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HomeMy WebLinkAbout2018 Limited Tax General Obligation Bonds - $18,365,000 (Ord 2559 - Public Safety: Public Works Shops Land Acquisition)2018 Limited Tax General Obligation Bonds - Public Safety Plan: Public Works Facility $18,365,000 CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2018 $18,365,000 Bonds Dated: August 14, 2018 Opinion Dated: August 14, 2018 PACIFICA LAW GROUP LLP 1191 2nd Avenue, Suite 2000 Seattle, Washington 98101-3404 10076 00005 ia07cs279k CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2018 — $18,365,000 RECORD OF PROCEEDINGS Organizational Documents 1. Certificate for Transcript 2. Certificate of the Director of Elections of King County setting forth the names and terms of office of the Mayor and City Council 3. Certificate of the Mayor setting forth the names of the City Administrator, Finance Director and City Clerk 4. Certified copy of the proceedings of the City Council last fixing the time, date and place of regular meetings of the City Council 5. Certificate of the City Clerk stating the official newspaper of the City 6. Certificate of the King County Assessor stating the assessed valuation of all of the taxable property within the City as fixed in the fall of 2017 for the purposes of 2018 taxation 7. Certificate of the Finance Director as to the outstanding indebtedness of the City, including any lease -purchase or conditional sale contracts and any general obligation debt 8. Bond Counsel's Calculation of Debt Limit Authorization of Bonds 9. Certified copy of Ordinance No. 2559 passed on December 4, 2017 (the "Bond Ordinance") 10. Certified copy of the minutes of the Committee of the Whole meeting held on November 27, 2017, showing the first discussion of the Bond Ordinance 11. Certified copy of the minutes of the meeting of the City Council held on December 4, 2017, showing the passage of the Bond Ordinance 12. Certified copy of Ordinance No. 2574 passed by the City Council on May 7, 2018 (the "First Amendment") 13. Certified copy of the minutes of the City Council meeting held on May 7, 2018, showing the passage of the First Amendment 14. Affidavit of publishing a summary of the Bond Ordinance 10076 00005 hg17g7274b 15. Affidavit of publishing a summary of the First Amendment 16. Preliminary Official Statement 17. Certificate of Award 18. Official Statement Closing Documents 19. Rating Letter 20. Copy of Blanket Issuer Letter of Representations to DTC 21. Continuing Disclosure Certificate 22. Signature Identification and Nonlitigation Certificate 23. Certificates of Manual Signature and Certificates of Mailing 24. Certificate of Authorization of Authorized Signer on Behalf of the Fiscal Agent 25. Certificate regarding Authentication, Registration and Delivery of the Bonds 26. Official Statement Certificate 27. Federal Tax Certificate with the following exhibits: Exhibit A — I. Description of Project II. Description of Private Use III. Schedule of Expected Expenditures Exhibit B — Certificate of Underwriter Exhibit C — Certificate of Financial Advisor, together with Schedules Exhibit D — Written Procedures 28. Internal Revenue Service Form 8038-G and Affidavit of Mailing 29. Specimen Bond 30. Certificate Regarding Payment and Delivery 31. Receipt for Bonds 32. Closing Memorandum 33. Bond Form 101 Opinion 34. Final approving legal opinion of Pacifica Law Group LLP, Bond Counsel 2 10076 00005 hg17g7274b CERTIFICATE FOR TRANSCRIPT I, CHRISTY O'FLAHERTY, the City Clerk of the City of Tukwila, Washington (the "City"), do hereby certify that the within and attached documents are in each case true and correct copies of the originals of such documents and that none of the resolutions, ordinances, proceedings, statements or certificates contained herein have been repealed, rescinded or canceled and all of the officers last certified as holding City offices have continued to hold their respective offices from such date to and including the date of this certificate. Dated this 14th day of August, 2018. Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 00005 hg17g827ky Department of Elections Julie Wise, Director STATE OF WASHINGTON )SS. COUNTY OF KING This is to certify that I, Julie Wise, am the Director of King County Elections, King County, Washington; and That the following officials serve as mayor and councilmembers for the City of Tukwila, King County, Washington, as determined from the official election records of King County, their terms of office included, as now on file in the Elections Department. Office Incumbent Term of Office Mayor Allan Ekberg December 2019 Council Position No. 1 Verna Seal December 2021 Council Position No. 2 Kathy Hougardy December 2019 Council Position No. 3 Thomas McLeod December 2021 Council Position No. 4 Dennis Robertson December 2019 Council Position No. 5 Zak Idan December 2021 Council Position No. 6 Kate Kruller December 2019 Council Position No. 7 De'Sean Quinn December 2021 Dated at Renton, King County, Washington this 30th day of May 2018. Julie W E.e, Director RNT-EL-0100 1919 SW Grady Way, Renton, WA 98057-2906 1 206-296-VOTE (8683) I II Y Relay: 711 I kingcounty.gov/elections CERTIFICATE I, ALLAN EKBERG, Mayor of the City of Tukwila, Washington (the "City") do hereby certify that David Cline is the duly appointed City Administrator, Peggy McCarthy is the duly appointed Finance Director, and Christy O'Flaherty is the duly appointed City Clerk of the City. Dated this 14th day of August, 2018. Allan Ekberg, May City of Tukwila, Washington 10076 00005 ha17a827kv CERTIFICATE REGARDING REGULAR MEETINGS OF THE CITY COUNCIL I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a true and correct copy of the proceedings setting the date, time and place for regular meetings of the City Council. Dated this 14th day of August, 2018. Christy O'Flaherty, City Clerk City of Tukwila, Washington 1(1f17F nnnnc hn17nR)7k, Amended by 2209 City of Tukwila Washington Ordinance No. c; O02- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, SETTING COUNCIL MEETING PROCEDURES; REPEALING ORDINANCE NOS. 1311, 1345, 1421, 1770 §1, AND 1796 §3 (PART); PROVIDING FOR SEVERABILTTY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council has decided to alter the procedures under which it operates to provide for a more efficient and orderly governmental process; and WHEREAS, several different ordinances from various years now have portions of operating procedures that could more easily be followed in one ordinance; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Chapter 2.04 of the TMC is hereby amended to read as follows: 2.04.010 Meetings Declared Open and Public All meetings of the Tukwila City Council and its committees shall be open and public, and all persons shall be permitted to attend any meeting of these bodies, except as otherwise provided in Section 2.04.140. 2.04.020 Regular Meetings The City Council shall meet regularly on the first and third Mondays of each month at 7:00 p.m., unless an alternative starting time is set and notice is provided to the public pursuant to Section 2.04.040. If at any time any Regular Meeting falls on a holiday, the Council shall meet on the next business day at the same hour. The City Council shall meet at Tukwila City Hall, unless otherwise publicly announced. 2.04.030 Committee of the Whole Meetings A. The Council shall sit as a Committee of the Whole on the second and fourth Monday of each month at 7:00 p.m., unless an alternate starting time is published; except, if at any time any committee meeting falls on a holiday, the Council shall meet on the next business day at the same hour. The City Council shall meet at Tukwila City Hall, unless otherwise publicly announced. B. Meetings of the Committee of the Whole shall be held primarily for the purpose of considering current issues of the City, coordinating the work of the City Council, and discussing draft ordinances, resolutions and policy issues in detail. The Committee of the Whole will have no power to take final actions including, but not limited to, adopting ordinances or passing motions or resolutions. C. The Committee of the Whole may meet in a retreat setting to plan their work at the beginning of the year or at any time beneficial to in-depth deliberations by the Council. Results of the Committee of the Whole's retreats will be discussed with the Mayor and administration in order to establish and understand City goals. A report summarizing the proceedings will be made available following each retreat. No official action will be taken at a retreat. 2.04.040 Special Meetings Special meetings may be called by the Mayor, or any three Councilmembers by written notice delivered by City employee(s) to each member of the Council at least 24 hours before the time specified for the proposed meeting and with public notice made pursuant to RCW 42.30.080. Council Meeting Procedures 1 1 2.04.050 Quorum At all meetings of the City Council, four members shall constitute a quorum for the transaction of business. 2 04.060 Seating A. Members of the City Council will be seated at the Council table according to seniority of the Council, except that the Council President will be seated at the right of the Mayor. B. Seniority shall be determined by the: 1. Greatest consecutive number of years served. 2. Greatest consecutive number of years plus months or years served prior to the current term(s). 3. Number of votes when elected. 2.04.070 Council President --Mayor Pro Tempore A. At the first Regular Meeting in January of each year, members of the City Council shall elect from their number a Council President who shall hold office at the pleasure of the Council. The general policy of Council is to elect presidents in a rotating order. If a vacancy occurs in the office of Council President, the City Council, at their next Regular Meeting, shall select a new Council President to serve the remainder of the year. B. In the absence of the Mayor, the Council President shall become the Mayor Pro Tempore and perform the duties of the Mayor except that the Council President shall not have the power to appoint or remove any officer or to veto any ordinance. If a vacancy occurs in the office of the Mayor, the City Council — at their next Regular Meeting -- shall elect from their number a Mayor who shall serve until a Mayor is elected and certified at the next municipal election. 2 04.080 Presiding Officer A. All Regular and Special Meetings of the City Council shall be presided over by the Mayor or, in his/ her absence, by the Mayor Pro Tempore. If neither the Mayor nor the Mayor Pro Tempore is present at a meeting, the presiding officer for that meeting shall be elected by a majority of the vote of those Councilmembers present, provided there is a quorum. B. All Committee of the Whole meetings shall be presided over by the Council President. If the Council President is temporarily absent, the Council shall elect a Councilmember to serve in that capacity until the Council President returns. C. The City Clerk or his/her designee will staff Regular and Special Council meetings and Committees of the Whole meetings. In the absence of the Clerk, Deputy Clerk or other qualified staff member appointed by the Clerk, the Mayor or Council may appoint a staff person to act in that capacity. D. The appointment of a Councilmember as Mayor Pro Tempore shall not in any way abridge his/her right to vote on matters coming before the Council at such meeting. E. The presiding officer shall preserve strict order and decorum at all meetings of the Council. The presiding officer shall state all questions coming before the Council, provide opportunity for discussion on each item on the table, and announce the decision of the Council on all subjects. Procedural decisions made by the presiding officer may be overruled by a majority vote of the Council. 2.04.090 Agenda for Regular or Special Council Meetings All items to be included on the agenda for Council consideration must be submitted to the City Clerk in full by 12:00 p.m. Noon on the Wednesday preceding each Council meeting. The City Clerk shall then prepare a proposed agenda, with attachments, according to the order of business. After the proposed agenda has been approved by the Council President or, in his/her absence, by his/her designated member of the City Council, the City Clerk shall prepare the final agenda, which shall be distributed to the Mayor, Councilmembers, City Attorney and Department Heads no later than Noon on the Friday preceding the Council Meeting. A copy of the agenda and subsequent documents shall be posted on the lobby bulletin board at City Hall. A copy of the Agenda face sheet will be posted on the City's website. Council Meeting Procedures 2 2 2.04.100 Agenda Format The format of a Regular or Special City Council agenda shall be as follows: A. Call to Order. B. Pledge of Allegiance. C. Roll Call. D. Special Presentations on key agenda items. E. Appointments and Proclamations of the Mayor. F. Citizens' Comments. This is an opportunity for the audience to comment on items not listed on the agenda. G. Consent Agenda. 1. Contains all consent agenda items approved by the Council President, from a Committee of the Whole, or forwarded by unanimous committee action, and routine items such as, but not limited to, approval of minutes and approval of vouchers. No ordinances, resolutions or bid awards will be included on the consent agenda. 2. The following rules shall apply to the consent agenda: a. Any member of the City Council may, by request and without a Council vote, have any items removed from the consent agenda. That item will, by automatic procedure, be placed under New Business for further discussion. b. The remaining items shall be approved by motion. H. Bid Awards. All competitive bid awards shall comply with RCW Title 39, and those that require Council approval shall include the contractor/ vendor name, the project name, and the total dollar amount of the award. The award may or may not include Washington State Sales Tax. I. Public Hearings. 1. For public hearings required by City, State or Federal law or as the Council may direct. Examples may include, but not be limited to: a. LID b. Zoning c. Budget d. Revenue sharing grants e. Annexation f. Moratoria g. Quasi-judicial decisions 2. The following procedures shall apply to public hearings, except public hearings subject to TMC Chapters 18.104 through 18.116, which shall be subject to the procedures specified therein: a. The presiding officer may exercise a change in the procedures, but said decision may be overruled by a majority vote of the City Council. b. The proponent spokesman shall speak first and be allowed 15 minutes. The Council may ask questions. c. The opponent spokesman shall be allowed 15 minutes for presentation and the Council may ask questions. d. Each side shall then be allowed 5 minutes for rebuttal. e. After the proponents and opponents have used their speaking time, Council may ask further questions of the speakers, who may respond. 3. At public hearings and for issues where a public meeting is required or requested, and a general audience is in attendance to present arguments for or against a public issue: a. A signup sheet for speakers will be available, and all citizens considering speaking will be asked to write their name and address legibly. If they speak without signing up, they will be asked to sign in after speaking. Council Meeting Procedures 3 3 b_ A person may speak for five minutes. No one may speak for a second time until everyone wishing to speak has had an opportunity to speak. c. After the speaker has used the allotted time, Council may ask questions of the speaker and the speaker may respond, but may not engage in further debate. d. Speakers should address their comments to the City Council and should not address other audience members. No disparaging remarks or remarks directed to opponents will be allowed. e. The hearing will then be closed to public participation by the presiding officer and open for Councilmember discussion. J. Unfinished Business. This section of the agenda shall include items of a general nature, including resolutions and ordinances previously discussed at a Council meeting. The following procedures shall apply during this section of the agenda: 1. The item will be put on the table by motion. 2. The committee chair, sponsor or a designated spokesman of each item may give a presentation. 3. If a resolution or ordinance, the City Attorney or City Administrator may read the item by title only or, if requested by any Councilmember, the document may be read in its entirety. A motion by Council shall rule. 4. The Council may then question the sponsor or designated spokesman of the presented item. 5. When discussions conclude, the Council, by motion, will act upon the resolution, ordinance or other item. K. New Business. This section of the agenda shall include all items of a general nature -- including resolutions and ordinances previously discussed at a Committee Meeting and put forward to the Regular Meeting -- and items that have been removed from the consent agenda. The procedures that apply during this section shall be the same as those under Unfinished Business. L. Reports. Reports on special interest items from the Mayor, City Council, staff, City Attorney, and intergovernmental representatives. M. Miscellaneous. N. Executive Session. O. Adjournment. 2.04.110 Miscellaneous Agenda Procedures A. The City Council desires to provide adequate time for administration and staff analysis, fact finding and presentation. 1. Items to come before the City Council should first be placed on the agenda of the appropriate committee for discussion before they are placed on the agenda of a Regular Council Meeting. 2. All items that are not routine in nature and presented shall include a completed Council Agenda Synopsis (CAS), a staff report, and Committee Minutes. The City Clerk or a designated person shall be responsible for attaching a CAS number, keeping the original CAS, and maintaining an index for future reference. B. The agenda and provision for the Committee of the Whole shall be citizen comments, committee reports, discussion of items referred from committees, items referred by three Councilmembers, and items set by the Council President. The agenda and any attachments will be approved by the Council President or his/her designee, and shall be prepared by the City Clerk for distribution to the Council by 12:00 p.m. Noon on Friday. C. Items may be placed directly on the agenda of a Regular Meeting when the items are approved by the Council President, and: 1. The items are routine in nature, such as approval of vouchers, proclamations, acknowledgement or receipt of petitions or documents, or discussion of claims for damages. Council Meeting Procedures 4 4 2. An emergency condition exists that represents a personnel hazard, impending deadline, or risk of immediate financial loss. In such instances, the CAS summary or staff memo should clearly define why the special procedure is necessary. 3. In the event the sponsor of any items to come before the City Council feels it both appropriate and beneficial to the City, that sponsor may bring such items directly to the Regular Meeting with the concurrence of three Councilmembers. D. The Council President may affix an approximate time limit for each agenda item at the time of approval of the agenda. E. All proposed ordinances and resolutions shall be reviewed by the City Attorney and bear the Attorney's certification that they are in correct form before final passage. All accompanying documents shall be available before ordinances and resolutions can be passed. F. Resolutions of the City Council shall be signed by the Council President. G . A joint resolution of the City Council and the Mayor may be proposed when: 1. The subject of the resolution is of broad City concern, and the subject contains Council policy and administrative procedure; or 2. The subject of the resolution is of a ceremonial or honorary nature. H. Joint resolutions will be subject to the voting rules in TMC Chapter 2.04.130 and will be signed by the Mayor and Council President. The Council may provide for all Councilmembers to sign the joint resolution enacted under TMC Chapter 2.04.110 G. 2.04.120 Speaking Procedures A. Speaking procedure for agenda items under consideration is as follows: 1. A Councilmember desiring to speak shall address the chair and, upon recognition by the presiding officer, shall confine him/herself to the question under debate. Recognition of Councilmembers shall be by seniority. 2. Any member, while speaking, shall not be interrupted unless it is to call him or her to order. 3. No Councilmember shall speak a second time on the same motion before an opportunity has been given each Councilmember to speak on that motion. B. Addressing the Council for items under Council discussion shall proceed as follows: 1. Any person, with the permission of the presiding officer, may address the Council, but the presiding officer shall be required to recognize speakers in the following order: a. A person designated by the presiding officer to introduce the subject under discussion. b. Those whose request to be heard is contained in the written agenda. c. Those who have submitted their request to be heard in writing or to the City Clerk before the meeting. d. Those who ask recognition from the floor. 2. In addressing the Council, each person shall advance to the podium and, after recognition, give name and address, and -- unless further time is given by the presiding officer -- shall limit his/her address to five minutes. All remarks shall be made to the Council as a body and not to any individual member or to the audience. 3. No person shall be permitted to enter into any discussion from the floor without tirst being recognized by the presiding officer. 4. Any person making personal, impertinent or slanderous remarks while addressing the Council shall be barred from further audience participation by the presiding officer unless permission to continue is granted by a majority vote of the Council. 2.04.130 Voting A. Silence of a Councilmember during a voice vote shall be recorded as an affirmative vote except where such a Councilmember abstains because of a stated conflict Council Meeting Procedures 5 5 of interest. Each member present must vote on all questions before the Council and may abstain only by reason of conflict of interest. B. A roll -call vote may be requested by the presiding officer or any member of the Council. Voting normally shall be by seniority; however, this procedure may be changed by the presiding officer. C. Confirmations of appointments by the Mayor, budget transfers, personnel levels, and formal motions, resolutions, ordinances and amendments thereto shall require the affirmative votes of four Councilmembers. 2.04.140 Executive Sessions The City Council may hold an Executive Session during a Regular Meeting, Special Meeting or Committee of the Whole meeting to consider certain matters as set forth in RCW 42.30.110. 2.04.150 Continuances Any hearing being held or ordered to be held by the City Council may be continued in the manner as set forth by RCW 42.30.100. 2.04.160 Adjournment A. Any Committee of the Whole, Regular, adjourned Regular, Special or adjourned Special Meeting may be adjourned in the manner as set forth in RCW 42.30.090. B. All meetings of the Council shall adjourn no later than 11:00 p.m. If the Council desires to extend the meeting, a motion shall be required of a majority plus one vote of Councilmembers present. Items not acted on by the 11:00 p.m. deadline shall be deferred to the next respective Council meeting as unfinished business, unless Council, by a majority vote of members present, determines otherwise. 2.04.170 Questions of Parliamentary Procedure Questions of parliamentary procedure not covered by this chapter shall be governed by Robert's Rules of Order, Newly Revised (latest edition). 2.04.180 Council Committees and Representatives A. There are four standing committees of the Council consisting of three members each. The Council President shall appoint the membership of each committee and the committee chair by the second Regular Meeting of each year. The chair for each committee shall set the schedule of meetings and cause them to be published. In the event a committee member is unable to attend a meeting, that member may ask another Councilmember to attend in his/her place. B. The standing committees shall consider and may make policy and legislative recommendations to the City Council on items referred to the committee by the Council President, the Council, administrative departments, boards or commissions. If budgeted in an amount less than or equal to $25,000, a committee can approve a bid or negotiation award by an affirmative vote of three committee members. If a unanimous committee vote is not obtained, the award will be referred to the City Council for action. The standing committees, their scopes of authority, and the supporting City departments are as follow: 1. Transportation Committee, which shall consider matters related to transportation, transportation plans, traffic, transit, streets, street lighting, signals, street LIDs, and rights -of -way in coordination with the Public Works Department and Department of Community Development. 2. Utilities Committee, which shall consider matters related to water; sewer; electric power; natural gas; telephone; cable television; telecommunications; solid waste reduction, reuse and recycling; river basins; and levies in coordination with the Public Works Department. 3. Finance and Safety Committee, which shall consider matters related to the general fiscal and financial operations of the City; budget and financial reports; and policy matters related to personnel including, but not limited to, the salary grade schedule, position classifications and salary changes in coordination with the Finance Department, Administrative Services Department, and City Administrator. They will consider library issues, tourism, administrative matters, and information technology issues in conjunction Council Meeting Procedures 6 6 with the City Clerk, Library Advisory Board, Lodging Tax Advisory Board, Chamber of Commerce, and Information Services. They shall consider matters related to police and fire protection; the municipal court; emergency services; and animal control in coordination with the Police Department, Fire Department, Civil Service Commission, Public Works Department, and Community -Oriented Policing Board. 4. Community Affairs and Parks Committee, which shall consider matters related to the planning of the physical, economic, aesthetic, cultural and social development of the City; and Comprehensive Plan, Zoning Code, Building Code, code enforcement, Sign Code and annexation policies, in coordination with the Department of Community Development, Human Services, Planning Commission, Hearing Examiner, Sister Cities Committee, Human Services Advisory Board, and the Equity and Diversity Commission. They shall consider matters relating to parks and park plans, recreation facilities and community activities, in coordination with the Parks and Recreation Department, the Arts Commission, and Park Commission. B. The Council President may establish such ad hoc committees as may be appropriate to consider special matters that do not readily fit the standing committee structure or that require special approach or emphasis. The Council President shall appoint Council representatives to intergovernmental councils, boards and committees as needed. C. Council committees shall consider all matters referred. Each committee chair shall report to the Council the findings of the committee. Committees may refer items to the Council with no committee recommendation. D. Each committee chair may review and approve his/her committee agenda and will approve committee minutes before distribution. The committee chair can authorize the cancellation of a committee meeting. An affirmative vote of three members of Finance and Safety Committee is required when the committee approves unbudgeted items. 2.04.190 Filling Council Vacancies If a vacancy occurs in the office of Councilmember, the Council will follow the procedures outlined in RCW 35A.12.050. In order to fill the vacancy with the most qualified person available until an election is held, the Council will widely distribute and publish a notice of the vacancy, the procedure and any application form for applying. The Council will draw up an application form, which contains relevant information to answer set questions posed by the Council. The application forms will be used in conjunction with an interview of each candidate to aid the Council selection of the new Councilmember. Section 2. Repealer. Ord. Nos. 1311, 1345, 1421, 1770 §1, and 1796 §3 (part) are hereby repealed. Section 3. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 4. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this o2 / S r day of 2003. •J ATTEST/ AUTHENTICATED: j)y (Xku C mat_ ane E. Cantu, CMC, City Clerk APPROVED AS TO FORM BY: Office of the City} Attorney Steven M. Mullet, Mayor Filed with the City Clerk: * // 7/6 3 Passed by the City Council: , / tj 3 Published: ,7 S . -3 Effective Date: 3 Ordinance Number: J.C) . / Council Meeting Procedures 7 7 SUMMARY OF ORDINANCE No. 2024 City of Tukwila, Washington On July 21, 2003, the City Council of the City of Tukwila, Washington, adopted Ordinance No. 2024, the main points of which are summarized by its title as follows: An ordinance of the City Council of the City of Tukwila, Washington, setting council meeting procedures; repealing Ordinance Nos. 1311, 1345, 1421, 1770 §1, and 1796 §3 (part); providing for severability; and establishing an effective date. The full text of this ordinance will be mailed upon request. Approved by the City Council at their Regular Meeting of July 21, 2003. Jane E. Cantu, CMC City Clerk Published: Seattle Times - July 25, 2003 CERTIFICATE REGARDING OFFICIAL NEWSPAPER I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that The Seattle Times is the official newspaper for publishing City Council's action and business. Dated this 14th day of August, 2018. Christy O'Flaherty, City Cler City of Tukwila, Washington 10076 00005 hg17a827kv King County Department of Assessments Accounting Division 500 Fourth Avenue, ADM-AS-0725 Seattle, WA 98104-2384 (206) 263-2381 FAX (206) 296-0106 Email: assessor.info@kingcounty.gov htta://www.kinecountv.eov/assessor/ John Wilson Assessor I, John Wilson, King County Assessor, pursuant to the duty imposed upon me by RCW 84.48.130, certify that the assessed valuation of all the property subject to taxation situated within the King County boundaries of the City of Tukwila, as equalized and fixed by the County Board of Equalization and the State Board of Tax Appeals, as of February 7, 2018 (for taxes payable in 2018) is $6,184,943,263 (Grand Total), $6,142,684,186 (Excess Total which excludes all exempt senior citizens). The TAV (timber assessed value) is $0. WITNESS my hand this 3rd day of April, 2018. tL Wilson King Count Assessor JW:dsm CERTIFICATE REGARDING OUTSTANDING DEBT I, Peggy McCarthy, Finance Director of the City of Tukwila, Washington (the "City"), do hereby certify that the following are all of the City's currently outstanding general obligation bonds and long-term leases and financing contracts as of August 14, 2018 (excluding the City's Limited Tax General Obligation Bonds, 2018 issued on the date hereof): Voted and Nonvoted General Obligation Bonds and Obligations: Principal Amount Outstanding General Obligation Debt Outstanding Limited Tax General Obligation Debt Limited Tax General Obligation Refunding Bonds, 2008 $ 1,485,000 South Correctional Entity Facility Public Development Authority Bonds, 2009B (Taxable Build America Bonds — Direct Payment) 5,914,400 Limited Tax General Obligation Bonds, 2010B 3,170,000 Limited Tax General Obligation Bonds, 2011 2,925,000 Limited Tax General Obligation Bond, 2013 513,549 Limited Tax General Obligation Bond, 2014 (Taxable) 3,410,000 Limited Tax General Obligation Bonds, 2015 5,380,000 Limited Tax General Obligation Bonds, 2017 8,180,000 Limited Tax General Obligation Bonds, 2017 (Taxable) 2,276,000 Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Bonds, 2016 $31,875,000 Long-term leases and conditional sale contracts (including COPs) and other debt: Designation None Dated as of this 14th day of August, 2018. Outstanding Balance None Peggyarthy, Finance 1'' ctor City o VTukwila, Washi r3 on 10076 00005 hg17027ky BOND COUNSEL'S CALCULATION OF DEBT LIMIT Value of Taxable Property within the City of Tukwila, Washington as equalized and fixed by the County Board of Equalization and the State Board of Tax Appeals, as of February 7, 2018 (for taxes payable in 2018), per certificate of the King County Assessor (excess total excluding exempt senior citizens and timber assessed value): Nonvoted Limited Indebtedness: Nonvoted Debt Ceiling per RCW 39.36.020: 1.50% of value of taxable property Less: Nonvoted debt outstanding per Certificate of Finance Director Proposed Limited Tax General Obligation Bonds, 2018 Leases/Sale Contracts Total Nonvoted Debt Remaining Nonvoted Debt Capacity Total Debt Ceiling for General Municipal Purposes, Voted and Nonvoted: 2.50% value of taxable property (RCW 39.36.020) Less: Voted debt outstanding per Certificate of the Finance Director Nonvoted debt from above Total Debt Remaining Debt Capacity Unused: $ 6,184,943,263 $ 92,774,149 33,253,949) 18,365,000) 0) 51,618,949 41,155,200 $ 154,623,582 31,875,000) 51,618,949) 83,493,949 71,129,633 Based upon the certificate of assessed valuation of the King County Assessor and the certificate of general obligation debt outstanding as of August 14, 2018 of the City of Tukwila, Washington (the "City"), the issuance of the Limited Tax General Obligation Bonds, 2018 by the City, will be within the constitutional and statutory limits for nonvoted, voted and total indebtedness. Dated as of this 14th day of August, 2018. PACIFICA LAW GROUP LLP Deanna Gregory 10076 00005 hg17g827ky CERTIFICATE REGARDING BOND ORDINANCE I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington (the "City"), do hereby certify: 1. That the attached Ordinance No. 2559 is a true and correct copy of an ordinance of the City Council, as adopted at a regular meeting of the City Council held on December 4, 2017, and duly recorded in my office, and that, except as amended by Ordinance No. 2574, Ordinance No. 2559 has not been amended or superseded. 2. That the meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of the meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the City Council voted in the proper manner for the adoption of the Ordinance No. 2559; that all other requirements and proceedings incident to the proper adoption of Ordinance No. 2559 have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. Dated this 14th day of August, 2018. Christy O'Flaherty, City Clerk / City of Tukwila, Washington 10076 00005 hg17027ky Washington Cover page to Ordinance 2559 The full text of the ordinance follows this cover page. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $20,000,0O0 TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES AND TO PAY COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE, THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2559 was amended or repealed by the following ordinances. AMENDED Section(s) Amended Amended by Ord # 2574 pealed by Ord# Washington Ordinance No. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $20,000,000 TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES AND TO PAY COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council (the "Council") of the City of Tukwila, Washington (the "City") has deemed it is in the best interest of the City to acquire certain parcels of land, including through eminent domain, and to construct, improve and equip maintenance and other City facilities (together, the "Project"); and WHEREAS, after due consideration the Council has determined that it is in the best interest of the City to authorize the issuance and sale of limited tax general obligation bonds to pay all or a portion of the costs of the Project and to pay costs of issuance for the Bonds; and WHEREAS, the Council wishes to delegate authority to the Mayor, City Administrator, and Finance Director, or his or her designee (each, a "Designated Representative"), for a limited time, to select the method of bond sale for each series of bonds authorized hereunder that is in the best interest of the City (if any) and to approve the interest rates, maturity dates, redemption terms and principal maturities for each series of Bonds within the parameters set by this ordinance; and W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM: bjs Page 1 of 18 WHEREAS, the Bonds of each series shall be sold by either a direct purchase or be underwritten as set forth herein; 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 words and terms shall have the following meanings, unless the context or use indicates another or different meaning or intent. Unless the context indicates otherwise, words importing the singular number shall include the plural number and vice versa. Beneficial Owner means any person that has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Underwritten Bonds (including persons holding Underwritten Bonds through nominees, depositories or other intermediaries). Bond Counsel means Pacifica Law Group LLP, or an attorney at law or a firm of attorneys, selected by the City, of nationally recognized standing in matters pertaining to the tax exempt nature of interest on bonds issued by states and their political subdivisions. Bond Purchase Contract means the contract, if any, for the purchase of any Underwritten Bonds sold by negotiated sale to the Underwriter, executed pursuant to Section 12. Bond Register means the registration books showing the name, address and tax identification number of each Registered Owner of a series of Bonds, maintained pursuant to Section 149(a) of the Code. Bond Registrar means: (a) for any Underwritten Bonds, initially, the fiscal agent of the State, for the purposes of registering and authenticating the Underwritten Bonds, maintaining the Bond Register for the Underwritten Bonds, effecting transfer of ownership of the Underwritten Bonds and paying interest on and principal of the Underwritten Bonds; and (b) for any Direct Purchase Bonds, the Finance Director of the City. Bonds mean the City's Limited Tax General Obligation Bonds, 2018, with such series designation as approved by a Designated Representative, authorized to be issued pursuant to the terms of this ordinance. Certificate of Award means one or more certificates, if any, for the purchase of any Underwritten Bonds sold by competitive sale awarding the Bonds of a series to the initial purchaser as set forth in Section 12 of this ordinance. City means the City of Tukwila, a municipal corporation duly organized and existing under the laws of the State. City Clerk means the duly appointed and acting City Clerk of the City or the successor to the duties of that office. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 2 of 18 City Administrator means the duly appointed and acting City Administrator, including anyone acting in such capacity for the position, or the successor to the duties of that office. Closing means the date of delivery of a Bond or Bonds of a series to the initial purchaser thereof. Code means the Internal Revenue Code of 1986 as in effect on the date of issuance of a series of Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of such series of Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code. Commission means the United States Securities and Exchange Commission. Continuing Disclosure Certificate means the written undertaking for the benefit of the owners and Beneficial Owners of any Underwritten Bonds as required by Section (b)(5) of the Rule. Council or City Council means the Tukwila City Council, as the general legislative body of the City as the same is duly and regularly constituted from time to time. Debt Service Fund means the fund or account created pursuant to this ordinance for the purpose of paying debt service on the Bonds. Designated Representative means the Mayor, City Administrator and Finance Director, or his or her designee. The signature of one Designated Representative shall be sufficient to bind the City. Direct Purchase Bonds means any Bonds or Bond sold to a Direct Purchaser pursuant to Section 12 of this ordinance. Direct Purchaser means any bank or other financial institution selected to purchase (or to accept delivery of one or more Direct Purchase Bonds to evidence the City's obligations under a Loan Agreement) one or more Direct Purchase Bonds pursuant to Section 12 of this ordinance. DTC means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for any Underwritten Bonds pursuant to Section 4(a) of this ordinance. Fair Market Value means the price at which a willing buyer would purchase an investment from a willing seller in a bona fide, arm's-length transaction, except for specified investments as described in Treasury Regulation §1.148-5(d)(6), including United States Treasury obligations, certificates of deposit, guaranteed investment contracts, and investments for yield restricted defeasance escrows. Fair Market Value is generally determined on the date on which a contract to purchase or sell an investment becomes binding, and, to the extent required by the applicable regulations under the Code, the term "investment" will include a hedge. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 3 of 18 Federal Tax Certificate means one or more certificates executed by a Designated Representative setting forth the requirements of the Code for maintaining the tax exemption of interest on the Bonds of a series to be dated as of the date of Closing for such Bonds, and attachments thereto. Finance Director means the duly appointed and acting Finance Director of the City or the successor to such officer. Government Obligations means those obligations now or hereafter defined as such in chapter 39.53 RCW constituting direct obligations of the United States or obligations unconditionally guaranteed by the United States, as such chapter may be hereafter amended or restated. Letter of Representations means the Blanket Issuer Letter of Representations given by the City to DTC, as amended from time to time. Loan Agreement means one or more loan or purchase agreements, if any, between the City and a Direct Purchaser under which the Direct Purchaser will make a loan to the City, evidenced by a Direct Purchase Bond, or under which the Direct Purchaser will purchase the Direct Purchase Bond. Mayor or City Mayor means the elected Mayor of the City or the successor to the duties of that office. MSRB means the Municipal Securities Rulemaking Board or any successors to its functions. Official Statement means the disclosure document(s) prepared and delivered in connection with the issuance of any Underwritten Bonds. Project means the capital projects described in Section 2 of this ordinance. Project Fund means the account created pursuant to Section 8 of this ordinance. Record Date means the close of business for the Bond Registrar that is 15 days preceding any interest and/or principal payment or redemption date. Registered Owner means the person named as the registered owner of a Bond in the Bond Register. Rule means the Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Sale Document means the Bond Purchase Contract, Certificate of Award, or Loan Agreement if any, executed by a Designated Representative in connection with the sale of a series of Bonds pursuant to Section 12 of this ordinance, which shall provide for the name, principal and interest payment dates and amounts, redemption/prepayment rights, and other terms to describe such series of Bonds as determined to be necessary by a Designated Representative. State means the State of Washington. