HomeMy WebLinkAbout2015 Limited Tax General Obligation Bonds - $5,825,000 (Ord 2471 - Street Improvements)2015 Limited Tax General Obligation Bonds
Street Improvements
$5,825,000
FOSTER PEPPERPLLC
TRANSCRIPT OF PROCEEDINGS
CITY OF TUKWILA, WASHINGTON
$5,825,000
LIMITED TAX GENERAL OBLIGATION BONDS, 2015
Bonds Dated: April 28, 2015
Closing Date: April 28, 2015
Bond Counsel
FOSTER PEPPER PLLC
CITY OF TUKWILA, WASHINGTON
$5,825,000
LIMITED TAX GENERAL OBLIGATION BONDS, 2015
INDEX OF PROCEEDINGS
Document Tab
Ordinance No. 2471 (Bond Ordinance) 1
Affidavit of Publication of Ordinance No. 2471 2
Certificate of Designated Representative 3
Certificates Relating to Debt Capacity 4
Calculation of Debt Limit
Certificate of Assessed Valuation
Certificate of General Obligation Debt Outstanding
Blanket Issuer Letter of Representation 5
Preliminary Official Statement 6
Certificate Regarding Preliminary Official Statement 7
Final Official Statement 8
Undertaking to Provide Continuing Disclosure 9
Rating Letter 10
Closing Certificate 11
Certificates of Manual Signature 12
Signature Identification Certificate 13
Tax Exemption and Nonarbitrage Certificate 14
Exhibit A — Certificate of Purchaser
Exhibit B — Post -Issuance Compliance Procedures
IRS Form 8038-G 15
State Bond Report Form 16
Certificate Regarding Registration of Bonds 17
Specimen Bond 18
Receipt for Bonds 19
Receipt for Payment 20
Legal Opinion and Reliance Letter 21
Closing Memorandum 22
City of Tukwila
Washington
Ordinance No. p, - i 1
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, RELATING TO CONTRACTING
INDEBTEDNESS; PROVIDING FOR THE ISSUANCE, SALE AND
DELIVERY OF NOT TO EXCEED $6,250,000 AGGREGATE
PRINCIPAL AMOUNT OF LIMITED TAX GENERAL OBLIGATION
BONDS TO PROVIDE FUNDS TO PAY OR REIMBURSE THE
CITY FOR THE COST OF ROAD CONSTRUCTION AND
IMPROVEMENT PROJECTS AND TO PAY THE COSTS OF
ISSUANCE AND SALE OF THE BONDS; FIXING OR SETTING
PARAMETERS WITH RESPECT TO CERTAIN TERMS AND
COVENANTS OF THE BONDS; APPOINTING THE CITY'S
DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL
TERMS OF THE SALE OF THE BONDS; AND PROVIDING FOR
OTHER RELATED MATTERS; PROVIDING FOR SEVERABILITY;
AND ESTABLISHING AN EFFECTIVE DATE.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Definitions. As used in this ordinance, the following capitalized terms
shall have the following meanings:
(a) "Authorized Denomination" means $5,000 or any integral multiple thereof
within a maturity of a Series.
(b) "Beneficial Owner" means, with respect to a Bond, the owner of any beneficial
interest in that Bond.
(c) "Bond" means each bond issued pursuant to and for the purposes provided in
this ordinance.
(d) "Bond Account" means the Limited Tax General Obligation Bond Account,
2015, of the City created for the payment of the principal of and interest on the Bonds.
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(e) "Bond Counsel" means the firm of Foster Pepper PLLC, its successor, or any
other attorney or firm of attorneys selected by the City with a nationally recognized
standing as bond counsel in the field of municipal finance.
(f) "Bond Purchase Agreement" means an offer to purchase a Series of the
Bonds, setting forth certain terms and conditions of the issuance, sale and delivery of
those Bonds, which offer is authorized to be accepted by the Designated
Representative on behalf of the City, if consistent with this ordinance. In the case of a
competitive sale, the official notice of sale, the Purchaser's bid and the award by the
City shall constitute the Bond Purchase Agreement for purposes of this ordinance.
(g) "Bond Register" means the books or records maintained by the Bond Registrar
for the purpose of identifying ownership of each Bond.
(h) "Bond Registrar" means the Fiscal Agent, or any successor bond registrar
selected by the City.
(i) "City" means the City of Tukwila, Washington, a municipal corporation duly
organized and existing under the laws of the State.
(j) "City Council" means the legislative authority of the City, as duly and regularly
constituted from time to time.
(k) "Code" means the United States Internal Revenue Code of 1986, as amended,
and applicable rules and regulations promulgated thereunder.
(I) "DTC" means The Depository Trust Company, New York, New York, or its
nominee.
(m) `Designated Representative" means the officer of the City appointed in
Section 4 of this ordinance to serve as the City's designated representative in
accordance with RCW 39.46.040(2).
(n) "Final Terms" means the terms and conditions for the sale of a Series of the
Bonds including the amount, date or dates, denominations, interest rate or rates (or
mechanism for determining interest rate or rates), payment dates, final maturity,
redemption rights, price, and other terms or covenants.
(o) "Finance Director" means the Finance Director or such other officer of the City
who succeeds to substantially all of the responsibilities of that office.
(p) "Fiscal Agent" means the fiscal agent of the State, as the same may be
designated by the State from time to time.
(q) "Government Obligations" has the meaning given in RCW 39.53.010, as now
in effect or as may hereafter be amended.
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(r) "Issue Date" means, with respect to a Bond, the date of initial issuance and
delivery of that Bond to the Purchaser in exchange for the purchase price of that Bond.
(s) "Letter of Representations" means . the Blanket Issuer Letter of
Representations between the City and DTC, dated October 18, 1999, as it may be
amended from time to time, and any successor or substitute letter relating to the
operational procedures of the Securities Depository.
(t) "MSRB" means the Municipal Securities Rulemaking Board.
(u) "Official Statement" means an offering document, disclosure document, private
placement memorandum or substantially similar disclosure document provided to
purchasers and potential purchasers in connection with the initial offering of a Series of
the Bonds in conformance with Rule 15c2-12 or other applicable regulations of the SEC.
(v) "Owner" means, without distinction, the Registered Owner and the Beneficial
Owner.
(w) "Project" means improvements to Interurban Avenue South, reconstruction or
retrofit of the Boeing Access Road Bridge and other road construction and capital
improvement projects of the City, as deemed necessary and advisable by the City
Council. Incidental costs incurred in connection with carrying out and accomplishing the
Project, consistent with RCW 39.46.070, may be included as costs of the Project. The
Project includes acquisition, construction and installation of all necessary equipment,
apparatus, accessories, fixtures and appurtenances. The term "land" includes all real
property and all appurtenant improvements, structures and interests therein.
(x) "Project Fund" means the fund or account designated or created by the
Finance Director for the purpose of carrying out the Project.
(y) "Purchaser" means the corporation, firm, association, partnership, trust, bank,
financial institution or other legal entity or group of entities selected by the Designated
Representative to serve as purchaser in a private placement, underwriter or placement
agent in a negotiated sale or awarded as the successful bidder in a competitive sale of
any Series of the Bonds.
(z) "Rating Agency" means any nationally recognized . rating agency then
maintaining a rating on the Bonds at the request of the City.
(aa) "Record Date" means the Bond Registrar's close of business on the 15th day
of the month preceding an interest payment date. With respect to redemption of a Bond
prior to its maturity, the Record Date shall mean the Bond Registrar's close of business
on the date on which the Bond Registrar sends the notice of redemption in accordance
with Section 9.
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(bb) "Registered Owner" means, with respect to a Bond, the person in whose name
that Bond is registered on the Bond Register. For so long as the City utilizes the book -
entry only system for the Bonds under the Letter of Representations, Registered Owner
shall mean the Securities Depository.
(cc) "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the
Securities Exchange Act of 1934, as amended.
(dd) "SEC" means the United States Securities and Exchange Commission.
(ee) "Securities Depository" means DTC, any successor thereto, any substitute
securities depository selected by the City that is qualified under applicable laws and
regulations to provide the services proposed to be provided by it, or the nominee of any
of the foregoing.
(ff) "Series of the Bonds" or "Series" means a series of the Bonds issued pursuant
to this ordinance.
(gg) "State" means the State of Washington.
(hh) "System of Registration" means the system of registration for the City's bonds
and other obligations set forth in Ordinance No. 1338 of the City.
(ii) "Term Bond" means each Bond designated as a Term Bond and subject to
mandatory redemption in the years and amounts set forth in the Bond Purchase
Agreement.
(jj) "Undertaking" means the undertaking to provide continuing disclosure entered
into pursuant to Section 15 of this ordinance.
Section 2. Findings and Determinations. The City takes note of the following
facts and makes the following findings and determinations:
(a) Authority and Description of Project. The City is in need of making
improvements to Interurban Avenue South, reconstructing or retrofitting a bridge on the
Boeing Access Road and carrying out other road construction and improvement
projects. The City Council finds that it is in the best interests of the City to carry out the
Project.
(b) Plan of Financing. Pursuant to applicable law, including without limitations
Chapters 35.37, 39.36 and 39.46 RCW, the City is authorized to issue general
obligation bonds for the purpose of financing the Project. The total expected cost of the
Project is approximately $23,761,000, which is expected to be made up of proceeds of
the Bonds, loans, grants, mitigation payments and other available money of the City.
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(c) Debt Capacity. The maximum amount of indebtedness authorized by this
ordinance is $6,250,000. Based on the following facts, this amount is to be issued
within the amount permitted to be issued by the City for general municipal purposes
without a vote:
(1) The assessed valuation of the taxable property for regular levies within the
City as ascertained by the last preceding assessment for City purposes for collection in
the calendar year 2015 is $5,039,692,101.
(2) As of February 12, 2015, the City has limited tax general obligation
indebtedness, consisting of bonds, notes, leases and conditional sales contracts
outstanding in the principal amount of $25,538,621, which is incurred within the limit of
up to 1'/% of the value of the taxable property within the City permitted for general
municipal purposes without a vote.
(3) As of February 12, 2015, the City has no unlimited tax general obligation
indebtedness for general municipal purposes; for City -owned water, artificial Tight, and
sewers; and for acquiring or developing open space, park facilities, and capital facilities
associated with economic development.
d. The Bonds. For the purpose of providing the funds necessary to carry out the
Project and to pay the costs of issuance and sale of the Bonds, the City Council finds
that it is in the best interests of the City and its taxpayers to issue and sell the Bonds to
the Purchaser, pursuant to the terms set forth in the Bond Purchase Agreement as
approved by the City's Designated Representative consistent with this ordinance.
Section 3. Authorization of Bonds. The City is authorized to borrow money on
the credit of the City and issue negotiable limited tax general obligation bonds
evidencing indebtedness in one or more Series in an aggregate principal amount not to
exceed $6,250,000 to provide funds necessary to carry out the Project and to pay the
costs of issuance and sale of the Bonds. The proceeds of the Bonds allocated to
paying the cost of the Project shall be deposited as set forth in Section 8 of this
ordinance and shall be used to carry out the Project, or a portion of the Project, in such
order of time as the City determines is advisable and practicable.
Section 4. Description of the Bonds; Appointment of Designated
Representative. The Finance Director is appointed as the Designated Representative
of the City and is authorized and directed to conduct the sale of the Bonds in the
manner and upon the terms deemed most advantageous to the City, and to approve the
Final Terms of each Series of the Bonds, with such additional terms and covenants as
the Designated Representative deems advisable, within the parameters set forth in
Exhibit A, which is attached to this ordinance and incorporated by this reference.
Section 5. Bond Registrar; Registration and Transfer of Bonds.
(a) Registration of Bonds. Each Bond shall be issued only in registered form as
to both principal and interest and the ownership of each Bond shall be recorded on the
Bond Register.
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(b) Bond Registrar; Duties. The Fiscal Agent is appointed as initial Bond
Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the
registration and transfer of the Bonds, which shall be open to inspection by the City at
all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and
deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds
and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all
of the Bond Registrar's powers and duties under this ordinance and the System of
Registration. The Bond Registrar shall be responsible for its representations contained
in the Bond Registrar's Certificate of Authentication on each Bond. The Bond Registrar
may become an Owner 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 members of, or in any other capacity with respect to,
any committee formed to protect the rights of Owners.
(c) Bond Register; Transfer and Exchange. The Bond Register shall contain the
name and mailing address of each Registered Owner and the principal amount and
number of each Bond held by each Registered Owner. A Bond surrendered to the
Bond Registrar may be exchanged for a Bond or Bonds in any Authorized
Denomination of an equal aggregate principal amount and of the same Series, interest
rate and maturity. A Bond may be transferred only if endorsed in the manner provided
thereon and surrendered to the Bond Registrar. Any exchange or transfer shall be
without cost to the Owner or transferee. The Bond Registrar shall not be obligated to
exchange any Bond or transfer registered ownership during the period between the
applicable Record Date and the next upcoming interest payment or redemption date.
(d) Securities Depository; Book -Entry Only Form. If a Bond is to be issued in
book -entry form, DTC shall be appointed as initial Securities Depository and each such
Bond initially shall be registered in the name of Cede & Co., as the nominee of DTC.
Each Bond registered in the name of the Securities Depository shall be held fully
immobilized in book -entry only form by the Securities Depository in accordance with the
provisions of the Letter of Representations. Registered ownership of any Bond
registered in the name of the Securities Depository may not be transferred except:
(i) to any successor Securities Depository;
(ii) to any substitute Securities Depository appointed by the City; or
(iii) to any person if the Bond is no longer to be held in book -entry only form.
Upon the resignation of the Securities Depository, or upon a termination of the services
of the Securities Depository by the City, the City may appoint a substitute Securities
Depository. If (i) the Securities Depository resigns and the City does not appoint a
substitute Securities Depository, or (ii) the City terminates the services of the Securities
Depository, the Bonds no longer shall be held in book -entry only form and the registered
ownership of each Bond may be transferred to any person as provided in this
ordinance.
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Neither the City nor the Bond Registrar shall have any obligation to participants of any
Securities Depository or the persons for whom they act as nominees regarding
accuracy of any records maintained by the Securities Depository or its participants.
Neither the City nor the Bond Registrar shall be responsible for any notice that is
permitted or required to be given to a Registered Owner except such notice as is
required to be given by the Bond Registrar to the Securities Depository.
Section 6. Form and Execution of Bonds.
(a) Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form
consistent with the provisions of this ordinance and State law. Each Bond shall be
signed by the Mayor and the City Clerk, either or both of whose signatures may be
manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall
be impressed or printed thereon. If any officer whose manual or facsimile signature
appears on a Bond ceases to be an officer of the City authorized to sign bonds before
the Bond bearing his or her manual or facsimile signature is authenticated by the Bond
Registrar, or issued or delivered by the City, that Bond nevertheless may be
authenticated, issued and delivered and, when authenticated, issued and delivered,
shall be as binding on the City as though that person had continued to be an officer of
the City authorized to sign bonds. Any Bond also may be signed on behalf of the City
by any person who, on the actual date of signing of the Bond, is an officer of the City
authorized to sign bonds, although he or she did not hold the required office on its Issue
Date.
(b) Authentication. Only a Bond bearing a Certificate of Authentication in
substantially the following form, manually signed by the Bond Registrar, shall be valid or
obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate Of
Authentication. This Bond is one of the fully registered City of Tukwila, Washington,
Limited Tax General Obligation Bonds, 2015, described in the Bond Ordinance." The
authorized signing of a Certificate of Authentication shall be conclusive evidence that
the Bond so authenticated has been duly executed, authenticated and delivered and is
entitled to the benefits of this ordinance.
Section 7. Payment of Bonds. Principal of and interest on each Bond shall be
payable in lawful money of the United States of America. Principal of and interest on
each Bond registered in the name of the Securities Depository is payable in the manner
set forth in the Letter of Representations. Interest on each Bond not registered in the
name of the Securities Depository is payable by electronic transfer on the interest
payment date, or by check or draft of the Bond Registrar mailed on the interest payment
date to the Registered Owner at the address appearing on the Bond Register on the
Record Date. However, the City is not required to make electronic transfers except
pursuant to a request by a Registered Owner in writing received on or prior to the
Record Date and at the sole expense of the Registered Owner. Principal of each Bond
not registered in the name of the Securities Depository is payable upon presentation
and surrender of the Bond by the Registered Owner to the Bond Registrar. The Bonds
are not subject to acceleration under any circumstances.
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Section 8. Funds and Accounts; Deposit of Proceeds.
(a) Bond Account. The 2015 Bond Account is created within the City's general
obligation bond repayment fund for the sole purpose of paying principal of and interest
on the Bonds. Bond proceeds in excess of the amounts needed to pay the costs of the
Project and the costs of issuance, if any, shall be deposited into the Bond Account. All
amounts allocated to the payment of the principal of and interest on the Bonds shall be
deposited in the Bond Account as necessary for the timely payment of amounts due
with respect to the Bonds. The principal of and interest on the Bonds shall be paid out
of the Bond Account. Until needed for that purpose, the City may invest money in the
Bond Account temporarily in any legal investment, and the investment earnings shall be
retained in the Bond Account and used for the purposes of that fund.
(b) Project Fund. The Project Fund has been previously created as a fund of the
City for the purpose of paying the costs of the Project. Proceeds received from the sale
and delivery of the Bonds shall be deposited into the Project Fund and used to pay the
costs of the Project and costs of issuance of the Bonds. Until needed to pay such
costs, the City may invest those proceeds temporarily in any legal investment, and the
investment earnings shall be retained in the Project Fund and used for the purposes of
that fund, except that earnings subject to a federal tax or rebate requirement (if
applicable) may be withdrawn from the Project Fund and used for those tax or rebate
purposes.
Section 9. Redemption Provisions and Purchase of Bonds.
(a) Optional Redemption. The Bonds shall be subject to redemption at the option
of the City on terms acceptable to the Designated Representative, as set forth in the
Bond Purchase Agreement, consistent with the parameters set forth in Exhibit A.
(b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the
Bond Purchase Agreement, consistent with the parameters set forth in Exhibit A and
except as set forth below, shall be called for redemption at a price equal to the stated
principal amount to be redeemed, plus accrued interest, on the dates and in the
amounts as set forth in the Bond Purchase Agreement. 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) shall be
credited against one or more scheduled mandatory redemption installments for that
Term Bond. The City shall determine the manner in which the credit is to be allocated
and shall notify the Bond Registrar in writing of its allocation prior to the earliest
mandatory redemption date for that Term Bond for which notice of redemption has not
already been given.
(c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of
the outstanding Bonds are to be redeemed at the option of the City, the City shall select
the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of
a maturity of a Series are to be redeemed, the Securities Depository shall select Bonds
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registered in the name of the Securities Depository to be redeemed in accordance with
the Letter of Representations, and the Bond Registrar shall select all other Bonds to be
redeemed randomly in such manner as the Bond Registrar shall determine. All or a
portion of the principal amount of any Bond that is to be redeemed may be redeemed in
any Authorized Denomination. If less than all of the outstanding principal amount of any
Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be
issued to the Registered Owner, without charge, a new Bond (or Bonds, at the option of
the Registered Owner) of the same Series, maturity and interest rate in any Authorized
Denomination in the aggregate principal amount to remain outstanding.
(d) Notice of Redemption. Notice of redemption of each, Bond registered in the
name of the Securities Depository shall be given in accordance with the Letter of
Representations. Notice of redemption of each other Bond, unless waived by the
Registered Owner, shall be given by the Bond Registrar not less than 20 nor more than
60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the
Registered Owner at the address appearing on the Bond Register on the Record Date.
The requirements of the preceding sentence shall be satisfied when notice has been
mailed as so provided, whether or not it is actually received by an Owner. In addition,
the redemption notice shall be mailed or sent electronically within the same period to
the MSRB (if required under the Undertaking), to each Rating Agency, and to such
other persons and with such additional information as the Finance Director shall
determine, but these additional mailings shall not be a condition precedent to the
redemption of any Bond.
(e) Rescission of Optional Redemption Notice. In the case of an optional
redemption, the notice of redemption may state that the City retains the right to rescind
the redemption notice and the redemption by giving a notice of rescission to the affected
Registered Owners at any time prior to the scheduled optional redemption date. Any
notice of optional redemption that is so rescinded shall be of no effect, and each Bond
for which a notice of optional redemption has been rescinded shall remain outstanding.
(f) Effect of Redemption. Interest on each Bond called for redemption shall
cease to accrue on the date fixed for redemption, unless either the notice of optional
redemption is rescinded as set forth above, or money sufficient to effect such
redemption is not on deposit in the Bond Account or in a trust account established to
refund or defease the Bond.
(g) Purchase of Bonds. The City reserves the right to purchase any or all of the
Bonds offered to the City at any time at any price acceptable to the City plus accrued
interest to the date of purchase.
Section 10. Failure To Pay Bonds. If the principal of any Bond is not paid when
the Bond is properly presented at its maturity or date fixed for redemption, the City shall
be obligated to pay interest on that Bond at the same rate provided in the Bond from
and after its maturity or date fixed for redemption until that Bond, both principal and
interest, is paid in full or until sufficient money for its payment in full is on deposit in the
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Bond Account, or in a trust account established to refund or defease the Bond, and the
Bond has been called for payment by giving notice of that call to the Registered Owner.
Section 11. Pledge of Taxes. The Bonds constitute a general indebtedness of
the City and are payable from tax revenues of the City and such other money as is
lawfully available and pledged by the City for the payment of principal of and interest on
the Bonds. For as long as any of the Bonds are outstanding, the City irrevocably
pledges that it shall, 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. The
full faith, credit and resources of the City are pledged irrevocably for the prompt
payment of the principal of and interest on the Bonds and such pledge shall be
enforceable in mandamus against the City.
Section 12. Tax Covenants; Designation of Bonds as "Qualified Tax Exempt
Obligations."
(a) Preservation of Tax Exemption for Interest on Bonds. The City covenants
that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any
action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds that will cause interest on the Bonds to be included in
gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirements of Section 148 of the Code are applicable
to the Bonds, take all actions necessary to comply (or to be treated as having complied)
with those requirements in connection with the Bonds.
(b) Post -Issuance Compliance. The Finance Director is authorized and directed
to review and update the City's written procedures to facilitate compliance by the City
with the covenants in this ordinance and the applicable requirements of the Code that
must be satisfied after the Issue Date to prevent interest on the Bonds from being
included in gross income for federal tax purposes.
(c) Designation of Bonds as "Qualified Tax -Exempt Obligations." A Series of
the Bonds may be designated as "qualified tax-exempt obligations" for the purposes of
Section 265(b)(3) of the Code, if the following conditions are met:
(1) the Series does not constitute "private activity bonds" within the meaning of
Section 141 of the Code;
(2) the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds and other obligations not required to be included in such
calculation) that the City and any entity subordinate to the City (including any entity that
the City controls, that derives its authority to issue tax-exempt obligations from the City,
or that issues tax-exempt obligations on behalf of the City) will issue during the calendar
year in which the Series is issued will not exceed $10,000,000; and
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(3) the amount of tax-exempt obligations, including the Series, designated by
the City as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of
the Code during the calendar year in which the Series is issued does not exceed
$10,000,000.
Section 13. Refunding or Defeasance of the Bonds. The City may issue
refunding bonds pursuant to State law or use money available from any other lawful
source to carry out a refunding or defeasance plan, which may include:
(a) paying when due the principal of and interest on any or all of the Bonds (the
"defeased Bonds");
(b) redeeming the defeased Bonds prior to their maturity; and
(c) paying the costs of the refunding or defeasance.
If the City sets aside in a special trust fund or escrow account irrevocably pledged to
that redemption or defeasance (the "trust account"), money and/or Government
Obligations maturing at a time or times and bearing interest in amounts sufficient to
redeem, refund or defease the defeased Bonds in accordance with their terms, then all
right and interest of the Owners of the defeased Bonds in the covenants of this
ordinance and in the funds and accounts obligated to the payment of the defeased
Bonds shall cease and become void. Thereafter, the Owners of defeased Bonds shall
have the right to receive payment of the principal of and interest on the defeased Bonds
solely from the trust account and the defeased Bonds shall be deemed no longer
outstanding. In that event, the City may apply money remaining in any fund or account
(other than the trust account) established for the payment or redemption of the
defeased Bonds to any lawful purpose.
Unless otherwise specified by the City in a refunding or defeasance plan, notice of
refunding or defeasance shall be given, and selection of Bonds for any partial refunding
or defeasance shall be conducted in the manner prescribed in this ordinance for the
redemption of Bonds.
Section 14. Sale and Delivery of the Bonds.
(a) Manner of Sale of Bonds; Delivery of Bonds. The Designated
Representative is authorized to sell each Series of the Bonds by negotiated sale or
private placement or by competitive sale in accordance with a notice of sale consistent
with this ordinance, based on the assessment of the Designated Representative of
market conditions, in consultation with appropriate City officials and staff, Bond Counsel
and other advisors. In determining the method of sale of a Series and accepting the
Final Terms, the Designated Representative shall take into account those factors that,
in the judgment of the Designated Representative, may be expected to result in the
lowest true interest cost to the City.
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(b) Procedure for Negotiated Sale or Private Placement. If the Designated
Representative determines that a Series of the Bonds is to be sold by negotiated sale or
private placement, the Designated Representative shall select one or more Purchasers
with which to negotiate such sale. The Bond Purchase Agreement for each Series of
the Bonds shall set forth the Final Terms. The Designated Representative is authorized
to execute the Bond Purchase Agreement on behalf of the City, so long as the terms
provided therein are consistent with the terms of this ordinance.
(c) Procedure for Competitive Sale. If the Designated Representative
determines that a Series of the Bonds is to be sold by competitive sale, the Designated
Representative shall cause the preparation of an official notice of bond sale setting forth
parameters for the Final Terms and any other bid parameters that the Designated
Representative deems appropriate consistent with this ordinance. Bids for the purchase
of each Series of the Bonds shall be received at such time or place and by such means
as the Designated Representative directs. On the date and time established for the
receipt of bids, the Designated Representative (or the designee of the Designated
Representative) shall open bids and shall cause the bids to be mathematically verified.
The Designated Representative is authorized to award, on behalf of the City, the
winning bid and accept the winning bidder's offer to purchase that Series of the Bonds,
with such adjustments to the aggregate principal amount and principal amount per
maturity as the Designated Representative deems appropriate, consistent with the
terms of this ordinance, and such award shall constitute the Bond Purchase Agreement.
The Designated Representative may reject any or all bids submitted and may waive any
formality or irregularity in any bid or in the bidding process if the Designated
Representative deems it to be in the City's best interest to do so. If all bids are rejected,
that Series of the Bonds may be sold pursuant to negotiated sale or in any manner
provided by law as the Designated Representative determines is in the best interest of
the City, within the parameters set forth in this ordinance.
(d) Preparation, Execution and Delivery of the Bonds. The Bonds will be
prepared at City expense and will be delivered to the Purchaser in accordance with the
Bond Purchase Agreement, together with the approving legal opinion of Bond Counsel
regarding the Bonds.
Section 15. Official Statement; Continuing Disclosure.
(a) Preliminary Official Statement Deemed Final. The Designated
Representative shall review and, if acceptable to him or her, approve the preliminary
Official Statement prepared in connection with each sale of a Series of the Bonds to the
public or through a Purchaser as a placement agent. For the sole purpose of the
Purchaser's compliance with paragraph (b)(1) of Rule 15c2-12, if applicable, the
Designated Representative is authorized to deem that preliminary Official Statement
final as of its date, except for the omission of information permitted to be omitted by
Rule 15c2-12. The City approves the distribution to potential purchasers of the Bonds
of a preliminary Official Statement that has been approved by the Designated
Representative and been deemed final, if applicable, in accordance with this
subsection.
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(b) Approval of Final Official Statement. The City approves the preparation of a
final Official Statement for each Series of the Bonds to be sold to the public in the form
of the preliminary Official Statement that has been approved and deemed final in
accordance with subsection (a), with such modifications and amendments as the
Designated Representative deems necessary or desirable, and further authorizes the
Designated Representative to execute and deliver such final Official Statement to the
Purchaser if required under Rule 15c2-12. The City authorizes and approves the
distribution by the Purchaser of the final Official Statement so executed and delivered to
purchasers and potential purchasers of a Series of the Bonds.
(c) Undertaking to Provide Continuing Disclosure. If necessary to meet the
requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to the Purchaser acting
as a participating underwriter for a Series of the Bonds, the Designated Representative
is authorized to execute a written undertaking to provide continuing disclosure for the
benefit of holders of a Series of the Bonds in substantially the form attached as
Exhibit B.
Section 16. Supplemental and Amendatory Ordinances. The City may
supplement or amend this ordinance for any one or more of the following purposes
without the consent of any Owners of the Bonds:
(a) To add covenants and agreements that do not materially adversely affect the
interests of Owners, or to surrender any right or power reserved to or conferred upon
the City.
(b) To cure any ambiguities, or to cure, correct or supplement any defective
provision contained in this ordinance in a manner that does not materially adversely
affect the interest of the Beneficial Owners of the Bonds.
Section 17. General Authorization and Ratification. The appropriate officers of
the City are severally authorized to take such actions and to execute such documents
as in their judgment may be necessary or desirable to carry out the transactions
contemplated in connection with this ordinance, and to do everything necessary for the
prompt delivery of the Bonds to the Purchaser and for the proper application, use and
investment of the proceeds of the Bonds. All actions taken prior to the effective date of
this ordinance in furtherance of the purposes described in this ordinance and not
inconsistent with the terms of this ordinance are ratified and confirmed in all respects.
Section 18. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; or ordinance numbering
and section/subsection numbering.
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Section 19. Severability. The provisions of this ordinance are declared to be
separate and severable. If a court of competent jurisdiction, all appeals having been
exhausted or all appeal periods having run, finds any provision of this ordinance to be
invalid or unenforceable as to any person or circumstance, such offending provision
shall, if feasible, be deemed to be modified to be within the limits of enforceability or
validity. However, if the offending provision cannot be so modified, it shall be null and
void with respect to the particular person or circumstance, and all other provisions of
this ordinance in all other respects, and the offending provision with respect to all other
persons and all other circumstances, shall remain valid and enforceable.
Section 20. 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 TUKWILA, WASHINGTON, at
a Regular Meeting thereof this I (p rH day of VY\ (Arc") , 2015.
ATTEST/AUTHENTICATED:
Christy O'FI erty, MMC, City Cle
APPROVED AS TO M BY: Filed with the City Clerk: 3-11- /5
Passed by the City Council: 3 — ) A -ice
Published: 5
Effective Date: —IS
and Counsel
Ordinance Number: 0?14. 1 f
Attachments:
Exhibit A — Parameters for Final Terms (Description of the Bonds)
Exhibit B — Form of Undertaking to Provide Continuing Disclosure
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Exhibit A
EXHIBIT A
DESCRIPTION OF THE BONDS
(a) Principal Amount. The Bonds may be issued in one or more Series
and shall not exceed the aggregate principal
amount of $6,250,000.
(b) Date or Dates.
Each Bond shall be dated its Issue Date, which
date may not be later than December 31, 2015.
(c) Denominations, Name, etc. The Bonds shall be issued in Authorized
Denominations and shall be numbered separately
in the manner and shall bear any name and
additional designation as deemed necessary or
appropriate by the Designated Representative.
(d) Interest Rate(s).
Each Bond shall bear interest at a fixed rate per
annum (computed on the basis of a 360-day year
of twelve 30-day months) from the Issue Date or
from the most recent date for which interest has
been paid or duly provided for, whichever is later.
One or more rates of interest may be fixed for the
Bonds. No rate of interest for any Bond may
exceed 5.00%, and the true interest cost to the City
for each Series of the Bonds may not exceed
4.25%.
(e) Payment Dates. Interest shall be payable semiannually on dates
acceptable to the Designated Representative,
commencing no later than one year following the
Issue Date. Principal payments shall commence
on a date acceptable to the Designated
Representative and shall be payable at maturity or
in mandatory redemption installments annually
thereafter, on dates acceptable to the Designated
Representative.
(f) Final Maturity.
Each Series shall mature no later than the date that
is twenty-one years after the Issue Date of that
Series.
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(g) Redemption Rights.
(h) Price.
(i)
Other Terms and
Conditions.
The Designated Representative may approve in
the Bond Purchase Agreement provisions for the
optional and mandatory redemption of Bonds,
subject to the following:
(1) Optional Redemption. Any Bond may be
designated as being (A) subject to redemption
at the option of the City prior to its maturity
date on the dates and at the prices set forth in
the Bond Purchase Agreement; or (B) not
subject to redemption prior to its maturity date.
If a Bond is subject to optional redemption
prior to its maturity, it must be subject to such
redemption on one or more dates occurring
not more than 10'/ years after the Issue Date.
(2) Mandatory Redemption. Any Bond may be
designated as a Term Bond, subject to
mandatory redemption prior to its maturity on
the dates and in the amounts set forth in the
Bond Purchase Agreement.
The purchase price for each Series of the Bonds
may not be less than 98% or more than 120% of
the stated principal amount of that Series.
(1) A Series of the Bonds may not be issued if it
would cause the indebtedness of the City to
exceed the City's legal debt capacity on the
Issue Date.
(2) The Designated Representative may
determine whether it is in the City's best
interests to provide for bond insurance or
other credit enhancement; and may accept
such additional terms, conditions and
covenants as he or she may determine are in
the best interests of the City, consistent with
this ordinance.
A-2
Exhibit B
EXHIBIT B
FORM OF
UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE
City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2015
The City of Tukwila, Washington (the "City"), makes the following written
Undertaking for the benefit of holders of the above -referenced bonds (the "Bonds"), for
the sole purpose of assisting the Purchaser in meeting the requirements of paragraph
(b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds.
Capitalized terms used but not defined below shall have the meanings given in
Ordinance No. of the City (the "Bond Ordinance").
(a) Undertaking to Provide Annual Financial Information and Notice of Listed
Events. The City undertakes 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:
(i)
Annual financial information and operating data of the type included in the
final official statement for the Bonds and described in paragraph
(b) ("annual financial information");
(ii) Timely notice (not in excess of 10 business days after the occurrence of
the event) 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;
modifications to rights of holders of the Bonds, if material;
(7)
B-1
(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 Rule 15c2-12;
(13) the consummation of a merger, consolidation, or acquisition involving
the City or the sale of all or substantially all of the assets of the City
other than in the ordinary course of business, the entry into a
definitive agreement to undertake such an action or the termination of
a definitive agreement relating to any such actions, other than
pursuant to its terms, if material; and
(14) appointment of a successor or additional trustee or the change of
name of a trustee, if material.
(iii) Timely notice of a failure by the City to provide required annual financial
information on or before the date specified in paragraph (b).
(b) Type of Annual Financial Information Undertaken to be Provided. The
annual financial information that the City undertakes to provide in paragraph (a):
(i)
Shall consist of:
(1) annual financial statements prepared (except as noted in the financial
statements) in accordance with applicable generally accepted
accounting principles applicable to local governmental units of the
State such as the City, as such principles may be changed from time
to time, which statements may be unaudited, provided, that if and
when audited financial statements are prepared and available they will
be provided;
(2) principal amount of general obligation bonds outstanding at the end of
the applicable fiscal year;
(3) assessed valuation for that fiscal year; and
(4) property tax levy amounts and rates for that fiscal year;
(ii) Shall be provided not later than the last day of the ninth month after the
end of each fiscal year of the City (currently, a fiscal year ending
December 31), as such fiscal year may be changed as required or
permitted by State law, commencing with the City's fiscal year ending
December 31, 2014; and
B-2
(iii) May be provided in a single or multiple documents, and may be
incorporated by specific reference to documents available to the public on
the Internet website of the MSRB or filed with the SEC.
(c) Amendment of Undertaking. This Undertaking is subject to amendment after
the primary offering of the Bonds without the consent of any holder of any Bond, or of
any broker, dealer, municipal securities dealer, participating underwriter, Rating Agency
or the MSRB, under the circumstances and in the manner permitted by Rule 15c2-12.
