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HomeMy WebLinkAbout2017 Limited Tax General Obligation Bonds - $8,180,000 (Ord 2541 - Residential Street Improvements)2017 Limited Tax General Obligation Bonds Residential Street Improvements $8,180,000 CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2017 - $8,180,000 Bonds Dated: July 26, 2017 Opinion Dated: July 26, 2017 PACIFICA LAW GROUP LLP 1191 2nd Avenue, Suite 2000 Seattle, Washington 98101-3404 CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2017 — $8,180,000 RECORD OF PROCEEDINGS Organizational Documents 1. Certificate for Transcript 2. Certificate of the Director of Elections of King County setting forth the names and terms of office of the Mayor and City Council 3. Certificate of the Mayor setting forth the names of the City Administrator, Finance Director and City Clerk 4. Certified copy of the proceedings of the City Council last fixing the time, date and place of regular meetings of the City Council 5. Certificate of the City Clerk stating the official newspaper of the City 6. Certificate of the King County Assessor stating the assessed valuation of all of the taxable property within the City as fixed in the fall of 2016 for the purposes of 2017 taxation 7. Certificate of the Finance Director as to the outstanding indebtedness of the City, including any lease -purchase or conditional sale contracts and any general obligation debt 8. Bond Counsel's Calculation of Debt Limit Authorization of Bonds 9. Certified copy of Ordinance No. 2541 passed on June 19, 2017 (the "Bond Ordinance") 10. Certified copy of the minutes of the Committee of the Whole meeting held on June 12, 2017, showing the first discussion of the Bond Ordinance 11. Certified copy of the minutes of the meeting of the City Council held on June 19, 2017, showing the passage of the Bond Ordinance 12. Certificate of Award 13. Preliminary Official Statement 14. Rule 15c2-12 Certification regarding Preliminary Official Statement 15. Official Statement Closing Documents 16. Rating Letter 17. Copy of Blanket Issuer Letter of Representations to DTC 18. Continuing Disclosure Certificate 19. Signature Identification and Nonlitigation Certificate 20. Certificates of Manual Signature and Certificates of Mailing 21. Certificate of Authorization of Authorized Signer on Behalf of the Fiscal Agent 22. Certificate regarding Authentication, Registration and Delivery of the Bonds 23. Official Statement Certificate 24. Federal Tax Certificate and exhibits 25. Financing Schedules 26. Internal Revenue Service Form 8038-G and Affidavit of Mailing 27. Specimen Bond 28. Certificate Regarding Payment and Delivery 29. Receipt for Bonds 30. Closing Memorandum 31. Bond Form 101 Opinion 32. Final approving legal opinion of Pacifica Law Group LLP, Bond Counsel 2 CERTIFICATE FOR TRANSCRIPT I, CHRISTY O'FLAHERTY, the City Clerk of the City of Tukwila, Washington (the "City"), do hereby certify that the within and attached documents are in each case true and correct copies of the originals of such documents and that none of the resolutions, ordinances, proceedings, statements or certificates contained herein have been repealed, rescinded or canceled and all of the officers last certified as holding City offices have continued to hold their respective offices from such date to and including the date of this certificate. Dated this 26th day of July, 2017. 611 Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 00003 gf23dm28bb King County Department of Elections Julie Wise, Director STATE OF WASHINGTON )SS. COUNTY OF KING This is to certify that I, Julie Wise, am the Director of King County Elections, King County, Washington; and That the following officials serve as mayor and councilmembers for the City of Tukwila, King County, Washington, as determined from the official election records of King County, their terms of office included, as now on file in the Elections Department. Office Incumbent Term of Office Mayor Allan Ekberg December 2019 Council Position No. 1 Verna Seal December 2017 Council Position No. 2 Kathy Hougardy December 2019 Council Position No. 3 Thomas McLeod December 2017 Council Position No. 4 Dennis Robertson December 2019 Council Position No. 5 Joe Henry Duffie December 2017 Council Position No. 6 Kate Kruller December 2019 Council Position No. 7 De'Sean Quinn December 2017 Dated at Renton, King County, Washington this 31St day of May 2017. Julie Wi .e, Director RNT-EL-0100 1 919 SW Grady Way, Renton, WA 98057-2906 1 206 -296 -VOTE (8683) 1 I I Y Relay: 711 1 kingcounty.gov/elections kcelections.com © twitter.com/kcelections iC facebook.com/kcelections ® instagram.com/kcelections CERTIFICATE I, ALLAN EKBERG, Mayor of the City of Tukwila, Washington (the "City"), do hereby certify that David Cline is the duly appointed City Administrator, Peggy McCarthy is the duly appointed Finance Director, and Christy O'Flaherty is the duly appointed City Clerk of the City. Dated this 26th day of July, 2017. 10076 00002 fm144128h1 I /1 l Ilan Ekberg, Mayo' City of Tukwila, Was ' .:ton CERTIFICATE REGARDING REGULAR MEETINGS OF THE CITY COUNCIL I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a true and correct copy of the proceedings setting the date, time and place for regular meetings of the City Council. Dated this 26th day of July, 2017. � IF Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 00003 gf23dm28bb Amended by 2209 City of Tukwila Washington Ordinance No. 010.29 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, SETTING COUNCIL MEETING PROCEDURES; REPEALING ORDINANCE NOS. 1311, 1345, 1421, 1770 §1, AND 1796 §3 (PART); PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council has decided to alter the procedures under which it operates to provide for a more efficient and orderly governmental process; and WHEREAS, several different ordinances from various years now have portions of operating procedures that could more easily be followed in one ordinance; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Chapter 2.04 of the TMC is hereby amended to read as follows: 2.04.010 Meetings Declared Open and Public All meetings of the Tukwila City Council and its committees shall be open and public, and all persons shall be permitted to attend any meeting of these bodies, except as otherwise provided in Section 2.04.140. 2.04.020 Regular Meetings The City Council shall meet regularly on the first and third Mondays of each month at 7:00 p.m., unless an alternative starting time is set and notice is provided to the public pursuant to Section 2.04.040. If at any time any Regular Meeting falls on a holiday, the Council shall meet on the next business day at the same hour. The City Council shall meet at Tukwila City Hall, unless otherwise publicly announced. 2.04.030 Committee of the Whole Meetings A. The Council shall sit as a Committee of the Whole on the second and fourth Monday of each month at 7:00 p.m., unless an alternate starting time is published; except, if at any time any committee meeting falls on a holiday, the Council shall meet on the next business day at the same hour. The City Council shall meet at Tukwila City Hall, unless otherwise publicly announced. B. Meetings of the Committee of the Whole shall be held primarily for the purpose of considering current issues of the City, coordinating the work of the City Council, and discussing draft ordinances, resolutions and policy issues in detail. The Committee of the Whole will have no power to take final actions including, but not limited to, adopting ordinances or passing motions or resolutions. C. The Committee of the Whole may meet in a retreat setting to plan their work at the beginning of the year or at any time beneficial to in-depth deliberations by the Council. Results of the Committee of the Whole's retreats will be discussed with the Mayor and administration in order to establish and understand City goals. A report summarizing the proceedings will be made available following each retreat. No official act -ion will be taken at a retreat. 2.04.040 Special Meetings Special meetings may be called by the Mayor, or any three Councilmembers by written notice delivered by City employee(s) to each member of the Council at least 24 hours before the time specified for the proposed meeting and with public notice made pursuant to RCW 42.30.080. Council Meeting Procedures 1 1 2.04.050 Quorum At all meetings of the City Council, four members shall constitute a quorum for the transaction of business. 2 04.060 Seating A. Members of the City Council will be seated at the Council table according to seniority of the Council, except that the Council President will be seated at the right of the Mayor. B. Seniority shall be determined by the: 1. Greatest consecutive number of years served. 2. Greatest consecutive number of years plus months or years served prior to the current term(s). 3. Number of votes when elected. 2.04.070 Council President—Mayor Pro Tempore A. At the first Regular Meeting in January of each year, members of the City Council shall elect from their number a Council President who shall hold office at the pleasure of the Council. The general policy of Council is to elect presidents in a rotating order. If a vacancy occurs in the office of Council President, the City Council, at their next Regular Meeting, shall select a new Council President to serve the remainder of the year. B. In the absence of the Mayor, the Council President shall become the Mayor Pro Tempore and perform the duties of the Mayor except that the Council President shall not have the power to appoint or remove any officer or to veto any ordinance. If a vacancy occurs in the office of the Mayor, the City Council -- at their next Regular Meeting -- shall elect from their number a Mayor who shall serve until a Mayor is elected and certified at the next municipal election. 2 04.080 Presiding Officer A. All Regular and Special Meetings of the City Council shall be presided over by the Mayor or, in his/her absence, by the Mayor Pro Tempore. If neither the Mayor nor the Mayor Pro Tempore is present at a meeting, the presiding officer for that meeting shall be elected by a majority of the vote of those Councilmembers present, provided there is a quorum. B. All Committee of the Whole meetings shall be presided over by the Council President. If the Council President is temporarily absent, the Council shall elect a Councilmember to serve in that capacity until the Council President returns. C. The City Clerk or his/her designee will staff Regular and Special Council meetings and Committees of the Whole meetings. In the absence of the Clerk, Deputy Clerk or other qualified staff member appointed by the Clerk, the Mayor or Council may appoint a staff person to act in that capacity. D. The appointment of a Councilmember as Mayor Pro Tempore shall not in any way abridge his/her right to vote on matters coming before the Council at such meeting. E. The presiding officer shall preserve strict order and decorum at all meetings of the Council. The presiding officer shall state all questions coming before the Council, provide opportunity for discussion on each item on the table, and announce the decision of the Council on all subjects. Procedural decisions made by the presiding officer may be overruled by a majority vote of the Council. 2.04.090 Agenda for Regular or Special Council Meetings All items to be included on the agenda for Council consideration must be submitted to the City Clerk in full by 12:00 p.m. Noon on the Wednesday preceding each Council meeting. The City Clerk shall then prepare a proposed agenda, with attachments, according to the order of business. After the proposed agenda has been approved by the Council President or, in his/her absence, by his/her designated member of the City Council, the City Clerk shall prepare the final agenda, which shall be distributed to the Mayor, Councilmembers, City Attorney and Department Heads no later than Noon on the Friday preceding the Council Meeting. A copy of the agenda and subsequent documents shall be posted on the lobby bulletin board at City Hall. A copy of the Agenda face sheet will be posted on the City's website. Council Meeting Procedures 2 2 2.04.100 Agenda Format The format of a Regular or Special City Council agenda shall be as follows: A. Call to Order. B. Pledge of Allegiance. C. Roll Call. D. Special Presentations on key agenda items. E. Appointments and Proclamations of the Mayor. F. Citizens' Comments. This is an opportunity for the audience to comment on items not listed on the agenda. G. Consent Agenda. 1. Contains all consent agenda items approved by the Council President, from a Committee of the Whole, or forwarded by unanimous committee action, and routine items such as, but not limited to, approval of minutes and approval of vouchers. No ordinances, resolutions or bid awards will be included on the consent agenda. 2. The following rules shall apply to the consent agenda: a. Any member of the City Council may, by request and without a Council vote, have any items removed from the consent agenda. That item will, by automatic procedure, be placed under New Business for further discussion. b. The remaining items shall be approved by motion. H. Bid Awards. All competitive bid awards shall comply with RCW Title 39, and those that require Council approval shall include the contractor/vendor name, the project name, and the total dollar amount of the award. The award may or may not include Washington State Sales Tax. I. Public Hearings. 1. For public hearings required by City, State or Federal law or as the Council may direct. Examples may include, but not be limited to: a. LID b. Zoning c. Budget d. Revenue sharing grants e. Annexation f. Moratoria g. Quasi-judicial decisions 2. The following procedures shall apply to public hearings, except public hearings subject to TMC Chapters 18.104 through 18.116, which shall be subject to the procedures specified therein: a. The presiding officer may exercise a change in the procedures, but said decision may be overruled by a majority vote of the City Council. b. The proponent spokesman shall speak first and be allowed 15 minutes. The Council may ask questions. c. The opponent spokesman shall be allowed 15 minutes for presentation and the Council may ask questions. d. Each side shall then be allowed 5 minutes for rebuttal. e. After the proponents and opponents have used their speaking time, Council may ask further questions of the speakers, who may respond. 3. At public hearings and for issues where a public meeting is required or requested, and a general audience is in attendance to present arguments for or against a public issue: a. A signup sheet for speakers will be available, and all citizens considering speaking will be asked to write their name and address legibly. If they speak without signing up, they will be asked to sign in after speaking. Council Meeting Procedures 3 3 b. A person may speak for five minutes. No one may speak for a second time until everyone wishing to speak has had an opportunity to speak. c. After the speaker has used the allotted time, Council may ask questions of the speaker and the speaker may respond, but may not engage in further debate. d. Speakers should address their comments to the City Council and should not address other audience members. No disparaging remarks or remarks directed to opponents will be allowed. e. The hearing will then be closed to public participation by the presiding officer and open for Councilmember discussion. J. Unfinished Business. This section of the agenda shall include items of a general nature, including resolutions and ordinances previously discussed at a Council meeting. The following procedures shall apply during this section of the agenda: 1. The item will be put on the table by motion. 2. The committee chair, sponsor or a designated spokesman of each item may give a presentation. 3. If a resolution or ordinance, the City Attorney or City Administrator may read the item by title only or, if requested by any Councilmember, the document may be read in its entirety. A motion by Council shall rule. 4. The Council may then question the sponsor or designated spokesman of the presented item. 5. When discussions conclude, the Council, by motion, will act upon the resolution, ordinance or other item. K. New Business. This section of the agenda shall include all items of a general nature — including resolutions and ordinances previously discussed at a Committee Meeting and put forward to the Regular Meeting — and items that have been removed from the consent agenda. The procedures that apply during this section shall be the same as those under Unfinished Business. L. Reports. Reports on special interest items from the Mayor, City Council, staff, City Attorney, and intergovernmental representatives. M. Miscellaneous. N. Executive Session. 0. Adjournment. 2.04.110 Miscellaneous Agenda Procedures A. The City Council desires to provide adequate time for administration and staff analysis, fact finding and presentation. 1. Items to come before the City Council should first be placed on the agenda of the appropriate committee for discussion before they are placed on the agenda of a Regular Council Meeting. 2. All items that are not routine in nature and presented shall include a completed Council Agenda Synopsis (CAS), a staff report, and Committee Minutes. The City Clerk or a designated person shall be responsible for attaching a CAS number, keeping the original CAS, and maintaining an index for future reference. B. The agenda and provision for the Committee of the Whole shall be citizen comments, committee reports, discussion of items referred from committees, items referred by three Councilmembers, and items set by the Council President. The agenda and any attachments will be approved by the Council President or his/her designee, and shall be prepared by the City Clerk for distribution to the Council by 12:00 p.m. Noon on Friday. C. Items may be placed directly on the agenda of a Regular Meeting when the items are approved by the Council President, and: 1. The items are routine in nature, such as approval of vouchers, proclamations, acknowledgement or receipt of petitions or documents, or discussion of claims for damages. Council Meeting Procedures 4 4 2. An emergency condition exists that represents a personnel hazard, impending deadline, or risk of immediate financial loss. In such instances, the CAS summary or staff memo should clearly define why the special procedure is necessary. 3. In the event the sponsor of any items to come before the City Council feels it both appropriate and beneficial to the City, that sponsor may bring such items directly to the Regular Meeting with the concurrence of three Councilmembers. D. The Council President may affix an approximate time limit for each agenda item at the time of approval of the agenda. E. All proposed ordinances and resolutions shall be reviewed by the City Attorney and bear the Attorney's certification that they are in correct form before final passage. All accompanying documents shall be available before ordinances and resolutions can be passed. F. Resolutions of the City Council shall be signed by the Council President. G . A joint resolution of the City Council and the Mayor may be proposed when: 1. The subject of the resolution is of broad City concern, and the subject contains Council policy and administrative procedure; or 2. The subject of the resolution is of a ceremonial or honorary nature. H. Joint resolutions will be subject to the voting rules in TMC Chapter 2.04.130 and will be signed by the Mayor and Council President. The Council may provide for all Councilmembers to sign the joint resolution enacted under TMC Chapter 2.04.110 G. 2.04.120 Speaking Procedures A. Speaking procedure for agenda items under consideration is as follows: 1. A Councilmember desiring to speak shall address the chair and, upon recognition by the presiding officer, shall confine him/herself to the question under debate. Recognition of Councilmembers shall be by seniority. 2. Any member, while speaking, shall not be interrupted unless it is to call him or her to order. 3. No Councilmember shall speak a second time on the same motion before an opportunity has been given each Councilmember to speak on that motion. B. Addressing the Council for items under Council discussion shall proceed as follows: 1. Any person, with the permission of the presiding officer, may address the Council, but the presiding officer shall be required to recognize speakers in the following order: a. A person designated by the presiding officer to introduce the subject under discussion. b. Those whose request to be heard is contained in the written agenda. c. Those who have submitted their request to be heard in writing or to the City Clerk before the meeting. d. Those who ask recognition from the floor. 2. In addressing the Council, each person shall advance to the podium and, after recognition, give name and address, and — unless further time is given by the presiding officer -- shall limit his/her address to five minutes. All remarks shall be made to the Council as a body and not to any individual member or to the audience. 3. No person shall be permitted to enter into any discussion from the floor without first being recognized by the presiding officer. 4. Any person making personal, impertinent or slanderous remarks while addressing the Council shall be barred from further audience participation by the presiding officer unless permission to continue is granted by a majority vote of the Council. 2.04.130 Voting A. Silence of a Councilmember during a voice vote shall be recorded as an affirmative vote except where such a Councilmember abstains because of a stated conflict Council Meeting Procedures 5 5 of interest. Each member present must vote on all questions before the Council and may abstain only by reason of conflict of interest. B. A roll -call vote may be requested by the presiding officer or any member of the Council. Voting normally shall be by seniority; however, this procedure may be changed by the presiding officer. C. Confirmations of appointments by the Mayor, budget transfers, personnel levels, and formal motions, resolutions, ordinances and amendments thereto shall require the affirmative votes of four Councilmembers. 2.04.140 Executive Sessions The City Council may hold an Executive Session during a Regular Meeting, Special Meeting or Committee of the Whole meeting to consider certain matters as set forth in RCW 42.30.110. 2.04.150 Continuances Any hearing being held or ordered to be held by the City Council may be continued in the manner as set forth by RCW 42.30.100. 2.04.160 Adjournment A. Any Committee of the Whole, Regular, adjourned Regular, Special or adjourned Special Meeting may be adjourned in the manner as set forth in RCW 42.30.090. B. All meetings of the Council shall adjourn no Iater than 11:00 p.m. If the Council desires to extend the meeting, a motion shall be required of a majority plus one vote of Councilmembers present. Items not acted on by the 11:00 p.m. deadline shall be deferred to the next respective Council meeting as unfinished business, unless Council, by a majority vote of members present, determines otherwise. 2.04.170 Questions of Parliamentary Procedure Questions of parliamentary procedure not covered by this chapter shall be governed by Robert's Rules of Order, Newly Revised (latest edition). 2.04.180 Council Committees and Representatives A. There are four standing committees of the Council consisting of three members each. The Council President shall appoint the membership of each committee and the committee chair by the second Regular Meeting of each year. The chair for each committee shall set the schedule of meetings and cause them to be published. In the event a committee member is unable to attend a meeting, that member may ask another Councilmember to attend in his/her place. B. The standing committees shall consider and may make policy and legislative recommendations to the City Council on items referred to the committee by the Council President, the Council, administrative departments, boards or commissions. If budgeted in an amount less than or equal to $25,000, a committee can approve a bid or negotiation award by an affirmative vote of three committee members. If a unanimous committee vote is not obtained, the award will be referred to the City Council for action. The standing committees, their scopes of authority, and the supporting City departments are as follow: 1. Transportation Committee, which shall consider matters related to transportation, transportation plans, traffic, transit, streets, street lighting, signals, street LIDs, and rights-of-way in coordination with the Public Works Department and Department of Community Development. 2. Utilities Committee, which shall consider matters related to water; sewer; electric power; natural gas; telephone; cable television; telecommunications; solid waste reduction, reuse and recycling; river basins; and levies in coordination with the Public Works Department. 3. Finance and Safety Committee, which shall consider matters related to the general fiscal and financial operations of the City; budget and financial reports; and policy matters related to personnel including, but not limited to, the salary grade schedule, position classifications and salary changes in coordination with the Finance Department, Administrative Services Department, and City Administrator. They will consider library issues, tourism, administrative matters, and information technology issues in conjunction Council Meeting Procedures 6 6 with the City Clerk, Library Advisory Board, Lodging Tax Advisory Board, Chamber of Commerce, and Information Services. They shall consider matters related to police and fire protection; the municipal court; emergency services; and animal control in coordination with the Police Department, Fire Department, Civil Service Commission, Public Works Department, and Community -Oriented Policing Board. 4. Community Affairs and Parks Committee, which shall consider matters related to the planning of the physical, economic, aesthetic, cultural and social development of the City; and Comprehensive Plan, Zoning Code, Building Code, code enforcement, Sign Code and annexation policies, in coordination with the Department of Community Development, Human Services, Planning Commission, Hearing Examiner, Sister Cities Committee, Human Services Advisory Board, and the Equity and Diversity Commission. They shall consider matters relating to parks and park plans, recreation facilities and community activities, in coordination with the Parks and Recreation Department, the Arts Commission, and Park Commission. B. The Council President may establish such ad hoc committees as may be appropriate to consider special matters that do not readily fit the standing committee structure or that require special approach or emphasis. The Council President shall appoint Council representatives to intergovernmental councils, boards and committees as needed. C. Council committees shall consider all matters referred. Each committee chair shall report to the Council the findings of the committee. Committees may refer items to the Council with no committee recommendation. D. Each committee chair may review and approve his/her committee agenda and will approve committee minutes before distribution. The committee chair can authorize the cancellation of a committee meeting. An affirmative vote of three members of Finance and Safety Committee is required when the committee approves unbudgeted items. 2.04.190 Filling Council Vacancies If a vacancy occurs in the office of Councilmember, the Council will follow the procedures outlined in RCW 35A.12.050. In order to fill the vacancy with the most qualified person available until an election is held, the Council will widely distribute and publish a notice of the vacancy, the procedure and any application form for applying. The Council will draw up an application form, which contains relevant information to answer set questions posed by the Council. The application forms will be used in conjunction with an interview of each candidate to aid the Council selection of the new Councilmember. Section 2. Repealer. Ord. Nos. 1311, 1345, 1421, 1770 §1, and 1796 §3 (part) are hereby repealed. Section 3. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 4. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TU WILA, WASHINGTON, at a Regular Meeting thereof this o2 / St day of 2003. •• ( — ATTEST/ AUTHENTICATED: 1 ane E. Cantu, CMC, City Clerk APPROVED AS TO FORM BY: UGt�. Office of the C. Attorney Council Meeting Procedures 7 Steven M. Mullet, Mayor Filed with the City Clerk: 9// 74 3 Passed by the City Council: 1 .2 / ^ 3 Published: 7 3 Effective Date: 1%i ) 3 Ordinance Number: �G 7 City of Tukwila Washington Ordinance No. ,?OZ 09 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2024 §1 (PART), AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 2.04.070, RELATED TO COUNCIL PRESIDENTS AND MAYOR PRO TEMPORE; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council desires to amend Ordinance No. 2024 §1 (part), as codified at Tukwila Municipal Code Section 2.04.070, to declare that the general policy of the City Council is to elect presidents in rotating order, based upon seniority; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. TMC 2.04.070 "Council President -Mayor Pro Tempore," Amended. Ordinance No. 2024 §1 (part), as codified at Tukwila Municipal Code Section 2.04.070, is hereby amended to read as follows: 2.04.070 Council President—Mayor Pro Tempore. A. At the first Regular Meeting in January of each year, members of the City Council shall elect from their number a Council President who shall hold office at the pleasure of the Council. The general policy of the City Council is to elect presidents in a rotating order, based upon seniority. If a vacancy occurs in the office of Council President, the City Council, at their next Regular Meeting, shall select a new Council President to serve the remainder of the year. B. In the absence of the Mayor, the Council President shall become the Mayor Pro Tempore and perform the duties of the Mayor except that the Council President shall not have the power to appoint or remove any officer or to veto any ordinance. If a vacancy occurs in the office of the Mayor, the City Council — at their next Regular Meeting — shall elect from their number a Mayor who shall serve until a Mayor is elected and certified at the next municipal election. Section 2. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 3. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of WOVeM ,r , 2008. ATTEST /AUTHENTICATED: tChristy O'Flaherty, City C rk Haggert to . yor Filed with the City Clerk: gla7/0r Passed by the City Council: /113/095 Published: ///Lo / S Effective Date: /1 1F OS Ordinance Number: aoq C:\Documents and Settings\All Users \ Desktop \ Kelly \ MSDATA \ Ordinances \ Council Procedures.doc SK:ksn 10/28/2008 Page 1 of 1 SUMMARY OF Ordinance No. 2209 City of Tukwila, Washington On November 3, 2008 the City Council of the City of Tukwila, Washington, adopted Ordinance No. 2209, the main points of which are summarized by its title as follows: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2024 §1 (PART), AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 2.04.070, RELATED TO COUNCIL PRESIDENTS AND MAYOR PRO TEMPORE; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. The full text of this ordinance will be mailed upon request. Approved by the City Council at a Regular Meeting thereof on November 3, 2008. Melissa Hart, Deputy City Ierk Published Seattle Times: November 6, 2008 CERTIFICATE REGARDING OFFICIAL NEWSPAPER I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that The Seattle Times is the official newspaper for publishing City Council's action and business. Dated this 26th day of July, 2017. Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 00003 gf23dm28bb L43 King County Department of Assessments Accounting Division 500 Fourth Avenue, ADM -AS -0725 Seattle, WA 98104-2384 (206) 263-2381 FAX (206) 296-0106 Email: assessor.info@kingcounty.gov http://www.kinucountv.uov/assessor/ John Wilson Assessor I, John Wilson, King County Assessor, pursuant to the duty imposed upon me by RCW 84.48.130, certify that the assessed valuation of all the property subject to taxation situated within the King County boundaries of the City of Tukwila, as equalized and fixed by the County Board of Equalization and the State Board of Tax Appeals, as of January 28, 2017 (for taxes payable in 2017) is $5,763,649,829 (Grand Total) and $5,725,133,738 (Excess Total which excludes all exempt senior citizens). The TAV (timber assessed value) is $0. WITNESS my hand this 31st day of May, 2017. John Wilson King County Assessor JW:dsm CERTIFICATE REGARDING OUTSTANDING DEBT I, Peggy McCarthy, Finance Director of the City of Tukwila, Washington (the "City"), do hereby certify that the following are all of the City's currently outstanding general obligation bonds and long-term leases and financing contracts as of July 26, 2017 (excluding the City's Limited Tax General Obligation Bonds, 2017 issued on the date hereof): Voted and Nonvoted General Obligation Bonds and Obligations: Principal Amount Outstanding General Obligation Debt Outstanding Limited Tax General Obligation Debt Limited Tax General Obligation Refunding Bonds, 2008 $ 2,165,000 South Correctional Entity Facility Public Development Authority Bonds, Series 2009A and 2009B (Taxable Build America Bonds — Direct Payment) 6,093,600 Limited Tax General Obligation Bonds, 2010B 3,575,000 Limited Tax General Obligation Bonds, 2011 3,360,000 Limited Tax General Obligation Bond, 2013 562,104 Limited Tax General Obligation Bond, 2014 (Taxable) 3,560,000 Limited Tax General Obligation Note, 2014 (Taxable) 2,250,000 Limited Tax General Obligation Bonds, 2015 5,605,000 Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Bonds, 2016 $32,990,000 Long-term leases and conditional sale contracts (including COPs) and other debt: Designation None Dated as of this 26th day of July, 2017. 10076 00003 gf23dm28bb Outstanding Balance kc(a),64, PegcCarthy, Fina City of Tukwila, Wa erector ington BOND COUNSEL'S CALCULATION OF DEBT LIMIT Value of Taxable Property within the City of Tukwila, Washington, as of January 28, 2017 for regular taxes and excess levies payable in 2017, per certificate of the King County Assessor (excess total excluding exempt $ 5,725,133,738 senior citizens and timber assessed value): Nonvoted Limited Indebtedness: Nonvoted Debt Ceiling per RCW 39.36.020: 1.50% of value of taxable $ 85,877,006 property Less: Nonvoted debt outstanding per Certificate of Finance Director ($ 27,170,704) Proposed Limited Tax General Obligation Bonds, 2017 ($ 8,180,000) Leases/Sale Contracts ($ 0) Total Nonvoted Debt ($ 35,350,704) Remaining Nonvoted Debt Capacity $ 50,526,302 Total Debt Ceiling for General Municipal Purposes, Voted and Nonvoted: 2.50% value of taxable property (RCW 39.36.020) $ 143,128,343 Less: Voted Debt Outstanding per Certificate of the Finance Director ($ 32,990,000) Nonvoted debt from above ($ 35,350,704) Total Debt ($ 68,340,704) Remaining Debt Capacity Unused: $ 74,787,639 Based upon the certificate of assessed valuation of the King County Assessor and the certificate of general obligation debt outstanding as of July 26, 2017 of the City of Tukwila, Washington (the "City"), the issuance of the Limited Tax General Obligation Bonds, 2017 by the City, will be within the constitutional and statutory limits for nonvoted, voted and total indebtedness. Dated as of this 26th day of July, 2017. PACIFICA LAW GROUP LLP yLkto---CtrenBy Deanna Gregory 10076 00003 gf23dm28bb CERTIFICATE REGARDING BOND ORDINANCE I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington (the "City"), do hereby certify: 1. That the attached Ordinance No. 2541 (the "Ordinance") is a true and correct copy of an ordinance of the City Council, as adopted at a regular meeting of the City Council held on June 19, 2017, and duly recorded in my office, and that such Ordinance has not been amended or superseded. 2. That the meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of the meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the City Council voted in the proper manner for the adoption of the Ordinance; that all other requirements and proceedings incident to the proper adoption of the Ordinance have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. Dated this 26th day of July, 2017. �1, go Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 00003 gf23dm28bb City of Tukwila Washington Ordinance No. 511 1 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $8,800,000 TO FINANCE COSTS RELATED TO STREET IMPROVEMENTS AND PAYING COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council (the "Council") of the City of Tukwila, Washington (the "City") has deemed it is in the best interest of the City to make certain street improvements in the City (the "Project"); and WHEREAS, after due consideration the Council has determined that it is in the best interest of the City to authorize the issuance and sale of limited tax general obligation bonds to pay all or a portion of the costs of the Project and to pay costs of issuance for the Bonds; and WHEREAS, the Council wishes to delegate authority to the Finance Director, or his or her designee (the "Designated Representative"), for a limited time, to approve the method of sale and the interest rates, maturity dates, redemption terms and principal maturities for the bonds within the parameters set by this ordinance; and WHEREAS, the Bonds shall be sold by negotiated or competitive public sale as set forth herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 1 of 16 Section 1. Definitions. As used in this ordinance, the following words and terms shall have the following meanings, unless the context or use indicates another or different meaning or intent. Unless the context indicates otherwise, words importing the singular number shall include the plural number and vice versa. Beneficial Owner means any person that has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Bond Counsel means Pacifica Law Group LLP or an attorney at law or a firm of attorneys, selected by the City, of nationally recognized standing in matters pertaining to the tax exempt nature of interest on bonds issued by states and their political subdivisions. Bond Purchase Contract means the contract, if any, for the purchase of any Bonds sold by negotiated sale to the Underwriter, executed pursuant to Section 12. Bond Register means the registration books showing the name, address and tax identification number of each Registered Owner of the Bonds, maintained pursuant to Section 149(a) of the Code. Bond Registrar means, initially, the fiscal agent of the State, for the purposes of registering and authenticating the Bonds, maintaining the Bond Register, effecting transfer of ownership of the Bonds and paying interest on and principal of the Bonds. Bonds mean the City's Limited Tax General Obligation Bonds, 2017, or other such series designation as approved by the Designated Representative, authorized to be issued pursuant to the terms of this ordinance. Certificate of Award means the certificate, if any, for the purchase of any Bonds sold by competitive sale awarding the Bonds to the initial purchaser as set forth in Section 12 of this ordinance. City means the City of Tukwila, a municipal corporation duly organized and existing under the laws of the State. City Clerk means the duly appointed and acting City Clerk of the City or the successor to the duties of that office. City Administrator means the duly appointed and acting City Administrator, including anyone acting in such capacity for the position, or the successor to the duties of that office. Closing means the date of delivery of the Bonds to the Underwriter. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 2 of 16 Code means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code. Commission means the United States Securities and Exchange Commission. Continuing Disclosure Certificate means the written undertaking for the benefit of the owners and Beneficial Owners of the Bonds as required by Section (b)(5) of the Rule. Council or City Council means the Tukwila City Council, as the general legislative body of the City as the same is duly and regularly constituted from time to time. Debt Service Fund means the fund or account created pursuant to this ordinance for the purpose of paying debt service on the Bonds. Designated Representative means the Finance Director, or his or her designee. DTC means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for the Bonds pursuant to Section 4 of this ordinance. Fair Market Value means the price at which a willing buyer would purchase an investment from a willing seller in a bona fide, arm's-length transaction, except for specified investments as described in Treasury Regulation §1.148-5(d)(6), including United States Treasury obligations, certificates of deposit, guaranteed investment contracts, and investments for yield restricted defeasance escrows. Fair Market Value is generally determined on the date on which a contract to purchase or sell an investment becomes binding, and, to the extent required by the applicable regulations under the Code, the term "investment" will include a hedge. Federal Tax Certificate means the certificate executed by the Designated Representative setting forth the requirements of the Code for maintaining the tax exemption of interest on the Bonds, and attachments thereto. Finance Director means the duly appointed and acting Finance Director of the City or the successor to such officer. Government Obligations means direct or indirect obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America. Letter of Representations means the Blanket Issuer Letter of Representations given by the City to DTC, as amended from time to time. W: Word ProcessinglOrdinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 3 of 16 Mayor or City Mayor means the elected Mayor of the City or the successor to the duties of that office. MSRB means the Municipal Securities Rulemaking Board or any successors to its functions. Official Statement means the disclosure documents prepared and delivered in connection with the issuance of the Bonds. Project means the capital projects described in Section 2 of this ordinance. Project Fund means the account created pursuant to Section 8 of this ordinance. Record Date means the close of business for the Bond Registrar that is 15 days preceding any interest and/or principal payment or redemption date. Registered Owner means the person named as the registered owner of a Bond in the Bond Register. For so long as the Bonds are held in book -entry only form, DTC or its nominee shall be deemed to be the sole Registered Owner. Rule means the Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Sale Document means the Bond Purchase Contract or Certificate of Award, if any, executed by the Designated Representative in connection with the sale of the Bonds pursuant to Section 12 of this ordinance, which shall provide for the name, principal and interest payment dates and amounts, redemption/prepayment rights, and other terms to describe such Bonds as determined to be necessary by the Designated Representative. State means the State of Washington. Underwriter means any underwriter, in the case of a negotiated sale, or initial purchaser, in the case of a competitive sale, the Bonds selected pursuant to Section 12. Section 2. Authorization of the Project. The Bonds are being issued to finance and/or reimburse the City for costs of making certain street improvements in the City (the "Project") and paying costs of issuance for the Bonds. The cost of all necessary and other costs incurred in connection with the Project shall be paid from other City funds legally available for such purposes. Section 3. Authorization of Bonds and Bond Details. (a) For the purpose of paying and/or reimbursing the City for costs of the Project and paying costs of issuance, the City shall issue and sell limited tax general obligation bonds in an aggregate principal amount not to exceed $8,800,000 (the "Bonds"). W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 4 of 16 (b) The Bonds shall be general obligations of the City and shall be designated "City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2017" with additional series designation or other such designation as determined to be necessary by the Designated Representative. The Bonds shall be dated as of the date of Closing; shall be fully registered as to both principal and interest; shall be in the denomination of $5,000 each, or any integral multiple thereof, within a maturity; shall be numbered separately in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; shall bear interest from their date payable on the dates and commencing as provided in the Sale Document; and shall mature on the dates and in the principal amounts set forth in the Sale Document, as approved and executed by the Designated Representative pursuant to Section 12 of this ordinance. Section 4. Registration, Exchange and Payments. (a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Bonds at its designated office. The Bond Registrar may be removed at any time at the option of the Finance Director upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication of the Bonds. (b) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes (except as provided in the Continuing Disclosure Certificate), and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 4(g), but such Bond may be transferred as herein provided. All such payments made as described in Section 4(g) shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. (c) DTC Acceptance/Letters of Representations. The Bonds initially shall be held by DTC acting as depository. The City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository) or any W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 5 of 16 DTC participant, the payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Bonds are held by a depository, DTC or its successor depository or its nominee shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of any beneficial interest in such Bonds. (d) Use of Depository. (1) The Bonds shall be registered initially in the name of "Cede & Co.", as nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (A) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any substitute depository appointed by the Finance Director pursuant to subsection (2) below or such substitute depository's successor; or (C) to any person as provided in subsection (4) below. (2) Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository or a determination by the Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Finance Director may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1) above, the Bond Registrar shall, upon receipt of all outstanding Bonds together with a written request on behalf of the Finance Director, issue a single new Bond for each maturity of that series then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the Finance Director. (4) In the event that: (A) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained; or (B) the Finance Director determines that it is in the best interest of the beneficial owners of the Bonds that such owners be able to obtain physical Bond certificates, the ownership of such Bonds may then be transferred to any person or entity as herein provided, and shall no longer be held by a depository. The Finance Director shall deliver a written request to the Bond Registrar, together with a supply of physical Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request on behalf of the Finance Director to the Bond Registrar, new Bonds of such W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 6 of 16 series shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (e) Registration of Transfer of Ownership or Exchange; Change in Denominations. The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing on such Bond duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registered Owner) of the same date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer of or to exchange any Bond during the 15 days preceding any principal payment or redemption date. (f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the Registered Owner of any Bond with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the right of the Registered Owners or beneficial owners of Bonds. (g) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be calculated on the basis of a year of 360 days and twelve 30 -day months. For so long as all Bonds are held by a depository, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are no longer held by a depository, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the Record Date, or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least by the Record Date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the designated office of the Bond Registrar. If any Bond is duly presented for payment and funds have not been provided by the City on the applicable payment date, then interest will continue to accrue thereafter on the unpaid principal thereof at the rate stated on the Bond until the Bond is paid. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 7 of 16 Section 5. Redemption Prior to Maturity and Purchase of Bonds. (a) Mandatory Redemption of Term Bonds and Optional Redemption. The Bonds shall be subject to mandatory redemption to the extent, if any, set forth in the Sale Document and as approved by the Designated Representative pursuant to Section 12. The Bonds shall be subject to optional redemption on the dates, at the prices and under the terms set forth in the Sale Document approved by the Designated Representative pursuant to Section 12. (b) Purchase of Bonds. The City reserves the right to purchase any or all of the Bonds offered to it at any time at a price deemed reasonable by the Finance Director plus accrued interest to the date of purchase. (c) Selection of Bonds for Redemption. For as long as the Bonds are held in book -entry only form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held by a depository, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c). If the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon surrender of such Bond at the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. (d) Notice of Redemption. (1) Official Notice. For so long as the Bonds are held by a depository, notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar shall provide any notice of redemption to any beneficial owners. The notice of redemption may be conditional. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 8 of 16 All official notices of redemption shall be dated and shall state: (A) the redemption date; (B) the redemption price; (C) if fewer than all outstanding Bonds are to be redeemed, the identification by series and maturity (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed; (D) any conditions to redemption; (E) that unless conditional notice of redemption has been given and such conditions have either been satisfied or waived, on the redemption date the redemption price shall become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date; and (F) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the designated office of the Bond Registrar. On or prior to any redemption date, unless such redemption has been rescinded or revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. (2) Effect of Notice; Bonds Due. If notice of redemption has been given and not rescinded or revoked, or if the conditions set forth in a conditional notice of redemption have been satisfied or waived, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. (3) Additional Notice. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus: (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of the Bonds as originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the series and maturity date of W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 9 of 16 each Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at least 20 days before the redemption date to each party entitled to receive notice pursuant to Section 14 and the Continuing Disclosure Certificate and with such additional information as the City shall deem appropriate, but such mailings shall not be a condition precedent to the redemption of such Bonds. (4) Amendment of Notice Provisions. The foregoing notice provisions of this Section 5, including but not limited to the information to be included in redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. Section 6. Form of Bonds. The Bonds shall be in substantially the form set forth in Exhibit A, which is incorporated herein by this reference. Section 7. Execution of Bonds. The Bonds shall be executed on behalf of the City by the facsimile or manual signature of the Mayor and shall be attested to by the facsimile or manual signature of the City Clerk, and shall have the seal of the City impressed or a facsimile thereof imprinted, or otherwise reproduced thereon. In the event any officer who shall have signed or whose facsimile signatures appear on any of the Bonds shall cease to be such officer of the City before said Bonds shall have been authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issuance, shall be as binding upon the City as though said person had not ceased to be such officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the actual date of execution of such Bond shall be the proper officer of the City, although at the original date of such Bond such persons were not such officers of the City. Only such Bonds as shall bear thereon a Certificate of Authentication manually executed by an authorized representative of the Bond Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. Section 8. Application of Bond Proceeds. The Finance Director is hereby authorized to create a fund or account (the "Project Fund"), and subaccounts therein as necessary, for the purposes set forth in this section. A portion of the proceeds of the Bonds net of any Underwriter's discount and fees, shall be deposited in the Project Fund in the amounts specified in the closing memorandum prepared in connection with the issuance of the Bonds. Such proceeds shall be used to pay and/or reimburse the City for the costs of the Project and to pay costs of issuance of the Bonds. The Finance Director shall invest money in the Project Fund and the subaccounts contained W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 10 of 16 therein in such obligations as may now or hereafter be permitted to cities of the State by law and which will mature prior to the date on which such money shall be needed, but only to the extent that the same are acquired, valued and disposed of at Fair Market Value. Upon completion of the Project, Bond proceeds (including interest earnings thereon) may be used for other capital projects of the City or shall be transferred to the Debt Service Fund. Section 9. Tax Covenants. The City will take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds, including but not limited to the following: (a) Private Activity Bond Limitation. The City will assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. (b) Limitations on Disposition of Project. The City will not sell or otherwise transfer or dispose of: (i) any personal property components of the Project other than in the ordinary course of an established government program under Treasury Regulation 1.141-2(d)(4); or (ii) any real property components of the Project, unless it has received an opinion of nationally recognized bond counsel to the effect that such disposition will not adversely affect the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. (c) Federal Guarantee Prohibition. The City will not take any action or permit or suffer any action to be taken if the result of such action would be to cause any of the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) Rebate Requirement. The City will take any and all actions necessary to assure compliance with Section 148(0 of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Bonds. (e) No Arbitrage. The City will not take, or permit or suffer to be taken, any action with respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code. (0 Registration Covenant. The City will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code until all Bonds have been surrendered and canceled. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 11 of 16 (g) Record Retention. The City will retain its records of all accounting and monitoring it carries out with respect to the Bonds for at least three years after the Bonds mature or are redeemed (whichever is earlier); however, if the Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least three years after the earlier of the maturity or redemption of the obligations that refunded the Bonds. (h) Compliance with Federal Tax Certificate. The City will comply with the provisions of the Federal Tax Certificate with respect to the Bonds, which are incorporated herein as if fully set forth herein. The covenants of this section will survive payment in full or defeasance of the Bonds. (i) Bank Qualification. The Finance Director is hereby authorized to designate the Bonds as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code for investment by financial institutions if the City does not reasonably expect to issue more than $10,000,000 of qualified tax-exempt obligations in the calendar year in which the Bonds are issued. Section 10. Debt Service Fund and Provision for Tax Levy Payments. The City hereby authorizes the creation of a fund or account to be used for the payment of debt service on the Bonds (the "Debt Service Fund"). No later than the date each payment of principal of or interest on the Bonds becomes due, the City shall transmit sufficient funds, from the Debt Service Fund or from other legally available sources, to the Bond Registrar for the payment of such principal or interest. Money in the Debt Service Fund may be invested in legal investments for City funds, but only to the extent that the same are acquired, valued and disposed of at Fair Market Value. Any interest or profit from the investment of such money shall be deposited in the Debt Service Fund. The City hereby irrevocably covenants and agrees for as long as any of the Bonds are outstanding and unpaid that each year it shall include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with all other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the property tax levy permitted to cities without a vote of the electorate, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bonds. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and for the prompt payment of the principal of and interest on the Bonds when due. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 12 of 16 Section 11. Defeasance. In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt Service Fund or in another special account, cash or noncallable Government Obligations, or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive payment of principal, premium, if any, and interest from the Debt Service Fund or such special account, and such Bond shall be deemed to be not outstanding under this ordinance. The City shall give written notice of defeasance of the Bonds in accordance with the Continuing Disclosure Certificate. Section 12. Sale of Bonds. (a) Bond Sale. The Council has determined that it would be in the best interest of the City to delegate to the Designated Representative, for a limited time, the authority to determine the method of sale for the Bonds and to approve the final interest rates, maturity dates, redemption terms and principal maturities for the Bonds. (b) Negotiated Bond Sale. If the Designated Representative determines that the Bonds are to be sold by negotiated public sale, the Designated Representative shall solicit proposals from one or more qualified underwriting firms and shall select the Underwriter that submits the proposal that is in the best interest of the City. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Bond Purchase Contract. (c) Competitive Sale. If the Designated Representative determines that the Bonds are to be sold at a competitive public sale, the Designated Representative shall: (1) establish the date of the public sale; (2) establish the criteria by which the successful bidder will be determined; (3) request that a good faith deposit accompany each bid; (4) cause notice of the public sale to be given; and (5) provide for such other matters pertaining to the public sale as he or she deems necessary or desirable. The Designated Representative shall cause the notice of sale to be given and provide for such other matters pertaining to the public sale as he or she deems necessary or desirable. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Certificate of Award. (d) Sale Parameters. Subject to the terms and conditions set forth in this Section 12, the Designated Representative is hereby authorized to approve the method of sale and the final interest rates, aggregate principal amount, principal maturities, and redemption rights for the Bonds in the manner provided hereafter so long as: (1) the aggregate principal amount of the Bonds does not exceed $8,800,000; W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 13 of 16 (2) the final maturity date for the Bonds is no later than December 1, 2037; (3) the aggregate purchase price for the Bonds shall not be less than 98% of the aggregate stated principal amount of the Bonds, excluding any original issue discount; and (4) the true interest cost for the Bonds (in the aggregate) does not exceed 4.50%. Subject to the terms and conditions set forth in this section, the Designated Representative is hereby authorized to execute the appropriate Sale Document on behalf of the City. Following the execution of the Sale Document, the Designated Representative shall provide a report to the Council describing the final terms of the Bonds approved pursuant to the authority delegated in this section. The authority granted to the Designated Representatives by this Section 12 shall expire 180 days after the effective date of this ordinance. If a Sale Document for the Bonds has not been executed within 180 days after the effective date of this ordinance, the authorization for the issuance of the Bonds shall be rescinded, and the Bonds shall not be issued nor their sale approved unless such Bonds are re -authorized by ordinance of the Council. The ordinance re -authorizing the issuance and sale of such Bonds may be in the form of a new ordinance repealing this ordinance in whole or in part or may be in the form of an amendatory ordinance approving a Sale Document or establishing terms and conditions for the authority delegated under this Section 12. (e) Delivery of Bonds; Documentation. Upon the passage and approval of this ordinance and execution of the Sale Document, the proper officials of the City, including the Designated Representative, the City Administrator, the Mayor and the City Clerk, are authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Underwriter and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Sale Document. Such documents may include, but are not limited to, documents related to a municipal bond insurance policy delivered by an insurer to insure the payment when due of the principal of and interest on all or a portion of the Bonds as provided therein, if such insurance is determined by the Designated Representative to be in the best interest of the City. Section 13. Preliminary and Final Official Statements. The Designated Representative is hereby authorized to deem final the preliminary Official Statement relating to the Bonds for the purposes of the Rule. The Designated Representative is further authorized to approve for purposes of the Rule, on behalf of the City, the final Official Statement relating to the issuance and sale of the Bonds and the distribution of the final Official Statement pursuant thereto with such changes, if any, as may be deemed by him or her to be appropriate. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 14 of 16 Section 14. Undertaking to Provide Ongoing Disclosure. The City covenants to execute and deliver at the time of Closing a Continuing Disclosure Certificate. The Designated Representative is hereby authorized to execute and deliver a Continuing Disclosure Certificate upon the issuance, delivery and sale of the Bonds with such terms and provisions as such officer shall deem appropriate and in the best interests of the City. Section 15. Lost, Stolen or Destroyed Bonds. In case any Bonds are lost, stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount, date and tenor to the Registered Owner thereof if the owner pays the expenses and charges of the Bond Registrar and the City in connection therewith and files with the Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or destroyed and of his or her ownership thereof, and furnishes the City and the Bond Registrar with indemnity satisfactory to both. Section 16. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. Section 17. Payments Due on Holidays. If an interest and/or principal payment date for the Bonds is not a business day, then payment shall be made on the next business day and no interest shall accrue for the intervening period. Section 18. Corrections by City Clerk. Upon approval of the City Attorney and Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to this ordinance, including but not limited to the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; ordinance numbering and section/subsection numbering; and other similar necessary corrections. Section 19. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 15 of 16 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this i q TH day of 'Z.—LW() , 2017. ATTEST/AUTHENTICATED: r 0:6 it Clerk Christy O'FIa rty, MMC, City APPROVED AS TO FORM BY: Filed with the City Clerk: 6-I (4- 9 Passed by the City Council: ica Published: { Effective Date: Law Group L6..B, d Counsel Ordinance Number: Attachments: Exhibit A — Form of Bond Exhibit B — Certificate (by City Clerk) W: Word Processing\Ordinances\LTGO Bonds -Street improvements 5-31-17 PM:bjs Page 16 of 16 NO. Exhibit A Form of Bond [DTC LANGUAGE] UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF TUKWILA LIMITED TAX GENERAL OBLIGATION BOND, 2017 INTEREST RATE: % MATURITY DATE: REGISTERED OWNER: PRINCIPAL AMOUNT: CUSIP NO.: The City of Tukwila, Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay interest thereon from , 20 , or the most recent date to which interest has been paid or duly provided for until payment of this bond at the Interest Rate set forth above, payable on 1, 20 , and semiannually thereafter on the first days of each succeeding and . Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agent of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so long as the bonds of this issue are held in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of Representations (the "Letter of Representations") from the City to DTC. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. duly passed by the City Council on June 19, 2017 (the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. A-1 This bond is one of an authorized issue of bonds of like date, tenor, rate of interest and date of maturity, except as to number and amount in the aggregate principal amount of $ and is issued pursuant to the Bond Ordinance to provide a portion of the funds necessary to pay the cost of certain street improvements in the City and to pay costs of issuance. The bonds of this issue are subject to redemption prior to their stated maturities as provided in the [Bond Purchase Contract/Certificate of Award]. The City has irrevocably covenanted with the owner of this bond that it shall include in its annual budget and levy taxes annually, within and a part of the tax levy permitted to the City without a vote of the electorate, upon all the taxable property in the City without limitation as to rate or amount and in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond when due. The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The pledge of tax levies for payment of principal of and interest on the bonds may be discharged prior to maturity of the bonds by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist and to have happened, been done and performed precedent to and in the issuance of this bond exist and have happened, been done and performed and that the issuance of this bond and the bonds of this issue does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signatures of the Mayor and the City Clerk and the seal of the City to be imprinted, impressed or otherwise reproduced hereon as of this day of , 2017. [SEAL] CITY OF TUKWILA, WASHINGTON ATTEST: Christy O'Flaherty, MMC, City Clerk A-2 By Allan Ekberg, Mayor The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially the following form: Date of Authentication: CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the within -mentioned Bond Ordinance and is one of the Limited Tax General Obligation Bonds, 20 , of the City of Tukwila, Washington, dated , 2017. WASHINGTON STATE FISCAL AGENT, as Bond Registrar By A-3 Clerk lerk Exhibit B CERTIFICATE I, the undersigned, City Clerk of the City of Tukwila, Washington (the "City"), DO HEREBY CERTIFY: 1. The attached copy of Ordinance No. ).5 (4 1 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on June 19, 2017 as that ordinance appears in the minute book of the City; and the Ordinance will be in full force and effect five (5) days after its passage and publication as provided by law; and 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been fully fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. 3. That Ordinance No. D.,5‘4 1 has not been amended, supplemented or rescinded since its passage and is in full force and effect and that I am authorized to execute this certificate. -��- IN WITNESS WHEREOF, I have hereunto set my hand this day of — un?e^ 2017. CITY OF TUKWILA, WASHINGTON O'Flahe MC, City City of Tukwila Public Notice of Ordinance Adoption for Ordinance 2541. On June 19, 2017 the City Council of the City of Tukwila, Washington, adopted the following ordinance, the main points of which are summarized by title as follows: Ordinance 2541: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $8,800,000 TO FINANCE COSTS RELATED TO STREET IMPROVEMENTS AND PAYING COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. The full text of this ordinance will be provided upon request. Christy O'Flaherty, MMC, City Clerk Published Seattle Times: June 22, 2017 CERTIFICATE REGARDING MINUTES OF COMMITTEE OF THE WHOLE I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a full, true and correct copy of the minutes of the June 12, 2017 Committee of the Whole meeting, which reflect the first discussion of Ordinance No. 2541. Dated this 26th day of July, 2017. Christ 'Flaherty, City Clerk City of Tukwila, Washington Tukwila City Council Committee of the Whole Meeting City Hall Council Chambers June 12, 2017 — 7:00 P.M. MINUTES COMMITTEE OF THE WHOLE CALL TO ORDERIPLEDGE OF ALLEGIANCE Council President Robertson called the Tukwila City Council meeting to order at 7:00 p.m. and led the audience in the Pledge of Allegiance. OFFICIALS Present were Dennis Robertson, Council President; Councilmembers Joe Duffie, Verna Seal, Kathy Hougardy, De'Sean Quinn, Kate Kruller, Thomas McLeod. CITY OFFICIALS Allan Ekberg, Mayor; David Cline, City Administrator; Bob Giberson, Public Works Director; Rachel Bianchi, Communications and Government Relations Manager; Jay Wittwer, Fire Chief; Vicky Carlsen, Deputy Finance Director; Joseph Todd, Technology & Innovation Services Director; Laurel Humphrey, Council Analyst; Barbara Saxton, Acting Deputy City Clerk. PUBLIC COMMENTS There were no public comments. PUBLIC HEARING A resolution adopting the Six -Year Transportation Improvement Program for 2018-2023. Bob Giberson, Public Works Director, stated the Transportation Improvement Program (TIP) is primarily a financial planning document to be incorporated into the State and regional TIPs. The TIP generally lists transportation -related projects planned within the next six years that are deemed regionally significant or for which grant funding is awarded or expected. Projects are removed from the TIP when funding within the six-year window is not feasible or construction has been completed. Councilmember Kruller stated the Transportation and Infrastructure Committee had requested that the City's Walk & Roll Program be retained in the current TIP as a placeholder even though it is unfunded during the 2018-2023 time frame. 7:03 p.m. Council President Robertson opened the public hearing and called for public comments. There were no public comments. 7:03 p.m. Council President Robertson closed the public hearing. SPECIAL ISSUES a. A resolution adopting the Six -Year Transportation Improvement Program for 2018-2023. Councilmember Kruller indicated this item was discussed at the Transportation and Infrastructure Committee meeting on May 23, 2017. The committee members were unanimous in recommending approval with an amendment. Mr. Giberson requested the resolution be forwarded to the Consent Agenda at the next Regular Meeting. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 2 of 9 Councilmember Seal stated her support for continued inclusion of the Walk & Roll Program in the City's Transportation Improvement Program. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE CONSENT AGENDA AT THE NEXT REGULAR MEETING. b. A bond ordinance for residential street projects. Councilmember Seal indicated this item was discussed at the Finance Committee meeting on June 6, 2017. The committee members were unanimous in recommending approval. Vicky Carlsen, Deputy Finance Director, explained the ordinance would authorize the issue of Limited Tax General Obligation (LTGO) bonds expected to yield $8,400,000 for two residential street projects. Approximately $6,400,000 would be for 42nd Avenue South and $2,000,000 for 53rd Avenue South. The projects were budgeted for and included in the City's 6 -year financial plan. Ms. Carlsen stated Duncan Brown from PFM Group and Deanna Gregory from Pacifica Law Group were in the audience and available to answer questions. Councilmember Quinn asked if rates were still stable, as they were with the City's last bond sale. Duncan Brown, PFM Group, stated generally yes, interest rates are expected to remain relatively stable between now and the proposed July 13, 2017 sale date. The Federal Open Market Committee is scheduled to meet next week and is expected to increase the Federal Fund Rate; however, that is not expected to have a material impact on the bond sale next month. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. c. Consensus on draft fire station programming and budget implications. Councilmember McLeod indicated this item was discussed at the Public Safety Committee meeting on June 5, 2017. The committee members made no recommendation on a specific pathway and requested further information from staff prior to discussion by the full Council. Rachel Bianchi, Communications and Government Relations Manager, stated Council is being asked for consensus on a program option in order to move on to the next phase of the fire station design effort and remain on schedule. She noted there are many decisions to be made moving forward. The preliminary planning stage was based on the following criteria from the Public Safety Plan: • One headquarters station with 3 bays • Two other stations with 2 bays each • Sufficient space to grow to the year 2040 • Space for Fire Administration Justine Kim with Shiels Obletz Johnsen, the City's Project Manager for the Public Safety Plan; Bob Giberson, Public Works Director; and Fire Chief Jay Wittwer were also available to provide information and answer questions. Ms. Kim clarified that programming is the first of several phases. During the programming phase, the architect and engineer determine the building blocks of the project (types of spaces, number of spaces and dimensional aspects). Specific assumptions of the preliminary planning efforts are tested, particularly as they relate to budget implications. A long vision for the future provides a master plan of where the design will end up, which helps inform how the design should start. The next phase is the schematic design phase, followed by the design development phase and construction documents. Each of these phases will require the City Council to provide further direction on the final budget and building. The projects would go out to bid at approximately 90% completion of the construction documents phase. This point is flexible and would be timed to go to bid at the most beneficial time based on market conditions. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 3 of 9 Ms. Kim referenced pages 99-103 of the agenda packet, which depict the project elements as they are being considered with a Tong -range outlook -for the years 2040, 2060 and 2080. The 2040 Program provides for the square footage outlined in the Public Safety Plan, and means the facility is planned to be functional through the year 2040. Similarly, the 2060 and 2080 Programs mean the facility's needs have been projected out to serve the community through 2060 and 2080 respectively. Weinstein A+U, the City's architectural firm for the fire station projects, was hired after passage of the bond measure. They have worked with City staff in the programming phase to ensure the actual design will be close to the initial concept. As part of that work, the following changes were identified: 1) A Training Room of 900 square feet was added to the original 2040 Program, as this was a key item that the firefighters' planning group felt was a critical need. This could also function as a back-up Emergency Operations Center (EOC) in the future, if necessary. 2) With the addition of the training room, overall square footage of the stations stayed similar (a net increase of 1,058 square feet). 3) The headquarters station is planned to be at the new Station 52, since it will be more centrally located than Station 51. 4) The average size of the smaller stations increased to better meet the needs of a fully functioning station, and the headquarters station slightly decreased. 5) Stations 52 and 54 are now planned to be built at the same time, opening in 2020. In previous plans, Station 54 had been planned to open as late as 2024. Ms. Kim reviewed changes in square footage and details of the initial budget estimate and the revised budget estimate: = YEAR Project OF EXPENDITURE UTGO (voter- approved) IVOE) SUMMARY Enterprise Funds TOTAL Impact fees General Raid Fire Stations 18,824 4,750 858 - 24,432 Justice Center 28,629 - - - 28,629 Public Works Shop - - 14,747 14,746 29,493 Fadlities Total 47,453 4,750 15,605 14,746 82,554 Fire Apparatus/Equipment 29,932 - - - 29,932 Pobik Safety Plan Total $77,385 $4,750 $15,605 514,746 $112,486 Fire 5 ation Program Project £ F551 ategory - - - INt1 IAI BUOGET ESTIMATE FS 52 6,567 sf 1S 54 8,228 sf TOTAL 32,745 sf 17 950 sf A/E Services (both design & CA) 731 356 464 1,551 Land Acquisition - 653 862 1,515 Permits/Fees 255 89 116 460 Construction (pre -con, const, tax) 7,809 3,278 4,273 15,360 Construction Related Costs (incl bond) 1,047 438 551 2,036 PM Services (incl other prof Svcs) 460 297 397 1,154 Contingency (incl Construction & Pro)) 1,145 546 665 2,356 TOTAL 511,446 55,657 $7,329 524,432 1 Funding sources included in Public Safety Plan Initial budget estimate Fire Station Program - REVISED BUDGET ESTIMATE F551 9,426 sf (as FS S2 15,068 sf of 5/23/17) 1554 9,287 sf Project Category TOTAL FUNDING 33;781 sf GAP A/E Services (both design & CA) 635 1,052 626 2,314 763 Land Acquisition 653 - 862 1,516 1, Permits/Fees 166 301 164 631 172 Construction (pre -con, const, tax) 6,324 9,547 6,233 22,105 6,744 Construction Related Costs (incl bond) 657 1,184 709 2,550 514 PM Services (incl other prof svcs) 300 576 305 1,181 28 Contingency (incl Construction & Pro)) 749 1,094 765 2,608 252 TOTAL $9,486 $13,755 59,665 532,906M Revised budget estimate Based on the updated estimates, there is expected to be a $8,474,000 funding gap associated with the Public Safety Plan for the fire station projects and what it would take to build the three stations as outlined in the Plan. This gap is due to the following: Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 4 of 9 • Unprecedented cost escalation and market conditions. Typically a cost escalation factor of 3 to 4% per annum is built into construction estimates. Recently escalation has been running at 4.5% or higher per year. A separate issue is market conditions, which speak to the regional saturation of construction activities. When these factors are combined, a 15% to 35% (or higher) increase can be expected at the time of bidding for these projects. • Fire station construction costs in the region have increased from $375 to $575 per square foot in the last three years. • Bids, in general, throughout the region are coming in significantly higher than the estimates. Ms. Kim noted that she has recently seen school district projects come in at 15% to 20% over estimates after only 2 months. Mr. Giberson stated the City conducted a call for bids for the Major Maintenance on 3 Bridges Project in March, for which there was only a single bidder and that came in at $3.9 million over budget with no contingencies. When the contractor discovered they were the only bidder, the price went up. The project was rebid in May with incentives on road closures and traffic control and received 3 bids, 2 of which were under budget with contingencies. He also referenced bids for the 2017 Overlay Program. Tukwila and other jurisdictions are seeing a 20% increase in the price of asphalt and construction throughout the region. Councilmember Quinn asked about the growth projection factor used in planning for the 2040, 2060 and 2080 Programs. Chief Wittwer explained the breakdown took place as the group went through the programming phase. An ideal situation (a 60 -year buildout) was planned out and the group worked backwards from there. Predicting growth and community needs in the south end of the City's jurisdiction was a major component of their planning for the 2040, 2060 and 2080 Programs. Councilmember Kruller asked about the expectation for funding the 2040 Program and how that will impact planning for the 2060 and 2080 Program elements. Ms. Kim stated the 2040 Program elements are closest in alignment with the intent of the Public Safety bond measure. Planning is being done with the feasibility for future design being considered to be mindful of the City's needs for 2060 and 2080. Chief Wittwer referenced a fire station in North Las Vegas where future growth was planned for during a rebuilding project. They were able to design the building for future expansion, and additional space was added 18 years later. Ms. Bianchi referenced the Project Schedule on page 97 of the agenda packet. The blue bars represent the entire design phase for each project, as well as the multiple check-in opportunities with the City Council. Council President Robertson asked about the point when the contractor is committed to a cost. Ms. Kim stated that would be at a point toward the end of the blue bars—at 90% completion of the construction documents phase. The cost projections shown for the fire stations have been escalated to the current project schedule. Mr. Giberson explained four options are being presented for Council consideration to facilitate moving forward into the schematic design phase: Option A: Programming: Fulfill the 2040 Program to include program and estimated costs for the three additional items identified (storage facility, training tower, additional bays). Funding: Address the funding gap through revision of fire impact fees and careful cash flow management. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 5 of 9 Option B: Staff is now recommending Option B (over the earlier recommendation for Option A). Programming: Fulfill the 2040 Program to include program and estimated costs for the three additional items identified (storage facility, training tower, additional bays). Funding: Review options on funding at a future date. Option C: Consensus on programming only for Fire Station 51 and the three additional items identified (storage facility, training tower, additional bays), and review the full program and funding at a future date. Option D: Review options for programming and funding at a future date, acknowledging that additional costs may result. Staff feels Option B is the prudent course forward at this time. This would allow the City to continue to refine the numbers as more data is compiled in order to make decisions on funding options. Option D would have the most impact on costs due to delays. Option C would delay the schedule, as well as some impact on costs. Ms. Kim introduced Ed Weinstein, Principal of Weinstein A+U, Architects + Urban Designers, the firm providing architectural and engineering design services for the three fire stations. Mr. Weinstein explained their firm dealt with similar situations of egregious escalation in 2006, 2007 and 2008. They were selected by the City of Seattle to design the Fire Station 10 replacement project, with an allocated budget of $25 million under the city's fire levy program. Before Weinstein A+U could sign their contract with the City, a brief overview with a cost estimator showed the project was underfunded by at least $10 million. Seattle was faced with the decision of how to provide a facility the city could afford but also that would meet the needs of the community, either by scaling down the programming to fit the $25 million budget or by finding ways to fund the station as designed. After due deliberation, the Mayor decided it was appropriate to fund the station correctly and allocated $35 million. This was in 2006. As they were designing into 2007, costs escalated to 7 or 8% --rather than the planned 3 to 3 -1/2% --and then continued to grow. The architect/engineers found they could not redesign fast enough to stay ahead of escalation. The City decided they would actually save money by building the facility as designed, as value engineering would delay the project and they would lose productive use of those funds. During that same time period, a renovation of the William K. Nakamura Federal Courthouse in Seattle was planned. The project was funded by Congress with a budget thought to be appropriate at the time. When it turned out to have been dramatically underfunded, the GSA (General Services Administration) had to adjust the program downward. Again, the design firm could not value engineer fast enough to stay ahead. The project was funded at the level needed. Mr. Weinstein stated situations similar to the above are starting to happen now. He is currently involved with an affordable housing project in Pioneer Square which has experienced a 30% rate escalation in the last four months. Identifying sites for Fire Stations 52 and 54 will allow the team to calibrate generic estimates on a square footage basis. Costs may increase if there are limited site options. He referenced a comparable fire station project on Capitol Hill in Seattle. After review of alternative locations, it was determined the city would need to tear down the existing facility and build on the same spot. This created logistical challenges and design limitations due to the site constraints. Mr. Weinstein stated much more information will be available to the City in December if the team is able to continue with schematic design now, and he feels it would be a shame to lose the current momentum by shelving a decision. The Councilmembers asked clarifying questions and received additional information including: • Value engineering involves designing to reduce cost, and trying to do more with less. • Option A or B would mean moving forward on all three stations. Although the amount of design work would be limited for Stations 52 and 54 without having confirmed sites, design can proceed and planning can be in place for the three additional items. More information will result in a better cost estimation in December/January, which will facilitate decision-making. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 6 of 9 • The project schedule (page 97 of the agenda packet) would still apply under Option A or B. The schedule would become invalid under Option C or D. Through the expertise of the City's consultants, staff has been made aware of cost savings available by moving these projects through together as a suite of buildings, which enables savings on design costs and construction costs. • Fire Station 51 will move into schematic design this year. Schematic design for Stations 52 and 54 will proceed after site selection. The project schedule includes some "buffer time" (built into the purple bars) for site acquisition. • The $8,400,000 funding gap does not include the three additional items. The team could continue with the design process for those elements in order to be flexible in the event market conditions improve later. • A core value in the Public Safety Plan process has been to deliver to the voters what the City said it would deliver (the 2040 Program), without going back and asking for additional funds. Chief Wittwer reviewed the three additional items identified during the programming phase (not included in the voter approved public safety bond): 1) Storage Facility – The Fire Department currently houses much of its specialized equipment outside or within operating bays at the stations. A stand-alone storage facility on the Station 51 site may be a more cost-effective approach than using bays for storage. 2) Training Tower –Tukwila firefighters currently need to go outside the City limits—and out of service—for some required training opportunities. This costs the department time and money for travel and reduces the availability of staff within the City. 3) Additional Apparatus Bays at Stations 51 and 54 – Designing all new Tukwila stations with three apparatus bays, instead of the two that are currently planned, will better accommodate future population growth and allow for flexibility within the department. Ms. Kim provided information on the King Street Station project, which has been in the design phase for 20 years because of a similar situation. WSDOT has designed and shelved the project 4 or 5 times due to a run -away market. She suggested the City will have more certainty and a clearer picture of a plan custom fitted to a site if the design proceeds. This does not commit the City to construction costs. 8:11 p.m. Councilmember Quinn exited the Council Chambers. 8:13 p.m. Councilmember Quinn returned to the Council Chambers. Additional questions and answers included the following: • Options C and D would both have potential fiscal impacts due to project delays. • The 2080 Program would include the Fire Marshal's Office (FMO) at Station 52, a back-up EOC/training room at Station 52 (the primary EOC is to be located in the Justice Center), and community rooms at each of the three stations. Ms. Bianchi provided information on funding options for the additional $8.4 million needed to complete the fire stations program. Fire impact fees are fees assessed with new development—growth that pays for growth. Funding for fire equipment and apparatus that is part of the Public Safety Plan can be addressed through careful cash flow management. The funds allocated for fire equipment and apparatus are required over a 20 -year period, meaning the City can front -load additional funds needed for the fire stations from this fund. Impact fees and rate increases would be dedicated to pay that fund back and it is reasonable to assume those funds will be more than adequate to make the apparatus and equipment fund whole over the next 15 years. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 7 of 9 Ms. Bianchi explained this cash flow management can also be achieved by using specific revenue opportunities not currently budgeted, which include: • Land sales and/or long-term leases of the old Fire Station 53, and existing 51, 52 and 54 properties. • Additional REET funding dedicated to reimbursing the equipment and apparatus fund above what is budgeted. The City has seen significant increases in REET funds, which have come in between 25% and 600% above budget since 2010. • Dedication of revenues above budget to backfill the apparatus and equipment fund. This would include fund balances of general fund dollars not spent in a calendar year. Additional questions and answers included the following: Q: Will additional costs be incurred in the programming phase for the three additional items? A: The cost would come if those elements are moved into the schematic design phase. 8:25 p.m. Councilmember Hougardy exited the Council Chambers. 8:27 p.m. Councilmember Hougardy returned to the Council Chambers. Q: Can the same type of cost increases be expected for the Justice Center project and for the City Shops? A: There will likely be cost escalations. It is too early to determine a specific number. At this same point in programming for the Justice Center, we would have this discussion again. Q: Do the estimates for the cost of land seem underpriced? The Justice Center and City Shops will likely be located in a commercial area. A: These are valid points; at this time the value of land and potential alternative sites are unknown. Q: Should a decision be made before a Program Management Quality Assurance (PMQA) firm is installed and available to provide an opinion? A: It would likely be the end of July before a contract would be approved. Considering the relative costs over the next 6 weeks, Administration feels it is worth proceeding on a parallel process. Q: Are decisions made now reversible? A: Absolutely. Councilmember McLeod noted the bond measure vote took place 9 months ago, and costs have been rising and are impacting project estimates. The decision now is whether to continue forward with design to a point when more accurate cost estimates would be available. Both the PMQA firm and Public Safety Bond Financial Oversight Committee will be in place soon and available to weigh in on these issues. Councilmember Duffle stated he is in favor of moving forward. Council President Robertson feels it is possible the total excess costs for the fire station projects could exceed $8.4 million, and it may not be possible to make a definitive statement that no tax of citizens or reduction in the proposed services would occur. A lot of policy decisions still need to be made. He discussed rough calculations that indicate it is reasonable to think there will be higher costs for the other projects within the Public Safety Plan. He recommends moving forward with Option B, and proposed that means to move forward beyond schematic design for Fire Station 51 to the full Option B as presented. He stated he is pleased the Council approved bringing a Program Management Quality Assurance (PMQA) firm to the project, and noted the Mayor has signature authority to sign a contract to expedite the typical contract process. He would like the first task to be looking at the budget and schedule for all four elements. He feels the Council needs to know the money is feasible before total project decisions are made. He explained the bonds were let for a significant amount of money, and the City has three years to commit those funds. He also suggested the Finance Committee look at all possible ways to fund the increased costs beyond those presented to date. He feels better cost estimates and potential funding possibilities could be available by the end of summer. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 8 of 9 Councilmember Seal stated Option B would provide the Council with more information as the process moves forward. She agreed part of that will be to explore additional funding options, and would like the City to move forward on a path to deliver what was promised. Councilmember Hougardy stated she is in support of Option B. A lot of items proposed by Council President Robertson would fit with the work in Option B and allow the City to continue with the design process. This will allow for firmer information relating to the funding gap, involvement by the PMQA firm, and to consider all projects within the Public Safety Plan. There are financial avenues specific to -the fire station projects, such as fire impact fees. Further discussion is needed on the 2040, 2060 and 2080 programming models and the three additional items. Councilmember Quinn stated he participated on the interview panel for a PMQA firm. All of the candidates mentioned the current price escalations and market conditions and stated they have not seen conditions like this in a long time. He feels Option B is a fiscally responsible decision that looks at market conditions, but does not cost more money while more information is collected. It would take into account what is known now and provide a strategy to deal with cost containment. If we accelerate some actions, we will not have the costs associated to be informed. Option B gives the City an opportunity to reassess the project scope once more information is available. He noted the line of questioning and process during the Public Safety Committee meeting discussion was very valuable. He is looking forward to a collaborative relationship with a PMQA firm. Councilmember Kruller stated she is in favor of Option B to keep the project moving forward in an efficient way. She would like to see a contract for PMQA services finalized as soon as possible. Councilmember McLeod stated the City's recent study relating to the question of whether to join a Regional Fire Authority determined the City wanted the best fire department possible. While the bond amount determines certain parameters, he is in favor of getting all options on the table until it is decided they need to be taken off. He feels the process in place is working and will help identify elements that can be implemented. He stated he is in favor of Option B. COUNCIL CONSENSUS EXISTED TO PROCEED WITH OPTION B, AND TO EXPEDITE A CONTRACT WITH THE SELECTED PMQA FIRM TO THE EXTENT POSSIBLE. REPORTS a. Mayor Mayor Ekberg reported on the retirement celebration for Evie Boykan on June 7, 2017. He also noted that four Foster High School students were recognized with scholarships at Alaska Airlines' recent graduation recognition ceremony. b. City Council Councilmember Duffie attended the Mayors' Luncheon event on June 10, 2017. Councilmember Seal participated in a National League of Cities webinar on "Civic Engagement and Health: How Partnerships Enhance and Contribute to Building a Culture of Health." She will distribute information to staff. Councilmember Hougardy hosted the Council Chat at Confetti Confections on June 10, 2017. Although the group of attendees was small, she feels the Chat is an important opportunity for accessibility of the Council to the public. Councilmember Quinn attended Evie Boykan's retirement celebration and expressed appreciation for her public service. He noted she is still as passionate about human services issues as when he first met her many years ago. Tukwila City Council Committee of the Whole Minutes June 12, 2017 Page 9 of 9 Councilmember Kruller noted there will be a public hearing on design review and a conditional use permit for the Tukwila School District's Early Learning Center on June 22 at 6:30 p.m. in the Council Chambers. She also noted the value of watching out for other residents in your neighborhoods, including senior citizens, who may need assistance at times. Councilmember McLeod offered thanks to the Council, Council President Robertson, City staff and firefighters for work related to the Public Safety Plan process. He noted big issues are being discussed, and the process is not being rubberstamped. The Council is sharing voices of the community, and City Administration is sharing information with Council. He feels it has been a great process. c. Staff There was no report. d. Council Analyst There was no report. ADJOURNMENT 9:05 p.m. COUNCIL PRESIDENT ROBERTSON DECLARED THE COMMITTEE OF THE WHOLE MEETING ADJOURNED. e nis Robertson, Council Presiden L L2 �r1 Barbara Saxton, Actii' g eputy City Clerk APPROVED BY THE COUNCIL PRESIDENT: 06/21/17 AVAILABLE ON THE CITY WEBSITE: 06/22/17 CERTIFICATE REGARDING MINUTES OF CITY COUNCIL MEETING I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a full, true and correct copy of the minutes of the June 19, 2017 regular meeting of the City Council, which reflect the passage and adoption of Ordinance No. 2541. Dated this 26th day of July, 2017. Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 00003 gf23dm28bb Tukwila City Council City Hall Council Chambers MINUTES REGULAR MEETING CALL TO ORDER/PLEDGE OF ALLEGIANCE/ROLL CALL Regular Meeting June 19, 2017 — 7:00 P.M. Mayor Ekberg called the Regular Meeting of the Tukwila City Council to order at 7:05 p.m. and led the audience in the Pledge of Allegiance. ROLL CALL Christy O'Flaherty, City Clerk, called the roll of the Council. Present were Councilmembers Joe Duffie, Dennis Robertson, De'Sean Quinn, Thomas McLeod. MOVED BY DUFFIE, SECONDED BY ROBERTSON TO EXCUSE COUNCILMEMBERS SEAL, HOUGARDY AND KRULLER FROM THE MEETING. MOTION CARRIED 4-0. CITY OFFICIALS Allan Ekberg, Mayor; Rachel Bianchi, Acting City Administrator; Bob Giberson, Public Works Director; Jack Pace, Community Development Director; Mike Villa, Police Chief; Jay Wittwer, Fire Chief; Vicky Carlsen, Deputy Finance Director; Kimberly Walden, Municipal Court Judge; Trish Kinlow, Court Administrator; Robert Eaton, Parks and Recreation Manager; Laurel Humphrey, Council Analyst; Christy O'Flaherty, City Clerk. SPECIAL PRESENTATIONS a. New employee introductions: Police Department: Oath of Office to Officer Peter Tiemann (Badge #229) Mayor Ekberg administered the Oath of Office to Officer Tiemann (Badge #229). Police Department: Rebecca Kalnasy, Police Records Specialist; Police K9, Apollo (rescue dog) Golf Course: Ryan Rosevear, Golf Maintenance Specialist; Nick Kuipers, Golf Mechanic Community Development: Lauri Dunning, Code Enforcement Officer; Katie Wendel, Transportation Outreach/Marketing Assistant Court: Lynne Sutherland, Judicial Support Associate II; Rajyanessa Canos, Judicial Support Associate II Fire Department: Mark Goetsch, Firefighter; Cory Murrell, Firefighter The Counc'lmembers congratulated the new City employees and welcomed them to the City. PUBLIC COMMENTS There were no public comments. CONSENT AGENDA a. Approval of Minutes: 6/5/17 (Regular) b. Approval of Vouchers #375043-375152; #170401, #170601-170602 in the amount of $1,663,700.31. c. Approve a fireworks permit submitted by Western Display Fireworks, Ltd., for a fireworks display at the Family Fourth at the Fort celebration on July 4, 2017 at the Starfire Sports Complex. [Reviewed and forwarded to Consent by the Public Safety Committee on 6/5/17.] Tukwila City Council Regular Meeting Minutes June 19, 2017 Page 2 of 4 d. Authorize the replacement and purchase of the Fire Department breathing equipment fit testing system in the amount of $15,491.45. [Reviewed and forwarded to Consent by the Finance Committee on 6/6/17.] e. Contracts for recipients of lodging tax funds: (1) Authorize the Mayor to sign a contract with Seattle Southside Regional Tourism Authority (SSRTA) for the use of lodging tax funds in the amount of $472,500. (2) Authorize the Mayor to sign a contract with the Museum of Flight for the use of lodging tax funds in the amount of $50,000. (3) Authorize the Mayor to sign a contract with Starfire Sports for the use of lodging tax funds in the amount of $42,000. [Reviewed and forwarded to Consent by the Community Development and Neighborhoods Committee on 6/12/17.] f. A resolution adopting a Six -Year Transportation Improvement Program for 2018-2023. [Reviewed and forwarded to Consent by Committee of the Whole on 6/12/17] RESOLUTION NO. 1910 g. A resolution declaring certain fleet vehicles and equipment surplus, and authorizing their sale or disposal. RESOLUTION NO. 1911 [Reviewed and forwarded to Consent by the Transportation and Infrastructure Committee on 6/13/17.] h. Award a bid and authorize the Mayor to sign a contract with Razz Construction, Inc., for the Major Maintenance of 3 Bridges Project (Grady Way Bridge, Beacon Avenue South Bridge, Frank Zepp Bridge) in the amount of $2,688,958.00. [Reviewed and forwarded to Consent by the Transportation and Infrastructure Committee on 6/13/17.] i. Award a bid and authorize the Mayor to sign a contract with Hoffman Construction for the Cascade View "Safe Routes to School" Phase II Project in the amount of $1,412,889.25. [Reviewed and forwarded to Consent by the Transportation and Infrastructure Committee on 6/13/17.] j. Award a bid and authorize the Mayor to sign a contract with McCann Construction Enterprises, Inc., for the 2017 Annual Small Drainage Program in the amount of $451,823.75. [Reviewed and forwarded to Consent by the Transportation and Infrastructure Committee on 6/13/17.] MOVED BY DUFFIE, SECONDED BY ROBERTSON, THAT THE CONSENT AGENDA BE APPROVED AS SUBMITTED. MOTION CARRIED 4-0. UNFINISHED BUSINESS a. An ordinance authorizing the issuance of Limited Tax General Obligation bonds in the aggregate principal amount of not to exceed $8,800,000 to finance costs related to street improvements and paying costs of issuing the bonds; providing the form, terms and covenants of the bonds; providing for the disposition of the proceeds of the sale of the bonds; delegating authority to approve the method of sale and the final terms of the bonds; and providing for other matters relating thereto. MOVED BY DUFFIE, SECONDED BY ROBERTSON THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 4-0. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $8,800,000 TO FINANCE COSTS RELATED TO STREET IMPROVEMENTS AND PAYING COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Tukwila City Council Regular Meeting Minutes June 19, 2017 Page 3 of 4 MOVED BY DUFFIE, SECONDED BY QUINN THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 4-0, TO ADOPT ORDINANCE NUMBER 2541. REPORTS a. Mayor Mayor Ekberg reported that this past week he attended a summer housing information session at the new Tukwila Library sponsored by the City's Human Services Office and the Tukwila School District. This was an educational opportunity regarding housing needs and opportunities. He would like to see this session repeated with greater outreach to the community. b. City Council Councilmember Duffie attended the Foster High School graduation, where one of the graduates received a total of $200,000 in scholarships throughout her high school years. Councilmember Quinn also attended the Foster High School graduation with his whole family. It was well attended and an inspiring event. He commended the Police Department for their good work in directing traffic. Councilmember McLeod attended the recent Senior Awards night at Foster High School on behalf of the Mayor to present the "Tukwila City of Opportunity" scholarships to the recipients. He then attended the graduation ceremony at the high school the next day. He extended a reminder that the Tukwila Planning Commission will be conducting a public hearing at their meeting on Thursday, June 22, 2017 in the Council Chambers. The hearing is to take comments regarding design of additions at Foster High School, to include reductions in parking. c. Staff Rachel Bianchi, Acting City Administrator, referenced the City Administrator (CA) Report and offered to answer any questions. She also relayed that the final report from the Center for New Urbanism (CNU) regarding the charrette focusing on Tukwila International Blvd. has been put in the Councilmember boxes. d. City Attorney There was no report. e. Council Analyst There was no report. MISCELLANEOUS Council President Robertson said that Councilmember Kruller sent an email referencing the recent SCA/PIC (Sound Cities Association Public Issues Committee), where feedback is requested regarding the Veterans, Seniors and Human Services Levy. On May 22, 2017, King County Executive Dow Constantine announced a proposal to place a Veterans, Seniors and Human Services Levy on the ballot this November to replace the one that expires at the end of 2017. As proposed the property tax would be levied at a rate of $0.12 per $1,000 in assessed valuation generating about $60.7 million in levy revenues in 2018. One third of the proceeds would go to each of the three service categories of veterans, military service members and their families, and seniors and vulnerable populations. At least half of all first-year levy proceeds would be dedicated to housing stability, including capital investments, and one-quarter would be devoted to housing stability in future years. The PIC would like feedback prior to their July 12 meeting. MOVED BY ROBERTSON, SECONDED BY MCLEOD TO SUPPORT THE PROPOSAL TO PLACE A VETERANS, SENIORS AND HUMAN SERVICES LEVY ON THE BALLOT THIS NOVEMBER 2017 (REPLACING THE LEVY THAT EXPIRES AT THE END OF 2017). MOTION CARRIED 4-0. Tukwila City Council Regular Meeting Minutes June 19, 2017 Page 4 of 4 Councilmember Quinn extended a reminder that 160 volunteers are needed at Cascade View Park Saturday, July 8, 2017 to construct a playground based on funding from the KaBoom grant. Volunteers can also help with site preparation on July 6. Volunteers must be at least 18 years of age and breakfast and lunch will be provided. ADJOURNMENT 7:44 p.m. MOVED BY DUFFIE, SECONDED BY ROBERTSON TO ADJOURN THE REGULAR MEETING. MOTION CARRIED 4-0. Allan Christy O'FI- -rty, City Clerk APPROVED BY THE CITY COUNCIL: 6/26/17 AVAILABLE ON CITY WEBSITE: 6/27/17 CERTIFICATE OF AWARD CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2017 With respect to the above -captioned bonds (the "Bonds"), the undersigned certifies as follows: 1. The undersigned is the Finance Director (the "Designated Representative") of the City of Tukwila, Washington (the "City"), and makes this certification for and on behalf of the City pursuant to the authorization and direction contained in Ordinance No. 2541 of the City adopted by the City on June 19, 2017 (the "Ordinance"). 2. Pursuant to Section 12(c) of the Ordinance, the Designated Representative determined that it was in the best interest of the City for the Bonds to be sold at a competitive public sale. 3. In accordance with the Ordinance, the Official Notice of Sale dated July 5, 2017 ("Notice of Sale"), has been prepared and distributed. Attached as Exhibit A hereto is the Notice of Sale, together with any amendments or supplements. 4. On July 13, 2017, bids for the purchase of the Bonds, as summarized on Exhibit B hereto, were received and opened in accordance with the Notice of Sale. 5. The sale of the Bonds is hereby awarded to FTN Financial Capital Markets (the "Purchaser"), the Purchaser's bid being the best responsible bid determined by the method of calculation therefor contained in the Notice of Sale as follows: True Interest Cost: 2.765633% (as resized from the original bid of 2.766197%). A copy of the Purchaser's bid setting forth interest rates and purchase price for the Bonds is attached as Exhibit C hereto. 6. The Bonds shall be dated, mature, bear interest and be subject to redemption and other terms, all as set forth in Exhibit D hereto. Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain construction and related improvement projects in the City, and (ii) to pay the costs of issuance of the Bonds. 7. All bids received other than that of the Purchaser are hereby rejected. Dated: July 13, 2017 CITY?F TUKWILA, WASHINGTON C Peggy t'E `hy, Finance Dir Designated Representative 10076 00003 gg1243501n EXHIBIT A OFFICIAL NOTICE OF SALE 10076 00003 gg1243501n OFFICIAL NOTICE OF SALE $8,160,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 NOTICE IS HEREBY GIVEN that electronic bids will be received by the City of Tukwila, Washington (the "City"), for purchase of the above described bonds (the "Bonds") at 8:30 a.m. Pacific Time on July 13, 2017 or such other day or time and under such other terms and conditions as may be established by the City and communicated as described under "Modification; Cancellation; Postponement." The Bonds will be sold on an all -or -none basis. Bids must be submitted electronically as described below. Bids must be submitted electronically via the Qualified Electronic Bid Provider in accordance with this Official Notice of Sale. The City has designated PARITY® as the Qualified Electronic Bid Provider for purposes of receiving electronic bids for the Bonds. Electronic bids will be received via PARITY® until the time and date of sale, and no bid will be accepted after that time. For further information about PARITY® including any fees charged, potential bidders may contact PARITY® at (212) 849-5021. By designating a bidding service as a Qualified Electronic Bid Provider, the City does not endorse the use of such bidding service. See "BIDDING INFORMATION AND AWARD— Submission of Bids" below. All bids properly received will be considered and acted on by the City Finance Director on behalf of the City by 12:00 p.m. Pacific Time on the sale date. Bidders are referred to the attached Preliminary Official Statement for additional information regarding the City, the Bond Ordinance (as defined herein), the Bonds, the security therefor, and other matters. Modification; Cancellation; Postponement. Bidders are advised that the City may modify the terms of this Official Notice of Sale prior to the time set for the receipt of bids. Any such modifications will be provided to the Qualified Electronic Bid Provider and i -Deal Prospectus on or prior to the time bids are due. In addition, the City may cancel or postpone the date and time for the receipt of bids for the Bonds at any time prior to the time bids are due. Notice of such cancellation or postponement will be communicated to the Qualified Electronic Bid Provider and i -Deal Prospectus as soon as practical following such cancellation or postponement. If a postponement occurs, bids will be received at the time and in the manner the City will determine. As an accommodation to bidders, telephonic, or electronic notice of any amendment or modification of this Official Notice of Sale will be given to any bidder requesting such notice from the City's Financial Advisor, PFM Financial Advisors LLC, telephone: (206) 858-5363 or e-mail at: sea-advisors@pfm.com. Failure of any bidder to receive such notice by telephone, the Qualified Electronic Bid Provider or i -Deal Prospectus will not affect the legality of the sale. Each bidder (and not the City or its Financial Advisor) is responsible for the timely delivery of its bid. The official time will be determined by the City and not by any bidder or Qualified Electronic Bid Provider. " Preliminary, subject to change. vii Description of the Bonds Bond Details. Each Bond will be dated its date of initial delivery. The Bonds will bear interest payable semiannually on each June 1 and December 1, beginning December 1, 2017, to maturity or earlier redemption. Principal will be payable on the dates and in the amounts shown below, except as may be adjusted as described herein. Due Due Dec. 1 (1) Amount(1) Dec. 1 (1) Amount(1) (1) 2018 305,000 2028 410,000 2019 315,000 2029 420,000 2020 320,000 2030 435,000 2021 330,000 2031 445,000 2022 340,000 2032 460,000 2023 350,000 2033 475,000 2024 360,000 2034 485,000 2025 375,000 2035 500,000 2026 385,000 2036 520,000 2027 395,000 2037 535,000 Preliminary; subject to adjustment by the City as provided in this Official Notice of Sale. These amounts will represent serial maturities unless term bonds are specified, by the successful bidder, as described in this Official Notice of Sale, in which case these amounts will represent mandatory redemption amounts of term bonds. See "Redemption Provisions—Mandatory Redemption" below. Adjustment of Principal Amount of Bonds and Bid Price for the Bonds Before Bid Opening. Bidders are advised that the City may increase or decrease the total principal amount and/or the amounts of individual maturities of Bonds stated in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus) prior to the bidding. If such changes are made, they will be reflected in the Official Bid Form to be made available through the Qualified Electronic Bid Provider. After Receipt of the Bids. Following the time bids are due, the City reserves the right to increase or decrease the aggregate principal amount of the Bonds by an amount not to exceed 15 percent, rounded up to the nearest $5,000. Adjustments of the aggregate principal amount in excess of 15 percent, rounded up to the nearest $5,000, may be made with approval of the successful bidder. The price bid by the successful bidder will be adjusted by the City to reflect an increase or decrease in the principal amount and maturity schedule for the Bonds, taking into account the interest rates and underwriting compensation in the bid as submitted. In the event the City elects to adjust the bond size after the bid pursuant to this Official Notice of Sale, the underwriter's discount (net of bond insurance expense, if any), expressed in dollars per thousand, will be held constant. The City will not be responsible in the event and to the extent that any adjustment affects the net compensation to be realized by the successful bidder, or the true interest cost of the winning bid or its ranking relative to other bids. Redemption Provisions Optional Redemption. The Bonds maturing on December 1, 2018 through December 1, 2026 are not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after December 1, 2027, are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027, at a price of par plus accrued interest, if any, to the date fixed for redemption. Mandatory Redemption. Bidders have the option to designate part or all of the Bonds as term bonds subject to mandatory redemption at a price of par plus accrued interest, in the years and in the amounts set forth in the serial maturity schedule for the Bonds, subject to adjustment as described herein. Any term bonds so designated must consist of the total principal payments for two or more consecutive years and mature on the latest of such years. If no term bonds are designated, the Bonds will mature in the amounts and on the dates set forth in the serial maturity schedule set forth above and subject to adjustment as described herein. See "DESCRIPTION OF THE BONDS— Redemption Provisions" in the Preliminary Official Statement. Purpose of the Bonds Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain road construction and related improvement projects in the City, and (ii) to pay the costs of issuance of the Bonds. viii Security for the Bonds The Bonds are limited tax general obligation of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in the Preliminary Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit, and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest on the Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. See "SECURITY FOR THE BONDS" in the Preliminary Official Statement. Registration and Book -Entry Transfer System The Bonds will be issued as fully registered bonds and, when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denomination of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive physical certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee for DTC, references to the Registered Owners herein will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. See APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM" in the Preliminary Official Statement for the Bonds. BIDDING INFORMATION AND AWARD Submission of Bids Bids for the Bonds are to be submitted electronically via the Qualified Electronic Bid Provider. Hard copy bids will not be accepted. By submitting a bid for the Bonds, such bidder thereby agrees to the following terms and conditions: (i) If any provision in this Official Notice of Sale with respect to the Bonds conflicts with information or terms provided or required by the Qualified Electronic Bid Provider, this Official Notice of Sale, including any amendments issued through the Qualified Electronic Bid Provider and i -Deal Prospectus, shall control. (ii) Each bidder is solely responsible for making necessary arrangements to access the Qualified Electronic Bid Provider for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus). (iii) The City has no duty or obligation to provide or assure access to the Qualified Electronic Bid Provider to any bidder, and the City shall not be responsible for proper operation of, or have any liability for, any delays, interruptions or damages caused by use or attempted use of the Qualified Electronic Bid Provider or any incomplete, inaccurate or untimely bid submitted by any bidder through the Qualified Electronic Bid Provider. (iv) The City is permitting the use of the Qualified Electronic Bid Provider as a communication mechanism, and not as the City's agent, to conduct the electronic bidding for the Bonds. The Qualified Electronic Bid Provider is acting as an independent contractor, and is not acting for or on behalf of the City. (v) The City is not responsible for ensuring or verifying bidder compliance with any Qualified Electronic Bid Provider procedures. (vi) If a bid is accepted by the City, this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus) and the information that is submitted electronically through the Qualified Electronic Bid Provider shall form a contract, and the bidder shall be bound by the terms of such contract. (vii) Information provided by the Qualified Electronic Bid Provider to bidders shall form no part of any bid or of any contract between the successful bidder and the City unless that information is included in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus). ix Bid Details and Parameters Form of Bids. Bids for the Bonds must be unconditional, and for not less than the entire offering of the Bonds. By submitting a bid, each bidder agrees to all of the terms and conditions of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus). Bids must be submitted electronically via the Qualified Electronic Bid Provider. Bids may not be withdrawn or revised after the time that bids are due. Interest Rates Bid. Bids may specify any number of interest rates in multiples of one-eighth of one percent (1/8 of 1 percent) or one-hundredth of one percent (1/100 of 1 percent). All Bonds of the same maturity must bear interest at the same rate and no Bond shall bear interest at more than one rate. No rate of interest may exceed 5.0 percent. Premium and Discount. No bid will be considered for a price that is less than 98 percent or more than 120 percent of the par value of the Bonds. Each maturity must be reoffered at a yield that will produce a price of not less than 98 percent of the principal amount for that maturity. For purposes of the preceding sentences, "price" means the price as calculated using the lesser of the yield to the redemption date, if any, or the yield to the maturity date. Good Faith Deposit The successful bidder for the Bonds shall deliver a good faith deposit in the amount of $80,000 to the City Finance Director. The good faith deposit must be paid by federal funds wire transfer delivered no later than two hours following the successful bidder's receipt of the verbal award. Wiring instructions will be provided to the successful bidder at the time of the verbal award. The good faith deposit will be retained by the City as security for the performance of the successful bidder and shall be applied to the purchase price of the Bonds upon delivery of the Bonds to the successful bidder. Pending delivery of the Bonds, the good faith deposit may be invested for the sole benefit of the City. If the Bonds are ready for delivery and the successful bidder fails or neglects to complete the purchase within 30 days following acceptance of its bid, the good faith deposit shall be retained by the City as reasonable liquidated damages, and not as a penalty. Such retention will constitute a full release and discharge of all claims by the City against the successful bidder and, in that event, the City may call for additional proposals. The City's actual damages may be higher or lower than the amount of such good faith deposit. Such amount constitutes a good faith estimate of the City's actual damages. Each bidder waives the right to claim that actual damages arising from such default are less than such amount. Selection of the Successful Bidder The bids for the Bonds will be considered by the City at the date and time set for sale. The Bonds will be sold to the bidder submitting a bid in conformance with this Official Notice of Sale that produces the lowest true interest cost to the City, based on the bid price, the interest rates specified in the bid and the principal amounts identified in this Official Notice of Sale. The true interest cost will be the rate necessary, on a 30/360 basis and semiannual compounding, to discount the debt service payments from the payment dates to the date of the Bonds and to the price bid. The true interest cost calculations will be performed by the City's Financial Advisor, and the City will base its determination of the best bid solely on such calculations. The successful bidder for the Bonds will be bound to purchase the Bonds in the principal amount, at such price, and with such interest rates as are specified in its bid, unless there is an adjustment in the principal amounts of the Bonds, in which case the successful bidder shall be bound to purchase the Bonds in the adjusted principal amounts at the revised bid amount, as described above under the heading "Adjustment of Principal Amount of Bonds and Bid Price for the Bonds." The City reserves the right to reject any or all bids and to waive any irregularity in any bid or the bidding process. If all bids are rejected, then the Bonds may be sold in any manner provided by law. Any bid presented after the time specified for receipt of the bids will not be accepted, and any bid not backed by the required good faith deposit will not be considered. The successful bid shall remain in effect until 5:00 p.m. Pacific Time, on the date set for the receipt of bids. x Bond Insurance; Rating Bond Insurance. The purchase of any insurance policy for the Bonds or the issuance of any commitment therefor will be at the sole option and expense of the successful bidder for such Bonds. Bids may not be conditioned upon qualification for or the receipt of municipal bond insurance. Any increased costs of issuance of the Bonds resulting from such purchase of insurance will be paid by the successful bidder for the Bonds and will not, in any event, be paid by the City. Payment of any bond insurance premium and satisfaction of any conditions to the issuance of the municipal bond insurance policy will be the sole responsibility of the successful bidder. In particular, the City will not provide any opinions or enter into any agreements with respect to the provisions of any such policy. Failure of any municipal bond insurer to issue or deliver its policy will not in any way relieve the successful bidder of its contractual obligations arising from acceptance of its proposal for the purchase of the Bonds. The successful bidder must provide the City with the municipal bond insurance commitment and information with respect to the municipal bond insurance policy and the insurance provider within two business days following the award of the bid by the City. The City will require delivery, on or prior to the date of initial delivery of the Bonds, of: (i) a certificate from the insurance provider regarding the accuracy and completeness of the information provided for inclusion in the Official Statement, (ii) an opinion of counsel to the insurance provider regarding the validity and enforceability of the municipal bond insurance policy, and (iii) a certificate with respect to certain tax matters, each in a form reasonably satisfactory to the City and Bond Counsel. Rating. The City has received a rating from S&P Global Ratings as shown on the cover of the Preliminary Official Statement. The City will pay the fees for the rating. Any other ratings are the responsibility of the successful bidder. See "RATING" in the Preliminary Official Statement. Delivery of Bonds The Bonds will be delivered to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, less payment of the purchase price to the City in immediately available federal funds, less the amount of the applicable good faith deposit. Closing is expected to occur within 30 days after the sale date set forth on the cover page of the Preliminary Official Statement. If, prior to delivery of the Bonds, the interest receivable by the owners of such Bonds becomes includable in gross income for federal income tax purposes, or becomes subject to federal income tax other than as described in the Preliminary Official Statement, the successful bidder, at its option, may be relieved of its obligation to purchase the Bonds and, in that case, the good faith deposit accompanying its bid will be returned without interest. The Bonds will be delivered in "book -entry only" form in accordance with the letter of representations from the City to DTC. As of the date of the award of the Bonds, each successful bidder must either participate in DTC or clear through or maintain a custodial relationship with an entity that participates in DTC. The City will furnish to the successful bidder one CD-ROM transcript of proceedings; additional transcripts will be furnished at the successful bidder's cost. Issue Price Information The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at closing an "issue price" or similar certificate setting forth the reasonably expected initial offering price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form attached to this Official Notice of Sale as Exhibit A, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel. The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the "competitive sale requirements") because: (i) the City shall disseminate this Official Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (ii) all bidders shall have an equal opportunity to bid; (iii) the City may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and xi (iv) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the Bonds at the highest price (or lowest interest cost), as set forth in this Official Notice of Sale. Any bid submitted pursuant to this Official Notice of Sale shall be considered a firm offer for the purchase of the Bonds, as specified in the bid. By submitting a bid for the Bonds, each bidder certifies that has an established industry reputation for underwriting new issuance of municipal bonds unless specifically noted in the bid. In the event that the competitive sale requirements are not satisfied, the City shall advise the winning bidder that such requirements are not satisfied and one of the following sections will apply: 10% Test May Apply. Unless otherwise agreed to by both the City and the successful bidder, as described further below, the City shall treat the first price at which 10% of a maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity, applied on a maturity -by -maturity basis. The winning bidder shall advise the City if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. The City will not require bidders to comply with the "hold the offering price" rule (except by mutual consent, as described further below). Bids will not be subject to cancellation in the event that the competitive sale requirements are not satisfied. If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the Bonds, the winning bidder agrees to promptly report to the City the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the Delivery Date (as defined in the Preliminary Official Statement) has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold. Hold -the -Offering -Price Rule May Apply. If mutually agreed to in writing by the both the City and the successful bidder, in the event that the competitive sale requirements are not satisfied, the City may determine to treat (i) the first price at which 10% of a maturity of the Bonds is sold to the public as the issue price of that maturity and/or (ii) the initial offering price to the public as of the sale date of any maturity of the Bonds as the issue price of that maturity (the "hold -the -offering -price rule"), in each case applied on a maturity -by -maturity basis (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity). The winning bidder shall advise the City if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. If mutually agreed to by the City and the winning bidder, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold -the -offering -price rule shall apply to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The winning bidder shall promptly advise the City when the underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the Bonds not subject to the hold -the -offering -price rule, the winning bidder agrees to promptly report to the City the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the Delivery Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold. The City acknowledges that, in making the representation set forth above, the winning bidder will rely on (i) the agreement of each underwriter to comply with the hold -the -offering -price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the -offering -price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold -the -offering -price rule, as set forth in the retail distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold -the -offering -price rule and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution xii agreement to comply with its corresponding agreement regarding the hold -the -offering -price rule as applicable to the Bonds. By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if mutually agreed to and applicable), in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if mutually agreed to and applicable), in each case if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Bonds to any person who is a related party to an underwriter shall not constitute sales to the public for purposes of this Official Notice of Sale. Further, for purposes of this Official Notice of Sale: (i) "public" means any person other than an underwriter or a related party, (ii) "underwriter" means (i) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder. CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds; however, neither the failure to print CUSIP numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds. The City will obtain CUSIP numbers. The charge of the CUSIP Service Bureau shall be paid by the successful bidder; however, all expenses for obtaining CUSIP numbers for the Bonds shall be paid for by the City. Bond Counsel Opinion The City will furnish to the purchaser of the Bonds the bond counsel opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, in substantially the form attached to the Preliminary Official Statement in Appendix A. Continuing Disclosure The City has entered into an undertaking for the benefit of the owners of the Bonds to provide certain financial information and operating data and notice of certain events to the Municipal Securities Rulemaking Board ("MSRB") pursuant to the requirements of paragraph (b)(5)(i) of Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule"). See "CONTINUING DISCLOSURE UNDERTAKING" in the Preliminary Official Statement. Closing Documents As a condition to the obligation of the successful bidder to accept delivery of and pay for the Bonds, the City will furnish a certificate of an official or officials of the City stating that to the best knowledge of such official(s), as of the date of the Official Statement and as of the date of delivery of the Bonds, the information (including financial information) contained in the Official Statement was, as of its date, and is, as of the date of closing, true and correct in all material respects and did not and 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 light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance or other credit facility). A no -litigation certificate will also be included in the closing documents for the Bonds. Official Statement The Preliminary Official Statement is in a form deemed final by the City for the purpose of the Rule, but is subject to revision, amendment and completion in a final Official Statement which the City will deliver, to the successful bidder, at the City's expense, not later than seven business days after the City's acceptance of the successful bidder's proposal, in sufficient quantities to permit the successful bidder to comply with the Rule. The successful bidder shall file, or cause to be filed, the final Official Statement with the MSRB within one business day following the receipt of the Official Statement from the City. The successful bidder also agrees: (i) to provide to the City, in writing, promptly after the acceptance of the bid, pricing and other related information, including initial reoffering prices of the Bonds, necessary for completion of the final Official Statement; (ii) to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any amendments or supplements prepared by the City; and (iii) to take any and all actions necessary to comply with applicable SEC and MSRB rules governing the offering, sale and delivery of the Bonds to ultimate purchasers, including without limitation, the delivery of a final Official Statement to each investor who purchases Bonds. Additional information may be obtained from the City's Financial Advisor; the Preliminary Official Statement may be obtained from i -Deal Prospectus, a service of i -Deal LLC, at www.i-dealprospectus.com, telephone (212) 849-5021. In addition, the Preliminary Official Statement may be obtained upon request to the City's Financial Advisor. Additional Information Additional information may be obtained from the City's Financial Advisor, PFM Financial Advisors LLC (by telephone: (206) 858-5363; or by e-mail: sea-advisors@pfm.com). CITY OF TUKWILA, WASHINGTON By: /s/ Peggy McCarthy Peggy McCarthy, Finance Director xiv EXHIBIT A FORM OF CERTIFICATE OF UNDERWRITER , has acted as underwriter (the "Underwriter") in connection with the sale and delivery of the , Washington (the "Issuer") in the aggregate principal amount of $ (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. [If competitive sale safe harbors are met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the respective prices for each Maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. c. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the Bonds, being the Expected Offering Price of each Maturity, is $ (the "Issue Price"). [If competitive sale safe harbors are not met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. With respect to the Bonds maturing in (the "General Rule Maturities"), at least 10% of the principal amount of each Maturity of the Bonds was sold to the Public at the respective price for that Maturity shown in Schedule A (the "Sale Price"). b. With respect to the Bonds maturing in (the "Unsold Maturities"), the Underwriter offered the Unsold Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Price") on or before the Sale Date. A copy of the pricing wire for the Bonds is attached as Schedule B. 3. As set forth in the Notice of Sale and Certificate of Award, the Underwriter [and all members of the Underwriting Group] agreed in writing that (i) for the following Unsold Maturities: ("Hold -the -Offering - Price Maturities"), [it] would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the applicable Initial Offering Price during the Holding Period (the "hold -the -offering -price rule"), and (ii) any selling group agreement will contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement will contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold -the -offering -price rule. During the Holding Period, no Underwriter (as defined in Treasury Regulation 1.148(f)) has offered or sold any of the Hold -the -Offering -Price Maturities at a price that is higher than the respective Initial Offering Price. "Holding Period" means, with respect to a Hold -the -Offering -Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the 5th business day after the Sale Date or (ii) the date on which the Underwriter has sold at least 10% of such Maturity to the Public at prices that are no higher than the applicable Initial Offering Price. A -i 4. [If applicable at closing: As of the date hereof, the 10% test has not be satisfied with respect to the following Unsold Maturities: ("Unsold General Rule Maturities") not subject to the hold -the -offering - price rule. Until the 10% test has been satisfied as to each Unsold General Rule Maturity, the Underwriter agrees to promptly report to the Issuer the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation will continue until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold.] 5. The expected aggregate issue price of the Bonds, being the Sale Price of each General Rule Maturity[, the expected Sale Price of each Unsold General Rule Maturity,] and the Initial Offering Price of each Hold - the -Offering -Price Maturity, is $ (the "Issue Price"). [For all transactions:] Provided that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Code, the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes Pacifica Law Group LLP ("Bond Counsel") to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2, in Treasury Regulation 1.148-1(f). A -ii EXHIBIT B COPY OF BIDS RECEIVED FOR THE BONDS 10076 00003 gg1243501n 08:38:07 a.m. POST Upcoming Calendar Overview Compare Summary Bid Results Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC © Reoffering FTN Financial Capital Markets 2.766197 ❑ Robert W. Baird & Co., Inc. 2.780246 ❑ Raymond James & Associates, Inc. 2.797536 ❑ Wells Fargo Bank, National Association 2.844905 ❑ SunTrust Robinson Humphrey 2.859578 ❑ Piper Jaffray 2.890581 ❑ Northland Securities, Inc. 2.941203 ❑ Morgan Stanley & Co, LLC 3.083494 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. �J 1981-2002 i -Deal LLC, All rights reserved, Trademarks Page 1 of 1 7/13/2017 Page 1 of 2 Upcoming Calendar Overview Result Excel FTN Financial Capital Markets - Memphis , TN's Bid Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 For the aggregate principal amount of $8,160,000.00, we will pay you $8,440,623.70, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.1500 102.465 12/01/2019 315M 3.0000 1.2000 104.152 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.5000 106.288 12/01/2022 340M 3.0000 1.6000 107.146 12/01/2023 350M 3.0000 1.7000 107.789 12/01/2024 360M 3.0000 1.8500 107.864 12/01/2025 375M 3.0000 2.0000 107.650 12/01/2026 385M 3.0000 2.1000 107.600 12/01/2027 395M 3.0000 2.2000 107.046 12/01/2028 410M 3.0000 2.2500 106.589 12/01/2029 420M 3.0000 2.4000 105.232 12/01/2030 435M 3.0000 2.5000 104.338 12/01/2031 445M 3.0000 2.6000 103.453 12/01/2032 460M 3.0000 2.7500 102.141 12/01/2033 475M 3.0000 2.9000 100.848 12/01/2034 485M 3.2500 3.0000 102.115 12/01/2035 500M 3.2500 3.1000 101.261 12/01/2036 520M 3.2500 3.1500 100.838 12/01/2037 535M 3.5000 3.2000 102.513 Total Interest Cost: $3,019,847.74 Premium: $280,623.70 Net Interest Cost: $2,739,224.04 TIC: 2.766197 Time Last Bid Received On:07/13/2017 8:29:38 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: FTN Financial Capital Markets, Memphis , TN Contact: Mason McWilliams Title: Telephone:901-435-8006 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: © 1981•20132 i -C eat I._L.C, All rights reserved, Trademarks Page 2 of 2 7/13/2017 Page 1 of 2 Upcoming Calendar Overview Result Excel Robert W. Baird & Co., Inc. - Milwaukee , WI's Bid :.ii 'TY. Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 For the aggregate principal amount of $8,160,000.00, we will pay you $8,362,986.75, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.0000 102.668 12/01/2019 315M 3.0000 1.1000 104.389 12/01/2020 320M 3.0000 1.2500 105.718 12/01/2021 330M 3.0000 1.4000 106.724 12/01/2022 340M 3.0000 1.5500 107.412 12/01/2023 350M 3.0000 1.7000 107.789 12/01/2024 360M 3.0000 1.8000 108.222 12/01/2025 375M 3.0000 1.9000 108.452 12/01/2026 385M 3.0000 2.0500 108.041 12/01/2027 395M 3.0000 2.1500 107.505 12/01/2028 410M 3.0000 2.3000 106.135 12/01/2029 420M 3.0000 2.4500 104.784 12/01/2030 435M 3.0000 2.6000 103.453 12/01/2031 445M 3.0000 2.7500 102.141 12/01/2032 460M 3.0000 2.8500 101.277 12/01/2033 475M 3.0000 3.0000 100.000 12/01/2034 485M 3.0000 3.0500 99.327 12/01/2035 500M 3.1250 3.1500 99.651 12/01/2036 520M 3.1250 3.2000 98.921 12/01/2037 535M 3.1250 3.2500 98.147 Total Interest Cost: Premium: Net Interest Cost: TIC: $2,933,949.91 $202,986.75 $2,730,963.16 2.780246 Time Last Bid Received On:07/13/2017 8:24:10 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Robert W. Baird & Co., Inc., Milwaukee , WI Contact: Geoff Kuczmarski Title: Telephone:414-765-7331 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: O 1981-2002 i -Deal LLC, All rights reserved. Trademarks Page 2 of 2 7/13/2017 Upcoming Calendar Overview 1 Result I Excel Raymond James f31 Associates, Inc. - Dallas , TX's Bid Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 Page 1 of 2 For the aggregate principal amount of $8,160,000.00, we will pay you $8,464,290.30, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.1500 102.465 12/01/2019 315M 3.0000 1.2500 104.034 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.5000 106.288 12/01/2022 340M 3.0000 1.6000 107.146 12/01/2023 350M 3.0000 1.7000 107.789 12/01/2024 360M 3.0000 1.8000 108.222 12/01/2025 375M 3.0000 1.9000 108.452 12/01/2026 385M 3.0000 2.0500 108.041 12/01/2027 395M 3.0000 2.2000 107.046 12/01/2028 410M 3.0000 2.3000 106.135 12/01/2029 420M 3.0000 2.4500 104.784 12/01/2030 435M 3.0000 2.6000 103.453 12/01/2031 445M 3.0000 2.7000 102.576 12/01/2032 460M 3.2500 2.7500 104.285 12/01/2033 475M 3.2500 2.8500 103.410 12/01/2034 485M 3.2500 3.0000 102.115 12/01/2035 500M 3.2500 3.1000 101.261 12/01/2036 520M 3.5000 3.1500 102.940 12/01/2037 535M 3.5000 3.2500 102.089 Total Interest Cost: Premium: Net Interest Cost: TIC: $3,082,060.76 $304,290.30 $2,777,770.46 2.797536 Time Last Bid Received On:07/13/2017 8:29:55 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Raymond James & Associates, Inc., Dallas , TX Contact: Randall Hawkins Title: Telephone:214-365-5546 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: 0 1981-2002 i -Deal LLC, All rights reserved, Trademarks Page 2 of 2 7/13/2017 Page 1 of 2 Upcoming Calendar Overview Result Excel Wells Fargo Bank, National Association - Charlotte , NC's Bid ;PARITY" Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 For the aggregate principal amount of $8,160,000.00, we will pay you $8,356,427.50, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.0500 102.600 12/01/2019 315M 3.0000 1.2000 104.152 12/01/2020 320M 3.0000 1.3000 105.549 12/01/2021 330M 3.0000 1.4500 106.506 12/01/2022 340M 3.0000 1.6000 107.146 12/01/2023 350M 3.0000 1.7500 107.476 12/01/2024 360M 3.0000 1.9000 107.508 12/01/2025 375M 3.0000 2.0500 107.252 12/01/2026 385M 3.0000 2.2000 106.724 12/01/2027 395M 3.0000 2.3000 106.135 12/01/2028 410M 3.0000 2.4500 104.784 12/01/2029 420M 3.0000 2.5500 103.894 12/01/2030 435M 3.0000 2.7000 102.576 12/01/2031 445M 3.0000 2.8000 101.708 12/01/2032 460M 3.0000 2.9000 100.848 12/01/2033 475M 3.0000 3.0000 100.000 12/01/2034 485M 3.2500 3.1000 101.261 12/01/2035 500M 3.2500 3.1500 100.838 12/01/2036 520M 3.2500 3.2000 100.416 12/01/2037 535M 3.2500 3.2500 100.000 Total Interest Cost: Premium: Net Interest Cost: TIC: $2,992,633.33 $196,427.50 $2,796,205.83 2.844905 Time Last Bid Received On:07/13/2017 8:29:40 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Wells Fargo Bank, National Association, Charlotte , NC Contact: Amanda Pogue Title: Vice President Telephone:704-410-4087 Fax: 704-383-0065 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: O 1981-2002 i -Deal LLC. All rights reserved, Trademarks Page 2 of 2 7/13/2017 Upcoming Calendar Overview Result Excel SunTrust Robinson Humphrey - Nashville , TN's Bid Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 Page 1 of 2 PAs f'. For the aggregate principal amount of $8,160,000.00, we will pay you $8,320,529.10, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.1000 102.533 12/01/2019 315M 3.0000 1.2500 104.034 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.4500 106.506 12/01/2022 340M 3.0000 1.5500 107.412 12/01/2023 350M 3.0000 1.7000 107.789 12/01/2024 360M 3.0000 1.8500 107.864 12/01/2025 375M 3.0000 2.0000 107.650 12/01/2026 385M 3.0000 2.1500 107.161 12/01/2027 395M 3.0000 2.2500 106.589 12/01/2028 410M 3.0000 2.3500 105.682 12/01/2029 420M 3.0000 2.5000 104.338 12/01/2030 435M 3.0000 2.6500 103.013 12/01/2031 445M 3.0000 2.8000 101.708 12/01/2032 460M 3.0000 2.9000 100.848 12/01/2033 475M 3.0000 3.0000 100.000 12/01/2034 485M 3.0500 3.1500 98.668 12/01/2035 500M 3.1500 3.2500 98.623 12/01/2036 520M 3.2000 3.3000 98.575 12/01/2037 535M 3.2500 3.3750_ 98.167 Total Interest Cost: Premium: Net Interest Cost: TIC: $2,961,602.64 $160,529.10 $2,801,073.54 2.859578 Time Last Bid Received On:07/13/2017 8:24:50 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: SunTrust Robinson Humphrey, Nashville , TN Contact: Wayne Mayo Title: Director Telephone:615-748-4436 Fax: 615-748-5952 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: 0 1951-2002 i -Deal LLC, All rights reserved, Trademarks Page 2 of 2 7/13/2017 Upcoming Calendar Overview Result Excel Piper Jaffray - Minneapolis , MN's Bid Page 1 of 2 Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 For the aggregate principal amount of $8,160,000.00, we will pay you $8,502,492.15, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.0500 102.600 12/01/2019 315M 3.0000 1.2500 104.034 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.4500 106.506 12/01/2022 340M 3.0000 1.6000 107.146 12/01/2023 350M 3.0000 1.7500 107.476 12/01/2024 360M 3.0000 1.9000 107.508 12/01/2025 375M 3.0000 2.0500 107.252 12/01/2026 385M 3.0000 2.1500 107.161 12/01/2027 395M 3.0000 2.3000 106.135 12/01/2028 410M 3.0000 2.4500 104.784 12/01/2029 420M 3.0000 2.6000 103.453 12/01/2030 435M 3.0000 2.7000 102.576 12/01/2031 445M 3.0000 2.8000 101.708 12/01/2032 12/01/2033 935M 3.2500 3.0000 102.115 12/01/2034 12/01/2035 985M 3.5000 3.1000 103.369 12/01/2036 12/01/2037 1,055M 4.0000 3.0000 108.468 Total Interest Cost: Premium: Net Interest Cost: TIC: $3,230,759.90 $342,492.15 $2,888,267.75 2.890581 Time Last Bid Received On:07/13/2017 8:29:38 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Piper Jaffray, Minneapolis , MN Contact: Chris Coleman Title: Telephone:612-303-2051 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: 0 1981-2002 i -Deal LLC, All rights reserved, Trademarks Page 2 of 2 7/13/2017 1 Upcoming Calendar Overview Result Excel Northland Securities, Inc. - Minneapolis , MN's Bid Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 Page 1 of 2 ::P n s F' - For the aggregate principal amount of $8,160,000.00, we will pay you $8,384,646.65, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.1500 102.465 12/01/2019 315M 3.0000 1.2000 104.152 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.5000 106.288 12/01/2022 340M 3.0000 1.6500 106.881 12/01/2023 350M 3.0000 1.8000 107.165 12/01/2024 360M 3.0000 2.0000 106.799 12/01/2025 375M 3.0000 2.1000 106.856 12/01/2026 385M 3.0000 2.2500 106.288 12/01/2027 395M 3.0000 2.3500 105.682 12/01/2028 410M 3.0000 2.4500 104.784 12/01/2029 420M 3.0000 2.5500 103.894 12/01/2030 435M 3.0000 2.7000 102.576 12/01/2031 445M 3.0000 2.8000 101.708 12/01/2032 12/01/2033 935M 3.0000 3.0000 100.000 12/01/2034 485M 3.1000 3.1000 100.000 12/01/2035 500M 3.2000 3.2000 100.000 12/01/2036 12/01/2037 1,055M 4.0000 3.0000 108.468 Total Interest Cost: Premium: Net Interest Cost: TIC: $3,132,523.82 $224,646.65 $2,907,877.17 2.941203 Time Last Bid Received On:07/13/2017 8:22:05 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Northland Securities, Inc., Minneapolis , MN Contact: Dustin Siehr Title: Telephone:414-908-0422 Fax: 414-755-1831 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: v 1981-2002 i -Deal LLC. Ali rights reserved. Tradernarks Page 2 of 2 7/13/2017 Page 1 of 2 Upcoming Calendar Overview Result Excel Morgan Stanley & Co, LLC - New York , NY's Bid .;PARITY. Y Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 For the aggregate principal amount of $8,160,000.00, we will pay you $8,365,757.63, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.1000 102.533 12/01/2019 315M 3.0000 1.2500 104.034 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.4500 106.506 12/01/2022 340M 3.0000 1.6000 107.146 12/01/2023 350M 3.0000 1.7500 107.476 12/01/2024 360M 4.0000 1.9000 114.335 12/01/2025 375M 4.0000 2.0500 114.888 12/01/2026 385M 4.0000 2.2500 114.675 12/01/2027 395M 4.0000 2.4000 113.955 12/01/2028 410M 4.0000 2.6000 112.091 12/01/2029 12/01/2030 855M 3.0000 3.0000 100.000 12/01/2031 12/01/2032 12/01/2033 12/01/2034 12/01/2035 12/01/2036 12/01/2037 3,420M 3.2500 3.3870 98.000 Total Interest Cost: Premium: Net Interest Cost: TIC: $3,226,790.28 $205,757.63 $3,021,032.65 3.083494 Time Last Bid Received On:07/13/2017 8:29:47 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Morgan Stanley & Co, LLC, New York , NY Contact: Daniel Kelly Title: Executive Director Telephone:212-761-1541 Fax: 212-507-2510 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: 1981-2002 i -Deal LLC, All rights reserved, Trademarks Page 2 of 2 7/13/2017 EXHIBIT C COPY OF WINNING BID OF THE PURCHASER 10076 00003 gg1243501n Page 1 of 2 Upcoming Calendar Overview Result Excel FTN Financial Capital Markets - Memphis , TN's Bid ;PAFI 'r! Tukwila $8,160,000 Llimited Tax General Obligation Bonds, 2017 For the aggregate principal amount of $8,160,000.00, we will pay you $8,440,623.70, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % Yield % Dollar Price 12/01/2018 305M 3.0000 1.1500 102.465 12/01/2019 315M 3.0000 1.2000 104.152 12/01/2020 320M 3.0000 1.3500 105.381 12/01/2021 330M 3.0000 1.5000 106.288 12/01/2022 340M 3.0000 1.6000 107.146 12/01/2023 350M 3.0000 1.7000 107.789 12/01/2024 360M 3.0000 1.8500 107.864 12/01/2025 375M 3.0000 2.0000 107.650 12/01/2026 385M 3.0000 2.1000 107.600 12/01/2027 395M 3.0000 2.2000 107.046 12/01/2028 410M 3.0000 2.2500 106.589 12/01/2029 420M 3.0000 2.4000 105.232 12/01/2030 435M 3.0000 2.5000 104.338 12/01/2031 445M 3.0000 2.6000 103.453 12/01/2032 460M 3.0000 2.7500 102.141 12/01/2033 475M 3.0000 2.9000 100.848 12/01/2034 485M 3.2500 3.0000 102.115 12/01/2035 500M 3.2500 3.1000 101.261 12/01/2036 520M 3.2500 3.1500 100.838 12/01/2037 535M 3.5000 3.2000 102.513 Total Interest Cost: $3,019,847.74 Premium: $280,623.70 Net Interest Cost: $2,739,224.04 TIC: 2.766197 Time Last Bid Received On:07/13/2017 8:29:38 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: FTN Financial Capital Markets, Memphis , TN Contact: Mason McWilliams Title: Telephone:901-435-8006 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: 7/13/2017 Date: Date: O 1981-2002 i -Deal LLC, All rights reserved, Trademarks Page 2 of 2 7/13/2017 f 80,000' City of T t vita Washington muted Tax General Obliigati n lands, 2017 Find Teri .S1 e indicated in Issue Size. Dated Date: Se Purchase S&P Rating: Please" and sera Cti Dr:4,01.4 "' As.Adiusted 2020 2021 2 8 410x00 2029 2 ,... 030 435,000 2031 445000 2032 450,000 2t 475,000 2034 490,004 2035 510,000` 2036 520,000 535,000 2037 Chime: No change No change $5,000 No change .. .............. . No:. change 5;000 5,.000 No change No change No change No change No change No change No change No change No change 5,000 No change No change No change e and maturity amounts bysigning -advisors pfm com.. a FT! rrc. p1 EXHIBIT D TERMS OF THE BONDS CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2017 $8,180,000 Maturity Interest Price (December 1) Amount Rate Yield (% of Par) 2018 $305,000 3.00% 1.15% 102.465 2019 315,000 3.00 1.20 104.152 2020 325,000 3.00 1.35 105.381 2021 330,000 3.00 1.50 106.288 2022 340,000 3.00 1.60 107.146 2023 355,000 3.00 1.70 107.789 2024 365,000 3.00 1.85 107.864 2025 375,000 3.00 2.00 107.650 2026 385,000 3.00 2.10 107.600 2027 395,000 3.00 2.20 107.046* 2028 410,000 3.00 2.25 106.589* 2029 420,000 3.00 2.40 105.232* 2030 435,000 3.00 2.50 104.338* 2031 445,000 3.00 2.60 103.453* 2032 460,000 3.00 2.75 102.141* 2033 475,000 3.00 2.90 100.848* 2034 490,000 3.25 3.00 102.115* 2035 500,000 3.25 3.10 101.261* 2036 520,000 3.25 3.15 100.838* 2037 535,000 3.50 3.20 102.513* * Priced to the par call date of June 1, 2027. Aggregate Price: 103.442508% True Interest Cost: 2.766197% Final Maturity Date: December 1, 2037 Redemption Optional Redemption. The Bonds maturing on December 1 in the years 2018 through 2026, inclusive, are not subject to redemption prior to their stated maturity. The Bonds maturing on or after December 1, 2027 are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redemption. 10076 00003 gg1243501n PRELIMINARY OFFICIAL STATEMENT DATED JULY 5, 2017 o SALE DATE: July 13, 2017 at 8:30 a.m. Pacific Time S&P Rating: AA Ct. CD NEW ISSUE — BOOK -ENTRY ONLY See "RATING" herein 2 BANK QUALIFIED In the opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, under existing law and subject to certain • qualifications described herein, the interest on the Bonds is excludable from gross income for federal income tax purposes. In co'2 addition, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on c o individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the E a purpose of computing the alternative minimum tax imposed on certain corporations. See "TAX MATTERS." i O $8,160,000 City of Tukwila, Washington O • co Limited Tax General Obligation Bonds, 2017 3 Dated: As of the Delivery Date Due: December 1, as shown on the inside cover oThe City of Tukwila, Washington (the "City"), is issuing its Limited Tax General Obligation Bonds, 2017 (the "Bonds"), o.- in fully registered form under a book -entry only system. When issued, the Bonds initially will be registered to Cede o a & Co., as bond owner and nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act • as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in the principal amount of $5,000 or integral multiples thereof within a maturity. Purchasers of the Bonds (the "Beneficial Owners") will not c f° receive certificates representing their beneficial ownership interest in the Bonds purchased. The fiscal agent of the E co state of Washington (the "State"), currently U.S. Bank National Association, will act as the registrar, paying agent, z0 transfer agent and authenticating agent for the Bonds (the "Bond Registrar"). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, u 2017, to the maturity or earlier redemption of the Bonds. The Bonds will mature on the dates and in the amounts and o bear interest at the rates set forth on the inside cover. For so long as the Bonds are held in book -entry only form, the principal of and interest on the Bonds will be paid by the Bond Registrar to DTC, which in turn is obligated to remit • such payments to its broker-dealer participants for subsequent disbursement to the Beneficial Owners. See Z "DESCRIPTION OF THE BONDS—Registration and Payment" and APPENDIX C— "DTC AND ITS BOOK -ENTRY • <L,SYSTEM." 15-0 Maturity Schedule on Inside Cover o• po • The Bonds are beingoffered atpublic sale bycompetitive bids to be received electronicallythrough Parity®, • a P 9 �• . pursuant to the Official Notice of Sale contained herein. CD z Qo z Z Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain road �, construction and related improvement projects in the City, and (ii) to pay the costs of issuance of the Bonds. See 0 • co • o t, "PURPOSE" herein. cu o The Bonds are subject to redemption prior to their stated dates of maturity as described herein. See "DESCRIPTION a m m OF THE BONDS—Redemption Provisions" herein. .0 o .92 The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such o.o. other money of the City as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably �.° a, has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by s.o (ulaw without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money of the City that is lawfully available, to pay when due the principal of and interest on the Bonds. The full faith, • — a credit and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest .. b- on the Bonds. See "SECURITY FOR THE BONDS" herein. The City's authority to collect taxes, including its property - y.o tax levy, is subject to various limitations. See "CITY TAXING AUTHORITY—Property Tax" and "PROPERTY TAX c g co LIMITATIONS." The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof m 6 other than the City. N m The City has designated the Bonds as "qualified tax-exempt obligations" for banks, thrift institutions and other financial m z institutions under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See "TAX MATTERS." (,)z.o m co @ This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors E.a� must read the entire Official Statement to obtain information essential to making an informed investment decision. 0 . -. 0 o The Bonds are offered when, as and if executed and delivered, and are subject to receipt of the approving legal opinion of Pacifica .c o Law Group LLP, Seattle, Washington, Bond Counsel to the City, and certain other conditions. It is expected that the Bonds will E .Q be available for delivery in New York, New York through the facilities of DTC or to the Bond Registrar on behalf of DTC by Fast `n Automated Securities Transfer on or about July 26, 2017 (the "Delivery Date"). co Preliminary, subject to change. Maturity Date (December) (1) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 (1) (2) $8,160,000 (1) City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 Maturity Amount (1) 305,000 315,000 320,000 330,000 340,000 350,000 360,000 375,000 385,000 395,000 410,000 420,000 435,000 445,000 460,000 475,000 485,000 500,000 520,000 535,000 Interest Rate Yield Price CUSIP No. (2) Preliminary; subject to change. The CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the Port and are provided solely for convenience and reference. CUSIP numbers for a specific maturity are subject to change after the issuance of the Bonds. The City takes no responsibility for the accuracy of such CUSIP numbers. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the cover page and Appendices, must be considered in its entirety. The offering of the Bonds is made only by means of this entire Official Statement. The information within this Official Statement has been compiled from sources considered reliable and, while not guaranteed as to accuracy, is believed to be correct as of its date. The City makes no representation regarding the accuracy or completeness of the information in APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM," which has been obtained from DTC's website, the form of opinion of Bond Counsel, or the information provided by or obtained from any entity providing bond insurance or other credit facility. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the information set forth herein since the date hereof. Information on website addresses set forth in this Official Statement is not incorporated into this Official Statement and cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon in making investment decisions regarding the Bonds. No dealer, broker, sales representative, or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement and, if given or made, such information or representations must not be relied upon as having been authorized by the City. 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 persons to make such offer, solicitation or sale. Certain statements contained in this Official Statement do not reflect historical facts, but rather are forecasts and "forward-looking statements." No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts shown. In this respect, the words "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward-looking statements. The achievement of certain results or other expectations contained in forward-looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. All estimates, projections, forecasts, assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. These forward-looking statements speak only as of the date they were prepared. The City does not plan to issue any updates or revisions to those forward-looking statements if or when their expectations or events, conditions or circumstances on which such statements are based occur and specifically disclaims any such obligation. The presentation of certain information, including tables of receipts from taxes and other revenues, is intended to show recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue to be repeated in the future. Information relating to debt and tax limitations is based on existing statutes and constitutional provisions. Changes in State law could alter these provisions. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Bond Ordinance has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such Acts. No federal or state securities commission or regulatory authority has passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. For the sole purpose of the Underwriter's compliance with Securities and Exchange Commission ("SEC") Rule 15c2 - 12(b)(1), the City has "deemed final" this Preliminary Official Statement as of its date, except for the omission of information as to offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, delivery dates, and other terms of the Bonds dependent on such matters. This page left blank intentionally. ii CITY OF TUKWILA, WASHINGTON 6200 Southcenter Boulevard Tukwila, Washington 98188 (206) 433-1800 www.tukwilawa.gov * MAYOR AND COUNCIL MEMBERS MAYOR Allan Ekberg CITY COUNCIL Dennis Robertson Joe Duffie Kathy Hougardy Kate Kruller Thomas McLeod De'Sean Quinn Verna Seal Mayor Council President Council Member Council Member Council Member Council Member Council Member Council Member CERTAIN APPOINTED OFFICIALS David Cline Peggy McCarthy Rachel Turpin BOND COUNSEL Pacifica Law Group LLP Seattle, Washington City Administrator Finance Director City Attorney FINANCIAL ADVISOR PFM Financial Advisors LLC Seattle, Washington (206) 858-5363 sea-advisors@pfm.com BOND REGISTRAR Washington State Fiscal Agent (Currently, U.S. Bank National Association, Seattle, Washington) The City's website is not part of this Official Statement, and investors should not rely on information presented in the City's website in determining whether to purchase the Bonds. This inactive textual reference to the City's website is not a hyperlink and does not incorporate such website by reference. iii This page left blank intentionally. iv Table of Contents OFFICIAL NOTICE OF SALE vii DESCRIPTION OF THE BONDS 1 General 1 Authorization 1 Registration and Payment 1 Redemption Provisions 2 Purchase 3 Failure to Pay Bonds 3 Defeasance 3 PURPOSE 4 Sources and Uses of Funds 4 SECURITY FOR THE BONDS 4 CITY TAXING AUTHORITY 4 Property Tax 5 Retail Sales and Use Taxes 5 Utility Taxes 6 Lodging Tax 6 PROPERTY TAX LIMITATIONS 7 Uniformity Requirement 7 Limitations on Regular Property Taxes 7 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES 9 Assessed Valuation 9 Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City 9 Property Tax Collection Procedures 10 Overlapping Levy Rates 11 GENERAL OBLIGATION DEBT 11 Authorization of Debt 11 Limits of Indebtedness 11 Outstanding General Obligation Debt 14 Debt Capacity Computation 14 Direct and Estimated Overlapping Debt 15 Debt Service Requirements 16 Future Financing 16 Debt Payment Record 16 CITY FUNDS AND ACCOUNTING 17 City Investments and Investment Policy 17 v Historical General Fund Operating Results 19 General Fund Budgets 20 THE CITY 21 Governance 21 Employees and Bargaining Groups 22 Pension Plans 22 Other Post -Employment Benefits 22 Risk Management 26 GENERAL AND ECONOMIC INFORMATION 27 General 27 Population 27 Economic Indicators for the City and the County 27 TAX MATTERS 28 General 28 Original Issue Premium and Discount 29 Post Issuance Matters 29 Bank Qualified 29 CONTINUING DISCLOSURE UNDERTAKING 30 CERTAIN INVESTMENT CONSIDERATIONS 32 Initiative and Referendum 32 Limitations on Remedies 32 No Acceleration 32 Bankruptcy 32 RATING 33 LITIGATION 33 APPROVAL OF COUNSEL 33 FINANCIAL ADVISOR 33 UNDERWRITING 33 CONFLICTS OF INTEREST 33 OFFICIAL STATEMENT 33 APPENDICES: FORM OF LEGAL OPINION APPENDIX A 2016 AUDITED FINANCIAL STATEMENTS APPENDIX B DTC AND ITS BOOK -ENTRY SYSTEMAPPENDIX C This page left blank intentionally. vi OFFICIAL NOTICE OF SALE $8,160,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 NOTICE IS HEREBY GIVEN that electronic bids will be received by the City of Tukwila, Washington (the "City"), for purchase of the above described bonds (the "Bonds") at 8:30 a.m. Pacific Time on July 13, 2017 or such other day or time and under such other terms and conditions as may be established by the City and communicated as described under "Modification; Cancellation; Postponement." The Bonds will be sold on an all -or -none basis. Bids must be submitted electronically as described below. Bids must be submitted electronically via the Qualified Electronic Bid Provider in accordance with this Official Notice of Sale. The City has designated PARITY® as the Qualified Electronic Bid Provider for purposes of receiving electronic bids for the Bonds. Electronic bids will be received via PARITY® until the time and date of sale, and no bid will be accepted after that time. For further information about PARITY® including any fees charged, potential bidders may contact PARITY® at (212) 849-5021. By designating a bidding service as a Qualified Electronic Bid Provider, the City does not endorse the use of such bidding service. See "BIDDING INFORMATION AND AWARD— Submission of Bids" below. All bids properly received will be considered and acted on by the City Finance Director on behalf of the City by 12:00 p.m. Pacific Time on the sale date. Bidders are referred to the attached Preliminary Official Statement for additional information regarding the City, the Bond Ordinance (as defined herein), the Bonds, the security therefor, and other matters. Modification; Cancellation; Postponement. Bidders are advised that the City may modify the terms of this Official Notice of Sale prior to the time set for the receipt of bids. Any such modifications will be provided to the Qualified Electronic Bid Provider and i -Deal Prospectus on or prior to the time bids are due. In addition, the City may cancel or postpone the date and time for the receipt of bids for the Bonds at any time prior to the time bids are due. Notice of such cancellation or postponement will be communicated to the Qualified Electronic Bid Provider and i -Deal Prospectus as soon as practical following such cancellation or postponement. If a postponement occurs, bids will be received at the time and in the manner the City will determine. As an accommodation to bidders, telephonic, or electronic notice of any amendment or modification of this Official Notice of Sale will be given to any bidder requesting such notice from the City's Financial Advisor, PFM Financial Advisors LLC, telephone: (206) 858-5363 or e-mail at: sea-advisors@pfm.com. Failure of any bidder to receive such notice by telephone, the Qualified Electronic Bid Provider or i -Deal Prospectus will not affect the legality of the sale. Each bidder (and not the City or its Financial Advisor) is responsible for the timely delivery of its bid. The official time will be determined by the City and not by any bidder or Qualified Electronic Bid Provider. Preliminary, subject to change. vii Description of the Bonds Bond Details. Each Bond will be dated its date of initial delivery. The Bonds will bear interest payable semiannually on each June 1 and December 1, beginning December 1, 2017, to maturity or earlier redemption. Principal will be payable on the dates and in the amounts shown below, except as may be adjusted as described herein. Due Due Dec. 1 (1) Amount(1) Dec. 1 (1) Amount(1) 2018 305,000 2028 410,000 2019 315,000 2029 420,000 2020 320,000 2030 435,000 2021 330,000 2031 445,000 2022 340,000 2032 460,000 2023 350,000 2033 475,000 2024 360,000 2034 485,000 2025 375,000 2035 500,000 2026 385,000 2036 520,000 2027 395,000 2037 535,000 Preliminary; subject to adjustment by the City as provided in this Official Notice of Sale. These amounts will represent serial maturities unless term bonds are specified, by the successful bidder, as described in this Official Notice of Sale, in which case these amounts will represent mandatory redemption amounts of term bonds. See "Redemption Provisions—Mandatory Redemption" below. Adjustment of Principal Amount of Bonds and Bid Price for the Bonds Before Bid Opening. Bidders are advised that the City may increase or decrease the total principal amount and/or the amounts of individual maturities of Bonds stated in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus) prior to the bidding. If such changes are made, they will be reflected in the Official Bid Form to be made available through the Qualified Electronic Bid Provider. After Receipt of the Bids. Following the time bids are due, the City reserves the right to increase or decrease the aggregate principal amount of the Bonds by an amount not to exceed 15 percent, rounded up to the nearest $5,000. Adjustments of the aggregate principal amount in excess of 15 percent, rounded up to the nearest $5,000, may be made with approval of the successful bidder. The price bid by the successful bidder will be adjusted by the City to reflect an increase or decrease in the principal amount and maturity schedule for the Bonds, taking into account the interest rates and underwriting compensation in the bid as submitted. In the event the City elects to adjust the bond size after the bid pursuant to this Official Notice of Sale, the underwriter's discount (net of bond insurance expense, if any), expressed in dollars per thousand, will be held constant. The City will not be responsible in the event and to the extent that any adjustment affects the net compensation to be realized by the successful bidder, or the true interest cost of the winning bid or its ranking relative to other bids. Redemption Provisions Optional Redemption. The Bonds maturing on December 1, 2018 through December 1, 2026 are not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after December 1, 2027, are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027, at a price of par plus accrued interest, if any, to the date fixed for redemption. Mandatory Redemption. Bidders have the option to designate part or all of the Bonds as term bonds subject to mandatory redemption at a price of par plus accrued interest, in the years and in the amounts set forth in the serial maturity schedule for the Bonds, subject to adjustment as described herein. Any term bonds so designated must consist of the total principal payments for two or more consecutive years and mature on the latest of such years. If no term bonds are designated, the Bonds will mature in the amounts and on the dates set forth in the serial maturity schedule set forth above and subject to adjustment as described herein. See "DESCRIPTION OF THE BONDS— Redemption Provisions" in the Preliminary Official Statement. Purpose of the Bonds Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain road construction and related improvement projects in the City, and (ii) to pay the costs of issuance of the Bonds. viii Security for the Bonds The Bonds are limited tax general obligation of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in the Preliminary Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit, and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest on the Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. See "SECURITY FOR THE BONDS" in the Preliminary Official Statement. Registration and Book -Entry Transfer System The Bonds will be issued as fully registered bonds and, when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denomination of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive physical certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee for DTC, references to the Registered Owners herein will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. See APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM" in the Preliminary Official Statement for the Bonds. BIDDING INFORMATION AND AWARD Submission of Bids Bids for the Bonds are to be submitted electronically via the Qualified Electronic Bid Provider. Hard copy bids will not be accepted. By submitting a bid for the Bonds, such bidder thereby agrees to the following terms and conditions: (i) If any provision in this Official Notice of Sale with respect to the Bonds conflicts with information or terms provided or required by the Qualified Electronic Bid Provider, this Official Notice of Sale, including any amendments issued through the Qualified Electronic Bid Provider and i -Deal Prospectus, shall control. (ii) Each bidder is solely responsible for making necessary arrangements to access the Qualified Electronic Bid Provider for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus). (iii) The City has no duty or obligation to provide or assure access to the Qualified Electronic Bid Provider to any bidder, and the City shall not be responsible for proper operation of, or have any liability for, any delays, interruptions or damages caused by use or attempted use of the Qualified Electronic Bid Provider or any incomplete, inaccurate or untimely bid submitted by any bidder through the Qualified Electronic Bid Provider. (iv) The City is permitting the use of the Qualified Electronic Bid Provider as a communication mechanism, and not as the City's agent, to conduct the electronic bidding for the Bonds. The Qualified Electronic Bid Provider is acting as an independent contractor, and is not acting for or on behalf of the City. (v) The City is not responsible for ensuring or verifying bidder compliance with any Qualified Electronic Bid Provider procedures. (vi) If a bid is accepted by the City, this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus) and the information that is submitted electronically through the Qualified Electronic Bid Provider shall form a contract, and the bidder shall be bound by the terms of such contract. (vii) Information provided by the Qualified Electronic Bid Provider to bidders shall form no part of any bid or of any contract between the successful bidder and the City unless that information is included in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus). ix Bid Details and Parameters Form of Bids. Bids for the Bonds must be unconditional, and for not less than the entire offering of the Bonds. By submitting a bid, each bidder agrees to all of the terms and conditions of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i -Deal Prospectus). Bids must be submitted electronically via the Qualified Electronic Bid Provider. Bids may not be withdrawn or revised after the time that bids are due. Interest Rates Bid. Bids may specify any number of interest rates in multiples of one-eighth of one percent (1/8 of 1 percent) or one-hundredth of one percent (1/100 of 1 percent). All Bonds of the same maturity must bear interest at the same rate and no Bond shall bear interest at more than one rate. No rate of interest may exceed 5.0 percent. Premium and Discount. No bid will be considered for a price that is less than 98 percent or more than 120 percent of the par value of the Bonds. Each maturity must be reoffered at a yield that will produce a price of not less than 98 percent of the principal amount for that maturity. For purposes of the preceding sentences, "price" means the price as calculated using the lesser of the yield to the redemption date, if any, or the yield to the maturity date. Good Faith Deposit The successful bidder for the Bonds shall deliver a good faith deposit in the amount of $80,000 to the City Finance Director. The good faith deposit must be paid by federal funds wire transfer delivered no later than two hours following the successful bidder's receipt of the verbal award. Wiring instructions will be provided to the successful bidder at the time of the verbal award. The good faith deposit will be retained by the City as security for the performance of the successful bidder and shall be applied to the purchase price of the Bonds upon delivery of the Bonds to the successful bidder. Pending delivery of the Bonds, the good faith deposit may be invested for the sole benefit of the City. If the Bonds are ready for delivery and the successful bidder fails or neglects to complete the purchase within 30 days following acceptance of its bid, the good faith deposit shall be retained by the City as reasonable liquidated damages, and not as a penalty. Such retention will constitute a full release and discharge of all claims by the City against the successful bidder and, in that event, the City may call for additional proposals. The City's actual damages may be higher or lower than the amount of such good faith deposit. Such amount constitutes a good faith estimate of the City's actual damages. Each bidder waives the right to claim that actual damages arising from such default are less than such amount. Selection of the Successful Bidder The bids for the Bonds will be considered by the City at the date and time set for sale. The Bonds will be sold to the bidder submitting a bid in conformance with this Official Notice of Sale that produces the lowest true interest cost to the City, based on the bid price, the interest rates specified in the bid and the principal amounts identified in this Official Notice of Sale. The true interest cost will be the rate necessary, on a 30/360 basis and semiannual compounding, to discount the debt service payments from the payment dates to the date of the Bonds and to the price bid. The true interest cost calculations will be performed by the City's Financial Advisor, and the City will base its determination of the best bid solely on such calculations. The successful bidder for the Bonds will be bound to purchase the Bonds in the principal amount, at such price, and with such interest rates as are specified in its bid, unless there is an adjustment in the principal amounts of the Bonds, in which case the successful bidder shall be bound to purchase the Bonds in the adjusted principal amounts at the revised bid amount, as described above under the heading "Adjustment of Principal Amount of Bonds and Bid Price for the Bonds." The City reserves the right to reject any or all bids and to waive any irregularity in any bid or the bidding process. If all bids are rejected, then the Bonds may be sold in any manner provided by law. Any bid presented after the time specified for receipt of the bids will not be accepted, and any bid not backed by the required good faith deposit will not be considered. The successful bid shall remain in effect until 5:00 p.m. Pacific Time, on the date set for the receipt of bids. x Bond Insurance; Rating Bond Insurance. The purchase of any insurance policy for the Bonds or the issuance of any commitment therefor will be at the sole option and expense of the successful bidder for such Bonds. Bids may not be conditioned upon qualification for or the receipt of municipal bond insurance. Any increased costs of issuance of the Bonds resulting from such purchase of insurance will be paid by the successful bidder for the Bonds and will not, in any event, be paid by the City. Payment of any bond insurance premium and satisfaction of any conditions to the issuance of the municipal bond insurance policy will be the sole responsibility of the successful bidder. In particular, the City will not provide any opinions or enter into any agreements with respect to the provisions of any such policy. Failure of any municipal bond insurer to issue or deliver its policy will not in any way relieve the successful bidder of its contractual obligations arising from acceptance of its proposal for the purchase of the Bonds. The successful bidder must provide the City with the municipal bond insurance commitment and information with respect to the municipal bond insurance policy and the insurance provider within two business days following the award of the bid by the City. The City will require delivery, on or prior to the date of initial delivery of the Bonds, of: (i) a certificate from the insurance provider regarding the accuracy and completeness of the information provided for inclusion in the Official Statement, (ii) an opinion of counsel to the insurance provider regarding the validity and enforceability of the municipal bond insurance policy, and (iii) a certificate with respect to certain tax matters, each in a form reasonably satisfactory to the City and Bond Counsel. Rating. The City has received a rating from S&P Global Ratings as shown on the cover of the Preliminary Official Statement. The City will pay the fees for the rating. Any other ratings are the responsibility of the successful bidder. See "RATING" in the Preliminary Official Statement. Delivery of Bonds The Bonds will be delivered to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, less payment of the purchase price to the City in immediately available federal funds, less the amount of the applicable good faith deposit. Closing is expected to occur within 30 days after the sale date set forth on the cover page of the Preliminary Official Statement. If, prior to delivery of the Bonds, the interest receivable by the owners of such Bonds becomes includable in gross income for federal income tax purposes, or becomes subject to federal income tax other than as described in the Preliminary Official Statement, the successful bidder, at its option, may be relieved of its obligation to purchase the Bonds and, in that case, the good faith deposit accompanying its bid will be returned without interest. The Bonds will be delivered in "book -entry only" form in accordance with the letter of representations from the City to DTC. As of the date of the award of the Bonds, each successful bidder must either participate in DTC or clear through or maintain a custodial relationship with an entity that participates in DTC. The City will furnish to the successful bidder one CD-ROM transcript of proceedings; additional transcripts will be furnished at the successful bidder's cost. Issue Price Information The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at closing an "issue price" or similar certificate setting forth the reasonably expected initial offering price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form attached to this Official Notice of Sale as Exhibit A, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel. The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the "competitive sale requirements") because: (i) the City shall disseminate this Official Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (ii) all bidders shall have an equal opportunity to bid; (iii) the City may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and xi (iv) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the Bonds at the highest price (or lowest interest cost), as set forth in this Official Notice of Sale. Any bid submitted pursuant to this Official Notice of Sale shall be considered a firm offer for the purchase of the Bonds, as specified in the bid. By submitting a bid for the Bonds, each bidder certifies that has an established industry reputation for underwriting new issuance of municipal bonds unless specifically noted in the bid. In the event that the competitive sale requirements are not satisfied, the City shall advise the winning bidder that such requirements are not satisfied and one of the following sections will apply: 10% Test May Apply. Unless otherwise agreed to by both the City and the successful bidder, as described further below, the City shall treat the first price at which 10% of a maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity, applied on a maturity -by -maturity basis. The winning bidder shall advise the City if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. The City will not require bidders to comply with the "hold the offering price" rule (except by mutual consent, as described further below). Bids will not be subject to cancellation in the event that the competitive sale requirements are not satisfied. If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the Bonds, the winning bidder agrees to promptly report to the City the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the Delivery Date (as defined in the Preliminary Official Statement) has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold. Hold -the -Offering -Price Rule May Apply. If mutually agreed to in writing by the both the City and the successful bidder, in the event that the competitive sale requirements are not satisfied, the City may determine to treat (i) the first price at which 10% of a maturity of the Bonds is sold to the public as the issue price of that maturity and/or (ii) the initial offering price to the public as of the sale date of any maturity of the Bonds as the issue price of that maturity (the "hold -the -offering -price rule"), in each case applied on a maturity -by -maturity basis (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity). The winning bidder shall advise the City if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. If mutually agreed to by the City and the winning bidder, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold -the -offering -price rule shall apply to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The winning bidder shall promptly advise the City when the underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the Bonds not subject to the hold -the -offering -price rule, the winning bidder agrees to promptly report to the City the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the Delivery Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold. The City acknowledges that, in making the representation set forth above, the winning bidder will rely on (i) the agreement of each underwriter to comply with the hold -the -offering -price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the -offering -price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold -the -offering -price rule, as set forth in the retail distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold -the -offering -price rule and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution xii agreement to comply with its corresponding agreement regarding the hold -the -offering -price rule as applicable to the Bonds. By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if mutually agreed to and applicable), in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if mutually agreed to and applicable), in each case if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Bonds to any person who is a related party to an underwriter shall not constitute sales to the public for purposes of this Official Notice of Sale. Further, for purposes of this Official Notice of Sale: (i) "public" means any person other than an underwriter or a related party, (ii) "underwriter" means (i) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder. CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds; however, neither the failure to print CUSIP numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds. The City will obtain CUSIP numbers. The charge of the CUSIP Service Bureau shall be paid by the successful bidder; however, all expenses for obtaining CUSIP numbers for the Bonds shall be paid for by the City. Bond Counsel Opinion The City will furnish to the purchaser of the Bonds the bond counsel opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, in substantially the form attached to the Preliminary Official Statement in Appendix A. Continuing Disclosure The City has entered into an undertaking for the benefit of the owners of the Bonds to provide certain financial information and operating data and notice of certain events to the Municipal Securities Rulemaking Board ("MSRB") pursuant to the requirements of paragraph (b)(5)(i) of Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule"). See "CONTINUING DISCLOSURE UNDERTAKING" in the Preliminary Official Statement. Closing Documents As a condition to the obligation of the successful bidder to accept delivery of and pay for the Bonds, the City will furnish a certificate of an official or officials of the City stating that to the best knowledge of such official(s), as of the date of the Official Statement and as of the date of delivery of the Bonds, the information (including financial information) contained in the Official Statement was, as of its date, and is, as of the date of closing, true and correct in all material respects and did not and 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 light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance or other credit facility). A no -litigation certificate will also be included in the closing documents for the Bonds. Official Statement The Preliminary Official Statement is in a form deemed final by the City for the purpose of the Rule, but is subject to revision, amendment and completion in a final Official Statement which the City will deliver, to the successful bidder, at the City's expense, not later than seven business days after the City's acceptance of the successful bidder's proposal, in sufficient quantities to permit the successful bidder to comply with the Rule. The successful bidder shall file, or cause to be filed, the final Official Statement with the MSRB within one business day following the receipt of the Official Statement from the City. The successful bidder also agrees: (i) to provide to the City, in writing, promptly after the acceptance of the bid, pricing and other related information, including initial reoffering prices of the Bonds, necessary for completion of the final Official Statement; (ii) to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any amendments or supplements prepared by the City; and (iii) to take any and all actions necessary to comply with applicable SEC and MSRB rules governing the offering, sale and delivery of the Bonds to ultimate purchasers, including without limitation, the delivery of a final Official Statement to each investor who purchases Bonds. Additional information may be obtained from the City's Financial Advisor; the Preliminary Official Statement may be obtained from i -Deal Prospectus, a service of i -Deal LLC, at www.i-dealprospectus.com, telephone (212) 849-5021. In addition, the Preliminary Official Statement may be obtained upon request to the City's Financial Advisor. Additional Information Additional information may be obtained from the City's Financial Advisor, PFM Financial Advisors LLC (by telephone: (206) 858-5363; or by e-mail: sea-advisors@pfm.com). CITY OF TUKWILA, WASHINGTON By: /s/ Peggy McCarthy Peggy McCarthy, Finance Director xiv EXHIBIT A FORM OF CERTIFICATE OF UNDERWRITER has acted as underwriter (the "Underwriter") in connection with the sale and delivery of the , Washington (the "Issuer") in the aggregate principal amount of $ (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. [If competitive sale safe harbors are met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the respective prices for each Maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. c. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the Bonds, being the Expected Offering Price of each Maturity, is $ (the "Issue Price"). [If competitive sale safe harbors are not met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. With respect to the Bonds maturing in (the "General Rule Maturities"), at least 10% of the principal amount of each Maturity of the Bonds was sold to the Public at the respective price for that Maturity shown in Schedule A (the "Sale Price"). b. With respect to the Bonds maturing in (the "Unsold Maturities"), the Underwriter offered the Unsold Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Price") on or before the Sale Date. A copy of the pricing wire for the Bonds is attached as Schedule B. 3. As set forth in the Notice of Sale and Certificate of Award, the Underwriter [and all members of the Underwriting Group] agreed in writing that (i) for the following Unsold Maturities: ("Hold -the -Offering - Price Maturities"), [it] would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the applicable Initial Offering Price during the Holding Period (the "hold -the -offering -price rule"), and (ii) any selling group agreement will contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement will contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold -the -offering -price rule. During the Holding Period, no Underwriter (as defined in Treasury Regulation 1.148(f)) has offered or sold any of the Hold -the -Offering -Price Maturities at a price that is higher than the respective Initial Offering Price. "Holding Period" means, with respect to a Hold -the -Offering -Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the 5th business day after the Sale Date or (ii) the date on which the Underwriter has sold at least 10% of such Maturity to the Public at prices that are no higher than the applicable Initial Offering Price. A -i 4. [If applicable at closing: As of the date hereof, the 10% test has not be satisfied with respect to the following Unsold Maturities: ("Unsold General Rule Maturities") not subject to the hold -the -offering - price rule. Until the 10% test has been satisfied as to each Unsold General Rule Maturity, the Underwriter agrees to promptly report to the Issuer the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation will continue until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold.] 5. The expected aggregate issue price of the Bonds, being the Sale Price of each General Rule Maturity[, the expected Sale Price of each Unsold General Rule Maturity,] and the Initial Offering Price of each Hold - the -Offering -Price Maturity, is $ (the "Issue Price"). [For all transactions:] Provided that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Code, the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes Pacifica Law Group LLP ("Bond Counsel") to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2, in Treasury Regulation 1.148-1(f). A -ii OFFICIAL STATEMENT $8,160,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 The City of Tukwila, Washington (the "City"), a municipal corporation duly organized and existing under and by virtue of the state of Washington (the "State"), furnishes this Official Statement in connection with the offering of its Limited Tax General Obligation Bonds, 2017 (the "Bonds"). This Official Statement, which includes the cover page, inside cover page, the table of contents and appendices, provides information concerning the City and the Bonds. Capitalized terms not defined herein shall have the meanings assigned to them in the Bond Ordinance, as defined below. All of the summaries of provisions of the Constitution and laws of the State, of ordinances and resolutions of the City, and of other documents contained herein are subject to the complete provisions thereof and do not purport to be complete statements of such laws or documents, copies of which may be obtained from the City upon request. A full review should be made of the entire Official Statement. The offering of the Bonds to prospective investors is made only by means of the entire Official Statement. DESCRIPTION OF THE BONDS General The Bonds will be dated as of their initial date of delivery (the "Delivery Date") and will bear interest from their dated date (or the most recent date to which interest has been paid thereon). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2017 to maturity or prior redemption. The Bonds will bear interest at the rates and will mature on the dates and in the amounts set forth on the inside cover of this Official Statement. Interest will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. Authorization The Bonds are issued pursuant to the provisions of the Constitution of the State, chapters 39.36 and 39.46 of the Revised Code of Washington ("RCW"), and other applicable laws of the State, and Ordinance No. 2541 passed by the City Council (the "Council") at a regular meeting on June 19, 2017 (the "Bond Ordinance"). Registration and Payment Book -Entry System. The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"). DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denominations of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee of DTC, references herein to the Registered Owners will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. For information about DTC and its book -entry system, see APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM." The City makes no representation as to the accuracy or completeness of the information in Appendix C provided by DTC. Purchasers of the Bonds should confirm this information with DTC or its broker-dealer participants. Bond Registrar. The City has adopted the system of registration for the Bonds approved, from time to time, by the State Finance Committee (the "Committee"). Pursuant to chapter 43.80 RCW, the Committee designates one or more fiscal agents for bonds issued within the State. The State's fiscal agent, currently U.S. Bank National Association (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal of and interest on the Bonds, recording the purchase and registration, exchange or transfer, and payment of Bonds and performing the other obligations of the paying agent and registrar. No resignation or removal of the Bond Registrar shall become effective until a successor has been appointed and has accepted the duties of Bond Registrar. Payments. To pay the principal of and interest on the Bonds when due, the City will remit money from the fund or account held under the Bond Ordinance for the purpose of paying debt service on the Bonds (the "Debt Service Fund") to the Bond Registrar. The Bond Registrar is obligated to remit such payments to DTC participants for subsequent disbursement to the Beneficial Owners of the Bonds as described in Appendix C. " Preliminary, subject to change. 1 For so long as all Bonds are held by a depository, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Blanket Issuer Letter of Representations from the City to DTC. In the event that the Bonds are no longer held by a depository, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register at the close of business for the Bond Registrar 15 days preceding any principal payment or redemption date (the "Record Date"), or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the designated office of the Bond Registrar. Transfer and Exchange. The transfer of any Bond may be registered and Bonds may be exchanged as provided in the Bond Ordinance. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registered Owner) of the same date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer of or to exchange any Bond during the period between the preceding Record Date and the principal payment or redemption date. Redemption Provisions Optional Redemption. The Bonds maturing on December 1 in the years 2018 through 2026, inclusive, are not subject to redemption prior to their stated maturity. The Bonds maturing on or after December 1, 2027 are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redem ption. [Mandatory Redemption. The Bonds maturing in the year are Term Bonds and, if not optionally redeemed or purchased in accordance with the Bond Ordinance, will be called for redemption at a price equal to the principal amount to be redeemed, plus accrued interest, if any, to the date fixed for redemption, on December 1 in years and amounts as follows: Term Bonds Maturing 20_ Year Principal Amount (1) (l) Final maturity. If a Term Bond is redeemed under the optional redemption provisions, defeased or purchased by the City and surrendered for cancellation, the principal amount of the Term Bond so redeemed, defeased or purchased (irrespective of its actual redemption or purchase price) will be credited against one or more scheduled mandatory redemption installments for that Term Bond in the manner described below regarding the selection of Bonds for redemption.] Selection of Bonds for Redemption. For as long as the Bonds are held in book -entry form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held by a depository, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the Bond Ordinance. If the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of bonds of such maturity to be redeemed shall be selected by lot (or in such manner as determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the sum of a Bond is redeemed, upon surrender of such Bond the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the rest of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. 2 Notice of Redemption. For so long as the Bonds are held by a depository, notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar shall provide any notice of redemption to any Beneficial Owners. The notice of redemption may be conditional. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. On or prior to any redemption date, unless such redemption has been rescinded or revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. Effect of Call for Redemption. If notice of redemption has been given and not rescinded or revoked, or if the conditions set forth in a conditional notice of redemption have been satisfied or waived, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. Purchase The City reserves the right to purchase any or all of the Bonds offered to the City at a time at a price deemed reasonable by the City plus accrued interest to the date of purchase. Failure to Pay Bonds If any Bond is duly presented for payment and funds have not been provided by the City on the applicable payment date, then interest will continue to accrue thereafter on the unpaid principal thereof at the rate stated on the Bond until the Bond is paid. Defeasance In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt Service Fund or in another special account, cash or noncallable Government Obligations (as defined below), or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of the Bond Ordinance except the right to receive payment of principal, premium, if any, and interest from the Debt Service Fund or such special account, and such Bond shall be deemed to be not outstanding under the Bond Ordinance. The term "Government Obligations" is defined in the Bond Ordinance to mean direct or indirect obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America. 3 PURPOSE Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain road construction and related improvement projects in the City, and (ii) to pay the costs of issuance and sale of the Bonds. Sources and Uses of Funds (1) Sources of Funds The Bonds Par Amount of Bonds [Plus Premium/Less Discount] Total Sources of Funds Uses of Funds Deposit to Project Fund Estimated Costs of Issuance (1) Total Uses of Funds Costs of issuance include legal fees, financial advisor's fees, underwriting fee, rating agency fees and other costs incurred in connection with the issuance of the Bonds. SECURITY FOR THE BONDS The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in this Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of the taxes and for the prompt payment of the principal of and interest of the Bonds. See "CITY TAXING AUTHORITY" for a summary of property taxes and other taxes imposed by the City. The City may, subject to applicable laws, apply other funds available to make payments with respect to the Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. CITY TAXING AUTHORITY The City has statutory authority to levy various taxes within its boundaries, including local option sales and use taxes, excise taxes, utility taxes, property taxes, and other taxes. In some cases, State law specifies the purposes for which various taxes can be used. The City's major sources of General Fund tax revenue are its regular property tax levy and sales and use taxes. Additionally, the City levies utility taxes and other taxes which include gambling tax, excise tax, admissions tax, and penalties and interest. Neither the State nor any municipal corporation of the State currently has the authority to or collects a tax on net income. The following table shows the tax revenue in the City's General Fund, by source, for 2012 through 2016. General Fund Tax Revenues by Source Fiscal Property Sales and Utility Other Total Year Taxes Use Taxes Taxes (1) Taxes (2) Taxes (1) (2) (3) 2016 $14,494,747 $18,908,190 $6,192,432 $6,291,392 $45,886,761 2015 14,323,133 19,334,152 6,080,387 5,463,697 45,201,369 2014 14,186,753 17,105,322 5,706,558 5,220,393 42,219,026 2013 13,757,092 16,520,856 5,566,851 4,771,091 40,615,890 2012 13,830,166 15,673,891 5,535,966 4,800,341 (3) 39,840,364 Includes taxes on City -owned utilities, which represent approximately 30-35 percent of Utility Tax revenue each year. See "Utility Taxes" below. Includes gambling tax, excise tax, admissions tax, full-time equivalent employee tax, and penalties and interest. In 2012, the City received approximately $440,000 in delinquent gambling taxes. Source: The City of Tukwila audited financial statements for each year 2012 to 2016 4 Property Tax Under the State's laws and Constitution, property taxes are classified as either "regular" property taxes or "excess" property taxes. The City is authorized to levy both types of taxes. It submits a levy amount request to the King County (the "County") Assessor (the "Assessor"), a County elected official, who calculates the levy rate by spreading the levy amount across the assessed valuation on the tax rolls, following procedures established by the State Department of Revenue. The Assessor confirms that the levy is within applicable statutory and constitutional limitations and makes any necessary reductions before the County Treasurer (the "Treasurer"), another County elected official, may begin to collect the levy on behalf of the City. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES" below. Regular Property Tax. Regular property taxes are subject to constitutional and statutory limitations as to rate and amount. See "PROPERTY TAX LIMITATIONS" herein. Regular property taxes are usually levied for general municipal purposes, though certain statutes authorize additional levies for particular limited purposes. General purpose levies may be used for the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, but State law does not provide any priority of use. In general, regular property taxes do not require voter approval, though certain statutes authorizing limited purpose levies may require voter approval. Certain tax limitations may be exceeded upon voter approval. Excess Property Tax. Excess property taxes for cities are not subject to constitutional or statutory limitations as to rate or amount, but must be authorized by a at least 60 percent approving vote in an election meeting minimum voter turnout requirements. Excess property tax levies may be made (1) by any taxing district for the repayment of bonds issued for capital purposes, excluding replacement of equipment; (2) by any taxing district for one year for any governmental purpose; or (3) without a vote when necessary to prevent impairment of an obligation of contract, if ordered by a court of last resort. Excess levies for the repayment of unlimited tax general obligation bonds must meet the minimum voter requirements set forth below under "GENERAL OBLIGATION DEBT—Limits of Indebtedness." Retail Sales and Use Taxes The State imposes a sales and use tax, and local governments (cities, counties and certain other municipal corporations) are authorized to levy additional "local option" sales and use taxes. In general, sales taxes are imposed on the purchase by consumers of a broad base of tangible personal property and selected services (including construction (labor and materials), machinery and supplies, services and repair of real and personal property). The use tax supplements the sales tax by taxing the use of certain services and personal property on which a sales tax has not been paid. Sales taxes upon applicable retail sales are collected by the seller from the consumer. Use taxes are payable by the consumer upon applicable rendering of services or uses of personal property. Each seller is required to hold taxes collected until remitted to the State Department of Revenue (the "DOR"), typically occurs on a monthly basis. The DOR collects and distributes all sales and use tax revenue in the State and retains one percent of all taxes collected to offset administration costs. Distribution to the local governments occurs on a monthly basis and lags approximately two months behind collections. Among the items currently exempt are most personal services, motor vehicle fuel, most food sold for consumption off premises, trade-ins of items (e.g., automobiles) and purchases for resale. The State Legislature, and the voters through the initiative process, have changed the base of the sales and use tax on occasion. State law does not provide a general exemption for businesses, nonprofits or governmental entities from payment of sales and use taxes. The State Legislature approved legislation that changed the State sales tax system from an origin -based system to a destination -based system, effective July 1, 2008. Under destination sourcing, sales taxes are credited to the taxing jurisdiction where the purchaser takes delivery of the goods (based on the local tax rate), which may differ from the point of sale with respect to goods delivered to the purchaser. Local option sales and use taxes may be imposed on any sale or use upon which the State also imposes a sales and use tax. As described below, some sales and use tax authority is for general purposes and some is restricted as to use. Additionally, some local option taxes are subject to approval of the voters within the local jurisdiction. Historical retail sales subject to the sales and use taxes in the City are shown under "GENERAL AND ECONOMIC INFORMATION—Economic Indicators for the City and the County." Overview of Sales and Use Taxes within the City. The State sales and use tax rate is 6.5 percent. The City imposes the basic and optional sales and use taxes described below at a rate totaling 1.0 percent. The County imposes a criminal justice sales and use tax and a chemical dependency or mental health treatment services sales and use tax, for a combined rate of 0.2 percent within the City. The Central Puget Sound Regional Authority (d/b/a Sound Transit) imposes a regional transit authority tax of 1.4 percent, and the County imposes a county transit system sales and use tax at a rate of 0.9 percent within its boundaries. Therefore, the total sales and use tax rate in the City is currently 10.00 percent. 5 Basic and Optional Sales and Use Taxes. The City imposes a basic sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(1), and an optional sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(2). The revenue collected from the sales and use tax is not restricted, and therefore may be used for general City purposes. The City receives 85 percent of the tax collected within the City and the balance is distributed to the County per State law. Taxes from this source are part of the City's General Fund, and therefore are available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. Criminal Justice Sales and Use Tax. The County imposes a local sales and use tax of 0.1 percent for funding criminal justice programs, as provided in State law. While the criminal justice sales tax is levied countywide, a portion of the revenues are distributed to the cities within the County, based on a formula in State law. Ten percent of the revenue from this tax is distributed to the County and 90 percent to the cities and the County on a per capita basis, based on their estimated population as determined by the State Office of Financial Management as of April 1 each year. Revenues from the criminal justice sales tax are deposited into the City's General Fund and may be used only for criminal justice purposes, including the construction, improvement, and expansion of jails, court facilities, juvenile justice facilities, and services with ancillary benefits to the civil justice system (such as domestic violence programs and services). Chemical Dependency or Mental Health Treatment Services Sales and Use Tax. The County imposes a local sales and use tax of 0.1 percent for funding of chemical dependency or mental health treatment services within the County, as provided in RCW 82.14.460. Revenue from the tax is to provide funding for the operation or delivery of chemical dependency or mental health treatment programs and services and for the operation or delivery of therapeutic court programs and services, including treatment services, case management, and housing that are a component of a coordinated chemical dependency or mental health treatment program or service. State law does not require distribution of these taxes to the City. Sales & Use Tax Streamlining Mitigation Payments. The State currently provides payments to certain jurisdictions to mitigate net losses in sales and use tax collections of local taxing jurisdictions resulting from the change to a destination -based system. Mitigation payments are distributed at the end of each quarter for the net loss experienced in the preceding quarter. For example, the first payments were made on December 31, 2008 for July through September (third quarter) 2008. Under current State law, when a jurisdiction's "voluntary compliance revenue" exceeds its loss of local sales tax revenue, the jurisdiction will cease receiving mitigation payments. The continuation of these payments is subject to change at any time by the State Legislature. The City has received mitigation payments averaging approximately $280,000 per quarter in each of the last three years. The total received in 2016 was $1.122 million. Although the City cannot predict its future sales tax receipts, it currently expects to continue to seek mitigation payments to offset any losses so long as it is eligible. However, the sales tax mitigation program is subject to annual appropriation by the State Legislature and to allocation formulas developed under State law, and the City cannot predict whether the State Legislature will continue to appropriate and to allocate mitigation payments to the City in the future. Utility Taxes The City levies a tax on public utility businesses (the "Utility Tax"), which is based on gross receipts from service provided or revenues generated within the City. It is collected from Puget Sound Energy (an investor-owned utility) and utilities operated by the City. Seattle City Light, which provides electric service to portions of the City, pays the City an annual franchise fee in lieu of the Utility Tax. Legal authority to impose the tax on public utilities (other than electric utilities) owned by other municipal corporations is not settled; however, no such public utilities provide service within the City. Under State law, the tax rate for electric, phone and natural gas utilities is limited to six percent without voter approval; there is no limitation on tax rates on other utilities. The City collects a six percent utility tax on electricity, telecommunications, natural gas, cable utilities, and solid waste utilities. The City collects a 10 percent utility tax on revenue from City -owned stormwater, water, and sewer utilities. Lodging Tax The City imposes a local option lodging tax at a rate of 1.0 percent on sales of hotel/motel rooms within the City. The City's lodging tax is credited against the State's 6.5 percent retail sales tax, and therefore is not an additional tax to consumers. The lodging tax receipts may be used only for tourism purposes. The City received $710,267 from the lodging tax in 2016. Revenues from the lodging tax are deposited into a special revenue fund. 6 PROPERTY TAX LIMITATIONS The authority of a city to levy taxes without voter approval for general city purposes, including the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the limitations described below. Information relating to regular property tax limitations is based on existing statutes and constitutional provisions, and is subject to change. Changes in such laws could alter the impact of other interrelated tax limitations on the City. Uniformity Requirement The State Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. The State Constitution also provides that all real estate constitutes a single class, except for certain agricultural properties eligible for special use classification, which may be valued based on current use. It is possible, because of different overlapping taxing district boundaries, the maximum permissible levy might vary within the boundaries of a particular taxing district. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of a taxing district would be applied to the entire taxing district. Limitations on Regular Property Taxes City Regular Levy Rates and Limitations. Cities in the State are authorized to impose a regular property tax levy of not to exceed $3.375 per $1,000 of assessed value. This amount is increased to an amount not to exceed $3.60 per $1,000 of assessed value if the city is annexed into a library district, a regional fire service protection authority, and/or a fire protection district, less the actual regular levy made by the library district, regional fire service protection authority, and/or fire protection district. Further, a city may impose an additional $0.225 per $1,000 of assessed value beyond the $3.375 or $3.60 (for annexed cities) if the city has a fire pension fund, which must be used to the extent necessary for firefighters' pension funding purposes, otherwise this tax may be levied and used for any other municipal purpose. The City's regular levy authority reflects certain of the adjustments described above. The City is annexed to the King County Rural Library District, which imposed a regular levy of $0.401 per $1,000 of assessed valuation within the City in 2017. The City also has a pre-LEOFF firefighters pension fund (see "THE CITY—Pensions" below), and therefore has authority to levy an additional $0.225/$1,000 of assessed valuation. Therefore, after application of the adjustments, the City is limited in 2017 to a maximum property tax levy rate of $3.199 per $1,000 of assessed valuation, plus the $0.225 pension fund levy. The City's actual 2017 regular property tax rate is $2.586 per $1,000 of assessed valuation, and it is not currently levying a firefighters' pension fund levy. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES—Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" below. Aggregate Levy Rate Limitations. The State Constitution and statutes limit the aggregate of all regular property tax levies imposed on any given tax parcel by the State and all overlapping taxing districts, except port districts and public utility districts, to one percent of the true and fair value of property. Within the one percent limitation, the levy by the State may not exceed $3.60 per $1,000 of assessed valuation and the aggregate of all regular levies by all taxing districts (other than the State and other than certain specified levies) may not exceed $5.90 per $1,000 of assessed valuation (the "$5.90 limitation"). Those specified levies excluded from the $5.90 limitation include port or public utility district levies; excess property tax levies; levies for acquiring conservation futures; levies for emergency medical care or emergency medical services; levies to finance affordable housing for very low-income residents; certain portions of levies by metropolitan park districts; certain levies imposed by ferry districts; levies for criminal justice purposes; certain portions of levies by fire protection districts; levies by counties for transit -related purposes; portions of certain levies by certain flood control zone districts; and levies imposed by a regional transit authority. The list of levies excluded from the $5.90 limitation is statutory and subject to change by the State Legislature at any time; certain of these exclusions are set to expire in 2018. Because various taxing districts may overlap, the aggregate levy rate applied to any two tax parcels within a single taxing district may not be identical. If the aggregate levy rate exceeds the aggregate rate limitation on any single parcel within a taxing district, the regular levy rates of certain taxing districts that include that parcel may be reduced. Because of the constitutional requirement for uniformity of taxation within a taxing district (described above), any reduction affects the entire taxing district. If reductions are required, they are made by the County Assessor, in accordance with State statutes and guidance from the DOR setting forth a prioritization of regular levies. The regular levies of the State, counties, road districts, cities, towns, port districts, and public utility districts are considered "senior" levies; the regular levies of all other taxing districts are considered "junior" levies. State statute prescribes the order in which the levies of the various junior levies are reduced or eliminated in order to comply with the aggregate rate limitations. Senior levies, such as the City's, are not subject to reduction or elimination based on aggregate rate limitations. The regular levy rates within the City are below both the individual and aggregate levy rate limitations. 7 Maximum Amount Increase Limitation. State law also limits the amount of a regular levy for any particular year to the highest amount that could have been levied in any prior year, multiplied by a specified percentage (the "limit factor") plus an adjustment for new construction, annexations, certain improvements to property, and state assessed property. The limit factor is defined as the greater of (i) the lesser of 101 percent or 100 percent plus inflation, or (ii) if approved by a majority plus one vote of the governing body upon a finding of substantial need, any percentage up to 101 percent. If a taxing district levies less than its highest allowable levy, the amount not levied is nonetheless included in the base for determining the maximum amount limitation for succeeding years. This difference between the highest allowable levy amount and the amount actually levied is sometimes referred to as "banked" levy capacity. The City has no "banked" levy capacity. See table titled "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES— Current and Historical Assessed Valuation and Property Tax Levy Rates and Levy Amounts for the City" herein. The maximum amount increase limitation may be exceeded upon approval of a simple majority of voters. This is known as a "levy lid lift." A levy lid lift permits a levy amount increase greater than would otherwise be allowed, which increase may be effective indefinitely or for a limited period of time. Tax receipts from the incremental increase may be (but are not required to be) restricted in the ballot proposition to satisfy a limited purpose. A levy lid lift will not increase the levy if it would cause the taxing district's levy to exceed the applicable maximum rate limitations or the aggregate rate limitations described above. The City does not have any levy lid lifts in effect and does not expect to seek voter approval for a levy lid lift in 2017 or 2018. Relationship Between Rate and Amount Limitations. Regular levies are limited by both the rate limitations and the amount limitations described above and, therefore, may need to be reduced below one threshold to avoid exceeding the other. Because the regular property tax increase limitation applies to the total dollar amount levied rather than to the levy rate, increases in the assessed value of all property in the taxing district (excluding new construction, improvements, annexations and State -assessed property) which exceed the rate of growth in taxes allowed by the limit factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses banked levy capacity. Decreases in the assessed value of all property in the taxing district (including new construction, improvements, annexations and State -assessed property) or increases in such assessed value that are less than the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates. Thus, as assessed values rise, the levy amount increase limitation may restrict levy rate growth. As assessed values fall, the levy rate limitation may restrict growth in the levy amount. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES—Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" herein for a table showing the City's historical assessed valuation, and regular property tax levy rates and amounts. Guaranty Fund Levies. Outside of the $3.60 per $1,000 and $5.90 per $1,000 limitations described above, but within the constitutional one percent aggregate levy limitation, the City may impose a levy for the maintenance of a local improvement guaranty fund to secure debt of any local improvement district that may be created by the City. The amount of a guaranty fund levy in any given collection year may not exceed the greater of (i) 12 percent of the outstanding obligations guaranteed by the fund, or (ii) the total amount of delinquent assessments and interest accumulated on the delinquent assessments (RCW 35.54.060). The taxes levied for the maintenance of the guaranty fund will be in addition to and, if need be, in excess of all statutory and charter limitations applicable to tax levies in any city or town. In 2013 the City issued $6,687,500 of Local Improvement District No. 33 Bonds, of which $4,805,000 principal is currently outstanding and guaranteed by the local improvement guaranty fund. As of May 31, 2017, the balance in the guaranty fund is $669,150, which was funded by a deposit of proceeds of the Local Improvement District No. 33 Bonds. 8 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES Assessed Valuation The Assessor determines the value of all real and personal property throughout the County that is subject to ad valorem taxation, except certain utility properties that are valued by the DOR. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the DOR. The assessed value is equal to 100 percent of fair market value, as determined by the Assessor using procedures prescribed by the DOR. Three approaches may be used to determine the fair market value of real property: market data, replacement cost and income generating capacity. In the County, all property is subject to revaluation every year based on market statistics and an on-site appraisal every six years. Though the intent is that the assessed value reflect 100 percent of market value, the infrequency of on-site appraisals can lead to assessed valuations that lag market and other adjustments. Personal property is valued each year based on affidavits filed by the property owner. The property is listed by the Assessor on a roll at its current assessed value and the roll is filed in the Assessor's office. The Assessor's determinations are subject to revision by the County Board of Equalization and, for certain property, subject to further revision by the State Board of Equalization. Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City The following table shows the current and historical assessed valuation, and property tax levy rates and levy amounts for the City from 2013 to 2017. Assessed Valuation and Property Tax Levy Rates and Levy Amounts Tax Year 2017 2016 2015 2014 2013 n) (2) Source: Assessed Valuation (1) $5,763,649,829 5,395,325,118 5,054,078,747 4,756,373,688 4,649,191,308 Regular Levy Rate $2.58592 2.71073 2.84188 2.97799 2.98778 Excess Levy Rate (2) $0.47143 N/A N/A N/A N/A Total Levy Rate $3.05735 N/A N/A N/A N/A Regular Levy Amount $14,869,800 14,592,910 14, 327,468 14,129,531 13,853,419 Excess Levy Amount (2) $2,698,992 N/A N/A N/A N/A Total Levy Amount $17,568,792 N/A N/A N/A N/A Total assessed valuation used for computation of debt capacity. Equal to regular assessed valuation plus timber assessed valuation. The City's voters approved an unlimited tax general obligation bond measure in November 2016. The excess property tax levy associated with these bonds became effective for collection in 2017. King County Department of Assessments Largest Property Taxpayers in the City of Tukwila — Taxpayer Boeing Westfield Southcenter Segale Properties Sabey Corporation KIR Tukwila 050 LLC/KIMCO Gateway North Buildings (Eproperty Tax Inc. Dept. 207) LIT Industrial Ltd. Partnership CenturyLink Communications International Gateway East CPF Kent Valley LLC All other property tax payers Source: King County Department of Assessments Type of Business Aerospace Shopping Center Commercial Properties Commercial Properties Commercial Properties Commercial Properties Commercial Properties Telecommunications Commercial Properties Shopping Center 9 Total 2017 Tax Year Assessed Valuation $ 482,031,129 306,693,888 114,654,362 103, 743, 927 89,180,000 85,477,600 84,820,900 60,820,553 59,218,716 49,242,900 $1,435,883,975 4,327,765,854 $5,763,649,829 % of Total A.V. 8.36% 5.32 1.99 1.80 1.55 1.48 1.47 1.06 1.03 0.85 24.91 % 75.09 100.00% Property Tax Collection Procedures Property taxes are levied in specific amounts by the taxing districts. The levy rate is calculated and fixed by the Assessor, based upon the assessed value of the taxable property within the taxing district and adjusted, in accordance with detailed guidelines from the DOR, to comply with the statutory and constitutional rate and amount limitations. See "PROPERTY TAX LIMITATIONS" above. The Assessor extends the taxes to be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the Treasurer by January 15 of each year. The Treasurer creates a tax account for each taxpayer and is responsible for the collection of taxes due for each account. All taxes are due and payable on the 30th of April of each year, but if the amount due from a taxpayer exceeds $50, one-half may be paid then and the balance no later than October 31 of that year. Delinquent taxes are subject to interest at the rate of 12 percent per year computed on a monthly basis from the date of delinquency until paid. In addition, a penalty of three percent is imposed on June 1 of the year in which the tax is due and eight percent on December 1 of the year due. Penalties are credited to the account of the taxing district; interest on delinquent taxes is credited to the County's current expense fund. The method of giving notice of payment of taxes due, the Treasurer's accounting for the money collected, the division of the taxes among the various taxing districts, notices of delinquency and collection procedures are all covered by detailed statutes and regulations. Property taxes and all charges and expenses relating to the taxes constitute a statutory lien on the property taxed. The lien attaches to the property from and including January 1 in the year in which the tax is levied, and is discharged only when the taxes are paid. By law, the Treasurer may commence foreclosure of a tax lien on real property after three years have passed since the first delinquency. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation except for federal civil judgment liens and the possible application of the State "homestead exemption" described below. A federal lien on personal property that is filed before the personal property tax is levied is senior to the local personal property tax lien. In addition, a federal civil judgment lien (but not a federal tax lien) is senior to real property taxes that are imposed after the judgment lien has been recorded. The State's courts have not decided whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain the first $125,000 of proceeds of a forced sale of the family residence or other "homestead property" for delinquent property taxes. The United States Bankruptcy Court for the Western District of Washington has held that the homestead exemption applies to the lien securing property taxes, while the State Attorney General has taken the position that it does not. See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982) (holding that liens securing improvement district assessments are subject to the homestead exemption). The following table shows the City's regular and excess property tax collection record. Regular and Excess Property Tax Collection Record for the City Amount Amount Collected Percent Collected Amount Collected Percent Collected Year Levied (1) Year of Levy Year of Levy As of 4/30/17 As of 4/30/17 2017 (2) $17,568,792 $ 7,025,323 39.99% $ 7,025,323 39.99% 2016 14,516,623 14,375,358 99.03 14,432,190 99.42 2015 14,245,846 14,113,739 99.07 14,217,472 99.80 2014 14,058,979 13,916,718 98.99 14,047,709 99.92 2013 13,750,828 13,549,525 98.54 13,751,560 100.00 (1) (2) The amount levied each year does not include supplements or cancellations of taxes or delinquent taxes collected in that year. In process of collection. Property taxes for the first half of the year are due and payable on April 30 and the balance is payable on October 31. Includes the excess property tax levy associated with the City's November 2016 unlimited tax general obligation bond authorization, which became effective for collection in 2017. Source: King County Office of Finance 10 Overlapping Levy Rates The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the following rates, subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved property taxes. For purposes of demonstration, representative levy rates (regular and excess) for "levy code 2340," the highest levy rate within the City, as well as the statutory regular levy authority of each type of overlapping district, are listed below. There is no statutory limitation on excess tax levies. Representative 2017 Levy Rate and Statutory Regular Levy Authority King County King County Rural Library District Port of Seattle Fire Protection District or Authority The City King County Hospital District No. 1 State Schools Renton School District No. 403 Emergency Medical Services King County Flood Zone Regional Transit Authority Tukwila Metropolitan Park District Source: Statutory Regular Levy Authority Per $1,000 of Assessed Value $1.80(1) 0.50 0.45 (2) 1.50 3.42 (3) 0.75 3.60 (4) -- (5) 0.50 0.25 0.50 0.75 Representative 2017 Regular Levy Rates Per $1,000 of Assessed Value $1.34685 0.40118 0.15334 2.58592 0.50089 2.03205 0.26305 0.11740 0.25000 0.15653 Representative 2017 Excess Levy Rates Per $1,000 of Assessed Value $0.03609 0.05000 0.47143 4.95978 Total Rate for King County Levy Code 2340: Representative Total Levy Rates Per $1,000 of Assessed Value $ 1.38294 0.45118 0.15334 3.05735 0.50089 2.03205 4.95978 0.26305 0.25000 0.11740 0.15653 $13.32451 A county may increase its levy up to $2.475 per $1,000 of assessed value for general county purposes if the total levies for both general and road purposes do not exceed $4.05 per $1, 000 of assessed value, and no other taxing district has its levy reduced as a result of the increased county levy. The County road levy is imposed on properties located in unincorporated areas of the County. Port districts may exceed this limitation if necessary to pay debt service on general obligation indebtedness. Pursuant to RCW 41.16.060, cities (like the City) who maintain a pre-LEOFF firefighter pension fund, may levy an additional $0.225 for firefighter pension funding purposes. If not actuarially required for that purpose, such a city may use this levy for any other municipal purpose. Additionally, the City's levy authority is reduced by the actual regular levy rate of the King County Rural Library District, which levied $0.40118 per $1,000 of assessed value in 2017. Pursuant to RCW 84.52.043(1), the levy by the State may not exceed $3.60 per $1,000 of assessed value adjusted to the State equalized value in accordance with a ratio fixed by the State Department of Revenue. School districts do not have non -voted regular levy authority. The City is served by and overlaps with five separate school districts. The representative levy code (2340) shown in the table reflects the portion of the City that overlaps with Renton School District No. 403. King County Department of Assessments GENERAL OBLIGATION DEBT Authorization of Debt The power of the City to contract debt of any kind is controlled and limited by State law. All debt must be set forth in accordance with detailed budget procedures and paid for out of identifiable receipts and revenues. The budget must be balanced for each fiscal year. It is unlawful for an officer or employee of the City to incur liabilities in excess of budgetary appropriations. In an emergency, the City Council may put a plan into effect and authorize indebtedness outside the current budget. All expenditures for emergency purposes must be paid from any available money in the fund properly chargeable with such expenditures. Limits of Indebtedness The State Constitution and statutes limit the City's ability to incur indebtedness based on a percentage of the assessed valuation of the taxable property within the City at the time the indebtedness is incurred. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES" above. 11 As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to 60 percent voter approval, is limited to 2.5 percent of assessed value for general purposes, an additional 2.5 percent of assessed value for certain utility purposes and an additional 2.5 percent of assessed value for open space, park facilities and capital facilities associated with economic development. The minimum turnout must be at least 40 percent of city voters who voted at the last preceding State general election. If the ballot proposition approving issuance of voter -approved debt also approved the levy of taxes without limitation in amounts sufficient to repay those voter - approved bonds, then bonds will be payable from an excess property tax levy. See "PROPERTY TAX LIMITATIONS" above. Within the 2.5 percent of assessed value for general purposes, the City may, without voter approval, incur general obligation indebtedness, such as the Bonds, in an amount not to exceed 1.5 percent of assessed value. Additionally, within the 2.5 percent of assessed value for general purposes, the City may, also without voter approval, enter into financing leases and conditional sale contracts if the total principal component of the lease and contract payments, together with the other non -voted general obligation indebtedness of the City, does not exceed 1.5 percent of assessed value. The Bonds constitute non -voted debt. There is no express provision in the State's laws or Constitution on the priority of payment of debt service on general obligation bonds as compared to the payment of other general obligations of the municipality. Aggregate Debt Limitations. The combination of voter -approved and non -voted general obligation debt for general municipal purposes may not exceed 2.5 percent of the City's assessed valuation. The total of all general obligation debt for all purposes may not exceed 7.5 percent of the City's assessed valuation. Short -Term Obligations. Within the limitations described above, State law permits municipal corporations to borrow money and issue short-term obligations for any lawful purpose, including the anticipation of the receipt of revenues, taxes, or grants or the sale of bonds, if the bonds have been authorized by the governing body or the voters, as applicable. Short-term obligations issued in anticipation of taxes must be repaid within six months after the end of the fiscal year in which they are issued. [Remainder of page intentionally left blank.] 12 Outstanding General Obligation Debt As of June 1, 2017 the City had the following outstanding general obligation indebtedness. Principal Date of Final Principal Amount Outstanding General Obligation Debt Amount Issued Maturity Outstanding Limited Tax General Obligation Debt Limited Tax General Obligation Refunding Bonds, 2008 $6,180,000 12/1/2019 $ 2,165,000 South Correctional Entity Facility Public Development 6,898,800 1/1/2039 6,093,600 Authority Bonds, Series 2009A and 2009B (Taxable Build America Bonds — Direct Payment) (1) Limited Tax General Obligation Bonds, 2010B 3,970,000 12/1/2024 3,575,000 Limited Tax General Obligation Bonds, 2011 4,620,000 12/1/2023 3,360,000 Limited Tax General Obligation Bond, 2013 (2) 1,000,000 12/1/2022 609,977 Limited Tax General Obligation Bond, 2014 (Taxable) 3,850,000 12/1/2034 3,560,000 Limited Tax General Obligation Note, 2014 (Taxable) 2,250,000 12/1/2017 2,250,000 Limited Tax General Obligation Bonds, 2015 5,825,000 12/1/2035 5,605,000 Total Outstanding Limited Tax General Obligation Debt $27,218,577 The Bonds (3) 8,160,000 12/01/2037 8,160,000 Total Limited Tax General Obligation Debt $35,378,577 Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Bonds, 2016 Total General Obligation Debt n) (2) (3) $32,990,000 12/1/2036 $32,990,000 $68,368,577 The South Correctional Entity Facility Public Development Authority issued bonds for a correctional facility (the "SCORE Bonds'). Pursuant to an interlocal agreement, the City is obligated to pay eight percent of the debt service on the SCORE Bonds in each year so long as the SCORE Bonds are outstanding, which obligation constitutes a limited tax general obligation debt of the City secured by the City's full faith and credit. The amounts shown in the table above represent the portion of the outstanding principal amount that is allocable to the City's obligation. The proceeds of this obligation were loaned to the Tukwila Metropolitan Park District (the "MPD") to pay for improvements to the pool. The MPD is a separate taxing district. Pursuant to the terms of an interlocal agreement, the MPD has irrevocably pledged to levy and collect taxes and other revenues in amounts sufficient to pay debt service on the 2013 Bonds. These amounts are required to be paid to the City not later than June 1 and December 1 of each year, so long as the 2013 Bonds remain outstanding. Preliminary, subject to change. Source: The City 13 Debt Capacity Computation The City may issue general obligation debt if, at the time the debt is issued, the City has sufficient debt capacity. Once the debt has been issued, changes in assessed valuation have no effect on the validity of outstanding debt or the City's ability to refund outstanding debt. Future declines in assessed valuation can impact the ability to issue future general obligation debt. The following information is based on the 2016 assessed valuation of property within the City for collection of taxes in 2017 and the general obligation debt of the City outstanding as of June 1, 2017 plus the Bonds. Calculation of Debt Capacity As of June 1,2017 Assessed Valuation (2017 tax year) General Purposes Non -Voted Debt Capacity (1.5% of Assessed Valuation) Outstanding Non -Voted General Obligation Debt Less: Non -Voted General Obligation Bond Account Balance The Bonds (1) Net Non -Voted General Obligation Debt (1) Remaining Non -Voted General Purpose Debt Capacity $5,763,649,829 $ 86,454,747 $27,218,577 (1,152,129) 8,160,000 $34,226,448 $ (34,226,448) $ 52,228,299 Voted and Non -Voted Debt Capacity (2.5% of Assessed Valuation) $ 144,091,246 Outstanding Voted General Obligation Debt $32,990,000 Plus: Net Non -Voted General Obligation Debt (calculated above) (1) 34,226,448 Direct Debt (1) $67,216,448 $ (67,216,448) Remaining Debt Capacity for General Municipal Purposes (1) $ 76,874,798 Utility Purposes Debt Capacity (2.5% of Assessed Valuation) $ 144,091,246 Utility Purpose Bonds Outstanding - Remaining General Obligation Debt Capacity for This Purpose $ 144,091,246 Parks and Open Space and Economic Development Purposes Debt Capacity (2.5% of Assessed Valuation) $ 144,091,246 Park and Open Space and Economic Development Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose $ 144,091,246 (1) Preliminary; subject to change. 14 Direct and Estimated Overlapping Debt The following table sets forth the outstanding principal amount of general obligation debt of the City including the Bonds (the "Direct Debt") and the estimated allocable share of the outstanding principal amount of general obligation bonds payable from property tax revenues of other taxing districts whose boundaries overlap a part or all of the City (the "Overlapping Debt"). The estimated allocable share of Overlapping Debt is calculated based on a percentage of the overlapping taxing district's assessed valuation that lies within the boundaries of the City. The City has obtained the information regarding the overlapping debt from the overlapping taxing districts, the County and other sources the City believes to be reliable, but the City has not independently verified the accuracy or completeness of such information. No person should rely upon such information as being accurate or complete. Furthermore, the amounts described below relate only to general obligation bonds issued by the various taxing districts and may not reflect certain leases or other contracts that may constitute indebtedness under State law. The table below does not reflect any special revenue obligations (e.g., utility revenue bonds) or other debt payable from other sources (e.g., sales taxes) issued by any taxing district. The taxing districts listed below may have issued additional general obligation debt since the dates indicated below and may have plans for future general obligation debt issuances. Direct and Estimated Overlapping Debt As of June 1,2017 2016 Assessed Valuation for 2017 Tax Year - $5,763,649,829 2016 City Population — 19,540 (1) Direct Debt (calculated above) (1) $ 67,216,448 Estimated Overlapping Debt: The County $ 8,838,774 Port of Seattle 5,024,131 School Districts 77,215,251 King County Rural Library District 2,111,637 Total Estimated Overlapping Debt $ 93,189,794 Total Net Direct and Estimated Overlapping Debt (1) $160,406,242 Certain Ratios (1) Direct Debt to Assessed Valuation 1.17% Direct and Estimated Overlapping Debt to Assessed Valuation 2.78% Direct Debt per Capita $ 3,440 Direct and Estimated Overlapping Debt per Capita $ 8,209 Per Capita Assessed Valuation $ 294,967 Preliminary; subject to change. Sources: The City, King County Office of Finance and Department of Assessments, and the Port of Seattle 15 Debt Service Requirements The following table provides the debt service schedule for the City's outstanding limited tax general obligation bonds and loans and debt service for the Bonds. Schedule of Limited Tax General Obligation Bond Debt Service Outstanding General Obligation Debt (1) The Bonds Total Year Principal Interest(2) Principal Interest Debt Service 2017 $ 4,413,028 $ 1,142,905 2018 2,241,396 1,011,715 2019 2,328,321 917,474 2020 1,607,261 809,354 2021 1,662,760 743,327 2022 1,734,010 670,504 2023 1,673,800 599,596 2024 1,184,400 528,889 2025 712,800 470,763 2026 732,400 441,482 2027 758,400 413,455 2028 784,800 382,128 2029 806,600 349,650 2030 833,800 315,861 2031 863,200 280,550 2032 891,600 243,919 2033 921,800 205,970 2034 957,800 166,622 2035 729,200 125,685 2036 364,000 90,692 2037 379,600 66,094 2038 396,000 40,437 2039 413,200 13,669 Total $27,390,177 $10,030,740 Includes certain assumptions for the SCORE Bonds and the general obligation loans. For the SCORE Bonds, it is assumed the City will pay the full amount of its allocable debt service in each year and that none of its obligation will be offset by other sources of funds as provided in the interlocal agreement for the SCORE Bonds. For the Limited Tax General Obligation Note, 2014 (Taxable), it is assumed that the entire balance is outstanding with an interest rate of 1.99 percent. For the Limited Tax General Obligation Bond, 2014, it is assumed the interest rate on the 2034 maturity remains unchanged at 2.85 percent. The City, however, currently expects to refinance its Limited Tax General Obligation Note, 2014 (Taxable) in the third quarter of 2017. Reflects interest prior to the application of the federal credit payments relating to the SCORE Bonds. (1) (2) Future Financing The City currently expects to refinance its outstanding Limited Tax General Obligation Note, 2014 (Taxable) in the third or fourth quarter of 2017. The City may also issue approximately $15 to $30 million of limited tax general obligation bonds for a public works shops facility over the next two years. The City has $40,885,000 of its 2016 unlimited tax general obligation bond authorization (the "2016 Authorization") remaining and anticipates issuing approximately $25 million of unlimited tax general obligation bonds under the 2016 Authorization over the next three years. The issuance of any such debt is preliminary, subject to change, and has not been approved by the City Council. Additionally, the City periodically reviews its outstanding bonds for refunding opportunities and may issue bonds for refunding purposes if market conditions warrant. Debt Payment Record The City has always promptly met principal and interest payments on outstanding bonds, and other obligations when due. No debt has been incurred for the purpose of avoiding an impending default. 16 CITY FUNDS AND ACCOUNTING The accounting and reporting policies of the City conform to those methods prescribed by the State Auditor under chapter 43.09 RCW. The Finance Director of the City maintains general supervision over financial transactions for all City funds. The accounts of the City are organized by fund and account group, each of which is considered a separate accounting entity. Each fund has a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to, and accounted for in, individual funds according to the purposes for which they are spent and the means by which spending activities are controlled. See APPENDIX B—"2016 AUDITED FINANCIAL STATEMENTS." Basis of Accounting. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Governmental funds use the modified accrual basis of accounting and proprietary and fiduciary funds use the accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. For the City, available means expected to be received within 60 days of year-end. On the accrual basis, the revenue is recognized in the period in which the income is earned. Auditing of City Finances. Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance with RCW 43.09.200 and RCW 43.09.230. The City complies with the systems and controls prescribed by the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of assets and the reliability of financial reporting (see "City Investments and Investment Policy" below). The State Auditor is required to examine the affairs of cities regularly and on a schedule determined by risk factors and financial activity. The City has been subject to financial statement and accountability audits. Financial statement audits are performed for the purpose of forming an opinion on the financial statements taken as a whole. Also considered are the City's internal controls over financial reporting and tests of compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. Accountability audits include, among other things, review of the financial condition and resources of the City, whether the laws and constitution of the State are being complied with, the methods and accuracy of the accounts and reports as well as other matters (potential areas of risk related to citizen concerns, payroll, inter -fund transactions, etc.). Reports of the auditor's examinations are filed in the office of the State Auditor and in the Finance Department of the City. The audited financial statements of the City for the year ended December 31, 2016, attached as Appendix B, are incorporated by reference to this Official Statement. The most recent accountability audit covers the period January 1, 2014 through December 31, 2014. The State Auditor performs accountability audits of the City every year and the City has been free of financial audit findings for at least the last 10 years. Budgetary Process. The City prepares biennial budgets in accordance with chapter 35A.33 RCW. Biennial appropriated budgets for all funds are adopted. These budgets are appropriated at the fund level. The budget constitutes the legal authority for expenditures at that level. Appropriations for these funds lapse at the end of the biennium. Appropriated budgets are adopted on the same basis of accounting used for financial reporting. The Council is required to hold public hearings prior to budget adoption, property tax levies and municipal revenues. Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. The budget is based on priorities established by Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. The Council conducts public hearings on the proposed budget in November and December. The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. The final operating budget as adopted is published and distributed within the first month of the following year. The City Council must approve by ordinance any amendments that increase the total for the fund. City Investments and Investment Policy In November 2010, the Council reviewed and updated the City's formal investment policy regarding the investment risks to which the City is exposed. The policy conforms to applicable State and local laws governing the investment of public funds. The primary objectives of the City's policy, in order of priority (high to low), are (i) legality, to ensure the compliance with all statutes governing the investment of public funds in the State, (ii) safety, to ensure the preservation of capital in the overall investment portfolio, (iii) liquidity, to enable to City to meet all operating requirements, and (iv) yield, to attain a market rate of return throughout budgetary and economic cycles, while taking into account the City's investment risk constraints and cash flow requirements. 17 Authorized Investments. Chapter 35.39 RCW limits the investment of funds of local governments to the following authorized instruments: (i) bonds of the State or any local government in the State, (ii) general obligation bonds of any other state or local government thereof which have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency, (iii) registered warrants of a local government in the same county as the local government making the investment, (iv) obligations of the U.S. government, its agencies and wholly owned corporations, or obligations issued or guaranteed by supranational institutions, provided, that at the time of investment, the United States government is the largest shareholder of such institution, (v) obligations of the Federal Home Loan Bank, Federal Land Bank and Fannie Mae, and obligations of other government-sponsored corporations whose obligations are or may become eligible as collateral for advances to member banks of the Federal Reserve System, (vi) bankers' acceptances purchased on the secondary market, (vii) commercial paper purchased on the secondary market, subject to State Investment Board policies, and (viii) corporate notes purchased on the secondary market, subject to State Investment Board policies. Money available for investment may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio. All income derived from such investment may be either apportioned to and used by the various participating funds or for the benefit of the general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be reinvested or used in such manner as the authorizing ordinances, resolutions, or bond covenants may lawfully prescribe. Local Government Investment Pool. The State Treasurer's Office administers the Local Government Investment Pool (the "LGIP"), a $15.173 billion dollar fund that invests money on behalf of more than 540 local governments (as of May 2017). In its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to meet all cash flow demands. The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants increased safety of principal and the ability to achieve a higher investment yield than would otherwise be available to them. Although not regulated by the U.S. Securities and Exchange Commission (the "SEC"), the LGIP is invested in a manner generally consistent with the SEC guidelines for Rule 2a-7 money market funds; for example, currently it has a maximum weighted average maturity of 60 days and a maximum weighted average life of 120 days. The maximum final maturity is 397 days except for floating and variable-rate securities and securities that are used for repurchase agreements. The weighted average maturity of the LGIP generally ranges from 30 to 60 days. Investments permitted under the pool's guidelines include U.S. government and agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified State depositories. The City may withdraw funds in their entirety on less than 24 -hours' notice. Authorized Investments for Bond Proceeds. In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less than four years; municipal securities rated in one of the four highest categories; and money market funds consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money market funds with portfolios of securities otherwise authorized by law for investment by local governments (RCW 39.59.030). Under the Bond Ordinance, any investment of Bond proceeds must be obtained at fair market value. The following table shows cash and investments for the City as of December 31, 2016 (audited), and March 31, 2017 (unaudited). ro Cash and Investments Amount as of Amount as of March 31, 2017 December 31, 2016 Cash, Banks, Savings and Loan Institutions $63,940,071 $43,362,731 LGIP Investments 18,066,946 43,001,758 Non -Pool Investments (1) 11,131,778 7,147,342 Total Cash and Investments $93,138,795 $93,511,831 Includes U.S. Treasury and U.S. Agency securities, bank notes and municipal bonds. 18 Historical General Fund Operating Results The General Fund financial information shown on the next page was extracted from the City's annual financial statements for the fiscal years ending December 31, 2012 through 2016. Additional information that may interpret, clarify or modify the data presented below may be contained in the complete financial statements, including the accompanying notes. Statement of Revenues, Expenditures and Changes in Fund Balances General Fund Fiscal Years Ending December 31 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenue EXPENDITURES General Government Public Safety Physical Environment Transportation Economic Environment Culture and Recreation Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers In (2) Transfers Out (3) GO Bonds Issued Loan to Tukwila MPD (4) Proceeds from Sales of Capital Assets Total Other Financing Sources and Uses Net Change in Fund Balances Fund Balances - Beginning Change in Accounting Principle (4) Fund Balances - Beginning as Restated Fund Balances - Ending Note: Totals may not add due to rounding. 2016 2015 2014 $45,886,761 2,129,221 4,498,683 3,286,105 318,459 233,544 214,444 $56,567,217 $ 8,315,631 29,100,506 1,955,028 2,879,996 4,070,805 4,408,302 810,180 $45,201,369 2,242,256 4,626,463 2,896,446 261,457 163,618 120,887 $55,512,496 $ 7,247,117 28,973,651 1,919,306 2,820,022 4,328,177 4,259,532 196,589 $42,219,026 2,114,638 5,307,861 2,553,690 264,934 130,859 137,237 $52,728,245 2013 2012 $40,615,890 2,013,875 4,719,583 2,202,307 242,638 108,053 110,317 $50,012,664 $ 7,146,956 (1) $ 9,266,330 27,204,740 25,650,155 1,789,658 1,766,087 2,605,602 2,759,506 3,662,211 3,893,111 3,808,476 3,631,819 407,400 250,482 $51,540,448 $49,744,394 $46,625,043 $ 5,026,769 $ 5,768,102 $ 6,103,202 $ (4,325,831) $ (4,325,831) $ 700,938 $18,330,806 18,330,806 $19,031,744 Footnotes are on $ 500,000 $ 1,000,000 (5,433,846) (6,900,080) $ (4,933,846) $ 834,256 $17,496,550 17,496,550 $18,330,806 the following page. 19 7,441 $ (5,892,639) $ 210,563 $17,285,986 $17,496,549 $39,840,364 1,604, 594 4,708,774 2,184,369 220,752 64,418 71,159 $48,694,430 $ 8,344,177 24,907,510 1,673,956 2,682,877 3,394,823 3,361,825 273,560 $47,217,490 $44,638,728 $ 2,795,174 $ 4,055,702 $14,919,606 $ 2,330,665 (10,662,843) (5,619,148) 1,000,000 - (658,706) 9,903 $ (3,937,286) 5,493 $ 5,262,256 $ 8,057,430 $ 8,378,557 850,000 9,228,557 $17,285,986 $ 118,416 $ 8,260,141 $ 8,378,557 (1) The reduction in 2014 is due to guidance from the Washington State Auditor's Office. The City reclassified proprietary fund reimbursement of overhead expense as a reduction of General Government expense, rather than a transfer in, as it had done in prior years. (2) For the years 2013 and prior, Transfers In represents indirect cost allocation from proprietary funds. In 2013, Transfers In also includes $8.5 million reimbursement from Local Improvement District No. 33, and a transfer from the General Fund to the Contingency Fund. For 2014 and 2015, Transfers In represents transfers of unrestricted funds that can be used for General Fund purposes. (3) Transfers Out generally represent transfers to various reserve funds, debt service funds, capital project funds, and the City's golf course fund. In 2013, Transfers Out also represents a transfer to the City's Contingency Fund. (4) Through 2012, $850, 000 had been loaned to the MPD. With the implementation of Governmental Accounting Standards Board Statement 61 in 2013, the City was required to report the MPD as a "blended" component unit, and as such, the loan to the MPD was reclassified as an interfund loan rather than a General Fund expenditure, necessitating an adjustment for the change in accounting principle. As of December 31, 2015, the MPD was no longer a component unit of the City and the financial data associated with it was removed from the City's financial statements. Source: The City of Tukwila audited financial statements for each year 2012 to 2016 General Fund Budgets The City has elected to prepare and use biennial budgets, as provided in State law. Budgets for the General Fund, for the years 2017 and 2018 are shown below. The City monitors the budget during the course of the year and may make amendments throughout the year to reflect known changes or updated projections. General Fund Budget For the Period January 1, 2017 through December 31, 2018 2017 2018 Adopted Budget Adopted Budget n) REVENUES Taxes $47,803,644 $49,073,331 Licenses and Permits 2,278,940 2,347,090 Intergovernmental 4,475,160 4,393,530 Charges for Services 2,821,177 2,847,080 Fines and Forfeits 254,129 254,129 Miscellaneous 1,030,083 1,043,084 Other Financing Sources 4,079,058 8,375,643 Total Revenue $62,742,191 $68,333,887 EXPENDITURES Salaries and Wages $30,496,507 $30,988,318 Personnel Benefits 11,030,151 11,628,711 Supplies 1,286,641 1,285,322 Other Services and Charges 11,350,783 11,505,008 Intergovernmental Services 3,003,797 3,191,124 Capital Outlay 234,000 30,000 Transfers Out 5,237,691 9,539,621 Total Expenditure $62,639,570 $68,168,104 Net Increase (Decrease) in Fund Balance $ 102,621 $ 165,783 Beginning Fund Balance(1) $11,500,000 $11,602,621 Ending Fund Balance (1) $11,602,621 $11,768,404 The 2018 budgeted beginning balance is based on the 2017 year-end as estimated at the time of budget development. 20 THE CITY The City was incorporated in 1908 as a non -charter code city, organized under Title 35A RCW. The City provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities and cultural events. The City provides sewer, water and surface water services and has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail and 911 dispatch services to the City. The City residents receive library services from the King County Rural Library District. In addition, the City operates an equipment maintenance/rental fund and operates an 18 -hole municipal golf course. Governance The City operates under a Mayor -Council form of government, with the Mayor and seven -member Council elected by the voters of the City for four-year terms. Council members are elected at large. The Mayor appoints the City Administrator who serves as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and Council. The Council is responsible for, among other things, passing ordinances and resolutions, adopting the budget, and adopting general policies and goals for the City. The Council holds regular meetings two times a month and special meetings as needed. All meetings are open to the public as provided by law and agenda items are prepared in advance. The following are the Mayor and members of the City Council. Elected Official Position Initially Elected Current Term Expires Allan Ekberg Mayor November 2015 December 31, 2019 Dennis Robertson Council President November 1987(1) December 31, 2019 Joe Duffle Council Member November 1981 December 31, 2017 Kate Kruller Council Member November 2011 December 31, 2019 Kathy Hougardy Council Member November 2007 December 31, 2019 Thomas McLeod Council Member November 2015 December 31, 2017 De"Sean Quinn Council Member November 2008 (2) December 31, 2017 Verna Seal Council Member November 2005 December 31, 2017 (1) (2) Council Member Robertson served from 1988 through 1995 and was re-elected in November 2003. Council Member Quinn was first appointed in to the position in 2008 and won election to his first full term in November 2009. Brief resumes of key administrative staff follow: David Cline, City Administrator. Mr. Cline was hired as the City Administrator in October 2011. Prior to joining the City, Mr. Cline was the City Administrator for the City of Lake Forest Park for five years, served as Interim Assistant City Manager at the City of Burien for five years, and served six years as the Finance Manager for the County District Court. Mr. Cline has 23 years of public service, including economic development, long-range financial planning, capital planning and financing, community consensus building and managing municipal departments. He is a Board Member of Washington City/County Manger's Association and serves on the State LEOFF 2 Retirement Board. Mr. Cline holds a Bachelor of Arts in Public Policy from Stanford University with Honors and Distinction and is credentialed by the International City/County Management Association. Peggy McCarthy, Finance Director. Ms. McCarthy was hired as the City's Deputy Finance Director in November 2008 and has been serving as the Finance Director since 2011. Prior to joining the City, Ms. McCarthy was the Financial Reporting Manager for the King County Housing Authority. Ms. McCarthy's experience includes over 14 years in municipal finance, as well as industry experience with a Fortune 500 company, and public accounting experience at Deloitte. Ms. McCarthy holds a Bachelor Degree in Business Administration from Washington State University and graduated Summa Cum Laude with Honors. 21 Employees and Bargaining Groups The number of full-time equivalent City employees for the years 2013 through 2017 are shown below. Full -Time Year Equivalent 2017 2016 2015 2014 2013 342.00 344.60 343.10 332.48 330.38 Source: The City Certain City employees are represented by one of five bargaining groups, and the City enters into written bargaining agreements with each bargaining group. The City negotiates labor contracts through a management team with support from a consultant. The following provides information on unions and bargaining groups representing City employees as of May 2017. The City considers its relations with all employees and bargaining units to be good. The City is currently in negotiations with all union and bargaining groups. Union or Bargaining Group Teamsters International Association of Firefighters Police Guild United Steelworkers Fraternal Order of Police Green River Valley Lodge 27 Total (') Contracts are currently in negotiations. Source: The City of Tukwila Pension Plans Employees/Department Represented Clerical/Maintenance/Supervisory Firefighters Police Police Non -Commissioned Officers Police Commanders Number of Contract Employees Expires (1) 154 12/31/2016 65 12/31/2016 69 12/31/2016 15 12/31/2016 3 12/31/2016 306 Introduction. Substantially all City full-time and qualifying part-time employees are eligible for participation in one of the following statewide cost-sharing multiple -employer plans administered by the State's Department of Retirement Systems ("DRS"): Public Employees Retirement System ("PERS") Plans 1, 2 and 3; the Public Safety Employees Retirement System ("PSERS") Plan 2; and the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF") Plans 1 and 2. The State Legislature establishes, and from time to time amends, laws pertaining to the creation and administration of these public retirement systems; however, employees are contractually entitled to receive plan benefits. The information in this section has been obtained from the City's financial statements and information on the websites of DRS and of the Office of the State Actuary (the "State Actuary"), a nonpartisan legislative agency charged with advising the Legislature and Governor on pension benefits and funding policy. DRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for each plan. The DRS Comprehensive Annual Financial Report ("DRS CAFR") may be obtained from the DRS website at www.drs.wa.gov. In addition to the State sponsored pension plans that the City participates in, the City also administers one local single employer defined benefit pension plan for pre-LEOFF fire retirees. LEOFF Plan 1 participants who joined prior to and were active on March 1, 1970 are entitled to the greater of the benefits under LEOFF Plan 1 or the Fire Pension Fund maintained by the City. This local plan is described below under "City Administered Firefighters' Pension Plan." State Sponsored Plan Descriptions. All PERS, PSERS and LEOFF plans provide retirement, disability and death benefits. Plans 1 and 2 (both PERS and LEOFF) are defined benefit plans. PERS Plan 3 is a hybrid defined benefit/defined contribution plan in which the employer contributes to the defined benefit portion and the employee contributes to the defined contribution portion. Contributions by both employees and employers are based on gross wages. PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. Those PERS participants who joined on or after October 1, 1977, are Plan 2 members, unless they exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002, have the irrevocable option of choosing membership in PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977, are Plan 2 members. PSERS Plan 2 is a defined benefit plan. 22 Benefits provided by each plan are based on a percentage of the member's average final compensation ("AFC"), multiplied by years of service. The percentages and methods for calculating AFC vary among the plans, as do vesting and retirement eligibility (age and years of service) requirements. Additional detail about each Plan is available in the DRS CAFR and in Note 9 to the City's Annual Financial Statements, attached as Appendix B. Contribution Rates and Amounts. Under State statute, contribution rates are adopted by the Pension Funding Council ("PFC") and, for LEOFF Plan 2, by the LEOFF Plan 2 Retirement Board (the "LEOFF 2 Board"), in even -numbered years for the next ensuing State biennium, which runs for a two year period beginning on July 1 and ending on June 30. The rate -setting process begins with an actuarial valuation by the State Actuary, who makes non-binding recommendations to the State Legislature's Select Committee on Pension Policy, which then recommends contribution rates to the PFC and the LEOFF 2 Board. No later than the end of July in even -numbered years, the PFC and LEOFF 2 Board adopt contribution rates, which are subject to revision by the Legislature. The City's total contribution for the year ended December 31, 2016, was $2,579,237, which was made up of $1,745,437 to PERS, $18,635 to PSERS and $815,165 to LEOFF. For additional information see Note 9 to the City's Annual Financial Statements attached as Appendix B. The following table outlines the current contribution rates of employees and employers in the State Biennia ending June 30, 2017 and June 30, 2019. While the City's contributions in fiscal year 2016 represented its full statutorily required contribution under the PERS, PSERS and LEOFF, any unfunded pension benefit obligations within the systems could be reflected in future years as higher contribution rates. Employer and Employee Pension Contribution Rates 2015-17 Biennium Employee PERS Plan 1 6.00%(3) Plan 2 6.12 Plan 3 Variable) PSERS Plan 2 6.59 LEOFF Plan 1 0.00% Plan 2 8.41 2017-19 Biennium (1) Employer (2) Employee 11.18% 6.00%(3) 11.18 7.38 11.18 Variable) 11.54 6.73 0.18% 0.00% 5.23(5) 8.75 Employer (2) 12.70% 12.70 12.70 11.94 0.18% 5.43(6) Rates shown for 2017-2019 are those that have been adopted by the PFC and the LEOFF 2 Board, respectively; all rates are subject to change by the State Legislature. Rates shown for 2017-2019 are based on the 2015 Actuarial Valuation Report, using a long-term investment rate of return assumption of 7.70% for PERS and 7.50% for LEOFF. Includes 0.18% DRS administrative expense rate. Rate statutorily set at 6.0%. Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. The State makes an additional contribution of 3.36% of each participating employer's covered payroll. The State makes an additional contribution of 3.50% of each participating employer's covered payroll. Source: Office of the State Actuary Rates shown above for the 2017-19 Biennium are adopted by the PFC and LEOFF 2 Board, and are subject to revision by the State Legislature. [Unless revised by the Legislature, they will become effective on July 1, 2017.][to be revised if needed] Projected contribution rates have been prepared by the State Actuary for the 2019-2021 Biennium, projecting a need for increases to contribution rates for PERS plans and no increases for LEOFF plans. In addition, the State Legislature has established certain minimum contribution rates that became effective in 2015 and remain in effect until the actuarial value of assets in PERS Plan 1 equals 100 percent of the actuarial accrued liability of PERS Plan 1. These rates are subject to change by future legislation enacted by the State Legislature to address future changes in actuarial and economic assumptions and investment performance. 23 Actuarial Valuation Methods and Assumptions. State law requires systematic actuarial funding to finance the ongoing cost of the State retirement systems. Actuarial calculations to determine the sufficiency of employer and employee contributions are prepared by the State Actuary. To calculate employer and employee contribution rates necessary to prefund the plans' benefits, the State Actuary uses actuarial cost and asset valuation methods selected by the Legislature as well as economic and demographic assumptions. The State Actuary uses the Entry Age Normal ("EAN") cost method to report each Plan's funded status. The annual cost of benefits under EAN is comprised of two components: normal cost, plus amortization of the unfunded liability. The normal cost is most commonly determined on an individual basis, from a member's age at plan entry, and is designed to be a level percentage of pay throughout a member's career. Comparing the EAN liabilities to the actuarial value of assets ("AVA") on the valuation date provides an appropriate measure of a plan's funded status and is acceptable according to current Governmental Accounting Standards Board ("GASB") Statements 67 and 68. For purposes of determining the actuarial accrued liability of each plan and the unfunded portion thereof, the State Actuary uses actuarial cost and asset valuation methods determined by the Legislature, which requirements differ from plan to plan. For purposes of calculating contribution rates the Legislature determines the long-term assumed rate of investment return to be used by the State Actuary, which was reduced in 2015 to 7.70% (from 7.80%) for all plans except the LEOFF Plan 2, which remains at 7.50%. Plan Funding Status and Unfunded Actuarial Liability. All DRS administered retirement plans are funded by a combination of funding sources: (i) contributions from the State; (ii) contributions from employers (including the State as employer and the City and other governmental employers); (iii) contributions from employees; and (iv) investment returns. The retirement funds (the "Commingled Trust Fund" or "CTF") are invested by the Washington State Investment Board, a 15 -member board created by the Legislature in 1981. The average annual return on the investment of the CTF for the 10 -year period from July 1, 2007 through June 30, 2016 was 6.18%. PERS Plans 2 and 3 are accounted for in the same pension trust fund and may legally be used to pay the defined benefits of any PERS Plan 2 or 3 participant. Otherwise, assets for one plan may not be used to fund benefits for another plan; however, all employers in PERS Plan 2 and 3 are required to make contributions at rates determined by the State Actuary every two years for the purpose of amortizing within a rolling 10 -year period the unfunded actuarial accrued liability in PERS Plan 1. The State's August 2016 Actuary actuarial valuation, as of June 30, 2015, was as follows: Funded Status on an Actuarial Value Basis (1) ($ millions) Unfunded Actuarial Actuarial Actuarial Accrued Value of Accrued Plan Liability Assets Liability/(Surplus) Funded Ratio PERS Plan 1 $12,553 $ 7,315 $5,239 58% PERS Plans 2/3 32,008 28,292 3,715 88 PSERS Plan 2 357 338 19 95 LEOFF Plan 1 4,307 5,404 (1,097) 125 LEOFF Plan 2 8,838 9,320 (482) 105 (1) As of June 30, 2015, the most recent actuarial valuation date. Liabilities valued using the EAN cost method at an interest rate of 7.7% (7.5% for LEOFF2). All assets valued under the actuarial asset method. Source: 2015 Actuarial Valuation GASB 67/68 Reporting. GASB Statement 68, Accounting and Financial Reporting for Pensions ("GASB 68") became effective for the City for the year ended December 31, 2015. Among the changes imposed by GASB 68 are that lower discount rates are required to be used for underfunded plans in certain cases and the difference between expected and actual investment returns each year will be recognized over a closed five-year smoothing period. GASB 68 also requires employers that participate in the State sponsored plans to report their proportionate share of Net Pension Liability, Deferred Inflows of Resources, Deferred Outflows of Resources, and Pension Expense for the State plans. DRS determines each participating employer's proportionate share of overall plan liability and the State Actuary determines each plan's accounting valuation. GASB 68 affects the accounting for pensions, but does not change the funding status of the plans calculated by State Actuary or pension contribution rates that are set based on statutory assumptions. 24 (1) Total Pension Liability Fiduciary Net Position Net Pension Liability (Asset) as % of TPL City Proportionate Share of Net Pension Liability (Asset) Schedule of Net Pension Liability (1) ($ millions) PERS 1 PERS 2/3 PSERS 2 LEOFF 1 LEOFF 2 $12,496.9 $35,517.5 $443.2 $4,340.6 $9,629.0 7,126.4 30,482.6 400.7 5,370.9 10,210.6 5,370.4 5,034.9 42.5 (1,030.3) (581.6) 57.03% 85.82% 90.41% 123.74% 106.04% 7.05 8.39 0.02 (0.80) (2.97) As of June 30, 2016. The Total Pension Liability and Net Pension Liability for the State fiscal year ended June 30, 2016 was determined based on the 2015 Actuarial Valuation (as of June 30, 2015), with the results rolled forward to June 30, 2016. The following actuarial assumptions were used and were applied to all prior periods included in the measurement: 3.0% total economic inflation, 3.75% salary inflation (plus growth by promotions and longevity) and 7.50% rate of investment returns. Source: 2016 DRS CAFR and DRS Participating Employer Financial Information for the fiscal year ended June 30, 2016 The actuarial assumptions used in the 2015 Actuarial Valuation report were based on the results of the State Actuary's 2007-2012 Experience Study Report. Additional assumptions for subsequent events and law changes were current as of the 2015 Actuarial Valuation report. The long-term investment return assumption is used as the discount rate for determining the liabilities for each Plan. The following table represents the aggregate pension amounts for all City -administered plans subject to the requirements of GASB 68 for the year ended December 31, 2016. City of Tukwila — Aggregate Pension Amounts — All Plans Pension Liabilities Pension Assets Deferred Outflows of Resources Deferred Inflows of Resources Pension Expense/Expenditures $(15,483,180) 3,772,659 4,733,197 (642,177) 2,166, 724 Source: The City of Tukwila audited financial statements for 2016 City Administered Firefighters' Pension Plan. The City administers the Firefighters' Pension Plan, which is a closed, single -employer, defined benefit pension plan that was established in conformance with chapter 41.18 RCW. This plan provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. Membership is limited to fire fighters employed prior to May 1, 1970 when the LEOFF retirement system was established. The City currently has 10 inactive members receiving benefits through this Plan, and the City contributed $66,360 to the plan in 2016. Under State law, the Firefighters' Pension Plan is provided an allocation of all monies received by the State from taxes on fire insurance premiums, interest earnings, member contributions made prior to the inception of LEOFF and City contributions required to meet projected future pension obligations. An actuarial valuation was completed by Healthcare Actuaries as of December 31, 2016, with a net pension liability of $18,985, and a plan fiduciary net position of $1,426,367 for a funded ratio of 98.69 percent. Additional information about the Fire Pension plan is available in the City's CAFR, Note 8, which was prepared in accordance with GASB 68. Other Post -Employment Benefits City -funded other post -employment benefits ("OPEB") consists of certain medical and disability benefits to retired firefighters and police officers who were hired prior to 1978 as required by RCW 41.26.150. Entry into this system is now closed. As of December 31, 2016, 35 retirees were eligible for OPEB from the City. Because its OPEB plan is not pre -funded on an actuarial basis, the City funds OPEB on a pay-as-you-go basis from its fund balance or other available sources. The City's annual contribution to the cost of OPEB was $905,974 in 2014, $477,292 in 2015 and $275,530 in 2016. In accordance with the GASB standard concerning Accounting and Financial Reporting by Employers for Post - Employment Benefits Other than Pensions ("GASB 45"), the City prepares an actuarial valuation of its OPEB plan. As of January 1, 2016, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $30.2 million and the OPEB plan had a funded ratio of zero percent. Additional information about the City's OPEB plan is available in the City's CAFR, Note 9, which was prepared in accordance with GASB 45. 