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 4 of 18 Underwriter means any underwriter, in the case of a negotiated sale, or initial purchaser, in the case of a competitive sale, for any series of Underwritten Bonds selected pursuant to Section 12. Underwritten Bonds means Bonds of a series, if any, sold pursuant to a negotiated or a competitive sale by the City to an Underwriter pursuant to Section 12 of this ordinance. Section 2. Authorization of the Project. The Bonds are being issued to finance and/or reimburse the City for costs of acquiring certain parcels of land, including through eminent domain, and constructing, improving and equipping maintenance and other City facilities (together, the "Project") and paying costs of issuance for the Bonds. The cost of all necessary and other costs incurred in connection with the Project shall be paid from other City funds legally available for such purposes. Section 3. Authorization of Bonds and Bond Details. (a) General. For the purpose of paying and/or reimbursing the City for costs of the Project and paying costs of issuance, the City is hereby authorized to issue and sell one or more series of its limited tax general obligation bonds in an aggregate principal amount not to exceed $20,000,000 (the "Bonds"). The Bonds shall be general obligations of the City and shall be designated "City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2018," with series designation or other such designation as determined to be necessary by a Designated Representative. The Bond or Bonds of a series shall be dated as of the date of Closing of such series of Bonds; shall be fully registered as to both principal and interest; and shall be sold from time to time under this ordinance as either Direct Purchase Bonds or Underwritten Bonds, as approved and executed by a Designated Representative pursuant to Section 12 hereof. (b) Underwritten Bonds. Any Bonds of a series may be sold as Underwritten Bonds. Underwritten Bonds shall be issued in denominations of $5,000, or any integral multiple thereof, within a series and maturity; shall be numbered separately in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; shall bear interest payable on the dates set forth in the applicable Sale Document; and shall be subject to optional and/or mandatory redemption and mature on the dates and in the principal amounts set forth in the applicable Sale Document. (c) Direct Purchase Bonds. Any Bonds of a series may be sold as Direct Purchase Bonds. Direct Purchase Bonds shall be dated as of the date of delivery to the Direct Purchaser, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature on the date set forth in the applicable Sale Document. Direct Purchase Bonds shall bear interest from the dated date or the most recent date to which interest has been paid at the interest rate set forth in the applicable Sale Document. Interest on the principal amount of Direct Purchase Bonds shall be W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 5 of 18 calculated per annum on a 30/360 basis, or as otherwise provided in the Bond and in the applicable Sale Document. Principal of and interest on Direct Purchase Bonds shall be payable at the times and in the amounts as set forth in the payment schedule attached to the Direct Purchase Bond. Section 4. Registration, Exchange and Payments. (a) Underwritten Bonds. (1) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of a State fiscal agent. The City shall cause a bond register to be maintained by the Bond Registrar. So long as any Underwritten Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Underwritten Bonds at its designated office. The Bond Registrar may be removed at any time at the option of the Finance Director upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Underwritten Bonds transferred or exchanged in accordance with the provisions of such Underwritten Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication of the Underwritten Bonds. (2) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Underwritten Bond as the absolute owner thereof for all purposes (except as provided in the Continuing Disclosure Certificate), and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 4(A)(7), but such Underwritten Bond may be transferred as herein provided. All such payments made as described in Section 4(A)(7) shall be valid and shall satisfy and discharge the liability of the City upon such Underwritten Bond to the extent of the amount or amounts so paid. (3) DTC Acceptance/Letters of Representations. The Underwritten Bonds initially shall be held by DTC acting as depository. The City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the Underwritten Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant, the payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on Underwritten Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 6 of 18 any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Underwritten Bonds are held by a depository, DTC or its successor depository or its nominee shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of any beneficial interest in such Underwritten Bonds. (4) Use of Depository. (A) The Underwritten Bonds shall be registered initially in the name of "Cede & Co.", as nominee of DTC, with one Underwritten Bond maturing on each of the maturity dates for the Underwritten Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such Underwritten Bonds, or any portions thereof, may not thereafter be transferred except: (i) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any substitute depository appointed by the Finance Director pursuant to subsection (B) below or such substitute depository's successor; or (iii) to any person as provided in subsection (D) below. (B) Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository or a determination by the Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Finance Director may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (C) In the case of any transfer pursuant to clause (i) or (ii) of subsection (A) above, the Bond Registrar shall, upon receipt of all outstanding Underwritten Bonds together with a written request on behalf of the Finance Director, issue a single new Underwritten Bond for each maturity of that series then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the Finance Director. (D) In the event that: (A) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained; or (B) the Finance Director determines that it is in the best interest of the beneficial owners of the Underwritten Bonds that such owners be able to obtain physical Bond certificates, the ownership of such Underwritten Bonds may then be transferred to any person or entity as herein provided, and shall no longer be held by a depository. The Finance Director shall deliver a written request to the Bond Registrar, together with a supply of physical Bonds, to issue Underwritten Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Underwritten Bonds together with a written request on behalf of the Finance Director to the Bond Registrar, new Underwritten Bonds of such series shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 7 of 18 (5) Registration of Transfer of Ownership or Exchange; Change in Denominations. The transfer of any Underwritten Bond may be registered and Underwritten Bonds may be exchanged, but no transfer of any such Underwritten Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing on such Underwritten Bond duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Underwritten Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Underwritten Bond (or Underwritten Bonds at the option of the new Registered Owner) of the same series, date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Underwritten Bond, in exchange for such surrendered and cancelled Underwritten Bond. Any Underwritten Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same series, date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer of or to exchange any Underwritten Bond during the 15 days preceding any principal payment or redemption date. (6) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the Registered Owner of any Underwritten Bond with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the right of the Registered Owners or beneficial owners of Underwritten Bonds. (7) Place and Medium of Payment. Both principal of and interest on the Underwritten Bonds shall be payable in lawful money of the United States of America. Interest on the Underwritten Bonds shall be calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all Underwritten Bonds are held by a depository, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Underwritten Bonds are no longer held by a depository, interest on the Underwritten Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the Record Date, or upon the written request of a Registered Owner of more than $1,000,000 of Underwritten Bonds (received by the Bond Registrar at least by the Record Date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Underwritten Bonds shall be payable upon presentation and surrender of such Underwritten Bonds by the Registered Owners at the designated office of the Bond Registrar. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 8 of 18 If any Underwritten Bond is duly presented for payment and funds have not been provided by the City on the applicable payment date, then interest will continue to accrue thereafter on the unpaid principal thereof at the rate stated on the Underwritten Bond until the Underwritten Bond is paid. (b) Direct Purchase Bonds. (1) Registrar/Bond Registrar. The Finance Director shall act as Bond Registrar for any Direct Purchase Bonds. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Direct Purchase Bonds if transferred or exchanged in accordance with the provisions of the Direct Purchase Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance with respect to Direct Purchase Bonds. (2) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered Owner of any Direct Purchase Bond as the absolute owner for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. (3) Transfer or Exchange of Registered Ownership. Direct Purchase Bonds shall not be transferrable without the consent of the City unless: (A) the Direct Purchaser's corporate name is changed and the transfer is necessary to reflect such change; or (B) the transferee is a successor in interest of the Direct Purchaser by means of a corporate merger, an exchange of stock, or a sale of assets. Notwithstanding the foregoing, Direct Purchase Bonds may be transferred upon satisfaction of the requirements, if any, set forth in the applicable Sale Document and the Direct Purchase Bonds. Section 5. Redemption Prior to Maturity and Purchase of Bonds. (a) Mandatory Redemption of Term Bonds and Optional Redemption. The Bonds of each series shall be subject to mandatory redemption to the extent, if any, set forth in the applicable Sale Document and as approved by a Designated Representative pursuant to Section 12. The Bonds of each series shall be subject to optional redemption and/or prepayment on the dates, at the prices and under the terms set forth in the applicable Sale Document approved by a Designated Representative pursuant to Section 12. (b) Purchase of Bonds. The City reserves the right to purchase any or all of the Bonds offered to it at any time at a price deemed reasonable by the Finance Director plus accrued interest to the date of purchase. (c) Selection of Bonds for Redemption. If the Underwritten Bonds of a series are held in book -entry only form, the selection of particular Underwritten Bonds within a series and maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Underwritten Bonds of a series are no longer held by a depository, the selection of such Underwritten Bonds of such series to be W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 9 of 18 redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c). If the City redeems at any one time fewer than all of the Underwritten Bonds of a series having the same maturity date, the particular Underwritten Bonds or portions of Underwritten Bonds of such series and maturity to be redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of $5,000. In the case of an Underwritten Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Underwritten Bond as representing such number of separate Underwritten Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Underwritten Bond by $5,000. In the event that only a portion of the principal sum of an Underwritten Bond is redeemed, upon surrender of such Underwritten Bond at the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, an Underwritten Bond or Bonds of like series, maturity and interest rate in any of the denominations herein authorized. (d) Notice of Redemption or Prepayment. (1) Official Notice. Notice of any prepayment of Direct Purchase Bonds shall be provided by the City to the Direct Purchaser as provided in the applicable Sale Document. For so long as the Underwritten Bonds of a series are held by a depository, notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar shall provide any notice of redemption to any beneficial owners. The notice of redemption may be conditional. Thereafter (if the Underwritten Bonds are no longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter provided. Unless waived by any owner of Underwritten Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Underwritten Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. All official notices of redemption shall be dated and shall state: (A) the redemption date, (B) the redemption price, (C) if fewer than all outstanding Underwritten Bonds of a series are to be redeemed, the identification by maturity (and, in the case of partial redemption, the respective principal amounts) of the Underwritten Bonds to be redeemed, W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 10 of 18 (D) any conditions to redemption, (E) that unless conditional notice of redemption has been given and such conditions have either been satisfied or waived, on the redemption date the redemption price shall become due and payable upon each such Underwritten Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, and (F) the place where such Underwritten Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the designated office of the Bond Registrar. On or prior to any redemption date, unless such redemption has been rescinded or revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Underwritten Bonds or portions of Underwritten Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Underwritten Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Underwritten Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. (2) Effect of Notice; Bonds Due. If notice of redemption has been given and not rescinded or revoked, or if the conditions set forth in a conditional notice of redemption have been satisfied or waived, the Underwritten Bonds or portions of Underwritten Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Underwritten Bonds or portions of Underwritten Bonds shall cease to bear interest. Upon surrender of such Underwritten Bonds for redemption in accordance with said notice, such Underwritten Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Underwritten Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. (3) Additional Notice. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus: (A) the CUSIP numbers of all Underwritten Bonds being redeemed; (B) the date of issue of the Underwritten Bonds as originally issued; (C) the rate of interest borne by each Underwritten Bond being redeemed; (D) the series and maturity date of each Underwritten Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Underwritten Bonds being redeemed. Each further notice of redemption may be sent at least 20 days before the redemption date to each party entitled to receive notice pursuant to Section 14 and the Continuing Disclosure Certificate and with such W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 11 of 18 additional information as the City shall deem appropriate, but such mailings shall not be a condition precedent to the redemption of such Underwritten Bonds. (4) Amendment of Notice Provisions. The foregoing notice provisions of this Section 5, including but not limited to the information to be included in redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. Section 6. Form of Bonds. The Bonds shall be in substantially the form set forth in Exhibit A, which is incorporated herein by this reference. Section 7. Execution of Bonds. The Bonds of each series shall be executed on behalf of the City by the facsimile or manual signature of the Mayor and shall be attested to by the facsimile or manual signature of the City Clerk, and shall have the seal of the City impressed or a facsimile thereof imprinted, or otherwise reproduced thereon. In the event any officer who shall have signed or whose facsimile signatures appear on any of the Bonds shall cease to be such officer of the City before said Bonds shall have been authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issuance, shall be as binding upon the City as though said person had not ceased to be such officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the actual date of execution of such Bond shall be the proper officer of the City, although at the original date of such Bond such persons were not such officers of the City. Only such Bonds as shall bear thereon a Certificate of Authentication manually executed by an authorized representative of the Bond Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. Section 8. Application of Bond Proceeds. The Finance Director is hereby authorized to create a fund or account (the "Project Fund"), and subaccounts therein as necessary, for the purposes set forth in this section. Net proceeds of the Bonds shall be deposited in the Project Fund in the amounts specified in the closing memorandum prepared in connection with the issuance of the Bonds. Such proceeds shall be used to pay and/or reimburse the City for the costs of the Project and to pay costs of issuance of the Bonds. The Finance Director shall invest money in the Project Fund and the subaccounts contained therein in such obligations as may now or hereafter be permitted to cities of the State by law and which will mature prior to the date on which such money shall be needed, but only to the extent that the same are acquired, valued and disposed of at Fair Market Value. Upon completion of the Project, Bond proceeds W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 12 of 18 (including interest earnings thereon) may be used for other capital projects of the City or shall be transferred to the Debt Service Fund. Section 9. Tax Covenants. The City will take all actions necessary to assure the exclusion of interest on each series of Bonds from the gross income of the owners of such Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds, including but not limited to the following: (a) Private Activity Bond Limitation. The City will assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. (b) Limitations on Disposition of Project. The City will not sell or otherwise transfer or dispose of: (i) any personal property components of the Project other than in the ordinary course of an established government program under Treasury Regulation 1.141-2(d)(4); or (ii) any real property components of the Project, unless it has received an opinion of nationally recognized bond counsel to the effect that such disposition will not adversely affect the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. (c) Federal Guarantee Prohibition. The City will not take any action or permit or suffer any action to be taken if the result of such action would be to cause any of the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) Rebate Requirement. The City will take any and all actions necessary to assure compliance with Section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Bonds. (e) No Arbitrage. The City will not take, or permit or suffer to be taken, any action with respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code. (f) Registration Covenant. The City will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code until all Bonds have been surrendered and canceled. (g) Record Retention. The City will retain its records of all accounting and monitoring it carries out with respect to the Bonds for at least three years after the Bonds mature or are redeemed (whichever is earlier); however, if the Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least three years after the earlier of the maturity or redemption of the obligations that refunded the Bonds. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 13 of 18 (h) Compliance with Federal Tax Certificate. The City will comply with the provisions of the Federal Tax Certificate with respect to each series of Bonds, which are incorporated herein as if fully set forth herein. The covenants of this Section will survive payment in full or defeasance of the Bonds. (i) Bank Qualification. The Finance Director is hereby authorized to designate each series of Bonds as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code for investment by financial institutions if the City does not reasonably expect to issue more than $10,000,000 of qualified tax-exempt obligations in the calendar year in which the Bonds are issued. Section 10. Debt Service Fund and Provision for Tax Levy Payments. The City hereby authorizes the creation of a fund or account to be used for the payment of debt service on the Bonds (the "Debt Service Fund"). No later than the date each payment of principal of or interest on the Bonds becomes due, the City shall transmit sufficient funds, from the Debt Service Fund or from other legally available sources, to the Bond Registrar for the payment of such principal or interest. Money in the Debt Service Fund may be invested in legal investments for City funds, but only to the extent that the same are acquired, valued and disposed of at Fair Market Value. Any interest or profit from the investment of such money shall be deposited in the Debt Service Fund. The City hereby irrevocably covenants and agrees for as long as any of the Bonds are outstanding and unpaid that each year it shall include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with all other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the property tax levy permitted to cities without a vote of the electorate, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bonds. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and for the prompt payment of the principal of and interest on the Bonds when due. Section 11. Defeasance. In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt Service Fund or in another special account, cash or noncallable Government Obligations, or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 14 of 18 payments need be made into the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive payment of principal, premium, if any, and interest from the Debt Service Fund or such special account, and such Bond shall be deemed to be not outstanding under this ordinance. The City shall give written notice of defeasance of the Bonds in accordance with the Continuing Disclosure Certificate. Section 12. Sale of Bonds. (a) Bond Sale. The Council has determined that it would be in the best interest of the City to delegate to each Designated Representative, for a limited time, the authority to determine the method of sale for each series of Bonds and to approve the final interest rates, maturity dates, redemption terms and principal maturities for each series of Bonds. Each series of Bonds issued pursuant to this ordinance may be issued at the same or different times so long as each series complies with the terms hereof. Each Designated Representative is hereby authorized to approve the issuance, from time to time, of one or more series of Bonds and to approve whether the Bonds of such series shall be sold in a private placement to a Direct Purchaser or to an Underwriter through a competitive public sale or a negotiated sale, as set forth below. (b) Direct Purchase. If a Designated Representative determines that the Bonds of a series are to be sold by private placement, a Designated Representative shall select the Direct Purchaser that submits the proposal that is in the best interest of the City. Direct Purchase Bonds shall be sold to the Direct Purchaser pursuant to the terms of a Loan Agreement. (c) Negotiated Bond Sale. If a Designated Representative determines that the Bonds of a series are to be sold by negotiated public sale, a Designated Representative shall select the Underwriter that submits the proposal that is in the best interest of the City. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Bond Purchase Contract. (d) Competitive Sale. If a Designated Representative determines that the Bonds of a series are to be sold at a competitive public sale, a Designated Representative shall: (1) establish the date of the public sale; (2) establish the criteria by which the successful bidder will be determined; (3) establish the criteria for a good faith deposit; (4) cause notice of the public sale to be given; and (5) provide for such other matters pertaining to the public sale as he or she deems necessary or desirable. A Designated Representative shall cause the notice of sale to be given and provide for such other matters pertaining to the public sale as he or she deems necessary or desirable. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Certificate of Award. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 15 of 18 (e) Sale Parameters. Subject to the terms and conditions set forth in this Section 12, each Designated Representative is hereby authorized to approve the method of sale and the final interest rates, aggregate principal amount, principal maturities, and redemption rights for each series of Bonds in the manner provided hereafter so long as: (1) the aggregate principal (face amount) amount of all Bonds issued from time to time under this ordinance does not exceed $20,000,000; (2) the final maturity date for each series of Bonds is no later than December 1, 2038; (3) the aggregate purchase price for each series of Bonds shall not be less than 98% of the aggregate stated principal amount of such series of Bonds, excluding any original issue discount; and (4) the true interest cost for each series of Bonds (in the aggregate for such series) does not exceed 4.5%. Subject to the terms and conditions set forth in this section, each Designated Representative is hereby authorized to execute the appropriate Sale Document on behalf of the City. The signature of one Designated Representative shall be sufficient to bind the City. Following the execution of a Sale Document, a Designated Representative shall provide a report to the Council describing the final terms of the Bonds sold pursuant to such Sale Document and approved pursuant to the authority delegated in this section. The authority granted to the Designated Representatives by this Section 12 shall expire one year after the effective date of this ordinance. After such date additional Council approval shall be necessary to sell and issue Bonds pursuant to the terms of this ordinance. (f) Delivery of Bonds; Documentation. Upon the passage and approval of this ordinance and execution of the applicable Sale Document for a series of Bonds, the proper officials of the City, including the Designated Representatives and the City Clerk, are authorized and directed to undertake all action necessary for the prompt execution and delivery of such series of Bonds to the purchaser thereof and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the applicable Sale Document. Such documents may include, but are not limited to, documents related to a municipal bond insurance policy delivered by an insurer to insure the payment when due of the principal of and interest on all or a portion of such series of Bonds as provided therein, if such insurance is determined by a Designated Representative to be in the best interest of the City. Section 13. Preliminary and Final Official Statements. Each Designated Representative is hereby authorized to deem final the preliminary Official Statement relating to a series of Underwritten Bonds for the purposes of the Rule. Each Designated Representative is further authorized to approve for purposes of the Rule, on behalf of the City, the final Official Statement relating to the issuance and sale of such series of Underwritten Bonds and the distribution of such final Official Statement W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 16 of 18 pursuant thereto with such changes, if any, as may be deemed by him or her to be appropriate. Section 14. Undertaking to Provide Ongoing Disclosure. (a) The City covenants to execute and deliver at the time of Closing of any Underwritten Bonds a Continuing Disclosure Certificate. Each Designated Representative is hereby authorized to execute and deliver a Continuing Disclosure Certificate upon the issuance, delivery and sale of any Underwritten Bonds with such terms and provisions as such officer shall deem appropriate and in the best interests of the City. (b) The City may agree to provide the Direct Purchaser certain financial or other information and agree to such additional covenants as determined to be necessary by a Designated Representative and as set forth in the Loan Agreement and approved by a Designated Representative pursuant to Section 12. Section 15. Lost, Stolen or Destroyed Bonds. In case any Bond or Bonds are lost, stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like series, amount, date and tenor to the Registered Owner thereof if the owner pays the expenses and charges of the Bond Registrar and the City in connection therewith and files with the Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or destroyed and of his or her ownership thereof, and furnishes the City and the Bond Registrar with indemnity satisfactory to both. Section 16. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. Section 17. Payments Due on Holidays. If an interest and/or principal payment date for a series of Bonds is not a business day, then payment shall be made on the next business day and no interest shall accrue for the intervening period. Section 18. Corrections by City Clerk. Upon approval of the City Attorney and Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to this ordinance, including but not limited to the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; ordinance numbering and section/subsection numbering; and other similar necessary corrections. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 17 of 18 Section 19. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCI OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this ` TH day of D LC.p r„,Ke,v- , 2017. ATTEST/AUTHENTICATED: Christy O'F a erty, MMC, City CI APPROVED AS TO FORM BY: Pia ca Law Group d Counsel Attachments: Exhibit A - Form of Bond Exhibit B - Certificate (by City Clerk) Filed with the City Clerk: 1 J - -c- I Passed by the City Council: 1 3-Li -► q Published: i g - 9 -II) Effective Date: 1.). -j -1 Ordinance Number: ,D S S c/ W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility 11-13-17 PM:bjs Page 18 of 18 Exhibit A Form of Bond [DTC LANGUAGE] [TRANSFER RESTRICTIONS] UNITED STATES OF AMERICA NO. $ STATE OF WASHINGTON:.. CITY OF TUKWILA LIMITED TAX GENERAL OBLIGATI: BOND, 2018 INTEREST RATE: % MATURITY DAT REGISTERED OWNER: PRINCIPAL AMOUNT: CUSIP NO. The City of Tukwila, Washington (th'e "City"), herebw acknowledges itself to owe and for value received promises to pay: to the,,, Registered., Owner identified above, or registered assigns, on the Maturity::, Date :id:entified `above, the Principal Amount indicated above and to pay: interest thereon from the date of delivery, or the most recent date to which interrest:'i as been., paid or duly. provided. at the Interest Rate set forth above (the "InterestRate"). Interest on this bond shall'accrue from its dated date until paid and shall be computed per annum on the;: principal amount outstanding on a 30/360 basis. PrincipaI _of and accrued:;interest on fhis;bond shall be payable on the dates set forth in the payment. schedule 'attached hereto ::The City of Tukwila, Washington (the "City°)hereby acknowledges itself to owe :arid: for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified'above, the Principal Arriount._indicated above and to pay interest thereon from 20 , or thei;most recent date to which interest has been paid or duly provided for until :payment of. this bond at the Interest Rate set forth above, payable on June 1, 2018, and::; semiannually thereafter on the first days of each succeeding June and December. Bothprincipal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agent of the State of Washington has been appointed by the City as 'the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so long as the bonds of this issue are held in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of Representations (the "Letter of Representations") from the City to DTC. A-1 The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. duly passed by the City Council on , 2017 (the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is one of an authorized issue of bonds:of like series, date, tenor, rate of interest and date of maturity, except as to number and amount in the aggregate principal amount of $ and is issued*irsuant to the Bond Ordinance to provide a portion of the funds necessary (a) to, pay the'cost of the acquisition of land and construction of City maintenance and other City facilities;,and (b) to pay costs of issuance. [insert description of redemption or prepayment terms] The City has [not] designated the Bonds as';qualified'tax-exempt-obligations' under • Section 265(b)(3) of the Code]. The City has irrevocably covenanted ;with the owner of this bond that it shall include in its annual budget and levy taxes annually within and**part of the tax levy permitted to the City without a vote:;of the electorate, upon:: all the taxable property in the City without limitation as to rate or amount and rn amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond when due. The full faith`; credit and_ resources ;`of the City are irrevocably pledged for the annual levy and collection of such ;taxes andthe prompt payment of such principal and interest. Thepledge of tax levies forpayment :of;principal of and interest on the bonds may be discharged prior to maturty of the bonds by making provision for the payment thereof on :the terms and conditions .et forth in the Bond Ordinance. Owners -ofthis bond do`not have asecurity interest in particular revenues or assets of the City. Tlis>.bond is not a -debt or indebtedness of the State of Washington, or any political subdivision' thereof other than the City. It is hereby certiified_:that; all acts, conditions and things required by the Constitution and statutes of the State`of'Washington to exist and to have happened, been done and performed precedent to and in the issuance of this bond exist and have happened, been done and performed and that the issuance of this bond and the bonds of this issue does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. A-2 IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signatures of the Mayor and the City Clerk and the seal of the City to be imprinted, impressed or otherwise reproduced hereon as of this day of , 20 .. [SEAL] ATTEST: Christy O'Flaherty, MMC, City Clerk CITY OF TUKWILA, WASHINGTON By AliaijEkberg, Mayor [FO[3UNDERWRITTEN BONDS] RTIFICATE OF AUTHENTICATION Date of:Authentication: his bond is one the b'o'nds described in the within -mentioned Bond Ordinance and is one<of. the Limited Tax General Obligation Bonds, [ ], of the City of Tukwila, Washington, dated , 2018. WASHINGTON STATE FISCAL AGENT, as Bond Registrar By A-3 [FOR DIRECT PURCHASE BONDS] REGISTRATION CERTIFICATE This bond is registered in the name of the Registered Owner on the books of the City, in the office of the Finance Director of the City (the "Bond Registrar"), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City as provided in the Bond Ordinance. Date of Registration 2018 Name and Address of, Signature of Registered Owner Bond Registrar Finance Director PAYMENT SCHEDULE hall`f?e payable as set forth in the following Interest Total Payment A-4 Exhibit B CERTIFICATE I, the undersigned, City Clerk of the City Council of the City of Tukwila, Washington (the "City"), DO HEREBY CERTIFY_ 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 , 2017 as that ordinance appears in the minute book of the City; and the Ordinance will be in full force and effect five (5) days after its passage and publication as provided by law; and 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been fully fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. 3. That Ordinance No. has not been amended, supplemented or rescinded since its passage and is in full force and effect and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand this day of , 2017. CITY OF TUKWILA, WASHINGTON Christy O'Flaherty, MMC, City Clerk City of Tukwila Public Notice of Ordinance Adoption for Ordinances 2559-2562. On December 4, 2017 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 2559: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $20,000,000 TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES AND TO PAY COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2560: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING A NEW CHAPTER OF THE TUKWILA MUNICIPAL CODE RELATED TO VEHICLE TRESPASS, TO BE CODIFIED AS TUKWILA MUNICIPAL CODE CHAPTER 8.26; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2561: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NO. 1674; AMENDING ORDINANCE NO. 1400 §4, AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 3.56.040, TO UPDATE REGULATIONS REGARDING DISTRIBUTION OF REAL ESTATE EXCISE TAX; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2562: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING AND PROVIDING FOR THE ACQUISITION OF INTERESTS IN LAND FOR THE PURPOSE OF COMPLETING THE 53RD AVENUE SOUTH ROADWAY AND SURFACE WATER DRAINAGE SYSTEM PROJECTS; PROVIDING FOR CONDEMNATION, APPROPRIATION, TAKING OF LAND AND PROPERTY RIGHTS NECESSARY THEREFOR; PROVIDING FOR PAYMENT THEREOF AND DIRECTING THE INITIATION OF APPROPRIATE PROCEEDINGS IN THE MANNER PROVIDED BY LAW AND FOR SAID CONDEMNATION; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. The full text of this ordinance will be provided upon request. Christy O'Flaherty, MMC, City Clerk Published Seattle Times: December 7, 2017 CERTIFICATE REGARDING MINUTES OF COMMITTEE OF THE WHOLE I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a full, true and correct copy of the minutes of the November 27, 2017 Committee of the Whole meeting, which reflect the first discussion of Ordinance No. 2559. Dated this 14th day of August, 2017. Christy O'Flaherty, City Cler City of Tukwila, Washington 1 nn7fi nnnmS ha17afi27kv Tukwila City Council Committee of the Whole Meeting City Hall Council Chambers November 27, 2017 — 7:00 P.M. MINUTES COMMITTEE OF THE WHOLE CALL TO ORDER/PLEDGE OF ALLEGIANCE Council President Robertson called the Tukwila City Council meeting to order at 7:00 p.m. and led the audience in the Pledge of Allegiance. OFFICIALS Present were Council President Robertson; CouncilmenThers Joe Duffle, Verna Seal, Kathy Hougardy, De Sean Quinn, Kate Kruller, Thomas McLeod. CITY OFFICIALS David Cline, City Administrator; Rachel Bianchi, Communications and Government Relations Manager; Sherry Wright, Senior Fiscal Coordinator; Peggy McCarthy, Finance Director; Vicky Carlsen, Deputy Finance Director; Mia Navarro, Community Engagement Manager; Stephanie Brown, Human Resources Director; Robin Tischmak, Acting Public Works Director; Eric Dreyer, Police Commander; Andy Youn, Deputy City Clerk. PUBLIC COMMENTS There were no public comments. PUBLIC HEARING Commercial parking tax legislation: (1) An ordinance regarding commercial parking tax regulations. 7:01 p.m. Council President Robertson opened the public hearing and asked for a staff report. Vicky Carlsen, Deputy Finance Director, explained that the legislation increases the commercial parking tax levy from 5% to 15%. While this is a big jump, this is the first increase in the rate since the parking tax was enacted in 1998. The legislation also updates language in Tukwila Municipal Code (TMC) Chapter 3.48, as it has not been adjusted in several years. Council President Robertson called for public comments. Oscar Garcia, 3610 South 158th Street, expressed his disapproval of the proposed commercial parking tax legislation. Mr. Garcia represents a business in Tukwila called Shuttlepark2 for Sea -Tao Airport parking. He stated the reason for his opposition is because many other properties that pay commercial parking tax are tourist -specific entities such as hotels. Shuttlepark2 is a local parking business patronized by residents parking for Sea-Tac Airport. Increasing the tax would significantly impact his business's pricing model. Mr. Garcia relayed he competes with other operators in Sea-Tac that have flat -fee models for $3 per transaction, and customers decide to use his or a competitor's services based on total cost. Much of the parking revenue generated by the City is through Mr. Garcia's parking business. Mr. Garcia emphasized that going from 5 to 15% is a 200% increase on a transaction, and customers will start looking elsewhere for cheaper airport parking. He asked the Council to take local businesses into consideration in this matter. Larry Bailey, 5000 30th Northeast, Seattle, is one of the original owners of Doug Fox Parking, which was started in SeaTac in 1975. They created a parking facility in Tukwila in 2001 and is in the furthest south piece of property in the City. Mr. Bailey expressed his business utilizes City roads and services Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 2 of 9 infrequently due to their proximity to Highway 99 and 1-5. After several years, Mr. Bailey was able to develop a profitable business. In 2015, he was forced to divest from the Doug Fox lot, and the parking business in Tukwila is now owned by Mr. Garcia, Ms. Nickles, and himself. The company faces national competition via WallyPark and Uber. Mr. Bailey expressed his concern that his small, local business will be forced to take on a huge tax burden that is not being placed on other Tukwila businesses. The City of Seattle's parking rate is 12.5%0; Renton, Bellevue, and Federal Way have no parking lot charges. The highest local rate is 10% and his main competitors are in SeaTac, which charges $3 per transaction: Mr. Bailey feels a per transaction fee is explainable to his customers when passing on a portion of the increase, but a 200% increase in tax is unconscionable. Sean Englin, 14800 Starfire Way, is here tonight on behalf of Starfire Sports. Starfire Sports is a youth nonprofit that started in 2003. This parking increase will be a financial hardship. It is a significant increase, which will be difficult for Starfire to handle and pass onto customers. Mr. Englin relayed that a significant portion of Starfire's parking proceeds is used to assist financially impoverished youth in the area. The increase in parking tax will impact Starfire's ability to provide services to these youths. While Mr. Englin understands that taxes increase, he expressed his opposition to a significant increase of 200% in one year. Jim Davis, 16500 Southcenter Parkway, is the Corporate Director of Hotel Operations at Cathedral Hill, which operates DoubleTree Suites by Hilton. Not many hotels in the area charge for parking, but his company initiated a parking charge 38 months ago. Mr. Davis conveyed how difficult it was to initiate the parking charge and explained his company intends to increase their parking charges next year. If this legislation passes, he will need to delay the planned increase. While he appreciates the necessity of raising taxes, a 200% increase is a big number. Mr. Davis relayed he receives significant pushback from guests regarding parking charges. He recommended that the City consider a tiered growth over time rather than a sudden jump. 7:17 p.m. Council President Robertson closed the public hearing. (2) A resolution adopting a fee schedule. 7:18 p.m. Council President Robertson opened the public hearing and asked for a staff report. Ms. Carlsen explained this resolution sets the fee for hearing should anyone wish to appeal their assessed commercial parking tax calculation. 7:18 p.m. Council President Robertson closed the public hearing. SPECIAL ISSUES a. Commercial Parking Tax Legislation: (1) An ordinance regarding commercial parking tax regulations (2) A resolution adopting a fee schedule Councilmember Seal indicated this item was discussed at the Finance Committee meeting on November 21, 2017. The committee members were unanimous in recommending approval: Ms. Seal noted the City has not increased parking charges since 1998, and over half of commercial parking taxes are paid late, which is why the legislation imposes a penalty for late payment. Ms. Carlsen provided further clarification on this item and stated the commercial parking tax is one of the City's few revenue sources which does not outline a penalty for late payments. As there is no incentive to pay on time, the City receives over 50% of commercial parking taxes late. While considering adding a late fee, City staff realized the commercial parking tax levy has not been adjusted since 1998. Ms. Carlsen acknowledged 15% is a large increase, but emphasized that the parking tax has not been changed in 20 years. Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 3 of 9 Ms. Carlsen noted parking tax revenues are deposited in Fund 104, Arterial Street Fund, and are restricted for transportation purposes such as road projects. The Councilmembers provided comments and asked clarifying questions as follows: • How many commercial parking lot owners are submitting their taxes late? The late payments were calculated based on total revenue, rather than number of businesses. A number of businesses submit their taxes several months past the payment deadline. • Why is the late fee proposed at 10%? 10% is consistent with other late fees, as outlined in page 9 of the agenda packet. The late fee is being proposed primarily for compliance purposes, rather than for use as a revenue source. • Why is the proposed commercial parking tax rate 15%? City staff did a comparison of all cities in Washington state that are currently levying a commercial parking tax and found that 15% is in line with what other cities are charging. • Is there a cost comparison available between a flat $3 per transaction fee versus a 15% tax? The City of SeaTac used to have a tiered approach but recently changed to a flat parking fee, regardless of length of time. Ms. Carlsen relayed that because there is no data available from parking establishments, staff are unable to complete a cost comparison. • Has the City implemented a similar fee raise in which the fee was not adjusted for several years? Ms. Carlsen recalled police false alarm fines were raised from $25 to $150. The updated fine was implemented with no issues. • Is there any time sensitivity in updating the parking tax rate? There is no time sensitivity. The parking tax rate has not been addressed in several years, and there is no outside process or event driving the timing of this legislation.. In response to comments regarding the Arterial Street Fund, Robin Tischmak, Acting Public Works Director, provided additional input. Mr. Tischmak does not know how much additional revenue will be generated by the updated commercial parking tax. He noted the City has several large expenditures by way of the Strander Boulevard extension project and other bridge projects: He also noted Real Estate Excise Tax revenue has contributed to the Arterial Street Fund. Council President Robertson commented that approximately 60% of the traffic on Tukwila International Boulevard is airport -related through traffic. The City spends $1.2 million annually on street maintenance. Mr. Robertson expressed interest in learning what kind of revenues would be generated for a flat transaction fee compared to a percentage of total cost. Councilmember Kruller suggested that the Finance Committee also review options for iterative increases over the next few years, to allow businesses to adapt to the increased rates. Ms. Kruller also expressed the importance of minimizing fiscal impact to nonprofits. In response to Ms. Kruller's comment on nonprofits, Councilmember Seal called attention to the provisions for exemptions within the ordinance as a possibility for minimizing impact. COUNCIL CONSENSUS EXISTED TO RETURN THIS ITEM TO THE FINANCE COMMITTEE. b. An ordinance regarding financing for the Public Safety Plan Public Works shops facility. Councilmember Seal indicated this item was discussed at the Finance Committee meeting on November 21, 2017. The committee rnembers were unanimous in recommending approval. 7:46 p.m. Councilmember Hougardy left the Council Chambers 7:49 p.m. Councilmember Hougardy returned to the Council Chambers Peggy McCarthy, Finance Director, introduced Fred Eoff from PFM and Deanna Gregory of Pacifica Law Group, the City's bond counsel. Mr. Eoff utilized a PowerPoint to provide an overview of the proposed LTGO (Limited Tax General Obligation) Bonds, 2018 for the Public Works Shops, Phase 1. Background • As part of its public safety' facilities plan, the City anticipates construction of a new Public Works shop Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 4 of 9 o Property parcels may be acquired as soon as January 2018 o Construction is projected to begin in Q3 or Q4 of 2019 • Anticipated to be financed in two phases: o Phase One of this project includes site acquisition and soft costs through 2018 — estimated to cost approximately $20 million o Phase Two, beginning in 2019, would include additional soft costs and construction costs through 2021. o The total cost of the project (and amount of Phase Two financing) will be dependent on the final design and scope of the project • The shops facility is anticipated to be used for both general government and utility purposes LTGO Bond Ordinance • The City Council is being asked to adopt an ordinance that would authorize the issuance of the LTGO debt within the following parameters: o Par amount not to exceed $20 million o Final maturity to be no later than December 1, 2038 (20-year terrn) o True Interest Cost not to exceed 4.50% o Authorizes long/short-term bank financing o Authority granted to the Designated Representative shall expire one year after the effective date of the Bond Ordinance • If authorized, proceeds of the 2018 LTGO Bonds would be used to acquire certain parcels; including through eminent domain, and construct maintenance and other City facilities • LTGO Bonds will be secured by the City's full faith and credit and non -voted property taxing authority Mr. Eoff stated the proposed LTGO bonds are known as a level debt structure, with level annual payments of debt service. The first 4 years during the construction phase of the project are interest only, with the 5th year commencing principal amortization with uniform semi-annual payments over the 20-year term. It's common in the bond market. The pricing convention by bond investors is referred to as a premium bond structure. Mr. Eoff outlined the City's non -voted and total general obligation debt capacity, as outlined in page 54 of the agenda packet. 