The City will give notice to the MSRB of the substance (or provide a copy) of any
amendment to the Undertaking and a brief statement of the reasons for the amendment.
If the amendment changes the type of annual financial information to be provided, the
annual financial information containing the amended financial information will include a
narrative explanation of the effect of that change on the type of information to be
provided.
(d) Beneficiaries. This Undertaking shall inure to the benefit of the City and the
holder of each Bond, and shall not inure to the benefit of or create any rights in any
other person.
(e) Termination of Undertaking. The City's obligations under this Undertaking
shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's
obligations under this Undertaking shall terminate if the provisions of Rule 15c2-12 that
require the City to comply with this Undertaking become legally inapplicable in respect
of the Bonds for any reason, as confirmed by an opinion of Bond Counsel delivered to
the City, and the City provides timely notice of such termination to the MSRB.
(f) Remedy for Failure to Comply with Undertaking. As soon as practicable
after the City learns of any failure to comply with this Undertaking, the City will proceed
with due diligence to cause such noncompliance to be corrected. No failure by the City
or other obligated person to comply with this Undertaking shall constitute a default in
respect of the Bonds. The sole remedy of any holder of a Bond shall be to take action
to compel the City or other obligated person to comply with this Undertaking, including
seeking an order of specific performance from an appropriate court.
(g) Designation of Official Responsible to Administer Undertaking. The
Finance Director or his or her designee is the person designated, in accordance with the
Bond Ordinance, to carry out the Undertaking in accordance with Rule 15c2-12,
including, without limitation, the following actions:
(i)
Preparing and filing the annual financial information undertaken to be
provided;
(ii) Determining whether any event specified in paragraph (a) has occurred,
assessing its materiality, where necessary, with respect to the Bonds, and
preparing and disseminating any required notice of its occurrence;
B-3
(iii) Determining whether any person other than the City is an "obligated
person" within the meaning of Rule 15c2-12 with respect to the Bonds, and
obtaining from such person an undertaking to provide any annual financial
information and notice of listed events for that person required under Rule
15c2-12;
(iv) Selecting, engaging and compensating designated agents and consultants,
including financial advisors and legal counsel, to assist and advise the City
in carrying out this Undertaking; and
(v) Effecting any necessary amendment of this Undertaking.
B-4
CERTIFICATION
I, the undersigned, City Clerk of the City of Tukwila, Washington (the "City"), hereby
certify as follows:
1. The attached copy of Ordinance No. (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 March 16, 2015, as that ordinance
appears on the minute book of the City.
2. The Ordinance will be in full force and effect five days after publication in the
City's official newspaper, which publication date is expected to be March 19, 2015.
3. A quorum of the members of the City Council was present throughout the
meeting and a majority of the members voted in the proper manner for the passage of
the Ordinance.
Dated: March 16, 2015.
CITY OF TUKWILA, WASHINGTON
Christy O'Flaherty, MMC, City Clerk
City of Tukwila Public Notice of Ordinance Adoption for Ordinances 2471-2473.
On March 16, 2015 the City Council of the City of Tukwila, Washington, adopted the
following ordinances, the main points of which are summarized by title as follows:
Ordinance 2471: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, RELATING TO CONTRACTING INDEBTEDNESS;
PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF NOT TO EXCEED
$6,250,000 AGGREGATE PRINCIPAL AMOUNT OF LIMITED TAX GENERAL
OBLIGATION BONDS TO PROVIDE FUNDS TO PAY OR REIMBURSE THE CITY FOR
THE COST OF ROAD CONSTRUCTION AND IMPROVEMENT PROJECTS AND TO
PAY THE COSTS OF ISSUANCE AND SALE OF THE BONDS; FIXING OR SETTING
PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE
BONDS; APPOINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE
THE FINAL TERMS OF THE SALE OF THE BONDS; AND PROVIDING FOR OTHER
RELATED MATTERS; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN
EFFECTIVE DATE.
Ordinance 2472: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2464, SECTION 4 (PART)
AND SECTION 5, AND AMENDING EXHIBIT A OF ORDINANCE NO. 2465, TO
CONFORM DEBT SERVICE PAYMENT DATES; AND PROVIDING FOR OTHER
PROPERLY RELATED MATTERS; PROVIDING FOR SEVERABILITY; AND
ESTABLISHING AN EFFECTIVE DATE.
Ordinance 2473: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, APPROVING AND AUTHORIZING THE DEVELOPMENT
AGREEMENT WITH TUKWILA TSD, LLC, FOR THE SHARED USE OF PARKING IN
THE PUBLIC RIGHT-OF-WAY OF CHRISTENSEN ROAD AS IT RELATES TO THE
PLANNED DEVELOPMENT OF A HOTEL LOCATED AT 90 ANDOVER PARK EAST;
PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE.
The full text of these ordinances will be provided upon request.
Christy O'Flaherty, MMC, City Clerk
Published Seattle Times: March 19, 2015
City of Tukwila, Finance
Dana Almberg
6200 Southcenter Blvd
Tukwila, WA 98188
Re: Advertiser Account # 107510
Ad #: 527077
STATE OF WASHINGTON
Counties of King and Snohomish
Agency Account #: 0
Agency Name:
Affidavit of Publication
The undersigned, on oath states that he/she is an authorized
representative of The Seattle Times Company,
publisher of The Seattle Times of general circulation.
published daily in King and. Snohomish_ Counties, State..:__.
of Washington. The'Seattle Times has been approved as.a
legal newspaper by others of the Superior Court of King and
Snohomish Counties.
The notice, in the exact form annexed, was published in the
regular and entire issue of said paper or papers and distrib-
uted to its subscribers during all of the said period.
Newspaper and Publication Date(s)
Seattle Times 03/19/15
eElana HansenAgki ,,
Signature
+r, GD, �. $cXON; E,-p q,,/` II A/► I I
f ? s oiARi. 1'ull'5cribed and sworn to before me on G,�,(' Q.
n P McKqrana
/i��;, OrNotary Public in ano �`r the State of Washington, residing at Seattle
/ /ii FOF \P1PS�a•
Re: Advertiser Account # 107510
Agency Account #: 0
AD TEXT
City of Tukwila Public
Notice of Ordinance Adoption for
Ordinances 2471-2473.
On March 16, 2015 the City Council at the
City of Tukwila, Washington, adopted the
following ordinances, the main points of
which are summarized by title as follows:
Ordinance 2471: AN ORDINANCE OF
TUKWILA ELY TING
= TO. CONTRACTING INDEBTEDNESS;
PROVIDING FOR THE ISSUANCE, SALE
AND DELIVERY OF NOT TO EXCEED
$6,250,000 AGGREGATE PRINCIPAL
AMOUNT OF LIMITED TAX GENERAL
OBLIGATION BONDS TO PROVIDE
FUNDS TO PAY OR REIMBURSE THE
CITY FOR THE COST OF ROAD CON-
STRUCTION AND IMPROVEMENT
PROJECTS AND TO PAY THE COSTS OF
ISSUANCE AND SALE OF THE BONDS;
FIXING OR SETTING PARAMETERS
WITH RESPECT TO CERTAIN TERMS
AND COVENANTS OF THE BONDS; AP-
POINTING THE CITY'S DESIGNATED
REPRESENTATIVE TO APPROVE THE
FINAL TERMS OF THE SALE OF THE
BONDS; AND PROVIDING FOR OTHER
RELATED MATTERS; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING
AN EFFECTIVE DATE.
Ordinance 2472: AN ORDINANCE OF
THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMEND-
ING ORDINANCE NO. 2464, SECTION 4
IGREHBFDNENONXIIIT AOORINACE.
2465, TO CONFORM DEBT SERVICE
PAYMENT DATES; AND PROVIDING
FOR OTHER PROPERLY RELATED
MATTERS; PROVIDING FOR SEVER -
ABILITY; AND ESTABLISHING AN EF-
FECTIVE DATE.
Ordinance 2473: AN ORDINANCE OF
THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, APPROVING
AND AUTHORIZING THE DEVELOP-
MENT AGREEMENT WITH TUKWILA
TSD, LLC, FOR THE SHARED USE OF
PARKING IN THE PUBLIC RIGHT-OF-
WAY OF CHRISTENSEN ROAD AS IT
RELATES TO THE PLANNED DEVEL-
OPMENT OF A HOTEL LOCATED AT
90 ANDOVER PARK EAST; PROVIDING
FOR SEVERABILITY; AND ESTABLISH-
ING AN EFFECTIVE DATE.
The full text of these ordinances will be
provided upnn request.
Christy O'Flaherty, MMC, City Clerk
Published Seattle Times: March 19, 2015
Ad #: 527077
Agency Name:
CERTIFICATE OF DESIGNATED REPRESENTATIVE
pursuant to
City of Tukwila, Washington
Ordinance No. 2471
This certificate is given in connection with the issuance, sale and delivery by the City of
Tukwila, Washington (the "City") of its $5,825,000 aggregate principal amount Limited Tax
General Obligation Bonds, 2015 (the "Bonds"). Unless otherwise defined herein, capitalized
terms shall have the meanings as defined in the Bond Ordinance, as defined below.
I, Peggy McCarthy, as Finance Director of the City do hereby certify that:
1. Authority; Definitions. On March 16, 2015, the City Council passed Ordinance
No. 2471 (the "Bond Ordinance"), which became effective on March 24, 2015, and remains in
effect as of the date hereof and has not been amended. Pursuant to Section 4 of the Bond
Ordinance, I was appointed to serve as the Designated Representative for purposes of awarding,
on behalf of the City, the winning bid for the purchase the Bonds, and taking certain other
actions in connection with the issuance and sale of the Bonds.
2. Terms of Bonds.
(a) Amount. The aggregate principal amount of the Bonds is $5,825,000,
which does not exceed $6,250,000.
(b) Date. The Issue Date is expected to be April 28, 2015, which is not later
than December 31, 2015.
(c) Interest Rates. The Bonds bear interest at the fixed rates per annum set
forth in Exhibit A, attached hereto and incorporated herein, none of which exceeds 5.00%. The
true interest cost to the City, set forth in the final pricing report prepared by the City's financial
advisor, Public Financial Management, Inc., dated April 14, 2015, attached to this certificate as
Exhibit A (the "Pricing Report"), is 2.548145%, which does not exceed 4.25%.
(d) Payment Dates. Interest is payable semiannually (on each June 1 and
December 1), commencing December 1, 2015. Principal is payable annually (on each
December 1) commencing December 1, 2016, in the amounts set forth in Exhibit A.
(f) Final Maturity. The final maturity of the Bonds is December 1, 2035,
which does not extend past April 28, 2036, the date that is twenty-one years after the Issue Date
of the Bonds.
(g) Redemption Rights. The Bonds maturing on and after December 1, 2025,
are subject to redemption at the option of the City prior to their stated maturity dates at any time
on or after June 1, 2025, as a whole or in part (within one or more maturities selected by the
City), at a price equal to the stated principal amount to be redeemed plus accrued interest, if any,
1
51438032.2
to the date fixed for redemption. The first redemption date for the Bonds does not occur more
than 10'/2 years after the Issue Date.
The Bonds stated to mature in 2033 and 2035 are Term Bonds and, if not previously
redeemed under the optional redemption provisions or purchased in the open market, shall be
called for redemption at par plus accrued interest to the date fixed for redemption, on the dates
and in the principal amounts set forth below.
Term Bonds Stated to Mature in 2033
Years Principal
(December 1) Amounts
2032 $345,000
2033* 355,000
*Maturity
Term Bonds Stated to Mature in 2035
Years Principal
(December 1) Amounts
2034 $370,000
2035* 380,000
*Maturity
(h) Price. The purchase price for the Bonds is 104.146685% of the stated
principal amount of the Bonds, which is not less than 98% or more than 120% of the stated
principal amount of the Bonds.
3. Award of Winning Bid. The winning bid (the "Winning Bid") submitted by
Sterne, Agee & Leach, Inc. (the "Purchaser") is attached to this certificate as Exhibit B. The
Winning Bid incorporates all of the terms and conditions set forth in the City's Notice of Bond
Sale dated April 3, 2015, including adjustments made within the parameters of the Notice of
Bond Sale and agreed upon with the Purchaser. Based upon the Pricing Report, the bids received
via Parity at 8:30 a.m. on April 14, 2015 (copies of which are attached as Exhibit C) and in
consultation with the Financial Advisor, I have determined that the Winning Bid is consistent
with the terms and parameters established in the Bond Ordinance, and therefore, I have awarded
the Winning Bid to the Purchaser pursuant to the authority delegated to me under the Bond
Ordinance.
4. Designation of Bonds as "Qualified Tax -Exempt Obligations."
For the purposes of Section 265(b)(3) of the United States Internal Revenue Code
of 1986, as amended (the "Code"): (i) the Bonds are not "private activity bonds" within the
meaning of Section 141 of the Code; (ii) the reasonably anticipated amount of tax-exempt
obligations (other than private activity bonds and other obligations not required to be included in
such calculation) that the City and any entity subordinate to the City (including any entity that
the City controls, that derives its authority to issue tax-exempt obligations from the City, or that
2
51438032.2
issues tax-exempt obligations on behalf of the City) will issue during 2015 (i.e., the calendar year
in which the Bonds will be issued) will not exceed $10,000,000; and (iii) the amount of tax-
exempt obligations, including the Bonds, so designated by the City as "qualified tax-exempt
obligations" for the purposes of Section 265(b)(3) of the Code during 2015 will not exceed
$10,000,000. In view of the foregoing, the Bonds are deemed designated as "qualified tax-
exempt obligations" for purposes of Section 265(b)(3) of the Code.
Dated April 14, 2015.
3
CITY OF TUKWILA, WASHINGTON
Pegg I arthy, Finance Director
51438032.2
CITY OF TUKWILA, WASHINGTON
LIMITED TAX GENERAL OBLIGATION BONDS, 2015
CALCULATION OF DEBT LIMIT
Value of taxable property within the City of Tukwila, Washington (the "City"), as
fixed in 2014 for purpose of 2015 regular tax levies, per the Certificate of the King
County Assessor, dated as of February 3, 2015 (the "AV Certificate"):
$5,054,078,747
NONVOTED DEBT CAPACITY
(per RCW 39.36.020) 11/2% of the value of taxable property: $75,811,181
Less: Nonvoted Debt Outstanding as of March 1, 2015, per the City's Certificate of
General Obligation Debt Outstanding, dated as of April 28, 2015 (the "Debt
Certificate"): (25,53 8,621)
Less: The above -captioned bonds (the "Bonds"): (5,825,000)
Plus: Cash and investment balances in the City's nonvoted debt service funds as of
March 1, 2015, per the Debt Certificate: 4,656
REMAINING NONVOTED DEBT CAPACITY: $44,452,216
TOTAL DEBT CAPACITY FOR GENERAL PURPOSES
(Nonvoted and Voted, per RCW 39.36.020) 21/4% of the value of taxable property: $126,351,968
Less: Voted Debt Outstanding as of March 1, 2015, per the Debt Certificate:
Less: Nonvoted Debt Outstanding as of March 1, 2015, per the Debt Certificate: (25,538,621)
Less: The Bonds: (5,825,000)
Plus: Cash and investment balances in the City's voted and nonvoted debt service
funds as of March 1, 2015, per the Debt Certificate: 4,656
REMAINING DEBT CAPACITY: $94,993,003
Based upon the AV Certificate and the Debt Certificate, the issuance of the Bonds is within the applicable
constitutional and statutory debt capacity of the City.
DATED as of April 28, 2015.
51436405.1
King County
Department of Assessments
Accounting Division
500 Fourth Avenue, ADM-AS-0725
Seattle, WA 98104-2384
(206) 263-2308 FAX (206) 296-0106
Email: assessor.info@kingcounty.gov
http://www.kingcountv.eov/assessor/
I, Lloyd Hara, 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 23, 2015 (for taxes payable in 2015) is $5,054,078,747
(Grand Total), $5,039,692,101 (Regular levy used for limited bonds),
and $5,026,912,521 (Excess Total which excludes all exempt senior
citizens). The TAV (timber assessed value) is $0.
WITNESS my hand this 3rd day of February, 2015.
King County Assessor
LH:dsm
CERTIFICATE OF GENERAL OBLIGATION DEBT OUTSTANDING
I, Peggy McCarthy, as the Finance Director of the City of Tukwila, Washington (the
"City"), hereby certify that the outstanding general obligation debt of the City, as of March 1,
2015, is as follows:
(1) Nonvoted Debt: The nonvoted debt of the City (including, but not limited to,
nonvoted general obligation bonds, long-term leases and other contracts) is
$25,538,621.
(2) Voted Debt: The City has no voted debt.
(3)
Cash and investment balances in the City's nonvoted debt service funds total
$4,656.
I further certify that the City has not incurred additional nonvoted or voted debt since
March 1, 2015, except for the City's Limited Tax General Obligation Bonds, 2015, in the
principal amount of $5,825,000, issued on the date hereof.
DATED as of April 28, 2015.
CITY OF TUKWILA, WASHINGTON
0
C
Peggy Mcy, Finance Dire
51436405.1
IT]
Blanket Issuer Letter of Representations
To be Completed by Issuer]
CITY OF TUKWILA, WASHINGTON
(Name of Issuer;
October 18, 1999
!Date;
Attention: Underwriting Department — Eligibility
The Depository Trust Company
55 Water Street; 50th Floor
New York, NY 100-1-0099
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 DTC's Rules with respect to the Securities, Issuer represents to DTC that Issuer will comply
with the requirements stated in DTC's 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 of acting book -
entry transfers of securities distributed through DTC. and
certain related matters
Received and Accepted:
Very truly yours,
City of Tukwila,- Washington
Alan R.-Doer schel, Finance Director
(TypewriteName 8C Title)
THE .e ORYTRU ► OMPAN 6200 Southcenter Boulevard
(Street Address)
Tukwila, Washington 98188
(clty)
(206) 433-1800
(State) (Tap)
(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)
I. The Depositor- Trust Companv ("DTC"). New York. NY. will act as securities depositor- for the
securities tthe "Securities":. The Securities will be issued as full- registered securities registered in the
name of Cede & Co. (DTC'_ partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully registered Security certificate will be issued for [each issue .
of] the Securities. [each] in the aggregate principal amount of such issue. and will be deposited with
DTC. [If. however. the aggregate principal amount of [any] issue exceeds S200 million. one certificate
will be issued with respect to each $200 million of principal amount and an additional certificate will be
issued with respect to anv remaining principal amount of such issue.]
2. DTC 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 Unifonn Commercial Code, and a
-clearing agency-" registered pursuant to the provisions of Section 1 T A 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 Nev 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 i"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 tum 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.
3. Conveyance of notices and other communications bv DTC to Direct Participants. by Direct
Particip&its to Indirect Partcipants. and by Direct Participants and Indirect Participants to Beneficial
Owners w i11 be governed by arrangements among them. subject to anv statutory or regulatory
requireinents 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 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).
S. Principal and interest payments on the Securities will be made to Cede & Co. or such other
nominee as may be requested bv 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 govemed 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 bv 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.
12. 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.
o PRELIMINARY OFFICIAL STATEMENT DATED APRIL 3, 2015
z NEW ISSUE - BOOK ENTRY ONLY Standard & Poor's Rating: AA
• BANK QUALIFIED See "RATING" herein
a a In the opinion of Bond Counsel, under existing federal law and assuming compliance with applicable requirements of the Internal
• Revenue Code of 1986, as amended (the "Code'), that must be satisfied subsequent to the issue date of the Bonds, interest on
the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of
• � the alternative minimum tax applicable to individuals. However, while interest on the Bonds also is not an item of tax preference
a o for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by corporations is taken
o .o into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to
.a corporations, interest on the Bonds received by certain S corporations may be subject to tax, and interest on the Bonds received
c by foreign corporations with United States branches may be subject to a foreign branch profits tax. Receipt of interest on the
Bonds may have other federal tax consequences for certain taxpayers. See "TAX MATTERS."
= $5,530,000
a .c City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2015
• Dated: As of the Delivery Date Due: December 1, as shown on the inside cover
=.5 The City of Tukwila, Washington (the "City"), is issuing its Limited Tax General Obligation Bonds, 2015 (the "Bonds"), in
0 .0 fully registered form under a book -entry only system. When issued, the Bonds initially will be registered to Cede & Co.,
3 a 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 (the "Securities Depository"). 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
o Owners") will not receive certificates representing their beneficial ownership interest in the Bonds purchased. The fiscal
4.0 agent of the state of Washington (the "State"), currently U.S. Bank National Association, will act as the registrar, paying
a a agent, transfer agent and authenticating agent for the Bonds (the "Bond Registrar").
2 Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2015, to
o co the maturity or earlier redemption of the Bonds. The Bonds will mature on the dates and in the amounts and bear interest
.; -z 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
0.) interest on the Bonds will be paid by the Bond Registrar to the Securities Depository, which in turn is obligated to remit
.o 0 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
E o SYSTEM."
o 0
Maturity Schedule on Inside Cover
a • Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for the cost of certain road
0'• m construction and related improvement projects identified in the Bond Ordinance (defined herein); and (ii) to pay the costs
,o of issuance of the Bonds.
(6 O U
• z`� The Bonds are subject to redemption prior to their stated dates of maturity as described herein. See "DESCRIPTION OF
o THE BONDS - Redemption Provisions" herein.
o
The Bonds constitute a general obligation of the City and are payable from tax revenues of the City and such other
o; money of the City as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has
z c 2 pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law
• ° o without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money of
.o c 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 Cityhave been pledged irrevocablyfor the prompt payment of the principal of and interest on the Bonds
Fly p 9 P P P Y p• p
• and such pledge is enforceable in mandamus against the City. The City's authority to collect taxes, including its property
.� co levy, is subject to various limitations. See "CITY TAXING AUTHORITY —Property Tax" and "PROPERTY TAX
2 LIMITATIONS." The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other
N than the City.
0O
• c a The City has designated the Bonds as "qualified tax-exempt obligations" for banks, thrift institutions and other financial
E o E institutions under Section 265(b)(93) of the Code. See "TAX MATTERS."
�° 4• 12
•o This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must
o ro
z read the entire Official Statement to obtain information essential to making an informed investment decision.
aThe Bonds are offered when, as and if executed and delivered, and are subject to receipt of the approving legal opinion of
4c-zo o Foster Pepper PLLC, Seattle, Washington, Bond Counsel to the City, and certain other conditions. It is expected that the Bonds
o 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
E .2469 Fast Automated Securities Transfer on or about April 28, 2015 (the "Delivery Date').
E�,
~ * Preliminary, subject to change.
$5,530,000 (1)
City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2015
Maturity Date
Maturity Amount (1) Interest Rate Yield CUSIP No. (2)
December 1, 2016
December 1, 2017
December 1, 2018
December 1, 2019
December 1, 2020
December 1, 2021
December 1, 2022
December 1, 2023
December 1, 2024
December 1, 2025
December 1, 2026
December 1, 2027
December 1, 2028
December 1, 2029
December 1, 2030
December 1, 2031
December 1, 2032
December 1, 2033
December 1, 2034
December 1, 2035
Preliminary; subject to change.
CUSIP is a registered trademark of the American Bankers Association. The CUSIP numbers herein are
provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by
Standard and Poor's. CUSIP numbers are provided herein for the convenience of reference only. CUSIP
numbers are subject to change. The City takes no responsibility for the accuracy of such CUSIP
numbers.
$190,000
195,000
200,000
205,000
215,000
220,000
230,000
240,000
255,000
265,000
280,000
290,000
300,000
310,000
325,000
340,000
350,000
360,000
375,000
385,000
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, or other information provided by parties other than the City. 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 except as otherwise expressly provided in "Continuing Disclosure Undertaking."
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 Preliminary Official Statement, as of its date, is in a form deemed final by the City for purposes of Securities
and Exchange Commission Rule 15c2-12(b)(1) but is subject to revision, amendment and completion in a final
Official Statement that will be available within seven business days after the sale date.
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
Jim Haggerton
CITY COUNCIL
Kate Kruller
Joe Duffie
Allan Ekberg
Kathy Hougardy
De"Sean Quinn
Dennis Robertson
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
Foster Pepper PLLC
Seattle, WA
City Administrator
Finance Director
City Attorney
FINANCIAL ADVISOR
Public Financial Management, Inc.
Seattle, WA
(206) 858-5363
Sea-advisors@pfm.com
BOND REGISTRAR
Washington State Fiscal Agent
Currently, U.S. Bank National Association
iii
This page left blank intentionally.
iv
Table of Contents
Page
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 5
Property Tax 5
Retail Sales and Use Taxes 6
Utility Taxes 7
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 10
GENERAL OBLIGATION DEBT 12
Authorization of Debt 12
Limits of Indebtedness 12
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 16
City Investments and Investment Policy 17
Historical General Fund Operating Results 19
Statement of Revenues, Expenditures and Changes in Fund Balances 19
General Fund Budgets 21
THE CITY 21
GENERAL AND ECONOMIC INFORMATION 26
TAX MATTERS 28
CONTINUING DISCLOSURE UNDERTAKING 29
CERTAIN INVESTMENT CONSIDERATIONS 30
RATING 32
LITIGATION 32
FINANCIAL ADVISOR 32
UNDERWRITING 32
OFFICIAL STATEMENT 32
APPENDICES:
FORM OF LEGAL OPINION APPENDIX A
2013 AUDITED FINANCIAL STATEMENTS APPENDIX B
DTC AND ITS BOOK -ENTRY SYSTEM APPENDIX C
v
This page left blank intentionally.
vi
OFFICIAL NOTICE OF SALE
$5,530,000
City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2015
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 April 14, 2015
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 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. See "Selection of the Successful Bidder" below. Bidders are referred to
the Preliminary Official Statement for additional information regarding the City, 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 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, Public Financial Management, Inc., 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, 2015, 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 Amount (1) Dec. 1 Amount (1)
2016 $190,000 2026 $280,000
2017 195,000 2027 290,000
2018 200,000 2028 300,000
2019 205,000 2029 310,000
2020 215,000 2030 325,000
2021 220,000 2031 340,000
2022 230,000 2032 350,000
2023 240,000 2033 360,000
2024 255,000 2034 375,000
2025 265,000 2035 385,000
(/) 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 the 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
provided by the City to the Qualified Electronic Bid Provider and i-Deal Prospectus) prior to the bidding. If such
changes are made, they will 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 10 percent. The City also reserves the right
to increase or decrease the principal amount of any maturity by 15 percent of the preliminary principal amount of
that maturity, rounded up to the next $5,000. Adjustments in any principal amount in excess of 15 percent of the
principal amount of that maturity, rounded up to the next $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, coupons and
underwriting compensation in the bid as submitted. In the event the City elects to alter 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, 2016 through December 1, 2024 are not subject to
redemption prior to their stated maturity dates. The Bonds maturing on or after December 1, 2025, 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, 2025, 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. No Bonds scheduled to mature on or after
December 1, 2025 may be combined with Bonds scheduled to mature on or before December 1, 2024. See
"DESCRIPTION OF THE BONDS — Redemption Provisions" in the Preliminary Official Statement.
Purpose of the Bonds
The Bonds are being issued for the purpose of (i) paying or reimbursing the City for the cost of certain road
construction and related improvement projects; and (ii) paying the costs of issuance of the Bonds.
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Security for the Bonds
The Bonds constitute a general obligation of the City and are 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" 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"). 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 ("Authorized Denominations"). 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, each 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 provided by the City to 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 provided by the City to 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 provided by the City to
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 provided by the City to the Qualified Electronic Bid Provider and i-Deal
Prospectus).
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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 provided by the City to 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
97 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 $60,000 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. All bids properly received
will be considered and acted on by the City Finance Director on behalf of the City pursuant to a previously adopted
delegation of authority. The City will notify the apparent winning bidder that it is the winning bidder within 30
minutes of the time the bids are due and will provide formal award by 2:00 p.m. Pacific Time. 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.
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 for inclusion in the final Official
Statement 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 its Bond Counsel.
Rating. The City has received a rating from Standard & Poor's 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 shall occur within 30 days after the sale date.
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
Simultaneous with or before delivery of the Bonds, the successful bidder shall advise the City and Bond Counsel of
the initial reoffering prices to the public of each maturity (the "Initial Reoffering Prices"), for the City's inclusion in the
final Official Statement for the Bonds. Prior to delivery of the Bonds, the successful bidder shall furnish to the City
and Bond Counsel a certificate in form and substance acceptable to Bond Counsel:
(i) confirming the Initial Reoffering Prices for the Bonds;
(ii) certifying that a bona fide offering of such Bonds has been made to the public (excluding bond houses, brokers,
and other intermediaries);
(iii) stating the first price at which a substantial amount (at least 10 percent of each maturity) of Bonds was sold to
the public (excluding bond houses, brokers and other intermediaries);
(iv) if the first price at which a substantial amount of any maturity of the Bonds is sold does not conform to the Initial
Reoffering Price of that maturity, providing an explanation of the facts and circumstances that resulted in that
non -conformity; and
(v) stating which maturities, if any, represent mandatory redemptions of term bonds maturing in the years specified
by the bidder.
A draft form of such certificate will be available prior to the sale date from the City's Financial Advisor.
xi
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 printing CUSIP
numbers on 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 Foster Pepper PLLC, 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 pursuant
to the requirements of paragraph (b)(5)(i) of Securities and Exchange Commission 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,
(i)
the information (including financial information) regarding the City 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;
and
(ii) the descriptions and statements, including financial data, of or pertaining to entities other than the City and
their activities contained in the Official Statement have been obtained from sources that the City believes to
be reliable and the City has no reason to believe that they are untrue in any material respect (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 Rule 15c2-12(b)(1), 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 Rule 15c2-12.
The successful bidder shall file, or cause to be filed, the final Official Statement with the Municipal Securities
Rulemaking Board ("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.
xii
Additional Information
Additional information may be obtained from the City's Financial Advisor, Public Financial Management, Inc. (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
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OFFICIAL STATEMENT
$5,530,000
City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2015
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, 2015 (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 ("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, 2015. 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. 2471 passed by
the City Council (the "Council") at a regular meeting on March 16, 2015 providing for the issuance and sale of the
Bonds (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 (the "Securities Depository"). 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 ("Authorized
Denominations"). 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 principal of and interest on the Bonds will be payable by the fiscal agent of the State (the "Bond
Registrar"), currently U.S. Bank National Association (or such other fiscal agent or agents as the State may from time
to time designate). So long as Cede & Co. is the Registered Owner of the Bonds, principal of and interest on the
Bonds will be payable by wire transfer by the Bond Registrar to DTC, which, in turn, is obligated to remit such
principal and interest to its participants for subsequent disbursement to the Beneficial Owners of the Bonds, as
further described in Appendix C—"DTC AND ITS BOOK -ENTRY SYSTEM."
Transfer and Exchange; Record Date. The Bond Registrar is not obligated to exchange any Bond or transfer
registered ownership during the period between the applicable Record Date and the next interest payment or
redemption date. For purposes hereof, Record Date means in the case of each interest payment date, the Bond
Registrar's close of business on the 15th day of the month immediately preceding such interest payment date, and,
with respect to redemption of a Bond prior to its maturity, the Bond Registrar's close of business on the date on
Preliminary, subject to change.
1
which the Bond Registrar sends the notice of redemption in accordance with the Bond Ordinance. Registered
ownership of any Bond registered in the name of the Securities Depository may not be transferred except (1) to any
successor Securities Depository; (2) to any substitute Securities Depository appointment by the City; or (3) to any
person if the Bond is no longer to be held in book -entry only form.
Termination of Book -Entry System. If the Bonds are no longer held in book -entry only form by the Securities
Depository, the City will execute, authenticate and deliver, at no cost to the Beneficial Owners, Bonds in fully
registered form, in Authorized Denominations. The principal of the Bonds will then be payable upon due
presentment and surrender to the Bond Registrar, and interest on the Bonds will then be payable by electronic
transfer on the interest payment date, or by check or draft of the Bond Registrar mailed on the interest payment date,
to the Registered Owners, at the address appearing upon the registration books on the Record Date. The City is not
required to make electronic transfers except pursuant to a request by a Registered Owner in writing received on or
prior to the Record Date and at the sole expense of the Registered Owner.
Redemption Provisions
Optional Redemption. The Bonds maturing on December 1 in the years 2016 through 2024, inclusive, are not
subject to redemption prior to their stated maturity. The Bonds maturing on or after December 1, 2025 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, 2025 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date
fixed for redemption.
[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)
(I) 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. If fewer than all of the outstanding Bonds are to be redeemed at the option of
the City, the City will select the maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity
are to be redeemed, so long as the Bonds are held by the Securities Depository in book -entry form, selection of
Bonds for redemption will be made in accordance with the operational arrangements between the City and the
Securities Depository (the "Letter of Representations"), and the Bond Registrar will select all other Bonds to be
redeemed randomly in such manner as the Bond Registrar determines. All or a portion of the principal amount of
any Bond that is to be redeemed may be redeemed in Authorized Denominations. If less than all of the outstanding
principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there will be issued to
the Registered Owner, without charge therefor, a new bond (or bonds, at the option of the Registered Owner) of the
same maturity and interest rate in any Authorized Denomination in the aggregate principal amount remaining
outstanding.
Notice of Redemption. While the Bonds are held by the Securities Depository in book -entry only form, any notice of
redemption will be given at the time, to the entity and in the manner required by the Letter of Representations, and
the Bond Registrar will not be required to give any other notice of redemption. If the Bonds cease to be in book -entry
only form, unless waived by any Registered Owner of the Bond to be redeemed, official notice of any redemption of
Bonds will be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by
first-class mail, postage prepaid, not less than 20 nor more than 60 days prior to the date fixed for redemption, to the
Registered Owners of the Bonds to be redeemed at the addresses appearing on the Bond Register at the time the
Bond Registrar prepares the notice.
2
Conditional Notice of Redemption. In the case of an optional redemption, the notice may state that the City retains
the right to rescind the redemption notice and the related optional redemption of Bonds by giving a notice of
rescission to the affected Registered Owners at any time on or prior to the date fixed for redemption. Any notice of
optional redemption that is so rescinded will be of no effect, and the Bonds for which the notice of optional
redemption has been rescinded will remain outstanding.
Effect of Call for Redemption. Interest on each Bond called for redemption will cease to accrue on the date fixed for
redemption unless either a conditional notice of optional redemption is rescinded as described above or money
sufficient to effect such redemption is not on deposit in the Bond Fund, or in a trust account established to refund or
defease the Bonds.
Purchase
The City reserves the right to purchase any or all of the Bonds offered to the City at any time at any price acceptable
to the City plus accrued interest to the date of purchase.
Failure to Pay Bonds
If the principal of any Bond is not paid when properly presented at its maturity or date fixed for redemption, as
applicable, the City will be obligated to pay interest on that Bond at the same rate provided in that Bond from and
after its maturity or date fixed for redemption until that Bond, both principal and interest, is paid in full or until
sufficient money for its payment in full is on deposit in the Bond Fund, or in a trust account established to refund or
defease that Bond, and that Bond has been called for payment by giving notice of that call to the Registered Owner
thereof.
Defeasance
The City may issue refunding bonds pursuant to the laws of the State or use money available from any other lawful
source to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and
interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to their maturity;
and (c) paying the costs of the refunding or defeasance. If the City sets aside in a special trust fund or escrow
account irrevocably pledged to that redemption or defeasance (the "trust account"), money and/or noncallable,
nonprepayable government obligations (see definition below) maturing at a time or times and bearing interest in
amounts sufficient to redeem, refund or defease the defeased Bonds in accordance with their terms, then all right
and interest of the Owners of the defeased Bonds in the covenants of the Bond Ordinance and in the funds and
accounts obligated to the payment of the defeased Bonds will cease and become void. Thereafter, the Owners of
defeased Bonds will have the right to receive payment of the principal of and interest on the defeased Bonds solely
from the trust account and the defeased Bonds will be deemed no longer outstanding. In that event, the City may
apply money remaining in any fund or account (other than the trust account) established for the payment and
redemption of the defeased Bonds to any lawful purpose.
