and
the seal of the City shall be impressed, imprinted or otherwise reproduced thereon.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bonds shall cease to be an
officer or officers of the City before the Bonds so signed shall have been authenticated or
delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be
authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be
-21-
as binding upon the City as though those who signed the same had continued to be such officers
of the City. Any Bond may be signed and attested on behalf of the City by such persons who at
the date of the actual execution of such 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 8. Application of Bond Proceeds; Plan of Refunding.
(a) 2014A Bonds. The City shall establish a fund designated the "Project Fund" into
which the proceeds of the 2014A Bonds (other than accrued interest, if any) allocable to the New
Money Project shall be deposited. Money on hand in the Project Fund shall be used to pay the
costs of the New Money Project. The Director of Finance and Budget may invest money in the
Project Fund in legal investments for City funds. Earnings on such investments shall accrue to
the benefit of the fund earning such interest. Any part of the proceeds of the 2014A Bonds
remaining in the Project Fund after all costs of the New Money Project have been paid (including
costs of issuance) may be used to finance other capital projects of the City approved by the
Council or transferred to the 2014A Bond Fund to pay principal on the 2014A Bonds.
(b) 2014E Bonds. For the purpose of realizing a debt service savings, the City
proposes to apply a portion of the proceeds of the 2014B Bonds to defease and refund the
Refunded Bonds as set forth herein. The Refunded Bonds shall include all or a portion of the
Refunding Candidates as designated by the Designated Representative and set forth in the
applicable Bond Purchase Contract. A portion of the proceeds of the 2014B Bonds shall be
deposited with the Escrow Agent pursuant to the Escrow Agreement to be used immediately
upon receipt thereof to defease the Refunded Bonds as authorized by the 2004 Bond Ordinance,
as applicable, and to pay costs of issuance of the 2014B Bonds.
-22-
The net proceeds deposited with the Escrow Agent shall be used to defease the Refunded
Bonds and discharge the obligations thereon by maintaining the net proceeds in cash or by the
purchase of certain Government Obligations (which obligations so purchased, are herein called
"Acquired Obligations"), bearing such interest and maturing as to principal and interest in such
amounts and at such times which, together with any necessary beginning cash balance, will
provide for the payment of:
(1) interest on the Refunded Bonds as such becomes due on and prior to the
Call Date;
(2) the redemption price (100% of the principal amount) of the Refunded
Bonds on the Call Date.
Such Acquired Obligations shall be purchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
(c) Escrow Agent/Escrow Agreement. The City hereby appoints U.S. Bank National
Association, Seattle Washington, as the Escrow Agent for the Refunded Bonds (the "Escrow
Agent"). A beginning cash balance, if any, and the Acquired Obligations shall be deposited
irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The
proceeds of the 2014B Bonds remaining after acquisition of the Acquired Obligations and
provision for the necessary beginning cash balance shall be utilized to pay expenses of the
acquisition and safekeeping of the Acquired Obligations and costs of issuance of the 2014B
Bonds.
In order to carry out the purposes of this section, the Director of Finance and Budget is
authorized and directed to execute and deliver to the Escrow Agent, the Escrow Agreement.
-23-
(d) Call for Redemption of Refunded Bonds. The City hereby irrevocably sets aside
sufficient funds out of the purchase of Acquired Obligations from proceeds of the 2014B Bonds
to make the payments described above.
The City hereby irrevocably calls the Refunded Bonds for redemption on the Call Date in
accordance with the provisions of the 2004 Bond Ordinance authorizing the redemption and
retirement of the 2004 Bonds prior to their fixed maturities.
Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after
the issuance of the 2014B Bonds and delivery of the Acquired Obligations to the Escrow Agent.
The Escrow Agent is hereby authorized and directed to provide for the giving of notices
of the redemption of the Refunded Bonds in accordance with the applicable provisions of the
2004 Bond Ordinance. The costs of publication of such notices shall be an expense of the City.
The Escrow Agent is hereby authorized and directed to pay to the Director of Finance and
Budget, or, at the direction of the Director of Finance and Budget, to the paying agent for the
Refunded Bonds, sums sufficient to pay, when due, the payments specified in this section. All
such sums shall be paid from the moneys and Acquired Obligations deposited with the Escrow
Agent, and the income therefrom and proceeds thereof All such sums so paid to the Director of
Finance and Budget shall be credited to the Refunding Account, which is hereby authorized to be
created (the "Refunding Account"). All moneys and Acquired Obligations deposited with the
Escrow Agent and any income therefrom shall be held, invested (but only at the direction of the
Director of Finance and Budget) and applied in accordance with the provisions of this ordinance
and with the laws of the State of Washington for the benefit of the City and owners of the
Refunded Bonds.
-24-
The City will take such actions as are found necessary to see that all necessary and proper
fees, compensation and expenses of the Escrow Agent for the Refunded Bonds shall be paid
when due.
Section 9. Tax Covenants. The City shall comply with the provisions of this section
unless, in the written opinion of Bond Counsel to the City, such compliance is not required to
maintain the exemption of the interest on each series of Bonds from federal income taxation.
The City hereby covenants that it will not make any use of the proceeds of sale of the
Bonds or any other funds of the City which may be deemed to be proceeds of such Bonds
pursuant to Section 148 of the Code and the applicable regulations thereunder that will cause the
Bonds to be "arbitrage bonds" within the meaning of such Section and regulations. The City will
comply with the requirements of Section 148 of the Code (or any successor provision thereof
applicable to the Bonds) and the applicable regulations thereunder throughout the respective
terms of the Bonds.
The City further covenants that it will not take any action or permit any action to be taken
that would cause the Bonds to constitute "private activity bonds" under Section 141 of the Code.
Section 10. Bond Funds and Provision for Tax Levy Payments.
(a) 2014A Bond Fund. The City hereby authorizes the creation of a fund to be used
for the payment of debt service on the 2014A Bonds, designated as the "City of Yakima,
Washington, General Obligation 2014A Bond Fund" (the "2014A Bond Fund"), and within such
fund separate accounts as determined to be necessary by the Director of Finance and Budget, for
the purpose of paying debt service on the 2014A Bonds. No later than the date each payment of
principal of and/or interest on the 2014A Bonds matures or becomes due and payable, the City
shall transmit sufficient funds, from the 2014A Bond Fund or from other legally available
-25-
sources to the Bond Registrar for the payment of such principal and/or interest. Money in the
2014A Bond Fund not needed to pay the interest or principal next coming due may temporarily
be deposited in legal investments for City funds.
The City hereby irrevocably covenants and agrees for as long as any of the 2014A Bonds
are 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 all other revenues and money of the City legally available for such purposes, to pay
the principal of and interest on the 2014A Bonds as the same shall become 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 regular property
tax levy permitted to cities, 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 2014A
Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of
the principal of and interest on the 2014A Bonds. 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 2014A Bonds as the same shall become due.
(b) 2014E Bond Fund. The City hereby authorizes the creation of a fund to be used
for the payment of debt service on the 2014B Bonds, designated as the "City of Yakima,
Washington, General Obligation 2014B Bond Fund" (the "2014B Bond Fund"), and within such
fund separate accounts as determined to be necessary by the Director of Finance and Budget, for
the purpose of paying debt service on the 2014B Bonds. No later than the date each payment of
principal of and/or interest on the 2014B Bonds matures or becomes due and payable, the City
shall transmit sufficient funds, from the 2014B Bond Fund or from other legally available
-26-
sources to the Bond Registrar for the payment of such principal and/or interest. Money in the
2014B Bond Fund not needed to pay the interest or principal next coming due may temporarily
be deposited in legal investments for City funds.
The City hereby irrevocably covenants and agrees for as long as any of the 2014B Bonds
are 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 all other revenues and money of the City legally available for such purposes, to pay
the principal of and interest on the 2014B Bonds as the same shall become 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 regular property
tax levy permitted to cities, 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 2014B Bonds
will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the
principal of and interest on the 2014B Bonds. 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 2014B Bonds as the same shall become due.
Section 11. Defeasance. In the event that the City, in order to effect the payment,
retirement or redemption of any Bond, sets aside in the 2014A Bond Fund or 2014B Bond Fund,
as applicable, or in another special account, cash or noncallable Government Obligations, or any
combination of cash and/or noncallable Government Obligations, in amounts and maturities
which, together with the known earned income therefrom, are sufficient to redeem or pay and
retire such Bond in accordance with its terms and to pay when due the interest and redemption
premium, if any, thereon, and such cash and/or noncallable Government Obligations are
-27-
irrevocably set aside and pledged for such purpose, then no further payments need be made into
the 2014A Bond Fund or 2014B Bond Fund, as applicable, for the payment of the principal of
and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any
lien, benefit or security of this ordinance except the right to receive payment of principal,
premium, if any, and interest from the 2014A Bond Fund or 2014B Bond Fund, as applicable, or
such special account, and such Bond shall be deemed to be not outstanding under this ordinance.
The City shall give or cause to be given written notice of defeasance to the owners of all
Bonds so provided for within 20 days of the defeasance and to each party entitled to receive
notice in accordance with Section 14 of this ordinance.
Section 12. Sale of Bonds.
(a) Bond Sale. The Bonds of each series shall be sold at negotiated sale to the
Underwriter pursuant to the terms of the Bond Purchase Contract executed in connection with the
issuance of such series of Bonds. The Underwriter has advised the Council that market
conditions are fluctuating and, as a result, the most favorable market conditions may occur on a
day other than a regular meeting date of the Council. The Council has determined that it would
be in the best interest of the City to delegate to the Designated Representative for a limited time
the authority to approve the final interest rates, aggregate principal amount, and principal
amounts of each maturity of each series of Bonds, and redemption rights for each series of
Bonds.
The Designated Representative is hereby authorized to approve the final interest rates,
aggregate principal amount, principal maturities, and redemption rights for each series of Bonds
in the manner provided hereafter so long as:
-28-
(1) 2014A Bonds:
(i)
exceed $15,000,000;
(ii) the final maturity date for the 2014A Bonds is no later than June 1,
2025;
the aggregate principal amount of the 2014A Bonds does not
(iii) the aggregate purchase price for the 2014A Bonds shall not be less
than 95% of the aggregate stated principal amount of the 2014A Bonds, excluding any
original issue discount;
(iv) the true interest cost for the 2014A Bonds (in the aggregate) does
not exceed 4.00%; and
(v) the Bond Purchase Contract executed in connection with the
2014A Bonds is executed no later than December 31, 2014.
(2) 2014B Bonds:
(i)
exceed $2,100,000;
(ii) the final maturity date for the 2014B Bonds is no later than
November 1, 2020;
(iii) the aggregate purchase price for the 2014B Bonds shall not be less
than 95% of the aggregate stated principal amount of the 2014B Bonds, excluding any
original issue discount;
(iv) the true interest cost for the 2014B Bonds (in the aggregate) does
not exceed 2.75%;
the aggregate principal amount of the 2014B Bonds does not
-29-
(v) the 2014B Bonds are sold for a price that results in a minimum net
present value debt service savings over the Refunded Bonds of 2.00%; and
(vi) the Bond Purchase Contract executed in connection with the
2014B Bonds is executed no later than December 31, 2014.
Subject to the terms and conditions set forth in this section, the Designated Representative is
hereby authorized to execute the Bond Purchase Contracts.
Following the execution of each Bond Purchase Contract, the Designated Representative
shall provide a report to the Council describing the final terms of the applicable series of Bonds
approved pursuant to the authority delegated in this section. If a Bond Purchase Contract for a
series of Bonds has not been executed within the time frame set forth above, the authorization for
the issuance of such series of Bonds shall be rescinded, and such series of Bonds shall not be
issued nor their sale approved unless such series of Bonds shall have been re -authorized by
ordinance of the Council. The ordinance re -authorizing the issuance and sale of such Bonds may
be in the form of a new ordinance repealing this ordinance in whole or in part or may be in the
form of an amendatory ordinance approving a bond purchase contract or establishing terms and
conditions for the authority delegated under this section.
(b) Delivery of Bonds; Documentation. Upon the passage and approval of this
ordinance, the proper officials of the City, including but not limited to the Designated
Representative and the City Manager, are authorized and directed to undertake all action
necessary for the prompt execution and delivery of each series of Bonds to the Underwriter and
further to execute all closing certificates and documents required to effect the closing and
delivery of each series of Bonds in accordance with the terms of the applicable Bond Purchase
Contract.
-30-
Section 13. Preliminary and Final Official Statements. The Designated Representative
is hereby authorized to deem final the preliminary Official Statements relating to each series of
Bonds for the purposes of the Rule. The Designated Representative is further authorized to
approve for purposes of the Rule, on behalf of the City, the Official Statement relating to the
issuance and sale of a series of Bonds and the distribution of such Official Statement pursuant
thereto with such changes, if any, as may be deemed by her to be appropriate.
Section 14. Undertaking to Provide Ongoing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's written undertaking for
the benefit of the owners, including Beneficial Owners, of the Bonds as required by
Section (b)(5) of the Rule.