2018 LTGO Bonds - Next Steps Finance Committee Meeting Consideration of Bond Ordinance 11/21/17 Committee of the Whole — Consideration of Bond Ordinance 11/27/17 Regular Meeting — Consideration of Bond Ordinance 12/4/17 Bond Ordinance Published 12/7/17 Bond Rating Agency Call Week of 1/8/18 Bond Sale 1/25/18 Bond Closing funds delivered 2/8/18 Questions and discussion from Councilmembers included: • How does Tukwila s debt capacity compare to other cities? Mr. Eoff estimated the City is in the 40th percentile in terms of total capacity and explained the City has a significant margin of debt. Ms. Gregory added that the debt capacity on page 54 of the agenda packet uses the 2017 tax year assessed valuation. The bonds will be issued in 2018 and will look at debt capacity calculation from the date of issuance. If the assessed value of the City increases next year, this will also increase the City's allowable debt capacity. • In response to questions regarding the timeline of the LTGO Bonds, Ms. McCarthy explained the timeline allows for maximum flexibility. It ensures financing tools are in place for the acquisition of properties relating to the Public Safety Plan. Ms. McCarthy explained it can take at least 3.5 months to prepare bond issues, so City staff are preparing the bond ordinance, including an option for short term financing, so the City has the tools to act quickly when necessary. She explained the project drives the financing and the City will not issue debts until the project moves forward in the form of land acquisition. • Is it standard to delegate authority to designated representatives on bond ordinances? Ms. Gregory answered in the affirmative and further explained that the past few bond ordinances Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 5 of 9 have provided for delegated authority to an individual. The process is authorized under state law. Ms. McCarthy further clarified that if the City does not use delegated authority, the Council has to approve the terms of issuance. Since the City is using a competitive sale process, once the bond is marketed, bids are received very quickly. The Designated Representative then takes the lowest interest offer. • Would the bonds be issued prior to having a signed contract for the purchase of land? Ms. McCarthy stated it is possible and would depend on cash flow. The City can front the purchase, up to a point. She relayed that the City has issued bonds before construction on a project started, such as in the case of the bond issues for Interurban Avenue and Boeing Access Road Bridge. • In response to a request for clarification on the conditions for sale and use of the bond, Ms. Gregory explained that this ordinance authorizes the City to issue debt for this project and city facilities related to the Public Safety Plan. This ordinance is intended to prepare financing tools, but there are several steps to be accomplished before the debt can be used for its purpose. Ms. Gregory explained that if there is a sale of a bond -financed property to a private party, certain tax requirements would need to be met to preserve the tax exemption of the bond proceeds. The main requirements are to use the disposition proceeds for another good governmental project of the City, or to use the proceeds and basically pay off the bond. She also stated there are state law considerations. • Is there a time frame on using the bond proceeds? Federal law requires that the majority of the proceeds be spent within three years. While state law does not have a time frame for when the proceeds need to be spent, it does further restrict the use of the bonds. For example, limited tax general obligation (LTGO) bonds can legally be towards any City purpose. The use of voter approved bonds are restricted by what voters approve in the ballot measure. • While the ordinance provides the City with flexibility regarding financing the acquisition of property, the Council wishes to remain informed in the process. • When are the first cost estimates for the fire stations expected? Mr. Cline referenced the report from Steve Goldblatt, Project Management Quality Assurance provider for the City, and explained that Lydig, the City's General Contractor Construction Management contractor is now beginning preliminary schematic designs, which will be shown during the Public Safety Plan Open House on December 2, 2017. The first cost estimate is anticipated in mid -January. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE CONSENT AGENDA AT THE NEXT REGULAR MEETING. c. An ordinance amending the Tukwila Municipal Code relating to the use of REET funds (Real Estate Excise Tax funds). Councilmember Hougardy indicated this item was discussed at the Community Development and Neighborhoods Committee meeting on November 13, 2017. The committee members were unanimous in recommending approval. Rachel Bianchi, Communications and Government Relations Manager, explained that the Tukwila Municipal Code (TMC) currently restricts Real Estate Excise Tax (REET) 1 fund allocations to the Land Acquisition, Rec and Park Development Fund 301. The City chose to restrict REET 1 funding in 1996, but RCW 82.46.010 allows cities and other jurisdictions collecting REET 1 to spend these funds on capital projects and maintenance of capital projects. Since 2014, REET has come in more than double the amount budgeted due to market conditions. This ordinance amends TMC section 3.56.040 to update regulations regarding distribution of REET funds to include allocation to the Public Safety Plan Fund (305) and the City Facilities Fund (306) for use in conjunction with the Public Safety Plan. Councilmember Quinn emphasized the importance of ensuring the language of this ordinance remains specific to the Public Safety Plan so that it cannot be interpreted for a broader intent in the future. Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 6 of 9 COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING: d. A resolution adopting a City equity policy. Councilmember Seal indicated this item was discussed at the Finance Committee meeting on November 21, 2017. The committee members were unanimous in recommending approval. Mia Navarro, Community Engagement Manager, provided an overview of this item. In August, the draft City Equity Policy was presented to the Council and feedback was received. Since that time, the policy has been presented to City staff. Representatives from almost every department attended at least one meeting over the past few months, and suggested changes from City staff were incorporated in the policy. The Equity and Social Justice Commission received and approved these changes, which include the addition of ''gender identity" to section 1 of the policy and the addition of "contractors" to section 4.5. Once adopted, an implementation and evaluation team will convene to begin planning the implementation of the equity policy. This group will meet over the course of 2018 and compose an implementation plan for the Council's review. Councilmember Kruller expressed that she would like to revisit the process for channeling items through Council Committees. The Community Development and Neighborhoods Committee may have been a more appropriate route for the City Equity Policy Councilmember Hougardy expressed support for Ms. Kruller's statement regarding committee processes. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. e. An ordinance relating to vehicle trespass. Councilmember McLeod indicated this item was discussed at the Public Safety Committee meeting on November 20, 2017. The committee members were unanimous in recommending approval. Eric Dreyer, Police Commander, stated this ordinance will establish a new chapter in the Tukwila Municipal Code (TMC), prohibiting vehicle trespass and classifying it as a misdemeanor. This will allow the Tukwila City Attorney's office to more effectively prosecute these offenders in the Tukwila Municipal Court. Washington state law currently allows for the arrest and prosecution of individuals for vehicle prowling, however, law enforcement officers must prove there is criminal intent upon making unlawful entry. Mr. Dreyer explained this can mean that someone can break into a car, but the actual crime of breaking in would not amount to a vehicle prowl because it must be proven that their intent was to commit a crime once in the vehicle. Due to the high volume of these types of cases, it is challenging for King County to provide resources to prosecute these offenders and an increasing number of offenders are therefore not prosecuted. Municipalities in the region have adopted vehicle trespass ordinances to address the issue on a local basis and have seen a positive impact of enforcing this ordinance. This ordinance would provide the Tukwila Police Department with a tool for dealing with individuals who are illegally entering cars with the intent of committing a crime. This will help the City address the issues of vehicle prowling and auto theft, which are experienced with greater frequency in Tukwila due to the higher commerce in the area. Councilmember McLeod noted that neighboring cities have already adopted similar ordinances. Councilmember Seal spoke in favor of this ordinance and relayed that she receives a high number of communications from residents regarding vehicle trespass. Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 7 of 9 Councilmember Kruller asked Commander Dreyer to define vehicle prowling. Commander Dreyer explained that vehicle prowling is when an individual enters a vehicle unlawfully and then commits a crime, or police officers can prove an intent to commit a crime. Councilmember McLeod asked what happens in cases where individuals may have legitimate reasons to break into vehicles and cited the example of an owner of a vehicle breaking in because their keys are inside. Commander Dreyer explained that officers have discretion in all non -mandatory codes, so they may assess the issue and come to reasonable conclusions on how to proceed. If officers believe there is malicious intent, they may move forward with probable cause and arrest and/or cite the individual. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. f. Collective bargaining agreements for Teamsters. Stephanie Brown, Human Resources Director, stated she is pleased to bring forward 3 collective bargaining agreements to the Council City staff, the City's Labor Relations Consultant, and representatives of the Teamsters Local Union No. 763 opened labor negotiations on November 18, 2016, to reach an agreement on successor labor contracts. She relayed that tentative agreements were negotiated in good faith between the parties on September 6, 2017, resulting in two-year agreements for the Maintenance Trades, Professional Supervisory and Senior Program Managers for 2017-2018. Ms. Brown explained that the collective bargaining agreements provide for a wage increase of 1.8% in 2017, and 2.7% in 2018. In addition, the groups have agreed to accept the City's Self -Insured Medical Benefit Plan Design changes, which will result in savings to the City's health care plan. Other negotiated changes include two floating holidays, a voluntary supplemental benefit option to participate in Mac and Legal Shield, arid clarification of language for ease of administration, interpretation and application. She noted the Council has been provided the collective bargaining agreements under separate cover. Council President Robertson commended Ms. Brown for bringing forward multiple successor labor contracts over the past few weeks. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE CONSENT AGENDA AT THE NEXT REGULAR MEETING. g. A resolution regarding the non -represented employees' salary compensation for 2018. Councilmember Seal indicated this item was discussed at the Finance Committee meeting on November 21, 2017. The committee memberswere unanimous in recommending approval. Stephanie Brown, Human Resources Director, explained Resolution No. 1796 adopted in 2013 established a compensation policy for City employees and outlines the process of adjusting non - represented employee salaries. Resolution No. 1796 adjusts non -represented employee salaries via market analysis in even -numbered years and provides a cost -of -living (COLA) allowance in odd - numbered years. In 2017, the market analysis was put on hold to allow Administration and the City Council an opportunity to review the City's compensation policy. The review has been postponed to 1st Quarter 2018 due to the ongoing collective bargaining negotiations occurring this year. Per the request of the Finance Committee Chair, staff was asked to provide a recommendation on moving forward with a non -represented compensation plan for 2017 that would be equitable for the 37 non -represented employees. Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 8 of This resolution provides a 2.7% increase effective January 1, 2018, matching the increase negotiated for the Teamsters, which is the group representing the largest number of City employees. The resolution also adopts a benefits and longevity pay plan. Councilmember Hougardy asked how the increases in salary affects the overall City budget. She noted the Council makes decisions based on metrics. Councilmember McLeod stated that next year, he intends to focus on the issue of salary increases to employees who may already be above market. Councilmember Seal referenced the Teamsters collective bargaining agreements and informed the Council that it contains some language addressing the over/under market issue brought forward by Mr. McLeod. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE NEXT REGULAR MEETING. h. A contract change order (No. 9) to contract #14-067 Councilmember Quinn was Acting Chair for the Transportation and Infrastructure Committee meeting on November 14, 2017. The committee members were unanimous in recommending approval. 9:10 p.m. Councilmember McLeod left the Council Chambers. 9:12 p.m. Councilmember McLeod returned to the Council Chambers Robin Tischmak, Acting Public Works Director, provided an overview of this item and explained that Change Order No. 9 settles the additional compensation request and subsequent remediation effort between the City and Walsh Construction, which commenced on June 16, 2017. Walsh Construction has asserted that during construction they encountered unexpected impacts to the contractor's work: The contractor has itemized requests for additional compensation, including: 1) unpaid bid items, 2) extra work orders, 3) gravel borrow, 4) sub -contractor costs for Pearson Drilling and ADP Electric and 5) additional costs for inefficiencies and overhead. The City responded to these requests for additional compensation and disputed the contractor's analysis of cost impacts, entering into mediation on June 16, 2017. Several settlement conferences were held throughout the summer. The discussed global settlement terms include the City increasing the current contract time by 141.5 calendar days, making the total contract time 1,067.5 calendar days. As a result of the contract time increase, the City shall rescind the assessed liquidated damage of $358,740.85, which was assessed but never collected by the City from the contractor. Change Order No. 9 is in the amount of $1,081,259.15. The Transportation Improvement Board JIB) has approved an additional $750,000 in grant funds. With the additional funds and $35,000 in traffic impact fees for signal improvements, the City overage is $165,000. The $165,000 is available from the 2017 Overlay & Repair Project that was under budget. The total final contract amount is now $8,917,921.31. Mr. Tischmak clarified that the $750,000 from the Transportation Improvement Board was within the original grant amount of $5 million, and that the City did not exceed the grant amount. COUNCIL CONSENSUS EXISTED TO FORWARD THIS ITEM TO THE CONSENT AGENDA AT THE NEXT REGULAR MEETING. REPORTS a. Mayor The Mayor was not in attendance. Tukwila City Council Committee of the Whole Minutes November 27, 2017 Page 9 of 9 b. City Council Councilmember Duffle thanked the City and City staff for holding the Annual Thanksgiving Dinner for Seniors at the Tukwila Community Center on November 21, 2017. Councilmember Seal issued a reminder about the upcoming Public Safety Plan Open House on December 2, 2017 and stated information about the Open House is available on the City website. She reminded the Council to submit committee preferences to Laurel Humphrey, Council Analyst. Councilmember Hougardy attended the Annual Thanksgiving Dinner for Seniors at the Tukwila Community Center on November 21, 2017. She commended the musicians who played at the event. Ms. Hougardy attended a South County Area Transportation Board (SCATBd) Meeting on November 21, 2017, which included a report regarding the METRO Connects Development Plan. SCATBd is creating its 2018 legislative agenda and plan. Councilmember Kruller was present at the Annual Thanksgiving Dinner for Seniors at the Tukwila Community Center on November 21, 2017 and reported that it was well attended. She commended Sheri McConnaughey, Senior Program Coordinator, for her work in organizing the Thanksgiving dinner. Councilmember McLeod attended the Annual Thanksgiving Dinner for Seniors at the Tukwila Community Center on November 21, 2017. c. Staff There was no report. d. Council Analyst There was no report. 9:21 PM. COUNCIL PRESIDENT ROBERTSON DECLARED THE COMMITTEE OF THE WHOLE MEETING ADJOURNED. e nis Robe , Cotincil President Andy Youn, Deputy City Clerk APPROVED BY THE COUNCIL PRESIDENT: 12/06/17 AVAILABLE ON THE CITY VVEBSITE: 12/06/17 CERTIFICATE REGARDING MINUTES OF CITY COUNCIL MEETING I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a full, true and correct copy of the minutes of the December 4, 2017 regular meeting of the City Council, which reflect the passage and adoption of Ordinance No. 2559. Dated this 14th day of August, 2018. /r' Christy 0 Flaherty, City Cl City of Tukwila, Washington 10076 00005 h4174827kv Tukwila City Council City Hall Council Chambers MINUTES REGULAR MEETING Regular Meeting December 4, 2017 — 7:00 P.M. CALL TO ORDER/PLEDGE OF ALLEGIANCE/ROLL CALL Mayor Ekberg called the Regular Meeting of the Tukwila City Council to order at 7:01 p.m. and led the audience in the Pledge of Allegiance. ROLL CALL Christy O'Flaherty, City Clerk, called the roll of the Council. Present were Councilmembers Joe Duffle, Dennis Robertson, Verna Seal, Kathy Hougardy, De'Sean Quinn, Kate Kruller, Thomas McLeod. CITY OFFICIALS Allan Ekberg, Mayor; David Cline, City Administrator; Ann Marie Soto, Assistant City Attorney; Rachel Bianchi. Communications and Government Relations Manager; Mia Navarro, Community Engagement Manager; Rick Mitchell, Police Commander, Kraig Boyd, Acting Police Commander; Jay Wittwer, Fire Chief; Robin Tischmak, Acting Public Works Director; Jack Pace, Community Development Director; Minnie Dhaliwal, Senior Planner; Maxwell Baker, Assistant Planner; Peggy McCarthy, Finance Director; Joseph Todd, Technology and Innovation Services Director; Christy O'Flaherty, Records Governance Manager/ City Clerk. PUBLIC COMMENTS There were no public comments. 7:02 p.m. Councilmember Quinn exited the Council Chambers. CONSENT AGENDA a. Approval of Minutes: 11/20/17 (Regular) b. Approval of Vouchers #376431-376539; #171000; #171104-171106 in the amount of $1,954,515.58 c. Authorize the Mayor to sign an agreement with Environmental Systems Research Institute, Inc., for GIS professional services in the amount of $55,000.00. [Reviewed and forwarded to Consent by the Finance Committee on 11/21/171 d. Authorize the Mayor to sign labor agreements with the Teamsters Local #763 for the period of January 1, 2017 through December 31, 2018 for the Maintenance Trades, Professional Supervisory, and Senior Program Manager units. [Reviewed and forwarded to Consent by the Committee of the Whole on 11/27/17] e. An ordinance authorizing the issuance of one or more series of Limited Tax General Obligation Bonds in the aggregate principal amount of not to exceed $20,000,000 to finance and/or reimburse costs related to the acquisition of land and the construction, improvement and equipping of maintenance and other City facilities and to pay costs of issuing the bonds; providing the form, terms and covenants of the bonds; providing for the disposition of the proceeds of the sale of the bonds; delegating authority to approve the method of sale and the final terms of the bonds; and providing for other matters relating thereto. [Reviewed and foiwarded to Consent by the Committee of the Whole on 11/27/171 ORDINANCE NO. 2559 MOVED BY DUFFIE, SECONDED BY KRULLER THAT THE CONSENT AGENDA BE APPROVED AS SUBMITTED. MOTION CARRIED 6-0, WITH QUINN ABSENT. 7:04 p.m. Councilmember Quinn returned to the Council Chambers. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 2 of 13 PUBLIC HEARING A quasi-judicial hearing on the Tukwila South Final Plat — Phase 1 Christy O'Flaherty, City Clerk, announced this is a quasi-judicial matter, with the City Council acting as the decision -maker based on the information and record presented at this meeting, similar to the process used by a hearing examiner or judge. Quasi-judicial matters do not follow the standard Council agenda process of Council Committee, Committee of the Whole and Regular Meeting. The Council is being asked to conduct the public hearing this evening as part of the final plat approval for Phase 1 of the Tukwila South Subdivision project for the property, generally bounded by South 180th Street to the north; South 204th Street to the south„ the Green River to the east and Orillia Road and Interstate 5 to the west. Part of the quasi-judicial process involves Appearance of Fairness questions to be asked of each Councilmember. Christy O'Flaherty, City Clerk, explained that City staff and applicant will be providing information on the project, and the public will be given an opportunity to provide comments. She asked the Council to make note of their questions which can be asked during the public hearing and after the speakers have finished their presentations. 7:04 p.m. Mayor Ekberg opened the public hearing. Ms. O'Flaherty stated that testimony at a quasi-judicial hearing is taken under oath. She asked those in attendance in the audience who are planning on testifying to raise their right hand and then asked, "Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth?" The members of the audience intending to testify answered in the affirmative. The City Clerk asked the following Appearance: of Fairness questions of each of the 7 Councilmembers` 1: Do you or your family have any interest in the subject property generally bounded by South 180th Street to the north; South 204th Street to the south; the Green River to the east; and Orillia Road and Interstate 5 to the west in Tukwila? DUFFIE NO SEAL NO ROBERTSON NO HOUGARDY NO QUINN NO KRULLER NO McLEOD NO 2. Do you stand to gain or lose by your decision on this matter? DUFFIE NO SEAL NO ROBERTSON NO HOUGARDY NO QUINN NO KRULLER NO McLEOD NO 3. Have you had any ex-parte communications regarding this application? DUFFIE NO SEAL NO ROBERTSON NO HOUGARDY NO QUINN NO Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 3 of 13 KRULLER NO McLEOD NO Each of the 7 Councilmembers answered "No" to all of the above questions. The City Clerk then asked, "Does anyone in the audience object to any of the Councilmembers presiding over this matter?" There were no objections from the audience. Mayor Ekberg asked for a staff report on the Tukwila South Final Plat Phase 1 project. Per the agenda procedures, 15 minutes will be allowed for the staff report. Maxwell Baker, Assistant Planner, provided an overview of the project. Information from the staff report follows: FILE NUMBER: L17-0068 PROJECT: Tukwila South Final Plat Phase 1. The first phase includes creation of 3 lots, 14 Future Development Tracts, 2 Open Space Tracts, 2 Regional Definition Tracts, 5 Sensitive Area Tracts, and 1 Non -Buildable Tract. This project originally received subdivision preliminary approval in October 2017 from the Hearing Examiner. APPLICANT: Segale Properties, LLC REQUEST: Request for Final Subdivision approval for Phase I of the Tukwila South Project. LOCATION: Tukwila South. The area is generally bounded by South 180th Street to the north; South 204th Street to the south; the Green River to the east; and Orillia Road and Interstate 5 to the west. CONCLUSIONS 1. The applicant, Segale Properties, LLC; is requesting final plat approval for Phase 1 of the Tukwila South plat. The City Council shall hold a hearing for Phase 1 of the project and subsequently make a decision of Phase 1. Additional phase approvals are not requested at this time and will require a separate final plat approval. 2. Any land being divided into ten or more lots, unit lots or tracts is subject to subdivision review. Subdivisions require preliminary plat approval by the Hearing Examiner. After preliminary plat approval, access and utilities for the project are built prior to final plat approval. The decision of the final plat is made by the City Council. The Hearing Examiner Review approved the preliminary plat and design review on October 9, 2017. 3- The Tukwila South area contains several zoning designations, which include: Low Density Residential (LDR); Tukwila Valley South (TVS); Heavy Industrial (HI); and Mixed Use Office (MUO). The area subject to this plat is zoned LDR, TVS, and MUO: The entire Tukwila South area includes an overlay which supersedes the underlying zoning. As indicated in TMC 18.41.010, the TSO "may be applied by the City Council to any property lying within the Comprehensive Plan's Tukwila South Master Plan." 4. The project site is generally bounded by S 180th St to the north; S. 204th St. to the south; the Green River to the east; and Orillia Road and Interstate 5 to the west. Phase 1 will create lots 1, 2, and 3, along with five Sensitive Area Tracts, two Regional Detention Tracts, and 14 Future Development Tracts. 5. Lots 1, 2, and 3 are provided with utilities and adequate access infrastructure, Future Development Tracts will be provided with access at time of final plat for those tracts; utilities are currently capped for each proposed Future Development Tract. 6. Phase 1 is designed so that it can function and meet all Tukwila Municipal Code requirements. Future phases will be reviewed subsequently. 7: The proposed final plat meets Tukwila Municipal Code requirements for final plats, as specifically noted below: a) TMC 17.14.030 A. Application Requirements b) TMC 17.14.030 B. Review Procedures c) TMC 17.14.030 C. Criteria for Final Plat a) The proposed plat bears the required certificates and statements of approval. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 4 of 13 ii) A title insurance report furnished by the subdivider confirms the title of the land and the proposed subdivision is vested in the name of the owner(s) whose signature appears on the plat certificate. iii) Facilities and improvements required to be provided by the subdivider have been completed for Phase 1. iv) Land surveyor has signed' the plat. v) The plat is in conformance with the approved preliminary plat. vi) The plat meets the requirements of Chapter 58.17 RCW and other applicable state and local laws which were in effect at the time of preliminary approval: The proposed plat complies with the phasing requirements listed under TMC 17.14.040. All infrastructure required as part of the preliminary approval for Phase 1 has been constructed and reviewed and accepted by the City's Public Works, Fire and Department of Community Development. The City's Finance Department has confirmed that no assessments are delinquent. RECOMMENDATIONS Approval of the Final Subdivision application for Phase 1 of the Tukwila South Project and approval of the phasing plan. Mr. Baker utilized a Powerpoint to provide additional information, with the following key points: Review Process History • In 2005 the City issued a Final Environmental Impact Statement under SEPA.. • In 2009 the City and Applicant entered into a development agreement for the Project. • In 2010 the City approved a Sensitive Areas Master Plan. • In 2011 the City issued a grading permit for mass grading of the Tukwila South area.. • On September 19, 2017 the Hearing Examiner held a public hearing for a Preliminary Plat application: Approval for the Preliminary Plat by the Hearing Examiner was provided on October 9, 2017. Subdivision Layout The Tukwila South property is proposed to be initially split into 14 "Future Development Tracts", two "Open -Space Tracts", two "Regional Detention Tracts", five "Sensitive Area Tracts", and one "Non - Buildable Tract." The property is subsequently divided into 42 lots, ranging in size from 1.40 acres to 21.55 acres. The larger lots are intended for use by large scale campus -style development for regional employers. The smaller lots will allow for street level retail uses to serve the office/campus and residential uses. Sensitive Area Tracts Lands that primarily contain sensitive areas as identified in the Sensitive Area Master Plan (SAMP) Future Development Tracts Lands that include one or more future lots and/or Non -Buildable Tracts (NBTs), which Tots and tracts will be finalized and recorded with later phases of the final plat. Non -Buildable Tracts Lands that are not suitable for development due to unavailability of utilities and/or access. Such tracts are reserved by Segale Properties, LLC, its successors and assigns for future development, provided that no development shall occur nor will the City of Tukwila issue any type of development permits until: A) The property owner is granted approval by the City of Tukwila to remove the Non -Buildable Tract status by going through a plat alteration process pursuant to RCW 58.17.215; and B) Utilities and access that meet the City of Tukwila's adopted standards are provided to these tracts. Regional Detention Tracts Lands that contain a regional detention pond. Open Space Tracts Lands not suitable for development. Open space tracts will be owned and maintained by Segale Properties, LLC and may be conveyed to an owner's association in the future. Construction of pavement Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 5 of 13 structures shall be prohibited on open space tracts, provided that limited development of trails and/or other recreational facilities, consistent with applicable codes, laws and regulations; shall be allowed: Lot Developable lands accessed via an existing road with water; sewer, stormwater and all dry utilities (e.g., power and cable) stubbed to each lot. Staff Recommendation Approval of the Final Subdivision application for Phase 1 of the Tukwila South Project and approval of the phasing plan. Mayor Ekberg asked for a presentation by the applicant on the Tukwila South Final Plat — Phase 1 project. Per the agenda procedures,15 minutes will be allowed for the applicant report. Nancy Rogers, land use attorney with Cairncross and Hempelmann, is representing the Segale's interests in this matter. 'Ms. Rogers expressed that Mark and Kirstin Segale are here this evening and in support of the staffs recommendation for approval of the final plat and the phasing plan. She emphasized that both the City Code and State Law are clear that when a legislative body finds that a final plat conforms to the terms of the preliminary plat approval, the Council shall approve that final plat. The information provided tonight confirms those findings for final approval of the plat.. Mayor Ekberg askedif either staff or the applicant had any other comments. Per the agenda procedures, 5 minutes is allowed by each for rebuttal. There were no rebuttals. Mayor Ekberg called for public comments. Bruce Mitchell represents Mitchell Moving and Storage, which has been in Tukwila since 1968. Mr. Mitchell submitted written comments for the record. He explained that there has been flooding on his property for several years. There is some sort of problem with the water table or the river level that is flooding recessed docks that have been there since 1968. He asked that Council give attention as they move on to the grading plans that were submitted for the project which say there will be no flooding. 7:22 p.m. Mayor Ekberg closed the public hearing. UNFINISHED BUSINESS a. Motion to approve the application for Tukwila South Final Plat - Phase 1, creating a new lot layout and phasing plan for parcels within the Tukwila South Development, located generally in the area bounded by South 180th Street to the north, South 204th Street to the south, the Green River to the east and Oriilia Road and 1-5 to the west as adopted by and set forth in the findings of fact, conclusions, and recommendations contained in the staff report for L17-0068 as the .City Council's final decision on this matter. MOVED BY ROBERTSON, SECONDED BY HOUGARDY TO APPROVE THE APPLICATION FOR TUKWILA SOUTH FINAL PLAT — PHASE 1, CREATING A NEW LOT LAYOUT AND PHASING PLAN FOR PARCELS WITHIN THE TUKWILA SOUTH DEVELOPMENT, LOCATED GENERALLY IN THE AREA BOUNDED BY SOUTH 180TH STREET TO THE NORTH, SOUTH 204TH STREET TO THE SOUTH, THE GREEN RIVER TO THE EAST AND ORILLIA ROAD AND 1-5 TO THE WEST AS ADOPTED BY AND SET FORTH IN THE FINDINGS OF FACT, CONCLUSIONS, AND RECOMMENDATIONS CONTAINED IN THE STAFF REPORT FOR L17-0068 AS THE CITY COUNCIL'S FINAL DECISION ON THIS MATTER.* Councilmember'McLeod inquired if there is a solution based on the public comment regarding flooding. Additionally, he asked how long the phasing will take. In response to the phasing question, Maxwell Baker, Assistant Planner, said that every phase would need to occur before the 5-year expiration of the preliminary plat. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 6 of 13 in response to the flooding issue, Robin Tischmak, Acting Public Works Director, explained that conversations are ongoing with Mr. Mitchell to assist with this matter. Mr. Tischmak emphasized the location is part of the private property, and City staff is limited in that regard. They have asked Mr. Mitchell to provide as-builts for the system and to have it cleaned and inspected, as that may provide some insight into what is occurring. Councilmember McLeod said if the application is approved tonight, would that change the course of action with Mitchell Moving. Mr. Tischmak said they will continue trying to determine what is occurring on the property. Jack Pace, Community Development Director, said under the subdivision ordinance and when dealing with a final plat, the decision is based on whether it complies with the conditions of the preliminary plat approval by the hearing examiner. The flooding matter was not an issue brought up to the hearing examiner, nor were there any conditions related to it. The final plat decision has to be tied to the criteria, and there is no record of the flooding issue in the preliminary plat approval. Mayor Ekberg emphasized while it may not be a part of this process, the City will still work with Mr. Mitchell to secure a resolution. Councilmember Hougardy said this project is consistent with the City's Comprehensive Plan, the Shoreline Master Plan, the Tukwila Valley South Master Plan, and the Development Agreement, and she supports approving the application. Councilmember Seal said she is thrilled to see this come before the Council and is in favor of approving the application. Council President Robertson said this project will be good for the City and the region. *MOTION CARRIED 7-0. b. A report from the Public Safety Bond Financial Oversight Committee. Public Safety Bond Financial Oversight Committee. Councilmember Seal introduced Sean Goode, Chair of the Public Safety Bon Committee, to the City Council. Mr. Goode provided a summary of the report to the City Council,. Sean Goode, Chair, Financial Oversight The Public Safety Bond Financial Oversight Committee met in open session on Thursday, June 29, 2017 at 4:00 p.m. at Tukwila City Hall. Pursuant to Ordinance 2509 and Resolution 1892, during this meeting the Committee reviewed status and expenditure reports relating to the Public Safety Bond as approved by Tukwila voters at the November 8, 2016 General Election. City staff' also provided an overview of the Public Safety Plan as well as schedules relating to construction and public outreach. As required by the Charter, the Committee elected a Chair (Sean Goode) and Vice -Chair (Jessica Jerwa) and approved by- laws. Minutes of this meeting are attached to this report in the packet. With regard to bond finances, the Oversight Committee reviewed a list of contracts and a report of revenues and expenditures through May 31, 2017. The Committee found that expenditures to date were in compliance with the purposes of the Public Safety Bond and reported the same to the City Council's Finance Committee on September 6, 2017. The Oversight Committee met again on October 19, 2017 in open session at Tukwila City Hall. During this meeting, the Committee received an overview of the current status of the projects, then reviewed a report of all Public Safety Bond expenditures through August 2017. The Committee also reviewed a list of all Public Safety Plan contracts as of August 2017. Draft minutes of this meeting are also in the agenda packet along with a copy of the materials that were reviewed. The Committee finds the bond expenditures to date are in compliance with the purposes of the Public Safety Plan. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 7 of 13 The Committee understands that the work is expected to intensify in 2018 due to the number of Public Safety Plan projects and activities in progress, and they would appreciate any feedback from the City Council regarding expectations for next year. In particular, Mr. Goode referenced that due to rising construction costs, the amount needed for the project is in excess of what has been projected. While they have stewardship over the project, they are unable to dictate what happens. The Councilmembers asked clarifying questions regarding the presentation and exchanged comments as follows: • The significance of the Public Safety Bond Financial Oversight Committee receiving updated project costs in a timely manner and being involved early on in the process. • The importance of the Committee continuing to ask the hard questions and expressing concerns. • It is crucial that the Committee continue looking at the numbers and advise the Council on what a reasonable and prudent person would do under the emerging conditions. • The benefit to the City by the Committee looking at the issues through the community lens. • The participation by the Committee and their input to the City Council as the process plays out is vital to Tukwila. Councilmember Kruller inquired regarding dwindling attendance by some of the Public Safety Plan Financial Oversight Committee members. Jessica Jerwa, Vice Chair, said that now is a good time to reach out to those members to see if the commitment remains or if it may be time to onboard new members. The Mayor and Councilmembers thanked Mr. Goode and Ms. Jerwa for their commitment and the information provided in the presentation. c. An update on the homeless encampment policy. Kraig Boyd, Acting Police Commander, utilized a Powerpoint presentation to provide an overview of this issue. Definitions and Classification 4 types of homelessness: 1. The indigent or those who fall on hard times 2. Addiction Issues 3. The severely mentally ill 4. The criminal element Legal Issues and Process • Legal Precedent • Availability of Resources Standard Operating Procedures — Homeless Encampment Glean -up Program • Notification • Assessment • Response/Enforcement • Clean-up • Monitor ncampment Response Notification Assessment Response/Enforcement Clean-up -Tukwila Works -Tukwila Police Patrol -Site Visit -Deploy Resources -Notification to Vacate -Sound Mental Health/ Tukwila Human Services Team -Tukwila Police Community Partners -Debris Removal -Site Reclamation -Post "No Trespassing" signs Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 8 of 13 Success Story — Tukwila Homeless Resident Mr. Johnson was first contacted in November 2016, He had been homeless and living on the street for several years. Mr. Johnson also had an alcohol problem and was offered homeless resources such as transitional resources and alcohol and drug rehabilitation treatment but refused. Mr. Johnson said that he enjoyed living under the bridge where he had a lot of freedom and nobody bothering him. In April 2017, Mr. Johnson agreed to get help via Sound Mental Health. On November 6, 2017, Mr. Johnson was approved for permanent housing in Burien, WA. Recreational Vehicles (RVs) and Other Vehicles • The. Tukwila Municipal Code (TMC) allows vehicles to be in one location for 72 hours. • Police cannot tow an RV if it is occupied. • Officers use the same outreach procedure for vehicles as for encampments. The Councilmembers asked clarifying questions regarding the presentation and offered the following comments: • The Council is open to looking at success stories from other agencies, assessing current policies, and working with legislators to mitigate the issues. • Seeking additional resources such as services provided by Mary's Place are important considerations. • Sometimes even when housing is available, people choose to remain homeless due to the opioid crisis and mental illness. • More and more families with young children are affected by homelessness. • A holistic approach such as forming a consortium, similar to what is occurring in other areas of the region could provide greater leverage toward success. • The Councilmembers would like continued presentations on issues regarding homelessness. The Mayor and Councilmember thanked Mr. Boyd for his informative presentation and the work done in the community by the Police Department. d. A resolution adopting a City equity policy. MOVED BY SEAL, SECONDED BY QUINN THAT THE PROPOSED RESOLUTION BE READ IN ITS ENTIRETY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk; read the proposed resolution in its entirety. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING A CITY EQUITY POLICY. MOVED BY SEAL, SECONDED BY DUFFIE THAT THE PROPOSED RESOLUTION BE ADOPTED AS READ. MOTION CARRIED 7-0, TO ADOPT RESOLUTION NUMBER 1921. e. An ordinance adopting a new chapter of the Tukwila Municipal Code related to vehicle trespass, to be codified as Tukwila Municipal Code Chapter 8.26. MOVED BY MCLEOD, SECONDED BY KRULLER THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING A NEW CHAPTER OF THE TUKWILA MUNICIPAL CODE RELATED TO VEHICLE TRESPASS, TO BE CODIFIED AS TUKWILA MUNICIPAL CODE CHAPTER 8.26; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. 8:33 p.m. Councilmember Duffie exited the Council Chambers. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 9 of 13 MOVED BY SEAL, SECONDED BY QUINN THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 6-0, WITH DUFFIE ABSENT, TO ADOPT ORDINANCE NUMBER 2560. f. A resolution updating and clarifying non -represented employees' compensation and adopting the non -represented salary schedule and benefits summary, effective January 1, 2018. MOVED BY SEAL, SECONDED BY HOUGARDY THAT THE PROPOSED RESOLUTION BE READ BY TITLE ONLY. MOTION CARRIED 6-0, WITH DUFFIE ABSENT. Christy O'Flaherty, City Clerk, read the proposed resolution by title only. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, UPDATING AND CLARIFYING NON -REPRESENTED EMPLOYEES' COMPENSATION; AND ADOPTING THE NON- REPRESENTED SALARY SCHEDULE AND BENEFITS SUMMARY, EFFECTIVE JANUARY 1, 2018. MOVED BY SEAL, SECONDED BY KRULLER THAT THE PROPOSED RESOLUTION BE ADOPTED AS READ. MOTION CARRIED 6-0, WITH DUFFIE ABSENT, TO ADOPT RESOLUTION NUMBER 1922. g. An ordinance to update regulations regarding distribution of Real Estate Excise Tax (REST). Rachel Bianchi, Communications and Government Relations Manager, explained that a question came up at the last Committee of the Whole meeting regarding this ordinance. The way the proposed ordinance is currently worded, the funds can be used for any project being funded by 301, 305, or 306. Fund 305 is clearly limited to Public Safety Plan projects, however, it is possible that the City Facilities Fund (306) could include projects besides Public Safety Plan projects, depending on what is in the CIP (Capital Improvement Program). To better strengthen the language, an amendment to Section B of the ordinance could be made based on the strike -through underlined version that has been put on the dais for Council consideration. MOVED BY ROBERTSON, SECONDED BY MCLEOD THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 6-0, WITH DUFFIE ABSENT. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NO, 1674; AMENDING ORDINANCE NO. 1400 §4, AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 3.56.040, TO UPDATE REGULATIONS REGARDING DISTRIBUTION OF REAL ESTATE EXCISE TAX, PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. MOVED BY ROBERTSON, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ.* 8:37 p.m. Councilmember Duffle returned to the Council Chambers. MOVED BY HOUGARDY, SECONDED BY ROBERTSON TO AMEND SECTION B OF THE ORDINANCE AS FOLLOWS: B. The remaining proceeds from City taxes imposed herein shall be distributed to the City on a monthly basis, and shall be placed by the Finance Director in the Land Acquisition, Recreation and Park Development Fund (301), and may be used in conjunction with any project within this fund. Tax proceeds collected pursuant to this chapter may also be placed by the Finance Director into the Public Safety Plan Fund (305) or the City Facilities Fund (306), provided the tax funds placed therein are used only for projects that are a part of the City's Public Safety Plan these funds. MOTION CARRIED 7-0. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 10 of 13 *MOTION CARRIED 7-0, TO ADOPT ORDINANCE NUMBER 2561, AS AMENDED. h. Authorize the Mayor to sign Contract Change Order No. 9 to contract #14-067 (Final Settlement) with Walsh Construction for the Interurban Avenue South Project in the amount of $1,081,259.15. MOVED BY QUINN, SECONDED BY KRULLER TO AUTHORIZE THE MAYOR TO SIGN CONTRACT CHANGE ORDER NO.9 TO CONTRACT #14-067 (FINAL SETTLEMENT) WITH WALSH CONSTRUCTION FOR THE INTERURBAN AVENUE SOUTH PROJECT IN THE AMOUNT OF $1,081,259.15. MOTION CARRIED 7.0. i. An ordinance authorizing and providing for the acquisition of interests in land for the purpose of completing the 53rd Avenue South roadway and surface water drainage system projects; providing for condemnation, appropriation, taking of land and property rights necessary therefor; providing for payment thereof and directing the initiation of appropriate proceedings in the manner provided by law and for said condemnation. NOTICE OF FINAL ACTION MOVED BY KRULLER, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 7-0.. