HomeMy WebLinkAboutR-1991-D5976 Sale of Water/Sewer BondsCITY OP YAKIMA, WASHINGTON
RESOLUTION NO.f 5 9 7 6
A resolution authorizing the execution and delivery of
a contract for purchase of the City's second lien water
and sewer revenue bonds, 1991, in the aggregate principal
amount of $7,675,000; fixing certain terms of the bonds;
approving the form of the official statement therefor and
the distribution thereof; and ratifying certain acts and
proceedings.
WHEREAS, City of Yakima, Washington (the "City") by Ordinance
No. 3380 passed July 16, 1991 authorized the issuance of the City's
Water and Sewer Revenue Bonds, 1991 (the "Bonds"); and
WHEREAS, certain terms of the Bonds were to be determined by
subsequent resolution of the Council; and
WHEREAS, the Director of Finance and Budget of the City has,
with the approval of the Council, entered into negotiations for the
sale of $7,675,000 aggregate principal amount of the Bonds; and
WHEREAS, such negotiations have been completed and the
Director of Finance and Budget recommends that the City accept the
offer to purchase the Bonds made by Seattle Northwest Securities
Corporation (the "Purchaser") which offer is set forth in the
Purchase Contract for the. Bonds dated August_13, 1991 (the
"Purchase Contract"), a copy of which has been presented at this
meeting and is on file with the City Clerk;
NOW, THEREFORE, BE IT RESOLVED by the City of Yakima,
Washington, as follows:
section 3,. psjinitions. Capitalized terms used herein and
not otherwise defined shall have the same meanings, respectively,
in this resolution as such terms are given in Section 1 of
Ordinance No. 3380.
Sect on z. h2ciAjaratngs of Ofd. The Council hereby finds and
determines that the Purchase Contract is fair and reasonable and
in the best interest of the City and that the Bonds shall be sold
upon the terms and conditions set forth in the Purchase Contract
and upon the basis of the representations therein set forth.
The Council further finds and determines that all conditions
precedent to or concurrent with the acceptance of the Purchase
Contract by the Council have been met.
The Council hereby accepts the Purchase Contract and hereby
authorizes and directs the Director of Finance and Budget to
execute the Purchase Contract and deliver it to the Purchaser.
The Bonds shall be issued and delivered to the Purchaser upon
payment of the purchase prices specified in the Purchase Contract,
plus accrued interest from their date to the date of their
delivery.
Beet . che 1e of Maturit es an Interest Rateg. The
Bonds shall mature on March 1 of the following years in the
following amounts and shall bear interest as follows:
®Z.. CER038 91/06/09
Interest
Yaar count Mate
1992 $165,000 4.75%
1993 280,000 5.20
1994 330,000 5.40
1995 295,000 5.60
1996 315,000 5.80
1997 340,000 6.00
1998 360,000 6.10
1999 380,000 6.25
2000 410,000 ...6.30
2001 430,000 6.40
2002 420,000 6.50
2003 330,000 6.60
2004 355,000 6.70
2005 380,000 6.80
2006 405,000 6.90
Term Bonds
Interest
Y ar Amount Rate
2011 $2,480,000 7.00%
Section.i. optional jtedejaotj.on. The Bonds maturing in the
years 1992 through 2001 shall not be subject to redemption prior
to their stated maturity dates. The Bonds maturing on or after
March 1, 2002 shall be subject to redemption prior to their stated
maturities at the option of the City on March 1, 2001 or on any
interest payment date thereafter, in whole at any time or in part
on any interest payment date (maturities to be selected by the City
and by lot within a maturity), at 100% of the principal amount
thereof plus accrued interest to the date of redemption.
,Section,. Mandatory Redemotion. If not redeemed under the
optional redemption provision set forth in Section 4, the Term
Bonds maturing March 1, 2011 will be subject to redemption by
operation of the Term Bond Principal Account through Sinking Fund
-3- CBR038 91/08/09
Installments on March ]L of the years and in the amounts set forth
below. The redemption price will be 100% of the principal amount
of Term Bonds to be reds ned plus accrued interest, if any, to the
redemption date. Bonds to be redeemed shall be chosen by lot in
such manner as the Bond Registrar shall determine.
Dates
untq
2007 $430,000
2008 460,000
2009 495,000
2010 525,000
2011 570,000
SectionElatiQn.A. F,xecutign dive of tte._Bonds. The proper
officers of the council and the Director of Finance and Budget of
the City are hereby authorized and directed to do all things
necessary or proper for the printing, execution and delivery of the
Bonds to the Purchaser in accordance with the terms of the Purchase
Contract and Ordinance Wo. 3380, as well as this resolution, and
for the proper application and use of the proceeds of such sale.
$ectiotaa. 4flir,, ° al ®$ atement s Uma of Documents. The
Director of Finance and Budget is authorized and directed to
execute and deliver to the Purchaser copies of an Official
Statement in substantially the form of the Preliminary Official
Statement dated August 2,, 19911 provided, however, that the
Director of Finance and Budget is authorized to supplement or amend
the Official Statement as the Director of Finance and Budget, with
the approval of bond counsel to the City, deems necessary or
appropriate. The Council represents and warrants to the Purchaser
that the Preliminary Official Statement was "deemed final" by the
-4- CBR038 91/08/09
District as of the date thereof within the meaning of paragraph 17
C.F.R. § 240.15c2-12 promulgated by the Securities and Exchange
Commission ("Rule 15c2-12"), except for the omission of such
information as may be permitted by Rule 15c2-12.
The Council approves and authorizes the use of such official
Statement (including any such supplements and amendments thereto)
in connection with the public offering and sale of the Bonds by the
Purchaser.
septior . . t, tayestaunt of:, pro___ cseds_. The Director of Finance
and Budget of the City is authorized and directed to cause the
proceeds of sale of the Bonds to be invested and reinvested in
accordance with Ordinance No. 3380.
$ection 9. z- -a= t= ,. A t• iz- •� o
future Agts. All actions and proceedings heretofore taken by the
officers, agents, attorneys and employees of the City in connection
with the issuance and sale of the Bonds are hereby ratified,
approved and confirmed.
The City further authorizes and directs all proper officers,
agents, attorneys and employees of the City to carry out or cause
to be carried out all obligations of the City under the Purchase
Contract and to perform such other acts as they shall consider
necessary or advisable in connection with the printing, execution,
sale and delivery of the Bonds and the application of the proceeds
of the sale of such Bonds.
-5- CBR038 91/08/09
Section 10. Effective Date. This Resolution shall be in
effect from and after its adoption in accordance with law.
ADOPTED at a regular meeting of the Council of the City of
Yakima this 13th day of August, 1991.
CITY OF Y
ATTEST:.
ale- c
City Clerk
APPROVED AS TO FORM:
City Attorney
w
INGTON
6 ' CBR038 91/08/09
11r
i
CERTIFICATE
the undersigned, Clerk of the City of Yakima, Washington
and keeper of the records of the Council of the City (the
&Council"), DO HEREBY CERTIFY:
1. That the attached Resolution No. • (the "Resolution")
is a true and correct copy of a resolution of the Commission, as
finally adopted at a regular meeting of the Council held on the
13th day of August, 1991 and duly recorded in my office.
2. That said tweeting was duly convened and held in all
respects in accordance with law, and to the extent required by law,
due and proper notice of such meeting was given; that a legal
quorum was present throughout -the meeting and a legally sufficient
number of members of the Council voted in the proper manner for the
passage of said Resolution; that all other requirements and
proceedings incident to the proper adoption of said Resolution have
been fully fulfilled, carried out and otherwise observed; and that
I am authorized to execute this certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this - day
of , 1991.
City Clea
City of Yakima, Washington
C8R038 91/08/09
9/—/a 8
Seattle
N @" thwezt
SECURITIES CORPORATION
1420 FIFTH AVENUE
SUITE 4300
SEATTLE, WASHINGTON 98101
(206) 628-2882
August 13, 1991
Honorable Mayor and City Council
City of Yakima
129 N. Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$7,675,000 Second Lien Water and Sewer Revenue Bonds, 1991
Honorable Mayor and City Council:
Seattle -Northwest Securities Corporation ("Purchaser") offers to purchase from City of
Yakima, Washington ("Seller") all the above-described bonds (the "Bonds"), on the terms and
based upon the covenants, representations and warranties set forth below. Appendix A, which
is incorporated into this agreement by reference, contains a brief description of the Bonds,
including principal amounts, maturities, interest rates, purchase price, and the proposed date
and place of delivery and payment (the "Closing"). Other provisions of this agreement are as
follows:
1. Prior to the Closing, Seller will approve a Preliminary Official Statement, and will
adopt an ordinance authorizing the Bonds (the "Bond Ordinance") with such changes
as are requested by the Seller and its counsel. The Purchaser is authorized by Seller to
use these documents and the information contained in them in connection with the
public offering of the Bonds and the Final Official Statement in connection with the
sale and delivery of the Bonds.
2. Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) It has and will have at the Closing the power and authority to enter into and
perform this agreement, to adopt the Bond Ordinance and to deliver and sell the
Bonds to the Purchaser;
(b) This agreement and the Bonds do not and will not conflict with, or constitute or
create a breach or default under, any existing law, regulation, order or
agreement to which Seller is subject;
(c) No governmental approval or authorization other than the Bond Ordinance
which has not been obtained, or will not be obtained prior to closing, is
required in connection with the sale c the Bonds to the Purchaser;
(d) The Preliminary Official Statement with corrections, if any, noted by the Seller
and its counsel, as of its date and (except as to matters corrected in the Final
Official Statement) as of the Closing, is accurate and complete in all material
respects as of its date to the knowledge and belief of the officers and employees
of the Seller, after due review.
Honorable Mayor and City Council
City of Yakima
August 13, 1991
Page Two
(e) The Seller has previously provided the underwriters with a copy of its
Preliminary Official Statement dated August 2, 1991. As of its date, the
Preliminary Official Statement has been "deemed final" by the Seller for
purposes of S.E.C. Rule 15c2 -12(b)(1).
(f) The Seller agrees to cooperate with the Purchaser to permit the Purchaser to
deliver or cause to be delivered, within seven business days after any final
agreement to purchase, offer, or sell the securities and in sufficient time to
accompany any confirmation that requests payment from any customer of the
Purchaser, copies of a final Official Statement in sufficient quantity to comply
with paragraph (b)(4) of the Securities and Exchange Commission Rule 15c2-
12 and the rules of the Municipal Securities Rulemaking Board. The Purchaser
agrees to deliver three copies of the final Official Statement to a nationally
recognized municipal securities information repository on the business day on
which the final Official Statement is available, and in any event no later than
seven business days after the date hereof.
3. The Purchaser shall have the right to cancel the agreement contained herein to
purchase the Bonds by notifying the Seller of its election to do so if, after the
execution of this Contract of Purchase and prior to the Closing:
(a) a decision by a court of the United States or the United States Tax Court shall
be rendered, or a ruling or a regulation (final, temporary, or proposed) by or on
behalf of the Treasury Department of the United States, the Internal Revenue
Service or other governmental agency shall be issued and in the case of any
such regulation, published in the Federal Register, or legislation shall have
been introduced in, enacted by or favorably reported to either the House of
Representatives or the Senate of the United States, with respect to Federal
taxation upon interest received on bonds of the type and character of any of the
Bonds which, in the reasonable judgment of the Purchaser, materially adversely
affects the marketability of the Bonds or their sale by the Purchaser, at the
contemplated public offering prices; or
(b) the United States shall have become engaged in hostilities which have resulted
in declaration of war or national emergency, or other national or international
calamity or other event shall have occurred or accelerated to such an extent as,
in the reasonable opinion of the Purchaser, to have a materially adverse effect
on the marketability of the Bonds; or
(c) there shall have occurred a general suspension of trading on the New York
Stock Exchange; or
(d) a general banking moratorium shall have been declared by United States, New
York State or Washington State authorities; or
Honorable Mayor and City Council
City of Yakima
August 13, 1991
Page Three
(e) legislation shall hereafter be enacted, or actively considered for enactment,
with an effective date prior to the date of the delivery of the Bonds, or a
decision by a court of the United States shall hereafter be rendered, or a ruling
or regulation by the Securities and Exchange Commission or other
governmental agency having jurisdiction of the subject matter shall hereafter be
made, the effect of which is that
(1) the Bonds are not exempt from the registration, qualification or other
requirements of the Securities Act of 1933, as amended and as then in
effect, or the Securities Exchange Act of 1934, as amended and then in
effect, or
(2) The Bond Ordinance is not exempt from the registration, qualification
or other requirements of the Trust Indenture Act of 1939, as amended
and as then in effect, or
(0 a stop order, ruling or regulation by the Securities and Exchange Commission
shall hereafter be issued or made, the effect of which is that the issuance,
offering or sale of the Bonds, as contemplated herein or in the Final Official
Statement, is in violation of any provision of the Securities Act of 1933, as
amended and as then in effect, the Securities Exchange Act of 1934, as
amended and as then in effect, or the Trust Indenture Act of 1939, as amended
and as then in effect, and which, in its reasonable judgment, adversely affects
the marketability of the Bonds or the market price thereof.
4. The Purchaser's obligations hereunder are also subject to the following conditions:
(a) At or prior to the Closing Seller will deliver, make available to the Purchaser,
or have adopted:
(i) The Bonds, in definitive form and duly executed, or a temporary bond;
(ii) A certificate from an authorized officer of Seller, in form and substance
acceptable to the Seller and the Purchaser, stating that execution of the
Certificate shall constitute execution of the Final Official Statement by
Seller, that the Final Official Statement attached thereto, to the
knowledge and belief of such officers, after due review, does not
contain any untrue statement of a material fact or omit any statement or
information which is necessary to make the statements therein, in the
light of the circumstances under which made, not misleading, and that
the representations of the Seller contained in this agreement were true
and correct when made and are true and correct as of the Closing;
(iii) The approving opinion of Bond Counsel dated the Closing date;
(iv) Assignment to the Bonds of a rating of A by Moody's Investors Service.
Honorable Mayor and City Council
City of Yakima
August 13, 1991
Page Four
(v) The following documents executed by authorized officers of the Seller:
(a) A certificate, dated the day of the Closing to the effect that no
litigation or other proceedings are pending or threatened in any
way affecting the issuance, sale or delivery of, or security for,
any of the Bonds.
(b) A certificate setting forth the facts, estimates and circumstances
in existence on the date of Closing which establish that it is not
expected that the proceeds of the Bonds will be used in a
manner that could cause the Bonds to be "arbitrage bonds"
within the meaning of Section 148 of the Internal Revenue Code
and any applicable regulations thereunder.
(c) Such additional certificates, instruments or opinions or other
evidence as the Purchaser may deem reasonably necessary or
desirable to evidence the due authorization, execution,
authentication and delivery of the Bonds, the truth and accuracy
as of the time of the Closing of the Seller's representations and
warranties, and the conformity of the Bonds and Bond
Ordinance with the terms thereof as summarized in the Official
Statement, and to cover such other matters as it reasonably
requests.
(d) A certified copy of the Bond Ordinance.
5. Seller will pay the cost of preparing, printing and executing the bonds, the fees and
disbursements of Bond Counsel, bond registration and rating fees and expenses,
escrow trustee, escrow verification, the cost of printing and distributing the
Preliminary and Final Official Statements, travel and lodging expenses of Seller's
employees and representatives, and other expenses of Seller.
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of
preparation and filing of blue sky and legal investment surveys where necessary,
Purchaser's travel expenses, and other expenses of Purchaser. As a convenience to
Seller, Purchaser may from time to time, as Seller's agent, make arrangements for
certain items for which Seller is responsible hereunder, such as printing of the Official
Statement and travel or lodging arrangements for Seller's representatives.
Purchaser also may advance for Seller's account when appropriate the cost of such
items by making payments to third -party vendors. In such cases, Seller shall pay such
costs or expenses directly, upon submission of appropriate invoices by Purchaser, or
promptly reimburse Purchaser in the event Purchaser has advanced such costs or
expenses for Seller's account. It is understood that Seller shall be primarily responsible
for payment of all such items and that Purchaser may agree to advance the cost of such
items from time to time solely as an accommodation to Seller and on the condition that
it shall be reimbursed in full by Seller.
Honorable Mayor and City Council
City of Yakima
August 13, 1991
Page Five
6. This agreement is intended to benefit only the parties hereto, and Seller's
representations and warranties shall survive any investigation made by or for the
Purchaser, delivery and payment for the Bonds, and the termination of this Purchase
Contract. Should the Seller fail to satisfy any of the foregoing conditions or covenants,
or if the Purchaser's obligations are terminated for any reasons permitted under this
agreement, then neither the Purchaser nor the Seller shall have any further obligations
under this Purchase Contract, except that any expenses incurred shall be borne in
accordance with Section 5.
7. The Seller further agrees that: (1) the closing will take place August 29, 1991, (2) the
Seller will deposit $138,000 from the Water and Sewer Revenue Bond Fund, together
with bond proceeds, with Security Pacific National Bank ("Escrow Trustee") on
August 29, 1991 to purchase obligations (as shown on the attached Appendix B) to be
placed irrevocably in escrow to refund $2,920,000 of the City's Water and Sewer
Bonds, 1983 dated March 1, 1983, which bonds mature on March 1, 1994 through
March 1, 2003.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Respectfully submitted,
SEATTLE -NORTHWEST SECURI IIhS CORPORATION
By:
John M. Rose, Vice President
Accepted August 13, 1991
CITY OF YAKIMA, WAS GTON
'rector cif Finance and Budget
APPENDIX A
DESCRIPTION OF BONDS
(a) Purchase Price: $7,556,232.45 ($98.45254 per $100), plus accrued interest from the
dated date of August 1, 1991 to date of Closing.
(b) Denominations: $5,000, or integral multiples thereof.
(c) Form: Fully registered.
(d) Interest Payment Dates: March 1 and September 1, commencing March 1, 1992.