25 Risk Management The City is a member of the Washington Cities Insurance Authority ("WCIA"). Utilizing chapter 48.62 RCW (self- insurance regulation) and chapter 39.34 RCW (the Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. As of December 31, 2016, WCIA has a total of 168 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one- year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self-insured layer, and $16 million per occurrence in the re -insured layer excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The board of directors of WCIA determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that amount by the purchase of insurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A board of directors governs WCIA, which is comprised of one designated representative from each member. The board elects an executive committee and appoints a treasurer to provide general policy direction for the organization. The WCIA executive director reports to the executive committee and is responsible for conducting the day to day operations of WCIA. The City self -insures for unemployment benefits. This is budgeted each year and has not exceeded $60,000 per year. This expense is budgeted in the Finance Department within the General Fund and no reserves are allocated because of the limited liability and historical cost. The City also self -insures for medical, dental, and other health care benefits. A third -party administrator, Healthcare Management Administrators, Inc. provides claims administration. The City has a stop -loss policy with Sun Life Insurance Company, which provides individual limits of $175,000 and a plan limit of $8,326,642 in 2016. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported ("IBNR") and a contingency reserve equal to 2.5 times the IBNR reserve. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 54.9 days for medical, 19.6 days for pharmacy, 32.2 days for dental, and 48.7 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of December 15, 2016. Next, the estimated IBNR liability as of December 31, 2016 was developed by trending the December 15, 2016 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. 26 GENERAL AND ECONOMIC INFORMATION General The City is located in King County, Washington approximately 12 miles south of the downtown area of the City of Seattle and 17 miles north of the City of Tacoma, at the intersection of Interstates 5 and 405. The City is adjacent to the western city limits of the City of Renton and the eastern city limits of the City of SeaTac and is one mile east of the Seattle -Tacoma International Airport. The City encompasses nine square miles and is home to a major regional shopping center (Westfield Southcenter). Population Historical and current population figures for the City and the County are provided below. Population Year The City King County 2016 19,540 2,105,100 2015 19,300 2,052,800 2014 19,210 2,017,250 2013 19,160 1,981,900 2012 19,080 1,957,000 Source: Washington State Office of Financial Management Economic Indicators for the City and the County The following tables present historical information on certain major economic indicators for the City and the County. City of Tukwila Major Employers, as of December 2016 Employer Type of Business Boeing Company Normac Inc. Allied Mechanical Services, Inc. Group Health Cooperative Macy's King County Metro Costco Wholesale King County Correctional Guild Boeing Employees Credit Union United Parcel Service Aerospace Wholesalers Plumbing, Heating & AC Contractors Data Center/Lab/Pharmacy Department Store Transit Operating Base Cash/Carry Warehouse Non -Profit Organization Banking/Credit Union Postal Delivery Service Employees (FTE) 5,597 1,821 1,249 950 869 800 609 545 516 381 Source: The City of Tukwila Finance Department — Business Licenses Civilian Labor Force and Employment Annual Average King County Civilian Labor Force Employment Unemployment Unemployment Rate Washington State Civilian Labor Force Employment Unemployment Unemployment Rate March 2017 March 2016 2016 2015 2014 2013 1,232,220 1,194,409 37,811 3.1% 3,685,830 3,506,701 179,129 4.9% Source: Bureau of Labor Statistics 1,204,586 1,208,334 1,178,606 1,153,783 1,160,734 1,128,497 50,803 47,600 50,109 4.2% 3.9% 4.3% 3,624,428 3,643,881 3,545,672 3,413,673 3,445,880 3,345,835 210,755 198,001 199,837 5.8% 5.4% 5.6% 27 2012 1,160,967 1,138,720 1,122,616 1,106,769 1,081,827 1,051,626 54,198 56,893 70,990 4.7% 5.0% 6.3% 3,490,445 3,462,202 3,471,282 3,276,706 3,218,571 3,189,271 213,739 243,631 282,011 6.1% 7.0% 8.1% Taxable Retail Sales King County City Taxable Year Taxable Retail Sales Retail Sales 2016 62,235,630,017 2,128,200,205 2015 57,615,757,451 2,174,715,850 2014 52,335,343,480 1,929,431,815 2013 48,553,937,856 1,846,436,835 2012 45,178,847,087 1,769,298,604 Source: Washington State Department of Revenue Per Capita Personal Income Seattle -Tacoma -Bellevue King State of Year Metropolitan Area County Washington National 2016 N/A N/A $53,493 $49,571 2015 $61,021 $72,530 51,971 48,190 2014 59,449 70,854 50,421 46,464 2013 55,908 66,016 47,814 44,493 2012 55,201 65,331 47,338 44,282 2011 50,724 58,685 44,202 42,461 Source: U. S. Department of Commerce Bureau of Economic Analysis Residential Building Permit Statistics — the City City Building Permits Source: The City of Tukwila General Year Number of Value of Permits Permits 2016 32 $11,320,511 2015 38 12,665,257 2014 17 6,029,754 2013 19 6,519,422 2012 14 4,835,717 TAX MATTERS In the opinion of Bond Counsel, under existing law and subject to certain qualifications described below, interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The proposed form of opinion of Bond Counsel with respect to the Bonds to be delivered on the date of issuance of the Bonds set forth in Appendix A. The Code contains a number of requirements that apply to the Bonds, and the City has made certain representations and has covenanted to comply with each such requirement. Bond Counsel's opinion assumes the accuracy of the representations made by the City and is subject to the condition that the City comply with the above -referenced covenants. If the City fails to comply with such covenants or if the City's representations are inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated herein, Bond Counsel expresses no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds 28 Original Issue Premium and Discount If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes. De minimis original issue discount and original issue premium is disregarded. Under the Code, original issue discount is treated as interest excluded from federal gross income to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes. Under the Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to federal income tax consequences of owning such Bonds. Post Issuance Matters The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City and its appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the City or the Owners to incur significant expense. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Bank Qualified The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code. 29 CONTINUING DISCLOSURE UNDERTAKING Basic Undertaking to Provide Annual Financial Information and Notice of Listed Events. To meet the requirements of paragraph (b)(5) of SEC Rule 15c2-12 (the "Rule"), as applicable to a participating underwriter for the Bonds, the City will undertake (the "Undertaking") for the benefit of holders of the Bonds to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB accompanied by identifying information as prescribed by the MSRB, the following annual financial information and operating data for the prior fiscal year (commencing in 2018 for the fiscal year ended December 31, 2017): (1) Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in this Official Statement; (2) Principal amount of general obligation debt outstanding at the end of the applicable fiscal year; (3) Assessed valuation of taxable property in the City for that fiscal year; and (4) Property tax levy amounts and rates for that fiscal year. Items 2-4 shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before the end of nine months after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross refer to other documents available to the public on the MSRB's internet website or filed with the SEC. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to the MSRB. Listed Events. The City further agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined in the Rule the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. The City also will provide to the MSRB timely notice of a failure by the City to provide required annual financial information on or before the date specified below. Format for Filing with the MSRB. Until otherwise designated by the MSRB or the SEC, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org (which is not incorporated herein by this reference). All notices, financial information and operating data required by the Undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to the Undertaking must be accompanied by identifying information as prescribed by the MSRB. 30 Termination/Amendment of Undertaking. The City's obligations to provide annual financial information and notices of listed events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of the Undertaking shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of all or any portion of the Undertaking. Notwithstanding any other provision of the Undertaking, the City may amend the Undertaking with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of the Undertaking, the City shall describe such amendment in the next annual report, and shall include a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed event, and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Bond Owner's Remedies. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of the Undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under the Undertaking, and any failure by the City to comply with the provisions of the Undertaking shall not be an event of default with respect to the Bonds. For purposes of the Undertaking, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent. Compliance With Continuing Disclosure Obligations. The City has entered into certain written undertakings under the Rule in connection with the issuance of certain of its outstanding obligations (the "Prior Undertakings"). With the exceptions noted below, the City believes that in the past five years it has complied in all material respects with its Prior Undertakings. The City notes certain exceptions to the foregoing statement as follows: • Under continuing disclosure agreements relating to the City's outstanding water and sewer system revenue bonds, the City failed to timely file certain utility customer statistics for the water and sewer system revenue bonds for fiscal years 2011 through 2013. The general customer statistics and a notice of failure to file have since been filed on EMMA. The City no longer has any water and sewer revenue bonds outstanding. • The City filed its 2011 audited financial statements on EMMA on time but failed to link them to the CUSIPs for its then outstanding Water and Sewer Revenue Bonds, 2006. The 2011 audited financial statements have since been linked to the Water and Sewer Revenue Bonds, 2006, which are no longer outstanding. • The City was an obligated party with respect to the Valley Communications Center Development Authority Refunding Bonds, 2010 (the "Valley Com Bonds"). The City filed its audited financial statements for fiscal years 2011 through 2012 on EMMA on time. However, the City failed to link these filings to the CUSIPs for the Valley Com Bonds. The audited financial statements have since been linked to the Valley Com Bond CUSIPs, which are no longer outstanding. • The City is an obligated party with respect to the SCORE Bonds. See notes to table titled "Outstanding General Obligation Debt" under "GENERAL OBLIGATION DEBT" above. In several of the past five years, City financial information was not linked to the SCORE Bond CUSIPs in a timely manner. However, under the continuing disclosure agreement, the City's obligation consisted of providing timely financial information to SCORE, who was responsible for disseminating this information. The City believes that in the past five years it has complied in all material respects with its obligation under its continuing disclosure agreement with respect to the SCORE Bonds. 31 CERTAIN INVESTMENT CONSIDERATIONS Initiative and Referendum State Initiative and Referendum. Under the State Constitution, the voters of the State have the ability to initiate legislation and require the State Legislature to refer legislation to the voters through the power of initiative and referendum, respectively. The initiative power in the State may not be used to amend the State Constitution. Initiatives and referenda are submitted to the voters upon receipt of petitions signed by at least eight percent (initiatives) and four percent (referenda) of the number of voters registered and voting for the office of Governor at the preceding regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or repealed by the State Legislature within a period of two years following enactment, except by a vote of two—thirds of all the members elected to each house of the State Legislature. After two years, the law is subject to amendment or repeal by the State Legislature in the same manner as other laws. In recent years there has been an increase in the number of initiatives and referenda filed in the State, including initiatives affecting the powers of local jurisdictions. The City cannot predict whether this trend will continue, whether any filed initiatives will receive the requisite signatures to be certified to the ballot, and whether such initiatives will be approved by the voters and, if challenged, upheld by the courts. Local Initiative and Referendum. The City Municipal Code provides for local initiatives and referenda as provided for in RCW 35A.11.080, as it may be amended from time to time. Under the City Municipal Code, City voters may initiate local legislation and Code amendments, and modify existing legislation, through powers of initiative and referendum. The City cannot predict when or if any such measures would be filed, or what the subject or effect of any such potential measure may be. Under State law, the Bond Ordinance may not be a proper subject for a referendum petition. Nevertheless, the referendum period relating to the Bond Ordinance will have expired and the Bond Ordinance will become effective on or before the date of issuance and delivery of the Bonds. As of the date of this Preliminary Official Statement, no referendum petition has been filed. Limitations on Remedies Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Bond Ordinance are in many respects dependent upon judicial actions, which are in turn often subject to discretion and delay and could be both expensive and time consuming to obtain. If the City fails to comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Bonds. In addition to the limitations on remedies contained in the Bond Ordinance, the rights and obligations under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws relating to or affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. The opinion to be delivered by Pacifica Law Group LLP, as Bond Counsel, concurrently with the issuance of the Bonds, will be subject to limitations regarding bankruptcy, insolvency and other laws relating to or affecting creditors' rights. A copy of the form of legal opinion of Bond Counsel is set forth in Appendix A. No Acceleration The Bonds are not subject to acceleration upon the occurrence of a default. The City is liable for principal and interest payments only as they become due. In the event of multiple defaults in payment of principal of or interest on the Bonds, the registered owners would be required to bring a separate action for each such payment not made. This could give rise to a difference in interests between registered owners of earlier and later maturing Bonds. Bankruptcy Under current State law, local governments, such as the City, may be able to file for bankruptcy under Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code"). A creditor, however, cannot bring an involuntary bankruptcy proceeding against a municipality, including the City. The federal bankruptcy courts have broad discretionary powers under the Bankruptcy Code. Taxing districts in the State are expressly authorized to carry out a plan of readjustment if approved by the appropriate court. If the City were to become a debtor in a federal bankruptcy case, owners of the Bonds may not be able to exercise any of their remedies under the Bond Ordinance during the course of a proceeding. Legal proceedings to resolve issues could be time-consuming and expensive, and substantial delays and/or reductions in payments could result. 32 RATING As noted on the cover page of this Official Statement, the Bonds have been rated "AA" by S&P Global Ratings ("S&P"). The rating reflects only the view of the rating agency and an explanation of the significance of the rating may be obtained from S&P. There is no assurance that the rating will be retained for any given period of time or that it will not be revised downward, suspended or withdrawn entirely by the rating agency if, in the judgment of the agency, circumstances so warrant. Any such downward revision or withdrawal of the rating would likely have an adverse effect on the market price of the Bonds. The City does not have any obligation to take any action, other than file a listed event notification, if the rating on the Bonds is changed, suspended or withdrawn. LITIGATION There is no litigation pending or threatened questioning the validity of the Bonds or the power and authority of the City to issue the Bonds. There is no litigation pending or threatened which would materially affect the City's ability to meet debt service requirements on the Bonds. Because of the nature of its activities, the City is subject to certain pending legal actions which arise in the ordinary course of business. Based on the information presently known, the City believes that the ultimate liability for any of such legal actions will not be material to the financial position of the City. Tukwila may share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for sediment contamination within the Lower Duwamish Waterway Superfund site. While it is impossible to accurately estimate the City's potential CERCLA liability at this time, the relatively small size of the City's storm water system within the Lower Duwamish Waterway Superfund site area, as well as the system's recent establishment in 1989, gives reason to the City to believe that its potential liability will be low, possibly ranging up to $300,000. APPROVAL OF COUNSEL Legal matters incident to the authorization, execution and delivery of the Bonds are subject to the unqualified approving legal opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel. The form of the opinion is included in Appendix A of this Official Statement. Bond Counsel has not been retained to review and has not reviewed this Official Statement for completeness or accuracy and will not offer an opinion concerning this Official Statement. FINANCIAL ADVISOR PFM Financial Advisors LLC has served as financial advisor to the City relative to the preparation of the Bonds for sale, timing of the sale and other factors relating to the Bonds. The financial advisor has not audited, authenticated or otherwise verified the information set forth in this Official Statement or other information provided relative to the Bonds. PFM Financial Advisors LLC makes no guaranty, warranty or other representation on any matter related to the information contained in the Official Statement. The financial advisor is an independent financial advisory firm and is not engaged in the business of underwriting, marketing, trading or distributing municipal securities. UNDERWRITING The Bonds are being purchased by (the "Underwriter"), at a price of $ . The Bonds will be re -offered at a price of $ . The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the initial offering prices set forth on the inside cover hereof, and such initial offering prices may be changed from time to time by the Underwriter. CONFLICTS OF INTEREST Some or all of the fees of the Financial Advisor and Bond Counsel are contingent upon the issuance and sale of the Bonds. None of the members of the City Council or other officers of the City have interests in the issuance of the Bonds that are prohibited by applicable law. OFFICIAL STATEMENT At the time of delivery of the Bonds, one or more officials of the City will furnish a certificate stating that to the best of his, her or their knowledge this Official Statement, as of its date and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance or other credit facility). 33 The execution and distribution of this Official Statement have been authorized by the City. CITY OF TUKWILA, WASHINGTON By: Peggy McCarthy, Finance Director APPENDIX A FORM OF LEGAL OPINION July f 1, 2017 City of Tukwila Tukwila, Washington Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 - $[ 1 Ladies and Gentlemen: We have acted as bond counsel to the City of Tukwila, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bonds, 2017 (the "Bonds"), dated as of the date hereof, in the aggregate principal amount of $[ 1, issued pursuant to Ordinance No. 2541 (the "Bond Ordinance") of the City for the purpose of providing funds to pay or reimburse the City for costs of certain road construction and related improvement projects in the City and to pay the costs for issuance of the Bonds. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Official Statement prepared in connection with the issuance of the Bonds. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. A-1 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City must comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated above, we express no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PACIFICA LAW GROUP LLP A-2 STRATEGIC GOALS AND OBJECTIVES COMPREHENSIVE ANNUAL FINANCIAL REPORT For the fiscal year ended December 31, 2016 City of Tukwila, Washington VISION The city of opportunity, the community of choice MISSION To provide superior services that support a safe, inviting and healthy environment for our residents, businesses and guests. VALUES Caring Professional Responsive A community of inviting neighborhoods and vib=ant business districts + Cultivate community ownership of shored spaces. + Build a broad and collaborative approach to preventing crime and increasing the sense of safety. + Focus City planning and investments on creating a connected, dynamic urban environment. + Use City efforts and investments to realize established visions for specific sub -areas. A solid foundation for all Tukwila residents + Partner with organizations that help meet the basic needs of all residents. + Strive for excellent education, vocational supports, and personal growth opportunities through effective partnerships and City services. + Encourage maintenance, improvements and diversity in the City's housing stock. A diverse and regionally competitive economy + Embrace the City's economic potential and strengthen the City's role as a regional business and employment center. + Strengthen the City's engagement and partnership with the business community. A high -performing and effective organization + Use Tukwila's Vision, Mission, and Strategic Plan to focus and prioritize City efforts. + Advance Tukwila's interests through participation in regional partnerships. + Continue to develop as an organization and support individual growth. + Ensure City facilities are safe, efficient and inviting to the public. + Ensure the long-term fiscal sustainability of the City. A positive community identity and image + Improve the City's ability to build trust and work with all members of the Tukwila community. + Facilitate connections among Tukwila's communities. + Promote o positive identity and image of Tukwila. COVER PHOTO' Duwamish Gardens project completed in 2016 N O O) c v_ m 0 T z z c-) cn cn r m m z El XION3ddV The City of Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT co For the Year Ended December 31, 2016 IV Prepared by the City of Tukwila, Finance Department Peggy McCarthy, Finance Director Allan Ekberg, MAYOR TUKWILA CITY COUNCIL Dennis Robertson, Council President Joe Duffie Kathy Hougardy Kate Kruller Verna Seal De'Sean Quinn Thomas McLeod CITY OF TUKWILA'. 2016 CAFR TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2016 TABLE OF CONTENTS I. INTRODUCTORY SECTION Administrative Organizational Structure, Principal Officials, and Council Committees... Letterof Transmittal ..................._ _. _....._....._...... _.._....._..... _...........�....... _.._... _..._ Certificate of Achievement. _..... . II. FINANCIAL SECTION Auditor's Report ........................................ Managements Discussion and Analysis......... Basic Financial Statements Govemment-wide Financial Statements: Statement of Net Position ................................................... _........._............ Statement of Activities...................... ..... ..................................................... Fund Financial Statements: Balance Sheet - Govemmental Funds .......................... _....................... _... _. Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position. ....................................... _.... _...... Statement of Revenues, Expenditures, and Changes in W Fund Balance - Governmental Funds ........................._............ _........�........ Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities.. 34 Statement of Net Position — Proprietary Funds.... ..................._.... _................ _,......... _... _. 35 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds... _.........._....................._...._......__..._......._.............. 36 Statement of Cash Flows — Proprietary Funds .................. ........................ ......... 37 Statement of Fiduciary Net Position — Fiduciary Fund. ..... .........._.... _. _...._........ _..... 39 Statement of Changes in Fiduciary Net Position — Fiduciary Fund.... ..... _. _.................. _........ 40 Notes to the Financial Statements ............................. _......................... _..... _..... _.............. 41 Required Supplemental Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual GeneralFund ............ _..........................__...................................... _.. 101 Notes to the Required Supplementary Information .............. _............ _......................... ......... 102 Firemen's Pension Trust Fund......... ........ ..... ............. _.... _........................, ... 105 Retiree Medical and Long -Term Care Benefits for LEOFF 1 Employees...... _. _.............._....._... 108 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet — Non -Major Governmental Funds.......... _............. . _...................... 111 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Governmental Funds ...................................... _.................... 112 Combining Balance Sheet — Non -Major Special Revenue Funds. 113 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Special Revenue Funds.... _ _. ............. . _. _ ......... _ ... _ _ .... _ ..... 114 CITY OF TUKWILA. 2016 CAFR TABLE OF CONTENTS TABLE OF CONTENTS - continued Combining Balance Sheet - Non -Major Debt Service Funds...... _......_...................................... Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Non -Major Debt Service Funds .............._........ _.............._............ _....... Combining Balance Sheet — Non -Major Capital Project Funds.,. ............. ....... .......... ......... Page Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Capital Project Funds.............. ........_................................. ......... Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: 1 Arterial Street Capital Project Fund 3 Local Improvement District #33 Debt Service Fund 9 Public Safety Plan Capital Project Fund..........,. Hotel/Motel Special Revenue Fund__ ..... ...... ............. ........... ......... ............... . Drug Seizure Special Revenue Fund. Residential Street Capital Project Fund......._............................................_..._ 11 Land & Park Acquisition Capital Project Fund 15 Facilities Capital Project Fund..._..................................................._............_ General Government Improvements Capital Project Fund. Fire Improvements Capital Project Fund _.......... _..,... _. _..........._ 29 Debt Service Funds . 30 Combining Statements of Net Position — Internal Service Funds... ..................... Combining Statement of Revenues, Expenses, and Changes in 31 Net Position — Internal Service Funds.. Combining Statement of Cash Flows — Internal Service Funds........_ ......._...._............._ 32 Statement of Changes in Assets and Liabilities — Agency Fund.._..... _.. _..............._... _.......... _ 33 III. STATISTICAL SECTION Schedule Net Position by Component 1 Changes in Net Position 2 Fund Balances, Governmental Funds 3 Changes in Fund Balances of Governmental Funds 4 General Government Tax Revenues by Source 5 Property Tax Levies and Collections 6 Assessed and Estimated Actual Value of Taxable Property 7 Property Tax Rates — Direct and Overlapping Governments 8 Principal Property Taxpayers 9 Retail Sales Tax Collections by Sector 10 Sales Tax Rate Direct and Overlapping Governments 11 Ratios of Outstanding Debt by Type 12 Ratios of General Bonded Debt Outstanding 13 Computation of Direct and Overlapping Debt 14 Legal Debt Margin Information 15 Demographic Statistics - 16 Principal Employers 17 Full -Time Equivalent City Government Employees by Department 18 Operating Indicators by Function 19 Capital Assets by Function 20 Page 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 131 132 133 135 138 140 142 144 146 147 148 149 150 152 154 156 158 159 160 162 163 164 165 166 CITY OF TUKWILA'. 2016 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS ADMINISTRATIVE ORGANIZATIONAL STRUCTURE AND PRINCIPAL OFFICIALS CITIZENS OF TUKWILA COUNCIL MEMBERS MAYOR Allan Ekberg CITY ADMINISTRATOR David Cline MUNICIPAL COURT Kimberly Walden CITY ATTORNEY Kenyon Disend PLLC (Contracted) HUMAN RESOURCES Stephanie Brown TECHNOLOGY INFORMATION SERVICES Joseph Todd FINANCE Peggy McCarthy COMMUNITY DEVELOPMENT Jack Pace FINANCE COMMITTEE Verna Seal, Chairperson Kathy Hougardy, Member Thomas McLeod, Member PARKS AND RECREATION Rick Still PUBLIC WORKS Bob Gibe rson F RE POLICE Jay Wittwer Mike Villa COUNCIL COMMITTEES COUNCIL PRESIDENT Dennis Robertson COMMUNITY DEVELOPMENT & NEIGHBORHOODS Kathy Hougardy, Chairperson Verna Seal, Member Kate Kruller, Member TRANSPORTATION & INFRASTRUCTURE Kate Kruller, Chairperson Joe Duffle, Member De'Sean Quinn, Member PUBLIC SAFETY Thomas McLeod, Chairperson Joe Duffle. Member De'Sean Quinn, Member CITY OF TUKWILA: 2016 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS City of Tukwila 6200 Southcenter Blvd, Tukwila, WA 98188 June 28, 2017 Honorable Allan Ekberg, Mayor Members of the Tukwila City Council Citizens of Tukwila City of Tukwila 6200 Southcenter Boulevard Tukwila, Washington 98188-2599 Allan Ekberg, Mayor Subject: TRANSMITTAL OF 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT I am pleased to transmit the City of Tukwila's Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2016. This transmittal letter provides an overview of the report and the financial condition of the City. State law requires that cities publish financial statements annually in conformity with Generally Accepted Accounting Principles (GAAP), which are audited in accordance with generally accepted auditing standards by the State Auditor's Office, under the Revised Code of Washington (RCW) 43.09.230. The CAFR has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is used as a reference by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the CAFR is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded and funds are expended as they were legally appropriated in the adopted budget. The Tukwila Finance Department prepared the report and accepts responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that the data is presented in a manner that fairly sets forth the results of operations and financial position of the City, as measured by the financial activity of the City's various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activity have been included. The report has been prepared in conformance with GAAP and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance is based on the assumption that the cost of internal controls should not exceed the benefits expected to be derived. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL As a recipient of federal, state and county financial assistance, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act amendments of 1996 and U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The audit is conducted by the State Auditor's Office in conjunction with the City's annual independent audit. Information related to this single audit includes the Schedule of Expenditures of Federal Awards, findings, and recommendations, if applicable, and auditor's reports on internal control and compliance with applicable laws, regulations, contracts, and agreements. The results of the City's annual single audit for the fiscal year ended December 31, 2016 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws. Management's Discussion and Analysis (MD&A) immediately follows the State Auditor's report and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. PROFILE OF THE CITY Incorporated in 1908, the City of Tukwila is located in the heart of the Puget Sound region, 12 miles south of downtown Seattle, 17 miles north of Tacoma, and one mile east of Seattle -Tacoma International Airport. Tukwila has a small residential population of 19,540, making it the 54th largest of 281 cities in the State of Washington. However, the daytime shopper/visitor and working population can reach over 150,000 during the holiday shopping season. The City of Tukwila is a non -charter optional code City, operating under Section 35A of the Revised Code of Washington. It has a strong Mayor form of government with a seven -member City Council elected by the voters of the City to serve a four-year term. Councilmembers are elected at large rather than by district and are responsible for establishing the general guidelines and policies for the City. The Mayor appoints the City Administrator as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and City Council. The City of Tukwila provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities, and cultural events. In addition, the City operates an equipment maintenance/rental fund. The City operates its own municipal 18 -hole golf course and provides sewer, water, and surface water services. Tukwila has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail services to the City. Tukwila residents receive library services from the King County Library System. Since the 2009-2010 biennium, the City has adopted a biennial budget in accordance with RCW 35A.34. The Council is required to adopt a biennial budget prior to the first of each odd -numbered calendar year. Budget reviews are conducted at mid -biennium and any changes for the second half of the biennium are adopted by the City Council. The biennial budget serves as the foundation for the City of Tukwila's financial planning and control. The budget is adopted at the fund level and any increases or decreases to a fund must be authorized by Council. Appropriation changes within a fund may be authorized by the Mayor. The General Fund, two special revenue funds, one debt service fund, and seven capital project funds are included in the biennially appropriated operating budget and have budget to actual statements presented for 2016. As demonstrated by the statements and schedules included in the financial section of this report, the city continues to meet its responsibility for sound financial management. CITY OF TUKWILA'. 2016 CAFR LETTER OF TRANSMITTAL LOCAL ECONOMY Tukwila is a great place for business. With over 40,000 jobs, more people are employed in the City of Tukwila than in 29 of the 39 counties in the State of Washington. Approximately one third of the jobs are retail, one third are in manufacturing, and the remainder span everything from entertainment to real estate. Many well-known companies such as Boeing and Costco employ thousands of people in Tukwila. Further, Tukwila is home to the global headquarters of Boeing Employees Credit Union (BECU), Continental Mills, Odin Brewing Company, Pop Gourmet Foods, Red Dot Corporation, Sabey Corporation, and Seattle Chocolates. Tukwila is also home to hundreds of small businesses, many of which are owned by members of the city's diverse international community. Tukwila enjoys a strong position in the Puget Sound region as well as the state of Washington. Tukwila's location is at the crossroads of the State's most significant freeway network (the 1-5 and 1-405 interchange), and includes all modes of public transportation. Tukwila's transit stations include the commuter Sounder train, Sound Transit's light rail, and the Tukwila Transit Center that all reinforce the well-established advantages of Tukwila as an employment and retail hub. These major transportation systems, the strategic access to Seattle, Tacoma, Sea -Tac Airport, and the population base of the south Puget Sound region provide a natural setting for commercial and industrial activity. Tukwila is a retail powerhouse with one of the largest local retail sales tax bases in the state of Washington. Anchored by Westfield Southcenter, which is the largest mall in the Pacific Northwest, Tukwila generated over $2.2 billion dollars in taxable retail sales in 2016. The total retail sales tax revenue amounted to $18.9 million in 2016, representing slight decrease in the $19.3 million collected in the prior year. LONG-TERM FINANCIAL PLANNING The city uses its six-year financial planning model and Capital Improvement Program (CIP) as long-term financial planning tools. These tools, along with regular review and revisions to the financial policies, ensure the City incorporates current economic conditions and financial projections into its long-range financial plans. In mid -2015, the City revised its financial reserve policy to increase the General Fund reserve level from 10% to 18%, and added a one-time 10% revenue reserve in the Contingency Fund. These changes will ensure the City's policies are in alignment with the Government Finance Officers Association's "Best Practices" and provide additional protection from future downturns in the economy. The City's diversified revenue base is supported by an assessed valuation of $5.7 billion, which is an increase of 6.8% from 2015, allowing the City to pursue a long-term capital investment program. The City's 2017-2018 Capital Improvement Program anticipates $38 million in infrastructure improvements, 77% of which will be paid for by non -City funding sources. These improvements are vital to the economic health of the City which must continue to efficiently move employees, shoppers, and goods into and out of the area. Additional investments include nearly $15 million for residential street improvements, of which 40% is funded from non -General Fund sources, including $2.5 million from grants. The CIP also includes opportunities to leverage city resources to enhance parks, continue to improve water quality, and focus on promoting a healthy environment in alignment with the adopted Strategic Plan. CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL MAJOR INITIATIVES The City made significant investments of time and financial resources into key public projects in 2016. These projects represent Council's commitment to meeting their five Strategic Goals and Objectives: • A community of inviting neighborhoods and vibrant business districts • A solid foundation for all Tukwila residents • A diverse and regionally competitive economy • A high -performing and effective organization, and • A positive community identity and image The City of Tukwila has design underway for the Early Start Work for the Strander Boulevard Extension Phase 3 Project. This project will extend Strander Boulevard from West Valley Highway to Oaksdale Ave in the City of Renton. Phase 1 and 2 have been completed and extended Strander Boulevard from Renton to the new Sounder Commuter Station. The final connection under the railroad tracks wit add capacity for a new east/west corridor between 1-405 and South 180th Street. This $39 million project is needed to serve Tukwila and Renton access to the Southcenter Mall and Tukwila's Southcenter District. The City was awarded $5.1 million in federal STP funds in 2016 for the preliminary engineering and right-of-way phases. The groundbreaking for the new $10 million Tukwila Urban Center Pedestrian/Bicycle Bridge was held on August 12, 2016 with construction ongoing through 2017. The new pedestrian and bicycle bridge wit span the Green River near the intersection of West Valley Highway and Longacres Way. This bridge will link the Southcenter District with the Tukwila commuter rail station and enable the area to grow as a transit -oriented neighborhood. The pedestrian bridge is fully funded with a $6.8 million state regional mobility grant, federal grant, and park impact fees. King County grant funding was also awarded for the Baker Boulevard Non -Motorized Improvement Project. This $1 million project wit design and construct non -motorized corridor improvements on Baker Boulevard from Andover Park West (at the Tukwila Urban Center Transit Center) to Christensen Road and the new pedestrian bridge. Tukwila finished design in 2016 to rehabilitate four different bridges in the City. The Boeing Access Road Bridge over the BNSF Railroad was awarded a $9.7 million federal grant. This bridge is structurally and seismically deficient and serves the Manufacturing/Industrial Center of Tukwila, which includes thousands of Boeing jobs and the Museum of Flight. The City also received grant funds to perform major maintenance on three City bridges that include seismic retrofit, deck and joint repair, and painting. The bridge work wit preserve the City -owned infrastructure and extend the service lives of the bridges. Construction on the four bridges is scheduled for 2017. The City of Tukwila has an on-going extensive rehabilitation program in the Sewer Fund for the Southcenter Commercial Business District. As the sewer mains are reaching their 50 -year life span, the City has budgeted over $1 million for 5 years to reline the asbestos concrete pipes in the Southcenter area. The relining of the sewer pipes will extend the life span approximately 50 years and reinforce the strength with little impact to the roadway and minimal excavation. Another water and sewer project began in 2016 in the Southcenter area. This project wit replace the water and sewer mains in Andover Park East from Strander Boulevard to Tukwila Parkway. The infrastructure must be upgraded with larger mains to facilitate the new development in the Commercial Business District that includes Washington Place and a new Holiday Inn Express. Construction began September 26, 2016 and will continue into 2017, with final paving of Andover Park East. CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL The City continued its partnership with Tukwila Village Development Associates to develop six acres of City -owned land on Tukwila International Boulevard at South 144th Street, known as Tukwila Village. Tukwila Village will be home to a new King County Library, 400 apartments for seniors, a police neighborhood resource center, retail, office, a restaurant, a cafe, a community room, and a plaza. The project was under construction in 2016 and the library should be open in April 2017. The plaza is scheduled to be open in summer 2017 and the senior apartments will start opening in early 2018. When completed, the entire Tukwila Village project costs will be over $100 million. Adjacent to Tukwila Village, the City finished design for street and frontage improvements on South 144th Street between Tukwila International Blvd and 42"d Avenue South. This project will also include a new traffic signal next to Tukwila School District's Foster High School. Construction will begin in 2017. The City demolished four motels on Tukwila International Boulevard in 2016. The site was then cleared, graded with topsoil, hydro -seeded, and was completed with a split rail fence. Council selected HealthPoint, a federally accredited community health center, who will develop and operate a $25 million health and wellness facility on Tukwila International Boulevard. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tukwila for its comprehensive annual financial report for the fiscal year that ended December 31, 2015. This was the 29th consecutive year that Tukwila has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CO comprehensive annual financial report. This report must satisfy both generally accepted accounting -.l principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Finance Department and the cooperation of other City departments. Their long hours of assistance with the preparation and review of this report are greatly appreciated. The Mayor, City Administrator and City Council are to be complimented for their encouragement, interest, and support in conducting the financial operations of the City in a fiscally sound and progressive manner. The efficient assistance of examiners from the Office of the State Auditor is also appreciated. Staff who had a direct role in preparing Tukwila's 2016 Comprehensive Annual Financial Report take great pride in their work, and the entire team who worked on this project is to be commended. Respectfully submitted, Peggy McCarthy, CPA Finance Director CITY OF TUKWILA. 2016 CAFR LETTER. OF TRANSMITTAL CITY OF TUKWILA'. 2016 CAFR CERTIFICATE OF ACHIEVEMENT CITY OF TUKWILA: 2016 CAFR CERTIFICATE OF ACHIEVEMENT Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting CO Presented to City of Tukwila Washington For its CanprehensiveAnnual Financial Report for the Fiscal Year Ended December 31, 2015 Executive Director/CEO 9, 10 Office of the Washington State Auditor Pat McCarthy INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEIMENTS June 28, 2017 Mayor and City Council City of Tukwila Tukwila, Washington REPORT ON THF' FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, King County, Washington, as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America. this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Gorernmenl Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • Pat. McCarthy@sao.wa.gos 11 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, King County, Washington, as of December 31, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 15 through 28, budgetary comparison information on pages 103 through 104, pension plan information on pages 105 through 110, and information on postemployment benefits other than pensions on pages 1 1 1 through 112 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 115 through 122 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. 12 Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 28, 2017, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Gorermnenl Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, Pat McCarthy State Auditor Olympia, WA CITY. OF TUKWILA'. 2016 CAFR AUDITOR'S OPINION LETTER 13 14 CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2016 The management discussion and analysis section of the City of Tukwila's Comprehensive Annual Financial Report provides an overview of the City's financial activities for the year ended December 31, 2016. The intent of this discussion and analysis is to look at the City's financial performance as a whole. Readers should also review the transmittal letter, and the basic financial statements to enhance their understanding of the City's financial performance. FINANCIAL HIGHLIGHTS • As of December 31, 2016, the City of Tukwila's total assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $296.0 million. Of this amount, $33.0 million represents unrestricted net position, which may be used to meet the government's ongoing obligations to citizens and creditors. • In November of 2016, the City of Tukwila issued $36.7 million in voter approved bonds (including the premium on bonds issued) to finance rebuilding three fire stations, various fire equipment and apparatus, and the construction of a Justice Center to house the City's police department and municipal court. This resulted in a $36.9 million net increase in governmental activities restricted cash. • The City of Tukwila's total net position increased $8.9 million, or 3.1%. Governmental activities increased $5.0 million partially due to growth in excise taxes. Business -type activities increased $3.9 million due in part to rate increases in all three utility funds. • At the close of the current fiscal year, the City of Tukwila's govemmental funds reported combined fund balances of $76.1 million, an increase of $37.4 million. Approximately 15.3% ($11.6 million) of the fund balance is available for spending at the City's discretion (unassigned fund balance). • Revenues exceeded expenditures in the governmental funds by $1.0 million, an increase of $2.4 million from 2015 when expenditures exceeded revenues by $1.4 million. This is primarily due to a $2.1 million decrease in capital outlay in the Arterial Street fund. I. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis is intended to serve as an introduction to the City of Tukwila's basic financial statements. The City's basic financial statements are presented in three parts: 1) Government -wide financial statements 2) Fund financial statements 3) Notes to the financial statements This report also includes supplementary information intended to furnish additional detail to support the basic financial statements. Government -wide Financial Statements The government -wide financial statements provide both long-term and short-term information about the City's overall financial status, in a manner similar to private -sector business. The Statement of Net Position presents financial information on all of the City's Tukwila's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Tukwila is improving or deteriorating. 15 CITY OF TUKWILA 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The Statement of Activities presents information designed to show how the City's net position changed during the year. The statement distinguishes revenue generated by specific functions from revenue provided by taxes and other sources not related to a specific function. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show the degree to which each function supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Items such as (but not limited to) uncollected taxes, unpaid vendor invoices for goods or services received during the year, and earned but unused vacation leave are included in the statement of activities as revenue and expenses even though no cash has changed hands. Both the government -wide financial statements distinguish functions of the City of Tukwila that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Tukwila include general government (finance, executive, legal, court, and human resources), public safety (police and fire), physical environment, economic environment, transportation, mental/physical health, and culture and recreation. The City's business -type activities include a water, sewer, and surface water utilities, and a municipal golf course. Governmental activities are primarily supported by taxes, charges for services, and grants. Business -type activities are primarily self-supporting through user fees and charges. Fund Financial Statements The annual financial report includes fund financial statements in addition to the government -wide financial statements. A fund is a fiscal and accounting entity with a self -balancing set of accounts used to account for specific activities or meet certain objectives. The City of Tukwila Funds are often set up in accordance with special regulations, restrictions or limitations. The City of Tukwila, like other state and local governments, uses fund accounting to ensure and show compliance with finance -related legal requirements. The City's funds are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions that are reported as governmental activities in the government -wide financial statements. The governmental fund statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. The information in the governmental fund statements can be used to evaluate the City's near-term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government -wide statements can help the reader better understand the long-term impact of the City's current year financing decisions. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains twenty individual govemmental funds. Of these, four are considered major (the general fund, the arterial street fund, the local improvement district #33 fund, and the public safety plan fund) and are presented separately in the governmental funds' Balance Sheet and the governmental funds' Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single. column labeled "Other Governmental Funds." Individual fund data for each of these non -major governmental funds is presented in the combining and individual fund statements and schedules section of this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. A budgetary comparison schedule is presented for the general fund in the Required Supplemental Information section of the report. Other budgetary comparison schedules are included following the other governmental funds' combining statements in this report. 16 CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Proprietary funds are used by governments to account for their business -type activities and use the same basis of accounting as utilized in private industry. Business -type activities provide specific goods or services to a group of customers that are paid for by fees charged to those customers. There is a direct relationship between the fees paid and the services rendered. The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided intemally to various City departments, The same basis of accounting is used for proprietary funds in both the government -wide and individual fund statements. Enterprise funds report the same functions presented as business -type activities in the government -wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's three utilities (water, sanitary sewer, surface water) as well as the City -owned golf course. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet of vehicles, and its insurance premiums for active employees and LEOFF 1 retirees. Internal service fund activities are predominantly governmental and have been included in the govemmental activities columns of the govemment-wide statements. Individual fund data for the internal service funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government -wide financial statements because the resources of those funds are not available to support the City of Tukwila's own programs. The accountingused for fiduciary funds is much like that used for proprietary funds. The City maintains two different types of fiduciary funds. The Firemen's Pension Trust Fund is used to report resources held in trust for retirees and beneficiaries covered by the Firemen's Pension plan. The agency fund reports resources held by Tukwila in a custodial capacity for individuals, private organizations, and other governments. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found immediately following the fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including a budget and actual schedule for the City's general fund and schedules of progress in funding its obligation to provide pension and OPEB benefits to its former employees. Additional pension benefit information is found in Note 8. The combining statements referred to earlier in connection with nonmajor govemmental funds and internal service funds are presented immediately following the required supplementary information on pensions and OPEB. 17 CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position over time, may serve as a useful indicator of a government's financial position. In the case of the City of Tukwila, assets and deferred outflows of resources exceeded liabilities by $296.0 million at the close of the most recent fiscal year. Total net position increased by $8.9 million (3.1 %) when compared to 2015. Current and other assets Capital assets, net of accumulated depreciation Total assets Deferred Outflows of Resources Long-term liabilities Net pension liability Net OPEB obligation Other liabilities Total liabilities CITY OF TUKWILA'S NET POSITION (In thousands) Governmental AcbvtttesBusiness-type Activities , Total 01 $112.308 $74,640 $20,741 $17,629 206.147 318,455 205,816 280,456 67,410 88,151 $133,049 $92,269 66.826 273,557 272,642 84,455 406,606 364,912 4,629 2,576 470 288 5.100 2,864 73.776 12,944 9,179 8,149 104,048 47.172 11,631 0 7.139 65.942 6 943 2,539 0 993 10,475 7.723 2.095 0 436 10.254 80719 15.483 9.179 9.142 114 523 54,895 13,726 0 7.576 76,197 Deferred Inflows of Resources 1,117 4,187 98 346 1 216 4,533 Net position Net investment in capital assets 193,113 191,331 60,807 59.483 253.920 250,815 Restricted 8,996 5,446 - - 8,996 5,446 Unrestricted 15810 16,126 17.241 14659 33,051 30.785 Tot l netpositio ; $2'4�,H1$' $342803 $7 ,048 : $74.142. , $296 967 ':. ' $287,045 By far, the largest portion of the City's net position ($253.9 million or 85.8%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be providedfrom other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position ($9.0 million or 3.0%) represents resources that are subject to external restrictions on how they may be used. The business -type activities do not report any restrictions, so the entire $9.0 million is restricted in govemmental activities funds. The majority is related to land and park acquisition. The remaining net position balance ($33.0 million, or 11.2%) is unrestricted and may be used to meet the City's ongoing obligations to its citizens and creditors. At the end of the current fiscal year, the City of Tukwila continued to report positive balances in all categories of net position. The City's overall net position increased $8.9 million from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business -type activities. 18 CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA'S CHANGES IN NET POSITION (in thousands) Governmental Act6ities. Susmess-type.Aetivitles. Total 2016. 2815. 2018 '2015 2016 2015 Revenues Program enues Charges for services $11.904 69.748 922,963 022.158 034,887 $31.906 Operating grants and contributions 1,079 893 25 184 1,104 1,077 Capital grants and contributions 5.001 6.432 768 2046 5,769 8.471 General revenues Property taxes 14,563 14,320 - - 14,563 14,320 Sales and use taxes 18,908 19,334 - - 18,908 19,334 Natural gas use tax - - - - - Hotel/Motel taxes 710 678 - - 710 678 Utility taxes 4.046 4,019 - - 4.046 4.016 Interhmd util0y taxes 2.147 2,061 - - 2.147 2.061 Business taxes 2716 2,749 - - 2.716 2.749 Excise taxes 6509 5,321 - 6509 5.321 State entitlements 1 916 1,844 - - 1 916 1.844 Investment earnings 560 475 - - 560 475 Miscellaneous 1.000 281 - - 1000 281 Total revenues 71.058 68,156 23.756 24381 94.813 92.537 Expenses. General government 9.662 8.042 - - 9.562 8.042 Public safety 31,419 29.403 - - 31.419 29.403 Transportation 11.188 11.070 - - 11,188 11070 Physical environment 2.554 2.611 - - 2,554 2.611 Culture and recreation 5,431 5.125 - - 5,431 5-125 Economic environment 4.411 5,783 - - 4,411 5.783 W Interest on long-term debt 1.076 1.033 - - 1,076 1,033 1 Water/sewer - - 13,984 13.186 13,984 13.186 -a Foster golf course 2,078 2.087 2,078 2,087 (a) .Surface water - - 4,088 4,148 4,088 4,148 Total expenses 65.741 63.088 20,150 19.421 85,892 82.489 Increase (decrease)in net psition before 5316 5.088 3.605 4 960 8.922 10.048 transfers and special Items Transfers (300) (300) 300 300 - - Special Item - (957) - - - (957) Change In net position 5,016 3.631 3,905 5.260 8,922 9.091 Net position -beginning of period 212.903 220.054 74,142 71.948 28.7,045. 292,012 Change in accounting principle - Retirement Costs - (9551) - (2 308) - (11859) Change in accounting principle - 1757) (757) Prior Period Adjustment - (1,442) - - - (1442) Net position -beginning balance, as restated 212 903 209,072 74,142 68,882 287,045 277,954 Net position -end of period $217,919 $212,903.. $78.048 $74;142 9295967 $287,045 Governmental Activities During the current fiscal year, net position for governmental activities increased $5.0 million (2.4%) from the prior fiscal year for an ending balance 098217 9 million. The primary reasons for this increase are: Charges for services increased by $2.2 million (22.1 %) to $11.9 million. The reason for the increase is the recognition of just over $2.0 million in fire impact fees related to new development. Capital grants and contributions decreased $1 4 million (22.2%), although this was partially offset by a $0.2 million increase in operating grants and contributions. In 2015, capital grants made up 10% of all governmental revenue, while in 2016 capital grants were only 7% of total revenues. The decrease in capital grant funding is mostly related to a one-time, $1.3 million State grant received in 2015 for the Interurban Avenue South project. MANAGEMENT'S DISCUSSION AND ANALYSIS • Excise taxes increased $1.2 million (22,3%) due to a $0.3 million increase in real estate excise taxes from the sale of properties in Tukwila, combined with a $0.9 million increase in gambling tax revenues. • Total expenses increased $2.7 million (4.2%), mostly related to general growth in employee costs, including medical benefits, retirement costs, and a 2% cost of living adjustment. REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES Otherr¢venus PROGRAM REVENUES AND EXPENSES -GOVERNMENTAL ACTIVITIES 530,000,005 23/,050;000 ;24,005,000 $21,000,605 U08,05q[IDO 510,000,000 512,000,000) 09,505,555 $0,000.000 s.rlor,,rc0 1 20 0 CP gram in ■ Excen5e5 CITY OF TUKWILA'. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA'. 2016 CAFR Business•Type Activities For the City of Tukwila's business -type activities, the results for the current fiscal year were positive in that overall net position increased by $3.9 million (5.3%) to reach an ending balance of $78.0 million. The overall growth is attributable to the following factors: In the Water Utility, total net position increased by $0 8 million (4.4%). Thisresulted from a 5 0% rate increase effective January 1, 2016, combined with a slight reduction in operating expenses from the prior year. In the Sewer Utility, charges for services increased $0.2 million (1 8%) primarily due to a 5.0% rate increase effective January 1, 2016 combined with a slight reduction in water usage by customers. • In the Surface Water Utility, a 15.0% rate increase resulted in charges for services increasing by almost SO 8 million (15.0%), • Despite the rate increases. operating income was $2.8 million, or approximately $20,000 less than last year, signifying that the rate increases were adequate to cover the growth In operating expenses. Of the $78.0 million total net position, $17.2 million (22.1%) is unrestricted and each utility can utilize their portion for any purpose. This operating balance is necessary for future planned infrastructure replacements and repairs. The following chart shows the relative net position balances for each business -type fund:. __: Were sealer BUSINESS -TYPE NET POSITION - BY FUND Poster golf rousse 8:0, The majority of net position in the City's enterprise funds relate to capital asset infrastructure, such as water and sewer mainsand the golf course land. As such, most of the net position is not available to support the ongoing expenses of the funds. The following chartcontrasts the total net position to the spendable portion of net position for each enterprise fund: 21 MANAGEMENT'S DISCUSSION AND ANALYSIS COMPARISON OF TOTAL NET POSITION TO SPENDABLE NET POSITION -BUSINESS-TYPE FUNDS DCO The following chart depicts the revenues and expenses for business -type funds: 500.000.000 58,000,000 06,000,000 00100,000. 02,00(1,000 $0 BUSINESS -TYPE ACTIVITY REVENUES & EXPENSES (before Capital Contributions & Transfers) ',Nater Reve, ■ Expenses Sewer Surface Plater Foster Golf Course 22 CITY OF TUKWILA'. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS The purpose of the City's govemmental funds is to report on near-term inflows, outflows, and balances of spendable resources. This information helps determine the City's financial requirements in the near future. Specifically, unassigned fund balance may serve as a useful measure of a government's net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City of Tukwila itself, or a group or individual that has been delegated authority to assign resources for use for a particular purpose.. As of December 31, 2016, the City's governmental funds had combined fund balances of $76 1 million, an increase of $37.4 million, or almost double the 2015 fund balance total of $38.6 million. The increase is primarily due to bond proceeds of $33.0 million, plus a premium of $3.7 million, in the public safety plan fund. The change in fund balance for governmental funds compared to 2015 is as follows: • General Fund $ 0.7 million • Arterial Street Fund (1 1 million) • Local Improvement District 633 (0 1 million) • Public Safety Plan 36.5 million • Other Governmental Funds 1.4 million The general fund is the primary operating fund of the City. All receipts and payments of ordinary City operations are processed through this fund unless they are required to be accounted for in another. At the end of 2016,. the general fund had a $19.0 million fund balance, with $11.6 million (61 0%) of the balance classified as unassigned and available to meet the City's general obligations. The arterial street fund decrease in fund balance is related to the planned use of reserves for capital projects.. In 2016, a total of $5.5 million was spent on capital outlay. The fund balance in the local improvement district #33 fund decreased by the difference between the special assessment revenue received and the payment on the LID bonds issued. The following chart shows the relative fund balances for governmental funds: GOVERNMENTAL FUNDS — FUND BALANCES. 23 CITY OF TUKWILA'. 2016 CAFR MANAGEMENT'S. DISCUSSION AND ANALYSIS The general fund revenue increase of $1.1 million is combined from the following sources: 00(10090 0400,000 0000:000' '0500,000 0400,000: 5300,000 0200,000 6100,000 0_0 i0]00,00( )0000,000) GENERAL FUND REVENUE INCREASES/DECREASES — BY SOURCE faxes 0685,392 Charges • 800sei and pennits 1 (0113 030) FINANCIAL ANALYSIS OF PROPRIETARY FUNDS rgo. (5127.780 Inxxstr,nCtarnings 569,520 ,xx rfeimres 507,002 M0 if s7 The City's proprietary funds provide the same type of information as found in the government -wide financial statements, but in greater detail. Factorsaffecting the finances of the City's proprietary funds have already been addressed in the discussion of the City's business -type activities. Unrestricted net position in business -type activities ended 2016 at $17.2 million, an increase of $2 6 million (17.6%) from 2015. GENERAL FUND BUDGETARY HIGHLIGHTS The City budgets biennially by adopting a budget at the end of the preceding biennium, and then making adjustments as necessary via budget amendments throughout the next two years. Following is a summary of such budget amendments that occurred in 2016' Gambling Tax revenue increased by $600,000 to reflect increasein tax collections partially due to a local casino resuming operations. Additional revenue and expenditures were appropriated for the City's COPS grant and two police officers, one dedicated to the Auto Theft Task Force and the other dedicated to the Criminal Justice Training Center for the Basic Law Enforcement Academy. Carryover of project costs unspent in 2015 related to the Police records management system and Laserfiche Rio projects. • Adjustments in transfers from the General Fund to other funds, including o $800,000 reduction in transfer to the Arterial Street Fund due to $1.0 million of unanticipated REET funds in 2015 to cover Arterial Street projects, and o $275,000 increase in transfer to the Contingency Fund in line with policy requirements. 24 Highline water district intertie Water district 75 intertie Water district #75 intertie CITY OF TUKWILA'. 2016 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS Reasons for the significant variances in the general fund between the final budget and actual results include: • Tax revenue was $0.6 million, or 1.4%, higher than budget. Of that amount, property taxes decreased $0.3 million due to a planned annexation that was not approved, sales and use taxes increased $0.3 million, and gambling taxes increased $0.6 million partially due to the resumption of operations at one of the local casinos. • Fines and forfeitures was $26 thousand (8.9%) over budget. This was due to false alarms coming in higher than anticipated. • A $2.1 million transfer in from the Facilities/Urban Renewal fund was budgeted but did not occur because an anticipated land sale did not happen in 2016. Expenditures were below budget by $1.9 million, or 3.6%. Public safety expenditures contributed $1.0 million of the budgetary savings due to less spending on overtime ($0.3 million), equipment operations and maintenance ($0.4 million), and equipment replacement costs ($0.2 million). Additional budgetary savings occurred in economic environment related primarily to salary and benefit savings from unfilled positions. CAPITAL ASSETS The City's investment in capital assets for both its govemmental and business -type activities as of December 31, 2016 totaled $ 273.6 million (net of accumulated depreciation), an increase of nearly $1.0 million (0.3%) from 2015. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission/distribution systems, roads, bridges, and infrastructure. CITY OF TUKWILA'S CAPITAL ASSETS (net of depreciation) Governmental Activities Business -Type Activities Total 2016 2015 2016 2015 2016 2015. Land Buildings Other Improvements Machinery and Equipment Infrastructure Construction in Progress Total $ 35,498,580 35,312,814 $ 2,346,230 2,346,230 $ 37,844,810 37,659,044 11,834,146 10,711,996 8,307 234 8,679,027 20.141,380 19,391,023 10,528,019 5.933,158 54,158.840 48,145,336 64,686,859 54,078,494 7,111,094 6,811,474 386.113 407,530 7.497,207 7,219,004 131,110,688 120,913,528 - 131,110,688 120,913,528 10,064,699 26,133,182 2,211.229 7,247,963 12 275,927 33,381,145 '.6206,147,226 X205,816,152 $ 67,409,646 ',66526087 6273,156,872, 272,642240:. More detailed information on capital assets is provided in Note 6 to the financial statements. General capital outlay purchases added $798,601 in machinery and equipment and included varioustechnology purchases in the amount of 0789,943, Parks & Recreational equipment for $10,686, and Street Division thermal imaging cameras totaling $11,676. Many of the projects in the Arterial Street Fund continue to be in the construction phase adding $5.5 million in construction -in -progress for the period. The major arterial street fund activities are comprised of the following: • Interurban Avenue South, $2.1 million • Tukwila Urban Center Pedestrian/Bicycle Bridge, $2.3 million • Tukwila Urban Center Transit Center, $0.23 million • Boeing Access Road Bridge Rehabilitation, 00.11 million • Andover Park West, $0.08 million • Various other Arterial Street Fund projects total $0.64 million Major construction projects completed in 2016 added $18 million to capitalized infrastructure for the Arterial Street Fund which included Interurban Avenue South with total overall previous and current years' construction -in - 25 CITY OF TUKWILA'. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS progresscosts of $9.2 million; Tukwila Urban Transit Center with costs of 06.6 million; and, Andover Park West with costs of $2.2 million. Ongoing Residential Street Fund construction projects added $649,579 to construction -in -progress and include the following: • 40 - 42nd Avenue South, $246,583 • Cascade View Safe Routes to School - Phase II, $153,924 • 42nd Avenue South Roadside Barriers, $90,010 • Various other Residential Street Fund projects total $159,062 Projects completed in 2016 for the Residential Street Fund include the newly constructed 42^9 Avenue South roadside barriers with total overall previous and current years' construction -in -progress costs of $196,100. Land Acquisition, Recreation & Park Development activities consist of $1,435,602 for the Duwamish Gardens and Duwamish Hill Preserve work in progress improvements. Both projects were completed in 2016 with total overall previous and current years' construction costs of $3,387,210 and $992,327 and capitalized into parks improvement infrastructure. Other park related projects total $11,900 in added current year construction -in -progress costs. Other governmental funds' activity in the areas of facilities improvements provided an additional $13,138 to construction -in -progress work for the year. Business -type activities consisted of $2.7 million in added construction -in -progress work for the year. Major projects in the utility funds comprise of the following: • East Marginal Way South Pipes, $694,852 • Andover Park East Waterline, $1,062,773 • Crystal Springs Intertie, $410,171 A total of $569,653 in other utility construction projects were added to construction -in -progress during the current period. Major construction projects completed in 2016 include Interurban Avenue South and East Marginal Way South Pipe projects with total overall previous and current years' construction -in -progress costs 0102.6 million and $3.2 million, respectively, which have both been capitalizedinto utilities infrastructure. LONG-TERM DEBT At the end of the current fiscal year, the City had total bonded debt outstanding of $61.1 million, excluding the premium on bonds issued. Of this amount, $54.1 million is general obligation bonds which is backed by the full faith and credit of the City, $1.6 million is revenue bonds for the water/sewer and surface water utilities, and the remaining $5.4 million is special assessment bonds which were issued to improve access to the City's urban center. The City issued $36.7 million (including premium) in general obligation debt in 2016 to finance a new Justice Center to house the police department and court operations, reconstruct three fire stations within the city, and provide funding for fire equipment and apparatus for 20 years, This new debt issuance resulted in an overall debt increase 01035.0 million. The City currently maintains a rating of "AA" with Standard and Poor's and Fitch's Investor Service, and "Al" with Moody's for its general obligation debt. In February 2017, Moody's informed the City that it raised the city's rating to Aa3. 26 CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA: 2016 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS The following schedule summarizes the City's long-term debt: REQUESTS FOR INFORMATION CITY OF TUKWILA'S LONG-TERM DEBT ¢avernrpental AcRGties Business=type Acti46i9a Total; 2018' ° 2015 2016 • 2015 2016 1'2015 General obligation bonds Revenue bonds Premium on bonds issued Special assessment bonds Public Works Trust Fund Loans Due to other governments $ 54,114.977 $ 23,057.714 $ - $ - $ 54,114,977 $ 23,057,714 1,597,704 1.742, 527 1,597,704 1,742,527 4,380,732 761.523 - 4,380,732 761,523 5,412,500 6,082,500 - - 5,412,500 6,082,500 - - 5,046,991 5,646.459 5,046,991 5,646,459 6,093.556 6,265,200 6,093,556 6,265,200 70,001 785 =.$,86,166937. $ 6,644605 $ 7,388986,< More detailed information on long-term debt, including debt limitations, is provided in Note 10 to the financial statements. ECONOMIC FACTORS AND THE UPCOMING BIENNIAL BUDGET The following economic factors currently affect the City of Tukwila and were considered in developing the 2017- 2018 biennial budget: • The City's 2017 assessedvalue of $5.8 billion is 6.8% higher than 2016 and its growth reflects positively on the local economy. • Sales Tax is the City's largest revenue source and is conservatively estimated to increase 7.5% in 2017 and an additional 2.9% in 2018, another sign that the local economy has rebounded, • Property tax is the second largest revenue source, contributing to approximately one-quarter of the annual general fund budget. This revenue source is limited to 1%0 growth annually, however new construction estimated in 2018 results in a 2.5% increase over 2017. • The 2017-2018 biennial budget includes a one-time revenue of $1.8 million in 2017 and $6.1 million in 2018 for anticipated properly sales in both the Tukwila Village and Tukwila Redevelopment (urban renewal) areas. These funds will be used for capital improvements throughout the City. In addition, $2.25 million will be used to repay the line of credit the City received in 2015 to purchase property in the urban renewal area. • Rate increases of 5% annually are scheduled in the Water utility from 2017-2022 to cover the cost of purchasing water from the Cascade Water Alliance and maintain the utility's infrastructure. An additional increase of 3.5% in sewer rates is scheduled for 2018. • National Pollutant Discharge Elimination system (NPDES) permit requirements have significant costs for the surface water fund, which will result in a 5% rate increase in 2017 and 3% in 2018 for that utility. • Capital outlay in the General Fund decreased 47.5% in 2017 and an additional 87.2% in 2018. This reduction reflects the fact that the Police records management system was completed in 2016 and the Parks and Recreation class registration system will be completed in 2017. The City's reserve policy specifies that the General Fund ending fund balance shall equal or exceed 18% of the previous year's operating revenues. The policy also requires that a 10% minimum fund balance be maintained for the Contingency Fund. The biennial budget complies with both these requirements. This financial report is designed to provide a general overview of the City of Tukwila's finances for readers with an interest in the City's finances. Questions concerning this report, or requests for additional information, may be addressed to the Finance Director, City of Tukwila, 6200 Southcenter Blvd, Tukwila, WA 98188-2544. 27 28 CITY OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION DECEMBER 31, 2016 Governmental Business -Type Activities ActNNfls Total ASSETS: Cash and cash equivalents Investments Taxes receivable Other recelables Due from other governmental Units Inventory of materials and supplies Restricted cash and cash equivalents Restricted investments Notes receivable Real property held for resale Investment in pint ventures Non -depreciable cap8al assets Depreciable capital assets (net of accumulated depreciation) Net Pension asset Total Assets.. DEFERRED OUTFLOWS OF RESOURCES: Deferred loss on refunding Deferred outflow s related to pensions Total Deferred Outflows Of Resources LIABILITIES: Accounts payable Accrued w ages and benefits payable Accrued interest payable Unearned revenue Other liabilities Bonds and other debt payable Due w ithin one year Due In more than one year Net pension liability Net other post employment obligation -Total Liabilities DEFERREDINFLOWS OF RESOURCES: Deferred inflows related to pensions Business taxes received in advance Total Deferred Inflows Of Resources NET POSITION: Net investment in capital assets Restricted for: Debt service Tourism promotion Arterial street improvements Drug Investigation and enforcement Land and park acquisition, development Are Improvements Public safety facilities Unrestricted net position Total Net Position $ 27,816.183 $ 15.987,448 $ 43,803.631 5,956.032 2,642,502 8598.534 6,807.605 836 6,808.441 418.712 1578117 2.096.728 2,57fi 606 64.822 2,641,427 15.778 53,458 69.237 38,386.341 93.007 38.479.349 1,000.203 1,000,203 8,723.916 221.035 8.944.951 7,645.000 7.645000 9,188.795 - 9.188.795 45,563.279 4.557,459 50,120.737 160,583.947 62.852,187 223 436,134 3,772 659 - 3.772659 318,455,055 ' 88,150,771 406,605,827 324,261 4,304,943 4,625.204 3,344,240 1,551.266 355,347 228.090 2,670 165 3,979 399 69,796 567 12,943 779 9,178,836 04.047 688- 543,699 573 715 1,117,414 42,079 428,254 470.333 661,414 120 627 17,782 17 100 175.598 776.814 6.165,240 2.539 401 0,474,977 366,340 4 733,197 5,099,537 4.005,655 1 671.892 373.129 245190 2845 764 4,756.213 75962.807 15 483.180 9,178,836 114,522,665. 98,478 642.177 573,715 98,478 1 215,892. 193,113.026 60 807,030 253.920,057 1,567.571 912.558 134.373 553.539 3,341 625 736.518 1750.000 15 809.945 17 240,620 1,567 571 912.558 134.373 553,539 3,341.625 736.518 1,750 000 33.050565 $ ',217,919,156.:$ .78,047,650 $ 295,965.806 The notes to The financial statements are an integral part of this statement. 29 CITY OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2016 FUNCTIONS! PROGRAMS: PRIMARY GOVERNMENT Governmental actSities General Government $ 9662,207 Public safety 31.418,713 Transportation 11 188,189 Physical environment 2 554.259 Culture and recreation 5 431.324 Economic environment 4 410.841 Interest on long-term debt 1.075.729 Total Governnen1al Activities '65.741..262 BUSINESS-TYPEACTIV ITIS: 5 3742,937 $ 114.451 $ - 4.130,701 545,067 - 454,525 254,844 1602614 464 - 624.276 1,140,558 57,748 774053 2,434,546 106,910 $ (5,804,818) $ $ (5,804 817) (26,742 945) (26,742945) (6,876206) - (6,876.206) (1,929.519) - (1,929.519) (3,458 965) - (3,458.965) (1,869,385) - (1,869385) (1.075 729) - (1,075729) 11,903,732 1 079,020 5 000,942 (47 757,587) . (47,757,566) Water 5700.976 6.431763 - 101.791 - 832078 832.078 Sewer 8283392 9,229156 - 270857 1216,821 1,216821 Surface water 4088360 5875343 25.000 395,583 - 2.207,566 2 20566 Foster golf course 2077536 1,426385 - - - (651.151) (651,101) T910586ei8e96-Type Actives 20,150284 22962,646 25.000 767,732 3605314: ..3,605,314 Total Primary Government $85,891,525 $ 34,866578 9.1,194020 $ 5,768 674 $(47757667) $ 3605,514 $ (44,152,252) General Revenues. Taxes taxes Retail sales and use taxes Hotel/motel taxes Utility taxes hrterf and utility taxes Business taxes Excise Taxes State entitlements Unrestricted Investment earning Miscellaneous Total. General Revenues $ 14,562,501 $ $ 14,562.501 18,908,190 - 18,908.190 710,267 - 710.267 4.045,916 - 4,045916 2,146,515 - 2,146.515 2.716,257 - 2716.257 6,508,665 - 6,508.665 1615,610 - 1,915810 559,733 - 559.733 1000,049 - 1,000,049 ..:53073904'_. - '53,073,804' Excess of revenues over expenses before transfers Transfers 5316.337 3605,314 8,921.652 (300,000) 300,000 Change in net position Net posRion - beginning Net porion -ending 5,016,337 212,902,819 217 519,156 3905314 - 8,921,652 74,142,336 287045,155 78047,650 $ 295966,806 The notes to the financial statements are an Integral part of this statement 30 CITY OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2D16 ...Local 5260 - Other Total.. General Arterial biprore trent Batety Governmental Governmental Fond Street Olstoct835 .Fhn Pun8a Funds ASSETS: Cash and cash equivalents $ 12278 557 $ 1 667,647 $ 898,722 5 114.324 $ 6.542202 9 21501453 hvestnents 3053 018 - - 3053,018 Taxes receivable 5.645 241 541,874 - - 620,491 6807,605 Other receivables 365262 21,703 - 189 6,600 393,754 Due from other governmental unfs 288,036 1,125,152 - - 1,163.418 2576,606 Restricted assets Cash and cash equsalents 8406 2,371097 35503,363 503,475 38 385,341 hvestoonts - - 1000,203 - 1000,203 Special assessment receivable - - 4794009 4,794,009 Flores receivable 1,501 003 378882 - 1.750,000 300,022 3929,907 Real property held for resale - - - - 7,645,000 7645,000 Total Assets .$:23,139523 $ 6,106,355 5 5,692,731 038,388,679 $ 16,81,208 $ 90,087,896 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: liabilMes Accounts payable 1093 021 1,377034 - 104,952 682,766 3.257,773 Accrued wages 86301380 1,504321 20448 - - 6.799 1.531,568 Unearned revenue 228 090 - - - - 228,090 YW Other1abil980 122 742 322,279 - 175,644 620,665 ,3 TolefUabiflna 2,948176 1,719,761 - 104952 865,209 5,638,095 Deferred inflow of resources Unavailable revenue -special assessment - - 4 79400 - - 4.794009 Business taxes rece5ed In advance 573.715 - - - - 573,715 Unavailable revenue -property tag, other 217 959 - - - - 217,959 Unavailable revenue -developer agreement 367931 387.217 - 1,750000 306,622 2811771 Total Deferred Inflow Of Recourses 1159,605 - 387,217 4,794009 1,750,000 306,622 8.397,454 Fund balance. Nonspendable 1,141484 7,645,050 8.786484 Restricted: 4081/1otel tax - - - 912,558 912,558 Arterial street c apflal improvements - 2,371,097 - - - 2371097 Drug investigation and enforcement - - - - 553,539 553,539 Park and land acgrslonldevebprrent - - - - 3,341 625 3341,625 NbNc safety facilities - - 36,503,556 - 36 503,556 Are Ilryrovenents - - - - 735518 736518 Cebt serVICO guraranty fund - - - - 668849 668,849 Local Improvement District - - 898,722 - - 898:722 Assigned'. Resiident21211 e0 ir6009emunts - - - 658,932 658,932 Arterial streetimpr0vements - 1,628,279 - - 1628,279 Contingencies 6,050624 - - - - 6050624 Land B park acquis Ilion - - - 10488 10,468 Facibies 8 urban renewal - - - 295,040 295,040 General government improvements - - - 391,903 391,903 RAW safety facillies - - - 9571 - 9.571 1% Arts 184.000 - - 184000 Technology 43306 - - - 43306 Debt service _ 394,025 394925 Unassigned 11,612 330 - - - 11 612,330 Total Fund 8aente :19031,744;9,999376 898,722 38,513,127 :15,509,377 76,052;346. Total L06Wbs Deferred Inflows And Find Balances $ 23,139523 $ 8,106355 $.5,592,731 $38,388,019 $ 16,781,208. $ 90,087,095 The notes to the financial statements are an integral part of 119$$tatement CITY OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS. CITY OF TUKWILA. WASHINGTON RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31 2016 Total Goyem9nenfal Funds: Total governmental Nnd balances as reported on this statement $ 76052.346 Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Non -depreciable assets Depreciable assets (net). Internal service fund assets The net pension asset Is not an available resource and, therefore, is not reported In the funds. Deferred outflow of pension costs Deferred inflow of pension contributions The City has an equity interest in two joint ventures. This equity Interest ler the provision of governmental services is not a current financial reSOUrce and therefore is not reported in the funds. Revenue that was not collected within the recognition period and thereforewas not available to pay current liabilities'. Unavailable revenue reported for property tax and other receivables Unavailable revenue reported for developer agreement Unavailable revenue reported ler special assessment Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Long term 114611ides due within one year Long term Mobilities due in more than one year Accrued interest payable Deferred outflow on refunding Internal service hind net position exclusive of capital assets, deferred outflow of pension costs and deferred Inflow of pension contributions which are included with other reconciling items above Internal service Nnds are used by management to charge the cost of certain activities, such as health insurance and fleet maintenance to individual funds. The assets and liabilities of these internal service funds are included in governmental activities In the statement of net position. 45,563,279 155.875,835 4,708,113 206,147225 3.772659 4,304.943 (543699) 3.761244 9.186 795 217,959 2,811,771 4,794009 7.823 739 (3,979,399) (82,358,785) (355 347) 324,261 (95.548 106) 6 721 251 Net l 6slbon Of Gdver69en0Activitles As Re • 0854 On The. Statement Of Net Position S '217 08 156 The notes to the 8696.41 statements are an integral penal this statement. 32 CITY OF TUKWILA_ 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31. 2016 Loc91 General Arterial . hprovenent Fund Street'. 1isthattf33 Pul Other Governmental' Funds REVENUES: Taxes Licenses and permts Intergovernmental Charges for services Fines and forfeitures hvestment earnings Special assessments Mscellaneous Total Revenue9: EXPENDITURES: Current. General government Econonic environment O Physlcalenvem orent Public safety Culture and recreation Transportation Debt service. Principal Interest Capital outlay $ 45,886761 $ 1,573,930 $ 2.129,221 - 5 2,127801 $ 49 588 492 2.129.221 4,498,683 3.642,889 - - 1.925.841 10.067.413 3,286,105 441,500 - - 183.867 3.911,473 318,459 - - - - 318.459 233,544 19,711 267,930 9.561 10.553 541299 542,180 214,444 117,549 886 624.279 957,158 58587215 5,795;580 810097 9,581 4872,341 68,055095.. 542.180 8,315,631 - 4,070,805 - 1,955,028 - 29,100,506 - 4,408,302 2879,996 2096,831 810,180 Total Expenditiny98 5,0868 (d9lrc)elcy)8f 90668006 04er (Under) Etpendfures OTHER FINANCINGSOURCES (USES) Transfers in Transfer out Issuance of debt Bond premum Total Other Financ0r9 9 5 670,000 281.044 5.502,756 - 7,599,587 951,044. 206,388 1,090,359 9,405,989 422.405 4.493 210 3 1.955.031 59.303 29.366,198 135.038 4543339 261,641 5,238 468 1.932.782 812,540 2,045 515 2.602.782 1,093 584 8.358 450 088 .8:759585 '67057051.' 5 (1,804,807) (140,047) (196,827) (1,887,245) 998. 751,000 - - 3.274.831 4.025,831 (4.325,831) - - (4.325831) 32,990,000 32,990,000 3,719,954 - 3719,954 (4325;831) 751,000 - 36709054 3.274,831 `36,409954 Nst ihdige in fund balances 700:938 (1.053:007) (640:047) 30518127 1,387586. 37;408597 Fund balance -beginning 18,330,806 5,052.383 1.038.769 - 14 221.790 38.643,748 Fund.Balance- Ending $ 19031,744 $ 3,999,376 $ 898,722 $36513,127 $ 15609077 $ 78;052,346 The notes to the financial statements are an integral part of this statement. 071 OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2016 Net change In fund balances per the Statementof Revenues, Expenditures, and Changes In Fund Balances Amount reported as change in net position In the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cast of those assets is allocated over their estimated useful Ives and reported as depreciation expense. In the current period, these amounts are'.. Capital Outlay Adjustments to construction in progress Donated capital assets Depreciation Expense (excludes internal service fund depreciation which is reflected In internal service fund change in net position listed below] Excess of Capital Outlay Over Depreciation Expense The net effect of various transactions involving the City's pension plans are Reduction in pension Ilabil,tyand expense Increase In pension contribution revenue Reduction in the Fireman's Pension liability and expense The City has equity interests in two joint ventures. The equity interests for the provision of governmental services are not current financial resources and therefore are not reported in the funds. Repayment of long-term debt is reported as an e4venditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. In the current year. these amounts con8i5t of Bond principal retirement Amortization expense Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. General Obligation Bonds Issued General Obligation Bonds Issued 8,358.450 (912.881) 82,808 (7,164.280) $ 37,408,597 364,098 519.875 509.312 394.435 1423,62Z (4208) 2,602.782 100,745 2703 526 (3 719,954) (32818 400) Internal senAce funds are used by management to charge the casts of certain attitudes 10 individual funds. The change in net position of Internal service funds is reported with governmental activities. (548,596) Because some revenues will not be collected for several months after the Citys fiscal year ends. they are not considered available revenues in the governm ant funds. Changes this year are for Miscellaneous receivables Developer agreements Property taxes Special assessment Same expenses reported in he Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of. Increasein accrued interest Amortization of deferred outflow on bond refunding Increase in compensated absences Increase in unfunded other post employment benefits Total additional expense (increase)decrease (41,228) 811 771 9,820 (542 180) (16,278) (66 613) 86.271 (2.033.913) 2.238.183 (2030533) Chane In Net Position On The Statement Of Aotivities $ 5,016,337 The notes to the financial statements are an Integral part of this statement. 33 34 CITY OF TUKWILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA. WASHINGTON STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31. 2016 urs Foster. 00i course urface Gove erbnte1 To Attulas 74erprae Funds Servae ftiMa Current assets( Cash and cash equvalents Investments Taxes receivable Other recevsbles Due from other governmental un'A5 Inventory of metera6 and supplies Current assets restricted Cash and cash equivalents 05IAC /tram Assets $ 4991515 $ 6.938,662 $ 723484 $ 3333787 $ 15,987.448 $ 6314729 2,134587 507,915 - - 2,642.502 2,903014 836 836 431760 770,779 2582 472896 1,678017 25462 64.822 64.822 53458 - 53458 152/3 35 83057.177 - 93,007 - 7,593 8217356 837,537 - 3.871,505 20,530,091 9,258,478 CITY OF TUKWILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 Oovernrental Foster Surface Total Activities Sewer - Golf Nater 6rlerprF-UMaae Herne! Ulity Cout68 l4ily Serve Funds. OPERATING REVENUES' Charges for servoes 011e! operatng revenue 701e) Operating Revenues $ 6 401 456 $ 9.186,732 $ 1317,806 $ 5850,799 $ 22756794 $ 7988,226 186 - 106,079 240 106505 140079 6401342 9186732 1423886 5861,039 22,863299 X5128,302: OPERATING 8368366: Noncurrent ass Operating & maintenance 3561.646 6259,871 1507.558 1798874 13,147 948 7578,017 Bbtes 77699 6 - - Adrmistratue and general 645770 556,465 177,352 702,884 2082471 448,689 Capital asseh Taxes 931 294 1057,474 65,114 655,744 2 709 626 - Land 87347 69.525 1609.5]5 5]9.]83 2.J46.230 - Depreciation and armrteation 526.817 370,312 327,513 914244 2,138.886 799436 Bulking 1,416567 3364,962 6627.496 1875.395 13,284 419 - 7o714Operating Erpeneee 5685527 8244121 2077536 '4071745 20,078930 .8,828142. Other Improvements 22,188810 14586,442 3559992 47 829.405 88,164649 - Operating Worm (Loss) 716.114 942611 (853551) 1779294 :2784.369 (697840) lasch2eryand equipnent 787,303 1242.767 94.785 49776 2,174031 14.942039 NON-OPERATING REVEUE(6P9450' Less'. accumulated depreciation (10922.163) (8.254,806) (6,088998) (15507546) (40,771,512) (10.234527) Inveslnenl earnings 33658 42624 2,500 29,101 107863 52291 Construction in progress 728,271 862642 - 620,315 2,211229 - Interest expense (15449) (39 271) - (16 614) (71.333) Totalcaptalassels(netof Can (loss) on disposal of oaprtal assets (3.538) - - (4,798) (8336) 96953 accumulated depcation) Other non-opetafing revenue - - - 25,000 25000 I�R� Total NoruorteM Aaseta Total Bon-Opefatirr9 Revenue (Expense) - 14,672 3,353 2,500 32,689 53,214 149244 W TotalAssels 21,879.827 20,386,922 6642388 39.318,834 -88,18077/ :13.986,590 Income (Lass) Before COMri6Nons B Transfers 730.787 945,984 (851,151) -'1811,983 2837582 .(548:6961 N 221035 - 221035 14285,135 11,871,532 5804,851 35,447,129 67,409,646 4,708,113 14,286,135 12,092,566 5804 651 35.447,129 67,630.681 4,708,113 Deferred Outflows of Resources Defer,ed pens8n 91 452 66,221 Deferred Lass on Refundm9 10,941 26099 Total Defamed O18fbWs Of Rasadrees 102,393 92,310 109,089 161 492 428 254 5,050 42079 109089 166,542 - 470,333 84,348 64 348 LIABILITIES: Current Labites Accounts payable 186.838 209593 3.034 261.949 661.414 86.468 Accrued wages and bent As 28.294 16,084 29.070 47.179 120,627 19.698 Accrued Interest payable 2.872 8.339 - 6570 17.782 IAuarned revenue 5.785 - - 11.315 17.100 - Other current fabRus 77.532 27629 52.247 18.190 175598 748250 Due to other governrrena 95.080 233,436 - 270953 599.468 Compensated absences - 8635 18486 6943 34064 - Revenue bond payable 37253 88,635 - 17.194 143,282 TotalOrrre61Lab*. --- 433.654 592,551 102837 840.293 769333 854,416 Nncurreta(06070s. Reserve for unreported cams - - - - - 1,301250 Revenue bonds payable 376150 901742 - 174531 1,454.422 Net pensuntabby 542277 392,669 646.059 957596 2,539,401 381561 Compensated absences 127,437 - 53.777 83,082 264.295 Due toother governments 622.195 1,963,450 1861.878 4,447,523 Total 6anerareMLabia. 1670.069 3,267,861 700.636 0.077,086 6,705842 - 1,682,811 Taal L6b91Ns 2103 714 3 850,411 - 803,473 3,717,379 10.474,977 2;537,227 00ferred Inflows of Resources Deferred inflow pension earnings 21359 74,878 25,172 37.269 98,478 14963 Teal Deferr44 Allows Or Resour465 21359 14678 25.172' 37269 98478 - 14,963 NET POSITION: Net investment in capital assets Lhresbhted Total Bat Poston 13.164397 8710,158 5604851 33,127.624 60807.030 4,706.113 6,692,750 7,826985 117.982 1.602.903 17,240620 6,770,636 19857,146 $.. .16.537.143 $ 5922833. $ 35,730.527 $ 76:047650 $ 11478.749 The notes to the financial statements are an integral part of this statement. 35 Capital contributions Transfers in Change a Net fCston Total net pesAon beginning 101291 270.857 - 395.583 767,732 300,000 - 300000 - 832,078 1.216,821. (351,151) 2.207366 3,906.314 (548,586) 19 025 068 15320,322 6,273.984 33.522961 74,142 335 12.027.345 Total Net: Foe Alen -204389 $ 19857646 $ 18537143 $. 6322833: 9 36730527.: $.. 78047650 .11478749. The notes to the financial statements are an integral part of this statement. 36 CITY OF TUKW ILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWIIA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31 2016 Page 1 012 Water Ubl ty 6mmanted Foster SurfaceTotal Activites: Sewer Golf Weber : Enterprise Internal Ut6ty Course Utity' Funds 'Serrice Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash rete Wed from customers Cash paid to supplier Cash paid for taxes Cash paid to or on behalf of employees Other cash received (paid) NetCash Provided (Used) By OperatingAotvltes CASH FLOWS FROM NONCAPITAL RNANCING ACTIVITIES: Operating grant received Transfers in Net Cash Provided (Used) By Non - Capital Financing Actm5es CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets Contributed capital Capital grants Principal payment on debt Interest payment on debt Proceeds from sale of equipment Other Net Cash Provided (used)for Capital And Related Financing Advices CASH FLOW FROM INVESTING ACTIVITIES: Sale of investments Interest received Net Cash Provided (Used) In Investing Aetisi5e Netincrease (decrease) in cash and Cash equivalents Cash and cash equlvale r9 -beginning of year Cash And Cash Equivalent - end of year Cash at end of year consists of Cash and cash equivalents Restricted cash -customer deposits Total Cash and cash equivalents $ 6459464 $ 9346.013 $ 1,408,602 $ 5,656,394 $ 22,870,473 (3,368,184) (6097869) (727,753) (1,018,151) (11211.957) (931294) (1.057 474) (65,114) (655,744) (2,709,626) (731,491) (513,566) (975,147) (1275,260) (3,495,464) 186 - 8,603 240 9029 9 8,190,613 (1284,411) (570) (6,850,302) 1 428 880 1877,104 (350,808)' 2,707,479 5462,455 300,000 25000 25,000 300,000 55,330 (621 865) 60209 431,877 (132734) (15,354) (701 042) 248 459 24 015 (323.226) (38 010) 80.321 00,000' 25,000 325,000 (1,438,707) 273.792 323.884 (288,331) (17231) (2,761,613) (797,536) 582,460 779,777 - (744,291) - (70,595) - (49488) 30,633 128,075 (277,866) (709,483)'. (1,196,080) (2183429) {669,461) - - - 1015,930 15,563 63649 2,500 29,101 100,813 173,121 15,563 ' ' 53,649 2,500 29,101 100,813- 1:189,051 1,166.378 1,021270 (48,309) 1.565,500 3.704,839 574,920 3,860 968 5,917 5,917,392 828,971 1.768,287 12,375,617 5,739.809 $;..5027,345 :.$.6,938,662 '$ 780,662 ':$.3,333,787.. .$16080,458 $6314729 4.991,515 6.938662 723,484 3,333,787 15.987448 $6314,729 35,830 - 57,177 - 93,007 - $: 5,027 345 $ 6,038,662 $ 780 662:.'.$.3 333 787 $ 16 080 456 6 314 729. The notes to the financial statements are an integral part of this statement. CITY OF TUKW ILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 2016 Page 2 of 2 U4 Utility;, Foster Golf Course Surface WabY 08ary Total Enterprise Funds; Governmental Activates Internal 8ervroe Funds RECONCIL$NTION OF NET OPERATING INCOME TO NET CASH PROVIDED BYOPERATING ACTNITIES Adjustments to reconcile operating Income to net cash Provided (used) by operating activities: Depreciation Asset (increase) decrease Accounts receivable Inventory and otter Deferred outflow of resources (nonose) decrease Lability increases (decreases): Accounts payable Other Iiabil4es Wages 8 benefits payable Defend inflow of resources increase (decrease) Total Adjustments NetD h Provided (Used) By Operating Activities 526.817 36,928 (36,638) 143,659 22 580 10,234 8.986 712,566 370,312 327.513 159,281 2.448 8 944 (34 395) (46.759) 175,136 (5,224) (15,939) 85,319 734,492 (2.130) (9.129) (19 374) 41.328 302,843' 914,244 2.138,886 799.436 (194,406) 4252 62,311 8.944 (1,436) (69.191) (186.983) (26.438) 219,183 6.126 (8 657) 60,886 928,185 535,851 14.353 (33.736) 196,519 2,678,086' (93.833) 213 12,917 753.170' 1.428,880:.6 1,677,104 $ (350,808), $ 2707,479 $ 5,462,455 $ 55,331 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCINGACTNITIES Capital assets acquired by contributed capital $ (390 795) $ (1 617). $ - - $ (392,412) $ - Increase (decrease) in falr value of Investment - - (18661) Tote) Non Cash mves8ng, Cepilal and Financing Antvitaa $ (390795) $ .(1617) . $ $ $ (362,412) $ (16661) The notes to the financial statements are an integral part of this statement CITY OF TUKWILA'.. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF FIDUCIARY NET POSITON FIDUCIARY FUND DECEMBER 31. 2016 rxemen's Pension < Agency Trust Fond Fund ASSETS: Gash and cash equwalents Investments Customer accounts Interest receivable Total Assets LIABILITIES: Accounts and other payables Total Liabilities CITY OF TUKWILA 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED DECEMBER 31, 2016 F men's Pension Trust FUnd,. $ 427.867 $ 201 739 ADUTIONS: 1,000 508 Contributions tromnonenpbyer entities: 55.543 Fire Insurance Premiums Transferred in 66.360 708 Investment earnings 10.205 1.429,083 257,282Total Additions 76:565 257.282 NET POSITION: Held In Trust For Pension Benefits And Other Purposes The notes to the financial statements are an integral part of this statement. 257,282 1,429.083 1,429 083,. DEDUCTIONS: Benefit payments Administrative expenses Total Deductions ChangeN. Net Position Net position - beginning Net Position -ending $ 60,488 3,500 63,988-- 12.577'- 1,416,506 1 ,429,083. The notes to the financial statements are an integral part of this statement. 39 40 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2016 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the City of Tukwila conform to generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The City's significant accounting policies are described in this note. A. The Reporting Entity The City of Tukwila was incorporated on June 23, 1908, and operates under the laws of the State of Washington applicable to a non -charter optional code city with a Mayor/Council form of government. Tukwila is served by a Mayor and seven councilmembers, all elected at large to four-year terms. The City provides what are considered general government services including public safety, streets, parks, planning and zoning, permits and inspection, general administrative, water services, sanitary sewer collection, and storm drainage. The City of Tukwila has no component units (either blended or discretely presented) included in these statements. B. Basis of Presentation The City's basic financial statements consist of government -wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government -wide Financial Statements The statement of net position and the statement of activities report information on all of the nonfiduciary activities of the City. The activity of the internal service funds is eliminated to avoid "doubling up" revenues and expenses. The statements distinguish between governmental activities and business -type activities. The statement of net position presents the financial condition of the governmental and business -type activities of the City at year-end. The statement of activities presents a comparison between direct expenses and program activity of the City. Direct expenses are those specifically associated with a service, program, or department and therefore clearly identifiable to a particular function. Indirect costs are included in the program expense reported for individual functions and activities. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. For identifying to which function program revenue pertains, the determining factor for charges for services is which function generates the revenue. For grants and contributions, the determining factor is to which functions the revenues are restricted. 41 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Revenues which are not classified as program revenues are presented as general revenues of the City, and certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the City. Fund Financial Statements During the year, the City segregates transactions related to certain City functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the City at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non -major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by type. While fiduciary funds are excluded from the government -wide statements, they are included in the fund financial statements. C. Fund Accounting The accounts of the City are organized on the basis of funds; each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self -balancing accounts that are comprised of assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to - and accounted for - in individual funds according to the purpose for which they are spent and how they are controlled. There are three categories of funds: governmental, proprietary and fiduciary. Governmental Funds All governmental funds are accounted for on a "flow of current financial resources" measurement focus. Their reported fund balance is considered a measure of "available spendable resources." Governmental fund operating statements focus on measuring changes in current financial position, rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. The following are the City's major governmental funds: • The general fund accounts for all the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. The general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. • The Arterial Street fund was established in accordance with RCW 82.36.020 for the administration of the State -levied motor vehicle half -cent gasoline tax distributed to Tukwila and is used primarily to account for capital arterial street projects. In addition to the State -levied motor vehicle gasoline tax, other revenue includes state and federal grants, impact fees, and transfers in from the general fund. • The Local Improvement District (LID) #33 accounts for assessments related to the LID and provides payment to the Fiscal Agent for principal and interest on bonds issued in November 2013. • The Public Safety Plan fund was established in 2016 after voters approved a $77.4 million bond measure to construct a justice center, rebuild 3 fire stations, and provide for life -cycle replacement of fire department apparatus and equipment. The other governmental funds of the City, account for the proceeds of specific revenue sources that are segregated to ensure that expenditures are made exclusively for qualified purposes. 42 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Proprietary and Internal Service Funds Proprietary and internal service funds are accounted for on a "flow of economic resources' measurement focus. This means all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund operating statements present increases (revenues and gains) and decreases (expenses and losses) in net position. Proprietary funds measurement focus is based upon determination of net income, financial position, and cash flows. Proprietary and internal service funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges to the City's customers for salesand services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. As described further below, there are two fund types in this category - enterprise and internal service. Restricted assets shown in the government -wide financial statements and the proprietary funds balance sheet include monies reserved for payment of revenue bond debt, and deposits held for utility and golf course customer accounts. When both restricted and unrestricted resources are available for use, it is the City's policy to use restrictedresources first, then unrestricted resources as they are needed. The City's enterprise funds account for utility and golf course operations, which are self -supported through user charges. The utilities are financed and operated like a private business enterprise, which requires periodic determination of revenues earned, expenses incurred, and net income for capital maintenance, public policy, management control and accountability. The City's major enterprise funds are as follows: • Water Utility Fund accounts for operations and capital improvements to provide water services to the City. • Sewer Utility Fund accounts for operations and capital improvements to provide sanitary sewer services to the City. • Foster Golf Course Fund is used to account for the operation, maintenance, and improvements of the municipal golf course facility. • Surface Water Utility Fund accounts for the operations and capital improvements for the City's storm drainage and surface water management function. The City has three internal service funds. The Equipment Rental Fund is used to account for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates charged to each user department. The Insurance and Insurance — LEOFF I Funds are used to account for the costs of the City's self-insured medical plan for active employees and retired LEOFF 1 employees respectively. Medical and dental costs for covered employees are charged to the respective user departments. All premiums, medical and dental costs and ancillary charges are included. Fiduciary Funds Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and other funds. The City has two fiduciary funds, Firemen's Pension Trust Fund and Agency Fund. The Firemen's Pension Trust Fund is accounted for in essentially the same manner as proprietary funds. The agency fund is custodial in nature (assets equal liabilities) and does not involve a measurement of results of operations. Fiduciary funds are excluded from the government -wide financial statements. 43 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS D. Measurement Focus Government -wide Financial Statements The government -wide financial statements are prepared using the economic resources measurement focus. All assets, deferred outflow of resources, liabilities, and deferred inflow of resources associated with the operation of the City are included on the Statement of Net Position, Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, current liabilities, and deferred inflow of resources generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the govemment activities of the government -wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government -wide statements and statements for governmental funds. Like the government -wide statements, all proprietary and internal service fund types are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net position. The statement of changes in activities presents increases (i.e., revenues) and decreases (i.e., expenses) in net total position. The statement of cash flows provides information about how the City finances and meets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resources measurement focus, E. Basis of Accounting Basis of accounting refers to, the recognition of revenues and expenditures or expenses in the accounts and reporting them in the financial statements. Government -wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds use the accrual basis of accounting. Revenues— Exchange and Non -Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. The modified accrual basis of accounting is followed in all governmental funds of the City. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, Le., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay current liabilities. For the City, available means expected to be received within sixty (60) days of year-end. The primary accrued revenues that meet these criteria are sales, real estate, and utility taxes. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, sales and use taxes, admission taxes, gambling taxes, utility taxes, hotel/motel taxes, grants, entitlements, and donations. These revenues are on an accrual basis. On the accrual basis, the revenue is recognized in the period in which the income is earned. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. (See Note 4 on receivables). 44 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Other Revenue Sources Revenue sources which are not considered to meet the measurable and available criteria for revenue recognition include licenses and permits, fines and forfeitures, and other miscellaneous revenues since they are generally not measurable until received. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for principal and interest on general long-term debt and vacation and sick pay which are recorded when paid. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements via the process of consolidation. Internal service fund and similar internal activity has been eliminated from the government -wide statement of activities so expenses are not reported twice. Exceptions to this general rule are payments for interfund services provided and used, such as between the City's water, sewer, and surface water functions and various other functions of the City, which are not eliminated in the process of consolidation. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported on the government -wide statements as program revenues include, charges to customers or applicants for goods, operating grants and contributions, and capital grants and contributions. General revenues include all taxes. The accrual basis of accounting is followed in all proprietary funds. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. All assets and liabilities are recorded in the fund. F. Budgets and Budgetary Accounting The City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. In compliance with the code, biennial budgets are adopted for the general fundand special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biennially budgeted governmental funds only. Budgets established for proprietary and fiduciary funds are "management budgets" and are not legally required to be reported and, as such, are not reported in the CAFR. The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legal authority for expenditures at that level. Subsidiary revenue and expenditure records are used to compare the budgeted amounts with actual revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for individual functions and activities by object class. Any unexpended appropriation balances lapse at the end of the biennium. The City of Tukwila's budget procedures are mandated by RCW 35A.33. The steps in the budget process are as follows 1) Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. 2) The City Council conducts public hearings on the proposed budget in November, Public hearings are also held in December, if necessary. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve, by ordinance, any amendments that increase the total for the fund. Budget amounts presented in the financial statements include both the original amounts and the final amended budget as approved 45 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS by the City Council. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Includes all police and fire activities. Physical Environment Includes expenditures for the public works activities not chargeable to the enterprise funds. Transportation Economic Development Culture and Recreation Includes all street and arterial street maintenance and construction. Reflects the planning and building inspection activities. Includes the parks and recreation activities. G. Assets, Liabilities, and Fund Equity Cash and Cash Equivalents The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Investments Investments are held separately by each fund with interest earned directly for the benefit of each fund. Investments are reported in the financial statements at fair value, based on quoted prices in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Washington State statutes provide for the City to hold investments consisting of obligations of the Federal Government, repurchase agreements, prime banker's acceptances, and time certificates of deposit. Additional deposit and investment information is presented in Note 2. Notes Receivable Notes receivable in the enterprise funds consists of sewer connection fees due from customers to the utility. In the governmental funds, it consists of the special assessment as well as developer agreements. The City currently has two developer agreements included in the financial statements. Amounts Due to and From Other Funds and Governments, Intel -fund Loans and Advances Receivable Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." As of December 31, 2016, there are no residual balances outstanding between the governmental activities and business -type activities. The non-current portion of interfund loans in the general fund and advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. See Note 4 on interfund transactions. 46 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Special Assessments Special assessments are amounts levied against benefited properties to recover costs associated with the construction of Local Improvement District (LID) projects. A lien is recorded against benefited properties until the assessment has been paid. Special assessments receivable represent all outstanding assessment amounts including current assessments billed but not collected, delinquent assessments unpaid at year-end, and special assessment amounts due in future years, which are recorded in a deferred inflow of resources account in the fund financial statements. Since special assessments are secured by liens against related properties, no allowance for uncollectible amounts is made. Inventories Inventory is defined as items purchased for resale to external customers or other City departments, or supplies and small tools used in normal operations that are considered material in amount. The inventory amount on this year's financial statements reflect only those items that will be resold. The inventory is valued at average cost using the consumption method and there is a physical inventory count taken annually at year-end. Governmental funds use the purchase method whereby inventory items are considered expenditures when purchased. Real Property Held for Resale Governmental funds do not report property, plant, and equipment because such assets normally are used in operations, and therefore will never be available for spending (they are not financial assets). However, specific items of property occasionally are acquired with the intent of sale. Examples include foreclosure properties, redevelopment properties, and donated assets held for resale rather than retained for use in operations. Govemments often acquire redevelopment properties to attract private -sector investment in an economically depressed area and are willing to sell the property at a price that may be far less than the government's cost to acquire and improve the property. Since assets held for sale can never be reported at an amount higher than their net realizable value, any cost in excess of net realizable value must be excluded from the property value reported in the financial statements. The City has acquired a number of redevelopment properties in its urban renewal area along Tukwila International Boulevard. For the Tukwila Village project, property acquisition began in 1999. The City has acquired and cleared a total of 5.76 acres. In 2012 the City executed an agreement to develop and sell the property and the first phase is currently under construction. As part of a crime -reduction project, the City purchased threecrime-ridden motels in 2014 plus another motel and retail shop in 2015. All structures on those properties were demolished in 2016 and the vacant land will be sold for redevelopment. All redevelopment properties are reported at net realizable value in the financial statements. Deferred Outflows /Inflows of Resources Deferred outflow of resources represents a consumption of net position by the government that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. The City reports a deferred outflow related to pension and a deferred loss on refunding water/sewer bonds. Deferred inflow of resources represents an acquisition of net position by the government that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time The City has two items that qualify for reporting in this category. The City reports business taxes that are received in advance and a deferred inflow related to pensions. 47 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Capital Assets and Depreciation The accounting and reporting treatmentapplied to the capital assets associated with a fund are determined by its measurement focus. Capital assets acquired in governmental funds are accounted for as expenditures in the fund when the asset is purchased. These assets are reported in the governmental activities column of the government - wide statement of net position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business -type activities column of the government -wide statement of net position and in the respective funds. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Where historical cost is not known, assets are recorded at estimated historical costs. Donated assets are recorded at acquisition value at time of acquisition. The City maintains a capitalization threshold of five thousand ($5,000) dollars. The City's infrastructure consists of roads, bridges, storm sewers, water and sewer distribution and collection systems. Improvements are capitalized while the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Depreciation is computed using the straight line method over estimated service lives, as follows: i <s Buildings Non -Building Improvements Machinery and Equipment Intangibles Infrastructure. See Note 6 for additional information on capital assets. Other Liabilities 25 to 50 years 25 to 50 years 2 to 50 years 2 to 50 years 25 to 50 years Other liabilities include retainage, deposits and the incurred -but -not -reported (IBNR) claims and claim reserve for the self-insured healthcare funds. The self-insurance fund for active employees includes an IBNR liability of $743,300 determined using actuarial methods. This liability is multiplied by a factor of 2.5 to meet the City's financial goal of maintaining reserves at 1 x IBNR for claim fluctuations plus 1.5 x IBNR for a claims reserve yielding a total liability of $1,858,250. The self-insurance fund for LEOFF 1 retirees includes an IBNR liability of $76,500 and total liability of $191,250 utilizing the same calculations as the active employees self-insurance fund. Compensated Absences City policy and labor contracts with City of Tukwila employees call for the accumulation of vacation and sick leave. At termination of employment, employees with the required length of service may receive cash payments for all accumulated vacation leave to a maximum of 384 hours. Sick leave termination benefits are based on a percentage of accumulated sick leave up to a maximum of 180 hours. The payment is based on current wages at termination. The entire compensated absence liability, which includes salary and wages as well as related taxes, is reported on the government -wide financial statements. In the enterprise funds, the entire amount of compensated absences is reported as a fund liability. This reporting format is in compliance with GASB Statement No. 16. • The current portion reported on the schedule of long-term liabilities is calculated using the last -in -first -out (LIFO) approach. Anticipated subsequent yearly usage is used to determine the current portion of the liability. There is 48 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS no current portion to report when the anticipatedleave usage is less than the anticipated leave to be accrued during the next year. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business - type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources, Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Long-term debt outstanding at year-end is outlined in Note 10. Fund Balance/Net Position A fund balance represents the difference between the current assets and current liabilities plus deferred inflows. The City restricts those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and therefore are not available for general appropriation or expenditure. Net position represents the difference between assets plus deferred outflow of resources and liabilities plus deferred inflow of resources. Net position invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the City has spent) for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The remaining balance is reported as unrestricted. In 2012 andagain in 2015, the City revised the Reserve Policy which addresses the various types of the City's operating and restricted use funds. The objectives of this Policy are to establish, attain, and restore minimum fund balances, including self-insurance health care reserve funds, and specified review and reporting of fund balances. At the close of each fiscal year, the General Fund balance shall equal or exceed 18%, and the Contingency Reserve Fund balance shall each equal or exceed 10%, of the previous year General Fund revenue, exclusive of significant non-operating, non-recurring revenues such as real estate sales or transfers in from other funds. Additionally, 10% of the previous year one-time revenues shall be set aside in a one-time revenue reserve within the Contingency Reserve fund. Enterprise funds, at the close of each fiscal year, the unrestricted fund balance shall equal or exceed 20% of the previous year revenue, exclusive of non-operating, non-recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. The City shall maintain a reserve balance in each of its self-insured health care funds an amount equal to 2.5 times or 250%, of the actuarially determined IBNR liability. Fund Balance Components The fund balance amounts for governmental funds have been classified in accordance with GASB Statement No. 54 and are reported as nonspendable, restricted, committed, assigned or unassigned. 49 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts, long-term portion of loans/notes receivable, or property held for resale unless the proceeds are restricted, committed or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. The general fund's nonspendable fund balance of $1.1 million is the outstanding balance of a loan from the general fund to the Tukwila Metropolitan Park District. The facilitieS fund, reported in the Other Governmental Funds column in the balance sheet, has a nonspendable fund balance of $7.65 million representing real property held for resale. At this time, there is no constraint on how the eventual proceeds will be spent. • Restricted fund balances have constraints placed upon the use of the resources either by an external party or imposedby law through a constitutional provision or enabling legislation. • Committed fund balances can be used only for specific purposes pursuant to constraints imposed by a formal action in the form of ordinances and resolutions of Tukwila Councilmembers, the City's highest level of decision-making authority. This formal action is the passage of an ordinance by City Council creating, modifying, or rescinding an appropriation. These committed amounts cannot be used for any other purpose unless Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose, but are neither restricted nor committed. Assigned also includes a contingency balance authorized via the City's Reserve Fund Balance policy. Intent of use and authority to assign amounts is determined through the budgetary process, either during adoption or amending, and the Finance Director has final authority. • Unassigned fund balance is the residual amount not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. Each fund has been analyzed to classify the fund balance in accordance with GASB Statement No. 54. Funds are created by the City Council and money is authorized to be transferred to the fund for a particular purpose. At this point, balances in these funds are at least committed, and may be further restricted depending on whether there is an external party, constitutional provision, or enabling legislation constraint involved. The City applies restricted resources first when an expense is incurred for purposes of which both restricted and unrestricted net position is available in the governmental funds. When expenditures are incurred for purposes, for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications can be used, it is the City's policy to spend committed resources first, the assigned second, followed by unassigned. Operating Revenues and Expenses Operating revenues are generated directly from the primary activity of the proprietary funds. For the City, these revenues are service fees for utilities, charges for services for the use of the golf course and the internal use of vehicles, computers, and facilities. Operating expenses are necessary costs incurred to provide the good or service that are the primary activity of each fund. All other revenues and expenses are classified as non-operating including investment earnings, interest expense and the gain or loss on the disposition of capital assets. Contributions of Capital Contributions of capital in proprietary fund financial statement arise from outside contributions of capital assets, for example, developers, and grants or outside contributions of resources restricted to capital acquisition and construction. It also includes water and sewer connection charges. 50 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Indirect Cost Allocation Indirect costs, also referred to as overhead costs, consist of the cost of central services or support functions shared across departments. They include accounting, human resources, payroll, information technology, janitorial services, and others. These services are paid through the general fund and charged back to the proprietary funds that directly benefit from them. In prior years, the indirect costs allocated to the proprietary funds were recorded as a transfer out of the proprietary funds and a transfer into the general fund. Pursuant to guidance by the Washington State Auditor's Office, Budgeting, Accounting, and Reporting System (BARS), the indirect costs allocated to the proprietary and other funds of $2,233,476 for 2016 are reported as a reduction of general government expenditures on the Statement of Activities rather than as transfers in and transfers out. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. On the government -wide statement of activities, the exchange transactions between the internal service funds and the user funds are eliminated. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses section in proprietary funds. Transfers between governmental and business -type activities on the government -wide statement of activities are reported separately after general revenues. Transfers between funds reported in the governmental activities column are eliminated. Transfers between funds reported in the business type activities column are eliminated. Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Risk Management It is the City of Tukwila's policy to self -insure for unemployment benefits because of the insignificant liability. Medical and dental self-insurance coverage is also provided for employees. All buildings, City equipment, and City vehicles are insured by carriers for property coverage at replacement value. The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA) as of January 1, 1984. WCIA is an organization of Washington entities numbering 168 as of December 31, 2016. WCIA provides pooled self- insurance coverage for general liability, vehicle liability, false arrest, and errors and omissions. See Note 13 for additional information on risk management. H. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans' fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. I. Changes in Reporting Effective for fiscal year 2016 reporting, the City adopted the following new standard issued by the Governmental Accounting Standards Board (GASB): 51 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS GASB Statement No. 72 Fair Value Measurement and Application, defines fair value and provides guidance for determining a fair value measurement for financial reporting purposes. NOTE 2 —DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool available for use by all funds. Interest earned on pooled investments is recorded in the participating funds. Investments are also held separately by several of the funds, with interest earned directly for the benefit of each fund. Cash and Cash Equivalents Custodial credit risk is the risk associated with the failure of a depository financial institution. In the event of a depository financial institution's failure, it is the risk that the City would not be able to recover its deposits or collateralized securitiesthat are in the possession of the outside parties. The City minimizes custodial credit risk by following the restrictions set forth in state law. At year-end, the carrying amount of the City's cash balance held in banks was $25,841,328. Of the bank balance, $250,000 was covered by Federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) insured the remainder. The City also maintains imprest funds totaling $14,950. The City participates in the State Treasurer's Investment Pool, which is a 2a7 -like unrated pool, overseen by the State Treasurer's Office. A 2a7 -like -pool is an external investment pool that is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC -registered mutual funds to use amortized cost, which approximates fair value, to report net assets and compute share prices. The fair value of the City's position in the pool is the same as the value of the pool shares. Because of its highly liquid nature, the Pool funds are considered cash equivalents. Investments The City's investment portfolio includes certificate of deposits insured by the Washington State Public Depository Commission, U.S. Government Agency Notes, and municipal bonds issued by state and local agencies. These investments are reported at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Also, the Firemen's Pension Fund is authorized to invest in stocks, bonds, and mutual funds. 52 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS At December 31, 2016, the City had the following deposits and investments. Certificates of deposits are measured at amortized cost, agencies and municipal bonds are measured at fair value. SCHEDULE OF INVESTMENTS BY MATURITY Maturity' ..Credit Date Rating Fair Value Certificates o/Deposit: Sound Community Bank Bank of Washington Total Certificate of Deposits U.S. Government Agency Notes.: Federal Home Loan Mtg Corp Federal Home Loan Mtg Corp Federal Farm Credit Bank Federal Farm Credit Bank Total U.S. Agency Notes 3/4/2017 5/1/2016 $ 3201,903 250,000 3.451,903 5/26/2017 Aaa / AA+ 1,000,508 5/25/2018 Aaa / AA+ 996,086 12/21/2018 Aaa / AA+ 1.000,015 12/27/2019 Aaa / AA+ 1,000,203 3.996,812 Municipal Bonds.: Washington State Biomedical Research: Revenue - Facilities 7/1/2017 Aa1 / AA+ 507,915 W Marysville Washington: Limited General Obligation 12/1/2017 Aa2 155,138 Skagit County, Washington: Limited General Obligation 12/1/2017 Aa2 370,490 Washington State Biomedical Research:Revenue -Facilities 7/1/2019 Aa1 / AA+ 537,765 Port of Anacortes, Washington: Limited General Obligation 9/1/2020 Aa3 357,986 Douglas County School District, Washington: Unlimited General Obligation 12/1/2020 Aa1 1,221,237 Total Municipal Bonds TOTAL INVESTMENTS 3.150,530 -.$.10.599,245 No credit rating with certificate of deposit accounts; accounts are insured by the Public Depository Protection Commission. CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS RECONCILIATION OF ALL CASH, DEPOSITS AND INVESTMENTS CASH 8 CASH :RESTRICTED RESTRICTED SUMMARY BY FUNDS EQUIVALENTS CASH INVESTMENTS INVESTMENTS TOTAL Governmental Funds General Fund $ 12,278,557 $ 8,406 $ 3.053.018 $ - $ 15 339,981 Arterial Street 1,667 647 2,371.097 - 4,038,744 Local Improvement District 633 898,722 - - 898,722 Public Safety Plan 114,324 35,503,363 1000203 36 617,890 Facilities Urban Renewal - - _ Other Governmental Funds 6.542,203 503.475 - 7.045.678 Proprietary Funds Water 4.991,515 35.830 2,134,587 - 7.161 933 Sewer 6.938,662 - 507.915 - 7,446 577 Foster Golf Course 723,484 57.177 - - 780.662 Surface Water 3,333,787 - - - 3,333 787 Internal Service Funds 6,314,729 2,903 014 - 9,217 744 Total as Reported on Statement of Net Position Firemen's Pension Trust Fund Agency Fund Total Cash, Cash Equivalents and Investments 43 803 631 38.479,349 8,598 534 1.000,203 91,881 717 427,867 1,000 508 201,739 1,428.375 201.739 $ 43803 631 $ 39108,956 $. 9 599,042 $ ,.1,000,203 $ ... 03,51'1,831 SUMMARY BY TYPE; Cash and Cash Equivalents: Local Government Investment Pool $ 43,001,758 Money market account 14,219,309 Cash on hand 14,950 Cash in bank -book balance 25,676,569 Total cash and cash equivalents 82,912,586 Investments: Certificates of deposit 3,451,903 U.S. Government Agency Notes 3,996,812 Municipal bonds 3,150,530 Total investments 10,599,245 Total Cash, Cash Equivalents, and Investments $ 93,511 831 53 54 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Restricted Assets - Govemmental +' Cash & cash equivalents Deposits Drug Seizure funds - federal portion Debt Service Impact fees Investments Restricted Assets-Govemmental' $ 35,503,363 8, 406 503,475 2,213,705 157,392 1,000,203 $ 39,386,544 Restricted Assets - 6usiness-Type Customer Deposits -Water Utility Customer Deposits -Golf Course Lease Deposits -Golf Course Restricted Assets -Business -Type Total Restricted Assets Fair Value Measurement 35.830 42,177 15.000 93,007 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE. FINANCIAL STATEMENTS Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debtinvestments will adversely affectthe fair value of an investment. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits at least half of the City's cash and investment portfolio to maturities of less than one year. Investment maturities are limited as follows: 1) At the time of investment, a minimum of thirty percent (30%) of the cash and investment portfolio will be comprised of investments maturing or available within one year. 2) At the time of investment, eighty percent (80%) of the portfolio will be comprised of investments maturing or available within five (5) years and no instruments shall have a maturity exceeding ten (10) years, except when compatible with a specific fund's investment needs. 3) The average maturity of the portfolio shall not exceed three and one half (314) years or forty-two (42) months. The City uses the weighted average maturity method to manage interest rate risk. Credit Risk $ 39,479,552. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes and the City's investment policy limit the types of securities authorized for investment by the City. The principal goveming statutes are RCW 39.59 and RCW 39.60. The Finance Director may further restrict eligible investments by this policy at his/her discretion. Authorized investments include (but are not limited to): The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. These valuation inputs are considered most reliable. Level 2 inputs are quoted prices for similar assets, quoted prices for identical or similar assets in markets that are not active, or other observables. These valuation inputs are considered to be reliable. • Level 3 inputs are significant unobservable inputs and are considered to be the least reliable. The City has thefollowing recurring fair value measurements as of December 31, 2016: Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Assets Inputs Investments by Fair Value Level Total (Level 1) (Level 2) US Government Agencies $ 3,996.812 $ 3,996.812 $ - Municipal Bonds 3,150,530 3,150,530 Significant Unobservable Inputs (Level 3) Total Investments by FairValue. Level $': 7,147,342.. $ 3,996,812 $ .3,.150530 $ 55 1) U.S. Treasury Securities. 2) U.S. Agency Securities (i.e., obligations of any government-sponsored corporation eligible for collateral purposes at the Federal Reserve). 3) Certificates of Deposit, Money Market Deposit Accounts and savings deposits with qualified depositories within statutory limits as promulgated by the WPDPC at the time of investment. 4) Bankers Acceptances (BA's) purchased on the secondary market with a rating of A-1, P-1, its equivalent or better. 5) General Obligation Bonds of a state or local government which have at the time of the investment one of the three highest credit ratings of a nationally -recognized rating agency. 6) The Washington State Local Government Investment Pool (LGIP). As of December 31, 2016, the City's investments in municipal bonds were rated Aaa to Aa3 by Moody's Investor Service. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City of Tukwila diversifies its investments by security type and institution as described below: 1) No more than fifty percent (50%) of the City's cash and investment portfolio, at the time of purchase, shall be in any single financial institution. 2) Except, that no more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in the Washington State Local Government Investment Pool, and 56 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS 3) No more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in U.S. Treasury or Agency securities. NOTE 3 — RECEIVABLES Taxes receivable consists of property, sales and use, gambling, leasehold, and hotel/motel taxes. Customer accounts receivable consists of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial and the direct write-off method is used. Customer accounts receivable also includes the current portion of special assessments due from property owners within Local Improvement District No. 33. Other types of accounts receivable include utility taxes due from private organizations and customer accounts receivable for amounts owed which billings have not been prepared. GovernmentalBusiness-Type Activities ALtivities Total' Taxes Receivable Property Sales 8 Use Real Estate Excise Tax Utility Tax Admission/Gambling/Parking/Other Total Taxes Receivable $ 198,515 $ 3,639,652 986,711 757,438 1,225,290 6,807,605 836 836 Customer Receivable Miscellaneous 167,097 2,582 Utility Accounts - 1,664,695 Total Customer Receivable Interest Notes due within one year Total. Recetables :. Property Taxes Receivable $ 198,515 3,639,652 986,711 757,438 1.226,126 6,808,442 169,678 1,664,695 167,097 1,667,277 1,834,373 44,695 10.740 206,920 55,435 206,920 7,226,317 $ 1,678,853 $ 8,905,170 The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Collections are distributed daily via wire transfer. January February 14i^ April 30'^ May 315' October 31. Property Tax Calendar Taxes are levied and become an enforceable lien against properties. Tax bills are mailed. First of two equal installment payments is due. If taxes are less than $50, full payment is due. (RCW 84.56.020) Assessed value of property established for next year's levy at 100 percent of market value. Second installment is due. (RCW84.56.020) Assessed values are established by the County Assessor at 100% of fair market value. A revaluation of all property is required every two years. On May 31 of each year the assessed value of property is established for the next year's property tax levy. 57 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Property taxes levied by the County Assessor and collected by the County treasurer become a lien on the first day of the levy year and may be paid in two equal installments if the total amount is $50 or more. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. During the year, property tax revenues are recognized when cash is received. At year-end, unpaid property taxes are recorded as a receivable. Property tax receivables at year-end not expected to be collected within 60 days after the current period are reported as other unavailable revenue in the deferred inflow of resources section of the governmental funds financial statements. The tax rate for general City operations is limited to $3.60 per $1,000 of assessed value. An additional levy rate of $0.225 is available to the City because the City funds a Firemen's Pension Fund. The payment of principal and interest on limited tax (non -voted) bonds issued by the City is made from the general levy. Accordingly, the issuance of limited tax general obligation bonds has the effect of reducing property taxes available for the general operations of City government. State law also provides that the City's operating levy may not exceed 101% of the largest single levy since 1985. The State Constitution provides that the total of all taxes upon real and personal property by the State and all taxing entities, including the City, shall not in any year exceed 1% ($10 per $1,000) of the true and fair monetary value of such property. This limitation may be exceeded upon the approval of 60% of the City voters at an election in which the total vote exceeds 40% of the votes cast at the last general election. Washington State Constitution and Washington State law, RCW 84.55.010, limit the rate. The City's regular levy in 2016 was $2.710173 per $1,000 of assessed valuation of $5,736,568,228 for a total regular levy of $14,592,910. Due from Other Governments All receivables from other governments are recorded at year-end as amounts Due from Other Governmental Units. These amounts represent federal, state, and local reimbursement -type grants, and are reported as receivables and intergovernmental revenues in the year when the related expenditures are incurred. As of December 31, 2016, the majority represents grants. Notes Receivable Notes receivable for governmental activities consists of the long-term portion of the special assessments related to Local Improvement District (LID) No. 33. Special assessments are levied against certain property owners benefited by the improvement. The current portion of outstanding assessments is reported in the receivables category on the Statement of Net Position and consists of assessments which are due within one year and delinquent assessments from the prior year. Assessments are charged to property owners within the LID annually with payments due in October of each year. The repayment period for the assessments is 15 years with the first installment due in 2014 and the final installment due in 2028. The other note receivable category is related to developer agreements. There are three agreements with local developers to defer fire, parks and traffic impact fees, along with building permit fees as part of new, large construction projects. The first agreement defers the developer's obligation to pay the building permit fee on the Washington Place project until 2017. The second agreement, also related to the Washington Place project, defers the developer's obligation to pay traffic, park, and fire impact fees until 2018. Finally, the third agreement is for the Tukwila South project which defers $1.75 million in fire impact fees, with annual payments due each December from 2017 through 2031. Notes receivable for business—type activities consists of outstanding payment plans for sewer connection fees. The City designed and constructed sewer infrastructure in both the Allentown and Foster Point neighborhoods, which was previously on septic. The project was completed and accepted by City Council in 2007. The connection fees to be paid by property owners were established by ordinance, effective in August, 2007. One option given to 58 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS property owners was an installment payment plan. This option allowed owners to sign an agreement to have the connection charge added to their monthly water bill and repaid over 5, 10, or 15 years with a 4% annual interest rate. The balance reflects all principal outstanding at year-end. GoNemmental Business -Type Activities. Activities Total.. Notes Receivable Special Assessments Developer Agreements Sewer Payment Plan Total Receivables NOTE 4 - INTERFUND TRANSACTIONS $ 4,794,009 $ 3,929,907 221,035 $ 4,794,009 3,929,907 221,035 $ 8,723,916 $ 221,035 $ 8,944,951,:. Interfund activity is the term used to describe similar financial transactions between funds of the primary government. Reciprocal interfund activity involves the exchange of equal or almost equal value between funds. Services Provided/Used - Transactions that would be treated as revenues, expenditures or expenses if they involve external organizations, such as buying goods and services in return for equal or almost equal value, are similarly treated when they involve other funds of the City of Tukwila. Interfund Loans/Advances - Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans are offset by a reservation of fund equity. Interfund loans are subject to elimination upon consolidation. As of December 31, 2016, the City has no outstanding interfund loans or advances. Nonreciprocal interfund activity does not involve the exchange of equal or almost equal value between funds. Transfers - Transactions to support the operations of other funds are recorded as "Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government -wide financial statements. Contributions - Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers of remaining balances when funds are closed are classified non-operating revenue. Reimbursements - Repayments from funds responsible for expenditures or expenses to the funds that initially paid for them. These transactions are expenditures/expense in the fund responsible and as a reduction of expenditure/expensed in the fund being reimbursed. CITY OF TUKWILA 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Interfund transfers for the year were as follows: SUMMARY OF INTERFUND TRANSFERS Gmemmental Funds Proprietary Funds General Arterial Other GoVt Total. Golf Fund Street Funds Governmental Course TOTAL Transfers In $ - Transfers Out (4,325.831) Net Transfers In (Out) $ 4325 83' $ 751,000 $ 3,274,831 $ 4,025,831 $ 300,000 $ 4.325,831 - (4,325,831) (4.325, 831) 751,000 $,', 3 274,831` 00'000 $, 300,000 The principal purposes for interfund transfers include interfund subsidies and transfers into debt service and capital projects funds. NOTE 6 OPERATING LEASES During 2016 the City maintained operating lease agreements for City operated machinery and equipment. Tukwila leases office/ storage space for the purposes of the Records Center, Police Archives Storage, Police Gym, and the Neighborhood Resource Center. In addition the City leased a postage machine and copiers during 2016. Costs associatedwith these activities are as follows. SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS i�ti%%� .;k, �,��y,`�i::\a\\;n�.»u.�.��.ti��������, *ma Ita Records Center Neighborhood Resource Center Police ArchiuesNehicle Storage Police Department Gym Postage Machines Office Equipment 29.400 - 21,300 10,800 55,752 57424 14.652 15,091 6,948 6,948 50,600 49,947 59.144 60,916 58,652 15,542 16,012 6,780 4,055 33.262 6,863 3,311 Leasing of the Records Center expires on 5/31/2017. The tenant is responsible for the cost of utilities and maintenance of building, which is estimated, based on square footage and reconciled annually by the lessor. ' Leasing of the Neighborhood Resource Center expires on 6/30/2017. CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 6 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2016, was as follows: GOVERNMENTAL ACTIVITIES BEGINNING BALANCE 1/1/2016 INCREASES ENDING BALANCE. DECREASES 12/31/2016 Governmental Activities Capital assets, not being depreciated: Land $ 35,312,814 $ 185,766 $ - $ 35,498,580 Construction in Progress 26,133,182 7,612,974 (23,681,457) 10,064,699 Total capital assets, not being depreciated 61,445,996 7,798,740 (23,681,457) 45,563,279 Capital assets, being depreciated: Buildings Other Improvements Machinery and Equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for: Buildings Other Improvements Machinery and Equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated. net 144,370,158 Governmental activity capital assets, net $ 205,816,154. $ 22,671,409 1,759,932 - 24,431,341 18,064,032 5.290.289 23,354,321 20,641,332 1,674,523 (820,820) 21,495,035 173,864,754 15.545.969 189,410,723 235,241,527 24,270,713 (820,820) 258,691,420 (11,959,413) (637,782) - (12,597,195) (12,130,873) (695,429) - (12,826,302) (13,829,857) (1,302,447) 748,363 (14,383,941) (52.951,226) (5,348,809) (58,300,035) (90.871.369) (7,984,467) 748,363 (98,107,473) 16,286,246 (72,457) 160,583,947 24,084,986. $ (23,753,914); $ 206,147,226 CITY OF TUKWILA'_ 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS BUSINESS -TYPE ACTIVITIES BEGINNING BALANCE 1/1/2016 ENDING BALANCE:. INCREASES DECREASES 12/31/2016 Business -Type Activities Capital assets, not being depreciated: Land Construction in Progress Total capital assets, not being depreciated Capital assets. being depreciated: Buildings Other Improvements Machinery and Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Other Improvements Machinery and Equipment 2.346,230 $ - $ - $ 2,346,230 7.247,963 2,737,449 (7,774,182) 2,211,229 9.594,193 2,737,449 (7,774,182) 4,557,459 13.284,419 80.641,041 2.189,468 13,284,419 7.743,350 (219,743) 88,164,649 24,164 (39,001) 2,174,631 96,114,928 7,767,514 (258,744) 103,623,698 (4.605,392) (32,495,706) (1.781,937) (371,794) (1.718,780) (48,312) - (4,977,186) 208,677 (34,005,809) 41,730 (1,788,518) Total accumulated depreciation (38.883,035) (2,138,886) 250,407 (40,771,513) Total capital assets, being depreciated, net 57,231,895 Business -Type activity capitalassets net $ 66,826,088 $ $ 8,366,078r $ (7,782,510) $ 67,409,646. 5,628,630 (8,337) 62,852,187 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS DEPRECIATION Depreciation expense for 2016 was oherged to functions/programs as follows _ - Governmental Activities General Government $ 255,007 Public Safety 152,172 Physical Environment 688,014 Transportation 5,379,671 Economic Environment 2,907 Culture and Recreation 707,260 Capital assets held by the govemment's internal service funds are charged to the various functions based on their usage of the assets Total 2016 depreciation expense - govemmental activities 799,436 $ 7,984,467 Business -type activities: Water Utility Sewer Utility Foster Golf Course Surface Water Utility Total 2016 depreciation expense -business -type activities NOTE 7 — JOINT VENTURES $ 526,817 370,312 327,513 914,244 $ 2,138.886 A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The City participates in two joint ventures. A summary of the City's investment in joint ventures follows. SUMMARY OF INVESTMENT IN JOINT VENTURES Equity in Equity in Capital Assets TOTAL-.. Operations - financed by. Outstanding `- Investment in Debt. Joint Ventures Valley Com $ 2,391,872 $ - SCORE 703,323 6.093,600 $ 2,391,872 6,796,923 TOTAL $ 3,095,195 $ 6.093,600 $ 9,188,795 Valley Communications Center The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by the four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and 63 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Tukwila. Federal Way was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to thefive participating cities and to several subscribing agencies. Separate agreements between Valley Com and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The allocation of prorated financial participation among the five participating cities is the percentage of estimated dispatched calls attributed to each jurisdiction compared to the total estimated dispatched calls for the current 12 -month period ending December 31. The 2016 cost distribution for the five (5) participating citiesis as follows: City Dispatchable Calls Percent of Total Renton 86,799 20.28% Kent 114,769 26.81% Auburn 96,406 22.52% Tukwila 37,375 8.73% Federal Way 92,658 21.65% Total 428,007 '100.00%`. Valley Com is governed by an Administration Board composed of the Mayors from the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Board is responsible for the following functions: (1) Adopting an annual budget after review by participating legislative bodies; (2) Appointment and/or discharge of the Director; (3) Approves personnel policy and makes final decisions on all major policy changes; (4) Reviews and approves all contracts. In addition, an Operating Board was established and consists of two members of each participating City's Public Safety Departments, including the heads of such departments or their designees. The Operating Board performs the following functions: (1) Oversees the operation of Valley Com and advises and makes recommendations to the Administration Board; (2) Makes recommendation on Director selection; (3) Presents proposed policies and budgets to the Administration Board; (4) Approves disbursement of funds by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. The proposed budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each participating city, in accordance with the provisions of the Interlocal Agreement. The share of equity belonging to the five (5) participating cities is as follows: ITEM Equity January 1, 2016 Current Year Increase/(Decrease) Equity December 31, 2016 Percent of Equity RENTON $ 3,944.879 586.665 $ 4,531,544 KENT 5 5.538 893 775.712 $6,314 605 AUBURN $ 3,853,230 651,598 $ 4,504, 828 TUKWILA $2,139 261 252,611 $2,391,872 FEDERAL WAY :;TOTAL.. $ 2, 858,305 $18,334 568 626,263 2,892,848 $ 3.484,568 $21,227,416 21.35 29.75%' 21.22% 1127% x,16.42% 100.00% Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. In August 1993, Valley Com entered into an interlocal cooperation agreement, pursuant to RCW 39.34 RCW, with the sub- regions of King County, Seattle, and the Eastside Public Safety Communications Agency. This agreement governs 64 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS the development, acquisition and installation of the 800 MHz emergency radio communications system funded by a $57 million King County levy approved in November 1992. This agreement provides that upon voluntary termination of any sub -region's participation in the system, it surrenders its radio frequencies, relinquishes its equipment and transfers any unexpended levy proceeds and associated equipment replacement reserves to another sub -region or consortium of sub -regions. Thus, in accordance with this agreement, the participating cities of Valley Com have no equity interest in Valley Com's 800 -MHz communications system. During 2000, the Valley Communications Center Development Authority was created to issue $12,758,000 in General Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each of the five participating cities was responsible for one-fifth of the debt obligation, which originally was $2,551,600 per City. The basic agreement shall not be terminated until all bonds issued by Valley Communications Center Development Authority have been paid and retired. The final payment on the bonds was made in 2015. A complete set of financial statements are available from Valley Communications 'Center, 27519 108"' Ave SE, Kent, WA 98030, or by telephone 253-372-1300. South Correctional Entity (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34), This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated. October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpected funds or reserve funds shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE, a governmental administrative agency pursuant to RCW 39,34.030(3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility was provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755. The SCORE PDA issued $86 million in special obligation bonds in 2009 (the "Bonds") to construct, develop, acquire and equip the SCORE Facility. Pursuant to the Formation Interlocal Agreement and the ordinances of each city, each Owner City (which includes the Cities of Auburn, Burien, Federal Way, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the principal of and interest on the Bonds as the same become due and payable. Each Owner City's obligation to pay its portion is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on at of the taxable property within the Owner City and other sources of revenues available therefor. The following is a summary of the debt service requirements for the Bonds: 65 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS SUMMARY OF DEBT SERVICE REQUIREMENTS Debt Senile Schedule Debt Service Allocation 10 Owner Cities -0608 Auburn : Burien Federal Way : Renton Seaton Tukwila Year Principal Interest Buboldy Toter 31% 484 i8% 3616 356" 816 2017 $ 2.145.000 $ 4820.241 $ (1510,874) $ 5,454.367 $ 1690,854 $ 218,175 $ 981 786 $ 1963572 $ 163.631 $ 436.349 2018 2.240,000 4,715979 (1.510,063) 5,445,916 1.688.234 217.837 980.265 1960529 163377 435,674 2019 2.310000 4,602229 (1473.568) 5438661 1.665,985 217 546 978.959 1,957,918 163160 435,093 2020 2,385,000 4484.854 (1.435.933) 5433921 1.684.516 217.357 978.106 1.956212 163018 434,714 2021 2,465,003 4,363.604 (1397,075) 5.431529 1.683.774 217.261 977.675 1.955,350 162946 434.522 2022-2026 13945 000 19,586.127 (6994,733) 26.536394 8,226282 1 061 456 4,776551 9.553,102 796.092 2,122,912 2027-2031 17910 000 14,723464 (55346.730) 26386,734 8.179888 1.055.470 4,749612 9,499224 791,602 2.110 939 2032-2036 2D.955.000 8,498.417 (3 217,063j 26236354 8.133,270 1.049.454 4,722544 9,445.087 787,091 2.096908 2037-2040 14,860000 1,502,494 (697,922 15,664572 4856017 626.583 2,819,623 5,639246 469937 1253166 Totals $78,318.000.. 487,297409-:3(23;583,961( .:$;122028448' - 337,828,820 $4;881,138 $:21',965,121 $43930,241 .:33,660,854 3.9,762,276. The City of Tukwila reports its share of equity interest in the Governmental Activities column within the Government - wide financial statements under assets. The ollowing is condensed (unaudited) financial information as of December 31, 2016 related to SCORE. The share of equity belonging to the seven participating cities are as follows FEDERAL ITEM AUBURN RUMEN .BES MOINES WAY RENTON SEATAC , TUKWILATOTAL Equity January 1. 2016 $ 3 331.776 $ 376 841 $ 197,267 $ 2.620.575 $ 3.222 670 3 498 467 $ 788 541 $11.036.137 Current Year Increase/(Decrease) (216,443) (52,239) (30,684) (328.310) (281 167) (64,438) (85,218) (1 058,499) Equity December 31. 2016 $ 3.115,334 $ 324602 $ 166,583 $2.292,265 $ 2.941503 3 434.029 $ 703.323 $ 9.977,638 Percent of Equity 31.22% 3.25% 1,67% 22.97% 29,4815 4.35% 7.05% 100.00% The investment in joint venture for SCORE on the Statement of Net Position includes Tukwila's share of debt issued in 2009. The City's share of SCORE debt is $6,093,600. See Note 10 for additional information on long-term debt. Completed financial statements for SCORE and SCORE PDA can be obtained from the SCORE, Attn: Finance Manager, 20817 17th Avenue South, Des Moines, WA 98198. NOTE 8 — PENSION PLANS The following table represents the aggregate pension amounts for all plans subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2016: Aggregate Pension Amounts -All Plans Pension liabilities $ (15,483,180) Pension assets $ 3.772.659 Deferred outflows of resources $ 4,733,197 Deferred inflows of resources $ (642,177) Pension expense/expenditures $ 2,166,724 Washington State Department of Retirement Systems Substantially all City of Tukwila full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple -employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. 66 CITY OF TUKWILA.. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380, Olympia, WA 98504-8380 Or the DRS CAFR may be downloaded from the DRS website at www.drs.wa.00v. A. Public Employees Retirement System (PERS) Plans 1, 2, and 3 PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local govemments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service. The AFC is the average of the member's 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of -living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows: PERS Plan 1 Actual Contribution Rates: Employer Employee* PERS Plan 1 6.23% 6.00% PERS Plan 1 UAAL 4 77% Administrative Fee 0.18% Total 11.18% 6.00% The City of Tukwila did not contribute to PERS Plan 1 in 2016 as there are no employees covered under this plan. Although, $752,418 of the PERS 2/3 contributions were allocated to the PERS 1 unfunded actuarial accrued liability (UAAL). PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member's 60 highest-paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least 67 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows: PERS Plan 2/3 Actual Contribution Rates: Employer 2/3 Employee 2 PERS Plan 2/3 6.23% 6.12% PERS Plan 1 UAAL 4.77 % Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 11.18% 6.12% The City of Tukwila actual contributions to the plan were $972,612 for the year ended December 31, 2016 Public Safety Employees' Retirement System (PSERS) PSERS Plan 2 was created by the 2004 Legislature and became effective July 1, 2006. To be eligible for membership, an employee must work on a full time basis and: • Have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job; or • Have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or 68 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS • Function as a limited authority Washington peace officer, as defined in RCW 10.93.020' or • Have primary responsibility to supervise eligible members who meetthe above criteria. PSERS membership includes: PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who met at least one of the PSERS eligibility criteria and elected membership during the period of July 1, 2006 to September. 30 2006; and • Employees hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. PSERS covered employers include. • Certain State of Washington agencies (Department of Corrections, Department of Natural Resources, Gambling commission, Liquor Control Board, Parks and Recreation Commission, and Washington State Patrol), • Washington State Counties, Washington State Cities (except for Seattle, Spokane, and Tacoma), Correctional entities formed by PSERS employers under the Interlocal Cooperation Act. PSERS Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the average final compensation (AFC) for each year of service. The AFC is based on the member's 60 consecutive highest creditable months of service. Benefits are actuarially reduced for each year that the member's age is less than 60 (with ten or more service credit years in PSERS), or less than 65 (with fewer than ten service credit years). There is no cap on years of service credit. Members are eligible for retirement at the age of 65 with five years of service; or at the age of 60 with at least ten years of PSERS service credit; or at age 53 with 20 years of service. Retirement before age 60 is considered an early retirement. PSERS members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. PSERS Plan 2 retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PSERS Plan 2 members are vested after completing five years of eligible service. Contributions The PSERS Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The Plan 2 employer rates include components to address the PERS Plan 1 unfunded actuarial accrued liability and administrative expense currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates. 69 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS The PSERS Plan 2 required contribution rates (expressed as a percentage of current -year covered payroll) for 2016 were as follows: PSERS Plan 2 Actual Contribution Rates: Employer Employee PSERS Plant 6 59% 6 59% PERS Plan 1 UAAL 4 77% Administrative Fee 0.18% Totals 11.54% 6.59% The City of Tukwila actual contributions to the plan were 518,635 for the year ended December 31, 2016 Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows: • 20+ years of service — 2.0% of FAS • 10-19 years of service — 1.5% of FAS • 5-9 years of service — 1% of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non -duty disability payments, a cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000. LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2016. Employers paid only the administrative expense of 0.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. 70 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows: LEOFF PIarl 2 target Allooatbon % Longrterm, Expected Real Rate of .' . ':Return ArithinetIc Actual Contribution Rates: Employer Employee State and local govemments 5.05 % 8.41 % Administrative Fee 0.18 % 5.80% Total 5.23 % 8.41 % The City of Tukwila actual contributions to the plan were $815,165 for the year ended December 31, 2016 The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2016, the state contributed $60,375,158 to LEOFF Plan 2. The amount recognized by the City of Tukwila as its proportionate share of this amount. is $509,312. _ Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2016 with a valuation date of June 30, 2015. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2007-2012 Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2015 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2016. Plan liabilities were rolled forward from June 30, 2015, to June 30, 2016, reflecting each plan's normal cost (using the entry -age cost method), assumed interest and actual benefit payments. • Inflation: 3.0% total economic inflation; 3.75% salary inflation • Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are also expected to grow by promotions and longevity. Investment rate of return: 7.5% Mortality rates were based on the RP -2000 report's Combined Healthy Table and Combined Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime. There were minor changes in methods and assumptions since the last valuation. For all systems, except LEOFF Plan 2, the assumed valuation interest rate was lowered from 7.8% to 7.7%. Assumed administrative factors were updated. • Valuation software was corrected on how the nonduty disability benefits for LEOFF Plan 2 active members is calculated. 71 CITY OF TUKWILA:. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS • New LEOFF Plan 2 benefit definitions were added within the OSA valuation software to model legislation signed into law during the 2015 legislative session. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent. To determine that rate, an asset sufficiency test included an assumed 7.7 percent long-term discount rate to determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the long-term expected rate of return, a 7.5 percent future investment rate of return on invested assets was assumed for the test. Contributions from plan members and employers are assumed to continue being made at contractually required rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a component for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.5 percent was used to determine the total liability. Long -Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.5 percent was determined using a building -block -method. The Washington State Investment Board (WSIB) used a best estimate of expected future rates of return (expected retums, net of pension plan investment expense, including inflation) to develop each major asset class. Those expected returns make up one component of WSIB's capital market assumptions. The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment returns at various future times. The long-term expected rate of return of 7.5 percent approximately equals the median of the simulated investment returns over a 50 -year time horizon. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2016, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB's most recent long-term estimate of broad economic inflation. Asset Crass; target Allooatbon % Longrterm, Expected Real Rate of .' . ':Return ArithinetIc Fixed Income 20% 1.70% Tangible Assets 5% 4.40% Real Estate 15% 5.80% Global Equity 37% 6.60% Private Equity 23% 9.60 % 100% Sensitivity of the Net Pension (Liability)/Asset The table below presents the City of Tukwila proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City of Tukwila proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower (6.5 percent) or 1 -percentage point higher (8.5 percent) than the current rate. 72 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension (Liabilities)/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2016, the City of Tukwila reported a pension asset of $3,772,659 and a pension liability of $15,463,180 for its proportionate share of the net pension liabilities as follows: 1% Decrease 6.50% - Current Rate 7.50% 1% Increase 8.50% PERS 1 8,506,811 7,054,328 5,804,378 PERS 2/3 15,446,184 8,389 286 (4,367,108) PSERS 2 89,366 20,581 (28,415) FIREMENS PENSION 82,436 18,985 (26.211) LEOFF 1 (476 712) (802,490) (1.080 957) LEOFF 2 8;329,174 (2,970,169) (11.486,593) Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension (Liabilities)/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2016, the City of Tukwila reported a pension asset of $3,772,659 and a pension liability of $15,463,180 for its proportionate share of the net pension liabilities as follows: The amount of the asset reported above for LEOFF Plan 1 and 2 reflects a reduction or State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension (liability)/asset, the related State support, and the total portion of the net pension asset that was associated with the City of Tukwila wereas follows: LEOFF 1 Asset (AssetyLiability..-.., PERS 1 $ 7,054,328 PERS 2/3 $ 8,389,286 PSERS 2 $ 20,581 FIREMENS PENSION $ 18,985 LEOFF 1 $ (802,490) LEOFF 2 $ (2,970,169) The amount of the asset reported above for LEOFF Plan 1 and 2 reflects a reduction or State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension (liability)/asset, the related State support, and the total portion of the net pension asset that was associated with the City of Tukwila wereas follows: 73 CITY. OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS LEOFF 1 Asset LEOFF 1 - employer's proportionate share (802,490) LEOFF 1 - State's proportionate share of the net pension asset associated with the employer (5,428,021) TOTAL (6,230, 511) 73 CITY. OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: LEOFF 2 Asset LEOFF 2 - employer's proportionate share 2,970,169 LEOFF 2 - State's proportionate share of the net pension asset associated with the employer 1,936,334 TOTAL 4,906,503 At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: Employer contribution transmittals rece ved and processed by he DRS for the fiscal year ended June 30 areused as the basis for determining each employer's proportionate sha a of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2016. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2016, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2016, the state of Washington contributed 39.46 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.54 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2016, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2015, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2016, the city of Tukwila recognized pension expense as follows: 74 Proportionate Share. 6130/15 Proportionate Share 6130116 Change in Pro'portion PERS 1 0.135736% 0.131354% -0.004382% PERS 2/3 0.173592% 0.166622% -0.006970% PSERS 2 0.052748% 0 048428% -0.004320% LEOFF 1 0.077944% 0.077890% -0.000054% LEOFF 2 0.519159% 0.510663% -0.008496% Employer contribution transmittals rece ved and processed by he DRS for the fiscal year ended June 30 areused as the basis for determining each employer's proportionate sha a of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2016. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2016, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2016, the state of Washington contributed 39.46 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.54 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2016, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2015, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2016, the city of Tukwila recognized pension expense as follows: 74 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2016, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PERS 1 Pension Expense PERS 1 138,454 PERS 2/3 1,063,703 PSERS 2 14,629 LEOFF 1 (103,253) LEOFF 2 970,084 FIREMENTS PENSION 83,107 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2016, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PERS 1 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience - - Net difference between projected and actual investment earnings on pension plan investments 177,617 - Changes of assumptions - - Changes in proportion and differences between contributions and proportionate - (328,447) Contributions subsequent to the measurement date $378,081 TOTAL $555,698 $0 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS PERS 2!3 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 446,724 (276,944) Net difference between projected and actual investment earnings on pension plan it estments 1,026,606 - Changes of assumptions 86,710 - Changes in proportion and differences between contributions and proportionate share of contributions - (328,447) Contributions subsequent to the measurement date 488,726 TOTAL 2,048,765 (605,390) CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS PEERS 2 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 7,010 - Net difference between projected and actual investment earnings on pension plan investments 4,245 - Changes of assumptions 80 - Changes in proportion and differences between contributions and proportionate share of contributions - (496) Contributions subsequent to the measurement date 5,372 TOTAL 16,707 (496) LEOFF 1 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience - - Net difference between projected and actual investment earnings on pension plan investments 81,572 - Changes of assumptions - - Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date TOTAL 81,572 -. 77 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS LEOFF 2 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience 406,993 - Net difference between projected and actual investment earnings on pension plan investments 1,067,301 - Changes of assumptions 11,199 - Changes in proportion and differences between contributions and proportionate share of contributions 57,284 (36,291) Contributions subsequent to the measurement date 404,571 TOTAL 1,947,348 (36,291) Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December 31 PERS1 2017 (43,733) 2018 (43,733) 2019 163,122 2020 101,961 2021 Thereafter TOTAL 177,617 78 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Year ended December 31 PERS 2/3 2017 (108,148) 2018 (108,148) 2019 698,141 2020 472,804 2021 1,326. Th a re afte r (31). TOTAL 954,649 Year ended December31 PSERS 2017 1,295 2018 1,295 2019 3,910 2020 3,045 2021 1,326. Thereafter (31). TOTAL 10,839 Year ended December31 LEOFFI 2017 (16,857) 2018 (16,857) 2019 70,647 2020. 44,639 2021 35,100 Thereafter TOTAL 81,572 Year ended December 31 LEOFF 2 2017 (11,672) 2018 (11,672) 2019 884,726 2020 610,004 2021 35,100 Thereafter TOTAL 1,506,486 79 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Firemen's Pension System Summary of Significant Accounting Policies Investments are valued and reported at fair value. Plan Description Plan Administration: The Firefighters" Pension Fund is administered by the City of Tukwila. The plan is a single - employer defined benefit pension plan that provides pensions for firefighters that were hired prior to 1970. The firefighters' pension board consists of the following five members: the chairperson of the fire commissioners for said district who shall be chairperson of the board, the county auditor, county treasurer, and in addition, two regularly employed or retired firefighters elected by secret ballot of the employed and retired firefighters. Retired members who are subject to the jurisdiction of the pension board have both the right to elect and the right to be elected under this section. The first members to be elected by the firefighters shall be elected annually for a two-year term. The two firefighter -elected members shall, in turn, select a third eligible member who shall serve in the event of an absence of one of the regularly elected members. Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970 and for providing the "excess benefit", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new members. At December 31, 2016, FPF membership consisted of the following: Inactive plan members retired prior to March 1, 1970 Inactive plan members retired March 1, 1970 or after Active Plan Members Benefits Provided 0 10 0 All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF providesretirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. All members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to the current salary of the rank from which the firefighter retired, or an increase proportionate to the increase in the Seattle -area CPI, with the change computed annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. The latter applies to all other types of monthly benefits. Contributions As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This statute require that each municipality levy up to $0.45 (only $0.225 of which can 80 CITY OF TUKWILA' 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. The actuarial assumptions were provided by an independent actuary. Investments It is the policy of the City of Tukwila to invest public funds in a manner that will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City, while conforming to all state and local statutes governing the investment of public funds. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. Concentrations. Approximately 70% of investments are in a long-term government bond. City's Net Pension Liability The components of the City's net pension liability at December 31, 2016 are as follows: Total pension liability Less: Plan fiduciary net position City's net pension liability Plan fiduciary net position as a percentage of the total pension liability $ 1,445,352 1,426,367 $ 18,985 98.69% Schedule of-Change8 in the City' and Related Ratios Net Pe,tision Liability Total Pension Liability 2014 2018 2016 Service Cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, included refunds of employee contributions $ 50,098 49,716 1 49,332 (61,863) (2,442) (311,190)- ._....._ (62,728) (58,277) (59,988) Net changein total pension liability Total pension liability - beginning Total pension liability - ending (a) (11,765) 1,852,693 (11,003) (384,574) • 1,840,929 4 1,829,926 1,840,929 $ 1,829,926 k 1,445,352 1 81 CITY OF TUKWILA_ 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Plan Fiduciary Net Position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other 64,114 $ 1,805 (61,863) 63,590 2,667 (58,277) (4,500) 66,360 7,988 (59,988) (4,500) Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) City's net pension liability- ending (a) (b) _._... .. . ......... _......_....._......_ Plan fiduciary net position as a percentage of the total pension liability Covered -employee payroll City's net pension liability as a percentage of covered -employee payroll 4,056 1,408,970 3,481 1,413,026 9,861 1,416,506 1,413,026 1,416,506 1,426,367 $ 427,903 $ 413,420 18,985 76.76% $ $ n/a Deferred Outflows of Resources and Deferred Inflows of Resources 77.41%' n/a 98.69% n/a At December 31, 2016, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 82 Deferred Outflows of , Resources Deferred inflows of Resources ,. Differences between expected and actual experience Net difference between projected and actual investment earnings on pension plan investments 83,107 Totals 83,107 82 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December -31: 2017 $ 22,625 2018 22,625 2019 22,625 2020 15,231 2021 Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 3.75% 2.75% Healthy life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back one year for males and set forward one year for females. Disabled life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back two years for males and females. The long-term expected rate of return on pension plan investments assumption was based on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The discount rate used to measure the total pension liability was 2.75%. The projection of cash flows used to determine the discountrate assumed City contributions were equal to revenue received from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75%. Based on this assumption, the pension plan's fiduciary netposition was projected to be available to make all projected future benefit payment of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the Firemen's net pension liability of the City, calculated using the discount rate of 2.75%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 -percentage -point lower, 2.75%, or 1 -percentage point higher, 3.75%, than the current rate: Firemen's net pension 1% Decrease Current Discount 1% Increase liability Rate $ 196,149 $ 18,985 $ (130,661) 83 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Basis of Valuation A general summary of the substantive plan used as the basis of the valuation follows. Applicable Statutes Benefits RCW 41.16, 41.18, 41.26 Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under LEOFF or FPF. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Service Retirement Benefit Member Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five years of service (RCW 41.26.090). Amount of benefit 50% of salary plus an additional 2% for each year of service in excess of 25 years. Maximum benefit of 60% of salary (does not apply for those retiring after July 1, 2006). Survivor Eligibility: spouse or child Amount of benefit: continuation of the firefighters benefit. (If spouse — same, plus additional 5% of salary per child. If no spouse — 30% of salary for first child, 10% for each additional child. Maximum of 60% of salary). Duty Disability Retirement Benefit Member Survivor Eligibility: disabled after six-month waiting period. Amount of benefit: determined the same as Service Retirement Benefit. Recovery: restoration to service. See Survivors Benefit section under Service Retirement. Non Duty Disability Retirement Benefit Member Eligibility: disabled after 90 -day waiting period. Amount of benefit: 50% of salary, or service retirement benefit, if greater. Recovery: see Duty Disability Retirement. Limitations: no benefits payable if firefighter employed elsewhere when disabled. Survivor Duty Death Benefit Non Duty Death Benefit Special Provisions Eligibility: spouse or child Amount of benefit: 33.3% to widow or children only. 45.8% to widow and one child. 47.6% to widow and two children. 50.0% to widow and three children. Eligibility. spouse or child Amount of benefit: If spouse — 50% of salary plus an additional 5% of salary per child; maximum benefit of 60% of salary. If no spouse — 50% of salary to children. Eligibility: spouse or child Amount of benefit: provisions the same as Survivors Benefit under Non -Duty Disability Retirement. Under disability or death benefits, a surviving spouse may elect a lump -sum payment of $5,000 in lieu of future monthly benefits. 84 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Vesting Deferred Benefit Postretirement Increase Benefits Payable Under LEOFF Type 1 Type 2 Applicability Minimum Benefit Funeral Benefit Participant Summary December 31, 2016 Age and service determined as of the census date. Termination after 20 years of service (RCW 41.18.130) or five years of service (RCW 41.26.090). Commences: when a firefighter would have had 25 years of service (RCW 41.18.130) or age 50 (RCW 41.26.090). Amount of benefit: 2% of salary for each year of service. Other provisions apply, see statutes. Death while vested prior to commencement of benefits: payment of firefighters deferred benefit to spouse or child. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Escalation by salary in proportion to current salary or rank from which the firefighter retired. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. Type 2 applies to all other types of monthly benefits After April 25, 1973, a minimum benefit of $300 per month to all retired firefighters and their survivors. This minimum is increased by the CPI. $500 RCW 41.18.140, no provision under RCW 41.26. LEOFF Plan 1 (Firemen's Pension) Inactive Participants Age Service Retirees Disabled Retirees Surviving Spouses Total < 65 0 0 0 0 65 — 69 0 0 0 0 70-74 1 1 1 3 75 — 79 1 1 2 4 80-84 0 1 1 1 85 - 89 1 0 0 1 90 + 0 0 0 0 Total 3 3 4 10 Annual pension amounts through December 31, 2016: Paid by City Paid by LEOFF $59,988 $440,025 The information presented in the preceding required schedules were determined as part of the actuarial valuations at the dates indicated. 85 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS The key actuarial assumptions used for the January 1, 2017 valuation were: Assumption 1 Rates Actuarial Cost Method Asset Valuation Method Measurement Date Inflation Rate Discount Rate (or Investment Return) Entry Age Fair Market Value December 31, 2016 2.75% We based the long-term expected rate of return on pension plan investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 2.75% was selected. Cost of Living 2 75%, based on SSA OASDI 2014 report. Salary Increases (for calculated benefit increases based on 3.75%, based on SSA OASDI 2014 report. rank) Healthy Mortality Disabled Mortality Spouse Age RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. We assumed that wives are three years younger than husbands. NOTE 9 — OTHER POSTEM PLOYM ENT BENEFIT (OPEB) PLAN During the year ended December 31, 2008, the City elected to adopt the provisions of GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB No. 45), which requires the City to accrue other postemployment benefits (OPEB) expense related to its postretirement healthcare plan based on a computed annual required contribution (ARC) that includes the current period's service cost and an amount to amortize unfunded actuarial accrued liabilities. Instead of recording expense on a "pay-as- you-go" basis, the City, under GASB No. 45, has recorded a liability of $9,178,836 for the difference between the actuarially calculated ARC and the estimated contributions made since the adoption of GASB No. 45 This liability is included in other noncurrent liabilities in the accompanying December 31, 2016 statement of net position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess of revenue over expenses before capital contributions and the City's increase in net position for the year ended December 31, 2016 by $2,033,913. Plan Description The City of Tukwila's LEOFF Plan 1 (the Health Plan) is a single -employer defined -benefit healthcare plan administered by the City. The authority to establish and amend benefits is determined by the LEOFF board. The Health Plan provides medical, prescription drug, dental, Medicare Part B premiums, long-term care, and vision expenses for LEOFF Plan 1 retirees. Dependent spouses and children are not covered. The Health Plan's actuary is Healthcare Actuaries. The Health Plan does not issue a separate standalone financial report. 86 CITY OF TUKWILA'. 2016 CAFR - NOTES TO THE FINANCIAL STATEMENTS Membership As of December 31, 2016, there were 35 retirees meeting the eligibility requirements of a LEOFF 1 member. The actuarial valuation is based on the 40 retirees in the plan as of December 31, 2014. This is considered a closed group with no new members. Funding Policy Funding for LEOFF 1 retiree healthcare costs is provided entirely by the City as required by RCW. The City's funding policy is based upon pay-as-you-go financing requirements, For the fiscal year ended December 31, 2016, the City contributed $275,530 to the Health Plan through use of existing fund balance. The City's contribution was entirely to fund 'pay-as-you-go' costs under the Health Plan and not to prefund benefits. There were no retiree contributions. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize unfunded actuarial liabilities over a period 21 years as of January 1, 2008. The following tables show the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation. ANNUAL OPEB COST AND NET OPEB OBLIGATION 2014 .--2015 2016 Annual required contribution (ARC) Interest on Net OPEB Obligation Adjustment to ARO Annual OPEB cost (expense) Employer contributions Change in Net OPEB Obligation Net OPEB Obligation at Beginning of year $ 1,903,679 $ 2,585,779 $ 2,765,486 171,067 146,904 178,623 (388,580) (452,441) (634,666) 1,686,166 2,280,242 2,309,443 (905,974) (477,292) (275,530) 780,192 1.802,950 2,033,913 4,561,781 5.341,973 7,144, 923 Net OPER Ob gatien et End ofyear $ 5,341,973 $:.:7,144,923 $','. ' (i) Is the assumed interest rate that year, 2.75% In 2014, 2.75% in 2015 and 2.50% in 2016. The net OPEB obligation of $9,178,836 is included as a non-current liability on the Statement of Net Position. 87 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS ANNUAL DEVELOPMENT OF OPEB COST Annual; 'squired" ntributton OPEB , AR igeNon :Adjure[ Anhusi OPEB tos r'rlployer 'Ch'errge in Net OPER Conn- Net OPEB1 Obligation (Gain)/ but,ona Obligation gBalance a Loss 2008 $ 1,366,284 $ - $ - $1,366.284 $ 557,103 $ 809,181 $ 809,181 $809,181 2009 1,366,284 40,459 61,839 1,344,904 335,265 1,009,639 1.818,820 1.031,019 2010 1,366,284 90,941 143,332 1,313,893 317,771 996,122 2.814,942 1,048,513 2011 1,264,522 112.598 213,809 1,163,311 335,090 828,221 3.643.163 929.432 2012 1,264,522 145,727 287,945 1,122,304 404,007 718,297 4.361.460 860.515 2013 1,264,522 174,458 359,904 1,079,076 878,755 200,321 4.561.781 385,767 2014 1,903,679 171,067 388,580 1,686,166 905,974 780,192 5.341.973 997.705 2015 2,585,779 146,904 452,441 2,280,242 477,292 1,802,950 7.144.923 2,108.487 2016 2,765,486 178,623 634,666 2,309,443 275,530 2,033,913 9.178.836 2,489.956 ' Based on a 21 -year closed amortization as of January 1, 2008 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows: PERCENTAGE OF ANNUAL OPEB COST CONTRIBUTED fiscaI Year Ending', ' December 31, 2014 December3l, 2015 December 31, 2016 ual OPEB gist Funded Status and Funding Progress 1,686,166 2,280,242 2,309,443 Percentage of plover" Annual OPEB Net OPEB nbution;- Coat Centributed „Obligation 905.974 54 5,341,973 477292 21 7144,923 275530 12 9178,836 As of January 1, 2017, the most recent actuarial accounting update, the plan was 0% funded. The actuarial accrued liability for benefits was $29.1 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of 529.1 million and a funded ratio of 0%. The funded ratio is 0%, because the City funds benefits on a pay-as-you-go basis. SCHEDULE OF FUNDING PROGRESS (rounded to thousands) Litt al Actuarial Acuruad 06 ' ° ilf Assets Un Ac nded Actuarial n ed LiabII)t)M (UAAL UAAL as a Fu dad Oatetad ; Percentage of Ratio 'Payroll Covered Payroll January 1, 2008 January 1,2011 January 1. 2014 January 1.2015 January 1.2016 so 0 0 $16,103 14,805 21,264 29,538 30,186 88 $16,103 14,805 21,264 29,538 30.186 0% 0 0 0 0 $581 371 195 132 0 4% 3 1 0 0 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. GASB 45 requires that the schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of Health Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions The basis of projections of benefits for financial reporting purposes is the substantive plan (the Health Plan as understood by the City and members of the Health Plan) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the City and Members of the Health Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The January 1, 2015 valuation used the entry age normal actuarial cost method. The actuarial assumptions included a 2.75% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 9.0% for pre -Medicare expenses, to an ultimate rate of 3.8% after 61 years. The Medicare trend assumption is 6.5%, to an ultimate rate of 3.8% after 61 years. The dental trend assumption is 5.5%, to an ultimate rate of 3.5% after 4 years. The Medicare premium trend rate is 5.4% for all years. The long-term care trend rate is 5.0% for at years. The trend for the Excise Tax threshold is 0% until 2020, when a trend rate of 4.24% is used. The trend for all future years after that year is 3.24%. All trend rates include a 3.0% inflation assumption. The UAAL is amortized as a level dollar amount on a closed basis over 21 years beginning January 1, 2008. The remaining amortization CO period at December 31, 2016 was 12.0 years. CO Assumption Rates Actuarial Cost Method Entry Age Normal method. Measurement Date January 1, 2015 Inflation Rate 3.00% Discount Rate (or Investment Return) Selected the assumed discount rate of 2.75% based on the five - year average investment yield on the investments expected to finance the payment of benefits. Healthy Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. Disabled Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. Turnover None assumed. All LEOFF 1 actives are fully eligible for retirement. 89 CITY OF TUKWILA, 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Per Capita Claims Cost Assumed annual per capita claims costs are as follows: Age Medical/Rx Dental Vision LTC 55 $ 21,875 $ 966 $ 181 $ 133 60 28,071 966 181 220 65 15,406 966 181 448 70 16,924 966 181 1,183 75 17,984 966 181 3,028 80 18,348 966 181 6,499 Aging or Morbidity Factors Aging/morbidity factors are included in the per capita claims costs shown above (except dental and vision). Medicare Part B Premium Reimbursements The City reimburses Medicare retirees for Part B premiums. The 2015 annual premium is $1,258.80. Affordable Care Act (ACA) Excise Tax Threshold Ages 55-64 All Other Single $ 11,850 $ 10,200 ACA Base Premium Assumed annual plan costs upon which the ACA tax calculation is based: Medicare ineligible $ 28,071 Medicare eligible $ 16,557 ACA Tax • We assumed a 40% excise tax rate on premiums above the ACA threshold. • We assumed the City of Tukwila pays no federal taxes. • We assumed the excise tax will apply to medical/Rx and Medicare premium reimbursements. Trend Rates Medical Long -Term Trends* from Getzen SOA Model version 2014 b using baseline assumptions. Excise Pre- Part 8 Long -Term Tax Year Medicare Medicare Dental Vision Premiums Care Threshold 2015 9.00% 6.50% 5.5% 4.0% 5.4% 5.0% 0.00% 2016 7.508 6.50% 5.0% 4.0% 5.4% 5.0% 0.00% 2017 6.50% 6.00% 4.5% 4.0% 5.4% 5.0% 0.00% 2018 5-508 5.50% 4.0% 4.0% 5.4% 5.0% 4.24% 2019 5.50% 5.50% 3.5% 3.5% 5.4% 5.0% 3.24% 2020 5.46% 5.46% 3.5% 3.5% 5.4% 5.0% 3.24% 2021-2074 ... _. 3.5% 3.5% 5.4% 5.0% 3.24% 2075, 3.80% 3.80% 3.5% 3.5% 5.4% 5.0% 3.24% ` The trend rates include assumed inflation of 3% for all future years. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, provides the multi-year trend information showing whether the actuarial value of plan assets is increasing or decreasing over time relative to the actual. 90 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 10 — LONG-TERM LIABILITIES Governmental Activities Long -Term Debt General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter -approved issues, of which the City has one, are funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes, sales taxes, or other general revenues, and is generally paid from debt service funds. The City currently maintains a rating of Al from Moody's Investor Service, Aa3 from Standard & Poor's, and a rating of AA- from Fitch's Rating Service for its General Obligation Bonds. General Obligation Bonds outstanding at year-end are as. follows: • 2008 LTGO bonds were issued to refund the remaining debt of the 1999 LTGO bonds. The 1999 LTGO bonds were issued to purchase an additional City Hall Annex (6300 building) and economic revitalization projects. • 2010 LTGO bonds were issued for the construction and realignment of Southcenter Parkway in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • 2011 LTGO refunding bonds were issued to refund a portion of the bonds issued in 2003 for the City's Arterial Street program. • 2013 LTGO bonds were issued and the proceeds loaned to the Tukwila Metropolitan Park District to pay for improvements to the pool. • 2014 LTGO bonds were issued to fund the purchase of land acquisition and capital costs of redevelopment activities within the City's Tukwila International Boulevard (TIB) urban renewal area. • 2014 LTGO general obligation bond in the form of a line of credit to purchase property and pay for capital costs of redevelopment activities within the City's Urban Renewal area. • 2015 LTGO bonds were issued to pay for improvements to Interurban Avenue South and reconstruct or retrofit Boeing Access Road Bridge. • 2016 UTGO bonds in the amount of $32.99 million were issuedafter voters approved a $77.385 million bond measure that will fund a justice center, rebuild 3 fire stations and provide fire apparatus and life -safety equipment replacement for 20 years. Special assessment bonds are issued to finance construction of local improvement district (LID) projects and are repaid through assessments collected from property owners benefiting from related improvements. Although the bonds are secured by liens against assessed properties, the City is required under state law to establish a guaranty fund to provide a means of paying LID bond debt service obligations in the event there are insufficient resources in the LID debt service fund. The special assessment bonds are not general obligation debt but the City is obligated in some manner to cover the interest on the bonds. Therefore, the bonds are reported as Special Assessment Debt with Governmental Commitment. Special assessments outstanding at year-end are as follows: • 2013 special assessment bonds LID No. 33 were issued to reimburse the City for a portion of the costs of a major reconstruction of Klickitat and Southcenter Parkway to improve access to the urban center. 91 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Business -Type Activities Long -Term Debt Revenue bond indebtedness issued to fund proprietary activities is recorded in proprietary funds. Debt service payments are made from operating revenues generated by the proprietary funds. In proprietary funds, bonds are displayed net of unamortized premium or discount; annual interest expense is decreased by amortization of debt premium and increased by the amortization of debt discount. The City currently maintains a rating of Aaa from Moody's Investor Service for debt in this category. Revenue bonds outstanding at year-end are as follows: • 2015 water/sewer/SWM bonds were issued to refund the remaining debt of the 2006 revenue bonds. The bonds were issued to provide neighborhood revitalization to Allentown and Foster Point Sewer system. State of Washington Public Works Trust Fund Loans are a low interest rate loans available from the State of Washington Department of Commerce, Local Government & Infrastructure Division for qualifying projects and are a direct responsibility of the City. This debt is repaid by proprietary fund revenues. Public Works Trust Fund loans outstanding at year-end are as follows: • 2003 loan to install new sewers in the Duwamish neighborhood. The project upgraded water and surface water infrastructure. • 2004 loan to install new water, sewer, and surface water infrastructure in Allentown and Foster Point neighborhoods. Additionally, 2 new sewer lift stations with generators, 33 manholes and catch basins, and 15 new fire hydrants were installed. • 2004 loan constructed an underground collection system in the Cascade View neighborhood. • 2014 loan to install sewer liners in the City's commercial business district of Southcenter. Relining the sewer main avoids full excavation for a significant savings and has minimal impact to the roadway. The City is in compliance with all Washington State debt limitation statutes and bond indenture agreements. The schedules that follow summarize the long-term debt transactions of the City for the year ended December 31, 2016. 92 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES SUMMARY - GOVERNMENTAL ACTIVITIES Outstanding 01/01/2016 Added Retired / redeemed Outstanding 12/31/2016 523,057,714 $6,082,500 $ 3,860,473 $ 6,265.200 $ 7,144,923 $11,630,656 $ 58,041,466 32,990,000 - 2.965.804 - 2,033,913 1,313,123 39,302,840 (1,932,782) (670,000) (3,052.075) (171,600) - - (5,826,458) $54,114,932 $5,412,500 $ 3,774,201 $ 6,093.600 $ 9,178,836 $12,943,779 $ 91,517,848 Add Premiums, Subtract Discount Debt Service to Maturity 4,380,732 $ 95,898,580 Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences, OPEB, and pensions. 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2036 2037-2040 Totals $ 5.356,428 $ 2,212,951 3.302,196 2,168,111 3.513,521 2,020.971 1.726.461 1,853,741 1.865,560 1,781,913 11.956,765 7,353,718 12.191,000 4,738.893 14,203,000 1,822.290 $ 54,114,932 $ 23,952,586 $ 179,200 $ 249,088 184,800 243,173 190,800 237,069 197,200 229,039 207,200 220,332 1,158,800 973,846 1,418,000 706,725 1,004,800 266,367 1,552,800 137,080 $ 6,093,600 $ 3,262,718 $ 607,500 $ 259,939 445,000 257,655 445,000 243,638 445,000 223,613 445,000 203,588 2,225,000 705,881 800,000 143.513 5,412 500. $ 2,037,825 $ 8,865,105 6,600,935 6,650,999 4,675,053 4,723,593 24,374 010 19,998.130 17,296,457 1,689,880 $ 94,874,161, 93 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES -GOVERNMENTAL ACTIVITIES tmrest OUTSTANDING OUTSTANDING: Due lAithin Rams Matunly Authorized 12/31/2015 ISSUED REDEEMED 12/31/16 011878ar GO6ERNMENTAL ACTINTIES, Limited General Obligation ILTGOI Bonds Payable' 2008 Refunding-Streets/Facilites 400-6.00 12/01/19 6,180000 2,820,000 - 655000 2,165000 680.000 2010 Streets / Equipment 200-541 12/01/24 5,870000 3,970,000 - 395000 3,575000 405000 2011 Refunding Streets (2003 00) 1.25-400 12/01/23 4,620.000 3,780,000 - 420.000 3,360 000 435000 2013 LT00-MP0 Pool Improve 2,00-400 12'01/22 1,000000 703,714 - 93782 609932 96428 2014 L000 -Urban Renewal 085-486 12/01/34 3,850000 3,709,000 - 149.000 3,560000 150000 2014 LTGO-Line of Credit 11M. LIBOR a 1.0%12/01/17 2,250000 2,250,000 - - 2,250.000 2015 LTG0-Inteturban. 868 225-3,00 12/01/35. 5,825000 5,825,000 - 220.000 5605000 225.000 Total LTGO Bonds Payable 29,595000 23057714 - 1932782 21,124932 1991428 Unlimited General Obligation IUTGOI Bonds Payable. 2016 UTG0- Public Safety 4.50-500 12/01/35 Total 0700 Bonds Payable Issuance premi Net Sonde:Payble Due to Omer Governments 2009 Facility SCORE Total Due Other Governments Special Assessment Debt 77 385 000 - 32,990.000 - 32,990.000 1,115000 77,385,000 -. 32,990,000--, 32,990,000 1,115.000 761523 3,719954 100.745 4,380732 - 106,980,000 23,819,237 36,709954 2.033 527 58,495.664 -: 3.106428 3.00-6.62 01/01/39 6,898 800 6,265 200 - 171.600 6,093 600 179 200 -6,898,800 6,265,200 171,600 6,093 600 179,200 Kickitat Urban Access Project 3.150-5.375 01/15/29 6,687 500 6082,500 - 670.000 6,687,500 6-,,082,500 - 670,000 5.412,500 607,500 5,412.500 607 500 Tote/Spewed Assessment Debt Other PostEmployement Benefits Payable Net Pension Liability Compensated Absences.. Total Governmental Funds' 7,144,923 : - 20331913 11.6301656 1,313,123 3,860,473 2,965,804 3,052075 9,1766,836 12 945,779 3,774,201 86,271. 66,300 $ 58;802,989 543,022,794 95,927,203 $.95,898,580 $ 3,979,399 AS governmental funds debt is liquidated by the general fund except for the special assessment debt and the 2009 SCORE intergovernmental debt. The special assessment debt is liquidated from assessments collected annually from property owners within boundaries of Local Improvement District #33. The 2009 SCORE debt was paid by SCORE from user fees. Due to Other Governments SCORE Public Development Authority issued General Obligation bonds in 2009 to acquire, construct, improve, and equip a consolidated correctional facility to be located in Des Moines, Washington. The City is contracted to pay 8% of the debt service of these 30 year bonds that mature in 2039. This debt is paid from the General fund. 94 Governmenta l Activities Year Ended December 31 General Obligation Bonds Principal interest - -. Due to Other Governments Principal '. Interest Special Assessments Principal Interest Total 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2036 2037-2040 Totals $ 5.356,428 $ 2,212,951 3.302,196 2,168,111 3.513,521 2,020.971 1.726.461 1,853,741 1.865,560 1,781,913 11.956,765 7,353,718 12.191,000 4,738.893 14,203,000 1,822.290 $ 54,114,932 $ 23,952,586 $ 179,200 $ 249,088 184,800 243,173 190,800 237,069 197,200 229,039 207,200 220,332 1,158,800 973,846 1,418,000 706,725 1,004,800 266,367 1,552,800 137,080 $ 6,093,600 $ 3,262,718 $ 607,500 $ 259,939 445,000 257,655 445,000 243,638 445,000 223,613 445,000 203,588 2,225,000 705,881 800,000 143.513 5,412 500. $ 2,037,825 $ 8,865,105 6,600,935 6,650,999 4,675,053 4,723,593 24,374 010 19,998.130 17,296,457 1,689,880 $ 94,874,161, 93 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES -GOVERNMENTAL ACTIVITIES tmrest OUTSTANDING OUTSTANDING: Due lAithin Rams Matunly Authorized 12/31/2015 ISSUED REDEEMED 12/31/16 011878ar GO6ERNMENTAL ACTINTIES, Limited General Obligation ILTGOI Bonds Payable' 2008 Refunding-Streets/Facilites 400-6.00 12/01/19 6,180000 2,820,000 - 655000 2,165000 680.000 2010 Streets / Equipment 200-541 12/01/24 5,870000 3,970,000 - 395000 3,575000 405000 2011 Refunding Streets (2003 00) 1.25-400 12/01/23 4,620.000 3,780,000 - 420.000 3,360 000 435000 2013 LT00-MP0 Pool Improve 2,00-400 12'01/22 1,000000 703,714 - 93782 609932 96428 2014 L000 -Urban Renewal 085-486 12/01/34 3,850000 3,709,000 - 149.000 3,560000 150000 2014 LTGO-Line of Credit 11M. LIBOR a 1.0%12/01/17 2,250000 2,250,000 - - 2,250.000 2015 LTG0-Inteturban. 868 225-3,00 12/01/35. 5,825000 5,825,000 - 220.000 5605000 225.000 Total LTGO Bonds Payable 29,595000 23057714 - 1932782 21,124932 1991428 Unlimited General Obligation IUTGOI Bonds Payable. 2016 UTG0- Public Safety 4.50-500 12/01/35 Total 0700 Bonds Payable Issuance premi Net Sonde:Payble Due to Omer Governments 2009 Facility SCORE Total Due Other Governments Special Assessment Debt 77 385 000 - 32,990.000 - 32,990.000 1,115000 77,385,000 -. 32,990,000--, 32,990,000 1,115.000 761523 3,719954 100.745 4,380732 - 106,980,000 23,819,237 36,709954 2.033 527 58,495.664 -: 3.106428 3.00-6.62 01/01/39 6,898 800 6,265 200 - 171.600 6,093 600 179 200 -6,898,800 6,265,200 171,600 6,093 600 179,200 Kickitat Urban Access Project 3.150-5.375 01/15/29 6,687 500 6082,500 - 670.000 6,687,500 6-,,082,500 - 670,000 5.412,500 607,500 5,412.500 607 500 Tote/Spewed Assessment Debt Other PostEmployement Benefits Payable Net Pension Liability Compensated Absences.. Total Governmental Funds' 7,144,923 : - 20331913 11.6301656 1,313,123 3,860,473 2,965,804 3,052075 9,1766,836 12 945,779 3,774,201 86,271. 66,300 $ 58;802,989 543,022,794 95,927,203 $.95,898,580 $ 3,979,399 AS governmental funds debt is liquidated by the general fund except for the special assessment debt and the 2009 SCORE intergovernmental debt. The special assessment debt is liquidated from assessments collected annually from property owners within boundaries of Local Improvement District #33. The 2009 SCORE debt was paid by SCORE from user fees. Due to Other Governments SCORE Public Development Authority issued General Obligation bonds in 2009 to acquire, construct, improve, and equip a consolidated correctional facility to be located in Des Moines, Washington. The City is contracted to pay 8% of the debt service of these 30 year bonds that mature in 2039. This debt is paid from the General fund. 94 CITY OF TUKWILA' 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES SUMMARY - BUSINESS -TYPE ACTIVITIES Outstanding 01/01/2016 Added Retired / redeemed Outstanding 12/31/2016 Debt Service to Maturity $1,742.527 (144.823) $1,597.704 5,646,458 $ 334.004 $ 2,095,180 - 290.095 444,223 (599,468) (325,740) - 5,046,990 $ 298.359 $ 2,539,403 9,818.169 734.318 (1,070,031) 9,482,455 $ 9,482.455 Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences and net pension liability. 2017 CO 2018 2019 2020 2021 2022-2026 2027-2031 2032 Totals $ 143,282 149,659 150,736 156,614 157,178 840,235 $ 37,386 $ 599.468 $ 25,235 34.033 599.468 22,238 30,531 599.468 19,240 27,004 599.468 16.243 23.339 599,447 13,246 59.829 1,802,601 25 232 205.875 4.118 41,195 206 1,597,704.:'$ 212,124. $ 5,046,690 $ ;125,757 $ 805,371 805,398 799.976 799,329 793,210 2,727,897 209,992 41,401 $ . 6,982,576' CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES --Mtsrest OUTSTANDING OUTSTANDING Due W4,In ITEM Pates l8,So6/: Authorimd 12/31/2015 ISSUED REDEEMED 12131/16 .One Year BUSINESS -TYPE ACTS/TIES. Bonds Payable: 2015 Water/Sewer/SWM Refunding 2,3412/01l26 1.742.527 1742527 - 144,823 1597704 143282 Wel Bonds Payable 1,742,527 1;742 527 144,823 97.704 143,282 Public works Trust Fund Loans. 2003 Loan-Wate,Sewer 0.50 06/01/21 2003 Loan -Surface Water 0.50 06/01/21 2004 Loan-Water/Sower 0.522.00 06/0124 2004 Loan -Surface Water 050-2.00 01124 2004 Loan -Surface Water 1.00 06/01/24 2014 LoanSewer 05 06/01/32 273,870 86.720 - 14,454 72.271 14,454 219,725 69.578 - 11,597 57982 11,597 5016,000 2455,976 - 272 886 2,183.090 272,886 684,000 334906 - 37212 297 694 37,212 4.196,056 1999.297 - 222,144 1,777.153 222,144 750,000 699975 - 41,175 658.800 41,175 Total Public Works Trust Fund Loans Net Pension Liability C006926 sled Absences 5,848,458 595,468 :.5,046980. 599,462 2,095180 444 223 2,538403 334004:; 290,095 325,740 298$59 ::34,084 Total Business -Type 2,882,178 :$ 9,818169;'$ 734,318..$1070031 $':9482,455 $ 776,824 TQTAL ALL 92605 3133,448,478,::$ 88 ,821157..943,757,11 .::08997,234 $105381036 $4,756,213, LONG-TERM LIABILITIES RECONCILIATION Gobemmental Business -Type Balance Activities Activities'.. 12-31-16 General obligation bonds Special assessment bonds Resenue bonds Public Works Trust Fund loans Due to Other Governments Employee leave benefits Net Premiums/Discounts Other Post -Employment Benefits Net Pension Liability Total long-term debt $54,114,932 $ 5,412,500 6,093,600 3,774,201 4,380,732 9,178, 836 12,943,779 $95,898,580:-; $ 54,114,932 5,412,500 1,597.704 1,597,704 5,046.990 5,046,990 6.093, 600 298,359 4,072.560 4,380.732 9,178, 836 2,539,403 15,483,182 9,482,455 $ 105,381,036. Debt Limit Capacities State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5% without a vote of the people; 2.5% with a vote of the people; 5.0% with a vote of the people, provided the indebtedness in excess of 2.5% is for utilities; 7.5% with a vote of the people, provided the indebtedness in excess of 5.0% is for parks or open space development. 95 96 Business -Type Activities Year Ended December 31 Revenue Bonds - Principal Interest - Public Works Trust Fund Loans Principal Interest : Total 2017 CO 2018 2019 2020 2021 2022-2026 2027-2031 2032 Totals $ 143,282 149,659 150,736 156,614 157,178 840,235 $ 37,386 $ 599.468 $ 25,235 34.033 599.468 22,238 30,531 599.468 19,240 27,004 599.468 16.243 23.339 599,447 13,246 59.829 1,802,601 25 232 205.875 4.118 41,195 206 1,597,704.:'$ 212,124. $ 5,046,690 $ ;125,757 $ 805,371 805,398 799.976 799,329 793,210 2,727,897 209,992 41,401 $ . 6,982,576' CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES --Mtsrest OUTSTANDING OUTSTANDING Due W4,In ITEM Pates l8,So6/: Authorimd 12/31/2015 ISSUED REDEEMED 12131/16 .One Year BUSINESS -TYPE ACTS/TIES. Bonds Payable: 2015 Water/Sewer/SWM Refunding 2,3412/01l26 1.742.527 1742527 - 144,823 1597704 143282 Wel Bonds Payable 1,742,527 1;742 527 144,823 97.704 143,282 Public works Trust Fund Loans. 2003 Loan-Wate,Sewer 0.50 06/01/21 2003 Loan -Surface Water 0.50 06/01/21 2004 Loan-Water/Sower 0.522.00 06/0124 2004 Loan -Surface Water 050-2.00 01124 2004 Loan -Surface Water 1.00 06/01/24 2014 LoanSewer 05 06/01/32 273,870 86.720 - 14,454 72.271 14,454 219,725 69.578 - 11,597 57982 11,597 5016,000 2455,976 - 272 886 2,183.090 272,886 684,000 334906 - 37212 297 694 37,212 4.196,056 1999.297 - 222,144 1,777.153 222,144 750,000 699975 - 41,175 658.800 41,175 Total Public Works Trust Fund Loans Net Pension Liability C006926 sled Absences 5,848,458 595,468 :.5,046980. 599,462 2,095180 444 223 2,538403 334004:; 290,095 325,740 298$59 ::34,084 Total Business -Type 2,882,178 :$ 9,818169;'$ 734,318..$1070031 $':9482,455 $ 776,824 TQTAL ALL 92605 3133,448,478,::$ 88 ,821157..943,757,11 .::08997,234 $105381036 $4,756,213, LONG-TERM LIABILITIES RECONCILIATION Gobemmental Business -Type Balance Activities Activities'.. 12-31-16 General obligation bonds Special assessment bonds Resenue bonds Public Works Trust Fund loans Due to Other Governments Employee leave benefits Net Premiums/Discounts Other Post -Employment Benefits Net Pension Liability Total long-term debt $54,114,932 $ 5,412,500 6,093,600 3,774,201 4,380,732 9,178, 836 12,943,779 $95,898,580:-; $ 54,114,932 5,412,500 1,597.704 1,597,704 5,046.990 5,046,990 6.093, 600 298,359 4,072.560 4,380.732 9,178, 836 2,539,403 15,483,182 9,482,455 $ 105,381,036. Debt Limit Capacities State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5% without a vote of the people; 2.5% with a vote of the people; 5.0% with a vote of the people, provided the indebtedness in excess of 2.5% is for utilities; 7.5% with a vote of the people, provided the indebtedness in excess of 5.0% is for parks or open space development. 95 96 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS At December 31, 2016, the debt limits for the City were as follows: SUMMARY OF DEBT LIMIT CAPACITIES Without a Vote —With a Vote of the People— Item 1.5% 2.5% 5.0% 7.5% Legal Limit $ 86,048 523 $ 143 414,206 $ 286,828,411 $ 430,242,617 Outstanding Net Indebtedness Margin Available 63,525,489 $ 22,523,035`. 63,525,489 63.525,489 63,525,489 79,888,717..$ 223,302,923 $� 366,717,128 Prior Year Defeasance of Debt In 2015, the City defeased water and sewer bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At December 31, 2016, $1,910,000 of the defeased bonds were outstanding. Long-term Liabilities other than debt Claims are paid from one or more funds based on the nature of the transaction. Employees' compensable leave is the City's liability for all unused vacation and sick leave and unpaid overtime accrued by employees and, payable under specified conditions. This obligation is paidonly at the time of termination, usually from the same funding source(s) from which the employee's salary or wage compensation was paid. The City does not report a liability for termination benefits because it is not reasonably estimable. Local Improvement District No. 33 Tukwila Urban Access Improvement Project Local Improvement District (LID) No. 33 was formed on November 16, 2009 by Ordinance No. 2260. The project was designed to improve congestion within the City's Urban Center. The project included a partial lid over Southcenter Parkway, removal of conflicting turning movements, and the widening of Southcenter Parkway. Construction for the project began in March 2011 and was completed in October 2011, The project was closed out and accepted as complete by City Council on February 19, 2013. A variety of funding sources were used to pay for the project including federal and state grants, impact fees, City funds, a right-of-way donation, and special assessments. The City chose to fund the project internally, rather than obtain external, short-term financing then apply special assessments to property owners after the project was completed. Fund 104 Arterial Streets, where the project was accounted for, loaned the project funds as needed using a draw method at an interest rate of 1.80%. This loan was repaid in 2013 when special assessment bonds were issued. The City confirmed the assessment roll with a final assessment of $9,475,894. The prepayment period for the special assessments was open in the fall of 2013 and during that time the City received $2,788,350 in prepayments. Once the prepayment window closed, the City issued bonds for the remaining outstanding assessments in the amount of $6,687,500. From these proceeds, the City deposited $668,750 to the guaranty fund. The third of 15 annual installments for the assessments was due by October 16, 2016. As of December 31, 2016, all LID Special Assessments were current, nothing was delinquent. During 2016, several property owners chose to pay the assessment in full. Because of the additional principal payments received, the 97 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS City has enough funds in the LID No. 33 funds to meet debt service requirements in 2017 and pay $157,500 additional principal. Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 2016 is $0 for its tax-exempt bond issues subject to the Tax Reform Act. NOTE 11 —COMMITMENTS Property Sale Commitment. In December 2014, the City agreed to a sell the land parcel commonly known as the Longacre Property for $1.6 million. The sale is contingent upon the suitability of the property as determined by the purchaser. The examination period to determine suitability expires July 1, 2017, Construction Commitments. As of December 31, 2016, the City share of contractual obligations on construction projects total $13,194,339. GoNemmental Actisti es 42nd Ave 5 Phase III/Gilliam Creek SSWM 53rd Ave S Street Improvements Public Safety Plan Tukwila 205 Levee Certification Phase 1 & 2 Tukwila Urban Center - Pedestrian/Bicyle Bridge Boeing Access Road Bridge Strander Blvd Extension Phase 3 Duwamish Gardens Other governmental projects Total Governmental Activities Remaining Commitment $ 207,617 389, 019 2,694 716 316,788 5,127.518 185,128 125,410 303, 964 559.440 -..9,909,599 Remaiting: Business -Type Activities' Projects Commitment Andover Park East Water/Sewer $ 3,154,507 Macadam Rd 5 Water Upgrade 81,384 East Marginal Way South Storm Pipe Replacement 36,247 Other Utility related projects 12,602 Total Business -Type Aotrsttles $ 3,284,740 Total Construction Commitments ; $ ; 13, 194,339.. 99 CITY OF TUKWILA 2016 CAFR NOTES TO THE. FINANCIAL STATEMENTS NOTE 12 — POTENTIAL POLLUTION REMEDIATION AND OTHER LIABILITIES There are several lawsuits in which the City is involved. The City Attorney estimates thatthe potential claims against the City to have no material financial impact. The City of Tukwila may share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for sediment contamination within the Lower Duwamish Waterway Superfund site. The Environmental Protection Agency has estimated the total costs to be $342 million with 120 parties sharing in the liability. While a is impossible to accurately estimate the City's potential CERCLA liability at this time, the relatively small size of the City's storm water system within the Lower Duwamish Waterway Superfund site area, as well as the system's recent establishment in 1989, gives reason to the City to believe that its share of the potential liability is not significant and not estimable. NOTE 13 — RISK MANAGEMENT The city of Tukwila is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (I nterlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. WCIA has a total of 168 Members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, errors or omissions, stop gap, employment practices and employee benefits liability. Limits are $4 million per occurrence in the self-insured layer, and $16 million in limits above the self-insured layer is provided by reinsurance. Total limits are $20 million per occurrence subject to aggregates and sublimits. The Board of Directors determines the limits and terms of coverage annually. Insurance for property, automobile physical damage, fidelity, inland marine, and boiler and machinery coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property coverage is self-funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self-funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims and litigation administration. WCIA contracts for certain claims investigations, consultants for personnel and land use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the 99 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. The City insures its buildings, equipment, and vehicle property insurance with WCIA. They self -fund up to $250,000 with standard property insurance purchased above that amount. Traveler's insures boiler machinery and provides for employee dishonesty coverage. The City of Tukwila has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self -insures for unemployment benefits. This is budgeted each year and the City paid $43,488 in unemployment in 2016. This expense is budgeted in the Finance Department within the general fund and no reserves are allocated because of the limited liability and historical cost. The City also self -insures for medical, dental and other health care benefits. A third -party administrator, Healthcare Management Administrators, Inc., provides claims administration. The City has a stop -loss policy with Sun Life Insurance Company, which provides individual limits of $175,000 and a plan limit of $8,326,642 in 2016. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported (IBNR's) and a contingency reserve equal to 2.5 times the IBNR liability. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 54.9 days for medical, 19.6 days for pharmacy, 32.2 days for dental, and 48.7 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of December 15, 2016. Next, the estimated IBNR liability as of December 31, 2016 was developed by trending the December 15, 2016 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. The following table reflects changes in the balances of claims liabilities for 2016 and 2015. SUMMARY OF HEALTH CARE CLAIM LIABILITIES ITEM Active Employees Retired Employees LEOFE 1 2016 2015 2016 2015 Claim Liabilities at Beginning of Year Claim expenses: Current year and changes in estimates Claim payments and expenses Claim, Liabilities at End of Year NOTE 14 — SUBSEQUENT EVENT $ 1,947,500 $ 2,260,000 $ 221,250 $ 285,750 5,938,336 (6,027,586) 1,858,250 5,561,504 (5,874,004) 1,947,500 $ 524,274 134,050 (554,274) (198,550) 191,250 $ 221,250 In June 2017, the City Council approved an ordinance to sell bonds in July up to the amount of $8.8 million. Proceeds will be used to fund two residential sidewalk projects. 100 CITY OF TUKWILA. 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA. 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NOTES TO REQUIRED SUPPLEMENTARY INFORMATION BUDGET AND ACTUAL The City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. In compliance GENERAL FUND with the code, biennial budgets are adopted for the general fund and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting FOR THE YEAR ENDED DECEMBER 31,2016 principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biennially budgeted governmental funds only. Budgets established for REVENUES: proprietary and fiduciary funds are "management budgets" and are not legally required to be reported and, as Variance VAdr such, are not reported in the CAFR. Original Final Final Budget The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legal authority for Budget Budget Actual.' P008186 expenditures at that level. Subsidiary revenue and expenditure records are used to compare the budgeted (Gasp Basis) (Geap Bays) Results(Negative) - amounts with actual revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for individual functions and activities by object class, Any unexpended appropriation balances lapse at the end of the biennium. Taxes $ 43,668,417 $ 45.268417 $ 45,886,761 $ 618,344 Licenses and permits 2,165,661 2,140,110 2,129.221 (10,889) Intergovernmental 4,785,929 4,570,473 4,498.683 (71,790) Charges for services 2,441,464 3.402,412 3,286,105 (116,307) Fines and Foreitures 217,198 292.380 318.459 26,079 Investment earnings 89,731 129,731 233.544 103.813 Nlscellaneous 97,288 97,288 214.444 117,156 CO Total Revenues 53,465 686 ' 55,900,81.1 56,567,215 666,404 61 EXPENDITURES: Current: General Government 8,206,283 8,208,474 8,315,631 (107,157) Economic environment 4.465,648 4.710,648 4,070,805 639,843 Physical environment 2.072,847 2.015,847 1.955,028 60,819 Public Safety 28 200,194 30,111,895 29,100.506 1,011,389 Culture and recreation 4,228,863 4,361,063 4,408 302 (47,239) Transportation 3,162.762 3,162,762 2,879.996 282,766 Capital outlay 39,040 914,740 810,180 104,560 Total Expenditures '50,375,637 r. 53,485429. 51,540446 1,944,983. BteeSs Of Revenues And Expenditures 3,090,05}. .2415,382 5,026,769 2,611,387] OTHER FINANCING SOURCES (USES): Sales of capital assets 1,600,000 - Transfers in 2,075,000 2,075,000 - (2,075,000) Transfers out (7,153,791) (4,325.831) (4,325,831) Total Other Financing Sources And 1 es (3,478,791) (2,250,831) (4,325,831) (2,075,000).: The City of Tukwila's budget procedures are mandated by RCW 35A.33. The steps in the budget process are as follows: 1) Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. 2) The City Council conducts public hearings on the proposed budget in November and December, 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve by ordinance any amendments that increase the total for the fund. Budget amounts presented in the basic financial statements include both the original amounts and the final amended budget as approved by the City Council. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Includes all police and fire activities. Physical Environment Includes expenditures for the public works activities not chargeable to the enterprise funds. Transportation Includes all street and arterial street maintenance and construction. Economic Environment Reflects the planning and building inspection activities. Culture and Recreation Includes expenditures related to parks and recreational activities. Net change in fund balances (388,740) 164.551 700.938 536,387 Fund balances - beginning 15,404,983 16,962,983 18,330,806 1,367,823 Fund Balances - Finding $ :15.016,243. $. 17,127,534: $ 19,031,744 $ 1,904,210.. The information presented in the following required schedules was determined as part of the actuarial valuations at the dates indicated. 101 102 CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION COST SHARING MULTIPLE EMPLOYER DEFINED BENEFIT PENSION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PER5 1 Emfa of Bu net pard en' -TONT Reverts nate the net pension Plant:Weary net': proportionate ahSfe .60b44y (asset) - shpre °line net: 136168 et a position me oflle net oastn eased atad ni[h the `penareh aadpty. Emp 00440 aeer§d Pamarrtage AY4ewtrpd 097p 8940 ottiin •. Year Ending (asset) - nnbnm .mpbyer (aSs empty enWI:lea wren WWIpelMonkaM'[ June 30 2015 0.135736% $ 7.100255 $ - $ 7.100,255 $ 15 561,015 45 63% 59.10% June 30 2016 0.131354% $ 7054328 9. - $ 7.054,328 $ 15 736921 44.83% 57.0375 PERS 2/3 States proportionate share Y. Elnpoykk, of the net pension -Total Proportionate plbp08fan of pardon to (auat) z .M6b469 4ebll679 (asset)' shale of fha nk'. elated with the: pension Ila5188 EmpoyaYs covered- 34497.7E (asst)66491.yee P77780 EmpoyeSs ▪ 6080 Stere of 4419.ns on 47.7(4 ray net: 7/003 positbnaaa reit' tal e644. lab) 9804 tef61p68d1o60444ty 2015 0.173592% June 30. 2016 0.166622% P5ER5 6,202.541 8,389,286 - $ 6202,541 $ 15.406,589 40.2675 - $ 8389,286 $ 15,579,718 53.85% 89.20% 85.82% es Em240001a p146116660669676680 Total. Propo8orete the het pawn Plan 9ditiay< share of therpt'. kitty visa ppsitw8. ler lot Empoyats eoyered parctriage 98 patted parteY64d of. • (asset) 4mpbyet 966790 ' empb860 749704 total petdpnlp June 30. 2015 0.052748% $ June 30. 2016 0.048428% $ LEOFF 1 9628 $ 20 581 $ 9,628 $ 154,426 623% 95.0675 20,581 $ 157,203 13.09% 9041% Employ 97010806313 sh3 of the rat Olean eX 10,114 dXy (aasan _ 444269 ,_ June 30. 2015 0.077944% $ June 30, 2016 0,077890% LEOFF 2 the rel pgnsmp 77.664368757794 X361009866 441600000 59068,3pafaowreu 736,Ma3066044 empbY 93966 iotW pppswn WNW (939.397) $ (802,490) (939.397) $ (802.490) $ CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS PERS 1 rtor Fisabl Datermrz YOLfran _ 0090,0149064 t 0800 0609 (00 0303) Payroll. bpntribution as,a.:. 8.15066080 o0 083.1.66 007041975 0,6035710131. 2015 $ 0,0.35601312016 $ PERS 2/3 686.881 $ 752,418 $ (686,881) 9 (752,418) $ - $ 15.654,255 - $ 15.777,881 4.39% Cgntn6utt 3lail06 80 the Oen or) es a' PerCentege of DatOrmtned': Conttibution 06001.0 0.6766oyoa Covere4l Employee C068118 tion De4e)ency:(EXee309 Payroll Payroll December 31, 2015 $ December 31. 2016 $ PSERS 873,248 972,612 $ (873,248) $ (972.612) $ $ 15,498,171 $ 15.616.400 5.63% 6.23% 10.105 9 10.642 $ LEOFF 2 Dontribuaon"' Deficiency se (10 105) $ (10.642) 9 op Pi Employee COierep. Elnpld5 yroll Payroll 6.47% 6.59% 156,084 161,481 R ContHbuilo I 60labo6 to the y $f tufcdy Fiscat Detarmined Deterr (6,06. eontnleufion Veer Entli62 $ C4606butler) Cont0b00(06„ ; 0006)3npy. (Ex case December 31. 2015 $ 776,719 $ (776,719) $ December 31 2016 $ 787,110 $ (787.110) $ Copntnbu$)0n 203 e Pe1benteg0 of yea Covered EMploy00, .380,541 .005% 15 58 6.296 5% 76,144 -1233.7162 127.36% O .00% 123.74% . Until a /ull 10-yeer trend is compiled governments should present information only far those years for ankh information is available. dlpo7447a Wthe P.Bopo0 (he net purport orate shale habil074{ sat) shah ofiha rale, 'X3bWy ase q#iti9600 nsion Ilebldly 00[14 Bat 434* 6 essoclat34 witRtha pmd an 1148164 E 9647/4 s davelatl 3764003 dame 4 4360773342'of 4w (3'668)' 48666y 0mpbyet (Asset)* 4mpoyeeyay704 em97.709 tayill4 [veal patten lenity June 30 2015 0.519159% $ (5,335.916) $ (2.123.832) $ (7459.748) $ 15.113237 49.36% 111.67% June 30 2116 05106635$ S. (2,970.169) $ (1.936,334) $ (4,906.503) $ 15.460,002 31.70% 106.047. • Until a full 10 -year turd is compact governments 0401,52 present information only for Mose years for Mich inrormafion is available 103 104 CITY OF TUKWILA'. 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION FIREMEN'S PENSION TRUST FUND SCHEDULE OF FUNDING PROGRESS (Rounded to thousands) Actuarial Unfunded Actuarial UAAL as a Actuarial Actuarial Value Accrued Accrued Liabilities Funded Covered Percentage Of Valuation Date of Assets Liabilities (UAAL) `, Ratio Payroll Covered Payroll January 1, 2005 $1,265 $1,182 ($83) 107% $608 N/A January 1, 2007 1,336 1,310 (26) 102 463 N/A January 1, 2009 1,445 1,610 165 90 442 37 January 1, 2011 1,430 1,582 152 90 0 N/A January 1, 2013 1,416 1,296 (120) 109 0 N/A January 1, 2014* 1,409 1,853 444 76 0 N/A January 1, 2015 1,413 1,830 417 77 0 N/A January 1, 2016 1,417 1,445 28 99 0 N/A 'January 1 2014 change in actuary and adoption of GASB 67 Schedule of Changes in the City's Net Pension Liability and Related Ratios,. Total Pension Liability 2014 2016 2016 Service Cost .__........ 1 Interest Changes of benefit terms 50,098 49,716 49,332 Differences between expected and actual experience Changes in assumptions Benefit payments, included refunds of employee contributions Net change in total pension liability Totalpensionliability- beginning ! 1,852,693 (61,863) (2,442) (311,190) (62,728) (58,277) (59,988) (11,765) (11,003) (384,574) 1,840,929 1,829,926 Total pension liability - ending (a) ', $ 1,840,929 $ 1,829,926 1,445,352 Plan Fiduciary Net Position Contributions - employer Contributions - employee 64,114 $ 63,590 i 66,360 CITY OF TUKWILA'. 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION Net investment income Benefit payments, including refunds of employee contributions Administrative expense 1,805 (61,863) 2,667 7,988 (58,277) (59,988) (4,500) (4,500) Other - - - Net change in plan fiduciary net 4,056 3,481 9,861 position Plan fiduciary net position - 1,408,970 1,413 026 1,416,506 beginning Plan fiduciary net position - 1,413,026 1,416,506 1,426,367 ending (b)'. • City's net pension liability - 427,903 $ 413,420 18,985 ending (a) - (b) Plan fiduciary net position as a percentage of the total pension 'i 76.76% 77.41 % 98.69% liability Covered -employee payroll $ City's net pension liability as a percentage of covered -employee n/a n/a payroll Schedule of Employer Contributions Less. Contfibutions Relation; to the Capntribution as a: tutonly Statutorily i Contnbution Percentage of el Oeterrnined Determined Deficiency ' 'Coiered Employee Cooered' Employee Year Ending Contribution ,Contribution (Excess) Payroll Payroll December 31, 2007 $ 50,555 $ 50,555 $ $ - n/a December 31, 2008 52,571 52,571 December 31, 2009 48,537 48,537 December 31, 2010 49,989 49.989 December 31, 2011 54,865 54,865 December 31, 2012 52,249 52,249 December 31, 2013 56,962 56,962 December 31, 2014 64,114 64.114 December 31, 2015 63,590 63,590 December 31, 2016 66,360 66.360 105 106 n/a n/a n/a n/a n/a n/a n/a n/a n/a Annual Required Fiscal `; Employer; , ` Contributions Percentage. of Year Ending Contributions ; (ARC). ' ARC Contributed', CITY OF TUKWILA'. 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA' 2016 CAFR Contributions are a portion of State Fire Insurance Premiums. Schedule of Investment Returns Fltedule of Investm ns:i Annual money -weighted rate of return, net of investment expense, 2011 0.12% 2012 0.20% 2013 0 17% 2014 0.13% 2015 0.19% 2016 0.56% Ten-year schedule required. However, until a full 10 -year trend is compiled, information is presented for those years where information is available. REQUIRED SUPPLEMENTAL INFORMATION RETIREE MEDICAL AND LONG-TERM CARE BENEFITS FOR LEOFF 1 EMPLOYEES SCHEDULE OF FUNDING PROGRESS (Rounded to thousands) V,4 uatitRri: D Actuarial . UnfundadActuarial UAAL as a tuanet Yalue .Aaowed, Acdrued Liabilities Funded CAcered `Percentage ofAs'at s;; LrebrlRies IUAAL} . Rat)u Payroll ;Covered Psyrall January 1. 2008 January 1. 2011 January 1,2014 January 1.2015 January 1.2016 January 1, 2017 $0 0 0 0 0 $16,103 14,805 21,264 29,538 30,186 29,054 $16.103 0% 14,805 0 21.264 0 29.538 0 30.186 0 29.054 0 SCHEDULE OF EMPLOYER CONTRIBUTIONS 0581 371 195 132 45 3 1 0 0 0 0 December 31, 2008 $557,103 $1,366,284 41% December 31, 2009 $335,265 $1,366,284 25 December 31, 2010 317,771 1,366,284 23 CO December 31, 2011 335,090 1,264,522 26 01 v December 31, 2012 404,007 1,264,522 32 December 31, 2013 878,755 1,264,522 69 December 31, 2014 905,974 1,903,679 48 December 31, 2015 477,292 2,585,779 18 December 31, 2016 275,530 2,765,486 18 107 108 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are established to account for proceeds of specific taxes or other specific revenue sources that are legally restricted to or committed for expenditures for particular purposes. • Hotel/Motel Tax Fund — Established to account for the proceeds of a 1% special excise tax on ovemight lodging in Tukwila. This tax provides resources to support tourism development and promotion activities in Tukwila. • Drug Seizure Fund —Accounts for monies and proceeds from the sale of property seized during drug and felony investigations. These funds are legally required to be expended on drug and felony related police activities. Debt Service Funds Debt Service Funds are account for the accumulation of resources for and the payment of principal and interest on general obligation and special assessment bonds. • Local Improvement Guaranty Fund — Holds reserve funds required under state law to provide a means of paying local improvement district (LID) bond debt service obligations in the event there are insufficient resources in the LID debt service fund. • Limited Tax G.O. Refunding 2003 — Accounts for the principal and interest payments for the refunded Limited Tax G.O. 1994 Bonds for the construction of a new Community Center and the replacement of Fire Station #53. This bond has been paid off. Limited Tax G.O. Refunding 2008 — Accounts for the principal and interest payments for the refunded Limited Tax G.O. 1999 Bonds which were issued for the purchase of a City Hail annex, known as the 6300 Building, and the purchase of land and payment of other economic revitalization costs for the future Tukwila Village project. • Limited Tax G.O. SCORE — Accounts for the principal and interest payments required per the debt service schedule for the City's portion of the construction of a correctional facility along with six other cities. Limited Tax G.O. 2010 — Accounts for the principal and interest payments for the bonds issued for the construction and realignment of a major arterial street, Southcenter Parkway, in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • Limited Tax G.O. Refunding 2010 — This fund provides payment to Valley Communications Center for principal and interest on bonds issued in April 2010 to refund bonds that were originally issued in 2000 to pay for the new Valley Communications Center. This debt reflects Tukwila's share with four other cities. Each of the five cities was responsible for one-fifth of the annual debt service. The final payment was made in 2015. Limited Tax G.O. Refunding 2011 — Accounts for the principal and interest payments for the portion of the Limited Tax G.O. 2003 Bonds refunded and pertaining to arterial street projects. 109 CITY OF TUKWILA'. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES • Limited Tax G.O. 2013 — Accounts for principal and interest on bonds issued for the renovation of the Tukwila Metropolitan Park District swimming pool. The proceeds were loaned to the District; the District reimburses the City for the debt service based on an interlocal agreement between the two entities. • Limited Tax 0.0 Fund — Accounts for principal and interest payments on bonds issued in 2014 for the Tukwila International Boulevard Revitalization project and for bonds issued in 2015 for the Interurban Avenue South improvement and Boeing Access Road Bridge retrofit projects. Capital Project Funds Capital Project Funds account for the acquisition or development of major capital facilities, except those projects financed by proprietary funds. Sources of revenue to these funds include general obligation bond proceeds, federal and state grants, real estate excise taxes, and transfers from the General Fund. Residential Street — Established in accordance with RCW 35A.37.010 to account for maintenance and improvement of the City's residential streets. Major sources of support are the State -levied tax on motor vehicle fuels distributed to Tukwila, to be used for City street purposes, state and federal grants, and transfers in from the General Fund. Land Acquisition, Recreation, and Park Development — Accounts for the acquisition of land, development of land, and construction of park facilities. • Facilities (Urban Renewal) — Established in 1988, this fund accounts for costs associated with property owned by the City that will be utilized for redevelopment or renewal purposes. General Government Improvements — This fund was established in 1992 to provide funding for minor capital improvements not related to parks, land acquisition, or major building replacements. • Fire Improvements — This fund is to be used for the acquisition of land, development of land and construction of fire facilities. Revenue for this fund comes primarily from fire impact fees. 110 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR GOVERNMENT FUNDS DECEMBER 31, 2016 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENT FUNDS FOR THE YEAR ENDED DECEMBER 31,2016 Total Total Total Total Special Revenue Debt Service Capital Projects GovernihentoI Funds. Funds Funds Funds REVENUES: TAXES. Total Total Total Total` Special Revenue Debt Service Capital Projects Governmental Funds -.Funds Funds Funds ASSETS: Taxes $ 710,267 $ Cash and cash equivalents $ 1,096,397 $ 1,063,774 $ 4.382,031 $ 6.542,202 Charges for services htergovernmental - Taxes receivable 84,316 536,175 620,491 Investment earnings 1,607 Other receivables 6,600 6,600 Miscellaneous 624,279 Due from other governmental units 1.163,418 1,163418 Total Revenues 1;336,163.. Restricted Assets: Cash and cash equivalents 503,475 - 503,475 Notes receivable - 300,022 300,022 Capital assets held for resale - - 7,645,000 7,645 000 Total Assets : $ 1,684,188 ..1,063 774 14 033,247: 16,781,208 CO w r LIABILITIES AND FUND BALANCES: CO Current liabilities Accounts payable Accrued wages and benefits Customer deposit Total Liabifties 218,091 464,675 682,766 6,799 6,799 175,644 175,644 218,091 647,118. 865,299 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -impact fee - - 306,622 306,622 TOTAL DEFERRED INFLOWS OF RESOIJRh - - - 306,622 '306,622 Fund balances: Nonspendable 7,645,000 7,645,000 Restricted 1,466,097 668,849 4,078,143 6,213088 Assigned - 394,925 1,356,364 1,751,288 Total Fund balances1,466097 1,063,774 13,079,507' 5A09,377 Total Liabilities and Fund 1,684,188 $.: 1,063,774 $ 14,033,247 $ 16,781,208: 111 62.091 5 1.417,534 $ 2.127,801 183,867 183,867 1,863,750 1,925,841 8.943 10,553 624,279 62.083 -.3,474,054 4872,341. EXPENDITURES: Current General government - - 1.090,359 1.090,359 Econonac environment 422405 - - 422,405 Physical environment - - 3 3 Public safety 59.303 - 59,303 Cultural and Recreation - 135,038 135,038 Transportation - 261,641 261,641 Debt service Principal 1,932782 1,932,782 Interest 812.540 - 812,540 Capital Outlay 18,707 - 2.026.808 2.045,515 Total Expenditures 500.415 2,745.321 3,513,849 6.759,585'. Exces (deficiency) of revenues Over (Under) Expenditures 035 738 - (2883,228) (38,755) 11:887.,245). OTHER FINANCING SOURCES (USES): Transfers in - Total Other Financing Sources And Uses - Net change In fund balances 835.738 Fund babnces - beginning 530.359 Fund Balances -. Ending $ .1;469097 2,874.831 400.000 3.274, 831 2,824.831 400.000 3.274,831 191.604 360 245 1.387,586 872.16 9 12.719,262 14, 221.790 ,063,774 '.:. $ 13,079,507 $. 15,609378.. 112 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. WASHINGTON COMBINING BALANCE SHEET NON -MAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2016 Total'.. Special Revenue Hotel/Motel Tax Drug Seizure Funds ASSETS: Cash and cash equivalents Taxes receivables Cash and cash equivalents Total Assets $ 1,049,539 $ 46,858 $ 1,096,397 84,316 84,316 - 503,475 503,475 1,133,855 550,333 - 1,684,188 CITY OF TUKWILA'. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31.2016 Hotel/ el Tax- Drug. Seizure Total Special Revenue Funds REVENUES: Taxes $ 710,267 $ - $ 710,267 Investment earnings 1,576 31 1,607 Miscelaneous - 624,279 624,279 Total Revenue 711,843 624,310 .'0,336,153 LIABILITIES AND FUND BALANCES: O(PENDITURES: Accounts payable 221,297 (3,206) 218,091 Current' Total Liabil5es . 221,297. - (3,206) 218,091 Public safety - 59,303 59,303 Economic environment 422,405 - 422.405 Fund balances: Capital outlay - 18,707 18,707 Restricted 912,558 553,535 1,466,097 total Expenc9tures 422,405 78,010 500,415. Total FundBalances 912,558 553,539. 1.,466,097 Excess (deficiency) of revenues Over (Under) Expenditures 289,438 - 546,300' ` .835,738 Total Uab68es and Fund Balances 1,133,855 $ 550,333 $ 1,684,186 Net change in fund balances 289,438 546,300 835,738 Fund balances -beginning Fund Balances - ending 623,120 7,239 630,359 912,558 $ 553,539... $ 1,466,097 113 114 CITY OF TUKWILA'. 2016. CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. WASHINGTON COMBINING BALANCE SHEET NON -MAJOR DEBT SERVICE FUNDS DECEMBER 31. 2016 Special LTGO L100 Score LTGO Vaky LTGO : LTGO LTGO Bond Total Assesnent Rsfundmg'. RefundingLTGO Bonds Com Refunding Bonds Fund -, Bonds Bonds Bonds. Bonds 2010 LTGO Bonds.. '..2013.. Guaranty 2003(Ref 2008(Ref 2009` Refunding 2011 (Ref Fund 2013 1994). 1999) 88n48 2003) 2010 (Ref 2000) Fi ASSETS: Cash and cash equrvalents $ 669,150 $ 195 $ 416 $ 2 $ 33,940 $ 794 $ 539 $ - $ 358740 $ 1,063,774 TOTAL ASSETS 869,150 195. 416. 2 33,940 794 539 358,740.. 1 063,774 LIABILITIES AND FMD BALANCES: Totalllabkas Fund balances. RestrFted Assgned Total Fund Bebnoes Total Llabities and Fund 9alances 668 849 - - 300 195 416 669,148 ..19.5 416 33,940 794 539 -33,940 - 794 539 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CM OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31,2016 Special 1100 -LTGO " Score LTGO : Valet LTGO LTGO LTCVJ Bond Total Assessment Refuldn Refun6ig ITGO Sonds Com' Ref+4Mng Bonds Bmd Nonrrafor Debt Bonds 9 Sons Bonds :Bands 2010" LTGO Sends 2093 Serves Funds Gaeta 19 2003 (Ref 2008 (Ref 2009* Rel nmg: 2011(Ref Fund2013 1954) 1999) Bonds 2003) 2010(Ref 2000) REVENUES' Intergovernnental Investment earnings Total revenues E%PB40iTURB: Debt service Principal Interest Total ExPondfures - 2 - 3 - $ 62 091 $ 62,091 2 2 62.091. - - 62,003 - 655,000 395,000 420,000 93,782 369.000 1,932.782 - 156.100 - 190450 - 128.675 19348 311966 812,539 011100 `565;450 :.548675. 113,130 666966 -2,745,321. 568,849 Excess (deficiency) of revenues 358740 394,925 Oyer (1914er) 609 998 res. 2 - (811,100): - (523,358) (548675) (119130) (888,966) -(9689228) 358,740 - 1,663,774.. 669.148..: 416 33 4 539 063.714' tinted Tax GO Bonds 2009A also'ncludes 1169109 Tax GO Bonds 20098 Limited Tax GO Bonds 2010A also'ncludes Taxable Build America Bonds 20108 OTHER FINANCING SOURCES (USES(: Transfers in Tafel Other Financing Source An Use - 811.100 523 593 548.675 113.130 878 333 2,874,831 811.100:. 523,593 - 548,675 113,130 878.333 2,874,831 Net change in fund balances 2 - - - 235 - - Fundbalances- beginning 669,146 195 416 2 33705 794 539 Fun Balances - Fading $.689148 $ 195 $ 416 :$ 2-$.33,940 $ 794 -.$ 539 $..:.. 191 367 191,604 167372 872,169 358,739 $ .1,063,774 ` United Tax GO Bonds 2009A also includes L'x led Tax GO Bonds 20098 " grated Tax O0 Bonds 2010A also Includes Taxable Build America Bonds 20108 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR CAPITAL PROJECTS FUNDS DECEMBER 31, 2016 ASSETS: Cash and cash equivalents Taxes tecelvable Other receivables Due from other governmental units RESTRICTED ASSETS'. Notes receivable Capital asset held for resale Total Assets CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKVv1LA WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR CAPITAL PROJECTS FUNDS FOR THE YEAR ENDED DECEMBER 312016 Land Acq. 68681:es General Total NO86661 Residential ROS&Park Urban Government Fire Capital Project REVENUES: Street Devebpment Renewal hproverrents krproverrents Funds Taxes Charges for services $ 719,316 $ 2,079.567 $ 445.059 $ 401.572 $ 736,518 $ 4382,031 42.820 493,355 24,672 1,138746 - 7,645,000 536,175 6,600 6,600 - 1.163.418 300,022 300,022 - 7,645,000 786,808 3;711,668 5060059. 401 572 ...;1043140 14033,247' LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Current payables'. Accounts payables 106.577 332.980 20.968 4.150 - 464,675 Accrued w ages and benefits 2.578 329 - 3.892 - 6.799 Custorrer deposit 18,720 26.246 129.050 1.627 - 175,644 W Total Llab:Nes - 127,875 359,555 150.018 .- 9,669 - - 647,118:, 6Deferred hflow of resources. Unavailable revenuesrupact fee - 306,622 306,622 Total Deferred hfbw of Resumes - _ _ 306,622 306,622 Fund balances Nonspendable - - 7,645000 - - 7645000 Restricted - 3,341 625 - - 736,518 4.078.143 Assigned 658,932 10488 295,040 391.903 - 1,356.364 Total Fund Belace - : 858.932 3,352;113 7040,040 391 903 736518: 13079,507: Total Liabkkles and. Fund Balances $ { 786,808 4 3,711,668 58,090,059 '; 401,572 51,043,140 . $:' 14,033,247, Land Acq. Residential Rat & Park Street Oevabpmenl FacMrea Gerreral Urban Government Renewal Improvements rOV Total N runesor Capital Rejects. Funds. Intergovernmental Investment earnings Total Revenues EXPENDITURES: Current. General government Physical environment Culture and recreation Transportation Capital Outlay Total Expenditures Exoes (deficiency) of revenues OJor (Under) Expenditures $ - 9 1417,534 $ - - $ - 5 1,417534 183 867 465.422 1,398,328 - - - 1.863 750 2,163 1,702 2,706 1.156 1,216 8,943 ....467585 .'.:2617564 2706.; 7156 185.084 3.474,094. 183,867 3 135,038 261,641 - 566.172 1,447,498 897,211 193,148 13.138 1.090.359 3 135.038 261.641 2.026 808 827,813 ....1582540 697211.'.. 206,285' . -- - 3.513,849... 0229) :..1,235025 (894,505) (206130):. 185084: OTHER RNA NCING SOURCES (USES): Transfers In 200.000 Total Other Brairming Sources And Uses : 200000 bkt change In fund balances Fund balances - beginning Fund Balances- erdrg 200.000 200:000-.. (160,229) 1.235,025 (894,505) (5.130) 185.084 9,755) 400.000 400.000. 360.245 819.161 2,117,089 8.834,545 397.033 551.434 12.719.262 $..658932 $ '3352,113 $ 7,940040:::.5 391903: $ 736,518 g 13,079,507 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL ARTERIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LOCAL IMPROVEMENT DISTRICT #33 DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance 1Mb Original Final Final Budget Variance With Budget Budget Actual Positive Orginal Final Final Budget (Gaap Basis) (Gaap Base Results (Negate,e) Budget Budget Actual.. Restive (Gaap Base) : (Gaap Bass)... Results (Negatwe) REVENUES: Special assessment $ 443,147 $ 593,147 $ 542,180 $ (50,967) REVENUES: Investment earnings 342,526 342,526 267,930 (74.596) Taxes $ 365,160 $365,160 $ 1,573 930 $ 1.208 770 Mscellaneous - 886 886 Intergovernmental 10 322,920 10 322,920 3,642.889 (6.680.031) To Revenues 785,673 935,673 810,997 (124,676). Charges for services 160,000 160000 441.500 281.500 EXPENDITURES: Investment earnings 5.000 5.000 19.711 14.711 Debt service: Miscellaneous 117,549 117.549 Rincipal 6) Total Revenues - 10,853,080 10853080: 5,795,580 (5,057,500) bterest C.a EXPENDITURES: Total B pendtures Current Transportation 436,216 436.216 2,096,831 (1660615) EXCe5s Of Revenues And E%penditures Capital outlay 13.764.001 14 164,001 5.502.756 8.661 245 Total Expenditures ` - - 14200,217 14,600,217. 7,599;587 7,000 630 Net change in Lund balances Fund balances -beginning Excees (deficiency) of revenues FundBalances- Ending -.. Over (Under) Expenditures (3147137) (3.747,137) (1,804,007) -1:943,130. OTHER FINANCING SOURCES (USES): Transfers in Total Other Financing Sources Andibes 3,151,000 751.000 751.000 3.151000 751,000 751,000 Net change in fund balances - (196,137) (2 996,137) (1 053,007) 1,943 130 Fund balance - beginning 344,489 5.044,489 5.052.363 7.894 Fund Balances - Ending $ 148,352 $ Z048.352 $ 3,999,376 $ 1,,951,024 450,000 900,000 286,005 286,005 670,000 281,044 230.000 4,961 736,005 1,186,005 ' 951,044 234,961'. 49,668 s; ` (250,332) 0,285 49,668 820,856 870,524 (250,332) 820,856 $ 570,524 $ (140.047) 1,038,769 898,722 110,285 217,913 328,198' 119 120 CITY OF TUKWILA'.. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL PUBLIC SAFETY PLAN CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31.2016 Original Budget (Gasp Basis) Final Budget (Gasp Bats) Actual ResuSS Variance With Rnal Budget Positive (Negative) REVENUES: Investment earnings Total Revenues EXPENDITURES: Current: General Government Total Expenditures 9.561 $ 9,561 9,561 9,561 209,954 .206,388 3,566 Excess Of Revenues And 6rpenditures (209,954) (196,827), OTHER FINANCING SOURCES (USES): Bond proceeds Premum on bonds issued Total Other Financing Sources And Uses` Net change in fund balances Fund balances - beginning Fund Balances --Ending 13,127 32,990.000 32,990,000 3,719,954 3,719,954 36,709,954 36,709,954.. 36,500.000 36,513,127 13,127 $. 36,500,000 $ 36,513127; 3,127 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL HOTELIMOTEL TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2016 Original - Final Budget- Bduget Actual (Gaap Basis) (Gaap Basis) Results Variance With Final Budget Positive (Negative) REVENUES: Taxes $ 630,000 $ 630,000 $ 710,267 $ 80,267 Investment earnings - - 1,576 1,576 Total Revenues 630,000 630,000 '711,843 81,843 EXPENDITURES: Current: Economic environment Total Expenditures Excess (deficiency) of revenues Over (Under) Expenditures 427,500 427.500 422,405 5,095 427,500 427,500 422,405. 5,095 202,500 202,500.. , 289,438 86,938, Net change in fund balances 202,500 202.500 289,438 Fund balances - beginning 389,674 389,674 623,120 86,938 233,446 Fund Balances Ending $ 592,174 g: - 592,174 $ ,912,558 320,384 CITY OF TUKWILA'. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DRUG SEIZURE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2016 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL RESIDENTIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance With. - - Original Final Final Budget Budget Budget Actual positive Variance With (Gaap Basis) (Gaap Basis)'. Results (Negative) _ ? Origin al Final Final Budget Budget Budget Actual PCs'Ee: REVENUES: Investment earnings Fines and forfeitures Total Revenues EXPENDITURES: Current. Public safety Capital outlay. Public safety Total Expenditures Excess (deficiency) of revenues Over (Under) Expenditures Net change In fund balances 0) CT Fund Balances - beginning Fund Balances.- Ending - $ - $ 31 $ 31 (Gaap Basis), - (Gaap Bae) Results '(Negative) 60000 635,000 624279 (10.721) - 60,000 635,000 624,310 - (10,690) REVENUES: Intergovernmental $ 1705.078 $ 2,544 028 $ 465,422 $ (2 078,606) Investment earnings 1.800 1.800 2,163 363 45,000 95,000 59,303 35.697 Miscellaneous 2,850 000 2,850,000 - (2.850,000) - - 18,707 (18 707) Total Revenue8:' 4,556,878 5,395,828 467,585 (4928243) 45,000 95,000 76,010 35,697 15,000 540.000 546,300 6,300 15,000 540000 546,300 6,300 65,000 65.000 7,239 (57,761) 80,000 $ 605,000 $ :553 539 $ (51,461) EXPENDITURES: Currents Transportation Capital outlay Total Expenditures 261.641 8,823,000 9,751,000 566,172 (261,641) 9,184,828 .'..8823000 9,751,000 827,813 8,923,187. ExcessOfRevenues And Expenditures (4,266,122) (4,355,172) (360,229) 3,994,943 OTHER FINANCING SOURCES (USES): Bond proceeds 4,400 000 4,400,000 - (4 400,000) Transfers in 200 000 200.000 200,000 - Total Other Financing Sources And Uses 4,600,000. 4,600,000 •200,000 (4 400,000)' Net change in fund balances Fund balances - beginning Fund Balances - Ending 333.878 244,828 (160,229) (405,057) 56.842 806.842 819,161 12,319 390,720 $ 1051,670 $ 658.932 $ (392,738) 123 124 CITY OF TUKWILA 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LAND & PARK ACQUISITION CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance 6M81 Original Final Final Budget Budget ' Budget Actual Positive (Gasp: Basis) (Gasp Bak) Results (Negative) CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CIN OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FACILITIES CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance NMth Original Final Final Budget -, Budget Budget Actual ..Positive (Gasp Basis) (Gasp Ben). Results (Negative) REVENUES: REVENUES: Taxes $ 260,000 $ 260.000 $ 1,417,534 $ 1,157,534 Investment earnings $ 3,602 $ 3,602 $ 2,706 $ (896) Intergovernmental 10,000 810,000 1.398,328 588,328 Total Revenues- - 3,602 3,602 2,706 (896) Charges for services 40,000 40,000 (40,000) Investment earnings .1,000 1,000 1,702 702 EXPENDITURES: Current: Total Revenues - 311,000 1,111000, 2.817,564 1,706,564 General Government - - - 897,211 (897,211) EXPENDITURES: Principal 2,250,000 2,250,000 - 2,250,000 Current: Capital outlay 90,000 90,000 - 90,000 r Fhysical environment - - 3 (3) Total Expenditures 2,340,000 2,340,000 897,211 1,442,789 0) Culture and recreation 135,038 (135,038) Capital outlay 292,000 1,092,000 1,447,498 (355,498) Excess Of Revenues And Expenditures (2,336298) '(2,336,398) ..(894,505) 1,441,893- Total Expenditures 292,000 1.092,000 1,582,540 .: (490,540)OTHER FINANCING SOURCES (USES): Sales of capital assets 4,325,000 4.325.000 - (4,325.000) Excess Of Revenues And Expenditures 19,000 19,000 1235,025 1,216,025 Transfers out (2,075,000) (2,075,000) - 2,075,000. Net change in fund balances 19,000 19,000 1.235,025 1,216,025 Total Other Financing SnurceS And Uses 2,250,000 2,250,000 - (2,250,000): Fund balances -beginning 318.000 2.118,000 2.117,089 (911) Net change in fund balances before special dem (86,398) (86,398) (894.505) (808,107) FundBalances-Ending $ 337,000 $ 2,137,000 $ 3252113 $ 1215,113 Fund balances - beginning 1,873,602 1.873,602 8,834,545 6,960,943 Fu9d 901 noes 9641 $: -`1787204 .$ 1787204 $ 7940,040 $ 6,152,836.. 125 126 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL GOVERNMENT IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance NMtt iginal Final Final Budget Budget Budget Actual Positive (Gasp Basis) (Gasp Baas)Resutls' (Negative) CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FIRE IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance W h'. Original Final Final Budget Budget Budget ActUal .Positive (Goap Basis) (Gasp Bak) Resuks (tkgative) REVENUES: REVENUES: Investment earnings $ 500 $ 500 $ 1.156 $ 656 Fire impact fees $ 50,000 $ 50,000 $ 183,867 $ 133,867 Investment earnings 100 100 1216 1116 Total Revenues 500 - .500 1}56 656;. , TotalRavenues C 50,100 50,100 :.185,084 134,984. EXPENDITURES: Current. General Government - 193.148 (193.148) General Government Improvements 130,640 130,640 130,640 Ca Capital outlay 200,000 200,000 13.138 186,862 6, Total Expend re 330,640 330,940 206,285 124,355' Excess Of Revenues And Expenditures (330140) (330,140) (205,130) 125,010:. OTHER FINANCING SOURCES (USES): Transfers in 200,000 200,000 200000 Total Other Financing Sources And Uses' ,,.200,000 200;000 200,000 Net change in fund balances Fund balances - beginning Fund Balances - Ending (130.140) (130,140) (5.130) 379,950 379.950 397.033 249,810. $ ,. 249,810 $ 381;903 125.010 17.083 142,093 EXPENDITURES: Current: Rrblic Safety Capital outlay Total Expenditures Ezceo6 Of Revenues And ExpendWres Net change in fund balances Fund balances - beginning Fund Balances -: Grderg 50,100 50,100 500,100 550,200 50,100 X185,084 134,984 50,100 500,100 185.084 551,434 134,984 51,334 550,200 7 6,5 8 86 127 128 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31,2016 Varlance: With Orgnal Final Final Budget Budget Budget Actual Positive (Gasp Basis) (Gasp Bais) Results ,(Negative) REVENUES: Intergovernnental $ 61,858 $ 61,858 $ 62,091 $ 233 Investment earnings 500 500 2 (498) Total Revenues 62,358, 62358 ;'62093 (265) EXPENDITURES: Debt service: Principal 2.607,271 2A42,071 1,932,782 Interest 757,378 494,618 812,539 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON -MAJOR INTERNAL SERVICE FUNDS Internal Service Funds The City's internal service funds are used to account for the financing of special services performed by designated departments within the City of Tukwila for the benefit of other departments within the City. The funds provide services then generate revenue by billingthe department for which the service was provided. • Equipment Rental Fund — Accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates which are charged to each user department. • Insurance Fund Active Employees — Accounts for the costs of the City's self-insured medical plan. Medical and dental costs for covered employees are charged to the respective departments. All premiums, medical and dental costs and ancillary charges are included. • Insurance Fund LEOFF 1 Retirees —Accounts for the costs of the City's self-insured medical plan for LEOFF 1 retirees. Medical and dental costs for covered employees are charged to the respective departments, either 509 289 the Police Department or the Fire Department. All premiums, medical and dental costs and ancillary charges (317.921) are included. CO Total Expenditures 3,364,649 2,936,689 2,745.321 (191,368) 6) CO Excess: 01 Revenues. And Expenditures x(3,302291) (2,874,331) (2,683227) 191,104' OTHER FINANCING SOURCES (USES): Transfers in Total Other Financing Sources And Uses 3,302,791 2 874,831 2,874 831 3.302,791 2,874,831 ,:2,874,831. Net change in fund halances 500 500 191,604 191,104 Fund balances - beginning 673,500 673,500 872,170 198.670 Fund Balances • Ending $ 874,000 $ 674,000 $ 1,063,773 $ 389,773: CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS DECEMBER 31, 2016 Equipment- Rental Insurance - Active Employees Insurance- Leoff I Retirees Total` InteMal Service Funds ASSETS: Current assets Cash and cash equivalents Investments Receivables Inventory of materials and supplies Total Current Assets -. NONCURRENT ASSETS Capital Assets: Machinery and equipment Less: accumulated depreciation Total Capital Assets (Net Of A(D) Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred outflow pension earnings Total Deferred. hflows Of Resources LIABILITIES: Current liabilities: Accounts payable Accrued w ages and benefits Clams incurred but not reported Total Current Liabilities Noncurrent liabilities: Reserve for unreported clams Net pension liability Total Noncurrent Liabilities - - Total LIab1 Deferred Inflows of Resources Deferred Inflow pension earnings Total Deferred Inflows Of Resources. NET POSITION. Investment In capital assets Unrestricted Total Net Position $ 4,285.711 525 627 1,546 15,273 951,771 2,377,387 23,915 $ 1.077247 4,828,157 -. 14.942 639 (10 234 527) 4,708,113 3.353,073 077,247 6,314,729 2,903 014 25,462 15,273 9,258.478 14,942.639 (10,234 527) 4,708,113 4,708,113 708,113 4,708,113 4;708,813 - 9,936,270- 3.353,073 - - 1 077,247. 13,966.590 64.348 64,348 64.348 82.948 19.698 102,646 381.561 3519 689,750 58500 381.561 689,750 62,019 1.168,500 132 750 1,168 500 .132.750 - -. 64,348 86,468 19,698 748,250 854,416 1,301,250 381,561 1,682,811 484,207 14.963 1,858,250 194,769 2,537,227 14,963 14,963 4,708 113 4,393 334 $ 9,101,447 1.494,823 882.478 $ 1,494,823 ,. 882.478 14,963' 4,708 113 6,770 636 11,478,749,. 131 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 Equipment Rental Insurance nsurance Active Leoff1 Employees Retirees Total Internal Service Funds OPERATING REVENUES: Charges for services Other operating revenue Total Operating Revenue OPERATING MENSES: Operations 8 maintenance Adninistrative 8 general Depreciation Total Operating Expense Operating Income (Loss) NON-OPERATING REVENUE (EXPENSE,: Investment earnings Gain (loss) on disposal of capital assets Total Non -Operating Revenue (Expense) Ohange In Net Rtsrfron Net position beginning of year Net Position end of year $ 2,066,889 $ 5,290,893 $ 630,444 $ 7,988,226 2,043 138,033 140,076 2,068,932 `. 5,428,926 630,444 8,128,302'. 1,247,530 5,817.626 512,861 316,578 120,703 11,408 799,436 - - 2,363,544 - 5,938,329 524,269'. (204,613) (505,403)-106175. 29,435 96,953 126,388 22,288 569 7,578.017 448,689 799,436 8,826,142 (697,840) 22,288 69 52,291 96,953 149,244 (168,225) (487,115) 9,269,672 1,981.939 106,744 (548,596) 775,734 12,027.345 $ 9,101,447: $ 1,494,823 $ 882,478 - $ 11,478,749 132 CITY OF TUKWILA'. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016 Page 1 of2 Insurance Equipment Active Rental Employees Insurance Leogl Retirees 5 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from users Cash paid to suppliers Cash paid for taxes Cash paid to, or on behalf of, employees Net Cash Provided (Used) By Operating Ac6Mties CASH ROWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceed from sale of equipment Purchase of capital asset Net Cash Provided (Used) For Capital And Related Financing Activities CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of investments Purchase of investments Interest received NetGash Provided (Used) In investing Activities Net Increase (Decrease) In Cash And Cash Equivalento Cash and cash equivalents-beginningof year Cash Md Cash Equivalents -End Of Year Cash atend of year consists of Cash and cash equivalents $ 2068.932 $ (990.773) (570) (562,898) 5,423,842 $ 697,839 $ 8.190,613 (246,446) (47,192) (1284.411) (570) (5,781,133) (506,271) (6,850,302) 514,69f (603,7: 128,075 (797,536) 144,376 55,330 128,075 (797,536) (669,461) (225,000) 33,052 (191,948) 1240 930 139,501 1,380,431 569 (669,461) 1,015,930 173,121 569 1,189,061; (346719) 776,694 '.144,945 574920 4.632,430 175,077 932,303 5,739,809 $ 4285,711, ,. 5. 951,771 , $ 1.077,247 $,' 6314,729 $ 4,285711 $ 951,771 $ 1,077,247 6,314,729 Total Cash $ 4,285,711 $ 951,771 $ 1,077,247 „$1 6314,729,;. CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016 Page 2 of Insurance'- Ac$ve Employees Tote! -' Insurance- Internal Leoffl Service Retirees Funds RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income: (Loss) Adjustments to reconcile operating income to net cash Provided (used) by operating activities: Depreciation Asset(increases) decreases. Accounts receivable Inventory Deferred outflow of resources (increase) decrease Liability increases (decreases): Accounts payable Wages and benefits payable Deferred inflow of resources increase (decrease) Total Adjustments Net Cash Provided:(Used) By Operating Activities SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Increase in fair value of investment Total. Non Cash: !nesting, Capital And Financing Acrfivfies. (294,613)' $ (509,403) $ 106,175 $ (697,840) 799,436 (1,436) (26,438) 24.611 213 12,917 (5.084) (89,250) 67,395 (29,194) 799,436 62,311 (1,436) (26,438) (93,833) 213 12,917 809,303 (94,334) '38,201- 753,170 514,691 ;'$ (603,737) $ 1. 144376','$ 55,331 $ (18,661) $ $ (18,661) 16,66 ,66 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Balance Balance January 1 2016 Additions Deductions December 31,2016 ASSETS Cash and cash equivalents $ 124,624 $ 940,142 $ (863.027) $ 201,739 Receivables 12,467 131,437 (88,361) 55,543 Total Assets - 137,092 1,071,579 (951,389) 257,282; LIABILITIES CO Accounts and other payables v Total Liabilities 137,092 1,857,890 (1,737,700) 257.282 ...137,092 $ 1,857,890. $ (1,737,700) $ 257,282, The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES 135 136 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION City of Tukwila STATISTICAL SECTION December 31, 2016 Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net Position by Component 138 Schedule 2 Changes in Net Position - 140 Schedule 3 Fund Balances, Govemmental Funds 142 Schedule 4 Changes in Fund Balances, Governmental Funds 144 Schedule 5 General Governmental Tax Revenues by Source 146 Revenue Capacity Information The objective of providing revenue capacity information is to helpusers understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Property Tax Levies and Collections 147 Schedule 7 Assessed and Estimated Actual Value of Taxable Property 148 Schedule 8 Property Tax Rates -Direct and Overlapping Governments 149 Schedule 9 Principal Property Taxpayers .. 150 Schedule 10 Retail Sales Tax Collections by Sector 152 Schedule 11 Sales Tax Rate Direct and Overlapping Governments 154 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of outstanding debt and ability to issue additional debt in the future. Schedule 12 Ratios of Outstanding Debt by Type 156 Schedule 13 Ratios of General Bonded Debt Outstanding 158 Schedule 14 Computation of Direct and Overlapping Debt 159 Schedule 15 Legal Debt Margin Information 160 Demographic and Economic Information These Schedules offer demographic and economic information to assist users in understanding certain aspects of the environment within which the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 16 Demographic Statistics 162 Schedule 17 Principal Employers 163 Operating Information These Schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedule 18 Full-time Equivalent Employee by Department .. 164 Schedule 19 Operating Indicators by Function 165 Schedule 20 Capital Assets by Function 166 137 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA SCHEDULE 1 NET POSITION BY COMPONENT(') LAST TEN FISCAL YEARS Page 1 of 2 2007, 008 :.. 12009 .2070. Governmental activities: Net investment in capital assets Restricted Unrestricted Total governmental active* c net $ 136,053,013 $ 136,742,368 1,233,234 19,720,546 35,520,681 18,476,837 Sod, $ ,172,806,926. $ , (74,939,751 Business -type activhes. Net investment in capital assets Restricted Unrestricted Total business -type ac80,8108 net pee Primary government. Net investment in capital assets Restricted Unrestricted Total printery government net posi8on $ 155,847,012 $ 177,078,793 16.360,097 23.005.792 16 031,473 12.119,923 $ 188238,582 ,.< $ 212,204,508:; $ 36,083,972 $ 36,071.402 $ 38,052,488 $ 44,759,489 441,073 439.100 438,619 430,444 11,267,171 13,335,836 10.987,162 11,158,081 n $ 47,792,216 $ . 49,846,338 , $ „49,478 289. $ 56248,014 9 172,136,985 1,674,307 46,787,852 $ 225,599,144. 9 172,813,770 20,159,646 31,812,673 $ 224,786,089 $ 193,899,500 16 798,716 27,018,635 $ 237,716,851 $ 221,838,282 23 436,236 23.278,004 $ 268,552,522 Notes: (a) All amounts are reported on the accrual basis Source: Tukwila Finance Department 138 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION Page 2 of 2 2011 2012 2013 2014 2015 2016 $ 199,511,779 $ 203,206,940 $ 207,660,389 $ 191,081,461 $ 191331,156 $ 193,113,026 5,019,817 2,749,680 3,480,002 3,973,726 5.446,074 8,996,183 21,479,064 20,194 333 26,981,105 25,009,212 16 125,592 15,809,945 $ 226,010,660 ,$, 226;150,953 $,. 238121,496 $ 220,064,399 $ 212,902,822. $ 217,919,155,E CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEGULE5 CHANGES IN NET POSITION fat Pagel oft Expenses Government Activities General Government Public safety Rryseal Environment Transportation Economic Environment Mental and R/ysrial Health Culture and Recreation interest on long Term Debt Total Governmental ActNXes Business Type Activities Water/Sewer Malty Foster Golf Course Surface Water UIiMy $ 7,456335 $ 4723.103 $ 6,689,659 $ 7,052717 21,726932 24.147.992 26,9593522 6088.644 2.764373 2862.487 25]5405 2.533.394 5.310.247 5.864.297 5.541.367 6,015197 3690845 5017635 0637.531 4,579.335 4204 4173 4 332 4,539 4506.223 4.797,856 4014.256 4,0614416 896215 1,844,224 753.904 1,06119 46555.374 49.262 067 52 075.606 52,091 924 7046603 7.293,362 9293434 9343.366 1849542 1.968,595 2050172 1,935,014 1,920,194 1762,417 2.299.394 2476,170 Total Business Type Activ rtes 16816 339 11,024,374 13 643 000 13,754,552 MOSIVO$ 52,134,799 $ 52,911,741 $ 55,955,595 $ 57,677,764 $ 59,483,424 $ 60,607,030 Revenues Programm 430,444 430,444 430,444 430,444 - Cover 82,4219,1,es 10,225.558 11,011,319 12,964,539 13,839.529 14.658,912 17,240,620 charges for rn General Service Goverent $ .62,790,801 $ 64,3532504 $ 69,350,577 $ 71,947,736 $ 74142,335:. $ .78,047,650, Rlbl2 Safety ----- -- R 9..1 Environment Transportation Economic Environment $ 248,636,920 5 253,253.170 $ 263,615,984 $ 248,759,225 $ 250 814,581 $ 253,920,056 Cultural dna Recreation Operating Gants and Contrbutens 5,450.261 3,180.123 3,910,445 4,404,170 5.446,074 8,996.183 Capltal Grants and Contribution 34,714,280 34,071.164 39,945,644 38,848,741 30,784504 33.050,565 Totainess Type Governmental Rogram Revenues Business Type Activities $ 288,801,461 $ 290 504,457 $ 307,472,073 $ 282,$12,136 $ _.. 287,045,158 $ 295,966 804 charges for Services Water/Sewer Utility Foster Gott Course I Surface Nater MAD Operating Grants and Conk Nations (,A3 Capital Grants and Canhibutens Total Business Type ACWXIes Rogram Revenues Total Primary Government Rogram Revenues Net(Benense)IRevenue 029e1nrte111214otN2ie2 (35844.111) (40 253.937) (30 444 551) (20,884225) Buslnoss Type Acta/Des 1.284 200 2559941 1.063 194 7,256 005 `;`n\--„"v'a�'r`vv pR9ra8., 3t.Yttle,$47U.S1:44TATI4A+14F: General Revenues and Other Changes in Net Positron Governmental Activities Taxes Popery Tax 15ales and Use Tax 6919 1918608181 Use Tax HMTax LIMN Tax 01erfund Mili9 Taxes Business Tax 2 236 675 2497,705 3.196.178 4205574 Excise Tax 4,127 360 983.078 367.198 507,798 State Entitlements 217 600 874046 2.233.445 1,951 936 Unrestreted 8vestment Earnings 1.7276]9 801.847 246.287 108 929 6226(5 Gain/Loss on Sale of Captal Assets 13652 (186663) 980.267 Miscellaneous - Transfers 1,134683 1,383274 1 601 200 1.399 310 Total GovernmentalI9iles 44709.874 42386.760 43743382 42798.557 Business Type Activities Retail Sales and Use Taxes Unrestricted Investment Interest Gain/Loss on sale at Capital Assets. Misrelaneous Transfers Total Bus ess Type ActiX (16 120) (505619) (1431262) (886.300) a 1 t` A ` t I,"s' SR*L... ,aL: "i:L a.,..=';9 a ,#Tatai24?:.; ..,./k,>?Xa: 139 9 1590553 $ 895,968 $ 1.136642 $ 1,080,801 425241 1.184,530 522.094 819.043 25.341 1,200 - 6,200 133 500 130.637 103.311 571.110 2319634 2.476,501 1001 511 1,787274 777.484 711542 647354 811.679 1 692 766 1.325,163 3386269 2,139 029 3.746,743 2,282,592 14.284.074 23,992.563 10.211.262 6008,131 21.631.255 31,207.699 8.272 647 8621,809 10.124,653 6665.095 1.272 425 1563,681 1.424,595 1,425327 2.206549 2642,325 2.641.313 3,029.630 347.416 756,400 515633 7,390545 12.101.037 13.584 315 14706.194 21.510 597 22 812 299 22582,446 36 337 449 52 718.296 $ 11.302099 9 11656,979 $ 11901072 $ 13.363.096 19355 867 18 009,297 14588.297 14.669.328 344748 643.037 746772 533.811 583.232 587216 489806 458.092 3,666.079 5.136,444 7390860 5,600.683 500.000 500,000 327.999 329.527 618.563 377,955 106 032 85 942 (264,093) - 9],541 (1,134683) (1383,774) (1,601.200) (1,399.310) Change in Net Position Before Special Xem spec'aliem Change in Net Position Governmental Act9Eies Business Type A trrtie Notes (a) All amounts are reported on the accrual basis Source Tukwila Finance Department 0 134343 4.186,945 12.930763 28784 077 10,134.343 4.186,945 12 930 28784,077 $ 8,865 765 $ 2132,823 $ 13,298 831 $ 21914,332 1,268.580 2.054,122 (368 068) 6869,]45 140 CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION Page 2 of 6 9,150 573 $ 8,343.107 $ 10.195,049 $ 10189,399 $ 8,042254 $ 9662 207 25348318 26,598.432 25.938946 29292,587 29.403206 31,418.713 2,885.175 3.625696 2610.591 11.668,098 2.611.297 2.554259 6,072 708 7,314,707 7,658.280 2 479 5331 1069 605 11.168189 4,712832 4,801.342 5209,954 5716091 5782.907 4410841 4,591 4,203,824 4,242725 5.635347 5,336,659 5,125,227 5,431324 472,438 1,152 063 1,038.851 1104,771 1.033,440 1,075.729 53,650,459 56,076072 58,287,017 65887 138 63067935 65,741.292 10,092 903 10,149.557 10,421,064 12,752.125 13,186 236 13 984.368 1,986,747 1,701.131 1,707,993 1945,789 2086,586 2,077536 2,588,098 2,699,767 2,563,132 3,310,716 4,147,974 4,088,360 14,667,748 14,550455 14,692,189 18008,631 19420,796 20,150264 $ 2,462.671 $ 1,332418 $ 1495,438 $ 3858,862 $ 3794.134 $ 3,742937 809,806 684.744 871,919 970,594 1754,856 4,139701 7572 4.939 27.007 196,506 - 464 345373. 1,004911 287,956 8,425 206 065 454525 1,722 285 2,323.528 2.786,178 726 869 0.348802 2,434546 1,001.117 481,404 744,014 2793.185 644283 1,140,558 2150,601 4411.618 3289818 2.563,002 893.470 1,078020 18,495127 1,581.882 16,941529 8053,435 6.431,537 5,000,942 27,094.552 11,825.044 28450,258 19.170,879 17.073.146 17,983.604 11711 242 11758.658 13,146,131 14308,945 15572,709 15.661 118 CO 1,304,016 1,448729 1.404,264 1.006440 1.482,288 1.426385 r 3,355956 3,827,010 3,913,184 4168,313 5.286.233 5575 343 - - - - 25000 4, 1,993.537 135.603 338.943 1548,280 2039890 767732 18,364751 17,170.000 18,802521 21 431,978 24381122 23755.578 45,459303 28,995444 45.252779 40.602,857 41.454268 41,739272 (26.555 907) (44.252 628) (31.836,759) (46 816,260) (45,994789) (47,757,566) 1697 003 2,619 546 4.110332 3.423,348 0,960 326 3,605.314 e>_-8cr112.2..-- $ 13,443.137 $ 14,131,605 6 14518,241 $ 14870621 $ 14,320085 $ 14,562,501 15 796.054 15 441 683 18.316,398 17.105,322 19 334.152 18908.190 317,531 232208 204457 - - 555,682 522,033 526,632 596.781 677.971 710.267 7,534.260 5.535.966 3.879,992 3855,544 4016.288 4,045916 1686859 1851013 2061098 2,146515 667,679 2.497.606 2.570,111 2555999 2749.140 2716.257 2,170293 1860.948 2745,475 3.512,894 5321281 6.508,665 2,085740 1895647 1861,511 1.735,637 1.843 634 1 915610 275,477 116,694 102486 444,262 475.345 559.733 101,688 304,704 179394 280.551 1,000,049 525,864 2,058,843 1.060.650 (600,000) - (300,000) 43,371717 44,392921 45769,716 46.107,488 51-082,545 52,773,904 61,119. - - - - - 200,871 - - - (525.864) (1.056,843) (1,060,650) 600.000 - 300.000 (263,874 (1,056,843) (1,060,650) 600,000 - 300.000 20,248 939 1,702.996 16982,640 3314,576 10.048 082 8,921652 (1995,000) (956,798) - 20.248,939 1,702,996 16.982,640 1.319,576 9091 285 8,921.652 $ 16.815,810 $ 140,293 $ 13932957 $ (2703772) 9, 3830958 $ 5016.337 3,433,129 1,562,703 3049682 4023348 5260.326 3,905.314 141 CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 3 FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Page 1 of2 2009 2010 General Fund (GASB 54) Nonspendable Restricted Committed Assigned Unassigned General Fund (Prior to GASB 54) Reserved Unreserved Total general fund $ 12,650 10,504,748 10.517.398 17,800 7.687,515 7,705 315., 17,900 7,371,530 7,389,430 $ 17,900 5,739,140 $ 5 757,040;. All other governmental funds (GASB 54) Nonspendable $ Restricted Committed Assigned Unassigned AN other governmental funds (Prior to GASB 54) Reserved Unreserved, reported in: Special revenue funds 10,834.781 12,943,487 9,123,401 14,461,546. Debt service funds 1,233,234 1,248,901135,438 3,051 Capital Rojects funds 8,113.739 6,831,634 7,101,258 8.541,195 Total a8 other governmental funds $ 20,181..754 $21,024,022 $16,360.097 c ;$ 23,005.792. Note- In 2011 the City of Tukw ila implemented GASB Statement No. 54, w hich changed the categories for fund balances. Balances prior to 2011 were not restated to the new standards. Source: Tukwila Finance Department Fund Balances 2007 2008 2009 2010 2011 2012 2013 :2014. 2015 2016 142 CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION Page 2 of 2 2012 20 3 2014 2015 - 2016' $ 5,000 $ - $ 1,743,362 $ 1,544,022 $ 1,340,914 $ 1.141,484 10,000 - - 225,000 5,771,471 6.078,648 6,277,929 8,237,141 6,376,557 15.317,624 10,181,057 10,911,244 11,612,330 $'8,260,141 $,8,$'78,557 $x7,285,9$6 617,498,,550 $;18,$30,606 $:19031;744-- $ - $ - $ - $ 7,370,000 $ 7,645,000 $ 7,645,000 5,014,817 2,749,681 3,480,001 3,973.726 5,446,074 45,986.463 402,306 - - - - - 11,127,221 7,021,183 4,510,623 4,076,803 7,221,870 3,389.139 - (1,566,175) (1,360,218) - - CITY OF TUKWILA 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 4 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS 1'1 LAST TEN FISCAL YEARS page 1 oft 2007 , 21 09 2010 Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Special Assessments Mscelaneous Total Revenues $ 39,660,792 $ 37.412,569 $ 37,167281 5 37,267.918 1,827,709 2,022,851 1,283463 1,618,830 6,403,217 5.697.598 17.596,486 14,525,872 2,024,892 2.569.381 1.443 680 2,366,174 266,188 259,991 301,761 390,079 1,425,423 926.913 282 604 144,258 1,751,145 816,054 701.957 891,307 53,359,366 49,705.357 58.777.232 57,204,438 Expenditures General Government 7,034,602 7.992.286 8.574.563 8,387,317 Public Safety 21,038,810 22.878,689 25.576932 24,676,370 Physical Environment 2,196,422 2.255.880 2.058.913 1,724,147 Transportation 2,413,390 2783.077 2.334,298 2,332,178 Econonrc Environment 3,878,658 4.995.514 4,601,391 4,541.845 Mental & FIYslcal Health 4,204 4.173 4,332 4,539 Culture and Recreation 3.938779 4.293658 4,365,023 4.163503 Debt Service Principal 930,000 972,000 1,316,297 1,555.028 - - - - - - Interest 914,584 872.224 778,018 849,148 V Capital Outlay 7,243,879 6,089703 16,860,362 11,513,976 01 _ _ - - _ _ Total Expenditures 49,593,328 53.137.204 66,470,129 59,748,051 $16,544,344 $ 9,770,864' $ 6,424,449 -$14,060.311 1$20,312,943 057020,602-;-. Excess (Deficiency) of Revenues 4036.039 (3,431,846) (7692,894) (2,543,613) Over (Under) Expenditures Other Financing Sources (Uses) Transfers In 2,266,349 2,515,982 3,865744 2,461,806 Transf ers In - Assessment Transfers Out (1,131666) (1.107,543) (2.234,444) (1.020,857) Capital Leases - 110,505 Sale of Capital Assets 100 53,592 1,014,608 27.308 General Obligation Bonds Issued - 6.935.000 General Obligation Refunding Bonds Issued 6.180.000 6,947,574 - [ID Bond, Assess nent - - - Operating Loan -Tukwila NFD - - Premium on General Obligation Debt - - - 112.151 Pentium on General Obligation Refunding Debt - 483.599 Issuance Costs on General Obligation Refunding Debt - (108326) Payment to Refunded Bond Escrow Agent - (6,555,273) (6 ,880,397) (1,069,000) Total Other Financing 50100,9 (Uses) 1,134,783 1,462.031 2,713,085 7,556,917 Change in Fund Balance Before Special Item 5,170,822 (1.969815) (4,979,809) 5,013,304 Special Item - - i&we U'Fo'nd 0i nc =4 9,8 5,513 3040 Ratio of Debt Service Expenditures To Total Non-Capdal Expenditures Note. (a) All amounts are reported on the modified - accrual basis Source'. Tukwila Finance Department A6% 143 144 4,1 4.4% 5.2% CO r 1.766.774 1.991,540 5,024,991 2,288,988 2.480,507 2,602,782 CD 881.850 1,178,464 1,162,649 961,457 1,125,609 1,093,584 25,643,704 12,099,293 5,854,962 10 150,912 11,426,274 8,358,450 73,804,646 62.624,756 61,725,970 65,696,921 69,686,279 67,057 051 CITY OF TUKWILA: 2016 CAFR STATISTICAL. SECTION page 2 of 2 2011 2012 2013 2014. 2015 2016 $ 38,035,681 $ 41,502,608 $ 42,402,070 $ 44,441,783 $ 48,548,116 $ 49.,588492 3,473,910 1,604,594 2,01.3,875 2,114638 2,242,256 2,129.221 24,059,907 7,626,487 7,190,325 14 298,126 11,839,883 10,067,413 2,359,600 3,974,356 3,747,646 3,838,531 3,935,248 3,911.473 308,027 220,752 242,638 264.934 261,457 318,459 275.479 106,286 151,911 479,219 475,345 541,299 - - 2,788,350 701.723 650,415 542,180 356,409 131,979 427,368 354.395 332,268 957,158 68,869013 55,167,062 58,964,183 66,493,348 68,284,989 68,055,695 8,253,440 8,504.511 9,303,742 24,327,498 24,918 306 25,720.864 2,060,482 3,022,516 1.935,895 2,676,511 2,769.182 3,111493 4,682.,646 4,767,944 5,224,964 4,591 3,507,150 3.373,000 4,386,392 7,505,173 7,708,394 27,254,312 29,035,165 1,807,993 1,935,228 5,820,601 5,792,668 5,226.832 5.832.384 4,680,651 4,350,052 9.405,989 29,366,198 1,955,031 5,238,468 4,493.210 4,543.339 (4,935,633) (7,457,694) (2,761786) 796,428 (1.401,291) 998,643 11,001,619 7,625,792 20,918,983 7,300 080 5,633,846 4,025,831 2,788,350 (10,061.205) (6,174,358) (23,301,516) (7 900,080) (5,933,846) (4;325.831) 15.468 - - - - 21.406 9,903 5,493 5,055,688 1,000,000 3:850,000 8.075,000 32,990,000 6,687,500 (658,706) - - - 309,758 3.719,954 (5,055,688) 977,288 802,631 8,098,809 3250.000 (3,958,345) (6,655,063) 5,337,023 4,046,428 (1.,995,000) $ (3,958,345) $ (6,655:.064). $ 5,337,023... $ 2,051,428... 8,084,758 6,683,467 (956,798) 5,726,669.. 36,409,954 37,408,597 37,408,597. 5.81 6.70/ 11.075, 6.65% 6.341 6.301 CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 6 GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS Fiscal Year. Property., Sales :&Use Llnllty/0j Excise Business`"' Other' Total Taxea:, 2007 11,177,532 19,355,867 3,666,079 4,724,168 405,973 931,173 39660,792 2008 11245,973 17,709,319 3,934,210 3.003,438 475,500 1,089 344 37.457,785 2009 12,190,219 14,585.,015 6,172,569 2,824,407 738,341 656.730 37.167,281 2010 13,188,942 14,251,312 6,134.494 2.488,357 727,151 301,867 37.092.122 2011 13.427,139 16,113,584 5,424 643 1,780,294 667,064 622,955 .38.035,681 2012 14,072,015 15,441,683 4,001,385 3.201,098 2497,606 2,288,822 41,502.608 2013 14.510,241. 16,316,398 3,879,992 2.745,475 2,570,111 2.418 148 42,440,365 2014 14870,621 17,105,322 3,855;544 3,512,894 2,555,999 2,447.794 44,348,175 2015 14,320,085 19,334,152 4,019,288 5.327,280 2,749,140 2,739,070 48,483,015 2016 14,562,501 18,908,190 4,045,916 6,508,665 2,716,257 2,856,782 49,598,312 Change 2007-2016.. 