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING AND PROVIDING FOR THE ACQUISITION OF INTERESTS IN LAND FOR THE PURPOSE OF COMPLETING THE 53RD AVENUE SOUTH ROADWAY AND SURFACE WATER DRAINAGE SYSTEM PROJECTS; PROVIDING FOR CONDEMNATION, APPROPRIATION, TAKING OF LAND AND PROPERTY RIGHTS NECESSARY THEREFOR PROVIDING FOR PAYMENT THEREOF AND DIRECTING THE INITIATION OF APPROPRIATE PROCEEDINGS IN THE MANNER PROVIDED BY LAW AND FOR SAID CONDEMNATION; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Mayor Ekberg asked if anyone in the audience had comments on this item. There were no public comments. MOVED BY KRULLER, SECONDED BY MCLEOD THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 7=0, TO ADOPT ORDINANCE NUMBER 2562. REPORTS a. Mayor Mayor Ekberg reported that last week the Washington State Department of Employment recognized G4S Security in Tukwila for hiring a veteran., They received a "Hire a Vet Award," and are proud that 36% of their personnel are veterans. b. City Council Councilmember Hougardy attended the SCA (Sound Cities Association) membership meeting on. November 29, 2017, where the budget was adopted for 2018. Peter Kageyama, the award winning author who wrote "For the Love of Cities" was in attendance. She also attended the December 2, 2017 Public Safety Plan Open House event, which was well attended and very beneficial. Councilmember Quinn attended the TIBAC (Tukwila International Boulevard Action Committee) cleanup event on December 2, 2017. That same day, he also attended the Public Safety Plan Open House event; which generated great dialogue in the community. Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 11 of 13 Councilmember Kruller attended the SCA (Sound Cities Association) membership meeting on November 29, 2017 as a voting representative for the budget. She displayed the 2 books written by Peter Kageyama, and emphasized that the books reference dog friendly cities being a catalyst to community engagement. She advocated, again, for a dog park in the Tukwila community and would like to see traction gained on this issue. She encouraged the Council to sign up for SCA regional committees, as there are many valuable openings where involvement would benefit the City. Councilmember McLeod attended the TIBAC (Tukwila International Boulevard Action Committee) cleanup event on December 2, 2017 and the Public Safety Plan Open House that same day. He inquired regarding the summary in the CA (City Administrator) Report pertaining to the Ryan Hill Neighborhood Meeting and asked when the responses would be compiled. David Cline,City Administrator, replied that he would get back to the full Council regarding the availability of the information. c. Staff David Cline, City Administrator, referenced the City Administrator (CA) Report and Monthly Public Safety Plan Update in the packet and offered to answer any questions. Additionally, he said that Steve Goldblatt, the PMQA (Project Management Quality Assurance) consultant let him know that the Project Review Committee provided unanimous approval (8-0) for GC/CM (General Contractor Construction Management) for the Public Safety Plan Justice Center site. Many contractors are looking forward to the RFP (Request for Proposals) on the project in December. Council President Robertson referenced the portion of the Public Safety Plan report on page 299 in the agenda packet regarding a December 18 date to provide estimated costs for the Justice Center. Mr. Cline responded that estimated costs would be provided on December 18. Additionally, Mr. Robertson inquired about the Disadvantaged Business Enterprises and apprenticeship utilization discussion and asked if the Public Safety Committee would be making those decisions. Mr. Cline responded that the decision making would come through the normal Council process in January. d. City Attorney There was no report. e. Council Analyst The Council Analyst was not present. Council President Robertson referenced that the Program Management Quality Assurance (PMQA) report for the Public Safety Plan is in the packet. MISCELLANEOUS. Councilmember Duffle relayed that a citizen contacted him about the timeline for the 53rd Avenue South project. Robin Tischmak, Acting Public Works Director, said the intent is to go out for bid in January 2018. Council President Robertson said the Council received an email from Rachel Bianchi, Communications and Government Relations Manager, regarding potential changes to the State's marijuana laws that could allow recreational growth of marijuana in homes. He is concerned that if the legislature intends to act on this soon, the City may not have time this year to take action as City Council meetings are ending for the year. He would like to contact Jennifer Ziegler, the City's lobbyist, to get information and bring it back to the December 11 Council meeting. The Councilmembers discussed this issue and it was determined that speaking with City legislators at the luncheon scheduled to occur tomorrow, December 5, would be the best next step. Mayor Ekberg also relayed that the City lobbyist will be at the luncheon and more information can be attained. Councilmember Kruller referenced receipt of a letter last week from the Mayor regarding Mary's Place (emergency shelter for homeless families). This issue has come before the CDN (Community Development and Neighborhoods) Committee twice. Mary's Place intended to use the Desimone property at the old Barnaby's Restaurant location. The Council then received a letter from Mary's Place Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 12 of 13 withdrawing their application, with a primary focus on the need to have walk-in capabilities as part of their program. With Tukwila having high percentages of homeless children, the City should be seeking to use Mary's Place as a resource. Every other City in the region has managed to work with Mary's Place. Ms. Kruller felt the direction from the CDN Committee was to go back and re-engage immediately with Mary's Place to "roll out the welcome mat" and re -open discussions. She submitted a copy of the Mayor's letter for the record and expressed great disappointment at this impasse with no timelines for moving forward. She would like City administration to move forward very quickly with a timeline on next steps for the Council on this issue. 9:03 p.m. Councilmember Seal exited the Council Chambers. 9:04 p.m. Councilmember Seal returned to the Council Chambers. Council President Robertson expressed that a working agreement with Mary's Place in Tukwila would be good for the City, and the Mayor's letter is appropriate in leaving the door open for action to be taken. The issue of daytime use was one element of concern, along with various issues associated with development of property that is located in the shoreline zone. If another location could be found for Mary's Place in the City, it would be very desirable. If any Councilmember like to talk with Mary's Place officials for fact finding, that is also appropriate. David Cline, City. Administrator, said the City has been working with Mary's Place for over a year. Mary's Place typically works with property owners who are willing to give them properties to use. The Desimone Trust had the Barnaby's Restaurant site, and the conversation began for Mary's Place. Councilmember McLeod relayed the importance of the City not remaining in a space of missed opportunity, due to a great regional need related to homelessness. Councilmember Hougardy, Chair of the CDN (Community Development and Neighborhoods) Committee explained that there had been a proposed agreement with Mary's Place, however, it had not gone to their Board of Directors. As additional vetting occurred, issues associated with improvements based on the proximity to the shoreline started triggering non -conforming uses. it was the decision of Mary's Place not to choose the "Barnaby's" location. The welcome mat remains out for Mary's Place in the City. Councilmember Quinn would like to keep the conversation moving forward to meet the needs of the community. Councilmember Kruller relayed that in 9 months, the item did not come back to CDN for more discussion. The withdrawal letter from Mary's Place did not focus on code issues, rather, the day walk-in program for people with children that was not possible in Tukwila. The delays may well have also caused loss of "grandfathering" opportunities. From her standpoint, the item should come back to CDN as soon as possible, as it is embarrassing that Tukwila is the only City who has not been able to engage with Mary's Place. Mayor Ekberg emphasized that he is very supportive of Mary's Place and has toured their facilities and has seen the heartbreak. His encounter while touring Mary's Place was reminiscent of experiences with his own mother when he was a child. He has an open invitation to Mary's Place; staff has been looking in the City for properties. He asked the Council to make him aware if they know of any properties that may be viable candidates for Mary's Place. He is very sorry this property did not work out. It was presented to CDN with intent to make it happen, until Mary's Place sent a letter withdrawing their application. The door to Tukwila is open for Mary's Place. EXECUTIVE SESSION — 15 minutes Potential Litigation — Pursuant to RCW 42.30.110(1)(i) Mayor Ekberg announced the Council will now go into Executive Session to discuss: Potential Litigation — Pursuant to RCW 42.30.110(1)(i) Tukwila City Council Regular Meeting Minutes December 4, 2017 Page 13 of 13 The discussion will last no more than 15 minutes, and no decisions will be made during the Executive Session. The Council will remain in the Council Chambers for this Executive Session. After the Executive Session has concluded, the Council may want to take action in the Open Meeting under New Business. The doors will be opened and the public invited to enter the Council Chambers for that discussion and potential action. 9:26 p.m. Mayor Ekberg called for a brief recess to allow the audience to exit the Council Chambers. Executive Session Start 9:31 p.m. Attendees: Mayor Ekberg; David Cline, City Administrator; Ann Marie Soto, Assistant City Attorney; Robin Tischmak, Acting Public Works Director; Councilmembers Duffle, Robertson, Seal, Hougardy, Quinn, Kruller, and McLeod. Executive Session End: 9:33 p.m. 9:34 p.m. Mayor Ekberg reconvened the Regular Meeting. AGENDA AMENDMENT MOVED BY ROBERTSON, SECONDED BY KRULLER TO AMEND THE AGENDA TO ADD A NEW BUSINESS ITEM TITLED "CR2A AGREEMENT." MOTION CARRIED 7-0. NEW BUSINESS CR2A Agreement MOVED BY ROBERTSON, SECONDED BY KRULLER TO RATIFY AND APPROVE A CR2A AGREEMENT WITH WALSH CONSTRUCTION COMPANY II, LLC, REGARDING THE TUKWILA INTERURBAN AVENUE SOUTH, SOUTH 143RD STREET TO FORT DENT WAY PROJECT, IN THE AMOUNT OF 61,425,000.00 PER THE TERMS OF THE AGREEMENT. MOTION CARRIED 7-0. ADJOURNMENT 9:36 p.m. MOVED BY SEAL, SECONDED BY DUFFIE TO ADJOURN THE REGULAR MEETING OF THE TUKWILA CITY COUNCIL. MOTION CARRIED 7-0. Allan Ekberg, Mayor Christy O'Flaherty, ecords Governance Manager/City Clerk APPROVED BY THE CITY COUNCIL: 1/2/18 AVAILABLE ON CITY VVEBSITE: 1/3/18 CERTIFICATE REGARDING ORDINANCE I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington (the "City"), do hereby certify: 1. That the attached Ordinance No. 2574 (the "Ordinance") is a true and correct copy of an ordinance of the City Council, as finally adopted at a regular meeting of the City Council held on May 7, 2018, and duly recorded in my office, and that such Ordinance has not been amended or superseded. 2. That the meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of the meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the City Council voted in the proper manner for the adoption of the Ordinance; that all other requirements and proceedings incident to the proper passage of the Ordinance have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. Dated this 14th day of August, 2018. Christy O'Flaherty, City Clerk City of Tukwila, Washington 10076 0000S ha17a827kv City of Tukwila Washington Ordinance No. i `; r)11 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2559 RELATING TO THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the City Council (the "Council") of the City of Tukwila, Washington (the "City") has deemed it is in the best interest of the City to acquire certain parcels of land, including through eminent domain, and to construct, improve and equip maintenance and other City facilities (together, the "Project"); and WHEREAS, after due consideration the Council adopted Ordinance No. 2559 on December 4, 2017, authorizing the issuance and sale of one or more series of limited tax general obligation bonds (the "Bonds") to pay all or a portion of the costs of the Project and to pay costs of issuance for the Bonds; and WHEREAS, the sale and issuance of the Bonds is contingent on satisfaction of certain parameters relating to maximum interest rates, final maturity dates, redemption terms and principal maturities as set forth in Ordinance No. 2559; and WHEREAS, the Council now desires to amend Ordinance No. 2559 to extend the final maturity date for the Bonds and other matters related thereto, as provided herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Definitions. Except as otherwise provided herein, definitions used in this ordinance shall have the meanings set forth in Ordinance No. 2559. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility -amend Sec 12 4-30-18 PM:bjs Page 1 of 4 Section 2. Amendment to Ordinance No. 2559: Section 12 (Sale of Bonds). Section 12 (Sale of Bonds) of Ordinance No. 2559 is hereby amended to read as follows: Section 12. Sale of Bonds. (a) Bond Sale. The Council has determined that it would be in the best interest of the City to delegate to each Designated Representative, for a limited time, the authority to determine the method of sale for each series of Bonds and to approve the final interest rates, maturity dates, redemption terms and principal maturities for each series of Bonds. Each series of Bonds issued pursuant to this ordinance may be issued at the same or different times so long as each series complies with the terms hereof. Each Designated Representative is hereby authorized to approve the issuance, from time to time, of one or more series of Bonds and to approve whether the Bonds of such series shall be sold in a private placement to a Direct Purchaser or to an Underwriter through a competitive public sale or a negotiated sale, as set forth below. (b) Direct Purchase. If a Designated Representative determines that the Bonds of a series are to be sold by private placement, a Designated Representative shall select the Direct Purchaser that submits the proposal that is in the best interest of the City. Direct Purchase Bonds shall be sold to the Direct Purchaser pursuant to the terms of a Loan Agreement. (c) Negotiated Bond Sale. If a Designated Representative determines that the Bonds of a series are to be sold by negotiated public sale, a Designated Representative shall select the Underwriter that submits the proposal that is in the best interest of the City. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Bond Purchase Contract. (d) Competitive Sale. If a Designated Representative determines that the Bonds of a series are to be sold at a competitive public sale, a Designated Representative shall: (1) establish the date of the public sale; (2) establish the criteria by which the successful bidder will be determined; (3) establish the criteria for a good faith deposit; (4) cause notice of the public sale to be given; and (5) provide for such other matters pertaining to the public sale as he or she deems necessary or desirable. A Designated Representative shall cause the notice of sale to be given and provide for such other matters pertaining to the public sale as he or she deems necessary or desirable. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Certificate of Award. (e) Sale Parameters. Subject to the terms and conditions set forth in this Section 12, each Designated Representative is hereby authorized to approve the method of sale and the final interest rates, aggregate principal amount, principal maturities, and redemption rights for each series of Bonds in the manner provided hereafter so long as: (1) the aggregate principal (face amount) amount of all Bonds issued from time to time under this ordinance does not exceed $20,000,000; W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility -amend Sec 12 4-30-18 PM:bjs Page 2 of 4 (2) the final maturity date for each series of Bonds is no later than December 1, 2048; (3) the aggregate purchase price for each series of Bonds shall not be less than 98% of the aggregate stated principal amount of such series of Bonds, excluding any original issue discount; and (4) the true interest cost for each series of Bonds (in the aggregate for such series) does not exceed 4.5%. Subject to the terms and conditions set forth in this section, each Designated Representative is hereby authorized to execute the appropriate Sale Document on behalf of the City. The signature of one Designated Representative shall be sufficient to bind the City. Following the execution of a Sale Document, a Designated Representative shall provide a report to the Council describing the final terms of the Bonds sold pursuant to such Sale Document and approved pursuant to the authority delegated in this section. The authority granted to the Designated Representatives by this Section 12 shall expire on December 31, 2018. After such date additional Council approval shall be necessary to sell and issue Bonds pursuant to the terms of this ordinance. (f) Delivery of Bonds; Documentation. Upon the passage and approval of this ordinance and execution of the applicable Sale Document for a series of Bonds, the proper officials of the City, including the Designated Representatives and the City Clerk, are authorized and directed to undertake all action necessary for the prompt execution and delivery of such series of Bonds to the purchaser thereof and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the applicable Sale Document. Such documents may include, but are not limited to, documents related to a municipal bond insurance policy delivered by an insurer to insure the payment when due of the principal of and interest on all or a portion of such series of Bonds as provided therein, if such insurance is determined by a Designated Representative to be in the best interest of the City. Section 3. Severability; Ratification. Except as hereby amended, the remaining terms and conditions of Ordinance No. 2559 are hereby ratified and confirmed in all respects. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility -amend Sec 12 4-30-18 PM:bjs Page 3 of 4 Section 4. Corrections by City Clerk. Upon approval of the City Attorney and Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to this ordinance, including but not limited to the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; ordinance numbering and section/subsection numbering; and other similar necessary corrections. Section 5. 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 914 day of Ma) , 2018. ATTEST/AUTHENTICATED: Christy O'Fla APPROVED AS TO FORM BY: Pacift6a Law Group LLP, Bbad Counsel Filed with the City Clerk: -j Y Passed by the City Council: Published: Effective Date: Ordinance Number: a c r1'I W: Word Processing\Ordinances\LTGO Bonds-2018-PW Shops Facility -amend Sec 12 4-30-18 PM:bjs Page 4 of 4 City of Tukwila Public Notice of Ordinance Adoption for Ordinances 2571-2575. On May 7, 2018 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 2571: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NOS. 2486 AND 2365, AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 16.26; REPEALING ORDINANCE NO. 2521 §4, 5 AND 6; REENACTING TMC CHAPTER 16.26, "FIRE IMPACT FEES," TO AMEND THE PROCESS FOR IMPOSING AND ADMINISTERING FIRE IMPACT FEES TO BETTER ADDRESS THE NATURE OF DEVELOPMENT ACTIVITY IN TUKWILA; ADDING REGULATIONS RELATING TO ANNUAL FIRE IMPACT FEE UPDATES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2572: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NOS. 2485 AND 2366, AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 16.28; REPEALING ORDINANCE NO. 2521 §7, 8 AND 9; REENACTING TMC CHAPTER 16.28, "PARKS IMPACT FEES," TO AMEND THE PROCESS FOR IMPOSING AND ADMINISTERING PARKS IMPACT FEES TO BETTER ADDRESS THE NATURE OF DEVELOPMENT ACTIVITY IN TUKWILA; ADDING REGULATIONS RELATING TO ANNUAL PARKS IMPACT FEE UPDATES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2573: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2430 TO ADOPT AN AMENDED 2014 PARKS, RECREATION AND OPEN SPACE PLAN FOR THE CITY OF TUKWILA; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2574: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2559 RELATING TO THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. Ordinance 2575: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING VARIOUS ORDINANCES TO ELIMINATE TUKWILA MUNICIPAL CODE CHAPTER 5.10, "ADULT CABARETS"; REPEALING AND AMENDING VARIOUS ORDINANCES AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 5.56, "ADULT ENTERTAINMENT CABARETS," TO CLARIFY AND UPDATE REGULATIONS; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. The full text of this ordinance will be provided upon request. Christy O'Flaherty, MMC, City Clerk Published Seattle Times: May 10, 2018 CERTIFICATE REGARDING MINUTES OF CITY COUNCIL MEETING I, CHRISTY O'FLAHERTY, City Clerk of the City of Tukwila, Washington, do hereby certify that the attached is a full, true and correct copy of the minutes of the May 7, 2018 regular meeting of the City Council, which reflect the passage and adoption of Ordinance No. 2574. Dated this 14th day of August, 2018. Christy 'Flaherty, ity Clerk,/ City of Tukwila, Washington Tukwila City Council City Hall Council Chambers MINUTES Regular Meeting May 7, 2018 — 7:00 P.M. REGULAR MEETING CALL TO ORDER/PLEDGE OF ALLEGIANCE/ROLL CALL Mayor Ekberg called the Regular Meeting of the Tukwila City Council to order at 7:00 p.m. and led the audience in the Pledge of Allegiance. ROLL CALL Christy O'Flaherty, City Clerk, called the roll of the Council. Present were Councilmembers Dennis Robertson, Kathy Hougardy, Verna Seal, De'Sean Quinn, Kate Kruller, Thomas McLeod, Zak Idan. CITY OFFICIALS Allan Ekberg, Mayor; David Cline, City Administrator; Ann Marie Soto, Assistant City Attorney; Peggy McCarthy, Finance Director; Jay Wittwer, Fire Chief; Bruce Linton, Police Chief; Henry Hash, Public Works Director; Nora Gierloff, Community Development Deputy Director; David Sorensen, Public Works Project Manager; Rachel Bianchi, Communications and Government Relations Manager; Christy O'Flaherty, Records Governance Manager/City Clerk; Laurel Humphrey, Council Analyst. SPECIAL PRESENTATIONS 2018 Legislative Session report. Jennifer Ziegler, Public Relations Consulting Jennifer Ziegler from Public Relations Consulting utilized a Powerpoint presentation to provide an overview of this topic. Legislative Overview • 60-day supplemental legislative session • Washington State Supreme Court Order on Basic Education • Began the 2018 Legislative Session with continued disagreement on the Hirst decision and no biennial capital budget • Public Records Lawsuit Against the Legislature • There were 2,064 House bills and 1,647 Senate bills introduced. Ultimately, 310 bills passed into law. 2018 Budgets • General Fund Operating (Supplemental) • Utilizes $935 million from the Budget Stabilization Account • .30 cent/$1,000 property tax reduction in 2019 • Provides $1.2 billion to meet the Supreme Court Order on funding Basic Education • For local governments, no changes to liquor revenue sharing distributions, restored marijuana revenue sharing and provided additional basic law enforcement academy funding for one class. • Capital Budget (Biennial and Supplemental) • Biennial budget appropriated $2.72 billion in state bond proceeds, including funding for 195 local and community projects. • Supplemental budget appropriated an additional $198 million in general obligation bonds with funding provided for an additional 95 local and community projects. • Transportation (Supplemental) • $360,000 for the Joint Transportation Committee (JTC) to evaluate city transportation funding needs with a report due to the Legislature on June 30, 2019. • Two JTC studies on transportation network companies with reports due January 14, 2019. Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 2 of 10 Tukwila Legislative Priorities • Transportation and Infrastructure • Housing and Human Services • $107 million investment in the Housing Trust Fund • Passage of HB 1570 to increase the document recording fee and make it permanent • Funding related to provisions of HB 2489 regarding opioid treatment • Shared Revenue • Streamlined Sales Tax Mitigation • Funded $20.6 million in the remainder of 2017-19 to continue to support streamlined sales tax mitigation commitments. • Revenue Reform • Education • Law Enforcement • Preserve Lodging Tax Flexibility Additional Issue Areas of Interest • Whatcom v. Hirst (SB 6091) • Voting Rights Act (SB 6002) • Body Worn Cameras (SB 6408) • Carbon Tax (SB 6203) • State Infrastructure Bank (SB 6375) • Small Cell Facilities (SB 5935 and HB 2592) • Public Records Reform (SB 6617) • Wrongful Death (SB 6015) • Use of Force (Initiative 940 and HB 3003) Looking Ahead and Next Steps • Changes in the 2019 Legislature • Multiple Retirement Announcements • All of the House and Half of the Senate up for Election • Legislative Delegation Meetings • Develop 2019 Legislative Agenda The Councilmembers asked clarifying questions regarding the presentation and thanked Ms. Ziegler for the update. PROCLAMATIONS a. A proclamation recognizing May 13-19, 2018, as "National Police Week," and May 15, 2018, as "Peace Officers Memorial Day," in the City of Tukwila. Mayor Ekberg read a proclamation recognizing May 13-19, 2018 as National Police Week," and May 15, 2018, as "Peace Officers Memorial Day," in the City of Tukwila urging all citizens to remember those officers who gave their lives serving the public. The Mayor presented the proclamation to Tukwila Police Chief Bruce Linton. Chief Linton extended thanks for the City recognizing National Police Week and Peace Officers Memorial Day. b. A proclamation recognizing May 13-19, 2018, as "Affordable Housing Week" in the City of Tukwila. Council President Seal read a proclamation recognizing May 13-19, 2018 as "Affordable Housing Week," recommitting the City's intent to ensuring that our community thrives with opportunity and that all people in it live with dignity in safe, healthy, and affordable homes. Ms. Seal presented the proclamation to Andrew Calkins from the King County Housing Authority. Mr. Calkins offered thanks for this recognition and the focus on such an important regional issue. Last month, the Office of the Superintendent for Public Instruction (OSPI) reported the number of homeless Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 3 of 10 students for the 2016-2017 school year was over 40,000 students across the state. In Tukwila, there were 375 homeless students during that time period, which was a 7% increase from the prior year. The level of need is great, and it is important to work on policy solutions. Based on a question from Councilmember Kruller regarding what Tukwila can do better, Mr. Calkins replied that he would look into that issue. PUBLIC COMMENTS Dave Puki, 3748 South 152nd Street, said he became involved in a code enforcement issue last week in his neighborhood. On April 25, 2018, he was notified that he was in violation of parking vehicles on the grass on his property, which is not true. While there are times when others park on his lawn illegally, he cannot control that issue and he has requested that Police put up a "no parking" sign. There are multiple issues in his neighborhood that have ongoing code enforcement issues needing attention. He contacted Code Enforcement staff on April 27 to inquire regarding the complaint against him and waited for 5 days for a return phone call. As it turns out someone anonymously utilized the City's "Tukwila Works" system to make a complaint, and the case had been closed. He is concerned that anyone can become an innocent victim of an anonymous complaint without verification of the facts. Additionally, he attended the recent community event regarding the Strategic Plan to convey his concern that the plan is not serving the City's goals and objectives, and he felt he needed to leave as it was becoming a demonstration. Councilmember Kruller emphasized that from her standpoint Mr. Puki parks his vehicles responsibly and follows the code. She asked City Administration if a complaint is determined to be unfounded, is there a method to restore the reputation of the affected party. David Cline, City Administrator, said he would get back to the full Council with a response. Mr. Puki relayed that he will be meeting with Mr. Cline in the future. Louise Jones Brown, President of the Tukwila Historical Society, said the Historical Society is fully in support of the Golf Course Bridge being named after the Aliments, which is coming up on the agenda this evening. Ms. Brown reported that the Historical Society's flag pole pavilion is being refurbished by a Boy Scout to attain his Eagle Scout distinction. The Historical Society was formerly the Tukwila School, Tukwila City Hall, and the Tukwila Library, and the flag pole has been unusable since 2010. The approval by the Boy Scout Council for this project will be a great benefit. She thanked Mayor Ekberg for putting the Historical Society in touch with the local American Legion Post who donated $600 for a flag pole as well as a United States and Washington State flag. To raise funds for the project, the Historical Society is selling commemorative bricks from "That's My Brick" in Wisconsin. The Strander family and Westfield Southcenter Mall have purchased a brick; and it is the Historical Society's hope that the City will purchase a brick in honor of the former City Hall being at this location. Additionally, the Historical Society will be honoring the 50th anniversary of the Southcenter Mall on May 19, 2018 from 1:00-4:00 p.m., complete with historical aerial photos of the site and refreshments. Councilmember Kruller said it is Troop 398 that is working on this, and it has been fun and rewarding to watch the progress. Mayor Ekberg suggested Ms. Brown talk with the City's Public Works Director regarding the project. Daniel Assefa is the owner of 4113 South Boeing Access Road as it relates to permit #PW16-0132. He explained they started the permit process in 2015, and it has cost over $100,000. On April 16, 2018 one permit was approved, yet Public Works says they cannot activate it until they hear from the City Attorney, and they cannot explain the issue that is causing the hold up. His contractors are starting to leave the project because they cannot begin the work. His consultant who costs him $300 an hour continues to call the City, but with no results. He is begging for assistance on this issue. Mayor Ekberg relayed that he has seen the email regarding this issue, and discussions will occur regarding this permit tomorrow. Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 4 of 10 Robert Meidinger said he is with ICON Materials, and they are the low bidder for the 2018 Overlay Program. Due to comments made by Councilmember McLeod at the Transportation and Infrastructure Committee, they feel compelled to defend their company. While they are not perfect, they aspire to do award winning work with every project. It is unfortunate that a single resident has detoured the process, as ICON was the contractor for the 2017 Overlay Project, with full endorsement from the City's project manager. They had an issue with the Fort Dent site last year, and they fixed the problem at no cost to the City. They were asked to participate with the food bank and agreed to perform $8,000 worth of paving on the site. They are proud of the work they have done for Tukwila. ICON has received numerous awards from WSDOT and the Washington Asphalt Pavement Association. One award was for the Best City Project in the State for the City of Renton Overlay Program, which is very similar to Tukwila's Program. Other awards include the Best Project in Western Washington and the Best Paving Project in Washington. It would be unfortunate if the Council chooses to spend an extra $200,000 on this project, when ICON will complete the project to the owner's acceptance. Joe Duffle, 5332 South 140'h Street, said it is important to publicize that the City scholarships can also be awarded to those going to trade schools and not just for college. Additionally, he is very pleased with the progress on the 53rd Avenue project and offered the reminder that the street is closed to through -traffic and is open to residents only. He thanked the Public Works staff for the great job. Judith Berry is the Superintendent for the Tukwila School District. She extended an invitation to the open house and ribbon cutting for 3 out of the 5 bond projects. The date is May 23, 2018 from 5:30-7:30 p.m. This will begin at the bus barn, where attendees will be transported to multiple locations, ending at Cascade View Elementary School. CONSENT AGENDA a. Approval of Minutes: 4/16/18 (Regular); 4/23/18 (Special) b. Approval of Vouchers #377777-377882; #180300, 180407, 180408, 180501,180502 in the amount of $1,443.410.67 c. Authorize the execution of a Memorandum of Understanding between the Tukwila Police Department and the U.S. Postal Service for a narcotics interdiction K9 team for reimbursement to the City in the amount of $17,000 annually. [Reviewed and forwarded to Consent by the Public Safety Committee on 4/16/18.] d. Authorize the Mayor to sign Supplement #1 to contract #17-154 with KPG, Inc., for the 2018 Overlay & Repair Program construction management in the amount of $167,200.00. [Reviewed and forwarded to Consent by the Transportation and Infrastructure Committee on 4/23/18] e. Authorize the Mayor to sign an application for Community Development Block Grant (CDBG) funds for the 2019 Minor Home Repair Program in the amount of $110,000, [Reviewed and forwarded to Consent by the Community Development and Neighborhoods Committee on 4/24/18.] MOVED BY ROBERTSON, SECONDED BY HOUGARDY THAT THE CONSENT AGENDA BE APPROVED AS SUBMITTED. MOTION CARRIED 7-0. UNFINISHED BUSINESS a. A resolution naming the bridge at Foster Golf Links the "Joe and Hazel Aliment Memorial Bridge." MOVED BY QUINN, SECONDED BY SEAL THAT THE PROPOSED RESOLUTION BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed resolution by title only. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, NAMING THE BRIDGE AT FOSTER GOLF LINKS THE "JOE AND HAZEL ALIMENT MEMORIAL BRIDGE." Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 5 of 10 MOVED BY QUINN, SECONDED BY KRULLER THAT THE PROPOSED RESOLUTION BE ADOPTED AS READ.* On August 22, 2017 the Parks & Recreation Department received a letter from the Foster Golf Links' Men's and Women's Clubs requesting the bridge located between the 1 lth and 16th holes at the golf course be named in honor of the longtime previous owners of the course that sold it to the City. Joe Aliment worked at the course from 1924 -- 1951, when he and his wife Hazel then purchased the course. After owning and operating the course for 27 years, they sold it to the City of Tukwila in 1978 rather than to developers. They wanted to preserve the green space and desired that it continue to be a place where Tukwila residents could congregate and enjoy the game of golf. City Council Resolution 1400 addresses the process for naming City property. For facilities within the Parks and Recreation Department, the names shall be recommended by the Park Commission to the Community Development and Neighborhoods Committee. Where persons' names are used, they should be people who have made an outstanding contribution to the community, or whose names are of historical significance to the area, or who the City would like to recognize as an important influence in the area. The Park Commission discussed this at the November 8, 2017 meeting and voted unanimously in recommending the name "Joe and Hazel Aliment Memorial Bridge" as requested by the Foster Golf Links Men's and Women's Clubs and forwarding the recommendation to the Community Development and Neighborhoods (CDN) Committee for consideration. The CDN concurred and forwarded the resolution to the full Council for adoption this evening. 8:18 p.m. Councilmember McLeod exited the Council Chambers. *MOTION CARRIED 6-0, WITH MCLEOD ABSENT, TO ADOPT RESOLUTION NUMBER 1932. b. Fire and Parks impact fees. Councilmember Quinn emphasized that the next 4 pieces of City legislation regarding impact fees have been discussed by the Finance Committee over the past 2 years and were then forwarded for adoption by the Committee of the Whole. (1) An ordinance reenacting TMC Chapter 16.26, "Fire Impact Fees," to amend the process for imposing and administering Fire Impact Fees to better address the nature of development activity in Tukwila; adding regulations relating to annual Fire Impact Fee updates. MOVED BY QUINN, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 6-0, WITH MCLEOD ABSENT. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NOS. 2486 AND 2365, AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 16.26; REPEALING ORDINANCE NO. 2521 §4, 5 AND 6; REENACTING TMC CHAPTER 16.26, "FIRE IMPACT FEES," TO AMEND THE PROCESS FOR IMPOSING AND ADMINISTERING FIRE IMPACT FEES TO BETTER ADDRESS THE NATURE OF DEVELOPMENT ACTIVITY IN TUKWILA; ADDING REGULATIONS RELATING TO ANNUAL FIRE IMPACT FEE UPDATES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. MOVED BY KRULLER, SECONDED BY IDAN THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ.* 8:20 p.m. Councilmember McLeod returned to the Council Chambers. *MOTION CARRIED 7-0, TO ADOPT ORDINANCE NUMBER 2571. Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 6 of 10 (2) An ordinance reenacting TMC Chapter 16.28, "Parks Impact Fees," to amend the process for imposing and administering Parks Impact Fees to better address the nature of development activity in Tukwila; adding regulations relating to annual Parks Impact Fee updates. MOVED BY QUINN, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NOS. 2485 AND 2366, AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 16.28; REPEALING ORDINANCE NO. 2521 §7, 8 AND 9; REENACTING TMC CHAPTER 16.28, "PARKS IMPACT FEES," TO AMEND THE PROCESS FOR IMPOSING AND ADMINISTERING PARKS IMPACT FEES TO BETTER ADDRESS THE NATURE OF DEVELOPMENT ACTIVITY IN TUKWILA; ADDING REGULATIONS RELATING TO ANNUAL PARKS IMPACT FEE UPDATES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. MOVED BY KRULLER, SECONDED BY QUINN THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 7-0, TO ADOPT ORDINANCE NUMBER 2572. (3) A resolution to adopt an amended 2017-2022 Financial Planning Model and the Capital Improvement Program for General Government and the City's Enterprise Funds. MOVED BY QUINN, SECONDED BY MCLEOD THAT THE PROPOSED RESOLUTION BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed resolution by title only. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING RESOLUTION NO. 1901 TO ADOPT AN AMENDED 2017-2022 FINANCIAL PLANNING MODEL AND THE CAPITAL IMPROVEMENT PROGRAM FOR GENERAL GOVERNMENT AND THE CITY'S ENTERPRISE FUNDS. MOVED BY KRULLER, SECONDED BY SEAL THAT THE PROPOSED RESOLUTION BE ADOPTED AS READ. MOTION CARRIED 7-0, TO ADOPT RESOLUTION NUMBER 1933. (4) An ordinance amending the 2014 Parks, Recreation and Open Space Plan for the City of Tukwila. MOVED BY QUINN, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2430 TO ADOPT AN AMENDED 2014 PARKS, RECREATION AND OPEN SPACE PLAN FOR THE CITY OF TUKWILA; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. MOVED BY KRULLER, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 7-0, TO ADOPT ORDINANCE NUMBER 2573. Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 7 of 10 c. An ordinance amending Ordinance No. 2559, relating to the issuance of one or more series of Limited Tax General Obligation (LTGO) Bonds to finance and/or reimburse costs related to the acquisition of land and the construction, improvement and equipping of maintenance and other City facilities in the aggregate principal amount of not to exceed $20,000,000. MOVED BY QUINN, SECONDED BY SEAL THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2559 RELATING TO THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. MOVED BY KRULLER, SECONDED BY MCLEOD THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 7-0, TO ADOPT ORDINANCE NUMBER 2574. NEW BUSINESS a. Authorize the approval of payment for increased flagging and railroad costs with BNSF for the Boeing Access Road over BNRR Rehabilitation project in the amount of $300,000.00. MOVED BY MCLEOD, SECONDED BY KRULLER TO AUTHORIZE THE APPROVAL OF PAYMENT FOR INCREASED FLAGGING AND RAILROAD COSTS WITH BNSF FOR THE BOEING ACCESS ROAD OVER BNRR REHABILITATION PROJECT IN THE AMOUNT OF $300,000.00.* This item was discussed at the Transportation and Infrastructure Committee meeting on April 23, 2018, with unanimous approval to forward to the Regular Meeting under New Business. The BNSF Overpass Agreement is for required construction and maintenance costs related to the work over the railroad's right-of-way and covers inspection services and flagging required by BNSF. Average charges from the previous six months were used to forecast the additional flagging costs of $300,000. At the Transportation and Infrastructure Committee meeting, the Committee members were concerned about the charges and asked staff to communicate with BNSF to ensure there are no further increases. Councilmember Robertson said the costs for this went from $150,000 to $450,000, or an increase of 3 times the original estimate. He has not seen a basis in the documentation for the increase. Henry Hash, Public Works Director, said the original $149,000 estimate came from BNSF in the preliminary stages of the project. They later realized it was more complicated, and additional flaggers were needed at a cost of an additional $300,000 to complete the job. The entire project is still on time and under budget with the use of grant funds. Councilmember Quinn said this question was asked in the Council Committee meeting, and he appreciates Councilmember Robertson asking it again at the full Council meeting. *MOTION CARRIED 7-0. Tukwila City Council Regular Meeting Minutes May7,2018 Page 8of10 b. Award a bid and authorize the Mayor to sign a contract with ICON Materials for the 2018 Overlay & Repair Program in the amount of $955,945.50. MOVED BY MCLEOD, SECONDED BY KRULLER TO AWARD A BID AND AUTHORIZE THE MAYOR TO SIGN A CONTRACT WITH ICON MATERIALS FOR THE 2018 OVERLAY & REPAIR PROGRAM IN THE AMOUNT OF $955,945.50.* This item was discussed at the Transportation and Infrastructure Committee meeting on April 23, 2018, with unanimous approval to forward to the Regular Meeting under New Business. The Overlay and Repair Program preserves and maintains the street structure in a safe and usable condition. Construction will include pavement repairs and an asphalt overlay at four locations citywide including the Fort Dent parking lot, as well as other incidental items of work. A call for bids was advertised for the 2018 Overlay and Repair Program on March 22 and 29, 2018, and 4 bids were opened on April 5, 2018. The lowest apparent bidder was ICON Materials with a bid of $955,945.50. The Engineer's Estimate was $1,137,680.00. There were no bidding errors. The project design consultant, KPG, concurred to award the 2018 Overlay and Repair Program to the apparent low bidder, ICON Materials. Councilmember McLeod, Chair of the Transportation and Infrastructure Committee, explained that someone who had experience in the paving industry had inquired about always using the lowest bidder. Mr. McLeod brought that up at the Committee and was informed the City has to take the lowest bid, and he then asked if use of the low bidder resulted in more change orders or cost overruns. ICON was awarded the Overlay Project in 2017 and while the numbers are not yet in, the City was very pleased with their work. ICON also did the project in 2012, and the City was very pleased with their work, and they were also under budget. When we hear a comment, we probe and ask questions to ensure responsible use of City funds. The Committee is recommending the contract move forward with ICON Materials. *MOTION CARRIED 7-0. REPORTS a. Mayor On May 1, 2018, the Mayor attended the WRPA (Washington Recreation and Parks Association) annual awards event. Former Councilmember Joe Duffle received an award for legislative recognition that will be provided to him at a later date. Additionally, the Mayor attended the memorial service for City employee Lily Jue. Lily was known for her giving nature, and the Mayor asked for a moment of silence in her honor. b. City Council Council President Seal said the Backyard Wildlife Festival is this Saturday, May 12, 2018, at the Tukwila Community Center. In conjunction with this event, the Tukwila Arts Commission is also having its annual arts show. There is also a 5k river run that day as well. Councilmember Quinn attended the Strategic Plan Community Workshop on May 3, 2018. Today he is wearing red in honor of the National Day of Awareness for Missing and Murdered Native Women and Girls. The United States Senate passed a resolution on April 25, 2018. Since the City is physically on Duwamish tribal land, it is important to make this recognition. Councilmember Kruller also attended the Strategic Plan Community Workshop on May 3, 2018. There was a complaint about outreach and communication from a member of the Somali Community, and it was suggested that flyers be put up at the mosque. This is a good suggestion that the City should put into its plan that should also involve other faith -based organizations. Additionally, Ms. Kruller attended an event at the Pabla Punjab Palace in support of Refugees Northwest. She also offered a reminder that the Homestead project near the Methodist Church involving Cottage Housing will have an event at Cascade View Elementary School on May 12, 2018 from 10:00 a.m.-noon to provide information about the project. Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 9 of 10 Councilmember McLeod said the Frank Zepp Bridge will be closed this Friday, May 11, 2018 at 7:00 p.m. until Sunday, May 13, 2018 at 5:00 a.m. c. Staff David Cline, City Administrator, referenced the CA (City Administrator) report and 2018 151 Quarter Work Plan and the Monthly Public Safety Plan Update in the packet and offered to answer any questions. d. City Attorney There was no report. e. Council Analyst There was no report. MISCELLANEOUS Councilmember Hougardy said she would like to begin discussion on parking related issues on South 144'h Street. While parking is permitted on one side of the street, the situation has worsened to a degree that it is necessary to encroach on or cross the center line to maneuver the street. She observed a bus that had to be in the oncoming lane by approximately 25% and blind to the hill in front of the bus to travel the roadway, due to limited access from parked cars. She would like this to be the first step in having this situation addressed by the City. Councilmember Quinn expressed concern about an ongoing issue of people parking at certain parks in the evenings. He has heard comments about the same car parking regularly after dusk and into the night at Southgate Park. Tukwila families use City parks, and awareness must be raised regarding unacceptable behavior. Councilmember Kruller will be attending the upcoming (PSRC) Puget Sound Regional Council meeting for the Transportation Policy Board. They have completed prioritization for King County projects. She would like to see Tukwila's Strander Extension project considered. There has been concern about Tukwila having unsubstantiated funding due to lack of grants coming through. She would like to have talking points that reflect that Tukwila will stand behind the project and fund it if we do not have other outside funding sources. She would like to see that in writing from City administration if that is a possibility and/or what the plan is. The cost is approximately $4.5 million, and she would need the information within a week. Mayor Ekberg said that will be taken care of and provided to Councilmember Kruller. EXECUTIVE SESSION —Pending/Potential Litigation— Pursuant to RCW 42.30.110(1)(i) 45 minutes. Mayor Ekberg announced the Council will now go into Executive Session to discuss: Pending/Potential Litigation— Pursuant to RCW 42.30.110(1)(i) The discussion will last no more than 45 minutes, and no decisions will be made during the Executive Session. After the Executive Session has concluded, the Council may want to take action in the Open Meeting under New Business. The doors will be opened and the public invited to enter the Council Chambers for that discussion and potential action. 8:48 p.m. Mayor Ekberg declared a brief recess. Tukwila City Council Regular Meeting Minutes May 7, 2018 Page 10 of 10 Executive Session Start 8:53 p.m. Attendees: Mayor Ekberg; David Cline, City Administrator; Ann Marie Soto, Assistant City Attorney; Nora Gierloff, Deputy Community Development Director; Laurel Humphrey, Council Analyst; Councilmembers Robertson, Seal, Hougardy, Quinn, Kruller, McLeod, and Idan. Executive Session End: 9:28 p.m. 9:31 p.m. Mayor Ekberg reconvened the Regular Meeting. AGENDA AMENDMENT MOVED BY SEAL, SECONDED BY KRULLER TO ADD 2 ITEMS UNDER NEW BUSINESS. MOTION CARRIED 7-0. NEW BUSINESS c. Initiation of abatement action on a piece of property. MOVED BY SEAL, SECONDED BY IDAN TO AUTHORIZE THE INITIATION OF ABATEMENT ACTION ON A PIECE OF PROPERTY AT 10702 47TH AVENUE SOUTH, TUKWILA. MOTION CARRIED 7-0. d. An ordinance regarding Adult Cabarets and Adult Entertainment. MOVED BY SEAL, SECONDED BY KRULLER THAT THE PROPOSED ORDINANCE BE READ BY TITLE ONLY. MOTION CARRIED 7-0. Christy O'Flaherty, City Clerk, read the proposed ordinance by title only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING VARIOUS ORDINANCES TO ELIMINATE TUKWILA MUNICIPAL CODE CHAPTER 5.10, "ADULT CABARETS"; REPEALING AND AMENDING VARIOUS ORDINANCES AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 5.56, "ADULT ENTERTAINMENT CABARETS," TO CLARIFY AND UPDATE REGULATIONS; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. MOVED BY SEAL, SECONDED BY KRULLER THAT THE PROPOSED ORDINANCE BE ADOPTED AS READ. MOTION CARRIED 7-0, TO ADOPT ORDINANCE NUMBER 2575. ADJOURNMENT 9:34 p.m. MOVED BY SEAL, SECONDED BY HOUGARDY TO ADJOURN THE REGULAR MEETING. MOTION CARRIED 7-0. Allan erg Mayor n e Man er/C O'Flaherty, Christy O' y, rds Governance g ity Clerk eco APPROVED BY THE CITY COUNCIL: 5/21/18 AVAILABLE ON CITY WEBSITE: 5/22/18 City of Tukwila, Finance Dana Almberg 6200 Southcenter Blvd Tukwila, WA 98188 Re: Advertiser Account # 107510 Ad #: 780101 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. Signatu nd sworn to before me on y Public in and fear t a State Newspaper and Publication Date(s) Seattle Times 12/07/17 DATE ngton, residing at eatt e inieScaUteirimes Re: Advertiser Account # 107510 Ad #: 780101 Agency Account #: 0 Agency Name: CITY OF TUKWILA AD TEXT PUBLIC NOTICE OF ORDINANCE ADOPTION FOR ORDINANCES 255?-2562 On December 4, 2017 the City Council of the City of Tukwila, Washington, adopted the following ordinances, the main points of which ore summarized by title as fol- lows: WRIFilfWNCIL AN OF ?LEA DINHEANCITY OCE OF F TUKWILA, WASHINGTON, AUTHORIZ- ING THE ISSUANCE OF ONE OR MORE SERIES OF LIMITED . TAX GENERAL OBLIGATION BONDS IN THE AGGRE- GATE PRINCIPAL AMOUNT OF NOT TO EXCEED $20,000,000 TO FINANCE AND/OR REIMBURSE COSTS RELATED TO THE ACQUISITION OF LAND AND THE CONSTRUCTION, IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES AND TO PAY COSTS OF ISSUING THE BONDS; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; PROVID- ING FOR THE DISPOSITION OF THE PROCEEDS OF THE SALE OF THE BONDS; DELEGATING AUTHORITY TO APPROVE THE METHOD OF SALE AND THE FINAL TERMS OF THE BONDS; AND PROVIDING FOR OTHER MAT- TERS RELATING THERETO; PROVID- ING FOR SEVERABILITY; AND ESTAB- LISHINGpp�ddQp�pAN EFFECTIVE DATE. THEnCIIV COIJNCtL OFT EA CITY OF TUKWILA, WASHINGTON, ADOPTING A NEW CHAPTER OF THE TUKWILA MUNICIPAL CODE RELATED TO VE- HICLE TRESPASS, TO BE CODIFIED AS TUKWILA MUNICIPAL CODE CHAPTER 8.26; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. pMite THEnCIT0Y COUNCIL OFT EAC TY OF TUKWILA, WASHINGTON, REPEALING ORDINANCE NO. 1674; AMENDING OR- DINANCE NO. 1400 44, AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 3.56.040, TO UPDATE REGULATIONS REGARDING DISTRIBUTION OF REAL ESTATE EXCISE TAX; PROVIDING FOR SEVERABILITY; AND ESTABLISHING OAN EFFECTIVE DATE. TH nCI Y COUNCIL OF TTHE CITY OF TUKWILA, WASHINGTON, AUTHORIZ- ING AND PROVIDING FOR THE AC- QUISITION OF INTERESTS IN LAND FOR THE PURPOSE OF COMPLETING THE 53RD AVENUE SOUTH ROADWAY AND SURFACE WATER DRAINAGE SYSTEM PROJECTS; PROVIDING FOR CONDEMNATION, APPROPRIATION, TAKING OF LAND AND PROPERTY RIGHTS NECESSARY THEREFOR; PROVIDING FOR PAYMENT THEREOF AND DIRECTING THE INITIATION OF APPROPRIATE PROCEEDINGS IN THE MANNER PROVIDED BY LAW AND FOR SAID CONDEMNATION; PROVID- ING FOR SEVERABILITY; AND ESTAB- LISHING AN EFFECTIVE DATE. The full text of this ordinance will be pro- vided upon request. Christy O'Flaherty, MMC, City Clerk Published Seattle Times: December 7, 2017 City of Tukwila, Finance Dana Almberg 6200 Southcenter Blvd Tukwila, WA 98188 Re: Advertiser Account # 107510 Ad #: 812088 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. Agent ky3 DEBBIE COLLANTES Notary Public State of Washinoton My Appointment Expires Feb 15, 2022 Newspaper and Publication Date(s) Seattle Times 05/10/18 ubscribed and sworn to before me on DATE Debbie Collates Notary Public in and for the State of Washington, residing at Seattle Re: Advertiser Account # 107510 Agency Account #: 0 AD TEXT On May 7 201$ t Tukwila, Wes#ngNn. riancea, the main par :ft by Ude as #:1low6 g"YORDINANC C8T ©F 7UMWItA WASHING nSOINANCE NOS. 2466 AN IN TUKWILA MUNICIPAL CO, PEALING ORDNANCE N0.2521 NACTING TMC CHAPTER 1636, '. TO. AMEND THE PROCESS dA APMINE$TERR9G FIRE 1M.. PftCT FEES TO BETTER ADDRESS THE NATURE OF DEVELOPMENT ACTIVITY IN. TUKWILA; ADDING REGULATIONS RELATING TO ANNUAL FIRE IMPACT FEE UPDATES; PROVIDING FOR SEVERABILIT Yl AND ESTABLISHING G� AN EFFECTIVE DATE. gb�SNe' bi TN1E GTY GFITUKWILA.,FWASHNG- TON, REPEALING ORDINANCE NOS. 2485 AND 2366, AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER 16.28, REPEALING ORDINANCE NO. 2521 $7, 8 AND 9; REENACTING TMC CHAPTER 1628, 'PARKS IMPACT FEES.' TO AMEND THE PROCESS FOR IMPOSING AND ADMINISTERING PARKS IM- PACT FEES TO BETTER ADDRESS THE NATURE OF DEVELOPMENT ACTIVITY IN TUKWILA; ADDING REGULATIONS RELATING TO ANNUAL PARKS IM- PACT FEE UPDATES. PROVIDING FOR SEVERABIL- ITY; AND ESTABLISHING AN EFFECTIVE DATE. TONCILJ06TH'E C T YO6ITLR WILA,F WASH NGY TOO, AMENDING ORDINANCE No. 2430 TO ADOPT AN AMENDED 2014 PARKS, RECREATION AND OPEN SPACE PLAN FOR THE CITY Of TUKWILA; PROVIDING FOR SEVERABILITY: AND ESTABLISH. NG AN EFFECTIVE DATE.. I°tldPb4.^.ac 474 AN ORDNANCE OF. THE COY E CITY OF TUKWILA, WASHING - TON, AMEN6NGCaRDINANCE t9 RELATING TO THE (S5UANCE Of ONE OR MORE SERIES OF LIMITED TAN GENERAL OBLIGATION BONDS TO 0 y7MEEACQU STIONN IOF LLAANDCAND THE' CON STRUCTION, IMPAOVEMENt.AND EQUIPPING OF MAINTENANCE AND OTHER CITY FACILITIES; PRO. VIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. COUNa I e0F5THE C T OODINUKWILA,FWASHING- TON, REPEALING VARIOUS ORDINANCES TO ELIMI- NATE. TUKWILA MUNICIPAL CODE CHAPTER 5.10, "ADULT CABARETS"; REPEALING AND AMENDING VARIOUS ORDINANCES AS CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTER "5.56, ADULT ENTER- TAINMENT CABARETS; TOCLAR1FYAND UPDATE REGULATIONS PROVIDING FOR iEVEAABIIY`Y, AND ESTABLISHING AN EFFECTIVE DATE. The full text of this ordinance will be provided upon request.: Christy O'Flaherty, MMC, City Clerk: Published Seattle Times: May 10,2018 Ad #: 812088 Agency Name: c-2 PRELIMINARY OFFICIAL STATEMENT DATED JULY 24, 2018 ca o SALE DATE: July 31, 2018 at 8:30 a.m. Pacific Time S&P Rating: AA • NEW ISSUE — BOOK -ENTRY ONLY See "RATING" herein co co In the opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, under existing law and subject to certain • o qualifications described herein, the interest on the Bonds is excludable from gross income for federal income tax purposes. In m c c � addition, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on �° individuals. See "TAX MATTERS." 'Z) w ° $18,525,000 * City of Tukwila, Washington 0 Limited Tax General Obligation Bonds, 2018 •U -0 Dated: As of the Delivery Date Due: December 1, as shown on the inside cover a The City of Tukwila, Washington (the "City"), is issuing its Limited Tax General Obligation Bonds, 2018 (the "Bonds"), in fully registered form under a book -entry only system. When issued, the Bonds initially will be registered to Cede • o & Co., as bond owner and nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act o .0 as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in the principal amount z'a' of $5,000 or integral multiples thereof within a maturity. Purchasers of the Bonds (the "Beneficial Owners") will not o receive certificates representing their beneficial ownership interest in the Bonds purchased. The fiscal agent of the state of Washington (the "State"), currently U.S. Bank National Association, will act as the registrar, paying agent, • @ transfer agent and authenticating agent for the Bonds (the "Bond Registrar"). as Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, • 2018, to the maturity or earlier redemption of the Bonds. The Bonds will mature on the dates and in the amounts and c • N bear interest at the rates set forth on the inside cover. For so long as the Bonds are held in book -entry only form, the a. principal of and interest on the Bonds will be paid by the Bond Registrar to DTC, which in turn is obligated to remit = o such payments to its broker -dealer participants for subsequent disbursement to the Beneficial Owners. See 'O "DESCRIPTION OF THE BONDS —Registration and Payment" and APPENDIX C—"DTC AND ITS BOOK -ENTRY • SYSTEM." o m Maturity Schedule on Inside Cover o The Bonds are being offered at public sale by competitive bids to be received electronically through Parity®, o "13• o pursuant to the Official Notice of Sale contained herein. O a Proceeds of the Bonds will be used to provide funds (i) to pay and/or reimburse the City for costs related to the • acquisition of land and the construction, improvement and equipping of maintenance and other City facilities, and • (ii) to pay the costs of issuance of the Bonds. See "PURPOSE" herein. oThe Bonds are subject to redemption prior to their stated dates of maturity as described herein. See "DESCRIPTION .c OF THE BONDS —Redemption Provisions" herein. 4) N 4- o ° The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such • co other money of the City as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably o has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by co o w law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other . ° money of the City that is lawfully available, to pay when due the principal of and interest on the Bonds. The full faith, .o 0 credit and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest • Q on the Bonds. See "SECURITY FOR THE BONDS" herein. The City's authority to collect taxes, including its property • a tax levy, is subject to various limitations. See "CITY TAXING AUTHORITY —Property Tax" and "PROPERTY TAX 0 LIMITATIONS." The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof °�,'.g other than the City. aom co The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) o co of the Internal Revenue Code of 1986, as amended. See "TAX MATTERS." • `• o This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors (13 .o must read the entire Official Statement to obtain information essential to making an informed investment decision. m so c The Bonds are offered when, as and if executed and delivered, and are subject to receipt of the approving legal opinion of Pacifica o Law Group LLP, Seattle, Washington, Bond Counsel to the City, and certain other conditions. It is expected that the Bonds will be available for delivery in New York, New York through the facilities of DTC or to the Bond Registrar on behalf of DTC by Fast co E gL. Automated Securities Transfer on or about August 14, 2018 (the "Delivery Date'). 0 • 0 o z * Preliminary, subject to change. Maturity Date (December 1) (1) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 (1) (2) $18,525,000 (1) City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 Maturity Amount (1) Interest Rate Yield Price CUSIP No. (2) $ 745,000 780,000 820,000 860,000 905,000 950,000 1,000,000 1,040,000 1,080,000 1,125,000 1,165,000 1,215,000 1,265,000 1,315,000 1,365,000 1,420,000 1,475,000 Preliminary; subject to change. The CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the City and are provided solely for convenience and reference. CUSIP numbers for a specific maturity are subject to change after the issuance of the Bonds. The City takes no responsibility for the accuracy of such CUSIP numbers. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the cover page and Appendices, must be considered in its entirety. The offering of the Bonds is made only by means of this entire Official Statement. The information within this Official Statement has been compiled from sources considered reliable and, while not guaranteed as to accuracy, is believed to be correct as of its date. The City makes no representation regarding the accuracy or completeness of the information in APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM," which has been obtained from DTC's website, the form of opinion of Bond Counsel, or the information provided by or obtained from any entity providing bond insurance or other credit facility. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the information set forth herein since the date hereof. Information on website addresses set forth in this Official Statement is not incorporated into this Official Statement and cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon in making investment decisions regarding the Bonds. No dealer, broker, sales representative, or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement and, if given or made, such information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such persons to make such offer, solicitation or sale. Certain statements contained in this Official Statement do not reflect historical facts, but rather are forecasts and "forward -looking statements." No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts shown. In this respect, the words "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward -looking statements. The achievement of certain results or other expectations contained in forward -looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward -looking statements. All estimates, projections, forecasts, assumptions and other forward -looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. These forward -looking statements speak only as of the date they were prepared. The City does not plan to issue any updates or revisions to those forward -looking statements if or when their expectations or events, conditions or circumstances on which such statements are based occur and specifically disclaims any such obligation. The presentation of certain information, including tables of receipts from taxes and other revenues, is intended to show recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue to be repeated in the future. Information relating to debt and tax limitations is based on existing statutes and constitutional provisions. Changes in State law could alter these provisions. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Bond Ordinance has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such Acts. No federal or state securities commission or regulatory authority has passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. For the sole purpose of the Underwriter's compliance with Securities and Exchange Commission ("SEC") Rule 15c2- 12(b)(1), the City has "deemed final" this Preliminary Official Statement as of its date, except for the omission of information as to offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, delivery dates, any other terms or provisions required by an issuer to be specified in a competitive bid, ratings, other terms of the Bonds dependent on such matters and the identity of the underwriter. CITY OF TUKWILA, WASHINGTON 6200 Southcenter Boulevard Tukwila, Washington 98188 (206) 433-1800 www.tukwilawa.gov * MAYOR AND COUNCIL MEMBERS MAYOR Allan Ekberg CITY COUNCIL Verna Seal Zak Idan Kathy Hougardy Kate Kruller Thomas McLeod De"Sean Quinn Dennis Robertson Mayor Council President Council Member Council Member Council Member Council Member Council Member Council Member CERTAIN APPOINTED OFFICIALS David Cline Peggy McCarthy Rachel Turpin, Kenyon Disend, PLLC BOND COUNSEL Pacifica Law Group LLP Seattle, Washington City Administrator Finance Director City Attorney FINANCIAL ADVISOR PFM Financial Advisors LLC Seattle, Washington (206) 858-5363 sea-advisors@pfm.com BOND REGISTRAR Washington State Fiscal Agent (Currently, U.S. Bank National Association, Seattle, Washington) The City's website is not part of this Official Statement, and investors should not rely on information presented in the City's website in determining whether to purchase the Bonds. This inactive textual reference to the City's website is not a hyperlink and does not incorporate such website by reference. iii Table of Contents OFFICIAL NOTICE OF SALE vii DESCRIPTION OF THE BONDS 1 General 1 Authorization 1 Registration and Payment 1 Redemption Provisions 2 Purchase 3 Failure to Pay Bonds 3 Defeasance 3 PURPOSE 4 Sources and Uses of Funds 4 SECURITY FOR THE BONDS 4 CITY TAXING AUTHORITY 4 Property Tax 5 Retail Sales and Use Taxes 5 Utility Taxes 6 PROPERTY TAX LIMITATIONS 7 Uniformity Requirement 7 Limitations on Regular Property Taxes 7 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES 9 Assessed Valuation 9 Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City 9 Property Tax Collection Procedures 10 Overlapping Levy Rates 11 GENERAL OBLIGATION DEBT 12 Authorization of Debt 12 Limits of Indebtedness 12 Outstanding General Obligation Debt 13 Debt Capacity Computation 14 Direct and Estimated Overlapping Debt 15 Debt Service Requirements 16 Future Financing 16 Debt Payment Record 16 CITY FUNDS AND ACCOUNTING 17 City Investments and Investment Policy 17 Historical General Fund Operating Results 19 Management Discussion of Fiscal Year 2017 Financial Results 20 General Fund Budgets 20 THE CITY 21 Governance 21 Employees and Bargaining Groups 22 Pension Plans 22 Other Post -Employment Benefits 25 Risk Management 26 GENERAL AND ECONOMIC INFORMATION 27 General 27 Population 27 Economic Indicators for the City and the County 27 TAX MATTERS 29 General 29 Original Issue Premium and Discount 29 Post Issuance Matters 29 Bank Qualified 30 CONTINUING DISCLOSURE UNDERTAKING 30 CERTAIN INVESTMENT CONSIDERATIONS 31 Initiative and Referendum 31 Limitations on Remedies 31 No Acceleration 31 Bankruptcy 31 RATING 32 LITIGATION 32 APPROVAL OF COUNSEL 32 FINANCIAL ADVISOR 32 UNDERWRITING 32 CONFLICTS OF INTEREST 32 OFFICIAL STATEMENT 33 APPENDICES: FORM OF LEGAL OPINION APPENDIX A 2017 AUDITED FINANCIAL STATEMENTS APPENDIX B DTC AND ITS BOOK -ENTRY SYSTEM APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX D v OFFICIAL NOTICE OF SALE $18,525,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 NOTICE IS HEREBY GIVEN that electronic bids will be received by the City of Tukwila, Washington (the "City"), for purchase of the above described bonds (the "Bonds") at 8:30 a.m. Pacific Time on July 31, 2018 or such other day or time and under such other terms and conditions as may be established by the City and communicated as described under "Modification; Cancellation; Postponement." The Bonds will be sold on an all -or -none basis. Bids must be submitted electronically as described below. Bids must be submitted electronically via the Qualified Electronic Bid Provider in accordance with this Official Notice of Sale. The City has designated PARITY° as the Qualified Electronic Bid Provider for purposes of receiving electronic bids for the Bonds. Electronic bids will be received via PARITY° until the time and date of sale, and no bid will be accepted after that time. For further information about PARITY° including any fees charged, potential bidders may contact PARITY° at (212) 849-5021. By designating a bidding service as a Qualified Electronic Bid Provider, the City does not endorse the use of such bidding service. See "BIDDING INFORMATION AND AWARD — Submission of Bids" below. All bids properly received will be considered and acted on by the City Finance Director on behalf of the City by 12:00 p.m. Pacific Time on the sale date. Bidders are referred to the attached Preliminary Official Statement for additional information regarding the City, the Bond Ordinance (as defined herein), the Bonds, the security therefor, and other matters. Modification; Cancellation; Postponement. Bidders are advised that the City may modify the terms of this Official Notice of Sale prior to the time set for the receipt of bids. Any such modifications will be provided to the Qualified Electronic Bid Provider and i-Deal Prospectus on or prior to the time bids are due. In addition, the City may cancel or postpone the date and time for the receipt of bids for the Bonds at any time prior to the time bids are due. Notice of such cancellation or postponement will be communicated to the Qualified Electronic Bid Provider and i-Deal Prospectus as soon as practical following such cancellation or postponement. If a postponement occurs, bids will be received at the time and in the manner the City will determine. As an accommodation to bidders, telephonic, or electronic notice of any amendment or modification of this Official Notice of Sale will be given to any bidder requesting such notice from the City's Financial Advisor, PFM Financial Advisors LLC, telephone: (206) 858-5363 or e-mail at: sea-advisors@pfm.com. Failure of any bidder to receive such notice by telephone, the Qualified Electronic Bid Provider or i-Deal Prospectus will not affect the legality of the sale. Each bidder (and not the City or its Financial Advisor) is responsible for the timely delivery of its bid. The official time will be determined by the City and not by any bidder or Qualified Electronic Bid Provider. * Preliminary, subject to change. vii Description of the Bonds Bond Details. Each Bond will be dated its date of initial delivery. The Bonds will bear interest payable semiannually on each June 1 and December 1, beginning December 1, 2018, to maturity or earlier redemption. Principal will be payable on the dates and in the amounts shown below, except as may be adjusted as described herein. Due Due Dec. 1 (1) Amount(1) Dec. 1 (1) Amount (1) 2022 $ 745,000 2031 $1,125,000 2023 780,000 2032 1,165,000 2024 820,000 2033 1,215,000 2025 860,000 2034 1,265,000 2026 905,000 2035 1,315,000 2027 950,000 2036 1,365,000 2028 1,000,000 2037 1,420, 000 2029 1,040,000 2038 1,475,000 2030 1,080,000 (I) Preliminary; subject to adjustment by the City as provided in this Official Notice of Sale. These amounts will represent serial maturities unless term bonds are specified, by the successful bidder, as described in this Official Notice of Sale, in which case these amounts will represent mandatory redemption amounts of term bonds. See "Redemption Provisions —Mandatory Redemption" below. Adjustment of Principal Amount of Bonds and Bid Price for the Bonds Before Bid Opening. Bidders are advised that the City may increase or decrease the total principal amount and/or the amounts of individual maturities of Bonds stated in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus) prior to the bidding. If such changes are made, they will be reflected in the Official Bid Form to be made available through the Qualified Electronic Bid Provider. After Receipt of the Bids. Following the time bids are due, the City reserves the right to increase or decrease the aggregate principal amount of the Bonds by an amount not to exceed 15 percent, rounded up to the nearest $5,000. Adjustments of the aggregate principal amount in excess of 15 percent, rounded up to the nearest $5,000, may be made with approval of the successful bidder. The price bid by the successful bidder will be adjusted by the City to reflect an increase or decrease in the principal amount and maturity schedule for the Bonds, taking into account the interest rates and underwriting compensation in the bid as submitted. In the event the City elects to adjust the bond size after the bid pursuant to this Official Notice of Sale, the underwriter's discount (net of bond insurance expense, if any), expressed in dollars per thousand, will be held constant. The City will not be responsible in the event and to the extent that any adjustment affects the net compensation to be realized by the successful bidder, or the true interest cost of the winning bid or its ranking relative to other bids. Redemption Provisions * Optional Redemption. The Bonds maturing on December 1, 2022 through December 1, 2026 are not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after December 1, 2027, are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027, at a price of par plus accrued interest, if any, to the date fixed for redemption. Mandatory Redemption. Bidders have the option to designate part or all of the Bonds maturing on or after December 1, 2027, as term bonds subject to mandatory redemption at a price of par plus accrued interest, in the years and in the amounts set forth in the serial maturity schedule for the Bonds, subject to adjustment as described herein. Any term bonds so designated must consist of the total principal payments for two or more consecutive years and mature on the latest of such years. If no term bonds are designated, the Bonds will mature in the amounts and on the dates set forth in the serial maturity schedule set forth above and subject to adjustment as described herein. See "DESCRIPTION OF THE BONDS —Redemption Provisions" in the Preliminary Official Statement. Purpose of the Bonds Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for costs related to the acquisition of land and the construction, improvement and equipping of maintenance and other City facilities, and (ii) to pay the costs of issuance of the Bonds. " Preliminary, subject to change. viii Security for the Bonds The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in the Preliminary Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit, and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest on the Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. See "SECURITY FOR THE BONDS" in the Preliminary Official Statement. Registration and Book -Entry Transfer System The Bonds will be issued as fully registered bonds and, when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denomination of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive physical certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee for DTC, references to the Registered Owners herein will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. See APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM" in the Preliminary Official Statement for the Bonds. BIDDING INFORMATION AND AWARD Submission of Bids Bids for the Bonds are to be submitted electronically via the Qualified Electronic Bid Provider. Hard copy bids will not be accepted. By submitting a bid for the Bonds, such bidder thereby agrees to the following terms and conditions: (i) If any provision in this Official Notice of Sale with respect to the Bonds conflicts with information or terms provided or required by the Qualified Electronic Bid Provider, this Official Notice of Sale, including any amendments issued through the Qualified Electronic Bid Provider and i-Deal Prospectus, shall control. (ii) Each bidder is solely responsible for making necessary arrangements to access the Qualified Electronic Bid Provider for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). (iii) The City has no duty or obligation to provide or assure access to the Qualified Electronic Bid Provider to any bidder, and the City shall not be responsible for proper operation of, or have any liability for, any delays, interruptions or damages caused by use or attempted use of the Qualified Electronic Bid Provider or any incomplete, inaccurate or untimely bid submitted by any bidder through the Qualified Electronic Bid Provider. (iv) The City is permitting the use of the Qualified Electronic Bid Provider as a communication mechanism, and not as the City's agent, to conduct the electronic bidding for the Bonds. The Qualified Electronic Bid Provider is acting as an independent contractor, and is not acting for or on behalf of the City. (v) The City is not responsible for ensuring or verifying bidder compliance with any Qualified Electronic Bid Provider procedures. (vi) If a bid is accepted by the City, this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus) and the information that is submitted electronically through the Qualified Electronic Bid Provider shall form a contract, and the bidder shall be bound by the terms of such contract. (vii) Information provided by the Qualified Electronic Bid Provider to bidders shall form no part of any bid or of any contract between the successful bidder and the City unless that information is included in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). ix Bid Details and Parameters Form of Bids. Bids for the Bonds must be unconditional, and for not less than the entire offering of the Bonds. By submitting a bid, each bidder agrees to all of the terms and conditions of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). Bids must be submitted electronically via the Qualified Electronic Bid Provider. Bids may not be withdrawn or revised after the time that bids are due. Interest Rates Bid. Bids may specify any number of interest rates in multiples of one -eighth of one percent (1/8 of 1 percent) or one -hundredth of one percent (1/100 of 1 percent). All Bonds of the same maturity must bear interest at the same rate and no Bond shall bear interest at more than one rate. No rate of interest may exceed 5.0 percent. Bonds maturing on or after December 1, 2027, must bear interest at a rate not lower than 4.0 percent. Premium and Discount. No bid will be considered for a price that is less than 100 percent or more than 125 percent of the par value of the Bonds. Each maturity must be reoffered at a yield that will produce a price of not less than 98 percent of the principal amount for that maturity. For purposes of the preceding sentences, "price" means the price as calculated using the lesser of the yield to the redemption date, if any, or the yield to the maturity date. Good Faith Deposit The successful bidder for the Bonds shall deliver a good faith deposit in the amount of $190,000 to the City Finance Director. The good faith deposit must be paid by federal funds wire transfer delivered no later than two hours following the successful bidder's receipt of the verbal award. Wiring instructions will be provided to the successful bidder at the time of the verbal award. The good faith deposit will be retained by the City as security for the performance of the successful bidder and shall be applied to the purchase price of the Bonds upon delivery of the Bonds to the successful bidder. Pending delivery of the Bonds, the good faith deposit may be invested for the sole benefit of the City. If the Bonds are ready for delivery and the successful bidder fails or neglects to complete the purchase within 30 days following acceptance of its bid, the good faith deposit shall be retained by the City as reasonable liquidated damages, and not as a penalty. Such retention will constitute a full release and discharge of all claims by the City against the successful bidder and, in that event, the City may call for additional proposals. The City's actual damages may be higher or lower than the amount of such good faith deposit. Such amount constitutes a good faith estimate of the City's actual damages. Each bidder waives the right to claim that actual damages arising from such default are less than such amount. Selection of the Successful Bidder The bids for the Bonds will be considered by the City at the date and time set for sale. The Bonds will be sold to the bidder submitting a bid in conformance with this Official Notice of Sale that produces the lowest true interest cost to the City, based on the bid price, the interest rates specified in the bid and the principal amounts identified in this Official Notice of Sale. The true interest cost will be the rate necessary, on a 30/360 basis and semiannual compounding, to discount the debt service payments from the payment dates to the date of the Bonds and to the price bid. The true interest cost calculations will be performed by the City's Financial Advisor, and the City will base its determination of the best bid solely on such calculations. The successful bidder for the Bonds will be bound to purchase the Bonds in the principal amount, at such price, and with such interest rates as are specified in its bid, unless there is an adjustment in the principal amounts of the Bonds, in which case the successful bidder shall be bound to purchase the Bonds in the adjusted principal amounts at the revised bid amount, as described above under the heading "Adjustment of Principal Amount of Bonds and Bid Price for the Bonds." The City reserves the right to reject any or all bids and to waive any irregularity in any bid or the bidding process. If all bids are rejected, then the Bonds may be sold in any manner provided by law. Any bid presented after the time specified for receipt of the bids will not be accepted, and any bid not backed by the required good faith deposit will not be considered. The successful bid shall remain in effect until 5:00 p.m. Pacific Time, on the date set for the receipt of bids. x Bond Insurance; Rating Bond Insurance. The purchase of any insurance policy for the Bonds or the issuance of any commitment therefor will be at the sole option and expense of the successful bidder for such Bonds. Bids may not be conditioned upon qualification for or the receipt of municipal bond insurance. Any increased costs of issuance of the Bonds resulting from such purchase of insurance will be paid by the successful bidder for the Bonds and will not, in any event, be paid by the City. Payment of any bond insurance premium and satisfaction of any conditions to the issuance of the municipal bond insurance policy will be the sole responsibility of the successful bidder. In particular, the City will not provide any opinions or enter into any agreements with respect to the provisions of any such policy. Failure of any municipal bond insurer to issue or deliver its policy will not in any way relieve the successful bidder of its contractual obligations arising from acceptance of its proposal for the purchase of the Bonds. The successful bidder must provide the City with the municipal bond insurance commitment and information with respect to the municipal bond insurance policy and the insurance provider within two business days following the award of the bid by the City. The City will require delivery, on or prior to the date of initial delivery of the Bonds, of: (i) a certificate from the insurance provider regarding the accuracy and completeness of the information provided for inclusion in the Official Statement, (ii) an opinion of counsel to the insurance provider regarding the validity and enforceability of the municipal bond insurance policy, and (iii) a certificate with respect to certain tax matters, each in a form reasonably satisfactory to the City and Bond Counsel. Rating. The City has received a rating from S&P Global Ratings as shown on the cover of the Preliminary Official Statement. The City will pay the fees for the rating. Any other ratings are the responsibility of the successful bidder. See "RATING" in the Preliminary Official Statement. Delivery of Bonds The Bonds will be delivered to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, less payment of the purchase price to the City in immediately available federal funds, less the amount of the applicable good faith deposit. Closing is expected to occur on the closing date set forth on the cover page of the Preliminary Official Statement. If, prior to delivery of the Bonds, the interest receivable by the owners of such Bonds becomes includable in gross income for federal income tax purposes, or becomes subject to federal income tax other than as described in the Preliminary Official Statement, the successful bidder, at its option, may be relieved of its obligation to purchase the Bonds and, in that case, the good faith deposit accompanying its bid will be returned without interest. The Bonds will be delivered in "book -entry only" form in accordance with the letter of representations from the City to DTC. As of the date of the award of the Bonds, each successful bidder must either participate in DTC or clear through or maintain a custodial relationship with an entity that participates in DTC. The City will furnish to the successful bidder one electronic transcript of proceedings; additional transcripts will be furnished at the successful bidder's cost. Issue Price Information The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at closing an "issue price" or similar certificate setting forth the reasonably expected initial offering price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form attached to this Official Notice of Sale as Exhibit A, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel. The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the "competitive sale requirements") because: (i) the City shall disseminate this Official Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (ii) all bidders shall have an equal opportunity to bid; (iii) the City may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and xi (iv) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the Bonds at the highest price (or lowest interest cost), as set forth in this Official Notice of Sale. Any bid submitted pursuant to this Official Notice of Sale shall be considered a firm offer for the purchase of the Bonds, as specified in the bid. By submitting a bid for the Bonds, each bidder certifies that has an established industry reputation for underwriting new issuance of municipal bonds unless specifically noted in the bid. In the event that the competitive sale requirements are not satisfied, the City shall advise the winning bidder that such requirements are not satisfied and the following section will apply: Hold -the -Offering -Price Rule May Apply. In the event that the competitive sale requirements are not satisfied, the City will so advise the winning bidder. The City will treat the first price at which 10% of a maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity if such maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. With respect to those maturities of the Bonds that do not meet the 10% test as of the date and time of the award of the Bonds, the City will treat the initial offering price to the public as of the sale date of any maturity of the Bonds as the issue price of that maturity (the "hold -the -offering -price rule"), in each case applied on a maturity -by -maturity basis. The winning bidder shall advise the City if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. As stated above, the hold -the -offering -price rule will apply to those maturities of the Bonds that do not meet the 10% test as of the sale date. By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold -the -offering -price rule shall apply to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The winning bidder shall promptly advise the City when the underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. The City acknowledges that, in making the representation set forth above, the winning bidder will rely on (i) the agreement of each underwriter to comply with the hold -the -offering -price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the -offering -price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the hold -the -offering -price rule, as set forth in the retail distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold -the -offering -price rule and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker -dealer that is a party to a retail distribution agreement to comply with its corresponding agreement regarding the hold -the -offering -price rule as applicable to the Bonds. By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker -dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if applicable), in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either xii the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if applicable), in each case if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Bonds to any person who is a related party to an underwriter shall not constitute sales to the public for purposes of this Official Notice of Sale. Further, for purposes of this Official Notice of Sale: (i) "public" means any person other than an underwriter or a related party, (ii) "underwriter" means (i) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder. CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds; however, neither the failure to print CUSIP numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds. The City's Financial Advisor will obtain CUSIP numbers on behalf of the City. The charge of the CUSIP Service Bureau shall be paid by the successful bidder. Bond Counsel Opinion The City will furnish to the purchaser of the Bonds the bond counsel opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, in substantially the form attached to the Preliminary Official Statement in Appendix A. Continuing Disclosure The City has entered into an undertaking for the benefit of the owners of the Bonds to provide certain financial information and operating data and notice of certain events to the Municipal Securities Rulemaking Board ("MSRB") pursuant to the requirements of paragraph (b)(5)(i) of Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule"). See Appendix D in the Preliminary Official Statement. Closing Documents As a condition to the obligation of the successful bidder to accept delivery of and pay for the Bonds, the City will furnish a certificate of an official or officials of the City stating that to the best knowledge of such official(s), as of the date of the Official Statement and as of the date of delivery of the Bonds, the information (including financial information) contained in the Official Statement was, as of its date, and is, as of the date of closing, true and correct in all material respects and did not and does not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance, if any, or other credit facility). A no -litigation certificate will also be included in the closing documents for the Bonds. Official Statement The Preliminary Official Statement is in a form deemed final by the City for the purpose of the Rule, but is subject to revision, amendment and completion in a final Official Statement which the City will deliver, to the successful bidder, at the City's expense, not later than seven business days after the City's acceptance of the successful bidder's proposal, in sufficient quantities to permit the successful bidder to comply with the Rule. The successful bidder shall file, or cause to be filed, the final Official Statement with the MSRB within one business day following the receipt of the Official Statement from the City. The successful bidder also agrees: (i) to provide to the City, in writing, promptly after the acceptance of the bid, pricing and other related information, including initial reoffering prices of the Bonds, necessary for completion of the final Official Statement; (ii) to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any amendments or supplements prepared by the City; and (iii) to take any and all actions necessary to comply with applicable SEC and MSRB rules governing the offering, sale and delivery of the Bonds to ultimate purchasers, including without limitation, the delivery of a final Official Statement to each investor who purchases Bonds. Additional Information The Preliminary Official Statement may be obtained from i-Deal Prospectus, a service of i-Deal LLC, at www.i-dealprospectus.com, telephone (212) 849-5021. In addition, the Preliminary Official Statement may be obtained upon request to the City's Financial Advisor. Additional information may be obtained from the City's Financial Advisor, PFM Financial Advisors LLC (by telephone: (206) 858-5363; or by e-mail: sea-advisors@pfm.com). CITY OF TUKWILA, WASHINGTON By: /s/ Peggy McCarthy Peggy McCarthy, Finance Director xiv EXHIBIT A FORM OF CERTIFICATE OF UNDERWRITER , has acted as underwriter (the "Underwriter") in connection with the sale and delivery of the of $ , Washington (the "Issuer") in the aggregate principal amount (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. [If competitive sale safe harbors are met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the respective prices for each Maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. c. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the Bonds, being the Expected Offering Price of each Maturity, is $ (the "Issue Price"). [If competitive sale safe harbors are not met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. With respect to the Bonds maturing in (the "General Rule Maturities"), at least 10% of the principal amount of each Maturity of the Bonds was sold to the Public at the respective price for that Maturity shown in Schedule A (the "Sale Price"). b. With respect to the Bonds maturing in (the "Unsold Maturities"), the Underwriter offered the Unsold Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Price") on or before the Sale Date. A copy of the pricing wire for the Bonds is attached as Schedule B. 3. As set forth in the Notice of Sale and Certificate of Award, the Underwriter [and all members of the Underwriting Group] agreed in writing that (i) for the Unsold Maturities ("Hold -the -Offering -Price Maturities"), [it] would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the applicable Initial Offering Price during the Holding Period (the "hold -the -offering -price rule"), and (ii) any selling group agreement will contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement will contain the agreement of each broker -dealer who is a party to the retail distribution agreement, to comply with the hold -the -offering -price rule. During the Holding Period, no Underwriter (as defined in Treasury Regulation 1.148(f)) has offered or sold any of the Hold -the -Offering -Price Maturities at a price that is higher than the respective Initial Offering Price. "Holding Period" means, with respect to a Hold -the -Offering -Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the 5th business day after the Sale Date or (ii) the date on which the Underwriter has sold at least 10% of such Maturity to the Public at prices that are no higher than the applicable Initial Offering Price. 4. The expected aggregate issue price of the Bonds, being the Sale Price of each General Rule Maturity and the Initial Offering Price of each Hold -the -Offering -Price Maturity, is $ (the "Issue Price"). A-i [For all transactions:] Provided that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Code, the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes Pacifica Law Group LLP ("Bond Counsel") to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2, in Treasury Regulation 1.148-1(f). A-ii OFFICIAL STATEMENT $18,525,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 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, 2018 (the "Bonds"). This Official Statement, which includes the cover page, inside cover page, the table of contents and appendices, provides information concerning the City and the Bonds. Capitalized terms not defined herein shall have the meanings assigned to them in the Bond Ordinance, as defined below. All of the summaries of provisions of the Constitution and laws of the State, of ordinances and resolutions of the City, and of other documents contained herein are subject to the complete provisions thereof and do not purport to be complete statements of such laws or documents, copies of which may be obtained from the City upon request. A full review should be made of the entire Official Statement. The offering of the Bonds to prospective investors is made only by means of the entire Official Statement. DESCRIPTION OF THE BONDS General The Bonds will be dated as of their initial date of delivery (the "Delivery Date") and will bear interest from their dated date (or the most recent date to which interest has been paid thereon). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2018, to maturity or prior redemption. The Bonds will bear interest at the rates and will mature on the dates and in the amounts set forth on the inside cover of this Official Statement. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Authorization The Bonds are issued pursuant to the provisions of the Constitution of the State, chapters 39.36 and 39.46 of the Revised Code of Washington ("RCW"), and other applicable laws of the State, and Ordinance No. 2559 passed by the City Council (the "Council") at a regular meeting on December 4, 2017 as amended by Ordinance No. 2574 passed by the Council at a regular meeting on May 7, 2018 (as so amended, the "Bond Ordinance"). Registration and Payment Book -Entry System. The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"). DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denominations of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee of DTC, references herein to the Registered Owners will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. For information about DTC and its book -entry system, see APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM." The City makes no representation as to the accuracy or completeness of the information in Appendix C provided by DTC. Purchasers of the Bonds should confirm this information with DTC or its broker -dealer participants. Bond Registrar. The City has adopted the system of registration for the Bonds approved, from time to time, by the State Finance Committee (the "Committee"). Pursuant to chapter 43.80 RCW, the Committee designates one or more fiscal agents for bonds issued within the State. The State's fiscal agent, currently U.S. Bank National Association (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal of and interest on the Bonds, recording the purchase and registration, exchange or transfer, and payment of Bonds and performing the other obligations of the paying agent and registrar. No resignation or removal of the Bond Registrar shall become effective until a successor has been appointed and has accepted the duties of Bond Registrar. Payments. To pay the principal of and interest on the Bonds when due, the City will remit money from the fund or account held under the Bond Ordinance for the purpose of paying debt service on the Bonds (the "Debt Service Fund") to the Bond Registrar. The Bond Registrar is obligated to remit such payments to DTC participants for subsequent disbursement to the Beneficial Owners of the Bonds as described in Appendix C. Preliminary, subject to change. 1 For so long as the Bonds are held by a depository, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are no longer held by a depository, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the Record Date (as defined below), or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least by the Record Date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Underwritten Bonds by the Registered Owners at the designated office of the Bond Registrar. "Record Date" is defined in the Bond Ordinance as the close of business for the Bond Registrar that is 15 days preceding any interest and/or principal payment or redemption date. Transfer and Exchange. The transfer of any Bond may be registered and Bonds may be exchanged as provided in the Bond Ordinance. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registered Owner) of the same date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer of or to exchange any Bond during the period between the preceding Record Date and the principal payment or redemption date. Redemption Provisions Optional Redemption. The Bonds maturing on December 1 in the years 2022 through 2026, inclusive, are not subject to redemption prior to their stated maturity. The Bonds maturing on or after December 1, 2027 are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redemption. (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) (1) Final maturity. If a Term Bond is redeemed under the optional redemption provisions, defeased or purchased by the City and surrendered for cancellation, the principal amount of the Term Bond so redeemed, defeased or purchased (irrespective of its actual redemption or purchase price) will be credited against one or more scheduled mandatory redemption installments for that Term Bond in the manner described below regarding the selection of Bonds for redemption.] Selection of Bonds for Redemption. For as long as the Bonds are held in book -entry form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held by a depository, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the Bond Ordinance. If the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of bonds of such maturity to be redeemed shall be selected by lot (or in such manner as determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the sum of a Bond is redeemed, upon surrender of such Bond the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the rest of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. 2 Notice of Redemption. For so long as the Bonds are held by a depository, notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar shall provide any notice of redemption to any Beneficial Owners. The notice of redemption may be conditional. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. On or prior to any redemption date, unless such redemption has been rescinded or revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. Effect of Call for Redemption. If notice of redemption has been given and not rescinded or revoked, or if the conditions set forth in a conditional notice of redemption have been satisfied or waived, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. Purchase The City reserves the right to purchase any or all of the Bonds offered to the City at a time at a price deemed reasonable by the City plus accrued interest to the date of purchase. Failure to Pay Bonds If any Bond is duly presented for payment and funds have not been provided by the City on the applicable payment date, then interest will continue to accrue thereafter on the unpaid principal thereof at the rate stated on the Bond until the Bond is paid. Defeasance In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt Service Fund or in another special account, cash or noncallable Government Obligations (as defined below), or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of the Bond Ordinance except the right to receive payment of principal, premium, if any, and interest from the Debt Service Fund or such special account, and such Bond shall be deemed to be not outstanding under the Bond Ordinance. The term "Government Obligations" is defined in the Bond Ordinance to mean direct or indirect obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America. 3 PURPOSE Proceeds of the Bonds will be used to provide funds (i) to pay and/or reimburse the City for costs related to the acquisition of land and construction, improvement and equipping of maintenance and other City facilities, 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] 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 are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in this Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of the taxes and for the prompt payment of the principal of and interest of the Bonds. See "CITY TAXING AUTHORITY" for a summary of property taxes and other taxes imposed by the City. The City may, subject to applicable laws, apply other funds available to make payments with respect to the Bonds. The City expects to apply revenues of its water, wastewater, and surface water utilities to pay a portion of debt service on the Bonds, commensurate with each utility's usage of the City maintenance facility financed with proceeds of the Bonds. Such revenues are not pledged as security for the Bonds. Bond owners do not have a perfected security interest in or lien on particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the County, the State, or any political subdivision thereof other than the City. State law provides that the payment of general obligation bonds is 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. 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." CITY TAXING AUTHORITY The City has statutory authority to levy various taxes within its boundaries, including local option sales and use taxes, excise taxes, utility taxes, property taxes, and other taxes. in some cases, State law specifies the purposes for which various taxes can be used. The City's major sources of General Fund tax revenue are its regular property tax levy and sales and use taxes. Additionally, the City levies utility taxes and other taxes which include gambling tax, excise tax, admissions tax, and penalties and interest. The State Constitution requires that all taxes on property be uniform. The Washington Supreme Court has ruled that personal income is considered property, overturning prior attempts within the state to impose graduated income taxes. Additionally, RCW 36.65.030 prohibits counties and cities from levying taxes on net income. On July 10, 2017, the City of Seattle adopted a local personal total income tax on high -income residents; the Seattle income tax has been challenged. A Superior Court judge ruled Seattle's income tax illegal in November 2017. The City of Seattle subsequently filed an appeal to the State Supreme Court, although it is unknown whether the State Supreme Court will decide to hear the case. Therefore, it is unknown at this time what the outcome of this case may be. The City does not currently impose an income tax, and has no plans to do so. 4 The following table shows the tax revenue in the City's General Fund, by source, for 2013 through 2017. General Fund Tax Revenues by Source Fiscal Property Sales and Utility Other Total Year Taxes Use Taxes Taxes (1) Taxes (2) Taxes (I) (2) (3J 2017 $14,857,788 $18,807,201 $6,440,759 $6,468,841 $46,574,589 2016 14,494,747 18,908,190 6,192,432 6,291,392 45,886,761 2015 14,323,133 19,334,152 (3) 6,080,387 5,463,697 45,201,369 2014 14,186,753 17,105,322 5,706,558 5,220,393 42,219,026 2013 13,757,092 16,520,856 5,566,851 4,771,091 40,615,890 Includes taxes on City -owned utilities, which represent approximately 30-35 percent of Utility Tax revenue each year. See "Utility Taxes" below. Includes gambling tax, excise tax, admissions tax, full-time equivalent employee tax, and penalties and interest. The increase in Sales and Use Taxes for 2015 include multiple one-time purchases, including over $380,000 in equipment purchases by one taxpayer. Source: The City of Tukwila audited financial statements for each year 2013 to 2017 Property Tax Under the State's laws and Constitution, property taxes are classified as either "regular" property taxes or "excess" property taxes. The City is authorized to levy both types of taxes. It submits a levy amount request to the King County (the "County") Assessor (the "Assessor"), a County elected official, who calculates the levy rate by spreading the levy amount across the assessed valuation on the tax rolls, following procedures established by the State Department of Revenue. The Assessor confirms that the levy is within applicable statutory and constitutional limitations and makes any necessary reductions before the County Treasurer (the "Treasurer") may begin to collect the levy on behalf of the City. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES" below. Regular Property Tax. Regular property taxes are subject to constitutional and statutory limitations as to rate and amount. See "PROPERTY TAX LIMITATIONS" herein. Regular property taxes are usually levied for general municipal purposes, though certain statutes authorize additional levies for particular limited purposes. General purpose levies may be used for the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, but State law does not provide any priority of use. In general, regular property taxes do not require voter approval, though certain statutes authorizing limited purpose levies may require voter approval. Certain tax limitations may be exceeded upon voter approval. Excess Property Tax. Excess property taxes for cities are not subject to constitutional or statutory limitations as to rate or amount, but must be authorized by a at least 60 percent approving vote in an election meeting minimum voter turnout requirements. Excess property tax levies may be made (1) by any taxing district for the repayment of bonds issued for capital purposes, excluding replacement of equipment; (2) by any taxing district for one year for any governmental purpose; or (3) without a vote when necessary to prevent impairment of an obligation of contract, if ordered by a court of last resort. Excess levies for the repayment of unlimited tax general obligation bonds must meet the minimum voter requirements set forth below under "GENERAL OBLIGATION DEBT —Limits of Indebtedness." Retail Sales and Use Taxes The State imposes a sales and use tax, and local governments (cities, counties and certain other municipal corporations) are authorized to levy additional "local option" sales and use taxes. In general, sales taxes are imposed on the purchase by consumers of a broad base of tangible personal property and selected services (including construction (labor and materials), machinery and supplies, services and repair of real and personal property). The use tax supplements the sales tax by taxing the use of certain services and personal property on which a sales tax has not been paid. Sales taxes upon applicable retail sales are collected by the seller from the consumer. Use taxes are payable by the consumer upon applicable rendering of services or uses of personal property. Each seller is required to hold taxes collected until remitted to the State Department of Revenue (the "DOR"), typically occurs on a monthly basis. The DOR collects and distributes all sales and use tax revenue in the State and retains one percent of all taxes collected to offset administration costs. Distribution to the local governments occurs on a monthly basis and lags approximately two months behind collections. 5 Among the items currently exempt are most personal services, motor vehicle fuel, most food sold for consumption off premises, trade-ins of items (e.g., automobiles) and purchases for resale. The State Legislature, and the voters through the initiative process, have changed the base of the sales and use tax on occasion. State law does not provide a general exemption for businesses, nonprofits or governmental entities from payment of sales and use taxes. The State Legislature approved legislation that changed the State sales tax system from an origin -based system to a destination -based system, effective July 1, 2008. Under destination sourcing, sales taxes are credited to the taxing jurisdiction where the purchaser takes delivery of the goods (based on the local tax rate), which may differ from the point of sale with respect to goods delivered to the purchaser. Local option sales and use taxes may be imposed on any sale or use upon which the State also imposes a sales and use tax. As described below, some sales and use tax authority is for general purposes and some is restricted as to use. Additionally, some local option taxes are subject to approval of the voters within the local jurisdiction. Historical retail sales subject to the sales and use taxes in the City are shown under "GENERAL AND ECONOMIC INFORMATION —Economic Indicators for the City and the County." Overview of Sales and Use Taxes within the City. The State sales and use tax rate is 6.5 percent. The City imposes the basic and optional sales and use taxes described below at a rate totaling 1.0 percent. The County imposes a criminal justice sales and use tax and a chemical dependency or mental health treatment services sales and use tax, for a combined rate of 0.2 percent within the City. The County also imposes a transit system sales and use tax at a rate of 0.9 percent within its boundaries. The Central Puget Sound Regional Authority ("Sound Transit") imposes a regional transit authority tax of 1.4 percent. Therefore, the total sales and use tax rate in the City is currently 10.0 percent. Basic and Optional Sales and Use Taxes. The City imposes a basic sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(1), and an optional sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(2). The revenue collected from the sales and use tax is not restricted, and therefore may be used for general City purposes. The City receives 85 percent of the tax collected within the City and the balance is distributed to the County per State law. Taxes from this source are part of the City's General Fund, and therefore are available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. Criminal Justice Sales and Use Tax. The County imposes a local sales and use tax of 0.1 percent for funding criminal justice programs, as provided in State law. While the criminal justice sales tax is levied countywide, a portion of the revenues are distributed to the cities within the County, based on a formula in State law. Ten percent of the revenue from this tax is distributed to the County and 90 percent to the cities and the County on a per capita basis, based on their estimated population as determined by the State Office of Financial Management as of April 1 each year. Revenues from the criminal justice sales tax are deposited into the City's General Fund and may be used only for criminal justice purposes, including the construction, improvement, and expansion of jails, court facilities, juvenile justice facilities, and services with ancillary benefits to the civil justice system (such as domestic violence programs and services). To the extent proceeds of the Bonds are applied to such purposes, taxes from this source are available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. Sales & Use Tax Streamlining Mitigation Payments. The State currently provides payments to certain jurisdictions to mitigate net losses in sales and use tax collections of local taxing jurisdictions resulting from the change to a destination -based system. Mitigation payments are distributed at the end of each quarter for the net loss experienced in the preceding quarter. The City has received mitigation payments averaging approximately $280,000 per quarter in each of the last three years. The City received mitigation payments totaling $1.22 million in 2016 and $1,099,090 in 2017 and expects to receive $1,090,000 in 2018. In 2017, the State Legislature enacted Engrossed House Bill 2163, Chapter 28, Laws of 2017, 3rd special session ("EHB 2163"). Pursuant to EHB 2163, the State will cease mitigation payments to local governments on September 30, 2019; however, EHB 2163 is expected to increase revenues from local sales and use taxes remitted by customers within the State and by sellers and "marketplace facilitators" located outside the State, including from certain online purchases. In South Dakota v. Wayfair (No. 17-494, June 21, 2018), the U.S. Supreme Court held for the first time that states have the authority to collect sales taxes directly from out-of- state sellers having no physical presence in the taxing state. The City cannot predict the effects of EHB 2163 or South Dakota v. Wayfair, including any impact on future collections of sales tax. Utility Taxes The City levies a tax on public utility businesses (the "Utility Tax"), which is based on gross receipts from service provided or revenues generated within the City. It is collected from Puget Sound Energy (an investor -owned utility) and utilities operated by the City and other municipal corporations. Seattle City Light, which provides electric service to portions of the City, pays the City an annual franchise fee in lieu of the Utility Tax. Legal authority to impose the tax on public utilities (other than electric utilities) owned by other municipal corporations is not settled. 6 Under State law, the tax rate for electric, phone and natural gas utilities is limited to six percent without voter approval; there is no limitation on tax rates on other utilities. The City collects a six percent utility tax on electricity, telecommunications, natural gas, cable utilities, and solid waste utilities. The City collects a 10 percent utility tax on revenue from City -owned stormwater, water, and sewer utilities. Taxes from this source may be available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. PROPERTY TAX LIMITATIONS The authority of a city to levy taxes without voter approval for general city purposes, including the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the limitations described below. Information relating to regular property tax limitations is based on existing statutes and constitutional provisions, and is subject to change. Changes in such laws could alter the impact of other interrelated tax limitations on the City. Uniformity Requirement The State Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. The State Constitution also provides that all real estate constitutes a single class, except for certain agricultural properties eligible for special use classification, which may be valued based on current use. It is possible, because of different overlapping taxing district boundaries, the maximum permissible levy might vary within the boundaries of a particular taxing district. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of a taxing district would be applied to the entire taxing district. Limitations on Regular Property Taxes City Regular Levy Rates and Limitations. Cities in the State are authorized to impose a regular property tax levy of not to exceed $3.375 per $1,000 of assessed value. This amount is increased to an amount not to exceed $3.60 per $1,000 of assessed value if the city is annexed into a library district, a regional fire service protection authority, and/or a fire protection district, less the actual regular levy made by the library district, regional fire service protection authority, and/or fire protection district. Further, a city may impose an additional $0.225 per $1,000 of assessed value beyond the $3.375 or $3.60 (for annexed cities) if the city has a fire pension fund, which must be used to the extent necessary for firefighters' pension funding purposes, otherwise this tax may be levied and used for any other municipal purpose. The City's regular levy authority reflects certain of the adjustments described above. The City is annexed to the King County Rural Library District, which imposed a regular levy of $0.367 per $1,000 of assessed valuation within the City in 2018. The City also has a pre-LEOFF firefighters pension fund (see "THE CITY —Pension Plans" 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 2018 to a maximum regular property tax levy rate of $3.233 per $1,000 of assessed valuation, plus the $0.225 pension fund levy. The City's actual 2018 regular property tax rate is $2.463 per $1,000 of assessed valuation, and it is not currently levying a firefighters' pension fund levy. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES —Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" below. Aggregate Levy Rate Limitations. The State Constitution and statutes limit the aggregate of all regular property tax levies imposed on any given tax parcel by the State and all overlapping taxing districts, except port districts and public utility districts, to one percent of the true and fair value of property. Within the one percent limitation, the levy by the State may not exceed $3.60 per $1,000 of assessed valuation and the aggregate of all regular levies by all taxing districts (other than the State and other than certain specified levies) may not exceed $5.90 per $1,000 of assessed valuation (the "$5.90 limitation"). Those specified levies excluded from the $5.90 limitation include port or public utility district levies; excess property tax levies; levies for acquiring conservation futures; levies for emergency medical care or emergency medical services; levies to finance affordable housing for very low-income residents; certain portions of levies by metropolitan park districts; certain levies imposed by ferry districts; levies for criminal justice purposes; certain portions of levies by fire protection districts; levies by counties for transit -related purposes; portions of certain levies by certain flood control zone districts; and levies imposed by a regional transit authority. The list of levies excluded from the $5.90 limitation is statutory and subject to change by the State Legislature at any time; certain of these exclusions expired in 2018. 7 Because various taxing districts may overlap, the aggregate levy rate applied to any two tax parcels within a single taxing district may not be identical. If the aggregate levy rate exceeds the aggregate rate limitation on any single parcel within a taxing district, the regular levy rates of certain taxing districts that include that parcel may be reduced. Because of the constitutional requirement for uniformity of taxation within a taxing district (described above), any reduction affects the entire taxing district. If reductions are required, they are made by the County Assessor, in accordance with State statutes and guidance from the DOR setting forth a prioritization of regular levies. The regular levies of the State, counties, road districts, cities, towns, port districts, and public utility districts are considered "senior" levies; the regular levies of all other taxing districts are considered "junior" levies. State statute prescribes the order in which the levies of the various junior levies are reduced or eliminated in order to comply with the aggregate rate limitations. Senior levies, such as the City's, are not subject to reduction or elimination based on aggregate rate limitations. The regular levy rates within the City are below both the individual and aggregate levy rate limitations. Maximum Amount Increase Limitation. State law also limits the amount of a regular levy for any particular year to the highest amount that could have been levied in any prior year, multiplied by a specified percentage (the "limit factor") plus an adjustment for new construction, annexations, certain improvements to property, and state assessed property. The limit factor is defined as the greater of (i) the lesser of 101 percent or 100 percent plus inflation, or (ii) if approved by a majority plus one vote of the governing body upon a finding of substantial need, any percentage up to 101 percent. If a taxing district levies less than its highest allowable levy, the amount not levied is nonetheless included in the base for determining the maximum amount limitation for succeeding years. This difference between the highest allowable levy amount and the amount actually levied is sometimes referred to as "banked" levy capacity. The City has no "banked" levy capacity. See table titled "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES — Current and Historical Assessed Valuation and Property Tax Levy Rates and Levy Amounts for the City" herein. The maximum amount increase limitation may be exceeded upon approval of a simple majority of voters. This is known as a "levy lid lift." A levy lid lift permits a levy amount increase greater than would otherwise be allowed, which increase may be effective indefinitely or for a limited period of time. Tax receipts from the incremental increase may be (but are not required to be) restricted in the ballot proposition to satisfy a limited purpose. A levy lid lift will not increase the levy if it would cause the taxing district's levy to exceed the applicable maximum rate limitations or the aggregate rate limitations described above. The City does not have any levy lid lifts in effect and does not have current plans to seek voter approval for a levy lid lift. Relationship Between Rate and Amount Limitations. Regular levies are limited by both the rate limitations and the amount limitations described above and, therefore, may need to be reduced below one threshold to avoid exceeding the other. Because the regular property tax increase limitation applies to the total dollar amount levied rather than to the levy rate, increases in the assessed value of all property in the taxing district (excluding new construction, improvements, annexations and State -assessed property) which exceed the rate of growth in taxes allowed by the limit factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses banked levy capacity. Decreases in the assessed value of all property in the taxing district (including new construction, improvements, annexations and State -assessed property) or increases in such assessed value that are less than the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates. Thus, as assessed values rise, the levy amount increase limitation may restrict levy rate growth. As assessed values fall, the levy rate limitation may restrict growth in the levy amount. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES —Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" herein for a table showing the City's historical assessed valuation, and regular property tax levy rates and amounts. Guaranty Fund Levies. Outside of the $3.60 per $1,000 and $5.90 per $1,000 limitations described above, but within the constitutional one percent aggregate levy limitation, the City may impose a levy for the maintenance of a local improvement guaranty fund to secure debt of any local improvement district that may be created by the City. The amount of a guaranty fund levy in any given collection year may not exceed the greater of (i) 12 percent of the outstanding obligations guaranteed by the fund, or (ii) the total amount of delinquent assessments and interest accumulated on the delinquent assessments (RCW 35.54.060). The taxes levied for the maintenance of the guaranty fund will be in addition to and, if need be, in excess of all statutory and charter limitations applicable to tax levies in any city or town. In 2013 the City issued $6,687,500 of Local Improvement District No. 33 Bonds, of which $4,805,000 principal is currently outstanding and guaranteed by the local improvement guaranty fund. As of December 31, 2017, the balance in the guaranty fund is $669,229, which was funded by a deposit of proceeds of the Local Improvement District No. 33 Bonds. 8 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES Assessed Valuation The Assessor determines the value of all real and personal property throughout the County that is subject to ad valorem taxation, except certain utility properties that are valued by the DOR. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the DOR. The assessed value is equal to 100 percent of fair market value, as determined by the Assessor using procedures prescribed by the DOR. Three approaches may be used to determine the fair market value of real property: market data, replacement cost and income generating capacity. In the County, all property is subject to revaluation every year based on market statistics and an on -site appraisal every six years. Though the intent is that the assessed value reflect 100 percent of market value, the infrequency of on -site appraisals can lead to assessed valuations that lag market and other adjustments. Personal property is valued each year based on affidavits filed by the property owner. The property is listed by the Assessor on a roll at its current assessed value and the roll is filed in the Assessor's office. The Assessor's determinations are subject to revision by the County Board of Equalization and, for certain property, subject to further revision by the State Board of Equalization. Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City The following table shows the current and historical assessed valuation, and property tax levy rates and levy amounts for the City from 2014 to 2018. Assessed Valuation and Property Tax Levy Rates and Levy Amounts Tax Assessed Regular Year Valuation (1) Levy Rate 2018 2017 2016 2015 2014 (1) (2) Source: Taxpayer $6,184,943,263 5,763,649,829 5,395,325,118 5,054,078,747 4,756,373,688 $2.46282 2.58592 2.71073 2.84188 2.97799 Excess Levy Rate (2) $0.45582 0.47143 N/A N/A N/A Total Levy Rate $2.91864 3.05735 2.71073 2.84188 2.97799 Regular Levy Amount $15,199,659 14,869,800 14,592,910 14,327,468 14,129,531 Excess Levy Amount(2) $2,807,019 2,698,992 N/A N/A N/A Total Levy Amount $18,006,678 17,568,792 14,592,910 14,327,468 14,129,531 Total assessed valuation used for computation of debt capacity. Equal to regular assessed valuation plus timber assessed valuation. The City's voters approved an unlimited tax general obligation bond measure in November 2016. The excess property tax levy associated with these bonds became effective for collection in 2017. King County Department of Assessments Largest Property Taxpayers in the City of Tukwila — 2018 Tax Year Assessed Type of Business Valuation Boeing Company Westfield Southcenter Boeing Employees Credit Union Segale Properties Sabey Corporation LIT Industrial Ltd. Partnership KIR Tukwila 050 LLC/KIMCO Prologis Re Tax (formerly 3301 South Norfolk LLC) CPF Kent Valley LLC CenturyLink Communication All other property tax payers Source: King County Department of Assessments Aerospace Shopping Center Credit Union Commercial Properties Commercial Properties Commercial Properties Commercial Properties Property Management Shopping Center Utility Total $ 649,477,382 331,894,672 131,088,803 121,353,075 112,816,028 105,799,200 88,273,700 87,512,300 62,141,900 60,616,151 $1,750,973,211 4,399,715,567 $6,184,943,263 % of Total A.V. 10.50% 5.37 2.12 1.96 1.82 1.71 1.43 1.41 1.00 0.98 28.31% 71.69 100.00% 9 Property Tax Collection Procedures Property taxes are levied in specific amounts by the taxing districts. The levy rate is calculated and fixed by the Assessor, based upon the assessed value of the taxable property within the taxing district and adjusted, in accordance with detailed guidelines from the DOR, to comply with the statutory and constitutional rate and amount limitations. See "PROPERTY TAX LIMITATIONS" above. The Assessor extends the taxes to be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the Treasurer by January 15 of each year. The Treasurer creates a tax account for each taxpayer and is responsible for the collection of taxes due for each account. All taxes are due and payable on April 30 of each year, but if the amount due from a taxpayer exceeds $50, one-half may be paid then and the balance no later than October 31 of that year. Delinquent taxes are subject to interest at the rate of 12 percent per year computed on a monthly basis from the date of delinquency until paid. In addition, a penalty of three percent is imposed on June 1 of the year in which the tax is due and eight percent on December 1 of the year due. Penalties are credited to the account of the taxing district; interest on delinquent taxes is credited to the County's current expense fund. The method of giving notice of payment of taxes due, the Treasurer's accounting for the money collected, the division of the taxes among the various taxing districts, notices of delinquency and collection procedures are all covered by detailed statutes and regulations. Property taxes and all charges and expenses relating to the taxes constitute a statutory lien on the property taxed. The lien attaches to the property from and including January 1 in the year in which the tax is levied, and is discharged only when the taxes are paid. By law, the Treasurer may commence foreclosure of a tax lien on real property after three years have passed since the first delinquency. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation except for federal civil judgment liens and the possible application of the State "homestead exemption" described below. A federal lien on personal property that is filed before the personal property tax is levied is senior to the local personal property tax lien. In addition, a federal civil judgment lien (but not a federal tax lien) is senior to real property taxes that are imposed after the judgment lien has been recorded. The State's courts have not decided whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain the first $125,000 of proceeds of a forced sale of the family residence or other "homestead property" for delinquent property taxes. The United States Bankruptcy Court for the Western District of Washington has held that the homestead exemption applies to the lien securing property taxes, while the State Attorney General has taken the position that it does not. See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982) (holding that liens securing improvement district assessments are subject to the homestead exemption). The following table shows the City's regular property tax collection record. Regular Property Tax Collection Record for the City Amount Amount Collected Percent Collected Year Levied (1) Year of Levy Year of Levy 2018 (2) 2017 2016 2015 2014 $15,199,659 14,885,710 14,516,623 14,245, 846 14,058,979 $ 8,059,088 14,606,179 14,375,358 14,113,739 13,916,718 53.02% 98.32 99.03 99.07 98.99 (» The amount levied each year does not include supplements or cancellations (2J In process of collection. Source: King County Finance and Business Operations Division Amount Collected Percent Collected As of 6/30/18 As of 6/30/18 $ 8,059,088 14,744,629 14,483,738 14,231,473 14,056,478 53.02% 99.25 99.77 99.90 99.98 of taxes or delinquent taxes collected in that year. 10 Overlapping Levy Rates The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the following rates, subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved property taxes. For purposes of demonstration, representative levy rates (regular and excess) for "levy code 2310," the highest levy rate within the City, as well as the statutory regular levy authority of each type of overlapping district, are listed below. There is no statutory limitation on excess tax levies. Representative 2018 Levy Rate and Statutory Regular Levy Authority King County King County Rural Library District Port of Seattle Fire Protection District or Authority The City King County Hospital District No. 1 State Schools Highline School District No. 401 King County Emergency Medical Services King County Flood Control District Sound Transit Tukwila Metropolitan Park District (6) (7) Statutory Regular Levy Authority Per $1,000 of Assessed Value $1.80 (1) 0.50 0.45 (2) 1.50 3.42 (3) 0.75 3.60 (4) -- (6) 0.50 Representative 2018 Regular Levy Rates Per $1,000 of Assessed Value $1.29474 0.36681 0.05361 2.46282 0.45689 2.91820 (5) Representative 2018 Excess Levy Rates Per $1,000 of Assessed Value $0.03261 0.04509 0.08157 0.45582 5.32819 (7) 0.23940 0.25 0.10708 0.50 0.22745 0.75 0.15513 Total Rate for King County Levy Code 2310: Representative Total Levy Rates Per $1,000 of Assessed Value $ 1.32735 0.41190 0.13518 2.91864 0.45689 2.91820 5.32819 0.23940 0.10708 0.22745 0.15513 $14.22541 A county may increase its levy up to $2.475 per $1,000 of assessed value for general county purposes if the total levies for both general and road purposes do not exceed $4.05 per $1,000 of assessed value, and no other taxing district has its levy reduced as a result of the increased county levy. The County road levy is imposed on properties located in unincorporated areas of the County. Port districts may exceed this limitation if necessary to pay debt service on general obligation indebtedness. Pursuant to RCW 41.16.060, cities that maintain a pre-LEOFF firefighter pension fund (such as the City) may levy an additional $0.225 for firefighter pension funding purposes. If not actuarially required for that purpose, such a city may use this levy for any other municipal purpose. Additionally, the City's levy authority is reduced by the actual regular levy rate of the King County Rural Library District, which levied $0.40118 per $1,000 of assessed value in 2017. Pursuant to RCW 84.52.043(1), the levy by the State may not exceed $3.60 per $1,000 of assessed value adjusted to the State equalized value in accordance with a ratio fixed by the State Department of Revenue. Pursuant to RCW 84.52.065, the aggregate rate of property taxes levied by the State exclusively for the support of the common schools for collection in calendar years 2018, 2020 and 2021 will be $2.70 per $1,000 of assessed value adjusted to the State equalized value in accordance with a ratio fixed by the State Department of Revenue; however, this levy rate will be reduced in 2019 to $2.40 per $1,000 of assessed value adjusted to the State equalized ratio. The rate may be greater than $2.70 in certain counties due to equalization ratios greater than 100%. School districts do not have non -voted regular levy authority. Pursuant to RCW 84.52.053, local school district excess property levies (excluding bonds) will be capped beginning in 2019 at the lesser of $1.50 per $1,000 of assessed valuation or an amount equal to $2,500 per student (adjusted for inflation in subsequent years). Source: King County Department of Assessments 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. As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to 60 percent voter approval, is limited to 2.5 percent of assessed value for general purposes, an additional 2.5 percent of assessed value for certain utility purposes and an additional 2.5 percent of assessed value for open space, park facilities and capital facilities associated with economic development. The minimum turnout must be at least 40 percent of city voters who voted at the last preceding State general election. If the ballot proposition approving issuance of voter -approved debt also approved the levy of taxes without limitation in amounts sufficient to repay those voter - approved bonds, then bonds will be payable from an excess property tax levy. See "PROPERTY TAX LIMITATIONS" above. Within the 2.5 percent of assessed value for general purposes, the City may, without voter approval, incur general obligation indebtedness, such as the Bonds, in an amount not to exceed 1.5 percent of assessed value. Additionally, within the 2.5 percent of assessed value for general purposes, the City may, also without voter approval, enter into financing leases and conditional sale contracts if the total principal component of the lease and contract payments, together with the other non -voted general obligation indebtedness of the City, does not exceed 1.5 percent of assessed value. The Bonds constitute non -voted debt. There is no express provision in the State's laws or Constitution on the priority of payment of debt service on general obligation bonds as compared to the payment of other general obligations of the municipality. Aggregate Debt Limitations. The combination of voter -approved and non -voted general obligation debt for general municipal purposes may not exceed 2.5 percent of the City's assessed valuation. The total of all general obligation debt for all purposes may not exceed 7.5 percent of the City's assessed valuation. Short -Term Obligations. Within the limitations described above, State law permits municipal corporations to borrow money and issue short-term obligations for any lawful purpose, including the anticipation of the receipt of revenues, taxes, or grants or the sale of bonds, if the bonds have been authorized by the governing body or the voters, as applicable. Short-term obligations issued in anticipation of taxes must be repaid within six months after the end of the fiscal year in which they are issued. 