(e) Maturity Schedule: Bonds shall mature serially on March 1 of each year and bear
interest as follows:
Due Interest Due Interest
March 1 Amounts Rates March 1 Amounts Rates
1992 $ 165,000 4.75% 2000 $ 410,000 6.30%
1993 280,000 5.20 2001 430,000 6.40
1994 330,000 5.40 2002 420,000 6.50
1995 295,000 5.60 2003 330,000 6.60
1996 315,000 5.80 2004 355,000 6.70
1997 340,000 6.00 2005 380,000 6.80
1998 360,000 6.10 2006 405,000 6.90
1999 380,000 6.25
$2,480,000 7.00% Term Bonds due March 1, 2011
(f) Optional Redemption: The 1991 Bonds maturing in years 1992 through 2001,
inclusive, are not subject to redemption prior to maturity. The 1991 Bonds maturing
on or after March 1, 2002, are subject to redemption at the option of the City on and
after March 1, 2001, in whole at any time, or in part on any interest payment date
(maturities to be selected by the City and by lot within a maturity in such manner as
the Bond Registrar shall determine) at a price of par plus accrued interest, if any, to the
date of redemption.
(g) Mandatory Redemption: If not redeemed under the optional redemption provision set
forth above, the Bonds maturing in 2011 shall be called for redemption by lot (in such
manner as the Bond Registrar shall determine) at par plus accrued interest on March 1
in years and amounts as follows:
Dates Amounts
2007 $430,000
2008 460,000
2009 495,000
2010 525,000
2011 570,000
(h) Closing Date: With definitive Bonds or a temporary Bond, on August 29, 1991.
(i) Offer Expires: 11:00 p.m., August 13, 1991.
(j) Bond Counsel: Preston Thorgrimson Shidler Gates & Ellis.
For Information Purposes Only:
Net Interest Cost: 6.8662923%
Net Present Value Savings: $312,462
Net Present Value Savings as a
percent of Refunded Bonds: 10.70%
APPENDIX B
City of Yakima. Washington
Water and Sewer Revenue Bonds, 1991
COST OF CANDIDATES FOR ESCROW PORTFOLIO
DELIVERY DATE: 8/29/91
MATURITY PAR ACCRUED TOTAL
TYPE DATE COUPON AMOUNT PRICE COST INTEREST COST
TOTE 2/28/93 6.750000 3,015,000 100.781250 3,038,554.69 100,650.20 3,139,204.89
SUBTOTAL 3,015,000 3,038,554.69 100,650.20 3,139,204.89
BEGINNING CASH
COST OF SECURITIES
TOTAL COST OF ESCROW
109,050.48
3,139,204.89
3,248,255.37
RUNDATE: 08-09-1991 0 09:11:48 FILENAME: KEY:
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PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 2,1991
MOODY'S RATING: Applied For
NEW ISSUE (See the caption "RATING" herein)
In the opinion of Bond Counsel, interest on the 1991 Bonds is excluded from gross income subject to federal
income taxation pursuant to the Internal Revenue Code of 1986, as amended, subject to certain conditions and
assumptions described herein under "TAX EXEMPTION." The 1991 Bonds are not private activity bonds. Interest
on the 1991 Bonds is included in the computation of certain federal taxes on corporations.
$7,635,000*
CITY OF YAKIMA, WASHINGTON
SECOND LIEN WATER AND SEWER REVENUE BONDS, 1991
DATED: August 1,1991 DUE: March 1, as shown below
The 1991 Bonds will be issued as registered bonds in denominations of $5,000, or integral multiples
thereof. Interest on the Bonds will be paid on March 1, 1992 and semiannually thereafter on
March 1 and September 1 of each year. Interest on the 1991 Bonds shall be paid by check or draft
mailed to the registered owners at the addresses appearing on the Bond Register on the 15th day of
the month preceding each interest payment date. Principal of the 1991 Bonds shall be payable upon
presentation and surrender of the 1991 Bonds by the registered owners at the principal office of
either fiscal agency of the State of Washington in Seattle, Washington or New York, New York.
Due Interest Yield Or Due Interest Yield Or
March 1 Amounts* Rates Price March 1 Amounts* Rates Price
1992 $165,000 2002 $370,000
1993 280,000 2003 330,000
1994 330,000 2004 355,000
1995 295,000 2005 380,000
1996 315,000 2006 405,000
1997 340,000 2007 430,000
1998 360,000 2008 460,000
1999 385,000 2009 495,000
2000 410,000 2010 525,000
2001 435,000 2011 570,000
(Plus accrued interest from August 1, 1991)
The City has designated the 1991 Bonds as Qualified Tax -Exempt Obligations for banks, thrift
institutions and other financial institutions. See the caption "TAX EXEMPTION" herein for a
discussion of this designation.
The 1991 Bonds maturing on or after March 1, 2002, are subject to redemption prior to their stated
maturities at the option of the City on March 1, 2001, or on any interest payment date thereafter, in
whole at any time, or in part on any interest payment date, at 100% of the principal amount thereof,
plus accrued interest to the date of redemption, as more fully set forth herein.
The 1991 Bonds are issued junior to the City's $6,635,000 Outstanding First Lien Water and Sewer
Revenue Bonds and are payable solely from and secured by the Revenue of the System after all
required payments for the Costs of Maintenance and Operation and the First Lien Parity Bonds
have been made or duly provided for. For so long as the 1991 Bonds are outstanding, no bonds may
be issued subsequent to the issuance of the 1991 Bonds with a lien and charge on the Gross
Revenues superior to the lien and charge of the 1991 Bonds.
The 1991 Bonds are offered when, as and if issued and received by the Underwriter, subject to the
approval of legality by Preston Thorgrimson Shidler Gates & Ellis, Seattle, Washington, Bond
Counsel. The 1991 Bonds will be ready for delivery in Seattle, Washington or at the facilities of The
Depository Trust Company in New York, New York on or about August 29, 1991.
* Preliminary, subject to change
Dated:
Seattle -Northwest Securities Corporation
CITY OF YAKIMA, WASHINGTON
Elected Officials
City Council Term Expires
Patricia Berndt, Mayor
Lynn Buchanan, Assistant Mayor
Clarence Barnett
Henry Beauchamp
George Pechtel
Lee "Skip" Semon
Bernard Sims
Richard Zais, Jr.
Frederick Stouder
Jerry Copeland
John Hanson
Karen Roberts
John Vanek
Dennis Covell
Chris Waarvick
Certain Appointed Officials
December 31, 1991
December 31, 1991
December 31, 1991
December 31, 1993
December 31, 1991
December 31, 1993
December 31, 1993
City Manager
Assistant City Manager
Director of Public Works
Director of Finance & Budget
City Clerk
City Attorney
Director of Engineering & Utilities
Wastewater Superintendent
Bond Counsel
Preston Thorgrimson Shidler Gates & Ellis
Seattle, Washington
Consulting Engineer
HDR Engineering, Inc.
Bellevue, Washington
No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to
give any information or to make any representations other than those contained in this Official
Statement, and, if given or made, such other information or representations must not be relied upon
as having been authorized by any of the foregoing. This Official Statement does not constitute an
offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any
person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or
sale.
The information set forth herein is not guaranteed as to accuracy or completeness and is not to be
construed as a representation by the Underwriter. The information herein is subject to change
without notice and neither the delivery of this Official Statement nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in the affairs of the
City since the date hereof.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF SUCH BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
i
TABLE OF CONTENTS
Paye
Certain Definitions .iii
Description of the Bonds 1
Principal Amount, Date, Interest Rates and Maturities 1
Optional Redemption 1
Notice of Redemption 2
Form and Denomination 2
Paying Agent 2
Purpose and Application of 1991 Bond Proceeds 2
Refunding Plan 2
Procedure 2
Verification of Mathematical Calculations 2
Source and Uses of Funds 3
Security for the 1991 Bonds 3
Pledge of Revenues 3
Bond Fund 3
Interest Account 3
Serial Bond Principal Account 4
Reserve Account 4
Flow of Funds Under the Bond Ordinance 4
Rate Covenant 4
Additional Bonds .5
Certain Other Bond Covenants in the Bond Ordinance 5
Debt Service Requirements 6
The City of Yakima 6
The Water System 7
Residential 7
Commercial 7
Industrial 7
Governmental 7
City (All Departments) 7
Water Service Charges 7
The Sewerage System .9
Sewer Service Charges 9
Number of Water Customers 10
Number of Sewer Customers 10
Major Water Customers 10
Combined Operating Statement 11
Balance Sheet 12
Projected Operating Results 13
General and Economic Information 14
Litigation 18
Approval of Counsel 18
Tax Exemption 18
Rating 20
Underwriting 20
Official Statement 20
Consulting Engineer's Report Appendix A
ii
CERTAIN DEFINITIONS
Certain words and phrases used in Ordinance No. 3380 (the "Bond Ordinance") and in this Official
Statement have the meanings set forth below, unless the context shall clearly indicate than another
meaning is intended:
"Additional Bonds" means any revenue bonds, revenue warrants or other revenue obligations
which may be issued in the future on a parity of lien with the 1991 Bonds and any other Second Lien
Parity Bonds.
"Assessment Income" means the principal of and interest on special assessments levied in any
utility local improvement district pledged to be paid into the Bond Fund. Assessment Income shall
be allocated to the years in which it would be received if the unpaid balance of each assessment roll
were paid in the remaining number of installments with interest on the declining balance at the
times and at the rate provided in the ordinance confirming the assessment roll.
'Assessments" means any special assessments which may be levied in any utility local improvement
district of the City created for the acquisition, construction or installation of additions and
improvements or extensions of the System, if such assessments are pledged to be paid into a revenue
bond fund to pay and secure the payment of any Second Lien Parity Bonds.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of all
interest and principal to be paid on outstanding Bonds from the date of determination to the last
maturity date of such Bonds, by (b) the number of Fiscal Years or calendar years from and including
the Fiscal Year or calendar year in which the determination is made to the last Fiscal Year or
calendar year in which the sum of (i) the principal amount of Serial Bonds maturing in such Fiscal
Year plus (ii) the Sinking Fund Requirement for such Fiscal Year, exceeds 4% of the principal
amount of Bonds outstanding as of the date of determination.
"City" means the City of Yakima, Washington, a municipal corporation duly organized and existing
under and by virtue of the laws of the State of Washington and the Charter of the City.
"Costs of Maintenance and Operation" means all normal operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, and insurance and
administrative expense, and reasonable pro -rata budget charges for services provided to the System
by City departments, but excludes depreciation, payments for debt service or into reserve accounts,
costs of capital additions to or replacements of the System, municipal taxes, or payments to the City
in lieu of taxes.
Tirst Lien Parity Bonds" means:
Issue
Water and Sewer Revenue Bonds, 1964
Water and Sewer Revenue Bonds, Series B
Water and Sewer Revenue Bonds, 1978
Water and Sewer Revenue Bonds, 1983
Amount
Date of Issue Outstanding
January 1, 1964
December 1, 1968
December 1, 1978
March 1, 1983
$ 285,000
2,535,000
3,500,000
315,000
Authorizing
Ordinance
475
1071
2231
2677
"Gross Revenues" means all earnings, revenue and moneys received by the City from or on account
of the operations of the System, from any source whatsoever.
"Maximum Annual Debt Service" means the maximum amount of Annual Debt Service that will
become due in any fiscal year on the Bonds then outstanding.
"Net Revenues" means the Gross Revenues of the System less the Costs of Maintenance and
Operation.
"1991 Bonds" means the City of Yakima, Second Lien Water and Sewer Revenue and Refunding
Bonds, 1991, in the aggregate principal amount of $7,635,000.
iii
"Outstanding" means, in connection with First Lien or Second Lien Bonds, as of the time in
question, all bonds issued except (a) bonds theretofore paid and cancelled or having matured or been
called for redemption, payment has been provided therefor, or bonds which have been defeased in
accordance with their authorizing ordinance and state law.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by the City
having a favorable reputation for skill and experience with facilities of comparable size and
character to the System in such of the following as are relevant to the purposes for which they are
retained: (a) engineering and operations and (b) the design of rates.
"Reserve Account" means the Bond Reserve Account created in the Bond Fund by Ordinance No.
3380.
"Reserve Account Requirement" means the Maximum Annual Debt Service of all Second Lien
Parity Bonds Outstanding. In the case of Variable Rate Bonds, the interest rate thereon shall be
calculated on the assumption that such Variable Rate Bonds will bear interest at a. rate equal to the
higher of (a) the rate most recently reported by the "Bond Buyer" as the Bond Buyer's Index for long-
term revenue bonds or (b) a rate equal to x+y where x represents the average rate of interest borne
by such Variable Rate Bonds in the twelve months preceding the date of calculation qr in the case of
newly issued Variable Rate Bonds the initial rate of interest borne by such Bonds and y represents
one-half the difference between the Maximum Interest Rate applicable to such Variable Rate Bonds
and x; provided that in no event shall such assumed Variable Rate exceed the Maximum Interest
Rate and provided further that if on such date of calculation the interest rate on such Bonds shall
then be fixed to maturity, the interest rate used for such specified period for the purpose of the
foregoing calculation shall be such actual interest rate.
"Second Lien Parity Bonds" means any revenue bonds, revenue warrants or other revenue
obligations issued by the City which have a lien upon the Gross Revenues of the System to pay and
secure the payment of the principal thereof and interest thereon equal to the lien created upon the
Gross Revenues of the System to pay and secure payment of the principal of and interest on the 1991
Bonds. "Second Lien Parity Bonds" includes the 1991 Bonds, and any Additional Bonds.
"System" means the combined water and sewerage system of the City as it now exists, as it shall be
added to and improved and extended with the proceeds of sale of the 1991 Bonds, and as it may be
later added to, extended and improved for as long as any First Lien Parity Bonds or any Second Lien
Parity Bonds remain outstanding.
iv
OFFICIAL STATEMENT
CITY OF YAKIMA, WASHINGTON
$7,635,000*
SECOND LIEN WATER AND SEWER REVENUE BONDS, 1991
The City of Yakima, Washington (the "City"), a first-class charter city duly organized and existing
under and by virtue of the laws of the State of Washington, furnishes this Official Statement in
connection with the offering of $7,635,000* principal amount of Second Lien Water and Sewer
Revenue Bonds, 1991 (the "1991 Bonds"). This Official Statement, which includes the cover page
and appendices, provides information concerning the City, the 1991 Bonds, and the City's combined
water and sewerage system (the "System").
Issuance of the 1991 Bonds is pursuant to the Revised Code of Washington, Chapter 35.92, and to
Ordinance No. 3380 adopted by the City Council on July 16, 1991 (the "Bond Ordinance")
authorizing the issuance of the 1991 Bonds.
The 1991 Bonds are issued junior to the following First Lien Parity Bonds of the City currently
outstanding in the amounts shown below:
Issue
Amount
Outstanding
Water and Sewer Revenue Bonds, 1964 $ 285,000
Water and Sewer Revenue Bonds, 1968 Series B 2,535,000
Water and Sewer Revenue Bonds, 1978 3,500,000
Water and Sewer Revenue Bonds, 1983 315,000
Certain of the capitalized words and phrases used in this Official Statement have the meanings as
defined in the Bond Ordinance or other contractual documents, unless the context shall clearly
indicate that another meaning is intended. Certain of these capitalized items are defined in the
section, "Certain Definitions" herein.
DESCRIPTION OF THE BONDS
Principal Amount. Date. Interest Rates and Maturities
The 1991 Bonds will be issued in the principal amount of $7,635,000* and will be dated August 1,
1991 and will mature on the dates and in the amounts shown on the cover page of this Official
Statement. Interest on the 1991 Bonds will be paid commencing on March 1, 1992 and semiannually
thereafter on March 1 and September 1 of each year to the date of maturity or prior redemption.
Optional Redemption
The 1991 Bonds maturing in the years 1992 through 2001 shall not be subject to redemption prior to
their stated dates of maturity. The 1991 Bonds maturing on or after March 1, 2002 shall be subject
to redemption prior to their stated maturities at the option of the City, on March 1, 2001 or on any
interest payment date thereafter, in whole at any time, or in part on any interest payment date
(maturities to be selected by the City and by lot within a maturity), at 100% of the principal amount
thereof plus accrued interest to the date of redemption.
*Preliminary, subject to change
1
Notice of Redemption
Notice of redemption will be given not less than 30 nor more than 60 days prior to the redemption
date by first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the
address appearing on the Bond Register. Interest on the 1991 Bonds called for redemption shall
cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed
when presented pursuant to the call. The City reserves the right and option to purchase any or all of
the 1991 Bonds in the open market at any time at a price not in excess of par plus accrued interest to
the date of purchase.
Form and Denomination
The 1991 Bonds will be issued in fully -registered form without coupons. The 1991 Bonds will be
issuable in the denomination of $5,000, or any integral multiple thereof.
Paying Agent
Principal of and interest on the 1991 Bonds will be payable by either fiscal agency of the State of
Washington in Seattle, Washington or New York, New York.
PURPOSE AND APPLICATION OF 1991 BOND PROCEEDS
The new money portion of the 1991 Bonds ($4,500,000) is being issued to provide funds necessary to
acquire, construct and install certain additions and improvements to the combined water and
sewerage system of the City. A detailed description of the improvements in included in Appendix A.
The proceeds from the sale of the refunding portion ($3,135,000) of the 1991 Bonds will be used to
refund $2,920,000 of the City's Water and Sewer Bonds, 1983 dated March 1, 1983, which bonds
mature on March 1, 1994 through March 1, 2003, (the "Refunded Bonds"). The Refunded Bonds will
be escrowed to their call date of March 1, 1993, at which time they will be called at a price of 102.
The refunding portion of the Bonds is being issued for the purpose of realizing a debt service savings.
