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HomeMy WebLinkAbout08/18/2009 14 Capitol Theatre LTGO Bond Sales Report BUSINESS OF THE CITY COUNCIL • YAKIMA, WASHINGTON • AGENDA STATEMENT Item No. I For Meeting of 08 -18-09 ITEM TITLE: A Report from the Finance Department regarding the result of the sale of the City's LTGO bonds for the Capitol Theatre, in the aggregate principal amount of $ (TBD) SUBMITTED BY: Finance Department CONTACT PERSON!TELEPHONE: Rita DeBord, Finance Director, 575-6070:30 Tim Jensen, Treasury Services Officer, # 575 -6070 SUMMARY EXPLANATION: On July 7 2009, the City Council passed Ordinance number 2009 -34 authorizing the issuance of up to $8 million Limited Tax General Obligation (LTGO) Bonds, the proceeds from which are to be used to fund the expansion and rehabilitation of the Capitol Theatre. At that time, Council directed and authorized staff to perform all proceedings and tasks necessary to accomplish this transaction, and delegated authority to the Finance Director to approve a Bond Purchase Contract, within the parameters stated in the Ordinance, with Seattle Northwest Securities. The Bond sale is scheduled to take place on Tuesday, August 18, 2009 - subject to market conditions on that date. If the sale takes place on this date, staff will prepare a report describing the terms and conditions of the sale and will submit this report for Council's review at your regular meeting that evening. (Note: Due to the timing of the scheduled Bond sale — Tuesday morning - staff will not be able to provide this report to Council for review in advance of Council's business meeting Tuesday evening.) Resolution Ordinance _ Other X (Specify) Report Contract Mail to (name and address): Phone Funding Source APPROVED FOR SUBMITTAL: /4 T City Manager STAFF RECOMMENDATION: Accept Report BOARD /COMMISSION RECOMMENDATION: COUNCIL ACTION: 410 • • - r ,q l'1G� �Cl (Yl � a s DEPARTMENT OF FINANCE & BUDGET — 129 North Second Street . �i Yakima, Washington 98901 4R � () RAtY:II MEMORANDUM August 18 2009 To: The Honorable Mayor and Members of City Council Dick Zais, City Manager From: Rita DeBord, Finance Director Subject: Report on the Sale of $7,035,000 Capitol Theatre LTGO Bonds Background: On July 7 2009 the Council passed Ordinance 2009 -34, authorizing the • sale of up to $8 million Limited Tax General Obligation (LTGO) Bonds to pay the costs of refurbishment and expansion of the Capitol Theatre. That Ordinance delegated authority to approve the final terms and conditions of the bond issue and authorize the purchase and sale agreement to the City Manager or Finance Director. The Ordinance also provided for the issuance of a new type of bonds called Build America Bonds, (known as BAB's), taking advantage of a new federal stimulus program. The BABs provide for a 35% cash subsidy from the Feds. on the interest payments for the taxable portion of the bonds throughout life of the issue. . Staff submits this report to Council to provide Council with the final terms and outcome of the bond sale now that the bonds have been sold. Depending on the market on any given day, this federal subsidy may be more or less that the discount in the interest costs that would otherwise be achieved in a traditional tax- exempt bond issue. If the "net" interest rate on the BABs — after the federal subsidy is taken into account - is less than the tax - exempt interest rate, then it is cheaper to issue BABs than a straight tax - exempt bond. The markets have fluctuated in both directions since we began monitoring the interest rates for this specific bond issue; thus we did not know until we actually went to market today whether we would issue all tax - exempt bonds or a combination of tax - exempt and BABs. The drawback to issuing BABs is that there are additional administration and reporting requirements associated with these bonds, and this extra work will continue for the life of the BABs; however, if the savings are great enough, the extra work will be well worth the effort. Update: Our underwriters, Seattle Northwest Securities, placed the City's bonds on the market today. Today's market conditions favored the issuance of the combination of traditional tax- exempt bonds and taxable bonds (BABs). The bonds issued today were insured and carried an "A Plus" underlying credit rating (AAA rating with insurance), and are comprised of $2,055,000 tax - exempt bonds and $4,980,000 taxable BABs, for a total aggregate amount of $7,035,000, at a total interest cost of 4.11%, (net of federal subsidies). The net proceeds to the City and available for the project will be $6,974,479; the transaction is scheduled to close on August 28, 2009. Yakima Ward q 11 1► Customer Service (509) 575 -6080 • Finance (509) 575 -6070 • Information Systems (509) 575 -6098 1994 Bond Rating: On August 13 Standard and Poors rating agency affirmed the City's "A Plus" credit rating of both the new and all of the City's outstanding LTGO debt. In their report they cited three primary rationale for this rating: 1. Yakima's good financial policies and practices, including a minimum General Fund balance threshold and the use of forecasting models; 2. Yakima's track record of very strong General Fund balances; and 3. Yakima's long standing roll as a service and manufacturing center for a surrounding agricultural region; A copy of the full report from the rating agency is attached. Attachments: • Bond Purchase Agreement with Seattle Northwest Securities (SNW) • S &P Rating Report • tEl AEC kMIES aNw August 18, 2009 Rita M. DeBord Director of Finance and Budget City of Yakima 129 North Second Street Yakima, Washington 98901 Re: City of Yakima, Washington $2,055,000 Limited Tax Obligation Bonds, Series 2009A (the "Series A Bonds ") $4,980,000 Limited Tax Obligation Bonds, Series 2009B Taxable (Build America Bonds — Direct Payment) (the "Series B Bonds ") • Dear Ms. DeBord: Seattle- Northwest Securities Corporation (the "Underwriter ") offers to enter into this purchase agreement (the "Purchase Agreement ") with the City of Yakima, Washington (the "Issuer "). Each of the Underwriter and the Issuer may be referred to herein as a "Party" or collectively as the "Parties." This offer is contingent upon acceptance by the Issuer by execution and delivery of this Purchase Agreement to the Underwriter at or prior to 11:59 p.m. Pacific Time on the date hereof, by means of hand delivery, facsimile or other secure electronic transmission, such as a PDF file. Upon execution of this Purchase Agreement by the Parties, this Purchase Agreement- will constitute a binding agreement between the Issuer and the Underwriter. Capitalized terms in this Purchase Agreement that are not otherwise defined herein shall have the meanings