30.3% -2.3% 19,4% 57.8.1 569.1%. - 206,8% 25,1% Notes: Lkifity taxes enacted beginning in 2003 for electricnatural gas, cable and telephone utilities are assessed at rates or 6.0% A utility tax was added in 2009 for solid waste and recycling assessed ate 6.0% rage. A utility tax rate of 10.0% was added in 2070 on the City's water, sewer, and stormwater utril4ies_ rel Beginning in 2072, reporting of"Business"tax revenues include the Revenue Generating Regulatory Lmense (RGRL) fees. 11 "Other Taxes" include a hotel/motel tax and mterf and utility taxes. Source Tukwila Finance Department $50,000,600 545,000,000 540,000,000 535,000,000 $30,000,000 $25,000,000 520,000,000 515,000,000 $10,000,000 55,000,000 5 - Tax Revenue by Source 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 145 146 kW Other Business Tax ■ Excise Tax ▪ Utility Tax ■ Sa les & Use Tax NI Property Tax CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 6 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected Within the Fiscal Year of the Levy Total Conect ons to bate Collections. in Fiscal Taxes Levied for Subsequent Year Fiscal Year Amount %of, Levy Years Amount %.of:Levy Levy Balance 2007 11,176 155 10,994 127 9837% 182.036 11,176 163 100,00%' (8) 2008 11,410,664 11,194.247 98.10% 216.076 11,410,323 100.05% 341 2009 12,286 929 12,017,213 97.80% 264,905 12.282,118 99.9616 4,811 2010 13.233,796 13,162.012 9938% 80.311 13,232323 99.99% 1,473 2011 13.383.153 13.225.338 98.82% 156.088 13,381,426 99 99% 1.727 2012 13,697,474 13,521621 98,72% 173.716 13.695 337 9998% 2.137 2013 13,740,076 13.549.525 98.61% 175,699 13,725 224 998916 14,852 2014 14,047.317 13 916,718 99.07% 95.467 14,012 185 99.7516 35,132 2015 14245,846 14 113,739 99.07% - 14,113 739 99,07% 132.108 2016 14,516,623 14,375,358 99.03% - 14,375 358 9903% 141,265 CITY OF TUKWILA, WASHINGTON SCHEDULE 7 ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Total A s sad. T falt3(rect 8) Fropet ty- FOkIic L506105 V9100 Tax Rate 2007 3.853,680,774 509,151,926 87,410,974 4,450,243.674 2.56911 2008 4,470,042,539 595,268 205 110,399,231 5,175,709.975 2.37324 2009 4.122,961,628 746.710,751 112,779,972 4,982 452 351 2.66345 2010 3,950,829,851 717,795,417 119,827,058 4,788,452,326 2.82566 2011 3,833,295,985 712,607,656 129,726,102 4675,629,743 2.95408 2012 3,778,571,709 736,480,616 134,138,983 4,649,191,308 2.98778 2013. 3,824,448,044 779,103,146 152.822,498 4,756,373.688 2.97799 2014 4,146,952,417 744,616,273 162,510,057 5,054,078,747 2.84188 2015 4,409,931.075 810,422,092 174,971,951 5,395,325.118 2.71073 2016 4,763,568,175 849,695,435 150,386,219 5,763,649,829 3.05735. Note: 'Realpersonal and state publicservice property have been assessed at 100% of the estimated value. Source: King County Office of Finance Source. King County Department of Assessments 15,000,000 12,000,000 9,000000 6,000,000 3,000,000. Property Tax Levies and Collections 2007 2008 2009 2010 2011. 2012 2013 2014 2015 2016 147 M Taxes Levied for Fiscal Year Amount Collected Within Fiscal Year of Levy 57,000,000,000 56,000,000,000 $5,000,000,000 54,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $- Assessed Value By Type 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 148 fel. Public Utilities NI Personal Property ® Real Property CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CIN OF TUKWILA. WASHINGTON SCHEDULES PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $1.000 OF ASSESSED VALUATION) LAST TEN FISCAL YEARS 2007 2.56911 256911 22359 0.30000 4.73164 0.10000 - 0.50854 - 12.22627 2008 237324 2.37324 1.96268 1.51508 0.19700 027404 4.12360 0.09123 - 0.47141 11.006928 - 2009 766345 266345 722253 1.74587 0.21597 030000 389183 0.10514 - 053290 11.67769 2010 282566 2.82566 2.27980 1.90797 0.22366 030000 583380 0.10976 - 0,55753 13.23820 2011 295400 295400 2.42266 198500 0,22982 030000 5.44659 0.11616 - 0.50372 - 13.95883 2012 2.98778 2.98778 256720 2.11172 0.23324 0.30000 560832 0.13210 0.15000 050000 -1368036 2013 2.97799 297799 247044 208129 0.21533 0.33500 5.89008 0.15369 0.14944 050000 - 1477416 2014 2.84188 2.84108 2.26514 1.84798 0.18885 0.30217 5.50160 0.13860 0.14962 050000 13.755. - 2015 2.71073 271073 2,16098 195741 0,16954 0.28235 5.22858 0.12980 014653 0.50000- 13.29592 2016 305735 3.05735 283205 183412 0.15334 0.26305 536954 0.11740 015653 050089 0.25000 1072427 Mle'. lc Includes Klrg County Library Disnicllax and Ferry Source: King County Department of Assessments 3.50000 3,00000 2,50000 2.00000 1.50000 1.00000 0.50000 T t Direct Property Tax Rates 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 9 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Boeing Corryany 22825269 (WEA) Southcenter LLC La Rama LRSegab Ropers s Sabey Corporation KIR Tubvila 050110011VLO E Property Tax peps LIT ndusmtbl United Partnership CenluryLink Co0earnicatbns (Cow est Corporation) International Gatew ay Post CFF Kent Valet' LLC RKM Yu*. 117 LLC (1ormory Icon TM. 4a Ou mer Pool 1) 3301 South Norfolk LLC Pea-Tuk Warehouse LLC( Boeing Rrpbyees Coedit 12rbn 998 Ropeges LLC (JC Penney) Puget Sound Energy/Gas - Rectr6 COSTCO Wholesale Airplane company Department Stores Comrerc'al Ropettes Deal Estate Combpnent Commercial Roperties Commercial Roperties Business Services Telephone Ltilty W n-625692n(el Property Managene Commercial Roperties Investment Roperry Food LEPEutlon Credit Union Department Stores 2826 0/Gas 118212 Cash 8 Carry Warehouse $ 482,031129 306,693.888 114,654362 103,743927 09,100.000 85477,600 84.820 900 60,820553 59.218.716 q9,242.900 ,12]300 43431.100 41,444.700 41,146,250 35,698 2. 33,653 557 B ank of China Wm York Branch (formerly Anne A runtIApartmenh Apartments 31,261,100 ...Property Real Estate IAvebpmenl 30,193,200 Washington Towers LP Real Estate DevelopOs'1 29,834.900 Interrelb0al Gateway West Nan -Residential Property 660826rm 29,811,600 CLI+ -Tuns ib LP Startup Company 28793600 9eatac Fbtel(Koar-Seatac Partners LPI Logging 28554.100 Southcenter ...rate Square Comrercal Properties 28365000 CSM Corp Real Estate 0vebpnent 28,205,623 Federated Department Stores (Macys) Department Stores 27825,600 Center*nt 8801 8Argnal (Ness. Geek Ibbings LLC( Roperties Trust 27,552,200 John CRadovich Dcv. Co. ConnercalPropertes 25967,700 Tabn Riverview Raza LLC (lorrrerlx 9RCP 802,0ew Raza 110) Commercial Properties 25.597.000 CFA TUkwib LLC(Deubbkee nn) Lodging 24.429,800 Av'a Rent A Car Sysle,115 Car Rental Services 24,109,727 D emesne Trust Ox bow 2601 Manufacturing 24069,200 Jorgensen Forge Corporatun Steel Man. aclnrer 21784,544 farneh Group Incorporated Truck Equipment • Sterling Realty Organ¢ation Commercial Roperties - Lowe's HAI Incorporated Form Improvement - Hill Investment Conpa0y Commercial Properties - RreefAmericaRe'AlCurporatan Comrercal Roperties Heitman Commercial Properties - 83656 $ 470,751450 10,50% 5.32% 130,337,850 293% 19996 85.320.368 192% 1.80% 15596 96,063,800 2.1656 148% 62,995,200 14112 47% 10652 12,392,870 025% 1.03% - 085% 0.82% 0.7556 29,159.800 0,6656 0.72% 52,386.532 1.18% 0.71% 24,136.800 0.5456 06271 25,408,979 0.5756 0.58% 0.54% 29,944.400 0.6756 052% 0.52% 0.52% 050% 05010 20,983.110 047% 049% 049% • 0.4856 26,920,700 0.60% 0.48% 18.104.000 0.41% 045% - 044% 26637,900 06056 0,4212 19.469,691 04456 0,42% 0.42% 03812 20,131703 045% 14.595,306 03356 35693,100 080% 15.816,965 0,3656 7,811400 0.18% 53.451,550 1.4356 57.055,700 1.28% Nofea: I0' In 2016 Inn total assessed property value in Ine City, Tukwleties $5.763649,829 7' In 2007 the total assessed property value in 0,5 City, Tukutila 088 24.450.243,674. Source: King County Department of Assessncnh 149 150 w v CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 10 RETAIL SALES TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS page 1 of2 Major Industry Sector 2007 2008 2009 2010 Construction and Contracting $ 2,018,058 $ 1,967.785 $ 869,640 $ 917,250 Finance, Insurance & Real Estate 121,879 118.780 119,121 99,975 Manufacturing 590.455 375.263 246,429 387,234 Transportation, Communications & Utt1ies 483,419 492.960 440,206 441,822 Wholesale - Durable/Non-durable Goods 2,457,437 1,760.449 1.436,045 1,346,750 Retail Trade - General Merchandise 2,571,601 2,231,745 2,072,356 2,068.263 Retail Trade - Furniture/Holm Furnishings 2,399,347 1.830,576 1,304,234 1,380.407 Retail Trade - Miscellaneous 1,766,853 1,718,898 1,473,496 1,521.741 Retail Trade - Clothing & Accessories 1,838.646 2,103.630 2,017,904 2,018.304 Retail Trade - Restaurants 1,158.424 1,312.603 1.292,252 1,342,964 Retail Trade -Automotive/Gas 1,026,778 1,066.183 748,482 664,310 Retail Trade - Building Materials 777,870 619.657 589,341 499,383 Service Industries - Business 1,198,690 1,129,380 868,260 882,012 Service Industries - Hotels 531,836 548,962 453,657 428,450 Service Industries - Other 294,869 318,696 283,319 215,045 All Other Categories 179,421 185,312 208,467 366,925 total Retail Setae Tax Calector $ 19,415.583 $ 17,780,879 $ 14,423.209'.$ 14,580,835 Notes: Sy State law the City of Tukwila is prohibited from reporting individual sales tax payers. Sources: Tukw ila Finance Department and Washington State Department of Revenue. 151 152 CO (1003). The funds are usedto finance transportation Improvements QDI Effective A 11. 2007 Kin Count d the local sales & use tax rate one-tenth of one t .001). Pn g Yrncrease percent 0 The tax W0 be used lar transportation purposes. CITY OF TUKWILA 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION page 2 of 2 2011 . ' 2012. 2013 - 2014 2015 2016. $ 1,390,952 $ 961.125 $ 1,212,594 $ 829.073 5 1,255,650 $ 1,383,624 115,123 143.792 174,705 141,010 163,161 175,060 232,737 390,252 386,964 322.189 281,501 269,117 405,197 432,608 475,688 549,126 743,746 746,115 1,119,527 1,077,613 1,108,771 1,592,613 2.016,722 1295,141 2,003.947 2,000,865 2,154,523 2,137,256 2,205,778 2.202,158 1,771,083 1,537,143 1,405274 1,431,965 1,527, 377 1,623, 926 1,626,452 1.703,741 1,870,200 1,973,478 1,954.150 2,032,967 2,037,554 2.082,930 2,070,198 2,013,796 2,159.647 2,089,128 1,337,067 1,472,343 1,529,101 1,611,860 1,703.187 1,751,724 670,806 690,076 690,691 765,765 825,143 743,468 487,620 516.861 565,734 600,610 683,485 733,928 932,422 928,610 968,996 1,073.511 1,265,789 1,467,620 459,606 487,977 502,721 562,130 626,822 650,270 202,217 234,870 246,802 274,497 273,514 253,089 553,493 381,693 525,133 468,547 978,142 845,209 CIN OF TUKWILA. WASHINGTON SCHEDULE 11 SALES TAX RATE DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS 06 nc 2009 mi 2010 2011 ': 2012 2013 2014 ' 3015 2018... BASIC SALES TAX RATES Gly of Tukwila 0,8456 0.84% 0.84% 0,6496 0.84% 0.84% 0.84% 0.84% 0.8496 0.84% Washington Slate 650% 6.5D% 6.50% 6.50% 6.50% 6.50% 650% 6.50% 650% 5.50% King County 0.15% 0.25% 0.2596 0.25% 0.25% 0.25% 0.25% 025% 025% 0.25% Regional Transl Authority 040% 0.40% 0.90% 09056 090% 090% 090% 0.90% 090% 0.90% Metro 0.90% 0.90% 090% 0.90% 0.9096 0:9096 0.90% 0.90% 090% 090% Crimnal Justice 0.10% 0.10% 0.1096 0.10% 0.1096 0.10% 0.10% 0.10% 010% 0.10% Department of Revenue Administration Fee Total Basle Combined Saks Tax Rat :8.90% 9,00% 9.50% 0.01% 0.01% 001% 0.01% 001% 00155 0.01% 0.0116 0,0156 0.0114 SPESIAL SALES TAX RATES Restaurants Motor Vehicles 0' 9.5016 9.50% 9.50% 9.50' 9.5 950' 9.50 0.50% 0.5014 050% 0.50% 050% 030% 0.30% 0.30% 0.3014 0.3016 0.30% 0.30% 0.3016 0,3016 0.30% Notes: ling County Food & Beverage tax is in addition to the combined sales fax rate for restaurants. taverns and bars. The funds are used to finance the professional baseball stadium in Seattle. NOTE: This faxexofred on October 1, 2111 as fears Imposed to pay the construction bonds for the Seattle baseball stadium expired. $ ,15,345,801 $ 15.,042,499 $ 5, 88.089 $ 16347426 $ 18,:63,814 $ 18,262 544: °1 Effective My 1, 200a an retail sales. leases and transfers effector vehicles are subject to the additional sales tax of three tenths of one percent jO1 Effective April i, 2008, King County increased the local sales 8 use tax rate one-tenth of one percent (.0017 The tax Kill be used for chemical dependency or mental health treatment services Effective Apol 1. 2009. the Regional Transit Authority Tax increased five -tenths of one percent (.005). The tax WII be used to expand and coordinate light-rail, commuter -rail, and express bus seniles, and improve access to transit facilities in King. Pierce. and Snohomish Counties. Source'. Washington Slate Department of Revenue Local Saks and Use Tao Rates, CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 12 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL. YEARS Page 1 of 2 2007 2008 2009 2010 GOVERNMENTAL ACTIVITIES General Obligation Bonds Special Assessment (0 Leases Total Governmental Activities $ 17,946,335 517,261,348 $ 22,453,003 $ 26,763,975 40,184 17,946,335 17,261,348 22,453.003 26,804.159 BUSINESS -TYPE ACTIVITIES General Obligation Bonds 4,102,500 3,642,500 3,423.797 3,238,825 Revenue Bonds 5,470,162 5,112,231 4.790.000 4.395,000 Public Works Trust Fund Loans 9,378,506 9,021,951 8,405.397 7,788,843 Leases 45,587 11,666 - - Total Business -Type Activities 18,996,755 17,788,348 16,619.194 15,422,668 TOTAL PRIMARY.'GOVERMASNIT $ 36,943,090 $35,049,696 $ 39,072,197 $ 42,226,827 Population lnl 18.000 18.080 18.170 19,107 Per Capita Personal Income $ 57,409 $ 58,141 $ 56,904 $ 44,271 Percentage of Personal Income 3.58% 3.33% 3.78% 4.99% Debt Per Capita $ 2,052 $ 1,939 $ 2,150 $ 2,210 Notes: CO . Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements sec00 6, 07 Reference SCHEDULE 16, Demographic Statistics, for population and personal income data. 0» Includes amounts. Due to Other Governments. (0) Special assessment debt one issued in 2013 for the Kim/titer Urban Access Project. ***Data not available at time of publication. Sources: U.S. Census Bureau WA State Office of Financial Management City of Tukwila Finance Department Total Debt 90.000,000 00,000.012 10,000,000 60,000.000 50,000,000 40,000,000 30.01(1000 20,000,000 10,000,000 2007 2003 20099 0010 2011 2012 2013 207.4 2015 2010 155 156 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION Page 2 of 2 2011 2012 2013 :: 2014 J 2015 2016 $ 28,006,800 $ 25,752,600 $ 21,727,609 $ 23,851,376 $ 30,084.437 $ 64,589,264 - 6.687,500 6,687.500 6.082,500 5,412,500 35,891 - - - - - 28,042,691 25,752,600 28.415,109 30,538,876 36,166.937 70,001,764 3,980,000 3,540,000 3575,000 2580,000 1,742.527 1,597,704 7,179,635 6,621,342 6,063,071 5,742,866 5,646.458 5,046,900 11,159,635 10,161,342 9,138,071 8,322,866 7,388.985 6,644,604 $ 39,202,326 $.35,913,942 $ 37553,180. $ 30,861,742 $ 43,555,922 $ 76646,368.. 19,486 19,611 19,765 19,920 19,300 19,540 $ 43,887 $ 43,333 $ 43,331 $ 44.820 $ 47,717 1" 4.59% 4.23% 4.38% 4,35% 4.73% $ 2,012 $ 1,831 $ 1,900 $ 1.951 $ 2,257 $ 3,923 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 13 RATIOS Of GENERAL BONDED DEBT OUTSTANDING. LAST TEN FISCAL YEARS Debt Payable . Reno of Net Net Specal Less Debt trent - Bonded Oebt. Bonded Fiscal 15860 Banded Assessment Service ' Enterprise Net Bonded to Assessed Debt per Year Pop08508 900060e6 Value Dell Oebtl' Funds4I RevenueSbl Value Capita 2007 18,000 4,450243.874 24421,474 - 1,233,234 4,102.500 19085,740 043% 1060 2008 18,080 5,175709.975 23,125,007 - 1,250275 3,642.500 18,232231 0.3510 1008 2009 18,170 4,973984.133 25.876,800 - 135,438 3,423.797 22,317565 0.45% 1228 2010 19,107 4,809.486786 29950,150 - 3,05D 3.238825 26,706.275 056% 1.398 2011 19,486 4,752606030 28.006,800 - 3,330,312 - 24,676.488 0.52% 1.266 2012 19,611 4,649.191308 25752,600 - 3,012,381 - 22,740,219 0.49% 1.160 2013 19,765 4.756.373,688 21,727,609 6,687500 696346 - 27,718.763 0.58% 1.402 2014 19.920 5,054078,747 23,851,376 6,687.500 1,687497 - 28.851379 0.57% 1.448 2015 19,300 5.395.325,118 30,084,437 6082.500 1,910940 - 34,255997 0.63% 1775 2016 19.540 5763.649,829 64,589264 5,412,500 1962,497 - 68.039267 1.18% 3482 Note - (a) Special assessment debt nes issued in 2013 for the Khc4)lae Urban Access Project (b) hcludes both restricted and assigned fund balance ava,hble for debt service payment. 5) These amounts are The general obligation bonds that are being repaid by the Foster Golf Course Fun, Sources_ US. census Bureau Slate of Washington Office of Financial Management King County Department of Assessments Tukwila Finance Department Net Bonded Debt 380 -- 360 $$0 330 $20 _.. ._._ _. _... _. $10 ...... _.. _..... 30 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 157 158 CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 14 COMPUTATION OF DIRECT AND OVERLAPPING DEBT CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 15 LEGAL DEBT MARGIN INFORMATION AS OF DECEMBER 31, 2016 LAST TEN FISCAL YEARS Jurisdiction Direct: City of Tukw ila Net General Percentage-. Estimated Page 1 of 2 2007 2008 .2009.. 2010 Obkga8on Debt Applicable to Applicable to Outstanding Tukwilam Tukwila. Debt Limit Total net debt applicable to limit Legal debt margin $ 64,589,264 100.00% $ 64,589,264 Total net debt applicable to the limit as a percentage of debt limit Overlapping: King County 764,587,000 1.27% 9,710,255 King County Library 97,581,556 2.18% 2,127,278 Port of Seattle 283,620,000 1.27% 3,601,974 Tukwila School District 8406 61,895,040 91.32% 56,522,551 Hospital District 81 - 5.22% - Total Overlapping Debt 1,207,683.596 71,962,057 Total Direct and Overlapping Debt: $ 1,272,272.860 Sou King County Office of Finance King County Office of Assessments $ 136,551,321 The percentage of overlapping debt applicable is estimated using taxable county assessed property values. Direct and Overlapping Debt III City of Tukwila ■ King County axing County Library • Port of Seattle a Tukwila School District a Hospital District $ 333,768,277 $388,178,248 $373,048,810 $ 360,711,509 .23,188,240 21,881,765 28,291,920 32,919,123 $ 310,580,037 $ 366,296,483 $ 344,756,890 $ 327,792,386 6.95°A 5.64% 7.58% Assessed Value as. of December 31, 2016 $ 5,763,649,829 Debt Limit (7.5% of assessed value) 432,273,737 Debt applicable to limit: General obligation bonds 60,208,532 Other long-term debt Less: Amount set aside for repayment of general obligation debt and contracts payable Total net debt applicable to limit Legaldebt margin -. Source' Tukw ila Finance Department 372, 065, 205 60, 206, 532 372,065,205 159 160 9.13% CITY OF TUKWILA 2016 CAFR STATISTICAL SECTION Page 2 of 2 2011 2012 2013 2014 2015 2016 $ 356,445,452 $ 348,689,348 $ 356,728,027 $ 379,055,906 $ 404,649.384 $ 432,273,737 29,703,995 25,884,632 21,727,609 23,288.621 29,322,914 60,208,532 $ 326,741,457 $ 322,804,716 $ 335,000,418 $ 355,767,285 $ 375,326.470 $ 372,065,205 8.33% 7.42% 6.09% 6.14% 7.25% 13.93% w Sources: Tukwila Nanning Division, Department of Community Development State of Washington Office of Financial Management Work Force Development Council of Seattle - King County (Unemployment Data) Tukwila School District #406 US Bureau of Econonic Analysis CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 16 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Per Capita Personal RLnber of Ratchet of :Tukwia School Fiscal Personal Income {°' Single -Family rv11Mi-Family District Unerryioyment Year P0p11la040 income-rol (in thousands) Fomes Units , Enrollment Rate I°I 2007 18,000 57,409 1,033,362 3.864 4,107 2,862 5.0% 2008 18,080 58,141 1,051,189 3.884 4,107 2,769 5.9% 2009 18,170 56,904 1,033,946 3,885 4,107 2,795 10.9% 2010 19,107 44,271 845.886 3,892 4,107 2,907 11.7% 2011 19,486 43,887 855,182 3,894 4,094 2,870 7.6% 2012 19,611 43,333 849.803 3,896 4,094 2,902 7.4% 2013 19,765 43,331 856,437 3,915 4,094 2,882 5.2% 2014 19,920 44,820 892,814 3,920 4,103 2,978 4.1%. 2015 19.300 47,717 920,938 3,940 4,103 2,910 4.5% 2016 19,540 "" ""' 3,969 4,103 2,873 4.2% Notes: (a) Per Capita Personal Income data shown is for King County. Specific data for City of Tukwila is not available. (b) Personal Income estimates are calculated by multiplying Tukwila population by the Per Capita Personal Income estimates for Tukwila and are based on a revised methodology that provides for more accuracy See also Footnote (a). (c) Unemployment rates are listed and estimated using the census -share method. ". Data not available at time ofpublication. 161 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Unemployment Rate 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 162 CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 17 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Name 00 Cohpany/Bnployer Product or Business '.. 2016 Fug & Percentage of Part -Tune Total City Employ ment Employees 2007 Full& ' Percentage 89 Pert -Time Total City Employment Employees Boeing Company Norrrac Inc. Allied Mechanical Services, Inc. Group Health Cooperative Macy's West Stores Inc King County Metro COSTCO Wholesale Corp. King county Correction Guild Boeing Employee's Credit Union Unlled Parcel Service Inc. Sob•8otal'- Major Employers AI Other Employment TOTAL ENPLOYNBJT; Aircraft Manufacturing Wholesalers Plumbing, Heating 8 AC Contractors Data Ctr/Lab/Pharmacy/Mfg, Department Store Transit operating base Warehouse Clubs and Supercenters Non -Profit Organization Credit Union Couriers and Express Delrery Service Source. Tukwila Finance Department- Business Licenses 5.597 13.19% 1.821 4.29% 1.249 2.94% 950 224% 869 2.05% B00 1.89% 609 1.44% 545 1.28% 516 1.22% 381 0.90% 337 29.086 42,423, 8,043 18.98% 0.00% 0.00% 1,100 2.60% 400 0.94% 664 1.57% 0.00% 0.00% 376 0.89% 0.00% 10,583 31,785 42,368 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 18 FULL TIME EQUIVALENT EMPLOYEE BY DEPARTMENT LAST TEN FISCAL YEARS DEPARTMENT Adnanistratrce Services "' 26.75 1975 - - - - - - - Council 700 7.00 7.00 7.00 700 7.00 700 7.00 7.00 7,00 Mayor '°I 12.00 11.00 16.00 1700 1575 1675 17.75 21.00 20.00 17.00 Hunan Resources 9' - - 4,00 4,00 400 4.00 4.00 4.00 400 400 Finance 1100 12,00 1200 13.00 11.00 1200 1200 12.00 12.00 1200 Recreation 2350 2350 22,50 2875 1625 16.25 1625 16.00 16.75 17.25 Community Development 20.25 24.25 24.25 23.00 2263 2338 22.13 21.63 21.00 23.75 Court"' - - 975 8.75 8.75 900 9.00 9.10 8.10 9.10 Police 9' 80.00 83.00 8200 80.00 8300 88.00 8750 89.00 93.00 93.75 Fire 66.00 64.00 6300 65.00 66.00 6700 67:00 67.00 70.00 71.00 Information Technology"' - - 800 800 800 8.00 700 6.00 6.00 700 Public Works 32.00 33.00 32.00 3000 30,00 3000 3100 31 00 3200 32.00 Parks 7.50 7.50 7.50 7.50 750 7,5D 6.00 700 7.00 8.00 Street 11.00 12.00 12.00 11.00 1200 1200 1250 11.50 10.00 12.00 Water 700 700 7.00 7.00 7.00 7.00 7.00 7.00 6.00 7.00 Sewer 3.00 200 2.00 1.00 2.00 2.00 2.00 2.00 200 2.00 Golf 9.25 9.75 9.75 10.00 9.25 8.25 9.25 8.25 8.25 7.75 Surface Water 7.00 8.00 8.00 7.00 8.00 8.00 8.00 8.00 9.00 9.00 50uiprrent Rental 400 500 500 5.00 5.00 500 500 500 5.00 5.00 Metropolitan Park District PoolL° 2.00 2.00 200 2,00 Notes: Based on filled posili ons not budgeted positions. The departments for Human Resources, Court. City Clerk and Information Technology were previously reported under Administrative Services. The department of City Clerk began reporting to the Mayor's department in 2009. The department of City Clerk began reporting to the Mayor's department in 2009. 1tl1 On September 12. 2011, the Board of Commissioners approved the formation of the Tukwila Metropolitan Park District (MPD) Pool. For the comprehensive annual financial report years of 2011 and 2012, the MPD Pool was treated as a discretely presented component unit Effective with the report year 2011 statistical information is nowincluded for the MPO and presented as a blended component unit. CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 19- OPERATING 9OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 0 2010 201 2014 FINCTION Police Number of Cats for Service 33985 35816 33095 32889 30,272 31,916 31655 29.840 32,946 34229 FUNCTION Fire General Government Total City Area (Square Mks) Number of Responses 4.673 4.824 4.654 4,574 4.649 4,844 4,604 5.156 5,549 5.754 Total Fre Loss $3065,005 $2.300,685 01534,596 91655.571 41801596 $675847 $343,495 02.738,080 61,926944 $2821016 Total Inspections 4.845 6.787 6.787 '°' 1.550 j°' 1360 6 4541 3.389 3.650 2,331 1.860 CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 20 CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS '2007 :2006 2009 ...2010 2011', 20. 14 ..:2615 2058 Parks and Recreation Class Re0683n1 98087 109.273 103.603 85693 64049 58.260 52.319 45.514 68.970 64,782 Fire. B.6 86 9,7 97 9.7 9.63 963 9,63 963 9.63 Public Safety Police Number of Vehicle Units 64 67 70 76 84 88 81 89 89 93 COrmonly Ctr Admissions 90.141 117.533 134,183 134275 115728 116.136 114.748 132.397 136,984 141.218 Water of Fire Stations 4 4 4 4 4 4 4 4 4 4 Rounds of Coe Rayed 55446 53.565 53.800 50,445 45,947 47,392 47757 47267 51.017 47595 Minter of Engines/Rescue Trucks/Ladders 9 9 9 8 7 7 7 9 9 9 Pool Attendance " 57,624 59,077 80727 101,128 66,213 69.332 71,233 79,537 - - Number of Weisel Aid Vehicles 2 2 2 2 1 1 1 1 1 1 Street Number of Hazardous Materials Trailer 5596 2 2 2 2 2 2 2 2 2 2 Mies 79 79 79 79 79 79 79 79 79 79 Pours N 8,1880119 17540 19840 22.140 20,360 20.360 22.920 16,767 6627 4,716 4.836 6gnalae0 Intersections 63 63 59 59 59 62 62 62 62 64 Hours Maintaining 7,540 7,540 6,700 6925 6925 7,000 8,815 3,012 2,408 2.135 Water Utility Services TOIOICustoners 2,113 2.109 2.112 2100 2.109 2117 2118 2,126 2.145 2.160 TolIC¢IbnseNateren thousands) 680.649 660515 731,469 630,755 625976 650659 645.982 668.740 697.147 655.472 Culture and Recreation Sanitary Sewer Parks Acreage t"' 160 162 162 162 162 175.6 175.6 175.6 190 190 Total Customers 1,718 1664 1.694 1699 1,710 1.R] 1742 1]52 1775 1.789 Namber of Parks 18 18 18 18 18 19 19 19 19 19 Golf Course Acreage 67 67 67 67 67 77.26 77,26 7728 77.26 7726 Surface Water Maintained Trails (Miles) 11 11 15 15 15 15 15 15 15 15 COW Total Customers 5,156 5164 5,204 52.07 5.207 5,212 5.206 5,239 5,242 5249 Namber of Playgrounds 13 13 11 11 11 11 11 11 11 11 80 Sw immiing Pool 1 1 1 Licenses - - - - 0) Business Licenses 2,350 2,523 2.422 2454 2.611 2030 1,877 2,208 2220 1909 Visitor Center 1 1 1 1 1 1 1 1 1 Outside Oanhactors - - - - - `° 1066 1.132 1,216 1.215 945 Community Center/Recreation 7,902es 1 1 1 1 1 1 1 1 1 1 Number of Libraries 3 3 3 2 2 2 2 2 2 2 Water Water Ostrlbution Mains (mks) 47 47 41 41 41 41 41 49 49 49 Maximum Wily Capacity (millions of gallons) 10 10 10 10 10 10 10 10 10 10 987158r of Fire Hydrants (Ow Med by City of Tukwila) 555 572 541 542 554 576 576 576 577 577 Vehicles 8 8 8 8 8 8 8 9 9 9 Sewer Sanitary Sewers (mks) 37 37 37 37 37 37 37 37 37 37 Maximum Daly Treatment Capacity (millions of gallons) 6,33 6.33 633 633 6.33 6.33 6,33 6.33 633 6.33 Vehicles 5 6 6 6 6 6 5 4 4 5 Surface Water Storm Drains (mules) 10I 67 67 69 69 70 70 70 70 71 70.5 Vehicles 57 4 4 4 4 4 4 8 8 8 Transportation Paved Streets (lane miles) 163 163 178 178 178 1882 186.2 188.2 188.2 188.2 Sidew elks (mks) 54 54 56 56 56 648 64.8 64.8 64.8 648 Number of Traffic Signals 57 57 59 59 59 64 63 63 63 74 Number of Streetlights Owned by Seattle City Light 1.180 1,180 1,180 1,335 1,335 ' 901 901 902 902 902 Matter of Streetlights Owned by Rget Sound Energy 670 570 696 696 623 "' 187 187 187 187 187 bLrrber of Streetlights Ow ned by City of Tukwila - - - - "' 1 210 1,216 1224 1224 1224 Permits Striding Pernits 425 423 265 290 389 354 374 347 277 311 tmchaneal Permits 238 256 159 160 180 191 221 216 154 192 Bechoal Perris 758 1,533 821 955 1,158 1.175 1,337 1,223 1,119 1.175 Numbing Permits 306 264 145 163 167 210 167 184 140 185 Polak Works Rrnds 136 154 131 138 106 126 155 152 163 175 Libraries Minter of Libraries 33 3 2 2 2 2 2 2 2 Total C'rc1250n 306,001 303.665 318.991 327,004 333451 332,509 313571 284,667 214.520 184,492 Mks: 1' Construction of new clubhouse completed and opened in 2003. '°' Due to'mtornation system aryl data programtransdioning.Watches not Include fire ton staff inspections at., time as reported h prim years. Doing 2012, Outside contractors began their ow n business ss kens'ng category. PriorIfli, o Prior to this, outside contractors were consolidated with current year issued licenses. hforrrotion not avaheble. Poolfecilities acquired from Kkg County in 2003. Sources Tukw k Departments, King County Library System 165 Notes: Reflects the correct reporting of data /or Culture and Recreation- Parks Acreage /or the years 2001 through 2006. Parks acreage previously reported included golf course acreage. Reflects the correct reporting of data for Sur/ace Water - Storm Drams (miles) for the years 2001 through 2006 Miles previously reported were incorrect data estimates. City's meters. Also, additional street lights were added due to new606917uction for Southcenter 087680y Extension and Klickitat Projects. Sources: Var6es Departments-Tukw iia 166 APPENDIX C DTC AND ITS BOOK -ENTRY SYSTEM DTC AND ITS BOOK -ENTRY SYSTEM The information in this section concerning the Depository Trust Company, New York, New York ("DTC") and DTC's book -entry system has been obtained from DTC's website at www.dtcc.com and the City takes no responsibility for the accuracy thereof. Beneficial Owners (as hereinafter defined) should therefore confirm the following with DTC or the Participants (as hereinafter defined). For purposes of this section, references to the Issuer mean the City, references to Agent mean the Bond Registrar and references to Securities means the Bonds. For the purposes of this Official Statement, the term "Beneficial Owner" includes the person for whom the Participant acquires an interest in the Bonds. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such maturity and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of the Securities under the DTC system, must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. C-1 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.] 6. [Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. [A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book -entry -only transfers through DTC. C-2 AMENDED AND RESTATED BYLAWS OF PUBLIC HOSPITAL DISTRICT 3 OF PACIFIC COUNTY, WASHINGTON The name of this Municipal Corporation is: Public Hospital District 3 of Pacific County, Washington, d/b/a Ocean Beach Hospital and associated entities, llwaco, Washington. Hereafter, it shall be referred to as the "District". The seal of this Municipal Corporation shall be a circular die so formed as to impress on paper the words: Public Hospital District 3 of Pacific County, WASHINGTON, CORPORATE SEAL, 1996. ARTICLE 1.0 FORMATION AND PURPOSE This public healthcare district, a municipal corporation sometimes hereinafter referred to as "the district", was created in 1946 to provide hospital service for the residents of the district and other persons. The activities of the district shall be conducted in conformity with the Constitution and laws of the State of Washington, including Chapter 70.44 of the Revised Code of Washington. These Bylaws are adopted in furtherance of the lawful purposes of the district, and to facilitate the governing of its activities, and provide a format for the orderly conduct of its meetings. ARTICLE 2.0 BOARD OF COMMISSIONERS Section 2.1 Qualifications and Election. No person shall be eligible to be elected to the office of public hospital district commissioner for a particular district commission unless he/she is a registered voter, a resident within the boundaries of such hospital district, and qualified for the office, in the manner and for the term prescribed by law. All members of the Board, whether elected or appointed, shall be required to take an oath of office in the form prescribed by the laws of the State of Washington relating to public officials. Section 2.2 Organization and Officers of the Board of Commissioners. The Board of Commissioners, sometimes herein referred to as "the board", shall at its last regular meeting of the calendar year organize an election from its own members a President and Secretary, such election AMENDED BYLAWS OF BOARD OF COMMISSIONERS REVISED 03/22/2016 to be by a majority vote of the Commissioners in each case. The term of both offices shall be for one year. 2.2.1 The Chairperson shall act as the presiding officer at meetings of the Board and shall execute, on behalf of the district, all contracts, agreements and other documents and papers duly authorized by the Board hat may require his/her signature. 2.2.2. The Secretary shall prepare, or cause to be prepared minutes and resolutions of all meetings of the Board and shall keep them or cause them to be kept on file for that purpose. The Secretary shall affix or cause to be affixed such seal to any documents requiring it, attesting the same. In the absence of the President, the Secretary shall preside at board meetings. Originals of all meeting minutes shall be kept at the District Office. 2.2.3. If a vacancy occurs in either the President or Secretary's office, an election of officers shall take place at the next regular meeting of the Board to fill the unexpired term created by the vacancy. 2.2.4 All members of the Board, whether elected or appointed, shall be required to take an oath of office in the form prescribed by the laws of the State of Washington relating to public officials. Section 2.3 Meetings of the Board. 2.3.1. Regular Meetings. The Board shall meet the fourth Tuesday of each month, unless the meetings are rescheduled, in which the public will be notified no less than twenty-four hours in advance. Meetings will be held at the hospital unless otherwise prearranged for another location and the public notified. Meetings will be held at 4:00 p.m. If for any reason a regular meeting needs to be changed, the Board will make every attempt to notify the public in a timely fashion. The order of business at regular meetings of the Board shall be as follows: 2.3.1.1. Regular Meetings 1. Call to order. 2. Reading and approval of the minutes of the last regular meeting and any intervening special meeting. 3. Approval of the Agenda. 4. Reports and business of the district. A. CEO B. CFO C. CPCE AMENDED BYLAWS OF BOARD OF COMMISSIONERS 2 REVISED 03/22/2016 D. Medical staff E. Quality Assurance F. Other Reports G. Comments of citizens and guests. H. Vouchers, payroll and write-offs. 1. Executive Sessions may be called if needed per RCW 42.30.110 Section A J. Adjournment. 2.3.1.2 Special Meetings. 1. Call to order. 2. State purpose of calling the meeting. 3. Consideration of matters and action thereon. 4. Adjournment. 2.3.1.3 Workshops 1. Call to order. 2. State purpose of calling the meeting. 3. Consideration of matters. 4. Adjournment. Section 2.4. Responsibilities of the Board of Commissioners. 2.4.1. Action by the Board of Commissioners. As used herein, "action" means the transaction of the official business of the district by the Board of Commissioners including but not limited to a collective commitment or promise by a majority of the members of the Board to make a positive or negative decision, or an actual vote by a majority of the members of the Board when sitting as a body or entity, upon a proposal, motion, or resolution. All action taken by the Board of Commissioners shall be by consensus or resolution, recorded and kept on file for such purposes, which shall be public records. All meetings at which the Board takes action shall be open and public and all persons shall be permitted to attend any meeting of the board, except as otherwise provided in this section or by law. The Board of Commissioners shall never adopt by consensus or resolution, except in a meeting open to the public at a regular meeting, duly convened at the prescribed time and place, or at a special meeting of which notice has been given according to the provisions of the foregoing section. Any action taken at meetings failing to comply with the provisions of this section shall be AMENDED BYLAWS OF BOARD OF COMMISSIONERS 3 REVISED 03/22/2016 null and void. 2.4.2. Conflict of Interest. The public hospital district commissioners, as public officials, are prohibited from various conflicts of interests. RCW 42.23.030 prohibits a municipal officer from being "beneficially interested, directly or indirectly, in any contract which may be made, through or under the supervision of such officer, in whole or in part, or which may be made for the benefit of his office". 2.4.3 Executive Session. Nothing contained in these Bylaws shall be construed to prevent the Board from holding executive sessions during a regular or special meeting as permitted by Revised Code of Washington Section 42.30.110. The Board also may exclude from any public meeting or executive session, during the examination of a witness on any matter, any or all other witnesses in the matter being investigated or under consideration. Section 2.5 Quorum. A majority of the persons holding the office of public healthcare district commissioner shall constitute a quorum of the Board for the transaction of business. The concurrence of a majority of the persons holding such office at the time shall be necessary and shall be sufficient for the passage of any motion or resolution, except as required by law. No business shall be transacted, except in usual and ordinary course, unless there is in office at least a majority of the full member of commissioners authorized. Section 2.6 Committees. The Board of Commissioners may, from time to time, act as a committee of the whole or the President may appoint such other committees, as he/she may deem necessary or advisable in the conduct of its affairs. The activities of any committees so appointed shall be recorded in written minutes and presented to the Board of Commissioners in a timely fashion. The Chair shall be responsible for appointing all board committees subject to final approval of the Board. Section 2.7 Powers and Duties of the Board of Commissioners. The Board shall always be regarded as the governing authority to which the superintendent (Chief Executive Officer), or other district employees and the medical staff ultimately are responsible. While the authority of the Board may be delegated to the superintendent (Chief Executive Officer) and the medical staff as specified in Sections 3.1 and 4.0 respectively, or by resolution, any delegation of authority by the Board may be rescinded in its sole discretion. The Board of Commissioners may exercise all of the powers authorized in Chapter 70.44 of the Revised Code of Washington in performance of its duties prescribed therein. Among other AMENDED BYLAWS OF BOARD OF COMMISSIONERS 4 REVISED 03/22/2016 things, the Board shall strive to: 2.7.1 Determine the policies of the district in proper relation to community needs. 2.7.2 Provide equipment and facilities consistent with present and future community needs for patients entrusted to the hospital. 2.7.3 Assure that appropriate standard of professional care is maintained for the sick. 2.7.4 Coordinate professional interest with administrative financial and community needs. 2.7.5 Provide for the sound administration and application of public funds. 2.7.6 Provide for maintenance of accurate records of district finances and all related activities. 2.7.7 Furnish every reasonable protection to the patients, thereby fulfilling the moral and legal responsibilities of the Board. ARTICLE 3.0 OTHER OFFICERS Section 3.1. The Superintendent (Chief Executive Officer) 3.1.1 Appointment. The Board shall select and appoint as superintendent a competent and experienced hospital administrator who shall be its direct representative in the management of the hospital. The superintendent, sometimes referred to herein as "the Chief Executive Officer", shall be appointed for an indefinite term, removable at the will of the Board, and shall receive such salary, as the Board shall establish by resolution. The appointment or removal of the administrator shall be by resolution of the Board introduced at a regular meeting and adopted at a subsequent regular meeting by majority vote. 3.1.2 Powers and Duties. The administrator shall be the Chief Superintendent of the Public Healthcare District. In direct charge with full authority to act, as representative of the Board and subject to its policies, he/she shall be responsible for the efficient administration of all affairs of the hospital. In performance of his/her duties prescribed by law, all of which shall be faithfully discharged, and not by way of limitation of his/her authority, the Chief Executive Officer shall: 3.1.2.1. Perfect and submit to the Board for approval a plan of organization for the personnel concerned with the operation of the hospital, which shall be periodically reviewed. AMENDED BYLAWS OF BOARD OF COMMISSIONERS 5 REVISED 03/22/2016 3.1.2.2. Prepare annually a budget showing anticipated receipts and expenditures for the ensuing fiscal year which shall be submitted to the Board to allow timely filing and hearing thereon before adoption as required by law. 3.1.2.3. Select, employ, control, and discharge all employees authorized by the budget. 3.1.2.4. Assure that all buildings, equipment, and other facilities are maintained in good repair. 3.1.2.5. Furnish periodic recommendations to the Board with respect to the acquisition, development and extension of desirable health care facilities, equipment and services. 3.1.2.6. Supervise through the Auditor (Business Manager or Chief Financial Officer, or Controller) all business affairs including the disbursement of funds, recording of financial transactions, collection of accounts and purchase and issue of supplies. 3.1.2.7. Cooperate with the Medical Staff and secure like cooperation on the part of all those concerned with rendering professional services, to the end that patients may receive the best possible care. 3.1.2.8. Submit to the Board monthly reports showing the professional service and financial activities of the hospital along with any special reports that may be requested by the Board. 3.1.2.9. Prepare and make available agenda and supporting materials 4-7 days in advance, in conjunction with the Board President, and attend all meetings of the Board at which he/she may participate in the discussion of matters being considered. 3.1.2.10. Execute on behalf of the district all contracts, agreements, and other documents and papers that he/she may be authorized by the Board to sign. 3.1.2.11. Undertake on his/her own initiative the performance of such other duties, consistent with the law and policies of the Board, as may be in the interest of the hospital. 3.1.2.12. The Administrator shall provide regular contact between the Board and the Medical Staff or its representative. Section 3.2 T h e Auditor (Business Manager, Chief Financial Officer or Controller) 3.2.1. Appointment. The Administrator shall recommend and the Board shall appoint as auditor a person experienced in accounting and business practices who may be referred to as the "Business Manager," "Chief Financial Officer," or "Controller" of the district. 3.2.2. Powers and Duties. The auditor (Business Manager, Chief Financial Officer or Controller) will report in the performance of his/her duties directly to the administrator. He/she shall draw and sign all warrants for the disbursement of funds of the district upon the order of, AMENDED BYLAWS OF BOARD OF COMMISSIONERS 6 REVISED 03/22/2016 or vouchers approved by, the Board; and shall perform other such duties relating to business affairs of the district including the recording of financial transactions, collection of accounts, and the routine purchase and issue of supplies, as are assigned by the Board and the Administrator. Section 3.3. Treasurer. The County Treasurer of Pacific County, Washington, shall be the treasurer of the district, or in the alternative, the Board by resolution may designate some other person having experience in financial and fiscal matters as treasurer, subject to the requirement of an adequate bond with an authorized surety company. The treasurer shall receive and disburse all funds of the district in the manner provided by law as directed by resolutions of the Board to the extent of its lawful discretion. Section 3.4. Recording Secretary. 3.4.1. Appointment. As recommended by the Superintendent, the Board shall appoint a recording secretary. 3.4.1.1. Meeting Attendance. The recording secretary shall attend all meetings as directed by the Board and/or the Administrator. 3.4.2. Power and Duties. Attends all regular and special meetings of the Board and accurately records and publishes the minutes of the Board. ARTICLE 4.0 MEDICAL STAFF Section 4.0. The Administrator shall arrange regular contact between the Board and the Medical Staff or its representative. Section 4.1. Appointment and Organization. The Board shall appoint the members of the medical staff of the hospital after considering recommendations duly submitted in accordance with the Medical Staff Bylaws; provided that all initial appointments shall be provisional and that all appointments to the provisional medical staff shall be for a period of six (6) months. Such bylaws, regulations and rules governing the appointment, organization and activities of the medical staff, including the assignment, curtailment, and withdrawal of staff privileges, shall be developed and adopted by the medical staff subject to approval by the Board, and shall assure that the requirements of due process of law are observed. Section 4.2. Powers and Duties. Mindful that the medical management of patients shall be subject to the approval of the Medical Staff as required by law, such staff also shall have authority and responsibility in the manner prescribed by its bylaws, rules, and regulations to: AMENDED BYLAWS OF BOARD OF COMMISSIONERS 7 REVISED 03/22/2016 4.2.1. Evaluate the professional competence of staff members and applicants for staff privileges. 4.2.2. Make recommendations to the Board concerning initial staff appointments, reappointment and the assignment or curtailment of staff privileges. 4.2.3. Establish controls designed to ensure the achievement and maintenance of high standards of ethical and professional practice. 4.2.4. Participate in the development of hospital policies relative to the effective use of existing facilities, and provision for the improvement or extension thereof where appropriate, to assure adequate patient care now and in the future. 4.2.5. Supervise a medical education program in the hospital and render such other services, as the Board may consider desirable to enhance the standards of medical practice in the hospital. ARTICLE 5.0 IMPROVING ORGANIZATIONAL PERFORMANCE/RISK MANAGEMENT Section 5.1 Performance Improvement The Board of the hospital sets the organization policy that supports quality patient care. This is accomplished by the development of the mission, vision, policies, and bylaws that govern the hospital's operations. 5.1.1 The Board assures the organization's ongoing performance improvement process by its oversight of: • The Design process, • Monitoring performance through data collection • Analysis of current performance, and • Improving and sustaining improved performance. 5.1.2. The Board assures the organization's ongoing performance improvement initiatives including: • A decrease variation in patient outcomes, Improved patient satisfaction, Decreased cost per case, Information is managed to obtain necessary data, and Integration of performance improvement into all processes throughout the AMENDED BYLAWS OF BOARD OF COMMISSIONERS 8 REVISED 03/22/2016 organization. • Risk management assessments are ongoing and include: • A safe and secure environment for patients, visitors, employees, and physicians. • Preserve the financial assets of the hospital and control/prevent financial losses to patient, physician, and hospital through loss control mechanisms and claims handling procedures. ARTICLE 6.0 AMENDMENT These By-laws may be amended by resolution of the Board introduced at a regular meeting and adopted at a subsequent regular meeting by the majority vote. ARTICLE 7.0 ANNUAL REVIEW The Board shall review these Bylaws once every year, incorporating any amendments adopted since the last review of the bylaws. Adopted this 22 day of March 2016. NANCY GO Co ' missio Ayit Ai� �Jf Commissioner AIl`IEL S Commissioner AMENDED BYLAWS OF BOARD OF COMMISSIONERS 9 REVISED 03/22/2016 .l it7 l7 (6,, SU E�TAPLES Commis i er and Secretary MADELINE MO- ORE Commissioner RULE 15c2-12 CERTIFICATION REGARDING PRELIMINARY OFFICIAL STATEMENT I, PEGGY MCCARTHY, the Finance Director of the City of Tukwila (the "City"), do hereby certify that I am authorized to execute and deliver this certificate on behalf of the City of Tukwila, Washington (the "City"), relating to the preliminary official statement dated July 5, 2017 (the "Preliminary Official Statement"), prepared in connection with the sale of the City's Limited Tax General Obligation Bonds, 2017 (the "Bonds"). For the sole purpose of the underwriter's compliance with Securities and Exchange Commission Rule 15c2 -12(b)(1), the City deems the Preliminary Official Statement final as of its date, except for the omission of information on offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, delivery dates, other terms of the Bonds dependent on such matters, and the identity of the underwriter. Dated as of this 5th day of July, 2017. Pe cCarthy, Finance ctor Ci of Tukwila, Was on OFFICIAL STATEMENT DATED JULY 13, 2017 NEW ISSUE — BOOK -ENTRY ONLY BANK QUALIFIED S&P Rating: AA See "RATING" herein In the opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, under existing law and subject to certain qualifications described herein, the interest on the Bonds is excludable from gross income for federal income tax purposes. In addition, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. See "TAX MATTERS." $8,180,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 Dated: As of the Delivery Date Due: December 1, as shown on the inside cover The City of Tukwila, Washington (the "City"), is issuing its Limited Tax General Obligation Bonds, 2017 (the "Bonds"), in fully registered form under a book -entry only system. When issued, the Bonds initially will be registered to Cede & Co., as bond owner and nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in the principal amount of $5,000 or integral multiples thereof within a maturity. Purchasers of the Bonds (the "Beneficial Owners") will not receive certificates representing their beneficial ownership interest in the Bonds purchased. The fiscal agent of the state of Washington (the "State"), currently U.S. Bank National Association, will act as the registrar, paying agent, transfer agent and authenticating agent for the Bonds (the "Bond Registrar"). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2017, to the maturity or earlier redemption of the Bonds. The Bonds will mature on the dates and in the amounts and bear interest at the rates set forth on the inside cover. For so long as the Bonds are held in book -entry only form, the principal of and interest on the Bonds will be paid by the Bond Registrar to DTC, which in turn is obligated to remit such payments to its broker-dealer participants for subsequent disbursement to the Beneficial Owners. See "DESCRIPTION OF THE BONDS—Registration and Payment" and APPENDIX C— "DTC AND ITS BOOK -ENTRY SYSTEM." Maturity Schedule on Inside Cover Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain road construction and related improvement projects in the City, and (ii) to pay the costs of issuance of the Bonds. See "PURPOSE" herein. The Bonds are subject to redemption prior to their stated dates of maturity as described herein. See "DESCRIPTION OF THE BONDS—Redemption Provisions" herein. The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money of the City as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money of the City that is lawfully available, to pay when due the principal of and interest on the Bonds. The full faith, credit and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest on the Bonds. See "SECURITY FOR THE BONDS" herein. The City's authority to collect taxes, including its property tax levy, is subject to various limitations. See "CITY TAXING AUTHORITY—Property Tax" and "PROPERTY TAX LIMITATIONS." The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. The City has designated the Bonds as "qualified tax-exempt obligations" for banks, thrift institutions and other financial institutions under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See "TAX MATTERS." This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. The Bonds are offered when, as and if executed and delivered, and are subject to receipt of the approving legal opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel to the City, and certain other conditions. It is expected that the Bonds will be available for delivery in New York, New York through the facilities of DTC or to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer on or about July 26, 2017 (the "Delivery Date'). $8,180,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 Maturity Date (December) Maturity Amount Interest Rate Yield Price CUSIP No. (1) 2018 305,000 3.00% 1.15% 102.465 899052KR4 2019 315,000 3.00 1.20 104.152 899052KS2 2020 325,000 3.00 1.35 105.381 899052KT0 2021 330,000 3.00 1.50 106.288 899052KU7 2022 340,000 3.00 1.60 107.146 899052KV5 2023 355,000 3.00 1.70 107.789 899052KW3 2024 365,000 3.00 1.85 107.864 899052KX1 2025 375,000 3.00 2.00 107.650 899052KY9 2026 385,000 3.00 2.10 107.600 899052KZ6 2027 395,000 3.00 2.20 (2) 107.046 899052LA0 2028 410,000 3.00 2.25 (2) 106.589 899052LB8 2029 420,000 3.00 2.40(2) 105.232 899052LC6 2030 435,000 3.00 2.50(2) 104.338 899052LD4 2031 445,000 3.00 2.60 (2) 103.453 899052LE2 2032 460,000 3.00 2.75 (2) 102.141 899052LF9 2033 475,000 3.00 2.90(2) 100.848 899052LG7 2034 490,000 3.25 3.00(2) 102.115 899052LH5 2035 500,000 3.25 3.10(2) 101.261 899052LJ1 2036 520,000 3.25 3.15 (2) 100.838 899052LK8 2037 535,000 3.50 3.20 (2) 102.513 899052LL6 (1) The CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the Port and are provided solely for convenience and reference. CUSIP numbers for a specific maturity are subject to change after the issuance of the Bonds. The City takes no responsibility for the accuracy of such CUSIP numbers. (2) Priced to the first optional can date of June 1, 2027. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the cover page and Appendices, must be considered in its entirety. The offering of the Bonds is made only by means of this entire Official Statement. The information within this Official Statement has been compiled from sources considered reliable and, while not guaranteed as to accuracy, is believed to be correct as of its date. The City makes no representation regarding the accuracy or completeness of the information in APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM," which has been obtained from DTC's website, the form of opinion of Bond Counsel, or the information provided by or obtained from any entity providing bond insurance or other credit facility. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the information set forth herein since the date hereof. Information on website addresses set forth in this Official Statement is not incorporated into this Official Statement and cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon in making investment decisions regarding the Bonds. No dealer, broker, sales representative, or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement and, if given or made, such information or representations must not be relied upon as having been authorized by the City. 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 persons to make such offer, solicitation or sale. Certain statements contained in this Official Statement do not reflect historical facts, but rather are forecasts and "forward-looking statements." No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts shown. In this respect, the words "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward-looking statements. The achievement of certain results or other expectations contained in forward-looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. All estimates, projections, forecasts, assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. These forward-looking statements speak only as of the date they were prepared. The City does not plan to issue any updates or revisions to those forward-looking statements if or when their expectations or events, conditions or circumstances on which such statements are based occur and specifically disclaims any such obligation. The presentation of certain information, including tables of receipts from taxes and other revenues, is intended to show recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue to be repeated in the future. Information relating to debt and tax limitations is based on existing statutes and constitutional provisions. Changes in State law could alter these provisions. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Bond Ordinance has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such Acts. No federal or state securities commission or regulatory authority has passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. This page left blank intentionally. ii CITY OF TUKWILA, WASHINGTON 6200 Southcenter Boulevard Tukwila, Washington 98188 (206) 433-1800 www.tukwilawa.gov * MAYOR AND COUNCIL MEMBERS MAYOR Allan Ekberg CITY COUNCIL Dennis Robertson Joe Duffie Kathy Hougardy Kate Kruller Thomas McLeod De"Sean Quinn Verna Seal Mayor Council President Council Member Council Member Council Member Council Member Council Member Council Member CERTAIN APPOINTED OFFICIALS David Cline Peggy McCarthy Rachel Turpin BOND COUNSEL Pacifica Law Group LLP Seattle, Washington City Administrator Finance Director City Attorney FINANCIAL ADVISOR PFM Financial Advisors LLC Seattle, Washington (206) 858-5363 sea-advisors@pfm.com BOND REGISTRAR Washington State Fiscal Agent (Currently, U.S. Bank National Association, Seattle, Washington) The City's website is not part of this Official Statement, and investors should not rely on information presented in the City's website in determining whether to purchase the Bonds. This inactive textual reference to the City's website is not a hyperlink and does not incorporate such website by reference. iii This page left blank intentionally. iv Table of Contents DESCRIPTION OF THE BONDS 1 General 1 Authorization 1 Registration and Payment 1 Redemption Provisions 2 Purchase 3 Failure to Pay Bonds 3 Defeasance 3 PURPOSE 3 Sources and Uses of Funds 3 SECURITY FOR THE BONDS 3 CITY TAXING AUTHORITY 4 Property Tax 4 Retail Sales and Use Taxes 5 Utility Taxes 6 Lodging Tax 6 PROPERTY TAX LIMITATIONS 6 Uniformity Requirement 6 Limitations on Regular Property Taxes 6 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES 8 Assessed Valuation 8 Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City 8 Property Tax Collection Procedures 9 Overlapping Levy Rates 10 GENERAL OBLIGATION DEBT 11 Authorization of Debt 11 Limits of Indebtedness 11 Outstanding General Obligation Debt 12 Debt Capacity Computation 13 Direct and Estimated Overlapping Debt 14 Debt Service Requirements 15 Future Financing 15 Debt Payment Record 15 CITY FUNDS AND ACCOUNTING 16 City Investments and Investment Policy 16 v Historical General Fund Operating Results 18 General Fund Budgets 19 THE CITY 20 Governance 20 Employees and Bargaining Groups 21 Pension Plans 21 Other Post -Employment Benefits 24 Risk Management 25 GENERAL AND ECONOMIC INFORMATION 26 General 26 Population 26 Economic Indicators for the City and the County 26 TAX MATTERS 27 General 27 Original Issue Premium and Discount 28 Post Issuance Matters 28 Bank Qualified 28 CONTINUING DISCLOSURE UNDERTAKING 29 CERTAIN INVESTMENT CONSIDERATIONS 31 Initiative and Referendum 31 Limitations on Remedies 31 No Acceleration 31 Bankruptcy 31 RATING 32 LITIGATION 32 APPROVAL OF COUNSEL 32 FINANCIAL ADVISOR 32 UNDERWRITING 32 CONFLICTS OF INTEREST 32 OFFICIAL STATEMENT 32 APPENDICES: FORM OF LEGAL OPINION APPENDIX A 2016 AUDITED FINANCIAL STATEMENTS APPENDIX B DTC AND ITS BOOK -ENTRY SYSTEM APPENDIX C This page left blank intentionally. vi OFFICIAL STATEMENT $8,180,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 The City of Tukwila, Washington (the "City"), a municipal corporation duly organized and existing under and by virtue of the state of Washington (the "State"), furnishes this Official Statement in connection with the offering of its Limited Tax General Obligation Bonds, 2017 (the "Bonds"). This Official Statement, which includes the cover page, inside cover page, the table of contents and appendices, provides information concerning the City and the Bonds. Capitalized terms not defined herein shall have the meanings assigned to them in the Bond Ordinance, as defined below. All of the summaries of provisions of the Constitution and laws of the State, of ordinances and resolutions of the City, and of other documents contained herein are subject to the complete provisions thereof and do not purport to be complete statements of such laws or documents, copies of which may be obtained from the City upon request. A full review should be made of the entire Official Statement. The offering of the Bonds to prospective investors is made only by means of the entire Official Statement. DESCRIPTION OF THE BONDS General The Bonds will be dated as of their initial date of delivery (the "Delivery Date") and will bear interest from their dated date (or the most recent date to which interest has been paid thereon). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2017 to maturity or prior redemption. The Bonds will bear interest at the rates and will mature on the dates and in the amounts set forth on the inside cover of this Official Statement. Interest will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. Authorization The Bonds are issued pursuant to the provisions of the Constitution of the State, chapters 39.36 and 39.46 of the Revised Code of Washington ("RCW"), and other applicable laws of the State, and Ordinance No. 2541 passed by the City Council (the "Council") at a regular meeting on June 19, 2017 (the "Bond Ordinance"). Registration and Payment Book -Entry System. The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"). DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denominations of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee of DTC, references herein to the Registered Owners will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. For information about DTC and its book -entry system, see APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM." The City makes no representation as to the accuracy or completeness of the information in Appendix C provided by DTC. Purchasers of the Bonds should confirm this information with DTC or its broker-dealer participants. Bond Registrar. The City has adopted the system of registration for the Bonds approved, from time to time, by the State Finance Committee (the "Committee"). Pursuant to chapter 43.80 RCW, the Committee designates one or more fiscal agents for bonds issued within the State. The State's fiscal agent, currently U.S. Bank National Association (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal of and interest on the Bonds, recording the purchase and registration, exchange or transfer, and payment of Bonds and performing the other obligations of the paying agent and registrar. No resignation or removal of the Bond Registrar shall become effective until a successor has been appointed and has accepted the duties of Bond Registrar. Payments. To pay the principal of and interest on the Bonds when due, the City will remit money from the fund or account held under the Bond Ordinance for the purpose of paying debt service on the Bonds (the "Debt Service Fund") to the Bond Registrar. The Bond Registrar is obligated to remit such payments to DTC participants for subsequent disbursement to the Beneficial Owners of the Bonds as described in Appendix C. 1 For so long as all Bonds are held by a depository, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Blanket Issuer Letter of Representations from the City to DTC. In the event that the Bonds are no longer held by a depository, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register at the close of business for the Bond Registrar 15 days preceding any principal payment or redemption date (the "Record Date"), or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the designated office of the Bond Registrar. Transfer and Exchange. The transfer of any Bond may be registered and Bonds may be exchanged as provided in the Bond Ordinance. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registered Owner) of the same date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer of or to exchange any Bond during the period between the preceding Record Date and the principal payment or redemption date. Redemption Provisions Optional Redemption. The Bonds maturing on December 1 in the years 2018 through 2026, inclusive, are not subject to redemption prior to their stated maturity. The Bonds maturing on or after December 1, 2027 are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redemption. Selection of Bonds for Redemption. For as long as the Bonds are held in book -entry form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held by a depository, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the Bond Ordinance. If the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of bonds of such maturity to be redeemed shall be selected by lot (or in such manner as determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the sum of a Bond is redeemed, upon surrender of such Bond the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the rest of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. Notice of Redemption. For so long as the Bonds are held by a depository, notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar shall provide any notice of redemption to any Beneficial Owners. The notice of redemption may be conditional. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. On or prior to any redemption date, unless such redemption has been rescinded or revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. 2 Effect of Call for Redemption. If notice of redemption has been given and not rescinded or revoked, or if the conditions set forth in a conditional notice of redemption have been satisfied or waived, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. Purchase The City reserves the right to purchase any or all of the Bonds offered to the City at a time at a price deemed reasonable by the City plus accrued interest to the date of purchase. Failure to Pay Bonds If any Bond is duly presented for payment and funds have not been provided by the City on the applicable payment date, then interest will continue to accrue thereafter on the unpaid principal thereof at the rate stated on the Bond until the Bond is paid. Defeasance In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt Service Fund or in another special account, cash or noncallable Government Obligations (as defined below), or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of the Bond Ordinance except the right to receive payment of principal, premium, if any, and interest from the Debt Service Fund or such special account, and such Bond shall be deemed to be not outstanding under the Bond Ordinance. The term "Government Obligations" is defined in the Bond Ordinance to mean direct or indirect obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America. PURPOSE Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the costs of certain road construction and related improvement projects in the City, and (ii) to pay the costs of issuance and sale of the Bonds. Sources and Uses of Funds Sources of Funds The Bonds Par Amount of Bonds $8,180,000 Plus Premium 356.839 Total Sources of Funds $8,536,839 Uses of Funds Deposit to Project Fund $8,400,000 Estimated Costs of Issuance (1) 136.839 Total Uses of Funds $8,536,839 (1) Costs of issuance include legal fees, financial advisor's fees, underwriting fee, rating agency fees and other costs incurred in connection with the issuance of the Bonds. SECURITY FOR THE BONDS The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in this Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of the taxes and for the prompt payment of the principal of and interest of the Bonds. See "CITY TAXING AUTHORITY" for a summary of property taxes and other taxes imposed by the City. 3 The City may, subject to applicable laws, apply other funds available to make payments with respect to the Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. CITY TAXING AUTHORITY The City has statutory authority to levy various taxes within its boundaries, including local option sales and use taxes, excise taxes, utility taxes, property taxes, and other taxes. In some cases, State law specifies the purposes for which various taxes can be used. The City's major sources of General Fund tax revenue are its regular property tax levy and sales and use taxes. Additionally, the City levies utility taxes and other taxes which include gambling tax, excise tax, admissions tax, and penalties and interest. Neither the State nor any municipal corporation of the State currently has the authority to or collects a tax on net income. The following table shows the tax revenue in the City's General Fund, by source, for 2012 through 2016. General Fund Tax Revenues by Source (1) (2) (3) Fiscal Property Year Taxes 2016 $14,494,747 2015 14,323,133 2014 14,186,753 2013 13,757,092 2012 13, 830,166 Sales and Use Taxes $18,908,190 19,334,152 17,105,322 16,520,856 15,673,891 Utility Other Taxes (1) Taxes (2) $6,192,432 6,080,387 5,706,558 5,566,851 5,535,966 $6,291,392 5,463,697 5,220,393 4,771,091 4,800,341 (3) Total Taxes $45,886,761 45,201,369 42,219,026 40,615,890 39,840,364 Includes taxes on City -owned utilities, which represent approximately 30-35 percent of Utility Tax revenue each year. See "Utility Taxes" below. Includes gambling tax, excise tax, admissions tax, full-time equivalent employee tax, and penalties and interest. In 2012, the City received approximately $440, 000 in delinquent gambling taxes. Source: The City of Tukwila audited financial statements for each year 2012 to 2016 Property Tax Under the State's laws and Constitution, property taxes are classified as either "regular" property taxes or "excess" property taxes. The City is authorized to levy both types of taxes. It submits a levy amount request to the King County (the "County") Assessor (the "Assessor"), a County elected official, who calculates the levy rate by spreading the levy amount across the assessed valuation on the tax rolls, following procedures established by the State Department of Revenue. The Assessor confirms that the levy is within applicable statutory and constitutional limitations and makes any necessary reductions before the County Treasurer (the "Treasurer"), another County elected official, may begin to collect the levy on behalf of the City. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES" below. Regular Property Tax. Regular property taxes are subject to constitutional and statutory limitations as to rate and amount. See "PROPERTY TAX LIMITATIONS" herein. Regular property taxes are usually levied for general municipal purposes, though certain statutes authorize additional levies for particular limited purposes. General purpose levies may be used for the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, but State law does not provide any priority of use. In general, regular property taxes do not require voter approval, though certain statutes authorizing limited purpose levies may require voter approval. Certain tax limitations may be exceeded upon voter approval. Excess Property Tax. Excess property taxes for cities are not subject to constitutional or statutory limitations as to rate or amount, but must be authorized by a at least 60 percent approving vote in an election meeting minimum voter turnout requirements. Excess property tax levies may be made (1) by any taxing district for the repayment of bonds issued for capital purposes, excluding replacement of equipment; (2) by any taxing district for one year for any governmental purpose; or (3) without a vote when necessary to prevent impairment of an obligation of contract, if ordered by a court of last resort. Excess levies for the repayment of unlimited tax general obligation bonds must meet the minimum voter requirements set forth below under "GENERAL OBLIGATION DEBT—Limits of Indebtedness." 4 Retail Sales and Use Taxes The State imposes a sales and use tax, and local governments (cities, counties and certain other municipal corporations) are authorized to levy additional "local option" sales and use taxes. In general, sales taxes are imposed on the purchase by consumers of a broad base of tangible personal property and selected services (including construction (labor and materials), machinery and supplies, services and repair of real and personal property). The use tax supplements the sales tax by taxing the use of certain services and personal property on which a sales tax has not been paid. Sales taxes upon applicable retail sales are collected by the seller from the consumer. Use taxes are payable by the consumer upon applicable rendering of services or uses of personal property. Each seller is required to hold taxes collected until remitted to the State Department of Revenue (the "DOR"), typically occurs on a monthly basis. The DOR collects and distributes all sales and use tax revenue in the State and retains one percent of all taxes collected to offset administration costs. Distribution to the local governments occurs on a monthly basis and lags approximately two months behind collections. Among the items currently exempt are most personal services, motor vehicle fuel, most food sold for consumption off premises, trade-ins of items (e.g., automobiles) and purchases for resale. The State Legislature, and the voters through the initiative process, have changed the base of the sales and use tax on occasion. State law does not provide a general exemption for businesses, nonprofits or governmental entities from payment of sales and use taxes. The State Legislature approved legislation that changed the State sales tax system from an origin-based system to a destination-based system, effective July 1, 2008. Under destination sourcing, sales taxes are credited to the taxing jurisdiction where the purchaser takes delivery of the goods (based on the local tax rate), which may differ from the point of sale with respect to goods delivered to the purchaser. Local option sales and use taxes may be imposed on any sale or use upon which the State also imposes a sales and use tax. As described below, some sales and use tax authority is for general purposes and some is restricted as to use. Additionally, some local option taxes are subject to approval of the voters within the local jurisdiction. Historical retail sales subject to the sales and use taxes in the City are shown under "GENERAL AND ECONOMIC INFORMATION—Economic Indicators for the City and the County." Overview of Sales and Use Taxes within the City. The State sales and use tax rate is 6.5 percent. The City imposes the basic and optional sales and use taxes described below at a rate totaling 1.0 percent. The County imposes a criminal justice sales and use tax and a chemical dependency or mental health treatment services sales and use tax, for a combined rate of 0.2 percent within the City. The Central Puget Sound Regional Authority (d/b/a Sound Transit) imposes a regional transit authority tax of 1.4 percent, and the County imposes a county transit system sales and use tax at a rate of 0.9 percent within its boundaries. Therefore, the total sales and use tax rate in the City is currently 10.00 percent. Basic and Optional Sales and Use Taxes. The City imposes a basic sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(1), and an optional sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(2). The revenue collected from the sales and use tax is not restricted, and therefore may be used for general City purposes. The City receives 85 percent of the tax collected within the City and the balance is distributed to the County per State law. Taxes from this source are part of the City's General Fund, and therefore are available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. Criminal Justice Sales and Use Tax. The County imposes a local sales and use tax of 0.1 percent for funding criminal justice programs, as provided in State law. While the criminal justice sales tax is levied countywide, a portion of the revenues are distributed to the cities within the County, based on a formula in State law. Ten percent of the revenue from this tax is distributed to the County and 90 percent to the cities and the County on a per capita basis, based on their estimated population as determined by the State Office of Financial Management as of April 1 each year. Revenues from the criminal justice sales tax are deposited into the City's General Fund and may be used only for criminal justice purposes, including the construction, improvement, and expansion of jails, court facilities, juvenile justice facilities, and services with ancillary benefits to the civil justice system (such as domestic violence programs and services). Chemical Dependency or Mental Health Treatment Services Sales and Use Tax. The County imposes a local sales and use tax of 0.1 percent for funding of chemical dependency or mental health treatment services within the County, as provided in RCW 82.14.460. Revenue from the tax is to provide funding for the operation or delivery of chemical dependency or mental health treatment programs and services and for the operation or delivery of therapeutic court programs and services, including treatment services, case management, and housing that are a component of a coordinated chemical dependency or mental health treatment program or service. State law does not require distribution of these taxes to the City. 5 Sales & Use Tax Streamlining Mitigation Payments. The State currently provides payments to certain jurisdictions to mitigate net losses in sales and use tax collections of local taxing jurisdictions resulting from the change to a destination -based system. Mitigation payments are distributed at the end of each quarter for the net loss experienced in the preceding quarter. For example, the first payments were made on December 31, 2008 for July through September (third quarter) 2008. Under current State law, when a jurisdiction's "voluntary compliance revenue" exceeds its Toss of local sales tax revenue, the jurisdiction will cease receiving mitigation payments. The continuation of these payments is subject to change at any time by the State Legislature. The City has received mitigation payments averaging approximately $280,000 per quarter in each of the last three years. The total received in 2016 was $1.122 million. Although the City cannot predict its future sales tax receipts, it currently expects to continue to seek mitigation payments to offset any losses so long as it is eligible. However, the sales tax mitigation program is subject to annual appropriation by the State Legislature and to allocation formulas developed under State law, and the City cannot predict whether the State Legislature will continue to appropriate and to allocate mitigation payments to the City in the future. Utility Taxes The City levies a tax on public utility businesses (the "Utility Tax"), which is based on gross receipts from service provided or revenues generated within the City. It is collected from Puget Sound Energy (an investor-owned utility) and utilities operated by the City. Seattle City Light, which provides electric service to portions of the City, pays the City an annual franchise fee in lieu of the Utility Tax. Legal authority to impose the tax on public utilities (other than electric utilities) owned by other municipal corporations is not settled; however, no such public utilities provide service within the City. Under State law, the tax rate for electric, phone and natural gas utilities is limited to six percent without voter approval; there is no limitation on tax rates on other utilities. The City collects a six percent utility tax on electricity, telecommunications, natural gas, cable utilities, and solid waste utilities. The City collects a 10 percent utility tax on revenue from City -owned stormwater, water, and sewer utilities. Lodging Tax The City imposes a local option lodging tax at a rate of 1.0 percent on sales of hotel/motel rooms within the City. The City's lodging tax is credited against the State's 6.5 percent retail sales tax, and therefore is not an additional tax to consumers. The lodging tax receipts may be used only for tourism purposes. The City received $710,267 from the lodging tax in 2016. Revenues from the lodging tax are deposited into a special revenue fund. PROPERTY TAX LIMITATIONS The authority of a city to levy taxes without voter approval for general city purposes, including the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the limitations described below. Information relating to regular property tax limitations is based on existing statutes and constitutional provisions, and is subject to change. Changes in such laws could alter the impact of other interrelated tax limitations on the City. Uniformity Requirement The State Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. The State Constitution also provides that all real estate constitutes a single class, except for certain agricultural properties eligible for special use classification, which may be valued based on current use. It is possible, because of different overlapping taxing district boundaries, the maximum permissible levy might vary within the boundaries of a particular taxing district. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of a taxing district would be applied to the entire taxing district. Limitations on Regular Property Taxes City Regular Levy Rates and Limitations. Cities in the State are authorized to impose a regular property tax levy of not to exceed $3.375 per $1,000 of assessed value. This amount is increased to an amount not to exceed $3.60 per $1,000 of assessed value if the city is annexed into a library district, a regional fire service protection authority, and/or a fire protection district, less the actual regular levy made by the library district, regional fire service protection authority, and/or fire protection district. Further, a city may impose an additional $0.225 per $1,000 of assessed value beyond the $3.375 or $3.60 (for annexed cities) if the city has a fire pension fund, which must be used to the extent necessary for firefighters' pension funding purposes, otherwise this tax may be levied and used for any other municipal purpose. 6 The City's regular levy authority reflects certain of the adjustments described above. The City is annexed to the King County Rural Library District, which imposed a regular levy of $0.401 per $1,000 of assessed valuation within the City in 2017. The City also has a pre-LEOFF firefighters pension fund (see "THE CITY—Pensions" below), and therefore has authority to levy an additional $0.225/$1,000 of assessed valuation. Therefore, after application of the adjustments, the City is limited in 2017 to a maximum property tax levy rate of $3.199 per $1,000 of assessed valuation, plus the $0.225 pension fund levy. The City's actual 2017 regular property tax rate is $2.586 per $1,000 of assessed valuation, and it is not currently levying a firefighters' pension fund levy. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES—Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" below. Aggregate Levy Rate Limitations. The State Constitution and statutes limit the aggregate of all regular property tax levies imposed on any given tax parcel by the State and all overlapping taxing districts, except port districts and public utility districts, to one percent of the true and fair value of property. Within the one percent limitation, the levy by the State may not exceed $3.60 per $1,000 of assessed valuation and the aggregate of all regular levies by all taxing districts (other than the State and other than certain specified levies) may not exceed $5.90 per $1,000 of assessed valuation (the "$5.90 limitation"). Those specified levies excluded from the $5.90 limitation include port or public utility district levies; excess property tax levies; levies for acquiring conservation futures; levies for emergency medical care or emergency medical services; levies to finance affordable housing for very low-income residents; certain portions of levies by metropolitan park districts; certain levies imposed by ferry districts; levies for criminal justice purposes; certain portions of levies by fire protection districts; levies by counties for transit -related purposes; portions of certain levies by certain flood control zone districts; and levies imposed by a regional transit authority. The list of levies excluded from the $5.90 limitation is statutory and subject to change by the State Legislature at any time; certain of these exclusions are set to expire in 2018. Because various taxing districts may overlap, the aggregate levy rate applied to any two tax parcels within a single taxing district may not be identical. If the aggregate levy rate exceeds the aggregate rate limitation on any single parcel within a taxing district, the regular levy rates of certain taxing districts that include that parcel may be reduced. Because of the constitutional requirement for uniformity of taxation within a taxing district (described above), any reduction affects the entire taxing district. If reductions are required, they are made by the County Assessor, in accordance with State statutes and guidance from the DOR setting forth a prioritization of regular levies. The regular levies of the State, counties, road districts, cities, towns, port districts, and public utility districts are considered "senior" levies; the regular levies of all other taxing districts are considered "junior" levies. State statute prescribes the order in which the levies of the various junior levies are reduced or eliminated in order to comply with the aggregate rate limitations. Senior levies, such as the City's, are not subject to reduction or elimination based on aggregate rate limitations. The regular levy rates within the City are below both the individual and aggregate levy rate limitations. Maximum Amount Increase Limitation. State law also limits the amount of a regular levy for any particular year to the highest amount that could have been levied in any prior year, multiplied by a specified percentage (the "limit factor") plus an adjustment for new construction, annexations, certain improvements to property, and state assessed property. The limit factor is defined as the greater of (i) the lesser of 101 percent or 100 percent plus inflation, or (ii) if approved by a majority plus one vote of the governing body upon a finding of substantial need, any percentage up to 101 percent. If a taxing district levies less than its highest allowable levy, the amount not levied is nonetheless included in the base for determining the maximum amount limitation for succeeding years. This difference between the highest allowable levy amount and the amount actually levied is sometimes referred to as "banked" levy capacity. The City has no "banked" levy capacity. See table titled "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES— Current and Historical Assessed Valuation and Property Tax Levy Rates and Levy Amounts for the City" herein. The maximum amount increase limitation may be exceeded upon approval of a simple majority of voters. This is known as a "levy lid lift." A levy lid lift permits a levy amount increase greater than would otherwise be allowed, which increase may be effective indefinitely or for a limited period of time. Tax receipts from the incremental increase may be (but are not required to be) restricted in the ballot proposition to satisfy a limited purpose. A levy lid lift will not increase the levy if it would cause the taxing district's levy to exceed the applicable maximum rate limitations or the aggregate rate limitations described above. The City does not have any levy lid lifts in effect and does not expect to seek voter approval for a levy lid lift in 2017 or 2018. 7 Relationship Between Rate and Amount Limitations. Regular levies are limited by both the rate limitations and the amount limitations described above and, therefore, may need to be reduced below one threshold to avoid exceeding the other. Because the regular property tax increase limitation applies to the total dollar amount levied rather than to the levy rate, increases in the assessed value of all property in the taxing district (excluding new construction, improvements, annexations and State -assessed property) which exceed the rate of growth in taxes allowed by the limit factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses banked levy capacity. Decreases in the assessed value of all property in the taxing district (including new construction, improvements, annexations and State -assessed property) or increases in such assessed value that are less than the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates. Thus, as assessed values rise, the levy amount increase limitation may restrict levy rate growth. As assessed values fall, the levy rate limitation may restrict growth in the levy amount. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES—Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" herein for a table showing the City's historical assessed valuation, and regular property tax levy rates and amounts. Guaranty Fund Levies. Outside of the $3.60 per $1,000 and $5.90 per $1,000 limitations described above, but within the constitutional one percent aggregate levy limitation, the City may impose a levy for the maintenance of a local improvement guaranty fund to secure debt of any local improvement district that may be created by the City. The amount of a guaranty fund levy in any given collection year may not exceed the greater of (i) 12 percent of the outstanding obligations guaranteed by the fund, or (ii) the total amount of delinquent assessments and interest accumulated on the delinquent assessments (RCW 35.54.060). The taxes levied for the maintenance of the guaranty fund will be in addition to and, if need be, in excess of all statutory and charter limitations applicable to tax levies in any city or town. In 2013 the City issued $6,687,500 of Local Improvement District No. 33 Bonds, of which $4,805,000 principal is currently outstanding and guaranteed by the local improvement guaranty fund. As of May 31, 2017, the balance in the guaranty fund is $669,150, which was funded by a deposit of proceeds of the Local Improvement District No. 33 Bonds. PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES Assessed Valuation The Assessor determines the value of all real and personal property throughout the County that is subject to ad valorem taxation, except certain utility properties that are valued by the DOR. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the DOR. The assessed value is equal to 100 percent of fair market value, as determined by the Assessor using procedures prescribed by the DOR. Three approaches may be used to determine the fair market value of real property: market data, replacement cost and income generating capacity. In the County, all property is subject to revaluation every year based on market statistics and an on-site appraisal every six years. Though the intent is that the assessed value reflect 100 percent of market value, the infrequency of on-site appraisals can lead to assessed valuations that lag market and other adjustments. Personal property is valued each year based on affidavits filed by the property owner. The property is listed by the Assessor on a roll at its current assessed value and the roll is filed in the Assessor's office. The Assessor's determinations are subject to revision by the County Board of Equalization and, for certain property, subject to further revision by the State Board of Equalization. Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City The following table shows the current and historical assessed valuation, and property tax levy rates and levy amounts for the City from 2013 to 2017. Assessed Valuation and Property Tax Levy Rates and Levy Amounts Tax Year 2017 2016 2015 2014 2013 n) (2) Assessed Valuation (1) $5,763,649,829 Regular Excess Total Levy Rate Levy Rate (2) Levy Rate $2.58592 5,395,325,118 2.71073 5,054,078,747 2.84188 4,756,373,688 2.97799 4,649,191,308 2.98778 $0.47143 N/A N/A N/A N/A $3.05735 N/A N/A N/A N/A Regular Levy Amount $14,869,800 14,592,910 14,327,468 14,129,531 13,853,419 Excess Levy Total Levy Amount(2) Amount $2,698,992 N/A N/A N/A N/A $17,568,792 N/A N/A N/A N/A Total assessed valuation used for computation of debt capacity. Equal to regular assessed valuation plus timber assessed valuation. The City's voters approved an unlimited tax general obligation bond measure in November 2016. The excess property tax levy associated with these bonds became effective for collection in 2017. Source: King County Department of Assessments 8 Taxpayer Largest Property Taxpayers in the City of Tukwila — 2017 Tax Year Assessed Valuation Boeing Westfield Southcenter Segale Properties Sabey Corporation KIR Tukwila 050 LLC/KIMCO Gateway North Buildings (Eproperty Tax Inc. Dept. 207) LIT Industrial Ltd. Partnership CenturyLink Communications International Gateway East CPF Kent Valley LLC All other property tax payers Type of Business Aerospace Shopping Center Commercial Properties Commercial Properties Commercial Properties Commercial Properties Commercial Properties Telecommunications Commercial Properties Shopping Center Total $ 482,031,129 306,693,888 114,654,362 103, 743, 927 89,180,000 85,477,600 84,820,900 60,820,553 59,218,716 49,242,900 $1,435,883,975 4,327,765,854 $5,763,649,829 % of Total A.V. 8.36% 5.32 1.99 1.80 1.55 1.48 1.47 1.06 1.03 0.85 24.91% 75.09 100.00% Source: King County Department of Assessments Property Tax Collection Procedures Property taxes are levied in specific amounts by the taxing districts. The levy rate is calculated and fixed by the Assessor, based upon the assessed value of the taxable property within the taxing district and adjusted, in accordance with detailed guidelines from the DOR, to comply with the statutory and constitutional rate and amount limitations. See "PROPERTY TAX LIMITATIONS" above. The Assessor extends the taxes to be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the Treasurer by January 15 of each year. The Treasurer creates a tax account for each taxpayer and is responsible for the collection of taxes due for each account. All taxes are due and payable on the 30th of April of each year, but if the amount due from a taxpayer exceeds $50, one-half may be paid then and the balance no later than October 31 of that year. Delinquent taxes are subject to interest at the rate of 12 percent per year computed on a monthly basis from the date of delinquency until paid. In addition, a penalty of three percent is imposed on June 1 of the year in which the tax is due and eight percent on December 1 of the year due. Penalties are credited to the account of the taxing district; interest on delinquent taxes is credited to the County's current expense fund. The method of giving notice of payment of taxes due, the Treasurer's accounting for the money collected, the division of the taxes among the various taxing districts, notices of delinquency and collection procedures are all covered by detailed statutes and regulations. Property taxes and all charges and expenses relating to the taxes constitute a statutory lien on the property taxed. The lien attaches to the property from and including January 1 in the year in which the tax is levied, and is discharged only when the taxes are paid. By law, the Treasurer may commence foreclosure of a tax lien on real property after three years have passed since the first delinquency. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation except for federal civil judgment liens and the possible application of the State "homestead exemption" described below. A federal lien on personal property that is filed before the personal property tax is levied is senior to the local personal property tax lien. In addition, a federal civil judgment lien (but not a federal tax lien) is senior to real property taxes that are imposed after the judgment lien has been recorded. The State's courts have not decided whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain the first $125,000 of proceeds of a forced sale of the family residence or other "homestead property" for delinquent property taxes. The United States Bankruptcy Court for the Western District of Washington has held that the homestead exemption applies to the lien securing property taxes, while the State Attorney General has taken the position that it does not. See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982) (holding that liens securing improvement district assessments are subject to the homestead exemption). 9 The following table shows the City's regular and excess property tax collection record. Regular and Excess Property Tax Collection Record for the City Amount Amount Collected Percent Collected Amount Collected Percent Collected Year Levied (1) Year of Levy Year of Levy As of 4/30/17 As of 4/30/17 2017 (2) 2016 2015 2014 2013 $17,568,792 14,516,623 14,245,846 14, 058, 979 13,750,828 $ 7,025,323 14,375,358 14,113,739 13,916,718 13, 549, 525 39.99% 99.03 99.07 98.99 98.54 $ 7,025,323 14,432,190 14,217,472 14,047,709 13,751,560 39.99% 99.42 99.80 99.92 100.00 The amount levied each year does not include supplements or cancellations of taxes or delinquent taxes collected in that year. In process of collection. Property taxes for the first half of the year are due and payable on April 30 and the balance is payable on October 31. Includes the excess property tax levy associated with the City's November 2016 unlimited tax general obligation bond authorization, which became effective for collection in 2017. Source: King County Office of Finance Overlapping Levy Rates The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the following rates, subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved property taxes. For purposes of demonstration, representative levy rates (regular and excess) for "levy code 2340," the highest levy rate within the City, as well as the statutory regular levy authority of each type of overlapping district, are listed below. There is no statutory limitation on excess tax levies. Representative 2017 Levy Rate and Statutory Regular Levy Authority King County King County Rural Library District Port of Seattle Fire Protection District or Authority The City King County Hospital District No. 1 State Schools Renton School District No. 403 Emergency Medical Services King County Flood Zone Regional Transit Authority Tukwila Metropolitan Park District Statutory Regular Levy Authority Per $1,000 of Assessed Value $1.80 (1) 0.50 0.45 (2) 1.50 3.42 (3) 0.75 3.60 (4) -- (5) 0.50 0.25 0.50 0.75 Representative 2017 Regular Levy Rates Per $1,000 of Assessed Value $1.34685 0.40118 0.15334 2.58592 0.50089 2.03205 0.26305 0.11740 0.25000 0.15653 Representative 2017 Excess Levy Rates Per $1,000 of Assessed Value $0.03609 0.05000 0.47143 4.95978 Total Rate for King County Levy Code 2340: Representative Total Levy Rates Per $1,000 of Assessed Value 1.38294 0.45118 0.15334 3.05735 0.50089 2.03205 4.95978 0.26305 0.25000 0.11740 0.15653 $13.32451 A county may increase its levy up to $2.475 per $1,000 of assessed value for general county purposes if the total levies for both general and road purposes do not exceed $4.05 per $1, 000 of assessed value, and no other taxing district has ifs levy reduced as a result of the increased county levy. The County road levy is imposed on properties located in unincorporated areas of the County. Port districts may exceed this limitation if necessary to pay debt service on general obligation indebtedness. Pursuant to RCW 41.16.060, cities (like the City) who maintain a pre-LEOFF firefighter pension fund, may levy an additional $0.225 for firefighter pension funding purposes. If not actuarially required for that purpose, such a city may use this levy for any other municipal purpose. Additionally, the City's levy authority is reduced by the actual regular levy rate of the King County Rural Library District, which levied $0.40118 per $1,000 of assessed value in 2017. Pursuant to RCW 84.52.043(1), the levy by the State may not exceed $3.60 per $1,000 of assessed value adjusted to the State equalized value in accordance with a ratio fixed by the State Department of Revenue. School districts do not have non -voted regular levy authority. The City is served by and overlaps with five separate school districts. The representative levy code (2340) shown in the table reflects the portion of the City that overlaps with Renton School District No. 403. Source: King County Department of Assessments 10 GENERAL OBLIGATION DEBT Authorization of Debt The power of the City to contract debt of any kind is controlled and limited by State law. All debt must be set forth in accordance with detailed budget procedures and paid for out of identifiable receipts and revenues. The budget must be balanced for each fiscal year. It is unlawful for an officer or employee of the City to incur liabilities in excess of budgetary appropriations. In an emergency, the City Council may put a plan into effect and authorize indebtedness outside the current budget. All expenditures for emergency purposes must be paid from any available money in the fund properly chargeable with such expenditures. Limits of Indebtedness The State Constitution and statutes limit the City's ability to incur indebtedness based on a percentage of the assessed valuation of the taxable property within the City at the time the indebtedness is incurred. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES" above. As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to 60 percent voter approval, is limited to 2.5 percent of assessed value for general purposes, an additional 2.5 percent of assessed value for certain utility purposes and an additional 2.5 percent of assessed value for open space, park facilities and capital facilities associated with economic development. The minimum turnout must be at least 40 percent of city voters who voted at the last preceding State general election. If the ballot proposition approving issuance of voter -approved debt also approved the levy of taxes without limitation in amounts sufficient to repay those voter - approved bonds, then bonds will be payable from an excess property tax levy. See "PROPERTY TAX LIMITATIONS" above. Within the 2.5 percent of assessed value for general purposes, the City may, without voter approval, incur general obligation indebtedness, such as the Bonds, in an amount not to exceed 1.5 percent of assessed value. Additionally, within the 2.5 percent of assessed value for general purposes, the City may, also without voter approval, enter into financing leases and conditional sale contracts if the total principal component of the lease and contract payments, together with the other non -voted general obligation indebtedness of the City, does not exceed 1.5 percent of assessed value. The Bonds constitute non -voted debt. There is no express provision in the State's laws or Constitution on the priority of payment of debt service on general obligation bonds as compared to the payment of other general obligations of the municipality. Aggregate Debt Limitations. The combination of voter -approved and non -voted general obligation debt for general municipal purposes may not exceed 2.5 percent of the City's assessed valuation. The total of all general obligation debt for all purposes may not exceed 7.5 percent of the City's assessed valuation. Short -Term Obligations. Within the limitations described above, State law permits municipal corporations to borrow money and issue short-term obligations for any lawful purpose, including the anticipation of the receipt of revenues, taxes, or grants or the sale of bonds, if the bonds have been authorized by the governing body or the voters, as applicable. Short-term obligations issued in anticipation of taxes must be repaid within six months after the end of the fiscal year in which they are issued. [Remainder of page intentionally left blank.] 11 Outstanding General Obligation Debt As of June 1, 2017 the City had the following outstanding general obligation indebtedness. Principal Date of Final Principal Amount Outstanding General Obligation Debt Amount Issued Maturity Outstanding Limited Tax General Obligation Debt Limited Tax General Obligation Refunding Bonds, 2008 $6,180,000 12/1/2019 $ 2,165,000 South Correctional Entity Facility Public Development 6,898,800 1/1/2039 6,093,600 Authority Bonds, Series 2009A and 2009B (Taxable Build America Bonds — Direct Payment) (1) Limited Tax General Obligation Bonds, 2010B 3,970,000 12/1/2024 3,575,000 Limited Tax General Obligation Bonds, 2011 4,620,000 12/1/2023 3,360,000 Limited Tax General Obligation Bond, 2013 (2) 1,000,000 12/1/2022 609,977 Limited Tax General Obligation Bond, 2014 (Taxable) 3,850,000 12/1/2034 3,560,000 Limited Tax General Obligation Note, 2014 (Taxable) 2,250,000 12/1/2017 2,250,000 Limited Tax General Obligation Bonds, 2015 5,825,000 12/1/2035 5.605.000 Total Outstanding Limited Tax General Obligation Debt $27,218,577 The Bonds 8,180,000 12/01/2037 8.180,000 Total Limited Tax General Obligation Debt $35,398,577 Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Bonds, 2016 Total General Obligation Debt (1) (2) $32,990,000 12/1/2036 $32.990.000 $68,388,577 The South Correctional Entity Facility Public Development Authority issued bonds for a correctional facility (the "SCORE Bonds). Pursuant to an interlocal agreement, the City is obligated to pay eight percent of the debt service on the SCORE Bonds in each year so long as the SCORE Bonds are outstanding, which obligation constitutes a limited tax general obligation debt of the City secured by the City's full faith and credit. The amounts shown in the table above represent the portion of the outstanding principal amount that is allocable to the City's obligation. The proceeds of this obligation were loaned to the Tukwila Metropolitan Park District (the "MPD) to pay for improvements to the pool. The MPD is a separate taxing district. Pursuant to the terms of an interlocal agreement, the MPD has irrevocably pledged to levy and collect taxes and other revenues in amounts sufficient to pay debt service on the 2013 Bonds. These amounts are required to be paid to the City not later than June 1 and December 1 of each year, so long as the 2013 Bonds remain outstanding. Source: The City 12 Debt Capacity Computation The City may issue general obligation debt if, at the time the debt is issued, the City has sufficient debt capacity. Once the debt has been issued, changes in assessed valuation have no effect on the validity of outstanding debt or the City's ability to refund outstanding debt. Future declines in assessed valuation can impact the ability to issue future general obligation debt. The following information is based on the 2016 assessed valuation of property within the City for collection of taxes in 2017 and the general obligation debt of the City outstanding as of June 1, 2017 plus the Bonds. Calculation of Debt Capacity As of June 1, 2017 Assessed Valuation (2017 tax year) General Purposes Non -Voted Debt Capacity (1.5% of Assessed Valuation) Outstanding Non -Voted General Obligation Debt Less: Non -Voted General Obligation Bond Account Balance The Bonds Net Non -Voted General Obligation Debt Remaining Non -Voted General Purpose Debt Capacity Voted and Non -Voted Debt Capacity (2.5% of Assessed Valuation) Outstanding Voted General Obligation Debt Plus: Net Non -Voted General Obligation Debt (calculated above) Direct Debt Remaining Debt Capacity for General Municipal Purposes Utility Purposes Debt Capacity (2.5% of Assessed Valuation) Utility Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose Parks and Open Space and Economic Development Purposes Debt Capacity (2.5% of Assessed Valuation) Park and Open Space and Economic Development Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose 13 $5,763,649,829 $ 86,454,747 $27,218,577 (1,152,129) 8,180,000 $34,246,448 $ (34,246,448) $ 52,208,299 $ 144,091,246 $32,990,000 34,246,448 $67,236,448 $ (67,236,448) $ 76,854,798 $ 144,091,246 $ 144,091,246 $ 144,091,246 $ 144,091,246 Direct and Estimated Overlapping Debt The following table sets forth the outstanding principal amount of general obligation debt of the City including the Bonds (the "Direct Debt") and the estimated allocable share of the outstanding principal amount of general obligation bonds payable from property tax revenues of other taxing districts whose boundaries overlap a part or all of the City (the "Overlapping Debt"). The estimated allocable share of Overlapping Debt is calculated based on a percentage of the overlapping taxing district's assessed valuation that hes within the boundaries of the City. The City has obtained the information regarding the overlapping debt from the overlapping taxing districts, the County and other sources the City believes to be reliable, but the City has not independently verified the accuracy or completeness of such information. No person should rely upon such information as being accurate or complete. Furthermore, the amounts described below relate only to general obligation bonds issued by the various taxing districts and may not reflect certain leases or other contracts that may constitute indebtedness under State law. The table below does not reflect any special revenue obligations (e.g., utility revenue bonds) or other debt payable from other sources (e.g., sales taxes) issued by any taxing district. The taxing districts listed below may have issued additional general obligation debt since the dates indicated below and may have plans for future general obligation debt issuances. Direct and Estimated Overlapping Debt As of June 1, 2017 2016 Assessed Valuation for 2017 Tax Year - $5,763,649,829 2016 City Population — 19,540 Direct Debt (calculated above) $ 67,236,448 Estimated Overlapping Debt: The County $ 8,838,774 Port of Seattle 5,024,131 School Districts 77,215,251 King County Rural Library District 2.111,637 Total Estimated Overlapping Debt $ 93.189,794 Total Net Direct and Estimated Overlapping Debt $160,426,242 Certain Ratios Direct Debt to Assessed Valuation 1.17% Direct and Estimated Overlapping Debt to Assessed Valuation 2.78% Direct Debt per Capita $ 3,441 Direct and Estimated Overlapping Debt per Capita $ 8,210 Per Capita Assessed Valuation $ 294,967 Sources: The City, King County Office of Finance and Department of Assessments, and the Port of Seattle 14 Debt Service Requirements The following table provides the debt service schedule for the City's outstanding limited tax general obligation bonds and loans and debt service for the Bonds. Schedule of Limited Tax General Obligation Bond Debt Service Outstanding General Obligation Debt (1) (1) (2) Year Principal Interest (2) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Total $ 4,413,028 2,241,396 2,328,321 1,607,261 1,662,760 1,734,010 1,673,800 1,184,400 712,800 732,400 758,400 784,800 806,600 833,800 863,200 891,600 921,800 957,800 729,200 364,000 379,600 396,000 413.200 $27,390,177 $ 1,142, 905 1,011,715 917,474 809,354 743,327 670,504 599,596 528,889 470,763 441,482 413,455 382,128 349,650 315,861 280,550 243,919 205,970 166,622 125,685 90,692 66,094 40,437 13.669 $10,030,740 The Bonds Total Principal Interest Debt Service $ - $ 87,448 $ 5,643,381 305,000 251,850 3,809,961 315,000 242,700 3,803,495 325,000 233,250 2,974,865 330,000 223,500 2,959,587 340,000 213,600 2,958,114 355,000 203,400 2,831,796 365,000 192,750 2,271,039 375,000 181,800 1,740,363 385,000 170,550 1,729,432 395,000 159,000 1,725,855 410,000 147,150 1,724,078 420,000 134,850 1,711,099 435,000 122,250 1,706,911 445,000 109,200 1,697,950 460,000 95,850 1,691,369 475,000 82,050 1,684,820 490,000 67,800 1,682,222 500,000 51,875 1,406,760 520,000 35,625 1,010,317 535,000 18,725 999,419 - 436,437 426.869 $8,180,000 $3,025,223 $48,626,140 Includes certain assumptions for the SCORE Bonds and the general obligation loans. For the SCORE Bonds, it is assumed the City will pay the full amount of its allocable debt service in each year and that none of its obligation will be offset by other sources of funds as provided in the interlocal agreement for the SCORE Bonds. For the Limited Tax General Obligation Note, 2014 (Taxable), it is assumed that the entire balance is outstanding with an interest rate of 1.99 percent. For the Limited Tax General Obligation Bond, 2014, it is assumed the interest rate on the 2034 maturity remains unchanged at 2.85 percent. The City, however, currently expects to refinance its Limited Tax General Obligation Note, 2014 (Taxable) in the third quarter of 2017. Reflects interest prior to the application of the federal credit payments relating to the SCORE Bonds. Future Financing The City currently expects to refinance its outstanding Limited Tax General Obligation Note, 2014 (Taxable) in the third or fourth quarter of 2017. The City may also issue approximately $15 to $30 million of limited tax general obligation bonds for a public works shops facility over the next two years. The City has $40,885,000 of its 2016 unlimited tax general obligation bond authorization (the "2016 Authorization") remaining and anticipates issuing approximately $25 million of unlimited tax general obligation bonds under the 2016 Authorization over the next three years. The issuance of any such debt is preliminary, subject to change, and has not been approved by the City Council. Additionally, the City periodically reviews its outstanding bonds for refunding opportunities and may issue bonds for refunding purposes if market conditions warrant. Debt Payment Record The City has always promptly met principal and interest payments on outstanding bonds, and other obligations when due. No debt has been incurred for the purpose of avoiding an impending default. 15 CITY FUNDS AND ACCOUNTING The accounting and reporting policies of the City conform to those methods prescribed by the State Auditor under chapter 43.09 RCW. The Finance Director of the City maintains general supervision over financial transactions for all City funds. The accounts of the City are organized by fund and account group, each of which is considered a separate accounting entity. Each fund has a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to, and accounted for in, individual funds according to the purposes for which they are spent and the means by which spending activities are controlled. See APPENDIX B—"2016 AUDITED FINANCIAL STATEMENTS." Basis of Accounting. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Governmental funds use the modified accrual basis of accounting and proprietary and fiduciary funds use the accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. For the City, available means expected to be received within 60 days of year-end. On the accrual basis, the revenue is recognized in the period in which the income is earned. Auditing of City Finances. Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance with RCW 43.09.200 and RCW 43.09.230. The City complies with the systems and controls prescribed by the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of assets and the reliability of financial reporting (see "City Investments and Investment Policy" below). The State Auditor is required to examine the affairs of cities regularly and on a schedule determined by risk factors and financial activity. The City has been subject to financial statement and accountability audits. Financial statement audits are performed for the purpose of forming an opinion on the financial statements taken as a whole. Also considered are the City's internal controls over financial reporting and tests of compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. Accountability audits include, among other things, review of the financial condition and resources of the City, whether the laws and constitution of the State are being complied with, the methods and accuracy of the accounts and reports as well as other matters (potential areas of risk related to citizen concerns, payroll, inter -fund transactions, etc.). Reports of the auditor's examinations are filed in the office of the State Auditor and in the Finance Department of the City. The audited financial statements of the City for the year ended December 31, 2016, attached as Appendix B, are incorporated by reference to this Official Statement. The most recent accountability audit covers the period January 1, 2014 through December 31, 2014. The State Auditor performs accountability audits of the City every year and the City has been free of financial audit findings for at least the last 10 years. Budgetary Process. The City prepares biennial budgets in accordance with chapter 35A.33 RCW. Biennial appropriated budgets for all funds are adopted. These budgets are appropriated at the fund level. The budget constitutes the legal authority for expenditures at that level. Appropriations for these funds lapse at the end of the biennium. Appropriated budgets are adopted on the same basis of accounting used for financial reporting. The Council is required to hold public hearings prior to budget adoption, property tax levies and municipal revenues. Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. The budget is based on priorities established by Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. The Council conducts public hearings on the proposed budget in November and December. The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. The final operating budget as adopted is published and distributed within the first month of the following year. The City Council must approve by ordinance any amendments that increase the total for the fund. City Investments and Investment Policy In November 2010, the Council reviewed and updated the City's formal investment policy regarding the investment risks to which the City is exposed. The policy conforms to applicable State and local laws governing the investment of public funds. The primary objectives of the City's policy, in order of priority (high to low), are (i) legality, to ensure the compliance with all statutes governing the investment of public funds in the State, (ii) safety, to ensure the preservation of capital in the overall investment portfolio, (iii) liquidity, to enable to City to meet all operating requirements, and (iv) yield, to attain a market rate of return throughout budgetary and economic cycles, while taking into account the City's investment risk constraints and cash flow requirements. 16 Authorized Investments. Chapter 35.39 RCW limits the investment of funds of local governments to the following authorized instruments: (i) bonds of the State or any local government in the State, (ii) general obligation bonds of any other state or local government thereof which have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency, (iii) registered warrants of a local government in the same county as the local government making the investment, (iv) obligations of the U.S. government, its agencies and wholly owned corporations, or obligations issued or guaranteed by supranational institutions, provided, that at the time of investment, the United States government is the largest shareholder of such institution, (v) obligations of the Federal Home Loan Bank, Federal Land Bank and Fannie Mae, and obligations of other government-sponsored corporations whose obligations are or may become eligible as collateral for advances to member banks of the Federal Reserve System, (vi) bankers' acceptances purchased on the secondary market, (vii) commercial paper purchased on the secondary market, subject to State Investment Board policies, and (viii) corporate notes purchased on the secondary market, subject to State Investment Board policies. Money available for investment may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio. All income derived from such investment may be either apportioned to and used by the various participating funds or for the benefit of the general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be reinvested or used in such manner as the authorizing ordinances, resolutions, or bond covenants may lawfully prescribe. Local Government Investment Pool. The State Treasurer's Office administers the Local Government Investment Pool (the "LGIP"), a $15.173 billion dollar fund that invests money on behalf of more than 540 local governments (as of May 2017). In its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to meet all cash flow demands. The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants increased safety of principal and the ability to achieve a higher investment yield than would otherwise be available to them. Although not regulated by the U.S. Securities and Exchange Commission (the "SEC"), the LGIP is invested in a manner generally consistent with the SEC guidelines for Rule 2a-7 money market funds; for example, currently it has a maximum weighted average maturity of 60 days and a maximum weighted average life of 120 days. The maximum final maturity is 397 days except for floating and variable-rate securities and securities that are used for repurchase agreements. The weighted average maturity of the LGIP generally ranges from 30 to 60 days. Investments permitted under the pool's guidelines include U.S. government and agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified State depositories. The City may withdraw funds in their entirety on less than 24 -hours' notice. Authorized Investments for Bond Proceeds. In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less than four years; municipal securities rated in one of the four highest categories; and money market funds consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money market funds with portfolios of securities otherwise authorized by law for investment by local governments (RCW 39.59.030). Under the Bond Ordinance, any investment of Bond proceeds must be obtained at fair market value. The following table shows cash and investments for the City as of December 31, 2016 (audited), and March 31, 2017 (unaudited). n) Cash and Investments Cash, Banks, Savings and Loan Institutions LGIP Investments Non -Pool Investments (1) Total Cash and Investments Amount as of March 31, 2017 $63,940,071 18,066,946 11.131.778 $93,138,795 Includes U.S. Treasury and U.S. Agency securities, bank notes and municipal bonds. 17 Amount as of December 31, 2016 $43,362,731 43,001,758 7.147, 342 $93,511,831 Historical General Fund Operating Results The General Fund financial information shown on the next page was extracted from the City's annual financial statements for the fiscal years ending December 31, 2012 through 2016. Additional information that may interpret, clarify or modify the data presented below may be contained in the complete financial statements, including the accompanying notes. Statement of Revenues, Expenditures and Changes in Fund Balances General Fund Fiscal Years Ending December 31 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenue EXPENDITURES General Government Public Safety Physical Environment Transportation Economic Environment Culture and Recreation Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers In (2) Transfers Out (3) GO Bonds Issued Loan to Tukwila MPD (4) Proceeds from Sales of Capital Assets Total Other Financing Sources and Uses Net Change in Fund Balances Fund Balances - Beginning Change in Accounting Principle (4) Fund Balances - Beginning as Restated Fund Balances - Ending Note: Totals may not add due to rounding. 2016 2015 2014 $45,886,761 2,129,221 4,498,683 3,286,105 318,459 233,544 214,444 $56,567,217 $ 8,315,631 29,100, 506 1,955,028 2,879,996 4,070,805 4,408,302 810,180 $51,540,448 $ 5,026,769 $45,201,369 2,242,256 4,626,463 2,896,446 261,457 163,618 120,887 $55,512,496 $ 7,247,117 28,973,651 1,919,306 2,820,022 4,328,177 4,259,532 196, 589 $49,744,394 $ 5,768,102 $42,219,026 2,114,638 5,307,861 2,553,690 264,934 130,859 137,237 $52,728,245 $ 7,146,956 (1) 27,204,740 1,789,658 2,605,602 3,662,211 3,808,476 407,400 $46,625,043 $ 6,103,202 $ - $ 500,000 $ 1,000,000 (4,325,831) (5,433,846) (6,900,080) $ (4,325,831) $ 700,938 $18,330,806 18,330,806 $19,031,744 Footnotes are on $ (4,933,846) $ 834,256 $17,496,550 17,496,550 $18,330,806 the following page. 18 7,441 $ (5,892,639) $ 210,563 $17,285,986 $17,496,549 2013 2012 $40,615,890 $39,840,364 2,013,875 1,604,594 4,719,583 4,708,774 2,202,307 2,184,369 242,638 220,752 108,053 64,418 110,317 71,159 $50,012,664 $48,694,430 $ 9,266,330 $ 8,344,177 25,650,155 24,907,510 1,766,087 1,673,956 2,759,506 2,682,877 3,893,111 3,394,823 3,631,819 3,361,825 250,482 273,560 $47,217,490 $44,638,728 $ 2,795,174 $ 4,055,702 $14,919,606 (10,662,843) 1,000,000 5,493 $ 5,262,256 $ 8,057,430 $ 8,378,557 850,000 9,228,557 $17,285,986 $ 2,330,665 (5,619,148) (658,706) 9,903 $ (3,937,286) $ 118,416 $ 8,260,141 $ 8,378,557 (1) The reduction in 2014 is due to guidance from the Washington State Auditor's Office. The City reclassified proprietary fund reimbursement of overhead expense as a reduction of General Government expense, rather than a transfer in, as it had done in prior years. (2) For the years 2013 and prior, Transfers In represents indirect cost allocation from proprietary funds. In 2013, Transfers In also includes $8.5 million reimbursement from Local Improvement District No. 33, and a transfer from the General Fund to the Contingency Fund. For 2014 and 2015, Transfers In represents transfers of unrestricted funds that can be used for General Fund purposes. (3) Transfers Out generally represent transfers to various reserve funds, debt service funds, capital project funds, and the City's golf course fund. In 2013, Transfers Out also represents a transfer to the City's Contingency Fund. (4) Through 2012, $850, 000 had been loaned to the MPD. With the implementation of Governmental Accounting Standards Board Statement 61 in 2013, the City was required to report the MPD as a "blended" component unit, and as such, the loan to the MPD was reclassified as an interfund loan rather than a General Fund expenditure, necessitating an adjustment for the change in accounting principle. As of December 31, 2015, the MPD was no longer a component unit of the City and the financial data associated with it was removed from the City's financial statements. Source: The City of Tukwila audited financial statements for each year 2012 to 2016 General Fund Budgets The City has elected to prepare and use biennial budgets, as provided in State law. Budgets for the General Fund, for the years 2017 and 2018 are shown below. The City monitors the budget during the course of the year and may make amendments throughout the year to reflect known changes or updated projections. General Fund Budget For the Period January 1, 2017 through December 31, 2018 2017 2018 Adopted Budget Adopted Budget n) REVENUES Taxes $47,803,644 $49,073,331 Licenses and Permits 2,278,940 2,347,090 Intergovernmental 4,475,160 4,393,530 Charges for Services 2,821,177 2,847,080 Fines and Forfeits 254,129 254,129 Miscellaneous 1,030,083 1,043,084 Other Financing Sources 4,079,058 8,375,643 Total Revenue $62,742,191 $68,333,887 EXPENDITURES Salaries and Wages $30,496,507 $30,988,318 Personnel Benefits 11,030,151 11,628,711 Supplies 1,286,641 1,285,322 Other Services and Charges 11,350,783 11,505,008 Intergovernmental Services 3,003,797 3,191,124 Capital Outlay 234,000 30,000 Transfers Out 5,237,691 9,539,621 Total Expenditure $62,639,570 $68,168,104 Net Increase (Decrease) in Fund Balance $ 102,621 $ 165,783 Beginning Fund Balance (1) $11,500,000 $11,602,621 Ending Fund Balance(1) $11,602,621 $11,768,404 The 2018 budgeted beginning balance is based on the 2017 year-end as estimated at the time of budget development. 19 THE CITY The City was incorporated in 1908 as a non -charter code city, organized under Title 35A RCW. The City provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities and cultural events. The City provides sewer, water and surface water services and has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail and 911 dispatch services to the City. The City residents receive library services from the King County Rural Library District. In addition, the City operates an equipment maintenance/rental fund and operates an 18 -hole municipal golf course. Governance The City operates under a Mayor -Council form of government, with the Mayor and seven -member Council elected by the voters of the City for four-year terms. Council members are elected at large. The Mayor appoints the City Administrator who serves as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and Council. The Council is responsible for, among other things, passing ordinances and resolutions, adopting the budget, and adopting general policies and goals for the City. The Council holds regular meetings two times a month and special meetings as needed. All meetings are open to the public as provided by law and agenda items are prepared in advance. The following are the Mayor and members of the City Council. Elected Official Position Initially Elected Current Term Expires Allan Ekberg Mayor November 2015 December 31, 2019 Dennis Robertson Council President November 1987 (1) December 31, 2019 Joe Duffie Council Member November 1981 December 31, 2017 Kate Kruller Council Member November 2011 December 31, 2019 Kathy Hougardy Council Member November 2007 December 31, 2019 Thomas McLeod Council Member November 2015 December 31, 2017 De"Sean Quinn Council Member November 2008 (2) December 31, 2017 Verna Seal Council Member November 2005 December 31, 2017 Council Member Robertson served from 1988 through 1995 and was re-elected in November 2003. Council Member Quinn was first appointed in to the position in 2008 and won election to his first full term in November 2009. Brief resumes of key administrative staff follow: David Cline, City Administrator. Mr. Cline was hired as the City Administrator in October 2011. Prior to joining the City, Mr. Cline was the City Administrator for the City of Lake Forest Park for five years, served as Interim Assistant City Manager at the City of Burien for five years, and served six years as the Finance Manager for the County District Court. Mr. Cline has 23 years of public service, including economic development, long-range financial planning, capital planning and financing, community consensus building and managing municipal departments. He is a Board Member of Washington City/County Manger's Association and serves on the State LEOFF 2 Retirement Board. Mr. Cline holds a Bachelor of Arts in Public Policy from Stanford University with Honors and Distinction and is credentialed by the International City/County Management Association. Peggy McCarthy, Finance Director. Ms. McCarthy was hired as the City's Deputy Finance Director in November 2008 and has been serving as the Finance Director since 2011. Prior to joining the City, Ms. McCarthy was the Financial Reporting Manager for the King County Housing Authority. Ms. McCarthy's experience includes over 14 years in municipal finance, as well as industry experience with a Fortune 500 company, and public accounting experience at Deloitte. Ms. McCarthy holds a Bachelor Degree in Business Administration from Washington State University and graduated Summa Cum Laude with Honors. 20 Employees and Bargaining Groups The number of full-time equivalent City employees for the years 2013 through 2017 are shown below. Full -Time Year Equivalent 2017 2016 2015 2014 2013 342.00 344.60 343.10 332.48 330.38 Source: The City Certain City employees are represented by one of five bargaining groups, and the City enters into written bargaining agreements with each bargaining group. The City negotiates labor contracts through a management team with support from a consultant. The following provides information on unions and bargaining groups representing City employees as of May 2017. The City considers its relations with all employees and bargaining units to be good. The City is currently in negotiations with all union and bargaining groups. Union or Bargaining Group Teamsters International Association of Firefighters Police Guild United Steelworkers Fraternal Order of Police Green River Valley Lodge 27 Total 01) Contracts are currently in negotiations. Source: The City of Tukwila Pension Plans Employees/Department Represented Clerical/Maintenance/Supervisory Firefighters Police Police Non -Commissioned Officers Police Commanders Number of Contract Employees Expires (1) 154 12/31/2016 65 12/31/2016 69 12/31/2016 15 12/31/2016 3 12/31/2016 306 Introduction. Substantially all City full-time and qualifying part-time employees are eligible for participation in one of the following statewide cost-sharing multiple -employer plans administered by the State's Department of Retirement Systems ("DRS"): Public Employees Retirement System ("PERS") Plans 1, 2 and 3; the Public Safety Employees Retirement System ("PSERS") Plan 2; and the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF") Plans 1 and 2. The State Legislature establishes, and from time to time amends, laws pertaining to the creation and administration of these public retirement systems; however, employees are contractually entitled to receive plan benefits. The information in this section has been obtained from the City's financial statements and information on the websites of DRS and of the Office of the State Actuary (the "State Actuary"), a nonpartisan legislative agency charged with advising the Legislature and Governor on pension benefits and funding policy. DRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for each plan. The DRS Comprehensive Annual Financial Report ("DRS CAFR") may be obtained from the DRS website at www.drs.wa.gov. In addition to the State sponsored pension plans that the City participates in, the City also administers one local single employer defined benefit pension plan for pre-LEOFF fire retirees. LEOFF Plan 1 participants who joined prior to and were active on March 1, 1970 are entitled to the greater of the benefits under LEOFF Plan 1 or the Fire Pension Fund maintained by the City. This local plan is described below under "City Administered Firefighters' Pension Plan." State Sponsored Plan Descriptions. All PERS, PSERS and LEOFF plans provide retirement, disability and death benefits. Plans 1 and 2 (both PERS and LEOFF) are defined benefit plans. PERS Plan 3 is a hybrid defined benefit/defined contribution plan in which the employer contributes to the defined benefit portion and the employee contributes to the defined contribution portion. Contributions by both employees and employers are based on gross wages. PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. Those PERS participants who joined on or after October 1, 1977, are Plan 2 members, unless they exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002, have the irrevocable option of choosing membership in PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977, are Plan 2 members. PSERS Plan 2 is a defined benefit plan. 21 Benefits provided by each plan are based on a percentage of the member's average final compensation ("AFC"), multiplied by years of service. The percentages and methods for calculating AFC vary among the plans, as do vesting and retirement eligibility (age and years of service) requirements. Additional detail about each Plan is available in the DRS CAFR and in Note 9 to the City's Annual Financial Statements, attached as Appendix B. Contribution Rates and Amounts. Under State statute, contribution rates are adopted by the Pension Funding Council ("PFC") and, for LEOFF Plan 2, by the LEOFF Plan 2 Retirement Board (the "LEOFF 2 Board"), in even -numbered years for the next ensuing State biennium, which runs for a two year period beginning on July 1 and ending on June 30. The rate -setting process begins with an actuarial valuation by the State Actuary, who makes non-binding recommendations to the State Legislature's Select Committee on Pension Policy, which then recommends contribution rates to the PFC and the LEOFF 2 Board. No later than the end of July in even -numbered years, the PFC and LEOFF 2 Board adopt contribution rates, which are subject to revision by the Legislature. The City's total contribution for the year ended December 31, 2016, was $2,579,237, which was made up of $1,745,437 to PERS, $18,635 to PSERS and $815,165 to LEOFF. For additional information see Note 9 to the City's Annual Financial Statements attached as Appendix B. The following table outlines the current contribution rates of employees and employers in the State Biennia ending June 30, 2017 and June 30, 2019. While the City's contributions in fiscal year 2016 represented its full statutorily required contribution under the PERS, PSERS and LEOFF, any unfunded pension benefit obligations within the systems could be reflected in future years as higher contribution rates. Employer and Employee Pension Contribution Rates PERS Plan 1 Plan 2 Plan 3 PSERS Plan 2 LEOFF Plan 1 Plan 2 2015-17 Biennium 2017-19 Biennium (1) Employee 6.00%(3) 6.12 Variablee4) 6.59 0.00% 8.41 Employer (2) 11.18% 11.18 11.18 11.54 0.18% 5.23(6) Employee Employer (2) 6.00%() 12.70% 7.38 12.70 Variablee4) 12.70 6.73 11.94 0.00% 0.18% 8.75 5.43(6) Rates shown for 2017-2019 are those that have been adopted by the PFC and the LEOFF 2 Board, respectively; all rates are subject to change by the State Legislature. Rates shown for 2017-2019 are based on the 2015 Actuarial Valuation Report, using a long-term investment rate of return assumption of 7.70% for PERS and 7.50% for LEOFF. Includes 0.18% DRS administrative expense rate. Rate statutorily set at 6.0%. Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. The State makes an additional contribution of 3.36% of each participating employer's covered payroll. The State makes an additional contribution of 3.50% of each participating employer's covered payroll. Source: Office of the State Actuary Rates shown above for the 2017-19 Biennium are adopted by the PFC and LEOFF 2 Board, and are subject to revision by the State Legislature. [Unless revised by the Legislature, they will become effective on July 1, 2017.][to be revised if needed] Projected contribution rates have been prepared by the State Actuary for the 2019-2021 Biennium, projecting a need for increases to contribution rates for PERS plans and no increases for LEOFF plans. In addition, the State Legislature has established certain minimum contribution rates that became effective in 2015 and remain in effect until the actuarial value of assets in PERS Plan 1 equals 100 percent of the actuarial accrued liability of PERS Plan 1. These rates are subject to change by future legislation enacted by the State Legislature to address future changes in actuarial and economic assumptions and investment performance. 22 Actuarial Valuation Methods and Assumptions. State law requires systematic actuarial funding to finance the ongoing cost of the State retirement systems. Actuarial calculations to determine the sufficiency of employer and employee contributions are prepared by the State Actuary. To calculate employer and employee contribution rates necessary to prefund the plans' benefits, the State Actuary uses actuarial cost and asset valuation methods selected by the Legislature as well as economic and demographic assumptions. The State Actuary uses the Entry Age Normal ("EAN") cost method to report each Plan's funded status. The annual cost of benefits under EAN is comprised of two components: normal cost, plus amortization of the unfunded liability. The normal cost is most commonly determined on an individual basis, from a member's age at plan entry, and is designed to be a level percentage of pay throughout a member's career. Comparing the EAN liabilities to the actuarial value of assets ("AVA") on the valuation date provides an appropriate measure of a plan's funded status and is acceptable according to current Governmental Accounting Standards Board ("GASB") Statements 67 and 68. For purposes of determining the actuarial accrued liability of each plan and the unfunded portion thereof, the State Actuary uses actuarial cost and asset valuation methods determined by the Legislature, which requirements differ from plan to plan. For purposes of calculating contribution rates the Legislature determines the long-term assumed rate of investment return to be used by the State Actuary, which was reduced in 2015 to 7.70% (from 7.80%) for all plans except the LEOFF Plan 2, which remains at 7.50%. Plan Funding Status and Unfunded Actuarial Liability. All DRS administered retirement plans are funded by a combination of funding sources: (i) contributions from the State; (ii) contributions from employers (including the State as employer and the City and other governmental employers); (iii) contributions from employees; and (iv) investment returns. The retirement funds (the "Commingled Trust Fund" or "GTE") are invested by the Washington State Investment Board, a 15 -member board created by the Legislature in 1981. The average annual return on the investment of the CTF for the 10 -year period from July 1, 2007 through June 30, 2016 was 6.18%. PERS Plans 2 and 3 are accounted for in the same pension trust fund and may legally be used to pay the defined benefits of any PERS Plan 2 or 3 participant. Otherwise, assets for one plan may not be used to fund benefits for another plan; however, all employers in PERS Plan 2 and 3 are required to make contributions at rates determined by the State Actuary every two years for the purpose of amortizing within a rolling 10 -year period the unfunded actuarial accrued liability in PERS Plan 1. The State's August 2016 Actuary actuarial valuation, as of June 30, 2015, was as follows: Funded Status on an Actuarial Value Basis (1) ($ millions) Unfunded Actuarial Actuarial Actuarial Accrued Value of Accrued Plan Liability Assets Liability/(Surplus) Funded Ratio PERS Plan 1 $12,553 $ 7,315 $5,239 58% PERS Plans 2/3 32,008 28,292 3,715 88 PSERS Plan 2 357 338 19 95 LEOFF Plan 1 4,307 5,404 (1,097) 125 LEOFF Plan 2 8,838 9,320 (482) 105 0) As of June 30, 2015, the most recent actuarial valuation date. Liabilities valued using the EAN cost method at an interest rate of 7.7% (7.5% for LEOFF2). All assets valued under the actuarial asset method. Source: 2015 Actuarial Valuation GASB 67/68 Reporting. GASB Statement 68, Accounting and Financial Reporting for Pensions ("GASB 68") became effective for the City for the year ended December 31, 2015. Among the changes imposed by GASB 68 are that lower discount rates are required to be used for underfunded plans in certain cases and the difference between expected and actual investment returns each year will be recognized over a closed five-year smoothing period. GASB 68 also requires employers that participate in the State sponsored plans to report their proportionate share of Net Pension Liability, Deferred Inflows of Resources, Deferred Outflows of Resources, and Pension Expense for the State plans. DRS determines each participating employer's proportionate share of overall plan liability and the State Actuary determines each plan's accounting valuation. GASB 68 affects the accounting for pensions, but does not change the funding status of the plans calculated by State Actuary or pension contribution rates that are set based on statutory assumptions. 