REFUNDING PLAN
Procedure
From the proceeds of the 1991 Bonds, and with other monies available, the District will purchase
certain direct United States Government obligations, including obligations of the State and Local
Government Series (:referred to herein as "Acquired Obligations"). These Acquired Obligations will
be deposited in the custody of Security Pacific National Bank ("Escrow Trustee"). The maturing
principal of the Acquired Obligations, interest earned thereon, and necessary cash balance, if any,
will provide payment of:
(a) Interest on the Refunded Bonds through March 1, 1993; and
(b) On March 1, 1993, the principal of the Refunded Bonds maturing in the years 1994
through 2003.
The Acquired Obligations, interest earned thereon, and necessary cash balance, if any, will
irrevocably be pledged to and held in trust for the benefit of the owners of the Refunded Bonds by the
Escrow Agent, pursuant to an escrow deposit agreement to be executed by the District and the
Escrow Agent.
Verification of Mathematical CakulatiQns
The mathematical accuracy of (a) the mathematical computations of the adequacy of the maturing
principal amounts of and interest on the Acquired Obligations to be held by the Escrow Trustee to
pay all principal and interest on the Refunded Bonds to the maturity or mandatory bond sinking
fund redemption dates as described above, and (b) the mathematical computations supporting the
conclusion of Bond Counsel that the Bonds are not "arbitrage bonds" under Section 148 of the
Internal Revenue Code of 1986 will be verified by Coopers & Lybrand, certified public accountants.
2
SOURCES AND USES OF FUNDS*
Sources and uses of funds related to the 1991 Bonds (less accrued interest) are estimated as follows:
Sources of Funds
1991 Bonds $ 7,635,000
Transfer from 1983 Bond Fund
Interest Account 138,000
Reserve Account 280,000
Transfer from 1968B Bond Fund 50.000
Total Sources $ 8.103.000
Uses of Funds
Project Costs $ 4,250,000
Refunding Escrow Investments 3,203,745
1991 Bond Fund Reserve Account 490,000
Issuance Expenses 46,589
Underwriter's Discount 106,890
Contingency 5.776
Total Uses $ 8.103.000
*Preliminary
SECURITY FOR THE 1991 BONDS
Pledge of Revenues
The principal of and interest on the 1991 Bonds are secured by a pledge of Revenue of the System
equal to the pledge of the Outstanding Second Lien Parity Bonds, subject only to the payment of the
Costs of Maintenance and Operation of the System and the required payments into the Prior Lien
Revenue Bond Fund. The City has covenanted that, so long as the 1991 Bonds are outstanding, no
bonds may be issued subsequent to the issuance of the 1991 Bonds with a lien and charge on the
Gross Revenues superior to the lien and charge of the 1991 Bonds.
The 1991 Bonds are not general obligations of the City, and the full faith and credit of the City is not
pledged for the payment thereof.
Bond Fund
The Bond Ordinance refers to a fund known as the "Second Lien Water and Sewer Revenue Bond
Fund" (the "Bond Fund") solely for the purpose of paying the principal of, premium, if any, and
interest on the 1991 Bonds and any other Second Lien Parity Bonds, of retiring the Second Lien
Parity Bonds prior to maturity as specified in the Bond Ordinance and of paying any reimbursement
obligation with respect to any credit enhancement device providing additional security for any
variable rate bonds. Said Revenue Bond Fund consists of an Interest Account, Serial Bond Principal
Account, Term Bond Principal Account, and a Reserve Account.
Interest Account
An Interest Account has been created in the Bond Fund for the purpose of paying the interest on the
1991 Bonds and any Second Lien Parity Bonds.
As long as any of the 1991 Bonds remain outstanding, the City has irrevocably obligated, pledged
and bound itself to set aside and pay from the Net Revenue of the System into the Debt Service
Account, those amounts necessary, together with such other funds as are on hand and available in
the Debt Service Account, to pay installments of interest, next coming due on the 1991 Bonds and
other Second Lien Parity Bonds.
3
A Serial Bond Principal Account has been created in the Bond Fund for the purpose of paying the
principal of Serial Bonds as the same shall mature and come due.
As long as any of the 1991 Bonds remain outstanding, the City has covenanted to transfer to the
Serial Bond Principal Account amounts sufficient to equal the installment of principal next falling
due on the Serial Bonds.
Reserve Account
A Reserve Account has been created in the Bond Fund for the purpose of securing the payment of the
principal of and interest on the 1991 Bonds and anyother Second Lien Parity Bonds. The City will
deposit an amount into the Reserve Account simutaneously with the issuance and delivery of the
1991 Bonds sufficient, together with the money already on deposit therein, to equal the Reserve
Account Requirement.
The City covenants and agrees that it will within five years of the date of issuance of the 1991 Bonds
pay into such Reserve Account out of the money in the Revenue Fund and/or out of other moneys it
may have on hand from time to time and legally available for such payments amounts sufficient to
equal the Maximum. Annual Debt Service for all Outstanding Second Lien Parity Bonds. Each
ordinance providing for the issuance of Additional Bonds shall provide for payments into the Bond
Fund for credit to the Reserve Account from any other moneys lawfully available thereafter.
The balance in the Bond Fund Reserve Account as of December 31, 1990 was $1,177,633.
Flow of Funds Under the Bond Qrdinance
The City has obligated and bound itself to pay into the Revenue Fund the Gross Revenues of the
System. The Gross Revenues of the System deposited therein shall be used only for the following
purposes and in the following order of priority:
First, to pay the Costs of Maintenance and Operation of the System;
Second, to make all required payments into the First Lien :Revenue Bond Fund;
Third, to pay the interest on the Second. Lien Parity Bonds;
Fourth, to pay the principal of the Second Lien Parity Bonds;
Fifth, to make all payments required to be made into any Reserve Account created to secure the
payment of the Second Lien Parity Bonds;
Sixth, to make all payments required to be made into any other revenue bond redemption fund
or debt service account or reserve account created to pay and secure the payment of the principal
of and interest on any revenue bonds of the City having a lien upon the Gross Revenues of the
System junior and inferior to the lien thereon for the payment of the principal of and interest on
the Second Lien Parity Bonds;
Seventh, to retire by redemption or purchase in the open market any outstanding revenue bonds,
of the City, to make necessary additions, improvements and repairs to or extensions and
replacements of the System, or for any lawful City purposes.
Rate Covenant
The City has covenanted in the Bond Ordinance to establish, maintain and collect rates and charges
for the use of the services and facilities and all commodities sold, furnished or supplied by the
System which shall be fair and nondiscriminatory and shall adjust such rates and charges from time
to time so that the Gross Revenues of the System will at all times be sufficient to pay (a) Costs of
Maintenance and Operation of the System, (b) to pay the principal of, premium, if any, and interest
on the First Lien Parity Bonds and the Second Lien Parity Bonds, as and when the same shall
become due and payable, (c) to make adequate provision for the payment of any Term Bonds, (d) to
make when due all payments which the City is obligated to make into the Reserve Account and all
other payments which the City is obligated to make pursuant to the Bond Ordinance, and (e) to pay
4
all taxes, assessments or other governmental charges lawfully imposed on the System or the revenue
therefrom or payments in lieu thereof and any and all other amounts which the City may now or
hereafter become obligated to pay from the Gross Revenues by law or contract; and the Net
Revenues (together with Assessments collected) in each Fiscal Year will be at least equal to 1.40
times the Average Annual Debt Service calculated as of December 31 of the preceding calendar year.
Additional. Bonds
The City may issue Second Lien Parity Bonds upon compliance with the following conditions:
1. At the time of the issuance of such Parity Bonds, there shall be no deficiency in the
Bond Fund.
2. In each ordinance authorizing such Second Lien Parity Bonds, provision shall be made
for payments into the Reserve Account in accordance with the Bond Ordinance.
3. At the time of the issuance of such Second Lien Parity Bonds, the City shall have on file
a certificate from the Professional Utility Consultant, not then employed by the City
except for the purpose of giving such certificate, showing that the Net Revenue received
during any consecutive 12 -month period for which financial statements are available
within the 24 months preceding the date of delivery of such Second Lien Parity Bonds
equals at least 1.40 times the Average Annual Debt Service in each calendar year or
Fiscal Year thereafter on the then -Outstanding First Lien Parity Bonds, Second Lien
Parity Bonds, and the Additional Bonds to be issued, and that the Adjusted Net
Revenues to be received each calendar year or Fiscal Year thereafter, will equal at least
1.40 times the Average Annual Debt Service each such calendar year or Fiscal Year, on
the Outstanding Second Lien Parity Bonds and the Additional Bonds to be issued.
The Adjusted Net Revenues shall be the Net Revenues for a period of any twelve consecutive months
out of the twenty-four months immediately preceding the date of delivery of such proposed
Additional Bonds, as adjusted to take into consideration changes in Net Revenues estimated to occur
under certain conditions designated in the Bond Ordinance for each year after such delivery for so
long as any Bonds, including the Additional Bonds proposed to be issued, shall be outstanding.
Certain Other Bond Covenants in the Bond Ordinance
Certain other covenants in the Bond Ordinance include:
1. The City shall at all times maintain, preserve and keep the properties of the System in
good repair, working order and condition and will from time to time make all necessary
and proper repairs, renewals, replacements, extensions and betterments thereto, so that
at all times the business carried on in connection therewith will be properly and
advantageously conducted and the City will at all times operate or cause to be operated
said properties of the System and the business in connection therewith in an efficient
manner and at a reasonable cost.
2. The City will not sell or otherwise dispose of the System in its entirety unless
simultaneously with such sale or other disposition provision is made for payment into the
Bond Fund of cash or Government Obligations sufficient to pay the principal of and
interest on ali then Outstanding Bonds and Additional Bonds, nor will it sell or otherwise
dispose of any part of the useful operating properties of the System unless such facilities
are replaced or provision is made for payment into the Bond Fund of the amount set forth
in the Bond Ordinance.
3. The City will not at any time create or permit to accrue or to exist any lien or other
encumbrance or indebtedness upon the System or the Revenue of the System, or any part
thereof, other than reasonable and nominal Costs of Maintenance and Operation, prior or
superior to the lien thereon for the payment of the Outstanding First Lien Parity Bonds,
the 1991 Bonds and any Additional Bonds, and will pay and discharge, or cause to be paid
and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid
might become a lien or charge upon the Revenue of the System, or any part thereof, prior
to or superior to the lien of the Outstanding First Lien Parity Bonds, the Bonds and any
Additional Bonds, or which might impair the security of the Parity Bonds.
5
4. The City shall keep proper books of account which shall be kept in accordance with any
applicable rules, regulations and statutes prescribed by the State of Washington.
5. The City will not furnish or supply or permit the furnishing or supplying of any service or
facility furnished by or in connection with the operation of the System, free of charge to
any person, firm or corporation, public or private, so long as any Bonds are outstanding
and unpaid.
DEBT'ER'ICE REQUIREMENTS
The following table shows debt service on the 1991 Bonds and the First Lien Parity Bonds.
First Lien
Parity
Year Bonds
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$ 768,914
773,826
600,026
659,526
660,586
665,556
663,956
661,144
661,909
661,249
658,929
660,726
387,956
384,788
385,662
390,263
388,269
0
0
$ 10.033.285
Schedule of Debt Service Requirements
for the Outstanding Bonds and the Bonds
This Issue - Second Lien Parity Bonds*
Principal Interest Total
$ 165,000
280,000
330,000
295,000
315,000
340,000
360,000
385,000
410,000
435,00(}
370,000
330,000
355,000
380,000
405,000
430,000
460,000
495,000
525,000
_5Z(.00(1
$ 7.635.00(1
$ 536,930
483,835
467,410
449,927
432,228
412,565
391,035
367,748
342,500
315,242
288,895
265,630
242,505
217,325
190,040
160,707
129,220
95,317
59,108
20,235
$ 701,930
763,835
797,410
744,927
747,228
752,565
751,035
752,748
752,500
750,242
658,895
595,630
597,505
597,325
595,040
590,707
589,220
590,317
584,108
590.235
$ 5.868.402 $ 13.503.402
* Preliminary, subject to change; assumed interest rates range from 5.00% to 7.10%
Total
Debt
Service
$ 1,470,844
1,537,661
1,397,436
1,404,453
1,407,814
1,418,121
1,414,991
1,413,892
1,414,409
1,411,491
1,317,824
1,256,356
985,461
982,113
980,702
980,970
977,489
590,317
584,108
590,235
$ 23.536.61
THE CITYOF YAKIMA
The City of Yakima was incorporated in 1886 and operates as a first class charter city under the
Council Manager form of government. It is the sixth largest city in the State of Washington, and
encompasses 13 square miles. The City Council consists of seven Council members, four of whom
are elected from separate districts, and three elected at large. The Mayor is chosen by the Council
from within its own membership every two years.
The City provides the full range of municipal services contemplated by charter or statute. These
include public safety (police, fire building), public improvements (streets, traffic signals, storm
sewer), sanitation (solid waste disposal, sanitary sewer utility), water utility, community
development, parks and recreation, andeneral administrative services. The City employs 532
people, including temporary, part-time workers.
6
THE WATER SYSTEM
The City of Yakima's water supply is from the Naches River. Water is treated prior to delivery at
the water treatment plant. The City has four high production wells to back up its gravity surface
supply system. The Nob Hill Water Association serves a portion of the western part of the urban
area. A number of the commercial and industrial facilities in Yakima take their source of cooling
water supply directly from shallow wells. Both the Town of Union Gap and the area within the
Terrace Heights Sewer District utilize groundwater as their source of water supply.
Residential
The residential customer class includes both single-family and multi -family. This class uses 52
percent of the total water produced. Within the City, approximately 85 percent of all residential
customers have irrigation water supplied from a separate irrigation system. Only one percent of
potable residential water use is for irrigation.
Commercial
The commercial customer class uses approximately 29 percent of the water produced. Commercial
users are shopping centers, banks, office complexes, motels and other businesses. The commercial
monthly demand is generally uniform throughout the year.
Industrial
Industrial customers account for nine percent of total water produced. Industrial customers are
primarily the fruit and vegetable processing industries with summer use generally being twice the
monthly average.
Governmental
The governmental group of users includes the state, federal and county facilities. Water use by this
group accounted for three percent of the total water produced.
City (All Departments)
This group includes schools and all City departments using approximately seven percent of all water
consumed. Nearly 90 percent of this group's total use is for irrigation during the summer.
Water Service Charges
Effective July 1, 1991, the following charges became effective for water service. This schedule
includes an overall two percent increase in charges over the prior schedule effective January 17,
1986.
Residential
The charge for domestic water supplied consists of a ready -to -serve charge and a charge for water
consumed as follows:
One-month Two-month
Ready -to -serve charges: Period Period
Meter Size
3/4' and smaller $ 1.56 $ 1.56
1' 2.36 3.12
11/2" 4.67 7.78
2" 9.32 17.10
3" 23.28 45.01
4" 37.24 72.94
6" 83.78 166.01
8" 148.92 294.75
10" 232.68 462.26
12" 335.05 667.03
7
Charges for water consumed per one hundred cubic feet:
First 600 cu. ft. $ .78
Next 600 cu. ft. (700-1,200 cu. ft.) .87
Next 800 cu. ft. (1,300-2,000 cu. ft.) .68
Next 23,000 cu. ft. (2,100-25,000 cu. ft.) .52
Next 25,000 cu. ft. (25,100-50,000 cu. ft.) .42
Over 50,000 cu. ft. .25
The minimum charges for domestic water supplied is as follows:
One-month Two-month
Period Pez
Meter Size
3/" and smaller $ 3.90 $ 6.24
1,f 4.70 7.80
11/2" 7.01 12.46
2" 11.66 21.78
3" 25.62 49.69
4" 39.58 77.62
6" 86.12 170.69
8" 151.26 299.43
10" 235.02 466.94
12" 337.39 671.71
Bulk Rate for Municipal Purposes
Charges for the City's water used for filling swimming pools in City parks, irrigation purposes is:
First 5,000 cu. ft. 210 per 100 cu. ft.
Over 5,000 cu. ft. 110 per 100 cu. ft.
Irrigation Rate on Domestic Water
Domestic water may be delivered to consumers during the irrigation season at a special irrigation
rate, computed as follows:
An amount equal to the maximum water meter reading taken during the previous non -
irrigation season shall be charged under the regular domestic water rates. All water used
on premises inside the city limits in excess of such maximums usage during the previous
non -irrigation season shall be charged during the irrigation season at the rate of twenty-
one cents per one hundred cubic feet and all water used on premises outside the city limits
in excess of such maximum usage during the previous non. -irrigation season shall be
charged during the irrigation season at a rate of twenty-five cents per one hundred cubic
feet, provided, the rate for domestic water consumed by the State of Washington or any
agency thereof, or any municipal corporation of a classification other than that charging
the bulk rate as provided by the Rate Ordinance and used exclusively for irrigation
purposes on property owned or occupied by such consumers shall be twenty-one cents per
one hundred cubic feet, regardless of whether the property served is situated within or
without the corporate limits of the City of Yakima.
Fire Service
Fire service charges for each active fire service area are as follows:
Inside Outside
Size of Service City City
2" $ 3.57 $ 7.14
3" 4.75 9.50
4" including hydrant only 7.14 14.28
6" including hydrant only 9.52 19.04
8" 14.28 28.56
10" 19.03 38.06
8
THE SEWERAGE SYSTEM
Yakima treats wastewater for the City and the surrounding urbanized area, currently serving a
population of about 70,000.
Yakima has two sewage collection and treatment systems, one for wastewater from food processing
industries and one for other wastewater. The wastewater from food processing industries is
collected and sprayed on 96 acres of land. All other wastewater is treated at the Regional
Wastewater Treatment Plant.
The City of Yakima operates a progressive sewer utility serving the health, welfare, and safety needs
of the community and providing treatment to prevent stream pollution. In 1936 the City constructed
a primary treatment plant. Improved control of water pollution was accomplished by separation of
industrial and domestic sewage in 1955. Sewage treatment was further enhanced in 1965 by the
addition of trickling filter biological treatment.