given to such terms in the Ordinance as defined below. • 1. Authorization and Documents The issuance, sale and delivery of the Series A Bonds and the Series B Bonds (together, the "Bonds") is authorized by Ordinance No. 2009 -34 passed by the City Council of the Issuer on July 7, 2009 (the "Ordinance "). " The transaction at .which the Bonds are delivered by the Issuer to the. Underwriter and paid for by the Underwriter is referred to herein as the "Closing" and the date of such transaction, the "Closing Date." The Ordinance includes an undertaking to provide certain information to the Municipal Securities Rulemaking Board (the "MSRB ") through its Electronic Municipal Market Access ( "EMMA ") portal, (so long as such method of disclosure continues to be approved by the Securities and Exchange Commission (the "SEC ") for such purposes) or any other approved City of Yakima, Washington August 18, 2009 Page 2 nationally recognized municipal securities repositories and regulatory bodies or their designees. The Ordinance and this. Purchase Contract are collectively referred to herein as the "Documents." 2. Purchase and Sale Subject to the terms and conditions of this Purchase Agreement, the Underwriter hereby agrees to purchase from the Issuer for offering to the public and the Issuer hereby agrees to sell to the Underwriter all, but not less than all of the $2,055,000 principal amount of Series A Bonds and $4,980,000 principal amount of Series B Bonds. The Bonds shall be dated, shall mature, shall bear interest, shall be payable, and shall have redemption provisions, all as set forth in Exhibit C attached hereto. The Underwriter's purchase price for the Bonds also is set forth in Exhibit C. 3. Fiscal Agent; Enhancement; Insurance a) The fiscal agent of the State of Washington shall be the fiscal agent for the Bonds, serving as registrar, authenticating agent and paying agent (the "Bond Registrar "). The Bonds shall be payable and shall be secured as provided in the Ordinance and as described in the document entitled Preliminary Official Statement, which is dated August 7, 2009 and which describes the Issuer and the Bonds (the "POS "). b) Payment when due of the regularly scheduled principal of and interest on the Bonds shall be insured by a municipal bond insurance policy (the "Policy ") issued by Assured Guaranty Corporation (the "Insurer "). 4. Offering The Underwriter agrees to make a bona fide public offering of all Bonds, at prices not in excess of the initial public offering prices or at yields not lower than the initial yields as set forth in Exhibit C attached hereto. 5. Official Statement a) Pursuant to a certificate dated August 7, 2009, the City has "deemed final" the POS for purposes of Rule 15c2 -12 of the Securities Exchange Act of 1934, as amended (the "Rule "). The Issuer approves and ratifies the use and distribution by the Underwriter of the POS in connection with the public offering for sale of the Bonds by the Underwriter. b) The final official statement shall be substantially in the form of the POS with only such changes permitted by the Rule as shall have been reviewed by the Underwriter (such final official statement, incorporating such changes, if any, shall be referred to herein as the "Final Official Statement "). The Issuer shall cooperate with the Underwriter in the preparation of the Final Official Statement for delivery within seven (7) business days after the date hereof and, in any event, for delivery in sufficient time to accompany any order confirmation from the Underwriter to its customer, and in sufficient time to permit the Underwriter to comply with the provisions of the Rule and with all applicable rules of the Municipal Securities Rulemaking Board. -2- City of Yakima, Washington August 18, 2009 Page 3 c) The Issuer will not amend or supplement the Final Official Statement without the consent of the Underwriter. The Issuer agrees to notify the Underwriter promptly if, on or prior to the 25th day after the End of the Underwriting Period (as defined below), any event shall occur, or information come to the attention of the Issuer, that would cause the Final Official Statement (whether or not previously supplemented or amended), as of its date, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If, in the opinion of the Issuer, such event requires the preparation and distribution of a supplement or amendment to the Final Official Statement, the Issuer at its expense and with Underwriter's assistance, shall amend or supplement the Final Official Statement in a form and manner approved by the Underwriter and will provide such number of copies of the supplement or amendment to the Final Official Statement, as the Underwriter may reasonably request. For purposes of this Purchase Agreement, the "End of the Underwriting Period" shall occur on the Closing Date. 6. Representations, Warranties and Covenants The Issuer represents, warrants and covenants to the Underwriter that as of the date hereof and as of the Closing Date: a) The Issuer is a municipal corporation duly organized and validly existing under the laws and Constitution of the State of Washington; b) The Issuer has duly adopted the Ordinance and it is a valid, legal and binding ordinance of the Issuer; c) The Issuer is duly authorized and has full legal right, power, and authority to issue, sell and deliver the Bonds and perform its obligations under the Documents; d) The Ordinance is in hill force and effect and has not been superseded, rescinded or amended; e) The Issuer has full legal right, power and authority to and will apply or cause to be applied the proceeds of the Bonds as described in the Ordinance; f) The execution of and performance by the Issuer of its obligations under the Documents will not cause the Issuer to be (i) in violation of any constitutional provision, law, court decree, administrative regulation or judgment or (ii) in material default under any loan agreement, indenture, bond, note, resolution or other material agreement or instrument to which the Issuer is a party or -to which the Issuer or any of its properties or assets is otherwise subject; - g) All governmental approvals or authorizations required to be obtained by the Issuer prior to the Closing in connection with the issuance and delivery of the Bonds or the performance by the Issuer of its obligations under the Documents have been or will be obtained prior to Closing; -3- City of Yakima, Washington August 18, 2009 Page 4 h) No filing or registration of the Ordinance or other instrument or financing statement is required to be made to create, protect or preserve the pledge of taxing power under the Ordinance or is required for the validity and enforceability of the Ordinance; i) As of