The term "government obligations" is defined in the Bond Ordinance to have the meaning given in RCW 39.53.010,
as it may be amended from time to time. As currently defined in that statute, the term "government obligations"
means (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed
by, the United States of America and bank certificates of deposit secured by such obligations; (b) bonds, debentures,
notes, participation certificates or other obligations issued by the banks for cooperatives, the Federal Intermediate
Credit Bank, the Federal Home Loan Bank system, the Export -Import Bank of the United States, federal land banks
or the Federal National Mortgage Association; (c) public housing bonds and project notes fully secured by contracts
with the United States; and (d) obligations of financial institutions insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured or to the extent
guaranteed as permitted under any other provision of State law.
3
PURPOSE
The Bonds are being issued to provide funds (i) to pay or reimburse the City for the cost of certain road construction
and related improvement projects identified in the Bond Ordinance; 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 $
[Plus Premium/Less Discount]
Total Sources of Funds $
Uses of Funds
Deposit to Project Fund
Estimated Costs of Issuance (1)
Total Uses of Funds
(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 constitute a general obligation of the City and are 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 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.
The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the
City and are not payable from any proprietary or enterprise fund of the City (including the City's utilities). The Bonds
are not secured by any lien or any other security interest in City property.
The Bonds are not subject to acceleration upon the occurrence of a default. The City therefore would be liable only
for principal and interest payments as they become due. In the event of multiple defaults in payment of principal of or
interest on the Bonds, the Registered Owner of each Bond 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.
State law provides that the payment of general obligation bonds will be enforceable in mandamus against the issuer.
There is no express provision in the State constitution or statutes on the priority of payment of debt service on
general obligations incurred by a Washington municipality. Additionally, certain taxes and other money deposited in
the City's governmental funds are restricted by State law to specific purposes and may not be available to pay debt
service on the Bonds. Under the State laws and constitution, excess levies approved by the voters for the purpose of
retiring outstanding voter -approved indebtedness may not be used for any other purpose. The rights and remedies
of anyone seeking enforcement of the Bonds are subject to laws of bankruptcy and insolvency and to other laws
affecting the rights and remedies of creditors and to the exercise of judicial discretion. See "CERTAIN INVESTMENT
CONSIDERATIONS —Limitations on Remedies."
4
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 and
admissions tax. Neither the State nor any municipal corporation of the State collects a tax on net income.
The following table shows the tax revenue in the City's General Fund, by source, for 2010 through 2014.
General Fund Tax Revenues by Source
(5)
Fiscal
Year
2014
2013
2012
2011
2010
Property
Taxes
$14,186,753
13,757,092
13,830,166
13,427,445
13,188, 942
Sales and
Use Taxes
$17,105,321
16,520,856
15,673,891
16,113,733
15,150,494 (5)
Utility Other
Taxes (1) Taxes (2)
$5,706,557
5,566,851
5,535,966
5,424,644
5,561,735
$5,220,393
4,771,091
4,800,341 (3)
3,679,638 (4)
2,693,121
Total
Taxes
$42, 219, 025
40,615,890
39, 840, 364
38,645,460 (4)
36,594,293 (5)
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, and penalties and interest.
In 2012, the City received approximately $440,000 in delinquent gambling taxes. Additionally, a new casino was opened in
December 2011, resulting in higher gambling tax revenue in 2012 and thereafter.
In 2011, the City instituted a per full-time equivalent employee tax on businesses. This tax was originally classified under
"licenses and permits" in the City's audited financial statements, although in subsequent years it was classified as "other
taxes." For ease of comparison, the 2011 data in this table includes $1.641 million of tax revenue received by the City but
classified as "licenses and permits."
Prior to 2011, the City recognized certain sales tax revenues in funds other than the General Fund. For ease of comparison,
the 2010 sales and use tax data in this table includes $4.855 million of sales tax received by the City but deposited to other
funds.
Source: The City of Tukwila, audited financial statements for each year 2009 to 2013. Data for 2014 is preliminary, unaudited
and subject to change
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"), 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") 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 are not subject to constitutional or statutory limitations as to rate or
amount, but must be authorized by a 60 percent approving vote in an election meeting minimum voter turnout
requirements (except for certain levies by school districts, which require only a simple majority approval). 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 voter -approved general obligation bonds must meet a minimum voter
turnout of 40 percent of the number who voted at the previous November general election, in addition to receiving
60 percent approval.
5
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"), which usually 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 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, which may differ from the point of sale with respect to goods delivered to
the purchaser. The rate of the tax is now determined by the local rate in the destination taxing jurisdiction and that
jurisdiction receives the revenue therefrom.
Local option 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 in the City are shown under "GENERAL AND ECONOMIC INFORMATION — Economic Indices for the City and
the County."
Summary of Sales and Use Taxes within the City. The State sales and use tax rate is 6.50 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. Sound Transit imposes a regional transit authority tax
of 0.9 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 9.50 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 to support payments on the Bonds.
Criminal Justice Sales and Use Tax. A portion of the sales and use tax levied by the County consists 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 but may
only be used 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). The City receipts from the County's criminal justice sales and use tax therefore is
not available to support debt service payments on the Bonds.
Chemical Dependency or Mental Health Treatment Services Sales and Use Tax. The County has imposed 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.
6
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 second 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 2014 was $1.37 million.
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 may be collected from investor -owned utilities and utilities
operated by the City. Legal authority to impose the tax on public utilities (other than electric utilities) owned by other
municipal corporations is not settled. 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
6 percent utility tax on electricity, telecommunications, natural gas, cable utilities, and solid waste. The City collects a
10 percent utility tax on revenue from City -owned stormwater, water, and sewer utilities.
PROPERTY TAX LIMITATIONS
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 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 maximum permissible rate for any part of a
taxing district would be applied as the maximum permissible rate for the entire taxing district.
Limitations on Regular Property Taxes
The authority of a taxing district to levy taxes without a vote for general municipal purposes, including the payment of
debt service on limited tax general obligation indebtedness such as the Bonds, is subject to the limitations described
below. Information relating to regular property tax limitations is based on existing statutes and constitutional
provisions. Changes in State law could alter the impact of other interrelated tax limitations on the City.
City Regular Levy Rates and Limitations. For general city purposes, a city may levy regular property taxes up to
$3.375/ $1,000 of assessed valuation. The maximum levy rate for a city that is annexed into a library district or a fire
protection district is $3.60/$1,000, less the levy rates imposed by those districts (up to a maximum of $1.50/$1,000
for a fire protection district and $0.50/$1000 for a library district). Cities that maintain a pension fund for firefighters
who entered service prior to the creation of the State's Law Enforcement and Firefighters ("LEOFF") retirement
system in March 1, 1970 may also levy up to an additional $0.225/$1,000 for pension fund purposes. Such a city
may apply this additional levy authority, if determined by an actuarial report to be not required for the pension fund, to
any other general municipal purpose. Cities are also permitted to impose certain additional levies for specific
purposes; each such levy is subject to its own statutory limitations. Examples include the firefighters' pension fund
levy described above, a levy for the maintenance of a local improvement guaranty fund (described below, under
"Guaranty Fund Levies") and a voter -approved levy for emergency medical services.
The City's regular levy authority reflects certain of the adjustments described above. The City is annexed to the King
County Library District, which levied $0.447/$1,000 of assessed valuation within the City in 2015. 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
2015 to a maximum property tax levy rate of $3.15/$1,000, plus the $0.225 pension fund levy. The City's actual 2015
regular property tax rate is $2.841/$1,000, 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 1 percent of the true and fair value of property. Within the 1 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
7
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;
and portions of certain levies by certain flood control zone districts. 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. See table titled "Overlapping Levy Rates" below.
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.
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 1 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
8
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. The City in 2013 issued $6,687,500 of Local Improvement District No. 33 Bonds, of which
$6,082,500 principal amount is currently outstanding and guaranteed by the local improvement guaranty fund. As of
February 28, 2015, the balance in the guaranty fund is $669,147, which was funded by a deposit of proceeds of the
LID No. 33 Bonds.
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 for "levy code 2340," the largest levy code within the City, as
well as the statutory regular levy authority of each type of overlapping district, are listed below.
Representative 2015 Levy Rate and Statutory Regular Levy Authority
(1)
(2)
(3)
(4)
(5)
(6)
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
Tukwila Pool Metropolitan Park District
Total rate for King County levy code 2340:
Representative 2015 Levy
Rates Per $1,000 of
Assessed Value
$ 1.34522
0.50276
0.18885
n/a (3)
2.84188
0.50000
2.28514
4.59301
0.30217
0.13860
0.14962
$12.84725
(2)
Statutory Regular Levy
Authority Per $1,000 of
Assessed Value
$1.80(1)
0.50
0.45
1.50
3.37 (4)
0.75
3.60 (5)
(6)
0.50
0.50
0.075
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 the county and any road district within the county 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 district levy is
imposed on properties located in unincorporated areas of the County.
Reflects regular (non -voted) levy rate of $0.44747 and a voter -approved excess levy of $0.05529.
Levy code area 2340 is not within the boundaries of any fire protection district, but the City is currently exploring
annexing into a regional fire protection authority (the "RFA"), subject to voter approval. If such annexation were to occur
the amount of any levy by the RFA would reduce the City's levy rate limitation, but would not affect the City's ability to
levy the firefighters' pension fund levy. See note 3 below.
Pursuant to RCW 41.16.060, cities (like the City) who maintain a pre-LEOFF firefighter pension fund, may levy and
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 rate levied
by the King County Rural Library District which has the authority to levy up to $0.50 per $1,000 of assessed value.
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, which levy is to be used
exclusively for the support of the common schools.
Voter -approved excess levy only. School districts do not have non -voted regular levy authority.
Source: King County Department of Assessments
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
9
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 2011 to 2015.
Assessed Valuation, Regular Property Tax Levy Rates and Levy Amounts
Tax
Year
2015
2014
2013
2012
2011
Assessed
Valuation (1)
$5,054,078,747
4,756,373,688
4,649,191,308
4,675,629,743
4,788,452,326
Regular Regular
Levy Rate Levy Amount
$2.84188 $14,322,249
2.97799 14,129,531
2.98778 13,853,419
2.95408 13,711,699
2.82566 13,494,599
O) Total assessed valuation used for computation of debt capacity. Equal to regular assessed valuation plus timber
assessed valuation.
Source: King County Department of Assessments
Largest Property Taxpayers in the City of Tukwila — 2015 Tax Year
Assessed
Valuation
Taxpayer
Boeing
Westfield Southcenter
Segale Properties (1)
KIR Tukwila 050 LLC/KIMCO (2)
Qwest Corporation
Gateway North Buildings (Eproperty Tax
Inc. Dept 207) (3)
Anne Arundel Apts LLC (Group Health) (4)
Boeing Employees Credit Union
CWWA Tukwila 1 LLC (5)
Wig Properties LLC (J C Penney)
Includes 62 parcels in the City.
Includes 4 parcels in the City.
Includes 9 parcels in the City.
Includes 1 parcel in the City.
Includes 4 parcels in the City.
Type of Business
Aerospace
Shopping Center
Commercial Properties
Commercial Properties
Telecommunications
Commercial Properties
Commercial Properties
Banking
Commercial Properties
Retail
Total
$ 563,211,498
291,267,487
186, 552, 266
85,051,300
80, 999, 544
66,917,200
52,802,552
50, 651,154
42,974,000
37,147,522
$1,457,574,523
% of Total
A.V.
11.14%
5.76
3.69
1.68
1.60
1.32
1.04
1.00
0.85
0.74
28.84%
Source: King County Department of Assessments, as of February 27, 2015
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, another County elected
official, 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 3 percent is imposed on June 1 of the year in which
the tax is due and 8 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.
10
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 property tax collection record for the preceding five years.
Property Tax Collection Record for the City of Tukwila
Amount Amount Collected Percent Collected Amount Collected Percent Collected
Year Levied Year of Levy (1) Year of Levy As of 1/31/15 As of 1/31/15
2014 $14,058,979 $13,916,718 98.99% $13,934,416 99.11%
2013 13,750,828 13,549,525 98.54 13,687,035 99.54
2012 13,705,220 13,521,621 98.66 13,679,733 99.81
2011 13,385,080 13,225,338 98.81 13,377,122 99.94
2010 13,175,524 12,996,287 98.64 13,170,572 99.96
PI The amount collected in year of levy does not include supplements or cancellations of taxes or delinquent taxes collected in
that year.
Source: King County Office of Finance
11
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.
Non -Voted Debt. State law permits the City to incur limited tax general obligation indebtedness without authorization
by the voters in an amount not to exceed 1.5 percent of the assessed value of all taxable property within the City.
The amount of non -voted debt is combined with outstanding voter -approved debt for general municipal purposes
(described below), for purposes of aggregate debt limitations described below. Non -voted general obligation debt
may be issued as follows: (1) pursuant to an ordinance specifying the amount and object of the expenditure of the
proceeds, the City may borrow money for corporate purposes and issue bonds or notes within the constitutional and
statutory limitations on indebtedness; (2) the City may execute conditional sales contracts for the purchase of real or
personal property; and (3) the City may execute financing leases with or without an option to purchase.
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.
Voter -Approved Debt. Subject to 60 percent voter approval meeting minimum voter turnout requirements, the City
may incur general obligation debt in an amount which does not exceed 2.5 percent of the assessed valuation for
general municipal purposes (when combined with any outstanding non -voted debt), 2.5 percent for certain utility
purposes and 2.5 percent for certain parks, open space and economic development purposes. 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.
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.
12
Outstanding General Obligation Debt
As of March 1, 2015 the City had the following outstanding general obligation indebtedness, all of which is non -voted,
limited tax debt. The City has no voter -approved, unlimited tax debt outstanding.
General Obligation Debt
Outstanding Limited Tax General Obligation Bonds
Limited Tax General Obligation Bonds, 2011
Limited Tax General Obligation Bonds, 2010A
Limited Tax General Obligation Bonds, 2010B
Valley Communications Center Development Authority
Refunding Bonds, 2010 (1)
South Correctional Entity Facility Public Development
Authority Bonds, Series 2009A&B (2)
Limited Tax General Obligation Refunding Bonds, 2008
Total Outstanding LTGO Bonds
Outstanding General Obligation Loans
Limited Tax General Obligation Note, 2014 (Taxable)
Limited Tax General Obligation Bond, 2014 (Taxable)
Limited Tax General Obligation Bond, 2013
Total Outstanding GO Loans
Total General Obligation Debt
The Bonds (3)
Total General Obligation Debt (3)
(n
(2)
(3)
Principal
Amount Issued
$4,620,000
1,900,000
3,970,000
1,065,000
6,898,800
6,180,000
$2,250,000
3,850,000
1,000,000
Date of Final
Maturity
12/1/2023
12/1/2015
12/1/2024
12/1/2015
1/1/2039
12/1/2019
12/1/2017
12/1/2034
12/1/2022
Principal Amount
Outstanding
$ 4,185,000
380,000
3,970,000
220,000
6,589,600
3,450,000
$18,794,600
$ 2,250,000
3,850,000
803,221
6,903,221
$25,697,821
5,530,000
$31,227,821
The Valley Communications Center Development Authority issued special obligation bonds in 2000 for a dispatch facility (the
"Valley Com Bonds'). Pursuant to an interlocal agreement, the City is obligated to pay 20 percent of the debt service, which
obligation constitutes non -voted limited general obligation debt, payable from the City's General Fund. The amounts shown
in the table above represent the portion of the outstanding principal amount that is allocable to the City's obligation.
The South Correctional Entity Facility Public Development Authority issued special obligation 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, which obligation constitutes non -voted limited general obligation debt, payable from the City's General
Fund. The amounts shown in the table above represent the portion of the outstanding principal amount that is allocable to the
City's obligation.
Preliminary, subject to change.
Source: The City of Tukwila
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 2014 assessed valuation of property within
the City for collection of taxes in 2015 and the general obligation debt of the City outstanding as of March 1, 2015,
plus the Bonds.
Calculation of Debt Capacity
As of March 1, 2015
Assessed Valuation (2015 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 Described in this Official Statement (1)
Net Non -Voted General Obligation Debt (1)
Remaining Non -Voted General Purpose Debt Capacity
Voter -Approved and Non -Voted Debt Capacity (2.5% of Assessed Valuation)
Outstanding Voter -Approved General Obligation Debt
Plus: Net Non -Voted General Obligation Debt (calculated above) (1)
Net Direct Debt (1)
Remaining Debt Capacity for General Municipal Purposes (1)
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
(I) Preliminary; subject to change.
$5,054,078,747
$ 75,811,181
$25,697,821
(4,656)
5,530,000
$31,223,165 $ (31,223,165)
$ 44,588,016
$ 126,351,969
$ 31,223,165
$31,223,165 $ (31,223,165)
$ 95,128,804
$ 126,351,969
$ 126,351,969
$ 126,351,969
$ 126,351,969
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 "Net Direct Debt") and the estimated allocable share of the outstanding principal amount of general
obligation bonds 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.
Direct and Estimated Overlapping Debt
As of March 1, 2015
2014 Assessed Valuation for 2015 Tax Year - $5,054,078,747
2014 City Population — 19,210
(1)
Net Direct Debt (calculated above) (1) $ 31,223,165
Estimated Overlapping Debt:
King County $10,755,982
Library District 2,605,028
Port District 2,935,416
School Districts 35,517,284
Total Estimated Overlapping Debt $ 51,813,710
Total Net Direct and Estimated Overlapping Debt (1) $ 83,036,875
Certain Ratios (1)
Direct Debt to Assessed Valuation 0.62%
Direct and Estimated Overlapping Debt to Assessed Valuation 1.64%
Direct Debt per Capita $ 1,625
Direct and Estimated Overlapping Debt per Capita $ 4,323
Per Capita Assessed Valuation $ 263,096
Preliminary; subject to change.
Sources: The City of Tukwila, King County Office of Finance and Department of Assessments, and the Port district
15
Debt Service Requirements
The following table provides the debt service schedule for the City's outstanding limited tax general obligation bonds
and loans, which includes the City's portion of the SCORE Bonds and the Valley Com Bonds, 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 Principal Interest Debt Service
2015 $ 2,034,707 $ 1,084,532
2016 1,877,937 1,025,812
2017 4,188,028 960,018
2018 2,011,396 852,490
2019 2,088,321 765,149
2020 1,362,261 664,229
2021 1,412,760 605,552
2022 1,474,010 540,229
2023 1,403,800 477,121
2024 909,400 414,514
2025 427,800 364,638
2026 442,400 343,907
2027 458,400 322,405
2028 474,800 300,078
2029 491,600 276,899
2030 508,800 252,561
2031 528,200 227,000
2032 546,600 200,419
2033 566,800 172,820
2034 587,800 144,122
2035 349,200 114,285
2036 364,000 90,692
2037 379,600 66,094
2038 396,000 40,437
2039 413,200 13,669
Total $25,697,821 $10,319,672
Includes certain assumptions for the SCORE Bonds and the general obligation loans. For the SCORE Bonds, it is assumed
the City is responsible for all of its allocable debt service and that no debt service is paid directly from net revenues of the
facility. For the Limited Tax General Obligation Note, 2014, it is assumed that the entire balance is outstanding with an
interest rate of 1.17 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.
Future Financing
The City does not plan to incur additional general obligation indebtedness during the next 12 months. The City
periodically reviews its outstanding bonds for refunding opportunities and may issue bonds for refunding purposes if
market conditions warrant. The City will potentially issue approximately $4.4 million of limited tax general obligation
bonds for additional road projects in the second half of 2016.
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.
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
16
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 — "2013 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 "Authorized Investments" 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, 2013, attached as Appendix B, are
incorporated by reference to this Official Statement. The most recent accountability audit covers the period
January 1, 2013 through December 31, 2013. The State Auditor performs Accountability audits of the City every
year and the City has been free of 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 (1) legality, to ensure
the compliance with all statutes governing the investment of public funds in the State, (2) safety, to ensure the
preservation of capital in the overall investment portfolio, (3) liquidity, to enable to City to meet all operating
requirements, and (4) 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.
Authorized Investments. Chapter 35.39 RCW limits the investment by a city or town of its inactive funds or other
funds in excess of current needs to the following authorized investments: United States bonds; United States
certificates of indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or
warrants of a local improvement district which are within the protection of the local improvement guaranty fund law;
and any other investment authorized by law for any other taxing district or the State Treasurer. Under chapter 43.84
RCW, the State Treasurer may invest in non-negotiable certificates of deposit in designated qualified public
depositories; in obligations of the U.S. government, its agencies, and wholly owned corporations; in bankers'
acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national mortgage
association, and other government corporations subject to statutory provisions; and may enter into repurchase
17
agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local improvement district are
also eligible investments (RCW 35.39.030).
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"), an $8.8 billion dollar fund (as of February 2015) that invests money on behalf of more than
450 participants. 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, (1) the safety of principal; (2) the
assurance of sufficient liquidity to meet cash flow demands; and (3) 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. The pool is
restricted to investments with maturities of one year or less, and the average life typically is less than 90 days.
Investments permitted under the 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).
The following table shows cash and investments as of December 31, 2014 and February 15, 2015.
m
Cash and Investments
Banks and Savings and Loan Institutions
LGIP Investments
Non -Pool Investments (1)
Total Cash and Investments
Amount as of
February 15, 2015
$31,519,374
3,693,130
6 696,704
$41, 909, 208
Includes U.S. Treasury and U.S. Agency securities, bank notes and municipal bonds.
Amount as of
December 31, 2014
$33,710,349
3,694,540
6,663,223
$44,068,112
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, 2010 through 2013. Information for fiscal year ending
December 31, 2014 is preliminary and subject to change. Additional information that may interpret, clarify or modify
the data presented below may be contained in the complete financial statements, including the accompanying
footnotes.
Statement of Revenues, Expenditures and Changes in Fund Balances
General Fund (1)
Fiscal Years Ending December 31
REVENUES
Taxes c2x3)
Licenses and permits (2)
Intergovernmental revenues
Charges for services
Fines and forfeitures
Investment earnings
Miscellaneous
Total revenue
EXPENDITURES
General Government
Public Safety
Physical Environment
Transportation
Economic Environment
Mental and Physical Health (5)
Culture and Recreation
Capital outlay
Total expenditures
Excess (deficiency) of revenue over
(under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers In (b)
Transfers Out (7)
GO Bonds Issued
Proceeds from Capital Lease
Loan to Tukwila MPD (8)
Proceeds from Sales of Capital Assets
Total Other Financing Sources and Uses
Net Change in Fund Balances
Fund Balances - Beginning (9)
Change in Accounting Principle (8)
Fund Balances - Beginning as Restated
Fund Balances - Ending
2014 2013 2012
$42,219,026
2,114,638
5,307,861
2,553,690
264,934
130,859
137,237
$52,728,245
$ 7,146,956 (4)
27,204,740
1,789,658
2,605,602
3,662,211
3,808,476
407,400
$46,625,043
$ 6,103,202
$ 1,000,000
(6,900,080)
7,441
$ (5,892,639)
$ 210,563
$17,285,986
$17,496,549
$40, 615, 890
2,013,875
4,719,583
2,202,307
242,638
108,053
110,317
$50,012,664
$ 9,266,330
25,650,155
1,766,087
2,759,506
3,893,111
3,631,819
250,482
$47,217,490
$ 2,795,174
$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
Note: Totals may not add due to rounding. Footnotes are on the following page.
$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
$44,638,728
$ 4,055,702
$ 2,330,665
(5,619,148)
(658,706)
9,903
$ (3,937,286)
$ 118,416
8,260,141
$ 8,378,557
2011
$37,004,222
3,473,910
4,756,033
2,108,235
229,907
131,288
139,122
$47,842,717
$ 8,233,654
24,324,023
1,686,755
2,481,836
3,259,887
4,591
3,502,447
208,197
$43, 701, 390
$ 4,141,327
$ 2,972,843
(6,282,303)
15,468
21,406
$ (3,272,586)
$ 868,741
7,391,400 (10)
$ 8,260,141
2010
$31, 738, 736
1,618,830
4,475,936
2,115,614
227,552
67,650
464,817
$40, 709,135
$ 8,343,154
24,668,456
1,601,680
2,306,503
3,239,030
4,539
4,148,875
330,504
$44,642,741
$ (3,933,606)
$ 2,461,806
(255,475)
94,576
308
$ 2,301,215
$ (1,632,391)
7,389,431
$ 5,757,040
19
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Information for fiscal years 2010 through 2013 is based on audited financial statements of the City. Information for fiscal year
2014 is preliminary, unaudited and subject to change.
In 2011, the City instituted a per full-time equivalent employee tax on businesses. This tax was originally classified under
"licenses and permits" in the City's audited financial statements, although in subsequent years it was classified as "other
taxes."
In 2011 and thereafter, all sales tax has been recognized in the General Fund with certain portions transferred to capital
project and debt service funds. See footnote 8, below.
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.
In 2012, Mental and Physical Health expenditures were reclassified under General Government.
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, Transfers In represents transfers of unrestricted funds that can be used for General Fund
purposes.
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. In 2010 and years prior,
a portion of sales tax revenue was recorded directly into capital project and debt service funds as a source of financing, and
was thus not recognized in or transferred out through the General Fund. See footnote 4, above.
Through 2012, $850,000 had been loaned to the Tukwila Metropolitan Park District. With the implementation of GASB 61 in
2013, the City was required to report the Tukwila Metropolitan Park District as a "blended" component unit, and as such, the
loan to the Tukwila Metropolitan Park District was reclassified as an interfund loan rather than a General Fund expenditure,
necessitating an adjustment for the change in accounting principle.
In 2011 the City implemented GASB Statement 54 which clarified the definition of "Special Revenue Fund." As a result, the
City combined the General Fund, Contingency Fund, and Fire Equipment Reserve Fund for reporting purposes. The
beginning balances of these funds in 2011 were $5, 757, 040, $889,470, and $744, 890, respectively.
(10) In 2013, the Fire Equipment Reserve Fund was merged with the Internal Service Fund — Equipment Rental and Replacement,
causing its balance to be transferred out of the combined General Fund.
Source: City of Tukwila
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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 2015 and 2016 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 (1)
For the Period January 1, 2015 through December 31, 2016
2015 2016
Adopted Budget Adopted Budget
REVENUES
Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeits
Miscellaneous
Other Financing Sources
Total Revenue
EXPENDITURES
Salaries and Wages
Personnel Benefits
Supplies
Other Services and Charges
Intergovernmental Services
Capital Outlay
Transfers Out
Total Expenditure
Net Increase (Decrease) in Fund Balance
Beginning Fund Balance (2)
Ending Fund Balance (2)
$42,301,944
2,105,089
4,714,899
1,935,648
242,829
778,087
4,655,320
$56,733,816
$27,370,848
9,509,449
1,413,838
10,817,286
2,447,566
10,000
4,959,846
$56,528,833
$ 204,983
$15,200,000
$15,404,983
$43,668,417
2,165,661
4,851,929
1,966,054
242,829
784,228
5,908,476
$59,587,594
$28,016,903
9,997,962
1,276,838
10,732,689
2,574,716
10,000
7,153,791
$59,762,899
$ (175,305)
$15,404,983
$15,229,678
The General Fund budget includes the Contingency Fund budget, a sub -fund of the General Fund.
The 2015 budgeted beginning balance is based on the 2014 year-end as estimated at the time of budget development.
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
services to the City. The City residents receive library services from the King County Library System. 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, are responsible for establishing the
general guidelines and policies for the City. 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.
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The following are the Mayor and members of the City Council.
Elected Official Position Initially Elected Current Term Expires
Jim Haggerton Mayor November 2007 December 31, 2015
Kate Kruller Council President November 2011 December 31, 2015
Joe Duffie Council Member November 1981 December 31, 2017
Allan Ekberg Council Member November 1989 (1) December 31, 2017
Kathy Hougardy Council Member November 2007 December 31, 2015
De"Sean Quinn Council Member November 2008 c2 December 31, 2017
Dennis Robertson Council Member November 1987 (3) December 31, 2015
Verna Seal Council Member November 2005 December 31, 2017
Council Member Ekberg served from 1990 through 2007 and was re-elected in November 2009.
(2) Council Member Quinn was first appointed in to the position in 2008 and won election to his first full term in November 2009.
(3) Council Member Robertson served from 1988 through 1995 and was re-elected in November 2003.
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 twenty 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's of Arts in Public Policy from Stanford University with Honors and Distinction and is one of 33
International City/County Management Association Credentialed Managers in the State.
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's Degree in Business Administration from Washington State
University and graduated Summa Cum Laude with Honors.
Employees and Bargaining Groups
The number of full-time equivalent City employees for the years 2011 through 2015 are shown below.
Full -Time
Year Equivalent
2015 343.10
2014 332.48
2013 330.38
2012 331.13
2011 323.13
Source: City of Tukwila
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 February 2015. The City considers its relations with all employees and bargaining units to be good.
Employees/Department Number of
Union or Bargaining Group Represented Employees Contract Expires
Teamsters Clerical/Maintenance/Supervisory 144 12/31/2016
International Association of Firefighters Firefighters 62 12/31/2016
Police Guild Police 69 12/31/2016
United Steelworkers Police Non -Commissioned Officers 14 12/31/2016
United Steelworkers Police Commanders 4 12/31/2016
Total 293
Source: City of Tukwila
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Pension Plans
The City provides most of its employee pensions through the following statewide cost -sharing multiple -employer
plans administered by the State's Department of Retirement Systems ("DRS"): the State Public Employees
Retirement System ("PERS"), the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF"), or the
Public Safety Employees Retirement System ("PSERS"). Contributions by both employees and employers are based
on gross wages. PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members.
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 has only one benefit plan, Plan 2.
State law requires systematic actuarial funding to finance the retirement plans. Actuarial calculations to determine
employer and employee contributions are prepared by the Office of the State Actuary ("OSA"), a nonpartisan
legislative agency charged with advising the Legislature and Governor on pension benefits and funding policy. To
calculate employer and employee contribution rates necessary to pre -fund the plans' benefits, OSA uses actuarial
cost and asset valuation methods selected by the Legislature as well as economic and demographic assumptions.
The Legislature adopted the following economic assumptions for contribution rates beginning July 1, 2013:
(1) 7.8 percent rate of investment return; (7.5 percent for LEOFF Plan 2); (2) general salary increases of
3.75 percent; (3) 3.0 percent rate of Consumer Price Index increase; and (4) 0.95 percent growth in membership
(1.25 percent for LEOFF). The long-term investment return assumption is used as the discount rate for determining
the liabilities for a plan. The 10-year average annual return on the investment of the retirement funds was
9.24 percent.
Plan Funding; Contribution Rates and Amounts. All DRS retirement plans are funded by a combination of funding
sources: (1) contributions from the State; (2) contributions from employers (including the State as employer and the
City and other governmental employers); (3) contributions from employees; and (4) investment returns. Retirement
funds are invested by the State Investment Board, a 15-member board created by the Legislature in 1981.
The City's total contribution for the year ended December 31, 2014, was $2,203,521 representing 7.2 percent of
covered payroll. The City contributed $1,415,464 to PERS, $772,284 to LEOFF and $15,773 to PSERS in 2014 for
all of the City's employees that are covered under PERS, LEOFF and PSERS.
See "APPENDIX B —2013 AUDITED FINANCIAL STATEMENTS — Note 9-Pension Plans" for a description of the
State pension system and the plans.
Under State statute, contribution rates are adopted by the Pension Funding Council ("PFC") (and, for LEOFF 2, by
the LEOFF 2 Board) in even -numbered years for the next ensuing State biennium. The rate -setting process begins
with an actuarial valuation by the OSA, who makes non -binding recommendations to the Select Committee on
Pension Policy who 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 following table outlines the current contribution rates of employees and employers.
Contribution Rates for the 2013 - 2015 Biennium
Expressed as a Percentage of Covered Payroll
Employee City')
PERS
Plan 1
Plan 2
Plan 3
LEOFF
Plan 1
Plan 2
PSERS
Plan 2
6.00%
4.92
Variable (2)
0.00
8.41 (3)
9.21%
9.21
9.21
0.18
5.23
6.36 10.54
Includes 0.18 percent DRS administrative rate.
Rates vary from 5.0 percent minimum to 15.0 percent maximum based on rate selected by the PERS 3 member.
The State also contributes 3.36 percent to this plan.
Plan Funding Status and Unfunded Actuarial Liability. While the City's prior contributions represent its full current
liability under the retirement systems, any unfunded pension benefit obligations could be reflected in future years as
higher contribution rates. It is expected that the contribution rates for employees and employers in the PERS Plans 2
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and 3 will increase in the coming years. The OSA website (which is not incorporated into this Official Statement by
reference) includes information regarding the values, funding levels and investments of these retirement plans.
According to OSA, as of June 30, 2013, PERS Plans 2 and 3, LEOFF Plans 1 and 2 and PSERS Plan 2 had no
unfunded actuarial accrued liability; however, during the years 2001 through 2010 the rates adopted by the
Legislature were lower than those that would have been required to produce actuarially required contributions to
PERS Plan 1, a closed plan with a large proportion of the retirees. The State Actuary's June 30, 2013 actuarial
valuation showed that the funded status of PERS Plan 1 had an unfunded accrued liability of $4.8 billion (a
63 percent funded ratio on an actuarial value basis), compared to a 69 percent funded ratio as of June 30, 2012;
PERS Plans 2 and 3 had a surplus of $537 million (a 102 percent funded ratio); LEOFF Plan 1 had a surplus of
$1.1 billion (a 125 percent funded ratio); LEOFF Plan 2 had a surplus of $1.0 billion (a 115 percent funded ratio); and
PSERS Plan 2 had a surplus of $44 million (a 124 percent funded ratio). OSA uses the Projected Unit Credit ("PUC")
cost method and the Actuarial Value of Assets ("AVA") to report a plan's funded status. PUC is one of several
acceptable measures of a plan's funded status under current GASB rules. The PUC cost method projects future
benefits under the plan, using salary growth and other assumptions and applies the service that has been earned as
of the valuation date to determine accrued liabilities. The AVA is calculated using a methodology which smoothes
the effect of short-term volatility in the Market Value of Assets by deferring a portion of annual investment gains or
losses over a period of up to eight years.
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 and 3 member. Otherwise, assets for one plan may not be used to fund benefits for
another plan: however, all employers in PERS are required to make contributions at a rate (percentage of payroll)
determined by the OSA every two years for the sole purpose of amortizing the PERS Plan 1 unfunded actuarial
accrued liability within a rolling 10-year period. The Legislature has established certain maximum contribution rates
that began in 2009 and continued until 2015 and 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 Legislature to
address future changes in actuarial and economic assumptions and investment performance. In 2011, the
Legislature ended the future automatic annual increase, which is a fixed dollar amount multiplied by the member's
total years of service, for most retirees in the PERS Plan 1 plan, which is forecast to reduce the unfunded accrued
actuarial liability in PERS Plan 1. A lawsuit has been filed challenging this legislation.
Firefighters' Pension Plan. The City is the administrator of 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 11 members receiving benefits through this Plan. 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 January 1, 2015, with a net pension liability of $1,840,929, and a plan fiduciary net
position of $1,413,026 for a funding percentage of 76.76 percent. In 2014, $64,114 was received from the State from
taxes on fire insurance premiums.
Other Post -Employment Benefits
In addition to pensions, many State and local governmental employers provide other post -employment benefits
("OPEB") as a part of total compensation to attract and retain the services of qualified employees. OPEB includes
post -employment health care as well as other forms of post -employment benefits when provided separately from a
pension plan. The Governmental Accounting Standards Board ("GASB") standard concerning Accounting and
Financial Reporting by Employers for Post -Employment Benefits Other than Pensions ("GASB 45") provides for the
measurement, recognition and display of OPEB expenses/expenditures, related liabilities (assets), note disclosures,
and, if applicable, required supplementary information in the financial reports.