12 Outstanding General Obligation Debt As of June 1, 2018 the City had the following outstanding general obligation indebtedness. Principal Date of Final Principal Amount Outstanding General Obligation Debt Amount Issued Maturity Outstanding Limited Tax General Obligation Debt Limited Tax General Obligation Refunding Bonds, 2008 $ 6,180,000 12/1/2019 $ 1,485,000 South Correctional Entity Facility Public Development 6,898,800 1/1/2039 5,914,400 Authority Bonds, Series 2009A and 2009E (Taxable Build America Bonds — Direct Payment) (1) Limited Tax General Obligation Bonds, 2010B 3,970,000 12/1/2024 3,170,000 Limited Tax General Obligation Bonds, 2011 4,620,000 12/1/2023 2,925,000 Limited Tax General Obligation Bond, 2013 (2) 1,000,000 12/1/2022 513,549 Limited Tax General Obligation Bond, 2014 (Taxable) 3,850,000 12/1/2034 3,410,000 Limited Tax General Obligation Bonds, 2015 5,825,000 12/1/2035 5,380,000 Limited Tax General Obligation Bonds, 2017 8,180,000 12/1/2037 8,180,000 Limited Tax General Obligation Bond, 2017 (Taxable) 2,276,000 12/1/2022 2,276,000 Total Outstanding Limited Tax General Obligation Debt $33,253,949 The Bonds (3) 18,525,000 12/1/2038 18,525,000 Total Limited Tax General Obligation Debt $51,778,949 Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Bonds, 2016 Total General Obligation Debt m (2) (3) $32, 990, 000 12/1/2036 $31, 875, 000 $83,653,949 The South Correctional Entity Facility Public Development Authority issued bonds for a correctional facility (the "SCORE Bonds"). Pursuant to an interlocal agreement, the City is obligated to pay eight percent of the debt service on the SCORE Bonds in each year so long as the SCORE Bonds are outstanding, which obligation constitutes a limited tax general obligation debt of the City secured by the City's full faith and credit. The amounts shown in the table above represent the portion of the outstanding principal amount that is allocable to the City's obligation. In recent years, debt service obligations for the SCORE Bonds allocable to the City have been paid with operating revenues of the correctional facility. The proceeds of this obligation were loaned to the Tukwila Metropolitan Park District (the "MPD') to pay for improvements to a pool. The MPD is a separate taxing district. Pursuant to the terms of an interlocal agreement, the MPD has irrevocably pledged to levy and collect taxes and other revenues in amounts sufficient to pay debt service on the 2013 Bond. These amounts are required to be paid to the City not later than June 1 and December 1 of each year, so long as the 2013 Bond remains outstanding. Preliminary, subject to change. Source: The City 13 Debt Capacity Computation The City may issue general obligation debt if, at the time the debt is issued, the City has sufficient debt capacity. Once the debt has been issued, changes in assessed valuation have no effect on the validity of outstanding debt or the City's ability to refund outstanding debt. Future declines in assessed valuation can impact the ability to issue future general obligation debt. The following information is based on the 2017 assessed valuation of property within the City for collection of taxes in 2018 and the anticipated general obligation debt of the City (including the Bonds) as of the issue date of the Bonds. Calculation of Debt Capacity Assessed Valuation (2018 tax year) $6,184,943,263 General Purposes Non -Voted Debt Capacity (1.5% of Assessed Valuation) $ 92,774,149 Outstanding Non -Voted General Obligation Debt $33,253,949 The Bonds (1) 18,525,000 Net Non -Voted General Obligation Debt (1) $51,778,949 $ (51,778,949) Remaining Non -Voted General Purpose Debt Capacity $ 40,995,200 Voted and Non -Voted Debt Capacity (2.5% of Assessed Valuation) $ 154,623,582 Outstanding Voted General Obligation Debt $31,875,000 Plus: Net Non -Voted General Obligation Debt (calculated above) (') 51,778,949 Direct Debt (1) $83,653,949 $ (83,653,949) Remaining Debt Capacity for General Municipal Purposes (1) $ 70,969,633 Utility Purposes Debt Capacity (2.5% of Assessed Valuation) $ 154,623,582 Utility Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose $ 154,623,582 Parks and Open Space and Economic Development Purposes Debt Capacity (2.5% of Assessed Valuation) $ 154,623,582 Park and Open Space and Economic Development Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose $ 154,623,582 (1) Preliminary; subject to change. 14 Direct and Estimated Overlapping Debt The following table sets forth the outstanding principal amount of general obligation debt of the City including the Bonds (the "Direct Debt") and the estimated allocable share of the outstanding principal amount of general obligation bonds payable from property tax revenues of other taxing districts whose boundaries overlap a part or all of the City (the "Overlapping Debt"). The estimated allocable share of Overlapping Debt is calculated based on a percentage of the overlapping taxing district's assessed valuation that lies within the boundaries of the City. The City has obtained the information regarding the overlapping debt from the overlapping taxing districts, the County and other sources the City believes to be reliable, but the City has not independently verified the accuracy or completeness of such information. No person should rely upon such information as being accurate or complete. Furthermore, the amounts described below relate only to general obligation bonds issued by the various taxing districts and may not reflect certain leases or other contracts that may constitute indebtedness under State law. The table below reflects only existing general obligations payable from property taxes and does not reflect obligations secured by a pledge of other revenues such as utility revenues, excise taxes, sales taxes, and/or motor vehicle excise taxes (such as the obligations of Sound Transit), paid from sales taxes and/or motor vehicle taxes). The taxing districts listed below may have issued additional general obligation debt since the dates indicated below and these and other taxing districts may have plans for future general obligation debt issuances. (1) Direct and Estimated Overlapping Debt As of June 1, 2018 2017 Assessed Valuation for 2018 Tax Year - $6,184,943,263 2018 City Population — 19,800 Direct Debt (calculated above) (1) $ 83,653,949 Estimated Overlapping Debt: The County $ 9,438,403 Port of Seattle 5,094,819 School Districts 86,050,302 King County Rural Library District 2,016,934 Total Estimated Overlapping Debt $102,600,459 Total Net Direct and Estimated Overlapping Debt (1) $186,254,408 Certain Ratios (1) Direct Debt to Assessed Valuation 1.35% Direct and Estimated Overlapping Debt to Assessed Valuation 3.01% Direct Debt per Capita $ 4,225 Direct and Estimated Overlapping Debt per Capita $ 9,407 Per Capita Assessed Valuation $ 312,371 Preliminary; subject to change. Sources: The City, King County Finance and Business Operations Division and Department of Assessments, and the Port of Seattle 15 Debt Service Requirements The following table provides the debt service schedule for the City's outstanding limited tax general obligation bonds and loans and debt service for the Bonds. (1) (2) Schedule of Limited Tax General Obligation Bond Debt Service Outstanding Limited Tax General Obligation Debt(1) The Bonds Total Year Principal Interest (2) Principal Interest Debt Service 2018 $ 2,546,396 $ 1,325,535 2019 2,643,321 1,219,350 2020 1,932,261 1,101,780 2021 1,992,760 1,030,555 2022 4,350,010 952,384 2023 2,028,800 802,996 2024 1,549,400 721,639 2025 1,087,800 652,563 2026 1,117,400 612,032 2027 1,153,400 572,455 2028 1,194,800 529,278 2029 1,226,600 484,500 2030 1,268,800 438,111 2031 1,308,200 389,750 2032 1,351,600 339,769 2033 1,396,800 288,020 2034 1,447,800 234,422 2035 1,229,200 177,560 2036 884,000 126,317 2037 914,600 84,819 2038 396,000 40,437 2039 413,200 13,669 Total $33,433,149 $12,137,941 Includes certain assumptions for the SCORE Bonds and the general obligation loans. For the SCORE Bonds, it is assumed the City will pay the full amount of its allocable debt service in each year and that none of its obligation will be offset by other sources of funds as provided in the interlocal agreement for the SCORE Bonds. In recent years, debt service obligations for the SCORE Bonds allocable to the City have been paid with operating revenues of the correctional facility. For the Limited Tax General Obligation Bond, 2014, it is assumed the interest rate on the 2034 maturity remains unchanged at 2.85 percent at each of its interest rate reset dates (2019, 2024, and 2029). Reflects interest prior to the application of the federal credit payments relating to the SCORE Bonds. Future Financing The City has $40,885,000 of its 2016 unlimited tax general obligation bond authorization (the "2016 Authorization") remaining. Over the next 18 months, the City anticipates issuing unlimited tax general obligation bonds for the remainder of the 2016 Authorization in order to fund a justice center and construction of new fire stations. The issuance of any such debt is preliminary, subject to change, and has not been approved by the City Council. The City periodically reviews its outstanding bonds for refunding opportunities and may issue bonds for refunding purposes if market conditions warrant. Debt Payment Record The City has always promptly met principal and interest payments on outstanding bonds, and other obligations when due. No debt has been incurred for the purpose of avoiding an impending default. 16 CITY FUNDS AND ACCOUNTING The accounting and reporting policies of the City conform to those methods prescribed by the State Auditor under chapter 43.09 RCW. The Finance Director of the City maintains general supervision over financial transactions for all City funds. The accounts of the City are organized by fund and account group, each of which is considered a separate accounting entity. Each fund has a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to, and accounted for in, individual funds according to the purposes for which they are spent and the means by which spending activities are controlled. See APPENDIX B—"2017 AUDITED FINANCIAL STATEMENTS." Basis of Accounting. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Governmental funds use the modified accrual basis of accounting and proprietary and fiduciary funds use the accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. For the City, available means expected to be received within 60 days of year-end. On the accrual basis, the revenue is recognized in the period in which the income is earned. Auditing of City Finances. Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance with RCW 43.09.200 and RCW 43.09.230. The City complies with the systems and controls prescribed by the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of assets and the reliability of financial reporting (see "City Investments and Investment Policy" below). The State Auditor is required to examine the affairs of cities regularly and on a schedule determined by risk factors and financial activity. The City has been subject to financial statement and accountability audits. Financial statement audits are performed for the purpose of forming an opinion on the financial statements taken as a whole. Also considered are the City's internal controls over financial reporting and tests of compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. Accountability audits include, among other things, review of the financial condition and resources of the City, whether the laws and constitution of the State are being complied with, the methods and accuracy of the accounts and reports as well as other matters (potential areas of risk related to citizen concerns, payroll, inter -fund transactions, etc.). Reports of the auditor's examinations are filed in the office of the State Auditor and in the Finance Department of the City. The audited financial statements of the City for the year ended December 31, 2017, attached as Appendix B, are incorporated by reference to this Official Statement. The most recent accountability audit covers the period January 1, 2016 through December 31, 2016. The State Auditor performs accountability audits of the City every year and the City has been free of financial audit findings for at least the last 10 years. Budgetary Process. The City prepares biennial budgets in accordance with chapter 35A.33 RCW. Biennial appropriated budgets for all funds are adopted. These budgets are appropriated at the fund level. The budget constitutes the legal authority for expenditures at that level. Appropriations for these funds lapse at the end of the biennium. Appropriated budgets are adopted on the same basis of accounting used for financial reporting. The Council is required to hold public hearings prior to budget adoption, property tax levies and municipal revenues. Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. The budget is based on priorities established by Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. The Council conducts public hearings on the proposed budget in November and December. The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. The final operating budget as adopted is published and distributed within the first month of the following year. The City Council must approve by ordinance any amendments that increase the total for the fund. City Investments and Investment Policy In November 2010, the Council reviewed and updated the City's formal investment policy regarding the investment risks to which the City is exposed. The policy conforms to applicable State and local laws governing the investment of public funds. The primary objectives of the City's policy, in order of priority (high to low), are (i) legality, to ensure the compliance with all statutes governing the investment of public funds in the State, (ii) safety, to ensure the preservation of capital in the overall investment portfolio, (iii) liquidity, to enable to City to meet all operating requirements, and (iv) yield, to attain a market rate of return throughout budgetary and economic cycles, while taking into account the City's investment risk constraints and cash flow requirements. 17 Authorized Investments. Chapter 35.39 RCW authorizes the investment of funds of local governments in the following instruments: (i) bonds of the State or any local government in the State, (ii) general obligation bonds of any other state or local government thereof which have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency, (iii) registered warrants of a local government in the same county as the local government making the investment, (iv) obligations of the U.S. government, its agencies and wholly owned corporations, or obligations issued or guaranteed by supranational institutions, provided, that at the time of investment, the United States government is the largest shareholder of such institution, (v) obligations of the Federal Home Loan Bank, Federal Land Bank and Fannie Mae, and obligations of other government -sponsored corporations whose obligations are or may become eligible as collateral for advances to member banks of the Federal Reserve System, (vi) bankers' acceptances purchased on the secondary market, (vii) commercial paper purchased on the secondary market, subject to State Investment Board policies, and (viii) corporate notes purchased on the secondary market, subject to State Investment Board policies. Money available for investment may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio. All income derived from such investment may be either apportioned to and used by the various participating funds or for the benefit of the general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be reinvested or used in such manner as the authorizing ordinances, resolutions, or bond covenants may lawfully prescribe. Local Government Investment Pool. The State Treasurer's Office administers the Local Government Investment Pool (the "LGIP"), a $16.127 billion dollar fund that invests money on behalf of more than 540 local governments (as of May 2018). In its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to meet all cash flow demands. The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants increased safety of principal and the ability to achieve a higher investment yield than would otherwise be available to them. Although not regulated by the U.S. Securities and Exchange Commission (the "SEC"), the LGIP is invested in a manner generally consistent with the SEC guidelines for Rule 2a-7 money market funds; for example, currently it has a maximum weighted average maturity of 60 days and a maximum weighted average life of 120 days. The maximum final maturity is 397 days except for floating and variable -rate securities and securities that are used for repurchase agreements. The weighted average maturity of the LGIP generally ranges from 30 to 60 days. Investments permitted under the pool's guidelines include U.S. government and agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified State depositories. The City may withdraw funds in their entirety on less than 24 hours' notice. Authorized Investments for Bond Proceeds. In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less than four years; municipal securities rated in one of the four highest categories; and money market funds consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money market funds with portfolios of securities otherwise authorized by law for investment by local governments (RCW 39.59.030). Under the Bond Ordinance, any investment of Bond proceeds must be obtained at fair market value. The following table shows cash and investments for the City as of December 31, 2016 and December 31, 2017. Cash and Investments Cash, Banks, Savings and Loan Institutions LGIP Investments Non -Pool Investments (1) Total Cash and Investments Amount as of December 31, 2017 $ 28,984,659 48,269,306 24,083,115 $101,337,080 (i) Includes U.S. Treasury and U.S. Agency securities, bank notes and municipal bonds. Amount as of December 31, 2016 $43,362,731 43,001,758 7,147,342 $93,511,831 18 Historical General Fund Operating Results The General Fund financial information shown below was extracted from the City's audited annual financial statements for the fiscal years ending December 31, 2013 through 2017. Additional information that may interpret, clarify or modify the data presented below may be contained in the complete financial statements, including the accompanying notes. Statement of Revenues, Expenditures and Changes in Fund Balances General Fund Fiscal Years Ending December 31 Audited Audited Audited Audited Audited 2017 2016 2015 2014 2013 REVENUES Taxes $46,574,589 $45,886,761 $45,201,369 $42,219,026 $40,615,890 Licenses and permits 2,749,137 2,129,221 2,242,256 2,114,638 2,013,875 Intergovernmental revenues 4,690,257 4,498,683 4,626,463 5,307,861 4,719,583 Charges for services 3,046,606 3,286,105 2,896,446 2,553,690 2,202,307 Fines and forfeitures 325,216 318,459 261,457 264,934 242,638 Investment earnings 230,784 233,544 163,618 130,859 108,053 Miscellaneous 160,309 214,444 120,887 137,237 110,317 Total revenue $57,776,899 $56,567,217 $55,512,496 $52,728,245 $50,012,664 EXPENDITURES General Government $ 9,358,235 $ 8,315,631 $ 7,247,117 $ 7,146,956 (1) $ 9,266,330 Economic Environment 4,098,765 4,070,805 4,328,177 3,662,211 3,893,111 Physical Environment 1,733,400 1,955,028 1,919,306 1,789,658 1,766,087 Public Safety 29,968,635 29,100,506 28,973,651 27,204,740 25,650,155 Culture and Recreation 4,395,696 4,408,302 4,259,532 3,808,476 3,631,819 Transportation 3,026,013 2,879,996 2,820,022 2,605,602 2,759,506 Capital outlay 117,679 810,180 196,589 407,400 250,482 Total expenditures $52,698,423 $51,540,448 $49,744,394 $46,625,043 $47,217,490 Excess (deficiency) of revenue over $ 5,078,476 $ 5,026,769 $ 5,768,102 $ 6,103,202 $ 2,795,174 (under) expenditures OTHER FINANCING SOURCES (USES) Transfers In (2) $ 300,000 $ - $ 500,000 $ 1,000,000 $14,919,606 Transfers Out (3) (5,337,496) (4,325,831) (5,433,846) (6,900,080) (10,662,843) GO Bonds Issued - - 1,000,000 Proceeds from Sales of Capital Assets 1 - 7,441 5,493 Total Other Financing Sources and Uses $ (5,037,495) $ (4,325,831) $ (4,933,846) $ (5,892,639) $ 5,262,256 Net Change in Fund Balances $ 40,981 $ 700,938 $ 834,256 $ 210,563 $ 8,057,430 Fund Balances - Beginning $19,031,744 $18,330,806 $17,496,550 $17,285,986 $ 8,378,557 Change in Accounting Principle (4) - - 850,000 Fund Balances - Beginning as Restated 19,031,744 18,330,806 17,496,550 17,285,986 9,228,557 Fund Balances - Ending $19,072,725 $19,031,744 $18,330,806 $17,496,549 $17,285,986 (1) (2) (3) (4) 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. For the years 2013 and prior, Transfers In represents indirect cost allocation from proprietary funds. In 2013, Transfers In also includes $8.5 million reimbursement from Local Improvement District No. 33, and a transfer from the General Fund to the Contingency Fund. For 2014 and 2015, Transfers In represents transfers of unrestricted funds that can be used for General Fund purposes. 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. Through 2012, the City had loaned $850,000 to the MPD. With the implementation of Governmental Accounting Standards Board Statement 61 in 2013, the City was required to report the MPD as a "blended" component unit, and as such, the loan to the MPD was reclassified as an interfund loan rather than a General Fund expenditure, necessitating an adjustment for the change in accounting principle. As of December 31, 2015, the MPD was no longer a component unit of the City and the financial data associated with it was removed from the City's financial statements. Source: The City of Tukwila 19 Management Discussion of Fiscal Year 2017 Financial Results The City's General Fund balance increased by approximately $40,000 from December 31, 2016 to December 31, 2017. The City ended fiscal year 2017 with sales tax revenue approximately 6.0 percent under budget but within 0.5 percent of 2016 sales tax revenue. The City's 2017 building permit revenue was 38 percent above budget, and 49 percent higher than 2016. 2017 gambling tax revenue exceeded budget by 1.4 percent and outperformed 2016 by 5.2 percent. The General Fund expenditures were under budget by 4.3 percent in fiscal year 2017. Citywide governmental fund balances increased $5 million in 2017 due primarily to the issuance of debt of $8.1 million and funding of construction expenditures. In 2018, the largest capital expenditures are expected to occur in the Public Safety Plan Fund, representing site acquisition for a new justice center and relocation of a fire station. These expenditures will be funded primarily from proceeds of the City's Unlimited Tax General Obligation Bonds, 2016. See APPENDIX B—"2017 AUDITED FINANCIAL STATEMENTS." General Fund Budgets The City has elected to prepare and use biennial budgets, as provided in State law. Adopted Budgets for the General Fund, for the years 2017 and 2018 are shown below and do not include any budget amendments. 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. (I) General Fund Budget For the Period January 1, 2017 through December 31, 2018 2017 2018 Adopted Budget Adopted Budget REVENUES Taxes $47,803,644 $49,073,331 Licenses and Permits 2,278,940 2,347,090 Intergovernmental 4,475,160 4,393,530 Charges for Services 2,821,177 2,847,080 Fines and Forfeits 254,129 254,129 Miscellaneous 1,030,083 1,043,084 Other Financing Sources 4,079,058 8,375,643 Total Revenue $62,742,191 $68,333,887 EXPENDITURES Salaries and Wages $30,496,507 $30,988,318 Personnel Benefits 11,030,151 11,628,711 Supplies 1,286,641 1,285,322 Other Services and Charges 11,350,783 11,505,008 Intergovernmental Services 3,003,797 3,191,124 Capital Outlay 234,000 30,000 Transfers Out 5,237,691 9,539,621 Total Expenditure $62,639,570 $68,168,104 Net Increase (Decrease) in Fund Balance $ 102,621 $ 165,783 Beginning Fund Balance (1) $11,500,000 $11,602,621 Ending Fund Balance(1) $11,602,621 $11,768,404 The 2018 budgeted beginning balance is based on the 2017 ending fund balances as estimated at the time of budget development. 20 THE CITY The City was incorporated in 1908 and now is a non -charter code city, organized under Title 35A RCW. The City provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities and cultural events. The City provides sewer, water and surface water services and has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail and 911 dispatch services to the City. City residents receive library services from the King County Rural Library District. In addition, the City operates an equipment maintenance/rental fund and an 18-hole municipal golf course. Governance The City operates under a Mayor -Council form of government, with the Mayor and seven -member Council elected by the voters of the City for four-year terms. Council members are elected at large. The Mayor appoints the City Administrator who serves as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and Council. The Council is responsible for, among other things, passing ordinances and resolutions, adopting the budget, and adopting general policies and goals for the City. The Council holds regular meetings two times a month and special meetings as needed. All meetings are open to the public as provided by law and agenda items are prepared in advance. The following are the Mayor and members of the City Council. Elected Official Position Initially Elected Current Term Expires Allan Ekberg Mayor November 2015 December 31, 2019 Verna Seal Council President November 2005 December 31, 2021 Kathy Hougardy Council Member November 2007 December 31, 2019 Zak Idan Council Member November 2017 December 31, 2021 Kate Kruller Council Member November 2011 December 31, 2019 Thomas McLeod Council Member November 2015 December 31, 2021 De"Sean Quinn Council Member November 2008 (1) December 31, 2021 Dennis Robertson Council Member November 1987 (2) December 31, 2019 Council Member Quinn was first appointed in to the position in 2008 and won election to his first full term in November 2009. 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 23 years of public service, including economic development, long-range financial planning, capital planning and financing, community consensus building and managing municipal departments. He is a Board Member of Washington City/County Manger's Association and serves on the State LEOFF 2 Retirement Board. Mr. Cline holds a Bachelor of Arts in Public Policy from Stanford University with Honors and Distinction and is credentialed by the International City/County Management Association. Peggy McCarthy, Finance Director. Ms. McCarthy was hired as the City's Deputy Finance Director in November 2008 and has been serving as the Finance Director since 2011. Prior to joining the City, Ms. McCarthy was the Financial Reporting Manager for the King County Housing Authority. Ms. McCarthy's experience includes over 18 years in municipal finance, as well as industry experience with a Fortune 500 company, and public accounting experience at Deloitte. Ms. McCarthy holds a Bachelor Degree in Business Administration from Washington State University and graduated Summa Cum Laude with Honors. 21 Employees and Bargaining Groups The number of full-time equivalent City employees for the years 2013 through 2017 are shown below. Full -Time Year Equivalent 2017 350.60 2016 344.60 2015 343.10 2014 332.48 2013 330.38 Source: The City Certain City employees are represented by one of five bargaining groups, and the City enters into written bargaining agreements with each bargaining group. The City negotiates labor contracts through a management team with support from a consultant. The following provides information on unions and bargaining groups representing City employees as of April 2018. The City considers its relations with all employees and bargaining units to be good. Employees/Department Number of Contract Union or Bargaining Group Represented Employees Expires Admin, Clerical, Maintenance, Supervisory, Senior Program Teamsters Managers 152 12/31/2018 International Association of Firefighters Firefighters 62 12/31/2016 (1) Police Guild Police 69 12/31/2018 United Steelworkers Police Non -Commissioned Officers 13 12/31/2018 Tukwila Police Commanders Police Commanders 4 12/31/2016 (1) Association Total 300 (1) The International Association of Firefighters union and Tukwila Police Commanders and the City are in mediation. Source: The City of Tukwila Pension Plans Introduction. Substantially all City full-time and qualifying part-time employees are eligible for participation in one of the following statewide cost -sharing multiple -employer plans administered by the State's Department of Retirement Systems ("DRS"): Public Employees Retirement System ("PERS") Plans 1, 2 and 3; the Public Safety Employees Retirement System ("PSERS") Plan 2; and the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF") Plans 1 and 2. The State Legislature establishes, and from time to time amends, laws pertaining to the creation and administration of these public retirement systems; however, employees are contractually entitled to receive plan benefits. The information in this section has been obtained from the City's financial statements and information on the websites of DRS and of the Office of the State Actuary (the "State Actuary"), a nonpartisan legislative agency charged with advising the Legislature and Governor on pension benefits and funding policy. DRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for each plan. The DRS Comprehensive Annual Financial Report ("DRS CAFR") may be obtained from the DRS website at www.drs.wa.gov. In addition to the State sponsored pension plans that the City participates in, the City also administers one local single employer defined benefit pension plan for pre-LEOFF fire retirees. LEOFF Plan 1 participants who joined prior to and were active on March 1, 1970 are entitled to the greater of the benefits under LEOFF Plan 1 or the Fire Pension Fund maintained by the City. This local plan is described below under "City Administered Firefighters' Pension Plan." 22 State Sponsored Plan Descriptions. All PERS, PSERS and LEOFF plans provide retirement, disability and death benefits. Plans 1 and 2 (both PERS and LEOFF) are defined benefit plans. PERS Plan 3 is a hybrid defined benefit/defined contribution plan in which the employer contributes to the defined benefit portion and the employee contributes to the defined contribution portion. Contributions by both employees and employers are based on gross wages. PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. Those PERS participants who joined on or after October 1, 1977, are Plan 2 members, unless they exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002, have the irrevocable option of choosing membership in PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977, are Plan 2 members. PSERS Plan 2 is a defined benefit plan. Benefits provided by each plan are based on a percentage of the member's average final compensation ("AFC"), multiplied by years of service. The percentages and methods for calculating AFC vary among the plans, as do vesting and retirement eligibility (age and years of service) requirements. Additional detail about each Plan is available in the DRS CAFR and in Note 9 to the City's Annual Financial Statements, attached as Appendix B. Contribution Rates and Amounts. Under State statute, contribution rates are adopted by the Pension Funding Council ("PFC") and, for LEOFF Plan 2, by the LEOFF Plan 2 Retirement Board (the "LEOFF 2 Board"), in even -numbered years for the next ensuing State biennium, which runs for a two year period beginning on July 1 and ending on June 30. The rate -setting process begins with an actuarial valuation by the State Actuary, who makes non -binding recommendations to the State Legislature's Select Committee on Pension Policy, which then recommends contribution rates to the PFC and the LEOFF 2 Board. No later than the end of July in even -numbered years, the PFC and LEOFF 2 Board adopt contribution rates, which are subject to revision by the Legislature. The City's total contribution for the year ended December 31, 2017, was $2,762,214, which was made up of $1,902,973 to PERS, $15,143 to PSERS and $844,098 to LEOFF. For additional information see Note 9 to the City's Annual Financial Statements attached as Appendix B. The following table outlines the current contribution rates of employees and employers in the State Biennium ending June 30, 2019. While the City's contributions in fiscal year 2017 represented its full statutorily required contribution under the PERS, PSERS and LEOFF, any unfunded pension benefit obligations within the systems could be reflected in future years as higher contribution rates. Employer and Employee Pension Contribution Rates 2017-19 Biennium (1) Employee Employer (2) PERS Plan 1 6.00%(3) 12.70% Plan 2 7.38 12.70 Plan 3 Variable@) 12.70 PSERS Plan 2 6.74 (5) 11.95 (5) LEOFF Plan 1 Plan 2 0.00% 0.18% 8.75 5.43 (6) Rates shown for 2017-2019 are those that have been adopted by the PFC and the LEOFF 2 Board, respectively. Rates shown for 2017-2019 are based on the 2015 Actuarial Valuation Report, using a long-term investment rate of return assumption of 7.70% for PERS and 7.50% for LEOFF. Includes 0.18% DRS administrative expense rate. Rate statutorily set at 6.0%. Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. Effective September 1, 2017. Between July 1, 2017 and August 31, 2017, contribution rates to PSERS Plan 2 were 6.73% for employees and 11.94% for employers. The State makes an additional contribution of 3.50% of each participating employer's covered payroll. Source: Office of the State Actuary Rates shown above for the 2017-19 Biennium are adopted by the PFC and LEOFF 2 Board. Projected contribution rates have been prepared by the State Actuary for the 2019-2021 Biennium, projecting a need for increases to contribution rates for PERS plans and no increases for LEOFF plans. In addition, the State Legislature has established certain minimum contribution rates (the "UAAL Rate") 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. In the 2017-19 Biennium, the UAAL Rate for all PERS and PSERS Plans is 5.03% and is included in the employer contribution rate shown above. These rates are subject to change by future legislation enacted by the State Legislature to address future changes in actuarial and economic assumptions and investment performance. 23 Actuarial Valuation Methods and Assumptions. State law requires systematic actuarial funding to finance the ongoing cost of the State retirement systems. Actuarial calculations to determine the sufficiency of employer and employee contributions are prepared by the State Actuary. To calculate employer and employee contribution rates necessary to prefund the plans' benefits, the State Actuary uses actuarial cost and asset valuation methods selected by the Legislature as well as economic and demographic assumptions. The State Actuary uses the Entry Age Normal ("EAN") cost method to report each Plan's funded status. The annual cost of benefits under EAN is comprised of two components: normal cost, plus amortization of the unfunded liability. The normal cost is most commonly determined on an individual basis, from a member's age at plan entry, and is designed to be a level percentage of pay throughout a member's career. Comparing the EAN liabilities to the actuarial value of assets ("AVA") on the valuation date provides an appropriate measure of a plan's funded status and is acceptable according to current Governmental Accounting Standards Board ("GASB") Statements 67 and 68. For purposes of determining the actuarial accrued liability of each plan and the unfunded portion thereof, the State Actuary uses actuarial cost and asset valuation methods determined by the Legislature, which requirements differ from plan to plan. For purposes of calculating contribution rates the Legislature determines the long-term assumed rate of investment return to be used by the State Actuary, which was reduced in 2015 to 7.70% (from 7.80%) for all plans except the LEOFF Plan 2, which remains at 7.50%. The State Actuary further assumes a salary growth rate of 3.75% per year, an inflation rate of 3.00% per year and a plan membership growth rate of 0.95% per year. Plan Funding Status and Unfunded Actuarial Liability. All DRS administered retirement plans are funded by a combination of funding sources: (i) contributions from the State; (ii) contributions from employers (including the State as employer and the City and other governmental employers); (iii) contributions from employees; and (iv) investment returns. The retirement funds (the "Commingled Trust Fund" or "CTF") are invested by the Washington State Investment Board, a 15-member board created by the Legislature in 1981. The average annualized return on the investment of the CTF for the 10-year period from July 1, 2007 through June 30, 2017 was 5.47%. PERS Plans 2 and 3 are accounted for in the same pension trust fund and may legally be used to pay the defined benefits of any PERS Plan 2 or 3 participant. Otherwise, assets for one plan may not be used to fund benefits for another plan; however, all employers in PERS Plan 2 and 3 and PSERS Plan 2 are required to make contributions at rates determined by the State Actuary every two years for the purpose of amortizing within a rolling 10-year period the unfunded actuarial accrued liability in PERS Plan 1. The State's Actuary August 2017 actuarial valuation, as of June 30, 2016, was as follows: Funded Status on an Actuarial Value Basis (1) ($ millions) Unfunded Actuarial Actuarial Actuarial Accrued Value of Accrued Plan Liability Assets Liability/(Surplus) Funded Ratio PERS Plan 1 $12,323 $ 6,958 $5,365 56% PERS Plans 2/3 34,759 30,262 4,497 87 PSERS Plan 2 425 402 24 94 LEOFF Plan 1 4,197 5,275 (1,078) 126 LEOFF Plan 2 9,571 10,021 (450) 105 a) As of June 30, 2016, the most recent actuarial valuation date. Liabilities valued using the EAN cost method at an interest rate of 7.7% (7.5% for LEOFF2). All assets valued under the actuarial asset method. Source: Office of State Actuary, 2016 Actuarial Valuation (August 2017) GASB 67/68 Reporting. GASB Statement 68, Accounting and Financial Reporting for Pensions ("GASB 68") became effective for the City for the year ended December 31, 2015. Among the changes imposed by GASB 68 are that lower discount rates are required to be used for underfunded plans in certain cases and the difference between expected and actual investment returns each year will be recognized over a closed five-year smoothing period. GASB 68 also requires employers that participate in the State sponsored plans to report their proportionate share of Net Pension Liability, Deferred Inflows of Resources, Deferred Outflows of Resources, and Pension Expense for the State plans. DRS determines each participating employer's proportionate share of overall plan liability and the State Actuary determines each plan's accounting valuation. GASB 68 affects the accounting for pensions, but does not change the funding status of the plans calculated by State Actuary or pension contribution rates that are set based on statutory assumptions. 24 Total Pension Liability Fiduciary Net Position Net Pension Liability (Asset) FNP as % of TPL City Proportionate Share of Net Pension Liability (Asset) City Proportionate Share u) PERS 1 $12,241,998 (7,496,920) $ 4,745,078 61.24% Schedule of Net Pension Liability (1) ($ thousands) PERS 2/3 $38,475,325 (35,000,803) $ 3,474,522 90.97% 0.127058% 0.161787% $ 6,029 $ 5,621 PSERS 2 $523,270 (503,677) $ 19,593 96.26% LEOFF 1 $ 4,219,277 (5,736,797) $(1,517,220) 136.0% LEOFF 2 $10,388,451 (11,776,127) $ (1,387,676) 113.4% 0.045565% 0.082086% 0.503269% $ 9 $ (1,245) $ (6,984) As of June 30, 2017. The Total Pension Liability and Net Pension Liability for the State fiscal year ended June 30, 2017 were determined based on the Actuarial Valuation (as of June 30, 2016), with the results rolled forward to June 30, 2017. The following actuarial assumptions were used and were applied to all prior periods included in the measurement: 3.0% total economic inflation, 3.75E salary inflation (plus growth by promotions and longevity) and 7.50% rate of investment returns. Source: 2017 DRS CAFR and DRS Participating Employer Financial Information for the fiscal year ended June 30, 2017 The actuarial assumptions used in the 2016 Actuarial Valuation report were based on the results of the State Actuary's 2007-2012 Experience Study Report and the 2015 Economic Experience Study. Additional assumptions for subsequent events and law changes were current as of the 2015 Actuarial Valuation report. The long-term investment return assumption is used as the discount rate for determining the liabilities for each Plan. The following table represents the aggregate pension amounts for all City -administered plans subject to the requirements of GASB 68 for the year ended December 31, 2017. City of Tukwila — Aggregate Pension Amounts — All Plans Pension Liabilities $(11,613,653) Pension Assets 8,229,168 Deferred Outflows of Resources 2,475,258 Deferred Inflows of Resources (4,284,751) Pension Expense/Expenditures 798,890 Source: The City of Tukwila audited financial statements for 2017 City Administered Firefighters' Pension Plan. The City administers the Firefighters' Pension Plan, which is a closed, single -employer, defined benefit pension plan that was established in conformance with chapter 41.18 RCW. This plan provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. Membership is limited to fire fighters employed prior to May 1, 1970 when the LEOFF retirement system was established. The City currently has 10 inactive members receiving benefits through this Plan, and the City contributed $66,360 to the plan in 2016. Under State law, the Firefighters' Pension Plan is provided an allocation of all monies received by the State from taxes on fire insurance premiums, interest earnings, member contributions made prior to the inception of LEOFF and City contributions required to meet projected future pension obligations. An actuarial valuation was completed by Healthcare Actuaries as of December 31, 2017, with a net pension liability of $45,601, and a plan fiduciary net position of $1,460,563 for a funded ratio of 103.22 percent. Additional information about the Fire Pension plan is available in the City's Annual Financial Statements attached as Appendix B. Other Post -Employment Benefits City -funded other post -employment benefits ("OPEB") consists of certain medical and disability benefits to retired firefighters and police officers who were hired prior to 1978 as required by RCW 41.26.150. Entry into this system is now closed. As of December 31, 2017, 35 retirees were eligible for OPEB from the City. Because its OPEB plan is not pre -funded on an actuarial basis, the City funds OPEB on a pay-as-you-go basis from its fund balance or other available sources. The City's annual contribution to the cost of OPEB was $477,292 in 2015 $275,530 in 2016 and $943,150 in 2017. In accordance with the GASB standard concerning Accounting and Financial Reporting by Employers for Post - Employment Benefits Other than Pensions ("GASB 45"), the City prepares an actuarial valuation of its OPEB plan. As of January 1, 2017, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $29.1 million and the OPEB plan had a funded ratio of zero percent. Additional information about the City's OPEB plan is available in the City's CAFR, Note 9, which was prepared in accordance with GASB 45. 25 Risk Management The City is a member of the Washington Cities Insurance Authority ("WCIA"). Utilizing chapter 48.62 RCW (self- insurance regulation) and chapter 39.34 RCW (the Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self -insuring, and/or jointly contracting for risk management services. As of December 31, 2017, WCIA has a total of 161 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 $21 million per occurrence in the re -insured layer excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $25 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 coverage is self -funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self -funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, claims and litigation administration. WCIA contracts for certain claims investigation, consultants for personnel and land use issues, insurance brokerage, actuarial and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A board of directors governs WCIA, which is comprised of one designated representative from each member. The board elects an executive committee and appoints a treasurer to provide general policy direction for the 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 has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self -insures for unemployment benefits. This is budgeted each year and City paid $15,077 in unemployment in 2017. This expense is budgeted in the Finance Department within the General Fund, Foster Golf Course and enterprise fund. 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 Symetra, which provides an individual limit of $175,000. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported ("IBNR") and a contingency reserve equal to 2.5 times the IBNR reserve. 26 The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 52.6 days for medical, 21.6 days for pharmacy, 31.6 days for dental, and 45.9 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of May 31, 2017. Next, the estimated IBNR liability as of December 31, 2017 was developed by trending the May 31, 2017 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. GENERAL AND ECONOMIC INFORMATION General The City is located in King County, Washington approximately 12 miles south of the downtown area of the City of Seattle and 17 miles north of the City of Tacoma, at the intersection of Interstates 5 and 405. The City is adjacent to the western city limits of the City of Renton and the eastern city limits of the City of SeaTac and is one mile east of the Seattle -Tacoma International Airport. The City encompasses nine square miles and is home to a major regional shopping center (Westfield Southcenter). Population Historical and current population figures for the City and the County are provided below. Population Year The City King County 2018 19,800 2,190,200 2017 19,660 2,153,700 2016 19,540 2,105,100 2015 19,300 2,052,800 2014 19,210 2,017,250 Source: Washington State Office of Financial Management Economic Indicators for the City and the County The following tables present historical information on certain major economic indicators for the City and the County. City of Tukwila Major Employers, as of December 2017 Employer Type of Business Employees (FTE) Boeing Company Aerospace 4,644 Macy's Department Store 877 King County Metro Transit Operating Base 806 Boeing Employees Credit Union Banking/Credit Union 658 Nordstrom Department Store 616 Hat Club LLC Clothing Accessories 586 Zonar Systems Inc. Miscellaneous Store 409 United Parcel Service Postal Delivery Service 388 Costco Wholesale Cash/Carry Warehouse 362 Cheesecake Factory Full -Service Restaurant 340 Source: The City of Tukwila Finance Department — Business Licenses 27 Civilian Labor Force and Employment Annual Average Feb 2018 Feb 2017 2017 2016 2015 2014 2013 King County Civilian Labor Force 1,272,915 1,233,709 1,231,276 1,208,334 1,178,606 1,160,967 1,138,720 Employment 1,225,543 1,193,452 1,187,646 1,160,734 1,128,497 1,106,769 1,081,827 Unemployment 47,372 40,257 43,630 47,600 50,109 54,198 56,893 Unemployment Rate 3.7% 3.3% 3.5% 3.9% 4.3% 4.7% 5.0% Washington State Civilian Labor Force 3,763,800 3,685,135 3,724,722 3,685,135 3,545,904 3,489,666 3,463,869 Employment 3,564,501 3,486,712 3,547,430 3,444,126 3,345,496 3,275,753 3,219,842 Unemployment 199,299 198,423 177,292 191,074 200,408 213,913 244,027 Unemployment Rate 5.3% 5.4% 4.8% 5.3% 5.7% 6.1% 7.0% Source: Bureau of Labor Statistics Taxable Retail Sales King County City Taxable Year Taxable Retail Sales Retail Sales 2017 $65,826,124,662 $2,114,786,442 2016 62,235,630,017 2,128,200,205 2015 57,615,757,451 2,174,715,850 2014 52,335,343,480 1,929,431,815 2013 48,553,937,856 1,846,436,835 Source: Washington State Department of Revenue Per Capita Personal Income Seattle -Tacoma -Bellevue King State of Year Metropolitan Area County Washington National 2016 N/A N/A $53,493 $49,571 2015 $61,021 $72,530 51,971 48,190 2014 59,449 70,854 50,421 46,464 2013 55,908 66,016 47,814 44,493 2012 55,201 65,331 47,338 44,282 2011 50,724 58,685 44,202 42,461 Source: U.S. Department of Commerce Bureau of Economic Analysis City Building Permit Statistics Residential Commercial (1) Year Number of Value of Number of Value of Permits Permits Permits Permits 2018 (1) 45 $ 7,530,763 878 $ 84,215,082 2017 98 18,103,138 1,652 104,143,909 2016 84 13,622,432 1,779 80,071,224 2015 71 13,121,808 1,618 176,915,972 2014 104 8,226,593 1,866 83,077,607 2013 106 19,499,672 1,993 76,909,102 Information is through June 2018. Source: The City of Tukwila 28 TAX MATTERS General In the opinion of Bond Counsel, under existing law and subject to certain qualifications described below, interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. The proposed form of opinion of Bond Counsel with respect to the Bonds to be delivered on the date of issuance of the Bonds set forth in Appendix A. The Code contains a number of requirements that apply to the Bonds, and the City has made certain representations and has covenanted to comply with each such requirement. Bond Counsel's opinion assumes the accuracy of the representations made by the City and is subject to the condition that the City comply with the above -referenced covenants. If the City fails to comply with such covenants or if the City's representations are inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated herein, Bond Counsel expresses no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds Original Issue Premium and Discount If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes. De minimis original issue discount and original issue premium is disregarded. Under the Code, original issue discount is treated as interest excluded from federal gross income to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes. Under the Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to federal income tax consequences of owning such Bonds. Post Issuance Matters The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. 