the Closing, the Bonds will be legal, valid and binding obligations of the Issuer, and, subject only to the laws of bankruptcy and insolvency, will be enforceable in accordance with their terms and will be in full force and effect; j) Except as described in the Final Official Statement there is no action, suit, proceeding, inquiry or investigation before or by any court, governmental agency, public board or body pending or, to the knowledge of the Issuer, threatened against the Issuer, (i) in any way questioning the legal existence of the Issuer or the titles of the officers of the Issuer to their respective offices; (ii) in any way affecting or contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of the Bonds; (iii) wherein an unfavorable decision, ruling, or finding would have a material adverse effect on the collection and application of taxes that may be levied for the benefit of the Issuer for the payment of the Bonds, the financial condition of the Issuer, or would have an adverse effect on the validity or enforceability of the Bonds or the Ordinance, or which would in any way adversely affect the exclusion of interest on the Series A Bonds from gross income for federal income tax purposes; (iv) contesting the completeness or accuracy of the POS or the Final Official Statement; or (v) to the actual knowledge of the Issuer, there is no reasonable basis for any action, proceeding, inquiry or investigation of the nature described in the foregoing clauses (i) through (iv); k) The issuer believes that the unaudited 2008 financial statements contained in the Final Official Statement fairly present the financial position of the Issuer as of the dates and for the periods therein set forth in accordance with the accounting standards applicable to the Issuer, and since the date thereof, there has been no material adverse change in the financial position of the Issuer; further, the City believes that, while unaudited, the 2008 figures contained in the Final Official Statement fairly reflect the financial condition of the City as of its date; 1) In connection with the financing process, the Underwriter provided the format for and certain of the content for inclusion in the POS, assumed principal drafting responsibility for the preparation of the POS and coordinated the preparation and dissemination of the Final Official Statement. The Issuer understands and acknowledges, however, that the ultimate responsibility for the POS and the Final Official Statement with respect to content, accuracy and completeness is the responsibility of the Issuer as an issuer of municipal securities. The Issuer hereby represents and warrants to the Underwriter that the POS did not, as of its date, and the Final Official Statement will not, as of its date and at the Closing Date, contain any untrue statement of material fact nor omit any statement or information which is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made with respect to information within the POS or the Final Official Statement relating to DTC, the book entry system, the Insurer or the Underwriter; and -4- City of Yakima, Washington August 18, 2009 Page 5 m) The Issuer has not failed to comply with any prior undertaking under the Rule in the past five years. 7. Termination The Underwriter may terminate its obligation under this Purchase Agreement, without liability therefor, by notifying the Issuer of its election to do so in writing if, after the execution of this Purchase Agreement and prior to the Closing, any one or more of the following events shall have occurred and such event, in the reasonable opinion of the Underwriter (i) would materially and adversely affect the marketability of the Bonds or the prices or yields of the Bonds as set forth in Exhibit C, or (ii) would materially and adversely affect the Underwriter's ability to enforce contracts for the sale of the Bonds: a) A material disruption in commercial banking or securities settlement or clearance services; or b) The United States shall have become engaged in hostilities or existing hostilities shall have escalated or a national emergency or other national or international calamity, including but not limited to terrorist attack(s) or other event; or c) A general suspension of trading or other material restrictions not in force as of the date of this Purchase Agreement on the New York Stock Exchange or other national securities exchange; or d) Declaration of a general banking moratorium by the United States, New York State or Washington State authorities; or e) Legislation with respect to eliminating or reducing the exemption from federal or state taxation for interest income received on obligations of the general character of the Series A Bonds shall be introduced or enacted by the legislature of the State of Washington or by. Congress of the United States or adopted by either the United States House of Representatives or the United States Senate or shall have been recommended to the Congress or otherwise endorsed for passage by the Treasury Department of the United States, the Internal Revenue Service or by the chairman of the Senate Finance Committee or a decision or an order . or ruling with respect to eliminating or reducing such exemption, shall have been issued by a court of the United States, including the United States Tax Court, or by or on behalf of the Treasury Department of the United States or the Internal Revenue Service; or f) Legislation shall hereafter be enacted, or actively considered for enactment, or a decision by a court of the United States shall hereafter be rendered, or a ruling, stop order or regulation by the SEC or other governmental agency having jurisdiction of the subject matter shall hereafter be made, the effect of which is or would be that the offering and sale of the Bonds would be illegal or that: i) The Bonds are not exempt from the registration, qualification or similar requirements of the Securities Act of 1933, as amended and as then in effect (the -5- City of Yakima, Washington August 18, 2009 Page 6 "33 Act ") or distribution of the Bonds, as contemplated herein or in the Final Official Statement, is in violation of or not exempt from the registration, qualification or other requirements of the 33 Act, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and then in effect or the Investment Company Act of 1940, as amended and then in effect (the "Investment Company Act ") or, in each case, the rules or regulations promulgated thereunder as then in effect; or ii) The Ordinance is not exempt from the registration, qualification or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or iii) This Purchase Agreement is subject to the Investment Company Act or requires any registration under the Investment