23 (I) Schedule of Net Pension Liability (1) ($ millions) PERS 1 PERS 2/3 PSERS 2 LEOFF 1 LEOFF 2 Total Pension Liability $12,496.9 $35,517.5 $443.2 $4,340.6 $9,629.0 Fiduciary Net Position 7,126.4 30,482.6 400.7 5,370.9 10,210.6 Net Pension Liability (Asset) 5,370.4 5,034.9 42.5 (1,030.3) (581.6) as % of TPL 57.03% 85.82% 90.41% 123.74% 106.04% City Proportionate Share of Net Pension Liability (Asset) 7.05 8.39 0.02 (0.80) (2.97) As of June 30, 2016. The Total Pension Liability and Net Pension Liability for the State fiscal year ended June 30, 2016 was determined based on the 2015 Actuarial Valuation (as of June 30, 2015), with the results rolled forward to June 30, 2016. The following actuarial assumptions were used and were applied to all prior periods included in the measurement: 3.0% total economic inflation, 3.75% salary inflation (plus growth by promotions and longevity) and 7.50% rate of investment retums. Source: 2016 DRS CAFR and DRS Participating Employer Financial Information for the fiscal year ended June 30, 2016 The actuarial assumptions used in the 2015 Actuarial Valuation report were based on the results of the State Actuary's 2007-2012 Experience Study Report. Additional assumptions for subsequent events and law changes were current as of the 2015 Actuarial Valuation report. The long-term investment return assumption is used as the discount rate for determining the liabilities for each Plan. The following table represents the aggregate pension amounts for all City -administered plans subject to the requirements of GASB 68 for the year ended December 31, 2016. City of Tukwila — Aggregate Pension Amounts — All Plans Pension Liabilities $(15,483,180) Pension Assets 3,772,659 Deferred Outflows of Resources 4,733,197 Deferred Inflows of Resources (642,177) Pension Expense/Expenditures 2,166,724 Source: The City of Tukwila audited financial statements for 2016 City Administered Firefighters' Pension Plan. The City administers the Firefighters' Pension Plan, which is a closed, single -employer, defined benefit pension plan that was established in conformance with chapter 41.18 RCW. This plan provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. Membership is limited to fire fighters employed prior to May 1, 1970 when the LEOFF retirement system was established. The City currently has 10 inactive members receiving benefits through this Plan, and the City contributed $66,360 to the plan in 2016. Under State law, the Firefighters' Pension Plan is provided an allocation of all monies received by the State from taxes on fire insurance premiums, interest earnings, member contributions made prior to the inception of LEOFF and City contributions required to meet projected future pension obligations. An actuarial valuation was completed by Healthcare Actuaries as of December 31, 2016, with a net pension liability of $18,985, and a plan fiduciary net position of $1,426,367 for a funded ratio of 98.69 percent. Additional information about the Fire Pension plan is available in the City's CAFR, Note 8, which was prepared in accordance with GASB 68. Other Post -Employment Benefits City -funded other post -employment benefits ("OPEB") consists of certain medical and disability benefits to retired firefighters and police officers who were hired prior to 1978 as required by RCW 41.26.150. Entry into this system is now closed. As of December 31, 2016, 35 retirees were eligible for OPEB from the City. Because its OPEB plan is not pre -funded on an actuarial basis, the City funds OPEB on a pay-as-you-go basis from its fund balance or other available sources. The City's annual contribution to the cost of OPEB was $905,974 in 2014, $477,292 in 2015 and $275,530 in 2016. In accordance with the GASB standard concerning Accounting and Financial Reporting by Employers for Post - Employment Benefits Other than Pensions ("GASB 45"), the City prepares an actuarial valuation of its OPEB plan. As of January 1, 2016, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $30.2 million and the OPEB plan had a funded ratio of zero percent. Additional information about the City's OPEB plan is available in the City's CAFR, Note 9, which was prepared in accordance with GASB 45. 24 Risk Management The City is a member of the Washington Cities Insurance Authority ("WCIA"). Utilizing chapter 48.62 RCW (self- insurance regulation) and chapter 39.34 RCW (the Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. As of December 31, 2016, WCIA has a total of 168 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one- year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self-insured layer, and $16 million per occurrence in the re -insured layer excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The board of directors of WCIA determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that amount by the purchase of insurance. In-house services include risk management consultation, Toss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A board of directors governs WCIA, which is comprised of one designated representative from each member. The board elects an executive committee and appoints a treasurer to provide general policy direction for the organization. The WCIA executive director reports to the executive committee and is responsible for conducting the day to day operations of WCIA. The City self -insures for unemployment benefits. This is budgeted each year and has not exceeded $60,000 per year. This expense is budgeted in the Finance Department within the General Fund and no reserves are allocated because of the limited liability and historical cost. The City also self -insures for medical, dental, and other health care benefits. A third -party administrator, Healthcare Management Administrators, Inc. provides claims administration. The City has a stop -loss policy with Sun Life Insurance Company, which provides individual limits of $175,000 and a plan limit of $8,326,642 in 2016. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported ("IBNR") and a contingency reserve equal to 2.5 times the IBNR reserve. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 54.9 days for medical, 19.6 days for pharmacy, 32.2 days for dental, and 48.7 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of December 15, 2016. Next, the estimated IBNR liability as of December 31, 2016 was developed by trending the December 15, 2016 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. 25 GENERAL AND ECONOMIC INFORMATION General The City is located in King County, Washington approximately 12 miles south of the downtown area of the City of Seattle and 17 miles north of the City of Tacoma, at the intersection of Interstates 5 and 405. The City is adjacent to the western city limits of the City of Renton and the eastern city limits of the City of SeaTac and is one mile east of the Seattle -Tacoma International Airport. The City encompasses nine square miles and is home to a major regional shopping center (Westfield Southcenter). Population Historical and current population figures for the City and the County are provided below. Population Year The City King County 2016 19,540 2,105,100 2015 19,300 2,052,800 2014 19,210 2,017,250 2013 19,160 1,981,900 2012 19,080 1,957,000 Source: Washington State Office of Financial Management Economic Indicators for the City and the County The following tables present historical information on certain major economic indicators for the City and the County. City of Tukwila Major Employers, as of December 2016 Employer Type of Business Boeing Company Normac Inc. Allied Mechanical Services, Inc. Group Health Cooperative Macy's King County Metro Costco Wholesale King County Correctional Guild Boeing Employees Credit Union United Parcel Service Aerospace Wholesalers Plumbing, Heating & AC Contractors Data Center/Lab/Pharmacy Department Store Transit Operating Base Cash/Carry Warehouse Non -Profit Organization Banking/Credit Union Postal Delivery Service Employees (FTE) 5,597 1,821 1,249 950 869 800 609 545 516 381 Source: The City of Tukwila Finance Department — Business Licenses Civilian Labor Force and Employment Annual Average March 2017 March 2016 2016 2015 2014 2013 2012 King County Civilian Labor Force 1,232,220 1,204,586 1,208,334 1,178,606 1,160,967 1,138,720 1,122,616 Employment 1,194,409 1,153,783 1,160,734 1,128,497 1,106,769 1,081,827 1,051,626 Unemployment 37,811 50,803 47,600 50,109 54,198 56,893 70,990 Unemployment Rate 3.1% 4.2% 3.9% 4.3% 4.7% 5.0% 6.3% Washington State Civilian Labor Force 3,685,830 3,624,428 3,643,881 3,545,672 3,490,445 3,462,202 3,471,282 Employment 3,506,701 3,413,673 3,445,880 3,345,835 3,276,706 3,218,571 3,189,271 Unemployment 179,129 210,755 198,001 199,837 213,739 243,631 282,011 Unemployment Rate 4.9% 5.8% 5.4% 5.6% 6.1% 7.0% 8.1% Source: Bureau of Labor Statistics 26 Taxable Retail Sales King County City Taxable Year Taxable Retail Sales Retail Sales 2016 62,235,630,017 2,128,200,205 2015 57,615,757,451 2,174,715,850 2014 52,335,343,480 1,929,431,815 2013 48,553,937,856 1,846,436,835 2012 45,178,847,087 1,769,298,604 Source: Washington State Department of Revenue Per Capita Personal Income Seattle -Tacoma -Bellevue King State of Year Metropolitan Area County Washington National 2016 N/A N/A $53,493 $49,571 2015 $61,021 $72,530 51,971 48,190 2014 59,449 70,854 50,421 46,464 2013 55,908 66,016 47,814 44,493 2012 55,201 65,331 47,338 44,282 2011 50,724 58,685 44,202 42,461 Source: U. S. Department of Commerce Bureau of Economic Analysis Residential Building Permit Statistics — the City City Building Permits Source: The City of Tukwila General Number of Value of Year Permits Permits 2016 32 $11,320,511 2015 38 12,665,257 2014 17 6,029,754 2013 19 6,519,422 2012 14 4,835,717 TAX MATTERS In the opinion of Bond Counsel, under existing law and subject to certain qualifications described below, interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The proposed form of opinion of Bond Counsel with respect to the Bonds to be delivered on the date of issuance of the Bonds set forth in Appendix A. The Code contains a number of requirements that apply to the Bonds, and the City has made certain representations and has covenanted to comply with each such requirement, Bond Counsel's opinion assumes the accuracy of the representations made by the City and is subject to the condition that the City comply with the above -referenced covenants. If the City fails to comply with such covenants or if the City's representations are inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated herein, Bond Counsel expresses no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds 27 Original Issue Premium and Discount If the initial offering price to the public at which a Bond is sold is Tess than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes. De minimis original issue discount and original issue premium is disregarded. Under the Code, original issue discount is treated as interest excluded from federal gross income to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes. Under the Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to federal income tax consequences of owning such Bonds. Post Issuance Matters The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City and its appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the City or the Owners to incur significant expense. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Bank Qualified The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code. 28 CONTINUING DISCLOSURE UNDERTAKING Basic Undertaking to Provide Annual Financial Information and Notice of Listed Events. To meet the requirements of paragraph (b)(5) of SEC Rule 15c2-12 (the "Rule"), as applicable to a participating underwriter for the Bonds, the City will undertake (the "Undertaking") for the benefit of holders of the Bonds to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB accompanied by identifying information as prescribed by the MSRB, the following annual financial information and operating data for the prior fiscal year (commencing in 2018 for the fiscal year ended December 31, 2017): (1) Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in this Official Statement; (2) Principal amount of general obligation debt outstanding at the end of the applicable fiscal year; (3) Assessed valuation of taxable property in the City for that fiscal year; and (4) Property tax levy amounts and rates for that fiscal year. Items 2-4 shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before the end of nine months after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross refer to other documents available to the public on the MSRB's internet website or filed with the SEC. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to the MSRB. Listed Events. The City further agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined in the Rule the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. The City also will provide to the MSRB timely notice of a failure by the City to provide required annual financial information on or before the date specified below. Format for Filing with the MSRB. Until otherwise designated by the MSRB or the SEC, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org (which is not incorporated herein by this reference). All notices, financial information and operating data required by the Undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to the Undertaking must be accompanied by identifying information as prescribed by the MSRB. 29 Termination/Amendment of Undertaking. The City's obligations to provide annual financial information and notices of listed events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of the Undertaking shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of all or any portion of the Undertaking. Notwithstanding any other provision of the Undertaking, the City may amend the Undertaking with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of the Undertaking, the City shall describe such amendment in the next annual report, and shall include a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed event, and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Bond Owner's Remedies. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of the Undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under the Undertaking, and any failure by the City to comply with the provisions of the Undertaking shall not be an event of default with respect to the Bonds. For purposes of the Undertaking, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent. Compliance With Continuing Disclosure Obligations. The City has entered into certain written undertakings under the Rule in connection with the issuance of certain of its outstanding obligations (the "Prior Undertakings"). With the exceptions noted below, the City believes that in the past five years it has complied in all material respects with its Prior Undertakings. The City notes certain exceptions to the foregoing statement as follows: • Under continuing disclosure agreements relating to the City's outstanding water and sewer system revenue bonds, the City failed to timely file certain utility customer statistics for the water and sewer system revenue bonds for fiscal years 2011 through 2013. The general customer statistics and a notice of failure to file have since been filed on EMMA. The City no longer has any water and sewer revenue bonds outstanding. • The City filed its 2011 audited financial statements on EMMA on time but failed to link them to the CUSIPs for its then outstanding Water and Sewer Revenue Bonds, 2006. The 2011 audited financial statements have since been linked to the Water and Sewer Revenue Bonds, 2006, which are no longer outstanding. • The City was an obligated party with respect to the Valley Communications Center Development Authority Refunding Bonds, 2010 (the "Valley Com Bonds"). The City filed its audited financial statements for fiscal years 2011 through 2012 on EMMA on time. However, the City failed to link these filings to the CUSIPs for the Valley Com Bonds. The audited financial statements have since been linked to the Valley Com Bond CUSIPs, which are no longer outstanding. • The City is an obligated party with respect to the SCORE Bonds. See notes to table titled "Outstanding General Obligation Debt" under "GENERAL OBLIGATION DEBT" above. In several of the past five years, City financial information was not linked to the SCORE Bond CUSIPs in a timely manner. However, under the continuing disclosure agreement, the City's obligation consisted of providing timely financial information to SCORE, who was responsible for disseminating this information. The City believes that in the past five years it has complied in all material respects with its obligation under its continuing disclosure agreement with respect to the SCORE Bonds. 30 CERTAIN INVESTMENT CONSIDERATIONS Initiative and Referendum State Initiative and Referendum. Under the State Constitution, the voters of the State have the ability to initiate legislation and require the State Legislature to refer legislation to the voters through the power of initiative and referendum, respectively. The initiative power in the State may not be used to amend the State Constitution. Initiatives and referenda are submitted to the voters upon receipt of petitions signed by at least eight percent (initiatives) and four percent (referenda) of the number of voters registered and voting for the office of Governor at the preceding regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or repealed by the State Legislature within a period of two years following enactment, except by a vote of two—thirds of all the members elected to each house of the State Legislature. After two years, the law is subject to amendment or repeal by the State Legislature in the same manner as other laws. In recent years there has been an increase in the number of initiatives and referenda filed in the State, including initiatives affecting the powers of local jurisdictions. The City cannot predict whether this trend will continue, whether any filed initiatives will receive the requisite signatures to be certified to the ballot, and whether such initiatives will be approved by the voters and, if challenged, upheld by the courts. Local Initiative and Referendum. The City Municipal Code provides for local initiatives and referenda as provided for in RCW 35A.11.080, as it may be amended from time to time. Under the City Municipal Code, City voters may initiate local legislation and Code amendments, and modify existing legislation, through powers of initiative and referendum. The City cannot predict when or if any such measures would be filed, or what the subject or effect of any such potential measure may be. Under State law, the Bond Ordinance may not be a proper subject for a referendum petition. Nevertheless, the referendum period relating to the Bond Ordinance will have expired and the Bond Ordinance will become effective on or before the date of issuance and delivery of the Bonds. As of the date of this Official Statement, no referendum petition has been filed. Limitations on Remedies Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Bond Ordinance are in many respects dependent upon judicial actions, which are in turn often subject to discretion and delay and could be both expensive and time consuming to obtain. If the City fails to comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Bonds. In addition to the limitations on remedies contained in the Bond Ordinance, the rights and obligations under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws relating to or affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. The opinion to be delivered by Pacifica Law Group LLP, as Bond Counsel, concurrently with the issuance of the Bonds, will be subject to limitations regarding bankruptcy, insolvency and other laws relating to or affecting creditors' rights. A copy of the form of legal opinion of Bond Counsel is set forth in Appendix A. No Acceleration The Bonds are not subject to acceleration upon the occurrence of a default. The City is liable for principal and interest payments only as they become due. In the event of multiple defaults in payment of principal of or interest on the Bonds, the registered owners would be required to bring a separate action for each such payment not made. This could give rise to a difference in interests between registered owners of earlier and later maturing Bonds. Bankruptcy Under current State law, local governments, such as the City, may be able to file for bankruptcy under Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code"). A creditor, however, cannot bring an involuntary bankruptcy proceeding against a municipality, including the City. The federal bankruptcy courts have broad discretionary powers under the Bankruptcy Code. Taxing districts in the State are expressly authorized to carry out a plan of readjustment if approved by the appropriate court. If the City were to become a debtor in a federal bankruptcy case, owners of the Bonds may not be able to exercise any of their remedies under the Bond Ordinance during the course of a proceeding. Legal proceedings to resolve issues could be time-consuming and expensive, and substantial delays and/or reductions in payments could result. 31 RATING As noted on the cover page of this Official Statement, the Bonds have been rated "AA" by S&P Global Ratings ("S&P"). The rating reflects only the view of the rating agency and an explanation of the significance of the rating may be obtained from S&P. There is no assurance that the rating will be retained for any given period of time or that it will not be revised downward, suspended or withdrawn entirely by the rating agency if, in the judgment of the agency, circumstances so warrant. Any such downward revision or withdrawal of the rating would likely have an adverse effect on the market price of the Bonds. The City does not have any obligation to take any action, other than file a listed event notification, if the rating on the Bonds is changed, suspended or withdrawn. LITIGATION There is no litigation pending or threatened questioning the validity of the Bonds or the power and authority of the City to issue the Bonds. There is no litigation pending or threatened which would materially affect the City's ability to meet debt service requirements on the Bonds. Because of the nature of its activities, the City is subject to certain pending legal actions which arise in the ordinary course of business. Based on the information presently known, the City believes that the ultimate liability for any of such legal actions will not be material to the financial position of the City. Tukwila may share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for sediment contamination within the Lower Duwamish Waterway Superfund site. While it is impossible to accurately estimate the City's potential CERCLA liability at this time, the relatively small size of the City's storm water system within the Lower Duwamish Waterway Superfund site area, as well as the system's recent establishment in 1989, gives reason to the City to believe that its potential liability will be low, possibly ranging up to $300,000. APPROVAL OF COUNSEL Legal matters incident to the authorization, execution and delivery of the Bonds are subject to the unqualified approving legal opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel. The form of the opinion is included in Appendix A of this Official Statement. Bond Counsel has not been retained to review and has not reviewed this Official Statement for completeness or accuracy and will not offer an opinion concerning this Official Statement. FINANCIAL ADVISOR PFM Financial Advisors LLC has served as financial advisor to the City relative to the preparation of the Bonds for sale, timing of the sale and other factors relating to the Bonds. The financial advisor has not audited, authenticated or otherwise verified the information set forth in this Official Statement or other information provided relative to the Bonds. PFM Financial Advisors LLC makes no guaranty, warranty or other representation on any matter related to the information contained in the Official Statement. The financial advisor is an independent financial advisory firm and is not engaged in the business of underwriting, marketing, trading or distributing municipal securities. UNDERWRITING The Bonds are being purchased by FTN Financial Capital Markets (the "Underwriter"), at a price of $8,461,597.18. The Bonds will be re -offered at a price of $8,536,838.55. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the initial offering prices set forth on the inside cover hereof, and such initial offering prices may be changed from time to time by the Underwriter. CONFLICTS OF INTEREST Some or all of the fees of the Financial Advisor and Bond Counsel are contingent upon the issuance and sale of the Bonds. None of the members of the City Council or other officers of the City have interests in the issuance of the Bonds that are prohibited by applicable law. OFFICIAL STATEMENT At the time of delivery of the Bonds, one or more officials of the City will furnish a certificate stating that to the best of his, her or their knowledge this Official Statement, as of its date and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance or other credit facility). 32 The execution and distribution of this Official Statement have been authorized by the City. CITY OF TUKWILA, WASHINGTON By: /s/ Peggy McCarthy Peggy McCarthy, Finance Director This page left blank intentionally APPENDIX A FORM OF LEGAL OPINION July 26, 2017 City of Tukwila Tukwila, Washington FTN Financial Capital Markets Memphis, Tennessee Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 - $8,180,000 Ladies and Gentlemen: We have acted as bond counsel to the City of Tukwila, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bonds, 2017 (the "Bonds"), dated as of the date hereof, in the aggregate principal amount of $8,180,000, issued pursuant to Ordinance No. 2541 (the "Bond Ordinance") of the City for the purpose of providing funds to pay or reimburse the City for costs of certain road construction and related improvement projects in the City and to pay the costs for issuance of the Bonds. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Official Statement prepared in connection with the issuance of the Bonds. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. A-1 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City must comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated above, we express no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PACIFICA LAW GROUP LLP A-2 Igoe, Cityof Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT For the fiscal year ended December3l, 2016 City of Tukwila, Washington VISION The city of opportunity, the community of choice MISSION To provide superior services that support a safe, inviting and healthy environment for our residents, businesses and guests. VALUES STRATEGIC GOALS AND OBJECTIVES Caring Professional Responsive © A community of inviting neighborhoods and vibrant business districts + Cultivate community ownership of shared spaces. ♦ Build a broad and collaborative approach to preventing crime and increasing the sense of safety. + Focus City planning and investments on creating a connected, dynamic urban environment. + Use City efforts and investments to realize established visions for specific sub -areas. ® A solid foundation for all Tukwila residents + Partner with organizations that help meet the basic needs of all residents. + Strive for excellent education, vocational supports, and personal growth opportunities through effective partnerships and City services. + Encourage maintenance, improvements and diversity in the City's housing stock. ® A diverse and regionally competitive economy + Embrace the City's economic potential and strengthen the City's role as a regional business and employment center. + Strengthen the City's engagement and partnership with the business community. O A high -performing and effective organization + Use Tukwila's Vision, Mission, and Strategic Plan to focus and prioritize City efforts. + Advance Tukwila's interests through participation in regional partnerships. + Continue to develop as an organization and support individual growth. 4 Ensure City facilities are safe, efficient and inviting to the public. + Ensure the long-term fiscal sustainability of the City. uA positive community identity and image + Improve the City's ability to build trust and work with all members of the Tukwila community. + Facilitate connections among Tukwila's communities. + Promote a positive identity and image of Tukwila. COVER PHOTO Duwamish Gardens project completed in 2016 O O) c v_ -1 m 0 'TI z z n r (1) D -a mm g mv_ -X CO The City of Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT CO For the Year Ended December 31, 2016 N Prepared by the City of Tukwila, Finance Department Peggy McCarthy, Finance Director Allan Ekberg, MAYOR TUKWILA CITY COUNCIL Dennis Robertson, Council President Joe Duffie Kathy Hougardy Kate Kruller Verna Seal De'Sean Quinn Thomas McLeod CITY OF TUKWILA. 2016 CAFR TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2016 TABLE OF CONTENTS I. INTRODUCTORY SECTION Administrative Organizational Structure, Principal Officials, and Council Committees.. Letter of Transmittal .......................... _..................._..................................... Certificate of Achievement...... _............... _........... _............ _......... II. FINANCIAL SECTION Auditor's Report... Management's Discussion and Analysis .................. Basic Financial Statements Government -wide Financial Statements: Statement of Net Position. ............................................ ....... Statement of Activities... Fund Financial Statements: Balance Sheet — Governmental Funds.. Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position............................................................................................ Statement of Revenues, Expenditures, and Changes in CO Fund Balance — Governmental Funds.............._......__._.............._.............._............... W Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities.. Statement of Net Position — Proprietary Funds ....................... ....... _..... ,... _ Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds.............. _. Statement of Cash Flows — Proprietary Funds Statement of Fiduciary Net Position — Fiduciary Fund............ _. _.......... _............... _... _........, Statement of Changes in Fiduciary Net Position — Fiduciary Fund.........._ Notes to the Financial Statements.........................................._..._......._............_ Required Supplemental Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual GeneralFund............_........._._.........._...................................._..._......_.............. _.. Notes to the Required Supplementary Information........._........................................... _. Firemen's Pension Trust Fund............... ......................... ......_.............. _...................... Retiree Medical and Long -Term Care Benefits for LEOFF I Employees .................. Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet — Non -Major Governmental Funds. Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Governmental Funds._ ..... ....... ......., ...... . ..... .. . Combining Balance Sheet — Non -Major Special Revenue Funds... ..................... ....... Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Special Revenue Funds .................................... CITY OF TUKWILA 2016 CAFR TABLE OF CONTENTS TABLE OF CONTENTS - continued Combining Balance Sheet — Non -Major Debt Service Funds ................ _............ _.....,................. Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Debt Service Funds........,.._................................................... Combining Balance Sheet — Non -Major Capital Project Funds....... .._.._._................................. Page Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Capital Project Funds............ _........ _.........,.. _....................... Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: 1 Arterial Street Capital Project Fund.. _....._...... 3 Local Improvement District #33 Debt Service Fund........_..._........................_......._........... 9 Public Safety Plan Capital Project Fund .. Hotel/Motel Special Revenue Fund... ................ ..... ......_.......................................... Drug Seizure Special Revenue Fund.................................................................... _........ Residential Street Capital Project Fund.......,. _,... __....................... ....... ...... .......... ......... 11 Land & Park Acquisition Capital Project Fund......... _............ _....................... _....... _. _..... 15 Facilities Capital Project Fund.............., ..... ..._. _.................................................... General Government Improvements Capital Project Fund........,. _.................. _....... _....... _.. Fire Improvements Capital Project Fund......_......................................................... _:....... 29 Debt Service Funds..................................................................................................... 30 Combining Statements of Net Position — Internal Service Funds...... _..... _ ....................._,........ Combining Statement of Revenues, Expenses, and Changes in 31 Net Position — Internal Service Funds... _............. _.......... _. _........................ _.......... _.... Combining Statement of Cash Flows — Internal Service Funds... 32 Statement of Changes in Assets and Liabilities — Agency Fund. 33 III. STATISTICAL SECTION 34 35 36 37 39 40 41 101 102 105 108 111 112 113 114 Schedule Net Position by Component 1 Changes in Net Position 2 Fund Balances, Governmental Funds 3 Changes in Fund Balances of Governmental Funds 4 General Government Tax Revenues by Source - 5 Property Tax Levies and Collections 6 Assessed and Estimated Actual Value of Taxable Property 7 Property Tax Rates — Direct and Overlapping Governments 8 Principal Property Taxpayers 9 Retail Sales Tax Collections by Sector 10 Sales Tax Rate Direct and Overlapping Governments 11 Ratios of Outstanding Debt by Type 12 Ratios of General Bonded Debt Outstanding 13 Computation of Direct and Overlapping Debt 14 Legal Debt Margin Information 15 Demographic Statistics 16 Principal Employers 17 Full -Time Equivalent City Government Employees by Department 18 Operating Indicators by Function 19 Capital Assets by Function - 20 Page 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 131 132 133 135 138 140 142 144 146 147 148 149 150 152 154 156 158 159 160 162 163 164 165 166 CITY OF TUKWILA. 2016 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS ADMINISTRATIVE ORGANIZATIONAL STRUCTURE AND PRINCIPAL OFFICIALS CITIZENS OF TUKWILA COUNCIL MEMBERS MAYOR Allan Ekberg CITY ADMINISTRATOR David Cline 1 MUNICIPAL COURT Kimberly Walden CITY ATTORNEY Kenyon Disend PLLC (Contracted) HUMAN RESOURCES Stephanie Brown FINANCE Peggy McCarthy TECHNOLOGY INFORMATION SERVICES Joseph Todd COMMUNITY DEVELOPMENT Jack Pace PARKS AND RECREATION Rick Still PUBLIC WORKS Bob Giberson F RE POLICE Jay Wittwer Mike Villa COUNCIL COMMITTEES COUNCIL PRESIDENT Dennis Robertson FINANCE COMMITTEE Verna Seal, Chairperson Kathy Hougardy, Member Thomas McLeod, Member COMMUNITY DEVELOPMENT & NEIGHBORHOODS Kathy Hougardy, Chairperson Verna Seal, Member Kate Kruller, Member TRANSPORTATION & INFRASTRUCTURE Kate Kruller, Chairperson Joe Duffle, Member De'Sean Quinn, Member PUBLIC SAFETY Thomas McLeod. Chairperson Joe Duffie, Member De'Sean Quinn, Member CITY OF TUKWILA. 2016 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS City of Tukwila 6200 Southcenter Blvd, Tukwila, WA 98188 June 28, 2017 Honorable Allan Ekberg, Mayor Members of the Tukwila City Council Citizens of Tukwila City of Tukwila 6200 Southcenter Boulevard Tukwila, Washington 98188-2599 Allan Ekberg, Mayor Subject: TRANSMITTAL OF 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT I am pleased to transmit the City of Tukwila's Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2016. This transmittal letter provides an overview of the report and the financial condition of the City. State law requires that cities publish financial statements annually in conformity with Generally Accepted Accounting Principles (GAAP), which are audited in accordance with generally accepted auditing standards by the State Auditor's Office, under the Revised Code of Washington (RCW) 43.09.230. The CAFR has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is used as a reference by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the CAFR is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded and funds are expended as they were legally appropriated in the adopted budget. The Tukwila Finance Department prepared the report and accepts responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that the data is presented in a manner that fairly sets forth the results of operations and financial position of the City, as measured by the financial activity of the City's various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activity have been included. The report has been prepared in conformance with GAAP and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance is based on the assumption that the cost of internal controls should not exceed the benefits expected to be derived. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL As a recipient of federal, state and county financial assistance, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act amendments of 1996 and U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The audit is conducted by the State Auditor's Office in conjunction with the City's annual independent audit. Information related to this single audit includes the Schedule of Expenditures of Federal Awards, findings, and recommendations, if applicable, and auditor's reports on internal control and compliance with applicable laws, regulations, contracts, and agreements. The results of the City's annual single audit for the fiscal year ended December 31, 2016 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws. Management's Discussion and Analysis (MD&A) immediately follows the State Auditor's report and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. PROFILE OF THE CITY Incorporated in 1908, the City of Tukwila is located in the heart of the Puget Sound region, 12 miles south of downtown Seattle, 17 miles north of Tacoma, and one mile east of Seattle -Tacoma International Airport. Tukwila has a small residential population of 19,540, making it the 54th largest of 281 cities in the State of Washington. However, the daytime shopper/visitor and working population can reach over 150,000 during the holiday shopping season. The City of Tukwila is a non -charter optional code City, operating under Section 35A of the Revised Code of Washington. It has a strong Mayor form of government with a seven -member City Council elected by the voters of the City to serve a four-year term. Councilmembers are elected at large rather than by district and are responsible for establishing the general guidelines and policies for the City. The Mayor appoints the City Administrator as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and City Council. The City of Tukwila provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities, and cultural events. In addition, the City operates an equipment maintenance/rental fund. The City operates its own municipal 18 -hole golf course and provides sewer, water, and surface water services. Tukwila has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail services to the City. Tukwila residents receive library services from the King County Library System. Since the 2009-2010 biennium, the City has adopted a biennial budget in accordance with RCW 35A.34. The Council is required to adopt a biennial budget prior to the first of each odd -numbered calendar year. Budget reviews are conducted at mid -biennium and any changes for the second half of the biennium are adopted by the City Council. The biennial budget serves as the foundation for the City of Tukwila's financial planning and control. The budget is adopted at the fund level and any increases or decreases to a fund must be authorized by Council. Appropriation changes within a fund may be authorized by the Mayor. The General Fund, two special revenue funds, one debt service fund, and seven capital project funds are included in the biennially appropriated operating budget and have budget to actual statements presented for 2016. As demonstrated by the statements and schedules included in the financial section of this report, the city continues to meet its responsibility for sound financial management. CITY OF TUKWILA: 2016 CAFR LETTER OF TRANSMITTAL LOCAL ECONOMY Tukwila is a great place for business. With over 40,000 jobs, more people are employed in the City of Tukwila than in 29 of the 39 counties in the State of Washington. Approximately one third of the jobs are retail, one third are in manufacturing, and the remainder span everything from entertainment to real estate. Many well-known companies such as Boeing and Costco employ thousands of people in Tukwila. Further, Tukwila is home to the global headquarters of Boeing Employees Credit Union (BECU), Continental Mills, Odin Brewing Company, Pop Gourmet Foods, Red Dot Corporation, Sabey Corporation, and Seattle Chocolates. Tukwila is also home to hundreds of small businesses, many of which are owned by members of the city's diverse international community. Tukwila enjoys a strong position in the Puget Sound region as well as the state of Washington. Tukwila's location is at the crossroads of the State's most significant freeway network (the 1-5 and 1-405 interchange), and includes all modes of public transportation. Tukwila's transit stations include the commuter Sounder train, Sound Transit's light rail, and the Tukwila Transit Center that all reinforce the well-established advantages of Tukwila as an employment and retail hub. These major transportation systems, the strategic access to Seattle, Tacoma, Sea -Tac Airport, and the population base of the south Puget Sound region provide a natural setting for commercial and industrial activity. Tukwila is a retail powerhouse with one of the largest local retail sales tax bases in the state of Washington. Anchored by Westfield Southcenter, which is the largest mall in the Pacific Northwest, Tukwila generated over $2.2 billion dollars in taxable retail sales in 2016. The total retail sales tax revenue CO amounted to $18.9 million in 2016, representing slight decrease in the $19.3 million collected in the prior year. LONG-TERM FINANCIAL PLANNING The city uses its six-year financial planning model and Capital Improvement Program (CIP) as long-term financial planning tools. These tools, along with regular review and revisions to the financial policies, ensure the City incorporates current economic conditions and financial projections into its long-range financial plans. In mid -2015, the City revised its financial reserve policy to increase the General Fund reserve level from 10% to 18%, and added a one-time 10% revenue reserve in the Contingency Fund. These changes wit ensure the City's policies are in alignment with the Government Finance Officers Association's "Best Practices" and provide additional protection from future downturns in the economy. The City's diversified revenue base is supported by an assessed valuation of $5.7 billion, which is an increase of 6.8% from 2015, avowing the City to pursue a long-term capital investment program. The City's 2017-2018 Capital Improvement Program anticipates $38 million in infrastructure improvements, 77% of which will be paid for by non -City funding sources. These improvements are vital to the economic health of the City which must continue to efficiently move employees, shoppers, and goods into and out of the area. Additional investments include nearly $15 million for residential street improvements, of which 40% is funded from non -General Fund sources, including $2.5 million from grants. The CIP also includes opportunities to leverage city resources to enhance parks, continue to improve water quality, and focus on promoting a healthy environment in alignment with the adopted Strategic Plan. CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL MAJOR INITIATIVES The City made significant investments of time and financial resources into key public projects in 2016. These projects represent Council's commitment to meeting their five Strategic Goals and Objectives: • A community of inviting neighborhoods and vibrant business districts • A solid foundation for all Tukwila residents • A diverse and regionally competitive economy • A high -performing and effective organization, and • A positive community identity and image The City of Tukwila has design underway for the Early Start Work for the Strander Boulevard Extension Phase 3 Project. This project will extend Strander Boulevard from West Valley Highway to Oaksdale Ave in the City of Renton. Phase 1 and 2 have been completed and extended Strander Boulevard from Renton to the new Sounder Commuter Station. The final connection under the railroad tracks will add capacity for a new east/west corridor between 1-405 and South 180th Street. This $39 million project is needed to serve Tukwila and Renton access to the Southcenter Mall and Tukwila's Southcenter District. The City was awarded $5.1 million in federal STP funds in 2016 for the preliminary engineering and right-of-way phases. The groundbreaking for the new $10 million Tukwila Urban Center Pedestrian/Bicycle Bridge was held on August 12, 2016 with construction ongoing through 2017. The new pedestrian and bicycle bridge wit span the Green River near the intersection of West Valley Highway and Longacres Way. This bridge wit link the Southcenter District with the Tukwila commuter rail station and enable the area to grow as a transit -oriented neighborhood. The pedestrian bridge is fully funded with a $6.8 million state regional mobility grant, federal grant, and park impact fees. King County grant funding was also awarded for the Baker Boulevard Non -Motorized Improvement Project. This $1 million project will design and construct non -motorized corridor improvements on Baker Boulevard from Andover Park West (at the Tukwila Urban Center Transit Center) to Christensen Road and the new pedestrian bridge. Tukwila finished design in 2016 to rehabilitate four different bridges in the City. The Boeing Access Road Bridge over the BNSF Railroad was awarded a $9.7 million federal grant. This bridge is structurally and seismically deficient and serves the Manufacturing/Industrial Center of Tukwila, which includes thousands of Boeing jobs and the Museum of Flight. The City also received grant funds to perform major maintenance on three City bridges that include seismic retrofit, deck and joint repair, and painting. The bridge work will preserve the City -owned infrastructure and extend the service lives of the bridges. Construction on the four bridges is scheduled for 2017. The City of Tukwila has an on-going extensive rehabilitation program in the Sewer Fund for the Southcenter Commercial Business District. As the sewer mains are reaching their 50 -year life span, the City has budgeted over $1 million for 5 years to reline the asbestos concrete pipes in the Southcenter area. The relining of the sewer pipes will extend the life span approximately 50 years and reinforce the strength with little impact to the roadway and minimal excavation. Another water and sewer project began in 2016 in the Southcenter area. This project will replace the water and sewer mains in Andover Park East from Strander Boulevard to Tukwila Parkway. The infrastructure must be upgraded with larger mains to facilitate the new development in the Commercial Business District that includes Washington Place and a new Holiday Inn Express. Construction began September 26, 2016 and will continue into 2017, with final paving of Andover Park East. CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL The City continued its partnership with Tukwila Village Development Associates to develop six acres of City -owned land on Tukwila International Boulevard at South 144th Street, known as Tukwila Village. Tukwila Village will be home to a new King County Library, 400 apartments for seniors, a police neighborhood resource center, retail, office, a restaurant, a cafe, a community room, and a plaza. The project was under construction in 2016 and the library should be open in April 2017. The plaza is scheduled to be open in summer 2017 and the senior apartments will start opening in early 2018. When completed, the entire Tukwila Village project costs will be over $100 million. Adjacent to Tukwila Village, the City finished design for street and frontage improvements on South 144th Street between Tukwila International Blvd and 42"d Avenue South. This project will also include a new traffic signal next to Tukwila School District's Foster High School. Construction will begin in 2017. The City demolished four motels on Tukwila International Boulevard in 2016. The site was then cleared, graded with topsoil, hydro -seeded, and was completed with a split rail fence. Council selected HealthPoint, a federally accredited community health center, who will develop and operate a $25 million health and wellness facility on Tukwila International Boulevard. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tukwila for its comprehensive annual financial report for the fiscal year that ended December 31, 2015. This was the 29th consecutive year that Tukwila has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting -,I principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Finance Department and the cooperation of other City departments. Their long hours of assistance with the preparation and review of this report are greatly appreciated. The Mayor, City Administrator and City Council are to be complimented for their encouragement, interest, and support in conducting the financial operations of the City in a fiscally sound and progressive manner. The efficient assistance of examiners from the Office of the State Auditor is also appreciated. Staff who had a direct role in preparing Tukwila's 2016 Comprehensive Annual Financial Report take great pride in their work, and the entire team who worked on this project is to be commended. Respectfully submitted, Peggy McCarthy, CPA Finance Director CITY OF TUKWILA. 2016 CAFR LETTER OF TRANSMITTAL 7 8 CITY OF TUKWILA. 2016 CAFR CERTIFICATE OF ACHIEVEMENT CITY OF TUKWILAI 2016 CAFR CERTIFICATE OF ACHIEVEMENT Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting W Presented to 6 City of Tukwila Washington For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2015 Executive Director/CEO 10 Office of the Washington State Auditor Pat McCarthy INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS June 28, 2017 Mayor and City Council City of Tukwila Tukwila, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, King County, Washington, as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Insurance Building, P.O. Bon 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • Pat.McCarthy@sao wa.gov 11 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, King County, Washington, as of December 31, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 15 through 28, budgetary comparison information on pages 103 through 104, pension plan information on pages 105 through 110, and information on postemployment benefits other than pensions on pages 111 through 112 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, isrequired by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 115 through 122 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. 12 Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 28, 2017, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, Pat McCarthy State Auditor Olympia, WA CITY OF TUKWILA: 2016 CAFR AUDIT R'S OPINION LETTER 13 14 CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2016 The management discussion and analysis section of the City of Tukwila's Comprehensive Annual Financial Report provides an overview of the City's financial activities for the year ended December 31, 2016. The intent of this discussion and analysis is to look at the City's financial performance as a whole. Readers should also review the transmittal letter, and the basic financial statements to enhance their understanding of the City's financial performance. FINANCIAL HIGHLIGHTS • As of December 31, 2016, the City of Tukwila's total assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $296.0 million. Of this amount, $33.0 million represents unrestricted net position, which may be used to meet the government's ongoing obligations to citizens and creditors. In November of 2016, the City of Tukwila issued $36.7 million in voter approved bonds (including the premium on bonds issued) to finance rebuilding three fire stations, various fire equipment and apparatus, and the construction of a Justice Center to house the City's police department and municipal court. This resulted in a $36.9 million net increase in governmental activities restricted cash. • The City of Tukwila's total net position increased $8.9 million, or 3.1%. Governmental activities increased $5.0 million partially due to growth in excise taxes. Business -type activities increased $3.9 million due in part to rate increases in all three utility funds. • At the close of the current fiscal year, the City of Tukwila's governmental funds reported combined fund balances of $76.1 million, an increase of $37.4 million. Approximately 15.3% ($11.6 million) of the fund balance is available for spending at the City's discretion (unassigned fund balance). • Revenues exceeded expenditures in the governmental funds by $1.0 million, an increase of $2.4 million from 2015 when expenditures exceeded revenues by $1.4 million, This is primarily due to a $2.1 million decrease in capital outlay in the Arterial Street fund. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis is intended to serve as an introduction to the City of Tukwila's basic financial statements. The City's basic financial statements are presented in three parts: 1) Government -wide financial statements 2) Fund financial statements 3) Notes to the financial statements This report also includes supplementary information intended to fumish additional detail to support the basic financial statements. Government -wide Financial Statements The government -wide financial statements provide both long-term and short-term information about the City's overall financial status, in a manner similar to private -sector business. The Statement of Net Position presents financial information on all of the City's Tukwila's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time,increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Tukwila is improving or deteriorating. 15 CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The Statement of Activities presents information designed to show how the City's net position changed during the year. The statement distinguishes revenue generated by specific functions from revenue provided by taxes and other sources not related to a specific function. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show the degree to which each function supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Items such as (but not limited to) uncollected taxes, unpaid vendor invoices for goods or services received during the year, and earned but unused vacation leave are included in the statement of activities as revenue and expenses even though no cash has changed hands. Both the government -wide financial statements distinguish functions of the City of Tukwila that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Tukwila include general government (finance, executive, legal, court, and human resources), public safety (police and fire), physical environment, economic environment, transportation, mental/physical health, and culture and recreation. The City's business -type activities include a water, sewer, and surface water utilities, and a municipal golf course. Governmental activities are primarily supported by taxes, charges for services, and grants. Business -type activities are primarily self-supporting through user fees and charges. Fund Financial Statements The annual financial report includes fund financial statements in addition to the govemment-wide financial statements. A fund is a fiscal and accounting entity with a self -balancing set of accounts used to account for specific activities or meet certain objectives. The City of Tukwila Funds are often set up in accordance with special regulations, restrictions or limitations. The City of Tukwila, like other state and local governments, uses fund accounting to ensure and show compliance with finance -related legal requirements. The City's funds are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions that are reported as governmental activities in the government -wide financial statements. The governmental fund statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. The information in the governmental fund statements can be used to evaluate the City's near-term financing requirements and immediate fiscal health, Comparing the governmental fund statements with the government -wide statements can help the reader better understand the long-term impact of the City's current year financing decisions. Because the focus of govemmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for govemmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the govemment's near-term financing decisions. Both the govemmental fund balance sheet and the govemmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains twenty individual govemmental funds. Of these, four are considered major (the general fund, the arterial street fund, the local improvement district #33 fund, and the public safety plan fund) and are presented separately in the govemmental funds' Balance Sheet and the govemmental funds' Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single column labeled "Other Governmental Funds." Individual fund data for each of these non -major governmental funds is presented in the combining and individual fund statements and schedules section of this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. A budgetary comparison schedule is presented for the general fund in the Required Supplemental Information section of the report. Other budgetary comparison schedules are included following the other governmental funds' combining statements in this report. 16 CITY OF TUKWILA: 2016 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS Proprietary funds are used by govemments to account for their business -type activities and use the same basis of accounting as utilized in private industry. Business -type activities provide specific goods or services to a group of customers that are paid for by fees charged to those customers. There is a direct relationship between the fees paid and the services rendered. The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided internally to various City departments. The same basis of accounting is used for proprietary funds in both the govemment-wide and individual fund statements. Enterprise funds report the same functions presented as business -type activities in the government -wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's three utilities (water, sanitary sewer, surface water) as well as the City -owned golf course. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service fundsto account for its fleet of vehicles, and its insurance premiums for active employees and LEOFF 1 retirees. Internal service fund activities are predominantly governmental and have been included in the governmental activities columns of the government -wide statements. Individual fund data for the internal service funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the govemment-wide financial statements because the resources of those funds are not available to support the City of Tukwila's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City maintains two different types of fiduciary funds. The Firemen's Pension Trust Fund is used to report resources held in trust for retirees and beneficiaries covered by the Firemen's Pension plan. The agency fund reports resources held by Tukwila in a custodial capacity for individuals, private organizations, and other governments. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found immediately following the fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including a budget and actual schedule for the City's general fund and schedules of progress in funding its obligation to provide pension and OPEB benefits to its former employees. Additional pension benefit information is found in Note 8. The combining statements referred to earlier in connection with nonmajor govemmental funds and internal service funds are presented immediately following the required supplementary information on pensions and OPEB. 17 CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS GOVERNMENTAWIDE FINANCIAL ANALYSIS As noted earlier, net position over time, may serve as a useful indicator of a government'sfinancial position. In the case of the City of Tukwila, assets and deferred outflows of resources exceeded liabilities by $296.0 million at the close of the most recent fiscal year. Total net position increased by $8.9 million (3.1%) when compared to 2015. CITY OF TUKWILA'S NET POSITION thousands) d anfaaTIO AAlarr la 1 +-9L9 a a Teta( `~1. 4bTCA, .`, i : �:,. �. �":: l ;.-, .' etE:`.. Current and other assets $112.308 $74,640 020,741 $17,629 $133.049 $92,269 Capital assets, net of accumulated depreciation 206,147 205,816 67 410 66,826 273 557 272,642 Total assets 318,455 280,456 88,151 84455 406,606 364,912 Deferred Outflows of Resources 4.629 2,576 470 288 5,100 2,864 Long-term liabilities 73,776 47,172 6.943 7.723 80.719 54,895 Net pension liability 12,944 11,631 2.539 2.095 15.483 13,726 Net OPER obligation 9,179 0 5 0 9,179 0 Other liabilities 8,149 7.139 993 436 9.142 7.576 Total liabilities 104,048 65,942 10.475 10,254 114,523 76,197 Deferred Inflows of Resources 1,117 4,187 98 346 1.216 4,533 Net position Net investment in capital assets 193,113 191,331 60,807 59,483 253,920 250,815 Restricted 8,996 5,446 - - 8.996 5,446 Unrestricted 15,810 16,126 17.241 14659 33,051 30785 .': F39i p2as1t1iN},.,"'i ,AXIII`27,d'ttt.;j:, n,,,,,';4 8Q3, r',;',k.:$ 4131nr e $29$;46,, ,..s...,428": By far, the largest portion of the City's net position ($253.9 million or 85.8%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position ($9.0 million or 3.0%) represents resources that are subject to external restrictions on how they may be used. The business -type activities do not report any restrictions, so the entire $9.0 million is restricted in governmental activities funds. The majority is related to land and park acquisition. The remaining net position balance ($33.0 million, or 11.2%) is unrestricted and may be used to meet the City's ongoing obligations to its citizens and creditors. At the end of the current fiscal year, the City of Tukwila continued to report positive balances in all categories of net position. The City's overall net position increased $8.9 million from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business -type activities. 18 CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA'S CHANGES IN NET POSITION (in thousands) Governmental Activities Business -type Ac 6vitles Total 2016 : 2015 -. 2516 2015 2016 20 Revenues Program revenues Charges for services $11,904 $9,748 622,963 522.158 $34,867 $31906 Operating grants and contributions 1,079 893 25 184 1,104 1,077 Capital grants and contributions 5.001 6,432 768. 2. D40 5,769 8,471 General revenues Property taxes 14,563 14,320 - 14.563 14,320 Sales and use taxes 18,908 19,334 - 18,908 19,334 Natural gas use tax - - - - - - Hotel/Motel taxes 710 678 - - 710 678 Unity taxes 4,046 4,019 - - 4.046 4.019 Interfund utility taxes 2,147 2,061 - - 2.147 2.061 Business taxes 2,716 2,749 - - 2.716 2.749 Excise taxes 6,509 5,321 - - 6.509 5.321 State entitlements 1,916 1,844 - - 1.916 1,844 Investment earnings 560 475 - - 560 475 Miscellaneous 1,000 281 - - 1,000 281 Total revenues 71,058 68,156 23,756 24.381 94.813 92,537 Expenses General government 9662 8,042 - - 9,662 8.042 Public safety 31.419 29,403 - - 31419 29,403 Transportation 11,188 11.070 - - 11,188 11,070 Physical environment 2.554 2:611 - - 2,554 2,611 Culture and recreation 5,431 5,125 - - 5,431 5,125 Economic environment 4.411 5.783 - - 4,411 5.783 W Interest on long-term debt 1.076 1.033 - - 1,076 1 033 T Water/sewer - - 13,984 13.186 13,984 13,186 Foster golf course - 2,078 2.087 2,078 2,087 CO Surface water - - 4,088 4,148 4,088 4,148 Total expenses 65,741 63.068 20,150 19.421 85,892 82.489 Increase (decrease) in net positron before 5.306 5,088 3,605 4.960 8.922 10.048 transfers and special Items Transfers (300) (300) 300 300 - Special Item - (957) - - - (957) Change in net position 5,016 3.831 3,905 5.260 8,922 9.D91 Net position -beginning of period 212.903 220.064 74,142 71.948 287,045 292.012 Change in accounting principle- Retirement Costs (9,551) - (2.308) - (11.859) Change in accounting principle - (757) (757) Prior Period Adjustment - (1,442) - - - (1 442) Net position -beginning balance, as restated 212,903 209.072 74,142 68 882 287,045 277,954 Net position -end of period ' .$217910 $212903 $78,048 $74142 8296967- $287,045 Governmental Activities During the current fiscal year, net position for governmental activities increased $5.0 million (2.4%) from the prior fiscal year for an ending balance of $217.9 million. The primary reasons for this increase are: • Charges for services increased by $2.2 million (22.1%) to $11.9 million. The reason for the increase is the recognition of just over $2.0 million in fire impact fees related to new development. • Capital grants and contributions decreased $1.4 million (22.2%), although this was partially offset by a $0.2 million increase in operating grants and contributions. In 2015, capital grants made up 10% of all govemmental revenue, while in 2016 capital grants were only 7% of total revenues. The decrease in capital grant funding is mostly related to a one-time, $1.3 million State grant received in 2015 for the Interurban Avenue South project. CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS • Excise taxes increased $1.2 million (22.3%) due to a $0.3 million increase in real estate excise taxes from the sale of properties in Tukwila, combined with a 50.9 million increase in gambling tax revenues. • Total expenses increased 52.7 million (4.2%), mostly related to general growth in employee costs, including medical benefits, retirement costs, and a 2% cost of living adjustment. REVENUES BY SOURCE — GOVERNMENTAL ACTIVITIES PROGRAM REVENUES AND EXPENSES—GOVERNMENTAL ACTIVITIES $30,005,005 527,000,000 $24,000.000 $21,000,000 718,000,000 $15;000,000 512000,000 50,000,000 $6.000,000 73,000,000 $0 U° 1 19 20 ■ expr, .... CITY OF TUKWILA. 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA: 2016 CAF 6 Business -Type Activities For the City of Tukwila's business -type activities, the results for the current fiscal year were positive in that overall net position increased by $3.9 million (5.3%) to reach an ending balance of $78.0 million. The overall growth is attributable to the following factors: • In the Water Utility, total net position increased by $0.8 million (4.4%). This resulted from a 5.0% rate increase effective January 1, 2016, combined with a slight reduction in operating expenses from the prior year. • In the Sewer Utility, charges for services increased $0.2 million (1.8%) primarily due to a 5.0% rate increase effective January 1, 2016 combined with a slight reduction in water usage by customers. • In the Surface Water Utility, a 15.0% rate increase resulted in charges for services increasing by almost $0.8 million (15.0%). • Despite the rate increases, operating income was $2.8 million, or approximately $20,000 less than last year, signifying that the rate increases were adequate to cover the growth in operating expenses. • Of the $78.0 million total net position, $17.2 million (22.1%) is unrestricted and each utility can utilize their portion for any purpose. This operating balance is necessary for future planned infrastructure replacements and repairs. The following chart shows the relative net position balances for each business -type fund: Surface water A6°% BUSINESS -TYPE NET POSITION - BY FUND Foster Of course 8% The majority of net position in the City's enterprise funds relate to capital asset infrastructure, such as water and sewer mains, and the golf course land. As such, most of the net position is not available to support the ongoing expenses of the funds. The following chart contrasts the total net position to the spendableportion of net position for each enterprise fund: 21 MANAGEMENTS DISCUSSION AND ANALYSIS COMPARISON OF TOTAL NET POSITION TO SPENDABLE NET POSITION -BUSINESS-TYPE FUNDS S30 000,D. 520 U.,000 01; s,: net The following chartdepicts the revenues and expenses for business -type funds: 010,000;000 00,000,000 06,000,000 51,000,000 02,000,000 BUSINESS -TYPE ACTIVITY REVENUES & EXPENSES (before Capital Contributions & Transfers) al Revenue, ■ Expenses Water Smvur 5 tate s}ater Foster Golf Course 22 CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS The purpose of the City's governmental funds is to report on near-term inflows, outflows, and balances of spendable resources. This information helps determine the City's financial requirements in the near future. Specifically, unassigned fund balance may serve as a useful measure of a government's net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City of Tukwila itself, or a group or individual that has been delegated authority to assign resources for use for a particular purpose. As of December 31, 2016, the City's governmental funds had combined fund balances of $76.1 million, an increase of $37.4 million, or almost double the 2015 fund balance total of $38.6 million. The increase is primarily due to bond proceeds of $33.0 million, plus a premium of $3.7 million, in the public safety plan fund. The change in fund balance for governmental funds compared to 2015 is es follows: • General Fund $ 0.7 million • Arterial Street Fund (1.1 million) • Local Improvement District #33 (0.1 million) • Public Safety Plan 36.5 million • Other Governmental Funds 1.4 million The general fund is the primary operating fund of the City. All receipts and payments of ordinary City operations are processed through this fund unless they are required to be accounted for in another. At the end of 2016, the general fund had a $19.0 million fund balance, with $11.6 million (61.0%) of the balance classified as unassigned and available to meet the City's general obligations. Thearterial street fund decrease in fund balance is related to the planned use of reserves for capital projects. In 2016, a total of $5.5 million was spent on capital outlay. The fund balance in the local improvement district #33 fund decreased by the difference between the special assessment revenue received and the payment on the LID bonds issued. The following chart shows the relative fund balances for governmental funds: GOVERNMENTAL FUNDS — FUND BALANCES Gererat rorty 23 ds CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The general fund revenue increase of $1.1 million is combined from the following sources: 3800,000 $700,000 $600,000 3500,000 ,$400.000 $000.000 200,000 5500,070 ($100,007) ($200,000) GENERAL FUND REVENUE INCREASES/DECREASES— BY SOURCE Taxes 5605,392 Charges for services $389,659 1 s i ee uses and permits I nvestment ea fi nes and fo rfeltures 057,002 (5113,03G I rite rgove rnmental ($127,780) FINANCIAL ANALYSIS OF PROPRIETARY FUNDS 169,926 MI sceilaneous $93,557 The City's proprietary funds provide the same type of information as foundin the government -wide financial statements, butin greater detail. Factors affecting the finances of the City's proprietary funds have already been addressed in the discussion of the City's business -type activities. Unrestricted net position in business -type activities ended 2016 at $17 2 million, an increase of $2.6 million (17.6%) from 2015. GENERAL FUND BUDGETARY HIGHLIGHTS The City budgets biennially by adopting a budget at the end of the preceding biennium, and then making adjustments as necessary via budget amendments throughout the next two years. Following is a summary of such budget amendments that occurred in 2016: • Gambling Tax revenue increased by $600,000 to reflect increase in tax collections partially due to a local casino resuming operations. Additional revenue and expenditures were appropriated for the City's COPS grant and two police officers, one dedicated to the Auto Theft Task Force and the other dedicated to the Criminal Justice Training Center for the Basic Law Enforcement Academy. • Carryover of project costs unspent in 2015 related to the Police records management system and Laserfiche Rio projects. • Adjustments in transfers from the General Fund to other funds, including. o $800,000 reduction in transfer to the Arterial Street Fund due to $1.0 million of unanticipated REET funds in 2015 to cover Arterial Street projects; and o $275,000 increase in transfer to the Contingency Fund in line with policy requirements. 24 CITY OF TUKWILA'. 2016 CAFR _. MANAGEMENT'S DISCUSSION AND ANALYSIS Reasons for the significant variances in the general fund between the final budget and actual results include: • Tax revenue was $0.6 million, or 1.4%, higher than budget. Of that amount, property taxes decreased $0.3 million due to a planned annexation that was not approved, sates and use taxes increased $0.3 million, and gambling taxes increased $0.6 million partially due to the resumption of operations at one of the local casinos. • Fines and forfeitures was $26 thousand (8.9%) over budget. This was due to false alarms coming in higher than anticipated. A $2.1 milliontransfer in from the Facilities/Urban Renewal fund was budgeted but did not occur because an anticipated land sale did nothappen in 2016. • Expenditures were below budget by $1.9 million, or 3.6%. Public safety expenditures contributed 51.0 million of the budgetary savings due to less spending on overtime ($0.3 million), equipment operations and maintenance ($0.4 million), and equipment replacement costs ($0.2 million). Additional budgetary savings occurred in economic environment related primarily to salary and benefit savings from unfilled positions. CAPITAL ASSETS The City's investment in capital assets for both its govemmental and business -type activities as of December 31, 2016 totaled $ 273.6 million (net of accumulated depreciation), an increase of nearly $1.0 million (0..3%) from 2015. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission/distribution systems, roads, bridges, and infrastructure. CITY OF TUKWILA'S CAPITAL ASSETS (net of depreciation) K3owm014rit•1 Activities Business -Type Activities'total Land Buildings Other Improvements Machinery and Equipment Infrastructure Construction in Progress $ 35,498,580 35,312,814 $ 2,346,230 2,346,230 $ 37,844,810 11,834,146 10,711,996 8,307.234 8,679,027 20.141,380 10,528,019 5,933,158 54,158,840 48,145,336 64,686,859 7,111,094 6,811,474 386.113 407,530 7497207 131,110,688 120,913,528 - - 131,110,688 10,064,699 26,133,182 2,251 229 7,247 963 12,275,927 37,659,044 19,391,023 54,078,494 7,219,004 120,913,528 33,381,145 $286,14706 ; 205,816,152 $ 87409,646- .80,826087 $2234866,972; 272,443,245,` More detailed information on capital assets is provided in Note 6 to the financial statements. General capital outlay purchases added $798,601 in machinery and equipment and included various technology purchases in the amount of $769,943, Parks & Recreational equipment for $10,686, and Street Division thermal imaging cameras totaling $11,676. Many of the projects in the Arterial Street Fund continue to be in the construction phase adding $5.5 million in construction -in -progress for the period. The major arterial street fund activities are comprised of the following: • Interurban Avenue South, $2.1 million • Tukwila Urban Center Pedestrian/Bicycle Bridge, $2.3 million • Tukwila Urban Center Transit Center, $0.23 million • Boeing Access Road Bridge Rehabilitation, $0.11 million • Andover Park West, $0.08 million • Various other Arterial Street Fund projects total $0.64 million Major construction projects completed in 2016 added $18 million to capitalized infrastructure for the Arterial Street Fund which included Interurban Avenue South with total overall previous and current years' construction -in - 25 CITY OF TUKWILA 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS progress costs of $9.2 million; Tukwila Urban Transit Center with costs of 56.6 million; and, Andover Park West with costs of $2.2 million. Ongoing Residential Street Fund construction projects added $649,579 to construction -in -progress and include the following: • 40 - 42nd Avenue South, $246,583 • Cascade View Safe Routes to School - Phase II, 5153,924 • 42" Avenue South Roadside Barriers, $90,010 • Various other Residential Street Fund projects total $159,062 Projects completed in 2016 for the Residential Street Fund include the newly constructed 42nd Avenue South roadside barriers with total overall previous and current years' construction -in -progress costs of $196,100. Land Acquisition, Recreation & Park Development activities consist of $1,435,602 for the Duwamish Gardens and Duwamish Hill Preserve work in progress improvements. Both projects were completed in 2016 with total overall previous and current years' construction costs of $3,387,210 and $992,327 and capitalized into parks improvement infrastructure. Other park related projects total $11,900 in added current year construction -in -progress costs. Other governmental funds' activity in the areas of facilities improvements provided an additional $13,138 to construction -in -progress work for the year. Business -type activities consisted of $2.7 million in added construction -in -progress work for the year. Major projects in the utility funds comprise of the following: • East Marginal Way South Pipes, $694,852 • Andover Park East Waterline, $1,062,773 • Crystal Springs Intertie, $410,171 A total of $569,653 in other utility construction projects were added to construction -in -progress during the current period. Major construction projects completed in 2016 include Interurban Avenue South and East Marginal Way South Pipe projects with total overall previous and current years' construction -in -progress costs of $2.6 million and $3.2 million, respectively, which have both been capitalized into utilities infrastructure. LONG-TERM DEBT At the end of the current fiscal year, the City had total bonded debt outstanding of 561.1 million, excluding the premium on bonds issued. Of this amount, $54.1 million is general obligation bonds which is backed by the full faith and credit of the City, $1.6 million is revenue bonds for the water/sewer and surface water utilities, and the remaining $5.4 million is special assessment bonds which were issued to improve access to the City's urban center. The City issued $36.7 million (including premium) in general obligation debt in 2016 to finance a new Justice Center to house the police department and court operations, reconstruct three fire stations within the city, and provide funding for fire equipment and apparatus for 20 years. This new debt issuance resulted in an overall debt increase of $35.0 million. The City currently maintains a rating of "AA" with Standard and Poor's and Fitch's Investor Service, and "Al" with Moody's for its general obligation debt. In February 2017, Moody's informed the City that it raised the city's rating to Aa3. 26 CITY OF TUKWILA: 2016 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS CITY OF TUKWILA: 2016 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The following schedule summarizes the City's long-term debt: REQUESTS FOR INFORMATION CITY OF TUKWILA'S LONG-TERM DEBT General obligation bonds Revenue bonds Premium on bonds issued Special assessment bonds Public Works Trust Fund Loans Due to other governments $ 54,114,977 $ 23,057,714 $ - $ - 1,597,704 4,380,732 761.523 5,412,500 6,082,500 - - 5 54,114,977 $ 23,057,714 .742,527 1,597,704 1,742,527 4,380,732 761,523 - 5.412,500 6,082,500 - - 5,046,991 5,646,459 5,046,991 5,646,459 6,093,556 6,265,200 - - 6,093,556 6,265,200 ook768 :;f..9$i,... ,$: 6 :. �i3 �• .'. 78846106. More detailed information on long-term debt, including debt limitations, is provided in Note 10 to the financial statements. ECONOMIC FACTORS AND THE UPCOMING BIENNIAL BUDGET The following economic factors currently affect the City of Tukwila and were considered in developing the 2017- 2018 biennial budget: • The City's 2017 assessed value of $5.8 billion is 6.8% higher than 2016 and its growth reflects positively on the local economy. • Sales Tax is the City's largest revenue source and is conservatively estimated to increase 7.5% in 2017 and an additional 2.9% in 2018, another sign that the local economy has rebounded. • Property tax is the second largest revenue source, contributing to approximately one-quarter of the annual general fund budget. This revenue source is limited to 1% growth annually, however new construction estimated in 2018 results in a 2.5% increase over 2017, • The 2017-2018 biennial budget includes a one-time revenue of $1.8 million in 2017 and $6.1 million in 2018 for anticipated property sales in both the Tukwila Village and Tukwila Redevelopment (urban renewal) areas. These funds will be used for capital improvements throughout the City. In addition, $2.25 million will be used to repay the line of credit the City received in 2015 to purchase property in the urban renewal area. • Rate increases of 5% annually are scheduled in the Water utility from 2017-2022 to cover the cost of purchasing water from the Cascade Water Alliance and maintain the utility's infrastructure. An additional increase of 3.5% in sewer rates is scheduled for 2018. • National Pollutant Discharge Elimination system (NPDES) permit requirements have significant costs for the surface water fund, which will result in a 5% rate increase in 2017 and 3% in 2018 for that utility. • Capital outlay in the General Fund decreased 47.5% in 2017 and an additional 87.2% in 2018. This reduction reflects the fact that the Police records management system was completed in 2016 and the Parks and Recreation class registration system will be completed in 2017. The City's reserve policy specifies that the General Fund ending fund balance shall equal or exceed 18% of the previous year's operating revenues. The policy also requires that a 10% minimum fund balance be maintained for the Contingency Fund. The biennial budget complies with both these requirements. This financial report is designed to provide a general overview of the City of Tukwila's finances for readers with an interest in the City's finances. Questions concerning this report, or requests for additional information, may be addressed to the Finance Director, City of Tukwila, 6200 Southcenter Blvd, Tukwila, WA 98188-2544. 27 28 CITY OF TUKWILA: 2016 CAFR CIN OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION DECEMBER 31, 2016 BASIC FINANCIAL STATEMENTS CITY OF TUKWILA: 2016 CAFR Governmental Business -Type Acii63565 Aeti51556 Total ASSETS: Cash and cash equivalents hvestments Taxes receivable Other receivables Due from other governmental units hventory of materials and supplies Restricted cash and cash equivalents Restricted investments Notes receivable Real property held for resale Investment in pint ventures Non -depreciable capital assets Depreciable capital assets (net of accumulated depreciation) Net Pension asset Nati As6sis DEFERRED OUTFLOWS OF RESOURCES: Deferred loss on refunding Total Di ferred`Out lows Of Resources $ 27,816,183 $ 15,987,448 $ 43,803.631 5,956,032 2.642,502 8.598.534 6,807605 836 6.808,441 418.712 1.678.017 2.096,728 2,576,606 64,822 2,641.427 15.778 53458 69.237 38,386,341 93007 38.479.349 1,000,203 - 1.000,203 8,723,916 221.035 8.944.951 7,645,000 7645.000 9,188.795 - 9.188.795 45,563279 4,557,459 50.120737 160.583 947 3,772 659 62 852,187 223 436,134 3.772.659 18,455055 88,150771 .''458,805927% 324261 42,079 366,340 4,304 943 428, 254 4.733,197 4629,204 470,333 ''. 5,099,537 LIABILITIES: Accounts payable 3,344.240 661,414 4005,655 Accrued w ages and benefits payable 1,551 266 120,627 1.671,892 Accrued Interest payable 355 347 17782 373,129 Unearned revenue 228.090 17100 245.190 Other liabilities 2,670 165 175,598 2.845764 Bonds and other debt payable Due within one year 3,979 399 776.814 4,756,213 Due in more than one year 69,796 567 6.166,240 75.962.807 Net pension liability 12,943 779 2,539,401 15.483 180 Net other post employment obligation 9,178,836 - 9,178,836 TCTeILMbglids -104,547888 '10474,977 114522866. DEFERRED INFLOWS OF RESOURCES: Deferred inflows related to pensions Business taxes received in advance Tot81 Deferred F1tISWs Of Resources NET POSITION: Net investment in capttal assets Restricted for: Debt service Tourism pronation Arterial skeet improvements Drug investigation and enforcement Land and park acqusit,on, development Fee Improvements Public safety facikhes Unrestricted net position Total Net Position 543.699 98,478 642.177 573.715 - 573,715 117,414 '. 98,478 ' I- 1,215,892':. 193,113,026 60.807,030 253.920,057 1,567.571 - 1,567,571 912.558 - 912,558 134.373 - 134.373 553.539 - 553.539 3.341625 - 3,341625 738,518 - 736.518 1,750,000 - 1,750.000 15,809,945 17,240,620 33.050,565 217919,156 78,047,660 $ 295,966606 The notes to the financial statements are an integral part of this statement. 29 BASIC FINANCIAL STATEMENTS CIN OF TUKWILA, WASHINGTON STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2016 FUNCTIONS / PROGRAMS: PRIMARY GOVERNMENT Governmental act,ines General Government 5 9.662,207 $ 3.742,937 $ 114.451 $ Public safety 31 418,713 4,130,701 545,067 Transportation 11,188,189 454,525 254.844 3602614 Physical environment 2,554,259 464 - 624,276 Culture and recreation - 5,431,324 1,140,558 57,748 774053 Economic environment 4,410841 2,434,546 106,910 h@rest on long-term debt 1075,729 - TotalGovadn irre8tAtevlBes ‘ 65,741262 ' f1 . 1074,020 ' 15,OW,$42 BUSINESS -TYPE A C TIVITIES: Water 5.700976 6,431,763 - 101291 Sewer 8,283,392 9,229,356 270.857 Surface water 4.088,360 5,875,343 25.000 395.583 Foster golf course 2,077.536 1,426,385 - - Toted 80anea5'1ypmAc6v05s , ` 20,6521,284 22,1162,846' ' 20550 ". 767-732 Total Orin* 0000,7nteM '. $ (5,804,818) $ (26,742.945) (6,876.206) (1,929.519) (3,458,965) (1869,385) (1.075.729) - $ (5,804.817) - (26.742945) (6,876,206) (1,929,519) (3,458.965) (1,869 385) - (1,075729) (47757.566):. 832,078 1,216,821 2.207 566 (551,151) 832,078 1,216,821 2,207 566 (651 151) 3 605,314? i6 4 Al 47767,587' b,To6.314, 44,152. General Revenues. Taxa Property taxes Retail sales and use taxes Hotagrretel taxes 50909 taxes Interf and utility taxes Business taxes Excise Taxes State entitlements ,.FotefGerlefalReveat»a. ,< $ 14,562,501 5 - 5 14,562,501 18,908,190 - 18,908.190 710,267 - 710.267 4,045,916 - 4,045.916 2.146,515 - 2,146,515 2,716,257 - 2,716 257 6,508,665 - 6,508.665 1,915,810 - 1,915,810 559.733 - 559.733 1,000,049 - 1,000,049 ..83,62 904 .. . - .53.0 8:044_ Excess of revenues over expenses before transfers Transfers (300,000) 300.000 d,4rtge lo-notpottlion : _.'5016,387 '3906,314 Net posNon-beginning 212,902,819 74 142,336 287.045,155 r4stp5569 4 g ; , , ,. _ .. �. 6217664,755:-$7A047,85p l$ 2x15;868$06-. 5,316.337 3605,314 8,921.652 The notes to the financial statements are an integral part of this statement 30 CITY OF TUKWILA. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA. WASHINGTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2016 Lbcat /rprovanb i5 ASSETS: Cash and cash equ*alenis hvestnenis Taxes recekabk other recevabks Cue fr0mather governrrental un9s Restricted assets: Cash and cash equivalents hues moots Special assessnentreceNabk Notes receivable Realproperty he6forresak -fatal6886l8 LIABILITIES, 0098RED INFLOWS AND FUND BALANCES: Labitka: Accounts payable Acc71184 wages 8 benefits Unearned revenue Other Eabitlbit8s ies Tolal Deferred inflow of r 801110es Unavailable revenue -special assessment Business taxes rece8ed in advance Unavailable revenue -property tax, other Unevanabk revenuedeveloper agreement ToNl Oil9rtoA hflaw Of Besourcas Fund Paanse'. Nonspendabk Restricted: Hotel/motel tax Arteral sheet caplet improvements aag investigation and eniorcenent Park and land acquiseon/devebpment Pubic safety tacikies Fre improvements Debt service guraranty fund Local hprovement District Assigned. Resaental street improvements Arteral street improvements - 1,628,279 Contingencies 6,050,624 Land 8park acqusflon - FaciElks8urban renewal Generalgovernnentimprovements - Wb1c safety facikies 1th Arts Technology Debt service Unassigned $ 12,278,557 3,053 018 5,645 241 365.262 288.036 $ 1,667,647 $ 898,722 $ 114.324 9 6.542,202 $ 21501,453 541,874 21,703 1,125,152 3.053,018 620,491 6807,605 189 6,600 393,754 5,193 418 2,576,606 8,406 2371097 - 35 503,363 503,475 38 386,341 - 1,000,203 - 1.000,203 - 4794,009 - 4,794,009 1501,003 378,882 - 1750,000 300,022 3929,907 7,645,000 7.645,000 ,$ 23130523 $6,106355 55.692;731 $38366,019e $ 18,781r2'L1A $. 910087,996:. 1,093.021 1,377,034 1,504321 20,448 228.090 122742 322,279 104,952 682,766 6,799 175,644 164.952 8852 3,25],773 1,531,568 228,090 620,665 6,638,695 - 4.794,009 - 4794,009 573.715 - - - 573,715 217.959 - - - - 217,959 367931 387217 - 1,750,000 306.622 2811771 159605 387,217 4;794,669 1,750400 306,922 9397454 1,141,484 2,371.,097 899,722 Tafel Fund Balance total LlablIses, Deferred InHaws And Fund. Ba9nce9 The H0m8 m the financial statements are an integral part of thi5yta 184.000 43,306 11 612.330 36.503,556 7,645,000 8,786,484 912,550 553,539 3,341,625 736,518 668,849 912,558 2.371 097 553,539 3341,625 36 503,556 736,518 668,849 898,722 658,932 658,932 1.628,279 6050,624 10,488 10 488 295,040 295,040 391,903 391,903 9571 9571 184,000 43,306 394,925 394,925 11.612,330 19031,744..3,999,376 722 355 3;12 .is,eoe,377,.'. 23,139,523 $ 6,108,355 S 5692131 $38368,0`(9 7 CITY OF TUKWILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA. WASHINGTON RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31. 2016 Total Total governmental fund balances as reported on this statement Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Non -depreciable assets Depreciable assets (net) Internal seance fund assets The net pension asset Is not an available resource and, therefore, is not reported in the funds. Deferred outflow of pension costs Deferred inflow of pension contributions The City has an equity interest In two joint ventures. This equity interest for the provision of governmental services is nota current financial resource and therefore is not reported in the funds. Revenue that was not collected within the recognition period and therefore was not available to pay current liabilities Unavailable revenue reported for property tax and other receivables Unavailable revenue reported for developer agreement Unavailable revenue reported for special assessment Some Liabilities are not due and payable in the current period and therefore are not reported in the funds. Long term Liabilities due within one year Long term liabilities due in more than one year Accrued interest payable Deferred outflow on refunding Internal service fund net position exclusive of capital assets, deferred outflow of pension costs and deferred inflow of pension contributions which are included with other reconciling items above Internal service funds are used by management to charge the costo( certain activities, such as health insurance and fleet maintenance, to individual hinds. The assets and liabilities of these infernal service funds are included in governmental activities in the statement of net position. $ 76052 346 45,563,279 155.875,835 4,708,113 206,147226 3772659 4,304,943 (543,699) 3.761,244 9,188 795 217,959 2,811,771 4,794,009 7 823 739 (3.979,399) (82,358,785) (355,347) 324,261 (95.546,106) 6 721 251 Nat Position OlU8491lmentAa09lflea A?At poded Oih,7i*Staloment Of Nig Position 217,919166'; 32 CITY OF TUKWILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 REVENUES: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures hvestirent earnings Special assessments MsceBaneous Iat Re`Venu8s EXPENDITURES: Current General government Economic environment Physical environment Public safety Culture and recreation Transportation Debt service Principal hterest Cap4al outlay $ 45,886,761 2,129,221 4,498,683 3,286,105 318,459 233,544 $ 1573,930 $ 3 642,889 441,500 19,711 214,444 117,549 8,315,631 - 4,070,805 1,955,028 - 29,100,506 - 4,408,302 - 2,879,996 2,096.831 810,180 5,502,756 267,930 9,561 542,180 886 b9 ,,$9'! . , 9961 670,000 281,044 $ 2,127,801 $ 49.588492 2129221 1,925 841 10.067 413 183.867 3.911473 318,459 10553 541,299 542,180 624,279 957,158 '48' 1,090359 9.405,989 422,405 4.493.210 3 1955031 206,388 59.303 29,366.198 - 135,038 4,543,339 - 261,641 5,238,468 1 932782 812.540 2,045.515 2,602782 1,093 584 8.358 450 & Peet (deflalendq)of/0986980 i'}Jei)Und§tj 1 *'$68d6u7a9 " OTHER FINANCINGSOURCES (USES): Transfers in Transfer out Issuance of debt Bond premum Tdt3IOB1et Fine seui Fond Balance - Endingi 751,000 (4,325,831) '(1 827) - C4,88Y;24 1274931 4.025.831 - - (4.325831) 32,990,000 - 32 990000 3,719,954 - 3,719,954 4do,9 -: 110 3007) ` ti 1,047) r -36813127 18,339806 5 052 383 1.038 769 - 19,031,744. : .3.$99,376„ BBB 732 , $-3$$13;327 ; 14.221,790 38,643.748 8$,60A37 $,7;082;34$ The notes to the financial statements are an integral part of this statement. 33 CITY OF TUKWILA': 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA. WASHINGTON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2016 Netchange in fund balances per the Statement of Revenues. Expenditures, and Changes in Fund Balances Amount reported as change In net position in the Statement of Activities are different because' Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are: Capital Outlay 8,358,450 Adjustments la construction in progress 1912.8131 ) Donated capital assets 82,808 Depreciation Expense (excludes internal service fund depreciation which is reflected ininternal service fund change in net posltion listed below) (7,164,280) Excess of Capital Outlay Over Depreciation Expense The net effect of various transactions involving the City's pension plans are: Reduction in pension liability and expense Increase in pension contribution revenue Reduction in the Fireman's Pension liability and expense The City has equity interests in two joint ventures. The equity interests for the provision of governmental services are not current financial resources and therefore are not reported in the funds. Repayment of long -tern debt is reported as an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. In the current year. these amounts consist of Bond principal retirement Amortization expense Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statenlentof net position. General Obligation Bonds issued General Obligation Bonds issued Internal service funds are used by management to charge the costs of certain activities to individual funds. The change In net position of internal service funds is reported with governmental acti4ties. Because some revenues will not be collected for several months after the City's fiscal year ends, they are not considered"available'. revenues in the government funds. Changes this year are for: Mscellaneous receivables Developer agreements Property taxes Special assessment Some expanses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of. Increase in accrued interest Amortization of deferred outflow on bond refunding Increase in compensated absences Increase in unfunded other post employment benefits Total additional expense (increase) decrease 519 875 509.312 394.435 $ 37,408597 364 098 1,423,622 (4208) 2,602 782 100,745 2703,526 (41,228) 2,811 771 9,820 (542 180) (16,278) (66.613) 96,271 (2,033,913) (3,719954) (32 818.400) (548.596) 2238.183 (2,030.533) Chane In Net Position On The Statement Of Activities $ 5,016,337 The notes to the financial statements are an integral part of this statement. 34 CITY OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31. 2016 unatl 046 Current assets. Cash and cash equ6ale. $ 4,991515 $ 6938662 $ 723484 $ 3333,787 $ 15,987448 $ 6,314,729 hvestments 2,134587 507815 - - 2,642502 2,903014 Taxes receivable - - 836 836 - OMerrece6abbs 431,760 770,779 2.582 472,896 1378017 25,462 Due fram other governmental un1s - - - 64.822 64.822 - Inver4ary of materials and supp1es - 53.458 - 53.458 15273 Current assets restrmted Cashandcashequivabnts 35,830 57,177 93007 TetaIOUrlant Asadb .... 7,563692 8317358 ' 837537 3371,505 29520091 9,58,478' Noncurrent assets: Notes receivable 221035 221 035 Capital assets Lard 87,347 69,525 1.609,575 579.783 2,346.230 921469 1416.567 3364962 6627,496 1875.395 13,284419 other improvements 21188810 14.586,442 3.559 992 47.829405 88,164649 8490746e09 and equipment 787.303 1242,767 94.786 49,776 2,174631 14,942636 Less'. accunubted depreciation (10,922.163) (8,254,806) (6,086 998) (15507,546) (40,771512) (10 234 120112101269604078090665 728,271 862,642 - 620.315 2211229 - Total capital assets (nefot 0c271498e4 deprecation) 14,286,135 11,871,532 5804851 35.447,129 67,4 646 4,708,113 To121 552800165( Asa 486 .14,286135 12392568 5804,861 96.447129 67350951 4,708;113' 76516,0e22 ' 21,879.927 :20,309822 8,642389 .....36:318.654 . 88.150,731 . 13366590.; Cahn( eft Outflows of Resources Deferred pension Deferred Lass on Refunding Total Cat aired CV/lbws ape:au 91,452 66,221 109,069 161.492 428 254 10,941 26,089 - 5.050 42079 02,393 82330 309089 .::160,542 470333 "... LIABILITIES: Current LabBes Accounts payable 186838 299,593 3,034 261 949 661,414 Accrued w ages and benef6s 26.294 76,084 29,070 47,179 120327 Accrued interest payable 2.872 8,339 - 6570 17,782 5,80earned revenue 5,785 - - 11.315 17,135 Other current 1291862 77,532 27,629 52.247 18.190 175598 Due to other governments 95.080 233,436 - 270.953 599.468 Carzpensatedabsanoes - 8,635 18.486 6943 34.064 Revenue hoed payable 37253 88835 - 17.194 143.282 Tole1C iiie18LY86tles -.. 433,654 592561 :..1 837 849293 .:'1,789:336 64,348 86.468 19.698 748 250 Noncurrent 9668ies'. Reserve for unreported cbhe - - - 1301.250 Revenue bonds payabb 378.150 901,742 - 174531 1454.322 561 pennon 12b419 542.277 392,669 646859 957,596 2,539.401 381.561 Compensated absences 127.437 - 53777 83082 264.295 De to other governments 622.195 1,963,450 - 1861,878 4,447523 702615906210e54 L669486 ,. ':1670059 3,257,861 :700,636 '...3:077,048. 9705842 1,882.811 Lb72624 Wows of Resources Deferred Mbw 720660 00094 TaletDeferred Wb+22s of.Res095028 3100714 "3,860 11 040.473 ' 3:717379 '10,474,977 2537227 21,359 21,058 14,678 25.172 37.269 98.478 34,963 14679 .: 25172 .... 37289 98478 ::14883 NET POSITION 1.3 20e4108e01i0007e28es600 13,164.397 8710.158 5.804851 33.127624 60,807,030 4708.113 56,2530e34 6.692.7`.0 7826985 117,982 2.602.903 17,240.620 6.770.636 '161a1146Pasl5b8 $ .39(857346 3 15537043 $ 5922633 6 :33750527 3 76647650. $ 11475749: The nates to the financial statements are an integral part of this statement. 35 BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 6810 210 OPERATING REVENUES: Charges for services Other operathgrevenue T481096,21165PEy452* $ 6,401 456 6 9.186,732 $ 1317306 9 5850,799 5 22756794 $ 7.988226 186 106,079 240 106.505 140 076 8.401.642 9188,732 1.473,886 5,451,008 22,689,309 8,128,302.. OPERATING EOPE4966: Operating 8 maintenance 3,581.646 1.259,871 1,507,558 1 798.874 13,147,948 7578,017 Admnistrattue and general 645770 556,465 177,352 702,884 2,082471 448689 Taxes 931.294 1057,474 65,114 655744 2,709 626 Depreciation andan9tgatbn 526.817 370,312 327,513 914,244 2,138886 799,436 Total Operating 6954na ' 5680527 9244.(21 ;.2,1177,548,,,, '4371745 ::20378930 „8326142::. 3petatlhg Intoner Mee) ` '' 715.114 942.811 :,.(653,651) 4.776294 3;284366' "'(697840): NON-OPERATING REVENUE (EXP1345Ej: hvestrrent earnings 33.658 42,624 2,500 29,101 107.883 52,291 33tere83 expense (15449) (39,271) - (16,614) (71,333) Gain (loss) on dsposal of cap6al assets (3538) - - (4,798) (8 33E) 96.953 Other non operating revenue25,000 25,000 total Neg.Opera69eve6ue{B(pensa)° _ . -... .. _._ -... 6134( 5,16.5) Berate (605816uMils 9 T,85888s Transt2s in 641592 (17128 966695 9I 101 291 270,857 832,078. 1,288,823 300,000 (351,151)' 19,025,068 15320,322 6,273,984 81 395,583 767732 - 300,000 3 297,5696' ' )3,6553.19' (548.596) 33 522.961 74,142,335 12,027345 7)0(el 46156(1846-404414 - 5:18- 344 5-'15,537,143 :6934,833-6 .3x527 5 7:347650 i, X1476,749 The notes to the financial statements are an integral part of this statement. 36 CITY OF TUKWILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 2016 Page 1 of 2 a Uglify Foster Sufi 8811 Wm Caurte U91 `Oooemmantal Total M86088 En6r@nee \ Internal: Fuunds j eNiee Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash paid to supplier Cash paid for taxes Cash paid to or on behalf of employees Other cash received (paid) NOtCasli9010080(Used)' By Operating Ao6M6ea CASH FLOWS FROM NONCAPITAL RNANCINGACTIVITES: Operating grant received Transfers in 10 (0 $h P7o0ded (Used) By Non- .+ Capital Financing AL -Wires CASH FLOWS FROM CAPITAL AND RELATED FINANCINGACTMTIES: Purchase of capital assets Contributed capital Capital grants Principal payment on debt Interest payment on debt Proceeds from sale of equipment Other Net0as9 Provided (Wed) gar Capital And Related Financing Ad ages CASH FLOW FROM INVESTINGACTNITIES: Sale of investments Interest received NetCa5h Prodded (Used) In Investing AcdulSes Net increase (decrease) in cash and Cash equivalents Cash and cash equivalents -beg nning of year Cash And Caen EErluiValonls-end of year Cash atend of year consists of Cash and cash equivalents Restricted cash -customer deposits Total Cash end Cash aqui tents $ 6,459464 $ 9346,013 $ 1,408602 $ 5,656,394 6, 22,870,473 $ 8190,613 (3368,184) (6097.869) (727,753) (1,018,151) (11.211,957) (12844111 (931294) (1.057.474) (65,114) (655,744) (2,709,626) (570) (731 491) (513,566) (975,147) (1275.260) (3495,464) (6650302) 186 8,603 240 9,028 Y 428880 1677,104 (356608) . 2'707479 6462455\ 56,330` 300,000 25,000 25,000 300,000 (621,865) 60.209 431,877 (132.734) (15.654) (701.042) 248,459 24.015 (323.226) (38,010) 80.321 300000 25600 (1,438,707) 273.792 323.884 (288,331). (17231) (2,761613) (797536) 582,460 - 779,777 - (744291) - (70,595) - (49,488) 30,833 128,075 (277,856) _- (709,453) 15,563 53649 15,563-' 53.849 1,166,378 3,860,968 0. 345 1.021 270 5,917.392 6,938 662.:: 2,500 2,500 (1 196080) ,A (2.183,42$) (668,461) 29,101 100,813 '29101 100813. (48,309) 1,565,500 3,704839 828.971 1,768,287 12,375,617 ,786 .:2 0 3 333 787 , .$ 18 080 466 1,015,930 173,121 1>169,001y 574,820 5,739,809 314 720 4,991,515 6938.662 35,830 - 5,527 345, $.6 038.662 723,484 3.333,787 15 987.448 $ 6, 314,729 57,177 - 93,007 - 780 662 , $: 3 333 787 $16 08r 456. $ 6 14 729;: The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2016 CAFR BASIC FINANCIAL STATEMENTS CIN OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 2016 Page 2 012 Utility \ Cou?se 'f ',t+o0ernmental Total Aebvtsae .065998sa mmol Fonda ? Senhca FOnds RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BYOPERATINGACTMTIES Adjustments to reconcile operating income to net cash Provided (used) by operating activities. Depreciation 526,817 370,312 327,513 914,244 2,138,886 799 436 Asset (increase) decrease: Accounts receivable 36,928 Inventory and other Deferred outflow of resources (ncrease) decrease (36,638) Increases (decreases): Accounts payable 143,659 175,139 (2,130) 219,183 535851 (93 833) Other liabilities 22580 (5224) (9.129) 6,126 14.353 - WagesBbenefitspayable 10,234 (15,939) (19,374) (8657) (33,736) 213 Deferred inflow of resources increase(decrease) 8,986 85,318 41,326 60,886 196,518 12917 -Total A80086e96 * F 712,568. .` 730494=^. 302043 \ 928,485 F,o $.678,086 ,753870P2 159,281 2,448 (194,405) 4252 62311 8.944 - 8,944 (1.436) (34.395) (46759) (69.191) (186983) (26438) Net0astiftrbdded fUsed)SyOgebeing &fibrillae. . $.1:428,580.",31,077,164 -$ (356,808) y$ 2,707470,.`,$ 5,465455 5 SCHEDULE OF NONCASH INVESTING, CAPITAL AND RNANCINGACTNITIES Capital assets acquired by contributed capital $ (390,705) 9 Increase (decrease) in fair value of investment Totat10 ntaeh uitea9ng, Capital and ,,) Flaanding AraMiea (1,617) $ $ (302412) $ - (18 661) (0,'}96) $ y11817), The notes to the financial statements are an integral part of this statement. 392,4125 .$.(186611 CITY OF TUKWILA: 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA. WASHINGTON STATEMENT OF FIDUCIARY NET POSITON FIDUCIARY FUND DECEMBER 31. 2016 r-xerren s. Pension Trust: Fund AS ASSETS: Cash and cash equivalents hvestments Customer accounts hterest receivable totalAssets LIABILITIES: Accounts and other payables Total Liabilities 427.867 $ 201,739 1.000.508 55.543 708 257,282 257,282 NET POSITION: 1,429.083 257,289 Heid In trust For Pension 8oeflte And Otherlurposesi $ 1,429,083 $, The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA. 2016 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Firniren's Penton, Trust Fund;_,'. ADDITIONS: Contributions fromnonenphyer entlties: Fire Insurance Rernuns Transferred in Investment earnings Totat•Ar 1dlo1e8 DEDUCTIONS: Benefit payments Adrrinistrafive expenses Total beductions Change In Net Poston Net posdlon - beginning tetl"tositidn 14.3 The notes to the financial statements are an integral part of the statement. 66,360 10.205 78.585':. $ 60,488 3,500 61088 1,416,506 1,429 083 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2016 NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the City of Tukwila conform to generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The City's significant accounting policies are described in this note. A. The Reporting Entity The City of Tukwila was incorporated on June 23, 1908, and operates under the laws of the State of Washington applicable to a non -charter optional code city with a Mayor/Council form of govemment. Tukwila is served by a Mayor and seven councilmembers, all elected at large to four-year terms. The City provides what are considered general government services including public safety, streets, parks, planning and zoning, permits and inspection, general administrative, water services, sanitary sewer collection, and storm drainage. The City of Tukwila has no component units (either blended or discretely presented) included in these statements. B. Basis of Presentation The City's basic financial statements consist of government -wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government -wide Financial Statements The statement of net position and the statement of activities report information on all of the nonfiduciary activities of the City. The activity of the internal service funds is eliminated to avoid "doubling up" revenues and expenses. The statements distinguish between governmental activities and business -type activities. The statement of net position presents the financial condition of the govemmental and business -type activities of the City at year-end. The statement of activities presents a comparison between direct expenses and program activity of the City. Direct expenses are those specifically associated with a service, program, or department and therefore clearly identifiable to a particular function. Indirect costs are included in the program expense reported for individual functions and activities. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. For identifying to which function program revenue pertains, the determining factor for charges for services is which function generates the revenue. For grants and contributions, the determining factor is to which functions the revenues are restricted. 41 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Revenues which are not classified as program revenues are presented as general revenues of the City, and certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the City. Fund Financial Statements During the year, the City segregates transactions related to certain City functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the City at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non -major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by type. While fiduciary funds are excluded from the government -wide statements, they are included in the fund financial statements. C. Fund Accounting The accounts of the City are organized on the basis of funds; each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self -balancing accounts that are comprised of assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to - and accounted for - in individual funds according to the purpose for which they are spent and how they are controlled. There are three categories of funds: governmental, proprietary and fiduciary. Governmental Funds All govemmental funds are accounted for on a "flow of current financial resources" measurement focus. Their reported fund balance is considered a measure of "available spendable resources." Governmental fund operating statements focus on measuring changes in current financial position, rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. The following are the City's major governmental funds: • The general fund accounts for all the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. The general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. The Arterial Street fund was established in accordance with RCW 82.36.020 for the administration of the State -levied motor vehicle half -cent gasoline tax distributed to Tukwila and is used primarily to account for capital arterial street projects. In addition to the State -levied motor vehicle gasoline tax, other revenue includes state and federal grants, impact fees, and transfers in from the general fund. • The Local Improvement District (LID) #33 accounts for assessments related to the LID and provides payment to the Fiscal Agent for principal and interest on bonds issued in November 2013. • The Public Safety Plan fund was established in 2016 after voters approved a $77.4 million bond measure to construct a justice center, rebuild 3 fire stations, and provide for life -cycle replacement of fire department apparatus and equipment. The other governmental funds of the City, account for the proceeds of specific revenue sources that are segregated to ensure that expenditures are made exclusively for qualified purposes. 42 CITY OF TUKWILk 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Proprietary and Internal Service Funds Proprietary and intemal service funds are accounted for on a "flow of economic resources" measurement focus. This means all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund operating statements present increases (revenues and gains) and decreases (expenses and losses) in net position. Proprietary funds measurement focus is based upon determination of net income, financial position, and cash flows. Proprietary and internal service funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges to the City's customers for sales and services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. As described further below, there are two fund types in this category - enterprise and internal service. Restricted assets shown in the government -wide financial statements and the proprietary funds balance sheet include monies reserved for payment of revenue bond debt, and deposits held for utility and golf course customer accounts. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. The City's enterprise funds account for utility and golf course operations, which are self -supported through user charges. The utilities are financed and operated like a private business enterprise, which requires periodic determination of revenues earned, expenses incurred, and net income for capital maintenance, public policy, management control and accountability. The City's major enterprise funds are as follows: • Water Utility Fund accounts for operations andcapital improvements to provide water services to the City. • Sewer Utility Fund accounts for operations and capital improvements to provide sanitary sewer services to the City. • Foster Golf Course Fund is used to account for the operation, maintenance, and improvements of the municipal golf course facility. • Surface Water Utility Fund accounts for the operations and capital improvements for the City's storm drainage and surface water management function. The City has three internal service funds. The Equipment Rental Fund is used to account for the costs of maintaining and replacing at City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates charged to each user department. The Insurance and Insurance — LEOFF I Funds are used to account for the costs of the City's self-insured medical plan for active employees and retired LEOFF 1 employees respectively. Medical and dental costs for covered employees are charged to the respective user departments. All premiums, medical and dental costs and ancillary charges are included. Fiduciary Funds Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and other funds. The City has two fiduciary funds, Firemen's Pension Trust Fund and Agency Fund. The Firemen's Pension Trust Fund is accounted for in essentially the same manner as proprietary funds. The agency fund is custodial in nature (assets equal liabilities) and does not involve a measurement of results of operations. Fiduciary funds are excluded from the government -wide financial statements. 43 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS D. Measurement Focus Government -wide Financial Statements The government -wide financial statements are prepared using the economic resources measurement focus. All assets, deferred oufflow of resources, liabilities,and deferred inflow of resources associated with the operation of the City are included on the Statement of Net Position. Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, current liabilities, and deferred inflow of resources generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e.,revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the government activities of the government -wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government -wide statements and statements for governmental funds. Like the government -wide statements, all proprietary and internal service fund types are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net position. The statement of changes in activities presents increases (i.e., revenues) and decreases (i.e., expenses) in net total position. The statement of cash flows provides information about how the City finances and meets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resources measurement focus. E. Basis of Accounting Basis of accounting refers to the recognition of revenues and expenditures or expenses in the accounts and reporting them in the financial statements. Government -wide financial statements are prepared using the accrual basis of accounting. Govemmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds use the accrual basis of accounting. Revenues — Exchange and Non -Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. The modified accrual basis of accounting is followed in all governmental funds of the City. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay current liabilities. For the City, available means expected to be received within sixty (60) days of year-end. The primary accrued revenues that meet these criteria are sales, real estate, and utility taxes. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, sales and use taxes, admission taxes, gambling taxes, utility taxes, hotel/motel taxes, grants, entitlements, and donations. These revenues are on an accrual basis. On the accrual basis, the revenue is recognized in the period in which the income is earned. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. (See Note 4 on receivables). 44 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Other Revenue Sources Revenue sources which are not considered to meet the measurable and available criteria for revenue recognition include licenses and permits, fines and forfeitures, and other miscellaneous revenues since they are generally not measurable until received. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for principal and interest on general long-term debt and vacation and sick pay which are recorded when paid. As a general rule the effect of interfund activity has been eliminated from the govemment-wide financial statements via the process of consolidation. Internal service fund and similar internal activity has been eliminated from the government -wide statement of activities so expenses are not reported twice. Exceptions to this general rule are payments for interfund services provided and used, such as between the City's water, sewer, and surface water functions and various other functions of the City, which are not eliminated in the process of consolidation. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported on the govemment-wide statements as program revenues include, charges to customers or applicants for goods, operating grants and contributions, and capital grants and contributions. General revenues include all taxes. The accrual basis of accounting is followed in all proprietary funds. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. All assets and liabilities are recorded in the fund. F. Budgets and Budgetary Accounting The City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. In compliance with the code, biennial budgets are adopted for the general fund and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biennially budgeted governmental funds only. Budgets established for proprietary and fiduciary funds are "management budgets" and are not legally required to be reported and, as such, are not reported in the CAFR. The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legal authority for expenditures at that level. Subsidiary revenue and expenditure records are used to compare the budgeted amounts with actual revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for individual functions and activities by object class. Any unexpended appropriation balances lapse at the end of the biennium, The City of Tukwila's budget procedures are mandated by RCW 35A.33. The steps in the budget process are as follows: 1) Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. 2) The City Council conducts public hearings on the proposed budget in November. Public hearings are also held in December, if necessary. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve, by ordinance, any amendments that increase the total for the fund. Budget amounts presented in the financial statements include both the original amounts and the final amended budget as approved 45 CITY OF TUKWILA: 2016 CAFR . NOTES TO THE FINANCIAL STATEMENTS by the City Council. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Physical Environment Transportation Economic Development Culture and Recreation Includes all police and fire activities Includes expenditures for the public works activities not chargeable to the enterprise funds. Includes all street and arterial Street maintenance and construction. Reflects the planning and building inspection activities. Includes the parks and recreation activities. G. Assets, Liabilities, and Fund Equity Cash and Cash Equivalents The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Investments Investments are held separately by each fund with interest earned directly for the benefit of each fund. Investments are reported in the financial statements at fair value, based on quoted prices in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Washington State statutes provide for the City to hold investments consisting of obligations of the Federal Government, repurchase agreements, prime banker's acceptances, and time certificates of deposit. Additional deposit and investment information is presented in Note 2. Notes Receivable Notes receivable in the enterprise funds consists of sewer connection fees due from customers to the utility. In the governmental funds, it consists of the special assessment as well as developer agreements. The City currently has two developer agreements included in the financial statements. Amounts Due to and From Other Funds and Governments, Interfund Loans and Advances Receivable Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." As of December 31, 2016, there are no residual balances outstanding between the governmental activities and business -type activities. The non-current portion of interfund loans in the general fund and advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. See Note 4 on interfund transactions. 46 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Special Assessments Special assessments are amounts levied against benefited properties to recover costs associated with the construction of Local Improvement District (LID) projects. A lien is recorded against benefited properties until the assessment has been paid. Special assessments receivable represent all outstanding assessment amounts including current assessments billed but not collected, delinquent assessments unpaid at year-end, and special assessment amounts due in future years, which are recorded in a deferred inflow of resources account in the fund financial statements. Since special assessments are secured by liens against related properties, no allowance for uncollectible amounts is made. Inventories inventory is defined as items purchased for resale to external customers or other City departments, or supplies and small tools used in normal operations that are considered material in amount. The inventory amount on this year's financial statements reflect only those items that will be resold. The inventory is valued at average cost using the consumption method and there is a physical inventory count taken annually at year-end. Governmental funds use the purchase method whereby inventory items are considered expenditures when purchased. Real Property Held for Resale Governmental funds do not report property, plant, and equipment because such assets normally are used in operations, and therefore will never be available for spending (they are not financial assets). However, specific items of property occasionally are acquired with the intent of sale. Examples include foreclosure properties, redevelopment properties, and donated assets held for resale rather than retained for use in operations. Governments often acquire redevelopment properties to attract private -sector investment in an economically depressed area and are willing to sell the property at a price that may be far less than the government's cost to acquire andimprove the property. Since assets held for sale can never be reported at an amount higher than their net realizable value, any cost in excess of net realizable value must be excluded from the property value reported in the financial statements. The City has acquired a number of redevelopment properties in its urban renewal area along Tukwila International Boulevard. For the Tukwila Village project, property acquisition began in 1999. The City has acquired and cleared a total of 5.76 acres. In 2012 the City executed an agreement to develop and set the property and the first phase is currently under construction. As part of a crime -reduction project, the City purchased three crime -ridden motels in 2014 plus another motel and retail shop in 2015. All structures on those properties were demolished in 2016 and the vacant land will be sold for redevelopment. All redevelopment properties are reported at net realizable value in the financial statements. Deferred Outflows /Inflows of Resources Deferred outflow of resources represents a consumption of net position by the government that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. The City reports a deferred outflow related to pension and a deferred loss on refunding water/sewer bonds. Deferred inflow of resources represents an acquisition of net position by the govemment that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time The City has two items that qualify for reporting in this category. The City reports business taxes that are received in advance and a deferred inflow related to pensions. 47 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. Capital assets acquired in governmental funds are accounted for as expenditures in the fund when the asset is purchased. These assets are reported in the governmental activities column of the government - wide statement of net position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business -type activities column of the government -wide statement of net position and in the respective funds. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Where historical cost is not known, assets are recorded at estimated historical costs. Donated assets are recorded at acquisition value at time of acquisition. The City maintains a capitalization threshold of five thousand ($5,000) dollars. The City's infrastructure consists of roads, bridges, storm sewers, water and sewer distribution and collection systems. Improvements are capitalized while the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Depreciation is computed using the straight line method over estimated service lives, as follows: Buildings Non -Building Improvements Machinery and Equipment Intangibles Infrastructure See Note 6 for additional information on capital assets. Other Liabilities 25 to 50 years 25 to 50 years 2 to 50 years 2 to 50 years 25 to 50 years Other liabilities include retainage, deposits and the incurred -but -not -reported (IBNR) claims and claim reserve for the self-insured healthcare funds. The self-insurance fund for active employees includes an IBNR liability of $743,300 determined using actuarial methods. This liability is multiplied by a factor of 2.5 to meet the City's financial goal of maintaining reserves at 1 x IBNR for claim fluctuations plus 1.5 x IBNR for a claims reserve yielding a total liability of $1,858,250. The self-insurance fund for LEOFF 1 retirees includes an IBNR liability of $76,500 and total liability of $191,250 utilizing the same calculations as the active employees self-insurance fund. Compensated Absences City policy and labor contracts with City of Tukwila employees call for the accumulation of vacation and sick leave. At termination of employment, employees with the required length of service may receive cash payments for all accumulated vacation leave to a maximum of 384 hours. Sick leave termination benefits are based on a percentage of accumulated sick leave up to a maximum of 180 hours. The payment is based on current wages at termination. The entire compensated absence liability, which includes salary and wages as well as related taxes, is reported on the government -wide financial statements. In the enterprise funds, the entire amount of compensated absences is reported as a fund liability. This reporting format is in compliance with GASB Statement No. 16. The current portion reported on the schedule of long-term liabilities is calculated using the last -in -first -out (LIFO) approach. Anticipated subsequent yearly usage is used to determine the current portion of the liability. There is 48 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS no current portion to report when the anticipated leave usage is less than the anticipated leave to be accrued during the next year. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial Statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business - type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Long-term debt outstanding at year-end is outlined in Note 10. Fund Balance/Net Position A fund balance represents the difference between the current assets and current liabilities plus deferred inflows. The City restricts those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and therefore are not available for general appropriation or expenditure. Net position represents the difference between assets plus deferred outflow of resources and liabilities plus deferred inflow of resources. Net position invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the City has spent) for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The remaining balance is reported as unrestricted. In 2012 and again in 2015, the City revised the Reserve Policy which addresses the various types of the City's operating and restricted use funds. The objectives of this Policy are to establish, attain, and restore minimum fund balances, including self-insurance health care reserve funds, and specified review and reporting of fund balances. At the close of each fiscal year, the General Fund balance shall equal or exceed 18%, and the Contingency Reserve Fund balance shall each equal or exceed 10%, of the previous year General Fund revenue, exclusive of significant non-operating, non-recurring revenues such as real estate sales or transfers in from other funds. Additionally, 10 of the previous year one-time revenues shall be set aside in a one-time revenue reserve within the Contingency Reserve fund. Enterprise funds, at the close of each fiscal year, the unrestricted fund balance shall equal or exceed 20% of the previous year revenue, exclusive of non-operating, non-recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. The City shall maintain a reserve balance in each of its self-insured health care funds an amount equal to 2.5 times or 250%, of the actuarially determined IBNR liability. Fund Balance Components The fund balance amounts for govemmental funds have been classified in accordance with GASB Statement No. 54 and are reported as nonspendable, restricted, committed, assigned or unassigned. 49 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS • Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts, long-term portion of loans/notes receivable, or property held for resale unless the proceeds are restricted, committed or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. The general fund's nonspendable fund balance of $1.1 million is the outstanding balance of a loan from the general fund to the Tukwila Metropolitan Park District. The facilities fund, reported in the Other Governmental Funds column in the balance sheet, has a nonspendable fund balance of $7.65 million representing real property held for resale. At this time, there is no constraint on how the eventual proceeds will be spent. • Restricted fund balances have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation_ • Committed fund balances can be used only for specific purposes pursuant to constraints imposed by a formal action in the form of ordinances and resolutions of Tukwila Councilmembers, the City's highest level of decision-making authority. This formal action is the passage of an ordinance by City Council creating, modifying, or rescinding an appropriation. These committed amounts cannot be used for any other purpose unless Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose, but are neither restricted nor committed. Assigned also includes a contingency balance authorized via the City's Reserve Fund Balance policy. Intent of use and authority to assign amounts is determined through the budgetary process, either during adoption or amending, and the Finance Director has final authority. • Unassigned fund balance is the residual amount not included in the four categories described above. Also, any deficit fundbalances within the other governmental fund types are reported as unassigned. Each fund has been analyzed to classify the fund balance in accordance with GASB Statement No. 54. Funds are created by the City Council and money is authorized to be transferred to the fund for a particular purpose. At this point, balances in these funds are at least committed, and may be further restricted depending on whether there is an external party, constitutional provision, or enabling legislation constraint involved. The City applies restricted resources first when an expense is incurred for purposes of which both restricted and unrestricted net position is available in the governmental funds. When expenditures are incurred for purposes, for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications can be used, itis the City's policy to spend committed resources first, the assigned second, followed by unassigned. Operating Revenues and Expenses Operating revenues are generated directly from the primary activity of the proprietary funds. For the City, these revenues are service fees for utilities, charges for services for the use of the golf course and the internal use of vehicles, computers, and facilities. Operating expenses are necessary costs incurred to provide the good or service that are the primary activity of each fund. All other revenues and expenses are classified as non-operating including investment earnings, interest expense and the gain or loss on the disposition of capital assets. Contributions of Capital Contributions of capital in proprietary fund financial statement arise from outside contributions of capital assets, for example, developers, and grants or outside contributions of resources restricted to capital acquisition and construction. It also includes water and sewer connection charges. 50 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Indirect Cost Allocation Indirect costs, also referred to as overhead costs, consist of the cost of central services or support functions shared across departments. They include accounting, human resources, payroll, information technology, janitorial services, and others. These services are paid through the general fund and charged back to the proprietary funds that directly benefit from them. In prior years, the indirect costs allocated to the proprietary funds were recorded as a transfer out of the proprietary funds and a transfer in to the general fund. Pursuant to guidance by the Washington State Auditor's Office, Budgeting, Accounting, and Reporting System (BARS), the indirect costs allocated to the proprietary and other funds of $2,233,476 for 2016 are reported as a reduction of general government expenditures on the Statement of Activities rather than as transfers in and transfers out. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. On the government -wide statement of activities, the exchange transactions between the intemal service funds and the user funds are eliminated. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses section in proprietary funds. Transfers between governmental and business -type activities on the govemment-wide statement of activities are reported separately after general revenues. Transfers between funds reported in the governmental activities column are eliminated. Transfers between funds reported in the business type activities column are eliminated. Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Risk Management It is the City of Tukwila's policy to self -insure for unemployment benefits because of the insignificant liability. Medical and dental self-insurance coverage is also provided for employees. All buildings, City equipment, and City vehicles are insured by carriers for property coverage at replacement value. The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA) as of January 1, 1984. WCIA is an organization of Washington entities numbering 168 as of December 31, 2016. WCIA provides pooled self- insurance coverage for general liability, vehicle liability, false arrest, and errors and omissions. See Note 13 for additional information on risk management. H. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans' fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. I. Changes in Reporting Effective for fiscal year 2016 reporting, the City adopted the following new standard issued by the Governmental Accounting Standards Board (GASB): 51 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS GASB Statement No. 72 Fair Value Measurement and Application, defines fair value and provides guidance for determining a fair value measurement for financial reporting purposes. NOTE 2 —DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool available for use by all funds. Interest eamed on pooled investments is recorded in the participating funds. Investments are also held separately by several of the funds, with interest earned directly for the benefit of each fund. Cash and Cash Equivalents Custodial credit risk is the risk associated with the failure of a depository financial institution. In the event of a depository financial institution's failure, it is the risk that the City would not be able to recover its deposits or collateralized securities that are in the possession of the outside parties. The City minimizes custodial credit risk by following the restrictions set forth in state law. At year-end, the carrying amount of the City's cash balance held in banks was $25,841,328. Of the bank balance, $250,000 was covered by Federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) insured the remainder. The City also maintains imprest funds totaling $14,950. The City participates in the State Treasurer's Investment Pool, which is a 2a7 -like unrated pool, overseen by the State Treasurer's Office. A 2a7 -like -pool is an external investment pool that is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC -registered mutual funds to use amortized cost, which approximates fair value, to report net assets and compute share prices. The fair value of the City's position in the pool is the same as the value of the pool shares. Because of its highly liquid nature, the Pool funds are considered cash equivalents. Investments The City's investment portfolio includes certificate of deposits insured by the Washington State Public Depository Commission, U.S. Govemment Agency Notes, and municipal bonds issued by state and local agencies. These investments are reported at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Also, the Firemen's Pension Fund is authorized to invest in stocks, bonds, and mutual funds. 52 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS At December 31, 2016, the City had the following deposits and investments. Certificates of deposits are measured at amortized cost, agencies and municipal bonds are measured at fair value. SCHEDULE OF INVESTMENTS BY MATURITY Maturity Credit Fair Value. Certificates of Deposit: Sound Community Bank Bank of Washington Total Certificate of Deposits U.S. Government Agency Notes: Federal Home Loan Mtg Corp Federal Home Loan Mtg Corp Federal Fern Credit Bank Federal Farm Credit Bank Total U.S. Agency Notes Municipal Bonds: Washington State Biomedical Research: Revenue - Facilities Marysville Washington: Limited General Obligation Skagit County, Washington: Limited General Obligation Washington State Biomedical Research:Revenue - Facilities Port of Anacortes, Washington: Limited General Obligation Douglas County School District, Washington: Unlimited General Obligation Total Municipal Bonds TOTAL iNWESTMENTS .. 3/4/2017 5/1/2016 5/26/2017 5/25/2018 12/21/2018 12/27/2019 7/1/2017 12/1/2017 12/1/2017 7/1/2019 9/1/2020 12/1/2020 Aaa / AA+ Aaa / AA+ Aaa / AA+ Aaa / AA+ Aa1/ AA+ Aa2 Aa2 Aa1 / AA+ Aa3 Aa1 $ 3.201,903 250,000 3.451,903 1,000,508 996,086 1,000015 1,000,203 3.996,812 507,915 155,138 370,490 537,765 357,986 1,221,237 3.150,530 10,599,245 ' No credit rating with certificate of deposit accounts; accounts are insured by the Public Depository Protection Commission. 53 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS RECONCILIATION OF ALL CASH, DEPOSITS AND INVESTMENTS At2Y BY FUN CASH 8 CASH, RBS3RiCTEO_ S EduNALENTS,,'..-yCASH' . 'INWESTMEI RESTRICTED 1Nu'€S7tuIENTS, TOTAL Governmental Funds General Fund $ 12.278557 $ 8,406 $ 3,053.018 $ Arterial Street 1,667,647 2,371.097 - Local Improvement District 533 898,722 Public Safety Plan 114,324 35,503,363 - Facilities Urban Renewal - - Other Governmental Funds 6.542,203 503.475 - Proprietary Funds Water 4.991,515 35.830 2,134,587 Sewer 6.938.662 - 507.915 Foster Golf Course 723,484 57.177 Surface Water 3.333,787 Internal Service Funds 6,314,728 Total as Reported on Statement of Net Position Firemen's Pension Trust Fund Agency Fund Total Gash, Gash tadta lehis 2,903.014 1,000.203 $ 15.339,981 4.038,744 898,722 36,617,890 7.045.678 7,161, 933 7,446.577 780,662 3,333.787 9,217.744 43.803 631 38.479,349 8,598.534 1.000,203 91,881 717 427,867 201,739 1,000 508 1,428.375 201.739 43:$03831 :$ a,;ide956..$x:. s, 1;000 203 5,,, 93,511,831 ,SSUMMARY BY YYPE', ; Cash and Cash Equivalents: Local Government Investment Pool Money market account Cash on hand Cash in bank -book balance Total cash and cash equivalents Investments: Certificates of deposit U.S. Government Agency Notes Municipal bonds Total investments Total cash, Cateh Eiquisalents,"and Investments $ _P ;5511�i $ 43,001,758 14,219,309 14,950 25,676,569 82,912,586 3,451,903 3,996,812 3,150,530 10,599,245 54 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Restricted Assets - Governmental Cash & cash equivalents Deposits Drug Seizure funds - federal portion Debt Service Impact fees Investments Restricted Assets-GovemmentaI $ 35,503,363 8.406 503,475 2,213,705 157,392 1,000,203 $ 39,388 544'.. Restnoted Assets - Business4Type Customer Deposits -Water Utility $ 35,830 Customer Deposits -Golf Course 42,177 Lease Deposits -Golf Course 15000 Restricted Assets -Business -Type $,� 93,407= Total Restricted Assets $ 39,479,552 Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. These valuation inputs are considered most reliable. • Level 2 inputs are quoted prices for similar assets, quoted prices for identical or similar assets in markets that are not active, or other observables. These valuation inputs are considered to be reliable. Level 3 inputs are significant unobservable inputs and are considered to be the least reliable. The City has the following recurring fair value measurements as of December 31, 2016: Fair Value Measurements Using Investments by Fair Value Level Total US Government Agencies $ 3,996,812 Municipal Bonds 3,150,530 Quoted Prices in Active Significant Markets for Other Identical Observeble Assets Inputs (Level 1) (Level 2) $ 3,996.812 $ - 3,150,530 Significant Unobservable Inputs (Level 3) Total lavaatmenta by Fair Value Level ' $ : 7,147,342, $ , 3,998,812 $ 3,150,530 $ 55 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits at least half of the City's cash and investment portfolio to maturities of less than one year. Investment maturities are limited as follows: 1) At the time of investment, a minimum of thirty percent (30%) of the cash and investment portfolio will be comprised of investments maturing or available within one year. 2) At the time of investment, eighty percent (80%) of the portfolio will be comprised of investments maturing or available within five (5) years and no instruments shall have a maturity exceeding ten (10) years, except when compatible with a specific fund's investment needs. 3) The average maturity of the portfolio shall not exceed three and one half (314) years or forty-two (42) months. The City uses the weighted average maturity method to manage interest rate risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes and the City's investment policy limit the types of securities authorized for investment by the City. The principal governing statutes are RCW 39.59 and RCW 39.60. The Finance Director may further restrict eligible investments by this policy at his/her discretion. Authorized investments include (but are not limited to): 1) U.S. Treasury Securities. 2) U.S. Agency Securities (i.e., obligations of any government-sponsored corporation eligible for collateral purposes at the Federal Reserve). 3) Certificates of Deposit, Money Market Deposit Accounts and savings deposits with qualified depositories within statutory limits as promulgated by the WPDPC at the time of investment. 