(b) Financial Statements/Operating Data. With respect to each series of Bonds, the
City agrees to provide or cause to be provided to the MSRB, the following annual financial
information and operating data for the prior fiscal year (commencing in 2014 for the fiscal year
ended December 31, 2013):
1. Annual financial statements, which statements may or may not be audited,
showing ending fund balances for the City's general fund prepared in accordance with the
Budgeting Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the
official statement for the Bonds under the heading (or similar heading) "General Fund
Comparative Statement of Revenues, Expenditures and Changes in Fund Balance";
2. The assessed valuation of taxable property in the City;
3. Ad valorem taxes due and percentage of taxes collected;
4. Property tax levy rate per $1,000 of assessed valuation; and
-31-
5. Outstanding general obligation debt of the City.
Items 2-5 shall be required only to the extent that such information is not included in the annual
financial statements.
The information and data described above shall be provided on or before nine months
after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City
may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB.
In lieu of providing such annual financial information and operating data, the City may
cross-reference to other documents available to the public on the MSRB's internet website or
filed with the Commission.
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement prepared in accordance with the Budgeting
Accounting and Reporting System prescribed by the Washington State Auditor pursuant to
RCW 43.09.200 (or any successor statute) when and if available to the MSRB.
(c) Listed Events. The City agrees to provide or cause to be provided to the MSRB,
in a timely manner not in excess of ten business days after the occurrence of the event, notice of
the occurrence of any of the following events with respect to the Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial
difficulties;
4. Unscheduled draws on credit enhancements reflecting financial
difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
-32-
6. Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the Bonds, or other material events affecting the
tax status of the Bonds;
7. Modifications to the rights of Bondholders, if material;
8. Optional, contingent or unscheduled Bond calls other than scheduled
sinking fund redemptions for which notice is given pursuant to Exchange
Act Release 34-23856, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds,
if material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the City;
13. The consummation of a merger, consolidation, or acquisition involving
the City or the sale of all or substantially all of the assets of the City,
other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material; and
14. Appointment of a successor or additional trustee or the change of name of
a trustee, if material.
Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises that no debt service reserves, credit enhancement, or property secures payment of the
Bonds.
(d) Format for Filings with the MSRB. All notices, financial information and
operating data required by this undertaking to be provided to the MSRB must be in an electronic
format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this
undertaking must be accompanied by identifying information as prescribed by the MSRB.
(e) Notification Upon Failure to Provide Financial Data. The City agrees to provide
or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the
annual financial information described in Subsection (b) above on or prior to the date set forth in
Subsection (b) above.
(f) Termination/Modification. The City's obligations to provide annual financial
information and notices of listed events shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. Any provision of this section shall be null and
void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the
portion of the Rule that requires that provision is invalid, has been repealed retroactively or
otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the
cancellation of this section.
The City may amend this section with an opinion of nationally recognized bond counsel
in accordance with the Rule. In the event of any amendment of this section, the City shall
describe such amendment in the next annual report, and shall include, a narrative explanation of
the reason for the amendment and its impact on the type (or in the case of a change of accounting
principles, on the presentation) of financial information or operating data being presented by the
-34-
City. In addition, if the amendment relates to the accounting principles to be followed in
preparing financial statements, (A) notice of such change shall be given in the same manner as
for a listed event under subsection (c), and (B) the annual report for the year in which the change
is made shall present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
(g)
Bond Owner's Remedies Under This Section. The right of any bondowner or
Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to a right to
obtain specific enforcement of the City's obligations under this section, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds.
(h) No Default. Except as otherwise disclosed in the City's official statement relating
to the Bonds, the City is not and has not been in default in the performance of its obligations of
any prior undertaking for ongoing disclosure with respect to its obligations.
Section 15. Lost, Stolen or Destroyed Bonds. In case any Bond or Bonds shall be lost,
stolen or destroyed, the Bond Registrar may execute and deliver a new Bond or Bonds of like
date, series, 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 his/her filing with the City evidence satisfactory to the City that such Bond was actually
lost, stolen or destroyed and of his/her ownership thereof, and upon furnishing the City and/or the
Bond Registrar with indemnity satisfactory to the City and the Bond Registrar.
Section 16. 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
-35-
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 Bonds. All acts taken pursuant to the authority
granted in this ordinance but prior to its effective date are hereby ratified and confirmed.
Section 17. Effective Date. 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
thereof held this 6th day of May, 2014.
CITY OF YAKIMA, WASHINGTON
ATTEST/AUTHENTICATED:
Sonya Claar Tee, City Clerk
Approved as to form:
Pacifica Law Group LLP
Filed with the City Clerk:
Passed by the City Council:
Ordinance No.
Date of Publication:
-36-
Micah Cawley, Mayor
CERTIFICATE
I, the undersigned, City Clerk of the City of Yakima, Washington (the "City") and keeper
of the records of the City Council (the "City Council"), DO HEREBY CERTIFY:
1. That the attached Ordinance is a true and correct copy of Ordinance No.
of the City Council (the "Ordinance"), duly passed at a regular meeting thereof held on the 6th
day of May, 2014.
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 City Council voted in the proper manner for the passage of the Ordinance; that all other
requirements and proceedings incident to the proper passage of the Ordinance have been duly
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 6th day of May, 2014.
City Clerk
PRELIMINARY OFFICIAL STATEMENT DATED J 2014
$13,220,000*
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2014A
DATED: Date of Delivery DUE: June 1, as shown below
STANDARD & POOR'S RATING — Applied for; see "Rating" herein.
NOT BANK QUALIFIED
BOOK -ENTRY ONLY—The City of Yakima, Washington (the "City") Limited Tax General Obligation Bonds, 2014A (the
"Bonds") will be issued as fully registered bonds in denominations of $5,000, or integral multiples thereof within a
maturity, and will be registered in the name of Cede & Co., as bond owner and nominee for The Depository Trust
Company ("DTC"). DTC will act as securities depository for the Bonds. Purchasers will not receive certificates
representing their interest in the Bonds purchased.
PRINCIPAL AND INTEREST PAYMENTS—Interest on the Bonds will be payable on June 1, 2015 and semiannually thereafter
on December 1 and June 1 of each year to their maturity. Principal of and interest on the Bonds will be payable by the
fiscal agency of the State of Washington, currently The Bank of New York Mellon (the "Bond Registrar"), as further
described herein. For so long as the Bonds remain in a "book -entry only" transfer system, the Bond Registrar 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 described in Appendix B - "Book -Entry Transfer System."
MATURITY SCHEDULE—
Due Interest Due Interest
Tune 1 Amount Rate Yield Price CUSIP No.
2015 $ 905,000 %
2016 1,175,000
2017 1,210,000
2018 1,255,000
2019 1,305,000
une 1 Amount Rate Yield Price CUSIP No.
2020 $ 1,360,000 %
2021 1,415,000
2022 1,470,000
2023 1,530,000
2024 1,595,000
NO REDEMPTION—The Bonds are not subject to redemption prior to their stated maturities.
PURPOSE—The Bonds are being issued for the purpose of providing funds (i) to finance the costs of certain street and road
improvements in the City and other capital improvements approved by the City Council and (ii) to pay costs of issuance
for the Bonds.
SECURITY—The Bonds are limited tax general obligations of the City. The City has covenanted and agreed irrevocably that
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 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 become due. The City has irrevocably pledged
that such tax will be within and as a part of the tax permitted to cities without a vote of the people. The full faith, credit and
resources of the City have been pledged irrevocably for the annual levy and collection of such taxes and for the prompt
payment of such principal and interest. The City's ability to raise taxes is subject to certain limitations as described
herein. The Bonds do not constitute a debt or indebtedness of the State of Washington, or any political subdivision
thereof other than the City.
TAX EXEMPTION —In the opinion of Pacifica Law Group LLP, Bond Counsel, assuming compliance with certain covenants of the City,
interest on the Bonds is excludable from gross income 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 Matters"
herein for a discussion of the opinion of Bond Counsel.
DELIVERY—The Bonds are offered when, as and if issued, subject to the approving legal opinion of Bond Counsel, and
certain other conditions. It is anticipated that the Bonds in definitive book -entry form will be available for delivery
through the facilities of DTC in New York, New York, or to the Bond Registrar on behalf of DTC by Fast Automated
Securities Transfer on or about June 9, 2014.
* Preliminary, subject to change.
This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire
Official Statement to obtain information essential to the making of an informed investment decision.
Pipedaffray
City of Yakima, Washington
129 North Second Street
Yakima, Washington 98901
Phone: (509) 575-6000
Fax: (509) 576-6614
www.yakimawa.gov (1)
Mayor and City Council
Micah Cawley Mayor
Kathy Coffey Assistant Mayor
Maureen Adkison Council Member
Tom Dittmar Council Member
Rick Ensey Council Member
Dave Ettl Council Member
Bill Lover Council Member
Tony O'Rourke
Jeffrey R. Cutter
Cindy Epperson
Tara Lewis
Administrative Officials
City Manager
City Attorney
Director of Finance & Budget
Financial Services Manager
Bond Counsel
Pacifica Law Group LLP
Seattle, Washington
(206) 245-1700
Bond Registrar
The Bank of New York Mellon
Dallas, Texas
1-800-438-5473
(1) 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 or a solicitation of an offer to purchase the Bonds in any jurisdiction in
which or to a person to whom it is unlawful to make such an offer or solicitation. No dealer, salesperson or other person has been
authorized by the City or the Underwriter to give any in ormation or to make any representations, other than those contained
herein, in connection with the offering of the Bonds and, i given or made, such information or representations must not be relied
upon. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this
Official Statement nor any sale made hereunder 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 with, and as part of, its responsibilities 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.
For the sole purpose ofthe Underwriter's compliance with Securities and Exchange Commission ("SEC") Rule 15c2 -12(b)(1),
the City has "deemed fnal" this Preliminary Official Statement as of its date, except for the omission of information as to offering
prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, elivery
dates, and other terms of the Bonds dependent on such matters.
In connection with this offering, the Underwriter may over -allot or effect transactions that stabilize or maintain the market price
oftheBonds at levels above those which might otherwise prevail in the open market. Such stabilizing, if commenced, may be
discontinued at any time.
The CUSIP numbers herein are provided by CUSIP Global Services. CUSIP is a registered trademark of the American Bankers
Association. CUSIP numbers are included in this Official Statement for convenience of the holders and potential holders of the
Bonds. The CUSIP numbers were provided by CUSIP Global Services and are not intended to create a database and do not serve
in any way as a substitute for the CUSIP Global Services. No assurance can be given that the CUSIP numbers for the Bonds
will remain the same after the date of issuance and delivery of the Bonds.
i
Table of Contents
Page
Description of the Bonds 1
Authorization for Issuance 1
Principal Amount, Date, Interest Rates and Maturities 1
Bond Registrar and Registration Features 1
No Redemption 1
Purchase 2
Book -Entry Bonds 2
Purpose and Use of Proceeds 2
Purpose 2
Estimated Sources and Uses of Funds 2
Security for the Bonds 3
General 3
Defeasance 3
No Acceleration 3
Bonded Indebtedness 4
Summary of Limited Tax General Obligation Bonds Debt Service Requirements 6
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
Property Tax Collection Procedure 11
Tax Collection Record 12
Major Property Taxpayers 12
Collection of Other Taxes 12
Authorized Investments 14
Local Government Investment Pool 15
Authorized Investments for Bond Proceeds 15
The City 19
Elected Officials 19
Key Administrative Staff 19
Labor Relations 20
Pension System 20
Other Post -Employment Benefits 22
Risk Management 22
Accounting 24
Budgetary Process 25
Auditing of City Finances 25
Bankruptcy 25
Demographic Information 26
Initiative and Referendum 29
Federal Sequestration 30
Tax Matters 30
Not Bank Qualified 31
Proposed Tax Legislation; Miscellaneous 31
Rating 31
Continuing Disclosure 32
Legal and Underwriting 34
Approval of Counsel 34
Litigation 34
Limitations on Remedies 34
Underwriting 34
Potential Conflicts 34
Concluding Statement 35
Form of Opinion of Bond Counsel Appendix A
Book -Entry Transfer System Appendix B
2012 Audited Financial Statements Appendix C
ll
This page left blank intentionally
iii
OFFICIAL STATEMENT
City of Yakima, Washington
$13,220,000*
Limited Tax General Obligation Bonds, 2014A
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 $13,220,000* aggregate principal amount of the above -referenced Limited Tax General
Obligation Bonds, 2014A (the "Bonds"). This Official Statement, which includes the cover page and
appendices, provides information concerning the City and the Bonds.
Description of the Bonds
Authorization for Issuance
The Bonds are issued pursuant to Ordinance No. (the "Ordinance"), passed by the City Council (the
"Council") on May 6, 2014 pursuant to the authority of chapters 35.37, 39.36 and 39.46 of the Revised Code of
Washington ("RCW"). The Bonds do not require voter approval.
Principal Amount, Date, Interest Rates and Maturities
The Bonds will be dated and bear interest from the date of issuance and delivery. 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, 2015) until their maturity 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.