During the period of 1974 through 1982, the City accepted regional responsibility for protecting the
environment by agreeing to provide regional wastewater treatment. A program costing more than
$33,000,000 with federal, state, and local funds, was completed that collects sewage from outlying
areas and expanded the treatment plant. The investment made by Yakima in wastewater collection
facilities and treatment is worth over $100,000,000.
Sewer Service Chartres
Effective January 1, 1990, the following charges became effective for sewer service. This schedule
includes an overall 16% increase over the prior schedule effective January 1, 1989. Effective
January 1, 1992, rates will increase by 8.5% over current rates.
Sewer service charge is calculated and charged on a ready -to -service basis for all customers other
than multiple -unit residential customers as follows:
Water
Meter Size
3i4�
11/
2
3"
4"
6"
8"
10"
Monthly Charge Bimonthly Charge
$ 5.73
9.92
16.88
25.22
44.71
72.52
142.11
253.45
406.53
$ 11.46
19.84
33.76
50.44
89.42
145.04
284.22
506.90
813.06
Multiple -unit Residential Customers. The monthly ready -to -serve charge is two dollars and ninety-
six cents per account plus two dollars and seventy-eight cents per dwelling unit.
Volume Charge. For all customers, the volume charge is one dollar and one cent per hundred cubic
feet of water consumption.
Rate to Property Outside City. For customers located outside the City, a surcharge amounting to
fifty percent is applied to the billings calculated in accordance with the rates for inside -city
customers, except that such surcharge shall not be applied to the strong waste surcharge.
Strong Waste Surcharge. For commercial and industrial customers discharging wastewater which
contains more than three hundred parts per million of biochemical oxygen demand (BOD) and/or
suspended solids (SS) there shall be a surcharge, in addition to the ready -to -serve charge and the
volume charge, which shall be calculated utilizing the national average values of BOD and SS
concentrations typical to each classification under the Standard Industrial Code or by actual
concentrations verified by the City. If the commercial industrial customer chooses at its expense to
install a sampling station, the strong waste charge is calculated based upon actual concentrations.
The following formula is utilized to calculate the strong waste charge:
9
Monthly Surcharge =
(Unit costs per pound of BOD or SS) times (weight of one gallon
of water) times (customer's flow in one hundred cubic feet
divided by one thousand three hundred thirty-seven per month)
times (customer's concentration of BOD or SS in parts per
million minus three hundred per the national average values or
verified concentrations)
In the foregoing formula:
Unit cost per pound for BOD =
Unit cost per pound for
Weight of one gallon of water =
Septage Charge. A charge of $.031 per gallon
wastewater treatment plant.
Commercial/
Year Residential
1991*
1990
1989
1988
1987
14,255
14,296
14,285
14,242
14,160
* As of February 12, :1991
Year
1991*
1990
1989
1988
1987
$ .08 pound
.02 pound
8.34 pounds.
is paid for septic tank waste dumped at the
CITY OF YAKIIVIA
NUMBER OF° WATER CUSTOMERS
Indus rial
1,057
1,066
1,056
1,045
1,037
All
Government Irrigation Other Total
18 241 13 15,584
18 231 13 15,624
18 226 15 15,600
18 177 52 15,534
18 177 14 15,406
CITY OF YAKIMA
NUMBED OF SEWER CUSTOMERS
Commercial/
Residen ial
17,220
17,103
17,017
16,418
15,927
* As of February 12, 1991
Customer
Mueller Hop
Products
Red Lion Inn
Town Plaza
Sewage Treat
-ment Plant
Boise Cascade
Del Monte
Corp.
]ndus'trial Governmett Other
1,143 23
1,142 23
1,121 23
1,070 22
1,044 23
CITY OF YAKIMA
,MMA fOR WATER LUST
_ 1987
Amount 100
Billg4 Cu. Ft.
$10,840 9,269
24,934 13,940
18,344 15,051
8,291 14,012
70,084 262,370
22,849 58,714
Total
7 18,393
7 18,275
7 18,168
7 17,5:17
7 17,001
1988 1989 1990 _
Amount 100 Amount 100 Amount 100
Billed Cu. Ft. Billed Cu. Ft. Billed Cu, Ft.
$ 5,779 11,098 $ 6,372 12,264 $ 5,458 9,798
24,799 16,385 25,273 15,720 23,489 13,178
20,529 18,719 25,768 21,126 31,770 23,009
6,832 14,770 5,445 11,342 5,244 11,655
70,370 263,961 68,889 281,272 57,250 219,292
24,958 161,875 25,856 291,006 24,197 52,621
10
WATER UTILITY
Operating Revenues:
Water Sales
Other Operating Revenue
Total Operating Revenues
Operating Expenses:
Less: Depreciation
Less: Amortization
Less: City Taxes
Net Operating Expenses
Available for Debt Service
Actual Debt Service
Coverage
SEWER UTILITY
Operating Revenues:
Operating Expenses:
Less: Depreciation
Less: Amortization
Less: City Taxes
Net Operating Expenses
Available for Debt Service
Actual Debt Service
Coverage
CITY OF YAKIMA
WATER -SEWER UTILITY
COMBINED OPERATING STATEMENT
1990 1989
$ 2,507,431
0
$ 2,507,431
$ 2,328,047
(382,618)
0
(465.256)
$ 1,480,173
$ 1,027,258
$ 375.673
2.73
$ 5,591.957
$ 5,107,143
(1,177,017)
0
(918,673)
$ 3,011,453
$ 2,580,504
$ 673.790
3.83
$ 2,418,768
34.851
$ 2,453,619
$ 2,023,981
(367,944)
0
(383.537)
$ 1,272,500
$ 1,181,119
$ 373.952
3.16
$ 4,600.508
$ 4,438,636
(1,108,900)
0
(724.168)
$ 2,605,568
$ 1,994,940
$ 654.585
3.05
1988 1987
$ 2,413,564 $ 2,418,594
37,974 27.045
$ 2,451,538 $ 2,445,639
$ 1,938,952 $ 1,831,874
(363,158) (334,176)
0 0
(447,347) (394,700)
$ 1,128,447 $ 1,102,998
$ 1,323,091 $ 1,342,641
$ 378.542 $ 375.147
3.50 3.58
$ 4.174,626 $ 3.985,233
$ 3,954,097 $ 3,812,541
(1,004,430) (984,251)
0 0
(645,757) (617,094)
$ 2,303,910 $ 2,211,196
$ 1,870,716 $ 1,774,037
$ 650,684 $ 650.917
2.87 2.73
1986
$ 2,297,840
28,409
$ 2,326,249
$ 1,876,922
(297,014)
(1,368)
(388.460)
$ 1,190,080
$ 1,136,169
$ 375,360
3.03
$ 3.836,478
$ 4,023,136
(1,083,957)
0
(651,948)
$ 2,287,231
$ 1,549,247
$ 645 381
2.40
1985
$ 2,159,827
24,386
$ 2,184,213
$ 1,764,664
(307,129)
(1,368)
(399.501)
$ 1,056,666
$ 1,127,547
$ 375,194
3.01
$ 3,724.254
$ 3,722,831
(901,400)
0
(634.451)
$ 2,186,980
$ 1,537,274
$ 662,325
2.32
WATER UTILITY
Assets & Other Debits:
Utility Plant
Other Property & Investments
Current & Accrued Assets
Deferred Debits
Total Assets & Other Debits
Liabilities & Other Credits:
Propietary Capital
Long -Terra Debt
Current & Accrued Liabilities
Deferred Credits
Contributions in Aid
of Construction
Total Liabilities &
Other Credits
SEWER UTILITY
Assets & Other Debits:
Utility Plant
Other Property & Investments
Current & Accrued Assets
Deferred Debits
Total Assets & Other Debits
Liabilities & Other Credits:
Propietary Capital
Long -Term Debt
Current or___ueu Liabilities
Deferred Credits
Contributions in Aid
of Construction
Total Liabilities &
Other Credits
1990
$11,962,055
643,489
5,075,579
39.472
$17.720.595
$ 5,732,668
3,728,575
373,184
500
7.885.668
$17.720.595
$38,223,647
1,011,905
7,401,864
88.425
$46.725,841
$ 1,775,579
6,729,504
333,791
17,300
37.869.667
$46.725.841
CITY OF YAKIMA
WATER -SEWER UTILITY
BALANCE SHEET
1989 1988
$12,064,575 $12,016,769
643,332 641,261
4,398,349 3,926,988
43,009 50.541
$17.149.265 $16.635,559
1987
$ 12,198,086
662,695
3,671,646
59.717
$ 16,592.144
$ 5,468,294 $ 5,076,293_____ $ 5,050,367___
3,602,425 3,697,57 7 3,855,031
306,244 286,880 299,250
236 52,721 52,840
7.772,066 7,522.088 7.334 656
$17.149.265 $16,635.559 $ 16.592.144
$39,098,740 $39,092,302
1,038,255 1,085,179
6,608,868 6,724,371
95.712 102.997
$46.841.575 $47.004.849
$ 1,894,166 $ 1,673,163
6,903,575 7,074,173
287,324 675,966
6,042 0
37.750,468 37.581.547
$ 36,640,689
1,198,680
8,199,851
110.633
$ 46.149.853
$ 1,555,535
7,094,969
254,908
0
37,244.441
1986
$12,280,022
629,790
2,969,077
57,980
$15 936.869
$ 4,472,154
4,005,412
235,926
52,840
7.170,537
$15,936.869
$37,213,514
1,071,015
7,466,186
125.650
$45.876.365
$ 1,377,114
7,244,588
328,339
0
36.926,324
$46,841.575 $47.004.849 $ 46.149.853 $45,876.365
1985
$ 12,003,329
634,189
2,705,703
61.770
$ 15.404.991
$ 4,139,994
4,148,720
125,482
52,840
6.937.955
$ 15.404.991
$ 37,677,987
1,001,985
7,016,475
133,319
$ 45,829.766
$ 1,763,532
7,381,280
229,998
0
36.454,956
$ 45.829.766
CITY OF YAKIMA
WATER -SEWER UTILITY
PROJECTED OPERATING RESULTS
1991 1992 1993 1994 1995
Net Revenue Available For Debt
Service (1)
Water $ 1,065,855 $ 1,014,655 $ 930,692 $ 840,361 $ 743,234
Sewer 2.437,844 2.727.400 2,591,341 2.441.691 2.277,462
Total $ 3,503,698 $ 3,742,055 $ 3,522,033 $ 3,282,052 $ 3,020,696
Debt Service Requirements (1)
Senior Lien Debt $ 385,292 $ 403,588 $ 374,464 $ 368,732 $ 364,649
Junior Lien 1991 Bonds 607.762 1.168.663 1,106,286 1.025.914 1.123,955
Total $ 993,053 $ 1,572,251 $ 1,480,750 $ 1,394,647 $ 1,488,605
Debt Service Coverage (1) 3.53 2.38 2.38 2.35 2.03
Balance After Debt Service
$ 2,510,645 $ 2.169.804 $ 2,041.283 $ 1.887.405 $ 1.532.091
Less: City Taxes
Water (2) $ (319,232) $ (324,369) $ (325,969) $ (327,578) $ (329,194)
Sewer,(3) (709,388) (773,389) (784,054) (794,875) (805,855)
Deposit to 1991 Bond Reserve (61,482) (61.482) (61,482) (61.482)
Balance Available
$ 1.482.025 $ 1,010.564 $ 869 778 $ 703 470 $ 335.560
(1) Source: Consulting Engineer's Report, Appendix A, Table 6
(2) Source: Consulting Engineer's Report, Appendix A, Table 4
(3) Source: Consulting Engineer's Report, Appendix A, Table 5
GENERAL AND ECONOMIC INFORMATION
The City lies in central Washington State 142 miles southwest of Seattle, Washington and 188 :miles
northeast of Portland, Oregon. The City serves as the Yakima County seat and is the largest city in
Yakima County. The 1990 U.S. Census population of the City of Yakima was 54,827 and of Yakima
County was 188,823. Population change for both the City of Yakima and Yakima County in recent
years is shown in the following table:
Population
City of Yakima and Yakima County
City of Yakima
Year Yakima Qunty
1990* 54,827 188,823
1989 50,610 187,800
1988 49,470 186,300
1987 49,600 184,400
1986 49,590 183,600
1985 49,510 182,500
1984 49,340 180,000
1983 48,500 177,000
1982 49,900 175,200
1981 49,800 175,000
1980* ° 49,826 172,508
*Source: U.S. Census
Source: Washington State Office of Financial Management
The economy of the City is diversified, with a strong agricultural production base and related
packing and processing, manufacturing in the areas of wood and paper products, recreational
vehicles and aircraft assembly as well as strong commercial trade and health care sectors.
The City lies within the fertile Yakima River Valley, which is known as the 'Fruit Bowl of the
Nation" due to its large fruit harvest. Irrigation in the valley is made possible from water from the
U.S. Bureau of Reclamation's Yakima Project. Apples, cherries, peaches, pears, grapes and other
fruits plus a wide variety of vegetables, seeds, field crops and cereal grains make the Yakima Valley
one of the top agricultural producing areas of the nation.
The yield and value of the crops in the Yakima Valley are shown below for the 1989 crop year.
'Yakima Project Major Crops, 1989(1)
Tons of Production Value
935,110 (2) $177,396,071
21,458 56,974,440
158,595 49,892,179
50,574 41,281,718
96,999 31,432,916
1,652,775 (3) 19,384,895
388,635 (4) 20,066,499
162,744 13,909,468
205,682 20,244,271
2,005,557 (2) 8,585,195
20,921 10,144,140
339,796 (5) 5,294,552
(1)
(2)
(3)
(4)
(5)
Crop
Apples
Hops
Grapes (all varieties)
Cherries
Pears
Mint
Asparagus
Hay, other
Hay, alfalfa
Wheat
Peaches
Irrigated pasture
Includes land in Yakima, Kittitas and Benton counties
Measured in bushels
Measured in pounds
Measured in cwt, hundred pound units
Measured in animal unit month
Source: U.S. Bureau of Reclamation
14
The largest processor, Snokist, operates two divisions in Yakima. One division fresh packs and sells
fruit from the 350 Snokist growers, while the second division processes fruit. Snokist processes a
large variety of local fruits including apples, cherries, bartlett pears, apricots, peaches, prunes and
plums. Employment levels range from 60 to 1,200, depending on the season, with an average annual
employment level of 370 people in the Yakima area. The majority of Snokist's operations are located
within the City.
Tree Top, Inc. is a farmer -owned cooperative engaged in the processing of apple juice, apple cider,
fruit juice blends, and dehydration of apples, and is the nation's largest producer of apple juice. The
company is now producing a new product line for export to Japan. During the peak of the ten-month
processing season, Tree Top employs about 860 throughout Yakima County. The company's primary
facilities are in Selah.
Del Monte is another local firm which processes pears and cherries. The company employs an
average of 600 people and twice that number for 10-14 weeks in late summer -early fall (harvest
season). Del Monte is located partially within the City as well as in Toppenish in the lower valley.
Washington Beef, one of the largest meat processors on the west coast, operates a plant in Yakima.
The company also has plants in Ellensburg and Toppenish and sells meat to markets in Alaska,
Washington, Oregon, California and Japan. The Yakima plant employs 412 people.
Manufacturing and Transportation
Two of Yakima's largest non-food products manufacturing employers are Boise Cascade and Shields
Bag and Printing. Boise Cascade operates two sawmills, a plywood mill, and a planing and finishing
area, providing employment to 510 people. The company, which has been in Yakima since 1903,
completed an $18 million remodeling and modernization effort to its Yakima plywood and sawmills
in the early 1980's. Shields Bag and Printing manufactures polyethylene bags and also does
conventional printing, employing 325 people within the City.
Western Recreational Vehicles is a manufacturer of trailer and recreational vehicles in Yakima
which supplies dealers in 14 states. The company has grown from two employees in 1971 to about
225 employees today. The firm has recently expanded its operation to include a new $2.5 million,
120,000 square -foot building, which has doubled the firm's space.
Another growing manufacturing concern in Yakima is Dowty Aerospace, which produces aircraft
hydraulic equipment and mechanical assemblies. The company currently has 284 employees.
Transportation is an important aspect of Yakima's economy. Located on State Highway 82, Yakima
is served by seven scheduled motor freight lines, Greyhound Bus, and Burlington Northern and
Union Pacific railroads. Commercial airline service is provided by United Express, PSA and Horizon
Airlines through the Yakima Airport.
Trade and Services
The City's largest non -manufacturing employers are the Yakima School District with 1,475
employees, St. Elizabeth Hospital with 850 employees, Yakima County with 775 employees
(including part-time workers) City with 532 employees, including part-time workers, and Yakima
Valley Memorial Hospital with 974 employees. The hospital is now completing the expansion of its
emergency room and energy plant, adding 7,000 new square feet at a cost of $3 million. Another
43,000 square feet is being added to the hospital for its psychiatry and surgery centers by 1990 at a
cost of $6.5 million.
Yakima is a popular spot for conventions due to its dry climate and central location in the State. In
1990, a total of 216 conventions, hosting approximately 49,794 delegates, were held in Yakima.
Approximately $9.376 million was generated for the area economy by these delegates.
Construction of a multipurpose trade and convention center, the Sun Dome, was completed in early
1990. The Sun Dome holds 8,000 people and has generated 500 direct and indirect jobs. The Sun
Dome was constructed at a cost of $8.5 million and is now the state's third domed center. It hosts
concerts, athletic events, rallies and will be used during the Central Washington State Fair each
year. Yakima now has a Continental Basketball Association professional basketball team, which
plays its home games at the Sundome.