Company Act; or g) Any litigation, except as described in the Final Official Statement, shall be instituted or pending at Closing to restrain or enjoin the authorization, issuance, execution, sale or delivery of the Bonds or the execution and delivery of any of the Documents, or in any way contesting or affecting any authority for or the validity or enforceability of the Bonds, the Ordinance or any of the other Documents, any moneys or securities provided for the payment of the Bonds or the existence or powers of the Issuer; or h) Any legislation, ordinance, rule or regulation shall be introduced in or enacted by any governmental body, board, department or agency of Washington State or of the United States, or a decision by any court of competent jurisdiction within Washington State or any court of the United States shall be rendered materially affecting the Issuer or the Bonds; or i) There shall have been established any new restrictions on transactions in securities materially affecting the free market for securities or the extension of credit by, or the charge to the net capital requirements of the Underwriter, including without limitation, the fixing of minimum or maximum prices for trading or maximum ranges of prices, by any exchange, the SEC, any other federal or state agency or the Congress of the United States, or by Executive Order; or j) Except for such changes to the Final Official Statement as provided in Section 5(c) of this Purchase Agreement, there shall have been a material adverse change in the affairs of the Issuer or there shall exist any event or fact or set of facts that either (a) makes untrue or incorrect in any material respect any statement or information contained in the Final Official Statement or (b) is not reflected in the Final Official Statement but should be reflected therein to make the statements and information contained therein under the circumstances in which made not misleading in any material respect; or k) The withdrawal or downgrading of any rating of the Bonds by a national rating agency from those shown in (c)(i) of Exhibit B. -6- City of Yakima, Washington August 18, 2009 _ Page 7 8. Closing; Conditions of Closing The Closing shall occur on such date and at such time and place as is set forth in Exhibit C or otherwise agreed between the Issuer and the Underwriter, and subject to the satisfaction of the terms and conditions of this Purchase Agreement. At Closing, the following shall occur: the Issuer will deliver the duly executed Bonds or cause to be delivered to the fiscal agent for re- delivery through Fast Automated Transfer System to DTC and will deliver or cause to be delivered to the Underwriter the Ordinance; the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Exhibit C hereof in same day funds. The Issuer shall cause the applicable CUSIP identification numbers to be printed on the Bonds of each maturity, but neither the failure to print such number on any such Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept delivery of and to pay for the Bonds. The Bonds shall be prepared and delivered to the Bond Registrar at • or prior to the Closing Date. In addition to the other requirements of this Purchase Agreement, Underwriter's obligations hereunder are subject to and conditioned upon Issuer, at or prior to the Closing Date, delivering or making available to Underwriter copies of the Documents and such items as are listed in Exhibit B attached hereto and incorporated herein. 9. Fees and Expenses The Issuer will pay the cost of preparing, printing and executing the Bonds; the fees and disbursements of Bond Counsel; bond registration and rating fees and expenses; the bond insurance premium; the cost of printing and distributing the POS and Final Official Statement; travel and lodging expenses of the Issuer's employees and representatives; and other expenses of the Issuer. The Underwriter will pay fees and disbursements of its counsel, if any, the cost of preparation and filing of blue sky and legal investment surveys where necessary, the Underwriter's travel expenses, and other expenses of the Underwriter. As a convenience to the Issuer, the Underwriter may from time to time, but only upon the prior written direction from the Issuer, make arrangements for certain items for which Issuer is responsible hereunder, such as printing of the POS and the Final Official Statement and travel or lodging arrangements for the Issuer's representatives. The Underwriter also may advance for the Issuer's account when appropriate and when directed in advance in writing by the Issuer, the cost of the items for which the Issuer is responsible by making payments to third -party vendors. In such cases, the Issuer shall pay such costs or expenses directly, upon submission of appropriate invoices by the Underwriter, or promptly reimburse the Underwriter in the event the Underwriter has advanced such costs or expenses for the Issuer's account. It is understood that the Issuer shall be primarily responsible for payment of all such items and that the Underwriter may agree to advance the cost of such items from time to time solely as an accommodation to the Issuer and on the condition that it shall be reimbursed in full by the Issuer. -7- City of Yakima, Washington August 18, 2009 Page 8 10. Miscellaneous a) All matters relating to the Purchase Agreement shall be governed by the laws of the state of Washington. b) This Purchase Agreement is intended to benefit only the parties hereto. Unless it can be shown that the untruth of any representation or warranty of the Issuer or the violation of any agreement of the Issuer hereunder actually was or should have been discovered by the Underwriter through its review of the information in the Final Official Statement in accordance with and as a part of its responsibilities under federal securities laws as applied to the facts and circumstances of this transaction, all representations and warranties and agreements of the Issuer in this Purchase Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of the Underwriter, (ii) delivery of and payment for the Bonds hereunder, or (iii) any termination of this Purchase Agreement. If the Issuer fails to satisfy any of the foregoing conditions or covenants, or if the Underwriter's obligations are terminated for any reason permitted under this Purchase Agreement, then neither the Underwriter nor the Issuer shall have any further obligations under this Purchase Agreement, except that any expenses incurred shall be borne in accordance with the Fees and Expenses Section hereof. c) Any notice or other communication to be given to the Issuer by the Underwriter under this Purchase Agreement may be given by delivering the same in writing to the Director of