4) Bankers Acceptances (BA's) purchased on the secondary market with a rating of A-1, P-1, its equivalent or better. 5) General Obligation Bonds of a state or local government which have at the time of the investment one of the three highest credit ratings of a nationally -recognized rating agency. 6) The Washington State Local Govemment Investment Pool (LGIP). As of December 31, 2016, the City's investments in municipal bonds were rated Aaa to Aa3 by Moody's Investor Service. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City of Tukwila diversifies its investments Dy security type and institution as described below: 1) No more than fifty percent (50%) of the City's cash and investment portfolio, at the time of purchase, shall be in any single financial institution. 2) Except, that no more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in the Washington State Local Government Investment Pool, and 56 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL. STATEMENTS 3) No more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in U.S. Treasury or Agency securities. NOTE 3 — RECEIVABLES Taxes receivable consists of property, sales and use, gambling, leasehold, and hotel/motel taxes. Customer accounts receivable consists of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial and the direct write-off method is used. Customer accounts receivable also includes the current portion of special assessments due from property owners within Local Improvement District No. 33. Other types of accounts receivable include utility taxes due from private organizations and customer accounts receivable for amounts owed which billings have not been prepared. GOVemmental Business-1ype Acthtties ActiNties Totai Taxes Receivable Property Sales & Use Real Estate Excise Tax Utility Tax Admission/Gambling/Parking/Other Total Taxes Receivable $ 198,515 $ 3,639,652 986,711 757,438 1,225,290 6,807,605 $ 198,515 3,639,652 986,711 757,438 836 1,226,126 836 6,808,442 Customer Receivable Miscellaneous 167,097 2,582 Utility Accounts - 1,664,695 Total Customer Receivable Interest Notes due within one year Total Receivables Property Taxes Receivable 169,678 1,664,695 167,097 1,667,277 1,834,373 44,695 10,740 206,920 - 55,435 206,920 .$ 7,229,317; $ 1,678,853 S :6,905 170.:; The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Collections are distributed daily via wire transfer. January 10 February 140 April 300 May 310 October 310 Property Tax Calendar Taxes are levied and become an enforceable lien against properties. Tax bills are mailed. First of two equal installment payments is due. If taxes are less than $50, full payment is due. (RCW 84.56.020) Assessed value of property established for next year's levy at 100 percent of market value. Second installment is due. (RCW84.56.020) Assessed values are established by the County Assessor at 100% of fair market value. A revaluation of all property is required every two years. On May 31 of each year the assessed value of property is established for the next year's property tax levy. 57 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Property taxes levied by the County Assessor and collected by the County treasurer become a lien on the first day of the levy year and may be paid in two equal installments if the total amount is $50 or more. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. During the year, property tax revenues are recognized when cash is received. At year-end, unpaid property taxes are recorded as a receivable. Property tax receivables at year-end not expected to be collected within 60 days after the current period are reported as other unavailable revenue in the deferred inflow of resources section of the governmental funds financial statements. The tax rate for general City operations is limited to $3.60 per $1,000 of assessed value. An additional levy rate of $0.225 is available to the City because the City funds a Firemen's Pension Fund. The payment of principal and interest on limited tax (non -voted) bonds issued by the City is made from the general levy. Accordingly, the issuance of limited tax general obligation bonds has the effect of reducing property taxes available for the general operations of City government. State law also provides that the City's operating levy may not exceed 101% of the largest single levy since 1985. The State Constitution provides that the total of all taxes upon real and personal property by the State and all taxing entities, including the City, shall not in any year exceed 1% ($10 per 51,000) of the true and fair monetary value of such property. This limitation may be exceeded upon the approval of 60% of the City voters at an election in which the total vote exceeds 40% of the votes cast at the last general election. Washington State Constitution and Washington State law, RCW 84.55.010, limit the rate. The City's regular levy in 2016 was 52.710173 per $1,000 of assessed valuation of $5,736,568,228 for a total regular levy of $14,592,910. Due from Other Governments All receivables from other governments are recorded at year-end as amounts Due from Other Govemmental Units. These amounts represent federal, state, and local reimbursement -type grants, and are reported as receivables and intergovernmental revenues in the year when the related expenditures are incurred. As of December 31, 2016, the majority represents grants. Notes Receivable Notes receivable for governmental activities consists of the long-term portion of the special assessments related to Local Improvement District (LID) No. 33. Special assessments are levied against certain property owners benefited by the improvement. The current portion of outstanding assessments is reported in the receivables category on the Statement of Net Position and consists of assessments which are due within one year and delinquent assessments from the prior year. Assessments are charged to property owners within the LID annually with payments due in October of each year. The repayment period for the assessments is 15 years with the first installment due in 2014 and the final installment due in 2028. The other note receivable category is related to developer agreements. There are three agreements with local developers to defer fire, parks and traffic impact fees, along with building permit fees as part of new, large construction projects. The first agreement defers the developer's obligation to pay the building permit fee on the Washington Place project until 2017. The second agreement, also related to the Washington Place project, defers the developer's obligation to pay traffic, park, and fire impact fees until 2018. Finally, the third agreement is for the Tukwila South project which defers $1.75 million in fire impact fees, with annual payments due each December from 2017 through 2031. Notes receivable for business—type activities consists of outstanding payment plans for sewer connection fees. The City designed and constructed sewer infrastructure in both the Allentown and Foster Point neighborhoods, which was previously on septic. The project was completed and accepted by City Council in 2007. The connection fees to be paid by property owners were established by ordinance, effective in August, 2007. One option given to 58 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS property owners was an installment payment plan. This option allowed owners to sign an agreement to have the connection charge added to their monthly water bill and repaid over 5, 10, or 15 years with a 4% annual interest rate. The balance reflects all principal outstanding at year-end. Go ernmental Business -Type y� Activities Activities ,f0 Notes Receivable Special Assessments Developer Agreements Sewer Payment Plan Total Receivables NOTE 4 - INTERFUND TRANSACTIONS $ 4,794,009 $ 3,929,907 - $ 4,794,009 3,929,907 221.035 221,035 8,723,916 ,$ 221,,035. $ .5,944,951 Interfund activity is the term used to describe similar financial transactions between funds of the primary government. Reciprocal interfund activity involves the exchange of equal or almost equal value between funds. Services Provided/Used — Transactions that would be treated as revenues, expenditures or expenses if they involve external organizations, such as buying goods and services in return for equal or almost equal value, are similarly treated when they involve other funds of the City of Tukwila. Interfund Loans/Advances — Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans are offset by a reservation of fund equity. Interfund loans are subject to elimination upon consolidation. As of December 31, 2016, the City has no outstanding interfund loans or advances. Nonreciprocal interfund activity does not involve the exchange of equal or almost equal value between funds. Transfers — Transactions to support the operations of other funds are recorded as "Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government -wide financial statements. Contributions — Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers of remaining balances when funds are closed are classified non-operating revenue. Reimbursements — Repayments from funds responsible for expenditures or expenses to the funds that initially paid for them. These transactions are expenditures/expense in thefund responsible and as a reduction of expenditure/expensed in the fund being reimbursed. 59 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Interfund transfers for the year were as follows: SUMMARY OF INTERFUND TRANSFERS hr Govemmental Fund Artenal ;,Other GoVt Total Funds" ' '„t3avt3ttihief Proprietary Funds aL .. - ` Course' TOTA Net Transfers; 1 (Put) 751,000 $ 3,274,831 $ 4,025,831 $ 300,000 $ 4.325,831 (4,325,831) - (4,325,831) (4,325,831): ,$> 751.000. $ ,274,831 :$,,. ',(300,000) $ (4,325,831) The principal purposes for interfund transfers include interfund subsidies and transfers into debt service and capital projects funds. NOTE 6 — OPERATING LEASES During 2016 the City maintained operating lease agreements for City operated machinery and equipment. Tukwila leases office/ storage space for the purposes of the Records Center, Police Archives Storage, Police Gym, and the Neighborhood Resource Center. In addition the City leased a postage machine and copiers during 2016. Costs associated with these activities are as follows. SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS Records Center' Neighborhood Resource Center 2 Police ArchivesNehicle Storage Police Department Gym Postage Machines Office Equipment 29,400 21.300 55,752 14.652 6,948 50,600 10,800 57,424 15,091 6,948 49,947 59,144 15,542 4,055 33,262 60,916 16,012 16,863 58,652 1 6,780 1 'Leasing of the Records Center expires on 5/31/2017. The tenant is responsible for the cost of utitiies and maintenance of building, which is estimated, based on square footage and reconciled annually by the lessor. 2 Leasing of the Neighborhood Resource Center expires on 6/30/2017. 60 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 6 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2016, was as follows: GOVERNMENTAL ACTIVITIES BEGINNING BALANCE 1/1/2016 INC ENDING' BALANCE'i EASES, DECREASES; '_12/31/2016'' Governmental Activities Capital assets. not being depreciated: Land Construction in Progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Other Improvements Machinery and Equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for Buildings Other Improvements Machinery and Equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated. net Go6emmental activity capitol assets, net $ , 205,616,154 $ 24,084,986 $;(23,753,814);. $ 35,312,814 $ 185,766 $ - $ 35,498,580 26,133,182 7,612,974 (23,681,457) 10,064,699 61,445,996 7,798,740 (23,681,457) 45,563,279 22,671,409 18,064,032 20,641,332 173,864,754 1,759,932 5.290.289 1,674,523 15.545,969 24,431,341 23,354,321 (820,820) 21,495,035 189,410,723 235,241,527 24,270,713 (820,820) 258,691,420 (11,959,413) (12,130,873) (13,829,857) (52,951,226) (637.782) (595,429) (1,302,447) (5,348,809) (12, 597,195) (12,826,302) 748,363 (14,383,941) (58,300.035) (90,871,369) (7,984,467) 748,363 (98,107,473) 144.370.158 16,286,246 (72,457) 160,583,947 106,147,226 61 CITY OF TUKWILA' 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS BUSINESS -TYPE ACTIVITIES Business -Type Activities Capital assets, not being depreciated: Land Construction in Progress Total capital assets. not being depreciated Capital assets, being depreciated: Buildings Other Improvements Machinery and Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Other Improvements Machinery and Equipment BEGINNING,. BALANCE.;: 1/1/2016 ENDING BALANCE NCREASES DECREASES 12/31/2016 $ 2.346,230 $ - $ - $ 2,346,230 7,247,963 2,737,449 (7,774,182) 2,211,229 9,594,193 2,737,449 (7,774,182) 4,557,459 13.284,419 80,641,041 2,189,468 7,.743,350 24,164 (219,743) (39,001) 13,284,419 88,164,649 2,174,631 96.114,928 7,767,514 (258,744) 103,623,698 (4.605,392) (32,495,706) (1,781,937) (371,794) (1,718,780) (48,312) Total accumulated depreciation Total capital assets, being depreciated, net Business -Type activity capital assets, net $ (38,883,035) 57.231,895 66,826;088 $ $ (2.138,886) 5,628,630 208,677 41,730 250,407 (4,977,186) (34,005,809) (1,788,518) (8,337) 9;366,078 $ (7,7826113 (40,771,513) 62,852,187 37 409,046 62 CITY OF TUKWILA 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS DEPRECIATION Deprecia0on expense for 2016 vias charged to functions/programs: as Governmental Activities General Goeemment $ 255,007 Public Safety 152,172 Physical Environment 688,014 Transportation 5,379,671 Economic Environment 2,907 Culture and Recreation 707,260 Capital assets held by the goeemment's internal service funds are charged to the venous functions based on their usage of the assets 799,436 Total 2016 depreciation expense:- governmental 800011ies $ 7,984,467... Business -type activities , } Water Utility $ 526,817 Sewer Utility 370,312 Foster Golf Course 327,513 Surface Water Utility 914,244 Total 2019 depreciation e8Pense = basintypeabe e $ ;2,;13$ 886: NOTE 7 —JOINT VENTURES A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest. or (b) an on-going financial responsibility. The City participates in two joint ventures. A summary of the City's investment in joint ventures follows. SUMMARY OF INVESTMENT IN JOINT VENTURES Equity in Equity in Capital Assets TOTAL Operations financed by Outstanding ,- Investment in Debt Joint Ventures Valley Com $ 2,391,872 $ - SCORE 703,323 6,093,600 $ 2,391,872 6,796,923 TOTAL $ 3,095,195 $ 6.093,600 $ 9,188,795 Valley Communications Center The "Valley Communications Center" was established. August 20, 1976, when an Interlocal Agreement was entered into by the four original participating municipal corporations, including the cities of Renton, Kent, Aubum, and 63 CITY OF TUKWILA.- 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Tukwila. Federal Way was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies. Separate agreements between Valley Corn and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The allocation of prorated financial participation among the five participating cities is the percentage of estimated dispatched calls attributed to each jurisdiction comparedto the total estimated dispatched callsfor the current 12 -month period ending December 31. The 2016 cost distribution for the five (5) participating citiesis as follows: City,. . Diispatchable , coils: .''` . Percent 00 .Total'..` Renton 86,799 20.28% Kent 114,769 26.81% Aubum 96,406 22.52% Tukwila 37,375 8.73% Federal Way 92,658 21.65. .�, Total . ': 428,007 ' 10(1,00%, Valley Com is governed by an Administration Board composed of the Mayors from the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Board is responsible for the following functions: (1) Adopting an annual budget after review by participating legislative bodies; (2) Appointment and/or discharge of the Director; (3) Approves personnel policy and makes final decisions on all major policy changes; (4) Reviews and approves all contracts. In addition, an Operating Board was established and consists of two members of each participating City's Public Safety Departments, including the heads of such departments or their designees. The Operating Board performs the following functions: (1) Oversees the operation of Valley Com and advises and makes recommendations to the Administration Board; (2) Makes recommendation on Director selection; (3) Presents proposed policies and budgets to the Administration Board; (4) Approves disbursement of funds by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. The proposed budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each participating city, in accordance with the provisions of the Interlocal Agreement. The share of equity belonging to the five (5) participating cities is as follows: 1TEI ON AUBURN ILA'. ERAL t°TA Equity January 1, 2016 Current Year lncreasel(Decr Equity December 31, 2016 percent ut Equity $ 3,944,879 586.665 $ 4,531,544 $ 5.538,893 775,712 $6,314.605 $3,853,230 651,598 $4 504,828 $2 139.261 252,611 52,391,872 $ 2,858,305 626,263 $ 3.484, 568 $18,334.568 2,892,848 $2 227.416 2 35% 7 122 00% Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. In August 1993, Valley Corn entered into art interlocal cooperation agreement, pursuant to RCW 39.34 RCW, with the sub- regions of King County, Seattle, and the Eastside Public Safety Communications Agency. This agreement governs 64 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS the development, acquisition and installation of the 800 MHz emergency radio communications system funded by a $57 million King County levy approved in November 1992. This agreement provides that upon voluntary termination of any sub -region's participation in the system, it surrenders its radio frequencies, relinquishes its equipment and transfers any unexpended levy proceeds and associated equipment replacement reserves to another sub -region or consortium of sub -regions. Thus, in accordance with this agreement, the participating cities of Valley Com have no equity interest in Valley Com's 800 -MHz communications system. During 2000, the Valley Communications Center Development Authority was created to issue $12,758,000 in General Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each of the five participating cities was responsible for one-fifth of the debt obligation, which originally was $2,551,600 per City. The basic agreement shall not be terminated until all bonds issued by Valley Communications Center Development Authority have been paid and retired. The final payment on the bonds was made in 2015. A complete set of financial statements are available from Valley Communications Center, 27519 108th Ave SE, Kent, WA 98030, or by telephone 253-372-1300. South Correctional Entity (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpected funds or reserve funds shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE, a governmental administrative agency pursuant to RCW 39.34.030(3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility was provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755. The SCORE PDA issued $86 million in special obligation bonds in 2009 (the "Bonds") to construct, develop, acquire and equip the SCORE Facility. Pursuant to the Formation Interlocal Agreement and the ordinances of each city, each Owner City (which includes the Cities of Auburn, Burien, Federal Way, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the principal of and interest On the Bonds as the same become due and payable. Each Owner City's obligation to pay its portion is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. The following is a summary of the debt service requirements for the Bonds: 55 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS SUMMARY OF DEBT SERVICE REQUIREMENTS dwe DOA .8e574 Aiooafia 3o (Meier: YOal. . dadclpal ; Intelsat ,; 3q)67 .Tot41--'U1%.` %0 ..,881. '..3691 3%. 2017 $ 2.145.000 $ 4,820.241 $ (1510,874) $ 5,454,367 $ 1690,854 $ 218,175 $ 981,786 $ 1,963 572 $ 163.631 $ 436.349 2018 2.240.000 4,715.979 (1.510,063) 5,445,916 1,688.234 217.837 980,265 1,960,529 163,377 435,674 2019 2.310,000 4.602,229 (1473.568) 5.438,661 1.685,985 217.546 978.959 1,957,918 163,160 435,093 2020 2,385,000 4,484854 (1435.933) 5.433,921 1,684516 217,357 978.106 1.956,212 163,018 434,714 2021 2,465,000 4,363 604 (1.397.075) 5.431,529 1,683,774 217.261 977.675 1.955,350 162,946 434,522 2022-2026 13,945.000 19,586,127 (6,994,733) 26,536,394 8,226,282 1,061,456 4,776 551 9,553,102 796,092 2,122,912 2027-2031 17,010.000 14,723.464 (5.346.730) 26 386,734 8.179.888 1055,470 4,749 612 9,499,224 791,602 2,110.939 2032-2036 20.955000 8,498.417 (3 217,063) 26,236,354 8.133,270 1.049.454 4,722 544 9,445.087 787,091 2098,908 2037.2040 14,860,000 1,502,494 (697922) 15,664,572 4,856.017 626,583 2,819623 5,639,246 469,937 1253,166 T01.88 -578415,996 <35T297.408 4125:583951), 5~922.028,446 5;27928,$20 38. ;52$11 lag 54# 102 i„ X3608854 54:.881.1 The City of Tukwila reports its share of equity interest in the Governmental Activities column within the Government- _ wide financial statements under assets. The following is condensed (unaudited) financial information as of December 31, 2016 related to SCORE. The share of equity belonging to the seven participating cities are as follows D AUBUFlH' .SUMO! `�065501NE5 FEWAYERAL' RIENTON ;.SAC •TUKWILA TOTAL Equity January 1, 2016 Current Year Increase/(Decrease) Equity December 31. 2016 Percent of Equhy $ 3,331,776 $ (216,443) $ 3.115,334 $ 376 841 $ 197,267 $ 2620.575 $ 3.222.670 3 498.467 $ 788 541 $11,036.137 (52,239) (30,684) (328310) (281.167) (64,438) (85,218) (1,058,499) 324.602 $ 106,583 52,292,265 5 2941.503 S 434.029 $ 703.323 $ 9977638 31,2296 3.25% 1,6710 22,9710 29.4610 4.35% 7,0510 100,00% The investment in joint venture for SCORE on the Statement of Net Position includes Tukwila's share of debt issued in 2009. The City's share of SCORE debt is $6,093,600. See Note 10 for additional information on long-term debt. Completed financial statements for SCORE and SCORE PDA can be obtained from the SCORE, Attn: Finance Manager, 20817 17th Avenue South, Des Moines, WA 98198. NOTE 8 — PENSION PLANS The following table represents the aggregate pension amounts for all plans subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2016: Aggregate Pension Am6ante -All Pians; Pension liabilities $ (15,483,180) Pension assets $ 3,772,659 Deferred outflows of resources $ 4,733,197 Deferred inflows of resources $ (642,177) Pension expense/expenditures $ 2,166,724 Washington State Department of Retirement Systems Substantially all City of Tukwila full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple -employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. 66 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380, Olympia, WA 98504-8380 Or the DRS CAFR may be downloaded from the DRS website at www.drs.wa.aov. A. Public Employees Retirement System (PERS) Plans 1, 2, and 3 PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments;. and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service. The AFC is the average of the member's 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of -living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 requiredcontribution rates (expressed as a percentage of covered payroll) for 2016 were as follows: PERS Plan i Actual Contribution Rates: Employer Employee* PERS Plan 1 6.23% 6.00 % PERS Plan 1 UAAL 4.77% Administrative Fee 0 18% Total 11.18 % 6.00 % The City of Tukwila did not contribute to PERS Plan 1 in 2016 as there are no employees covered under this plan. Although, $752,418 of the PERS 2/3 contributions were allocated to the PERS 1 unfunded actuarial accrued liability (UAAL). PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member's 60 highest-paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least 67 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 213 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the definedbenefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows: PERS Plan 2/3 Actual Contribution Rates: Employer 2/3 Employee 2 PERS Plan 2/3 6.23% 6.12°! PERS Plan 1 UAAL 4 77% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 11.18% 6.12% The City of Tukwila actual contributions to the plan were $972,612 for the year ended December 31, 2016 Public Safety Employees' Retirement System (PSERS) PSERS Plan 2 was created by the 2004 Legislature and became effective July 1, 2006. To be eligible for membership, an employee must work on a full time basis and: • Have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job; or • Have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or 68 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS • Function as a limited authority Washington peace officer, as defined in RCW 10.93.020' or • Have primary responsibility to supervise eligible members who meet the above criteria. PSERS membership includes: • PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who met at least one of the PSERS eligibility criteria and elected membership during the period of July 1, 2006 to September 30 2006; and Employees hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. PSERS covered employers include: • Certain State of Washington agencies (Department of Corrections, Department of Natural Resources, Gambling commission, Liquor Control Board, Parks and Recreation Commission, and Washington State Patrol), • Washington State Counties, Washington State Cities (except for Seattle, Spokane, and Tacoma), • Correctional entities formed by PSERS employers under the Interlocal Cooperation Act. PSERS Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the average final compensation (AFC) for each year of service. The AFC is based on the member's 60 consecutive highest creditable months of service. Benefits are actuarially reduced for each year that the member's age is less than 60 (with ten or more service credit years in PSERS), or less than 65 (with fewer than ten service credit years). There is no cap on years of service credit. Members are eligible for retirement at the age of 65 with five years of service; or at the age of 60 with at least ten years of PSERS service credit; or at age 53 with 20 years of service. Retirement before age 60 is considered an early retirement. PSERS members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. PSERS Plan 2 retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PSERS Plan 2 members are vested after completing five years of eligible service. Contributions The PSERS Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The Plan 2 employer rates include components to address the PERS Plan 1 unfunded actuarial accrued liability and administrative expense currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates. 69 CITY OF TUKWILA2016 CAFR NOTES TO THE FINANCIAL STATEMENTS The PSERS Plan 2 required contribution rates (expressed as a percentage of current -year covered payroll) for 2016 were as follows: PSERS Plan 2, .. Actual Contribution Rates: Employer Employee PSERS Plant 6 59% 6 59% PERS Plan 1 UAAL 4.77% Administrative Fee 0.18% Totals 11.54% 6.59% The City of Tukwila actual contributions to the plan were $18,635 for the year ended December 31, 2016 Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows: • 20+ years of service — 2.0% of FAS • 10-19 years of service — 1.5% of FAS • 5-9 years of service — 1./o of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non -duty disability payments, a cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2016. Employers paid only the administrative expense 010.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. 70 CITY OF TUKWILA'. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows: . LEOF 011011:- Ali ton .. et rn Arfth l 1� •' Actual Contribution Rates: Employer Employee State and local govemments 5.05 % 8.41 % Administrative Fee 0.18% 5.80% Total 5.23 % 8.41 % The City of Tukwila actual contributions to the plan were $815,165 for the year ended December 31, 2016 The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2016, the state contributed $60,375,158 to LEOFF Plan 2. The amount recognized by the City of Tukwila as its proportionate share of this amount is $509,312. Actuarial Assumptions The total pension liability. (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2016 with a valuation date of June 30, 2015. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2007-2012 Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2015 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2016. Plan liabilities were rolled forward from June 30, 2015, to June 30, 2016, reflecting each plan's normal cost (using the entry -age cost method), assumed interest and actual benefit payments. • Inflation: 3.0% total economic inflation; 3.75% salary inflation • Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are also expected to grow by promotions and longevity. • Investment rate of return: 7.5% Mortality rates were based on the RP -2000 report's Combined Healthy Table and Combined Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime. There were minor changes in methods and assumptions since the last valuation. • For all systems, except LEOFF Plan 2, the assumed valuation interest rate was lowered from 7.8% to 7.7%. Assumed administrative factors were updated. • Valuation software was corrected on how the nonduty disability benefits for LEOFF Plan 2 active members is calculated. 71 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS • New LEOFF Plan 2 benefit definitions were added within the OSA valuation software to model legislation signed into law during the 2015 legislative session. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent. To determine that rate, an asset sufficiency test included an assumed 7.7 percent long-term discount rate to determine funding liabilities for calculating future contribution rate requirements. (At plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the long-term expected rate of return, a 7.5 percent future investment rate of retum on invested assets was assumed for the test. Contributions from plan members and employers are assumed to continue being made at contractually required rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a component for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans' fiduciary net position was protected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of retum of 7.5 percent was used to determine the total liability. Long -Term Expected Rate of Return The long-term expected rate of retum on the DRS pension plan investments of 7.5 percent was determined using a building -block -method. The Washington State Investment Board (WSIB) used a best estimate of expected future rates of return (expected retums, net of pension plan investment expense, including inflation) to develop each major asset class. Those expected retums make up one component of WSIB's capital market assumptions. The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment retums at various future times. The long-term expected rate of return of 7,5 percent approximately equals the median of the simulated investment returns over a 50 -year time horizon. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2016, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB's most recent long-term estimate of broad economic inflation. Sensitivity of the Net Pension (Liability)/Asset The table below presents the City of Tukwila proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City of Tukwila proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower (6.5 percent) or 1 -percentage point higher (8.5 percent) than the current rate. 72 Ali ton .. et rn Arfth l 1� •' Fixed Income 20% 1.70% Tangible Assets 5% 4.40% Real Estate 15% 5.80% Global Equity 37% 6.60% Private Equity 23% 9.60% 100% Sensitivity of the Net Pension (Liability)/Asset The table below presents the City of Tukwila proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City of Tukwila proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower (6.5 percent) or 1 -percentage point higher (8.5 percent) than the current rate. 72 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension (Liabilities)/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2016, the City of Tukwila reported a pension asset of $3,772,659 and a pension liability of $15,463,180 for its proportionate share of the net pension liabilities as follows. 1% Decrease 6.50% ,.. Current Rate 7.50% 1% Increase 8.50% , PERS 1 8,506,811 7,054,328 5,804378 PERS 2/3 15,446,184 8,389,286 (4,367,108) PSERS 2 89,366 20,581 (28,415) FIREMENS PENSION 82,436 18,985 (26,211) LEOFF 1 (476,712) (802,490) (1,080,957) LEOFF 2 8,329,174 (2,970,169) (11,486,593) Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension (Liabilities)/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2016, the City of Tukwila reported a pension asset of $3,772,659 and a pension liability of $15,463,180 for its proportionate share of the net pension liabilities as follows. The amount of the asset reported above for LEOFF Plan 1 and 2 reflects a reduction or State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension (liability)/asset, the related State support, and the total portion of the net pension asset that was associated with the City of Tukwila were as follows: . LEOFF 1 Asset (AlisetYLIabili.ti, .: PERS 1 $ 7,054 328 PERS 2/3 $ 8,389,286 PSERS 2 $ 20,581 FIREMENS PENSION $ 18,985 LEOFF 1 $ (802,490) LEOFF 2 $ (2970,169) The amount of the asset reported above for LEOFF Plan 1 and 2 reflects a reduction or State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension (liability)/asset, the related State support, and the total portion of the net pension asset that was associated with the City of Tukwila were as follows: 73 CITY OF TUKWILA 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS . LEOFF 1 Asset LEOFF 1 - employer's proportionate share (802,490) LEOFF 1 - State's proportionate share of the net pension asset associated with the employer (5,428,021) TOTAL (6,230,511) 73 CITY OF TUKWILA 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: = LEOFF 2At ,': LEOFF 2 - employers proportionate share 2.970,169 LEOFF 2 - State's proportionate share of the net pension asset associated with the employer 1,936,334 TOTAL 4,906,503 At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: = Proportionate Wopert;ondt Share 'OHS Change rn Proportion PERS 1 0.135736% 0.131354% -0.004382% PERS 2/3 0.173592% 0.166622% -0.006970% PSERS 2 0.052748% 0.048428% -0.004320% LEOFF 1 0.077944% 0.077890 % -0.000054 LEOFF 2 0.519159% 0.510663% -0.008496°4 Employer contribution transmittals rece ved and processed by he DRS for the fiscal year ended June 30 are used as the basis for determining each employer's proportionate sha e of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemp/oyerAllocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2016. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2016, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. if the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2016, the state of Washington contributed 39.46 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.54 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2016, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2015, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2016, the city of Tukwila recognized pension expense as follows: 74 CITY OFTUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2016, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PERS pension Expense PERS 1 138.454 PERS 2/3 1,063,703 PSERS 2 14,629 LEOFF 1 (103,253) LEOFF 2 970,084 FIREMENTS PENSION 83,107 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2016, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PERS Deferred Outflows ' of Resources Deferred Inflows of. Resources Differences between expected and actual experience - - Net difference between projected and actual investment earnings on pension plan investments 177,617 - Changes of assumptions - - Changes in proportion and differences between contributions and proportionate - (328,447) Contributions subsequent to the measurement date $378,081 TOTAL $555,698 $0 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS ERS 2i3 Deferred Outflows .,; of esources � Deterred Inflows woes Differences between expected and actual experience 446,724 (276,944) Net difference between projected and actual investment earnings on pension plan investments 1,026,606 - Changes of assumptions 86,710 - Changes in proportion and differences between contributions and proportionate share of contributions - (328,447) Contributions subsequent to the measurement date 488,726 TOTAL 2,048,765 (605,390) CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS P$E2 ,. Deferred Outflows of Resources , Deferredlntlows ° ' of Resources ,. Differences between expected and actual experience 7,010 - Net difference between projected and actual investment earnings on pension plan investments 4,245 - Changes of assumptions 80 - Changes in proportion and differences between contributions and proportionate share of contributions - (496) Contributions subsequent to the measurement date 5,372 TOTAL 16,707 (496) 6EOFr?f Deferred Outflows : Of Resources ,' 4 Deferred Inflows`_; - Of Resources . ,: Differences between expected and actual experience - - Net difference between projected and actual investment earnings on pension plan investments 81,572 - Changes of assumptions - - Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date TOTAL 81,572 - 77 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended D9cer ber31 ferred Outflows of Resources � Deferred inflows �' of Resources Differences between expected and actual experience 406,993 - Net difference between projected and actual investment earnings on pension plan investments 1,067,301 - Changes of assumptions 11,199 - Changes in proportion and differences between contributions and proportionate share of contributions 57,284 (36,291) Contributions subsequent to the measurement date 404,571. TOTAL 1,947,348 (36,291) Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended D9cer ber31 PERS 2017 (43,733) 2018 (43,733) 2019 163,122 2020 101,961 2021 Thereafter TOTAL 177,617 76 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Year ended, December 31' PEAS 2/3 2017 (108,148) 2018 (108,148) 2019 698,141 2020 472,804 2021 1,326 Thereafter (31) TOTAL 954,649 Year ended December31 PSERS 2017 1,295 2018 1,295 2019 3,910 2020 3,045 2021 1,326 Thereafter (31) TOTAL 10,839 Year ended December;31 LEOFF1 2017 (16,857) 2018 (16,857) 2019 70,647 2020 44,639 2021 35,100 Thereafter TOTAL 81,572 Yearehdedi December31 ,,.. LEOFF 2017 (11,672) 2018 (11,672) 2019 884,726 2020 610,004 2021 35,100 Thereafter TOTAL 1,506,486 79 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Firemen's Pension System Summary of Significant Accounting Policies Investments are valued and reported at fair value. Plan Description Plan Administration: The Firefighters" Pension Fund is administered by the City of Tukwila. The plan is a single - employer defined benefit pension plan that provides pensions for firefighters that were hired prior to 1970. The firefighters' pension board consists of the following five members: the chairperson of the fire commissioners for said district who shall be chairperson of the board, the county auditor, county treasurer, and in addition, two regularly employed or retired firefighters elected by secret ballot of the employed and retired firefighters. Retired members who are subject to the jurisdiction of the pension board have both the right to elect and the right to be elected under this section. The first members to be elected by the firefighters shall be elected annually for a two-year term. The two firefighter -elected members shall, in turn, select a third eligible member who shall serve in the event of an absence of one of the regularly elected members. Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970 and for providing the "excess benefit", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new members. At December 31, 2016, FPF membership consisted of the following: 51 Inactive plan members retired prior to March 1, 1970 Inactive plan members retired March 1, 1970 or after Active Plan Members Benefits Provided 0 10 0 All benefit terms are in statutes RCW 41,16, 41.18, and 41.26. FPF provides retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. All members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to the current salary of the rank from which the firefighter retired, or an increase proportionate to the increase in the Seattle -area CPI, with the change computed annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. The latter applies to all other types of monthly benefits. Contributions As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This statute require that each municipality levy up to $0.45 (only $0.225 of which can 80 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS be in excess of the property tax limit pursuant to ROW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. The actuarial assumptions were provided by an independent actuary, Investments it is the policy of the City of Tukwila to invest public funds in a manner that will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City, while conforming to all state and local statutes governing the investment of public funds. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. Concentrations. Approximately 70% of investments are in a long-term government bond. City's Net Pension Liability The components of the City's net pension liability at December 31, 2016 are as follows: Total pension liability Less: Plan fiduciary net position City's net pension liability Plan fiduciary net position as a percentage of the total pension liability $ 1,445,352 1,426,367 $ 18985 98.69% Schedule of.Clien and Related Ratk Net P iod t lafiil Total Pension Liability 1 Service Cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, included refunds of employee contributions Net change in total pension liability 2014 f 50,098 2015 2016 49,716 49,332 (61,863) (2,442) (58,277) (311,190) (62,728) (59,988) (11,765) Total pension liability — beginning 1,852,693 (11,003) 1,840,929 (384,574) 1,829,926 Total pension liability—ending (a) $ 1,840,929 $ 1,829,926 1,445,352 81 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Plan Fiduciary Net Position Contributions — employer Contributions — employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other 64,114 $ 1,805 (61,863) 63,590 2,667 (58,277) (4,500) 66,360 7,988 (59,988) (4,500) Net change in plan fiduciary net osition Plan fiduciary net position — beginning Plan fiduciary net position — ending (b) _---- --- City's net pension liability—ending (a) — (b) ...._.__. Plan fiduciary net position as a percentage of the total pension liability Covered -employee payroll 1 $ City's net pension liability as a percentage of covered -employee payroll_—......................._____.__...........__...---......._.......!....... 4,056 1,408,970 3,481 1,413,026 9,861 1,416,506 1,413,026 1,416,506 1,426,367 $ 427,903 $ 413,420 18,985 76.76% nJa ' $ Deferred Outflows of Resources and Deferred Inflows of Resources 77.41% n/a 98.69% n/a At December 31, 2016, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Torre f utf1�W �1 Rosou e I rred Inflows 0? Net difference between projected and actual investment earnings on pension plan investments 83,107 Totals 83,107 82 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended Decsmbet 31; 2017 $ 22,625 2018 22,625 2019 22,625 2020 15,231 2021 Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 3.75% 2.75% Healthy life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back one year for males and set forward one year for females. Disabled life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back two years for males and females. The long-term expected rate of return on pension plan investments assumption was based on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The discount rate used to measure the total pension liability was 2.75%. The projection of cash flows used to determine the discount rate assumed City contributions were equal to revenue received from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75%. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payment of current plan members. Therefore, the long-term expected rate of retum on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the Firemen's net pension liability of the City, calculated using the discount rate of 2.75%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 -percentage -point lower, 2.75%, or 1 -percentage point higher, 3.75%, than the current rate: Firemen's net pension 1% Decrease Current Discount 1% Increase liability Rate $ 196,149 $ 18,985 $ (130,661) 83 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Basis of Valuation A general summary of the substantive plan used as the basis of the valuation follows. Applicable Statutes RCW 41.16, 41.18, 41.26 Benefits Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under LEOFF or FPF. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Service Retirement Benefit Member Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five years of service (RCW 41.26.090). Amount of benefit: 50% of salary plus an additional 2% for each year of service in excess of 25 years. Maximum benefit of 60% of salary (does not apply for those retiring after July 1, 2006). Survivor Eligibility: spouse or child Amount of benefit: continuation of the firefighter's benefit. (If spouse — same, plus additional 5% of salary per child. If no spouse — 30% of salary for first child, 10% for each additional child. Maximum of 60% of salary). Duty Disability Retirement Benefit Member Eligibility: disabled after six-month waiting period. Amount of benefit: determined the same as Service Retirement Benefit. Recovery: restoration to service. Survivor See Survivor's Benefit section under Service Retirement. Non Duty Disability Retirement Benefit Member Survivor Duty Death Benefit Non Duty Death Benefit Special Provisions Eligibility: disabled after 90 -day waiting period. Amount of benefit 50% of salary, or service retirement benefit, if greater. Recovery: see Duty Disability Retirement. Limitations: no benefits payable if firefighter employed elsewhere when disabled. Eligibility: spouse or child Amount of benefit: 33.3% to widow or children only. 45.8% to widow and one child. 47,6% to widow and two children. 50.0% to widow and three children. Eligibility: spouse or child Amount of benefit If spouse — 50% of salary plus an additional 5% of salary per child; maximum benefit of 60% of salary. If no spouse — 50% of salary to children. Eligibility: spouse or child Amount of benefit: provisions the same as Survivor's Benefit under Non -Duty Disability Retirement. Under disability or death benefits, a surviving spouse may elect a lump -sum payment of $5,000 in lieu of future monthly benefits. 84 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Vesting Deferred Benefit Postretirement Increase Benefits Payable Under LEOFF Type 1 Type 2 Applicability Minimum Benefit Funeral Benefit Participant Summary December 31, 2016 Age and service determined as of the census date. Termination after 20 years of service (RCW 41:18.130) or five years of service (RCW 41.26.090). Commences: when a firefighter would have had 25 years of service (RCW 41.18.130) or age 50 (RCW 41.26.090). Amount of benefit: 2% of salary for each year of service. Other provisions apply, see statutes. Death while vested prior to commencement of benefits: payment of firefighters deferred benefit to spouse or child. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Escalation by salary in proportion to current salary or rank from which the firefighter retired. Annual increase proportionate to the Increase in the Seattle -area CPI. Minimum increase at least 2% each year. Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. Type 2 applies to all other types of monthly benefits After April 25, 1973, a minimum benefit of $300 per month to all retired firefighters and their survivors. This minimum is increased by the CPI. $500 RCW 41.18.140, no provision under RCW 41.26. LEOFF Plan 1 (Firemen's Pension) Inactive Participants Age Service Retirees Disabled Retirees Surviving Spouses Total <65 0 0 0 0 65 — 69 0 0 0 0 70 — 74 1 1 1 3 75-79 1 1 2 4 80 — 84 0 1 1 1 85-89 1 0 0 1 90+ 0 0 0 0 Total 3 3 4 10 Annual pension amounts through December 31, 2016: Paid by City '. Paid by LEOFF $59,988 $440,025 The information presented in the preceding required schedules were determined as part of the actuarial valuations at the dates indicated. 85 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS The key actuarial assumptions used for the January 1, 2017 valuation were' 1 Assumption 1 Rates Actuarial Cost Method Asset Valuation Method Measurement Date Inflation Rate Discount Rate (or Investment Return) Entry Age Fair Market Value December 31, 2016 2.75% We based the long-term expected rate of return on pension plan investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 2.75% was selected. Cost of Living 2.75%, based on SSA OASDI 2014 report. Salary Increases (for calculated benefit increases based on 3.75%, based on SSA OASDI 2014 report. rank) Healthy Mortality Disabled Mortality Spouse Age RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. We assumed that wives are three years younger than husbands. NOTE 9 — OTHER POSTEMPLOYM ENT BENEFIT (OPER) PLAN During the year ended December 31, 2008, the City elected to adopt the provisions of GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB No. 45), which requires the City to accrue other postemployment benefits (OPEB) expense related to its postretirement healthcare plan based on a computed annual required contribution (ARC) that includes the current period's service cost and an amount to amortize unfunded actuarial accrued liabilities. Instead of recording expense on a "pay-as- you-go" basis, the City, under GASB No. 45, has recorded a liability of $9,178,836 for the difference between the actuarially calculated ARC and the estimated contributions made since the adoption of GASB No. 45. This liability is included in other noncurrent liabilities in the accompanying December 31, 2016 statement of net position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess of revenue over expenses before capital contributions and the City's increase in net position for the year ended December 31, 2016 by $2,033,913. Plan Description The City of Tukwila's LEOFF Plan 1 (the Health Plan) is a single -employer defined -benefit healthcare plan administered by the City. The authority to establish and amend benefits is determined by the LEOFF board. The Health Plan provides medical, prescription drug, dental, Medicare Part B premiums, long-term care, and vision expenses for LEOFF Plan 1 retirees. Dependent spouses and children are not covered. The Health Plan's actuary is Healthcare Actuaries. The Health Plan does not issue a separate standalone financial report. 86 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Membership As of December 31, 2016, there were 35 retirees meeting the eligibility requir valuation is based on the 40 retirees in the plan as of December 31 group with no new members. Funding Policy rements of a LEOFF 1 member. The , 2014. This is considered a closed Funding for LEOFF 1 retiree healthcare costs is provided entirely by the City as policy is based upon pay-as-you-go financing requirements. For the fiscal year contributed $275,530 to the Health Plan through use of existing fund balance. to fund 'pay-as-you-go' costs under the Health Plan and not to prefund benefits. required by RCW. The City's funding ended December 31, 2016, the City The City's contribution was entirely There were no retiree contributions. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize unfunded actuarial liabilities over a period 21 years as of January 1, 2008. The following tables show the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation. ANNUAL OPEB COST AND NET OPEB OBLIGATION Annual required contribution (ARC) $ 1,903,679 $ 2,585,779 $ 2,765,486 Interest on Net OPEB Obligation Adjustment to ARC Annual OPEB cost (expense) 171,067 146,904 178,623 (388,580) (452,441) (634,666) 1,686,166 2,280,242 2,309,443 Employer contributions (905,974) (477,292) (275,530) Change in Net OPEB Obligation 780,192 1,802,950 2,033,913 Net OPEB Obligation at Beginning of year 4,561,781 5,341,973 7,144,923 Not OPt)3blig9fioil at r3i! ofy$ 5341 973. $ :.7714+)• 92 :$ 8 $3611L (i) is the assumed interest rate that year, 2 75% in 2014, 2.75% in 2015 and 2.50% in 2016. The net OPEB obligation of $9,178,836 is included as a non-current liability on the Statement of Net Position. 87 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS ANNUAL DEVELOPMENT OF OPEB COST 2008 $ 1,366,284 $ - $ - 31,366,284 $ 557,103 $ 809,181 $ 809,181 $809,181 2009 1,366,284 40,459 61,839 1,344,904 335,265 1,009,639 1,818,820 1.031.019 2010 1,366,284 90,941 143,332 1,313,893 317,771 996,122 2,814942 1,048,513 2011 1,264,522 112,598 213,809 1,163,311 335,090 828,221 3,643.163 929,432 2012 1,264,522 145,727 287,945 1,122,304 404,007 718,297 4,361.460 860.515 2013 1,264,522 174,458 359,904 1,079,076 878,755 200,321 4.561.781 385.767 2014 1,903,679 171,067 388,580 1,686,166 905,974 780,192 5,341.973 997.705 2016 2,585,779 146,904 452,441 2,280,242 477,292 1,802,950 7,144,923 2,108.487 2016 2,765,486 178,623 634,666 2,309,443 275,530 2,033,913 9,176836 2,489.956 ` Based on a 21 -year closed amortization as of January 1, 2008 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows: PERCENTAGE OF ANNUAL OPEB COST CONTRIBUTED December 31, 2014 December 31, 2015 December 31, 2016 Funded Status and Funding Progress 1,686,166 2,280,242 2,309,443 905,974 477.292 275,530 54 21 12 5.341,973 7.144, 923 9.178, 836 As of January 1, 2017, the most recent actuarial accounting update, the plan was 0% funded. The actuarial accrued liability for benefits was $29.1 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $29.1 million and a funded ratio of 0%. The funded ratio is 0%, because the City funds benefits on a pay-as-you-go basis. SCHEDULE OF FUNDING PROGRESS (rounded to thousands) January 1. 2008 January 1 201 January 1,2014 January 1, 2015 January 1, 2016 $0 0 0 0 0 $16,103 14,805 21,264 29,538 30,186 88 $16,103 14, 805 21.264 29,538 30,166 0% 0 00 $581 371 195 132 0 4% 3 1 0 0 CITY OF TUKWILA'' 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. GASS 45 requires that the schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of Health Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions The basis of projections of benefits for financial reporting purposes is the substantive plan (the Health Plan as understood by the City and members of the Health Plan) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the City and Members of the Health Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The January 1, 2015 valuation used the entry age normal actuarial cost method. The actuarial assumptions included a 2.75% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 9.0% for pre -Medicare expenses, to an ultimate rate of 3.8% after 61 years. The Medicare trend assumption is 6.5%, to an ultimate rate of 3.8% after 61 years. The dental trend assumption is 5.5%, to an ultimate rate of 3.5% after 4 years. The Medicare premium trend rate is 5.4% for all years. The long-term care trend rate is 5.0% for all years. The trend for the Excise Tax threshold is 0% until 2020, when a trend rate of 4.24% is used. The trend for all future years after that year is 3.24%. All trend rates include a 3.0% inflation assumption. The UAAL is amortized as a level dollar amount on a closed basis over 21 years beginning January 1, 2008. The remaining amortization CO period at December 31, 2016 was 12.0 years. Assumption Rates Actuarial Cost Method Entry Age Normal method. Measurement Date January 1, 2015 Inflation Rate 3.00% Discount Rate (or Investment Return) Selected the assumed discount rate of 2.75% based on the five - year average investment yield on the investments expected to finance the payment of benefits. Healthy Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 setback one year for males and set forward one year for females. Disabled Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for malesand females. Turnover None assumed. All LEOFF 1 actives are fully eligible for retirement. 69 CITY OF TUKWILA: 2016 CAFR. NOTES TO THE FINANCIAL STATEMENTS Per Capita Claims Cost Assumed annual per capita claims costs are as follows: Age Medical/Rx Dental Vision LTC 55 $ 21,875 $ 966 $ 181 $ 133 60 28,071 966 181 220 65 15,406 966 181 448 70 16,924 966 181 1,183 75 17,984 966 181 3,028 80 18,348 966 181 6,499 Aging or Morbidity Factors Aging/morbidity factors are included in the per capita claims costs shown above (except dental and vision). Medicare Part 8 Premium Reimbursements The City reimburses Medicare retirees for Part B premiums. The 2015 annual premium is $1,258.80. Affordable Care Act (ACA) Excise Tax Threshold Ages 55-64 All Other Single $ 11,850 $ 10,200 ACA Base Premium Assumed annual plan costs upon which the ACA tax calculation is based: Medicare ineligible $ 28,071 Medicare eligible $ 16,557 ACA Tax • We assumed a 40% excise tax rate on premiums above the ACA threshold. • We assumed the City of Tukwila pays no federal taxes. • We assumed the excise tax will apply to medical/Rx and Medicare premium reimbursements. Trend Rates Medical Long -Term Trends* from Getzen SOA Model version 2014 b using baseline assumptions. Excise Pre- Part 8 Long -Term Tax Year Medicare Medicare Dental Vision Premiums Care Threshold 2015 9.00% 6.50% 5.5% 4.0% 5.4% 5.0% 0.00% 2016 7.50% 6.50% 5.0% 4.0% 5.4% 5.0% 0.00% 2017 6.50% 6.00%, 4.5% 4.0% 5.4% 5.0% 0.00% 2018 5.50% 5.50% 4.0% 4.0% 5.4% 5.0% 4.24% 2019 5.50% 5.50% 3.5% 3.5% 5.4% 5.0% 3.24% 2020 5.46% 5.46% 3.55 3.5% 5.4% 5.0% 3.24% 2021-2074 -_ ... 3.5% 3.5% 5.4% 5.0% 3.24% 2075. 3.80% 3.80% 3.5% 3.5% 5.4% 5.0% 3.24% ' The trend rates include assumed inflation of 3% for all future years. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, provides the multi-year trend information showing whether the actuarial value of plan assets is increasing or decreasing over time relative to the actual. 90 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 10 — LONG-TERM LIABILITIES Governmental Activities Long -Term Debt General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter -approved issues, of which the City has one, are funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes, sales taxes, or other general revenues, and is generally paid from debt service funds. The City currently maintains a rating of Al from Moody's Investor Service, Aa3 from Standard & Poor's, and a rating of AA- from Fitch's Rating Service for its General Obligation Bonds. General Obligation Bonds outstanding at year-end are as follows: • 2008 LTGO bonds were issued to refund the remaining debt of the 1999 LTGO bonds. The 1999 LTGO bonds were issued to purchase an additional City Hall Annex (6300 building) and economic revitalization projects. • 2010 LTGO bonds were issued for the construction and realignment of Southcenter Parkway in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • 2011 LTGO refunding bonds were issued to refund a portion of the bonds issued in 2003 for the City's Arterial Street program. • 2013 LTGO bonds were issued and the proceeds loaned to the Tukwila Metropolitan Park District to pay for improvements to the pool. • 2014 LTGO bonds were issued to fund the purchase of land acquisition and capital costs of redevelopment activities within the City's Tukwila International Boulevard (TIB) urban renewal area. • 2014 LTGO general obligation bond in the form of a line of credit to purchase property and pay for capital costs of redevelopment activities within the City's Urban Renewal area. • 2015 LTGO bonds were issued to pay for improvements to Interurban Avenue South and reconstruct or retrofit Boeing Access Road Bridge. • 2016 UTGO bonds in the amount of $32.99 million were issued after voters approved a $77.385 million bond measure that will fund a justice center, rebuild 3 fire stations and provide fire apparatus and life -safety equipment replacement for 20 years. Special assessment bonds are issued to finance construction of local improvement district (LID) projects and are repaid through assessments collected from property owners benefiting from related improvements. Although the bonds are secured by liens against assessed properties, the City is required under state law to establish a guaranty fund to provide a means of paying LID bond debt service obligations in the event there are insufficient resources in the LID debt service fund. The special assessment bonds are not general obligation debt but the City is obligated in some manner to cover the interest on the bonds. Therefore, the bonds are reported as Special Assessment Debt with Governmental Commitment. Special assessments outstanding at year-end are as follows: • 2013 special assessment bonds LID No. 33 were issued to reimburse the City for a portion of the costs of a major reconstruction of Klickitat and Southcenter Parkway to improve access to the urban center. 91 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS Business -Type Activities Long -Term Debt Revenue bond indebtedness issued to fund proprietary activities is recorded in proprietary funds. Debt service payments are made from operating revenues generated by the proprietary funds. In proprietary funds, bonds are displayed net of unamortized premium or discount; annual interest expense is decreased by amortization of debt premium and increased by the amortization of debt discount. The City currently maintains a rating of Aaa from Moody's Investor Service for debt in this category. Revenue bonds outstanding at year-end are as follows: • 2015 water/sewer/SWM bonds were issued to refund the remaining debt of the 2006 revenue bonds. The bonds were issued to provide neighborhood revitalization to Allentown and Foster Point Sewer system. State of Washington Public Works Trust Fund Loans are a low interest rate loans available from the State of Washington Department of Commerce, Local Government & Infrastructure Division for qualifying projects and are a direct responsibility of the City. This debt is repaid by proprietary fund revenues. Public Works Trust Fund loans outstanding at year-end are as follows: • 2003 loan to install new sewers in the Duwamish neighborhood. The project upgraded water and surface water infrastructure. • 2004 loan to install new water, sewer, and surface water infrastructure in Allentown and Foster Point neighborhoods. Additionally, 2 new sewer lift stations with generators, 33 manholes and catch basins, and 15 new fire hydrants were installed. • 2004 loan constructed an underground collection system in the Cascade View neighborhood. • 2014 loan to install sewer liners in the City's commercial business district of Southcenter. Relining the sewer main avoids full excavation for a significant savings and has minimal impact to the roadway. The City is in compliance with all Washington State debt limitation statutes and bond indenture agreements. The schedules that follow summarize the long-term debt transactions of the City for the year ended December 31, 2016. 92 GITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES SUMMARY - GOVERNMENTAL ACTIVITIES Outstanding 01/01/2016 Added Retired / redeemed Outstanding 12/31/2016 $23,057,714 32,990,000 (1,932,782) $54,114,932 Add Premiums, Subtract Discounts Debt Service to Maturity 66,082,500 $ 3,866,473 $ 6,265.200 $ 7,144,923 $11,630,656 $ 58,041,466 - 2.965.804 - 2,033,913 1,313,123 39,302,840 (670,000) (3,052.075) (171,600) - - (5,826,458) $5,412,500 $ 3,774,201 $ 6,093.600 $ 9,178,836 $12,943,779 $ 91,517,848 4,380,732 $ 95,898,580 Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences, OPEB, and pensions. 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2036 2037-2040 Totals $ 5.356,428 $ 2,212,951 3.302,196 2,168,111 3,513,521 2,020,971 1,726.,461 1,853,741 1,865,560 1,781,913 11 956,765 7,353,718 12.191,000 4,738.893 14,203,000 1,822.290 $ 54,114932 $ 23,852,588 $ 179,200 184,800 190,800 197,200 207,200 1,158, 800 1,418,000 1,004,800 1,552,800 $ 6,093.600 $ $ 249,088 243,173 237,069 229,039 220,332 973,846 706,725 266,367 137,080 262;718 $ 607,500 $ 259,939 $ 8,865,105 445,000 257,655 6,600,935 445,000 243,638 6,650,999 445,000 223,613 4,675,053 445,000 203,588 4,723,593 2,225,000 705.881 24,374,010 800,000 143,513 19,998.130 17,296,457 1,689,880 $ , 5,402,590 $ 21037,825 $ X94,8/4,161'. 93 CITY. OF TUKWILA 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - GOVERNMENTAL. ACTIVITIES Merest Baha of OUTSTANDING. 12/35/2015' suEh D 0971$70 n�1n N25 Due Wdhin. One Year; GOVERNMENTAL ACTMTIES: Limited General 0bliaa506/LTGO Bonds Pavdble: 2008 Refunding-Streets/Facilibes 4.00-6.00 12101119 6.180000 2,820,000 - 655,000 2,165.000 680.000 2010 Streets/Equipment 2.00-5.41 12,01/24 5,870.000 3,970,000 - 395,000 3,575000 405000 2011 Refunding Streets (2003 GO) 125-4.00 12/01/23 4,620000 3,780,000 420000 3,360000 435000 2013 LTGO-MP6 Pool Improve 2.00-4.00 12/01/22 1,000.000 703,714 - 93782 609 932 96.428 2014L700 -Urban Renewal 0.65.4.86 12/01/34 3,850000 3709,000 - 149000 3660.000 150000 2014LTGO-Line of Credit 1 MN. L1308.1.0% 12101/17 2,250000 2,250000 - - 2,250000 2015 LTGO-Interurban, BAR 2.25-3.00. 12/01135 5,825,000 5,825,000 - 220,000 5,605.000 225000 Total LTGO Bonds Payable 29,595,000 23,057,714 - 1932.782 21,124932 1,991.428 Unlimited Genaral 0b000907 (UTGO) Bonds Payable 2016 UTGO - Public Safety 4.50-5.00 12,01/35 hetet 0t6O 80046.P599ble . .. Issuance premiums N 8188644 Piyeb)e Due to Other Governments 77,385.000 77,385;000 32,990.000 '32,990,000 32,990000 1,115,000 53,950,000 1,1150001:: 761.523 3,719,954 100 745 4,380 732 679,237 • 38.705954 .2,0331527:.: 158.455;864. 'a,)5542 2009 Facility SCORE 300-662 01/01139 6898800 6,265,200 - 171 600 6093600 179 200 'Total Du, 6,Ase,800' 3t 2s$,255 .'.y •• `171X10. .6,093800".179.200 Special Assessment Debt KI ck tat Urban Access Project Teta) Special Asaettanit nEOebl' 3.150-5 375 01/15/29 6,687 500 6,082 500 6,887,500 6,082 500 (AOPo0860091byerdanl$bnehts P89460.- Ne)Adt101on Liability O 605460 1edAbsentee, Tbtei 670.000 5,412.500 607.500 6 412,500 ; .607;550:.. 7,144,923. 2,062 913 8.178,636 1,6351156- ' 1,313,123 52943;779 3,860,473 )2965494.• 3;052075 / 3774;201 Gaveinnten 40. O 5 58a02,989 943022, 5,898,580 93979 All govemmental funds debt is liquidated by the general fund except for the special assessment debt and the 2009 SCORE intergovernmental debt. The special assessment debt is liquidated from assessments collected annually from property owners within boundaries of Local Improvement District 633. The 2009 SCORE debt was paid by SCORE from user fees. Due to Other Governments SCORE Public Development Authority issued General Obligation bonds in 2009 to acquire, construct, improve, and equip a consolidated correctional facility to be located in Des Moines, Washington. The City is contracted to pay 8% of the debt service of these 30 year bonds that mature in 2039. This debt is paid from the General fund. 94 Governmental Activities Year Ended December 31 General Obligation Bonds .. Prrncipal Interest, ., . Due to Other Go6emments . Principal . Interest ' Special Assessments, Princrpat.:,Interest ,: Tolat 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2036 2037-2040 Totals $ 5.356,428 $ 2,212,951 3.302,196 2,168,111 3,513,521 2,020,971 1,726.,461 1,853,741 1,865,560 1,781,913 11 956,765 7,353,718 12.191,000 4,738.893 14,203,000 1,822.290 $ 54,114932 $ 23,852,588 $ 179,200 184,800 190,800 197,200 207,200 1,158, 800 1,418,000 1,004,800 1,552,800 $ 6,093.600 $ $ 249,088 243,173 237,069 229,039 220,332 973,846 706,725 266,367 137,080 262;718 $ 607,500 $ 259,939 $ 8,865,105 445,000 257,655 6,600,935 445,000 243,638 6,650,999 445,000 223,613 4,675,053 445,000 203,588 4,723,593 2,225,000 705.881 24,374,010 800,000 143,513 19,998.130 17,296,457 1,689,880 $ , 5,402,590 $ 21037,825 $ X94,8/4,161'. 93 CITY. OF TUKWILA 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - GOVERNMENTAL. ACTIVITIES Merest Baha of OUTSTANDING. 12/35/2015' suEh D 0971$70 n�1n N25 Due Wdhin. One Year; GOVERNMENTAL ACTMTIES: Limited General 0bliaa506/LTGO Bonds Pavdble: 2008 Refunding-Streets/Facilibes 4.00-6.00 12101119 6.180000 2,820,000 - 655,000 2,165.000 680.000 2010 Streets/Equipment 2.00-5.41 12,01/24 5,870.000 3,970,000 - 395,000 3,575000 405000 2011 Refunding Streets (2003 GO) 125-4.00 12/01/23 4,620000 3,780,000 420000 3,360000 435000 2013 LTGO-MP6 Pool Improve 2.00-4.00 12/01/22 1,000.000 703,714 - 93782 609 932 96.428 2014L700 -Urban Renewal 0.65.4.86 12/01/34 3,850000 3709,000 - 149000 3660.000 150000 2014LTGO-Line of Credit 1 MN. L1308.1.0% 12101/17 2,250000 2,250000 - - 2,250000 2015 LTGO-Interurban, BAR 2.25-3.00. 12/01135 5,825,000 5,825,000 - 220,000 5,605.000 225000 Total LTGO Bonds Payable 29,595,000 23,057,714 - 1932.782 21,124932 1,991.428 Unlimited Genaral 0b000907 (UTGO) Bonds Payable 2016 UTGO - Public Safety 4.50-5.00 12,01/35 hetet 0t6O 80046.P599ble . .. Issuance premiums N 8188644 Piyeb)e Due to Other Governments 77,385.000 77,385;000 32,990.000 '32,990,000 32,990000 1,115,000 53,950,000 1,1150001:: 761.523 3,719,954 100 745 4,380 732 679,237 • 38.705954 .2,0331527:.: 158.455;864. 'a,)5542 2009 Facility SCORE 300-662 01/01139 6898800 6,265,200 - 171 600 6093600 179 200 'Total Du, 6,Ase,800' 3t 2s$,255 .'.y •• `171X10. .6,093800".179.200 Special Assessment Debt KI ck tat Urban Access Project Teta) Special Asaettanit nEOebl' 3.150-5 375 01/15/29 6,687 500 6,082 500 6,887,500 6,082 500 (AOPo0860091byerdanl$bnehts P89460.- Ne)Adt101on Liability O 605460 1edAbsentee, Tbtei 670.000 5,412.500 607.500 6 412,500 ; .607;550:.. 7,144,923. 2,062 913 8.178,636 1,6351156- ' 1,313,123 52943;779 3,860,473 )2965494.• 3;052075 / 3774;201 Gaveinnten 40. O 5 58a02,989 943022, 5,898,580 93979 All govemmental funds debt is liquidated by the general fund except for the special assessment debt and the 2009 SCORE intergovernmental debt. The special assessment debt is liquidated from assessments collected annually from property owners within boundaries of Local Improvement District 633. The 2009 SCORE debt was paid by SCORE from user fees. Due to Other Governments SCORE Public Development Authority issued General Obligation bonds in 2009 to acquire, construct, improve, and equip a consolidated correctional facility to be located in Des Moines, Washington. The City is contracted to pay 8% of the debt service of these 30 year bonds that mature in 2039. This debt is paid from the General fund. 94 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES SUMMARY - BUSINESS -TYPE ACTIVITIES Outstanding 01101/2016 Added Retired / fedeemed Outstanding 12/312016 Debt Service to Maturity $1,742.527 $ 5,646,458 $ 334.004 $ 2,095,180 $ 9,818,169 - 290.095 444,223 734.318 (144.823) (599,468) (325,740) - (1,070,031) $1,597,704 $ 5,046,990 $ 298,359 $ 2,539,403 $ 9,482,455 $ 9,482,455 Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences and net pension liability. 2017 00 2018 1n 2019 2020 2021 2022-2026 2027-2031 2032 Totals,, 143,282 149,659 150,736 156,614 157,178 840,235 37.386 34.033 30.531 27.004 23.339 59, 829 1;597,704 212,1241, 1 599.468 $ 599 468 599, 468 599,468 599 447 1,802 601 205 875 41,195 5,046,996 $ 25,235 22.238 19.240 16 243 13.246 25,232 4,118 206 125,757 $ 805,371 805.398 799,976 799.329 793,210 2,727 897 209,992 41,401 $ 6,982,576 95 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES ii OU1$YANDIN ,aUTSTANDING Dub Wt oo .e�12/31201$_ ` ISSSEo-'PESEEMES 11/06 one Y9ar BUSINESS -TYPE ACTIVITIES: Bonds Payable - 2015 Water/Sewer/SSW Refunding 12101a6 1 742,527 1.742,527 1, 742527 ;'1 1,742,627, 144,823 1,597,704 143,282 144,823 '1,697704 148.,282 Public Works Trust Fund Loans: 2003 Loan-W81e3/Sewer 0.50 273870 86,725 - 14,454 72271 14,454 2003 LoanSurface Water 0.50 06/01/21 219,725 69.578 - 11,597 57982 11,597 2004 Loan-W86r/5ewe1 0.50-2.00 /01/24 5,016,000 2455976 - 272,886 2,183 040 272,686 2004 Loan -Surface Water 0.50-2.00 06/01/24 684,000 334,906 37,212 297 694 37,212 2004 Loan -Surface Water 1.00 06/01/24 4.196,056 1,999.297 - 222,144 1,777.153 222,144 2014 Loan -Sewer 05 06/01/32 750,000 699 975 41,175 658.800 41,175 70688 eiv'vwlk9iru21 kaki Com8' 11 .139659 ''r 9846;46.67 ' Fs 8 $468'' x`5046990 '"4699,488 095190 014794 038 2981 2883 075 ;1 5,818,169 _3 734318 $ 0 ,482 465 4r /7, 943,70 4 , 1,99,390036',$4: LONG-TERM LIABILITIES RECONCILIATION Governmental Business Type Balance Activities = Activities 12-31-16 ' .. General obligation bonds $54,114,932 $ - $ 54.114,932 Special assessment bonds 5,412,500 - 5,412,500 Revenue bonds 1,597,704 1,597,704 Public Works Trust Fund loans 5,046;990 5,046,990 Due to Other GDvemments 6,093,600 - 6.093,600 Employee leave benefits 3,774,201 298,359 4,072,560 Net Premiums/Discounts 4,380,732 4,380.732 Other Post -Employment Benefits 9,178,836 9,178,836 Net Pension Liability 12,943,779 2,539,403 15,483,182 Total long -terra debt .$95,898;58(1 $ 9,482,455 $105;3$1,006 Debt Limit Capacities State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5% without a vote of the people; 2.5% with a vote of the people; 5.0% with a vote of the people, provided the indebtedness in excess of 2.5% is for utilities; 7.5% with a vote of the people, provided the indebtedness in excess of 5.0% is for parks or open space development. 96 Business -Type Activities Year Ended December '31 . Relenue Bonds Principal Interest Public Worts Trust F Loans Principal Interest '; ' Total 2017 00 2018 1n 2019 2020 2021 2022-2026 2027-2031 2032 Totals,, 143,282 149,659 150,736 156,614 157,178 840,235 37.386 34.033 30.531 27.004 23.339 59, 829 1;597,704 212,1241, 1 599.468 $ 599 468 599, 468 599,468 599 447 1,802 601 205 875 41,195 5,046,996 $ 25,235 22.238 19.240 16 243 13.246 25,232 4,118 206 125,757 $ 805,371 805.398 799,976 799.329 793,210 2,727 897 209,992 41,401 $ 6,982,576 95 CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES ii OU1$YANDIN ,aUTSTANDING Dub Wt oo .e�12/31201$_ ` ISSSEo-'PESEEMES 11/06 one Y9ar BUSINESS -TYPE ACTIVITIES: Bonds Payable - 2015 Water/Sewer/SSW Refunding 12101a6 1 742,527 1.742,527 1, 742527 ;'1 1,742,627, 144,823 1,597,704 143,282 144,823 '1,697704 148.,282 Public Works Trust Fund Loans: 2003 Loan-W81e3/Sewer 0.50 273870 86,725 - 14,454 72271 14,454 2003 LoanSurface Water 0.50 06/01/21 219,725 69.578 - 11,597 57982 11,597 2004 Loan-W86r/5ewe1 0.50-2.00 /01/24 5,016,000 2455976 - 272,886 2,183 040 272,686 2004 Loan -Surface Water 0.50-2.00 06/01/24 684,000 334,906 37,212 297 694 37,212 2004 Loan -Surface Water 1.00 06/01/24 4.196,056 1,999.297 - 222,144 1,777.153 222,144 2014 Loan -Sewer 05 06/01/32 750,000 699 975 41,175 658.800 41,175 70688 eiv'vwlk9iru21 kaki Com8' 11 .139659 ''r 9846;46.67 ' Fs 8 $468'' x`5046990 '"4699,488 095190 014794 038 2981 2883 075 ;1 5,818,169 _3 734318 $ 0 ,482 465 4r /7, 943,70 4 , 1,99,390036',$4: LONG-TERM LIABILITIES RECONCILIATION Governmental Business Type Balance Activities = Activities 12-31-16 ' .. General obligation bonds $54,114,932 $ - $ 54.114,932 Special assessment bonds 5,412,500 - 5,412,500 Revenue bonds 1,597,704 1,597,704 Public Works Trust Fund loans 5,046;990 5,046,990 Due to Other GDvemments 6,093,600 - 6.093,600 Employee leave benefits 3,774,201 298,359 4,072,560 Net Premiums/Discounts 4,380,732 4,380.732 Other Post -Employment Benefits 9,178,836 9,178,836 Net Pension Liability 12,943,779 2,539,403 15,483,182 Total long -terra debt .$95,898;58(1 $ 9,482,455 $105;3$1,006 Debt Limit Capacities State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5% without a vote of the people; 2.5% with a vote of the people; 5.0% with a vote of the people, provided the indebtedness in excess of 2.5% is for utilities; 7.5% with a vote of the people, provided the indebtedness in excess of 5.0% is for parks or open space development. 96 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS At December 31, 2016, the debt limits for the City were as follows: SUMMARY OF DEBT LIMIT CAPACITIES Without a Vote —With a Vote of the People— Item 1.5% 2.5% 5.0% 7.51 Legal Limit $ 86,048,523 $ 143,414,206 $ 286,828,411 $ 430,242,617 Outstanding Net Indebtedness 63,525,489 63,525,489 63 525,489 63,525,489 Margin Available $ 22,523,035 $ 79,888,717 $ 223,302 923 $ 366,717,1u28 Prior Year Defeasance of Debt In 2015, the City defeased water and sewer bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At December 31, 2016, $1,910,000 of the defeased bonds were outstanding. Long-term Liabilities other than debt Claims are paid from one or more funds based on the nature of the transaction. Employees' compensable leave is the City's liability for all unused vacation and sick leave and unpaid overtime accrued by employees and, payable under specified conditions. This obligation is paid only at the time of termination, usually from the same funding source(s) from which the employee's salary or wage compensation was paid. The City does not report a liability for termination benefits because it is not reasonably estimable. Local Improvement District No. 33 Tukwila Urban Access Improvement Project Local Improvement District (LID) No. 33 was formed on November 16, 2009 by Ordinance No. 2260. The project was designed to improve congestion within the City's Urban Center. The project included a partial lid over Southcenter Parkway, removal of conflicting turning movements, and the widening of Southcenter Parkway. Construction for the project began in March 2011 and was completed in October 2011. The project was closed out and accepted as complete by City Council on February 19, 2013. A variety of funding sources were used to pay for the project including federal and state grants, impact fees, City funds, a right-of-way donation, and special assessments. The City chose to fund the project internally, rather than obtain extemal, short-term financing then apply special assessments to property owners after the project was completed. Fund 104 Arterial Streets, where the project was accounted for, loaned the project funds as needed using a draw method at an interest rate of 1.80%. This loan was repaid in 2013 when special assessment bonds were issued. The City confirmed the assessment roll with a final assessment of $9,475,894. The prepayment period for the special assessments was open in the fall of 2013 and during that time the City received $2,788,350 in prepayments. Once the prepayment window closed, the City issued bonds for the remaining outstanding assessments in the amount of $6,687,5D0. From these proceeds, the City deposited $668,750 to the guaranty fund. The third of 15 annual installments for the assessments was due by October 16, 2016. As of December 31, 2016, all LID Special Assessments were current, nothing was delinquent. During 2016, several property owners chose to pay the assessment in full. Because of the additional principal payments received, the 97 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS City has enough funds in the LID No. 33 funds to meet debt service requirements in 2017 and pay $157,500 additional principal. Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 2016 is $0 for its tax-exempt bond issues subject to the Tax Reform Act. NOTE 11 –COMMITMENTS Property Sale Commitment. In December 2014, the City agreed to a sell the land parcel commonly known as the Longacre Property for $1.6 million. The sale is contingent upon the suitability of the property as determined by the purchaser. The examination period to determine suitability expires July 1, 2017. Construction Commitments. As of December 31, 2016, the City share of contractual obligations on construction projects total $13,194,339. GOlwmmentel Aotivitie$ 42nd Ave S Phase III/Gilliam Creek SSWM 53rd Ave 5 Street Improvements Public Safety Plan Tukwila 205 Levee Certification Phase 1 & 2 Tukwila Urban Center - Pedestrian/Bicyle Bridge Boeing Access Road Bridge Strander Blvd Extension Phase 3 Duwamish Gardens Other governmental projects Total Goveminentat AEtivities Business-Type'Activties Projects Andover Park East Water/Sewer Macadam Rd S Water Upgrade East Marginal Way South Storm Pipe Replacement Other Utility related projects Total Business Type Actl'Fties. Total Construction Commitments 98 Remaining. Commitment $ 207,617 389,019 2,694;716 316,788 5,127 518 185,128 125,410 303.964 559; 440 9,e0$,S@8< Remainingi :Carrenitment $ 3,154.507 81 384 36,247 12.602 .284,740 1094,339, CITY OF TUKWILA. 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 12 — POTENTIAL POLLUTION REMEDIATION AND OTHER LIABILITIES There are several lawsuits in which the City is involved. The City Attorney estimates that the potential claims against the City to have no material financial impact. The City of Tukwila may share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for sediment contamination within the Lower Duwamish Waterway Superfund site. The Environmental Protection Agency has estimated the total costs to be $342 million with 120 parties sharing in the liability. While it is impossible to accurately estimate the City's potential CERCLA liability at this time, the relatively small size of the City's storm water system within the Lower Duwamish Waterway Superfund site area, as well as the system's recent establishment in 1989, gives reason to the City to believe that its share of the potential liability is not significant and not estimable. NOTE 13 — RISK MANAGEMENT The city of Tukwila is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. WCIA has a total of 168 Members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, errors or omissions, stop gap, employment practices and employee benefits liability. Limits are $4 million per occurrence in the self-insured layer, and $16 million in limits above the self-insured layer is provided by reinsurance. Total limits are $20 million per occurrence subject to aggregates and sublimits. The Board of Directors determines the limits and terms of coverage annually. Insurance for property, automobile physical damage, fidelity, inland marine, and boiler and machinery coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property coverage is self-funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self-funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims and litigation administration. WCIA contracts for certain claims investigations, consultants for personnel and land use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the 99 CITY OF TUKWILA: 2016 CAFR NOTES TO THE FINANCIAL STATEMENTS organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. The City insures its buildings, equipment, and vehicle property insurance with WCIA. They self -fund up to $250,000 with standard property insurance purchased above that amount. Traveler's insures boiler machinery and provides for employee dishonesty coverage. The City of Tukwila has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self -insures for unemployment benefits. This is budgeted each year and the City paid $43,488 in unemployment in 2016. This expense is budgeted in the Finance Department within the general fund and no reserves are allocated because of the limited liability and historical cost. The City also self -insures for medical, dental and other health care benefits. A third -party administrator, Healthcare Management Administrators, Inc., provides claims administration. The City has a stop -loss policy with Sun Life Insurance Company, which provides individual limits of $175,000 and a plan limit of $8,326,642 in 2016. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported (IBNR's) and a. contingency reserve equal to 2.5 times the IBNR liability. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 54.9 days for medical, 19.6 days for pharmacy, 32.2 days for dental, and 48.7 daysfor vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of December 15, 2016. Next, the estimated IBNR liability as of December 31, 2016 was developed by trending the December 15, 2016 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. The following table reflects changes in the balances of claims liabilities for 2016 and 2015. SUMMARY OF HEALTH CARE CLAIM LIABILITIES ITEtui t Active Employees Retired Employees LEOFF I ...2016 2015 Claim Liabilities at Beginning of Year Claim expenses: Current year and changes in estimates Claim payments and expenses dean Liabilities at End byYear NOTE 14 - SUBSEQUENT EVENT $ 1,947,500 $ 2,260,000 $ 221,250 $ 285,750 5,938,336 5,561,504 (6,027,586) (5,874,004) 1,858,250 $', 1,947,500 $ 524,274 (554,274) 191,250 134,050 (198,550) 22't 250 In June 2017, the City Council approved an ordinance to sell bonds in July up to the amount of $8.8 million. Proceeds will be used to fund two residential sidewalk projects. 100 CITY OF TUKWILA. 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31,2016 5!M Budget (GoBp Basis) REVENUES: Taxes Licenses and pernits Intergovernmental Charges for services Fines and Foreftures krvestment earnings Mscelaneous Total Revtnuts'' EXPENDITURES: Current: General Government Economic environment Riysical environment Public Safety Culture and recreaton Transportation Capital outlay `fatal Erpendibtre9 = `( Etoess 08 RevtfiletAnd Erpendltu el; OTHER FINANCING SOURCES (USES): Sales of capital assets Transfers in Transfers out 'Tata, other Ananchi4 6aure90 And Lints Net change in fund balances Fund balances - beginning Fund Baancts - Ending $ 43.668,417 2,165,661 4,785,929 2,441,464 217,198 89,731 97,288 $ 45,268,417 $ 2,140,110 4,570,473 3,402,412 292,380 129,731 97,288 5,000 811 5,688 45,886,761 2,129.221 4,498.683 3,286.105 318.459 233,544 214.444 $ 618,344 (10,889) (71,790) (116,307) 26,079 103,813 117,156 487,315 ; ', . 686,404. 8.206,283 4.465,648 2072,847 28.200,194 4,228,863 3,162,762 39,040 8,208,474 4,710,648 2,015,847 30,111,895 4,361,063 3,162,762 914,740 8,315,631 4,070,805 1,955,028 29,100.506 4,408.302 2,879.996 810,180 (107,157) 639,843 60,819 1,011,389 (47,239) 282,766 104,560 0,375,637 :.: 51,485,429 .51,544,4+ 3,090,051 . {- 2,415,38 26;769 2611,887 1,600,000 - 2075,000 2,075,000 (7,153,791) (4,325.831) (4,325,831) - ( 478,791) (2,250,831). (4,825,831)' (2,075,000) (388,740) 15,404,983 15,016,243: $ 164.551 16,962,983 17127,534:;:$ 59,031344 700,938 18,330,806 536,387 1,367,823 101 CITY OF TUKWILA 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The City of Tukwila budgets its funds in accordance with the Revised Code of Washington 35A.33. Incompliance with the code, biennial budgets are adopted for the general fund and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biennially budgeted governmental funds only. Budgets established for proprietary and fiduciary funds are "management budgets" and are not legally required to be reported and, as such, are not reported in the CAFR. The biennial appropriated budgets are adopted at the fund level and the budgets constitute the legal authority for expenditures at that level. Subsidiary revenue and expenditure records are used to compare the budgeted amounts with actual revenues and expenditures. As a management control device, the subsidiary ledgers monitor expenditures for individual functions and activities by object class. Any unexpended appropriation balances lapse at the end of the biennium. The City of Tukwila's budget procedures are mandated by RCW 35A.33. The steps in the budget process are as follows: 1) Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. 2) The City Council conducts public hearings on the proposed budget in November and December. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve by ordinance any amendments that increase the total for the fund. Budget amounts presented in the basic financial statements include both the original amounts and the final amended budget as approved by the City Council. Expenditure Categories General Government Public Safety Physical Environment Transportation Economic Environment Culture and Recreation Includes administration, finance, municipal court, attomey, and city clerk activities. Includes all police and fire activities. Includes expenditures for the public works activities not chargeable to the enterprise funds. Includes all street and arterial street maintenance and construction. Reflects the planning and building inspection activities. Includes expenditures related to parks and recreational activities. The information presented in the following required schedules was determined as part of the actuarial valuations at the dates indicated. 102 CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION COST SHARING MULTIPLE EMPLOYER DEFINED BENEFIT PENSION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PERS! June 30. 2015 0.135736% $ 7,100.255 $ June 30, 2016 PERS 2/ 0.131354% $ 7,054,328 $ 7.100,255 $ 15.561015 45.63% 59.10% 7,054,328 $ 15,736,921 44,83% 57.03% 981 Jura 30, 2015 0.173592% 6 6,202.541 $ Jute 30, 2016 0.166622% $ 8.389.286 $ 6202,541 $ 15.406,589 8,389,286 $ 15,579,718 40. 6% 53.85% 89.20% 85,82% June 30. 2015 June 30. 2016 LEOFF 2 0.077944% $ 0,077890% $ (939.397) $ (802,490) $ (939,3971 $ (802490) $ 76,144 -1233.71% 0.00% CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS PERS 1 December 31, 2015 $ December 31. 2016 $ PERS 2/3 666,881 $ 752,418 $ (686.881) $ (752.418) 9 15.654.255 15.777,881 4.39% 4,77% December 31, 2015 $ December 31. 2016 $ PSERS �.t December 31, 2015 $ December 31, 2016 $ 873,248 $ (873,248) $ 972612 $ (972,612) $ - $ 15,498.171 - $ 15 616,400 5.63 % 6.23 Yl LEOFF 2 10.105 $ 10,642 $ (10.105) $ (10,642) $ - $ 156,084 $ 161,481 6,47% 6.59% December 31. 2015 $ 776,719 $ (776.719) $ - December 31,2016 $ 787,110 $ (787.1 10) $ - $ 15.380,541 15.586, 296 5.05% 5.05% 127.36% 12374% 'Until a full 10 -year trend is compiled. governments should present information only for those years for Wrich information is available_ Until a 754/ 1$yeer trend o compiled governments should present information only for tbose years for Mich information is evak8k. 103 104 CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION FIREMEN'S PENSION TRUST FUND SCHEDULE OF FUNDING PROGRESS (Rounded to thousands) .Valuati(tit 1Ds1'a January 1, 2005 January 1, 2007 January 1, 2009 January 1, 2011 January 1, 2013 January 1, 2014* January 1, 2015 January 1, 2016 Al Atu Actuaria $1,265 1,336 1,445 1,430 1,416 1,409 1,413 1,417 $1,182 1,310 1,610 1,582 1,296 1,853 1,830 1,445 "January 1, 2014 change in actuary and adoption of GASB 67 ($83) 107% $608 (26) 102 463 165 90 442 152 90 0 (120) 109 0 444 76 417 77 28 99 �tl•Pg N/A N/A 37 WA N/A N/A N/A N/A Schedules LJabiIity an Total Pension Liability Service Cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, included refunds of employee contributions Net change in total pension liability Total pension liability - beginning 2014 2016 I 2016 50,098 49,716 49,332 (61,863) (2,442) (58,277) (311,190) (62,728) (59,988) (11,765) (11,003) 1,852,693 1,840,929 (384,574) 1,829,926 Total pension liability - ending (a) $ 1,840,929 $ 1,829,926 1,445,352 Plan Fiduciary Net Position I Contributions -employer Contributions -employee 64,114 1 $ 105 63,590 I 66,360 CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION Net investment income 1,805 2,667 Benefit payments, including refunds of employee contributions Administrative expense (4,500) (61,863) (58,277) Other Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) City's net pension liability - ending (a) - (b) Plan fiduciary net position as a percentage of the total pension liability Covered -employee payroll City's net pension liability as a percentage of covered -employee payroll-______ 7,988 (59,988) (4,500) 4,056 3,481 9,861 1,408,970 1,413,026 1,416,506 1,413,026 1,416,506 1,426,367 $ 427,903 $ 413,420 18,985 $ 76.76% ora Schedule of Employer Contributions 77.41% 'r 98.69% n/a December 31, 2007 $ 50,555 $ 50,555 $ December 31, 2008 52,571 52,571 December 31, 2009 48,537 48.537 December 31, 2010 49,989 49.989 December 31, 2011 54,865 54.865 December3l, 2012 52,249 52,249 December 31, 2013 56,962 56.962 December 31, 2014 64,114 64.114 December 31, 2015 63,590 63.590 December 31, 2016 66,360 66.360 106 n/a n/a n/a n/a n/a 0/2 n/a n/a n/a n/a CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION Contributions are a portion of State Fire Insurance Premiums. Schedule of Investment Returns Inual dr 2011 0.12% 2012 2013 2014 020% 0.17% 0.13 % 2015 0.19% 2016 0.56% Ten-year schedule required. However, until a full 10 -year trend is compiled, information is presented for those years where information is available. CITY OF TUKWILA: 2016 CAFR REQUIRED SUPPLEMENTAL INFORMATION RETIREE MEDICAL AND LONG-TERM CARE BENEFITS FOR LEOFF 1 EMPLOYEES SCHEDULE OF FUNDING PROGRESS (Rounded to thousands) January 1. 2008 January 1,2011 January 1,2014 January 1,2015 January 1.2016 January 1, 2017 50 0 0 0 0 0 $16.103 14,805 21,264 29,538 30,186 29,054 $16.103 14,805 21,264 29.538 30.186 29.054 0% $581 0 371 O 195 O 132 O 0 0 0 SCHEDULE OF EMPLOYER CONTRIBUTIONS is December 31, 2008 $557,103 $1,366,284 41% December 31, 2009 $335,265 $1,366,284 25 December 31, 2010 317,771 1,366,284 23 CO December 31, 2011 335,090 1,264,522 26 -,1 December31, 2012 404,007 1,264,522 32 v December 31, 2013 878,755 1,264,522 69 December 31, 2014 905,974 1,903,679 48 December 31, 2015 477,292 2,585,779 18 December 31, 2016 275,530 2,765,486 18 107 106 4% 3 1 0 0 0 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are established to account for proceeds of specific taxes or other specific revenue sources that are legally restricted to or committed for expenditures for particular purposes. • Hotel/Motel Tax Fund — Established to account for the proceeds of a 1% special excise tax on overnight lodging in Tukwila. This tax provides resources to support tourism development and promotion activities in Tukwila. • Drug Seizure Fund —Accounts for monies and proceeds from the sale of property seized during drug and felony investigations. These funds are legally required to be expended on drug and felony related police activities. Debt Service Funds Debt Service Funds are account for the accumulation of resources for and the payment of principal and interest on general obligation and special assessment bonds. • Local Improvement Guaranty Fund — Holds reserve funds required under state law to provide a means of paying local improvement district (LID) bond debt service obligations in the event there are insufficient resources in the LID debt service fund. • Limited Tax G.O. Refunding 2003 — Accounts for the principal and interest payments for the refunded Limited Tax G.O. 1994 Bonds for the construction of a new Community Center and the replacement of Fire Station #53. This bond has been paid off. • Limited Tax G.O. Refunding 2008 — Accounts for the principal and interest payments for the refunded Limited Tax G.O. 1999 Bonds which were issued for the purchase of a City Hall annex, known as the 6300 Building, and the purchase of land and payment of other economic revitalization costs for the future Tukwila Village project. • Limited Tax G.O. SCORE — Accounts for the principal and interest payments required per the debt service schedule for the City's portion of the construction of a correctional facility along with six other cities. • Limited Tax G.O. 2010 — Accounts for the principal and interest payments for the bonds issued for the construction and realignment of a major arterial street, Southcenter Parkway, in the Tukwila South Annexation area andfor the cost of emergency preparedness capital and other equipment. • Limited Tax G.O. Refunding 2010 — This fund provides payment to Valley Communications Center for principal and interest on bonds issued in April 2010 to refund bonds that were originally issued in 2000 to pay for the new Valley Communications Center. This debt reflects Tukwila's share with four other cities. Each of the five cities was responsible for one-fifth of the annual debt service. The final payment was made in 2015. • Limited Tax G.O. Refunding 2011 — Accounts for the principal and interest payments for the portion of the Limited Tax G.O. 2003 Bonds refunded and pertaining to arterial street projects. 109 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES • Limited Tax G.O. 2013 — Accounts for principal and interest on bonds issued for the renovation of the Tukwila Metropolitan Park District swimming pool. The proceeds were loaned to the District; the District reimburses the City for the debt service based on an interlocal agreement between the two entities. • Limited Tax G.O Fund — Accounts for principal and interest payments on bonds issued in 2014 for the Tukwila International Boulevard Revitalization project and for bonds issued in 2015 for the Interurban Avenue South improvement and Boeing Access Road Bridge retrofit projects. Capital Project Funds Capital Project Funds account for the acquisition or development of major capital facilities, except those projects financed by proprietary funds. Sources of revenue to these funds include general obligation bond proceeds, federal and state grants, real estate excise taxes, and transfers from the General Fund. • Residential Street — Established in accordance with RCW 35A.37.010 to account for maintenance and improvement of the City's residential streets. Major sources of support are the State -levied tax on motor vehicle fuels distributed to Tukwila, to be used for City street purposes, state and federal grants, and transfers in from the General Fund. Land Acquisition, Recreation, and Park Development — Accounts for the acquisition of land, development of land, and construction of park facilities, • Facilities (Urban Renewal) — Established in 1988, this fund accounts for costs associated with property owned by the City that will be utilized for redevelopment or renewal purposes. • General Government Improvements — This fund was established in 1992 to provide funding for minor capital improvements not related to parks, land acquisition, or major building replacements. • Fire Improvements — This fund is to be used for the acquisition of land, development of land and construction of fire facilities. Revenue for this fund comes primarily from fire impact fees. 110 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR GOVERNMENT FUNDS DECEMBER 31, 2016 Tote) fetal fetal. sSpecial Revenue Debt Servroe Capital Protects Oovernne.ntaI, Funds Funds Funds REVENUES: ..' - • . TAXES'. FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENT FUNDS FOR THE YEAR ENDED DECEMBER 31,2016 bite , 1Cepitel: Funds Fu Total G0Vernn'ental ASSETS: Taxes Cash and cash equivalents $ 1,096,397 $ 1,063,774 $ 4.382,031 $ 6,542,202 Charges for services Intergovernmental Taxes receivable 84.316 - 536,175 620,491 Investment earnings Other receivables - - 6,600 6,600 Miscellaneous Due from other governmental units - - 1.163,418 1,163,418 Total Revenues Restricted Assets Cash and cash equivalents 503,475 - 503,475 Notes receivable - 300;022 300,022 Capital assets held for resale - - 7,645,000 7,645,000 TotatAssetig $ 1684,j88 i„063,774 ,14,033547.; 16781,208 CO LIABILITIES AND FUND BALANCES: CT1 CO Current liabilities Accounts payable Accrued wages and benefits Customer deposit Total Llabites 219;891 - 647,118:- 865,209 218,091 464,675 682,766 6,799 6,799 175,644 175,644 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-inpact fee TOTAL DEFERRED INFLOWS OF RESOURt: $ 710.267 $ - $ 1,417,534 $ 2,127,001 183,867 183,867 62091 1,863,750 1, 925,841 1.607 2 8.943 10 553 624.279 - 624,279 386,153 - 6 093' _ 1'8,474;094 r . 4,872,341:1 EXPENDITURES: Current General government - - 1,090,359 1.090,359 Econaruc environment 422.405 - - 422,405 Physical environment - - 3 3 Public safety 59.303 - - 59,303 Cultural and Recreation - - 135,038 135,038 Transportation - 261,641 261,641 Debt service Principal 1,932.782 1.932,782 Interest - 812.540 - 812,540 Cap8al Outlay 18,707 - 2,026 808 2,045,515 Total Expendeutes - 500,416 2.74$ 321 3,513 849 6;759,385; Exces (deficiency) of revenues Over (Under) Brpend6rSes `< `835738 - .;(2,683228) :(39755) (1;8871245);. OTHER FINANCING SOURCES ( USES): 2,874.831 400.000 3.274,831 TialOtAar:1<tntinc1ng Sources Anti Uses .. :2874831 -`400,006 3;234,031`-: 306,622 306,622 Net change in fund balances 835.738 191.604 360.245 1.387,586 306,622. 306,622 Fund balances - beginning 630.359 872.169 12.719,262 14,221,790 Fund balances Nonspendable 7,645,000 7,645,000 Restricted 1,466,097 668,849 4,078,143 6.213,088 Assigned - 394,925 1,356,364 1,751,288 Total Fund balances - 1466;697 (063,774 13,079,507'' 15;689,317 Total Liabilities and Fund.Balancas ;$ 1,684,188 $ 363,774 14,033,2473 5 , 16,781,208,` 111 Fund Balances - Ending _ $ , '1,466,097 $ ; 1,063,774 ' 4 13,079,807 5 , ,1&600 378 112 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA. WASHINGTON COMBINING BALANCE SHEET NON -MAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2016 ASSETS: Cash and cash equivalents Taxes receivables Cash and cash equivalents Total Assets: ... LIABILITIES AND FUND BALANCE: Accounts payable TotalUab s TotaWFuhdSala nces $ 1,049,539 $ 46,858 $ 1,096,397 84,316 - 84,316 - 503,475 503,475 133,855 550833-_ ',1;684,168 221,297 (3,206) 218,091 (2,206) 218,091 912,558 553,539 1,466,097 612559 553,539 1,466,697 Tb6a1 tiab85es and Fundllalanoes $ ;:1,133,855 5 550,333. $ .1684,188 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31 2016 el T 99 u 1 finds REVENUE: Taxes Investment earnings NIscelaneous FXPENDITURES: Current: Public safety Economic environment Capital outlay '..,T089 Ex9e809Ures Excess (deficiency) of revenues 0981 (U r)`0xeend890e6 Net change in fund balances Fund balances - beginning N111I8dlen6C5ending. $ 710,267 $ 1,576 711,842 422,405 710,267 31 1,607 624,279 624,279 624,316. $;336,153. 59,303 59,303 422,405 18,707 18,707 0 _ '550,415. 289,438 00 ".;635.739 289,438 546,300 835,738 623,120 7239 630,359 912 5558 $, ' ; ' 53,539„ '' 1,466,097> co 6) CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA. WASHINGTON COMBINING BALANCE SHEET NON -MAJOR DEBT SERVICE FUNDS DECEMBER 31, 2016 Special LTGO' 1700 Stare LTOO VaIey LTGO LTCB LTGO Band Talar Assaa0811 Refunding : R4 Orr LTGO Banda Com R9fuhd4lg BoNis Bondy Sand - Bonds Bonds 2010'• LTGO Bands 2ui3 '208ren(y 2003(681 200818. X2009' Rerun U91d2833 1994( 98991 Bore 2010 ASSETS: Gash and cash equwa6nts TOTALASSETS . $ 669,150 $ 195 $ 416 $ 2 $ 33,940 $ 794 $ 539 $ 9 358740 $ 1,063,774 889.150 195. 416 2 ., ,.,. 794 :._ 839 , , 358740.:, .,1,053774 LIABILITIES 8140 FUND BALANCES: Total Uablitlat Fund balances: Restricted Assigned Total Fund Mantes TafelL6bil68and Rind 668 849 300 195 416 148..99$ 416 33 94 334400 794:. 794 :399 666,849 358,749 394,925 358340..: 1063774' .1.48 $33.940.., 9 794 $. 939 .$ $ 3 .;740 ' Linked Tax GO Bonds 2009A also includes United Tax GO Bonds 20090 • Limned Tax GO Bonds 20106 also ncludes Taxable Build America Bonds 2010B FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR DEBT SERVICE FUNDS FOR THE 'YEAR ENDED DECEMBER 31,2016 REVENUES: To401s46n06s EXPENDITURES: To14111i06Tdaurea Excess (defciency) ofrevenues dieRl154063) 64081 10193': 9 2 $ 62,091 $ _ 62,091 - 655.095 156.100 831,1(0' 099 - 395,000 - 190,450 62,083 - 420,000 93,782 369000 1,932,782 128.675 19 348 317,866 812,539 548875 .. 113,130 . ` `888.968 2,745,321 OTHER FINANCING SOURCES (USES): Transfers in 341al ORher Rnanedp 84oroa And Use Nat change in fund ba6nces Fund balances - beginning 898 B8i934 8-Endkq 811.100 - 523 593 (648,875): 13,238) : - (8',965; (2,883,228} 548.675 113,130 878333 2,874,831 81 523,593 548,675 :613,130 2 - - - 235 - 669,146 195 416 2 33705 794 539 449.144 $ ;195. $ 415 ;:6 2 $ 33840 191 367 191,604 167.372 872,169 Ya8,739 . S 1063774:'.. ' United Tax GO Bonds 2009A 680 includes Linked Tax GO Bonds 20096 "Limned Tax GO Bonds 2010A also inc6Mes Taxable Build Anerca Bonds 20108 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA_ 2016 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR CAPITAL PROJECTS FUNDS DECEMBER 31, 2016 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA WASHINGTON COMBIMNGSTATEatENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR CAPITAL PROJECTS FUNDS FOR THE YEAR ENDED DECEMBER 31.2016 Land Aoq. ,Fac 7tes .General Total Nonrfa 01 Resident RPM & Park Urban i3diefalrent Fee '' Captst F6oJect REVENUES: Street - GoV8Npbent Renewal drprAvemerHs F>irTaVemenis Funds Taxes Charges for services ASSETS: Intergovernmental Cash and cashequ6elents $ 719,316 $ 2079,567 $ 445.059 $ 401,572 $ 736518 $ 4382.031 Frvestnent earnings Taxes receivable 42.820 493,355 - - - 535175 Other rece6ebles - - 5600 6,600 Due from other governmental unts 24,672 1,138 746 - - 1,163,418 RESTRICTED ASSETS'. Notes receivable - - 300,022 300.022 Ceptal asset held for resale- - 7645,000 - 7645,000 Tete€Assets 786,808 8,711,868 8,050059 ,401572 1,043,140 -" 14,033,247 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Current payables: Accounts payables 106.577 332.980 20.968 4.150 - 464,675 Accrued wages and benefits 2.578 329 3.892 - 6.799 Customer deposit 18,720 26,246 129,050 1,627 - 175,644 W Tafel L(ablBlas - -x127,875 >359,655 '.150,018, 8669 _ 647116' I Deferred Inflow of resources. NUnavailable revenue impact fee TOW Deferredhfbw of Re5urces - _. - _:' - ;.308,422' . 309.922 306,622 306 622 Fund balances. Nonspendable Restricted Assigned Total Pond 6alace Total Llabdt(es,and.Fund Bala - 7,645 000 - 7.645 008 - 3,341 625 - - 736,518 4.078.143 658.932 10.488 295,040 391,903 - 1,356364 958.932 -0352,113 7;940040 ":391903 738518 10075507-. 7@6808 ' 711,665 04,0 401,572 . 51,043,140, 3F d Acq. :Faeifad General "Total Mrgrie}or;. 6 Palk lkban 'Ooverrtirpenf .Hra Capital PFoje'ets bp''ert ,Renewal inprovembnla; >.ilpravenne1s Fulda TotelRowerroes: EXPENDITURES: Current: General government Physical environment Cuture and recreation - $ 1,417,534 $ 465,422 1398,328 2,163 1,702 2,706 467585. X2.817,564 2.706 - 1,156 897,211 193,148 3 135,038 - - Transportatbn 261 641 - - Capital Outlay 566.172 1,447,498 X1645 EXPetalture8 827,813- .'i.582,540. 897211 &roes (defeerey) of rev5Mlea ...Over (thderI E.oper dtures .' 0711E2 FINANCING soURCES (USE): toti5Other 1=maneirg Sources And t../ads Net change in fund balances Fund balances - beginning Fund 88590088 - ardkxr 13,138 183.867 $ 1,417.534 183.857 1.863.750 1,216 8,943 185,084-1, . '3,474,694': 1,090.359 3 135,038 261,641 2,026 808 3,513,849..::. 0380.240) ' x 1235023' ;,. • 1494 200,000 200 000 39; 400.000 210000 (160229) 1235,025 (894,505) (5.130) 185 084 360 245 819,161 2,117,089 8834,545 397,033 551.434 12719,262 9321 Y.. 3, `..7946040 $ 1,3 .....$. ,736,518 $, . 13,079;507::: CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA. WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL ARTERIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 REVENUES: Taxes htergovernrrental Charges for services hvestrrent earnings Miscellaneous W 0) Total. Revenues (.J EXPENDITURES: Current. Transportation Capital outlay Total 5Spendlutes b cees (deficiency) of revenues Wet (Under) Evpendhures OTHER FINANCING SOURCES (USES): Transfers In Total Other Financing Sources And Uses Net change in fund balances Fund balance - beginning Fund Balunees = Ending 365,160 $ 365,160 $ 1,573.930 $ 1.208,770 10.322,920 10.322,920 3,642.889 (6.680.031) 160,000 160.000 441,500 281,500 5.000 5.000 19.711 14 711 - 117,549 117,549 0,851080 `l 10851080:' 079$;580 (5,A57,500) 436,216 436216 2,096,831 (1.660,615) 13,764001 14 164,001 5.502.756 8.661,245 14206217 14600,217- 7599,587 7,0006"30, 47,137), (1747,137): (7,804,007) 3,151,000 751,000 751.000 151,000 751,000 ` 751,000' (196.137) (2,996,137) (1,053,007) 1.943,130 5,052.383 344,489 5.044,489 7,894 :748.352- $,.S 2048.352: $ 3,999;376 $ , , 1951,724 119 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LOCAL IMPROVEMENT DISTRICT 833 DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variant Print Budget Positive REVENUES: Special assessment Investment earnings 11.4scellaneous Total Revenues EXPENDITURES, Debt service: Rincipal Interest Total Batpenditurea: tYeess Of Re0enu88 And Btpendsures Net change in fund balances Fund balances - beginning Fund Bate9ces.- Ending' $ 443,147 $ 593,147 $ 542,180 $ (50,967) 342,526 342,526 267,930 (74.596) 886 886 5,673 , 935,873 450,000 900,000 286,005 286,005 8t43,997 ' .. .". (124676; 670,000 281,044 230,000 4,961 '7'.i6,' ),9 234,961 49.69 8,$32), (140,047)-", C 116,285., 49,668 (250,332) (140.047) 820,856 820,856 1,038,769 110.285 217,913 78 524 $ 519,524 $ , ; 698,12 120 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL PUBLIC SAFETY PLAN CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31 2016 Budget iaap Basis} al Budget (Gasp Bab) Variance VVah Final Budget Actual':: PosAve Resuks (Negative) ' ±. REVENUES: Investment earnings Total,Revenues EXPENDITURES: Current: General Government Total Expenditures Et0e56-Of Revenues And Expenditures OTHER FINANCING SOURCES (USES): Bond proceeds Rerrium on bonds issued total Other Financing Souroes And Uses 36,709,054 - 36,709;954 9,561 $ 9,561 9,561 9,561 209,954 2(1$,388 s. 8,566.1 (209 954) ((96,827) 13,127; 32,990.000 32,990.000 3,719,954 3,719,954 Net change in fund balances Fund balances - beginning Fund Balances - Ending 36,500,000 36,513,127 13.127 $ _: 38,500600. $ , 38,51.3:127 $ , ,: 13,127, CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL HOTEUMOTEL TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2016 Original' Budget Gasp Basis) Variance:6565 Final Budget Positiae' 9155 (Negative) REVENUES: Taxes Investment earnings Total ReVenuee 'r EXPENDITURES: Current: Economic environment Total Expaad'ures Excess (deficiency) of revenues Over (Under) i7ipehddures $ 630,000 $ 630,000 $ 710,267 $ 80,267 - - 1,576 1.576 630,000 `; 630,000;_:= X11,843; : 81,843... 427,500 427.500 422,405 5,095 427,500. J: 427,5) _ 422,405 5,Q95 ,202,500 202;500 289,438 - 80,936 Net change in fund balances 202,500 202,500 289,438 86,938 Fund balances - beginning 389,674 389,674 623,120 233,446 Fund Balahces-Ending' :$ .,592,174 $ 592,174 :$ 912,558 ffi X20.384 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2016 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DRUG SEIZURE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2016 Variance With -. iginal 'Final Etna( 9upget Budget Budget . Actual po§IBJe:., Gaap B'a,61$) )Gasp Ba") Results REVENUES: Investment earnings Fines and forfeitures EXPENDITURES: Current: Public safety Capital outlay: Wblic safety Total Expenditures Excess (deficiency) of revenues Over "(Under) 60568462896 Net change in fund balances Fund Balances - beginning Fund Balances > Ending - $ - $ 60.000 635.000 31 $ 624.279 31 (10721) 60,000. 635.600 624,310 `: (10 690)-. 45,000 95,000 59,303 35.697 18,707 (18 707) 46,000 . . 95,000 78,010. 15,000 540,000 "-' 546,300 15,000 540.000 546,300 6.300 65,000 65,000 7,239 (57.761) 80,000 ; 600,000 $ ., 553,539 $r„ , ,(51,481), FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL RESIDENTIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 ,Variance Wlth inal$uciget BasO); .,':,(GaepBak ? .: ,Reer�lte. tNepativa) REVENUES: Intergovernmental Investment earnings Miscellaneous Tamil Revenues 1,705,078 $ 2,544,028 $ 465,422 $ (2,078,606) 1.800 1800 2,163 363 2,850 000 2,850,000 - (2.850,000) 4 (4.928.243)- ,56€76 :, _ 5,395,828` 467,585 EXPENDITURES: Current: Transportation 261,641 (261,641) Capital outlay 8,823.000 9,751,000 566,172 9,184,828 TeiatExpenditUFes , . ,.8,823,050 " 9,751U0 827,813 , ;.:8,923,187 OTHER RNANCING SOURCES (USES): Bond proceeds Transfers in teal tithe' Financirl0 Soutcas And Use! Net change in fund balances Fund balances - beginning Y3uhd Balances.68068 ` ).4;266,122)' (4;: to,229)z `; 3,984,94; 4,400,000 4,400,000 200,000 200,000 200,000 (4,400,000) 4,600 QQO4000„000 b ' ' 200,000' ` ::`j$ 400, 333.878 244,828 (160,229) (405,057) 56,842 806, 842 819.161 12, 319 390,720 $ 1.051,670; s� `.;;608932 , $ (392,738), 123 124 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA 2016 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LAND & PARK ACQUISITION CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 Original Final Fsial B Budget Budget Actual - )A30, aap Basis) REVENUES: Taxes Intergovernmental Charges for services Investment earnings TotalRe;tenues EXPENDITURES: co Current Physical environment a) Culture and recreation Capital outlay Total Bipend)Wres l i. Evicese Of )revenues: And Bipen Net change in fund balances Fund balances - beginning Fund Balance's - Ending OS $ 260,000 $ 260,000 $ 10,000 810,000 40,000 40,000 1,000 1,000 1,417,534 $ 1,398,328 1,702 1,157,534 588,328 (40,000) 702 1,0 900 Y,8{7,884_" 3 (3) 135,038 (135,038) 292,000 1,092,000 1,447,498 (355,498) 292,800: 092,000 1,582,540: 490,540 19,000 , 1! 235,0 19,000 19,000 1,235,025 1216.025 318,000 2,118,000 2,117,089 (911) 337,000 $ 2,137,000 3352113 $ ..1215,113; FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FACILITIES CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 REVENUES: Investment earnings Tutat Ri5Jeilifes EXPENDITURES: Current: General Government Principal Capital outlay ' 3efalExpehditures' 5roese Ol Revenue3 And Fxpendtrirre OTHER FINANCING SOURCES (USES): Sales of capital assets Transfers out Teta605151 FsiandingSources And Uaee Net change in fund balances before special tem Fund balances - beginning Find Balances - Ending, 3,602 $ 3,602 $ 2,706 $ (896) 3,502 2,705 897,211 (897,211) 2,250,000 2.250,000 2,250,000 90,000 90,000 - 90,000 2.340,000, 2,340,040. " 897 7 398), .z 3 4,325,000 (2.075,000) 2,298 000 ' 2250,000, 4,325,000 (2.075,000) (4,325.000) 2,075,000 (2250;000) (86,398) 1,873,602 5,787 204 (86,398) 1,873,602 (894.505) 8,834,545 (808,107) 6,960,943 81 2,836 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. 2016 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL GOVERNMENT IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 REVENUES: hrvestment earnings Total Revenues EXPENDITURES: Current: General Government General Government Improvements CO Capital outlay O) Total &pent86ures ss Of Revenaes And 6rpentl8ures OTHER FINANCING SOURCES (USES): Transfers in Total Other Pnanctrrg Sources. And 18e Net change in fund balances Fund balances - beginning Fund 9alandes • hiding 500 $ 500 $ 1.156 $ 656 50 00: 193.148 (193.148) 130,640 130,640 130.640 200,000 200,000 13.138 186,862 330640 330640 ' 206,285 , 330140) (330140) (206130) , 1125,0 200,000 200,000 200,000 200,000. 200,000 200.000 (130.140) (130,140) 379,950 379.950 249,8)0, $.; 249,810 (5.130) 125.010 397,033 17.083 391,903 . $ 142,093 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FIRE IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2016 VariancelIAfah':'J Final Budget positva gMere) (0 ( REVENUES: Fire impact fees Investment earnings %tet Revenues EXPENDITURES: Current Public Safety Capital outlay Total Etpendttuies:' Excess df Revenues And 6tpenhkteti Net change in fund balances Fund balances - beginning Fund Balanced- Eridhtg $ 50,000 $ 50,000 $ 183,867 $ 133,867 100 100 1,216 1,116 50,100 00,100 . , , , ' 185.0$4' 58u180 6,100 5,084' , 134, 50,100 50,100 185,084 500,100 500,100 551,434 560,200 : 550 200 ; $ 736,518 $ ' 186 134,984 51,334 CITY OF TUKWILA. 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31,2016 al Fnal Budget Budget p Basis) (Gaup Bats) Variance,V.Mh 1. Final Budget, Positive fsgatiVe) REVENUES: Intergovernnental Investment earrings ,TotelR4evenues EXPENDITURES: Debt service: Rincipal !Merest 61,858 $ 500 61,858. $ 62,091 $ 500 2 233 (498) 62,358 62,358; 2,607,271 2.442,071 1,932,782 509.289 757,378 494,618 812,539 (317,921) 03 Total Expenditures J384649 2,936,689'. 2,748321, (181,388). r CO ptcess Of Revenues And Expenditures (3,392,291) (2,874,331) 7) 191,104 OTHER FINANCING SOURCES (USES): Transfers in 3,302,791 2,874,831 2,874,831 Total Other Fnanomg Source§ And Uses 3,302,791 2,874,831 ,2,874,831 Net change in fund balances Fund balances - beginning Fund Bake -166S - Endelg 500 500 191,604 673,500 673,500 872,170 .674,090 $ 674,008 $ 1,063,773 $, 191.104 198.670 589373 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON -MAJOR INTERNAL SERVICE FUNDS Internal Service Funds The City's internal service funds are used to account for the financing of special services performed by designated departments within the City of Tukwila for the benefit of other departments within the City. The funds provide services then generate revenue by billing the department for which the service was provided. • Equipment Rental Fund — Accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates which are charged to each user department. • Insurance Fund Active Employees — Accounts for the costs of the City's self-insured medical plan. Medical and dental costs for covered employees are charged to the respective departments. All premiums, medical and dental costs and ancillary charges are included. • Insurance Fund LEOFF 1 Retirees —Accounts for the costs of the City's self-insured medical plan for LEOFF 1 retirees. Medical and dental costs for covered employees are charged to the respective departments, either the Police Department or the Fire Department. All premiums, medical and dental costs and ancillary charges are included. 129 130 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS DECEMBER 31, 2016 . ` Equipment Rental insurance+ Active Employees Insurance -" Leotf I Retirees. Infernal Service Funds ASSETS: Current assets Cash and cash equivalents $ 4,285.711 Investments 525.627 Receivables 1,546 hventory of meterals and supplies 15.273 T lalCurrentAbsets - '4,828.157 3;353,073 $ 951,771 $ 1,077.247 2.377,387 23,915 NONCURRENT ASSETS'. Capital Assets. Machinery and equipment 14,942 639 Less. accumulated depreciation (10,234.527) Total'Capital Aseets (Net Of A/0) 4,798,113 To Noncurrent Assets - 4,708,113 TotalAssete Deferred Outflows of Resources Deferred outflow pension earnings Total Deferred liflows Of Resources LIABILITIES: Current liabilities: Accounts payable Accrued wages and benefits Claims incurred but not reported Total Currant Liabdibes Noncurrent liabilities: Reserve for unreported claims Net pension Ilabirity Total Nbneufrent L101,lties Deferred Inflows of Resources Deferred inflow pension earnings Toted Deferred Inflow; Of Resources NET POSITION: Investment in capital assets Unrestricted Total Net Position 077,247 6,314 729 2,903,014 25,462 15,273 9,258,478': 14,942,639 (10,234 527) 4;788,113 4,708;113;: 9,536:270 64.348 383.87 77,247 11,966,390 CITY OF TUKWILA, 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 Equipment_ Rental nsuranoe Active } mptoyees` Insurance- Lebff 1 Retirees Funds Total OPERATING REVENUES: Charges for services Other operating revenue Teta' Operating Revenue OPERATING IXPBJSES: Operations & maintenance Adninstrative & general Depreciation Tota) Operative 87568869 Opera�n9ircone(Loas)` NON-OPERATING REV EJUE (D(PE4SE): Investment earnings $ 2,066,889 $ 5,290,893 $ 630,444 $ 7,988,226 2,043 138,033 - 2,068932 __ - _ 5426926 _ 630,444,.4 140,076 .;8,128,302 1,247,530 5,817.626 316,578 120,703 799,436 - 512,861 11,408 7,578.017 448,689 799,436 2363,544 5,938,329 524,269 ; 8,626,142.; (294,613) (509,493) .1 06,175 ' `'-(897,840) 29,435 22,288 Gain (loss) on disposal of capital assets 96,953 64,348 Total NO 098ra695 Revenue (E%p6066 126,486 _ 22288 64,348..;. 82.948 19.698 102.646 381,561 3519 689,750 381,561 589,750 1.168500 132,750 1168,500 132.750 58.500 62,018 64,348? 86,468 19,698 748,250 854,416::- 1,301,250 381,561 1,682,811 484,2071 1,858 250 184,769'' 2,633, 227'' 14,963 14,963 14,063, 4,708,113 4,393.334 9,191,447., 1.494,823 1,494,823 882,478 14,9831 4, 708,113 6,770 636 1,478,749,;: 131 Ohange N Net isitioh Net position beginning of year Net fb$Ition end of year 569 52,291 96,953 149,244 (188,225) (467,11:5) 9,269,672 1,981,939 106: 744 775,734 (548,596) 12,027.345 $ ', 5,19T,447_ 4,823- 'S _ 82,478 -:$ 11,478 749_ 132 4."285791;: 5-3, 951,77§-;'3 ;1571,,247.. CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016 Page 1 012 CASH FLOWS FROM OPERATINGACTIVMES: Cash received from users Cash paid to suppliers Cash paid for taxes Cash paid to, or on behalf of Ns1Ces6 Provided (Usad)' By 0dere6ng As9t46ee . employees CASH ROWS FROM CAPITAL AND RELATED FINANCINGACTIVmES: Proceed from sale of equipment Purchase of capital asset Net Cash Oirdvlded (C ood)`t'oFCnapiSoI '. -n. Aid Reliibd F'ih0foir) Arch41i 6' CASH FLOW FROM INVESTING ACTIvmES: Proceeds from sale ofinvestinents Purchase of investments Interest received NatOa 6 Ptcadde4jUs5d(lnlnv&s9n Activilie6 Netinsrease (De,crease) In 1 Caoh Egthoalenta '' Cash and cash equivalents -beginning ofyear Cash Asd Oas)ti Equtva)ehta=E6 0fYea0 Cash at end of year consists of Cash and cash equivalents TOTalCath $ 2.068 932 $ 5,423.842 $ (990.773) (246,446) (570) - (56z898) (5,781,133) 514,691 (603,737) . 144,37 697,839 $ (47,192) (506271) 8,190,613 (1,284.411) (570) (6,850,302) 128,075 5797,536) 128,075 (797,536) 461) , (225,000) 33,052 1240,930 139,501 569 (4 1,015,930 173,121 ($90.,946)" 1,369,435 5 ' 069461 46,719)1 4,632,430 76,694 175,077 4,255,711 gs 991,77': 44 932,303 5,739,809 ITT''.c47 $: $ 4285 711 $ 951,771 $ 1,077,247 6,314,729 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016 Paae 2 o12 hp RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Opeietio9 hricoHoe:(L64s) .. ".' .' .'," � $ '� "(264413)'.:$ ;"�'(5644oa� .3. : •,196:1is. ` S `,. ' (687,640 Adjustments to reconcile operating income to net cash Provided (used) by operating activities: Depreciation Ass et (increases) decreases: Accounts receivable Inventory Deterred outflow otresources (increase) decrease Liability increases (decreases): Accounts payable Wages and benefits payable Deferred inflow of resources increase (decrease) 799,436 (1,436) (26,438) 24,611 213 12,917 '8091303 (g } (5.084) (89,250) 67,395 (29,194) 799,436 62,311 (1,436) (26,438) (93,833) 213 12,917 4) > 7 NefCaslt7rdvlded (U65d) ByOper 6 2 666'66 :; ;$ .,,,..:,51.449j', ,<$, _.. ($9$,737 $ ,.'1441376, $: 5,339 SCHEDULE OF NONCASH INVESTING, CAPITAL AND RNANCING ACTIVITIES Increase in fair value of investment Total Nan Catch Inxns8n(j;-Capdal And,' F9nan4tngAniti,6es .t (18,661) $ $ (18,661) 666 CITY OF TUKWILA: 2016 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Balance•', January,1, 2016 Additions Di;'duction December $1„2016 ASSETS Cash and cash equivalents Receivables Total Assets $ 124,624 $ 940,142 $ (863,027) $ 201,739 12,467 131,437 187,092 ` 1,071;579' 951,389) ; ;257,282; (88,361) 55,543 LIABILITIES CO Accounts and other payables 137,092 1,857,890 (1 737,700) 257,282 d Total Liabilities $ , 137,092 $� '1,857,890 $ (1,7$7700) $ ,257;282;. The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA: 2016 CAFR _.. __. FUND FINANCIAL STATEMENTS AND SCHEDULES 135 136 CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. 2016 CAFR City of Tukwila STATISTICAL SECTION December 31, 2016 STATISTICAL SECTION Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net Position by Component . 138 Governmental acTh,6ies: Schedule 2 Changes in Net Position 140 Net investment in capital assets $ 136,053,013 $ 136,742,368 $ 155,847,012 $ 177,078,793 Schedule 3 Fund Balances, Governmental Funds 142 Restricted 1,233,234 19,720,546 16.360,097 23.005,792 Schedule 4 Changes in Fund Balances, Governmental Funds 144 unrestricted 35,520,681 18,476,837 16.031,473 12,119,923 Schedule 5 General Governmental Tax Revenues by Source 146 r ' _t �, 'haw gn�ictBtttf�4lvd� h�� _$ i9aa4�a, �.;,:'t,'..�� asst ,> ,...� '404:Si.Y.A.....0744s+w: Revenue Capacity Information The objective of providing revenue capacity information is to help users understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Property Tax Levies and Collections 147 Schedule 7 Assessed and Estimated Actual Value of Taxable Property 148 Schedule 8 Property Tax Rates -Direct and Overlapping Governments 149 Schedule 9 Principal Property Taxpayers 150 Schedule 10 Retail Sales Tax Collections by Sector 152 Schedule 11 Sales Tax Rate Direct and Overlapping Govemments 154 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of CO outstanding debt and ability to issue additional debt in the future. Notes: v N Schedule 12 Ratios of Outstanding Debt by Type 156 Schedule 13 Ratios of General Bonded Debt Outstanding 158 Schedule 14 Computation of Direct and Overlapping Debt 159 Schedule 15 Legal Debt Margin Information 160 Demographic and Economic Information These Schedules offer demographic and economic information to assist users in understanding certain aspects of the environmentwithinwhich the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 16 Demographic Statistics 162 Schedule 17 Principal Employers 163 Operating Information These Schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities 4 performs. Schedule 18 Full-time Equivalent Employee by Department 164 Schedule 19 Operating Indicators by Function 165 Schedule 20 Capital Assets by Function 166 CITY OF TUKWILA SCHEDULE 1 NET POSITION BY COMPONENT1a1 LAST TEN FISCAL YEARS Page 1 of 2 Business -type activites: Net investment in capital assets $ 36,083,972 $ 36,071.402 $ 38.052,488 $ 44,759,489 Restricted 441,073 439.100 438,619 430,444 Unrestricted 11,267,171 13,335,836 10,987,162 11.158,081 ibits?re cti Pito t as+ibti o Nidd ,...>4irtaO ? to ? 6464 }aE ..$> dTO,6C.... Primary government: Net investment in capital assets Restricted Unrestricted Yrttti rl ty ctlit.is*m iettia9%ari 137 $ 172,136,985 $ 172,813,770 1,674,307 20,159,646 46,787,852 31,812,673 $ 193,899,500 16,798,716 27,018,635 $ 221,838,282 23.436,236 23,278,004 (a) All amounts are reported on the accrual basis Source: Tukwila Finance Department 138 CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA'. 2016 CAFR Page 2 of 2 201 `t, 2012 2013 2014 : `. 2015 2016 $ 199,511,779 $ 203206,940 $ 207,660,389 $ 191,081,461 $ 191.331,156 $ 193,113,026 5,019,817 2,749,680 3,480,002 3,973,726 5,446,074 8,996,183 21,479,064 20,194,333 26,981,105 25,009,212 16,125,592 15,809,945 $ 226;010660 $'.,226350,953;. $,238321,496 $X220,064,399. - $ 212502522_.: $ 217,919,155:: $ 52,134.799 $ 52,911,741 $ 55,955,595 $ 57,677,764 $ 59,483,424 $ 60,807,030 430,444 430,444 430,444 430,444 10,225, 558 11,011,319 12,964,539 13,839,529 14,658,912 17,240,620 $ 62,790 801 $ ; 64353 504. , $. 69,350,$V$' ! $ 71947`736 $ ;: 74 142 35 $ 76-047,850 $ 248,636,920 $ 253,253.170 $ 263,615,984 $ 248,759,225 $ 250.814,581 $ 253,920,056 5,450.261 3,180,123 3,910,445 4,404,170 5.446,074 8,996,183 34,714,280 34,071,164 39,945,644 38,848,741 30,784,504 33.050,565 $ 258,801,461- $_ 260,504,457 $ 367,472073 $ - 292012336 $, 287,045158 < $ 265,956604::' STATISTICAL SECTION CITY OF T11KWILA, WASHINGTON SCHEDULE 2 CHANGES IN NET POSITION 141 Page 1 of 2 Expenses Governmental Actviies General Government Wblc Safety Rryscal Envkonrrent Transportation Economic Environment Mental and Fhys cul Heal. Culture and Recreation Interest on Long Term Debt Total Governmental Activities Business Type Activities $ 7,456335 $ 4,723.103 $ 6669,659 $ 7,052.717 21 726.932 24.147,992 26959,352 26,088644 2.764373 2 062,487 2,575 405 2,533 394 5,310247 5864,297 5.541.367 6,015.197 3890845 5.017,935 4.637,531 4,579338 4,204 4,173 4332 4,539 4,506223 4.797,856 4,814.256 4,756.676 896,215 1,844,224 753,804 1,001 418 46,555,374 49262,067 52075,806 52,091.924 W6ley/Sewer UMly 7,046603 7293,362 9.293.434 9,343368 Foster Gott Course 1,849,542 1.968.595 2,050172 1,935,014 Surface Water 18,64 1,920,194 1,762,417 2299,394 2,476,170 Total Business Type 4,00 .5 10,816339 11,024,374 13 643,000 13,754552 Program Revenues Governmental Activities Charges for Services General Govemnent RIM. Safely Rmscal Environment Transom.tn Economic ewironrrent Cultural and Recreation Operating 111445 Mons CapltN M Grants and CanMttiom Totalormr.lAc4Nties Program Revenues Business Type Activities Charges for Services Water/Sewer U9,ty ODFaster Golf Course Surface Water tttiCy Operating Grants and Contributions (� Capital Grants and Contributions Total Business Type 0050Program Program Revenues Total Primary Government Revenues Net(ExpensepRe venue Governrrental Activites Business Type Activities 139 $ 1.590.553 9 895,966 5 1.136.642 $ 1,080,801 425241 1,184,530 572094 819,043 25.341 1,200 - 6,200 133.500 130,637 103.311 571.110 2319.634 2476,501 1001 511 1,787.274 777,484 711,542 647354 811679 1592766 1.325,163 3,386269 2,139029 3746743 2,282,592 14764.074 23,992.563 10,711,262 9,008,131 21631:255 31,207699 8272 647 1.272425 2,208.549 347.416 12:101,037 22 812 299 8,621,909 563 681 2,642.325 756 400 13,584,315 22,592,446 10.124653 1.424.595 2.641,313 515.633 14 706.194 36 337449 9,665.095 1,425327 3,029630 7,390,545 21,510,597 52.718.296 General Revenues and Other Changes to Net Position Governmental Activities Taxes Property Tax Retail Saks and Use Tax Natural Cas Use Tax 344748 643,037 • otel Tax 583232 587216 lfltyT Miry Tax 3,666079 5.136,444 16266 ▪ Utility Taxes 9 - Business Tax 2,236075 2,497,705 3196.178 &cse Tax 4,127.360 983,078 367.198 State 1,11 Entitlements 217600 874,046 2,233445 Unrestricted hvestnent Earnings 1727879 801.847 246287 Gain/Loss on Sale of Capital Assets 13052 1186,6631 980267 IVAscebneous - • - Transfers 1,134.683 1,383,774 1501200 1,399.310 Total Governmental Activtes 44.709.874 42,386.760 43,743,382 42798,557 (35,844,1111 (40253,937) 1,284,700 2,559,941 $ 11.302099 $ 11656,979 19 355.867 18 009,297 (30.444551) (20.884225) 1,053,194 7,756 045 $r 11901,072 $ 13,363,096 14588,297 14,669328 748772 533 811 489806 458.092 7.390860 5,600.683 4205 574 507.798 1,951.936 108.929 Business Type Acti4ties Retail Sales and Use Taxes Unrestricted hvestrrent Merest Gain/Loss an Sale of Capital Asse6 Mscebneous Transfers Total Business Type ActNitos Change in Net Position .1ore Special Special item Change in Net Position Geyer rtentelA 6e Business Type Activities Notes: (a) All amounts are reported on the accrual bests Source' Tukwila Finance Department 500 000 618,563 (1,134,683) (16,1201 a96 500,000 377,955 (1383,774) 505,819) 327.999 106.032 (264,093) (1 601,2001 (1 431,262) 329527 85 942 97,541 (1,399,310) (886,300) 10,134.343 4.186,945 12930.763 28.784077 10.134,343 4.186,945 12930.763 28,784,077 $ 8,865.765 $ 2132,623 $ 13,298831 $ 21,914,332 1,266,580 2.054 122 (368 0613 6,869,745 140 CITY OF TUKWILA: 2016 CAFR Pape 2 of $ 9150573 3 8,343107 $ 10.195 049 $ 10289,399 $ 8.042254 $ 9662 207 25348.318 26,596432 25936946 29292,587 29403,206 31,418713 2,885.175 3625696 2.610.591 11668098 2611.297 2.554259 6,872.708 7,314.707 7656280 2479533 11 069 6051 1.188.189 4712832 4,801.342 5209,954 5716,091 5,782907 4,410.841 4,591 4,203824 4,242725 6.635,347 5.336,659 5.125,227 5,431.324 472,438 1,152.063 1,038.851 1204,771 1,033,440 1,07 5,729 53650459 56,078072 58,287,017 65.987,138 63,061935 65.741.262 10.092,903 10149 557 10.421.064 12,752,125 13,186236 13,984.368 1,986 747 1.701.131 1,707,993 1945.789 2.086.586 2,077536 2,588,098 2,699.767 2,563,132 3310,716 4,147,974 4,088.360 14,667,748 14,550,455 14,692,189 18,008,631 19,420,796 20,150264 $ 2,462671 $ 1,332.418 $ 1.495,438 $ 3858862 $ 3794.134 $ 3,742937 809.806 684.744 871,919 970,594 1.754.856 4,130701 7 572 4.939 27,407 196,506 - 464 345 373 1.004.911 287,956 8,425 206065 454.525 1,722.265 2,323.528 2786,178 726.869 3.346802 2,434.546 1,001.117 481404 744,014 2,793,185 644.283 1,140558 2,250601 4,411,618 3.289.818 2563.002 893,470 1,079020 18495,127 1,581.882 16,947,529 8,053.435 6.439537 5,000942 27094 552 11,825.444 26 450258 19170,879 17.073.146 17,983 694 11 711242 11,758 658 13,146,131 14.308,945 15572 709 15.661 118 W 1,304,016 1.448.729 1404.264 1.406,440 1.482.288 1,426.385 3,355,956 3,827010 3913,184 4.168,313 5286233 5.875.343 J - - - - - 25000 1,993537 135603 338.943 1548280 2039.890 767.732 16,364.751 17,170 000 18802.521 21.431 978 24 381.122 23,755576 45.459.303 28,995.444 45252779 40,602.857 41454268 41739.272 (28555,907) (44,252628) 3,697,003 2,619546 (31,836,759) (46.816,260) (45994,769) 4.960.326 4.110,332 3.423.348 (47,757.566) 3,605 314 9 13443,137 $ 14,131,605 9 14510,241 $ 14870.621 $ 14,320,085 $ 14,562.501 15 796.054 15.441.683 16316,398 17.105,322 19 334.152 18.908.190 317.531 232,208 204,457 - - - 555.682 522,033 526.832 596,781 677971 710.267 7,534,260 5.535,966 3.879,992 3855.544 4.019.288 4.045916 1686859 1.851.013 2,061.098 2.146 515 667,679 2.497.606 2.570,111 2.555,999 2749.140 2,716257 2.170,293 2,860.948 2745,475 3.512,894 5,321.281 6506,665 2,085,740 1,895.647 1.861511 1,735 637 1843.634 1,915 810 275,477 116,694 102,486 044,282 475.345 559733 101,688 304,704 179,394 280.551 1,000.049 525,864 1,056,843 1.060,650 (600,000) (300.000) 43,371.717 44392921 45,769,716 46.107,488 51.082.545 52,773.904 61,119 200,871 - (525.864) (1,056,843) (1060,650) • 600.000 (263,674 (1,056,843) (1060.650) 600,000 300.000 00,000 20248,939 1,702.996 16982,640 3314576 10,048,082 (1995,000) (956,798) 8.921 652 20.248.939 1.702.996 16 982,640 1319.576 9 091,285 8,921 652 $ 16.815.810 $ 140,293 $ 13932,957 $ (2703.772) $ 3,830 958 $ 5,016 337 3.433.129 1,562.703 3,049,682 4023.348 5.260.326 3,905314 141 STATISTICAL SECTION CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 3 FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Page 1 of 2 2099; General Fund (GASB 54) Nonspendable $ Restricted Committed Assigned Unassigned General Fund (Prior to GASB 54) Reserved 12,650 17,800 17,900 17,900 Unreserved 10,504,748 7,687,515 7,371,530 5,739,140 TOW genera) fund - - - ' $19,5i'/43,98 , 3 7 7 $4a15. , $ 7)3$8:439 , $ S,757,p4Q, Al other governmental funds (GASB 54) Nonspendable $ - $ Restricted Committed Assigned Unassigned - - - All other governmental funds (Prior to GASB 54) Reserved - - Unreserved,reportedin: Special revenue funds 10,834.781 12,943,487 9,123,401 14,461,546 Debt service funds 1,233,234 1,248,901 135,438 3,051 Capital Projects funds 8,113,739 6,831,634 7,101,258 8,541,195 Total all Other governmental funds $,24,181,754 $21,024,022 ',. $16)360,047'.' .$23,045,792.., Note: In 2011 the City of Tukwila implemented GASB Statement No. 54, which changed the categories for fund balances. Balances prior to 2011 were not restated to the new standards. Source: Tukwila Finance Department 080 $70 560 $50 $40 $30 520 510 $ Fund Balances 1-HAII Other Governmental -General Fund 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 142 CITY OF TUKWILA' 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2016 CAFR Page 2 oft 5,000 $ 18,000 8.237,141 8,378,557 15.317,624 10,181,057 10,911,244 11,612,330 $ 1,743,362 $ 1,544,022 $ 1,340,914 $ 1,141,484 225,050 5.771,471 6.079,648 6,277,929 5.5225 41 5y/171213,5Acl 99$fi d i$i430p*;r 19tC $ - $ - $ - $ 7,370,000 $ 7,645,000 $ 7,645,000 5,014,817 2,749,681 3,480,001 3,973,726 5,446,074 45,986.463 402,306 - - - - - 11,127,221 7,021,183 4,510,623 4,076,803 7,221,870 3,389.139 - (1,566,175) (1,360,218) - - STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 4 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS t'1 LAST TEN FISCAL YEARS page 1 oft Revenues Taves Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Special Assessments Miscellaneous Total Revenues $ 39,660,792 $ 37412,569 $ 37,167,281 $ 37,267,918 1,827,709 2,022,851 1282463 1,618,830 6,403,217 5.697.598 17.596.486 14,525,872 2,024,892 2569.381 1.443,680 2,366,174 266,188 259,991 301,761 390.079 1,425,423 926 613 282.604 144,258 1751,145 816,054 701,957 891,307 53,359,366 49,705,357 58,777,232 57,204,438 Expenditures General Government 7,034,602 7,992,286 8,574.563 8,387.317 Public Safety 21,038,810 22,878,689 25,576.932 24,676,370 Physical Environment 2,196,422 2.255.880 2.058,913 1,724,147 Transportation 2,413,390 2.783.077 2334,298 2,332,178 Economic Environment 3,878,658 4.995.514 4,601,391 4,541 845 Mental 8 Physical Health 4,204 4,173 4,332 4,539 Culture and Recreation 3,938,779 4.293658 4,305,023 4163,503 Debt Service Rincipal 930,000 972,000 1,316,297 1,555.028 - _ _ _ Interest 914.584 872.224 778,018 849.148 r Capital Outlay 7.243,879 6,089,703 16,860,362 11,513,976 CA _ _ _ _ _ Total Expenditures 49.593,328 53.137.204 66,470,129 59,748,051 16,544,344 , : ; , scriU BS *424,09' $14 143 2,943, 0,002, Excess (Deficiency) of Revenues 4,036,039 (3,431,846) (7,692,894) (2,543,613) Over (Under) Expenditures Other Financing Sources (Uses) Transfers In 2.266,349 2,515,982 3,865,744 2.461,806 Transfers In - Assessment Transfers Out (1.131,666) (1.107,543) (2,234,444) (1,020,857) Capital Leases - - 110,509 Sale of Capital Assets 100 53,592 1,014,608 27,308 General Obligation Bonds Issued - - 6.935.000 General Obligation Refunding Bonds Issued - 6,180000 6,947,574 LID Bonds Assessment - - - Operating Loan -Tukwila MPD Premum on General Obligation Debt Premum on General Obligation Refunding Debt Issuance Costs on General Obligation Refunding Debt Payment to Refundod Bond Escrow Agent Total Other Financing Sources (Uses) Change in Fund Balance Before Special hem Special Nem 112151 483.599 - - (108,326) - - (6,555,273) (6,880,397) (1,069,000) 1,134,783 1.462,031 2,713,085 7,556,917 5,170,822 (1,969,815) (4,979,809) 5,013,304 Ratio of Debt Service Expenditures To Total NonGapdal Expenditures Note' (a) All amounts are reported on the modified- accrual basis Source' Tukwila Finance Department 4.6% 144 4.1% 4.4% 5.2% w CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULER GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE page 2 of 2 LAST TEN FISCAL YEARS 2011. 2012. 2013 2014 2015 2016 $ 38,035,681 $ 41,502,608 $ 42,402,070 $ 44,441,783 5 48,548,116 $ 49,588,492 3,473.910 1,604,594 2,013,875 2,114,638 2,242,256 2,129.221 24,059,907 7,626,487 7,190,325 14.298,126 11639,883 10,067.413 2,359,600 3,974,356 3,747,646 3.838,531 3,935,248 3,911473 308.027 220,752 242,638 264,934 261,457 318.459 275.479 106,286 151,911 479,219 475,345 541299 - - 2,788,350 701.723 650,415 542,180 356409 131,979 427,368 354,395 332,268 957,158 68,869,013 55,167,062 58,964,183 66,493,348 68.284,989 68,055,695 8,253,440 24,327,498 2,060,482 2,676,511 4,682,646 4,591 3,507,150 8,504.511 24,918.306 3,022.516 2,769.182 4,767,944 3.373,000 9,303,742 7,505,173 25,720,884 27,254,312 1.935,895 1,807,993 3,111,493 5,820,601 5,224,964 5,226,832 4,386,392 4,680,651 F'scel Year. lNopetty :Sales B Use : Ut91y -. Excise Bus ne Other" I Total Tax 2007 11.177,532 19,355,867 3,666,079 4,124,168 405,973 931,173 39.660,792 2008 11,245,973 17,709,319 3,934,210 3,003,438 475,500 1,089,344 37.457,785 2009 12.190,219 14,585,015 6,172,569 2,824,407 738,341 656,730 37.167,281 2010 13.188,942 14,251,312 6,134.494 2.488,357 727,151 301.867 37.092,122 2011 13.427,139 16,113,584 5,424.643 1.780,294 667,064 622.955 38.035,681 2012 14,072,015 15,441,683 4,001.385 3.201,098 2,497,606 2,288.822 41,502,608 2013 14,510,241 16,316,398 3,879.992 2.745,475 2,570,111 2,418.148 42.440,365 2014 14.870,621 17,105,322 3,855.544 3.512,894 2,555,999 2,447.794 44.348,175 2015 14.320,085 19,334,152 4,019.288 5.321,280 2,749,140 2,739,070 48,483,015 2016 14.562,501 18,908,190 4,045916 6,508,665 2,716,257 2,856,782 49,598,312 7,708,394 9,405,989 Change2007.2016 30,3 , -2.3% 10.4% 578/ 29,035,165 29,366,198 .. ,- :*. ".$1°In,-;�� 2068% 25.1118.. 1,935,228 1,955,031 Notes: 5.792,668 5,238,468 ft Utility taxes enacted beginning in 2003 for electric natural gas, cable and telephone utilities are assessed at rates of 5.010. 5.832,384 4,493,210 A utility tax was added in 2009 for solid waste and recycling assessed ata 60% rate. - A utility tax rate of 10.0% was added in 2010 on the City's water, sewer, and stormwater utilities 4,350,052 4.543,339 1') Beginning in 2012, reporting of "Business" tax revenues include the Revenue Generating Regulatory License (RGRL) fees. "Other Taxes" include a hotel/motel tax and interfund utility taxes. r 1,766,774 1.991,540 5,024,991 2,288,988 2,480,507 2,602,782 881,850 1,178,464 1,162,649 961,457 1,125,609 1,093,584 25,643,704 12,099,293 5,854,962 10.150,912 11,426,274 8,358,450 73,804,646 62,624,756 61,725,970 65,696,921 69,686,279 67,057,051 (4,935,633) (7.457,694) (2,761,786) 796,428 (1,401,291) 998,643 11,001,619 7,625,792 20,918,983 7,300,080 5,633,846 4,025,831 2,788,350 - - - (10,061.205) (6,174,358) (23,301,516) (7.900,080) (5,933,846) (4,325.831) 15.468 - - - - 21.406 9,903 5,493 5,055,688 - 1,000,000 3,850,000 8,075,000 32,990,000 6,687,500 - - - (658,706) - - - - - 309.758 3.719,954 (5,055,688) - - 977,288 802,631 8,098,609 3,250.000 8.084,758 36,409,954 (3,958,345) (6,655,063) 5,337,023 4,046 428 6,683,467 37,408,597 - - - (1,995,000) (956,798) - $ (3,958,345). $ (6,655,064). $ .5:337,023 5 2,055,428'.._ 5 :.5,726669 $ 37,408597., 5.8%% 6.7% 11.07°/ 6.65% 6.34/ 6.30% Source: Tukwila Finance Department 550,000,000 $45,000,000 540,000,000 $35,000,000 $30,000,000 525,000,000 520,000,000 $15,000,000 $:10,000,000 55,000,000 5 - Tax Revenue by Source 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 145 146 ■ Othe r ® Business Tax • Excise Tax ® Utility Tax ■ Sales & Use Tax • Property Tax Anpunt % 01 Levy Ley Balance.. CITY OF TUKWILA'. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 6 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected Within the Fiscal Year of the Levy Total C Ilections to Date Flscal Taxes LeVled for Year. Fiscal Year Amo Collections in Subsequent Years 2007 11,176,155 10.994 127 98.37% 182.036 11,176,163 100.00% (8) 2008 11,410864 11,194.247 98.10% 216.076 11,410,323 100.00% 341 2009 12,286,929 12,017 213 97.80% 264.905 12282,118 99.96% 4,811 2010 13.233.796 13,152 012 99.38% 80.311 13,232.323 99.99% 1 473 2011 13.383,153 13225.338 98 82% 156.088 13,381426 99.99% 1.727 2012 13 697,474 13.521 621 98.72% 173.716 13,695,337 99 98% 2,137 2013 13,740,076 13.549.525 98.61% 175,699 13,725.224 99,89% 14,852 2014 14,047,317 13.916,718 99.07% 95,467 14.012 185 99.75% 35,132 2015 14,245,846. 