Bond Registrar and Registration Features
The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede &
Co., as registered owner and nominee of The Depository Trust Company ("DTC"). DTC will ad as securities
depository for the Bonds. Individual purchases will initially be made in book -entry form only in minimum
denominations of $5,000 within a maturity and integral multiples thereof. Purchasers ("Beneficial Owners")
will not receive certificates representing their beneficial ownership interest in the Bonds so purchased.
Under the Ordinance, the City adopted the system of registration for the Bonds approved by the State Finance
Committee of the State of Washington (the "Committee"). Pursuant to chapter 43.80 RCW, the Committee
designates one or more fiscal agencies (the "Fiscal Agency") for bonds issued within the State of Washington.
The Committee currently is under contract with The Bank of New York Mellon. The Fiscal Agency will act as
bond registrar (the "Bond Registrar") under the terms of the Ordinance.
In order to meet payment requirements for interest on and principal of the Bonds as the same becomes due and
payable, the City will remit money from the City of Yakima, Washington, General Obligation 2014A Bond
Fund 2014 (the "Bond Fund") to the Bond Registrar. The Bond Registrar will remit payment to DTC in
accordance with the terms of the DTC procedures as then in effect. Principal of the Bonds will be paid to
registered owners upon presentation and surrender of the Bonds at maturity to the office of the Bond Registrar.
See "Book -Entry Bonds" and Appendix B.
No Redemption
The Bonds are not subject to redemption prior to their scheduled maturities.
* Preliminary, subject to change.
Purchase
The City reserves the right and option to purchase any or all of the Bonds offered to the City at any time at a
price deemed to be reasonable by the City.
Book -Entry Bonds
DTC will ad 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 Termination of Book -Entry Transfer System. In the event that (i) DTC or its successor (or
substitute depository or its successor) resigns from its functions as depository, and no substitute depository
can be obtained, or (ii) the Finance Director determines that it is in the best interest of the Beneficial Owners of
the Bonds that such owners be able to obtain such Bonds in the form of Bond certificates, the ownership of the
Bonds may then be transferred to any person or entity as provided in the Ordinance, and will no longer be held
in fully -immobilized form. In the event that the Bonds are no longer in fully immobilized form, interest on the
Bonds will be paid by check or draft mailed to the registered owners at the addresses for such registered
owners appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date,
or upon the written request of a registered owner of more than $1,000,000 of Bonds (received by the Bond
Registrar at least 15 days prior to the applicable payment date), such payment shall be made by the Bond
Registrar by wire transfer to the account within the continental United States designated by the registered
owner. Principal of the Bonds will be payable upon presentation and surrender of such Bonds by the
registered owners at the principal office of the Bond Registrar.
Purpose and Use of Proceeds
Purpose
The proceeds from the sale of the Bonds will be used (i) to finance a portion of the costs of certain street and
road improvements in the City and other capital improvements approved by the City Council and (ii) to pay
costs of issuance for the Bonds.
Estimated Sources and Uses of Funds
The proceeds from the Bonds will be applied as follows:
Sources of Funds
Par Amount
Net Original Issue Premium/(Discount)
Total Sources of Funds
$ 13,220,000 (1)
Uses of Funds
Project Fund $
Costs of Issuance (2)
Total Uses of Funds
(1) Preliminary, subject to change.
(2) Includes bond counsel fee, rating fees, Underwriter's discount and other costs associated with the issuance of the Bonds.
2
Security for the Bonds
General
The Bonds are limited tax general obligation bonds of the City. The City, as authorized by law and the
Ordinance, has covenanted and agreed irrevocably that 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 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 become due. The City has irrevocably pledged that such tax will be within and as a
part of the tax levy permitted to cities without a vote of the people. The full faith, credit and resources of the
City have been pledged irrevocably for the annual levy and collection of such taxes and for the prompt
payment of such principal and interest.
The City may, subject to applicable laws, apply other funds available to make payments with respect to the
Bonds.
Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not
constitute a debt or indebtedness of the State or any political subdivision thereof other than the City.
Defeasance
In the event that the City, in order to effect the payment or retirement of any Bond, sets aside in the Bond Fund
or in another special account, cash or noncallable Government Obligations, as defined below, or any
combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together
with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance
with its terms and to pay when due the interest thereon, and such cash and/or noncallable Government
Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made
into the Bond Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so
provided for will cease to be entitled to any lien, benefit or security of the Ordinance except the right to receive
payment of principal, premium, if any, and interest from the Bond Fund or such special account, and such
Bond will be deemed to be not outstanding under the Ordinance.
"Government Obligations" is defined in the Ordinance to have the meaning specified in RCW 39.53.010, as it
may be amended from time to time, which currently means any of the following: (a) direct obligations of, or
obligations the principal of and interest on which are unconditionally guaranteed by, the United States of
America, and bank certificates of deposit secured by such obligations; (b) bonds, debentures, notes,
participation certificates or other obligations issued by the Banks for Cooperatives, the Federal Intermediate
Credit Bank, the Federal Home Loan Bank system, the Export -Import Bank of the United States, Federal Land
Banks or the Federal National Mortgage Association; (c) public housing bonds and project notes fully secured
by contracts with the United States; and (d) obligations of financial institutions insured by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured or to the
extent guaranteed as permitted under any other provision of State law.
No Acceleration
The Bonds are not subject to acceleration upon the occurrence of a default. The City is liable for principal and
interest payments only as they become due. In the event of multiple defaults in payment of principal of or
interest on the Bonds, the registered owners would be required to bring a separate action for each such
payment not made. This could give rise to a difference in interests between registered owners of earlier and
later maturing Bonds.
3
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 certain utility purposes and 2.5 percent for open space, park facilities and capital facilities
associated with economic development. Within the 2.5 percent of assessed value for general purposes, the City
may, without a vote of the electors, incur general obligation indebtedness (such as the Bonds) 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.
Without a vote of the electorate, the City may incur debt as follows:
(1) Pursuant to an ordinance specifying the amount and object of the expenditure of the proceeds,
the City 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.
Computation of Debt Capacity
(As of June 9, 2014)
2014 Tax Collection Year Assessed Value (1) $ 5,515,264,870
Nonvoted Debt Capacity
1.5% of Assessed Value $ 82,728,973
Less: Outstanding Nonvoted Debt (2)(3) (27,612,877)
Less: The Bonds (4) (13,220,000)
Remaining Nonvoted Debt Capacity $ 41,896,096
Voted and Nonvoted Debt Capacity for General Purposes
2.5% of Assessed Value $ 137,881,621
Less: Outstanding Nonvoted Debt (2)(3) (27,612,877)
Less: The Bonds (4) (13,220,000)
Less: Outstanding Voted Debt (285,000)
Total Remaining Voted and Nonvoted Debt Capacity for General Purposes $ 96,763,744
(1) Provided by the Yakima County Assessor.
(2) Includes limited tax general obligation debt and other nonvoted general obligation debt.
(3) Zero coupon bonds reflect accreted value at maturity.
(4) Preliminary, subject to change.
Source: City of Yakima.
4
General Obligations: Non -voted (1)
Limited Tax General Obligation
LTGO 2003 Series A
LTGO Refunding 2004
LTGO 2005
LTGO & Refunding 2007
LTGO 2008
LTGO 2009A
LTGO 2009B
LTGO 2013 (2)
The Bonds (this issue)
LTGO Bond Total
Outstanding General Obligation Debt
(As of June 9, 2014)
Date of
("LTGO") Debt Issue
06/01/03
09/01/04
12/01/05
05/08/07
08/28/08
08/28/09
08/28/09
06/20/13
06/09/14
Other Nonvoted General Obligation ("UTGO") Debt
CERB Loan
Printer/Copier Lease
LOCAL Program — Two Fire Apparatus
LOCAL Program — Fire Apparatus
LOCAL Program — Police Vehicles
08/21/95
01/01/10
03/15/11
03/19/13
08/22/13
Other Nonvoted General Obligation Debt Total
Date of Amount Amount
Maturity Issued Outstanding
12/01/23 $ 1,430,528 $ 1,575,000 (1)
11/01/19 4,175,000 2,170,000
12/01/15 755,000 175,000
05/01/26 8,980,000 6,350,000
12/01/21 2,950,000 1,770,000
12/01/18 2,055,000 1,130,000
12/01/32 4,980,000 4,980,000
06/20/28 5,000,000 4,731,218
06/01/24 13,220,000 (3) 13,220,000 (3)
43,545,528 36,101,218
07/01/16
12/31/14
12/01/20
06/01/23
06/01/19
425,448
51,000
576,847
310,414
4,632,793
5,996,502
Total Non -voted General Obligations $ 49,542,030
General Obligations: Voter Approved
Unlimited Tax General Obligation Bonds
UTGO Refunding 2004
09/01/04 12/01/14 $ 2,300,000
96,049
7,534
420,411
284,905
3,922,760
4,731,659
$ 40,832,877
$ 285,000
(1) Zero coupon bonds; reflects accreted value at maturity.
(2) The 2013 LTGO is a bank loan which rate can be reset every fifth anniversary of the loan with a maximum amortization
of 15 years. The loan can be paid off at its earliest date of reset (June 20, 2018).
(3) Preliminary, subject to change.
5
(1)
(2)
(3)
(4)
Summary of Limited Tax General Obligation Bonds Debt Service Requirements (1)
Calendar Outstanding LTGO Bonds (2)
Years Principal
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
$ 975,455
1,637,376
1,593,196
1,668,302
1,505,855
1,483,409
945,464
976,613
939,687
762,762
730,000
770,000
800,000
375,000
390,000
410,000
430,000
450,000
475,000
Total $ 17,318,120
The Bonds (3)
Interest Principal
$ 450,072 $
802,264
744,563
679,302
620,572
565,887
510,098
471,798
434,206
401,556
275,558
240,186
199,644
166,980
142,230
116,490
89,430
61,050
31,350
(4) $
905,000
1,175,000
1,210,000
1,255,000
1,305,000
1,360,000
1,415,000
1,470,000
1,530,000
1,595,000
Interest
719,255
451,125
415,350
372,100
320,900
267,600
212,100
154,400
94,400
31,900
Total Debt
Service
$ 1,425,527
4,063,895
3,963,885
3,972,955
3,753,528
3,675,195
3,083,161
3,075,511
2,998,294
2,788,718
2,632,458
1,010,186
999,644
541,980
532,230
526,490
519,430
511,050
506,350
7,003,235 (4) $ 13,220,000 $ 3,039,130 $ 40,580,484
Totals may not foot due to rounding.
Any principal and/or interest payments made prior to June 9, 2014 have been excluded; does not include City's
Limited Tax General Obligation Bond, 2013 which rate of interest is reset every fifth anniversary of the bond. Assumes
gross debt service for the City's Limited Tax General Obligation Bonds, Series 2009B which were issued as direct pay
Build America Bonds. See "Federal Sequestration" herein.
Preliminary, subject to change; assumes interest rates ranging from 3.00% to 4.00%.
The interest amounts shown above include the portion of the accreted value of zero coupon bonds not included in the
principal amounts shown above.
Overlapping Taxing District
Yakima School District No. 7
West Valley School District No. 208
Yakima Rural Library District
Yakima County
Union Gap School District No. 2
Naches School District No. 3
Total
Summary of Overlapping Debt
(As of April 1, 2014)
2014 Assessed
Value
$ 4,291,764,572
2,382,040,854
13,804,560,484
15,024,702,587
370,588,037
762,144,602
Percent
Overlap
94.86%
60.45
39.99
36.74
1.63
0.40
Source: Yakima County Assessor and Treasurer and individual taxing districts.
6
Outstanding
GO Debt
$ 106,315,000
47,275,000
1,025,000
35,890,000
5,990,000
596,968
Estimated
Overlapping
Debt
$ 100,848,914
28,576,956
409,872
13,186,060
97,848
2,382
$143,122,034
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 districts allocated to the City's residents.
Regular Assessed Value (2014 Tax Collection Year) (1) $ 5,515,264,870
Estimated 2013 Population (2) 92,620
Debt Information
Direct Debt (3) $ 41,117,877
Estimated Overlapping Debt (as previously detailed herein) 143,122,034
Total Direct and Overlapping Debt (3) $ 184,239,911
(1) Provided by the Yakima County Assessor's Office.
(2) Estimate derived from the State of Washington, Office of Financial Management, Forecasting Division.
(3) Preliminary, subject to change. Includes the Bonds plus limited and unlimited tax general obligation bonds and other
nonvoted general obligation debt.
Bonded Debt Ratios
Direct Debt to Assessed Value 0.75%
Direct and Overlapping Debt
to Assessed Value 3.34%
Per Capita Assessed Value $ 59,547
Per Capita Direct Debt $ 444
Per Capita Total Direct and Overlapping Debt $ 1,989
Debt Payment Record
The City has promptly met all debt service payments on outstanding obligations. The City has never issued
refunding bonds to prevent an impending default.