The City provides 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 January 1, 2015, the most
recent actuarial valuation date, the actuarial accrued liability for benefits was $29.5 million and a funded ratio of
0 percent. The funded ratio is 0 percent, because the City funds benefits on a pay-as-you-go basis.
The City's annual OPEB cost is calculated based on the annual required contribution of the employer ("ARC"), an
amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any
unfunded actuarial liabilities over a period of thirty years.
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The following table shows the components of the City's annual OPEB cost for 2014, the amount actually contributed
to the plan and changes in the City's net OPEB costs:
Determination of Annual Required Contribution:
Normal Cost at year end
Amortization of Unfunded Actuarial Accrued Liability
Interest for year
Annual Required Contribution
Determination of Net OPEB Obligation:
Annual Required Contribution
Interest on prior year Net OPEB Obligation
Adjustment to ARC
Annual OPEB Cost
Contributions made
Increase in Net OPEB Obligation
Net OPEB Obligation — beginning of year
Net OPEB Obligation — end of year
Fiscal Year Ending
12/31/2014
$ 23,534
1,811,337
68,808
$1,903,679
$1,903,679
171,067
(388,580)
1,686,166
(905,974)
$ 780,192
$4,561,781
$5,341,973
The City's annual OPEB cost, the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for
the past three years were as follows:
Fiscal Year Annual Contribution as a Net OPEB
Ended OPEB Cost Percentage of OPEB Cost Obligation
2014 $1,686,166 54% $5,341,973
2013 1,079,076 81 4,561,781
2012 1,122,304 36 4,361,460
2011 1,163,311 29 3,643,163
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 (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
175 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 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.
25
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 $150,000 and a plan limit of $9,045,316 in 2014. 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 reserve.
GENERAL AND ECONOMIC INFORMATION
General
The City is located in King County, Washington approximately 12 miles south of downtown Seattle and 17 miles
north of Tacoma, at the intersection of Interstate 5 and 405. The City is adjacent to the western city limits of Renton
and the eastern city limits 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.
Population
Historical and current population figures for the City and the County are provided below.
Population
Year Tukwila King County
2014 19,210 2,017,250
2013 19,160 1,981,900
2012 19,080 1,957,000
2011 19,050 1,942,600
2010 19,107 1,931,249
Source: Washington State Office of Financial Management, 2010 population from the 2010 Census
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.
Tukwila Major Employers, as of January 2015
Employer Type of Business Employees (FTE)
Boeing Company Aerospace 7,516
Group Health Cooperative Data Center/Lab/Pharmacy 1,880
King County Metro Transit Operating Base 914
Costco Wholesale Cash/Carry Warehouse 823
Boeing Employees Credit Union Banking/Credit Union 576
Nordstrom Department Store 514
Macy's Department Store 376
Red Dot Corp Heater/Air Conditioning Equipment 308
Hartung Glass Industries Inc. Manufacturing 281
United Parcel Service Postal Delivery Service 268
Source: City of Tukwila Finance Department — Business Licenses
26
Civilian Labor Force and Employment
Annual Average
Jan 2015 Jan 2014 2014 2013 2012 2011 2010
King County
Civilian Labor Force 1,160,417 1,146,403 1,157,694 1,139,612 1,129,671 1,115,789 1,113,293
Employment 1,104,477 1,087,129 1,104,223 1,079,951 1,055,002 1,025,067 1,011,944
Unemployment 55,940 59,274 53,472 59,661 74,669 90,722 101,349
Unemployment Rate 4.8% 5.2% 4.6% 5.2% 6.6% 8.1 % 9.1%
Washington State
Civilian Labor Force 3,527,969 3,432,820 3,488,183 3,461,123 3,484,733 3,473,092 3,515,195
Employment 3,280,522 3,196,620 3,270,362 3,218,409 3,203,435 3,153,915 3,166,684
Unemployment 247,447 236,200 217,821 242,714 281,298 319,177 348,511
Unemployment Rate 7.0% 6.9% 6.2% 7.0% 8.1% 9.2% 9.9%
Source: Bureau of Labor Statistics
(1)
Taxable Retail Sales
King County City Taxable
Year Taxable Retail Sales Retail Sales
2014 (1) $38,171,408,820 $1,361,474,282
2013 48,553,929,767 1,846,436,674
2012 45,178,847,087 1,769,298,604
2011 42,349,096,577 1,779,854,753
2010 40,506,885,020 1,697,981,249
Taxable retail sales and use is year to date through the third quarter. Taxable retail sales and use for the third quarter of
2013 were $35,377,963,117 and $1,341,877,173, respectively.
Source: Washington State Department of Revenue
Per Capita Personal Income
Seattle -Tacoma -Bellevue King State of
Year Metropolitan Area County Washington National
2013 $55,190 $62,770 $47,031 $44,543
2012 54,590 61,911 46,045 43,735
2011 51,350 57,400 44,420 42,298
2010 48,833 54,395 42,521 40,163
2009 48,277 53,739 42,112 39,357
Source: U.S. Department of Commerce Bureau of Economic Analysis
Residential Building Permit Statistics - King County and the City
King County Building Permits City Building Permits
Number of Value of Number of Value of
Year Permits Permits Permits Permits
2014 4,451 $2,784,148,087 17 $6,029,574
2013 4,554 2,414,075,573 20 7,441,102
2012 3,938 2,197,719,628 14 4,835,717
2011 2,736 1,155,094,272 8 1,931,795
2010 2,692 1,010,942,012 7 2,377,310
Source: U.S. Census Bureau
27
TAX MATTERS
Tax Exemption
Exclusion From Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming compliance
with applicable requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied
subsequent to the issue date of the Bonds, interest on the Bonds is excluded from gross income for federal income
tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to
individuals.
Continuing Requirements. The City is required to comply with certain requirements of the Code after the date of
issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for federal
income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and
the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bonds in
higher yielding investments in certain circumstances, and the requirement to comply with the arbitrage rebate
requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with
those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become
taxable retroactive to the date of issuance of the Bonds. Bond Counsel has not undertaken and does not undertake
to monitor the City's compliance with such requirements.
Corporate Alternative Minimum Tax. While interest on the Bonds also is not an item of tax preference for purposes
of the alternative minimum tax applicable to corporations, under Section 55 of the Code, tax-exempt interest,
including interest on the Bonds, received by corporations is taken into account in the computation of adjusted current
earnings for purposes of the alternative minimum tax applicable to corporations (as defined for federal income tax
purposes). Under the Code, alternative minimum taxable income of a corporation will be increased by 75 percent of
the excess of the corporation's adjusted current earnings (including any tax-exempt interest) over the corporation's
alternative minimum taxable income determined without regard to such increase. A corporation's alternative
minimum taxable income, so computed, that is in excess of an exemption of $40,000, which exemption will be
reduced (but not below zero) by 25 percent of the amount by which the corporation's alternative minimum taxable
income exceeds $150,000, is then subject to a 20 percent minimum tax.
A small business corporation is exempt from the corporate alternative minimum tax for any taxable year beginning
after December 31, 1997, if its average annual gross receipts during the three -taxable -year period beginning after
December 31, 1993, did not exceed $5,000,000, and its average annual gross receipts during each successive
three -taxable -year period thereafter ending before the relevant taxable year did not exceed $7,500,000.
Tax on Certain Passive Investment Income of S Corporations. Under Section 1375 of the Code, certain excess net
passive investment income, including interest on the Bonds, received by an S corporation (a corporation treated as a
partnership for most federal tax purposes) that has Subchapter C earnings and profits at the close of the taxable year
may be subject to federal income taxation at the highest rate applicable to corporations if more than 25 percent of the
gross receipts of such S corporation is passive investment income.
Foreign Branch Profits Tax. Interest on the Bonds may be subject to the foreign branch profits tax imposed by
Section 884 of the Code when the Bonds are owned by, and effectively connected with a trade or business of, a
United States branch of a foreign corporation.
Possible Consequences of Tax Compliance Audit. The Internal Revenue Service (the "IRS") has established a
general audit program to determine whether issuers of tax-exempt obligations, such as the Bonds, are in compliance
with requirements of the Code that must be satisfied in order for interest on those obligations to be, and continue to
be, excluded from gross income for federal income tax purposes. Bond Counsel cannot predict whether the IRS
would commence an audit of the Bonds. Depending on all the facts and circumstances and the type of audit
involved, it is possible that commencement of an audit of the Bonds could adversely affect the market value and
liquidity of the Bonds until the audit is concluded, regardless of its ultimate outcome.
Certain Other Federal Tax Consequences of Ownership of the Bonds
Bonds "Qualified Tax -Exempt Obligations" for Financial Institutions. Section 265 of the Code provides that
100 percent of any interest expense incurred by banks and other financial institutions for interest allocable to
tax-exempt obligations acquired after August 7, 1986, will be disallowed as a tax deduction. However, if the
tax-exempt obligations are obligations other than private activity bonds, are issued by a governmental unit that,
together with all entities subordinate to it, does not reasonably anticipate issuing more than $10,000,000 of
tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such
calculation) in the current calendar year, and are designated by the governmental unit as "qualified tax-exempt
obligations," only 20 percent of any interest expense deduction allocable to those obligations will be disallowed.
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The City is a governmental unit that, together with all subordinate entities, does not reasonably anticipate issuing
more than $10,000,000 of tax-exempt obligations (other than private activity bonds and other obligations not required
to be included in such calculation) during the current calendar year, and has designated the Bonds as "qualified tax
exempt obligations" for purposes of the 80 percent financial institution interest expense deduction. Therefore,
20 percent of any interest expense of a financial institution allocable to the Bonds is deductible for federal income tax
purposes.
Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies. Under Section 832 of the
Code, interest on the Bonds received by property and casualty insurance companies will reduce tax deductions for
loss reserves otherwise available to such companies by an amount equal to 15 percent of tax-exempt interest
received during the taxable year.
Effect on Certain Social Security and Retirement Benefits. Section 86 of the Code requires recipients of certain
Social Security and certain Railroad Retirement benefits to take receipts or accruals of interest on the Bonds into
account in determining gross income.
Other Possible Federal Tax Consequences. Receipt of interest on the Bonds may have other federal tax
consequences as to which prospective purchasers of the Bonds may wish to consult their own tax advisors.
Potential Future Federal Tax Law Changes. From time to time, there are legislative proposals in Congress which, if
enacted, could adversely affect the tax treatment, the market value or the marketability of the Bonds. It cannot be
predicted whether future legislation may be proposed or enacted that would affect the federal tax treatment of
interest received on the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors
regarding the potential impact of any pending or proposed legislation that would change the federal tax treatment of
interest on the Bonds.
CONTINUING DISCLOSURE UNDERTAKING
Basic Undertaking to Provide Annual Financial Information and Notice of Listed Events. To meet the requirements of
paragraph (b)(5) of United States Securities and Exchange Commission (the "SEC") Rule 15c2-12 (the "Rule 15c2-
12"), 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 Municipal Securities Rulemaking Board (the "MSRB"), in an electronic format as prescribed by the MSRB
accompanied by identifying information as prescribed by the MSRB:
(i)
Annual financial information and operating data of the type included in the final official statement for
the Bonds and described below ("annual financial information"); and
(ii) Timely notice (not in excess of 10 business days after the occurrence of the event) 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 Rule 15c2-12; (13) the consummation of a
merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the
assets of the City other than in the ordinary course of business, the entry into a definitive agreement
to undertake such an action or the termination of a definitive agreement relating to any such actions,
other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee
or the change of name of a trustee, if material.
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.
Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City
undertakes to provide will consist of (i) annual financial statements prepared (except as noted in the financial
statements) in accordance with applicable generally accepted accounting principles applicable to local governmental
units of the State such as the City, as such principles may be changed from time to time, which statements may be
29
unaudited, provided, that if and when audited financial statements are prepared and available they will be provided;
(ii) principal amount of general obligation bonds outstanding at the end of the applicable fiscal year; (iii) assessed
valuation for that fiscal year; and (iv) property tax levy amounts and rates for that fiscal year; and will be provided not
later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending
December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the
City's fiscal year ending December 31, 2014.
The annual financial information may be provided in a single or multiple documents, and may be incorporated by
specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC.
Amendment of Undertaking. The Undertaking is subject to amendment after the primary offering of the Bonds
without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating
underwriter, Rating Agency or the MSRB, under the circumstances and in the manner permitted by Rule 15c2-12.
The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and
a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial
information to be provided, the annual financial information containing the amended financial information will include
a narrative explanation of the effect of that change on the type of information to be provided.
Beneficiaries. The Undertaking will inure to the benefit of the City and the holder of each Bond, and will not inure to
the benefit of or create any rights in any other person.
Termination of Undertaking. The City's obligations under the Undertaking shall terminate upon the legal defeasance
of all of the Bonds. In addition, the City's obligations under the Undertaking will terminate if the provisions of Rule
15c2-12 that require the City to comply with the Undertaking become legally inapplicable in respect of the Bonds for
any reason, as confirmed by an opinion of Bond Counsel delivered to the City, and the City provides timely notice of
such termination to the MSRB.
Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply
with the Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No
failure by the City or other obligated person to comply with the Undertaking shall constitute a default in respect of the
Bonds. The sole remedy of any holder of a Bond will be to take action to compel the City or other obligated person to
comply with the Undertaking, including seeking an order of specific performance from an appropriate court.
Compliance With Continuing Disclosure Obligations. The City has entered into certain written agreements for the
sole purpose of assisting an underwriter in meeting the requirements of paragraph (b)(5) of Rule 15c2-12, as
applicable to a participating underwriter for certain of its outstanding bonds (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:
• The City failed to timely file general customer statistics for the water and sewer system revenue bonds for
fiscal years 2009 through 2013. The general customer statistics and a notice of failure to file have since
been filed on EMMA.
• The City filed its 2011 audited financial statements on time but failed to link them to the water and sewer
system revenue bonds. The 2011 audited financial statements have since been linked to the water and
sewer revenue bonds.
• The City filed its audited financial statements on EMMA on time for fiscal years 2009 through 2013 however,
the City failed to link its audited financial statements to the Valley Com bonds for fiscal years 2010 through
2012. The audited financial statements have since been linked to the Valley Com bonds.
• In several of the past five years, City financial information was not linked to the SCORE bonds 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.
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
30
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 charter provides for local initiatives and referenda. Initiatives and
referenda are submitted to the voters upon receipt of petitions signed by at least 20 percent (initiatives) and
25 percent (referenda) of the total vote cast at the last preceding regular general election. Referendum petitions
must be filed within 30 days after first publication of the ordinance that is the subject of the referendum. An initiative
ordinance or an ordinance repealed as a result of a referendum petition may not be amended (initiative) or reenacted
(referendum) by the Council for one year. Neither the initiative nor referendum may be used to amend the City
charter and may not address any subject that is barred under State law, including administrative or ministerial
actions; ordinances necessary for immediate preservation of public peace, health, and safety or for the support of
City government and its existing public institutions which contain a statement of urgency and are passed by
unanimous vote of the Council; ordinances providing for local improvement districts; ordinances appropriating
money; ordinances providing for or approving collective bargaining; ordinances providing for the compensation of or
working conditions of City employees; and ordinances authorizing or repealing the levy of taxes. From time to time
voters may submit petitions for initiatives and referenda within the City. 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.
Limitations on Remedies; Bankruptcy
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 State law, 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 legal opinion of Bond Counsel regarding the validity of the Bonds will be qualified by reference to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium and other similar laws affecting the rights of creditors
generally, and by general principles of equity.
A municipality such as the City must be specifically authorized under state law in order to seek relief under Chapter 9
of the U.S. Bankruptcy Code (the "Bankruptcy Code"). Chapter 39.64 RCW, entitled the "Taxing District Relief Act,"
permits any "taxing district" (defined to include any municipality or political subdivision, including cities) to voluntarily
petition for relief under the Bankruptcy Code. A creditor cannot bring an involuntarily bankruptcy proceeding against
a municipality, including the City. Under Chapter 9, a federal bankruptcy court may not appoint a receiver for a
municipality or order the dissolution or liquidation of the municipality. The federal bankruptcy courts have some
discretionary powers under the Bankruptcy Code.
Federal Sequestration
The sequestration of federal funds under the Budget Control Act of 2011 ("Sequestration") is expected to have both
indirect and direct effects on the City. Indirect effects of Sequestration include an expectation that reduced federal
spending may negatively affect the economy generally, including City revenue sources that are dependent on
economic activity such as retail sales and use tax. Direct effects on the City could include a reduction in federal
funds (including grant funds that come directly or indirectly from federal sources). The precise effect of
Sequestration will depend on how various Federal agencies respond to the mandate to cut expenditures and how
long Sequestration is in place. It therefore cannot be quantified at this time. The City does not expect any immediate
effects that will materially alter the City's financial condition and will evaluate potential long-term impacts if
Sequestration continues.
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RATING
As noted on the cover page of this Official Statement, the Bonds have been rated "AA" by Standard & Poor's Rating
Services ("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.
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, issuance, and sale of the Bonds by the City are subject to the approving
legal opinion of Foster Pepper PLLC, Bond Counsel, Seattle, Washington. The form of the opinion of Bond Counsel
is attached as Appendix A. The opinion of Bond Counsel is given based on factual representations made to Bond
Counsel, and under existing law, as of the date of initial delivery of the Bonds, and Bond Counsel assumes no
obligation to revise or supplement its opinion to reflect any facts or circumstances that may thereafter come to its
attention, or any changes in law that may thereafter occur. The opinion of Bond Counsel is an expression of its
professional judgment on the matters expressly addressed in its opinion and does not constitute a guarantee of
result. Bond Counsel will be compensated only upon the issuance and sale of the Bonds.
FINANCIAL ADVISOR
Public Financial Management, Inc. 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. Public Financial Management, Inc. 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. The financial advisor's compensation is contingent on the sale and delivery of the Bonds.
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.
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.
The execution and distribution of this Official Statement have been authorized by the City.
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APPENDIX A
FORM OF LEGAL OPINION
[FORM OF BOND COUNSEL OPINION]
City of Tukwila, Washington
Re: City of Tukwila, Washington
$ Limited Tax General Obligation Bonds, 2015
We have served as bond counsel to the City of Tukwila, Washington (the "City"), in connection with the
issuance of the above referenced bonds (the "Bonds"), and in that capacity have examined such law and such
certified proceedings and other documents as we have deemed necessary to render this opinion. As to matters of
fact material to this opinion, we have relied upon representations contained in the certified proceedings and other
certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
The Bonds are issued by the City pursuant to Ordinance No. (the "Bond Ordinance") for general City
purposes to provide the funds to pay or reimburse the City for the cost of road construction and improvement projects
and to pay the costs of issuance and sale of the Bonds, all as set forth in the Bond Ordinance.
Reference is made to the Bonds and the Bond Ordinance for the definitions of capitalized terms used and
not otherwise defined herein.
We have not been engaged to review and thus express no opinion concerning the completeness or accuracy
of any official statement, offering circular or other sales or disclosure material relating to the issuance of the Bonds or
otherwise used in connection with the Bonds.
Under the Internal Revenue Code of 1986, as amended (the "Code"), the City is required to comply with
certain requirements after the date of issuance of the Bonds in order to maintain the exclusion of the interest on the
Bonds from gross income for federal income tax purposes, including, without limitation, requirements concerning the
qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing
gross proceeds of the Bonds in higher yielding investments in certain circumstances and the arbitrage rebate
requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with
those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become
taxable retroactive to the date of issuance of the Bonds. We have not undertaken and do not undertake to monitor
the City's compliance with such requirements.
Based upon the foregoing, as of the date of initial delivery of the Bonds to the purchaser thereof and full
payment therefor, it is our opinion that under existing law:
1. The City is a duly organized and legally existing code city under the laws of the State of Washington.
2. The Bonds have been duly authorized and executed by the City and are issued in full compliance
with the provisions of the Constitution and laws of the State of Washington and the ordinances of the City relating
thereto.
3. The Bonds constitute valid and binding general obligations of the City payable from tax revenue of
the City and such other money as is lawfully available and pledged by the City to be levied within the constitutional
and statutory limitations provided by law without the assent of the voters, except only to the extent that enforcement
of payment may be limited by bankruptcy, insolvency or other laws affecting creditors' rights and by the application of
equitable principles and the exercise of judicial discretion in appropriate cases.
A-1
4. Assuming compliance by the City after the date of issuance of the Bonds with applicable
requirements of the Code, the interest on the Bonds is excluded from gross income for federal income tax purposes
and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals; however,
while interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax
applicable to corporations, interest on the Bonds received by corporations is to be taken into account in the
computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations,
interest on the Bonds received by certain S corporations may be subject to tax, and interest on the Bonds received
by foreign corporations with United States branches may be subject to a foreign branch profits tax. We express no
opinion regarding any other federal tax consequences of receipt of interest on the Bonds.
This opinion is given as of the date hereof, and we assume no obligation to 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.
We bring to your attention the fact that the foregoing opinions are expressions of our professional judgment
on the matters expressly addressed and do not constitute guarantees of result.
Respectfully submitted,
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APPENDIX B
2013 AUDITED FINANCIAL STATEMENTS
Washington State Auditor's Office
Financial Statements and Federal Single Audit Report
City of Tukwila
King County
Audit Period
January 1, 2013 through December 31, 2013
Issue Date
July 28, 2014
Report No. 1012286
Washington State Auditor
Troy Kelley
Independence • Respect • Integrity
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Washington State Auditor
Troy Kelley
July 28, 2014
Mayor and City Council
City of Tukwila
Tukwila, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Tukwila's financial statements and compliance
with federal laws and regulations
We are issuing this report in order to provide information on the City's financial condition.
Sincerely,
TROY KELLEY
STATE AUDITOR
Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • TDD Relay (800) 833-6388
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Table of Contents
City of Tukwila
King County
January 1, 2013 through December 31, 2013
Federal Summary 1
Independent Auditor's Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards 3
Independent Auditor's Report on Compliance for Each Major Federal Program and on
Internal Control over Compliance in Accordance with OMB Circular A-133 5
Independent Auditor's Report on Financial Statements 8
Financial Section 11
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Federal Summary
City of Tukwila
King County
January 1, 2013 through December 31, 2013
The results of our audit of the City of Tukwila are summarized below in accordance with U.S.
Office of Management and Budget Circular A-133.
FINANCIAL STATEMENTS
An unmodified opinion was issued on the financial statements of the governmental activities, the
business -type activities, each major fund and the aggregate remaining fund information.
Internal Control Over Financial Reporting:
• Significant Deficiencies: We reported no deficiencies in the design or operation of
internal control over financial reporting that we consider to be significant deficiencies.
• Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the
City.
FEDERAL AWARDS
Internal Control Over Major Programs:
• Significant Deficiencies: We reported no deficiencies in the design or operation of
internal control over major federal programs that we consider to be significant
deficiencies.
• Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
We issued an unmodified opinion on the City's compliance with requirements applicable to each
of its major federal programs.
We reported no findings that are required to be disclosed under section 510(a) of OMB Circular
A-133.
B-4
Identification of Major Programs:
The following were major programs during the period under audit:
CFDA No.
16.710
20.205
Program Title
ARRA - Public Safety Partnership and Community Policing Grants
Highway Planning and Construction Cluster - Highway Planning and
Construction
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
OMB Circular A-133, was $300,000.
The City qualified as a low -risk auditee under OMB Circular A-133.
B-5
Independent Auditor's Report on Internal Control over
Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
City of Tukwila
King County
January 1, 2013 through December 31, 2013
Mayor and City Council
City of Tukwila
Tukwila, Washington
We have audited, 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, the 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, 2013, and the related notes to the financial statements, which
collectively comprise the City's basic financial statements, and have issued our report thereon
dated June 25, 2014. As discussed in Note 1 to the financial statements, during the year ended
December 31, 2013, the City implemented Governmental Accounting Standards Board
Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB
Statements No. 14 and No. 34 and Statement No. 65, Items Previously Reported as Assets and
Liabilities.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City's
internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, we do not express an opinion on the effectiveness of the City's
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the City's financial statements will not be prevented,
or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
B-6
combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
In addition, we noted certain matters that we have reported to the management of the City in a
separate letter dated June 25, 2014.
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City's financial statements are free
from material misstatement, we performed tests of the City's compliance with certain provisions
of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the City's internal control or on compliance. This report is an integral part of an audit performed
in accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose. However,
this report is a matter of public record and its distribution is not limited. It also serves to
disseminate information to the public as a reporting tool to help citizens assess government
operations.
TROY KELLEY
STATE AUDITOR
June 25, 2014
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Independent Auditor's Report on Compliance for Each
Major Federal Program and on Internal Control over
Compliance in Accordance with OMB Circular A-133
City of Tukwila
King County
January 1, 2013 through December 31, 2013
Mayor and City Council
City of Tukwila
Tukwila, Washington
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM
We have audited the compliance of the City of Tukwila, King County, Washington, with the
types of compliance requirements described in the U.S. Office of Management and Budget
(OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on
each of its major federal programs for the year ended December 31, 2013. The City's major
federal programs are identified in the accompanying Federal Summary.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts
and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and
OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations.
Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the City's compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each
major federal program. Our audit does not provide a legal determination on the City's
compliance.
B-8
Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2013.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Management of the City is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the City's internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program in order to determine the auditing procedures that are appropriate in the circumstances
for the purpose of expressing an opinion on compliance for each major federal program and to
test and report on internal control over compliance in accordance with OMB Circular A-133, but
not for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, we do not express an opinion on the effectiveness of the City's
internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
PURPOSE OF THIS REPORT
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other
purpose. However, this report is a matter of public record and its distribution is not limited.
B-9
It also serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
Ku/1-y
TROY KELLEY
STATE AUDITOR
July 22, 2014
B-10
Independent Auditor's Report on Financial Statements
City of Tukwila
King County
January 1, 2013 through December 31, 2013
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, 2013,
and the related notes to the financial statements, which collectively comprise the City's basic
financial statements as listed on page 11.
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 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.
B-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, as of
December 31, 2013, 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.
Matters of Emphasis
As discussed in Note 1 to the financial statements, in 2013, the City adopted new accounting
guidance, Governmental Accounting Standards Board Statement No. 61, The Financial
Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34 and
Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not
modified with respect to this matter.
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 12 through 27, budgetary comparison
information on pages 97 through 100, pension trust fund information on page 101 through 102
and information on postemployment benefits other than pensions on page 103 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 Schedule of
Expenditures of Federal Awards is presented for purposes of additional analysis as required by
U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments,
and Non -Profit Organizations. This schedule 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 basic financial
statements. The information has been subjected to the auditing procedures applied in the audit of
B-12
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 basic financial statements or to the basic 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.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
June 25, 2014 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. 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.
x
TROY KELLEY
STATE AUDITOR
June 25, 2014
B-13
Financial Section
City of Tukwila
King County
January 1, 2013 through December 31, 2013
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis — 2013
BASIC FINANCIAL STATEMENTS
Statement of Net Position — 2013
Statement of Activities — 2013
Balance Sheet — Governmental Funds — 2013
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net
Position — 2013
Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental
Funds — 2013
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Government Funds to the Statement of Activities — 2013
Statement of Net Position — Proprietary Funds — 2013
Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds —
2013
Statement of Cash Flows — Proprietary Funds — 2013
Combining Statement of Fiduciary Net Position — Fiduciary Fund — 2013
Statement of Changes in Fiduciary Net Position — Fiduciary Fund — 2013
Notes to the Financial Statements — 2013
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
— General Fund — 2013
Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual
— Metropolitan Park District — 2013
Notes to Required Supplementary Information — 2013
Firemen's Pension Trust Fund — 2013
Retiree Medical and Long -Term Care Benefits for LEOFF 1 Employees — 2013
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards — 2013
Notes to the Schedule of Expenditures of Federal Awards — 2013
B-14
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the Year Ended December 31, 2013
The discussion and analysis of the City of Tukwila's financial performance provides an overall review
of the City's financial activities for the year ended December 31, 2013. 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
• Total net position, the amount by which total assets exceed total liabilities, equals $307.5
million. A total of 86 percent or $263.6 million of total net position is invested in capital assets
such as streets, land, buildings, equipment, and other improvements. The remaining net
position of $43.9 million is available for debt service, capital projects, and to meet the
government's ongoing activities and obligations.
• The City's net position increased by $17 million. Governmental activities provided a $12 million
increase, and business -type activities accounted for the difference. The City received
donations of capital assets amounting to $5.4 million.
• As of the close of the current fiscal year, the City of Tukwila's governmental funds reported
combined ending fund balances of $23.7 million, an increase of $5.3 million in comparison with
the prior year due primarily to the proceeds received from the special assessment bond to
reimburse the City for a portion of the costs of a major reconstruction of Southcenter Parkway
to improve access to the urban center.
• At the end of the current fiscal year, unassigned fund balance for the general fund was $15.3
million, or 32 percent of total general fund expenditures.
• The City of Tukwila's total debt increased by $2.3 million during the current fiscal year. This
change is a combination of new debt issued including the $6.7 million special assessment and
a general obligation bond of $1 million offset by debt service payments for the year and the
redemption of $3.2 million bond for the construction of the golf course clubhouse.
USING THIS ANNUAL FINANCIAL REPORT
This annual report consists of a series of financial statements and notes to those statements. These
statements are organized so the reader can understand the City of Tukwila as an entire operating
entity. The statements then proceed to provide an increasingly detailed look at specific financial
conditions.
The Statement of Net Position and Statement of Activities provide information about the activities of
the whole City presenting both an aggregate view of the City's finances and a longer -term view of
those assets. Major fund financial statements provide the next level of detail. For governmental
funds, these statements tell how services were financed in the short-term as well as what dollars
remain for future spending. The fund financial statements also look at the City's most significant
funds with all other non -major funds presented in total in one column.
B-15
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview of the 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
Other supplementary information, in addition to the basic financial statements, is also contained in
this report. This section of the Management's Discussion and Analysis is intended to introduce and
explain the basic financial statements.
Government -wide Financial Statements
The government -wide financial statements are designed to be corporate -like in that all governmental
and business -type activities are consolidated into columns which add to a total for the City. The
focus of the Statement of Net Position is designed to be similar to bottom -line results for the City and
its governmental and business -type activities. This statement combines and consolidates
governmental funds' current financial resources (short-term spendable resources) with capital assets
and long-term obligations. Over time, increases or decreases in net position may be one indicator of
improvement or deterioration in the City's overall financial health.
The Statement of Activities is focused on both the gross and net cost of various functions, including
both governmental and business -type activities, which are supported by the City's general tax and
other revenues. This is intended to summarize and simplify the user's analysis of the cost of various
governmental services and/or subsidy to various business -type activities. The revenue generated by
the specific functions (charges for services, grants, and contributions) is compared to the expenses
for those functions to show how much each function either 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.
Governmental activities of the City include general government (executive, finance, legal, human
resources, court), public safety, physical environment, economic environment, transportation, mental
and physical health, and culture and recreation. The City's business -type activities include a water
and sanitary sewer utility, surface water utility, and a municipal golf course. Governmental activities
are primarily supported by taxes, charges for services, and grants while business -type activities are
self-supporting through user fees and charges.
Fund Financial Statements
The fund financial statements are the traditional reporting format for governments. 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. While the government -wide statements present the City's finances based
on the type of activity (general government vs. business type), the Fund Financial Statements are
presented by fund type, such as the general fund, special revenue funds and proprietary funds, with
the focus on major funds.
Governmental 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 major fund
presentation is used, utilizing the "sources and uses of resources" basis. This is the manner in which
the budget is typically developed. The basis of accounting is different between the governmental
fund statements and the government -wide financial statements. The governmental fund statements
B-16
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
focus on the near -term revenues/financial resources and expenditures while the government -wide
financial statements include both near -term and long-term revenues/financial resources and
expenditures. 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 basis of accounting is different between the governmental fund statements and the
government -wide financial statements, reconciliations are provided. The reconciliation between the
governmental fund Balance Sheets and the government -wide Statement of Net Position is found on
the page following the governmental funds' Balance Sheet, while the reconciliation between the
governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance and the
government -wide Statement of Activities is found directly following the governmental funds'
Statement of Revenues, Expenditures, and Changes in Fund Balance.
The City maintains twenty-four individual governmental funds. Of these, five are considered major
(the general fund, the arterial street fund, the land acquisition recreation & park development fund,
the local improvement district #33 fund, and the metropolitan park district fund) and are presented
separately in the governmental fund Balance Sheet and the governmental fund Statement of
Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are
combined into a single column labeled "Other Governmental Funds". Beginning in 2013, the City's
component unit, Metropolitan Park District, is reported as blended. Individual fund data for each of
the other governmental funds can be found in the combining statements later in 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. Budgetary comparison
statements are presented for the general and major special revenue funds 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.
Proprietary Funds
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 internally to various City departments.
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. Internal service funds benefit both governmental and
business -type activities, and are allocated accordingly in the government -wide statement of
activities.
B-17
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
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 or other funds. Fiduciary funds are not
included in the government -wide financial statements because their assets are not available to
support the City's activities.
The City has two fiduciary funds: a firemen's pension trust fund and an agency fund, which are
accounted for on the accrual basis. As agency funds are custodial in nature, they do not include
revenues and expenses.
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 at the end of the Basic Financial Statements section.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information including a budget vs. actuals report for the City's
general fund, a schedule of major/non-major special revenue funds, and a schedule of funding
progress for the Firemen's Pension Trust Fund and other post -employment benefits. Additional
pension benefit information is found in Note 9.
The combining statements referred to earlier in connection with non -major governmental funds and
internal service funds are presented in the section titled "Fund Financial Statements and Schedules".
Government -wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. For the City of Tukwila, total assets exceeded liabilities by $307.5 million at December 31,
2013.
The largest portion of the City's net position, $263.6 million, or 86 percent, reflects its investment in
capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire
those assets that is still outstanding.
The City of Tukwila uses these capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the City of Tukwila's investment in its capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities:
B-18
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
CITY OF TUKWILA NET POSITION
(in thousands)
Governmental Activities Business -type Activities
Total
As of 12/31/13 As of 12/31/12 As of 12/31/13 As of 12/31/12 As of 12/31/13 As of 12/31/12
Current and other assets
Capital assets, net of
accumulated depreciation
Total assets
Deferred Outflows of Resources
Long-term liabilities
Other liabilities
Total liabilities
$57,557 $46,928 $14,703 $12,476
223,051 218,767
65,040 63,118
$72,260 $59,403
288,090 281,885
280,608 265,695 79,742 75,594
360,350 341,289
524
32,437
10,057
42,495
29,126
10,417
39,544
1,058
9,333
10,392
10,515
725
11,240
524
33,496
19,391
52,887
39,642
11,142
50,784
Deferred Inflows of Resources 515
Net position
Net investment in
capital assets
Restricted
Unrestricted
Total net position
207,660
3,480
26,981
203,207
2,750
20,194
55,956
430
12,965
52,912
430
11,011
515 -
263,616
3,910
39,946
253,109
3,180
34,215
$238,121 $226,151 $69,351 $64,354 $307,472 $290,504
The governmental unrestricted net position comprises $27 million. The general fund unrestricted net
position is available for functions such as public safety employee salaries and supplies, park and
road maintenance, and other general government services. The unrestricted net position of
business -type activities, $13 million, may only be spent on activities related to one of the three City
utilities (water, sewer, and surface water) or on the golf course activities. Examples of utility
activities include maintenance of water/sewer mains, pump and lift stations, storm drain flushing, and
water meter reading.
The $10.6 million increase in current and other assets for governmental activities includes a $6
million net increase in cash and investments from the repayment of bond funding on the
Klickitat/Southcenter Parkway/I-5 Access Revision project. The increase of $2.2 million in current
and other assets for business -type activities is comprised of an net increase of $3.3 million in cash
and investments. This increase results from a rate structure design in the utility funds that build
reserves for major infrastructure replacement and improvement.