15
Other
About five miles northeast of the City lies the Yakima Firing Range, a military reservation used for
troop maneuvers, field training and artillery practice. One of the largest military installations in the
United States, encompassing 263,311 acres, the Yakima Firing Center trains over 10,000 National
Guard and Army Reserve personnel annually. This facility has about 345 permanent military and
civilian employees.
Additional economic indicators for the City, and Yakima County are shown as follows:
Employer
Yakima Area
Largest Employers
Snokist
Del Monte
Yakima School District No. 7
Memorial Hospital
St. Elizabeth Hospital
Yakima County
Yakima City
Boise Cascade
Yakima Valley Community College
Washington Beef Inc.
Easley Hauling Service
Shields Bag and Printing
Yakima Training Center
John L Haas Inc.
Stimson Lane Ltd Chateau Ste. Michelle
Dowty Aerospace Yakima
Western Recreational Vehicles Inc.
Product or Service
Fruit growers, packers and processors
Fruit processing
Education
Health care
Health care
Government
Government
Wood products processing
Education
Beef processing
Trucking/transportation
Polyethylene bags/printing
Military
Hops processing
Winery
Aircraft hydraulic equipment and
mechanical assemblies
Trucks, trailers, recreation vehicles
Source: Yakima Chamber of Commerce, January 1991
Yakima County
Personal and Per Capita Income
Year
Per Personal
Capita Income
Income (Thow,,ands)
1989 $14,494 $2,718,500
1988 13,262 $2,460,800
1987 12,760 2,338,800
1986 12,112 2,208,100
1985 11,226 2,046,800
1984 11,083 2,004,200
Source: U.S. Bureau of Economic Analysis
16
Number of
Employees
60-1,200
60-1,200
1,475
974
850
775
532
510
500
412
350
345
345
300
300
284
225
City of Yakima and Yakima County
Building Permits
City of Yakima Yakima County
No. of No. of
Year Permits Valuation Permits Valuation
1990 792 $32,090,152 1,352 $51,667,419
1989 695 25,804,796 1,085 38,234,373
1988 636 21,643,583 1,007 33,092,978
1987 649 23,235,310 1,125 47,812,025
1986 697 21,084,903 1,323 43,822,940
1985 640 16,732,625 1,425 41,880,516
1984 694 25,588,365 1,565 43,493,299
1983 658 18,435,507 1,415 43,285,306
1982 552 14,153,285 1,217 27,127,108
1981 673 25,591,827 1,352 27,445,556
1980 771 16,818,283 1,447 40,676,525
1979 843 34,430,652 2,004 44,649,629
Sources: City of Yakima and Yakima County building departments
Year
City of Yakima and Yakima County
Taxable Retail Sales
City County
1990* $520,702,000 $ 964,508,300
1989 680,095,300 1,257,570,700
1988 618,369,900 1,145,630,700
1987 570,296,700 1,105,104,300
1986 551,133,500 1,020,175,000
1985 536,896,500 1,012,081,000
1984 536,064,366 1,040,466,704
1983 516,825,494 986,713,230
1982 488,446,072 934,041,596
1981 438,474,271 862,590,119
1980 459,537,136 858,731,064
1979 441,468,304 833,653,203
*Includes first three quarters only
Source: Washington State Department of Revenue
17
Yakima County
Labor. Force and Employment Data
Annual Average
1990* 1989* 12ila 1987
Civilian Labor Force 101,500 98,800 93,900 91,400
Employment 91,600 87,000 83,800 80,800
Unemployment 9,900 11,800 10,100 10,600
Percent Unemployed 9.8% 11.9% 110.8% 11.6%
Total Nonagricultural Wage
and Salary Earners 64,800 62,000 59,700 57,800
Manufacturing 9,900 8,900 8,700 8,800
Food & kindred products 3,600 3,200 3,200 3,600
Lumber & wood products 1,500 1,400 1,400 1,400
Paper & allied products 900 600 700 600
Printing & publishing 500 400 400 400
Machinery excluding electrical 600 600 600 300
Transportation Equipment 1,100 1,000 900 600
Other manufacturing 1,800 1,700 1,500 1,900
Construction & mining 2,600 2,600 2,400 2,300
Transportation & public utilities 3,000 3,000 2,800 2,700
Wholesale trade 7,200 7,000 6,600 6,500
Retail trade 12,800 12,600 12,300 11,500
Finance, Insurance & real estate 1,900 1,900 1,900 1,800
Services 15,600 14,900 14,300 13,500
Government 11,800 11,200 10,700 10,600
Workers in Labor/Management Disputes 0 0 100 0
*Preliminary. The preliminary statewide unemployment rate for 1990 was 4.9%®
Source: Washington State Employment Security Department
LITIGATION
There is no litigation pending questioning the validity of the 1991 Bonds or the power and authority
of the City to issue the 1991 Bonds.
APPROVAL OF COUNSEL
Legal matters incident to the authorization, issuance and sale of 1991 Bonds by t;he City are subject
to the unqualified approving legall opinion of Preston Thorgrimson Shidler Gates & Ellis, Seattle,
Washington, Bond Counsel. A copy of the opinion of Bond Counsel will be printed on the 1991
Bonds. Bond Counsel has reviewed this document only to confirm. that the portions of it describing
the 1991 Bonds and the authority to issue them, conform to the 1991 Bonds and the applicable laws
under which they are issued.
TAX EXEMPTION
General. In the opinion of Preston Thorgrimson Shidler Gates & Ellis, Seattle, Washington, Bond
Counsel, interest on the 1991 Bonds is excluded from gross income subject to federal income taxation
pursuant to Section 103 of the Internal Revenue Code of 1986, as amended and any Treasury
Regulations promulgated thereunder (collectively the "Code").
18
The 1991 Bonds are not private activity bonds, and interest on the 1991 Bonds is not an item of tax
preference for purposes of determining alternative minimum taxable income for individuals or
corporations under the Code. However, interest on the 1991 Bonds is taken into account in the
computation of adjusted current earnings for purposes of the corporate alternative minimum tax
under Section 55 of the Code and in the computation of the environmental tax on corporations under
Section 59A of the Code as more fully described in this section under the heading "Certain Federal
Income Tax Consequences."
Except as described herein, Bond Counsel expresses no opinion on any federal, state or local tax
consequence arising with respect to ownership of the Bonds.
Certain Federal Income Tax Consequences. The following is a discussion of certain federal tax
matters under the Code. This discussion does not purport to deal with all aspects of federal taxation
that may be relevant to particular bondowners. Prospective bondowners, particularly those who
may be subject to special rules, are advised to consult their own tax advisors regarding the federal
tax consequences of owning and disposing of the 1991 Bonds, as well as any tax consequences arising
under the laws of any state or other taxing jurisdiction.
Alternative Minimum Tax on Corporations. Section 55 of the Code imposes an alternative
minimum tax on corporations equal to the excess of the tentative minimum tax for the taxable
year over the regular tax for such year. The tentative minimum tax is based upon alternative
minimum taxable income which is regular taxable income with certain adjustments and
increased by the amount of certain items of tax preference. One of the adjustments is a portion
(75% for any taxable year beginning after 1989) of the amount by which a corporation's adjusted
current earnings exceeds the corporation's alternative minimum taxable income (determined
without regard to such adjustment and the alternative tax net operating loss deduction).
Interest on tax-exempt obligations, such as the 1991 Bonds, is included in a corporation's
adjusted current earnings.
Environmental Tax on Corporations. Section 59A of the Code imposes an environmental tax on
corporations for taxable years beginning before January 1, 1996 (subject to certain exceptions)
equal to .12 percent of modified alternative minimum taxable income (determined, in part,
without regard to the alternative tax net operating loss deduction) that is in excess of
$2,000,000. Interest on tax-exempt obligations, such as the Bonds, is included in a corporation's
alternative minimum taxable income for purposes of this environmental tax. The environmental
tax is payable whether or not an alternative minimum tax is payable.
Qualified Tax -Exempt Obligations. The City has designated the 1991 Bonds as Qualified Tax -
Exempt Obligations for banks, thrift institutions and other financial institutions so that such
financial institutions will not be denied a deduction of 100% of their interest expenses allocable
to the 1991 Bonds. However, corporate tax preference rules reduceb 20% the amount that may
be deducted by such financial institutions for interest on funds allocable to tax-exempt
obligations such as the 1991 Bonds.
Borrowed Funds. The Code provides that interest paid on funds borrowed to purchase or carry
tax-exempt obligations during a tax year is not deductible. In addition, under rules used by the
Internal Revenue Service for determining when borrowed funds are considered used for the
purpose of purchasing or when carrying particular assets, the purchase of obligations may be
considered to have been made with borrowed funds even though the borrowed funds are not
directly traceable to the purchase of such obligations.
Property and Casualty Insurance Companies. The deduction for loss reserves for property and
casualty insurance companies is reduced by 15 percent of the sum of certain items, including the
interest received on tax-exempt obligations, such as the Bonds.
Social Security and Railroad Retirement Benefits. The Code also requires recipients of certain
Social Security or Railroad Retirement benefits to take into account, in determining gross
income, receipts or accruals of interest that is exempt from federal income tax.
Branch Profits Tax. Certain foreign corporations doing business in the United States may be
subject to a branch profits tax on their effectively connected earnings and profits, including tax-
exempt interest on obligations such as the 1991 Bonds.
19
S Corporations. Certain S corporations that have subchapter C earnings and profits at the
close of a taxable year and gross receipts more than 25%® of which are passive investment
income, which includes interest on tax-exempt obligations, such as the 1991 Bonds, may be
subject to a tax on excess net passive income.
RATING
As noted on the cover page of this Official Statement, the City has applied for a rating for the 1991
Bonds from Moody's Investors Service. The rating reflects only the view of the rating agency and an
explanation of the significance of the rating may be obtained from the rating agency. There is no
assurance that the 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 itsudgmentt, 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 1991 Bonds.
UNDERWRITING
The 1991 Bonds are being purchased by Seattle -Northwest Securities Corporation acting as the
Underwriter. The purchase contract provides that the Underwriter will purchase all of the 1991
Bonds, if any are purchased, at a price of % of the par value of the Bonds, plus accrued
interest. The 1991 Bonds will be reoffered at an average price of % of the par value of the
1991 Bonds. After the initial public offering, the public offering prices may be varied from time to
time.
S FFI :IAL STATEMENT
The City hereby deems this Preliminary Official Statement pursuant to Securities and Exchange
Commission Rule 15c2-12 as final as of its date except for the omission of information dependent
upon the pricing of the issue and the completion of the underwriting agreement, such as offering
prices, interest rates, selling compensation, aggregate principalamount, principal amount per
maturity, delivery dates, ratings, and other terms of the 1991 Bonds dependent on the foregoing
matters.
20
V x puaddd
July 29, 1991
Mr. Dennis E. Covell
Director of Engineering and Utilities
City of Yakima
129 North 2nd Street
Yakima, WA 98901
Subject: Consulting Engineers Report
1991 Second Lien Water and Sewer Revenue Bonds
City of Yakima, Washington
Dear Mr. Covell:
I -Da
This report sets forth information concerning the engineering and financial feasibility of
the proposed issuance of $7,635,000 of Second Lien Water and Sewer Revenue Bonds
(the "Bonds") by the City of Yakima (the "City"), Washington. The proceeds of the
Bonds are to be used to finance capital improvements at the City's wastewater treatment
facility, which are currently under construction and scheduled for completion in 1992,
and to refinance the outstanding 1983 First Lien Water and Sewer Revenue Bonds
maturing on or after March 1, 1994, the proceeds of which were used to finance previous
capital improvements for the City's Water and Sewer Utility's.
This report summarizes the results of a review and analysis of the Utility's capital
improvement and financial plans. Included is the following information:
■ Service Area - Review of Land Use and Population trends.
■ Water Utility Service Provided - Discussion of the background and
regional service provided by the Water Utility with respect to its future
growth.
■ Sewer Utility Service Provided - Discussion of the background and
regional service provided by the Sewer Utility, including wastewater
treatment for surrounding areas beyond the City limits.
HDR Engineering, Inc.
Suite 200
Lincoln Plaza
11225 S.E. Sixth Street, Building C
Bellevue, Washington
98004-6441
Telephone
206 453-1523
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 2
• Capital Improvement Program - Presentation of the Capita]. Improvement;
Program and financing plans for both Water and Sewer Utilities.
Descriptions of current capital improvements underway at the wastewater
treatment facility are also included.
• Financial Operations and Projections - Analysis of both the Water and
Sewer Utility's financial condition, including historical and projected'
revenues and expenditure obligations, the funding requirements related to
the capital improvement program, and the debt service coverage for the
proposed Bonds as well as the existing first lien revenue bonds and other
long term debt obligations of the Utility.
The reported results of these investigations into the Utility's operations, are primarily
descriptive in nature and indicate the present activities and policies of the Utility.
CUSTOMER SERVICE ACTIVITY
This section discusses the current land use and population trends within the Utility's
service areas, the water and sewer service that is provided by the Utility, and certain
trends expected to effect the Utility's operations through the year 1996.
SERVICE AREA LAND USE
The land use pattern within the Urban Area is characterized by a north -south strip of
high intensity commercial and industrial development which runs parallel with the
Yakima River from north of the City of Yakima downtownarea to south of the Town
of Union Gap. These commercial and industrial developments generally are located on
both sides of Highway 97 and are also adjacent to the Northern Pacific railroad corridor.
The City's industrial sewer customers are located between Nob Hill Blvd. on the south
and Fruitvale Blvd. on the north, and immediately adjacent to the railroad corridor.
Residential land use types range from the older established residential neighborhoods
immediately to the east and west of the north -south commercial and industrial strip, to
the newer residential developments in West Valley (west) and Terrace Heights (east:).
During the past 15 to 20 years, shopping centers have been developed in the Urban Area,
including Wards Plaza, Yakima :Mall, and Valley Mall. Commercial development has
also located adjacent to major east -west routes including Nob Hill Blvd. and Fruitvale
Blvd. Multi -family residential developments have been interspersed throughout the area.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 3
The Yakima Urban Area represents a regional center for cultural, shopping and business
needs in addition to its attraction to industries in the processing and handling of farm
products and manufacturing of apparel, textiles, and wood products. The City of Yakima
currently offers excellent medical and dental facilities and is the location of the County's
Community College.
SERVICE AREA POPULATION
The City has projected the total urban area population to grow from 62,134 in 1985 to
117,284 in 2025, which equals an average increase of 1.6 percent per year. The West
Valley, Southwest, Terrace Heights, and Southeast areas are expected to accommodate
the majority of this increase (37,000). The Gleed area is not currently served by the
Regional WWTP but is anticipated to be served by the year 2025. The City of Moxee
may connect to the Regional WWTP in the future should separate treatment by Moxee
become more costly than would be provided by the regional facility.
A substantial portion of the West Valley area to be served by the year 2025 lies outside
of the Yakima city limits. Sewer service to this area will be provided by the City under
an interagency agreement with Yakima County or through annexation of the lands to the
City.
The Town of Union Gap and the Terrace Heights drainage areas are currently provided
sewer service as wholesale customers which contract for treatment service under an
interagency agreement with the Regional WWTP. Sewer service to the Gleed and
Moxee area may be offered under a similar interagency agreement in the future.
WATER UTILITY SERVICE PROVIDED
Background
The Water Utility currently provides domestic water service to approximately 17,400
customers located primarily within the city limits.
The original City of Yakima water system was developed by the Pacific Power and Light
Company (PP&L) in the early 1900's. The City of Yakima purchased the system on
July 1, 1926. The supply consisted of a diversion from the PP&L power canal.
Mr. Dennis E. Covell
Director of Engineering and Utiilities
July 29, 1991
Page 4
In an effort to expand the water supply, the City purchased 343 acres of land at Oak
Flats to develop a source on the Naches River. A 14 -mile, 24 -inch woodstave
transmission main was constructed to transport the supply to twin concrete reservoirs
with a combined 24 -MG capacity. Two shallow wells were later developed in 1948 and
1949 to supplement the Oak Flats supply.
A water treatment plant near Rowe Hill on the Naches River and a 48 -inch transmission
pipeline to the City were constructed in the early 1970's to replace the Oak Flats supply.
The growth of the Utility's systemhas been limited by adjacent water associations and
other municipal water purveyors.
Regional Service
The entire Yakima urban area population is growing at approximately :L.6 percent per
year. However, the water service area does not include the primary areas of population
growth. The future population expected to be served by the Water Utility has been
projected by using minimum and maximum probable rates of conversion of private wells
to the Utility's water system with some anticipated growth within the existing service
area. At a maximum rate of 90 percent conversion of private wells by the year 2025, the
water service area population would increase by 40 percent or approximately 1 percent
per year. At the minimum of 25 ]percent conversion of private wells by the year 2025,
the water service area population would grow by approximately 5 percent, or 0.12
percent per year. With conversion of private wells, with increasing conversion of
customers from the separate irrigation Utility to the Water Utility, and with conversion
of existing residential areas to higher density use, customer revenue is expected to
conservatively grow by 0.5 percent per year.
The most significant planning considerations for the Water Utility's are not rapid
changes of population or land use, but characteristics of the water system itself and the
potential for serving surrounding areas in the future. The Utility has the only water
system in the Yakima area based on a surface water supply. The four adjacent utilities
are supplied from groundwater, a resource becoming increasingly problematic because
of contamination, depletion, and the high cost of energy required to ;pump it. The
Utility's surface water supply and treatment facility can readily serve as the foundation
for a future regional supply system incorporating the surrounding Utilities. Adjacent
water systems also represent potential customers for wholesale water supply from the
Utility's surface source. A regional water supply would take advantage of economies of
scale, increasing efficiency, and lowering regional costs.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 5
SEWER UTILITY SERVICE PROVIDED
Background
The Sewer Utility provides regional domestic sewage collection and treatment services
to approximately 18,300 customers within the City of Yakima plus another 1230 and 910
customers respectively in the surrounding communities of Union Gap and Terrace
Heights. Septage Disposal is provided at the Utility's wastewater treatment plant and
food processing waste, discharged by three large industrial customers, is processed in a
separate industrial treatment facility with sprayfield disposal.