Finance and Budget or other authorized official of the Issuer at 129 North Second Street, Yakima, Washington 98901; and any notice or other communication to be given to the Underwriter by the Issuer under this Purchase Agreement may be given by delivering the same in writing to the attention of the officer of the Underwriter executing this Purchase Agreement at Seattle- Northwest Securities Corporation, 1420 Fifth Avenue, Suite 4300, Seattle, Washington, 98101. Written communications may be delivered by electronic means. d) This Purchase Agreement may be executed in any number of counterparts, all of which shall be one and the same instrument, and either Party hereto may execute this Purchase Agreement by signing any such counterpart. e) This Purchase Agreement, including all documents incorporated herein by reference, constitutes the entire agreement between and among the Parties, supersedes any other representations, understandings or communications between the Parties or their representatives, and may be amended only in a writing signed by both Parties. This Purchase Agreement is intended solely for the benefit of the Parties (including any .. successors and assigns thereof but not any holder of any Bonds). No other person shall acquire or have any rights hereunder or by virtue hereof. -8- City of Yakima, Washington August 18, 2009 Page 9 Respectfully submitted, SEATTLE - NORTHWEST SECURITIES CORPORATION Y A/C-257A6(fis— Title: Senior Vice Presi ent Accepted August 18, 2009 CITY OF YAKIMA, WASHINGTON By: 7 . Q M Rita M. DeBord, Director of Finance and Budget Time Signed -9- EXHIBIT A FINAL PRICING NUMBERS BOND DEBT SERVICE City of Yakima,.Washington Limited Tax General Obligation Bonds, Series 2009A & Series 2009B Taxable (BABs) FINAL NUMBERS Dated Date 08/28/2009 Delivery Date 08/28/2009 Period . Annual • Ending Principal Coupon interest Debt Service Debt Service 12/01/2009 175,000 3.000% 99,136.71 274,136.71 . 274,136.71 06/01/2010 - 189,252.50 189,252.50 12/01/2010 180,000 3.000% 189,252.50 369,252.50 558,505.00 06/01/2011 186,552.50 186,552.50 12/01/2011 185,000 3.000% 186,552.50 371,552.50 558,105.00 06/01/2012 183,777.50 183,777.50 12/01/2012 190,000 3.000% 183,777.50. 373,777.50 557,555.00 06/01/2013 180,927.50 180,927.50 12/01/2013 195,000 3.000% 180,927.50' 375,927.50 556,855.00 06/01/2014 178,002.50 178,002.50 `12/01/2014 205,000 3.500% 178,002.50 383,002.50 . 561,005.00 06/01/2015 174,415.00 174,415,00 12/01/2015 215,000 3.500% 174,415.00 389,415.00 563,830.00 06/01/2016 170,652.50 170,652.50 12/01/2016 225,000 4.250% 170,652.50 395,652.50 566,305.00 06/01/2017 165,871.25 165,871.25 12/01/2017 235,000 4.250% 165,871.25 400,871.25 566,742.50 06/01/2018 160,877.50 160,877.50 12/01/2018 250,000 4.250% 160,877.50 410,877.50 571,755.00 06/01/2019 155,565.00 155,565.00 12/01/2019 260,000 5 600% 155,565.00 415,565.00 571,130.00 • 06/01/2020 148,285.00 148,285.00 . 12/01/2020 275,000 5.600% 148,285.00 _ 423,285.00 571,570.00 06/01/2021 140,585.00 140,585.00 12/01/2021 285,000 5.600% 140,585.00 425,585.00 566,170.00 . 06/01/2022 132,605.00 132,605.00 12/01/2022 300,000 5.600% 132,605.00 432,605.00 565,210.00 06/01/2023 124,205.00 124,205.00 12/01/2023 310,000 5.600% 1 24,205:00 434,205.00 558,410.00 06/01/2024 115,525.00 115,525.00 12/01/2024 325,000 5.600% 115,525.00 440,525.00 556,050.00 06/01/2025 106,425.00 106,425.00 12/01/2025 340,000 6.600% 106,425.00 446,425.00 552,850.00 06/01/2026 95,205.00 95,205.00 12/01/2026 355,000 6.600% 95,205.00 450,205.00 545,410.00 • 06/01/2027 83,490.00 83,490.00 12/01/2027 375,000 6.600% 83,490.00 458,490.00 541,980.00 06/01/2028 71,115.00 71,115.00 12/01/2028 ' 390,000 6.600% . 71,115.00 461,115.00 532,230.00 . 06/01/2029 58,245.00 58,245.00 ' 12/01/2029 410,000 6.600% 58,245.00 468,245.00 526,490.00 06/01/2030 44,715.00 44,715.00 12/01/2030 430,000 6.600% 44,715.00 474,715.00 519,430.00 • 06/01/2031 30,525.00 30,525.00 12/01/2031 450,000 6.600% 30,525.00 480,525.00 511,050.00 06/01/2032 15,675.00 15,675.00 12/01/2032 475,000 6.600% 15,675.00 490,675.00 506,350.00 7,035,000 5,924,124,21 12,959,124.21 12,959,124.21 Aug 18, 2009 11:27 am Prepared by Seattle - Northwest Securities Corp -1MW (k:\ analysis \dbc \city\Yakima:2009LTGO) Page 3 NET DEBT SERVICE City of Yakima, Washington Limited Tax.General Obligation Bonds, Series 2009A & Series 2009B Taxable (BABs) FINAL NUMBERS • Period Total Net Ending Debt Service 35% Tax Credit Debt Sery ice 12/01/2009 274,136.71 - 28,131.34 246,005.37 • 12/01/2010 558,505.00 - 108,895.50' 449,609.50 12/01/2011 558,105.00 - 108,895.50 449,209.50 12/01/2012 557,555.00 - 108,895.50 448,659.50 12/01/2013 556,855.00 - 108,895.50 447,959.50 12/01/2014 561,005.00 - 108,895.50 452,109.50 12/01/2015 563,830.00 - 108,895.50 454,934.50 12/01/2016 566,305.00 - 108,895.50 457,409.50 12/01/2017 566,742.50 - 108,895.50 - 457,847.00 12/01/2018 571,755.00 - 108,895.50 462,859.50 12/01/2019 571,130.00 - 108,895.50 462,234.50 12/01/2020 571,570.00 - 103,799.50 467,770.50 12/01/2021 566,170.00 - 98,409.50 467,760.50 12/01/2022 565,210.00 - 92,823.50 472,386.50 12/01/2023 558,410.00 - 86,943.50 471,466.50 12/01/2024 556,050.00 - 80,867.50 475,182.50 12/01/2025 552,850.00 - 74,497.50 478,352.50 12/01/2026 545,410.00 -66,643.50 478,766.50 12/01/2027 541,980.00 - 58,443.00 483,537.00 12/01/2028 532,230.00 - 49,780.50 482,449.50 12/01/2029 526,490.00 - 40,771.50 485,718.50 12/01/2030 519,430.00 - 31,300.50 488,129.50 12/01/2031 511,050.00 - 21,367.50 489,682.50 12/01/2032 506,350.00 - 10,972.50 495,377.50 12,959,124.21 - 1,933,706.34 11,025,417.87 • • Aug 18, 2009 11:27 am Prepared by Seattle - Northwest Securities Corp - IMW (k:\ analysis \dbc \city\ Yakima:2009LTGO) Page 4 • • • • BOND PRICING City of Yakima, Washington Limited Tax General Obligation Bonds, Series 2009A & Series 2009B Taxable (BABs) FINAL NUMBERS Maturity Premium • Bond Component Date Amount Rate Yield Price (- Discount) Serial Bonds (Tax- Exempt): • 12/01/2009 175,000 3.000% 0.920% 100.534 934.50 12/01/2010 - 180,000 3.000% 1.070% 102.404 4,327.20 12/01/2011 185,000 3.000% 1.330 103.701 6,846.85 12/01/2012 190,000 3.000% 1.750 103.940 7;486.00 12/01/2013 195,000 3.000% 2.050% 103.853 7,513.35 1 2/01 /2014 205,000 3.500% 2.430% 105.249 10,760.45 12/01/2015 215,000 3.500% 2.700% 104.575 9,836.25 1 2/01/201 6 225,000 4.250% 2.970% 108.298 18,670.50 12/01/2017 235,000 4.250% 3.240% 107.262 17,065.70 1 2/01 /2018 250,000 4.250% 3.480% 106.045 15,112.50 2,055,000 98,553.30 2024 Term Bond (BABs): 1 2/01/201 9 260,000 5.600% 5.620% 99.787 - 553.80 12/01/2020 275,000 5.600% 5.620% 99.787 - 585.75 12/01/2021 285,000 5.600% 5.620% 99.787 - 607.05 12/01/2022 300,000 5.600% 5.620% 99.787 - 639.00 • 12/01 /2023 310,000 5.600% 5.620% 99.787 - 660.30 12/01/2024 325,000 5.600% 5.620% 99.787 - 692.25 1,755,000 - 3,738.15 2032 Term Bond (BABs): 12/01 /2025 340,000 6.600% 6.600% 100.000 12/01/2026 355,000 6.600% 6.600% 100.000 12/01/2027 375,000 6.600% 6.600% 100.000 12/01/2028 390,000 6.6001 6.600% 100.000 12/01/2029 410,000 6.600% 6.600% 100.000 12/01/2030 430,000 6.600% 6.600% 100.000 1 2/01 /2031 450,000 6.600% 6.600% 100.000 . 