Governmental capital assets increased by $4.3 million due to capital outlays of $5.8 million and
capital contributions of $5.4 million, offset by depreciation. The addition is due to the activities in the
major projects below:
• Interurban Avenue South, $577,814
• Tukwila Urban Transit Center, $1.1 million
• Tukwila Urban Center Ped/Bicycle Bridge, $336,480
• Southcenter Parkway Extension, $1.1 million
The $3.3 million increase in long-term liabilities for governmental activities is due to the $1 million
bond issue to fund the Metropolitan Park District capital improvements, and $6.7 million special
assessment debt on the Klickitat Urban Access project, offset by principal payments on existing debt.
The increase in other liabilities comprise year-end payables that were settled in 2014.
Business -type activity capital assets increased by $1.9 million due to capital outlays of $5.8 million
offset by depreciation. Capital outlays for the period primarily include drainage projects and
construction activity on the Southcenter Parkway extension project amounting to $4.8 million.
B-19
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Changes in Net Position
The change in net position represents the increase or decrease in City net position resulting from its
various activities.
Following is a condensed version of the City's changes in net position. The table shows the
revenues, expenses and related changes in net position for both governmental -type and business -
type activities:
CITY OF TUKWILA CHANGES IN NET POSITION
(in thousands)
Governmental Activities
Business -type Activities Total
2013 2012 2013 2012 2013 2012
Revenues:
Program revenues
Charges for services $6,213 $5,832 $18,464 $17,034 $24,676 $22,866
Operating grants and contributions 3,290 4,412 - 3,290 4,412
Capital grants and contributions 16,948 1,582 339 136 17,286 1,717
General revenues
Property taxes 14,510 14,132 - 14,510 14,132
Sales and use taxes 16,316 15,442 - - 16,316 15,442
Natural gas use tax 204 232 204 232
Hotel/Motel taxes 527 522 - 527 522
Utility taxes 3,880 4,001 - - 3,880 4,001
Interfund utility taxes 1,687 1,535 1,687 1,535
Business taxes 2,570 2,498 2,570 2,498
Excise taxes 2,745 2,861 - - 2,745 2,861
State entitlements 1,862 1,896 1,862 1,896
Investment earnings 102 117 - 102 117
Miscellaneous 305 102 - 305 102
Total revenues 71,159 55,162 18,803 17,170 89,962 72,332
Expenses:
General government 10,195 8,343 10,195 8,343
Public safety 25,939 26,598 - - 25,939 26,598
Transportation 7,658 7,315 7,658 7,315
Physical environment 2,611 3,626 - 2,611 3,626
Culture and recreation 5,635 4,243 - - 5,635 4,243
Economic environment 5,210 4,801 5,210 4,801
Interest on long-term debt 1,039 1,152 - 1,039 1,152
Water/sewer 10,421 10,150 10,421 10,150
Foster golf course 1,708 1,701 1,708 1,701
Surface water 2,563 2,700 2,563 2,700
14,550
Total expenses 58,287 56,078 14,692
Increase (decrease) in net position before transfers 12,872 -917 4,110
2,620
Transfers 1,061 1,057 -1,061 -1,057
Change in net position 13,933 140 3,050 1,563
Net position -beginning of period 227,888 226,011 64,354
Prior Period Adjustment / Restatements -3,700 - 1,947
Net position -beginning balance, as restated 224,189 226,011 66,301
Net position -end of period $238,121 $226,151 $69,351
72,979 70,629
16,983 1,703
16,983 1,703
62,791 292,242 288,801
-1,752 -
62,791 290,489 288,801
$64,354 $307,472 $290,504
Governmental activities ended the year with $14 million increase in the City's net position.
Revenues to fund capital assets are recorded as program or general revenues in the statement of
activities. However, asset purchases are not recorded as expenses in the year purchased and
construction costs are not recorded as expenses in the year incurred. Instead, the costs are
recorded as long-term assets and are depreciated over their useful life.
Revenues from governmental activities increased $16 million from 2012 activity. The components
and explanation of this increase follows.
B-20
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
• Capital grants and contributions increased $15.4 million mainly due to $5.4 million of
donated assets from private contributors or by government transfer. In addition, the City
recognized $9.5 million in special assessment revenue, a reimbursement to the City for
Klickitat urban access project costs. Of this assessment, $2.8 million was prepaid by
property owners.
• Sales and use taxes category increased $874,715 due to increased construction activity.
• Charges for services increased $380,967 due to increased permitting activity and receipts.
• Miscellaneous category change of $203,016 includes $61,000 of seized funds.
Total governmental expenses increased by $2.2 million. Physical environment expenses decreased
by $1 million or 28% primarily due to the completion of the removal of flood response protective
measures. Culture and recreation expenses increased by almost $1.4 million, or 32%, as a result of
implementing GASB Statement No. 61, where the City was required to change the reporting of its
component unit from discreet to blended. Interest expense on long-term debt decreased $113,212.
The next chart summarizes the governmental activity revenue by source, while the second one
reflects the specific programs' revenues and related expenses for the various activities of the City.
Gaps between specific programs' revenues and their related expenses are funded through general
tax revenues.
Utility taxes
8%
Sales/use taxes
23%
Revenues by Source — Governmental Activities
Other taxes
8%
Other revenue Charges for
3% services
9%
Property taxes
20%
Capital grants &
contributions
5%
Operating grants
& contributions
24%
B-21
CITY OF TUKWILA: 2013 CAFR
MANAGEMENT'S DISCUSSION AND ANALYSIS
$30,000,000
$27,000,000
$24,000,000
$21,000,000
$18,000,000
$15,000,000
$12,000,000
$9,000,000
$6,000,000
$3,000,000
$0
Program Revenues and Expenses - Governmental Activities
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❑Program revenues
• Expenses
Business -type net position increased by $3 million during 2013. Key components of this increase
include:
• $1,429,181 or 8% increase in charges for services primarily due to utility rate increase
effective January 2013, and water and sewer hook up fees on new construction.
• $3,863,455 of utility related construction costs were transferred from the Arterial Street fund
as a prior period adjustment.
• Income before capital contributions and transfers amounted to:
o Water fund: $ 812,887
o Sewer fund: 1,912,181
o Foster golf course fund: (303,729)
o Surface water fund: 1,322,665
$ 3,744,003
B-22
CITY OF TUKWILA: 2013 CAFR
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following chart shows the relative net position balances for each business -type fund:
Business -Type Net Position - By Fund
Foster golf course
12%
Surface water
45%
VVater
25%
Sewer
18%
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 spendable portion of net position for each enterprise fund:
Comparison of Total Net Position to Spendable Net Position
Business -Type Funds
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
Sewer
❑Spendable/Unrst Net Position
•Total Net Position
Surface water
Foster golf
course
B-23
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
The following chart depicts the revenues and expenses for business -type funds:
$10,000,000 —
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
Business -type Activity Revenues and Expenses
Before Capital Contributions and Transfers
Water Sewer Surface Water Foster Gdf Course
Financial Analysis of Governmental Funds
❑ Revenues
■ Expenses
The purpose of the City's governmental funds is to report on near -term revenues/financial resources
and expenditures. This information helps determine the City's financial requirements in the near
future. Specifically, fund balance is a good indicator of the City's financial resources.
As of December 31, 2013, the City's governmental funds had combined fund balances of $23.7
million, an increase of $5.3 million or 29%. This increase is related to delayed capital expenditures
and reimbursement of constructions costs via a local improvement district assessment.
The change in prior year fund balances for other major funds are as follows:
• General fund $8,057,430
• Arterial Street fund $198,884
• Land Acq., & Park Development $129,702
• Other governmental funds ($3,048,992)
The increase in the general fund is due to improved current year results and receipt of Local
Improvement District #33 reimbursement funds. The decrease in other governmental funds is due
primarily to the $2.6 million early retirement of the 2003 general obligation bonds originally issued to
fund the construction of the golf course clubhouse.
B-24
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Of the governmental fund balances $1,743,362 is nonspendable. Restricted fund balances
constrained for a specific purpose by external parties or enabling legislation consist of $714,946 for
tourism, $1,185,955 for streets, $397,420 for arterial street improvements, $75,609 for drug seizure,
$437,222 for fire improvements, and $668,849 for debt service. Assigned fund balances intended to
be used for specific purposes consist of $698,115 for arterial streets, $1,219,890 for land acquisition
and park development, $1,902,602 for facility replacement, $451,755 for general government
improvements, $230,000 for residential street improvements, $8,261 dedicated for debt repayment,
and $225,000 for public safety equipment.
The general fund is the primary operating fund of the City. All receipts and payments of ordinary City
operations are processed through it unless they are required to be accounted for in another fund. At
the end of 2013, the general fund had an unassigned fund balance of $15,317,624.
The following chart shows the relative fund balances for governmental funds:
Governmental Funds — Fund Balances
Capital project funds
12%
Land acq, rec & park
improvement funds
5%
Arterial street fund
4%
Debt service funds
3%
Special revenue funds
3 °%
General fund
73%
The $8,057,430 increase in the general fund balance results from revenue of $50,012,664, expenses
of $47,217,490, transfers into the fund of $14,919,606, transfers out of $10,662,843, a bond issue of
$1 million to fund the Metropolitan Park District capital improvements, and sale of capital assets of
$5,493. In comparison with 2012, revenue increased $1,318,235, expenses increased $2,578,762,
transfers into the fund increased $12,588,941 and transfers out of the fund increased $4,384,989.
B-25
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
The general fund revenue increase of $1.3 million came from the following sources:
General Fund Revenue Increases / (Decreases) - By Source
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Taxes
$775,527
Charges for services
$17,938
Licenses and permits
$409,281
Intergovernmental Fines and forfeitures
$10,809 $21,886
Investment earnings
$43,635
Miscellaneous
$39,158
Financial Analysis of Proprietary Funds
The City's proprietary funds provide the same type of information as found in the government -wide
financial statements, but in 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.
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:
• Increase in salary and benefits for Council approved decisions and programs $ 126,000
• Additional funding for staff coverage in the fire department 200,000
• Additional funding for parks department public utility costs 85,000
• Bond proceeds to fund capital improvements to Metropolitan Park District 1,000,000
• Lending of bond proceeds to Metropolitan Park District (1,000,000)
• Delayed capital equipment expenditures and compensation study (112,000)
B-26
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Reasons for the significant variances in the general fund between the final budget and actual results
include:
• Revenue from sales and use tax were over eight percent higher than budget. This increase
is primarily from a rise in construction activity. In addition, there is a combined gain of
almost two percent, or $198 thousand on interfund utility tax from water and sewer.
• Capital equipment purchases planned for 2013 were carried over to the second half of the
biennium.
Capital Asset and Debt Administration
Capital Assets
The City's investment in capital assets for both its governmental and business -type activities as of
December 31, 2013 totaled $288.2 million (net of accumulated depreciation), an increase of $3.5
million, or 1.2%, from 2012. This investment in capital assets includes land, buildings, improvements,
machinery and equipment, construction in progress, utility transmission/distribution systems, roads,
bridges, and other infrastructure.
SUMMARY OF CAPITAL ASSETS (NET OF DEPRECIATION)
Governmental Activities
Beginning
Beginning Balance
Balance Blended Prior Period 12/31/2012
As of 12/31/13 12/31/2012 Component Unit Adjustment Restated
Land $42,191,328 $40,501,509 $ - $ - $ 40,501,509
Intangible Assets, Non -depreciable 770,000 - -
Buildings 14,466,801 12,181,708 1,859,013 - 14,040,721
Other Improvements 7,587,915 7,943,508 - - 7,943,508
Machinery and Equipment 5,456,039 5,597,527 - 5,597,527
Infrastructure 141,611,727 104,089,598 - - 104,089,598
Intangible Assets, Depreciable 482,907 510,592 - - 510,592
Construction in Progress 10,483,961 47,942,200 942,119 (3,863,455) 45,020,864
Total $223,050,679 $218,766,642 $ 2,801,132 $ (3,863,455) $217,704,319
B-27
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Land
Intangible Assets, Non -depreciable
Buildings
Other Improvements
Machinery and Equipment
Infrastructure
Intangible Assets, Depreciable
Construction in Progress
Total
Business -Type Activities
Beginning
Balance
As of 12/31/13 12/31/2012
Prior Period
Adjustment
Beginning
Balance
12/31/2012
Restated
$ 1,929,684 $ 2,214,118 $
308,074
8,947,243 8,099,220
50,294,183 44,569,514
502,211 584,202
- $ 2,214,118
8,099,220
44, 569, 514
584,202
53,858 56,012 - 56,012
3,104, 260 7,595,365 2,427,372 10, 022, 737
$65,139,514 $63,118,430 $ 2,427, 372 $ 65, 545, 804
Total
As of 12/31/13
Beginning
Balance
12/31/2012
Blended Prior Period
Component Unit Adjustment
Beginning
Balance
12/31/2012
Restated
Land $ 44,121,012
Intangible Assets, Non -depreciable 1,078,074 - -
Buildings 23,414,044 20,280,928 1,859,013
Other Improvements 57,882,099 52,513,021
Machinery and Equipment 5,958,250 6,181,729
Infrastructure 141, 611, 727 104, 089, 598
Intangible Assets, Depreciable 536,765 566,604
Construction in Progress 13,588,221 55,537,565 942,119
Total $288,190,193 $281,885,072 $ 2,801,132
$ 42, 715, 627 $ - $
- $ 42, 715, 627
22,139, 941
52, 513, 022
6,181, 729
104, 089, 598
566,604
(1,436,083) 55,043,602
$ (1,436,083) $283,250,123
More detailed information on capital assets is provided in Note 7.
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 for 2013, the beginning balances to the capital asset categories for Construction in
Progress in the amount of $942,119 and Buildings Net of Accumulated Depreciation for Buildings of
$1,859,013 now reflect these totals carried over on behalf of the MPD Pool and is, therefore,
presented in this Management's Discussion and Analysis Section to the Financial Statements as a
blended component unit. Construction work in progress and capital improvement costs of nearly $1.7
million incurred during years 2012 and 2013 were completed for the MPD Pool in the current period.
General capital outlay purchases added $250,482 in machinery and equipment. Among these
include final payment in the amount of $117,224 for the new permitting software, traffic signal
housing units totaling $53,074, and various computer equipment purchases in the amount of
$47,177.
Major construction projects completed in 2013 include the Klickitat/Southcenter Parkway/I-5 Access
Revision and the Southcenter Parkway Extension with total overall previous and current years'
construction -in -progress costs of $22.3 million and $23.1 million, respectively, have been capitalized
into the various asset categories of roadway, bridges, traffic control, and utilities infrastructure.
B-28
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Many of the remaining projects in the Arterial Street fund continue to be in the construction phase
adding $2.0 million in construction -in -progress for the period. The major arterial street fund activities
are comprised of the following:
• Tukwila Urban Center (TUC) Transit Center, $659,662
• Interurban Avenue South, $577,814
• Tukwila Urban Center (TUC)-Pedestrian//Bicycle Bridge, $336,480
• Various other Arterial Street Fund projects total $434,283
Land Acquisition, Recreation & Park Development activities consist of $233,714 for the Duwamish
Gardens and Duwamish Hill Preserve work in progress improvements.
Other governmental funds' activity in the areas of residential streets and facilities improvements
provided an additional $362,123 to work in progress costs for the year.
Business -type activities consisted of nearly $1.5 million in added construction in progress work for
the year. Major projects in the utility funds comprise of the following:
• Surface Water Small Drainage, Storm Lift Station #15, and Others, $1.0 million
• Sewer Utility Projects, $391,766
A total of $940,287 in purchases of pipes, catch basins, and other utility infrastructure were
capitalized during the current period.
Long-term Debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $17,781,009. Of
this amount, $14,706,009 is general obligation bonds, and $3,075,000 is revenue bonds for the
water/sewer and surface water utilities. The reduction in outstanding bonds is due to the principal
payments redeemed for the year. The City currently maintains a rating of Al with Moody's and AA -
with Fitch's Investor Service for its general obligation debt. The City also has $6.7 million in special
assessment debt.
The following schedule summarizes the City's bonded debt:
Governmental Activities
Business -type Activities Total
As of 12/31/13 As of 12/31/12 As of 12/31/13 As of 12/31/12 As of 12/31/13 As of 12/31/12
General obligation bonds $ 14,706,009 $ 18,360,000 $ - $ - $ 14,706,009 $ 18,360,000
Revenue bonds - 3,075,000 3,540,000 3,075,000 3,540,000
Other
$ 14,706,009 $ 18,360,000 $ 3,075,000 $ 3,540,000 $ 17,781,009 $ 21,900,000
Special assessment bonds $ 6,687,500 $
$ $ 6,687,500 $
Below is a summary of additional long-term debt of the City:
Governmental Activities
Business -type Activities Total
Other Long-term Debt As of 12/31/13 As of 12/31/12 As of 12/31/13 As of 12/31/12 As of 12/31/13 As of 12/31/12
Public Works Trust Fund loans $ - $ - $ 6,063,071 $ 6,621,364 $ 6,063,071 $ 6,621,364
Employee leave benefits 3,337,967 3,168,775 319,303 308,530 3,657,270 3,477,305
Due to other governments 7,021,600 7,392,600 7,021,600 7,392,600
$ 10,359,567 $ 10,561,375 $ 6,382,374 $ 6,929,894 $ 16,741,941 $ 17,491,269
More detailed information on long-term debt is provided in Note 11.
B-29
CITY OF TUKWILA: 2013 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS
Economic Factors
The outlook for 2014 is positive. The economy is showing steady signs of recovery. The City of
Tukwila has a small residential population, yet the City works hard to serve the regional economy
and has become an economic powerhouse providing jobs and revenue for the region and State.
Several major pending developments will have significant impacts on the future of Tukwila's
economy:
• Tukwila Village - The Board of Architecture Review approved the design of the library on
November 14, 2013 and of the first development phase (and includes the plaza and
commons) on November 26, 2013. The building permit applications have been submitted
and construction is starting in summer 2014. The library and first phase are scheduled to
open in 2015, the second phase in late 2015/16, and the third and final phase in 2016.
• Tukwila Urban Center Transit Center — The current facilities are inadequate in size and
location to serve Metro operations and transit riders. The design work for the project was
completed in 2013. Construction began in 2014 and is expected to be functional in June to
coincide with the new F-Line Rapid Ride.
• Major Tenant Improvements/Additions — Tenant improvements and additions were
completed for Tahoma Clinic, Vulcan, Boeing, Providence Infusion and Pharmacy, as well as
other improvements. This added $203,895 in revenue receipts, and added $17.5 million in
property values.
• Urban Renewal - Safety along Tukwila International Boulevard is a major concern for the
City. Reducing crime is the City's highest priority for 2013 and 2014 with an emphasis on
Tukwila International Boulevard. Certain areas along Tukwila International Boulevard have
long been identified as "hot spots", where a large amount of serious crime occurs. In early
2013 the City's police department evaluated crime for all commercial properties in the
Tukwila community renewal area and recommended the City purchase certain properties in
order to reduce crime. The City is currently in negotiations with property owners to purchase
the Spruce Motel and the Smoke Shop. The City is also currently working through the U.S.
Attorney's Office and the lenders (banks) to purchase the Great Bear, Boulevard, and
Traveler's Choice motels.
Requests for Information
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.
B-30
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
STATEMENT OF NET POSITION
DECEMBER 31, 2013
PRIMARY GOVERNMENT
GOVERNMENTAL BUSINESS -TYPE
ACTIVITIES ACTIVITIES TOTAL
ASSETS:
CASH AND CASH EQUIVALENTS $ 27,944,806 $ 9,633,326 $ 37,578,131
INVESTMENTS 5,085,228 2,078,276 7,163,504
RECEIVABLES:
TAXES 4,997,723 854 4,998,577
CUSTOMER ACCOUNTS 876,455 1,291,785 2,168,241
INTEREST ON INVESTMENTS 47,848 42,224 90,072
DUE FROM OTHER GOVERNMENTAL UNITS 947,561 47,387 994,948
INVENTORY OF MATERIALS AND SUPPLIES 208,180 597,547 805,727
NOTES RECEIVABLE 6,242,835 403,041 6,645,875
RESTRICTED CASH AND CASH EQUIVALENTS 397,420 508,340 905,760
NET PENSION ASSET 380,893 - 380,893
INVESTMENT IN JOINT VENTURES 10,427,892 - 10,427,892
NON -DEPRECIABLE CAPITAL ASSETS 53,445,289 5,342,019 58,787,307
DEPRECIABLE CAPITAL ASSETS (NET OF ACCUMULATED
DEPRECIATION 169,605,390 59,797,496 229,402,886
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
DEFRRED CHARGE ON REFUNDING
TOTAL DEFERRED OUTFLOWS OF RESOURCES
280,607,519 79,742,293 360,349,812
524,100 - 524,100
524,100 - 524,100
LIABILITIES:
ACCOUNTS PAYABLE 1,685,549 630,714 2,316,263
ACCRUED WAGES AND BENEFITS PAYABLE 1,431,578 120,298 1,551,876
ACCRUED INTEREST PAYABLE 56,750 43,921 100,671
REVENUES COLLECTED IN ADVANCE 204,767 20,549 225,316
OTHER LIABILITIES 2,117,010 73,013 2,190,023
BONDS AND OTHER DEBT PAYABLE
DUE WITHIN ONE YEAR 2,288,988 1,058,391 3,347,379
DUE IN MORE THAN ONE YEAR 30,148,368 8,444,831 38,593,199
NET OTHER POST EMPLOYMENT OBLIGATION 4,561,781 - 4,561,781
TOTAL LIABILITIES 42,494,791 10,391,717 52,886,508
DEFERRED INFLOWS OF RESOURCES:
NON -EXCHANGE REVENUE RECEIVED IN ADVANCE 515,333 515,333
TOTAL DEFERRED INFLOWS OF RESOURCES 515,333 - 515,333
NET POSITION:
NET INVESTMENT IN CAPITAL ASSETS 207,660,389 55,955,595 263,615,984
RESTRICTED FOR DEBT SERVICE 430,444 430,444
RESTRICTED BY ENABLING LEGISLATION:
TOURISM PROMOTION 714,946 714,946
RESIDENTIAL STREET IMPROVEMENTS 1,185,955 1,185,955
ARTERIAL STREET IMPROVEMENTS 397,420 397,420
DRUG INVESTIGATION AND ENFORCEMENT 75,609 75,609
DEBT SERVICE GUARANTY FUND 668,849 668,849
FIRE IMPROVEMENTS 437,222 - 437,222
UNRESTRICTED NET POSITION 26,981,105 12,964,539 39,945,644
TOTAL NET POSITION $ 238,121,496 $ 69,350,577 $ 307,472,073
The notes to the financial statements are an integral part of this statement.
B-31
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2013
PRIMARY GOVERNMENT
COMPO-
NENT
UNIT
EXPENSES
PROGRAM REVENUES --NET (EXPB4SE) REVENUE AND CHANGES IN NET POSUlON--
CHARGES OPERATING CAPITAL Grants GOVERNMENTAL BUSINESS- TOTAL TOTAL
For Services Grants and and Activities TYPE
Contributions Contributions Activities
FUNCTIONS / PROGRAM S:
PRIMARY GOV BRNM BAT
GOVERNMENTAL ACTMmES:
GENERALGOVERNMENT $ 10,195,049 $ 1,495,438 $ 2,145,397 $ $ (6,554,214) $ (6,554,214) $
PUBLIC SAFETY 25,938,946 871,919 715,581 36,000 (24,315,446) (24,315,446)
TRANSPORTATION 7,658,280 287,956 37,875 16,581,425 9,248,975 9,248,975
PHYSICAL ENVIRONMENT 2,610,591 27,407 246,545 - (2,336,639) (2,336,639)
CULTURE AND RECREATION 5,635,347 744,014 70,881 330,104 (4,490,349) (4,490,349)
ECONOMIC ENVIRONMENT 5,209,954 2,786,178 73,540 - (2,350,236) (2,350,236)
INTEREST ON LONG-TERM DEBT 1,038,851 (1,038,851) (1,038,851)
Total Governmental Activities 58,287,017 6,212,911 3,289,818 16,947,529
(31,836,759) - (31,836,759)
BUSINESS -TYPE ACTIVITIES:
WATER 4,949,381 5,762,267 83,776 896,663 896,663
SEWER 5,471,683 7,383,864 - 248,946 - 2,161,126 2,161,126
SURFACE WATER 2,563,132 3,913,184 6,221 1,356,273 1,356,273
FOSTER GOLF COURSE 1,707,993 1,404,264 - - - (303,729) (303,729)
Total Business -Type Activities
14,692,189 18,463,578 - 338,943 - 4,110,332 4,110,332
TOTAL PRIMARY GOVERNMENT
$ 72,979,205 $ 24,676,490 $ 3,289,818 $ 17,286,471 $ (31,836,759) $ 4,110,332 $ (27,726,426) $
GENERAL REVENUES:
TAXES
PROFERTY TAXES $ 14,510,241 $ - $ 14,510,241 $
RETAIL SALES AND USE TAXES 16,316,398 16,316,398
NATURAL GAS USE TAX 204,457 204,457
HOTEL/MOTEL TAXES 526,832 - 526,832
UTILITY TAXES 3,879,992 3,879,992
INTERFUND UTILITY TAXES 1,686,859 1,686,859
BUSINESS TAXES 2,570,111 - 2,570,111
IXGSE TAXES 2,745,475 2,745,475
STATEENTTTLETNENTS 1,861,511 - 1,861,511
UNRESTRICTED INVESTMENT EARNINGS 102,486 102,486
MISCELLANEOUS 304,704 304,704
TRANSFERS 1,060,650 (1,060,650) 0
TOTAL GENERAL REVENUES
45,769,716 (1,060,650) 44,709,066
CHANGE IN NET POSITION
13,932,957 3,049,682 16,982,640
NET POSITION- BEGINNING 226,150,953 64,353,504 290,504,457 1,737,441
RESTATEMENT FOR BLENDED COMPONENT UNIT 1,737,441 1,737,441 (1,737,441)
NET POSITION- BEGINNING RESTATED 227,888,394 64,353,504 292,241,898 -
CHANGE INACCOUNTING PRINCIPLE (249,721) (66,661) (316,382)
PRIOR PERIOD ADJUSTMENT (3,450,134) 2,014,051 (1,436,083)
NET POSITION - BEGINNING RESTATED
224,188,538 66,300,894 290,489,433
NET POSITION - ENDING $ 238,121,496 $ 69,350,577 $ 307,472,073 $
The notes to the financial statements are an integral part of this statement.
B-32
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2013
LANDACQ. LOCAL METROPOLITAN OTHER TOTAL
GENERAL ARTERIAL REC &PARK IMPROVEMENT PARK GOVERNMENTAL GOVERNMENTAL
FUND STREET DEVELOPMENT DISTRICT#33 DISTRICT FUNDS FUNDS
ASSETS:
CASH AND CASH EQUIVALENTS $ 13,550,093 $ 769,736 $ 1,159,366 $ 17,681 $ 407,664 $ 5,610,806 $ 21,515,345
RECEIVABLES:
TAXES 4,843,959 43,254 147 110,363 4,997,723
CUSTOMER ACCOUNTS 279,798 306 151,642 431,746
CURRENT ASSESSMENT 444,710 444,710
INTEREST 3,050 - - 3,050
INTERFUND LOAN RECEIVABLE 199,340 199,340
DUE FROM OTHER GOVERNMENTAL UNITS 200,254 601,101 112,204 3,059 30,943 947,561
RESTRICTED ASSETS:
CASH AND CASH EQUIVALENTS - 397,420 - - 397,420
SPECIAL ASSESSMENT RECEIVABLE - 6,242,835 - - 6,242,835
ADVANCES TO OTHER FUNDS 1,743,362 1,743,362
TOTAL ASSETS $ 20,819,855 $1,811,511 $ 1,271,717 $ 6,705,225 $ 411,028 $ 5,903,755 $ 36,923,091
LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES:
LIABILITIIES:
ACCOUNTS PAYABLE 763,141 698,709 50,983 - 18,019 109,148 1,640,000
ACCRUED WAGES & BENEFITS 1,362,613 17,267 345 13,078 19,407 1,412,710
OTHER CURRENT IABILITIES 123,038 500 3,176 100,000 226,714
REVENUE COLLECTED IN ADVANCE 186,857 17,681 229 204,767
INTERFUND LOAN PAYABLE 199,340 199,340
ADVANCES FROM OTHER FUNDS 1,743,362 1,743,362
TOTAL LIABILRIES 2,435,649 715,976 51,828 17,681 1,977,203 228,555 5,426,892
DEFERRED INFLOW OF RESOURCES:
UNAVAILABLE REVENUE -SPECIAL ASSESSMENT 6,687,544 - 6,687,544
NON -EXCHANGE REVENUE RECEIVED IN ADVANCE 515,333 - 515,333
UNAVAILABLE REVENUE -OTHER 582,886 - - 582,886
TOTAL DEFERRED INFLOW OF RESOURCES 1,098,220 6,687,544 7,785,784
FUND BALANCES:
NONSPENDABLE 1,743,362 1,743,362
RESTRICTED FOR
HOTEL MOTEL TAX 714,946 714,946
RESIDBJTIALSTREET IMPROVEMENTS - - - - 1,185,955 1,185,955
ARTERIAL STREET CAPTALIMPROVEMENTS - 397,420 - 397,420
DRUG INVESTIGATION AND ENFORCEMENT - - 75,609 75,609
FIRE IMPROVEMENTS 437,222 437,222
DEBT SERVICE GUARANTY FUND - 668,849 668,849
ASSIGNED FOR
ARTERIAL STREET 698,115 - 698,115
LAND ACQ. REC & PARK DEVELOPMENT 1,219,890 - 1,219,890
FACILITY REPLACEMENT - - - 1,902,602 1,902,602
GENERAL GOVERNMENT IMPROVEMENTS 451,755 451,755
RESIDENTIAL STREET IMPROVEMENTS 230,000 230,000
PUBLIC SAFETY EQUIPMENT 225,000 - - - - 225,000
DEBT SERVICE - - - - 8,261 8,261
UNASSIGNED 15,317,624 - (1,566,175) 13,751,448
TOTAL FUND BALANCES 17,285,986 1,095,535 1,219,890 - (1,566,175) 5,675,199 23,710,435
TOTAL LIABILITIES, DEFERRED INFLOWS AND
FUND BALANCES $ 20,819,855 $ 1,811,511 $ 1,271,717 $ 6,705,225 $ 411,028 $ 5,903,755 $ 36,923,091
The notes to the financial statements are an integral part of this statement.
B-33
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2013
TOTAL
GOVERNMENTAL
FUNDS
Total governmental fund balances as reported on this statement $ 23,710,435
Amounts reported for governmental activities in the statement of net position are different because:
The purchases method is used in Governmental Funds to account for Materials and Supplies - Inventory
amount outstanding. 194,845
Capital assets used in governmental activities are not financial resources and therefore not reported in the funds.
Governmental funds assets 218,617,727
Internal service fund assets 4,432,951 223,050,679
The net pension asset resulting from contributions in excess of the annual required contribution are not
financial resources and therefore is not reported in the funds. 380,893
The City has an equity interest in two joint ventures. This equity interest for the provision of governmental services
is not a current financial resource and therefore is not reported in the funds. 10,427,892
Unavailable revenue reported for propertytaxes that are current and prior year tax levies that were not collected
and available to paycurrent year liabilities
Unavailable revenue reported for special assessment
582,886
6,687,544 7,270,431
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 (2,288,988)
Long Term Liabilities Due in More Than One Year (23,126,768)
Due to Other Governmental Units (7,021,600)
Unfunded Other Post Employment Benefits (4,561,781)
Accrued Interest Payable (53,700)
Deferred charge on refunding 524,100 (36,528,737)
Internal service funds 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. 9,615,058
Net position of government activities as reported on the statement of net position $ 238,121,496
The notes to the financial statements are an integral part of this statement.
B-34
CITY OF TUKWILA: 2013 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, 2013
LAND ACQ. LOCAL AETROPOLRAN OTHER TOTAL
GENERAL ARTERIAL REC&PARK IMPROVEMENT PARK GOVERNMENTAL GOVERNMENTAL
FUND STREET DEVELOPMENT DISTRICT#33 DISTRICT FUNDS FUNDS
REVENUES:
TAXES $ 40,615,890 $ 349,560 $ 228,501 $
LICENSES AND FERMIS 2,013,875
INTERGOVERNMENTAL 4,719,583 1,545,665 271,562
CHARGES FOR SERVICES 2,202,307 270,446 25,661
FINES AND FORFEITURES 242,638
INVESTMENT EARNINGS 108,053 5,650 1,904
SPECIAL ASSESSMENTS
MISCELLANEOUS 110,317 231,086
TOTAL REVENUES 50,012,664 2,402,407 527,627
$ 681,288 $ 526,832 $ 42,402,070
2,013,875
3,059 650,456 7,190,325
226,709 1,022,524 3,747,646
242,638
36,303 151,911
2,788,350 2,788,350
3,044 82,922 427,368
2,788,350
914,100 2,319,036 58,964,183
EXPENDITURES:
CURRENT
GENERAL GOVERNMENT 9,266,330 - - - - 37,411 9,303,742
PUBLIC SAFETY 25,650,155 - - 70,729 25,720,884
PHYSICAL ENVIRONMENT 1,766,087 - - 169,808 1,935,895
TRANSPORTATION 2,759,506 351,987 - 3,111,493
ECONOMIC ENVIRONMENT 3,893,111 1,331,852 5,224,964
CULTURE AND RECREATION 3,631,819 91,753 662,820 4,386,392
DEBT SERVICE
PRINCIPAL - - - - 5,024,991 5,024,991
INTEREST - 39,016 1,123,633 1,162,649
CAPITAL OUTLAY 250,482 3,808,636 306,173 - 739,109 750,561 5,854,962
TOTAL EXPENDITURES 47,217,490 4,160,623 397,926 1,440,946 8,508,985 61,725,970
EXCESS (DEFICIENCY) OF REVENUES
OVER(UNDER) EXPENDITURES 2,795,173 (1,758,216) 129,702 2,788,350 (526,846) (6,189,949) (2,761,786)
OTHER FINANCING SOURCES (USES):
TRANSFERS IN 14,919,606
TRANSFER IN - ASSESSMENT
TRANSFERS OUT (10,662,843)
GO BONDS ISSUED 1,000,000
ASSESSMENT BONDS ISSUED
PROCEEDS FROM SALES OF CAPITAL ASSETS 5,493
1,650,000 1,100,048 3,249,329 20,918,983
2,788,350 2,788,350
(8,500,000) (2,788,350) (1,100,048) (250,276) (23,301,516)
1,000,000
6,018,750 668,750 6,687,500
5,493
TOTAL OTHER FINANCING SOURCES AND
USES 5,262,256 1,957,100 (2,788,350) 3,667,803 8,098,809
NET CHANGE IN FUND BALANCES 8,057,430 198,884 129,702 - (526,846) (2,522,146) 5,337,023
FUND BALANCES -BEGINNING 8,378,557 483,331 1,090,188 - (189,329) 8,197,345 17,960,092
CHANGE IN ACCOUNTING PRINCIPLE 850,000 (850,000)
PRIOR PERIOD ADJUSTMENT 413,321 - 413,321
FUND BALANCES- BEGINNING AS RESTATED 8,378,557 896,651 1,090,188 (189,329) 8,197,345 18,373,412
FUNDBALANCES- ENDING $ 17,285,986 $ 1,095,535 $ 1,219,890 $ - $ (1,566,175) $ 5,675,199 $ 23,710,435
The notes to the financial statements are an integral part of this statement.