During the 1970's, a Facility Plan was prepared for the Sewer Utility to enable it to meet
requirements of the Federal Water Pollution Control Act. This Plan resulted in
upgrades and expansion of the regional wastewater treatment plant and construction of
interceptors to provide for the transport of sewage to the treatment plant from Union
Gap, Terrace Heights and the unincorporated areas in the county surrounding the City.
The costs for these improvements totalled over $34,000,000 and were completed in the
late 1970's and early 1980's. The improvements were financed by a grant from the U.S.
Environmental Protection Agency (75%), a grant from the State of Washington
Department of Ecology (15%), and by local funds (approximately 10%).
Following these improvements, the Department of Ecology issued a compliance order
for correction of treatment plant facilities which were experiencing hydraulic, organic,
and solids loadings in excess of design assumptions. An update of the City's Facility Plan
was subsequently completed in June 1989 which recommended various capital
improvements necessary to meet the state's compliance order.
The Regional Wastewater Treatment Plant operated by the Utility currently processes
up to 21 million gallons per day (gpd) of domestic sewage. The Utility's other sewerage
facilities include a collection system with six small sewage pumping stations and one
major pumping station at Rudkin Road.
The Sewer Utility's collection system consists of 22,600 linear feet of 30" to 48"
transmission pipeline, 53,040 linear feet of 20" to 27" transmission pipeline, 84,160 linear
feet of 15" to 18" transmission pipeline, and 1,075,200 linear feet of local collection
system lines (12" and smaller). This equates to over 230 miles of sewer lines and a
$100,000,000 investment in the sewage collection system expressed in 1991 dollars.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 6
Sewage flow from Union Gap is discharged into an interceptor flowing to the Rudkin
Road pumping station and is transmitted via forcemain and gravity sewer to the
wastewater treatment plant. Union Gap purchased the South Broadway interceptor from
the City and has recently annexed the area served by this interceptor to the Town of
Union Gap.
Terrace Heights is connected to the sewerage system via a sewage pumping station and
interconnecting forcemain that discharges at the treatment plant.
The remainder of the City's sewage system, excluding Union Gap and Terrace Heights,
provides service to customers located inside City boundaries and also extends beyond
City boundaries into unincorporated areas of Yakima County.
Agreement for Regional Wastewater Treatment and Disposal Facilities
In 1976, the City entered into an agreement to provide treatment and disposal services
for Union Gap, Terrace Heights, and the unincorporated areas of the county. At that
time it was recognized that regional planning for the future disposal of wastewater was
needed to meet current water pollution control requirements and to eliminate health
hazards.
At the time the original Agreement was adopted, the County did not own or operate its
own collection system or treatment facilities and provision for this service was construed
to mean such facilities that may be developed in the future. The Town of Union Gap
and Terrace Heights were responsible for operating and maintaining sewer interceptors
and pumping facilities necessary to deliver wastewater to the City's system.
Through the Agreement, the City was given responsibility for establishing specific rates
and charges for providing treatment service to the County, Union Gap, and Terrace
Heights which reflected the costs for the City to intercept, treat, and dispose of the
wastewater from these outlying areas. Eligible costs include system ,administration,
operation, maintenance, taxes„ repair and replacement, and debt service for existing as
well as new collection, treatment and disposal facilities (including requirements of
resolutions surrounding the issuance of revenue bonds). To the extent the City's
interceptors are used to transmit wastewater, the associated costs may also be included
in charges. Operating surpluses, debt service coverage, reserve funds, local shares of
payments from industrial cost recovery or any other funds paid from rates and charges
are to be used exclusively for the benefit of the wastewater treatment and disposal
facilities.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 7
In addition to the above computed charges, additional charges may be applied if the
customer's BOD (biochemical oxygen demand), SS (suspended solids), or other pollutant
concentrations exceed the concentrations contained in "normal" domestic sewage. A
level of 300 milligrams per liter (mg/1) is used as the base level for BOD and SS
concentrations in "normal" domestic sewage as currently defined by the City.
The Sewer Utility serves the entire Yakima urban area which is growing at
approximately 1.6 percent per year and customer revenue is expected to grow
accordingly. Revenue has been projected to conservatively increase by 1.5 percent per
year for metered customers, 0.5 percent per year for unmetered customers and wholesale
users, and 1.2 percent per year for septage haulers. No major change is expected for the
areas food processing industry and revenue from industrial treatment service is projected
to remain at current levels.
CAPITAL IMPROVEMENT PROGRAM
Proceeds from the 1991 Bonds will be used in part to finance approximately $13 million
of improvements at the Regional Wastewater Treatment Plant and to retire the
outstanding 1983 Water and Sewer Revenue Bonds maturing on or after March 1, 1994.
The City will utilize up to $3 million of its own cash reserves along with a $803,250
PWTF loan and $5,990,000 of matching grant funds from the Environmental Protection
Agency as administered by the State Department of Ecology to complete these
improvements. These capital improvements at the Wastewater Treatment Plant are
currently under construction and will be completed in 1992. In addition, the Sewer and
Water Utilities have identified other routine and specific capital improvement projects
for construction during the next five years that will be financed from cash reserves.
Together, these capital improvement projects represent the Utility's prioritized needs to
continue reliable water and sewerage service to the Yakima region. The various capital
improvement projects are further discussed in this section. The capital improvements
currently under construction at the Wastewater Treatment Plant are listed in Table 1
and the Utility's overall Capital Improvement Program through the year 1996 is
summarized in Table 7.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 8
Wastewater Treatment Plant Improvements
The capital improvements currently under construction at the Wastewater Treatment
Plant are listed in Table 1 along with their associated cost. Included in Table 1 are cost
for administrative and engineering services associated with construction of these
improvements. These improvements were identified in the June 1989 update to the
City's Wastewater Facilities Plan and are needed to satisfy the compliance order issued
by the State Department of Ecology for correction of treatment plant facilities which
were experiencing hydraulic, organic and solids loading that exceeded original design
assumptions. A brief description andreason for these various improvements follow.
Trickling Filter Pumping Station - This new pumping station will provide
hydraulic capacity to meet current plant influent flows and organic loadings and
will allow meeting ammonia limitations at the plant discharge to the Yakima
River. The existing pumping station is 25 years old, has served its expected life,
and is not large enough to be effectively reconstructed.
Activated Sludge Secondary Clarifier - Modifications are needed to the Activated
Sludge Secondary Clarifier system to improve hydraulic performance and replace
existing gate operations.
Dechlorination Facility - The dechlorination facility will remove free residual
chlorine from the plant effluent prior to discharge to the Yakima River. This is
required to meet effluent discharge limitations relative to total effluent toxicity.
Screenings Dewatering - Equipment will be provided to dewater screenings
removed from the plant influent to comply with State land fill regulations.
Solids Handling - A new centrifuge will be added in the existing Solids Handling
Building. The additional centrifuge is needed to meet increased organic and
solids loading in the plant influent along with increased solids generated from the
nitrification process. The new centrifuge will also provide system reliability in the
event the existing unit is out of service.
Intermediate Grit Basin - This facility will remove snails from trickling filter
effluent prior to the aeration basins to minimize clogging of downstream facilities.
Odor Control - Improvements for neutralizing odors are included. The trickling
filters will be covered and odorous air from the filters, as well as the Solids
Building and the Influent Building, will be scrubbed in a packed tower odor
removal system.
TABLE 1
1991 FACILITIES IMPROVEMENTS
Construction
Project Element Cost ($1
Trickling Filter Pumping Station $2,685,000
Activated Sludge Secondary Clarifier 100,000
Dechlorination Facility 863,300
Screenings Dewatering 98,000
Solids Handling 1,580,000
Intermediate Grit Basin 542,500
Trickling Filter Odor Control 2,044,900
Solids Handling Building Odor Control 128,000
Influent Building Odor Control 184,500
Chlorine System Improvements 168,800
Laboratory Expansion 906,600
Outfall 287,800
Rudkin Road Pumping Station 516,600
Miscellaneous
Primary Scum Pumping 87,300
Septage Aeration 80,000
Sludge Drying Beds 50,000
Hot Water Unit Heaters 118,000
Meter Yard Pumping Station 21,000
Centrifuge Meters 5,000
CL Basin Modifications 10,000
On-line Turbity Meter 14,500
Sludge Drying Bed Conversion 58,000
Sludge Storage Area 40,000
Digester Heat Exchanger 15,000
Lathe (Equipment) 45,000
Forklift (Equipment) 38,300
Concrete Rehabilitation 25.000
Total Construction Cost $10,713,100
City Administration $75,000
City Engineering 45,000
City Financing 30,000
City Legal 60,000
Operations/Maintenance 125.000
Subtotal $335,000
Bidding Services $99,310
Construction Administration 500,360
O&M Manual 130,054
Start-up Services 87,860
Plant Performance Testing 59,610
Extended Services 53.706
Subtotal $930,900
Resident Inspection $205,843
Testing Services 91,154
On -Site Surveys 21,000
Geotechnical 20.000
Subtotal $337,997
Contingency (5%) $699.110
TOTALS $13,016,107
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 10
Chlorine System Improvements - The existing chlorinators, residual analyzer, and
associated controls will be replaced to provide additional chlorination capacity and
better control of the effluent chlorine residual prior to dechlorination. The
additional chlorination capacity is needed to meet current and future plant influent
hydraulic loading, to provide chlorine for the odor control process, and to provide
for algae control in the future secondary clarifier included in the Utility's capital
improvement program.
Laboratory Expansion - The existing laboratory will be renovated and expanded to
provide additional facilities, equipment, and testing capability. This will provide for
increased sampling and testing for priority pollutants, lbiomonitorin; sampling and
testing, ammonia toxicity testing, solids testing, and implementation of a pretreatment
program as required by the plants NPDES permit.
Outfall - A new outfall diffuser will be installed to provide mixing of plant effluent
discharged to the Yakima River in accordance with current WDOE design guidelines.
Rudkin Road Pumping Station - The existing pumping station will be renovated to
provide necessary hydraulic capacity, to improve reliability of this critical pumping
station, and to resolve clogging and other operational problems that have developed.
The cost for these improvements will be shared by the Town of Union Gap, City of
Yakima, and county customers.
Miscellaneous Improvements - A series of miscellaneous improvements are also
listed in Table 1. These improvements are needed to resolve operational problems,
assure treatment reliability, and provide for ongoing plant maintenance.
OTHER SEWER SYSTEM IMPROVEMENTS
The Sewer Utility has identified other capital improvement projects to be constructed
over the next five years using net operating revenue and existing capital reserves. A new
operations center, final clarifier, and digester facilities will be constructed at the
wastewater treatment plant. The industrial treatment system will be upgraded and
routing extensions and upgrades to the sewer collection system and the trunk sewer
system will be completed. The budgeted costs and timing for these projects are shown
in Table 7.
The sewer collection system currently experiences surcharging and specific pipelines
where surcharging is known to exist are described in the Comprehensive Plan. The total
estimated cost to relieve surcharging is $9,396,000 and the annual cost to make the
necessary capital improvements is budgeted at $300,000 during this planning period.
Additional capacity in these pipelines is also required to provide for future customers
connecting to the City collection system. Another benefit of relieving surcharging will
be the ability of the Sewer Utility to provide better operation and maintenance of the
collection system.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 11
The Comprehensive Plan also identifies $7,976,000 in costs for extending new interceptor
sewers within the Yakima Urban Area. The City does not anticipate construction of new
interceptor sewers until 1997. Timing of service to new areas is dependent on
development opportunities.
At this time there are no State or Federal grant funds or low interest loan funds
available to assist in financing relief sewers or new interceptor sewers. All resources for
these projects must be raised from the Sewer Utilities operations budget.
WATER SYSTEM IMPROVEMENTS
The Water Utility has also identified capital projects to be constructed over the next five
years using its net operating revenue and existing capital reserves. The water treatment
plant serving the City's surface source from the Naches River will be expanded. A new
distribution reservoir will be constructed and some extensions to water distribution mains
will be completed. The budgeted costs and timing for these improvements are shown
in Table 7.
FINANCIAL OPERATIONS AND PROJECTIONS
As a measure of the Water and Sewer Utility's ability to meet its financial obligations,
an analysis of the customer service activity revenues, expenditures, and debt service
requirements has been conducted. The total net revenues from both the water and
sewer operations are available for covering any debt service incurred by the Utility.
However, the Water and Sewer Departments are operated essentially as two separate
Utilities and financial operations are tracked and reported accordingly. The results of
this analysis have also been broken down into water and sewer operations.
The historical financial data used in the analysis presented herein were obtained from
the financial records of the City. The Utility is required to maintain its financial records
in conformity with generally accepted accounting principles which are subject to the
State of Washington guidelines and internal controls of government units.
The customer service activity for the water and sewer operations is discussed elsewhere
in this report. The structure of each Utility along with the land use and expected
population growth within its service area provide the basis for setting rates and
projecting revenue that will be generated by each Utility in the future.
REVENUES
The rates established for both the Water and Sewer Utilities are discussed in the official
statement. The historical and projected operating revenue for each Utility is shown on
Table 2.
TABLE 2 WATER AND SEWER UTILITY - HISTORICAL AND PROJECTED OPERATING REVENUE Annual
Percentage
Historical Revenue Estimated Projected Revenue Increase
Above 1991
Description 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Revenue
WATER SERVICE REVENUE
Operating Revenue
Metered Customers $2,160,849 52,278,798 52,271,038 52,281,238 52,331,267 52,355,000 52,366,775 52,378,609 52,390,502 52,402,454 52,414,467 0.50
Private Fire Protection 36,801 37,288 38,736 41,696 41,361 41,800 42,009 42,219 42,430 42,642 42,856 0.50
Public Authorities 100,190 102,508 103,790 95,834 101,263 102,800 103,314 103,831 104,350 104,871 105,396 0.50
Miscellaneous Service 28,409 27,045 37,974 34,851 33,540 34,000 34,000 34,000 34,000 34,000 34,000 0.00
Approved Rate Increase
Effective 8/1/91 0 27.. 20,257 48,856 49,097 49,339 49,582 49,826
Other Income
Sale of Fixed Assets -47 0 0 0 0 0 0 0 0 0 0
Non -Utility Income 677 699 1,028 526 6,227 1,000 1,000 1,000 1,000 1,000 1,000 0.00
Interest Income 175,800 251,642 279,980 257,607 322,525 322,000 370,000 404,000 224,000 224,000 224,000
Misc. Non -Operating Income 8,743 2,518 11,185 10,023 0 2,000 2,000 2,000 2,000 2,000 2,000 0.00
Subtotal - Water Revenue 52,511,422 52,700,498 52,743,731 52,721,775 52,836,183 52,878,857 52,967,954 $3,014,755 52,847,620 $2,860,550 52,873,544
SEWER SERVICE REVENUE
Operating Revenue
Metered Customers 3,397,791 3,476,431 3,591,838 4,014,354 4,892,176 4,966,000 5,040,490 5,116,097 5,192,839 5,270,731 5,349,792 1.50
Urmetered Customers 64,594 53,192 49,063 56,661 67,370 68,400 68,742 69,086 69,431 69,778 70,127 0.50
Public Authorities 307,687 299,883 360,294 376,397 419,814 428,000 430,140 432,291 434,452 436,624 438,808 0.50
Industrial Treatment 14,455 94,057 114,954 91,077 150,618 150,000 150,000 150,000 150,000 • 150,000 150,000 0.00
Scptagr' Disposal 51,951 61,670 58,477 62,019 61,979 62,700 63,452 64,214 64,984 65,764 66,553 1.20
Approved Rate Increases
Effective 1/1/92 0 8.5% 434,285 440,741 447,293 453,943 460,693
Other Income
Sale of Fixed Assets 0 44,546 0 0 0 0 0 0 0 0 0
Non -Utility Income 1,399 1,513 2,706 113,616 739 800 800 800 800 800 800 0.00
Interest Income 521,179 625,832 674,050 513,394 577,885 577,000 697,000 390,000 390,000 390,000 390,000
Misc. Non-Operatin0 Income 86,148 78,437 94,445 70,971 76,640 75,000 75,000 75,000 75,000 75,000 75,000 0.00
Subtotal - Sewer Revenue 54,445,204 54,735,561 $4,945,827 $5,298,489 $6,247,221 56,327,900 56,959,909 S6,738,228 56,824,799 $6,912,642 57,001,774
ipAoa •a S UTia( •aye
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 13
Water Service Revenue
Water service operating revenue comes from the direct sale of water to metered
customers. Additional revenue comes from providing fire protection for private parties,
from direct sales to public authorities outside the City, and for miscellaneous service
provided to customers outside the City boundaries. As discussed herein, the service area
is fairly well fixed and no substantial growth is anticipated. Revenue has been projected
to increase by a nominal amount of 0.5 percent per year above the revenue expected in
1991. In addition, the City has approved a 2 percent rate increase for water service to
become effective August 1, 1991.
Other income comes in the form of the sale of fixed assets, interest income from
retained earnings and construction accounts, and a nominal amount of non -Utility and
miscellaneous non-operating income. The interest income is expected to decrease over
the next five years as cash on hand is used to finance the Utility's Capital Improvement
Program.
Sewer Service Revenue
Sewer operating revenue comes primarily from service to individual customers, both
inside and outside the City limits. Sewer charges are based on water use for those
customers that receive metered water service from the City. Wholesale service is
provided to nearby public authorities in accordance with the Agreement with the City
of Yakima to provide regional wastewater treatment services as discussed elsewhere in
this report. The industrial wastewater treatment facility is operated for three large food
processors in the area who are charged for this service. The wastewater treatment
facility accepts discharges from septage haulers who are charged for this service.