12/01 /2032 475,000 6.600% 6.600% 100.000 • 3,225,000 7,035,000 94,815.15 Dated Date 08/28/2009 Delivery Date 08/28/2009 First Coupon 12/01/2009 Par Amount 7,035,000.00 Premium 94,815.15 Production 7,129,815.15 101.347763% Underwriter's Discount - 55,188.60 - 0.784486% Purchase Price 7,074,626.55 100.563277% Accrued Interest • • Net Proceeds 7,074,626.55 Aug 18, 2009 11:27 am Prepared by Seattle - Northwest Securities Corp - JMW (k:\ analysis \dbc \city\ Yakima:2009LTGO) Page 2 • • • SOURCES AND USES OF FUNDS • City of Yakima, Washington Limited Tax General Obligation Bonds, Series 2009A & Series 2009B Taxable (BABs) FINAL NUMBERS Dated Date 08/28/2009 • Delivery Date 08/28/2009 Sources: 09LTGO 09LTGOB Total • Bond Proceeds! Par Amount 2,055,000.00 4,980,000.00 7,035,000.00 Premium 98,553.30 98,553.30 Original Issue Discount - 3,738.15 - 3,738.15 2,153,553.30 4,976,261.85 7,129,815.15 Uses: 09LTGO 09LTGOB Total • Project Fund Deposits: Project Fund 2,112,316.63 4,870,105.65 6,982,422.28 Delivery Date Expenses: Cost of Issuance 6,492.16 15,732.84 22,225.00 . Underwriter's Discount 14,302.80 40,885.80 55,188.60 Bond Insurance (AGC Co 54 bps) 20,441.71 49,537.56 69,979.27 41,236.67 106,156.20 147,392.87 2 ,153,553.30 4,976,261.85 7,129,815.15 • • • • • Aug 18, 2009 11:27 am Prepared by Seattle - Northwest Securities Corp - JMW (k:\ analysis \dbc \city`Yakima:2009LTGO) Page 1 • • EXHIBIT B CLOSING DOCUMENTS Issuer's Closing Documents At Closing, Issuer shall provide the following: a) Copies of the Ordinance and the Blanket Issuer Letter of Representation; b) The approving opinions of Bond Counsel dated as of the Closing Date and addressed to the Issuer and the Underwriter, substantially in the forms set forth in Appendix B to the Final Official Statement and letters addressed to the Insurer to the effect that the Insurer may rely upon such opinion as if it were addressed to the Insurer; c) Evidence of each of the following: i) That Standard & Poor's ( "S &P ") has assigned its (a) underlying rating of "A +" to the Bonds and that such rating is in full force and effect on and as of the date of Closing and (b) insured rating of "AAA" based upon the Issuer's purchase of the Policy issued by the Insurer; ii) Issuer's purchase of the Policy, including a copy of the Policy and an opinion of counsel to the Insurer in form and substance satisfactory to the Underwriter; and iii) designation of the Series A Bonds as "qualified tax - exempt obligations" for banks, thrift institutions and other financial institutions, as defined in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. d) A copy of completed Form 8038 -G; e) The following certifications, which may be combined, executed by an authorized officer of the Issuer and dated as of the Closing Date, to the effect that: i) The representations, warranties and covenants of the Issuer contained herein and in the Ordinance are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; ii) No litigation or other proceedings are pending or, to the knowledge of the Issuer, threatened in any court in any way (a) affecting the position or title of the authorized officers of the Issuer, or (b) seeking to restrain or to enjoin the authorization, issuance, sale or delivery of, or security for, any of the Bonds, or (c) contesting or affecting the validity or enforceability of the Bonds, the Ordinance, this Purchase Agreement, or (d) contesting the completeness or accuracy of the POS or the Final Official Statement, or (e) contesting the powers of the Issuer or its authority with respect to the Bonds; the Ordinance or this Purchase Agreement, or (f) materially affecting the finances of the Issuer. For the purpose of this subparagraph, the Issuer may rely upon a certificate of the Issuer's legal counsel with respect to the legal matters set forth therein; iii) No event affecting the Issuer has occurred since the date of the Final Official Statement which should be disclosed in the Final Official Statement for the purpose for which it is to be used or which is necessary to disclose therein in order to make the statements therein not misleading, and the Final Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made with respect to information within the Final Official Statement relating to DTC, the book entry system, the Insurer or the Underwriter; and f) Such additional certificates, instruments or opinions or other evidence as the Underwriter or Bond Counsel may deem reasonably necessary or desirable to evidence the due authorization, issuance, execution, authentication and delivery of the Bonds, the truth and accuracy as of the time of the Closing of the representations and warranties contained in this Purchase Agreement, and the conformity of the Bonds and Ordinance with the terms thereof as summarized in the POS and the Final Official Statement, and to cover such other matters as the Underwriter or Bond Counsel reasonably requests. Underwriter's Closing Documents At Closing, Underwriter shall deliver or cause to be delivered to the Issuer or Bond Counsel a receipt for the Bonds including therein a representation that all closing conditions set forth in this Purchase Agreement have been provided to the satisfaction of the Underwriter or waived by it. EXHIBIT C DESCRIPTION OF THE BONDS (a) Principal Amount (Series A Bonds): $2,055,000 Principal Amount (Series B Bonds): $4,980,000 (b) Purchase Price (Series A Bonds): $2,139,250.50 ($104.099781 per $100), representing an original issue premium of $98,553.30 and an underwriter's discount of $14,302.80. Purchase Price (Series B Bonds): $4,935,376.05 ($99.103937 per $100), representing an original issue discount of $3,738.15 and an underwriter's discount of $40,885.80. (c) Denominations: $5,000, or integral multiples thereof (d) Form: Registered; Book -entry only (e) Interest Payment Dates: June 1 and December 1, commencing December 1, 2009. (f) Maturity and Interest Rates: The Bonds shall mature on December 1 of each year and bear interest as follows: Series A Bonds NNiliken Duey # Interests GUSIP Dec 1� Ar p*O aRafes stOds 98 1 Deal 3Amunta R ate `Yi 8521 .- t .�.w:. �'..,,,c= ,_ Yr., . .°.`._... >...c...