B-35
CITY OF TUKWILA: 2013 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, 2013
Net change in fund balances per the Statement of Revenues, Expenditures, and Changes in Fund Balances
Amounts 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
ofactivities 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
Depreciation Expense
$ 5,337,023
5,854,962
(6,538,166) (683,204)
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and
donations) is to decrease net position.
Contributed capital assets 5,432,639
Net book value of disposed assets (532,340)
Net book value of equipment contributed to internal service fund (1,257,928) 3,642,371
The net pension asset (negative net pension obligation) amortization amount is not a financial
resource and therefore not reported in the funds.
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 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
Issuance premium amortization
Bond proceeds provide current financial resources to governmental funds, but issuing debt
increases long-term liabilities in the Statement of Net Position.
Special Assessment Bonds
General Obligation Bonds-MPD
44,541
332,431
5,024,991
143,552 5,168,543
(6,687,500)
(1,000,000) (7,687,500)
Internal service funds are used by management to charge the cost of certain activities to individual funds.
The net revenue (expense) of certain internal service funds is reported with governmental activities.
Capital contribution of equipment from governmental fund 1,257,928
Other net revenue 106,010 1,363,938
Because some revenues will not be collected for several months after the Citys fiscal year ends,
they are not considered "available" revenues in the government funds. Unavailable revenues
increased bythis amount this year.
Miscellaneous receivables 250,647
Property taxes 38,295
Special Assessment 6,687,544 6,976,486
Some expenses 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:
Decrease in Accrued Interest
Amortization of deferred charge on bond refunding
Increase in Compensated Absences
Increase in Unfunded Other Post Employment Benefits
Other -Park District
Decrease in inventory
Total Additional Expense (Increase) Decrease
15,485
(74,256)
(169,192)
(128,455)
(10,408)
(194,846)
(561,672)
Change in net position on the Statement of Activities $ 13,932,957
The notes to the financial statements are an integral part of this statement.
B-36
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2013
GOVERNMENTAL
FOSTER SURFACE TOTAL ACTIVITIES
WATER SEWER GOLF WA 1 ER ENTERPRISE INTERNAL
UTILITY UTILITY COURSE UTILITY FUNDS SERVICE FUNDS
CURRENT ASSETS:
CASH AND CASHEQUIVALENTS $ 3,951,346 $ 2,628,239 $ 478,346 $ 2,575,395 $ 9,633,326 $ 6,429,460
INVESTMENTS 2,078,276 - 2,078,276 5,085,228
RECEIVABLES:
CUSTOMER ACCOUNTS 427,404 647,787 5,127 212,321 1,292,639
INTEREST ON INVESTMENTS 1,742 40,483 42,224 44,798
DUE FROM OTHER GOVERNMENTAL UNITS - 47,387 47,387 -
INVENTORY OF MATERIALS AND SUPPLIES 250,180 51,826 247,162 48,379 597,547 13,335
CURRENT ASSETS RESTRICTED:
CASH AND CASH EQUIVALENTS 19,115 58,780 77,895
TOTAL CURRENT ASSETS 6,726,321 3,329,594 789,415 2,923,964 13,769,294 11,572,822
NONCURRENT ASSETS:
RESTRICTED CASH, CASH EQUIVALENTS 266,713 126,834 36,897 430,444
NOTES RECEIVABLE 403,041 403,041 -
CAPITAL ASSETS:
LAND AND INTANGIBLE ASSETS 87,347 69,525 1,609,575 471,311 2,237,758
BUILDINGS AND EQUIPMENT 1,416,567 3,333,973 6,627,496 1,165,129 12,543,165
OTHER IMPROVEMENTS 19,868,170 14,586,442 3,559,992 41,132,401 79,147,004
MACHINERY AND EQUIPMENT 820,244 1,242,767 163,358 34,979 2,261,349 12,264,907
CONSTRUCTION IN PROGRESS 226,623 491,922 2,385,715 3,104,260 1,304,333
LESS: ACCUMULATED DEPRECIATION (9,506,992) (7,095,104) (4,492,836) (13,059,090) (34,154,022) (9,136,288)
TOTAL CAPITAL ASSETS (NET OF 12,911,959 12,629,525 7,467,585 32,130,445 65,139,514 4,432,951
ACCUMULATED DcrrCCIATION)
TOTAL NONCURRENT ASSETS 13,178,672 13,159,400 7,467,585 32,167,342 65,972,999 4,432,951
TOTAL ASSETS 19,904,993 16,488,994 8,257,000 35,091,306 79,742,293 16,005,773
LIABILITIES:
CURRENT LABILrrIES:
ACCOUNTS PAYABLE 9,806 50,989 6,158
RETAINAGE PAYABLE 7,616
ACCRUED WAGES AND BENEFITS 27,213 21,125 33,649
DUE TO OTHER GOVERNMENTAL UNITS 95,080 192,261
OTHER CURRENT LIABILITIES 4,620 478
REVENUE RECEIVED IN ADVANCE 3,530 129
REVENUE BOND PRINCIPAL 391,400 86,800
DEPOSITS 44,011 10,627 53,898
536,315
19,830
38,311
270,953
16,890
16,800
8,398
603,268
27,446
120,298
558,293
5,098
20,549
495,000
116,934
55,395
18,868
1,883,500
TOTAL CURRENT LIABILITIES 571,040 374,038 94,312
NONCURRENT LIABILITIES:
REVENUE BONDS PAYABLE
(NET OF UNAMORTIZED PREMIUMS)
COMPENSATED ABSENCES
OTHER LONG-TERM LIABILITIES
TOTAL NONCURRENT LIABILITIES
907,496 1,946,886 1,957,763
966,006 1,390,679
99,616 38,363
907,435 1,922,608
269,164 2,625,848
85,112 91,114
2,674,735
314,205
5,504,778
1,973,056
3,351,649 85,112
3,035,013 8,444,830
TOTAL LIABILITIES 2,544,097 3,725,688 179,424 3,942,509 10,391,717 1,957,763
NET POSITION:
NET INVESTMENT IN CAPITAL ASSETS 10,552,038 9,037,178 7,467,588 28,898,793 55,955,595 4,432,952
RESTRIC 1 EU FOR:
DEBT SERVICE 266,713 126,834 36,897 430,444
UNRESTRICItl) 6,542,145 3,599,294 609,988 2,213,107 12,964,539 9,615,058
TOTAL NET POSITION $ 17,360,896 $ 12,763,306 $ 8,077,576 $ 31,148,798 $ 69,350,577 $ 14,048,010
The notes to the financial statements are an integral part of this statement.
B-37
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2013
GOVERNMENTAL
FOSTER SURFACE TOTAL ACTIVITIES
WATER SEWER GOLF WATER ENTERPRISE INTERNAL
UTILITY UTILITY COURSE UTILITY FUNDS SERVICE FUNDS
OPERATING REVENUES:
CHARGES FORSERVICES $ 5,747,733 $ 7,366,555 $ 1,399,015 $ 3,865,438 $ 18,378,740 $ 6,968,697
OTHER OPERATING REVENUE - - - 77,142
TOTAL OPERATING REVENUES 5,747,733 7,366,555 1,399,015 3,865,438 18,378,740 7,045,839
OPERATING IDCPENSES:
OPERATIONS & MAINTENANCE 3,408,640 4,037,448 1,342,253 1,027,907 9,816,247 6,755,040
ADMINISTRATNEAND GENERAL 136,484 149,903 - 305,181 591,568
TAXES 816,564 841,585 63,609 440,356 2,162,114
DD16CCLTION AND AMORTIZATION 511,630 365,998 302,131 761,614 1,941,373 886,201
TOTAL OPERATING EXPENSES 4,873,318 5,394,934 1,707,993 2,535,057 14,511,302 7,641,241
OPERATING INCOME(LOSS) 874,415 1,971,621 (308,978) 1,330,380 3,867,438 (595,402)
NON -OPERATING REVENUE (EXPENSE):
INVESTMENT EARNINGS 13,898 3,265 5,249 4,728 27,139 (19,365)
INTEREST EXPENSE (84,045) (78,201) - (28,428) (190,673) -
GAIW(LOSS) FR DISPOSAL OF CAPITAL ASSETS (1,446) (3,184) (937) (5,567) 65,943
AMORTIZATION OF BOND PREMIUM 8,972 1,825 353 11,150
AMORTIZATION OF BOND DISCOUNT (989) (374) - (1,363)
OTHER NON -OPERATING REVENUE 2,082 17,228 16,569 35,879
TOTAL NON -OPERATING REVENUE (EXPENSE) (61,528) (59,440) 5,249 (7,715) (123,435) 46,578
INCOME (LOSS) BEFORE CONTRIBUTIONS & TRANSFERS 812,887 1,912,181 (303,729) 1,322,665 3,744,003 (548,824)
CAPITAL CONTRIBUTIONS 83,776 248,946 - 33,608 366,330 1,257,928
TRANSFERS IN 103,680 400,000 - 503,680 1,030,000
TRANSFERS OUT (511,447) (385,141) (192,801) (474,941) (1,564,330) (375,166)
CHANGE IN NET POSITION 488,896 1,775,986 (96,530) 881,332 3,049,684 1,363,938
TOTAL NET POSITION BEGINNING OF YEAR 18,333,285 11,022,056 8,174,106 26,824,055 64,353,503 12,684,072
CHANGE IN ACCOUNTING FRINCIPLE (25,201) (34,737) - (6,723) (66,661)
PRIOR PERIOD ADJUSTMENT (1,436,082) - 3,450,134 2,014,052
TOTAL NET POSITION BEGINNING OF YEAR 16,872,001 10,987,319 8,174,106 30,267,466 66,300,892 12,684,072
AS RESTATED
TOTAL NET POSITION END OF YEAR $ 17,360,896 $ 12,763,306 $ 8,077,576 $ 31,148,798 $ 69,350,577 $ 14,048,010
The notes to the financial statements are an integral part of this statement.
B-38
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
Page 1 of 2
GOVERNMENT
FOSTER SURFACE TOTAL ACTIVITIES
WATER SEWER GOLF WATER ENTERPRISE INTERNAL
UTILITY UTILITY COURSE UTILITY FUNDS SERVICE FUNDS
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $ 5,586,065 $ 7,356,950 $ 1,396,925 $ 3,832,638 $ 18,172,579 $ 7,046,234
CASH RECEIVED SERVICE REIMBURSEMENT 1,388,498 1,388,498
CASH PAID TO SUPPLIERS (2,734,359) (4,013,428) (326,951) (4,810) (7,079,548) (6,200,369)
CASH PAID FOR TAXES (816,564) (841,585) (146,689) (388,189) (2,193,026)
CASH PAID TO EMPLOYEES (826,932) (427,152) (913,858) (961,258) (3,129,200) (526,806)
OTHER CASH RECEIVED (PAID) 4,470 4,470 31,000
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 2,596,708 2,074,786 13,897 2,478,381 7,163,773 350,060
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
TRANSFERS IN 103,680 400,000 503,680 1,030,000
TRANSFERS OUT (511,447) (385,141) (192,801) (474,941) (1,564,330) (375,166)
NET CASH PROVIDED (USED) BY NON -
CAPITAL FINANCING ACTIVITIES (407,767) (385,141) 207,199 (474,941) (1,060,650) 654,834
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
PROCEEDS FROM SALE OF EQUIPMENT 94,490
PURCHASE OF CAPITAL ASSETS (55,071) (433,174) (1,046,185) (1,534,429) (2,044,013)
CONTRIBUTED CAPITAL 83,776 248,946 332,722
CAPITAL GRANTS - 27,605 27,605
PRINCIPAL PAYMENT ON DEBT (460,180) (275,961) (287,153) (1,023,293)
INTEREST PAYMENT ON DEBT (93,509) (79,334) (29,159) (202,003)
NET CASH PROVIDED (USED) FOR CAPITAL
AND RELATED FINANCING ACTIVITIES (524,984) (539,523) (1,334,891) (2,399,398) (1,949,523)
CASH FLOW FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF INVESTMENTS 3,450,000 3,450,000 401,949
PURCHASE OF INVESTMENTS (2,078,276) (2,078,276) (228,540)
INTEREST RECEIVED 15,980 20,493 5,249 12,178 53,900 2,168
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 1,387,704 20,493 5,249 12,178 1,425,624 175,577
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,051,661 1,170,615 226,345 680,726 5,129,347 (769,052)
PRIOR PERIOD -CASH USED TO ACCQUIRE ASSETS - - - (413,321) (413,321)
RESTATED CASH EQUIVALENTS 3,051,661 1,170,615 226,345 267,405 4,716,026 (769,052)
CASH AND CASH EQUIVALENTS -BEGINNING OF YEAR 1,185,512 1,584,458 310,781 2,344,887 5,425,638 7,198,512
CASH AND CASH EQUIVALENTS -END OF YEAR $ 4,237,174 $ 2,755,073 $ 537,126 $ 2,612,292 $ 10,141,665 $ 6,429,460
CASH AT END OF YEAR CONSISTS OF:
CASH AND CASH EQUIVALENTS $ 3,951,346 $ 2,628,239 $ 478,346 $ 2,575,395 $ 9,633,326 $ 6,429,460
RESTRICTED CASH -BOND PAYMENTS 266,713 126,834 - 36,897 430,444
RESTRICTED CASH -CUSTOMER DEPOSITS 19,115 - 58,780 - 77,895
TOTAL CASH $ 4,237,174 $ 2,755,073 $ 537,126 $ 2,612,292 $ 10,141,665 $ 6,429,460
The notes to the financial statements are an integral part of this statement
B-39
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
Page 2 of 2
GOVERNMENT
FOSTER SURFACE TOTAL ACTIVITIES
WATER SEWER GOLF WATER ENTERPRISE INTERNAL
UTILITY UTILITY COURSE UTILITY FUNDS SERVICE FUNDS
RECONCILIATION OF NET OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
OPERATING INCOME (LOSS)
jai 874,415 $ 1971,621 $ (308,978) $ 1,330,380 $ 3,867,438 $ (595,402)
ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES:
DEPRECIATION 511,630 365,998 302,131 761,614 1,941,373 886,201
ASSET (INCREASES) DECREASES:
ACCOUNTS RECEIVABLE (46,434) (13,779) 1,708 (37,057) (95,561)
MISCELLANEOUS ANR-REVENUE 1,261,696 4,175 (854) 1,265,017 395
INVENTORY (9,672) 369 8,817 953 467 (1,016)
LIABILITY INCREASES (DECREASES) :
ACCOUNTS & VOUCHERS PAYABLE (12,658) (254,924) 4,474 411,650 148,542 58,906
OTHER LIABILITIES PAYABLE (1,512) - (1,512)
DEPOSITS PAYABLE 13,080 1,526 14,606
WAGES & BENEFITS PAYABLE 313 5,946 3,994 819 11,073 976
COMPENSATED ABSENCES PAYABLE 5,849 (4,620) 1,079 10,022 12,330
TOTAL ADJUSTMENTS 1,722,293 103,165 322,876 1,148,001 3,296,335 945,461
NET CASH PROVIDED (USED) BY OPERATING ACTMTIES $ 2,596,708 $ 2,074,786 $ 13,897 $ 2,478,381 $ 7,163,773 $ 350,060
SCHEDULE OF NONCASH INVESTING, CAPITAL AND
RNANCINGACTIVITIES
CAPITAL ASSETS ACQUIRED BY CONTRIBUTED CAPITAL $ - $ - $ - $ 6,221 $ 6,221 $ 1,257,928
INCREASE (DECREASE) IN FAIR VALUE OF INVESTMENT 231,092
TOTAL NON CASH INVESTING, CAPITAL AND
FINANCING ACTIVITIES $ $ S - $ 6,221 $ 6,221 $ 1,489,020
The notes to the financial statements are an integral part of this statement.
B-40
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
COMBINING STATEMENT OF FIDUCIARY NET POSITON
FIDUCIARY FUND
DECEMBER 31, 2013
FIREMEN'S
PENSION AGENCY
TRUST FUND FUND
ASSETS:
CASH AND CASH EQUIVALENTS $ 1,408,970 $ 177,206
RECEIVABLES:
CUSTOMER ACCOUNTS - $ 2,934
TOTAL ASSETS 1,408,970 180,140
LIABILITIES:
CURRENT PAYABLES
TOTAL LIABILITIES
NET POSITION:
- 180,140
180,140
HELD IN TRUST FOR PENSION BENEFITS AND OTHER PURPOSES $ 1,408,970 $
The notes to the financial statements are an integral part of this statement.
B-41
CITY OF TUKWILA: 2013 CAFR BASIC FINANCIAL STATEMENTS
CITY OF TUKWILA, WASHINGTON
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUND
FOR THE YEAR ENDED DECEMBER 31, 2013
FIREMEN'S
PENSION
TRUST FUND
ADDITIONS:
OTHER CONTRIBUTIONS:
FIRE INSURANCE PREMIUM TAXES $ 56,962
INVESTMENT EARNINGS 2,421
DEDUCTIONS:
BENEFIT PAYMENTS
ADMINISTRATIVE EXPENSES
TOTAL ADDITIONS 59,383
58,277
7,775
TOTAL DEDUCTIONS 66,052
CHANGE IN NET POSITION (6,669)
NET POSITION - BEGINNING
NET POSITION - ENDING
The notes to the financial statements are an integral part of this statement.
1,415,638
$ 1,408,970
B-42
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended December 31, 2013
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Tukwila was incorporated on June 29, 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 council members, 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 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
As required by generally accepted accounting principles the financial statements present the City and
its component unit, an entity for which the government is considered to be financially accountable. The
component unit discussed below is included in the reporting entity because of the significance of its
operational or financial relationship with the City.
See Note 8, Joint Ventures, for a discussion of Valley Communications Center, which is a joint public
safety dispatching authority for five member cities, and South Correctional Entity (SCORE), which is a
governmental administrative agency. Also, see Note 14, Risk Management, for a discussion of the
Washington Cities Insurance Authority.
The City of Tukwila is a party to the following interlocal agreements;
• Cascade Water Alliance
• Jail Administration Group
• Valley Narcotics Enforcement Team
• Valley Special Weapons and Tactics Team
• Valley Civil Disturbance Unit
• Metropolitan Park District
• Regional Animal Services of King County
• City of Sea Tac Probation Services
• King County Reclaimed Water
• eCity.gov Alliance
The organizations above are separate entities in the State of Washington whereby the City may enter
into these agreements pursuant to, and as authorized by, the Interlocal Cooperation Act under RCW
39.34. The City of Tukwila is not financially accountable to these organizations, none of the
organizations have an ongoing financial interest in the City, and the City is not financially dependent
upon these organizations.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Blended Component Unit
The Tukwila Metropolitan Park District (District) was formed on August 16, 2011. The City Council of
the City of Tukwila is authorized pursuant to RCW 35.61.050 to serve in an ex-officio capacity as the
Board of Metropolitan Park Commissioners. Through this shared governance, it is a component unit of
the City. The Metropolitan Park District provides a benefit to the citizens of Tukwila serving the
community as a multigenerational facility that provides health and recreation benefits to all ages.
Component units are legally separate entities but so closely related to the City through shared
governance that their exclusion would cause the City's financials to be misleading or incomplete.
The District is a component unit of the City of Tukwila, which operates pool programs within the City
and the District. When the District was formed in 2011, it was reported on the City's financial
statements as a discretely presented component unit and was shown as a separate column in the
govern -wide financial statements. However, with the implementation of GASB Statement No. 61, The
Financial Reporting Entity: Omnibus, the District is now reported as blended and is shown as a major
fund in the Basic Financial Statements section. The component unit's fund is blended into those of the
City by appropriate activity type to compose the primary government presentation. Requests for the
District's separately issued financial statements may be addressed to the Finance Director, City of
Tukwila, 6200 Southcenter Blvd., Tukwila, WA 98188-2544.
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 display information about the City and its
component unit. These statements include the financial activities of the government, except for fiduciary
funds. 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.
B-44
CITY OF TUKWILA: 2013 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
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 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.
This means only current assets and current liabilities are generally included on their balance sheets.
Their reported fund balance (net current assets) is considered a measure of "available spendable
resources." Governmental fund operating statements focus on measuring changes in financial position,
rather than net income; they present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets. The following are the City's major
governmental funds:
• The General Fund is the general operating fund of the City. It accounts for all
financial resources and transactions except those required to be accounted for in
another fund.
• The Arterial Street Fund, a special revenue fund, is established in accordance with
RCW 82.36.020 for the administration of the State -levied motor vehicle half -cent
gasoline tax distributed to Tukwila.
• The Land Acquisition, Recreation and Park Development Fund is used to account for
financial resources to be used for the acquisition of land, development of land, and
construction of park facilities.
• 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 Metropolitan Park District is a component unit of the City of Tukwila, which
operates pool programs within the City and the District.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
The other governmental funds of the City, which are Special Revenue Funds, account for the proceeds
of specific revenue sources that are segregated to ensure that expenditures are made exclusively for
qualified purposes.
Proprietary Funds
Proprietary 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 total assets. Proprietary funds measurement
focus is based upon determination of net income, financial position, and cash flows.
Proprietary 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 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 I 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.
B-46
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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.
D. Measurement Focus
Government -wide Financial Statements
The government -wide financial statements are prepared using the economic resources measurement
focus. All assets and liabilities 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 and current liabilities 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 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 fund net
position presents increases (i.e., revenues) and decreases (i.e., expenses) in net total assets. 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, 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 property, sales and utility taxes.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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).
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 via the process of consolidation
from the government -wide financial statements. 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 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.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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
Includes administration, finance, municipal court, attorney, 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.
Culture and Recreation Includes the parks and recreation activities.
G. Assets, Liabilities and Fund Equity
Cash and Cash Equivalents
All cash and cash equivalents, restricted and unrestricted, consists of cash balances in the checking
account, imprest funds, and the State Treasurer's Local Government Investment Pool. All funds in the
care of other institutions are considered investments. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash.
Investments
Investments are held separately by each of the funds with interest earned directly for the benefit of each
fund. Investments are reported on the financial statements at fair value, cost or amortized cost,
depending on the type and maturity length of each investment as required by GASB Statement 31.
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 3.
Notes Receivable
Notes receivable in the enterprise funds consists of sewer connection fees due from customers to the
utility and in the governmental funds, it consists of the current portion of the special assessment
receivable.
B-49
CITY OF TUKWILA: 2013 CAFR NOTES TO 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."
The non -current portion of interfund loans and advances between funds, as reported in the fund
financial statements, are offset by a fund balance unspendable account in applicable governmental
funds to indicate they are not available for appropriation and are not expendable available financial
resources. See Note 5 on interfund transactions.
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. Since special assessments are secured by liens
against related properties, no allowance for uncollectible amounts is made.
Inventories
Inventories carried in proprietary funds are valued at average cost using the consumption method. A
physical count is taken at year-end. Governmental funds use the purchase method whereby inventory
items are considered expenditures when purchased.
Deferred Outflows /Inflows of Resources
Deferred outflow of resources is a consumption of net position by the government that is applicable to a
future reporting period. Deferred inflow of resources is acquisition of net position by the government
that is applicable to a future reporting period.
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. Donated assets are valued at estimated fair market value at time of
acquisition. Where historical cost is not known, assets are recorded at estimated historical costs. The
City maintains a capitalization threshold of five thousand dollars. The City's infrastructure consists of
roads, bridges, storm sewers, water and sewer distribution and collection systems. Improvements are
capitalized; 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.
B-50
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Depreciation is computed using the straight line method over estimated service lives, as follows:
Asset Estimated Service Life
Buildings 25 to 50 years
Non -Building Improvements 25 to 50 years
Machinery and Equipment 2 to 50 years
Intangibles 2 to 50 years
Infrastructure 25 to 50 years
See Note 7 for additional information on capital assets.
Other Liabilities
These liabilities are current obligations that are due within one year and include accounts payable,
accrued liabilities, and other debts. The Self Insurance fund includes an incurred but not reported
(IBNR) liability of $753,400 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 IBR for claim fluctuations plus 1.5 x
IBNR for the IBNR liability of $1,883,500.
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 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. Prior year activity is used to determine the current year activity. There is no
current portion to report when the prior year leave usage amount is less than the amount of leave
earned during the same period.
B-51
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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 deferred and 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 debt service
expenditures.
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 11.
Fund Balance/Net Position
Fund balance represents the difference between the current assets and current liabilities. 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 and liabilities. 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 not 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.
The City applies restricted resources first when an expense is incurred for purposes of which both
restricted and unrestricted net position is available. This is followed by committed resources, then
assigned, and lastly unassigned resources.
In 2012, 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 and the 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.
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 (incurred but not reported) reserve. The
contingency reserve balance will be combined with the IBNR reserve balance and recorded as one
liability in each of the self -insured health care plan funds.
B-52
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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.
• 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.
• 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. Intent of use can be expressed by
City Council or by a designated official.
• 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 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 following table illustrates the use of fund balance resources for governmental funds. 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.
B-53
CITY OF TUKWILA: 2013 CAFR
NOTES TO THE FINANCIAL STATEMENTS
General Fund
Nonspendable
Beginning Fund Balance $ -
Additions 1,743,362
Expenditures -
Restricted
$ -
-
-
Committed
$ -
-
-
Assigned
$ -
225,000
-
Unassigned
$ 8,378,557
65,037,763
(58,098,696)
Total
$ 8,378,557
67,006,125
(58,098,696)
Ending Fund Balance $ 1,743,362
$ -
$ -
$ 225,000
$ 15,317,624
$17,285,986
Restricted -Committed -Assigned -Unassigned
Arterial Street
Nonspendable
Beginning Fund Balance $ -
Additions -
Expenditures -
Restricted
$ 394,755
105,179
(102,514)
Committed
$ -
-
-
Assigned
$ 88,576
12,754,328
(12,144,789)
Unassigned
$ -
-
-
Total
$ 483,331
12,859,507
(12,247,303)
Ending Fund Balance $ -
$ 397,420
$ -
$ 698,115
$ -
$ 1,095,535
Restricted -Committed -Assigned -Unassigned
Land Acquisition Recreation & Park Development
Nonspendable
Beginning Fund Balance $ -
Additions -
Expenditures -
Restricted
$ -
25,661
(25,661)
Committed
$ -
-
-
Assigned
$ 1,090,188
342,931
(213,229)
Unassigned
$ -
-
-
Total
$ 1,090,188
368,592
(238,890)
Ending Fund Balance $ -
$ -
$ -
$ 1,219,890
$ -
$ 1,219,890
Restricted -Committed -Assigned -Unassigned
Local Improvement District #33
Nonspendable
Beginning Fund Balance $ -
Additions -
Expenditures -
Restricted
$ -
-
-
Committed
$ -
-
-
Assigned
$ -
2,788,350
(2,788,350)
Unassigned
$ -
-
-
Total
$ -
2,788,350
(2,788,350)
Ending Fund Balance $ -
$ -
$ -
$ -
$ -
$ -
Restricted -Committed -Assigned -Unassigned
Metropolitan Park District
Nonspendable
Beginning Fund Balance $ -
Additions -
Expenditures -
Restricted
$ -
-
-
Committed
$ -
-
-
Assigned
$ -
-
-
Unassigned
$ (189,329)
914,100
(2,290,946)
Total
$ (189,329)
914,100
(2,290,946)
Ending Fund Balance $
-
$ -
$ (1,566,175)
$ (1,566,175)
Restricted -Committed -Assigned -Unassigned
B-54
CITY OF TUKWILA: 2013 CAFR
NOTES TO THE FINANCIAL STATEMENTS
Hotel Motel Tax
Nonspendable
Beginning Fund Balance $ -
Additions -
Expenditures -
Restricted
$ 710,707
1,432,282
(1,428,043)
Committed
$ -
-
-
Assigned
$ -
-
-
Unassigned
$ -
-
-
Total
$ 710,707
1,432,282
(1,428,043)
Ending Fund Balance $ -
$ 714,946
$ -
$ -
$ -
$ 714,946
Restricted -Committed -Assigned -Unassigned
Street
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total
Beginning Fund Balance $ -
$ 1,046,771
$ -
$ -
$ -
$ 1,046,771
Additions -
323,387
-
230,000
-
553,387
Expenditures -
(184,203)
-
-
-
(184,203)
Ending Fund Balance $ -
$ 1,185,955
$ -
$ 230,000
$ -
$ 1,415,955
Restricted -Committed -Assigned -Unassigned
Drug Seizure
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total
Beginning Fund Balance $ -
$ 85,125
$ -
$ 75,000
$ -
$ 160,125
Additions -
61,213
-
-
-
61,213
Expenditures -
(70,729)
-
(75,000)
-
(145,729)
Ending Fund Balance $ -
$ 75,609
$ -
$ -
$ -
$ 75,609
Restricted -Committed -Assigned -Unassigned
Debt Service Funds
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total
Beginning Fund Balance $ -
$ -
$ -
$ 3,012,381
$ -
$ 3,012,381
Additions -
668,849
-
3,145,498
-
3,814,347
Expenditures -
-
-
(6,149,618)
-
(6,149,618)
Ending Fund Balance $ -
$ 668,849
$ -
$ 8,261
$ -
$ 677,110
Restricted -Committed -Assigned -Unassigned
Facility Replacement
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total
Beginning Fund Balance $ -
$ -
$ -
$ 2,005,520
$ -
$ 2,005,520
Additions -
-
-
3,373
-
3,373
Expenditures -
-
-
(106,291)
-
(106,291)
Ending Fund Balance $ -
$ -
$ -
$ 1,902,602
$ -
$ 1,902,602
Restricted -Committed -Assigned -Unassigned
General Government Improvement
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total
Beginning Fund Balance $ -
$ 164,312
$ -
$ 749,518
$ -
$ 913,830
Additions -
-
-
232,217
-
232,217
Expenditures -
(164,312)
-
(529,980)
-
(694,292)
Ending Fund Balance $ -
$ -
$ -
$ 451,755
$ -
$ 451,755
Restricted -Committed -Assigned -Unassigned
Fire Improvement
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total
Beginning Fund Balance $ -
$ 348,010
$ -
$ -
$ -
$ 348,010
Additions -
140,295
-
-
-
140,295
Expenditures -
(51,083)
-
-
-
(51,083)
Ending Fund Balance $ -
$ 437,222
$ -
$ -
$ -
$ 437,222
Restricted -Committed -Assigned -Unassigned
B-55
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Risk Management and Risk Retention
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. The WCIA is an organization of Washington municipal entities numbering 162 as of December
31, 2013. WCIA provides pooled self-insurance coverage for general liability, vehicle liability, false
arrest, and errors and omissions. See Note 14 for additional information on risk management.
Operating Revenues and Expenses
Operating revenues are generated directly from the primary activity of the proprietary funds. For the
City, these revenues are 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.
lnterfund 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.
H. Changes in Accounting Standards
The City implemented the following Government Accounting Standards Board (GASB) statements in
2013:
GASB Statement No. 61, The Financial Reporting Entity: Omnibus — which modifies certain
requirements for inclusion of component units in the financial reporting entity. As a result of
implementing this statement, the City is required to change the reporting of its component unit from
discreet presentation to blended.
B-56
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
GASB Statement No. 65, Items previously reported as Assets and Liabilities — clarifies the use of
deferred outflows of resources and deferred inflows of resources to ensure consistency in financial
reporting. This statement requires certain items which were previously reported as assets and liabilities
to be reported as deferred outflows of resources, deferred inflows of resources and as revenues or
expenditures.
NOTE 2 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
There have been no material violations of finance -related legal or contractual provisions, and there
have been no expenditures exceeding legal appropriations in any of the funds of the City of Tukwila.
NOTE 3 —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
At year-end, the carrying amount of the City's bank balance was $20,238,500. Of the bank balance,
$250,000 was covered by Federal depository insurance and the WPDPC insured the remainder. The
City also maintains imprest funds totaling $14,400. The City participates in the State Treasurer's
Investment Pool, which is a 2a7-like unrated pool, overseen by the State Treasurer's Office. 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.
Deposits and Investments
The City's investment portfolio includes certificate of deposits insured by the Washington State Public
Depository Commission 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.
B-57
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
At December 31, 2013, the City had the following deposits and investments:
SCHEDULE OF INVESTMENTS BY MATURITY
Maturity Credit Market
Date Rating Value
Certificates of Deposit:
Sound Community Bank 3/4/2014 * $ 3,117,093
Regal Bank 12/20/2014 * 250,000
Total Certificate of Deposits 3,367,093
Municipal Bonds:
Lodging Tax 7/1/2016 Aa3 / A+ 523,780
Revenue - Facilities 7/1/2017 Aa1 / AA+ 542,440
Limited General Obligation 12/1/2017 Aa3 / Al 585,600
Revenue - Facilities 7/1/2019 Aa1 / AA+ 553,760
Limited General Obligation 9/1/2020 Al 354,021
Unlimited General Obligation 12/1/2020 Aa1 / Aa3 1,236,810
Total Municipal Bonds 3,796,411
TOTAL INVESTMENTS $ 7,163,504
* No credit rating with certificate of deposit accounts; accounts are insured by the Public
Depository Protection Commission.
B-58
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
RECONCILIATION OF ALL CASH, DEPOSITS AND INVESTMENTS
AS REPORTED ON STATEMENT OF NET POSITION:
Cash and Cash Equivalents: $ 37,578,132
Investments 7,163, 504
Current Assets Restricted:
Cash and cash equivalents 905,759
Total Cash, Cash Equivalents and Investments $ 45,647,395
SUMMARY BY TYPE:
Cash and Cash Equivalents:
Cash on hand $ 14,400
Money Market account 12,706,968
Local Government Investment Pool 5,927,799
Cash in bank -book balance 19,834,724
Total cash and cash equivalents 38,483,891
Investments:
Certificates of deposit 3,367,093
Municipal bonds 3,796,411
Total investments 7,163,504
Total Cash, Cash Equivalents, and Investments $ 45,647,395
Restricted Assets - Governmental
Impact Fees 397,420
Restricted Assets -Governmental
Restricted Assets - Business -Type
Customer Deposits -Water Utility
Customer Deposits -Golf Course
Lease Deposits -Golf Course
Revenue Bond Reserve Account-Water/Sewer/Surface Water
Restricted Assets -Business -Type
$ 397,420
$ 19,115
43,780
15,000
430,444
$ 508,339
Total Restricted Assets $ 905,759
B-59
CITY OF TUKWILA: 2013 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 (3 1/2) years
or forty-two (42) months.
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 PDPC 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, 2013, the City's investments in municipal bonds were rated Aa1 to Al by Moody's
Investor Service. The City currently maintains a rating of AA- with Fitch's Investor Service for its general
obligation debt and Al with Moody's Investor Service.
B-60
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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
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 4 — RECEIVABLES
Taxes Receivable
Taxes receivable consists of property taxes, sales and use tax, and gambling taxes. Customer accounts
receivable consists of amounts owed by private individuals or organizations for good and services
provided. Uncollectible amounts are considered immaterial and the direct write-off method is used.
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.
Governmental Business -Type
Activities Activities Total
Taxes Receivable
Property $ 332,239 $ $ 332,239
Sales & Use 3,257,528 3,257,528
Utility Tax 640,901 640,901
Admission/Gambling/Parking 767,054 854 767,908
Total Taxes Receivable 4,997,723 854 4,998,577
Customer Receivable
Miscellaneous 431,746 4,273 436,019
Utility Accounts 1,287,512 1,287,512
Total Customer Receivable 431,746 1,291,785 1,723,531
Special Assessments -current portion 444,710 444,710
Interest 47,848 42,224 90,072
Total Receivables $ 5,922,027 $ 1,334,864 $ 7,256,890
B-61
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Property Taxes Receivable
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 1st
Februar' 14th
April 30t
May 31st
October 31st
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.
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 exceeds $50.
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. Of this amount, up to $0.45 per
thousand may be designated for contribution to the Firemen's Pension Fund, if a report by a qualified
actuary indicates that additional funds are required.
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 of the past three years. 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 for 2013 was $2.98778 per $1,000 of assessed valuation of $4,649,191,308 for a total
regular levy of $13,890,761.
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, 2013, 99 percent represents grants.