Future Financings
Pursuant to the terms of the Ordinance, the City has authorized the issuance of its Limited Tax General
Obligation Refunding Bonds, 2014B in the aggregate principal amount of not to exceed $2,100,000 (the "2014B
Bonds"). When and if issued, proceeds of the 2014B Bonds will be used to refund, for debt service savings, the
City's Limited Tax General Obligation Refunding Bonds, 2004 maturing on November 1 in the years 2014
through 2019. Depending on market conditions, the City expects to issue the 2014B Bonds in June 2014. The
City also anticipates issuing approximately $13,000,000 in limited tax general obligation bonds in 2015-2016 for
economic development initiatives including potential street improvements and renovations, a downtown plaza
area and/or a tourism recreation facility, such as an aquatic center.
7
Taxing Authority
Authorized Property Tax Levies
The City is authorized to impose (1) a regular levy (up to $3.60/$1,000, less the Yakima County Rural Library
District (the "Library District") levy, not to exceed $0.50/$1,000 of assessed value) and (2) excess levies
(unlimited as to rate or amount). For the 2014 collection year, the City's regular levy rate is $3.11879/$1,000 and
excess levy rate is $0.01972/$1,000. The regular levy is imposed without a vote of the people for general
purposes, including payment of debt service on limited tax general obligation bonds, such as the Bonds, and
other obligations, and is subject to limitations (see "General Property Taxes—Regular Property Tax
Limitations" herein).
The City is also authorized to impose excess voter -approved levies (unlimited as to rate or amount). Excess
levies are imposed, upon voter approval, to pay, among other things, 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 2010.
Ad Valorem Tax Levies
(Dollars per $1,000 of Assessed Value)
Collection
Year General Bond (1) Total
2014 $3.11879 $0.01972 $3.13851
2013 3.08950 0.05409 3.14359
2012 3.05586 0.05448 3.11036
2011 2.91847 0.05306 2.97153
2010 2.93485 0.05585 2.99071
Levy Rates Levy Amounts
General Bond (1) Total
$17,200,931 $ 107,230 $17,308,161
16,975,232 293,000 17,268,232
16,667,323 293,000 16,690,323
16,341,342 293,000 16,634,342
15,816,566 297,000 16,113,566
(1) 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," the largest levy
code within the City, as well as the statutory levy authority of each type of potential overlapping district, are
listed below. Levy code 333 is wholly within the City, but it does not include all of the property within the
City; as a result, additional taxing districts, not listed below, levy taxes within the City.
Yakima County
County (Road Levy)
Library District
Fire Protection District
Port District
The City
Hospital District
State Schools
Yakima School District No. 7
County Flood Control
County Emergency Services
Total rate for Yakima County levy code 333:
Total Representative
Levy Rates
Per $1,000 of
Assessed Value
$ 1.76458
n/a
0.48122
n/a
n/a
3.13851
n/a
2.61490
4.83251
0.09131
0.25000
$ 13.17303
(1)
(1)
(1)
(2)
(1)
Total Statutory
Levy Authority
Per $1,000 of
Assessed Value
$1.80 (3)
2.25
0.50
1.50
0.45
3.10 (4)
0.75
3.60 (5)
n/a (6)
n/a
n/a
(1) Yakima County levy code 333 is entirely within the incorporated portion of Yakima County and therefore does not
have a road levy. Likewise, it does not contain a fire district, port district or a hospital district.
(2) The total levy includes a regular levy of $3.11879 and a voted bond levy of $0.01972.
(3) 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.
(4) The City's levy authority of $3.60 per $1,000 is impacted due to its annexation to the Library District in 2006. The
Library District has the authority to levy up to $0.50 per $1,000 thereby reducing the City's levy authority to $3.10 per
$1,000 plus any unused levy authority from the Library District. Pursuant to RCW 41.16.060, $0.225 of the total $3.60
can be used by the City for pension funding purposes, if required; otherwise this tax may be levied and used for any
other City municipal purpose.
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.
(6) Washington school districts do not have nonvoted regular levy authority.
Source: Yakima County Assessor for Levy Code 333.
(5)
General Property Taxes
The following provides a general description of the City's authority to levy property taxes 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
9
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 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, such as the Bonds, 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.
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, to finance affordable housing, for ferry districts, for criminal
justice purposes and for transit -related purposes; and certain protected portions of levies for metropolitan park
districts, for fire protection districts and for flood control zone districts.
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. With certain limited exceptions, all real estate constitutes one class of property for purposes of this
uniformity requirement. Aggregate property tax levy rates vary within the City due to its different
overlapping taxing districts. In the event that the maximum permissible levy rate by a taxing district varies
within the taxing district, the lowest permissible rate for any part of the taxing district must be applied
throughout the entire taxing district.
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 84.52.050
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 Bonds are not unlimited tax
general obligation bonds.
Regular Levy Increase Limitation. The regular property tax increase limitation (chapter 84.55 RCW) 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. With a supermajority vote of
the Council, the limit factor is a flat 101 percent.
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. The City does not have any banked levy capacity.
Within the rate limitations described above and only after so authorized by a majority vote of its electors, a
taxing district may levy, indefinitely or for a limited period or to satisfy a limited purpose, an amount greater
than otherwise would be allowed by the tax increase limitation, 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 ("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 true and fair value. Three approaches may
be used to determine real property value: market data, replacement cost and income -generating capacity. In
the County, all property is subject to an annual property valuation and an on-site revaluation at least once
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.
Property 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 which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the
County Treasurer by January 15, 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 each 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 1 of the
year in which the tax was due and eight percent on December 1 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 all covered
by detailed statutes. 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. Property taxes levied are secured by a lien on the
property assessed. A federal tax lien filed before personal property taxes are levied is senior to the personal
property tax lien. In addition, a federal civil judgment lien (but not a federal tax lien) is senior to real property
taxes that are incurred after the judgment lien has been recorded. In all other respects, and subject to the
possible "homestead exemption" described below, the lien that secures property taxes is senior to all other
liens or encumbrances of any kind on real or personal property subject to taxation. The State's courts have not
decided whether the homestead law (chapter 6.13 RCW) gives the occupying homeowner a right to retain the
first $125,000 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
11
homestead right superior to 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.
The following table shows the regular property tax collection record for the City for the years shown.
Collection
Year
2014
2013
2012
2011
2010
2009
Tax Collection Record
Regular Ad Valorem
Assessed Value (1) Tax Levy
$ 5,515,264,870 $ 17,308,161
5,494,497,093 17, 268, 232
5, 454, 218, 436 16, 690, 323
5,599,278,437 16,634,342
5, 389, 218, 769 16,113, 566
5, 368, 959, 341 15, 776, 981
Tax Collection
Year As of
of Levy 03/31/14
(2) (2)
97.7% 98.3%
97.6 99.3
97.2 99.7
97.0 100.0
96.8 100.0
(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 County Assessor's Office.
The following table lists the largest ten taxpayers within the City for tax collection year 2014 listed in declining
order of assessed value.
Taxpayer
Yakima HMA Inc. (Yakima Regional)
Wal-Mart Stores Inc.
Washington Fruit & Produce Co.
Shields Bag & Printing Co.
Michelsen Packaging Co.
Wide Hollow Development Inc.
John I. Haas Inc.
Pacificorp
Castle Creek Apartments LLC
Longview Fibre Paper & Packaging Inc.
Subtotal — Ten Largest Taxpayers
All Other City Taxpayers
Total City Taxpayers
Source: Yakima County Assessor's Office.
Major Property Taxpayers
Type of Business
Health care service
General merchandise
Agriculture
Plastic bag mfg.
Produce packaging
Development
Hops & hop products
Utilities
Residential
Paper manufacturing
2014 Collection Year
Assessed Valuation
$ 61,364,644
38,630,275
37,782,200
32,498,919
22,852,119
21,044,600
20,033,763
19,649,414
19,278,135
19,112,007
292,246,076
5,223,018,794
$ 5,515,264,870
Percentage
of City's
Total A.V.
1.11%
0.70
0.69
0.59
0.41
0.38
0.36
0.36
0.35
0.35
5.30
94.70
100.00%
Collection of Other Taxes
In addition to regular property tax levies, the City is authorized to impose various other taxes, including those
described below. Neither the State nor any municipal corporation of the State has the authority to nor has ever
collected a tax on net income.
Local Sales and Use Tax. The State currently imposes a sales and use tax of 6.5 percent. Cities, counties and
certain other municipal corporations are authorized to levy incremental local sales and use taxes for various
purposes. The sales tax currently is applied to a broad base of tangible personal property and selected services
purchased by consumers, including construction (labor and materials), machinery and supplies used by
businesses, services and repair of real and personal property, and many other transactions not taxed in other
12
states. The use tax supplements the sales tax by taxing the use of certain services and by taxing the use of
certain personal property on which a sales tax has not been paid (such as items purchased in a state that
imposes no sales tax). The State Legislature, and the voters through the initiative process, have changed the
base of the sales and use tax on occasion, and this may occur again in the future. See "Initiative and
Referendum." The State Department of Revenue administers and collects sales and use taxes from sellers,
consumers and the County and makes disbursements to the City on a monthly basis.
The City is authorized to impose a local sales and use tax of 1.0%, of which 1.0% is required to be remitted to
the State Department of Revenue for administrative costs. An aggregate sales and use tax of 8.2% is currently
imposed in the City. The resulting tax revenues are allocated 6.5% to the State; 0.85% for the City's "basic"
sales tax; 0.15% to the County for general purposes; 0.3% for the City's Transit sales tax; and 0.4% for the
County/City restricted to funding law and justice. The amount of revenue generated by sales tax fluctuates
from year to year due to changes in the economy, buying habits of consumers, and the level of construction
taking place in the City.
Hotel/Motel Tax. The hotel/motel tax levied by the City is five percent. Two percent is levied pursuant to RCW
67.28.150 and RCW 67.28.160. This tax is for construction and operation of stadiums, convention centers,
performing arts centers or visual arts facilities. The City also levies a three percent Local Option Hotel/Motel
tax authorized by the legislature in 1995 under RCW 67.28.240 (for the same purposes as the two percent tax),
which was later repealed in 1997. Since the City had pledged the tax for the payment of limited tax general
obligation bonds prior to its repeal, it continues to receive the tax until all bonds to which the tax is pledged are
retired (currently December 1, 2032), or later if additional bonds are issued with a pledge of the hotel/motel tax.
The uses of the tax proceeds are restricted by State law.
Real Estate Excise Tax. The City imposes a real estate excise tax ("REET") of 0.5% on sales of real property in the
City. The City's tax is in addition to the current State real estate excise tax of 1.28%.
Of the 0.50 percent REET tax, the first 0.25 percent tax ("REET 1") is imposed pursuant to RCW 82.46.010 and
may be used for financing certain "capital projects" specified in a capital facilities plan element of the City's a
comprehensive plan or, within certain limitations, maintenance and operating expenses. Eligible "capital
projects" for REET 1 include: streets, roads, highways, sidewalks, street and road lighting systems, traffic
signals, bridges, domestic water systems, storm and sanitary sewer systems, parks, recreational facilities, law
enforcement facilities, fire protection facilities, trails, libraries, administrative and judicial facilities. The City
may use the greater of $100,000 or 35 percent of REET 1 revenues, not to exceed $1 million, to pay for
maintenance and operation expenses of existing capital facilities through calendar year 2016.
Of the 0.50 percent REET tax, the second 0.25 percent tax ("REET 2") is imposed pursuant to RCW 82.46.035(2)
and may be used for certain capital projects specified in a capital facilities plan element of the City's
comprehensive plan or, within certain limitations, maintenance and operating expenses. Eligible "capital
projects" for REET 2 include: streets, roads, highways, sidewalks, street and road lighting systems, traffic
signals, bridges, domestic water systems, storm and sanitary sewer systems, and planning, construction,
reconstruction, repair, rehabilitation, or improvement of parks. REET 2 excludes the use of funds to acquire
land for parks. The City may use the greater of $100,000 or 35 percent of REET 2 revenues, not to exceed $1
million, to pay for maintenance and operation expenses of existing capital facilities through calendar year 2016.
Utility Taxes. The City imposes a gross receipts utility business and occupation tax on investor- and City -
owned utilities. The following table displays the maximum utility tax rate permitted under State law without
voter approval and the City's current utility tax rate.
13
Maximum Current
Utility Statutory Limit Rate
Investor-owned
Telephone 6.0% 6%
Electric 6.0 6%
Natural Gas 6.0 6%
Cable Television 6.0 (1) 6%
Nob Hill Water None 20%
Yakima Waste Systems None 16%
City -owned
Water None 20%
Wastewater None 20%
Stormwater None 6%
Refuse None 15%
(1) The rate must not be unduly discriminatory against cable operators and subscribers and therefore should be consistent
with the other utility rates charged.
Criminal Justice Sales Tax. The objective of the Criminal Justice Sales Tax is to have additional resources
available to enhance the criminal justice operations in the City and the County. The tax has two parts: (i) a
0.1% county -wide tax voted on and approved prior to 2000 and (ii) a County -wide tax of 0.3% which began in
June 2005.