Revenue has been projected to conservatively increase by 1.5 percent per year for
metered customers, 0.5 percent per year for unmetered customers and wholesale users,
and 1.2 percent per year for septage haulers. Revenue from industrial treatment of food
processing waste is projected to remain at current levels.
The City of Yakima has recently approved three rate increases for the Sewer Utility in
anticipation of the current construction which affect metered and unmetered customers.
Two 16 percent rate increases became effective January 1, 1989, and January 1, 1990,
respectively, and a third 8.5 percent rate increase will become effective January 1, 1992.
Other income comes from the sale of fixed assets, interest income on retained earnings
and construction accounts, and a nominal amount of non -Utility and miscellaneous non-
operating income. The interest income is expected to decrease over the next five years
as cash on hand is used to finance the Utility's Capital Improvement Program.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 14
LONG TERM DEBT
The Water and Sewer Utility has incurred debt in the form of revenue bonds and loans
for the purpose of constructing previous capital improvements for the Utility. The
proposed 1991 Revenue Bonds, as well as a new Public Works Trust Fund (PWTF) loan,
are required to construct the current capital improvements at the wastewater treatment
facility. The Utility's historical and scheduled debt service payments through the year
1996 for both existing and proposed debts are shown on Table 3.
When possible, the Utility issues revenue bonds for construction of capital improvements
for both the Water and Sewer Utility concurrently and the debt service is apportioned
accordingly. The percentage share attributed to the Water and Sewer Utility is indicated
on Table 3 for each revenue bond issue and PWTF loan.
Proceeds from the proposed 1991 bonds will be used for funding capital improvements
at the Wastewater Treatment Plant and to refinance the outstanding 1983 First Lien
Revenue Bonds maturing 011 or after March 1, 1994. The Water Utility had a 19.48
percent share in the 1983 bond issue which results in their maintaining an 8.25 percent
share in the new 1991 bond issue as indicated on Table 3. The outstanding principal of
the 1983 bond issue to be refinanced as of 1993 is $2,920,000.
In addition to the new 1991 l3ond issue, the Sewer Utility also intends to utilize the
remainder of its $945,000 loan from the Public Works Trust Fund. This is shown on
Table 3 as a new PWTF loan of $803,250 at a rate of 1 percent simple interest on the
outstanding principal to be paid annually.
The total existing, new, and combined debt service is shown on Table 3. The
proportionate share of the total combined debt service attributed to i:he Water and
Sewer Utilities are indicated on Tables 4 and 5 respectively.
WATER UTILITY OPERATING EXPENSES AND DEBT SERVICE
The historical and projected operating expenses, the financial operations summary, and
the debt service coverage for the 'Water Utility are shown on Table 4.
Water Service Expenses
The Water Utility tracks its annual operation and maintenance expenses by major system
components. The major expense categories include operation of the surface water
intake, booster pumping to reservoirs and within the distribution system, operation of the
water treatment 'plant which processes surface water from the Naches River, water
transmission and distribution, servicing customer accounts, and the general administrative
expenses associated with operating the Utility. Future expenses are conservatively
projected to increase at approximately 7 percent per year.
IABIE 3: WATER AND SEWER UTILITY - DEBT SERVICE
Description
Historical Debt Service Payments Scheduled Debt Service Payments
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
1964 Water -Sewer Revenue Bonds (2.5% Water; 97.5% Sewer)
Principal $75,000 580,000 580,000 $85,000 585,000 90,000 95,000 100,000
Interest 23,650 21,024 18,224 15,424 12,450 9,475 6,325 2,500
Subtotal - 1964 Revenue Bonds 98,650 101,024 98,224 100,424 97,450 99,475 101,325 102,500
1968 "A Series" Water Revenue Bonds (100% Water)
Principal 129,166 134,167 143,333 53,334 5,833
Interest 21,874 15,824 9,518 2,782 274
Subtotal - 1968 "A" Rev. Bonds 151,040 149,991 152,851 56,116 6,107 ---
1968 "8 Series" Water Revenue Bonds (100% Water)
Principal 0 0 0 91,667 147,501 159,166 168,334 174,166 183,334 193,333 203,333
Interest 141,736 141,736 141,736 141,736 136,695 128,582 109,932 99,403 90,694 81,528 71,861
Subtotal - 1968 "8" Rev. Bonds 141,736 141,736 141,736 233,403 284,196 287,748 278,266 273,569 274,028 274,861 275,194
1978 Sewer Revenue Bonds (100% Sewer)
Principal 0 0 0 0 0 0 0 0 13,333 160,834 171,250
Interest 218,041 218,041 218,041 218,041 218,041 218,041 218,041 218,041 218,041 217,281 208,000
Subtotal - 1978 Revevue Bonds 218,041 218,041 218,041 218,041 218,041 218,041 218,041 218,041 231,374 378,115 379,250
1983 Water -Sewer Revenue Bonds (19.48% Water; 80.52% Sewer)
Principal 93,334 103,333 113,333 123,334 137,500 148,333 162,500 27,500 (Remainder of 1983 bonds refinanced
Interest 317,940 311,939 305,041 297,220 288,428 200,962 16,088 2,337 by proposed 1991 revenue bonds)
Subtotal 1983 Revenue Bonds 411,274 415,272 418,374 420,554 425,928 349,295 178,588 29,837
Public Works Trust Fund Loan (100% Water)
Principal 19,539 19,539 19,539 19,539 19,539 19,539
Interest 2,252 7,475 10,551 9,965 9,379 8,793 8,207
Subtotal PWTF Loan 2,252 27,014 30,090 29,504 28,918 28,332 27,746
Public Works Trust Fund Loan (100% Sewer)
Principal 7,460 7,460 7,460 7,460 7,460 7,460 7,460
Interest 1,449 1,418 1,343 1,268 1,194 1,119 1,045 970
Subtotal PWTF Loan
1,449 8,878
8,803 8,728
8,654 8,579
8,505 8,430
Total Existing Debt Service 31,020,741 31,026,064 51,029,226 11,029,987 31,042,852 1990,376 1815,039 5662,105 3542,899 1689,812 5690,620
New Public Works Trust Fund loan (100X Sewer)
Principal
Interest
Subtotal PWTF Loan
Proposed 1991 Water 8 Sewer Revenue Bonds (8.25% Water; 91.75% Sewer)
Principal
Interest
47,250 47,250 47,250 47,250 47,250
2,678 8,033 7,560 7,088 6,615 6,143
2,678
55,283 54,810
54,338 53,865 53,393
165,000 280,000 330,000 295,000 315,000
536,930 483,835 . 467,410 449,928 432,228
Subtotal - 1991 Revenue Bonds 701,930 763,835 797,410 744,928 747,228
Total New Debt Service $2,678 5757,212 $818,645 $851,748 $798,793 $800,620
Total Combined Debt Service 31,020,741 $1,026,064 11,029,226 31,029,987 81,042,852 $993,053 31,572,251 11,480,750 $1,394,647 51,488,605 81,491,240
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 16
Other expenses that must be paid out of Utility revenues include principal and interest
on long term debt, amortization of discount and other expenses associated with issuing
revenue bonds, depreciation of the Utility's assets, and retained earnings and equity.
Taxes include state sales and excise tax charged on certain portions of the Utility's
operations, social security tax, industrial insurance, payroll taxes associated with certain
benefits, and an "in lieu" tax paid to the City of Yakima for facilities and, services it has
contributed toward the operation of the Water Utility.
Water Utility Summary
The net earnings and balance of the Water Utility account is summarized on Table 4.
The account balance consists of the account balance for the previous year plus net
earnings for the current year, less any transfer of funds to the construction account. The
remainder of the account balance is designated as either appropriated or unappropriated
retained earnings. Appropriated retained earnings are intended to cover the next year's
debt which becomes an obligation of the Water Utility as of January 1 of each year.
Considerable cash has been accumulating in the Water Utility's account balance in
anticipation of upcoming capital improvements. The projected account balance indicates
a decrease in these cash reserves as funds are transferred to the Utility's construction
account to implement its proposed Capital Improvement Program as discussed previously
and summarized on Table 7.
Water Utility Debt Service
The net revenue available for debt service coverage, the total debt service, and the debt
service ratio for the Water Utility are shown on Table 4. Net revenue available for debt
service equals operating revenue less direct expenses associated with operation and
maintenance of the Utility's system. The total debt service for the Water Utility equals
the Utility's proportionate share of the total combined debt service for the Water and
Sewer Utility shown on Table 3.
The debt service ratio is projected to decrease from 2.51 to 1.75 during the study period.
This is because revenue has been projected to increase by only about 0.5 percent per
year while the Utility direct operating and maintenance expenses have been projected
to increase by approximately 7 percent per year. Accumulated revenues from
depreciation should offset any anticipated negative net earnings during the planning
period.
TABLE 4: WATER UTILITY - HISTORICAL AND PROJECTED OPERATING EXPENSES AND TOTAL DEBT SERVICE
Description
WATER SERVICE EXPENSES
Operation 8 Maintenance
Source of Supply
Pumping
Water Treatment
Transmission
Distribution
Customer Accounts
Administration and General
Other Expenses
Interest on Long Term Debt
Amortized Debt
Other Interest Expense
Loss on Investment Sales
Depreciation Expense
Amoritization Expense
Retained Earnings/Equity
Taxes
Total Taxes Paid
Subtotal - Water Expenses
Historical Expenses
1986 1987
1988
1989
$17,390 $10,588 $9,129 $26,299
39,538 38,710 36,531 34,983
267,044 257,440 260,929 282,365
5,873 12 1,236 34
359,197 286,074 321,431 359,541
142,849 158,362 164,482 174,063
358,189 351,812 334,709 395,215
1990
$9,973
34,868
315,263
316
573,328
174,990
371,435
Estimated
Projected Expenses
1991
$11,000
37,400
338,000
600
400,000
180,000
380,000
1992
$11,715
40,089
361,592
640
426,600
191,700
404,700
1993
$12,476
42,971
386,832
682
454,969
204,161
431,006
1994
$13,287
46,061
413,832
728.
485,224
217,431
459,021
1995
$14,151
49,373
442,718
776
517,492
231,564
488,857
1996
$15,071
52,923
473,620
828
551,905
246,616
520,633
233,434 229,044 222,282 214,422 205,603 184,213 189,365 171,873 159,651 147,370 134,538
4,748 4,748 4,748 4,748 3,308 3,308 2,582 2,582 1,782 1,782 1,782
16 373 392 391 391 400 400 400 400 400 400
0 0 137,307 67,802 0 0 0 0 0 0 0
297,014 334,176 363,158 367,944 382,618 394,100 405,923 418,101 430,644 443,563 456,870
1,368 0 0 0 0 0 0 0 0 0 0
64,143 56,246 414,124 18,430 34,460 60,000 60,000 60,000 60,000 60,000 60,000
388,460 394,700 447,347 383,537 465,256 460,234 467,632 469,936 472,252 474,579 476,918
$2,179,263 $2,122,285 $2,717,805 *2,329,774 $2,571,809 $2,449,256 $2,562,938 $2,655,988 $2,760,314 $2,872,626 $2,992,103
'WATER UTILITY SUMMARY
Total Water Revenue - Table 2 $2,511,422 $2,700,498 $2,743,731 $2,721,775 $2,836,183 $2,878,857 $2,967,954 $3,014,755 $2,847,620 $2,860,550 $2,873,544
Total Water Expenses 2,179,263 2,122,285 2,717,805 2,329,774 2,571,809 2,449,256 2,562,938 2,655,988 2,760,314 2,872,626 2,992,103
Net Earnings
Transfer to Construction Acct
Retained Earnings
Appropriated
Unappropriated
Balance - Water Utility
WATER UTILITY TOTAL DEBT SERVICE
Total Water Revenue - Table 2
Less Other Income - Table 2
Net Operating Income
Total Water Expenses
less Other Expenses
Less "In Lieu" City Tax
Net Operating Expenses
Net Revenue Available
for Debt Service
Total Debt Service - Water
Debt Service Ratio
332,159 578,213 25,926 392,001 264,374 429,601 405,015 358,767 87,307 -12,075 -118,558
NA NA NA NA NA -1,000,000 -1,000,000 -1,000,000 -1,000,000 -1,000,000 -600,000
477,057 477,057 502,888 469,138 463,661 485,467 508,520 471,825 464,603 459,458 459,378
3,662,938 3,995,097 4,547,479 4,607,155 5,004,633 5,247,201 4,653,749 4,095,459 3,461,448 2,553,900 1,541,904
$4,472,154 $5,050,367 $5,076,293 $5,468,294 $5,732,668 $5,162,269 $4,567,284 $3,926,051 $3,013,358 $2,001,283 $1,282,724
(See note)
2,511,422 2,700,498 2,743,731 2,721,775 2,836,183 2,878,857 2,967,954 3,014,755 2,847,620 2,860,550 2,873,544
-185,173 -254,859 -292,193 -268,156 -328,752 -325,000 -373,000 -407,000 -227,000 -227,000 -227,000
2,326,249 2,445,639 2,451,538 2,453,619 2,507,431 2,553,857 2,594,954 2,607,755 2,620,620 2,633,550 2,646,544
2,179,263
-600,723
-267,146
2,122,285 2,717,805
-624,587 -1,142,011
-260,452 -307,722
2,329,774
-673,737
-310,256
2,571,809
-626,380
-313,257
2,449,256
-642,021
-319,232
2,562,938
-658,270
-324,369
2,655,988
-652,955
-325,969
2,760,314
-652,477
-327,578
2,872,626
-653,115
-329,194
2,992,103
-653,590
-330,818
1,311,394 1,237,246 1,268,072 1,345,781 1,632,172 1,488,002 1,580,299 1,677,063 1,780,259 1,890,316 2,007,695
1,014,855 1,208,393 1,183,466 1,107,838 875,259 1,065,855 1,014,655 930,692
375,358 375,148 378,542 373,954 377,962 385,292 403,588 374,464
2.70 3.22 3.13 2.96 2.32 2.77 2.51 2.49
840,361
368,732
2.28
Note: Total Debt Service and Debt Service Ratio account for all existing and proposed long term debt attributed to the Water Utility
743,234
364,649
2.04
638,850
364,586
1.75
Annual
Percentage
Increase
Above 1991
Revenue
6.50
7.19
6.98
6.65
6.65
6.50
6.50
3.00
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 18
SEWER UTILITY OPERATING EXPENSES ANI) DEBT SERVICE
The historical and projected operating expenses, the financial operations summary, and
the debt service coverage for the Sewer Utility are shown on Table 5.
Sewer Utility Expenses
The Sewer Utility tracks its operation and maintenance expenses according to major
system components. The major expense categories include pumping, operation and
maintenance of the transmission system, operating the wastewater treatment facility,
operating the industrial transmission and treatment facility, maintaining a nominal
amount of storm sewers for which the Utility is responsible, the cost for servicing the
various customer accounts, and the general administrative expenses associated with
operating the Utility. Future expenses are conservatively projected to increase at
approximately 7 percent per year.
Other expenses that must be paid out of Utility revenues include principal and interest
on long term debt, amortization of discount and other expenses associated with issuing
revenue bonds, depreciation of the Utility's assets, and retained earnings and equity.
Taxes include state sales and excise tax charged on certain portions of the Utility's
operations, social security tax, industrial insurance, payroll taxes associated with certain
benefits, and an "in lieu" tax paid to the City of Yakima for facilities and services it has
contributed toward the operation of the Sewer Utility.
Sewer Utility Summary
The net earnings and balance of the Sewer Utility account is summarized on Table 5.
The account balance consists of the account balance for the previous year plus net
earnings for the current year, less any transfer of funds to the construction. account. The
remainder of the account balance is designated as either appropriated or unappropriated
retained earnings. Appropriated retained earnings are intended to cover the next year's
debt which becomes an obligation of the Sewer Utility as of January 1 of each year.
Considerable cash has been accumulating in the Sewer Utility's account balance in
anticipation of upcoming capital improvements. The projected account balance indicates
a decrease in these cash reserves as funds are transferred to the Utility's construction
account to implement its proposed Capital Improvement Program as discussed previously
and summarized on Table 7.
TABLE 5 SEWER UTILITY - HISTORICAL AND PROJECTED OPERATING EXPENSES AND TOTAL DEBT SERVICE
Description
SEWER SERVICE EXPENSES
Operation 8 Maintenance
Wastewater Pumping
Wastewater Transmission
Wastewater Treatment
Industrial Transmission
Industrial Treatment
Storm Sewer
Customer Accounts
Administration and General
Other Expenses
Interest on long Term Debt
Amortized Debt
Other Interest Expense
loss on Investment Sales
Depreciation Expense
Amortization Expense
Retained Earnings/Equity
Taxes
Total Taxes Paid
Subtotal - Sewer Expenses
SEWER UTILITY SUMMARY
Total Sewer Revenue - Table 2
Total Sewer Expenses
Net Earnings
Transfer to Construction Acct.