B-62
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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. 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. At this time, there are no
delinquent assessments outstanding.
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 area in the City, 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 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 an 4% annual interest rate. The balance
reflects all principal outstanding at year-end.
Governmental Business -Type
Activities Activities Total
Notes Receivable
Special Assessments - LT portion
Sewer Payment Plan
6,242,835 - 6,242,835
403,041 403,041
Total Notes Receivable $ 6,242,835 $ 403,041 $ 6,645,875
NOTE 5 — INTERFUND TRANSACTIONS
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. The City issued
a $1,million bond and loaned the proceeds to the MPD February 2013 for capital purposes. This loan is
being repaid twice a year at the same interest rate as the bond.
Nonreciprocal interfund activity does not involve the exchange of equal or almost equal value between
funds.
B-63
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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.
Interfund transfers for the year were as follows:
SUMMARY OF INTERFUND TRANSFERS
Government and Internal
Service Funds
General
Fund
Other
Government
Funds
Internal
Service
Funds
Total
Transfers In
Transfers Out
Net Transfers In (Out)
$ 14, 919, 606 $ 5,999,377 $1, 030, 000 $ 21, 948, 983
(10, 662, 843) (9,850,324) (375,166) (20, 888, 333)
$ 4,256,763 $ (3,850,947) $ 654,834 $ 1,060,650
Proprietary Funds
Water/Sewer Surface Water Foster Golf
Utility Utility Course Total
Transfers In
Transfers Out
Net Transfers In (Out)
$ 103,680 $ - $ 400,000 $ 503,680
(896,588) (474,941) (192,801) (1,564,330)
$ (792, 908) $ (474, 941) $ 207,199 $ (1,060,650)
The principal purposes for interfund transfers include interfund subsidies and transfers into debt service
and capital projects funds.
B-64
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTE 6 — OPERATING LEASES
During 2013 the City maintained operating lease agreements for the purpose of leasing City operated
machinery and equipment.
Tukwila leases office/ storage space for the purposes of the Records Center, Seattle Southside Visitor
Center and the Neighborhood Resource Center. In addition the City leased a postage machine and
copiers during 2013. Costs associated with these activities are as follows.
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
2013 2014 2015 2016 2017
Records Center'
Neighborhood Resource Center 2
Seattle Southside Visitors Center
Postage Machines
Office Equipment
66,510
19,800
40,314
6,126
46,908
67,674
20,400
41,520
8,263
52,041
28,544
10,200
42,132
8,263
53,052
42,132
8,263
52,200
42,132
8,263
51,349
Total Lease Payments 179,657 189,898 142,191 102,595 101,744
1 Leasing of the Records Center expires on 5/31/2015. The tenant is responsible for the cost of utilities and
maintenance of building, w hich is estimated, based on square footage and reconciled annually by the
lessor.
2 Leasing of the Neighborhood Resource Center expires on 6/30/2015.
B-65
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTE 7 — CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2013, was as follows:
GOVERNMENTAL ACTIVITIES
BEGINNING
BEGINNING BLENDED PRIOR BALANCE
BALANCE COMPONENT PERIOD 12/31/2012 ENDING
12/31/2012 UNIT ADJUSTMENT RESTATED INCREASES DECREASES BALANCE
Governmental Activities
Capital assets, not being depreciated:
Land S 40,501,509 S - S - 40,501,509 5 1,689,819 S - 5 42,191,328
Construction in Progress 47,942,240 942,119 I (3,863,455) 2 45,420,864 6,854,400 (41,391,343) 10,483,961
Intangible Assets - - - - 770,000 - 770,000
Total capital assets,
not being depreciated 88,443,709 912,119 (3,863,455) 85,522,373 9,314,219 (41,391,303) 53,445,289
Capital assets, being depreciated:
Buildings 22,273,557 1,938,376 I 24,211,933 1,549,900 (484,594) 25,277,239
Other Improvements 17,699,804 - - 17,699,80,1 430,689 - 18,130,492
Machinery and Equipment 16,992,308 - - 16,992,308 4,497,423 (4,536,069) 16,953,662
Infrastructure 149,595,860 - - 149,595,860 42,121,179 (400,269) 191,316,770
Intangible Assets 605,762 - - 605,762 136,246 - 742,048
Total capital assets
being depreciated
207,167,29E 1,938,376 - 249,105,666 48,735,437 (5,424,932) 252,424,172
Less accumulated depreciation for:
Buildings (10,091,849)
Other Improvements (9,756,296)
Machinery and Equipment (11,394,781)
Infrastructure (45,506,262)
Intangible Assets (95,174)
(79,363) 1
(10,171,212)
(9,756 296)
(11,394,781)
(45,506,262)
(95,170)
(671,533)
(786,281)
(1,283,625)
(4,518,997)
(163,931)
32,307
1,180, 783
320,216
(10,810,438)
(10,542,577)
(11,497,623)
(49,705,043)
(259,101)
Total accumulated depreciation (76,844,358) (79,363) - (76,923,721) (7,424,367) 1,533,306 (82,814,782)
Total capital assets, being
depreciated, net 130,322,932 1,859,013 132,181,945 41,311,070 (3,887,626) 169,605,390
Governmental activity capital assets, net S 218,766,642 S 2,801,132 S (3,863,455) 217,704,319 5 50,025,289 S (45,278,929) 5 223,050,679
'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
2013, the beginning balances to the capital asset categories for Construction in Progress, Buildings, and
Accumulated Depreciation for Buildings now reflect totals carried over on behalf of the MPD Pool and
presented in this Note Section to the Financial Statements as a blended component unit.
2The City had two construction projects that were accepted by the Council in 2013. Both road projects
had expenditures that the majority were charged correctly to the Arterial Street Fund. However there
were utility (Proprietary Fund) expenditures that were also charged to the Arterial Street Fund. These
expenditures should have been charged to the Proprietary Fund since the assets were constructed in
both funds. The correction in 2013 has resulted in a prior period adjustment of ($3,863,455) which is
reflected in the decreases to Construction in Progress. (See Prior Period Adjustment Note).
Significant decreases for Governmental Activities Machinery and Equipment of ($4,536,069) reflect Fleet
vehicle dispositions totaling ($1,191,778); transfer of Fire apparatuses totaling ($3,326,739) from the 107
Fire Equipment Cumulate Reserve Fund into Fund 501 for Fleet vehicles; while general fixed asset
Machinery and Equipment in the amount of ($17,552) were disposed of for the Parks & Recreation
Department. Conversely, significant increases to infrastructure of $42,121,179 for the period include
B-66
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
$38,881,758 being capitalized into roadway; $315,379 into bridges; and $2,924,042 into traffic
signals/street lighting.
BUSINESS -TYPE ACTIVITIES
BEGINNING
BEGINNING PRIOR BALANCE
BALANCE PERIOD 12131/2012 ENDING
12/31/2012 ADJUSTMENT RESTATED INCREASES DECREASES BALANCE
Business -Type Activities
Capital assets, not being depreciated.
Land $ 2,214,118 $
Construction in Progress 7,595,365
Intangible Assets
- $ 2,214,118 $
2,427,372 10022737
- $ (284,434) $ 1,929,684
1545690 (8,464,166) 3,104 260
308, 074 308 074
Total capital assets,
not being depreciated 9,809,483
2,427,372 12,236,855 1,853,764 (8,748,600) 5,342,018
Capital assets; being depreciated:
Buildings 11,390;601 11390601 1,152,563 12,543,164
Other Improvements 71,829,216 - 71,829,216 7;282,925 (55,783) 79,056,357
Machinery and Equipment 2,295,253 2295,253 - (33,905) 2,261,349
Intangible Assets 90;647 - 90,647 - 90;647
Total capital assets
being depreciated 85,605,717 - 85,605 717 8,435,487 (89,688) 93,951,517
Less accumulated depreciation for:
Buildings (3,291,381) - (3291381) (304,540) - (3,595,921)
Other Improvements (27,259,703) (27,259,703) (1,552,688) 50,216 (28,762,175)
M a c h i ne ry and Equipment (1,711,052) - (1,711,052) (81,991) 33,905 (1,759,138)
Intangible Assets (34,635) (34,635) (2,154) - (36,789)
Total accumulated depreciation (32,296,770) - (32,296,770) (1,941,373) 84,121 (34,154,023)
Total capital assets, being
depreciated, net 53,308,949 53308949 6,494,114 (5,567) 59,797,496
Business Type activity capital assets, net $ 63,118,432 $ 2,427,372 $ 65,545,804 8,347,877 $ (8,754,168) $ 65,139,514
A prior period adjustment totaling $2,427,372 for Construction in Progress in the Business -Type
Activities consists of the two construction projects where utility expenditures were also charged to the
Arterial Street Fund as described in Footnote 2 above. This resulted in a prior period adjustment of
$3,863,455 into the Proprietary Funds. Additionally, another prior period adjustment was recognized for
the Proprietary Funds in the amount ($1,436,083) for utility assets that were already recorded by the
Highline Water District (See Prior Period Adjustment Note).
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CITY OF TUKWILA: 2013 CAFR
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL ASSET ADDITIONS BY PROJECT
GOVERNMENTAL ACTIVITIES
Southcenter Parkway
Transit Center
Interurban Avenue South
Pedestrian Bridge
Other
Internal Service fund - Fleet
Capital Outlay
1,098,196
1,094,162
577,814
336,480
2,748,309
2,044,015
Donated
4,367,291
335,500
729,848
Total
5,465,487
1,429,662
577,814
336,480
3,478,157
2,044,015
Totals
$ 7,898,976 $ 5,432,639 $ 13, 331, 615
BUSINESS -TYPE ACTIVITIES
Storm Lift Station #15
Small Drainage Project - 2013
Andover Park West/Andover Park
East Sewer
CBD Sewer Rehabilitation
E Marginal Way S Storm
Other
Land Turnovers, Contributions
Capital Outlay
480,539
381,261
165,885
158,724
153,910
194,111
Donated
6,221
Total
480,539
381,261
165,885
158,724
153,910
194,111
6,221
Totals
$ 1,534,430 $ 6,221 $ 1,540,651
Government Wide Totals
$ 9,433,406 $ 5,438,860 $ 14,872,266
B-68
CITY OF TUKWILA: 2013 CAFR
NOTES TO THE FINANCIAL STATEMENTS
COMPONENTS OF NET CAPITAL ASSET CHANGES
CAPITAL ASSET CHANGES
GOVERNMENTAL
ACTIVITIES
BUSINESS -TYPE
ACTIVITIES
TOTAL
Increases / Additions
Capital outlay
Land turnovers, contributions
Internal service funds (Equipment rental)
$ 5,854,961 *
5,432,639
2,044,015
$ 1,534,430
6,221
$ 7,389,391
5,438,860
2,044,015
Total capital asset additions
13,331,615
1,540,651
14,872,266
Decreases / Disposals
Right of way and other land donations:
Sale or disposal of assets
Internal service funds (Equipment rental)
400,269
502,146 *
1,191,778
89,688
400,269
591,834
1,191,778
Total capital asset disposals
2,094,193
89,688
2,183,881
Net Increase in Capital Assets
$ 11,237,422
$ 1,450,963
$12,688,385
ACCUMULATED DEPRECIATION CHANGES
GOVERNMENTAL
BUSINESS -TYPE
ACTIVITIES
ACTIVITIES
TOTAL
Increases / Additions
Depreciation:
Governmental
$ 6,538,166
$ -
$ 6,538,166
General government
314,115
Public safety
140,013
Physical Environment
662,855
Transportation
4,549,202
Economic Environment
4,833
Culture and recreation
867,148 *
Internal service funds (Equipment rental)
886,201
886,201
Business -type funds
1,941,373
1,941,373
Total capital asset additions
7,424,367
1,941,373
9,365,740
Decreases / Disposals
Accumulated depreciation associated with
asset sale or disposal:
Governmental
370,075 *
370,075
Internal service funds (Equipment rental)
1,163,231
1,163,231
Business -type funds
84,121
84,121
Total accumulated depreciation disposal
1,533,306
84,121
1,617,427
Net Increase in Accumulated Depreciation
$ 5,891,061
$ 1,857,252
$ 7,748,313
NET CHANGE IN CAPITAL ASSETS
INCREASE (DECREASE) IN NET CAPITAL
ASSETS
$ 5,346,361
$ (406,289)
$ 4,940,072
* Includes Park District activity consisting of:
Capital outlay $ 739,109
Book value, disposed/replaced assets 484,594
Depreciation 64,613
Accumulated depreciation,disposed/replaced assets 32,307
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTE 8 — JOINT VENTURES
A joint venture is a legal entity or other organization that results from a contractural 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.
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 Tukwila, with Federal Way 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 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 2013 cost distribution for the five participating cities is as follows:
City
Dispatchable
Calls
Percent of
Total
Renton
72,740
20.70%
Kent
97,579
27.76%
Auburn
71,881
20.45%
Tukwila
34,192
9.73%
Federal Way
75,073
21.36%
Total
351,465
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
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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 participating cities is as follows:
ITEM
FEDERAL
RENTON KENT AUBURN TUKWILA WAY TOTAL
Equity January 1, 2013 $ 5,062,434 $ 7,139,778 $4,783,577 $2,843,407 $3,324,584 $ 23,153,780
Current Year Increase(Decrease) 178,173 239,013 176,069 83,751 183,886 860,892
Equity December 31, 2013 $ 5,240,607 $ 7,378,791 $ 4,959,646 $ 2,927,158 $3,508,470 $ 24,014,672
Percent of Equity 21.82% 30.73% 20.65% 12.19% 14.61% 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 subregions of King County, Seattle, and the Eastside Public Safety Communications
Agency. This agreement governs 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 subregion'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 subregion or
consortium of subregions. 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 is 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.
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 their Owner City or Host City status.
B-71
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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 and secured by the full faith and credit of the Cities of Auburn, Burien
Federal Way, Renton, SeaTac, and Tukwila. The SCORE PDA issued $86 million in special obligation
bonds in 2009 to carry out the facility development project. The following is a summary of the debt
service requirements for the bond issue:
SUMMARY OF DEBT SERVICE REQUIREMENTS
Debt Seance Schedule
Debt Seance Allocation to Owner Cities
35% BABs
Auburn
Butler
Federal Way
Renton
SeaTac
Tukwila *
Year
Principal
Interest
Subsidy
Total
31%
4%
18%
36%
3%
8%
2014
$ 1.9E0.000
$ 5.066.666
5
1.654.976)
$ 5.361.591
$ 1,662,093
$ 214.464
$ 966.086
5
1.930,173
$ 160.848
$ 428.927
2015
1.990.000
4,996.069
1,632,787)
5.352.282
1,659,207
214,091
963.411
1.926.822
160,568
428,183
2016
2,065.004
4.911,886
1.632,787)
5.344,499
1,656,671
213,764
961.938
1,923.876
160,323
427.528
2017
2,145.004
4.820.241
1.621,960)
5,343.261
1,656.411
213,730
961.787
1,923.574
160,298
427.461
2018
2..240.000
4.716.979
1.621.930)
6..333.999
1.653.540
213,360
964.120
1.920,244
160.020
426.720
2019-2023
12.435.400
21,771.988
7.583.953)
26.623,435
8.253,141
1,064.921
4.792.146
9.584.293
798.691
2.129.843
2024-2028
15,060.400
17.849.677
6.398.978)
26.470.699
8.205,917
1,058,828
4.764.723
9.529,452
794.121
2.117.656
2029-2033
18,475.000
12,403,424
4.553,914)
26.324,514
8.164.598
1,052.980
4.738,412
9.476,824
789.736
2.105.961
2034 2438
22.795.000
5,605.241
2.226.756)
26.174.486
8.114.091
1.046.979
4.711.407
9.422.815
785.235
2.093.9E9
2039
6,165.000
170.858
(119.601)
6.216,257
1.617,040
208.650
938.926
1.877.853
166.488
417.301
Totals
$84,320.000
$ 82,270,929
$ (29,046,714)
$137,544,219
$ 42,638,709
$ 5,501.767
$ 24,757,959
549.515,922
$ 4,126,327
$11,443,539
*lea service is due 111 of each year. The City paid the 2014 principal in 2013 so the schedule reflects a payment the City has already nade.
The City of Tukwila reports its share of equity interest in the Governmental Activities column within the
Government -wide financial statements under non -current assets. The share of equity belonging to the six
participating cities is as follows:
ITEM
AUBURN BURIEN DES MOINES FEDERAL WAY RENTON SEATAC TUKWILA TOTAL
Equity January 1, 2013 $ 1,368,859 $ 176,627 $ - $ 794,820
Current Year Increase/(Decrease) 1,148,378 117,696 107,970 1,026,120
Equity December31, 2013 $ 2,517,237 $ 294,323 $ 107,970 $ 1,820,940
1,589,644 $ 132,469 $ 353,254 $ 4,415,673
958,575 199,239 248,680 3,806,658
2,548,219 $ 331,708 $ 601,934 $ 8,222,331
Percent of Equity 30.61% 3.58% 1.31% 22.15% 30.99% 4.03% 7.32% 100.00%
B-72
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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 $6,589,600. See Note 11 for additional
information on long-term debt. Completed financial statements for SCORE and SCORE PDA can be
obtained from the SCORE office, 20817 17th Avenue South, Des Moines, WA 98198.
NOTE 9 — PENSION PLANS
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 retirement plans. 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 it may be downloaded from the DRS website at www.drs.wa.gov. The
following disclosures are made pursuant to GASB Statements 27, Accounting for Pensions by State and
Local Government Employers and 50, Pension Disclosures, an Amendment of GASB Statements 25 and
27.
Public Employees Retirement System (PERS) Plans 1, 2, and 3
Plan Description
The Legislature established PERS in 1947. Membership in the system includes: elected officials; state
employees; employees of the Supreme, Appeals, and Superior courts; employees of legislative
committees; employees of district and municipal courts; and employees of local governments.
Approximately 49 percent of PERS salaries are accounted for by state employment. PERS retirement
benefit provisions are established in Chapters 41.34 and 41.40 RCW and may be amended only by the
State Legislature.
PERS is a cost -sharing multiple -employer retirement system comprised of three separate plans for
membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a
defined contribution component.
PERS members who joined the system by September 30, 1977 are Plan 1 members. Those who joined
on or after October 1, 1977 and by either, February 28, 2002 for state and higher education employees,
or August 31, 2002 for local government employees, are Plan 2 members unless they exercised an
option to transfer their membership to Plan 3. PERS members joining the system on or after March 1,
2002 for state and higher education employees, or September 1, 2002 for local government employees
have the irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option
must be exercised within 90 days of employment. Employees who fail to choose within 90 days default to
PERS Plan 3.
PERS is comprise of and reported as three separate plans for accounting purposes: Plan 1, Plan 2/3, and
Plan 3. Plan 1 accounts for the defined benefits of Plan 1 members. Plan 2/3 accounts for the defined
benefits of Plan 2 members and the defined benefit portion of benefits for Plan 3 members. Plan 3
accounts for the defined contribution portion of benefits for Plan 3 members. Although members can only
be a member of either Plan 2 or Plan 3, the defined benefit portions of Plan 2 and Plan 3 are accounted
for in the same pension trust fund. All assets of this Plan 2/3 defined benefit plan may legally be used to
pay the defined benefits of any of the Plan 2 or Plan 3 members or beneficiaries, as defined by the terms
of the plan. Therefore, Plan 2/3 is considered to be a single plan for accounting purposes.
B-73
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
PERS Plan 1 and Plan 2 retirement benefits are financed from a combination of investment earnings and
employer and employee contributions. Employee contributions to the PERS Plan 1 and Plan 2 defined
benefit plans accrue interest at a rate specified by the Director of DRS. During DRS' Fiscal Year 2013,
the rate was five and on -half percent compounded quarterly. Members in PERS Plan 1 and Plan 2 can
elect to withdraw total employee contributions and interest thereon, in lieu of any retirement benefit, upon
separation from PERS-covered employment.
PERS Plan 1 members are vested after the completion of five years of eligible service.
Plan 1 members are eligible for retirement from active status at any age with at least 30 years of service,
at age 55 with 25 years of service, or at age 60 with at least 5 years of service. Plan 1 members retiring
from inactive status prior to the age of 65 may receive actuarially reduced benefits.
The monthly benefit is two percent of the average final compensation (AFC) per year of service, but the
benefit may not exceed 60 percent of AFC. The AFC is the monthly average of the 24 consecutive
highest -paid service credit months.
PERS Plan 1 retirement benefits are actuarially reduced to reflect the choice, if made, of a survivor
option.
Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment
based on the Consumer Price Index. The adjustment is capped at three percent annually. To offset the
cost of this annual adjustment, the benefit is reduced.
PERS Plan 1 provides duty and non -duty disability benefits. Duty disability retirement benefits for
disablement prior to the age of 60 consist of a temporary life annuity. The benefit amount is $350 a
month, or two-thirds of the monthly AFC, whichever is less. The benefit is reduced by any workers'
compensation benefit and is payable as long as the member remains disabled or until the member attains
the age of 60, at which time the benefit is converted to the member's service retirement amount.
A member with five years of covered employment is eligible for non -duty disability retirement. Prior to the
age of 55, the benefit amount is two percent of the AFC for each year of service reduced by two percent
for each year that the member's age is less than 55. The total benefit is limited to 60 percent of the AFC
and is actuarially reduced to reflect the choice of a survivor option. Plan 1 members may elect to receive
an optional COLA amount (based on the Consumer Price Index), capped at 3 percent annually. To offset
the cost of this annual adjustment, the benefit is reduced.
PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members
are eligible for normal retirement at the age of 65 with five years of service. The monthly benefit is two
percent of the AFC per year of service. The AFC is the monthly average of the 60 consecutive highest -
paid service months. There is now cap on years of service credit; and a cost -of -living allowance is
granted (based on the Consumer Price Index), capped at 3 percent annually.
PERS Plan 2 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 reduced benefit. The benefit is reduced by an early retirement factor
(ERF) that varies according to age, for each year before age 65.
PERS Plan 2 members who have 30 or more years of service credit and are at least 55 years old can
retire under one of two provisions, if hired prior to May 1, 2013:
• With a benefit that is reduced by three percent for each year before age 65;
or
B-74
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
• With a benefit that has a smaller (or no) reduction (depending on age) that
imposes stricter return -to -work rules.
PERS Plan 2 members hired on or after May 1, 2013 have the option to retire early by accepting a
reduction of 5 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.
PERS Plan 2 retirement benefits are also actuarially reduced to reflect the choice, if made, of a survivor
option.
PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component
and member contributions finance a defined contribution component. As established by Chapter 41.34
RCW, employee contribution rates to the defined contribution component range from 5 percent to 15
percent of salaries, based on member choice. Members who do not choose a contribution rate default to
a 5 percent rate. There are currently no requirements for employer contributions to the defined
contribution component of PERS Plan 3
PERS Plan 3 defined contribution retirement benefits are dependent upon the results of investment
activities. Members may elect to self -direct the investment of their contributions. Any expenses incurred
in conjunction with self -directed investments are paid by members. Absent a member's self -direction.
PERS Plan 3 contributions are invested in the Retirement Strategy Fund that assumes the member will
retire at age 65.
For DRS' fiscal year 2013, PERS Plan 3 employee contributions were $99.0 million, and plan refunds
paid out were $69.4 million.
The defined benefit portion of PERS Plan 3 provides members a monthly benefit that is one percent of
the AFC per year of service. The AFC is the monthly average of the 60 consecutive highest -paid service
months. There is no cap on years of service credit, and Plan 3 provides the same cost -of -living allowance
as Plan 2.
Effective June 7, 2006, PERS 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 twelve months of that service are earned after age
44; or after five service credit years earned in PERS Plan 2 by June 1, 2003. Plan 3 members are
immediately vested in the defined contribution portion of their plan.
Vested Plan 3 members are eligible for normal retirement at age 65, or they may retire early with the
following conditions and benefits:
• If they have at least ten service credit years and are 55 years old, the benefit
is reduced by an ERF that varies with age, for each year before age 65.
• If they have 30 service credit years and are at least 55 years old, and were
hired before May 1, 2013, they have the choice of a benefit that is reduced
by three percent for each year before age 65; or a benefit with a smaller (or
no) reduction factor (depending on age) that imposes stricter return -to -work
rules.
• If they have 30 service credit years, are at least 55 years old, and were hired
after May 1, 2013, they have the option to retire early by accepting a
reduction of 5 percent for each year before age 65.
PERS Plan 3 benefit retirement benefits are also actuarially reduced to reflect the choice, if made, of a
survivor option.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
PERS Plan 2 and Plan 3 provide disability benefits. There is no minimum amount of service credit
required for eligibility. The Plan 2 monthly benefit amount is two percent of the AFC per year of service.
For Plan 3, the monthly benefit amount is one percent of the AFC per year of service. These disability
benefit amounts are actuarially reduced for each year that the member's age is less than 65, and to
reflect the choice of a survivor option. There is no cap on years of service credit, and a cost -of -living
allowance is granted (based on the Consumer Price Index) capped at three percent annually.
PERS members meeting specific eligibility requirements have options available to enhance their
retirement benefits. Some of these options are available to their survivors.
A one-time duty -related death benefit is provided to the estate of a PERS member who dies as a result of
injuries sustained in the course of employment, or if the death resulted from an occupational disease or
infection that arose naturally and proximately out of the member's covered employment, if found eligible
by the Department of Labor and Industries.
From January 1, 2007 through December 31, 2007, judicial members of PERS were given the choice to
elect participation in the Judicial Benefit Multiplier (JBM) Program enacted in 2006. Justices and judges in
PERS Plan 1 and Plan 2 were able to make an irrevocable election to pay increased contributions that
would fund a retirement benefit with a 3.5 percent multiplier. The benefit would be capped at 75 percent
of AFC. Judges in PERS Plan 3 could elect a 1.6 percent of pay per year of service benefit, capped at
37.5 percent of AFC.
Newly elected or appointed justices and judges who chose to become PERS members on or after
January 1, 2007, or who had not previously opted into PERS membership, were required to participate in
the JBM Program.
There are 1,176 participating employers in PERS. Membership in PERS consisted of the following as of
the latest actuarial valuation date for the plans of June 30, 2012:
Type of Membership Membership
Retirees and Beneficiaries Receiving Benefits
Terminated Plan Members Entitled to but not yet Receiving Benefits
Active Plan Members Vested
Active Plan Members Non -vested
Total
82,242
30,515
106,317
44,273
263,347
Funding Policy
Each biennium, the state Pension Funding Council adopts PERS Plan 1 employer contribution rates,
PERS Plan 2 employer and employee contribution rates, and PERS Plan 3 employer contribution rates.
Employee contribution rates for Plan 1 are established by statute at six percent for state agencies and
local government unit employees, and at 7.5 percent for state government elected officials. The employer
and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed
by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. Under
PERS Plan 3, employer contributions finance the defined benefit portion of the plan and member
contributions finance the defined contribution portion. The Plan 3 employee contribution rates range from
5 to 15 percent.
As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier
of employer and employee rates was developed to fund, along with investment earnings, the increased
retirement benefits of those justices and judges that participate in the program.
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The methods used to determine the contribution requirements are established under state statute in
accordance with RCW 41.40 and RCW 41.45.
The required contribution rates expressed as a percentage of current -year covered payroll, as of
December 31, 2013, are as follows:
Members Not Participating in JBM:
Employer*
Employee
PERS Plan I
PERS Plan II PERS Plan III
9.21 % 9.21
6.00% 4.92%
9.21% **
Minimum 5% to
maximum 15%
* The employer rates include the employer administrative expense fee currently set at 0.18%.
** Plan 3 defined benefit portion only.
Both the City and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows:
2013
2012
2011
PERS Plan 1
PERS Plan II PERS Plan III
2,078
$ 1,069,130
902,516
753,456
$ 177,312
144,456
113,753
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plan 1 and 2
Plan Description
LEOFF was established in 1970 by the Legislature. Membership includes all full-time, fully compensated,
local law enforcement commissioned officers, firefighters and, as of July 24, 2005, emergency medical
technicians. LEOFF membership is comprised primarily of non -state employees, with Department of Fish
and Wildlife enforcement officers, who were first included effective July 27, 2003, being an exception.
LEOFF retirement benefit provisions are established in chapter 41.26 RCW and may be amended only by
the State Legislature.
LEOFF is a cost -sharing multiple -employer retirement system comprised of two separate defined benefit
plans. LEOFF members who joined the system by September 30, 1977 are Plan 1 members. Those who
joined on or after October 1, 1977 are Plan 2 members.
Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide
governance of LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending
policy changes to the Legislature.
LEOFF retirement benefits are financed from a combination of investment earnings, employer and
employee contributions, and a special funding situation in which the state pays through legislative
appropriations. Employee contributions to the LEOFF Plan 1 and Plan 2 defined benefit plans accrue
interest at a rate specified by the Director of DRS. During DRS' Fiscal Year 2013, the rate was five and
one-half percent compounded quarterly. Members in LEOFF Plan 1 and Plan 2 can elect to withdraw total
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employee contributions and interest earnings, in lieu of any retirement benefit, upon separation from
LEOFF-covered employment.
LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members
are eligible for retirement with five years of service at the age of 50.
The benefit per year of service calculated as a percent of final average salary (FAS) is as follows:
Term of Service Percent of final Average
20 or more years
10 but less than 20 years
5 but less than 10 years
2.0%
1.5%
1.0%
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. A cost -of -living allowance is
granted (based on the Consumer Price Index).
LEOFF Plan 1 provides death and disability benefits. Death benefits for survivors of Plan 1 members on
active duty consist of the following: (1) If there is an eligible spouse, 50 percent of the FAS, plus 5 percent
of FAS for each eligible surviving child, with a limitation on the combined allowances of 60 percent of the
FAS; or (2) If there is no eligible spouse, eligible children receive 30 percent of FAS for the first child plus
10 percent for each additional child, subject to a 60 percent limitation of FAS, divided equally.
A one-time duty -related death benefit is provided to the estate of a LEOFF Plan 1 member who dies as a
result of injuries or illness sustained in the course of employment, or if the death resulted from an
occupational disease or infection that arose naturally and proximately out of the member's covered
employment, if found eligible by the Department of Labor and Industries.
The LEOFF Plan 1 disability allowance is 50 percent of the FAS plus 5 percent for each child up to a
maximum of 60 percent. Upon recovery from disability before the age of 50, a member is restored to
service with full credit for service while disabled. Upon recovery after the age of 50, the benefit continues
as the greater of the member's disability benefit or service retirement benefit.
LEOFF Plan 2 members are vested after the completion of five years of eligible service.
Plan 2 members are eligible for retirement at the age of 53 with five years of service, or at the age of 50
with 20 years of service. Plan 2 members receive a benefit of two percent of the FAS per year of service.
(the FAS is based on the highest consecutive 60 months), actuarially reduced to reflect the choice of a
survivor option. 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. A cost -of -living allowance is
granted (based on the Consumer Price Index), capped at three percent annually.
LEOFF Plan 2 provides disability benefits. There is no minimum amount of service credit required for
eligibility. The Plan 2 benefit amount is two percent of the FAS for each year of service. Benefits are
reduced to reflect the choice of survivor option and for each year that the member's age is less than 53,
unless the disability is duty -related. 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.
A disability benefit equal to 70 percent of their FAS, subject to offsets for workers' compensation and
Social Security disability benefits received, is also available to those LEOFF Plan 2 members who are
catastrophically disabled in the line of duty and incapable of future substantial gainful employment in any
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capacity. Effective June 2010, benefits to LEOFF Plan 2 members who are catastrophically disabled
include payment of eligible health care insurance premiums.
Members of LEOFF Plan 2 who leave service because of a line of duty disability are allowed to withdraw
150 percent of accumulated member contributions. This withdrawal benefit is not subject to federal
income tax. Alternatively, members of LEOFF Plan 2 who leave service because of a line of duty disability
may be eligible to receive a retirement benefit of at least 10 percent of FAS and two percent per year of
service beyond five years. The first 10 percent of the FAS is not subject to federal income tax.
LEOFF Plan 2 retirees may return to work in an eligible position covered by another retirement system,
choose membership in that system and suspend their pension benefits, or not choose membership and
continue receiving pension benefits without interruption.
A one-time duty -related death benefit is provided to the beneficiary or the estate of a LEOFF Plan 2
member who dies as a result of injuries or illness sustained in the course of employment, or if the death
resulted from an occupational disease or infection that arose naturally and proximately out of the
member's covered employment, if found eligible by the Department of Labor and Industries.
Benefits to eligible surviving spouses and dependent children of LEOFF Plan 2 members killed in the
course of employment include the payment of eligible health care insurance premiums.
Legislation passed in 2009 provides to the Washington state registered domestic partners of LEOFF Plan
2 members the same treatment as married spouses, to the extent that the treatment is not in conflict with
federal laws.
LEOFF members meeting specific eligibility requirements have options available to enhance their
retirement benefits. Some of these options are available to their survivors.
There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the following as of
the latest actuarial valuation date for the plans of June 30, 2012:
Type of Membership Membership
Retirees and Beneficiaries Receiving Benefits 10,189
Terminated Plan Members Entitled to But Not Yet Receiving Benefits 689
Active Plan Members Vested 14,273
Active Plan Members Non -vested 2,633
Total 27,784
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Funding Policy
Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund
the plans. Starting on July 1, 2000, Plan 1 employers and employees contribute zero percent, as long as
the plan remains fully funded. Plan 2 employers and employees are required to pay at the level adopted
by the LEOFF Plan 2 Retirement Board.
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 this funding could be changed by
statute. For DRS' Fiscal Year 2013, the state contributed $54.2 million to LEOFF Plan 2.
The methods used to determine the contribution requirements are established under state statute in
accordance with Chapters 41.26 and 41.45 RCW.
The required contribution rates expressed as a percentage of current -year covered payroll, as of
December 31, 2013, are as follows:
LEOFF Plan I LEOFF Plan II
Employer 0.18% 5.23%
Employee 0.00% 8.41%
Both the City and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows:
LEOFF Plan I LEOFF Plan II
2013 $ 229 $ 737,626
2012 410 691,175
2011 489 654,131
Public Safety Employee's Retirement System (PSERS) Plan 2
Plan Description
PSERS was created by the 2004 legislature and became effective July 1, 2006. PSERS retirement
benefit provisions have been established by Chapter 41.37 RCW and may be amended only by the
State Legislature.
PSERS is a cost -sharing multiple -employer retirement system comprised of a single defined benefit
plan, PSERES Plan 2.
PSERS Plan 2 membership includes:
• PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who meet at least one
of the PSERS eligibility criteria and elected membership during the election 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.
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Covered employers include:
• State of Washington agencies: Department of Corrections, Department of Natural Resources,
Gambling Commission, Liquor Control Broad; Parks and Recreation Commission, and
Washington State Patrol;
• Washington State counties;
• Washington State cities except for Seattle, Spokane and Tacoma; and
• Correctional entities formed by PSERS employers under the Interlocal Cooperation Act.
To be eligible for PSERS, 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
• 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 retirement benefits are financed from a combination of investment earnings and employer and
employee contributions. Employee contributions to the plan accrue interest at a rate specified by the
Director of DRS. During DRS' Fiscal Year 2013, the rate was five and one-half percent compounded
quarterly. Members in PSERS Plan 2 can elect to withdraw total employee contributions and interest
theron, in lieu of any retirement benefit, upon separation from PSERS-covered employment.
PSERS Plan 2 members are vested after the completion of five years of eligible service.
PSERS members may retire with a monthly benefit of two percent of the average final compensation
(AFC) at the age of 65 with five years of service, or at the age of 60 with at least 10 years of PSERS
service credit, or at age 53 with 20 years of service. The AFC is the monthly average of the member's 60
consecutive highest -paid service credit months. There is no cap on years of service credit; and a cost -of -
living allowance is granted (based on the Consumer Price Index), capped at three percent annually.