Gambling Tax. The City taxes gross receipts derived by operators of gambling activities, including
punchboards, pulltabs, bingo, raffles, amusement games, and social card games. Also, fund- raising activities
of charitable and nonprofit organizations that involve games of chance are subject to local taxes.
The following table shows the historical General Fund revenues from these taxes.
Taxes
Preliminary Actual
2014 2013 2012 2011 2010
Property taxes levied for general purpose $ 11,178,000 $ 10,195,969 $ 9,935,939 $ 9,595,175 $ 9,190,326
Sales taxes 14,820,000 14,462,963 13,494,843 12,590,563 12,653,993
Utility taxes 15,842,500 15,280,369 14,929,797 12,062,593 12,547,713
Criminal Justice taxes 2,970,000 2,922,211 2,497,008 2,612,126 2,553,893
Gambling Tax/other 910,500 901,176 885,548 869,890 855,105
Total Taxes $ 45,721,000 $ 43,762,688 $ 41,743,135 $ 37,730,347 $ 37,801,030
Source: City of Yakima.
Authorized Investments
Chapter 35.39 RCW limits the investment by a city of its inactive funds or other funds in excess of current
needs to the following: United States bonds; United States certificates of indebtedness; State bonds or warrants
general obligation or utility revenue bonds of its own or of any other city or town 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. Under chapter 39.59 RCW,
a city also may invest in the following: bonds of any local government in the State that have at the time of
investment one of the three highest credit ratings of a nationally recognized rating agency; general obligation
bonds of any other state or local government of any other state that have at the time of the investment one of
the three highest credit ratings of a nationally recognized rating agency; registered warrants of a local
government in the same county; and any investments authorized by law for the State Treasurer or any local
government of the State other than a metropolitan municipal corporation (other than bank certificates of
deposit of banks or bank branches not located in the State). Under chapter 43.84 RCW, the State Treasurer (and,
under chapter 39.59 RCW, a city) may invest in the following; in obligations of the United States or its agencies
and of any corporation wholly owned by the government of the United States; State county, municipal or
school district general obligation bonds or general obligation warrants of taxing districts of the State, if within
the statutory limitation of indebtedness; motor vehicle fund warrants; Federal Home Loan Bank notes and
bonds, Federal Land Bank bonds, Fannie Mae notes, debentures and guaranteed certificates of participation
and obligation of any other government-sponsored corporation whose obligations are eligible for collateral for
14
advances to Federal Reserve System member banks; bankers' acceptances purchased in the secondary market;
negotiable certificates of deposit of any national or state commercial or mutual savings bank or savings and
loan association doing business in the United States; and commercial paper.
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"), which invests money on behalf of more than 640 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 funds. These principles are, in order of priority, (i) the safety of principal; (ii)
the assurance of sufficient liquidity to meet cash flow demands; and (iii) the attainment of 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 LGIP 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 guidelines of the LGIP 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.
As of March 31, 2014, the City's investments at market value totaled $49,466,262, with $4,318,850 (or nine
percent) of that amount invested in the LGIP and the balance invested in government agencies and certificates
of deposits.
Authorized Investments for Bond Proceeds
In addition to the eligible investments discussed above, bond proceeds may also be invested, subject to certain
restrictions, in mutual funds with portfolios consisting of (i) only United States government bonds or United
States government guaranteed bonds issued by federal agencies with average maturities of less than four years;
bonds of the State or of any local government in the State that have at the time of the investment one of the four
highest credit ratings of a nationally recognized rating agency; general obligation bonds of any other state or
local government of any other state that have at the time of the investment one of the four highest credit ratings
of a nationally recognized rating agency; (ii) bonds of state and local governments or other issuers authorized
by law for investment by local governments that have at the time of investment one of the two highest credit
ratings of a nationally recognized rating agency; or (iii) securities otherwise authorized by law for investment
by local governments.
15
Comparative General Fund Statement
of Revenues, Expenditures and Changes in Fund Balance
(Fiscal Years Ended December 31)
Revenues
Taxes and Special Assessments
Licenses and Permits
Intergovernmental Revenues
Charges for Services
Fines and Forfeits
Interest
Other Revenues
Total Revenues
Expenditures
General Government
Security of Persons and Property
Physical Environment
Economic Environment
Mental & Physical Health
Culture & Recreation
Capital Outlay
Debt Service
Total Expenditures
Excess of Revenues
Over (Under) Expenditures
Other Financing Sources (Uses)
Proceeds from Capital Lease Financing
Operating Transfers In
Operating Transfers (Out) (1)
Intergovernmental Agreements
Sale of Capital Assets
Comp. For Loss of Gen. Fixed Assets
Total Other Financing Sources (Uses)
Excess of Revenues and Other Sources
Over (Under) Expenditures/Other Uses
Fund Balance, January 1
Change in Reserve for Inventory
Ending Fund Balance
Unaudited
Actual
2013 2012 2011 2010 2009
$ 43,762,688 $ 41,847,570 $ 37,755,252 $ 37,801,077 $ 36,761,929
817,750 892,282 842,272 768,469 711,834
2,683,040 2,862,187 2,553,306 2,813,157 3,073,099
4,965,671 4,676,966 5,343,249 4,917,224 4,719,438
1,603,138 1,512,477 1,569,946 1,658,467 1,631,593
100,906 309,075 272,541 403,183 556,076
40,285 41,541 32,952 (64,261) 101,369
53,973,478 52,142,098 48,369,518 48,297,316 47,555,338
12,100, 404 11, 339, 326
36,329,610 34,783,683
953,034 899,783
1,077,916 643,232
17,774 23,859
378,774 225,945
121,297 47,109
50,978,809 47,962,937
2,994,669 4,179,161
(3,019,305)
(39,095)
9,765
46
(3,048,589)
(53,920)
9,779,648
(7,065)
$ 9,718,663
40,000
(3,485,667)
(39,095)
16
11,569,702
32,252, 777
964,552
753,914
21,794
269,613
111,193
45,943,545
2,425,973
40,000
(2,261,918)
(39,095)
(3,484,746) (2,261,013)
694,415 164,960
9,099,335
(14,102)
$ 9,779,648 $ 9,099,335
8,945,631 (2)
(11,256)
11,253,487
32,576,171
1,250,939
784,452
87,223
8,167
61,052
57,394
46,078,885
2,218,431
51,000
40,000
(2,412,206)
(39,095)
11,508,451
33,219,445
1,363,183
914,254
86,217
16,333
130,374
94,364
47,332,621
222,717
40,000
(2,422,933)
(39,095)
975
145
(2,360,301) (2,420,908)
(141,870) (2,198,191)
8,842,208 11,047,042
9,929 (6,643)
$ 8,710,267 (2) $ 8,842,208
(1) The majority of operating funds transferred out of the General Fund are used to fund parks programs, contingency
funds and the City's public safety communications network.
(2) In 2011 the City implemented GASB (defined herein) Statement 54 and restated its beginning fund balance with the
recategorization of certain funds for reporting purposes.
Source: City of Yakima.
16
2013-14 Budget — General Fund
(Fiscal Years Ended December 31)
2013 2014
Amended Adopted
REVENUES
Taxes and Special Assessments $ 42,689,500 $ 45,721,000
Licenses and Permits 731,700 769,200
Intergovernmental Revenues 2,670,719 2,882,551
Charges for Services 5,195,480 5,806,614
Fines and Forfeits 1,555,000 1,670,000
Interest 250,000 265,000
Other Revenues 40,850 67,478
Total Revenues 53,133,249 57,181,843
EXPENDITURES
Current
General Government 12,595,795
Security of Persons and Property 36,513,334
Physical Environment 984,511
Economic Environment 1,047,333
Mental & Physical Health 18,000
Capital Outlay
General Government 95,000
Security of Persons and Property 401,520
Debt Service
Principal Retirement 74,419
Interest 12,690
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
12,767,017
37,243,981
1,460,858
1,006,214
19,500
45,000
786,033
176,483
51,742,602 53,505,086
1,390,647 3,676,757
OTHER FINANCING SOURCES (USES)
Transfers In 40,000 -
Transfers (Out) (2,272,275) (3,492,275)
Intergovernmental Agreements (39,095) (39,095)
Total Other Financing Sources (Uses) (2,271,370) (3,531,370)
Net Change in Fund Balances
Fund Balances - January 1
Change in Reserve for Inventory
Fund Balances - December 31
Source: City of Yakima.
17
(880,723) 145,387
9,779,648 9,718,663
$ 8,898,925 $ 9,864,050
General Fund
Balance Sheet
(Years Ending December 31)
Unaudited Actual
2013 2012 2011 2010 2009
Assets and Other Debits
Cash & Equity in Pooled Investments $ 2,203,412 $ 4,864,345 $ 2,040,443 $ 990,765 $ 1,690,087
Deposits w/ Fiscal Agent/Trustee 79,972 79,972 127,903 202,070 173,510
Receivables:
Taxes 4,759,411 4,357,428 4,426,606 4,745,805 4,377,582
Accounts 1,532,603 1,435,712 1,494,471 1,550,315 1,473,515
Interest/Penalties 140,581 93,773 151,226 90,976 100,694
Due from Other Funds (3) - 1,199 - 25,485 136,212
Due from Other Gov't Units 23,966 174,652 212,063 148,322 101,902
Inventories 34,505 41,570 43,796 66,928 56,999
Investments, at Amortized Cost 8,022,508 5,435,302 6,595,482 7,101,198 7,153,387
Total Assets $ 16,796,958 $ 16,483,953 $ 15,091,990 $ 14,921,864 $ 15,263,888
Liabilities
Warrants/Accounts Payable $ 1,214,221 $ 1,176,584 $ 582,604 $ 626,141 $ 744,140
Wages/Benefits Payable 4,140,927 3,805,398 3,565,804 3,594,074 3,646,341
Due to Governments 68,483 69,146 69,146 69,040 69,040
Deposits Payable 148,251 75,798 177,899 149,047 181,349
Deferred Revenues 1,426,441 1,497,407 1,469,299 1,571,225 1,607,300
Custodial Accounts 79,972 79,972 127,903 202,070 173,510
Total Liabilities 7,078,295 6,704,305 5,992,655 6,211,597 6,421,680
Fund Equity and Other Credits
Fund Balance:
Reserved
Unreserved
Total Fund Equity and Other Credits
9,505 41,570 43,796
9,738,078 9,055,539
9,709,158
9,718,663
9,779,648 9,099,335
445,568 356,224
8,264,699 8,485,984
8,710,267 8,842,208
Total Liabilities, Equity and Other Credits $ 16,796,958 $ 16,483,953 $ 15,091,990 $ 14,921,864 $ 15,263,888
Source: City of Yakima.
18
The City
The City was incorporated in 1886. The City encompasses approximately 23 square miles and is the ninth
largest in terms of population with an estimated 2013 population of 92,620. The City provides the full range of
municipal services including public safety (police, fire, building), public improvements (streets, traffic signals,
storm sewer, irrigation utility), sanitation (solid waste disposal, wastewater utility), water utility, community
development, parks and recreation, and general administrative services.
The City operates under a council/manager form of government with a full-time city manager. The 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 Council from within its own membership every two years.
Elected Officials
City Council
Micah Cawley, Mayor
Kathy Coffey, Asst. Mayor
Maureen Adkison
Tom Dittmar
Rick Ensey
Dave Ettl
Bill Lover
Term Expires
December 31, 2017
December 31, 2015
December 31, 2015
December 31, 2015
December 31, 2015
December 31, 2017
December 31, 2017
Key Administrative Staff
Tony O'Rourke, City Manager. Mr. O'Rourke joined the City as its City Manager in July 2012. Prior to joining
the City, Mr. O'Rourke worked at the City of Coral Springs, Florida from 1989 to 1996 and served as the
Assistant City Manager and the City Manager. Mr. O'Rourke joined the Beaver Creek Resort Company in 1996
and served as the Chief Executive of the private corporation which operates an alpine resort. From 2010 to
2012, Mr. O'Rourke served as the City Manager for the City of South Lake Tahoe, California. Mr. O'Rourke
received his undergraduate degree from the University of California, Santa Barbara and earned a Master's
degree from Cornell University in Ithaca, New York.
Cindy J. Epperson, Director of Finance & Budget. Ms. Epperson joined the City in 1990 as an accountant,
previously working in the agricultural industry as an accounting manager. Prior to that she was a licensed
CPA working as a Senior Auditor for an international accounting firm. Ms. Epperson was promoted to Deputy
Director over Budget and Accounting in 2007, where she has the responsibility for the City's accounting
systems and processes including financial statement preparation and annual Budget preparation. In 2012 Ms.
Epperson became the Director of Finance & Budget. Ms. Epperson is a key strategic participator in the
development of the City's budget, in maintaining the City's fiscal stability, and in generating and/or analyzing
complex financial proposals to further the City's critical goals and objectives. Ms. Epperson obtained a
Bachelor of Science degree in Accounting from the University of Arkansas in Little Rock.