�....x:..;.x . .r. o .. . _�z .:.Ta 2009 $ 175,000 3.00% 0.92% RX4 2014 $ 205,000 3.50% 2.43% SC9 2010 180,000 3.00 1.07 RY2 2015 215,000 350 2.70 SD7 2011 185,000 3.00 1.33 RZ9 2016 225,000 425 2.97 SE5 2012 190,000 3.00 1.75 SA3 2017 235,000 425 3.24 SF2 2013 195,000 3.00 2.05 SB1 2018 250,000 425 3.48 %0 Series B Bonds $1,755,000 5.60% Term Bonds due December 1, 2024 @ 5.62% Yield; CUSIP No. 984521SN5 $3,225,000 6.60 %Term Bonds due December 1, 2032 @ 6.60% Yield; CUSIP No. 984521SW5 (g) No Optional Redemption (Series A Bonds): The Series A Bonds are not subject to redemption prior to maturity. Optional Redemption (Series B Bonds): Except as otherwise provided below under "Extraordinary Optional Redemption," the Series B Bonds are subject to redemption at the option of the City prior to their stated maturity dates at any time on or after June 1, 2019 at the price of par, plus accrued interest, if any, to the date of redemption. The City will direct the Bond Registrar to notify DTC that in the event that fewer than all of the Series B Bonds of a maturity are to be redeemed, any such redemption shall be on a pro rata basis in a principal amount equal to the authorized denomination of $5,000 or any integral multiple thereof. Extraordinary Optional Redemption (Series B Bonds): Prior to June 1, 2019, the Series B Bonds are subject to redemption prior to their stated maturity at the option of the City, in whole or in part at any time upon the occurrence of an Extraordinary Event (defined below), at a redemption price (the "Extraordinary Redemption • Price ") equal to the greater of: (i) the issue price set forth on the inside cover page hereof (but not less than 100 %) of the principal amount of such Series B Bonds to be redeemed; or (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of such Series B Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which such Series B Bonds are to be redeemed, discounted to the date on which such Series B Bonds are to be redeemed on a semi - annual basis, assuming a 360 -day year consisting of twelve 30 -day months, at the Treasury Rate (described below) plus 100 basis points; plus, in each case, accrued interest on such Series B Bonds to be redeemed to the redemption date. • An "Extraordinary Event" will have occurred if a material adverse change has occurred to Section 54AA of 6431 of the Internal Revenue Code of 1986, as amended (the "Code ") (as such Sections were added by Section 1531 of the Recovery Act, pertaining to Build America Bonds) pursuant to which the City's 35% cash subsidy payment from the United States Treasury is reduced or eliminated. The term "Treasury Rate" means, with respect to any redemption date for a particular Series B Bond, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity excluding inflation indexed securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the redemption date or, if such Statistical Release is no longer published, any publicly available source of similar market date) most nearly equal to the period from the redemption date to the maturity date of the Series B Bond to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one . year, the weekly average yield on actually traded United States Treasury securities . adjusted to a constant maturity of one year will be used. At the request of the Bond Registrar, the redemption price of the Series B Bonds to be redeemed at the option of the City will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the City at the City's expense to calculate such redemption price. The Bond Registrar and the City may conclusively rely on the determination of such redemption price by such independent accounting firm, investment banking firm or financial advisor and will not be liable for such reliance. (h) Mandatory Redemption: The Series B Bonds due on December 1 in the years 2024 and 2032 are subject to mandatory redemption (in such manner as the Bond Registrar will determine) at a price of par, plus accrued interest on the date of redemption, on December 1 in the years and amounts as follows: 2024 Term Bond Years Amounts 2019 $ 260,000 2020 275,000 2021 285,000 2022 300,000 2023 310,000 2024 ( 325,000 $ 1,755,000 (1) Maturity. • 2032 Term Bond Years Amounts 2025 $ 340,000 2026 355,000 2027 375,000 2028 390,000 2029 410,000 2030 - 430,000 2031 450,000 2032 00) 475,000 $ 3,225,000 (1) Maturity. (i) Dated Date: Date of Delivery, expected to be August 28, 2009. (j) Offer Expires: 11:59 p.m. Pacific Time, August 18, 2009. (k) Bond Counsel: K &L Gates LLP (1) Closing: Via conference call initiated by Bond Counsel on August 28, 2009, at 9:00 a.m. (m) Delivery: To the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer. (n) Bond Insurance: Payment of the principal of and interest on the Bonds, when due, will be insured by the Policy to be issued by the Insurer (Assured Guaranty Corporation) simultaneously with the delivery of the Bonds. (o) Ratings: S &P will assign its rating of "AAA" to the Bonds based on the Issuer's purchase of the Policy described above. Furthermore, S &P has assigned its underlying rating of "A +" to the Bonds. • • :J . t; . a A mo t , ,{ ( } S t t r j i f y � t � 9 1gi� 'd ^ `� t a $g � � '. . yc } , : ;t} tt 3 ilt', i, T . £ i _ •`) o • y - v Fe 4 tr .0.. � 4 � ) } : y l r +,4 3 t . ! y a v. 1,. „Fs- Y.� >I rti.P t . L ; i � I `,e h Y eY :` ''-::: 1 .J , • rr ! ,4 ' , .‹..'N' :4 :::' LL � 4 f Y D ` . . i V1 , �/ l 2 t! r{ r I ! I - "h :.Y`. It } ' } STANDA " � •,.,....,,,,, ' .,� i p i ; t a 4 t RATJNGSDIRECT® :f &POOR'S }� ;( �i, ? S t i tt s ,r s :J+' 5 i N I 7 ' t X a l f . lA y F t } I x !W , fr}p nt'P ! a < t t br -i r s '� }'t i� , 6r?: t , r t t ss ,. 7 l $ , • a n t t r r a x d i ; s . h > s � t sti s f r "y / ; s t3Y,'' n ,s"v Yf" d ' iC., t� ts` ; T w y t o tY s ° f , £ i s } rt s i ,, t f 3 s 3 r. u 1 k c u r t r 6 �. ! r ! i -'fiw Wiz' t d sy s - e §_ . sar F n. \ z 1 i r' ,, . s, '' i a ' v 'k y � Y LL _ + t i rr !, t' ,F4 s r r., ➢ ` ,�_.i s x . r• ;i :er . t Au g u st T3 2009 Summary: Yakima, Was General Obligation Primary Credit Analyst: Bryan A Moore, San Franc (1) 415 371 - 5077 Secondary Credit Analyst: Misty Newland, San Francisco (1)415-371 misty _newland ©standardandpoors.com Table Of Contents • Rationale • Outlook Related Research • • •'.::: :!•:, .;,..',..::::.......H..,:,,,'... ........... ,„:.:;:i..'n.;::.., wwwstandardandpoors .com rep /ratingsdirect 1 • • • Standard & Poor's. All the r i g hts . No rint or dissemination wi thout S &P's permission. See Terms of 1 Use /Disclaimer on page. • Summary: . Yakima Washington; General Obligation Credit,Profile k �, t z , 4 =t '�,""t ..'r•h'fw' ,., ., .. `�.H9'E ,, .�`6 kr r ^ir ;.'!� i= `:'. i, .. • ' •' �. a t .