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 provides disability benefits. There is no minimum amount of service credit required for
eligibility. The monthly benefit is two percent of the 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, and a
cost -of -living allowance is granted (based on the Consumer Price Index), capped at three percent
annually.
PSERS members meeting specific eligibility requirements have options available to enhance their
retirement benefits. Some of these options are available to their survivors.
A one-time duty -related death benefit is provided to the beneficiary or the estate of a PSERS member
who dies as a result of injuries or illness sustained in the course of employment, or if the death resulted
from an occupational disease or infection that arose naturally and proximately out of the member's
covered employment, if found eligible by the Department of Labor and Industries.
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There are 75 participating employers in PSERS. Membership in PSERS consisted of the following as of
the latest actuarial valuation date for the plan of June 30, 2012:
Type of Membership Membership
Retirees and Beneficiaries Receiving Benefits 27
Terminated Plan Members Entitled to But Not Yet Receiving Benefits 60
Active Plan Members Vested 2,083
Active Plan Members Non -vested 2,167
Total 4,337
Funding Policy
Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution
rates. The employer and employee contribution rates for Plan 2 are developed by the Office of the State
Actuary to fully fund Plan 2.
The methods used to determine the contribution requirements are established under state statue in the
accordance with Chapters 41.37 and 41.45 RCW.
The required contribution rates expressed as a percentage of current -year covered payroll, as of
December 31, 2013 are as follows:
Employer
Employee
PSERS Plan II
10.54%
6.36%
Both the City and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows:
PSERS Plan II
2013 $ 14,175
2012 11,187
2011 8,712
Firemen's Pension System
Plan Description
The City is the administrator of the Firemen's Pension Plan which is a closed, single -employer, defined
benefit pension plan that was established in conformance with RCW Chapter 41.18. 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 March 1, 1970 when the LEOFF
retirement system was established. The City's obligation under the Firemen's Pension Plan consists of
paying all benefits, including payments to beneficiaries, for fire fighters who retired prior to March 1, 1970
and excess benefits over LEOFF for covered fire fighters who retired after March 1, 1970. Benefits and
refunds of the defined benefit pension plan are recognized when due and payable in accordance with the
Plan. The Plan does not issue a separate financial report.
Membership of the Firemen's Pension Plan consisted of the following at December 31, 2013.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Type of Membership
Retirees and beneficiaries receiving benefits
Retirees currently receiving full retirement benefits through the
Law Enforcement Officers and Fire Fighters Retirement Plan (LEOFF)
Total
Total
10
1
11
Funding Policy
Under State law, the Firemen's 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 as of January 1, 2013 and it was determined that current assets of the
fund, along with future revenues from state fire insurance taxes and interest earnings, will be sufficient to
pay all future Firemen's Pension Plan pension benefits. In 2013 $56,962 was received from the state
from taxes on fire insurance premiums. On -behalf payments of fringe benefits and salaries for the City's
employees were recognized as revenues and expenditures/expenses during the period. Costs to
administer the plan are paid for through investment earnings and General Fund resources. The Actuarial
Valuation of Firefighters' Pension Fund table is reported in the Required Supplemental Information
section, and a recap of the Schedule of Funding Progress is as follows:
PENSION SCHEDULE OF FUNDING PROGRESS
Actuarial
Valuation Date
January 1, 2005
January 1, 2007
January 1, 2009
January 1, 2011
January 1, 2013
Actuarial Value
of Assets
$1,265
1,336
1,445
1,430
1,416
Actuarial
Accrued
Liabilities
$1,182
1,310
1,610
1,582
1,296
Unfunded Actuarial
Accrued Liabilities
(UAAL)
($83)
(26)
165
152
(120)
Funded Covered
Ratio Payroll
107% $0
102 0
90 442
90 371
109 0
UAAL as a
Percentage of
Covered Payroll
N/A
N/A
37
41
N/A
The Firemen's Pension Plan does not issue a stand-alone financial report and is not included in another
Public Employee Retirement System or another entity. Biennially a complete actuarial valuation financial
report, including an accounting update for intervening years, is prepared by Milliman USA, Incorporated.
This report is available from the City of Tukwila.
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Basis of Accounting
The financial statements are prepared using the accrual basis of accounting. Benefits are recognized
when due and payable in accordance with the plan.
ANNUAL PENSION COST AND NET PENSION OBLIGATION
2011
2012 2013
1 Annual normal cost (BOY) $ - $ - $
2 Amortization of UAAL (BOY) 11,523 11,523 (9,690)
3 Interest to EOY (1 + 2 x i*) 461 461 (363)
4 ARC at EOY (1 + 2 + 3) 11,984 11,984 (10,053)
5 Interest on NPO
6 Adjustment to ARC
7 Annual Pension cost
8 Employer contributions**
9 Change in NPO
10 NPO at BOY
11 NPO at EOY
(4 + 5 - 6)
(11,400)
(21,647)
22,231
47,065
(12,393)
(24,488)
24,079
(12,613)
(27,312)
4,646
50,599 49,187
(7- 8) (24,834) (26,520) (44,541)
(11 prior yr) (284,998) (309,832) (336,352)
(9 + 10) $ (309,832) $ (336,352) $ (380,893)
* (i) is the assumed interest rate that year: 4.0% in 2011, 4.0% in 2012, and 3.75% in 2013.
** Employer contributions for pensions are total contributions to the Fund net of disbursements from the Fund for medical
expenses under RCW 41.26.150 and administrative expenses.
The Annual Required Contribution (ARC) was computed using the Entry Age Normal Cost Method.
Under this method, the projected benefits are allocated on a level basis as a percentage of salary over
the earnings of each individual between entry age and exit age. The amount allocated to each year is
called the Normal Cost and the portion of the Actuarial Present Value of all benefits not provided for by
future Normal Cost payments is called the Actuarial Accrued Liability. Since all members have already
retired, the amount of the Normal Cost is zero. The Unfunded Actuarial Accrued Liability (UAAL) is the
Actuarial Accrued Liability minus the actuarial value of the Fund's assets.
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ANNUAL DEVELOPMENT OF PENSION COST
Interest on Total Change in
Fiscal Annual Net Annual Employer Net Net Pension
Year Required Pension ARC Pension Contri- Pension Obligation (Gain)/
Ended Contribution Obligation Adjustment Cost butions Obligation Balance Loss
--- Amortization ---
(Gain)/ Ending
Factor Loss Balance
2011 11,984 (11,400) (21,647) 22,231 47,065 (24,834) (309,832) (35,081) 13.1657 (21,647) (309,832)
2012 11,984 (12,393) (24,488) 24,079 50,599 (26,520) (336,352) (38,615) 12.6523 (24,488) (336,352)
2013 (10,053) (12,613) (27,312) 4,646 49,187 (44,541) (380,893) (59,240) 12.3153 (27,312) (380,893)
PERCENTAGE OF ANNUAL PENSION COST CONTRIBUTED
Annual Contribution as a* Net Pension
Pension Cost Percentage of Obligation
Fiscal Year Ending (APC) APC (Asset)
December 31, 2011 22,231 212 (309,832)
December 31, 2012 24,079 210 (336,352)
December 31, 2013 4,646 1059 (380,893)
* In years with a negative APC, this percentage is not applicable.
The information presented in the preceding required schedules were determined as part of the actuarial
valuations at the dates indicated.
The key actuarial assumptions used for the January 1, 2013 valuation were:
Actuarial Valuations
Actuarial valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
January 1, 2013
Entry Age Normal
30-year, closed as of January 1, 1999
18 years
Fair market value
Assumptions
Investment rate of return 3.75%
Projected salary increases 3.50%
Price inflation 2.50%
Cost -of -living adjustments Based upon salary increase assumption
when appropriate, for FPF benefits.*
Based upon inflation assumption for some
FPF benefits and all LEOFF benefits.
* Under the Firemen's Pension Trust Fund, most adjustments are based on the change in
salary for the rank of members held at retirement or based on the Consumer Price Index.
Adjustments are determined in accordance with RCW 41.18.150, RCW 41.20 and RCW
41.26
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The Schedule of Funding progress, presented as required supplementary information following the notes
of the financial statements, presents multiyear trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The
Schedule of Employer Contributions is also included as required supplementary information following the
notes to the financial statements.
NOTE 10 — OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLAN
Plan Description
The City is the administrator of the Retiree Medical and Long -Term Care Benefits for LEOFF 1
Employees Plan which is a closed, single -employer, defined benefit, other post -employment benefit plan
(OPEB). The benefits are authorized under state statute, RCW Chapters 41.16 and 41.18 and 41.26 and
may be amended by the state legislature. This plan provides medical, dental and long-term care benefits
to eligible retirees. Membership is limited to eligible law enforcement officers and fire fighters hired prior
to the March 1, 1970 establishment of LEOFF, as well as eligible members of LEOFF hired prior to
October 1, 1977. Financial reporting for the LEOFF retiree healthcare plan is included in the City's
Comprehensive Annual Financial Report. Triennially, a complete actuarial valuation financial report is
prepared by Milliman USA, Incorporated. This report is available from the City.
Membership
As of December 31, 2013, there were 1 active employees and 40 retirees meeting the eligibility
requirements of a LEOFF 1 member. 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. The employee or retiree is not
required to contribute to the cost of the plan. The annual contribution represents the cost of employer -
paid benefits.
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.
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
ANNUAL OPEB COST AND NET OPEB OBLIGATION
2011
2012 2013
1 Annual normal cost (BOY)
2 Amortization of UAAL (BOY)
3 Interest to EOY
4 ARC at EOY
5 Interest on Net OPEB Obligation
6 Adjustment to ARC
7 Annual OPEB cost
(1 + 2 x i")
(1 + 2 + 3)
(4 + 5 - 6)
$ 91,385 $ 91,385 $ 91,385
1,124, 502 1,124, 502 1,124, 502
48,635 48,635 48,635
1,264,522
112,598
1,264,522 1,264,522
145,727
174,458
213,809 287,945 359,904
1,163,311
1,122,304 1,079,076
8 Employer contributions 335,090 404,007 878,755
9 Change in Net OPEB Obligation (7- 8) 828,221 718,297 200,321
10 Net OPEB Obligation at BOY (11 prior yr) 2,814,942 3,643,163 4,361,460
11 Net OPEB Obligation at EOY (9 + 10) $ 3,643,163 $ 4,361,460 $ 4,561,781
" (i) is the assumed interest rate that year: 4% in 2011, 4% in 2012, and 4% in 2013.
The net OPEB obligation of $4,561,781 is included as a non -current liability on the Statement of Net
Position.
ANNUAL DEVELOPMENT OF OPEB COST
Total
Fiscal Annual Interest on Employer Change in Net OPEB Amortization---
Year Required Net OPEB ARC Annual Contri- Net OPEB Obligation (Gain)/ (Gain)/ Ending
Ended Contribution Obligation Adjustment OPEB Cost butions Obligation Balance Loss Factor * Loss Balance
2008 $ 1,366,284 $ - $ - $1, 366, 284 $ 557,103 $ 809,181 $ 809,181 $ 809,181 13.4622 $ - $ 809,181
2009 1,366,284 40,459 61,839 1,344,904 335,265 1,009,639 1,818,820 1,031,019 13.0853 61,839 1,818,820
2010 1,366,284 90,941 143,332 1,313,893 317,771 996,122 2,814,942 1,048,513 12.6896 143,332 2,814,942
2011 1,264,522 112,598 213,809 1,163,311 335,090 828,221 3,643,163 929,432 13.1657 213,809 3,643,163
2012 1,264,522 145,727 287,945 1,122,304 404,007 718,297 4,361,460 860,515 12.6523 287,945 4,361,460
2013 1,264,522 174,458 359,904 1,079,076 878,755 200,321 4,561,781 385,767 12.1184 359,904 4,561,781
* 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
Percentage of
Annual OPEB Employer Annual OPEB Net OPEB
Fiscal Year Ending Cost Contribution Cost Contributed Obligation
December21, 2011 1,163,311 335,090 29 3,643,163
December 21, 2012 1,122, 304 404,007 36 4,361,460
December 21, 2013 1,079,076 878,755 81 4,561,781
Funded Status and Funding Progress
As of January 1, 2014, the most recent actuarial valuation date, the plan was 0% funded. The actuarial
accrued liability for benefits was $21.3 million, and the actuarial value of assets was $0, resulting in an
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CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
unfunded actuarial accrued liability (UAAL) of $21.3 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)
Actuarial Unfunded Actuarial UAAL as a
Actuarial Value Accrued Accrued Liabilities Funded Covered Percentage of
Valuation Date of Assets Liabilities (UAAL)* Ratio Payroll Covered Payroll
January 1, 2008 $0 $16,103 $16,103 0% $581 4%
January 1, 2011 0 14,805 14,805 0 371 3
January 1, 2014 0 21,264 21,264 0 195 1
* Only three valuations completed to date
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. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made
about the future.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation. 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. Significant methods and
assumptions were as follows:
Actuarial Valuations
Valuation date
Actuarial Cost Method
Amortization Method
Remaining Amortization Period
Asset Valuation Method
January 1, 2011
Entry Age Normal
21-year, closed as of January 1, 2008
18 years
Fair market value
Assumptions
Investment rate of return 4.00%
Medical inflation
Long-term care inflation
Year Medical Cost Rate
2011 7.80%
2012 7.10%
2013 6.50%
2014-2019 5.90%
2020-2030 5.80%
2031-2036 5.70%
4.75%
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.
B-88
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTE 11 — LONG-TERM DEBT
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 none, would be 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 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:
• 2003 LTGO refunding bonds were issued to refund the remaining debt of the 1994 LTGO bonds.
1994 LTGO bonds were issued to pay for the Community Center and Fire Station #53.
• 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.
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.
B-89
CITY OF TUKWILA: 2013 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, unamortized debt issue costs are recorded as deferred charges and bonds are displayed net of
premium or discount; annual interest expense is decreased by amortization of debt premium and
increased by the amortization of debt issue costs and discount. The City currently maintains a rating of
Aaa from Moody's Investor Service for debt in this category.
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.
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, 2013.
CHANGES IN LONG-TERM LIABILITIES SUMMARY
REVENUE PUBLIC WORKS DUE TO
GENERAL SPECIAL BONDS TRUST FUND COMPENSATED OTHER
OBLIGATION ASSESSMENT UTILTIES LOANS ABSENCES' GOVERNMENTS TOTAL
Outstanding 01/01/2013 $18,360,000 $ - $3,540,000 $ 6,621,364 $ 3,477,305 $ 7,392,600 $ 39,391,269
Added 1,000,000 6,687,500 - - 2,937,241 10,624,741
Retired / redeemed (4,653,991) (465,000) (558,294) (2,757,276) (371,000) (8,805,560)
Outstanding 12/31/2013 $14,706,009 $6,687,500 $3,075,000 $ 6,063,071 $ 3,657,270 $ 7,021,600 41,210,450
Add: Premium net of discounts 730,129
Total Long -Term Liabilities $ 41,940,579
1 Compensated absences beginning balance restated due to inclusion of Metropolitan Park District. See Changes in Long -Term Liabilities section for additional details.
B-90
CITY OF TUKWILA: 2013 CAFR
NOTES TO THE FINANCIAL STATEMENTS
Debt Service to Maturity
Following is a schedule showing the debt service requirements to maturity for the City's long-term debt,
excluding compensated absences.
Government Activities
Year Ended
December
31
General Obligation
Bonds
Due to Other Governments
Special Assessments
TOTAL
Principal Interest
Principal Interest
Principal Interest
2014
2015
2016
2017
2018
2019 - 2023
2024 - 2028
2029 - 2033
2034 - 2038
Totals
$ 1,917,788 $ 743,479
1,514,507 649,495
1,563,737 593,400
1,616,428 528,915
1,679,196 445,846
5,914,353 1,092,810
500,000 27,050
$ 14, 706, 009
$ 4,080,995
$ 371,200 $ 286,263
385,200 271,560
171,600 255,861
179,200 249,088
184,800 243,173
1,032,400 1,103, 504
1,254,000 875,353
1,541,200 580,236
1,902,000 211,365
$ 7,021,600
$ 4,076,402
$ - $ -
447,500 346,784
450,000 286,005
450,000 271,830
445,000 257,655
2,225,000 1,017,938
2,225,000 478,375
445,000 23,919
$ 6,687,500
$2,682,505
$ 3,318,730
3,615,046
3,320,603
3,295,460
3,255,670
12, 386, 006
5,359,778
2,590,355
2,113, 365
$ 39,255,011
Year Ended
December
31
Business -Type Activities
General Obligation
Bonds
Revenue Bonds
Public Works Trust Fund
Loans
TOTAL
Principal Interest
Principal Interest
Principal Interest
2014
2015
2016
2017
2018
2019 - 2023
2024 - 2026
Totals
$
$
$
$
$ 495,000 $ 139,953
520,000 110,172
150,000 91,950
155,000 85,950
165,000 78,975
930,000 277,425
660,000 60,300
$ 3,075,000
$ 844,725
$ 558,293 $ 30,315
558,293 27,524
558,293 24,732
558,293 21,941
558,293 19,149
2,739,363 16,358
532,242 2,661
$ 6,063,071
$ 142,681
$ 1,223,561
1,215,989
824,975
821,184
821,418
3,963,146
1,255,203
$ 10,125,477
B-91
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
Changes in Long -Term Debt
CHANGES IN LONG-TERM LIABILITIES — GOVERNMENTAL FUNDS
ITEM
Interest OUTSTANDING
OUTSTANDING Due Within
Rates Maturity Authorized 12/31/2012 ISSUED REDEEMED 12/31/13 One Year
GOVERNMENTAL ACTIVITIES:
Limited General Obligation (GO) Bonds Payable:
2003 Refunding-TCC, Fire Stn 4.00-5.00 12/01/14 $ 4,195,000 $ 910,000 $
2003 LTGO-Golf Course 4.25-4.65 12/01/23 6,277,500 3,240,000
2008 Refunding-Streets/Facilities 4.00-6.00 12/01/19 6,180,000 4,545,000
2010 LTGO-Streets/Equipment 2.00-5.41 12/01/24 5,870,000 5,070,000
2011 Refunding -Streets (2003 GO) 12/01/39 4,620,000 4,595,000
2013 LTGO-MPD Pool Improve 2.00-4.00 12/01/22 1,000,000
1,000,000
$ 445,000 $ 465,000 $ 465,000
3,240,000 - -
500,000 4,045,000 595,000
355,000 4,715,000 365,000
15,000 4,580,000 395,000
98,991 901,009 97,788
Total Bonds Payable
Unamortized Premiums:
Issuance premiums
28,142,500 18,360,000
827,832
1,000,000 4,653,991 14,706,009 1,917,788
143,552 684,280
Net Bonds Payable
Due to Other Governments
2009 Facility SCORE
2010 Refunding ValleyCom
3.00-6.62 01/01/39
4.30-5.75 12/01/15
28,142,500 19,187,832
6,898,800 6,745,600
1,065,000 647,000
1,000,000 4,797,542 15,390,290 1,917,788
156,000 6,589,600
215,000 432,000
159,200
212,000
Total Due Other Governments
Special Assessment Debt
7,963,800 7,392,600
Klickitat Urban Access Project 3.150-5.375 01/15/29 6,687,500
371,000
7,021,600 371,200
6,687,500 - 6,687,500
Total Special Assessment Debt 6,687,500
Compensated Absences: 1
6,687,500 6,687,500
3,168,775 2,669,860 2,500,668 3,337,967
Total Governmental Funds $ 42,793,800 $ 29,749,207 $ 10,357,360 $ 7,669,210 $ 32,437,357 $ 2,288,988
1 Prior year compensated abesnces earned was greater then w hat was taken. Using LIFO, there is no current portion to report.
Net bonds payable beginning balance has been restated due to the implementation of GASB Statement
No. 65 Items Previously Reported as Assets and Liabilities. This statement calls for deferred charges on
refunding bond issues to be reported as a deferred outflow of resources rather than bonds and other debt
payable, due in more than one year.
Additionally, compensated absences beginning balance has been restated to reflect the Tukwila
Metropolitan Park District as a blended component unit. Prior to 2013, the MPD was reported as a
discretely presented component unit and the compensated absences related to the MPD was not
included in the Changes in Long-term Liabilities — Governmental Funds chart.
ITEM
BEGINNING
BEGINNING BLENDED GASB BALANCE
BALANCE COMPONENT STATEMENT 12/31/2012,
12/31/2012 UNIT NO. 65 RESTATED
Net Bonds Payable
Compensated Absences
$18,589,476 $
3,144,413
- $ 598,356 $
24,362
19,187, 832
3,168, 775
B-92
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES
ITEM
Interest
OUTSTANDING OUTSTANDING Due Within
Rates Maturity Authorized 12/31/2012 ISSUED REDEEMED 12/31/13 One Year
BUSINESS -TYPE ACTIVITIES:
Bonds Payable:
1995 Water/Sewer Revenue 4.15-6.63 02/01/15 $ 4,500,000 $ 1,060,000 $ - $ 330,000 $ 730,000 $ 355,000
2006 Water/Sewer/SWM Revenue 4.00-4.50 12/01/26 3,180,000 2,480,000 135,000 2,345,000 140,000
Total Bonds Payable
Unamortized Deferred Credits (Charges):
Issuance Premiums
Issuance Discounts
7,680,000 3,540,000 465,000 3,075,000 495,000
58,070 11,150 46,920
(12,695) - (11,623) (1,072)
Net Bonds Payable
Public Works Trust Fund Loans:
2003 Loan-Water/Sewer
2003 Loan -Surface Water
2004 Loan-Water/Sewer
2004 Loan -Surface Water
2004 Loan -Surface Water
7,680,000 3,585,375
0.50 07/01/21 273,870
0.50 07/01/21 219,725
0.50-2.00 07/01/24 5,016,000
0.50-2.00 07/01/24 684,000
1.00 07/01/24 4,196,056
129,962
104,496
3,274,635
446,541
2,665,730
464,528
14,328
11,723
272,886
37,212
222,144
3,120,848 495,000
115,634
92,773
3,001,749
409,329
2,443,586
14,454
11,597
272,886
37,212
222,144
Total Public Works Trust Fund Loans
11,702,651 6,621,364
558,294
6,063,071 558,293
Compensated Absences:
308,530 267,381 256,608 319,303 5,098
Total Business -Type Activities
$ 19,382,651 $ 10,515,270 $ 267,381 $ 1,279,429 $ 9,503,222 $ 1,058,391
TOTAL ALL FUNDS
$ 62,176,451 $ 40,264,477 $ 10,624,741 $ 8,948,640 r$ 41,940,578 $ 3,347,379
Due to Other Governments
Valley Communication Center Public Development Authority issued General Obligation bonds in 2000 for
a new dispatch facility and refunded the debt in April 2010. The City is contracted to pay 20% of the debt
service of these 15-year bonds that mature in 2015. This debt is paid from the General fund.
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.
LONG-TERM LIABILITIES RECONCILIATION
Government Enterprise Balance
Funds Funds 12-31-13
General obligation bonds
Special assessment bonds
Revenue bonds
Public Works Trust Fund loans
Due to Other Governments
Employee leave benefits
Net Premiums
$ 14, 706, 009 $
6,687,500
7,021,600
3,337,967
684,280
3,075,000
6,063,071
319,303
45,849
$ 14,706,009
6,687,500
3,075,000
6,063,071
7,021,600
3,657,270
730,129
Total long-term debt $ 32,437,357 $ 9,503,222 $ 41,940,579
B-93
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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.
At December 31, 2013, 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 $ 71,345,605 $ 118,909,342 $ 237,818,684 $ 356,728,027
Outstanding Net
Indebtedness 26,231,623 26,231,623 26,231,623 26,231,623
Margin Available $ 45,113,982 $ 92,677,719 $ 211,587,061 $ 330,496,404
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.
LID 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 first of 15 annual installments for the assessments will be
due by October 16, 2014.
As of December 31, 2013, all assessments are current and no accounts are delinquent or in default.
B-94
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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, 2013 is $0 for its tax-exempt bond issues subject to the Tax Reform Act.
NOTE 12 — CONSTRUCTION COMMITMENT
Upon completion, the projects will be capitalized in their appropriate categories in the Government Wide
Statements and in the proprietary fund financials, if applicable. As of December 31, 2013 the City share
of contractual obligations on construction projects total $4,020,911.
Project Name
Interurban Avenue South
Tukwila Urban Center
Duwamish Gardens
City Facilities Needs Assessment & Feasibility
Andover Park West
42nd Avenue 5
Boeing Access Rd over BNRR Rehab Design
Other governmental projects
Total Governmental Activities
Project Name
Remaining
Commitment
4,248
859,780
113,578
298,261
608,841
392,579
187,425
53,670
$ 2,518,382
Remaining
Commitment
Sewer Lift Station No. 2 $ 57,778
Storm Lift Station No.15 185,276
Small Drainage 2013 90,066
42nd Ave S Gilliam Creek Culvert 43,982
Andover Park West 1,024,834
Other Utility related projects 100,593
Total Business -Type Activities $ 1,502,528
Total Commitments $ 4,020,911
NOTE 13 — LITIGATION
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.
B-95
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTE 14 — 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 162 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
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 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. These revenues directly
offset portions of the membership's annual assessment.
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 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.
B-96
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
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 $150,000 and a plan limit of
$8,086,270 in 2013. 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 reserve.
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 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 $150,000 and a plan limit of
$8,086,270 in 2013. 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 reserve.
The following table reflects changes in the balances of claims liabilities for 2013 and 2012.
SUMMARY OF HEALTH CARE CLAIM LIABILITIES
ITE M
Active Employees Retired Employees LEOFF I
2013 2012 2013 2012
Claim Liabilities at Beginning of Year
Claim expenses:
Current year and changes in estimates
Claim payments and expenses
Claim Liabilities at End of Year
$ 1,638,250 $ 1,499,600 $ 209,500 $ 193,200
4,745,675 4,852,259 817,357 388,026
(4,714,675) (4,713,609) (812,607) (371,726)
$ 1,669,250 $ 1,638,250 $ 214,250 $ 209,500
B-97
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
NOTE 15 — GASB IMPLEMENTATION / CHANGES IN ACCOUNTING PRINCIPLE
Changes in Accounting Principle related to GASB Implementation
The City implemented GASB Statement No. 61, The Financial Reporting Entity: Omnibus. This required
the City to change the presentation of the Tukwila Metropolitan Park District (MPD) from a discretely
presented component unit to a blended component unit. The implementation of GASB Statement No. 61
also required the City to change the accounting for the operating loan in 2011 and 2012. When the loans
were made, the City recorded an expenditure and the MPD recorded revenue received. The prior period
adjustment reversed these entries and recorded a receivable to the City and a payable from the MPD.
Additional details on all loans to the MPD can be found in Note 1.
The City implemented GASB Statement No. 65 Items Previously Reported as Assets and Liabilities, for
the year ended December 31, 2013. The portion of this standard that impacted the City was the
requirement to eliminate the amortization of bond issuance costs. The implementation required the
expensing of outstanding bond issuance costs retroactively and showing a prior period adjustment. The
total prior period adjustment is $316,382 which restated the 2012 ending fund balance. The proprietary
statements were restated by $66,661. The governmental statements were restated by $249,721. The
amount per bond is listed in the table below.
Governmental Activities:
Name
Year/Type
Issuance Costs Remaining
as of 12/31/2012
Streets & Golf Course
Facilities
Streets & Facilities
Streets & Equipment
Streets
2003/G.O. Bonds
2003 Refunded/G.O. Bonds
2008 Refunded/G.O. Bonds
2010/G.O. Bonds
2011 Refunded/G.O. Bonds
Total
$54,021
13,419
60,676
63,452
58,153
$249,721
Business -Type Activities
Name
Year/Type
Issuance Costs Remaining
as of 12/31/2012
Water/Sewer 1995/Revenue Bonds
Water/Sewer/SWM 2006 Revenue Bonds
Total
$10,633
56,028
$66,661
Prior Period Adjustments not related to GASB Implementation
Two construction projects were completed in early 2013; Tukwila Urban Center Access (Klickitat Local
Improvement District No. 33) and Southcenter Parkway Extension. Both were roadway projects where
the majority of expenditures were charged correctly to the Arterial Street fund. However, when the
projects were closed out, it was discovered that prior year storm drain capital expenses were incorrectly
accounted for in the arterial Street fund rather than the Surface Water Management fund. The prior
period adjustment moves the costs and related revenue from the Arterial Street fund to the Surface
Water Management fund and adjusts construction -in -progress as needed.
The City has a franchise agreement with the Highline Water District which requires the District, at their
own expense, to relocate District water assets to accommodate any City improvements. Due to a
development agreement the City entered into to develop certain real property, the water district was
B-98
CITY OF TUKWILA: 2013 CAFR NOTES TO THE FINANCIAL STATEMENTS
required to relocate its water assets as well as construct larger water mains to accommodate future
growth in capacity. The City and Highline entered into an interlocal agreement to include the water
district's water costs with the City's construction contract bid. The water district would then reimburse
the City for the construction, restoration, and administrative costs. When the project was closed out in
2013, it was discovered that the costs related to this interlocal agreement had been included in
Construction -in -Progress for the City. The prior period adjustment reduces construction -in -progress
totals by the amount of the Highline Water District agreement.
The following chart summarizes the effect of all changes in accounting principle/prior period
adjustments:
DESCRIPTION
FUND FINANCIAL STATEMENTS
GOV'T WIDE
Primary
Go',emment
FUND FINANCIAL STATEMENTS
GOV'T WIDE
Business -
Type
GOUT WIDE
TOTAL
Assets transferred from
Arterial Street to Storm Water
Cash
Capital asset
Fund Balance
Assets constructed for
neighboring water district
Capital asset
Fund Balance
Blending of Component unit
GASB 61
Interfund receivable
Interfund payable
Fund Balance
Expensing Bond Cost of
Issuance GASB 65
Other asset
Fund Balance
TOTAL ADJUSTMENTS
General
Fund
Park
District
Arterial
Street
GoVt Wide
Adjustments
Water
Sewer
Storm Water
$ -
$ -
$413,321
$ -
(3,863,456)
$ 413,321
(3,863,456)
$ -
$ -
$ (413,321)
3,863,456
$ (413,321)
3,863,456
$ -
-
-
-
413,321
(3,863,456)
(3,450,135)
-
-
3,450,135
3,450,135
-
(1,436,084)
(1,436,084)
(1,436,084)
-
-
-
-
(1,436,084)
-
-
(1,436,084)
(1,436,084)
850,000
850,000
(850,000)
(850,000)
-
-
-
-
-
850,000
(850,000)
-
-
-
-
-
-
-
(249,721)
(249,721)
(25,201)
(34,737)
(6,723)
(66,661)
(316,382)
-
-
-
(249,721)
(249,721)
(25,201)
(34,737)
(6,723)
(66,661)
(316,382)
$850,000
$(850,000)
$413,321
$(4,113,177)
$(3,699,856)
$ (1,461,285)
$(34,737)
$ 3,443,412
$ 1,947,390
$(1,752,466)
B-99
CITY OF TUKWILA: 2013 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 31,2013
VARIANCE WITH
ORIGINAL FINAL FINAL BUDGET
BUDGET BUDGET ACTUAL POSITIVE
(GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE)
REVENUES:
TAXES $ 39,346,544 $ 39,183,384 $ 40,615,890 $ 1,432,506
LICENSES AND PERMITS 1,892,089 1,892,089 2,013,875 121,786
INIb-GOVERNMENTAL 4,738,196 4,867,856 4,719,583 (148,273)
CHARGES FOR SERVICES 2,422,606 2,422,606 2,202,307 (220,299)
FINES AND FORFEITURES 234,829 234,829 242,638 7,809
INVESTMENT EARNINGS 147,573 147,573 108,053 (39,520)
MISCELLANEOUS 118,318 151,818 110,317 (41,501)
TOTAL REVENUES
48,900,155 48,900,155
50,012,664 1,112,509
EXPENDITURES:
CURRENT:
GENERAL GOVERNMENT 9,375,569 9,079,533 9,266,330 (186,797)
PUBLIC SAFETY 25,904,060 25,712,296 25,650,155 62,141
PHYSICAL ENVIRONMENT 1,961,047 1,961,047 1,766,087 194,960
TRANSPORTATION 2,841,361 2,841,361 2,759,506 81,855
ECONOMIC ENVIRONMENT 3,848,667 3,973,667 3,893,111 80,556
CULTURE AND RECREATION 3,622,994 3,667,794 3,631,819 35,975
CAPITAL OUTLAY 400,440 400,440 250,482 149,958
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER EXPENDITURES
OTHER FINANCING SOURCES (USES):
SALES OF CAPITAL ASSETS
BOND PROCI-H )S
TRANSFERS IN
TRANSFERS OUT
LOAN TO TUKWILA METROPOLITAN PARK DISTRICT
TOTAL OTHER FINANCING SOURCES AND USES
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
CHANGE IN ACCOUNTING PRINCIPLE
FUND BALANCES - BEGINNING AS RESTATED
47,954,138 47,636,138
47,217,490 418,648
946,017 1,264,017
2,795,173 1,531,156
81,000
12,035,740
(10,925,688)
- 5,493 5,493
1,081,000 1,000,000 (81,000)
12,110,740 14,919,606 2,808,866
(11,325,688) (10,662,843) 662,845
(1,000,000) 1,000,000
1,191,052 866,052
5,262,256 4,396,204
2,137,069 2,130,069 8,057,430 5,927,361
6,330,000 8,530,000
6,330,000 8,530,000
8,378,557
850,000
9,228,557
(151,443)
850,000
698,557
FUND BALANCES - ENDING $ 8,467,069 $ 10,660,069 $ 17,285,986 $ 6,625,917
B-100
CITY OF TUKWILA: 2013 CAFR REQUIRED SUPPLEMENTAL INFORMATION
CITY OF TUKWILA, WASHINGTON
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
METROPOLITAN PARK DISTRICT
FOR THE YEAR ENDED DECEMBER 31, 2013
VARIANCE WITH
ORIGINAL FINAL FINAL BUDGET
BUDGET BUDGET ACTUAL POSITME
(GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE)
REVENUES:
TAXES:
PROPERTY $ 680,186 $ 680,186 $ 681,288 $ 1,102
INTERGOVERNMENTAL 416,666 416,666 3,059 (413,607)
CHARGES FOR SERVICES 211,000 211,000 226,709 15,709
MISCELLANEOUS 3,044 3,044
TOTAL REVENUES 1,307,852 1,307,852 914,100 (393,752)
EXPENDITURES:
CURRENT:
CULTURAL AND RECREATION 613,760 613,760 662,820 (49,060)
CAPITAL OUTLAY:
CULTURAL AND RECREATION 1,416,666 1,416,666 739,109 677,557
DEBT SERVICE
PRINCIPAL 141,615 141,615 141,615
INTEREST 32,235 32,235 39,016 (6,781)
TOTAL EXPENDITURES 2,204,276 2,204,276 1,440,946 763,330
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (896,424) (896,424) (526,846) 369,578
OTHER FINANCING SOURCES (USES):
TRANSFERS IN
TRANSFERS OUT
CAPTAL LOAN FR PRIMARY GOVT
TOTAL OTHER FINANCING SOURCES AND USES
NET CHANGE IN FUND BALANCES
1,100,048 1,100,048
30,000 30,000 (1,100,048) (1,130,048)
1,038,066 1,038,066 (1,038,066)
1,068,066 1,068,066 (1,068,066)
171,642 171,642 (526,846) (698,488)
FUND BALANCES - BEGINNING 111,642 (189,329) (189,329)
CHANGE IN ACCOUNTING PRINCIPLE (850,000) (850,000)
FUND BALANCES - BEGINNING AS RESTATED 111,642 (1,039,329) (1,039,329)
FUND BALANCES - ENDING $ 283,284 $ 171,642 $ (1,566,175) $ (1,737,817)
B-101
CITY OF TUKWILA: 2013 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. 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 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.
B-102