Tara Lewis, Financial Services Manager. Ms. Lewis joined the City in 2010 having previously worked for a
number of years in the State Higher Education field, specifically as Director of Accounting for Columbia Basin
College in Pasco, Washington and subsequently for Yakima Valley Community College in Yakima. Prior to
that Ms. Lewis worked in the not-for-profit healthcare environment. Her responsibilities have included
Financial Statement reporting, audit, grants accounting and reporting, debt management, cash and investment
management and internal control. Ms. Lewis began her career at a regional CPA firm where she performed
both tax and audit work. Ms. Lewis earned her Bachelor of Science in Accounting from Central Washington
University and a Master of Business Administration from Washington State University. She is a licensed CPA.
19
Labor Relations
The City currently employs 654 full-time and 119 part-time/seasonal employees, the majority of whom are
eligible under State law to be represented by a labor organization under provisions of negotiated contracts
with 10 bargaining units. The City considers its relationship with the bargaining units to be good. A majority
of the City's employees are represented by bargaining units as follows:
Number
Bargaining Unit of Employees Contract Expiration Date
American Federation of State, County and
Municipal Employees (AFSCME) — Municipal 262 December 31, 2017
Yakima Police Patrolman's Association 130 December 31, 2015
International Association of Fire Fighters 77 December 31, 2017
AFSCME — Transit 45 December 31, 2015
IAFF — Fire Communications 14 December 31, 2017
IAFF — Fire PERS 17 December 31, 2017
Police Management 9 December 31, 2014
Public Works Division Managers 5 December 31, 2016
Yakima Supervisors & Administrative 44 December 31, 2016
Yakima Police Corrections Sergeants 3 December 31, 2015
Pension System
Substantially all of the City's employees are enrolled in cost-sharing multiple -employer pension plans
administered by the State Department of Retirement Systems: Public Employees Retirement System ("PERS"),
the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF") or the Public Safety Employees
Retirement System ("PSERS"). Contributions by both employees and employers are based on gross wages.
PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. PERS
participants who joined on or after October 1, 1977 and by August 31, 2002 are Plan 2 members, unless they
exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002 have the
irrevocable option of choosing membership in Plan 2 or Plan 3. LEOFF participants who joined on or after
October 1, 1977 are Plan 2 members. PSERS consists of a single defined benefit plan, Plan 2, that became
effective July 1, 2006, and includes all full-time public safety officers. PERS Plans 1 and 2, LEOFF and PSERS
are defined -benefit pension plans. PERS Plan 3 is a hybrid defined -benefit and defined -contribution pension
plan.
The following tables outline the contribution rates of employees and employers under PERS, LEOFF and
PSERS. In 2013, the City contributed $1,747,999 to PERS, $1,075,288 to LEOFF and $66,949 to PSERS.
Employee
Employer (1)
PERS Contribution Rates as of September 1, 2013
PERS Plan 1
PERS Plan 2 PERS Plan 3
6.00% 4.92% Variable (5% to 15%)
9.21% 9.21% 9.21%
(1) Includes a 0.18% administration fee.
LEOFF Contribution Rates as of September 1, 2013
Plan 1 Plan 2
Employee 0.00% 8.41%
Employer (1) 0.18% 5.23%
State 0.00% 3.36%
(1) Includes a 0.18% administration fee.
20
PSERS Contribution Rates as of September 1, 2013
Plan 2
Employee
Employer (1)
(1) Includes a 0.18% administration fee.
6.36%
10.52%
Information regarding all of these plans is presented in annual financial report of the State Department of
Retirement Systems, which may be obtained from:
Department of Retirement Systems
1025 East Union Street
P.O. Box 48380
Olympia, WA 98504-8380
Internet Address: www.drs.wa.gov (which website is not incorporated herein by reference)
According to the Office of the State Actuary, and based on the assumptions set forth in the report of the Office
of the State Actuary, as of June 30, 2010, PERS Plans 2/3 (which are reported together), LEOFF Plan 1, LEOFF
Plan 2 and PSERS Plan 2 had actuarial accrued surpluses (with funded ratios of 113%, 127%, 124% and 129%,
respectively). However, during the years 2001 through 2009 the rates adopted by the State Legislature were
lower than those that would have been required to produce actuarially required contributions to PERS Plan 1,
a closed plan with a large proportion of the retirees. According to a report issued by the Office of the State
Actuary in August 2013, and subject to the assumptions therein, the total unfunded actuarial accrued liability
of PERS Plan 1 was $3.847 billion (69% funded on an actuarial basis) as of June 30, 2012. The assumptions used
by the State Actuary in calculating the unfunded liability as of June 30, 2012 of PERS and LEOFF are 7.9 percent
annual rate of investment return (7.5% for LEOFF—Plan 2), 3.75 percent salary increases, 3.0 percent inflation
and 0.95 percent growth in membership (1.25% for LEOFF). To report funded status, liabilities were valued
using the "Projected Unit Credit" cost method and assets valued using the actuarial value of assets. In 2005
and 2006, the State Legislature enacted and authorized the State Pension Funding Council to adopt changes in
contribution rates to PERS intended to amortize the PERS Plan 1 unfunded actuarial accrued liability by 2024.
These rates are subject to change by future legislation enacted by the State Legislature to address future
changes in actuarial and economic assumptions and investment performances.
Volunteer Firefighters' Relief and Pension Fund. The Volunteer Firefighters' Relief and Pension Fund System is a
cost sharing multiple employer retirement system which was created by the Legislature in 1945 under chapter
41.16 RCW. It provides pension, disability and survivor benefits. Membership in the system requires service
with a fire department of an electing municipality of Washington State except those covered by LEOFF. The
system is funded through member contributions of $30 per year, employer contributions of $30 per year, 40%
of the Fire Insurance Premium Tax, and earnings from the investment of moneys by the Washington State
Investment Board. Members may elect to withdraw their contribution upon termination.
Firemen's Pension. The City has a single employer, defined benefit pension plan for firefighters employed prior
to March 1, 1970, and governed by chapter 41.26 RCW. Under the terms of the governing law, the pension
member is entitled to payment from the City's pension plan for those benefits in excess of those calculated
under the LEOFF plan.
The City's Firemen's Pension Fund is a closed group. Employees attaining the age of fifty who have completed
25 or more years of service are entitled to annual benefits of 50% of their salary plus an additional 2% for each
year of service in excess of 25 years, up to a maximum of 60% of their salary. The pension plan also provides
death and disability pension benefits plus sick benefits for eligible active and retired employees.
If the employee terminates his/her employment with the fire department and is not eligible for any other
benefit under the Firemen's Pension, the employee is entitled to the following: (1) return of accumulated
contributions less any benefits paid and (2) when a firefighter would have had 25 years of service, 2% of salary
for each year of service.
Firefighters are no longer required to contribute to the Firemen's Pension Fund. The City is required to
contribute the amount necessary to fund the Firemen's Pension Fund, using the aggregate projected benefit
21
method. Under State law, partial funding of the Firemen's Pension Fund may be provided by an annual tax
levy of up to $0.45 per $1,000 of assessed valuation of all taxable property of the City. The Firemen's Pension
Fund also receives a proportionate share of the 25% of the tax on fire insurance premiums set aside by the state
for all paid firemen in the State. Additional funding is provided by investment interest earnings.
Police Pension. The City has a single employer, defined benefit pension plan for police officers employed prior
to March 1, 1970, and governed by chapters 41.20 and 41.26 RCW. Under the governing laws, the pension
member is entitled to payment from the City's pension plan for those benefits in excess of those calculated
under the LEOFF plan. The City also covers four members who were ineligible under the LEOFF plans.
The City's Police Pension Fund is a closed group. Employees who have completed 25 years or more of service
are entitled to annual benefits of 50% of their salary plus an additional 2% for each year of service in excess of
25 years, up to a maximum of 60% of salary. The Police Pension Fund provides death and disability pension
benefits plus sick benefits for eligible active and retired employees.
If the employee terminates his employment with the City's Police Department and is not eligible for any other
benefit under the Police Pension Fund, the employee is entitled to the following: (1) return of 75% of
contributions made after June 8, 1955, less any benefits paid and (2) when the police officer would have had 25
years of service, 2% of salary for each year of service. The City is operating this Police Pension Fund on a pay
as you go basis.
Other Post -Employment Benefits
The Government Accounting Standards Board ("GASB") has a standard concerning Accounting and Financial
Reporting by Employers for Post Employment Benefits Other than Pensions ("GASB 45"). In addition to
pensions, many state and local governmental employers provide other post employment benefits ("OPEB") as
a part of total compensation to attract and retain the services of qualified employees. OPEB includes post
employment healthcare, as well as other forms of post employment benefits when provided separately from a
pension plan. The new standard provides for the measurement, recognition and display of OPEB
expenses/expenditures, related liabilities (assets), note disclosures, and if applicable, required supplementary
information in the financial reports. This pronouncement became effective for the City as of the fiscal year
ending December 31, 2008.
In addition to the plans described under "Pension System," the City provides to its retirees employer-provided
subsidies associated with postemployment medical benefits. Retirees eligible to receive pension benefit
payments along with their qualifying dependents are eligible to remain on the medical insurance plan up to
Medicare eligible age 65, by self -paying the entire composite premium rates which blend both active and
retiree member claims history.
Upon retirement, the eligible City retirees, and their eligible dependents, are permitted to receive medical
benefits. Retirees paid $651.54 per month for pre -65 medical coverage for 2014. The eligible retiree's spouse or
family member cost the retiree $431.03 per month for pre -65 medical coverage. This funding policy is based
upon the pay-as-you-go financing requirements. As of December 31, 2012, the City's Net OPEB obligation for
this plan was $2,483,880, and the City paid $343,042 in 2012.
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 coverage.
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. Interfund
premiums, based primarily on the insured funds claims experience reported as quasi -external interfund
transactions, was $181,275 in 2012 and was $190,978 in 2013. Incurred but not reported claims of $23,052 were
accrued as a liability in 2012 and $39,322 were accrued as a liability in 2013.
22
Self-insured Medical/Dental Program. The City, in 1979, self-insured its medical and dental programs for all
eligible employees (temporary employees and employees hired to work less than half-time are not eligible
under the plan). The City's Human Resources Office administers the self-insured program and claims
payment services are provided by Employee Benefit Management Services, 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 2010 were $8,255,464
and $8,451,168 in 2011. Incurred but not reported claims of $1,370,556 were accrued as a liability in 2010 and
$1,482,399 were accrued as a liability in 2011.
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 Optum. Under the individual stop -loss insurance, the City
pays the first $250,000 of claims for an individual employee or dependent. Any charges accrued by an
individual in excess of $250,000 in a calendar year are thereafter reimbursed by Optum. 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 $250,000. The aggregate stop -loss attachment point is calculated by determining the
projected amount of claims for the year and adding an additional 25% of that amount (125% of projected
claims).
Workers' Compensation Program. The City self-insured its workers' compensation program for all employees
except those covered by LEOFF Plan 1. 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 Human Resources Office with
claims administration and safety services provided by Intermountain Claims, Inc.
Each City 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 2012 were
$948,326 and were $966,270 in 2013. Based on the claim manager's estimate, the City had accrued incurred but
not reported claims of $486,807 at December 31, 2012 and $736,065 at December 31, 2013.
In order to avoid catastrophic losses, the City "reinsures" the program by purchasing insurance known as
"stop -loss insurance." This insurance is provided through Wells Fargo Insurance Services under a policy
purchased from Safety National Casualty Corporation. Under the individual stop -loss portion of the
insurance, the City pays the first $550,000 of a claim and the insurance company pays (a) the balance up to $1
million for an individual claim or (b) the balance up to a maximum of $25 million for multiple claims arising
from a single incident.
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 Risk
Management Reserve Fund through interfund premiums to operating funds for appropriate insurance
coverage and the replenishment and building of reserves for potential liability claims. City contributions to the
Risk Management Reserve Fund for 2012 were $2,844,429 and were $3,145,531 for 2013. The Risk Management
Reserve Fund provides for administration, legal services, claims adjustment, and for the purchase of property,
excess liability and other insurance coverage.
Liabilities of the Risk Management Reserve 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 $1,219,000 as of December 31, 2012 and was $1,521,000 as of December 31, 2013.
Property Insurance Coverage. The City purchases property insurance and boiler and machinery insurance from
Affiliated FM Insurance Company covering loss or damage to City owned property from various perils,
23
including earthquake and flood. The policy is subject to a $100,000,000 limit per occurrence, and a $100,000 per
occurrence deductible.
Cities Insurance Association of Washington. The City was an associate member of the Cities Insurance Association
of Washington ("CIAW") effective December 14, 2005, and became a member of CIAW effective September 1,
2010. The CIAW pool was formed on September 1, 1988 when 32 cities in the State joined together by signing
an Interlocal Governmental Agreement to pool their losses and jointly purchase insurance and administrative
services. Currently, the CIAW has over 250 members in the program.