Retained Earnings
Appropriated
Unappropriated
Balance - Sewer Utility
Historical Expenses
1986
1987
1988
1989
1990
Estimated
Projected Expenses
1991
1992
1993
1994
$49,503 553,995 550,896 147,820 551,211 552,000 155,739 559,746 564,042
383,493 374,639 401,271 491,117 653,914 650,000 693,225 739,324 788,490
1,289,762 1,270,990 1,323,193 1,349,339 1,597,516 1,600,000 1,711,680 1,831,155 1,958,970
0 4,564 643 30 395 500 533 569 607
95,394 81,788 89,924 95,545 110,051 116,000 122,206 128,744 135,632
30,606 26,608 32,385 42,443 44,448 48,000 51,250 54,719 58,424
118,515 124,849 124,850 136,499 137,213 140,000 149,100 158,792 169,113
319,958 273,763 280,748 442,775 416,705 420,000 447,300 476,375 507,339
1995 1996
568,647
840,924
2,095,706
647
142,888
62,379
180,105
540,316
$73,583
896,846
2,241,986
690
150,533
66,602
191,812
575,436
520,709 512,944 504,953 494,673 484,113 412,770 746,268 694,204 673,766 656,078 629,240
7,286 7,286 7,286 7,286 7,286 7,286 9,548 9,548 9,548 9,548 9,548
235 9,371 4,407 4,087 4,008 4,000 4,000 4,000 4,000 4,000 4,000
0 0 149,770 54,189 0 0 0 0 0 0 0
1,083,957 984,251 1,004,430 1,108,900 1,177,017 1,212,300 1,248,669 1,286,129 1,324,713 1,364,454 1,405,388
0 0 0 0 0 0 0 0 0
0 0
280,256 214,998 207,686 78,614 763,258 220,000 220,000 220,000 220,000 220,000 220,000
651,948 617,094 645,757 724,168 918,673 920,144 1,002,065 1,015,717 1,029,568 1,043,623 1,057,884
54,831,622 54,557,140 $4,828,199 $5,077,485 $6,365,808 15,803,000 56,461,583 $6,679,021 56,944,210 $7,229,315 57,523,547
14,445,204 14,735,561 14,945,827 55,298,489 16,247,221 16,327,900 16,959,909 16,738,228 56,824,799 56,912,642 17,001,774
4,831,622 4,557,140 4,828,199 5,077,485 6,365,808 5,803,000 6,461,583 6,679,021 6,944,210 7,229,315 7,523,547
-386,416 178,421 117,628 221,004 -118,587 524,900 498,326 59,207 -119,411 -316,673 -521,774
NA NA NA NA NA -700,000 -300,000 -300,000 -300,000 ' -300,000 -300,000
921,396 921,396 519,400 914,581 816,302 790,090 1,519,262 1,438,171 1,333,689 1,461,142 1,464,650
842,136 455,718 1,036,135 758,581 1,077,864 985,489 81,217 360,634 224,323 -322,541 -942,722
11,377,114 11,555,535 11,673,163 11,894,166 11,775,579 11,600,479 11,798,805 11,558,012 11,138,601 1521,928 -1299,846
SEWER UTILITY TOTAL DEBT SERVICE (See note)
Total Sewer Revenue - Table 2 4,445,204
Less Other Income - Table 2 -608,726
Net Operating Income
Total Sewer Expenses
Less Other Expenses
Less "In Lieu" City Tax
Net Operating Expenses
Net Revenue Available
for Debt Service
Total Debt Service - Sewer
Debt Service Ratio
4,735,561 4,945,827 5,298,489 6,247,221 6,327,900 6,959,909 6,738,228 6,824,799 6,912,642 7,001,774
-750,328 -771,201 -697,981 -655,264 -652,800 -772,800 -465,800 -465,800 -465,800 -465,800
3,836,478 3,985,233 4,174,626 4,600,508 5,591,957 5,675,100 6,187,109 6,272,428 6,358,999 6,446,842 6,535,974
4,831,622 4,557,140 4,828,199 5,077,485 6,365,808 5,803,000 6,461,583 6,679,021 6,944,210 7,229,315 7,523,547
-1,892,443 -1,728,850 -1,878,532 -1,747,749 -2,435,682 -1,856,356 -2,228,485 -2,213,881 -2,232,027 -2,254,080 -2,268,176
-464,165 -428,888 -526,356 -578,446 -690,650 -709,388 -773,389 -784,054 -794,875 -805,855 -816,997
2,475,014 2,399,402 2,423,311 2,751,290 3,239,476 3,237,257 3,459,709 3,681,087 3,917,308 4,169,379 4,438,375
1,361,464 1,585,831 1,751,315 1,849,218 2,352,481 2,437,844 2,727,400 2,591,341 2,441,691 2,277,462 2,097,599
645,383 650,916
2.11
2.44
650,684 656,033 664,889 607,762 1,168,663 1,106,286 1,025,914 1,123,955 1,126,654
2.69
2.82
3.54
4.01
2.33
2.34
Note: Total Debt Service and Debt Service Ratio account for all existing and proposed long term debt attributed to the Sewer Utility
2.38
2.03 1.86
Percentage
Increase
Above 1991
Revenue
7.19
6.65
6.98
6.65
5.35
6.77
6.50
6.50
3.00
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 20
Sewer Utility Debt Service
The net revenue available for debt service coverage, the total debt service, and the debt
service ratio for the Sewer Utility are also shown on Table 5. Net revenue available for
debt service equals operating revenue less direct expenses associated with operation and
maintenance of the Utility's system. The total debt service for the Sewer Utility equals
the Utility's proportionate share of the total combined debt service for the Water and
Sewer Utility as shown on Table 3.
The debt service ratio is projected to decrease from 2.33 to 1.86 over the next five years.
This is because revenue has been projected to increase by only about 1.5 percent per
year while expenses have been projected to increase by approximately 7 percent per
year. Accumulated revenues from depreciation should offset any anticipated negative
net earnings during the planning period.
FIRST AND SECOND LIEN DEBT SERVICE
Historical and projected debt service ratios have been calculated for the total combined
debt service, the existing first lien revenue bonds, and for the proposed 1991 Bonds as
shown on Table 6.
Total Combined Debt Service
The total debt service and debt service ratio for the Water Utility and the Sewer Utility
are shown on Tables 4 and 5 respectively. The net revenue available for debt service,
the debt service requirements, and the debt service ratio for the total combined Water
and Sewer Utility are indicated on Table 6. The total debt service includes scheduled
principal and interest payments for all existing revenue bonds, the proposed 1991 Bonds,
and all new and existing loans from the Public Works Trust Fund.
First Lien Debt Service
The total net revenue, first lien debt service, and annual debt service ratio for the
remaining first lien revenue bonds are indicated on Table 6. The 1964 Water and Sewer
Bonds will be paidoff in 1993. The outstanding 1983 Water and Sewer Revenue Bonds
maturing on or after March 1, 1994, will be refinanced by the proposed 1991 Bonds.
The debt service ratio for the first lien bonds increases to above 3.6 in 1991 through
1993, following payoff of the 1968 'Series A' Water Revenue Bonds, and then increases
to above 4.1 in 1994 through 1996.when both the 1964 revenue bonds are retired and
the outstanding portion of the 198:3 revenue bonds are retired.
TABLE 6 WATER AND SEWER UTILITY - COMBINED DEBT SERVICE
Description
TOTAL COMBINED DEBT SERVICE
Net Revenue Available
for Debt Service
Water - Table 4
Sewer - Table 5
Historical Debt Service Payments Scheduled Debt Service Payments
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
51,014,855 51,208,393 51,183,466 S1,107,838 5875,259 S1,065,855 11,014,655 5930,692 5840,361 1743,234 1638,850
1,361,464 1,585,831 1,751,315 1,849,218 2,352,481 2,437,844 2,727,400 2,591,341 2,441,691 2,277,462 2,097,599
Total Net Revenue 2,376,319 2,794,224 2,934,781 2,957,056 3,227,740 3,503,698 3,742,055 3,522,033 3,282,052 3,020,696 2,736,449
Debt Service Requirements
Water - Table 4
Sewer - Table 5
375,358 375,148 378,542 373,954 377,962 385,292 403,588 374,464 368,732 364,649 364,586
645,383 650,916 650,684 656,033 664,889 607,762 1,168,663 1,106,286 1,025,914 1,123,955 1,126,654
Total Debt Service 1,020,741 1,026,064 1,029,226 1,029,987 1,042,852 993,053 1,572,251 1,480,750 1,394,647 1,488,605 1,491,240
Combined Debt Service Ratio 2.33 2.72 2.85 2.87 3.10 3.53 2.38 2.38 2.35 2.03 1.84
DEBT SERVICE FOR FIRST LIEN REVENUE BONDS
Total Net Revenue 52,376,319 52,794,224 S2,934,781 52,957,056 53,227,740 53,503,698 53,742,055 53,522,033 53,282,052 53,020,696 52,736,449
First Lien Debt Service
1964 Water F. Sewer Bonds 98,650 101,024 98,224 100,424 97,450 99,475 101,325 102,500
1968 Series "A" Water Bonds 151,040 149,991 152,851 56,116 6,107 --- --- --- --- --- ---
1968 Series "8" Water Bonds 141,736 141,736 141,736 233,403 284,196 287,748 278,266 273,569 274,028 274,861 275,194
1978 Sewer Bonds 218,041 218,041 218,041 218,041 218,041 218,041 218,041 218,041 231,374 378,115 379,250
1983 Water 8 Sewer Bonds 411,274 415,272 418,374 420,554 425,928 349,295 178,588 29,837 (Refinanced by 1991 Revenue Bonds)
Total First Lien Debt Service 1,020,741 1,026,064 1,029,226 1,028,538 1,031,722 954,559 776,220 623,947 505,402 652,976 654,444
Annual Debt Service Ratio
2.33 2.72 2.85 2.88 3.13
3.67 4.82
5.64 6.49
4.63 4.18
ANNUAL DEBT SERVICE COVERAGE FOR 1991 BONDS
Net Revenue Available for
1991 Debt Service 51,355,578 51,768,160 51,905,555 51,928,518 S2,196,018 52,549,139 52,965,835 S2,898,086 52,776,650 12,367,720 12,082,005
1991 Debt Service NA NA NA NA NA
Debt Service Ratio NA NA NA NA NA
MAXIMUM FUTURE DEBT COVERAGE FOR 1991 BONDS
Maximum Annual Debt Service NA NA NA NA NA
Debt Service Ratio NA NA NA NA NA
AVERAGE ANNUAL COVERAGE FOR 1991 BONDS
Average Annual Debt Service NA NA NA NA NA
Debt Service Ratio NA NA NA NA NA
NA
NA
NA
NA
NA
NA
701,930 763,835 797,410 744,928 747,228
4.23 3.79 3.48 3.18 2.79
797,410 797,410 797,410 797,410 797,410
3.72 3.63 3.48 2.97 2.61
675,170 675,170 675,170 675,170 675,170
4.39 4.29 4.11 3.51 3.08
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 22
1991 Revenue Bond Debt Service
The net revenue available for the 1991 Revenue Bond coverage (net revenue less first
lien debt service) and related calculations for various debt service and debt service ratios
are also shown on Table 6.
The debt service ratio for the actual annual debt service exceeds 2.7 in the years 1992
to 1996.
The debt service ratio for the maximum future debt service ($797,410 in year 1994)
exceeds 2.6 in the years 1992 to 1996.
The debt service :ratio for the average annual debt service of $675,170 exceeds 3.0 in the
years 1992 to 1996.
SUMMARY OF CASH FLOW AND DISTRIBUTION
The various sources and uses of construction funds, as well as the cash flow necessary
to implement the Utilities Capital Improvement Program, are summarized on Table 7
for the years 1991 through 1996.
Sources of Funds
Funds available for capital improvements include the balance of designated construction
accounts plus transfers to these accounts from either the water or sewer operating
account, proceeds from the sale of the 1991 Revenue Bonds, grant funds, and the
proceeds from the new Public Works Trust Fund loan extended to the. Sewer Utility.
The cash balance of each Utility's construction account decreases over the next five years
as the Capital Improvement Programs are implemented and funds are withdrawn for
construction projects.
Uses of Funds
The total construction funds available must pay for the capital improvements currently
under construction at the wastewater treatment facility, retire the outstanding portion
of the 1983 revenue bonds, and cover other construction projects as discussed above
under the Utilities capital improvement program. The cash flow needs for the total
capital improvement program from 1991 to 1996 are indicated on Table 7.
TABLE 7 WATER AND SEWER UTILITY - CAPITAL IMPROVEMENT PROGRAM
Description
SOURCES OF FUNDS
1990 1991 1992 1993 1994 1995 1996
Water Construction Account
Transfer from Operations NA 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 600,000
Construction Account Batance 3,825,143 3,825,143 4,545,881 5,145,881 5,695,881 3,495,881 1,295,881
Sewer Construction Account
Transfer from Operations NA 700,000 300,000 300,000 300,000 300,000 300,000
Construction Account Balance 6,836,872 6,836,872 7,939,385 3,759,385 1,079,385 629,385 -120,616
Bond Proceeds
Grant Reimbursement
Loan Proceeds (PWTF)
Total Funds Available
USES OF FUNDS
7,635,000
3,300,000 2,600,000
803,250
90,000
$10,662,015 $24,100,265 $16,385,265 S10,295,265 $8,075,265 S5,425,265 $2,075,265
1991 WASTEWATER FACILITIES IMPROVEMENTS
Capital Improvements 7,830,000 5,530,000 70,000
Bond Related Costs
Issuance Costs 40,000
Underwriting Discount 106,890
Reserve Requirement 150,000
Retire Existing 1983 Bond 3,074,810
Contingency 13,300
SEWER SYSTEM IMPROVEMENTS
Operations Center 250,000 750,000
Final Clarifier Project 500,000 2,700,000
Digester/Solids Project 300,000 600,000
Industrial System Project 150,000 150,000
Collection System Upgrades 150,000 300,000 300,000 300,000 300,000 300,000
Trunk Sewer Extensions
WATER SYSTEM IMPROVEMENTS
Water Treatment Plant Project 200,000 250,000 3,000,000 2,100,000 500,000
Resevoir Project 100,000 1,000,000 1,150,000
Main Extensions 200,000 200,000 100,000 100,000 100,000
Total Uses of Funds $11,615,000 S7,480,000 $3,520,000 $3,950,000 $4,250,000 $2,050,000
IlaAOD •3 SiUU cI WAI
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 24
OPINIONS
Based upon our studies, reviews, investigations, and analysis with respect to the sale of
the proposed 1991 Revenue Bonds, along with the principal considerations and
assumptions set forth in this Consulting Engineers Report, we are prepared to set forth
opinions relative to said bond sale. In preparation of this report and the opinions and
conclusions that follow, we have relied upon information and statements provided us by
the Water and Sewer Utility as well as representatives of the City. It is anticipated that
actual future conditions will vary from those assumed herein, or otherwise provided us,
and that actual results will vary from those forecast.
Based upon our review, we offer the following opinions and conclusions:
1. The Sewer Utility will continue to provide regional sewerage service to the City
of Yakima and the surrounding communities. This includes providing domestic
wastewater treatment for the entire region as well as industrial treatment and
disposal for the area's three major food processors. The Utility has expended
considerable funds in the past to construct these regional facilities. An official
agreement exists between the Utility and the surrounding communities for this
service.
2. The Sewer Utility's domestic wastewater treatment facility is in need of some $13
million worth of capital improvements in order to :meet current and projected
waste loads, to meet provisions of the current state NF'DES permit limitations, and
to provide for the continuation of reliable operation of its equipment and facilities.
3. The Sewer Utility has anticipated these capital improvements at the wastewater
treatment facility and the City has subsequently approved three recent rate
increases. Two rate increases of 16 percent each became effective January 1, 1989,
and January 1, 1990, respectively. The third rate increase of 8.5 percent will
become effective January 1, 1992.
4. The Environmental Protection Agency, through the State of Washington
Department of Ecology, will provide $5,990,000 in grant funds for construction of
the current capital improvements at the wastewater treatment facility.
5. The Sewer Utility has secured a loan at 1 percent simple interest on the
outstanding principal, payable annually, in the amount of $803,250 from the Public
Works Trust Fund to be used for construction of the current capital improvements
at the wastewater treatment facility.
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 25
6. As of July 1, 1991, the amounts in the Sewer Utility's construction fund together
with proceeds from the proposed 1991 Bonds, grant funds, and proceeds from the
Public Works Trust Fund loan will be sufficient to pay the Utility's estimated cost
for the capital improvements currently under construction at the wastewater
treatment facility as identified in the Capital Improvement Program herein.
7. Due to existing land use and limitations of the service area, the demand for water
service and subsequent revenues will not increase significantly over the next five
years unless the City surface water supply is expanded to become a regional supply
facility.
8. An approved 2 percent rate increase for water service will become effective August
1, 1991 and has been included in the projected revenues generated by the Water
Utility.
9. The Water and Sewer Utility's have ongoing capital improvement programs in
addition to the current construction needs at the wastewater treatment facility.
The capital improvement programs are designed to maintain the Utility's water
and sewer systems in good repair and operating condition in accordance with State
and Federal guidelines as recommended in the current comprehensive plans and
facility plans prepared for the Water and Sewer Utility's.
10. The estimated cost of the capital improvement program developed by and for the
Utility's have been prepared using sound estimating practices and methods and are
considered reasonable for the type of work anticipated.
11. The bond underwriter has indicated that it is cost effective to redeem the
outstanding 1983 Revenue Bonds maturing on or after March 1, 1994, and to
refinance the balance of those bonds along with the construction funds required
at this time.
12. An analysis of the revenues, revenue requirements, and financial requirements of
the Water and Sewer Utility's indicates that the proposed $7,635,000 Revenue
Bond issue is financially feasible. Net revenues for system operations, adjusted for
planned annual revenue increases, are projected to exceed the required 140
percent coverage of outstanding and proposed debt service requirements during
the next five years. In addition, the coverage test for the remaining First Lien
Revenue Bonds is calculated to exceed 410 percent. For the purposes of this
analysis, the operation and maintenance expenses for both the Water and Sewer
Utility's have been projected to increase by approximately 7 percent per year and
an aggressive capital improvement program for each Utility has been planned.
Without additional revenue sources, above those currently anticipated for financing
of capital improvements, and if the anticipated level of increase in expenses is
actually experienced, it may be necessary for each Utility to initiate a rate increase
toward the end of this study period
Mr. Dennis E. Covell
Director of Engineering and Utilities
July 29, 1991
Page 26
We have reviewed the official statement to which this report is appended, and in our
opinion the information presented therein that has been taken from the Consulting
Engineers Report, or which has otherwise been attributed to us, is accurately presented.
Respectfully submitted,
HDR ENGINEERING, INC.
Anthony H. Krutsch, P.E.
Vice President
AHK/sdh