�: .. US$4.5 mil Lmtd Tax GO (BId:Amer Bnds) S due-12/01/2032 >. Long Term Rating A+ /Stable, New US$2.5 mil Lmtd Tax G0 ser`2009A dtd 09/15/2009 due 12/01/2032' Long Term Rating . A+ /Stable . New Yakima GO Unenhanced Rating A +(SPUR) /Stable Affirmed • Rationale Standard & Poor's Ratings Services assigned its 'A +' long -term rating, with a stable outlook, to the City of Yakima, Wash.'s series 2009A limited -tax general obligation (GO) bonds and series 2009B federally taxable (Build America Bonds -- Direct Payment) GO bonds. At the same time, Standard & Poor's affirmed its 'A +' long -term rating and underlying rating (SPUR), with a stable outlook, on the city's outstanding GO debt. Credit strengths influencing the ratings include our view of the city's: • Long- standing economic role as a service and manufacturing center for a surrounding agricultural region; • Track record of very strong general fund balances; and • Good financial policies and practices, including a minimum general fund balance threshold and the use of a financial forecasting model. Offsetting rating factors include the city's: • Adequate median household effective buying income (EBI) and historically high unemployment rates, and • Limited revenue flexibility under state law. The bonds are secured by the city's full faith and credit and a limited ad valorem tax pledge subject to the state's statutory tax limits. The city has indicated that it intends to designate the series 2009B bonds as Build America Bonds as authorized by the American Recovery and Reinvestment Act (ARRA) of 2009. Under ARRA, the city expects that the bonds will qualify for a cash subsidy from the U.S. Treasury equivalent to 35% of the amount of each interest payment. Regardless of whether the subsidy is collected, the series 2009B bonds are ultimately secured by a limited ad valorem tax pledge and the city is obligated to levy the amount necessary to pay the full amount of annual principal and interest. Located 142 miles southeast of Seattle, the city serves a modestly growing population of 84,300. Assessed value totals $5.4 billion in 2009. The city has long served as an urban center for a surrounding economy anchored by - agriculture, a sector that is often associated with seasonal employment. As a result, the city's median household EBI is what we consider to be adequate at 70% of the U.S. level. • Standard & Poor's RatingsDirect I August 13, 2009 2 Standard & Poor's. All rights reserved. No reprint or dissemination without S &P's permission. See Terms of Use /Disclaimer on the last page. 7 j Summary: Yakima, Washington; General Obligation • The city has maintained, in our view, a very strong financial position in the face of statutory restrictions on tax revenues and rising public safety costs. During the past five years through 2008 (the latter year unaudited), the city's unreserved general fund balance has grown steadily in nominal terms and hovered within a narrow range of what we consider to be a very strong 20 % -23% of expenditures. At the close of 2008, the unreserved general fund balance was $10.6 million, or 23.8% of expenditures. The city is also working to mitigate expenditure growth in the fiscal year ending Dec. 31, 2009, by eliminating positions and reducing miscellaneous payroll expenses; however, the city has budgeted for a $1.7 million deficit to be pulled from the unreserved fund balance. Additionally, the city stated that it has a strong commitment to maintaining at least the minimum reserve policy. The city's budget has recently been under pressure given the economic downturn and a resulting decrease in sales • tax. Ongoing revenue constraints are also due in part to a state -wide limit on property tax revenue growth to no more than 1% per year plus new construction without a public vote. We understand that officials will use bond proceeds primarily to finance the expansion, rehabilitation, and improvement of the Capitol Theatre (a performing arts theater located in the city); repay an interfund loan; and repay draws on the city's line of credit. The city reported that debt service on the bonds has been sized to equal about 85% of the 2008 sales tax generated from a 0.025% tax approved and dedicated to purposes related to the Capitol Theatre. For 2008, the dollar amount was equal to $389,110, which reflects nine months of collections because the tax took effect after the start of the calendar year. The tax will expire in December 2032, which is also the final maturity on the bonds. Combined direct and overlapping debt supported by city taxpayers, in our opinion, is low, translating into 1.9% of market value and $1,158 per capita. Likewise, 2008 (unaudited) carrying charges were low, at 5% of government -wide expenditures, and will not rise materially with series 2009 obligations. The city's management practices are considered "good" under Standard & Poor's Financial Management Assessment (FMA). An FMA of "good" indicates that practices exist in most areas, though not all might be • formalized or regularly monitored by governance officials. Outlook The stable outlook reflects the city's history of adjusting its operations in response to statutory restrictions on property tax revenue growth. The outlook also reflects management's forecast of a -end 2009 general fund balance that will fall well above its target range, even including additional expenditure cuts in response to a lowered sales tax forecast. We believe that the city's ability to continue to respond to budgetary pressures ,and adhere to its financial goals during this negative stage of the economic cycle will be important in the medium term. Evidence of • continuing economic growth and improving personal and household economic indicators would likely playa key role in any future upward rating movement. . Related Research • • USPF Criteria: "GO Debt," Oct. 12, 2006 • USPF Criteria: "Location, Location, Location; What Does It Mean For My Community's Rating ?," April 22, 2008 • www. standardandpoors .com /ratingsdirect 3 Standard & Poor's. All rights reserved. No reprint or dissemination without S &P's permission. See Terms of Use /Disclaimer on the last page. '4U.i?7 301 Z34 "•'. • Summary: Yakima, Washington; General Obligation YiRattngs 'iDetatl l'AstO Augustal3 R2009Yli': ,. Yakima ltd tax GO buds ser 2002:dtd 05/01/2002'due 06/01/2003 -2014 2016 2022 2026;; Unenhanced Rating :`. A +(SPUR► /Stable ' Affirmed -' Yakima GO ser 2005 Long Term Rating A + /Stable Affirmed Yakima GO (FSA) . Unenhanced Rating A +►SPUR► /Stable;:' Affirmed. • Yakima unitd tax GO & ltd "tax GO rtdg pods` Unenhanced Rating " A +(SPUR► /Stable - Affirmed Yakima G0 Unenhanced Rating A +(SPUR► /Stable Affirmed. Many issues are enhanced by bond insurance. Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Ratings in the left navigation bar, select Find a Rating. • • • Standard & Poor's RatingsOirect August 13, 2009 4 Standard & Poor's. All rights reserved. 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