The CIAW pool allows members to jointly purchase insurance coverage and provide related services, such as
administration, risk management and claims administration. Coverage for Public Officials Liability is on a
claims made basis. All other coverages are on an occurrence basis. The pool provides the following forms of
group purchased insurance coverage for its members: property, liability, vehicle liability, other mobile
equipment, boiler and machinery, bonds of various types, excess liability and public official liability.
The City participates in the liability coverages provided by the CIAW. The City has general liability, public
officials liability and automobile liability coverage, subject to a program retention of $100,000 per occurrence
and a member deductible of $99,000. The per occurrence and aggregate limits of liability of the general liability
coverage through CIAW are $15,000,000 per occurrence with $25,000,000 aggregate for general liability.
Claims are submitted by the City with Canfield, which has been contracted by CIAW to perform pool
administration, claims adjustment and administration and loss prevention for the pool. The Board of Directors
of CIAW has contracted with Canfield to perform day to day administration of the pool.
Washington State Transit Insurance Pool. The City of Yakima Transit Division ("Yakima Transit") is insured for
liability insurance through the Washington State Transit Insurance Pool ("WSTIP"). WSTIP is a 25 -member self
insurance program with public transit members who provide transit services and is located in Olympia,
Washington. The WSTIP was formed by Interlocal Agreement on January 1, 1989, pursuant to chapters 48.61
and 39.34 RCW. The purpose for forming WSTIP was to provide member transit systems programs of joint self
insurance, joint purchasing of insurance and joint contracting for hiring of personnel to provide risk
management, claims handling and administrative services. Transit authorities joining WSTIP must remain
members for a minimum of 36 months; a member may withdraw from the WSTIP after that time by giving 12
months notice. WSTIP underwriting and rate setting policies have been established after consulting with
actuaries. The WSTIP members are subject to a supplemental assessment in the event of deficiencies. If the
assets of WSTIP were exhausted, the members would be responsible for the liabilities. WSTIP is regulated by
the State Risk Manager and audited annually by the State Auditor.
WSTIP supplies Yakima Transit auto liability, general liability, and public officials' liability coverage. Yakima
Transit has liability coverage, which is not subject to a deductible amount, and public official liability coverage,
subject to a deductible amount of $5,000. The per occurrence and aggregate limits of liability of the liability
coverage through WSTIP are $12,000,000. Since joining WSTIP on September 1, 2005, Yakima Transit has not
presented any claims to WSTIP that exceeded its coverage limits through WSTIP.
Accounting
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.
24
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 Council annually approves the City's operating budget. The operating budget is designed to allocate
available resources among the City's services and programs and to provide for associated financing decisions.
Annual appropriated budgets are adopted on the modified accrual basis of accounting. For governmental
funds, there are no differences between budgetary basis and generally accepted accounting principles.
Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include
budgetary comparisons for the General Fund and Special Revenue Funds only. Budgets for debt service and
capital projects are adopted at the level of the individual debt issue or project and for fiscal periods that
correspond to the lines of debt issues or projects. Annual appropriated budgets are adopted at the fund level.
Subsidiary revenue and expenditure ledgers are used to compare the budgeted amounts with actual revenues
and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for
individual functions and activities by object class. Appropriations for general and special revenue funds lapse
at year-end.
The City Manager is authorized to transfer budgeted appropriations between departments within any fund;
however, any revisions that alter the total expenditures of a fund, or that affect the number of permanently
authorized employee positions, salary ranges, or other conditions of employment must be approved by the
Council.
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 local governments in the State at least once every three
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 City Clerk's Office.
The audited financial statements of the City for the year ended December 31, 2012, attached as Appendix C, are
incorporated by reference to this Official Statement.
Bankruptcy
Under current Washington law, local governments, such as the City, may be able to file for bankruptcy under
Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code"). A creditor, however, cannot bring
an involuntarily bankruptcy proceeding against a municipality, including the City. The federal bankruptcy
courts have broad discretionary powers under the Bankruptcy Code. Taxing districts in the State are expressly
authorized to carry out a plan of readjustment if approved by the appropriate court. If the City were to
25
become a debtor in a federal bankruptcy case, owners of the Bonds may not be able to exercise any of their
remedies under the Ordinance during the course of a proceeding. Legal proceedings to resolve issues could be
time-consuming and expensive, and substantial delays and/or reductions in payments could result.
Demographic Information
The City lies in central Washington State in the County approximately 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 eighth 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 City of Yakima
Yakima City of
April 1 County Yakima
2013 247,250 92,620
2012 246,000 91,930
2011 244,700 91,630
2010(1) 243,231 91,196
2009 241,708 90,271
(1) Official 2010 U.S. Census figure.
Source: Washington State Office of Financial Management, April 2014.
Economic Indicators
Income.
Historic personal income and per capita income levels for the County and the State are shown below:
Yakima County and State of Washington
Total Personal and Per Capita Income
Yakima County
Total Personal
Year Income (in thousands)
2012
2011
2010
2009
2008
$8,566,751
8,310,956
7,807,789
7,417,850
7,610,312
Per Capita
Income
$34,686
33,763
31,965
30,959
32,347
State of Washington
Total Personal Per Capita
Income (in thousands) Income
Source: U.S. Department of Commerce, Bureau of Economic Analysis, March 2014.
26
$317,574,707
303,087,834
286,743,785
280, 778,028
289,801,024
$46,045
44,420
42,521
42,112
44,162
Median Household Income. Median household income estimation is based on 1990 and 2000 Census data, and on
the Census Bureau's American Community Surveys' estimates for 2006-2010.
(1)
(2)
Yakima County and State of Washington
Median Household Income
State of
Year Yakima County Washington
2012(1)
2011(2)
2010
2009
2008
$ 42,162
41,164
40,802
39,836
43,692
$ 56,444
55,500
54,888
55,458
57,858
The Revenue Forecast Council's September 2012 forecast of the state personal income is used in the projection of 2012
median household income.
In addition to the State personal income data published by the Bureau of Economic Analysis, the payroll data compiled
by the State Employment Security Department are used in the preliminary estimates of 2011 median household
income.
Source: Washington State Department of Revenue, March 2014.
Taxable Retail Sales. Taxable retail sales reflect only those sales subject to retail sales tax. Historic taxable retail
sales for the County and the City are shown below:
2013(1)
2012
2011
2010
2009
2008
Yakima County
Taxable Retail Sales
Yakima County City of Yakima
$ 2,361,873,635
2,979,170,961
2,777,583,833
2,722,621,806
2,732,338,539
2,954,364,053
(1) Through third quarter only.
Source: Washington State Department of Revenue, March 2014.
$ 1,204,311,318
1,532,458,084
1,405,582,220
1,430,578,580
1,424,971,310
1,539,739,751
Building Permits. The number and valuation of new single-family and multi -family
permits in the City are listed below:
City of Yakima
Residential Building Permits
New Single Family Units New Multi -Family Units
Year Number Construction Cost Number Construction Cost
2014(')
2013
2012
2011
2010
2009
13 $ 2,784,504
73 16,168,476
64 12,554,903
62 13,376,958
92 18,927,373
119 23,249,158
(1) Through March 2014.
Source: City of Yakima Permits Department.
3 $ 679,279
14 5,185,054
21 10,681,727
17 15,175,450
26 21,962,330
12 8,194,977
Employment. Major employers located within the County include the following:
27
residential building
Total
Construction Cost
$ 3,463,783
21,353,530
23,236,630
28,552,408
45,211,488
31,444,135
Yakima County
Major Employers
Employer
Yakima Valley Memorial Hospital
Walmart -Yakima/Sunnyside/Grandview
Yakima School District, No. 7
Zirkle Fruit
Washington Fruit and Produce
Boston Fruit
Yakima County
Monson Fruit
Yakima Valley Farm Workers Clinic
Yakima Regional Medical Center
WA Dept. of Social/Health Services
A.B. Foods
City of Yakima
Sunnyside School District
Yakama Nation Legends Casino
Yakima Training Center
Type of Business
Medical
Distribution Center/Retail Stores
Education
Food Processing
Food Processing
Food Processing
Government
Food Processing
Medical
Medical
Medical
Food Processing
Government
Education
Entertainment
Military
Source: Yakima County Development Association, March 2014.
28
Number of
Employees
2,200
1,700
1,594
1,500
1,500
1,212
1,074
1,023
1,006
985
920
900
722
652
644
491
Employment within the County is described in the following table.
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 Metropolitan Statistical Area (Yakima County)
Nonagricultural Wage & Salary Workers(1)
and Labor Force and Employment Data
Annual Average
2013(2) 2012 2011 2010 2009
1,139,610 1,118,930 1,114,310 1,111,000 1,117,710
1,079,950 1,042,540 1,023,300 1,009,510 1,021,770
59,660 76,390 91,010 101,490 95,940
5.2% 6.80/0 8.2% 9.1% 8.60/0
NAICS INDUSTRY(3)
Total Nonfarm
Total Private
Goods Producing
Mining, Logging, and Construction
Manufacturing
Nondurable Goods
Service Providing
Private Service Providing
Trade, Transportation, and Utilities
Wholesale Trade
Retail Trade
Transportation and Utilities
Professional and Business Services
Education and Health Services
Health Care and Social Assistance
Leisure and Hospitality
Food Services
Government
Federal Government
State Government
Local Government
Workers in Labor/Management Disputes
2013(2)
76,992
60,142
11,033
3,108
7,925
5,233
65,958
49,108
18,008
4,375
10,350
3,283
4,133
14,067
12,992
6,733
4,833
16,850
1,200
2,658
12,992
0
(1) Excludes proprietors, self-employed, members of the armed services,
Includes all full- and part-time wage and salary workers receiving pay
month.
(2) Preliminary data through December 2013.
(3) North American Industry Classification System.
Source: Washington State Employment Security Department, March 2014.
2012 2011 2010 2009
76,317 76,375 75,992 76,700
59,300 59,258 58,692 59,200
10,942 10,992 10,808 11,167
3,025 3,017 3,158 3,483
7,917 7,975 7,650 7,683
5,242 5,375 5,117 5,175
65,375 65,383 65,183 65,533
48,358 48,267 47,883 48,033
17,467 17,325 17,167 17,283
4,092 4,042 4,133 4,342
10,208 10,125 9,967 9,808
3,167 3,158 3,067 3,133
4,050 4,100 3,933 3,908
14,008 14,075 14,217 14,175
12,975 13,025 13,142 13,125
6,742 6,658 6,633 6,675
4,750 4,725 4,708 4,725
17,017 17,117 17,300 17,500
1,250 1,308 1,375 1,275
2,658 2,717 2,858 2,967
13,108 13,092 13,067 13,258
0 0 0 0
workers in private households, and agriculture.
during the pay period including the 12th of the
Initiative and Referendum
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
29
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.
Under the City Charter, City voters may initiate local legislation and City Code amendments, and modify
existing legislation, and through referendum may prevent legislation passed by the City Council from
becoming law. With certain exceptions, ordinances passed by the City Council will go into effect 30 days from
the time of final passage and are subject to referendum during the interim. Under Washington law, the
Ordinance may not be a proper subject for a referendum petition. Nonetheless, the referendum period will
have expired and the Ordinance will become effective before the date of issuance and delivery of the Bonds.
As of the date of this Preliminary Official Statement, no referendum petition has been filed.
In recent years there has been an increase in the number of initiatives and referenda filed in Washington,
including state initiatives targeting property taxes imposed by local jurisdictions. The City cannot predict
whether this trend will continue, whether any filed initiatives will receive the requisite signatures to be
certified to the ballot, and whether such initiatives will be approved by the voters and, if challenged, upheld by
the courts.
Federal Sequestration
On March 1, 2013, the sequestration provisions of the Budget Control Ad of 2011 ("Sequestration") went into
effect. Sequestration has had both indirect and direct effects on the City. Indirect effects include reduced
federal spending that negatively affects the economy in general, including City revenue sources that are
dependent on economic activity such as retail sales and use tax. Direct effects on the City could include a
reduction in federal funds, including grant funds that come directly or indirectly from federal sources.
Sequestration has also resulted in and will continue to result in a reduction in the amount the City expects to
receive from the federal government in connection with the interest payments due on its outstanding Limited
Tax General Obligation Bonds, Series 2009B Taxable (Build America Bonds—Direct Payment). With respect to
General Obligation Build America Bonds, the City is eligible for a tax credit subsidy payment of 35% of each
interest payment due. As a result of Sequestration, the interest subsidy payment from the federal government
that came due on December 1, 2013, was reduced by 8.7% ($4,737) and payments in 2014 are to be reduced by
7.2% (a reduction of approximately $7,840 for the year). The recently adopted Bipartisan Budget Ad of 2013
(the "Budget Act") calls for Sequestration to remain in effect with regards to federal direct pay subsidy bonds,
such as those of the City described above, through 2024, although the exact amount of any reduced subsidy in
future years has not yet been announced. The City cannot predict how long the Sequestration may ultimately
last and in what amounts, but has sufficient cash available in its general governmental funds to make timely
debt service payments through its 2014 budget cycle, and does not expect Sequestration to materially adversely
affect its ability to make debt service payments in the current or future years.