14.113,739 99.07% - 14,113 739 99.07% 132108 2016 14 516,623 14,375,358 99.03% 14,375,358 99.03% 141,265 Source: King County 011(60 01 Finance 15,000,000 12,000,000 9,000,000 6,000,000 3,000,000 Property Tax Levies and Collections 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 147 ®Taxes Levied for Fiscal Year ■ Amount Collected Within Fiscal Year of Levy CITY OF TUKWILA, WASHINGTON SCHEDULE 7 ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Real P'operty Petsenal F:.operly Wolic Utilities 27a}ue Ta 2007 3,853,680,774 509,151,926 87,410,974 4,450,243.674 2.56911 2008 4,470,042,539 595,268,205 110,399,231 5,175,709,975 2.37324 2009 4,122,961,628 746,710,751 112,779,972 4,982,452.351 2,66345 2010 3,950,829,851 717,795,417 119,827,058 4,788,452.326 2.82566 2011 3,833,295,985 712,607,656 129,726,102 4,675,629,743 2.95408 2012 3,778,571,709 736,480,616 134,138,983 4,649,191.308 2,98778 2013 3,824,448,044 779,103,146 152,822,498 4,756,373.688 2.97799 2014 4,146,952,417 744,616,273 162,510,057 5,054,078.747 2.84188 2015 4,409,931,075 810,422,092 174,971,951 5,395,325,118 2.71073 2016 4,763,568,175 849,695,435 150,386,219 5,763,649.829 3.05735 Note. "Real. personal, and state public service property have been assessed at 100%of the estimated value. Source' King County Department of Assessments 57,000,000,000 $6,000,000,000. $5,000,000,000 54,000,000,000 53,000,000,000 52,000,000;000 51,000,000,000 $- Assessed Value By Type 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Public Utilities ■Personal Property • Real Property 148 CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 8 PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $1,000 OF ASSESSED VALUATION) LAST TEN FISCAL YEARS 2007 256911 - 256911 2.13233 1.66106 0.22359 0.30000 4.73164 0.10000 2008 237324 - 237324 1.96268 1.51508 0.19700 037404 4.12360 0.08123 2009 2.66345 - 2.66345 2,22253 17.87 0.21591 0.30000 3.89183 0.10514 2010 2.82566 - 2.82566 2.27990 1.90797 0.22366 0.30000 5.03380 0.10926 2011 2.95408 - 2.95408 2.42266 1.90580 0.22982 030000 5.44659 0.11616 2012 2.96118 - 2.96778 256720 2.11172 0.23324 0.30000 869832 0.13210 2013 2.91199 - 292299 242044 2.06129 0.21533 0.33500 5.89096 0.15369 2014 2.04188 - 284108 2.28514 1.84290 0.18885 5.17 5,50160 0.13860 2015 2.71073 - 2.11073 2.16898 125741 0.16954 0.28735 5.22050 0.12980 2016 3.05135 - 3.05735 203205 183412 0.15334 0.26305 536954 0.11740 Able- Includes King Lounry Library OleMcl tax and Ferry Sauce. King County Department of Assessments 0,15000 014944 0.14962 0.14653 0.15653 050854 - 12,22622 0.42141 - 11.00628 053290 - 11.62269 0.55253 - 13.23820 0.5037 - 13.95883 050000 - 14.68036 050000 - 14.22416 050000 - 13.25504 050000 - 13.29592 0.50089 025000 13.73427 3.50000 3.00000 2.50000 2.00000 1.50000 1.00000 0.50000 Direct Property Tax Rates 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 9 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 858rg Carmam Westfield (WEA) Southcenler LLC La Rama LRSega 8 Properties 5abey Cerrp0retbn 692 Tukwb 050 LLOKB-VO E Property Tax Dept LRkdustrtbl Limited Podnership CenturyUnk Corwmnkations (Qwest Corpof International Gateway East CFF Kent Valey LLC BKM Tukwila 117 LLC (formerly Icon Tukw da Owner Pool 1) 3301 South Abrfo& LLC (Sea-Tuk Warehouse LL0 Boeing Etpbyees Credit Leen VW Properties LLC (JC Penney) Rget Sound E er9y!0as - Electric COSTCO Wholesale n) A'rpbme cone)/ Depart -rent Stares Commercial Properties Real Estate Gnvebpnent Commercial Properties Commercial ROperties Business Serv6es Telephone Ugly Mn -Residential Property Nbnagene Commercial Properties Investment Property Food 641703tbn Credi1Jmon Department Stores Electric/Cas Uiiy Cash & Carry Warehouse Bank of China Mw York Branch (former* Anne Arundel Apartments Apartments A168 Property Real Estate Development Washington Towers LP International Gateway West CLEF-Tukw b LP Seatac Hotel (KoalSeatac Partners LPI 5outhcenter Corporate Square Federated Department Stores Ikkcys) C9nlerpomt 8601 Mar9hal Windt Reek Ibldhgs LLC) John C Radar/oh w, Co. Talon Riverview Flare LLC (formerly BRCP Reervew Raza LLCI CFA Tukvr ib LLC (0 obletree 131) Ay 's Rent A Car System LLC Genome Trust Or how 2601 Jorgensen Forge Corporation lbrn'sh Group Incorporated Sterbg Really Or971290on Lowe's HN Incorporated M Investment Company W eer Ameroa Reit I Corporator Heenan Real Estate Devebprrent hon-Resirbntel Ropery Fbna9erre Stsdup Campay Lodging Commercial Progenies Real Estate Development Cepartrmnt Stores Properties Trust Connercbl Properties Commercial Properties Lodging Car Rental Services k4snufacMing Steel N4nuracturer Truck Equipment Commercial Ropertes Hone kierove rer4 Corr/march( Propenes Commercial PrOeed*. Commercial Properties $ 482,031.129 306.693888 114,654,362 103,743.927 89,180.000 85,477000 64,620.903 60,820,553 59,218,216 49,242900 47.127300 43,431.100 41444.700 41,146250 35,698 234 33,603557 31,261,100 30.193,200 29.634.900 29.811600 28,293,000 28,554.100 28,365800 28,205023 27,825000 27,552,200 28%2,200 28597,000 24429 800 24,109,722 24.069,200 21,784,544 8.36% 5,32% 1.99% 1.80% 1.55% 1,48% 147% 1.06% 1.03% 0.85% 0,82% 0.75% 0.72% 071% 0.62% 058% 0,54% 0,52% 0.52% 0.52% 000% 0.50% 0.49% O ,49% 0.46% 0.48% 0.45% 0,44% 042% 042% 0.42% O .38% $ 470,251.450 130.337,850 85,320,368 10.58% 2.93% 1,92% 96,063,800 2.1696 62,945,200 1.41% 12.392,870 028% 29,159 100 52,386.532 24,136,800 25,408,929 29,944 400 0.66% 1,18% 0,54% 0.57% 0.62% 20963.110 0.47% 26,920,700 18,104600 26 637.900 19 469,641 20.131.703 14,595,306 35693,100 15816965 7,811,400 63451.550 51055.700 0.60% 0.41% 0.60% 0.44% 045% 033% 080% 0.36% 0.18% 1.43% 1.28% Nates: ▪ In 2016 the blel essessect propedy value in the Cityol Tuk%le nes 85763.649,429 2002 the tote/ 845#04edpropedy value in the City nl Tukuila stes 64,450.243,674. Souk King County Department of Assessments CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 10 RETAIL SALES TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS page 1 082 duYtry Sector 2007 , 2008 2009 - 2010 Construction and Contracting $ 2,018,058 $ 1,967.785 $ 869,640 $ 917,250 Finance, Insurance & Real Estate 121.879 118,780 119,121 99,975 Manufacturing 590.455 375.263 246,429 387,234 Transportation, Communications & Unities 483,419 492.960 440,206 441,822 Wholesale - Durable/Non-durable Goods 2,457.437 1,760,449 1.436,045 1,346,750 Retail Trade - General Merchandise 2,571,601 2,231,745 2,072,356 2,068.263 Retail Trade - Furniture/Horne Furnishings 2,399,347 1,830,576 1,304,234 1,380.407 Retail Trade - Miscellaneous 1,766,853 1,718,898 1,473,496 1,521,741 Retail Trade - Clothing&Accessories 1,838.646 2,103.630 2,017,904 2,018.304 Retail Trade - Restaurants 1,158,424 1,312,603 1.292,252 1,342,964 Retail Trade - Automotive/Gas 1,026,778 1,066,183 748,482 664,310 Retail Trade - Building Materials 777,870 619.657 589,341 499,383 Service Industries - Business 1,198,690 1,129,380 868,260 882,012 Service Industries -Hotels 531,836 548,962 453,657 428,450 Service industries - Other 294,869 318,696 283,319 215,045 All Other Categories 179,421 185,312 208,467 366,925 CO v CD Notes: 19415,583' $ 11780 679 $ 114,423.209 14 580,8: By State law, the City of Tukwila is prohibited from reporting individual sales tax payers. Sources: Tukwila Finance Department and Washington State Department of Revenue. 151 152 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. 2016 CAFR page 2 012 2011 2012 2613 2014. ; 2015 2016 $ 1,390,952 $ 961,125 $ 1,212,594 $ 829.073 $ 1,255,650 $ 1,383,624 115,123 143,792 174,705 141.010 163,161 175,060 232,737 390,252 386,964 322.189 281,501 269,117 405,197 432,608 475,688 549,126 743,746 746.115 1,119,527 1,077,613 1,108,771 1,592,613 2.016,722 1,295,141 2,003.947 2,000,865 2,154,523 2,137,256 2,205,778 2,202,158 1,771,083 1,537,143 1,405,274 1,431,965 1527,377 1,623,926 1,626,452 1,703,741 1,870,200 1,973,478 1,954.150 2,032,967 2,037,554 2.082,930 2,070,198 2.013,796 2,159.647 2,089,128 1,337,067 1,472,343 1,529,101 1.611,860 1,703.187 1,751,724 670,806 690,076 690,691 765,765 825,143 743,468 487,620 516.861 565,734 600,610 683,485 733,928 932,422 928,610 968,996 1,073,511 1,265,789 1,467,620 459,606 487,977 502,721 562,130 626,822 650.270 202,217 234,870 246,802 274,497 273,514 253,089 553,493 381,693 525.133 468,547 978,142 845,209 5,345 851 15,545,496 $ 15,858089. $ 16,341`,426 } $ 16,663,814 $- 18 STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 15 SALES TAX RATE DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS 4 ,,2015 2016 94515 SALE TAX RATE Cly of Turrw ik Washington State King County Regional Transd Authority fktro Criminal Justice 0.84% 0.848 0.84% 0.64% 084% 0.6496 0.84% 0.84% 0.64% 0.84% 6.50% 6.5D% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 0.158 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.4010 0.40% 0.90% 0.90% 0.90% 0908 0.90% 0.90% 0.90% 0.90% 090% 0.90% 0908 090% 0.90% 0908 0.90% 090% 0.9096 0.90% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0108 0.108 0.10% Department of Revenue 0.01% 0.01% 0.01% 001% 0.01% 0.01% 0.01% 001% 001% 001% Atlninistratnn Fee Vat 8ak&OoMln04Saks Tax Rah @,y0%, ,.9.0 %;: 9101 ; 9.50% . 9.505. 9586 „ ,9.51]% 9.' 96 85810 '9.0 SPECIAL SALES TAX RATES Restaurants '^ 0.50% 050% 0.50% 0.50% 0.50% Motor Vehicles'" 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.3096 0.30% Notes: King CountyFood & Beverage taxis in addition to the combined sales tax rate for restaurants, taverns and bars. The funds are used to finance the professional baseball sladum in Seattle. ' NOTE: This taxexoLf94 on October 1, 2011 as tams imposed to pay the construction bonds for the Seattle baseball stadium expired. Effective July 1, 2003. all retail sales. leases and transfers of motor vehicles are subject to the additional sales tax of three -tenths of one percent CO (.003). The funds are used to finance transportation improvements. �t '" Effective April 2007. KingCount increased local sales 8 use tax rate one-tenth of one (.001). pn County percent Q The tax tall be used for transportation purposes. Effective April 1. 2008. King County increased the local sales 8 use fax rale one-tenth of one percent (001). The tax tall be used for chemical dependency or mental health treatment services. Effective April 1. 2006, the Regional Transit Authority Tax increased five -tenths of one percent (005). The tax tall be used to expand and coordinate light-rail, commuter -rail, and express bus service, and. improve access to transit faculties in King, Pierce, and Snohomish Counties. Sou Washington State Department of Revenue Local Saks and Use Tax Rates. CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 12 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Page 1 of 2 007,„ ' , 20 2009 z2010 - GOVERNMENTAL ACTIVITIES General Obligation Bonds I" Special Assess ment j0) Leases Total Governmental Activities $ 17,946,335 $17,261,348 $ 22,453,003 $ 26,763,975 40,184 17,946,335 17,261,348 22,453.003 26,804.159 BUSINESS -TYPE ACTIVITIES General Obligation Bonds 4,102,500 3,642,500 Revenue Bonds 5,470,162 5,112,231 Public Works Trust Fund Loans 9,378,506 9,021,951 Leases 45,587 11,666 3,423.797 4.790.000 8,405,397 3,238,825 4.395,000 7,788,843 Total Business -Type Activities 18,996,755 17,788,348 16,619.194 15 422,668 TOTAL PR11,4ARY, 4GiVERWIENfi6 $,. 36,943,690...$35,04$696 $'34,172407 $-42,246,827_ Population 18,000 18,080 18,170 19,107 Per Capita Personal Income 'b1 $ 57,409 $ 58,141 $ 56,904 $ 44,271 Percentage of Personal hcome 3.58 % 3.33% 3.78% 4.99 Debt Per Capita $ 2,052 $ 1,939 $ 2,150 $ 2,210 Notes: CO 0) Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements sectic r I"I Reference SCHEDULE 16, Demographic Statistics, for population and personal income data. Includes amounts Due to Other Governments. Special assessment debt was issued in 2013 for the Klickitat Urban Access Project """ Data not available at 8me of publication. Sources: U.S. Census Bureau WA State Office of Financial Management City of Tukwila Finance Department 90,000,0(0 80,000,000 70,000,000 50,000,000 50,000,000 40,000,000 .30,000,000 20,000,010 10,000,000 Total Debt 2007 2008 2009 2010 2011 2012 2013 2014 0015 2016 155 156 CITY OF TUKWILA 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2016 CAFR Page 2 oft 2011 2012'.' 2010 2014. 2015 2016 $ 28,006,800 $ 25,752,600 $ 21,727,609 $ 23,851.376 $ 30,084,437 $ 64,589,264 - - 6.687,500 6,687,500 6,082,500 5,412,500 35,891 - - - - - 28,042,691 25,752,600 28.415,109 30,538,876 36,166.937 70,001,764 3,980,000 3,540,000 3.075,000 2,580,000 1,742.527 1,597,704 7,179,635 6,621,342 6.063,071 5,742,866 5,646.458 5,046,900 11,159,635 10,161,342 9.138,071 8,322,866 7,388,985 6,644,604 $ 39,202A6A 351912,942 $ 37,553 185 $ 3$,881-,742' $ 43 555,922 '.6, 76,646,368.: 19,486 19,611 19,765 19,920 19,300 19,540 $ 43,887 $ 43,333 $ 43,331 $ 44,820 $ 47,717 "' 4.58% 4.23% 4.38% 4.35% 4.73% .^. $ 2,012 $ 1,831 $ 1,900 $ 1.951 $ 2,257 $ 3,923 STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Bonded Om Bonded:. "36 Asadssed beb1 venues`°"::, L9b1 _ Value -,C$p 2007 18,000 4,450,243,674 24,421.474 1,233,234 4.102,500 19,085,740 0.43% 1960 2008 18,080 5,175.709,976 23.125.007 - 1,250,275 3,642,500 18,232,231 0.35% 1.008 2009 18,170 4,973.984.133 25876,800 - 135,438 3,423,797 22,317,565 046% 1228 2010 19,107 4,609.486756 29,950,150 - 3,050 3,238825 26,708.275 0.56% 1.398 2011 19,486 4,752.606.030 28006,800 - 3,330.312 - 24,676488 0.52% 1.266 2012 19,611 4,649.101,308 25,752,600 - 3,012,381 - 22,740,219 0.49% 1,160 2013 19,765 4,756.373,686 21,727,609 6,687,500 696.346 - 27,718,763 0.58% 1,402 2014 19920 5,054,078,747 23,851,376 6687.500 1,687.497 - 28851.379 0.57% 1448 2015 19.300 5,395.325,118 30,084,437 6,082.500 1,910,940 - 34255997 0.63% 1,775 2016 19540 5,763,649,829 64,589,264 5,412.500 1962497 - 68,039,267 1.1896 3.482 Note. (a) Special assessment debt bias issued in 2013 for the Wichita! Urban Access Project (b) Includes both restricted and assigned fund balance available for debt service payment. (c) These amounts are the general obligation bonds that are being repaid by Me Foster Golf Course Fund. Sources: U.S, Census Bureau State of Washington Office of Financial Management King County Oeparbrent of Assessments Tukw is Finance Department 580 - a570 - f 560 - 550 540 - 030 - 520 - 010 - 50 Net Bonded Debt ................. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 157 158 CITY OF TUKWILA. 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 14 COMPUTATION OF DIRECT AND OVERLAPPING DEBT CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 15 LEGAL DEBT MARGIN INFORMATION AS OF DECEMBER 31, 2016 LAST TEN FISCAL YEARS $70 $60 $50 $40 $30 $20 $10 Junsdicfion Direct: City of Tukwila Net General Percentage .. &timated lhgahbn Debt Applicable to Appcable to but6tand6 s .., ;7ukwileld <. Tdkw,18 $ 64,589,264 Overlapping: King County 764,587,000 King County Library 97,581,556 Port of Seattle 283,620,000 Tukw la School District 6406 61,895,040 Hospital District 81 - Total Overlapping Debt: 1,207,683,596 Total Direct and Overlapping Debt: $ 1,272,272,860 Sources: King County Office of Finance King County Office of Assessments 100.00% $ 64,589,264 1.27% 9,710,255 2.18% 2,127,278 1.27% 3,601,974 91.32% 56,522,551 5.22% - 71,962,057 $ 136,551,321 Pi The percentage of overlapping debt applicable is estimated using taxable county assessed property values. Direct and Overlapping Debt ■ City of Tukwila ■ King County Wing County Library ■ Part of Seattle ■ Tukwila School District ■ Hos pital District 2007 2008 Page 1 of 2 2009 2010 .. Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit $ 333,768,277 $ 388,178,248 $ 373,048,810 $ 360,711,509 23,188,240 21,881,765 28,291,920 32,919,123 $ 310,580,037 $ 366,296,483 $ 344,756,890 $ 327,792,386 6.95% 5.64% 7.58% 9.13% Asees6ed Value as of December:51, 2016 $ 55,763,649,829' Debt Limit (7.5% of assessed value) 432,273,737 Debt applicable to limit: General obligation bonds 60,208,532 Other long-term debt Less: Amount set aside for repayment of general obligation debt and contracts payable Total net debt applicable to limit 372,065,205 60,208,532 Legal debt margin .$ 372;068,705;` Source. Tukwila Finance Department 159 160 CITY OF TUKWILA: 2016 CAFR. STATISTICAL SECTION CITY OF TUKWILA. 2016 CAFR Page 2 of 2 2011 2012 2018 2014 : 2015 2016' .. $ 356,445,452 $ 348,689,348 $ 29,703,995 25,884,632 $ 326,741,457 $ 322,804,716 $ 356,728,027 $ 379,055,906 $ 404,649.384 $ 432,273,737 21,727,609 23,288,621 29,322,914 60,208,532 335,000,418 $ 355,767,285 $ 375,326.470 $ 372,065,205 8.33% 7.42% 6.09% 6.14% 7.25% 13.93% CO Sources: Tukwila Ranning Division, Department of Community Development State of Washington Office of Financial Management Work Force Development Council of Seattle - King County (Unenploynent Data) Tukwila School District 9406 US Bureau of Econonic Analysis STATISTICAL SECTION CITY OF TUKWILA. WASHINGTON SCHEDULE 16 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Per Capita Persona( Mtetret atNzM3ef at UV SoS Personal Income e -Pandy 10,1111 -Panty 06841 1op01afk til Mcorne ' (In theusandsl Hc. inee'., ":Units. Ernollmeni Re nt 2007 18,000 2008 18,080 2009 18,170 2010 19,107 2011 19,486 2012 19,611 2013 19,765 2014 19.920 2015 19.300 2016 19,540 57,409 1,033,362 3.864 4,107 58,141 1,051,189 3.884 4,107 56,904 1,033,946 3,885 4,107 44,271 845.886 3,892 4,107 43,887 855,182 3,894 4,094 43,333 849.803 3,896 4,094 43,331 856,437 3,915 4,094 44,820 892,814 3,920 4,103 47,717 920,938 3,940 4,103 "' 3,969 4,103 2,862 2,769 2,795 2,907 2,870 2.902 2,882 2,978 2,910 2,873 5.0% 5.9% 10.9% 11.7% 7.6% 7.4% 5.2% 4.1% 4.5% 4.2% Notes: (a) Per Capita Personal Income data shown is for King County Specific data for City of Tukwila is not available. (b) Personal Income estimates are calculated by multiplying Tukwila population by the Per Capita Personal Income estimates for Tukwila and are based on a revised methodology that provides for more accuracy See also Footnote (a). (c) Unemployment rates are listed and estimated using the census -share method. "` Data not available at time of publication. 161 162 Unemployment Rate 14.0% 12.0% .. 10.0% 2.0% 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 161 162 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CIN OF TUKWILA, WASHINGTON SCHEDULE 17 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Nems 06 Conp&1 4ductor $usine9s':. Total )7 Ful rt -fame Total Gf Boeing Company Nornac Inc. Allied Mechanical Services, Inc. Group Health Cooperative Macy's West Stores Inc King County Metro COSTCO Wholesale Corp. King County Correction Guild Boeing Employee's Credit Union United Parcel Service Inc. Sub -total- M8)ot Employers. Al Other Employment TOTAL EMPLOY NEAR Aircraft Manufacturing Wholesalers 7umbing, Heating & AC Contractors Data [3r/Lab/Pharmacy/Mtg. Department Store Transit operating base 5.597 1.821 1.249 950 869 800 13.19% 4.29% 2.94% 2.24% 2.05% 1.89% Warehouse Clubs and Supercenters 609 1.44% Non -Prof it Organ¢ation 545 1.28% Credit Union 516 1.22% Couriers and Express Delivery Service 381 0.90% 13,337 - -10.5831 29.086 31,785 Source: Tukwila Finance Department - Business Licenses 8,043 18.98% 0.00% 0.00% 1,100 2,60% 400 0,94% 664 1.57% 0.00 % 0.00% 376 0.89% 0.00% 42'366 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CIN OF TUKWILA, WASHINGTON SCHEDULE 18 FULL TIME EQUIVALENT EMPLOYEE BY DEPARTMENT LAST TEN FISCAL YEARS PEPARTMENT Adrrinislrat&e Services Counci tvbyor Marren Resources Finance Recreation Community Development Court Pohce Fire Information Technology "' Public Works Parks Street Water Sewer Golf Surface Water Equipment Rental tvBtropoktan Park 23201151 Pool0, 26.75 700 12.00 11.00 23.50 20.25 80.00 66.00 32.00 7.50 11.00 700 3.00 9.25 7.00 4.00 19,75 7.00 11.00 12.00 2350 24.25 83.00 64.00 33.00 7.50 12.00 7.00 2.00 9.75 800 5.00 7.00 16.00 400 1200 22,50 24.25 9.75 82.00 63.00 800 32.00 7.50 12.00 7.00 2.00 9.75 8.00 5.00 7.00 17.00 4.0D 13.00 20.75 23.00 8.75 80.00 65.00 8 00 30,00 750 11,00 7.00 1.00 10.00 7.00 5.00 7.00 15.75 4.00 11.00 16,25 2243 8.75 8300 66.00 800 30.00 7.50 1200 700 2.00 9.25 8,00 5.00 2.00 7.00 16.75 4.00 1200 16.25 23.38 9.00 88.00 67.00 8.00 30.00 7.50 12.00 7.00 2.00 8.25 8.00 5.00 2.00 7.00 1775 4.00 1200 1625 22.13 9.00 87.50 67.00 7.00 31.00 6.00 12.50 7.00 200 9.25 8,00 5.00 200 7.00 21.00 400 12.00 16.00 21.63 9,10 89.00 67.00 6.00 31,00 700 11.50 7.00 2.00 8.25 8.00 5.00 2,00 700 20.00 4,00 1200 16.75 21.00 8,10 93.00 70.00 6.00 32.00 7.00 10.00 6,00 2,00 8.25 9,00 5.00 7.00 17.00 400 12.00 17.25 23,75 9.10 93.75 71.00 7.00 32,00 8,00 12,00 7.00 2.00 7.75 9.00 5.00 Notes: Based on filled positions not budgeted positrons. The departments for Human Resources, Court, City Clerk and Information Technology were previously reported under Adminislraeve Services. The department of City Clerk began reporting to the Mayor's department in 2009. The department of City Clerk began reporting to the Mayor's department in 2009. a' On September 12. 2011, the Board o/ Commissioners approved the formation of Inc Tukwila Metropolitan Park District (MPO) Pool. For the comprehensive annual financial report years of 2011 and 2012 the MPD Pool was treated as a discretely presented component unit Effective with Inc report year 2013.. statistical information is nowincluded for the MPD and presented as a blended component unit. CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CIN OF TUKWILA, WASHINGTON SCHEDULE 19 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS SUCTION Pokce Mintier of Cale for Serves 33,985 35816 33695 32889 30.272 31,916 31,355 29,840 32.946 34,229 Fire Number of Responses Total Fre Loss Totallnspec6ons Parks and Recreation Class Participants 98097 109273 103,603 85,693 64,049 58,260 52,319 45,514 68970 64782 701e. 4673 4,824 4654 4,574 4649 4,644 4,604 5,156 5,549 5,754 93060,005 62300685 91.934,596 61655571 51,601,596 5675.847 9343,495 92,738,080 51,926,944 52,821016 4,845 6,787 6.787° 1550 n' 1,360 ry 4541 3.389 3,850 2,331 1,860 CITY OF TUKWILA: 2016 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 20 CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS FUNCTION General Government Total City Area (Square Mks) Public Safety name PLtrter of Vehicle 0549 8.6 8.6 9.7 9.7 9.7 9.63 9.63 9.63 9.63 9.63 64 67 70 76 84 88 81 89 89 93 9579r6,06 Ch 0009006 90.141 117,533 134,163 134275 115.728 116,136 114,748 132,397 136984 141218 Wilber of Fire Stations 4 4 4 4 4 4 4 4 4 4 Rounds of Gob Flayed 55.445 53,565 53.800 59.445 45,947 47,392 47,757 47.267 51.017 47,595 Number of Engines/Rescue Trucks/Ladders 9 9 9 8 7 7 7 9 9 9 Pool Attendance -' 57,624 59,077 80.727 101,128 66213 69332 71,233 79537 - - Number 01 #Mdical Aid Vehicles 2 2 2 2 11 1 1 1 i Miner o1 Hazardous Materials Trailer Utas 2 2 2 2 2 2 2 2 2 2 Street Mees 79 79 79 79 79 79 79 79 79 79 Transportation Fours maintaining 17.540 19,640 22.140 20360 20,360 22,920 16,767 8.627 4,716 4,836 Paved Streets (lane mks) 163 163 178 178 178 1882 188.2 188.2 188.2 188.2 Sgnalzedlrcersectbns 63 63 59 59 59 62 62 6262 64 Sides elks Miles) 54 54 56 56 56 64.8 648 64.8 64.8 64,8 Iburs Maintain, 7.540 7,540 6.700 6925 6925 7000 8,815 3012 2,408 2135 Number of Traffic Signals 57 57 59 59 59 64 63 63 63 74 Water Utility Gerace s Naber of Streetlights Owned by Seattle City Light 1.180 1.180 1.180 1.335 1,335 5' 901 901 902 902 902 Tool Customers 2,113 2,109 2,112 2.100 2109 2.117 2.118 2,126 2.145 2160 Number of Streetlights Owned by Puget Sound Energy 670 670 696 696 623 " 187 187 187 187 187 Total GabnsMMerlin Number of Streetlights Owned by City of Tukw Fla - - - . 1 210 1,216 1224 1224 1224 719458445) 680,649 660,915 731469 630,755 625,976 650,659 645.982 668,740 697.147 655472 Sanitary Sewer Total Customers 1,718 1,684 1,694 1,699 1 710 1.727 1,742 1,752 1,775 1,789 Surface Water COW Total Customrs 5.156 5.164 5,204 5207 5207 5,212 5226 5,239 5,242 5.249 1 6) Licenses CD eushess Licenses 2,350 2,523 2.422 2,454 2,611 2030 1,877 2208 2220 1909 Outside Contractors - - - - - "r 1066 1,132 1,216 1215 945 Permits Baking Pewits 425 423 265 29D 389 354 374 347 277 311 6SchanOeIPor580 238 256 159 106 180 191 221 216 154 192 BectrCal Permits 758 1,533 821 955 1.158 1.175 1.337 1,223 1.119 1 175 Rumbing Permits 306 264 145 163 187 210 167 184 140 185 tabic Works ferias 136 154 131 138 106 126 155 152 163 175 Libraries limber of Libraries 3 3 3 2 2 2 2 2 2 2 TotaICycubton 306,001 303,665 318,991 327.004 333,451 332,508 313,571 284,667 214520 184,492 Wes) °' Construction of new clubhouse completed and opened m 2003. Pre tg2012 tion systemised data program transitioning. this total does not include flee prevenMon stafo9,aotctiions at the Mrs as reported h prior years. " During 2012.Outside .97990999 began thein ow n business Isere, category.Pr'ior to MK, ommde contractors were consolidated w M current year ¢sued lice Information not avelable. "' Pool 1wates acquired fnomKing County len 2003. Sources: Tram k Departments. Ding dourly Library System 165 Culture and 236159 ion Parks Acreage °, N ober of Parks Golf Course Acreage Maintained Trails (mks) Writer of Raygrounds Swimming Foot Visitor Center Community Center/Recreation Facilities Number of Librares Water Water Distribution Mains (mks) Maximum Daily Capacity anions of gallons) Number of Fire Hydrants (OWned by City of Tu Vehicles 160 18 67 55 162 16 18 1 67 6 11 1 13 1 3 47 4 10 1 572 54 8 Sewer Sanitary Sew ers(niles) 37 37 3 Maximum Daly Treatment Capacity Millan of gallons) 6.33 6.33 6.33 Vehicles 5 6 6 Surface Water Storm Drains (miss) Irl 67 67 69 69 70 70 Vehicles 4 4 4 4 4 4 Notes: Reflects the correct reporting of data /or Culture and Recreation - Parks Acreage for the years 2001 through 2006. Parks acreage previously reported Included golf course acreage. Reflects the correct reporting of data for Surface Water- Storm Grains (miles) for the years 2001 through 2006. Miles previously reported were incorrect data estimates. Cilyrs meters. Also, additional street lights were added due t9 newconstructian for Southcenter Parkway 162 162 175.6 17a6 175.6 190 190 18 18 19 19 19 19 19 67 67 7726 77.26 77.26 77,26 77.26 15 15 15 15 15 15 15 11 11 11 11 11 11 11 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 41 41 41 41 49 49 49 10 10 10 10 10 10 10 542 554 576 576 576 577 577 8 8 8 8 9 9 9 37 37 37 37 37 37 37 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6 6 6 5 4 4 5 Extension and Klickitet Protects. Sourc Various Departments -Tukwila 166 70 70 71 70.5 4 8 8 8 APPENDIX C DTC AND ITS BOOK -ENTRY SYSTEM DTC AND ITS BOOK -ENTRY SYSTEM The information in this section concerning the Depository Trust Company, New York, New York ("DTC") and DTC's book -entry system has been obtained from DTC's website at www.dtcc.com and the City takes no responsibility for the accuracy thereof. Beneficial Owners (as hereinafter defined) should therefore confirm the following with DTC or the Participants (as hereinafter defined). For purposes of this section, references to the Issuer mean the City, references to Agent mean the Bond Registrar and references to Securities means the Bonds. For the purposes of this Official Statement, the term "Beneficial Owner" includes the person for whom the Participant acquires an interest in the Bonds. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such maturity and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of the Securities under the DTC system, must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. C-1 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.] 6. [Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. [A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book -entry -only transfers through DTC. C-2 S&P Global Ratings June 30, 2017 City of Tukwila 6200 Southcenter Boulevard Tukwila, WA 98188 Attention: Ms. Peggy McCarthy, Finance Director One California Street, 31st Floor San Francisco, CA 94111-5432 tel 415 371-5000 reference no.: 1486127 Re: US$7,685,000 Tukwila, Washington, Limited Tax General Obligation, Series 2017, dated: Date of delivery, due: December 1, 2037 Dear Ms. McCarthy: Pursuant to your request for an S&P Global Ratings rating on the above -referenced obligations, S&P Global Ratings has assigned a rating of "AA". S&P Global Ratings views the outlook for this rating as stable. A copy of the rationale supporting the rating is enclosed. This letter constitutes S&P Global Ratings' permission for you to disseminate the above -assigned ratings to interested parties in accordance with applicable laws and regulations. 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PF Ratings U.S. (4/28/16) S&P Global Ratings RatingsDirect® Summary: Tukwila, Washington; General Obligation Primary Credit Analyst: Jennifer Hansen, San Francisco (1) 415-371-5035; jen.hansen@spglobal.com Secondary Contact: Satomi D Suzuki, San Francisco (1) 415-371-5018; satomi.suzuki@spglobal.com Table Of Contents Rationale Outlook Related Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 30, 2017 1 Summary: Tukwila, Washington; General Obligation Credit Profile US$7.685 mil ltd tax GO ser 2017 due 12/01/2037 Long Term Rating AA/Stable Tukwila unitd tax GO bnds ser 2016 dtd 12/15/2016 due 12/01/2036 Long Term Rating AA/Stable Tukwila GO Long Term Rating Rationale AA/Stable New Affirmed Affirmed S&P Global Ratings assigned its 'AA' long-term rating to Tukwila, Wash.'s series 2017 limited -tax general obligation (LTGO) bonds and affirmed its 'AA' rating on the city's outstanding unlimited -tax GO (UTGO) and LTGO bonds. The outlook is stable. The UTGO bonds are full faith, credit and resources obligations of the city, including an ad valorem property tax pledge without limit as to rate or amount. The LTGO bonds are full faith, credit, and resources obligations of the city, including an ad valorem property tax pledge within statutory and constitutional restrictions. We rate the LTGO bonds to the general obligation of the city given the strength of the city's financial position and tax base. The bonds are being issued to finance the costs of certain road construction and related improvement projects in the City. The rating reflects our assessment of the following factors for the city: • Strong economy, with access to a broad and diverse metropolitan statistical area (MSA); • Very strong management, with strong financial policies and practices under our Financial Management Assessment (FMA) methodology; • Adequate budgetary performance, with an operating surplus in the general fund but an operating deficit at the total governmental fund level in fiscal 2015; • Very strong budgetary flexibility, with an available fund balance in fiscal 2015 of 31% of operating expenditures; • Very strong liquidity, with total government available cash at 50.2% of total governmental fund expenditures and 9.7x governmental debt service, and access to external liquidity we consider strong; • Adequate debt and contingent liability position, with debt service carrying charges at 5.2% of expenditures and net direct debt that is 107.4% of total governmental fund revenue, as well as low overall net debt at less than 3% of market value, but significant medium-term debt plans; and • Adequate institutional framework score. Strong economy We consider Tukwila's economy strong. The city, with an estimated population of 20,250, is located in King County in WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 30, 2017 2 Summary: Tukwila, Washington; General Obligation the Seattle -Tacoma -Bellevue, Wash., MSA, which we consider to be broad and diverse. The city has a projected per capita effective buying income of 79.9% of the national level and per capita market value of $284,625. Overall, the city's market value grew by 6.8% over the past year to $5.8 billion in 2017. The county unemployment rate was 3.9% in 2016. Tukwila is located 12 miles south of downtown Seattle and 17 miles north of Tacoma. The city is home to the Westfield Southcenter Mall, the largest shopping center in the Pacific Northwest. Tukwila is a major retail, commercial, and light industrial center in the region, partly because of its location at the junction of interstates 5 and 405. Boeing is the largest landowner in the city and accounts for 8.36% of assessed value. Very strong management We view the city's management as very strong, with strong financial policies and practices under our FMA methodology, indicating financial practices are strong, well embedded, and likely sustainable. The city compares prior years' budget -to -actuals and considers inflationary increases when building its budgets. The city also consults outside economists at the state level for revenue guidance. The city presents quarterly budget -to -actual updates to its council along with quarterly investment reports to the finance and safety committee. The city maintains six-year plans for both long-term financial planning and capital improvement planning that lay out revenue and expenditure assumptions and are updated annually. The city has a 18% reserve policy for cash flow purposes. In 2014, the city adopted a debt policy, which, while comprehensive, does not address variable-rate debt. Adequate budgetary performance Tukwila's budgetary performance is adequate in our opinion. The city had surplus operating results in the general fund of 1.5% of expenditures, but a deficit result across all governmental funds of negative 2.0% in fiscal 2015. The city has posted general fund surpluses in the last two years. The city's revenues have benefited from large increases in sales taxes over the past few years, including 13% growth in 2015. Sales tax revenues are the city's largest revenue source, at 43%, followed by property taxes, at 32%. Based on unaudited numbers in 2016, the city posted an additional general fund surplus in 2016. Based on the city's recent performance and balanced budgets over fiscals 2017 and 2018, we believe that the city's performance is likely to remain adequate. Very strong budgetary flexibility Tukwila's budgetary flexibility is very strong, in our view, with an available fund balance in fiscal 2015 of 31% of operating expenditures, or $17.0 million. We expect the available fund balance to remain above 30% of expenditures for the current and next fiscal years, which we view as a positive credit factor. After adjusting for transfers out, the fund balance just reached 30% of expenditures in fiscal 2015. Based on unaudited actuals for fiscal 2016, the city fund balance again increased in 2016. Given that the city does not have plans to spend reserves in fiscal 2017 or 2018, we do not expect the fund balance to materially deteriorate in the near term. Very strong liquidity In our opinion, Tukwila's liquidity is very strong, with total government available cash at 50.2% of total governmental fund expenditures and 9.7x governmental debt service in 2015. In our view, the city has strong access to external liquidity if necessary. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 30, 2017 3 Summary: Tukwila, Washington; General Obligation We do not consider the city's investments to be aggressive, as they are primarily certificates of deposits, U.S. agencies, and municipal bonds. The city also invests in the State Treasurer's Local Government Investment Pool. We do not expect that liquidity will deteriorate over the near term. The city has a $2.25 million variable-rate line of credit available, which it has fully utilized to purchase some properties. The city plans to sell the properties and repay the line of credit. Adequate debt and contingent liability profile In our view, Tukwila's debt and contingent liability profile is adequate. Total governmental fund debt service is 5.2% of total governmental fund expenditures, and net direct debt is 107.4% of total governmental fund revenue. Overall net debt is low at 2.9% of market value, which is in our view a positive credit factor. Negatively affecting our view of the city's debt profile is its significant medium-term debt plans. The city plans to issue an additional $25 million of the Nov. 8, 2016, authorization in the next three years. Additionally, the city plans to build a $29 million City Shops Facility as part of the city's Public Safety Facilities Plan. This construction was not part of the 2016 authorization and will be funded through a mix of LTGO debt and utility bonds. Tukwila's combined required pension and actual other postemployment benefit (OPEB) contributions totaled 4.1% of total governmental fund expenditures in 2015. Of that amount, 3.5% represented required contributions to pension obligations, and 0.7% represented OPEB payments. The city made its full annual required pension contribution in 2015. The city and its employees participate in defined benefit pension plans administered by the state under the Public Employees Retirement System (PERS) and Law Enforcement Officers' and Fire Fighters' Retirement System. Plans under these systems have fiduciary net positions ranging from 59% to 127% of their respective pension liabilities, with the largest by pension liability at 85.8% (PERS), which we consider adequate, as of June 30, 2016. Adequate institutional framework The institutional framework score for Washington municipalities is adequate. Outlook The stable outlook reflects our view of the city as a strong commercial base within the larger Seattle area. It also reflects our view of the city's very strong flexibility and liquidity and strong management. We do not anticipate changing the rating during the two-year outlook horizon. Upside scenario If the city's income indicators were to improve or the debt profile were to moderate, we could raise the rating. Downside scenario If the city were to significantly decrease its available reserves or liquidity, we could lower the rating. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 30, 2017 4 Summary: Tukwila, Washington; General Obligation Related Research • S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013 • Incorporating GASB 67 And 68: Evaluating Pension/OPEB Obligations Under Standard & Poor's U.S. Local Government GO Criteria, Sept. 2, 2015 • 2016 Update Of Institutional Framework For U.S. Local Governments Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. 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S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third -party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. STANDARD & POOR'S, S&P and RATINGSDIRECT are registered trademarks of Standard & Poor's Financial Services LLC. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 30, 2017 6 Blanket Issuer Letter of Representations To 7e Completed by Issuer) CITY OF TUKWILA, WASHINGTON (Name of Issuer.+ October 18, 1999 !Dace. Attention: Underwriting Department -- Eligibility The Depository Trust Company 55 Water Street; 50th Floor New York, NY 10041-0099 Ladies and Gentlemen: This letter sets forth our understanding with respect to all issues ;the "Securities") that Issuer shall request be made eligible for deposit.by The Depository Trust Company ("DTC"). To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in accordance with DTCs Rules with respect to the Securities, Issuer represents to DTC that Issuer will comply with the requirements stated in DTCs Operational Arrangements, as they may be amended from time to time. Note: Schedule A contains statements that DTC believes accurately describe DTC, the method of effecting book- entry ookentry transfers of securities distributed through DTC. and tortilla related = ttas. Received and Accepted: Very truly yours, City of Tukwila,- Washington By Alan R. •Doerschel, Finance Director (Typewrite Name & Tek) 6200 Southcenter Boulevard (Street Address) Tukwila, Washington 98188 (City) (206) 433-1800 (State) Op) (Pbone Number) SCHEDULE A (To Blanket Issuer Letter of Representations' SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK -ENTRY -ONLY ISSUANCE (Prepared by DTC—bracketed material may be applicable only to certain issues) 1. The Depository Trust Company (-"DTC"). New York. NT. will act as securities depositor- for the securities (the "Securities":. The Securities will be issued as fully registered securities registered in the name of Cede & Co. iDTC's partnership nominee) or such other name as may. be requested by an authorized representative of DTC. One full registered Security certificate will be issued for [each issue . oto the Securities. [each] in the aggregate principal amount of such issue. and will be deposited with DTC. [If. however. the aggregate principal amount of [any] issue exceeds 8200 million. one certificate will be issued with respect to each 3200 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC is.a limited -purpose trust company organized under the New York Banking Law. a "banldno organization" within the meaning of the New York Banldng Law. a member of the Federal Reserve System; a "clearing corporation"within the meaning of the New York Uniform Commercial Code, and a -clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions. such as transfers and pledges. in deposited securities through electronic computerized book -entry changes in Participants' accounts. thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers. banks. trust companies, clearing corporations. and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange. Inc.. the American Stock Exchange, Inc., and the National association of Securities Dealers. Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks. and trust companies that clear through or maintain a custodial relationship with a Direct Participant. either directly or indirectly- '"Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants. which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings. from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notice_ and other communications by DTC to Direct Participants. by Direct Partidp.mts to Indirect Partiipants..axl by Direct Participmts and Indirect Participants to Beneficial Owners will be governed by arran?ements among them. subject to any statutor or regulatory requirements as may be in effect from time to time. [Beneficial Owners of the Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities. such as redemptions, tenders. defaults. and proposed amendments to the Security documents. Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. or in the alternative. Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.) [6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed. DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to Securities. Under its usual procedures. DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Prom- assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified Ina listing attached to the Omnibus Prov). S. Principal and interest payments on the Securities will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of Funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices. as is the case with securities held for the accounts of customers in bearer form or registered in street name." and will be the responsibility of such Participant and not of DTC (nor its nominee). Agent, or Issuer, subject to any statutory or regulatory- requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to Beneficial Owners is the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing) Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing) Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered securities to [Tender/Remarketing) Agent's DTC account.] 10. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. 1'2. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. CONTINUING DISCLOSURE CERTIFICATE OF CITY OF TUKWILA, WASHINGTON This Continuing Disclosure Certificate (this "Certificate") is executed and delivered by the City of Tukwila, Washington (the "City"), in connection with the issuance by the City of its Limited Tax General Obligation Bonds, 2017 (the "Bonds") pursuant to Ordinance No. 2541 of the City Council, adopted on June 19, 2017 (the "Bond Ordinance"). Pursuant to the Bond Ordinance, the City hereby covenants and agrees as follows: Section 1. Purpose of this Certificate. This Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (each as defined below). Section 2. Definitions. In addition to the definitions set forth herein, in the Bond Ordinance or in the Official Statement, which apply to any capitalized term used in this Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings: Commission means the Securities and Exchange Commission. MSRB means the Municipal Securities Rulemaking Board. Participating Underwriter means the original underwriters of the Bonds required to comply with the Rule in connection with offering the Bonds. Rule means Section (b)(5) of Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provisions of Annual Information. (a) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to the MSRB, the following annual financial information and operating data for the prior fiscal year (commencing in 2018 for the fiscal year ended December 31, 2017): (1) Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the official statement for the Bonds; (2) Principal amount of general obligation debt outstanding at the end of the applicable fiscal year; (3) Assessed valuation of taxable property in the City for that fiscal year; and (4) Property tax levy amounts and rates for that fiscal year. -1- 10076 00003 ggl9cp424w Items 2-4 shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before the end of nine months after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross refer to other documents available to the public on the MSRB's interne website or filed with the Commission. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to the MSRB. (b) Listed Events. The City further agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: • Principal and interest payment delinquencies; • Non-payment related defaults, if material; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; • Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; • Modifications to the rights of Bondholders, if material; • Optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856, if material, and tender offers; • Defeasances; • Release, substitution, or sale of property securing repayment of the Bonds, if material; • Rating changes; • Bankruptcy, insolvency, receivership or similar event of the City; • The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and • Appointment of a successor or additional trustee or the change of name of a trustee, if material. -2- 10076 00003 gg19cp424w Section 4. Notification Upon Failure to Provide Financial Data The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in above on or prior to the date set forth in above. Section 5. EMMA; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination/Modification. The City's obligations to provide annual financial information and notices of listed events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this undertaking shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of all or any portion of this undertaking. Notwithstanding any other provision of this certificate, the City may amend this undertaking with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this undertaking, the City shall describe such amendment in the next annual report, and shall include a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed event under Subsection (b), and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Bond Owner's Remedies. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under this undertaking, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. For purposes of this Certificate, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Certificate, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent. -3- 10076 00003 gg19cp424w DATED this 26th day of July, 2017. -4- 10076 00003 ggl9cp424w CITY OF TUKWILA, WASHINGTON P --k c arthy, Finance rector SIGNATURE IDENTIFICATION AND NONLITIGATION CERTIFICATE We, ALLAN EKBERG and CHRISTY O'FLAHERTY, the duly chosen, qualified and acting Mayor and City Clerk, respectively, of the City of Tukwila, Washington, DO HEREBY CERTIFY that our facsimile signatures appearing on each of the following -described limited tax general obligation bonds of the City are true and genuine facsimiles of our signatures. The bonds are dated July 26, 2017 are in the total principal amount of $8,180,000, are designated "City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017," are in fully registered form, are issuable in the denomination of $5,000 each or any integral multiple of $5,000, provided no bond represents more than one maturity, are payable, both principal and interest, in lawful money of the United States of America, bear interest payable semiannually on the first day of December and June, commencing on December 1, 2017, at the following rates and mature on the following dates in the following principal amounts: Maturity Year Principal Interest (December 1) Amount Rate 2018 $ 305,000 3.00% 2019 315,000 3.00 2020 325,000 3.00 2021 330,000 3.00 2022 340,000 3.00 2023 355,000 3.00 2024 365,000 3.00 2025 375,000 3.00 2026 385,000 3.00 2027 395,000 3.00 2028 410,000 3.00 2029 420,000 3.00 2030 435,000 3.00 2031 445,000 3.00 2032 460,000 3.00 2033 475,000 3.00 2034 490,000 3.25 2035 500,000 3.25 2036 520,000 3.25 2037 535,000 3.50 WE FURTHER CERTIFY that there is no controversy or litigation pending or to the best of our knowledge threatened affecting the issuance and delivery of said bonds, the levy and collection of taxes and other revenue pledged to pay the principal thereof and interest thereon, the proceedings and authority under which said bonds are issued and said taxes levied, the validity of said bonds, the corporate existence or boundaries of the City, or the title of the present officers to their respective offices, and that no authority or proceedings for the issuance of said bonds has or have been repealed, revoked or rescinded. DATED as of this 26th day of July, 2017. Signatures Title 10076 00003 gf23dm28bb Mayor City Clerk * * * * * * * * * * STATE OF WASHINGTON ) ss. COUNTY OF KING On this (11 day of 3 -LA (LI , 2017, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared ALLAN EKBERG, to me known to be the Mayor of the City of Tukwila, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that he signed said instrument as his free and voluntary act and deed for the uses and purposes therein mentioned. ``�\�\\\\1\ 111 l 0113Eit fish ,✓�o. 6Yl 1 d e.b`� _ ? SsioH �a O / (i)NotaraPublic A/ [Printed Name] i A% q&so(' 2 j 7;`,'4 ?.1 g.1s�Fk0 4Ilj'� 1`WASN\` -'- My appointment expires: a- lc - 1°) STATE OF WASHINGTON ) ) ss. COUNTY OF KING On this 0 day of 3 -0t -Ly , 2017, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared CHRISTY O'FLAHERTY, to me known to be the City Clerk of the City of Tukwila, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that she signed said instrument as her free and voluntary act and deed for the uses and purposes therein mentioned. ‘,0\\‘‘1i1 10076 00003 gf23dm28bb Qa_ifux ed Notary Public a_n A[ rnbei Did n [Printed Name] — My appointment expires: ) v� 9 ` j`7 I, CERTIFICATE OF MAILING Holli B. Van Valkenburg the duly chosen (PRINT OR TYPE NAME) qualified and acting Paralegal (POSITION) of the law firm of Pacifica Law Group LLP DO HEREBY CERTIFY that on the 19th day of December, 2016, I mailed to the Secretary of State of the State of Washington, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials: Name Position ALLAN EKBERG Mayor, City of Tukwila King County, Washington Dated: December 19, 2016 10076 00002fm16gh2850 CERTIFICATE OF MANUAL SIGNATURE Signature STATE OF WASHINGT. COUNTY OF KING ) ) ss: I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Allan Ekberg (print or type) I have been duly chosen and am qualified and acting as for Mayor (title or position) City of Tukwila, Washington (name of municipality) The signature appearing above is my true manual signature. This affidavit is made to comply with 39.62.020 Revised Code of Washington (Ch. 86, Wash. Sess. Laws of 1969). SUBSCRIBED AND SWORN TO before me this 02 1 day of December, 2016. dry NOTARY PUBLIC in and fbr the State of Washington, residing at T U K -w s k Printed Name:'Da n i4 I rn he r, fl e d ca it My Commission Expires: 1 - 1 ' - 11 I, CERTIFICATE OF MAILING Holli B. Van Valkenburg the duly chosen (PRINT OR TYPE. NAME) qualified and acting Paralegal of the of (POSITION) law firm Pacifica Law Group LLP DO HEREBY CERTIFY that on the 19th day of December, 2016, I mailed to the Secretary of State of the State of Washington, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials: Name Position CHRISTY O'FLAHERTY City Clerk, City of Tukwila King County, Washington Dated: December 19, 2016 10076 00002 fm16gj2819 x CERTIFICATE OF MANUAL SIGNATURE `7%/45 Signature STATE OF WASHINGTON ) ) ss: COUNTY OF KING I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Christy O'Flaherty (print or type) I have been duly chosen and am qualified and acting as for City Clerk (tide or position) City of Tukwila, Washington (name of municipality) The signature appearing above is my true manual signature. This affidavit is made to comply with 39.62.020 Revised Code of Washington (Ch. 86, Wash. Sess. Laws of 1969). Signature SUBSCRIBED AND SWORN TO before me this e,2 I day of December, 2016. io, alp rn t'a-.� NOTARY PUBLIC in annfor the State of Washington, residing at --Tin-444A), 1 & Printed Name: A l rn 101Didrl My Commission Expires: la -1 G1 - 1 q CERTIFICATE OF AUTHORIZATION OF AUTHORIZED SIGNER ON BEHALF OF THE FISCAL AGENT FOR THE STATE OF WASHINGTON I, Ryan P. Brennan, certify that I am an Assistant Vice President of U.S. Bank National Association (the "Bank"), fiscal agent for the State of Washington and Registrar for the City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2017, in the aggregate principal amount of $8,180,000; and I further certify that Carolyn Morrison is authorized by the Bank to sign the above bonds as an Authorized Signer for the Bank; and I further certify that the signature set forth below is the true and correct signature of that Authorized Signer. DATED as of this 26th day of July, 2017. U.S. BANK NATIONAL ASSOCIATION, fiscal agent for the State of Washington By: Name: v Ryan P. Brennan Title: Assistant Vice President Ctaer, ) Authorized Signer 10076 00003 gf23dm28bb CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2017 $8,180,000 CERTIFICATE OF AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS U.S. Bank National Association, fiscal agent for the State of Washington (the "Registrar"), hereby certifies as follows: (1) The Registrar hereby acknowledges receipt in Seattle, Washington, of the following numbers of unauthenticated bonds of the following issue: Bond Issue Number of Unauthenticated Bonds Received City of Tukwila, Washington, Limited Tax General 20 Obligation Bonds, 2017 - $8,180,000 (2) On the date hereof the Registrar authenticated and registered the City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2017, in the aggregate principal amount of $8,180,000 (the "Bonds"), by manually executing the Certificate of Authentication and by entering the names and addresses of the Bond owners or their nominees in records maintained for such purpose and shall hold the Bonds on behalf of The Depository Trust Company. (3) All unauthenticated bonds delivered to the Registrar shall be held by it and shall be subject to the terms of the Agreement for Fiscal Agency Services dated as of February 1, 2015, between the Washington State Finance Committee, as agent of the state of Washington, and U.S. Bank National Association (the "Fiscal Agency Contract"), and the duties and obligations created therein. The Registrar shall be liable for the safekeeping thereof and for the performance of its duties and obligations as specifically set forth therein and for the actions and omissions of its agent(s). The Registrar shall act in good faith, and no implied duties or obligations shall be incurred by the Registrar other than those specifically in the Fiscal Agency Contract. 10076 00003 gf23dm28bb (4) CUSIP numbers have been assigned to the Bonds as follows: Maturity Year Principal Interest CUSIP (December 1) Amount Rate No. 2018 $305,000 3.00% 899052KR4 2019 315,000 3.00 899052KS2 2020 325,000 3.00 899052KT0 2021 330,000 3.00 899052KU7 2022 340,000 3.00 899052KV5 2023 355,000 3.00 899052KW3 2024 365,000 3.00 89905210(1 2025 375,000 3.00 899052KY9 2026 385,000 3.00 899052KZ6 2027 395,000 3.00 899052LA0 2028 410,000 3.00 899052LB8 2029 420,000 3.00 899052LC6 2030 435,000 3.00 899052LD4 2031 445,000 3.00 899052LE2 2032 460,000 3.00 899052LF9 2033 475,000 3.00 899052LG7 2034 490,000 3.25 899052LH5 2035 500,000 3.25 899052LJ1 2036 520,000 3.25 899052LK8 2037 535,000 3.50 899052LL6 DATED as of this 26th day of July, 2017. 10076 00003 gf23dm28bb U.S. BANK NATIONAL ASSOCIATION, fiscal agent for the State of Washington, as Registrar By: Name: Title: Carolyn Morrison Vice President OFFICIAL STATEMENT CERTIFICATE I, Peggy McCarthy, Finance Director of the City of Tukwila, Washington (the "City"), acting in my official capacity, DO HEREBY CERTIFY that to the best of my knowledge and belief, and after reasonable investigation, (a) neither the Official Statement for the Limited Tax General Obligation Bonds, 2017, of the City in the aggregate principal amount of $8,180,000, nor any amendment or supplement thereto, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; nor (b) has there been any material adverse change in the financial condition and affairs of the City or relating to the economy of the City since the dated date of such Official Statement. Dated this 26th day of July, 2017. CITY OF TUKWILA, WASHINGTON 1/4 Pe :,f cCarthy, Fnce Director $8,180,000 CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2017 FEDERAL TAX CERTIFICATE I, the undersigned, am the duly chosen, qualified and acting Finance Director of the City of Tukwila, Washington (the "Issuer"), and am one of the officers of the Issuer duly charged (by ordinance of the governing body of the Issuer), with others, with the responsibility of issuing the above -referenced bonds (the "Bonds"), on the date hereof. I am familiar with the facts certified herein and I am duly authorized to execute and deliver this certificate on behalf of the Issuer. I hereby certify and covenant in good faith on behalf of the Issuer as follows: Part A: General 1. Reliance by Bond Counsel. I understand and agree that the facts, representations and covenants in this Certificate will be relied upon by Pacifica Law Group LLP, bond counsel, in expressing the opinion that the interest on the Bonds is excludable from gross income for Federal income tax purposes. 2. Code and Regulations. The Bonds are subject to the provisions of Sections 103, 141, 148, 149 and 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the related Treasury Regulations (the "Regulations"). These provisions of the Code and Regulations impose restrictions on the use of bond -financed facilities and on the investment of bond proceeds. The Issuer acknowledges its responsibility to set forth herein all facts and other matters relevant to the determination of whether the Bonds are in compliance with relevant provisions of the Code and the Regulations, and acknowledges that if such facts are incorrect, the Bonds may be invalid or the interest on the Bonds may not be tax exempt. 3. Defined Terms. The Bonds are being issued pursuant to Ordinance No. 2541 passed by the governing body of the Issuer on June 19, 2017, authorizing the issuance and sale of the Bonds (the "Bond Ordinance"). All terms defined in the Code or Regulations will have the same meanings as given to those terms in the Code and Regulations unless the context clearly requires otherwise. Any additional capitalized terms used but not defined in this Certificate will have the same meanings as given to those terms in the Bond Ordinance. 4. Purpose of Financing. The Bonds are being issued for the primary purpose of financing all or a portion of certain capital improvements (the "Project") described in Part I of Exhibit A that is attached to this Certificate and incorporated herein. 5. Reasonable Expectations; Exhibits. The facts and estimates set forth in this Certificate are accurate, and the expectations set forth in this Certificate are reasonable in light of such facts and estimates. There are no other facts or estimates that would materially change such expectations. I have, to the extent necessary, reviewed the certifications in this Certificate with other representatives of the Issuer as to their accuracy and reasonableness. I have also relied, to the extent appropriate, on representations set forth in the following exhibits that are attached to this Certificate and incorporated herein: 10076 00003 gg171m34g1 Exhibit B — Certificate of Underwriter Exhibit C Certificate of Financial Advisor I am aware of no fact, estimate or circumstance that would create any doubt regarding the accuracy or reasonableness of all or any portion of such documents. 6. Confirmation of Covenants. The Issuer has made certain covenants with respect to the tax exemption of the Bonds in Section 9 of the Bond Ordinance (the "Tax Covenants"). The Issuer acknowledges that if the Tax Covenants are not complied with, interest on the Bonds may become taxable in the future, either at that time or with retroactive effect back to the date of issuance of the Bonds. Certain of the Tax Covenants in the Bond Ordinance and in this Certificate will survive payment in full or defeasance of the Bonds. 7. Qualification of the Issuer. The Issuer is a political subdivision of the State of Washington (the "State"), duly organized and existing as a municipal corporation with the power of taxation under the laws of the State, including Article XI of the Washington State Constitution. 8. Small Issuer Exemption from Bank Nondeductibility Restriction. The Issuer hereby designates the Bonds for purposes of paragraph (3) of section 265(b) of the Code and represents that not more than $10,000,000 aggregate principal amount of obligations the interest on which is excludable (under section 103(a) of the Code) from gross income for federal income tax purposes (excluding (i) private activity bonds, as defined in section 141 of the Code, except qualified 501(c)(3) bonds as defined in section 145 of the Code and (ii) current refunding obligations to the extent the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation), including the Bonds (together, the "Bank Qualified Bonds"), has been or will be issued by the Issuer, including all subordinate entities of the Issuer, during the calendar year 2017. No Bank Qualified Bonds, other than the Bonds, have been issued or are expected to be issued by the City during calendar year 2017. Part B: Issue; Sale Proceeds 1. Bond Terms. The Bonds will be dated as of and issued on the date hereof (the "Issue Date"), and bear interest from the Issue Date, payable semiannually on each June 1 and December 1, beginning on December 1, 2017. The Bonds will mature on December 1 in the years and amounts, and bear interest at the rates as set forth in the Schedules attached to this Certificate. 2. Net Sale Proceeds. The Bonds were sold to FTN Financial Capital Markets (the "Underwriter") on July 13, 2017 (the "Sale Date"), as follows: Face Amount of Bonds $8,180,000.00 Plus Original Premium 356,838.55 Sale Proceeds of Bonds $8,536,838.55 The Bonds are being delivered on this date in exchange for good funds. -2- 10076 00003 gg171m34g1 3. Use of Sale Proceeds. The Issuer expects to use the Sale Proceeds of the Bonds as follows: Underwriter's Discount $75,241.37 Issuance Costs 61,597.18 Costs of the Project 8,400,000.00 Total Sale Proceeds $8,536,838.55 Earnings on the proceeds of the Bonds are expected to be used for the above purposes or for payment of debt service on the Bonds, as described in Part D. 4. No Refunding. No portion of the receipts derived from the sale of the Bonds will be used to pay the principal of or interest on another issue of governmental obligations. 5. No Aggregated Issues. No tax-exempt obligations of the Issuer have been sold within 15 days before or after the Sale Date that will be paid from substantially the same source of funds as the Bonds (excluding guarantees from unrelated parties). 6. No Pooled Financing. No portion of the purchase price of any of the Bonds is being provided by the issuance of any other obligations of the Issuer or any other governmental entity. The proceeds of the Bonds will not be loaned to any governmental entity. Part C: Private Activity and Other Project Limitations 1. Expectations Regarding Project Use for Life of Bonds. The Issuer reasonably expects to use the Project for governmental purposes of the Issuer during the entire term of the Bonds. 2. Private Uses of Project. Part II of Exhibit A describes the Issuer's reasonable expectations regarding: a. each use to be made of the Project by any private person or entity (that is, any entity other than (i) the Issuer, (ii) other state or local governmental entities, or (iii) members of the public generally), and b. all payments (if any) directly or indirectly in respect of any use to be made of the Project by any private person or entity, which are to be made after the Issue Date. The Issuer does not expect (i) any private business use that is not related to a use of the Project for governmental purposes or (ii) private business use that is related to such governmental purposes but is greater than governmental purposes financed with the Bonds. 3. No Private Loans. No portion of the proceeds of the Bonds will be used, directly or indirectly, to make or finance a loan to any person (other than a State or local government unit). 4. Reimbursement. No portion of the proceeds of the Bonds will be used for reimbursement of expenditures paid by the Issuer prior to the Issue Date except for -3- 10076 00003 gg171m34g1 (i) expenditures paid for costs of issuance of the Bonds, (ii) amounts not in excess of the lesser of $100,000 or 5% of the proceeds of the Bonds, (iii) preliminary capital expenditures (such as architectural, engineering surveying, soil testing and similar costs incurred before commencement of acquisition or construction of the Project) that do not exceed 20% of the issue price of the Bonds, and (iv) capital expenditures that (A) were paid no earlier than 60 days before the date of the adoption by the Issuer of a declaration of intent (a "Reimbursement Declaration") to reimburse such expenditures from the proceeds of obligations, and (B) are reimbursed no later than 18 months after the later of the date the expenditure was paid or the date the Project is placed in service (but no later than three years after the expenditure is paid). The Bond Ordinance is also the Reimbursement Declaration for the Bonds. The Reimbursement Declaration was not declared as a matter of course, and is not in an amount substantially in excess of the amount expected to be necessary for the Project. Proceeds (if any) used for reimbursement of expenditures will be deposited in the general funds of the Issuer and will not be used to replace funds of the Issuer to be used to refund debt of the Issuer, to create a sinking or pledged fund for such debt or the Bonds or otherwise to create replacement proceeds for such debt or for the Bonds. 5. Qualified Equity. The Issuer does not expect to contribute "Qualified Equity" for costs of the Project, consisting of proceeds of obligations that are not tax -advantaged obligations or funds that are not derived from proceeds of a borrowing. 6. Costs of Project. The total cost of the Project is anticipated to be not less than $8,400,000. Any costs of the Project not financed out of sale or investment proceeds of the Bonds will be financed out of the Issuer's available funds. Part D: Flow of Funds; Temporary Periods 1. Flow of Funds. The Bond Ordinance creates the "Debt Service Fund" and the "Project Fund," which are described in more detail below. The Debt Service Fund and the Project Fund are held by the Issuer pursuant to the terms of the Bond Ordinance. 2. Issuance Costs. The Underwriter will retain $75,241.37 in Bond proceeds as payment of underwriter's discount. Bond proceeds in the amount of $61,597.18 will be deposited in the Project Fund used for payment of legal fees, financial advisor fees, printing costs and other costs incurred in connection with the issuance of the Bonds and will be fully expended promptly upon receipt of invoices. Any amounts not spent on issuance costs will be transferred to the Debt Service Fund and used to pay capitalized interest on the Bonds. 3. Project Fund. a. Capital Expenditures. Other than amounts spending on issuance costs, all expenditures from the Project Fund will be for (i) costs that are chargeable to the capital accounts of the Project and (ii) interest on the Bonds in an amount that does not exceed the interest on the Bonds for the period that commences on the Issue Date and ends on the later of (A) the date that is three years from the Issue Date or (B) the date that is one year after the date on which the Project is placed in service; however, up to 5% of the -4- 10076 00003 gg171m34g1 Sale Proceeds of the Bonds may be spent on working capital costs directly related to the Project. b. Completion of Project. The Issuer has entered into a contract for construction of a portion of the Project, which contract constitutes a substantial binding obligation of the Issuer to a third party to expend at least 5% of the Net Sale Proceeds of the Bonds (being the Sale Proceeds of the Bonds, as shown above). Not less than 85% of the Net Sale Proceeds will be spent within three years of the Issue Date. The Issuer will proceed with due diligence to complete the Project and to allocate the proceeds of the Bonds to expenditures for the Project. Completion is expected by December 2018. Part III of Exhibit A contains a schedule of reasonably expected expenditures of proceeds of the Bonds from the Project Fund for costs of the Project (the "Draw Down Schedule"). The Issuer has documentation (e.g., architectural and engineering reports, plans and drawings, agreements and contracts) supporting its expectations regarding the expenditures set forth in the Draw Down Schedule. c. Investment of Project Fund. Amounts deposited in the Project Fund will be invested without yield restrictions for the period from the Issue Date to the date that is three years after the Issue Date unless earlier expended (the "3 -year Temporary Period"). Interest earnings and gains resulting from investment of the Project Fund will be retained in that Fund and used for the payment of costs of the Project. Proceeds of the Bonds and any interest earnings and gains remaining in the Project Fund following the 3 -year Temporary Period will be invested at a yield not in excess of the yield of the Bonds or yield reduction payments will be made with respect to such investment. Amounts, if any, remaining in the Project Fund upon completion of the Project will be retained in the Project Fund and used for capital expenditures in furtherance of the governmental purposes of the Issuer or transferred to the Debt Service Fund and used for payment of debt service on the Bonds, as directed by the Issuer. 4. Pledge of Revenues; General Fund. The Issuer has pledged the receipts from certain levies of ad valorem property taxes and other available revenues (the "Revenues") to the payment of debt service on the Bonds. The Issuer expects that the Revenues will be sufficient each year to pay debt service. Upon receipt, the Revenues will be deposited in the general funds (the "General Fund") of the Issuer. Amounts in the General Fund may be used for any lawful purposes of the Issuer. While on deposit in the General Fund, there is no assurance that the Revenues will be available for the payment of debt service on the Bonds if the Issuer encounters financial difficulties. The Revenues, and other amounts in the General Fund, may be invested without yield restrictions. Any amounts in excess of a reasonable carryover amount held in the Debt Service Fund for longer than 13 months will be invested in obligations the yield on which is not in excess of the yield on the Bonds. 5. Debt Service Fund. The Issuer will transfer Revenues from its General Fund to the Debt Service Fund when required for payment of debt service on the Bonds. The Debt Service Fund has been established primarily to achieve a proper matching of Revenues and debt -5- 10076 00003 gg171m34g1 service due on the Bonds during each year that the Bonds are outstanding. Amounts deposited in the Debt Service Fund will be spent within 13 months of the date of deposit, and the Debt Service Fund will be depleted at least once a year except for a reasonable carryover amount not in excess of the greater of earnings on said Fund during the preceding bond year for the Bonds or 1/12th of debt service on the Bonds during the preceding bond year for the Bonds. Amounts in the Debt Service Fund will be invested without yield restrictions. Interest earnings and gains resulting from investment of the Debt Service Fund will be retained in the Debt Service Fund and used for the payment of debt service on the Bonds. 6. No Reserve Fund. No debt service reserve fund has been established with respect to the Bonds. 7. Minor Portion. The Issuer does not expect to invest any proceeds of the Bonds at a yield which is higher than the yield on the Bonds if such amounts are subject to yield restriction under the Code; however, under the Code, the Issuer may invest a Minor Portion of otherwise restricted amounts at an unrestricted yield. The Minor Portion is an amount not to exceed in the aggregate the lesser of $100,000 or 5% of the Sale Proceeds of the Bonds. Part E: Other Replacement Proceeds 1. No Other Pledged Amounts or Investment -Type Property. Except as described herein, no amounts have been pledged to, or are reasonably expected to be used directly or indirectly to pay, principal or interest on the Bonds, nor are there any amounts that have been reserved or otherwise set aside such that there is a reasonable assurance that such amounts will be available to pay principal or interest on the Bonds. 2. No Negative Pledges. There are no amounts held under any agreement requiring the maintenance of amounts at a particular level for the direct or indirect benefit of the owners of the Bonds or any guarantor of the Bonds, excluding for this purpose amounts in which the Issuer may grant rights that are superior to the rights of the owners of the Bonds or any guarantor of the Bonds and amounts that do not exceed reasonable needs for which they are maintained and as to which the required level is tested no more frequently than every 6 months and the amount may be spent without any substantial restriction other than a requirement to replenish the amount by the next testing date. 3. No Other Replacement Proceeds. There are no amounts not described herein that have a sufficiently direct nexus to the Bonds or to the Project to conclude that the amounts would have been used for debt service on the Bonds or for the Project if the proceeds of the Bonds were not being used for those purposes. 4. Safe Harbor. The weighted average maturity of the Bonds (11.7306 years) does not exceed 120% of the average reasonably expected economic life of the Project. The weighted average maturity of the Bonds was computed by the Financial Advisor as set forth in Exhibit C. The average reasonably expected economic life of the Project was determined in accordance with Section 147(b) of the Code. -6- 10076 00003 gg171m34g1 Part F: Yield 1. Yield of the Bonds. The Financial Advisor has computed that the yield of the Bonds is 2.6149%. For purposes of computing yield, the Underwriter has represented that the issue price of the Bonds is $8,536,838.55 (being the face amount of the Bonds of $8,180,000.00, plus net original issue premium of $356,838.55). The Underwriter and the Financial Advisor have made certain representations regarding the issue price of the Bonds in Exhibit B and Exhibit C. 2. No Hedge Contracts. The Issuer has not entered into, and does not reasonably expect to enter into, a hedge contract primarily for the purpose of reducing the Issuer's risk of interest rate changes with respect to the Bonds. 3. Yield on Investments. The yield on investments acquired with proceeds of the Bonds will be calculated in an identical manner and by use of the same frequency interval of compounding interest used to calculate the yield on the Bonds. For certain investments subject to yield restriction, the Issuer may make yield reduction payments to the federal government under Section 148 of the Code and such payments will be treated as a payment for that investment that reduces the yield on that investment. Part G: Compliance with Rebate 1. Bond Year for the Bonds. The Issuer selects each period from December 2 through December 1 of the following calendar year as the bond years for the Bonds, except that the first bond year will commence on the Issue Date and the last bond year will end on the date of payment of the Bonds in full. 2. Rebate Requirement. The Issuer has covenanted in the Bond Ordinance to comply with requirements for rebate of excess investment earnings to the federal government to the extent applicable and acknowledges that the first payment of excess investment earnings, if any, is required to be paid to the federal government no later than 60 days after the end of the 5th bond year for the Bonds. 3. Special Limitation. No portion of the Bonds will constitute a private activity bond within the meaning of Section 141(a) of the Code, the average maturity of the Bonds is greater than five years and none of the interest rates on the Bonds vary during the term of the Bonds. As a result, investment earnings on the Debt Service Fund will be excluded for the purposes of computation of the amount required to be rebated to the federal government without regard to the total amount of said earnings. 4. Rebate Spending Exceptions. If certain spending requirements are met, certain Bond proceeds may qualify for an exception to the payment of rebate. The Issuer elects the use of actual facts for purposes of determining eligibility for and compliance with any expenditure exceptions to arbitrage rebate; however, the Issuer's expectations regarding rebate spending exceptions are set forth in Exhibit A. -7- 10076 00003 gg171m34g1 Part H: No Abusive Devices; Other Requirements 1. No Abusive Arbitrage Device. The issuance of the Bonds does not exploit the difference between tax-exempt and taxable interest rates to obtain a material financial advantage and does not overburden the tax-exempt bond market in that the Issuer is not issuing more Bonds, issuing the Bonds earlier, or allowing the Bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bonds. 2. No Hedge Bonds. At least 85% of the Net Sale Proceeds will be used to carry out the governmental purposes of the Bonds within three years of the Issue Date, and not more than 50% of the proceeds of the Bonds, if any, are invested in investments having a substantially guaranteed yield for four or more years. 3. No Federal Guarantee. No portion of the debt service on the Bonds is being guaranteed, directly or indirectly, by the United States or any agency or instrumentality of the United States and no proceeds of the Bonds will be invested in federally insured accounts. A federal guarantee will not be deemed to arise if proceeds are invested during a temporary period or as part of a bona fide debt service fund or if invested in United States Treasury obligations. 4. Form 8038-G. I have examined the completed Form 8038-G, Information Return for Tax -Exempt Governmental Obligations, and to the best of my knowledge and belief, it is true, correct, and complete. Part I: Allocation and Accounting 1. General. The Issuer will use a consistently applied accounting method to account for investments and expenditures of proceeds of the Bonds. Allocations of Bond proceeds to expenditures will be made only with respect to a current outlay of cash for the expenditures. No proceeds of the Bonds will be allocated to any expenditure to which proceeds of any other obligations have been allocated. 2. Final Allocation. The Issuer will identify any deviations in the Project financed from the description in Exhibit A, confirm the amount of Qualified Equity allocated to the Project, and allocate proceeds of the Bonds to expenditures with respect to the Project no later than 18 months after the later of the date the expenditure is paid or the date the Project is placed in service. In the event allocations of Bond proceeds to expenditures are not made within 60 days after the date that is five years after the Issue Date, the Issuer acknowledges that the Internal Revenue Service may apply a specific tracing accounting method to account for investment and expenditures of proceeds of the Bonds. 3. No Commingled Funds. The Issuer expects to invest all proceeds of the Bonds in segregated accounts or within a commingled fund where Bond proceeds are invested and accounted for separately. If any Bond proceeds are invested commingled accounts that are invested and accounted for collectively, all payments and receipts of any investments will be allocated based on a consistently applied, reasonably ratable allocation method in accordance with Section 1.148-6(e) of the Regulations. -8- 10076 00003 gg171m34g1 4. Books and Records. The Issuer will maintain books and records until three years after the date of retirement or redemption of the Bonds relating to the Tax Covenants and the representations and certifications set forth herein. Such records include, but are not limited to, documents (i) establishing the accounting method used, (ii) accounting for all investments of proceeds of the Bonds, (iii) establishing compliance with rebate requirements, (iv) substantiating the allocation of proceeds of the Bonds to expenditures, and (v) tracking the use of the Projects. 5. Written Procedures. The Issuer has implemented the practices and procedures (the "Written Procedures") set forth in Exhibit D in order to assure that the proceeds of the Bonds are used in such a manner so as not to violate the provisions of the Code and the applicable Regulations and to take remedial actions in the event of a violation. These Written Procedures generally account for and monitor (i) the expenditure and investment of Bond proceeds, (ii) the use of the Project financed with the proceeds of the Bonds, and (iii) any changes in the underlying structure of the Bond financing. 6. Amendment. This Tax Certificate may be amended or supplemented to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Bonds without consent of the holders of the Bonds. -9- 10076 00003 gg171m34g1 On the basis of the foregoing, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be private activity bonds under Section 141 of the Code or to be arbitrage bonds under Section 148 of the Code and applicable Regulations. Dated: July 26, 2017 -10- 10076 00003 99171m34g1 CITY OF TUKWILA ce Director Schedule of Exhibits Exhibit A — I. Description of Project II. Description of Private Use III. Schedule of Expected Expenditures Exhibit B — Certificate of the Underwriter Exhibit C — Certificate of the Financial Advisor, together with Schedules Exhibit D — Written Procedures -11- 10076 00003 gg171m34g1 Exhibit A PART I. Description of Project The Project consists of construction of residential street improvements at 42nd Ave South and 53`d Ave South. PART II. Description of Private Use A. Describe each use to be made of the Project by any private person or entity (that is, any entity other than (i) the Issuer, (ii) other State or local governmental entities, or (iii) members of the general public), applying the following rules: (A) any activity carried on by a person other than a natural person or a state or local governmental unit will be treated as a trade or business of a nongovernmental person; (B) the use of all or any portion of the Project is treated as the direct use of proceeds; (C) a nongovernmental person will be treated as a private business user of proceeds of the Bonds as a result of ownership, actual or beneficial use pursuant to a lease, or a management or incentive payment contract, or certain other arrangements such as a take -or -pay or other output -type contract; and (D) the private business use test is met if a nongovernmental person has special legal entitlements to use directly or indirectly the Project. If the Project is not available for general public use, describe any special economic benefit from the Project to any nongovernmental persons. None B. Payments to be made on or after the Issue Date with respect to the private uses described above. None A-1 10076 00003 99171m34g1 Exhibit A (continued) PART III. Schedule of Expected Expenditures The table below lists all reasonably expected expenditures of the Bond proceeds deposited in the Project Fund (including investment earnings to the extent those earnings remain on deposit in the Project Fund). The Issuer reasonably expects that all Bond proceeds will be spent within three years after the Issue Date. On the Issue Date, the Issuer expects to use $1,680,000 from proceeds of the Bonds to reimburse expenditures relating to the Project. Expenditure Date (by month or quarter) Expenditure Amount By 3rd Quarter 2017 $1,280,000 4th Quarter 2017 $960,000 2nd Quarter 2018 $1,240,000 3rd Quarter 2018 $2,080,000 4th Quarter 2018 $1,160,000 Total: $8,400,000 Based upon the Draw Down Schedule, the Issuer expects the 18 month exception to rebate to apply to the Bonds because (a) at least 15% of the proceeds will be spent within 6 months, (b) at least 60% will be spent within 12 months, and (c) 100% will be spent within 18 months. A-2 10076 00003 gg171m34g1 CERTIFICATE OF UNDERWRITER FTN Financial Capital Markets has acted as underwriter (the "Underwriter") in connection with the sale and delivery of the City of Tukwila, Washington (the "Issuer") Limited Tax General Obligation Bonds, 2017 in the aggregate principal amount of $8,180,000 (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated July 13, 2017 (the "Sale Date"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the r espective prices for each maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. c. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the Bonds, being the Expected Offering Price of each maturity, is $8,536,838.55 (the "Issue Price"). Provided that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Code, the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes Pacifica Law Group LLP to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2, in Treasury Regulation 1.148- 1(0. Dated July 26, 2017. FTN FINS I APITAL MARKETS By Its B-1 ,SVP EXHIBIT C CERTIFICATE OF FINANCIAL ADVISOR I, the undersigned representative of the Financial Advisor, make this certificate for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest on the Bonds. Each capitalized term used herein has the meaning specified for such term in the Federal Tax Certificate to which this Exhibit C is attached (the "Federal Tax Certificate"). I hereby certify as follows as of the Issue Date: 1. I am the duly chosen, qualified and acting representative of the Financial Advisor for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Financial Advisor. I am the representative of the Financial Advisor who has worked with representatives of the Issuer in structuring the financial terms of the Bonds. 2. I have worked closely with representatives of the Issuer in structuring the financial terms of the Bonds. To the best of my knowledge, which was acquired in the course of structuring the Bonds on behalf of the Issuer, (i) the Bonds were not structured to take advantage of the difference between tax exempt and taxable rates except as identified in the Federal Tax Certificate with respect to permissible investments subject to arbitrage rebate, and (ii) the Bonds were not issued earlier, in a greater amount, with reserves or sinking funds larger, or with a maturity longer than was reasonably necessary to finance the projects financed by the Bonds. 3. The Bonds were offered for sale at specified written terms more particularly described in the Official Notice of Sale, which was distributed to potential bidders, a copy of which is attached as Attachment 1. 4. To the knowledge of the Financial Advisor, all bidders were offered an equal opportunity to bid to purchase the Bonds so that, for example, if the bidding process afforded any opportunity for bidders to review other bids before providing a bid, no bidder was given an opportunity to review other bids that was not equally given to all other bidders (no exclusive "last -look"). 5. The winning bidder was FTN Financial Capital Markets (the "Underwriter"), whose bid was determined to be the best conforming bid in accordance with the terms set forth in the Official Notice of Sale, as shown in the bid comparison attached as Attachment 3. The Issuer awarded the Bonds to the Underwriter. 6. As shown on the attached Schedules, the yield on the Bonds has been calculated to be 2.6149%. For purposes of this certificate, we have computed yield as the discount rate that, when used in computing the present value of all principal and interest payments to be made under each applicable maturity of the Bonds from the date of issuance, to maturity, produces an amount equal to the Initial Offering Prices; provided that, the Issuer is assumed to exercise or not exercise an option or combination of options (including an optional redemption provision) in a manner that minimizes yield on the debt instrument. 10076 00003 gf23ew28h2 7. As shown on the attached Schedules, the weighted average maturity of the Bonds is 11.7306 years. For purposes of this certificate, the weighted average maturity of the Bonds is the sum of the products of the issue price of each group of identical Bonds and the number of years to maturity (determined separately for each group of identical Bonds and taking into account mandatory redemptions), divided by the aggregate issue price of the Bonds. To the extent that we provided the Issuer and Pacifica Law Group LLP ("Bond Counsel") with certain computations that show a bond yield, issue price, weighted average maturity and certain other information with respect to the Bonds, these computations are provided for informational purposes and are based on our understanding of directions that we have received from Bond Counsel regarding interpretation of the applicable law. We express no view regarding the legal sufficiency of any such computations or the correctness of any legal interpretation made by Bond Counsel. The Issuer may rely on the statements made herein in connection with making the representations set forth in the Certificate and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. Bond Counsel also may rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Dated: July 26, 2017. PFM FINANCIAL ADVISORS LLC By: Name: Title: NytA/_-S' A,n M SSC 4'nA^ r e c-fa2 10076 00003 gf23ew28h2 City of Tukwila Washington Resolution No. / 2'1® A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING A DEBT POLICY AND PROVIDING FOR APPROPRIATE MANAGEMENT OF DEBT ISSUED BY THE CITY OF TUKWILA. WHEREAS, a debt policy and appropriate management of debt issued by the City is an important factor in measuring the City's financial performance and condition; and WHEREAS, proper use and management of borrowing can yield significant advantages; and WHEREAS, the use of debt is a mechanism to equalize costs of needed improvements to both present and future citizens; and WHEREAS, it is the responsibility of the City Council of the City of Tukwila to provide policy direction through the passage of motions and ordinances, adoption of resolutions, and final approval of the budget; and WHEREAS, a debt policy establishes the purpose, type, and use of debt; responsibilities of various City officials; method of sale of bonds; refundings (bonds or notes); structural elements; credit objective; and the use of professional and other service providers; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. The debt policy dated August 2014, attached hereto as "Exhibit A," is hereby adopted by this reference as if set forth in full. Section 2. The debt policy shall be reviewed on a regular basis and updated as necessary. W:\Word Processing\Resolutions\Debt policy adopted 8-5-14 VC:bjs Page 1 of 2 PASSED BY THE CITY COUNC OF THE CI OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of S -1--1.b or , 2014. i�' ATTEST/AUTHENTICATED: Christy O'Flahe , MMC, City Clerk APPROVED AS TO FORM BY: Rachel Turpin, City Attorney De'Sean Quinn, Council President Filed with the City Clerk: 8 3 f - J tt Passed by the City Council: ate/ N Resolution Number: J p Attachment: Exhibit A, City of Tukwila Debt Policy dated August 2014 W:\Word Processing\Resolutions\Debt policy adopted 8-5-14 VC:bjs Page 2 of 2 CITY OF TUKWILA DEBT POLICY A debt policy and appropriate management of debt issued by the City of Tukwila (the "City") is an important factor in measuring its financial performance and condition. Proper use and management of borrowing can yield significant advantages. From a policy perspective, the City uses debt as a mechanism to equalize the costs of needed improvements to both present and future citizens. SECTION 1. PURPOSE, TYPE AND USE OF DEBT In the issuance and management of debt, the City shall comply with the Washington State constitution and with all other applicable legal requirements imposed by federal, state and local laws, rules and regulations. Approval from the City Council (the "Council") is required prior to the issuance of all debt. Long-term debt will only be used for improvements that cannot be financed from current revenues or to fulfill the purposes set forth in the first paragraph of this Debt Policy (the "Policy"). Long-term debt will only be issued after reviewing the impact on the Six Year Financial Planning Model and its policy guidelines. When both tax exempt and taxable debt is under consideration, priority will be given to issuing the tax exempt debt, unless otherwise justified. Limited Tax General Obligation (LTGO) Bonds. The City is authorized to sell LTGO bonds under RCW 39.36.020, subject to the approval of the Council. LTGO bonds will be issued only if: (1) a project requires funding not available from alternative sources; (2) the project has a useful life longer than five years, and the Council determines it is appropriate to spread the cost over that useful life, to achieve intergenerational equity, so those benefiting will also be the ones paying; (3) matching money is available which may be lost if not applied for in a timely manner; or (4) emergency conditions exist as determined by the Council. LTGO (non -voted) debt of the City shall not exceed an aggregate total of 1.5 percent of the City's assessed value of taxable property within the City. Unlimited Tax General Obligation (UTGO) Bonds. The City is authorized to sell UTGO bonds under RCW 39.36.020, subject to the approval of the Council, and subject to voter approval. UTGO debt will be used for capital purposes when the use of an excess tax levy is necessary for debt service payments. No combination of UTGO (voter approved) debt and LTGO debt of the City shall exceed an aggregate total of: (a) 2.5 percent of the City's assessed value of the taxable property within the City for general purposes; (b) 2.5 percent of the City's assessed value of the taxable property within the City for parks, open spaces and capital facilities associated with economic development; and (c) 2.5 percent of the City's assessed value of the taxable property within the City for utility purposes. Revenue Bonds. The City is authorized to sell revenue bonds under RCW 35.41.030, subject to the approval of the Council. Revenue bonds will be issued to finance the acquisition, construction or improvements to facilities of enterprise systems operated by the City, in accordance with a system and plan of improvements. The enterprise system must be legally authorized for operation by the City. There are no legal limits to the amount of revenue bonds the City can issue, but the City will not incur revenue obligations without first ensuring the ability of an enterprise system to meet all pledges and covenants customarily required by investors in such obligations during the term of the obligation. 1 Local Improvement District Bonds. The City is authorized to sell local improvement district (special assessment) bonds ("LID bonds") under RCW 35.45.010, subject to the approval of the Council. LID bonds are issued to finance projects that will provide special benefit to certain property owners. The specially benefiting property owners are levied an assessment, based upon a formula developed to fairly reflect the benefit received by each property owner in the local improvement district. After consideration and review, the City may form local improvement districts upon petition of benefiting property owner(s), unless the Council determines to establish such districts by resolution, pursuant to statutory authority. LIDs for utility improvements may be authorized as ULIDs, which may be financed through issuance of Revenue Bonds. Lease Purchase Financing. Lease purchase financing may be used when the cost of borrowing or other factors make it in the City's best interest. Short -Term Debt. The City is authorized to incur short-term debt under chapter 39.50 RCW, subject to the approval of the Council. Short-term debt may be issued to meet: (1) the immediate financing needs of a project for which long-term financing has been identified and is likely or secured but not yet received; or (2) cash flow needs within authorized budgets and anticipated receipts for the budget year. The Finance Director is authorized to make loans from one City fund to another City fund for periods not exceeding twelve months. The Finance Director or designee is required to assure that the loaning fund will have adequate cash balances to continue to meet current expenses after the loan is made and until repayment from the receiving fund. All interfund short-term borrowing will bear interest based upon prevailing Local Government Investment Pool rates. SECTION 2. RESPONSIBILITIES The primary responsibility for debt management rests with the City's Finance Director. The Finance Director shall (or shall cause the following to occur): • Provide for the issuance of debt at the lowest cost and risk; • Determine the available debt capacity; • Provide for the issuance of debt at appropriate intervals and in reasonable amounts as required to fund approved projects; • Recommend to the Council the manner of sale of debt; • Monitor opportunities to refund debt and recommend such refunding as appropriate; • Comply with all Internal Revenue Service (IRS), Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) rules and regulations governing the issuance of debt pursuant to the City's Post Issuance Compliance Policy; • Provide information for and participate in the preparation and review of bond offering or disclosure documents; • Comply with all terms, conditions and disclosures required by Ordinances governing the debt issued; • Submit to the Council all recommendations to issue debt; • Distribute to appropriate repositories, such as the EMMA repository managed by the Municipal Securities Rulemaking Board, information regarding financial condition and affairs at such times and in the form required by contract, regulation and general practice, including Rule 15c2-12 regarding continuing disclosure; 2 • Provide for the distribution of pertinent information to rating agencies; • Coordinate and lead presentations to rating agencies, when appropriate; • Maintain a database with all outstanding debt; • Apply and promote prudent fiscal practices; • Select a qualified financial advisor with experience in municipal finance in Washington, and registered with the SEC and MSRB as a "municipal advisor," and • Account for and pay all bonded indebtedness for the City , by specifically providing for the timely payment of principal of and interest on all debt; and ensuring that the fiscal agent receives funds for payment of debt service on or before the payment date. The Council shall: • Approve the Debt Policy; • Approve indebtedness; • Approve budgets sufficient to provide for the timely payment of principal and interest on debt; • Determine the most appropriate financing plan for proposed debt, based on recommendation from the Finance Director, upon advice of the City's financial advisor; and • By Ordinance, delegate broad or limited authority to the Finance Director relative to execution of a financing plan approved by the Council. SECTION 3: METHOD OF SALE OF BONDS Competitive Sale. The Finance Director may, upon the advice of the City's financial advisor, submit to the Council a recommendation to sell debt on a competitive bid basis. City debt issued on a competitive bid basis will be sold to the bidder proposing the lowest true interest cost to the City. Such bid may take the form of electronically transmitted offers to purchase the bonds. Negotiated Sale. The Finance Director may, upon the advice of the City's financial advisor, submit to the Council a recommendation to sell debt on a negotiated basis. If debt is sold on a negotiated basis, the negotiations of terms and conditions shall include, but not be limited to, prices, interest rates, redemption provisions and underwriting compensation. The Finance Director, with the assistance of its financial advisor, shall evaluate the terms offered by the underwriter including comparison of terms with prevailing terms and conditions in the marketplace for comparable issues. If more than one underwriter is included in the negotiated sale of debt, the Finance Director shall establish appropriate levels of liability, participation and priority of orders and, with the assistance of its financial advisor, oversee the bond allocation process. Private or Direct Placement. When deemed appropriate to minimize the direct or indirect costs and risks of a debt issue, the Finance Director will, upon the advice of the City's financial advisor, submit. to the Council a request to incur debt issue through a private placement or direct bank placement. SECTION 4. REFUNDING BONDS OR NOTES Refundings will be conducted in accordance with chapter 39.53 RCW. Unless otherwise justified, the City will refinance debt to either achieve debt service savings as market opportunities arise, or to eliminate restrictive covenants. 3 Unless otherwise justified, an "advance refunding" transaction will require a present value savings of five percent of the principal amount of the debt being refunded. In addition to the savings, any determination to refund debt should take into consideration all costs and negative arbitrage in the refunding escrow. A "current refunding" transaction will require present value savings in an amount or percentage to be determined by the Finance Director based upon the advice of the City's financial advisor. SECTION 5. STRUCTURAL ELEMENTS Maturity Term. The City shall issue debt with an average life less than or equal to the average life of the assets being financed. Unless otherwise stated in law, the final maturity of the debt shall be no longer than 40 years (RCW 39.46.110). Debt Service Structure. Unless otherwise justified and deemed necessary, debt service should be structured on a level annual basis. Refunding bonds should be structured to produce debt service savings as determined by the Finance Director, based upon the advice of the City's financial advisor, to be in the best interest of the City. Unless specifically justified and deemed necessary. debt shall not have capitalized interest. If appropriate, debt service reserve funds may be used for revenue bonds. Maturity Structure. The City's long-term debt may include serial and term bonds. Unless otherwise justified, term bonds should be sold with mandatory sinking fund requirements. Price Structure. The City's long-term debt may include par, discount and premium bonds. Discount and premium bonds must be demonstrated to be advantageous relative to par bond structures, given applicable market conditions and the City's financing goals. Interest Payments. Unless otherwise justified and deemed necessary, long-term debt will bear interest payable semiannually. Redemption Features. For each transaction, the City shall evaluate the costs and benefits of call provisions. Capitalization. Debt service reserves may be capitalized for enterprise activities only. Costs of issuance may be capitalized for all debt. Interest costs may be capitalized upon the advice of the City's financial advisor for any type of debt. Bond Insurance. The City may evaluate the costs and benefits of bond insurance or other credit enhancements. Any credit enhancement purchased by the City shall be competitively procured unless otherwise justified. Tax -exemption. Unless otherwise justified and deemed necessary, the City shall issue its debt on a tax-exempt basis. Taxable debt may be justified based on a need for flexibility in use of proceeds, or when expected to reduce burdens relative to IRS rules. SECTION 6. CREDIT OBJECTIVE The City shall seek to maintain and improve its bond rating or ratings, as applicable. 4 SECTION 7. USE OF PROFESSIONALS AND OTHER SERVICE PROVIDERS Bond Counsel. All debt issued by the City will include a written opinion by bond counsel affirming that the City is authorized to issue the debt, and that all statutory requirements have been met. The bond counsel opinion and other documents relating to the issuance of debt will be prepared by nationally recognized bond counsel with extensive experience in public finance and tax issues. Bond counsel will be appointed by the Finance Director consistent with the City's general authority to contract. . Financial Advisor. The Finance Director will appoint a financial advisor for each debt issue, or for a specified term, consistent with the City's general authority to contract. The financial advisor shall be nationally recognized, have comprehensive municipal debt experience, including debt structuring and pricing of municipal securities, be registered as a "municipal advisor" with the MSRB and SEC, and have knowledge of State laws relating to City finances. The City financial advisor is to be available for general purposes, and will assist the City with all financing issues. In no case shall the ,financial advisor serve as underwriterfor the City's debt issues. Underwriter. The Finance Director in consultation with the City's financial advisor will select an underwriter for any negotiated sale of bonds. The selection of an underwriter may be for an individual bond issue, series of financings or a specified time period, as determined by the Finance Director. Depending upon the nature and amount of each financing, the Finance Director is authorized, in consultation with the City's financial advisor, to appoint more than one underwriter for each financing and to designate one underwriting firm as the managing underwriter. Other Service Providers. Professional services such as verification agent, escrow agent or rebate analyst shall be appointed by the Finance Director in consultation with the City's financial advisor and/or bond counsel. Other Ciry Policies and Procedures. The City shall comply with its Post -Issuance Tax Compliance Policy, and shall provide the appropriate department heads and staff with educational opportunities to ensure they are aware of requirements that may pertain to bond financed facilities and assets relating to their duties. SECTION 8. POST -ISSUANCE COMPLIANCE PROCEDURES Continuing Disclosure Obligations for All Bonds Purpose. At the time of issuance of any Bonds, regardless of tax status, the City is required to enter into a Continuing Disclosure Undertaking ("Undertaking") in order to allow the underwriter of the Bonds to comply with Securities and Exchange ("SEC") Rule 15(c)2-12. The Undertaking is a contract between the City and the underwriter in which the City agrees to provide certain information to an "information repository" operated by the Municipal Securities Rulemaking Board ("MSRB") to ensure investors have access to annual updates and related events that occur during the year. Responsibility for Undertaking. The Finance Director is responsible for negotiating the terms of and complying with each of the City's Undertakings. The Finance Director will negotiate the terms of the Undertaking at the time of each bond issuance, with a goal of meeting the 5 requirements of Rule 15(c)2-12, without undue burden on the City. The Finance Director will strive to ensure that each Undertaking is similar to prior Undertakings to the extent possible, to simplify future compliance. Compliance with Undertaking. The Finance Director will have responsibility for ensuring compliance with each Undertaking, which activities may be delegated to staff within the finance department. This will require certain annual filings, by a set due date, as well as periodic filings as certain specified events arise. Filings are to be made through the Electronic Municipal Market Access ("EMMA") portal, managed by the MSRB. The Finance Director is responsible for knowing the terms of the City's Undertakings, and ensuring appropriate staff within the finance department and other departments of the City are aware of the events that may require a filing. Certification of Compliance. At the time of each subsequent bond issue, the Finance Director is responsible for reviewing all prior compliance, and providing a statement as to that prior compliance, as required by Rule 15(c)2-12. Each official statement will include a statement that describes compliance (or non-compliance) with each prior undertaking, which statement will be certified by the Finance Director. Compliance Relating to Tax Exempt Bonds Purpose. The purpose of these post -issuance compliance procedures ("Compliance Procedures") for tax-exempt bonds and other obligations issued by the City for which federal tax exemption is provided by the Internal Revenue Code of 1986, as amended (the "Code"), is to facilitate compliance by the City with the applicable requirements of the Code that must be satisfied after the issue date of the bonds to maintain the tax exemption for the bonds after the issue date. Responsibility for Monitoring Post -Issuance Tax Compliance. The City Council of the City has the overall, final responsibility for monitoring whether the City is in compliance with post - issuance federal tax requirements for the City's tax-exempt bonds. However, the City Council has delegated the primary operating responsibility to monitor the City's compliance with post - issuance federal tax requirements for the City's bonds to the Finance Director and has authorized and directed the Finance Director of the City to adopt and implement on behalf of the City these Compliance Procedures. Arbitrage Yield Restriction and Rebate Requirements. The Finance Director will maintain or cause to be maintained records of: (a) purchases and sales of investments made with bond proceeds (including amounts treated as "gross proceeds" of bonds under section 148 of the Code) and receipts of earnings on those investments; (b) expenditures made with bond proceeds (including investment earnings on bond proceeds) in a timely and diligent manner for the governmental purposes of the bonds, such as for the costs of purchasing, constructing and/or renovating property and facilities; (c) information showing, where applicable for a particular calendar year, that the City was eligible to be treated as a "small City" in respect of bonds issued in that calendar year because the City did not reasonably expect to issue more than $5,000,000 of tax-exempt bonds in that calendar year; (d) calculations that will be sufficient to demonstrate to the Internal Revenue Service ("IRS") upon an audit of a bond issue that, where applicable, the City has complied with an available spending exception to the arbitrage rebate requirement in respect of that bond issue; 6 (e) calculations that will be sufficient to demonstrate to the IRS upon an audit of a bond issue for which no exception to the arbitrage rebate requirement was applicable, that the rebate amount, if any, that was payable to the United States of America in respect of investments made with gross proceeds of that bond issue was calculated and timely paid with Form 8038- T timely filed with the IRS; and (f) information and records showing that investments held in yield-restricted advance refunding or defeasance escrows for bonds, and investments made with unspent bond proceeds after the expiration of the applicable temporary period, were not invested in higher-yielding investments. Restrictions on Private Business Use and Private Loans. The Finance Director will adopt procedures calculated to educate and inform the principal operating officials of those departments, including utility departments, if any, of the City (the "users") for which land, buildings, facilities and equipment ("property") are financed with proceeds of tax-exempt bonds about the restrictions on private business use that apply to that property after the bonds have been issued, and of the restriction on the use of proceeds of tax-exempt bonds to make or finance any loan to any person other than a state or local government unit. In particular, following the issuance of bonds for the financing of property, the Finance Director shall provide to the users of the property a copy of these Compliance Procedures and other appropriate written guidance advising that: (a) "private business use" means use by any person other than a state or local government unit, including business corporations, partnerships, limited liability companies, associations, nonprofit corporations, natural persons engaged in trade or business activity, and the United States of America and any federal agency, as a result of ownership of the property or use of the property under a lease, management or service contract (except for certain "qualified" management or service contracts), output contract for the purchase of electricity or water, privately sponsored research contract (except for certain "qualified" research contracts), "naming rights" contract, "public-private partnership" arrangement, or any similar use arrangement that provides special legal entitlements for the use of the bond-financed property; (h) under section 141 of the Code, no more than 10% of the proceeds of any tax-exempt bond issue (including the property financed with the bonds) may be used for private business use, of which no more than 5% of the proceeds of the tax-exempt bond issue (including the property financed with the bonds) may be used for any "unrelated" private business use— that is, generally, a private business use that is not functionally related to the governmental purposes of the bonds; and no more than the lesser of $5,000,000 or 5% of the proceeds of a tax-exempt bond issue may be used to make or finance a loan to any person other than a state or local government unit; (c) before entering into any special use arrangement with a nongovernmental person that involves the use of bond-financed property, the user must consult with the Finance Director, provide the Finance Director with a description of the proposed nongovernmental use arrangement, and determine whether that use arrangement, if put into effect, will be consistent with the restrictions on private business use of the bond-financed property; (d) the Finance Director is to communicate with the City's bond counsel and/or financial advisor relative to any proposed change in use or special use arrangement that may impact the status of the bonds, before entering into such agreement. 7 TABLE OF CONTENTS City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Report Page Sources and Uses of Funds Bond Summary Statistics Bond Pricing Bond Debt Service Cost of Issuance Underwriter's Discount Form 8038 Statistics Proof of Arbitrage Yield 1 2 3 4 6 7 8 9 Jul 13, 2017 12:13 pm Prepared by PFM SOURCES AND USES OF FUNDS City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Dated Date 07/26/2017 Delivery Date 07/26/2017 Sources: Bond Proceeds: Par Amount 8,180,000.00 Premium 356,838.55 8,536,838.55 Uses: Project Fund Deposits: Project Fund Delivery Date Expenses: Cost of Issuance Underwriter's Discount 8,400,000.00 61,597.18 75,241.37 136,838.55 8,536,838.55 Jul 13, 2017 12:13 pm Prepared by PFM Page 1 r Bond Component BOND SUMMARY STATISTICS City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Dated Date 07/26/2017 Delivery Date 07/26/2017 First Coupon 12/01/2017 Last Maturity 12/01/2037 Arbitrage Yield 2.614928% True Interest Cost (TIC) 2.765633% Net Interest Cost (NIC) 2.836807% All -In TIC 2.841652% Average Coupon 3.127968% Average Life (years) 11.823 Weighted Average Maturity (years) 11.731 Duration of Issue (years) 9.758 Par Amount 8,180,000.00 Bond Proceeds 8,536,838.55 Total Interest 3,025,222.92 Net Interest 2,743,625.74 Bond Years from Dated Date 96,715,277.78 Bond Years from Delivery Date 96,715,277.78 Total Debt Service 11,205,222.92 Maximum Annual Debt Service 558,400.00 Average Annual Debt Service 550,700.38 Underwriter's Fees (per $1000) Average Takedown Other Fee 9.198211 Total Underwriter's Discount 9.198211 Bid Price 103.442508 Average Par Average Average Maturity PV of 1 bp Value Price Coupon Life Date change Serial Bonds 8,180,000.00 104.362 3.128% 11.823 05/22/2029 6,100.95 8,180,000.00 11.823 6,100.95 Par Value + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense - Other Amounts TIC 8,180,000.00 356,838.55 -75,241.37 All -In Arbitrage TIC Yield 8,180,000.00 356,838.55 -75,241.37 -61,597.18 8,180,000.00 356,838.55 Target Value 8,461,597.18 8,400,000.00 8,536,838.55 Target Date 07/26/2017 07/26/2017 07/26/2017 Yield 2.765633% 2.841652% 2.614928% Jul 13, 2017 12:13 pm Prepared by PFM Page 2 Bond Component BOND PRICING City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Maturity Yield to Call Call Call Date CaII Price Premium Date Amount Rate Yield Price Maturity Date Price for Arb Yield for Arb Yield (-Discount) Serial Bonds: 12/01/2018 305,000 3.000% 1.150% 102.465 7,518.25 12/01/2019 315,000 3.000% 1.200% 104.152 13,078.80 12/01/2020 325,000 3.000% 1.350% 105.381 17,488.25 12/01/2021 330,000 3.000% 1.500% 106.288 20,750.40 12/01/2022 340,000 3.000% 1.600% 107.146 24,296.40 12/01/2023 355,000 3.000% 1.700% 107.789 27,650.95 12/01/2024 365,000 3.000% 1.850% 107.864 28,703.60 12/01/2025 375,000 3.000% 2.000% 107.650 28,687.50 12/01/2026 385,000 3.000% 2.100% 107.600 29,260.00 12/01/2027 395,000 3.000% 2.200% 107.046 C 2.233% 06/01/2027 100.000 06/01/2027 100.000 27,831.70 12/01/2028 410,000 3.000% 2.250% 106.589 C 2.335% 06/01/2027 100.000 06/01/2027 100.000 27,014.90 12/01/2029 420,000 3.000% 2.400% 105.232 C 2.505% 06/01/2027 100.000 06/01/2027 100.000 21,974.40 12/01/2030 435,000 3.000% 2.500% 104.338 C 2.613% 06/01/2027 100.000 06/01/2027 100.000 18,870.30 12/01/2031 445,000 3.000% 2.600% 103.453 C 2.708% 06/01/2027 100.000 06/01/2027 100.000 15,365.85 12/01/2032 460,000 3.000% 2.750% 102.141 C 2.827% 06/01/2027 100.000 9,848.60 12/01/2033 475,000 3.000% 2.900% 100.848 C 2.934% 06/01/2027 100.000 4,028.00 12/01/2034 490,000 3.250% 3.000% 102.115 C 3.091% 06/01/2027 100.000 10,363.50 12/01/2035 500,000 3.250% 3.100% 101.261 C 3.159% 06/01/2027 100.000 6,305.00 12/01/2036 520,000 3.250% 3.150% 100.838 C 3.191% 06/01/2027 100.000 4,357.60 12/01/2037 535,000 3.500% 3.200% 102.513 C 3.329% 06/01/2027 100.000 06/01/2027 100.000 13,444.55 8,180, 000 356, 838.55 Dated Date 07/26/2017 Delivery Date 07/26/2017 First Coupon 12/01/2017 Par Amount 8,180,000.00 Premium 356,838.55 Production 8, 536, 838.55 104.362329% Underwriter's Discount -75,241.37 -0.919821% Purchase Price 8,461,597.18 103.442508% Accrued Interest Net Proceeds 8,461,597.18 Jul 13, 2017 12:13 pm Prepared by PFM Page 3 pfm BOND DEBT SERVICE City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Dated Date Delivery Date 07/26/2017 07/26/2017 Period Ending Principal Coupon Interest Debt Service 12/01/2017 87,447.92 87,447.92 12/01/2018 305,000 3.000% 251,850.00 556,850.00 12/01/2019 315,000 3.000% 242,700.00 557,700.00 12/01/2020 325,000 3.000% 233,250.00 558,250.00 12/01/2021 330,000 3.000% 223,500.00 553,500.00 12/01/2022 340,000 3.000% 213,600.00 553,600.00 12/01/2023 355,000 3.000% 203,400.00 558,400.00 12/01/2024 365,000 3.000% 192,750.00 557,750.00 12/01/2025 375,000 3.000% 181,800.00 556,800.00 12/01/2026 385,000 3.000% 170,550.00 555,550.00 12/01/2027 395,000 3.000% 159,000.00 554,000.00 12/01/2028 410,000 3.000% 147,150.00 557,150.00 12/01/2029 420,000 3.000% 134,850.00 554,850.00 12/01/2030 435,000 3.000% 122,250.00 557,250.00 12/01/2031 445,000 3.000% 109,200.00 554,200.00 12/01/2032 460,000 3.000% 95,850.00 555,850.00 12/01/2033 475,000 3.000% 82,050.00 557,050.00 12/01/2034 490,000 3.250% 67,800.00 557,800.00 12/01/2035 500,000 3.250% 51,875.00 551,875.00 12/01/2036 520,000 3.250% 35,625.00 555,625.00 12/01/2037 535,000 3.500% 18,725.00 553,725.00 8,180,000 3,025,222.92 11,205,222.92 Jul 13, 2017 12:13 pm Prepared by PFM Page 4 BOND DEBT SERVICE City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Dated Date 07/26/2017 Delivery Date 07/26/2017 Period Annual Ending Principal Coupon Interest Debt Service Debt Service 12/01/2017 87,447.92 87,447.92 87,447.92 06/01/2018 125,925.00 125,925.00 12/01/2018 305,000 3.000% 125,925.00 430,925.00 556,850.00 06/01/2019 121,350.00 121,350.00 12/01/2019 315,000 3.000% 121,350.00 436,350.00 557,700.00 06/01/2020 116,625.00 116,625.00 12/01/2020 325,000 3.000% 116,625.00 441,625.00 558,250.00 06/01/2021 111,750.00 111,750.00 12/01/2021 330,000 3.000% 111,750.00 441,750.00 553,500.00 06/01/2022 106,800.00 106,800.00 12/01/2022 340,000 3.000% 106,800.00 446,800.00 553,600.00 06/01/2023 101,700.00 101,700.00 12/01/2023 355,000 3.000% 101,700.00 456,700.00 558,400.00 06/01/2024 96,375.00 96,375.00 12/01/2024 365,000 3.000% 96,375.00 461,375.00 557,750.00 06/01/2025 90,900.00 90,900.00 12/01/2025 375,000 3.000% 90,900.00 465,900.00 556,800.00 06/01/2026 85,275.00 85,275.00 12/01/2026 385,000 3.000% 85,275.00 470,275.00 555,550.00 06/01/2027 79,500.00 79,500.00 12/01/2027 395,000 3.000% 79,500.00 474,500.00 554,000.00 06/01/2028 73,575.00 73,575.00 12/01/2028 410,000 3.000% 73,575.00 483,575.00 557,150.00 06/01/2029 67,425.00 67,425.00 12/01/2029 420,000 3.000% 67,425.00 487,425.00 554,850.00 06/01/2030 61,125.00 61,125.00 12/01/2030 435,000 3.000% 61,125.00 496,125.00 557,250.00 06/01/2031 54,600.00 54,600.00 12/01/2031 445,000 3.000% 54,600.00 499,600.00 554,200.00 06/01/2032 47,925.00 47,925.00 12/01/2032 460,000 3.000% 47,925.00 507,925.00 555,850.00 06/01/2033 41,025.00 41,025.00 12/01/2033 475,000 3.000% 41,025.00 516,025.00 557,050.00 06/01/2034 33,900.00 33,900.00 12/01/2034 490,000 3.250% 33,900.00 523,900.00 557,800.00 06/01/2035 25,937.50 25,937.50 12/01/2035 500,000 3.250% 25,937.50 525,937.50 551,875.00 06/01/2036 17,812.50 17,812.50 12/01/2036 520,000 3.250% 17,812.50 537,812.50 555,625.00 06/01/2037 9,362.50 9,362.50 12/01/2037 535,000 3.500% 9,362.50 544,362.50 553,725.00 8,180,000 3,025,222.92 11,205,222.92 11,205,222.92 Jul 13, 2017 12:13 pm Prepared by PFM Page 5 COST OF ISSUANCE City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Cost of Issuance $/1000 Amount Bond Counsel 2.54499 20,818.00 Disclosure Preparation 1.03912 8,500.00 Financial Advisor 1.83374 15,000.00 Financial Advisor 0.02445 200.00 Rating Agency 1.65037 13,500.00 IPREO 0.09169 750.00 Contingency 0.34587 2,829.18 7.53022 61,597.18 Jul 13, 2017 12:13 pm Prepared by PFM Page 6 UNDERWRITER'S DISCOUNT City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Underwriter's Discount $/1000 Amount Other Underwriter's Discount 9.19821 75,241.37 9.19821 75,241.37 Jul 13, 2017 12:13 pm Prepared by PFM Page 7 FORM 8038 STATISTICS City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Dated Date 07/26/2017 Delivery Date 07/26/2017 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Serial Bonds: 12/01/2018 305,000.00 3.000% 102.465 312,518.25 305,000.00 12/01/2019 315,000.00 3.000% 104.152 328,078.80 315,000.00 12/01/2020 325,000.00 3.000% 105.381 342,488.25 325,000.00 12/01/2021 330,000.00 3.000% 106.288 350,750.40 330,000.00 12/01/2022 340,000.00 3.000% 107.146 364,296.40 340,000.00 12/01/2023 355,000.00 3.000% 107.789 382,650.95 355,000.00 12/01/2024 365,000.00 3.000% 107.864 393,703.60 365,000.00 12/01/2025 375,000.00 3.000% 107.650 403,687.50 375,000.00 12/01/2026 385,000.00 3.000% 107.600 414,260.00 385,000.00 12/01/2027 395,000.00 3.000% 107.046 422,831.70 395,000.00 12/01/2028 410,000.00 3.000% 106.589 437,014.90 410,000.00 12/01/2029 420,000.00 3.000% 105.232 441,974.40 420,000.00 12/01/2030 435,000.00 3.000% 104.338 453,870.30 435,000.00 12/01/2031 445,000.00 3.000% 103.453 460,365.85 445,000.00 12/01/2032 460,000.00 3.000% 102.141 469,848.60 460,000.00 12/01/2033 475,000.00 3.000% 100.848 479,028.00 475,000.00 12/01/2034 490,000.00 3.250% 102.115 500,363.50 490,000.00 12/01/2035 500,000.00 3.250% 101.261 506,305.00 500,000.00 12/01/2036 520,000.00 3.250% 100.838 524,357.60 520,000.00 12/01/2037 535,000.00 3.500% 102.513 548,444.55 535,000.00 8,180,000.00 8,536,838.55 8,180,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 12/01/2037 3.500% 548,444.55 535,000.00 Entire Issue 8,536,838.55 8,180,000.00 11.7306 2.6149% Proceeds used for accrued interest Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund 0.00 136,838.55 0.00 0.00 Jul 13, 2017 12:13 pm Prepared by PFM Page 8 PROOF OF ARBITRAGE YIELD City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Present Value to 07/26/2017 Date Debt Service @ 2.6149283453% 12/01/2017 87,447.92 86,662.62 06/01/2018 125, 925.00 123,183.59 12/01/2018 430,925.00 416,103.27 06/01/2019 121,350.00 115,663.89 12/01/2019 436,350.00 410,536.27 06/01/2020 116, 625.00 108, 309.55 12/01/2020 441,625.00 404,843.63 06/01/2021 111, 750.00 101,120.63 12/01/2021 441,750.00 394,572.97 06/01/2022 106,800.00 94,163.06 12/01/2022 446,800.00 388,849.06 06/01/2023 101,700.00 87,366.99 12/01/2023 456,700.00 387,271.92 06/01/2024 96,375.00 80,669.24 12/01/2024 461,375.00 381,202.87 06/01/2025 90,900.00 74,135.21 12/01/2025 465,900.00 375,069.65 06/01/2026 85,275.00 67,764.07 12/01/2026 470,275.00 368,882.64 06/01/2027 2,719,500.00 2,105,639.14 12/01/2027 38,562.50 29,472.61 06/01/2028 38,562.50 29,092.24 12/01/2028 38,562.50 28,716.78 06/01/2029 38,562.50 28,346.16 12/01/2029 38,562.50 27,980.33 06/01/2030 38,562.50 27,619.22 12/01/2030 38,562.50 27,262.77 06/01/2031 38,562.50 26,910.92 12/01/2031 38,562.50 26,563.61 06/01/2032 38,562.50 26,220.78 12/01/2032 498,562.50 334,625.17 06/01/2033 31,662.50 20,976.97 12/01/2033 506,662.50 331,340.76 06/01/2034 24,537.50 15,839.63 12/01/2034 514,537.50 327,861.37 06/01/2035 16,575.00 10,425.22 12/01/2035 516,575.00 320,718.27 06/01/2036 8,450.00 5,178.52 12/01/2036 528,450.00 319,676.96 10,846,985.42 8,536,838.55 Proceeds Summary Delivery date 07/26/2017 Par Value 8,180,000.00 Premium (Discount) 356,838.55 Target for yield calculation 8,536,838.55 Jul 13, 2017 12:13 pm Prepared by PFM Page 9 PROOF OF ARBITRAGE YIELD City of Tukwila Limited Tax General Obligation Bonds, 2017 **Final Numbers** Assumed CaII/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Component Date Rate Yield Date Price Call/Maturity BOND 12/01/2027 3.000% 2.200% 06/01/2027 100.000 2.2004322% BOND 12/01/2028 3.000% 2.250% 06/01/2027 100.000 2.2504587% BOND 12/01/2029 3.000% 2.400% 06/01/2027 100.000 2.4004634% BOND 12/01/2030 3.000% 2.500% 06/01/2027 100.000 2.5005019% BOND 12/01/2031 3.000% 2.600% 06/01/2027 100.000 2.6005045% BOND 12/01/2037 3.500% 3.200% 06/01/2027 100.000 3.2008017% Refected CaII/Computation Dates for Premium Bonds Bond Maturity Call Cali Yield To Increase Component Date Rate Yield Date Price CaII/Maturity to Yield BOND 12/01/2027 3.000% 2.200% 2.2337332% 0.0333010% BOND 12/01/2028 3.000% 2.250% 2.3358012% 0.0853425% BOND 12/01/2029 3.000% 2.400% 2.5049186% 0.1044552% BOND 12/01/2030 3.000% 2.500% 2.6131076% 0.1126057% BOND 12/01/2031 3.000% 2.600% 2.7081242% 0.1076197% BOND 12/01/2037 3.500% 3.200% 3.3291952% 0.1283935% Jul 13, 2017 12:13 pm Prepared by PFM Page 10 Form 8038-G (Rev. September 2011) Department of the Treasury Internal Revenue Service Information Return for Tax -Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) ► See separate instructions. Caution: If the issue price is under $100,000, use Form 8038 -GC. OMB No. 1545-0720 Part I Reporting Authority If Amended Return, check here ► ❑ 1 Issuer's name City of Tukwila, Washington 2 Issuer's employer identification number (EIN) 91-6001519 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a 4 Number and street (or P.O. box if mail is not delivered to street address) 6200 Southcenter Boulevard Room/suite 5 Report number (For IRS Use Only) 13 6 City, town, or post office, state, and ZIP code Tukwila, WA 98188-2544 7 Date of issue July 26, 2017 8 Name of issue Limited Tax General Obligation Bonds, 2017 9 CUSIP number 899052KR4 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see instructions) Peggy McCarthy, Finance Director 10b Telephone number of officer or other employee shown on 10a (206) 433-1838 Par Tvoe of Issue (enter the issue price). See the instructions and attach schedule. 11 Education 12 Health and hospital 13 Transportation 14 Public safety 15 Environment (including sewage bonds) 16 Housing 17 Utilities 18 Other. Describe ► 11 12 13 8,536,838 55 14 15 16 17 18 19 If obligations are TANs or RANs, check only box 19a ► ■ If obligations are BANs, check only box 19b ► ■ 20 If obligations are in the form of a lease or installment sale, check box ► ■ Part I11 Description of Obligations. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 12/1/2037 $ 8,536,838.55 $ 8,180,000.00 11.7306 years 2.6149 % Part IV Uses of Proceeds of Bond issue (including underwriters' discount) 22 23 24 Proceeds used for accrued interest Issue price of entire issue (enter amount from line 21, column (b)) Proceeds used for bond issuance costs (including underwriters' discount) . . 24 136,838 55 22 0 23 8,536,838 55 55 25 Proceeds used for credit enhancement 25 0 26 Proceeds allocated to reasonably required reserve or replacement fund 26 0 27 Proceeds used to currently refund prior issues 27 0 28 Proceeds used to advance refund prior issues 28 0 29 Total (add lines 24 through 28) 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) . . 29 136,838 30 8,400,000 00 Part V Description of Refunded Bonds. Complete this part only for refunding bonds. 31 32 33 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/YYYY) Enter the remaining weighted average maturity of the bonds to be currently refunded . ► Enter the remaining weighted average maturity of the bonds to be advance refunded . ► Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) ► years years For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S. Form 8038-G (Rev. 9-2011) Form 8038-G (Rev. 9-2011) Page 2 Part VI Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) Enter the final maturity date of the GIC ► Enter the name of the GIC provider► Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units b c 37 38a b c d 39 40 41a b c d 42 43 44 45a b 0 0 0 If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► [land enter the following information: Enter the date of the master pool obligation ► Enter the EIN of the issuer of the master pool obligation ► Enter the name of the issuer of the master pool obligation ► If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box ► ❑? If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ► ❑ If the issuer has identified a hedge, check here ► ❑ and enter the following information: Name of hedge provider ► Type of hedge ► Term of hedge ► If the issuer has superintegrated the hedge, check box ► ❑ If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box ► ❑✓ If the issuer has established written procedures to monitor the requirements of section 148, check box ► ❑j If some portion of the proceeds was used to reimburse expenditures, check here ► I] and enter the amount of reimbursement ► $1,680,000 Enter the date the official intent was adopted ► 6/19/2017 Signature and Consent Paid Preparer Use Only Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and bell= hey are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's retum information, as necessary to proc retum, to the person at I h -v- authorized above. , ,/ �. . Signatu •.i r s authorized repr tative Date Print/Type I - • • 's name Alison J. Benge Peggy McCarthy, Finance Director Type or print name and title Preparer' signature Firm's name ► Pacifica Law Group LLP ff\6. DlDat ac,ii Firm's address ► 1191 Second Avenue, Suite 2000, Seattle, Washington 98101 PTIN P01066582 Firm's EIN ► 45-1446871 Phone no. (206) 245-1700 Form 8038-G (Rev. 9-2011) Check ❑ if self-employed U.S. Postal ServiceTM CERTIFIED MAIL° RECEIPT Domestic Mail Only For delivery information, visit our website at wwwuspscom®. Certified Mail Fee $3,35 v7 $2,75, Extra Services & Fees (check box, add fee j gophate), ❑ Return Receipt (hardcopy) $ ❑ Return Receipt (electronic) $ &i , o-ri ,lW.. ❑ Certified Mail Restricted Delivery $ $1-1. i;)f_ p-� ['Adult Signature Required $ l 1 . IJ1r ❑Adult Signature Restricted Delivery $ Postage $1.19 Total Postage and Fy. 29 Sent To t)e,i9 le Street and Apt. No., or Pb Box t i of itke, I rtASU vi+errid f iteAtC4'1k 2 v(`ce, Ctvti-t7r- City, State, 21P+4 �✓� SIT 8426 1 PS Form 3800, April 2015 PSN 7530-02-000-9047 See Reverse for Instructions SENDER: COMPLETE THIS SECTION ■ Complete items 1, 2, and 3. • Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: DEPT. OF THE TREASURY IRS CENTER OGDEN, UTAH 84201 COMPLETE THIS SECTION ON DELIVERY A. Signature X B. Received by (Printed Name) Agent 0 Addressee C. Date of Delivery D. Is delivery address different from item 1? 0 Yes If YES, enter delivery address below: ❑ No 3. Service Type 111 I ISI I i I II0 Adult Signature Signature0 Adult iRestricted Delivery Certified CI Certified Mail Restricted Deliveryry ❑ Collect on Delive ❑ Collect on Delivery Restricted Delivery ❑ Insured Mail 7016 0750 0000 3407 8349 1 Restricted Delivery PS Form 3811, July 2015 PSN 7530-02-000-9053 I (I III II III 9590 9402 2002 6123 4336 40 2. Article Number (Transfer from service label) ❑ Priority Mail Express® O Registered Ma1ITM ® Registered Mail Restricted Delivery O Return Receipt for Merchandise ❑ Signature ConfirmationT" ❑ Signature Confirmation Restricted Delivery Domestic Return Receipt AFFIDAVIT OF MAILING STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) Grace Nguyen, being duly sworn, deposes and says that she is a citizen of the United States and over the age of eighteen years; that she is a resident of Pierce County, Washington. That on August 21, 2017, at 3 : 3S a.m./ p n�i she caused IRS Form 8038-G, completed by the City of Tukwila, Washington, with respect to its Limited Tax General Obligation Refunding Bond, 2017 to be mailed by depositing the same in the United States mail, in a sealed envelope, certified delivery, first class, postage prepaid, properly addressed to the Department of the Treasury, Internal Revenue Service Center, Ogden, Utah 84201. I certify that I know or have satisfactory evi • ence that Grace Nguyen is the person who appeared before me, and said person acknowledged that she signed this instrument, and acknowledged it to be her free and voluntary act for the uses and purposes mentioned in the instrument. Dated: HOW B. VAN VALKENBURG NOTARY PUBLIC STATE OF WASHINGTON MY COMMISSION EXPIRES 11-14-18 (Use this space for notarial stamp/seal) 10076 00003 gh212y48rf v.,),,r Notary Public Print Name1-1-0111` My commission expires 1/ • 1 'N• L0 t D PACIFICA LAW GROUP August 21, 2017 VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED Department of the Treasury Internal Revenue Service Center Ogden, UT 84201 Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 - $8,180,000 Ladies and Gentlemen: T 206.245.1700 1191 2nd Avenue, Suite 2000 Seattle, WA 98101-3404 pacificalawgroup.com Enclosed please find an IRS Form 8038-G relative to the above -captioned issue. Very truly yours, PACIFICA LAW GROUP LLP By er �� Holli . n Valkenburg Paralegal 10076 00003 gh212y48rf nnn nn, , , ,' J n,'n nn, , <°1111°Sil UNITED STATES OF AMERICA UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC), TO THE ISSUER OR ITS / AGENT FORREGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS /\ REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. < F/rir/ririririririririrYAW rreltrrVZVAVAririririr/ri 8 < 4 I IF R-1 j j $305,000 j irrririrrrrrr®i®i®iri®iris 4wAra ommerririrrrirrr/r/ < STATE OF WASHINGTON CITY OF TUKWILA > LIMITED TAX GENERAL OBLIGATION BOND, 2017 < INTEREST RATE: MATURITY DATE: CUSP NO.: , 3.00% December 1, 2018 899052KR4 < REGISTERED OWNER: CEDE & CO. < PRINCIPAL AMOUNT: THREE HUNDRED FIVE THOUSAND AND NO/100 DOLLARS , The City of Tukwila, Washington (the "City"), hereby acknowledges itself to owe and for value received ` promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay interest thereon from July 26, 2017, or the most recent date to which interest has been paid or duly provided for until payment of this bond at the Interest Rate set forth above, payable on December 1, 2017, and semiannually thereafter on the first days of each succeeding June and December. ` < Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal / < agent of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so long as the bonds of this issue are held in fully < immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of , < Representations (the "Letter of Representations") from the City to DTC. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and < applicable statutes of the State of Washington and Ordinance No. 2541 duly passed by the City Council on June 19, 2017 (the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. \ \ This bond is one of an authorized issue of bonds of like date, tenor, rate of interest and date of maturity, / except as to number and amount in the aggregate principal amount of $8,180,000 and is issued pursuant to the Bond , < Ordinance to provide a portion of the funds necessary to pay the cost of certain street improvements in the City and to pay costs of issuance. The bonds of this issue are subject to redemption prior to their stated maturities as provided in the > Certificate of Award. i The City has irrevocably covenanted with the owner of this bond that it shall include in its annual budget and levy taxes annually, within and a part of the tax levy permitted to the City without a vote of the electorate, upon all the taxable property in the City without limitation as to rate or amount and in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond when due. The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The pledge of tax levies for payment of principal of and interest on the bonds may be discharged prior to maturity of the bonds by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist and to have happened, been done and performed precedent to and in the issuance of this bond exist and have happened, been done and performed and that the issuance of this bond and the bonds of this issue does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signatures of the Mayor and the City Clerk and the seal of the City to be imprinted, impressed or otherwise reproduced hereon as of this 26th day of July, 2017. ATTEST: City Clerk Date of Authentication: CITY OF TUKWILA, WASHINGTON By a €44 R',A.A►, CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the within -mentioned Bond Ordinance and is one of the Limited Tax General Obligation Bonds, 2017, of the City of Tukwila, Washington, dated July 26, 2017. WASHINGTON STATE FISCAL AGENT, as Bond Registrar By: Authorized= Signatory v - -„ V" V- V ® T CERTIFICATE REGARDING PAYMENT AND DELIVERY I, Peggy McCarthy, Finance Director of the City of Tukwila, Washington (the "City"), DO HEREBY CERTIFY, with respect to the issuance of the City's Limited Tax General Obligation Bonds, 2017 (the "Bonds"), that I have received payment from FTN Financial Capital Markets, or their duly appointed agent, in the amount of $8,461,597.18, as follows: Sources of Funds: Principal Amount $ 8,180,000.00 Plus: Original Issue Premium 356,838.55 Less: Underwriter's Discount (75,241.37) Total: $ 8,461,597.18 Uses of Funds Project Fund $ 8,400,000.00 Costs of Issuance 61,597.18 Total Uses: $ 8,461,597.18 Receipt of proceeds of the Bonds as set forth above is hereby acknowledged and confirmed on behalf of the City. On this date, the City delivered the Bonds to FTN Financial Capital Markets, as underwriter. Dated this 26th day of July, 2017. CITY OF TUKWILA, WASHINGTON 10076 00003 gf23dm28bb Peg f'?' cCarthy, Finan 'rector RECEIPT FOR BONDS Receipt of the City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2017, dated as of the date hereof, in the principal amount of $8,180,000 is hereby acknowledged on behalf of FTN Financial Capital Markets. Dated this 26th day of July, 2017. FTN FINAN ALC • AL MARKETS By: Name: A1a9n lit W,1bir6 Title: 51 112 Department of Commerce BOND 101 REPORT FORM 1011 Plum Street SE P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-2733 Email: buc@commerce.wa.gov Issue ID: 1707-023 Date Submitted: 07/28/2017 Issuer Information Name of Issuer: City of Tukwila Address of Issuer: 6200 Southcenter Boulevard Tukwila, WA 98188 Issue Type: City/Town Principle User, if different than issuer: Counties in which the entity using the bond proceeds is located: King ❑ Various Counties - More than four ❑ Statewide Issue Type and Title Was this bond voter approved? 0 Yes ■ No Exact title of issue: Limited Tax General Obligation Bonds, 2017 Issue Sale Method: Negotiated Sale If Competitive Bid, number of bids: Debt Type: GO Bond Debt Category: Bond Series: 2017 6 -DIGIT CUSIP: New/Refund/Combo: New Issue CUSIP(S) of Refunded Bonds: Private Placement Number(s): Series or Issue Year of Refunded Bonds: Advance Refund? ❑ Yes ■ No Net Present Value Savings: Issue Dates Dated Date of Issue: 07/26/2017 Issue Closing Date: 07/26/2017 Date of Issue Sale: 07/13/2017 Issue Maturity Date: 12/01/2037 Issue Purpose Purpose Type: Public Facilities Purpose of Proceeds: To provide funds to pay or reimburse the City for the costs of certain road construction and related improvement projects in the City and to pay the costs of issuance of the Bonds. Printed on 8/15/2017 2:28:59 PM Page 1 of 3 Department o Commerce 1011 Plum Street SE P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-2733 Email: buc@commerce.wa.gov Is this a Bond Cap issuance? 0 Yes • No If yes: Bond Cap Use Category: Project Title: Bond Cap Amount: Par Value and Interest Rates NEW REFUND Tax -Exempt Par Value: $8,180,000.00 Taxable par Value: $0.00 Total Par Value: $8,180,000.00 Net Tax -Exempt Interest Rate: 2.836807% 0 Variable 0 Variable Net Taxable Interest Rate: 0% 0 Variable 0 Variable Discount: $75,241.37 0 Estimate 0 Estimate Premium: $356,838.55 0 Estimate 0 Estimate Yield: 2.614928% Issue Costs Underlying Security Bond Proceeds Gross Underwriting Spread: $75,241.37 ❑ Estimate Underwriting Spread per $1,000: $9.20 Bond Counsel Fee: $20,818.00 0 Estimate Legal/Underwriter's Counsel Fee: $0.00 0 Estimate Adminsitrative/Commission Fee: $0.00 0 Estimate Feasiblity Study Cost: $0.00 0 Estimate Rating Agency Fee: $13,500.00 0 Estimate Trustee Fee: $0.00 0 Estimate Credit Enhancement: $0.00 0 Estimate Escrow Costs: $0.00 0 Estimate Financial Advisor Fee: $15,200.00 ❑ Estimate Placement Agent: $0.00 0 Estimate Bond Insurance: $0.00 0 Estimate Printing, inc. Office Statement: $750.00 0 Estimate Out -of -State Travel: $0.00 0 Estimate Miscellaneous: $11,329.18 0 Estimate issuance Team Name of Financial Advisor: PFM Financial Advisors LLC Name of Bond Counsel: Pacifica Law Group LLP Name Of Lead Underwiter(s): FTN Financial Capital Markets Printed on 8/15/2017 2:28:59 PM Page 2 of 3 Department of Commerce 1011 Plum Street SE P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-2733 Email: buc@commerce.wa.gov Name Of Company Insuring Bond: Name of Bond Registrar: U.S. Bank National Association Escrow Agent/Trustee: Bond Ratings Standard & Poor's: AA Moody's: Fitch: Other Attachments Are bond covenants available? • Yes ❑ No Is an Official Statement available? • Yes 0 No Reporter Contact information Reporter Name: Holli B. Van Valkenburg Title: Paralegal Affiliation: Pacifica Law Group Address: 1011 Second Avenue Suite 2000 Seattle, WA 98101 Email: holli.vanvalkenburg@pacificalawgroup.com Phone: (206) 602-1214 Printed on 8/15/2017 2:28:59 PM Page 3 of 3 O PACIFICA LAW GROUP July 26, 2017 City of Tukwila Tukwila, Washington FTN Financial Capital Markets Memphis, Tennessee Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2017 - $8,180,000 Ladies and Gentlemen: T 206.245.1700 1191 2nd Avenue, Suite 2000 Seattle, WA 98101-3404 pa ci fica l awg rou p. co m We have acted as bond counsel to the City of Tukwila, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bonds, 2017 (the "Bonds"), dated as of the date hereof, in the aggregate principal amount of $8,180,000, issued pursuant to Ordinance No. 2541 (the "Bond Ordinance") of the City for the purpose of providing funds to pay or reimburse the City for costs of certain road construction and related improvement projects in the City and to pay the costs for issuance of the Bonds. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Official Statement prepared in connection with the issuance of the Bonds. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. City of Tukwila July 26, 2017 Page 2 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City must comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated above, we express no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PACIFICA LAW GROUP LLP Gnp LLP