Tax Matters
In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on
individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted
current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations.
Federal income tax law contains a number of requirements that apply to the Bonds, including investment
restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the use of
proceeds of the Bonds and the facilities financed with proceeds of the Bonds and certain other matters. The
City has covenanted to comply with all applicable requirements.
Bond Counsel's opinion is subject to the condition that the City comply with the above -referenced covenants
and, in addition, will rely on representations by the City and its advisors with respect to matters solely within
the knowledge of the City and its advisors, respectively, which Bond Counsel has not independently verified.
If the City fails to comply with such covenants or if the foregoing representations are determined to be
inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax
30
purposes retroactively to the date of issuance of the Bonds, regardless of the date on which the event causing
taxability occurs.
Except as expressly stated above, Bond Counsel expresses no opinion regarding any other federal or state
income tax consequences of acquiring, carrying, owning or disposing of the Bonds. Owners of the Bonds
should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the
Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at
a premium, taxation upon sale or other disposition, and various withholding requirements.
Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral
federal income tax consequences to certain taxpayers, including, without limitation, financial institutions,
property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement
benefits, certain S corporations with "excess net passive income," foreign corporations subject to the branch
profits tax, life insurance companies and taxpayers who may be deemed to have incurred or continued
indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds. Bond
Counsel expresses no opinion regarding any collateral tax consequences. Prospective purchasers of the Bonds
should consult their tax advisors regarding collateral federal income tax consequences.
Payments of interest on tax-exempt obligations such as the Bonds, are in many cases required to be reported to
the Internal Revenue Service (the "IRS"). Additionally, backup withholding may apply to any such payments
made to any owner who is not an "exempt recipient" and who fails to provide certain identifying information.
Individuals generally are not exempt recipients, whereas corporations and certain other entities generally are
exempt recipients.
Bond Counsel's opinion is not a guarantee of result and is not binding on the IRS; rather, the opinion
represents Bond Counsel's legal judgment based on its review of existing law and in reliance on the
representations made to Bond Counsel and the City's compliance with its covenants. The IRS has established
an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations is
includable in gross income for federal income tax purposes. Bond Counsel cannot predict whether the IRS will
commence an audit of the Bonds. Owners of the Bonds are advised that, if the IRS does audit the Bonds, under
current IRS procedures, at least during the early stages of an audit, the IRS will treat the City as the taxpayer,
and the owners of the Bonds may have limited rights to participate in the audit. The commencement of an
audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless
of the ultimate outcome.
Not Bank Qualified
The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section
265(b)(3)(B) of the Code.
Proposed Tax Legislation; Miscellaneous
Tax legislation, administrative actions taken by tax authorities, and court decisions may cause interest on the
Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state
income taxation, or otherwise prevent the beneficial owners of the Bonds from realizing the full current benefit
of the tax status of such interest. In addition, such legislation or actions (whether currently proposed,
proposed in the future or enacted) could affect the market price or marketability of the Bonds. For example,
proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from
gross income for federal tax purposes of interest on obligations such as the Bonds. Prospective purchasers of
the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax
legislation, regulations or litigation, and its impact on their individual situations, as to which Bond Counsel
expresses no opinion.
Rating
As noted on the cover page of this Official Statement, the City has received a rating for the Bonds from
Standard & Poor's Rating Services, a part of McGraw Hill Financial. Standard & Poor's has assigned its rating
of " " to the Bonds. The rating reflects only the views of the rating agency and an explanation of the
31
significance of the rating may be obtained from the rating agency. There is no assurance that the rating will be
retained for any given period of time or that the rating will not be revised downward or withdrawn entirely by
the rating agency if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of
the rating will be likely to have an adverse effect on the market price of the Bonds.
Continuing Disclosure
In accordance with Section (b)(5) of Securities and Exchange Commission (the "Commission") Rule 15c2-12
under the Securities Exchange Act of 1934, as the same may be amended from time to time (the "Rule"), the
City has agreed in the Ordinance for the benefit of the owners of the Bonds to provide or cause to be provided
to the Municipal Securities Rulemaking Board ("MSRB") the following annual financial information and
operating data for the prior fiscal year (commencing in 2014 for the fiscal year ended December 31, 2013):
(i) annual financial statements, which statements may or may not be audited, showing ending fund balances
for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System
("BARS") prescribed by the State Auditor pursuant to RCW 43.09.200 (or any successor statutes) and generally
of the type included in this Official Statement for the Bonds under the heading "General Fund Comparative
Statement of Revenues, Expenditures and Changes in Fund Balance"; (ii) the assessed valuation of taxable
property in the City; (iii) ad valorem taxes due and percentage of taxes collected; (iv) property tax levy rate per
$1,000 of assessed valuation; and (v) outstanding general obligation debt of the City. Items (ii) through (v)
need only be provided to the extent such information is not included in the annual financial statements.
Such annual information and operating data described above will be so provided on or before the end of nine
months after the end of the City's fiscal year. The City's current fiscal year ends on December 31. The City
may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of
providing such annual financial information and operating data, the City may cross-reference to other
documents available to the public on the MSRB's internet website or filed with the Commission.
If not provided as part of the annual financial information discussed above, the City will provide the City's
audited annual financial statement prepared in accordance with BARS prescribed by the Washington State
Auditor pursuant to the statute cited above (or any successor statutes) when and if available to the MSRB.
Listed Events. The City agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess
of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events
with respect to the Bonds:
(i) principal and interest payment delinquencies;
(ii) non-payment related defaults, if material;
(iii) unscheduled draws on debt service reserves reflecting financial difficulties;
(iv) unscheduled draws on credit enhancements reflecting financial difficulties;
(v) substitution of credit or liquidity providers, or their failure to perform;
(vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices
or determinations with respect to the tax status of the Bonds, or other material events affecting the tax
status of the Bonds;
(vii) modifications to the rights of Bondholders, if material;
(vii) optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions
for which notice is given pursuant to Exchange Ad Release 34-23856, if material, and tender offers;
(ix) defeasances;
32
(x) release, substitution or sale of property securing repayment of the Bonds, if material;
(xi) rating changes;
(xii) bankruptcy, insolvency, receivership or similar event of the City;
(xiii) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or
substantially all of the assets of the City, other than in the ordinary course of business, the entry into a
definitive agreement to undertake such an action or the termination of a definitive agreement relating
to any such actions, other than pursuant to its terms, if material; and
(xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material.
Solely for purposes of disclosure, without any intent to modify the undertaking as set forth above, the City
advises that no credit enhancement, credit or liquidity facilities, debt service reserves or property secure
payment of the Bonds.
Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information
or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's
Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org (which is
not incorporated into this Official Statement by reference). All notices, financial information and operating
data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by
the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by
identifying information as prescribed by the MSRB.
Notification Upon Failure to Provide Financial Data. The City also agrees to provide or cause to be provided, in a
timely manner, to the MSRB notice of its failure to provide the annual financial information described above on
or prior to the date set forth above.
Termination/Modification. The City's obligations to provide annual financial information and notices of listed
events will terminate upon the legal defeasance or payment in full of all of the Bonds. This section, or any
provision hereof, will be null and void if the City (i) obtains an opinion of nationally recognized bond counsel
to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively
or otherwise does not apply to the Bonds and (ii) notifies the MSRB of such opinion and the cancellation of this
section.
Notwithstanding any other provision of the undertaking, the City may amend the provisions described in this
section with an approving opinion of nationally recognized bond counsel and in accordance with the Rule. In
the event of any amendment of its undertaking, the City will describe such amendment in the next annual
report, and will include a narrative explanation of the reason for the amendment and its impact on the type (or
in the case of a change of accounting principles, on the presentation) of financial information or operating data
being presented by the City. In addition, if the amendment relates to the accounting principles to be followed
in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed
event, as described above, and (ii) the annual report for the year in which the change is made will present a
comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as
prepared on the basis of the new accounting principles and those prepared on the basis of the former
accounting principles.
Bond Owner's Remedies Under This Section. A Bond Owner's or Beneficial Owner's right to enforce the
provisions of the City's undertaking described in this section will be limited to a right to obtain specific
enforcement of the City's obligations, and any failure by the City to comply with the provisions of this
undertaking will not be an event of default with respect to the Bonds. For purposes of this section, "Beneficial
Owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, any bonds, including persons holding bonds through nominees or depositories.
Other Continuing Disclosure Undertakings of the City. The City has entered into written undertakings under the
Rule with respect to its outstanding obligations (the "Prior Undertakings") subject thereto and is in compliance
with its obligations thereunder. [TO BE REVIEWED]
33
Legal and Underwriting
Approval of Counsel
Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the
approving legal opinion of Pacifica Law Group LLP, Bond Counsel, the form of which is attached hereto in
Appendix A. Bond Counsel will be compensated only upon the issuance and sale of the Bonds. Bond Counsel
has not been retained to review and has not reviewed this Official Statement for completeness or accuracy and
will not offer an opinion concerning this Official Statement.
Litigation [TO BE CONFIRMED BY THE CITY]
At the time of delivery of and payment for the Bonds, an authorized officer of the City will deliver a certificate
stating that there is no litigation or other proceedings pending or, to the best knowledge of the City, threatened
in any court in any way seeking to restrain or to enjoin the authorization, issuance, sale or delivery of, or
security for, any of the Bonds, or contesting or affecting the validity or enforceability of the Bonds or the
Ordinance, or materially affecting the finances of the City.
The City is a party to lawsuits in its normal course of business, but the City does not believe any of such
litigation will have a significant adverse impact upon the financial condition of the City, or would affect the
issuance and delivery of the Bonds, or the power and authority of the City to issue the Bonds.
Limitations on Remedies
Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the
Ordinance are in many respects dependent upon judicial actions, which are in turn often subject to discretion
and delay and could be both expensive and time-consuming to obtain. If the City fails to comply with its
covenants under the Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that
available remedies will be adequate to fully protect the interests of the owners of the Bonds.
In addition to the limitations on remedies contained in the Ordinance, the rights and obligations under the
Bonds and the Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, and other laws relating to or affecting creditors' rights, to the application
of equitable principles, and to the exercise of judicial discretion in appropriate cases. The opinion to be
delivered by Pacifica Law Group LLP, as Bond Counsel, concurrently with the issuance of the Bonds, will be
subject to limitations regarding bankruptcy, insolvency and other laws relating to or affecting creditors' rights.
A copy of the form of legal opinion of Bond Counsel is set forth in Appendix A.
Underwriting
The Bonds are being purchased by Piper Jaffray & Co. (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. 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.
Piper Jaffray & Co. and Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, entered into
an agreement (the "Agreement") which enables Pershing LLC to distribute certain new issue municipal
securities underwritten by or allocated to Piper Jaffray & Co., including the Bonds. Under the Agreement,
Piper Jaffray & Co. will share with Pershing LLC a portion of the fee or commission paid to Piper Jaffray & Co.
Piper Jaffray & Co. has entered into a distribution agreement ("Distribution Agreement") with Charles Schwab
& Co., Inc. ("CS&Co") for the retail distribution of certain securities offerings at the original issue prices.
Pursuant to the Distribution Agreement, CS&Co. may purchase Bonds from Piper Jaffray & Co. at the original
issue price less a negotiated portion of the selling concession applicable to any Bonds that CS&Co. sells.
Potential Conflicts
Some or all of the fees of the Underwriter and Bond Counsel counsel are contingent upon the sale of the Bonds.
Pacifica Law Group LLP is serving as Bond Counsel to the City with respect to the Bonds. From time to time
34
Bond Counsel may serve as counsel to the Underwriter with respect to transactions other than the issuance of
the Bonds.
Concluding Statement
All estimates, assumptions, statistical information and other statements contained herein, while taken from
sources the City considers reliable, are not guaranteed by 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. This Official Statement is not to be construed as a contract
or agreement between the City and the purchasers of the Bonds. The City has authorized the preparation and
distribution of this Official Statement.
THE CITY OF YAKIMA, WASHINGTON
By:
Director of Finance and Budget
35
This page left blank intentionally
36
Appendix A
Form of Opinion of Bond Counsel
This page left blank intentionally
Appendix B
Book -Entry Transfer System
This page left blank intentionally
The Depository Trust Company
A subsidiary of The Depository Trust & Clearing Corporation
Sample Offering Document Language
Describing DTC and Book -Entry -Only Issuance
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 3.5 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 facilitates 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, clearing corporations, and certain other
organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and
Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by
the users of its regulated subsidiaries. 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 a Standard & Poor's rating of AA+. 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.
DTCC
The Depository Trust &
Clearing Corporation
-i-
SOL 08-10-11
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 MMI
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).
DTCC.
The Depository Trust &
Clearing Corporation
SOL 08-10-11
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. Payrmnts 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, disbursement 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 tobe reliable, but Issuer takes no responsibility for the
accuracy thereof.
DTCC.
The Depository Trust &
Clearing Corporation
[8/11 ]
SOL 08-10-11
This page left blank intentionally
Appendix C
2012 Audited Financial Statements
This page left blank intentionally
This page left blank intentionally