29 Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City and its appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the City or the Owners to incur significant expense. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Bank Qualified The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code. CONTINUING DISCLOSURE UNDERTAKING Pursuant to a certificate to be executed by the City on or prior to the date of issuance and delivery of the Bonds (a "Continuing Disclosure Certificate"), the City will covenant for the benefit of the owners and the "Beneficial Owners" (as defined in the Continuing Disclosure Certificate) of the Bonds pursuant to Securities and Exchange Commission Rule 15c2-12 to provide certain financial information and operating data not later than the end of nine months after the end of each of the City's fiscal years (presently, December 31), commencing with the report for the fiscal year ended December 31, 2018, and to provide notices of the occurrence of certain enumerated events with respect to the Bonds. The information will be filed by or on behalf of the City with the Municipal Securities Rulemaking Board ("MSRB") through its Electronic Municipal Market Access ("EMMA") system. See Appendix D for a form of the Continuing Disclosure Certificate. Compliance With Continuing Disclosure Obligations. The City has entered into certain written undertakings under the Rule in connection with the issuance of certain of its outstanding obligations (the "Prior Undertakings"). With the exceptions noted below, the City believes that in the past five years it has complied in all material respects with its Prior Undertakings. The City notes certain exceptions to the foregoing statement as follows: • Under continuing disclosure agreements relating to the City's then outstanding water and sewer system revenue bonds, the City failed to timely file certain utility customer statistics for the water and sewer system revenue bonds for fiscal years 2012 and 2013. The general customer statistics and a notice of failure to file have since been filed on EMMA. The City no longer has any outstanding water and sewer revenue bonds which are subject to a Prior Undertaking. • The City was an obligated party with respect to the Valley Communications Center Development Authority Refunding Bonds, 2010 (the "Valley Com Bonds"). The City filed its audited financial statements for fiscal 2012 on EMMA on time. However, the City failed to link that filing to the CUSIPs for the Valley Com Bonds. The audited financial statements have since been linked to the Valley Com Bond CUSIPs, which are no longer outstanding. • The City is an obligated party with respect to the SCORE Bonds. See notes to table titled "Outstanding General Obligation Debt" under "GENERAL OBLIGATION DEBT" above. In several of the past five years, City financial information was not linked to the SCORE Bond CUSIPs in a timely manner. However, under the continuing disclosure agreement, the City's obligation consisted of providing timely financial information to SCORE, which was responsible for disseminating this information. The City believes that in the past five years it has complied in all material respects with its obligation under its continuing disclosure agreement with respect to the SCORE Bonds. 30 CERTAIN INVESTMENT CONSIDERATIONS Initiative and Referendum State Initiative and Referendum. Under the State Constitution, the voters of the State have the ability to initiate legislation and require the State Legislature to refer legislation to the voters through the power of initiative and referendum, respectively. The initiative power in the State may not be used to amend the State Constitution. Initiatives and referenda are submitted to the voters upon receipt of petitions signed by at least eight percent (initiatives) and four percent (referenda) of the number of voters registered and voting for the office of Governor at the preceding regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or repealed by the State Legislature within a period of two years following enactment, except by a vote of two—thirds of all the members elected to each house of the State Legislature. After two years, the law is subject to amendment or repeal by the State Legislature in the same manner as other laws. In recent years there has been an increase in the number of initiatives and referenda filed in the State, including initiatives affecting the powers of local jurisdictions. The City cannot predict whether this trend will continue, whether any filed initiatives will receive the requisite signatures to be certified to the ballot, and whether such initiatives will be approved by the voters and, if challenged, upheld by the courts. Local Initiative and Referendum. The City Municipal Code provides for local initiatives and referenda as provided for in RCW 35A.11.080, as it may be amended from time to time. Under the City Municipal Code, City voters may initiate local legislation and Code amendments, and modify existing legislation, through powers of initiative and referendum. The City cannot predict when or if any such measures would be filed, or what the subject or effect of any such potential measure may be. Under State law, the Bond Ordinance may not be a proper subject for a referendum petition. Nevertheless, the referendum period relating to the Bond Ordinance will have expired and the Bond Ordinance has become effective. As of the date of this Preliminary Official Statement, no referendum petition has been filed. Limitations on Remedies Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Bond Ordinance are in many respects dependent upon judicial actions, which are in turn often subject to discretion and delay and could be both expensive and time consuming to obtain. If the City fails to comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Bonds. In addition to the limitations on remedies contained in the Bond Ordinance, the rights and obligations under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws relating to or affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. The opinion to be delivered by Pacifica Law Group LLP, as Bond Counsel, concurrently with the issuance of the Bonds, will be subject to limitations regarding bankruptcy, insolvency and other laws relating to or affecting creditors' rights. A copy of the form of legal opinion of Bond Counsel is set forth in Appendix A. No Acceleration The Bonds are not subject to acceleration upon the occurrence of a default. The City is liable for principal and interest payments only as they become due. In the event of multiple defaults in payment of principal of or interest on the Bonds, the registered owners would be required to bring a separate action for each such payment not made. This could give rise to a difference in interests between registered owners of earlier and later maturing Bonds. Bankruptcy Under current State law, local governments, such as the City, may be able to file for bankruptcy under Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code"). A creditor, however, cannot bring an involuntary bankruptcy proceeding against a municipality, including the City. The federal bankruptcy courts have broad discretionary powers under the Bankruptcy Code. Taxing districts in the State are expressly authorized to carry out a plan of readjustment if approved by the appropriate court. If the City were to become a debtor in a federal bankruptcy case, owners of the Bonds may not be able to exercise any of their remedies under the Bond Ordinance during the course of a proceeding. Legal proceedings to resolve issues could be time-consuming and expensive, and substantial delays and/or reductions in payments could result. 31 RATING As noted on the cover page of this Official Statement, the Bonds have been rated "AA" by S&P Global Ratings ("S&P"). The rating reflects only the view of the rating agency and an explanation of the significance of the rating may be obtained from S&P. There is no assurance that the rating will be retained for any given period of time or that it will not be revised downward, suspended or withdrawn entirely by the rating agency if, in the judgment of the agency, circumstances so warrant. Any such downward revision or withdrawal of the rating would likely have an adverse effect on the market price of the Bonds. The City does not have any obligation to take any action, other than file a listed event notification, if the rating on the Bonds is changed, suspended or withdrawn. LITIGATION There is no litigation pending or threatened questioning the validity of the Bonds or the power and authority of the City to issue the Bonds. There is no litigation pending or threatened which would materially affect the City's ability to meet debt service requirements on the Bonds. Because of the nature of its activities, the City is subject to certain pending legal actions which arise in the ordinary course of business. Based on the information presently known, the City believes that the ultimate liability for any of such legal actions will not be material to the financial position of the City. The City 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. APPROVAL OF COUNSEL Legal matters incident to the authorization, execution and delivery of the Bonds are subject to the unqualified approving legal opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel. The form of the opinion is included in Appendix A of this Official Statement. Bond Counsel has not been retained to review and has not reviewed this Official Statement for completeness or accuracy and will not offer an opinion concerning this Official Statement. FINANCIAL ADVISOR PFM Financial Advisors LLC has served as Financial Advisor to the City relative to the preparation of the Bonds for sale, timing of the sale and other factors relating to the Bonds. The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in this Official Statement or other information provided relative to the Bonds. PFM Financial Advisors LLC makes no guaranty, warranty or other representation on any matter related to the information contained in the Official Statement. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, marketing, trading or distributing municipal securities. UNDERWRITING The Bonds are being purchased by (the "Underwriter"), at a price of $ . The Bonds will be re -offered at a price of $ . The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the initial offering prices set forth on the inside cover hereof, and such initial offering prices may be changed from time to time by the Underwriter. CONFLICTS OF INTEREST Some or all of the fees of the Financial Advisor and Bond Counsel are contingent upon the issuance and sale of the Bonds. None of the members of the City Council or other officers of the City have interests in the issuance of the Bonds that are prohibited by applicable law. 32 OFFICIAL STATEMENT At the time of delivery of the Bonds, one or more officials of the City will furnish a certificate stating that to the best of his, her or their knowledge this Official Statement, as of its date and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance, if any, or other credit facility). The execution and distribution of this Official Statement have been authorized by the City. CITY OF TUKWILA, WASHINGTON By: Peggy McCarthy, Finance Director 33 APPENDIX A FORM OF LEGAL OPINION [Date] City of Tukwila Tukwila, Washington [Underwriter] [City, State] Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 - $ Ladies and Gentlemen: We have acted as bond counsel to the City of Tukwila, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bonds, 2018 (the "Bonds"), dated as of the date hereof, in the aggregate principal amount of $ , issued pursuant to City Ordinance No. 2559 passed on December 4, 2017, as amended (the "Bond Ordinance") for the purpose of providing funds to pay or reimburse the City for costs of acquiring certain parcels of land and constructing, improving and equipping maintenance and other City facilities, and to pay the costs of issuance of the Bonds. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Official Statement prepared in connection with the issuance of the Bonds. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts that, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. A-1 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. The opinion set forth in the preceding sentence is subject to the condition that the City must comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated above, we express no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PACIFICA LAW GROUP LLP A-2 City of Tukwila, Washington STRATEGIC GOALS AND OBJECTIVES © A community of inviting neighborhoods and vibrant business districts + Cultivate community ownership of shared spaces. + Build a broad and collaborative approach to preventing crime and increasing the sense of safety. + Focus City planning and investments on creating a connected, dynamic urban environment. + Use City efforts and investments to realize established visions for specific sub -areas. © Asolid foundation for all Tukwila residents + Partner with organizations that help meet the basic needs of all residents. + Strive for excellent education, vocational supports, and personal growth opportunities through effective partnerships and City services. + Encourage maintenance, improvements and diversity in the City's housing stock. © A diverse and regionally competitive economy + Embrace the City's economic potential and strengthen the City's role as a regional business and employment center. ♦ Strengthen the City's engagement and partnership with the business community. flA high -performing and effective organization + Use Tukwila's Vision, Mission, and Strategic Plan to focus and prioritize City efforts. ♦ Advance Tukwila's interests through participation in regional partnerships. + Continue to develop as an organization and support individual growth. + Ensure City facilities are safe, efficient and inviting to the public. + Ensure the long-term fiscal sustainability of the City. © A positive community identity and image + Improve the City's ability to build trust and work with all members of the Tukwila community. + Facilitate connections among Tukwila's communities. + Promote a positive identity and image of Tukwila. 2017 AUDITED FINANCIAL STATEMENTS 8 XICIN3ddV The City of Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2017 Prepared by the City of Tukwila, Finance Department Peggy McCarthy, Finance Director Allan Ekberg, MAYOR TUKWILA CITY COUNCIL Verna Seal, Council President Dennis Robertson De'Sean Quinn Thomas McLeod Kathy Hougardy Kate Kruller Zak Idan CITY OF TUKWILA'. 2017 CAFR TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2017 TABLE OF CONTENTS I. INTRODUCTORY SECTION Administrative Organizational Structure, Principal Officials, and Council Committees ......... ................. Letterof Transmittal.......... ..... _. _._......_.........._....................... _. ............. ............... Certificate of Achievement __....._ ....__ _._._.__..... ................ II. FINANCIAL SECTION Auditor's Report. _... ............ ........... _.._............................... _....... ................. Management's Discussion and Analysis . ..................... _.... _. _.._............... Basic Financial Statements Government -wide Financial Statements: Statement of Net Position .... Statement of Activities. _...................... ........... _.. _........... Fund Financial Statements: Balance Sheet — Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position__ .......... ..... .......... ....................... Statement of Revenues, Expenditures, and Changes in Fund Balance — Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................... 36 Statement of Net Position — Proprietary Funds........ ........_................................. __............ 37 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds................................................................................... Statement of Cash Flows — Proprietary Funds Statement of Fiduciary Net Position — Fiduciary Fund. Statement of Changes in Fiduciary Net Position — Fiduciary Fund... Notes to the Financial Statements..... ....... ............_ Required Supplemental Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual General Fund.......... ..... ........... ............... ................... ....... ......... ....... ....... 103 Notes to the Required Supplementary Information.............. ....... ........ ..... ......_.............. 104 Firemen's Pension Trust Fund............ _... _..._ __................. ...._......... _...... _............. _.. 107 Retiree Medical and Long -Term Care Benefits for LEOFF I Employees ......... 110 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet — Non -Major Governmental Funds 113 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Governmental Funds114 Combining Balance Sheet — Non -Major Special Revenue Funds.. .................. 115 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Special Revenue Funds _.... ... _... _. _._. ..._. 116 38 39 41 42 43 CITY OF TUKWILA: 2017 CAFR TABLE OF CONTENTS TABLE OF CONTENTS - continued Page Combining Balance Sheet — Non -Major Debt Service Funds.. _. _........ ............... . _.................... 117 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Debt Service Funds ............ .................. _. _.....,.... _. _............. 118 Combining Balance Sheet — Non -Major Capital Project Funds... ... _. _. _.......................... ..... 119 Page Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Capital Project Funds 120 Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: 1 Arterial Street Capital Project Fund..............................._...._._....._...................._121 3 Local Improvement District #33 Debt Service Fund_. _.._ ..................................._._122 9 Public Safety Plan Capital Project Fund.. ......_123 .............. Hotel/Motel Special Revenue Fund.. ......... .. ...... .... ..... ... ................... ........................ ...... 124 Drug Seizure Special Revenue Fund..................._............_._.................................._125 Residential Street Capital Project Fund.......... ......... ..... ......_..._._.............. _................._. 126 11 Land & Park Acquisition Capital Project Fund ......................_...._...... _.........................._. 127 15 Facilities Urban Renewal Capital Project Fund........................._....._................._._............. 128 General Government Improvements Capital Project Fund....._ 129 Fire Improvements Capital Project Fund ..................... _. _............................ ................ _ _130 31 City Facilities Capital Project Fund......... _. _.. _......................................... _............. ......... 131 32 Special Assessment Bonds Guaranty Funds 132 Unlimited Tax General Obligation Debt Service Fund........ _..... _....... _............................ __. 133 33 Debt Service Fund ................. _......................... _.......... _.... _.... _........................... _.. _. 134 Combining Statements of Net Position — Internal Service Funds...... _....._._ 136 34 Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds... _........._ ....................... _._................................. 137 35 Combining Statement of Cash Flows — Internal Service Funds...... 138 Statement of Changes in Assets and Liabilities — Agency Fund............ 140 III. STATISTICAL SECTION Schedule Net Position by Component 1 Changes in Net Position 2 Fund Balances, Governmental Funds 3 Changes in Fund Balances of Governmental Funds 4 General Government Tax Revenues by Source 5 Property Tax Levies and Collections 6 Assessed and Estimated Actual Value of Taxable Property 7 Property Tax Rates — Direct and Overlapping Governments 8 Principal Property Taxpayers 9 Retail Sales Tax Collections by Sector 10 Sales Tax Rate Direct and Overlapping Governments 11 Ratios of Outstanding Debt by Type 12 Ratios of General Bonded Debt Outstanding 13 Computation of Direct and Overlapping Debt 14 Legal Debt Margin Information 15 Demographic Statistics 16 Principal Employers 17 Full -Time Equivalent City Government Employees by Department 18 Operating Indicators by Function 19 Capital Assets by Function 20 142 144 146 148 150 151 152 153 154 156 158 160 162 163 164 166 167 168 169 170 CITY OF TUKWILA'. 2017 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS ADMINISTRATIVE ORGANIZATIONAL STRUCTURE AND PRINCIPAL OFFICIALS CITIZENS OF TUKWILA COUNCIL MEMBERS MAYOR Allan Ekberg CITY ADMINISTRATOR David Cline 7 MUNICIPAL COURT Kimberly Walden • CITY ATTORNEY Kenyon Disend PLLC (Contracted) 1 HUMAN RESOURCES Stephanie Brown i TECHNOLOGY INFORMATION SERVICES Joseph Todd FINANCE Peggy McCarthy COMMUNITY DEVELOPMENT Jack Pace • FINANCE COMMITTEE De'Sean Quinn, Chairperson Dennis Robertson, Member Kate Kruller, Member • PARKS AND RECREATION Rick S ID F RE Jay Wittwer COUNCIL COMMITTEES COUNCIL PRESIDENT Dennis Robertson COMMUNITY DEVELOPMENT& NEIGHBORHOODS Kate Kruller, Chairperson Kathy Hougardy, Member Zak Idan, Member PUBLIC WORKS Henry Hash POLICE Bruce Linton / TRANSPORTATION & INFRASTRUCTURE Thomas McLeod, Chairperson De'Sean Quinn. Member Zak Idan, Member PUBLIC SAFETY Kathy Hougardy, Chairperson Dennis Robertson, Member Thomas McLeod, Member CITY OF TUKWILA'. 2017 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS City of Tukwila 6200 Southcenter Blvd, Tukwila, WA 98188 June 27, 2018 Honorable Allan Ekberg, Mayor Members of the Tukwila City Council Citizens of Tukwila City of Tukwila 6200 Southcenter Boulevard Tukwila, Washington 98188-2599 Allan Ekberg, Mayor Subject: TRANSMITTAL OF 2017 COMPREHENSIVE ANNUAL FINANCIAL REPORT I am pleased to transmit the City of Tukwila's Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2017. This transmittal letter provides an overview of the report and the financial condition of the City. State law requires that cities publish financial statements annually in conformity with Generally Accepted Accounting Principles (GAAP), which are audited in accordance with generally accepted auditing standards by the State Auditor's Office, under the Revised Code of Washington (RCW) 43.09.230. The CAFR has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is used as a reference by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the CAFR is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded and funds are expended as they were legally appropriated in the adopted budget. The Tukwila Finance Department prepared the report and accepts responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that the data is presented in a manner that fairly sets forth the results of operations and financial position of the City, as measured by the financial activity of the City's various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activity have been included. The report has been prepared in conformance with GAAP and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance is based on the assumption that the cost of internal controls should not exceed the benefits expected to be derived. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. CITY OF TUKWILA. 2017 CAFR LETTER OF TRANSMITTAL As a recipient of federal, state and county financial assistance, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act amendments of 1996 and U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The audit is conducted by the State Auditor's Office in conjunction with the City's annual independent audit. Information related to this single audit includes the Schedule of Expenditures of Federal Awards, findings, and recommendations, if applicable, and auditor's reports on internal control and compliance with applicable laws, regulations, contracts, and agreements. The results of the City's annual single audit for the fiscal year ended December 31, 2016 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws. Management's Discussion and Analysis (MD&A) immediately follows the State Auditor's report and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. PROFILE OF THE CITY Incorporated in 1908, the City of Tukwila is in the heart of the Puget Sound region, 12 miles south of downtown Seattle, 17 miles north of Tacoma, and one mile east of Seattle -Tacoma International Airport. Tukwila has a small residential population of 19,660, making it the 55'h largest of 281 cities in the State of Washington. However, the daytime shopper/visitor and working population can reach over 150,000 during the holiday shopping season. The City of Tukwila is a non -charter optional code City, operating under Section 35A of the Revised Code of Washington. It has a strong Mayor form of government with a seven -member City Council elected by the voters of the City to serve a four-year term. Councilmembers are elected at large rather than by district and are responsible for establishing the general guidelines and policies for the City. The Mayor appoints the City Administrator as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and City Council. The City of Tukwila provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities, and cultural events. In addition, the City operates an equipment maintenance/rental fund. The City operates its own municipal 18-hole golf course and provides sewer, water, and surface water services. Tukwila has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail services to the City. Tukwila residents receive library services from the King County Library System. Since the 2009-2010 biennium, the City has adopted a biennial budget in accordance with RCW 35A.34. The Council is required to adopt a biennial budget prior to the first of each odd -numbered calendar year. Budget reviews are conducted at mid -biennium and any changes for the second half of the biennium are adopted by the City Council. The biennial budget serves as the foundation for the City of Tukwila's financial planning and control. The budget is adopted at the fund level and any increases or decreases to a fund must be authorized by Council. Appropriation changes within a fund may be authorized by the Mayor. The General Fund, two special revenue funds, one debt service fund, and eight capital project funds are included in the biennially appropriated operating budget and have budget to actual statements presented for 2017. As demonstrated by the statements and schedules included in the financial section of this report, the city continues to meet its responsibility for sound financial management. CITY OF TUKWILA'' 2017 CAFR LETTER OF TRANSMITTAL LOCAL ECONOMY Tukwila is a great place for business. With nearly 40,000 jobs, more people are employed in the City of Tukwila than in 27 of the 39 counties in the State of Washington. Approximately one third of the jobs are retail, one third are in manufacturing, and the remainder span everything from entertainment to real estate. Many well-known companies such as Boeing, Costco and United Parcel Service employ thousands of people in Tukwila. Further, Tukwila is home to the global headquarters of Boeing Employees Credit Union (BECU), Continental Mills, Odin Brewing Company, Red Dot Corporation, Sabey Corporation, and Seattle Chocolates. Tukwila is also home to hundreds of small businesses, many of which are owned by members of the city's diverse international community. The strong local economy is evident in the low unemployment rate of 3.5%, down significantly from a 10-year high of 11.7% in 2010. Tukwila enjoys a strong position in the Puget Sound region as well as the state of Washington. Tukwila's location is at the crossroads of the State's most significant freeway network (the 1-5 and 1-405 interchange), and includes all modes of public transportation. Tukwila's transit stations include the commuter Sounder train, Sound Transits light rail, and the Tukwila Transit Center that all reinforce the well -established advantages of Tukwila as an employment and retail hub. These major transportation systems, the strategic access to Seattle, Tacoma, Sea-Tac Airport, and the population base of the south Puget Sound region provide a natural setting for commercial and industrial activity. Tukwila is a retail powerhouse with one of the largest local retail sales tax bases in the state of Washington. Anchored by Westfield Southcenter, which is the largest mall in the Pacific Northwest, 03 Tukwila generated almost $2.2 billion dollars in taxable retail sales in 2017. The total retail sales tax (27l) revenue amounted to $18.7 million in 2017, representing slight decrease from the $18.9 million collected in the prior year. LONG-TERM FINANCIAL PLANNING The city uses its six -year financial planning model and Capital Improvement Program (CIP) as long-term financial planning tools. These tools, along with regular review and revisions to the financial policies, ensure the City incorporates current economic conditions and financial projections into its long-range financial plans. In mid-2015, the City revised its financial reserve policy to increase the General Fund reserve level from 10% to 18%, and added a one-time 10% revenue reserve in the Contingency Fund. These changes will ensure the City's policies are in alignment with the Government Finance Officers Association's "Best Practices" and provide additional protection from future downturns in the economy. The City's diversified revenue base is supported by an assessed valuation of $6.2 billion, which is an increase of 7.3% from 2016, allowing the City to pursue a long-term capital investment program. The City's 2017-2022 Capital Improvement Program anticipates just over $200 million in general government capital projects, with only $11.2 million of that paid by City funding sources. These improvements are vital to the economic health of the City which must continue to efficiently move employees, shoppers, and goods into and out of the area. CITY OF TUKWILA' 2017 CAFR LETTER OF TRANSMITTAL MAJOR INITIATIVES The City made significant investments of time and financial resources into key public projects in 2017. These projects represent Council's commitment to meeting their five Strategic Goals and Objectives: • A community of inviting neighborhoods and vibrant business districts • A solid foundation for all Tukwila residents • A diverse and regionally competitive economy • A high -performing and effective organization, and • A positive community identity and image The new $10 million pedestrian/bicycle bridge was finalized in 2017. The non -motorized bridge crosses the Green River and provides a connection between Southcenter and the West Valley Highway area, including the Tukwila Station (Sounder/Amtrak station). The pedestrian bridge was funded with a $6.87 million State Regional Mobility Grant from WSDOT, federal grant funds, park impact fees, and City funding. The City of Tukwila began construction on 42"d Avenue, which will include new street improvements, drainage, curbs, gutters, and driveway adjustments. It will also bring new sidewalks and bike facilities to this important residential corridor, as well as undergrounding various utility wires along 42nd. The project includes building a new culvert at Gilliam Creek that will make the stream crossing fish passable and improve roadway safety. The City issued bonds to cover the General Fund portion of the project, the bulk of the financing. Surface Water fees collected by the City will pay for the culvert replacement portion, and Seattle City Light and other communication utilities will cover a portion of the costs associated with undergrounding the utilities. Construction has also started on 53° Avenue South, from South 137'h St to South 144'h Street, to improve pedestrian and vehicle safety, drainage, and neighborhood revitalization. The project will include residential street improvements such as curb, gutter, sidewalk, utility undergrounding, and illumination. This project is anticipated to be complete in 2018, and will be funded by bonds, a state TIB grant, and support from utility funds. The City of Tukwila has an on -going extensive rehabilitation program in the Sewer Fund for the Southcenter Commercial Business District. As the sewer mains are reaching their 50-year life span, the City has budgeted over $1 million for 5 years to reline the asbestos concrete pipes in the Southcenter area. The relining of the sewer pipes will extend the life span approximately 50 years and reinforce the strength with little impact to the roadway and minimal excavation. The City continued its partnership with Tukwila Village Development Associates (TVDA) to develop six acres of City -owned land on Tukwila International Boulevard at South 144th Street, known as Tukwila Village. In 2017 the King County Library System opened the new Tukwila Library and TVDA completed the plaza and opened Kona Kai Coffee. Construction continued on two mixed -use apartment buildings including 193 units for seniors which will open in 2018. TVDA will re -start construction on the remaining two mixed -use senior apartment buildings in 2018 with scheduled openings in 2019 and 2020. When fully open, the development will include 398 senior apartments and 4 live/work units, plus 13,000 square feet of office and 16,000 square feet of retail in addition to the plaza and library. When completed, the entire Tukwila Village project costs will be over $100 million. Adjacent to Tukwila Village, the City substantially completed street and frontage improvements on South 144'h Street between Tukwila International Blvd and 42"d Avenue South. This project includes a new traffic signal next to Tukwila School District's Foster High School. CITY OF TUKWILA: 2017 CAFR LETTER OF TRANSMITTAL CITY OF TUKWILA'. 2017 CAFR The Public Safety Plan continues to be a primary focus for the City, with voters approving $77 million in bonds in 2016 to finance a new Justice Center, three fire stations, and replacement fire equipment and apparatus. The design phase is moving forward, and properties have been identified for the new structures. This project will remain a high priority. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tukwila for its comprehensive annual financial report for the fiscal year that ended December 31, 2016. This was the 30th consecutive year that Tukwila has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Finance Department and the cooperation of other City departments. Their long hours of assistance with the preparation and review of this report are greatly appreciated. The Mayor, City Administrator and City Council are to be complimented for their encouragement, interest, and support in conducting the financial operations of the City in a fiscally sound COand progressive manner. The efficient assistance of examiners from the Office of the State Auditor is also appreciated. Staff who had a direct role in preparing Tukwila's 2017 Comprehensive Annual Financial Report take great pride in their work, and the entire team who worked on this project is to be commended. Respectfully submitted, d J V cI Peggy McCarthy, CPA Finance Director LETTER OF TRANSMITTAL CITY OF TUKWILA. 2017 CAFR GoveF.' unent:Finance Officers Association Certificate of Achievement. for Excellence in Financial Reporting COen�� Co City of Tukwila Washington For its Comprehensive Annual Financial Report tor the Fiscal Year Ended December 31, 2016 LETTER OF TRANSMITTAL CITY OF TUKWILA: 2017 CAFR LETTER OF TRANSMITTAL Office of the Washington State Auditor Pat McCarthy INDEPENDENT AUDITOR'S iREPORT ON FINANCIAL STATEMENTS June 27, 2018 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, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the 11 Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • Pat.McCethy@seo.wa. gov 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 ofthe financial statements. 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 ofthe governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Tukwila, as of December 31, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information listed in the table of contents 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 combining financial statements and schedules are 12 presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Our audit was conducted for the sole purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The Introductory and Statistical Sections presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 27, 2018, on our consideration of the City's internal control over financial reporting and on our tests of its CD compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, t1,1.45,0f. Pat McCarthy State Auditor Olympia, WA CITY OF TUKW ILA: 2017 CAFR AUDITOR'S OPINION LETTER 14 CITY OF TUKWILA'. 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2017 The management discussion and analysis section of the City of Tukwila's Comprehensive Annual Financial Report provides an overview of the City's financial activities for the year ended December 31, 2017. The intent of this discussion and analysis is to look at the City's financial performance as a whole. Readers should also review the transmittal letter, and the basic financial statements to enhance their understanding of the City's financial performance. FINANCIAL HIGHLIGHTS As of December 31, 2017, the City of Tukwila's total assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $307.0 million. Of this amount, $28.8 million represents unrestricted net position, which may be used to meet the government's ongoing obligations to citizens and creditors. The City of Tukwila's total net position increased $11.0 million, or 3.7%. Governmental activities increased $6.3 million partially due to growth in property taxes to cover voted debt principal and interest. Business -type activities increased $4.7 million due in part to rate increases in all three utility funds. At the close of the current fiscal year, the City of Tukwila's governmental funds reported combined fund balances of $80.6 million, an increase of $4.5 million (6.0 %). Approximately 22.4% ($18.0 million) of the fund balance is available for spending at the City's discretion (unassigned fund balance). OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis is intended to serve as an introduction to the City of Tukwila's basic financial statements. The City's basic financial statements are presented in three parts: 1) Government -wide financial statements 2) Fund financial statements 3) Notes to the financial statements This report also includes supplementary information intended to furnish additional detail to support the basic financial statements. Government•wide Financial Statements The government -wide financial statements provide both long-term and short-term information about the City's overall financial status, in a manner similar to private -sector business. The Statement of Net Position presents financial information on all the City's Tukwila's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Tukwila is improving or deteriorating. The Statement of Activities presents information designed to show how the City's net position changed during the year. The statement distinguishes revenue generated by specific functions from revenue provided by taxes and other sources not related to a specific function. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show the degree to which each function supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Items such 15 CITY OF TUKWILA'. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS as (but not limited to) uncollected taxes, unpaid vendor invoices for goods or services received during the year, and earned but unused vacation leave are included in the statement of activities as revenue and expenses even though no cash has changed hands. Both the government -wide financial statements distinguish functions of the City of Tukwila that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Tukwila include general government (finance, executive, legal, court, and human resources), public safety (police and fire), physical environment, economic environment, transportation, mental/physical health, and culture and recreation. The City's business -type activities include a water, sewer, and surface water utilities, and a municipal golf course. Governmental activities are primarily supported by taxes, charges for services, and grants. Business -type activities are primarily self-supporting through user fees and charges. Fund Financial Statements The annual financial report includes fund financial statements in addition to the government -wide financial statements. A fund is a fiscal and accounting entity with a self -balancing set of accounts used to account for specific activities or meet certain objectives. The City of Tukwila Funds are often set up in accordance with special regulations, restrictions or limitations. The City of Tukwila, like other state and local governments, uses fund accounting to ensure and show compliance with finance -related legal requirements. The City's funds are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions that are reported as governmental activities in the government -wide financial statements. The governmental fund statements focus on the near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. The information in the governmental fund statements can be used to evaluate the City's near -term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government -wide statements can help the reader better understand the long-term impact of the City's current year financing decisions. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains fourteen individual governmental funds. Of these, four are considered major (the general fund, the arterial street fund, the local improvement district #33 fund, and the public safety plan fund) and are presented separately in the governmental funds' Balance Sheet and the governmental funds' Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single column labeled "Other Governmental Funds." Individual fund data for each of these non -major governmental funds is presented in the combining and individual fund statements and schedules section of this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. A budgetary comparison schedule is presented for the general fund in the Required Supplemental Information section of the report. Other budgetary comparison schedules are included following the other governmental funds' combining statements in this report. 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. 16 CITY OF TUKWILA: 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided internally to various City departments. The same basis of accounting is used for proprietary funds in both the government -wide and individual fund statements. Enterprise funds report the same functions presented as business -type activities in the government -wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's three utilities (water, sanitary sewer, surface water) as well as the City -owned golf course. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet of vehicles, and its insurance premiums for active employees and LEOFF 1 retirees. Internal service fund activities are predominantly governmental and have been included in the governmental activities columns of the government -wide statements. Individual fund data for the internal service funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government -wide financial statements because the resources of those funds are not available to support the City of Tukwila's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City maintains two different types of fiduciary funds. The Firemen's Pension Trust Fund is used to report resources held in trust for retirees and beneficiaries covered by the Firemen's Pension plan. The agency fund reports resources held by Tukwila in a custodial capacity for individuals, private organizations, and other governments. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found immediately following the fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including a budget and actual schedule for the City's general fund and schedules of progress in funding its obligation to provide pension and OPEB benefits to its former employees. Additional pension benefit information is found in Note 8. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information on pensions and OPEB. 17 CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position over time, may serve as a useful indicator of a government's financial position. In the case of the City of Tukwila, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by nearly $307.0 million at the close of the most recent fiscal year. Total net position increased by $11.0 million (3.7%) when compared to 2016. BMW Wow mit; Current and other assets Capital assets. net of accumulated depreciation Total assets Deferred Outflows of Resources Long-term liabilities Net pension liability Net OPEB obligation Other liabilities Total liabilities Deferred Inflows of Resources Net position Net investment in capital assets Restricted Unrestricted Aged CITY OF TUKWILA'S NET POSITION In thousands 80 $120,303 213,212 333,515 $112,308 206. 147 318.455 $21.385 71,220 92,605 $20,741 67.410 88,151 $141,688 284,432 $133,049 273,557 426,120 406,606 2,543 4,629 77,965 9,745 10,488 8.887 107,085 73,776 12,944 9,179 8,149 104,048 289 470 6,220 6.943 1,799 2,539 0 1 735 9,755 0 993 10,475 2,831 5,100 84,186 11,544 10,488 10,622 116 840 80,719 15,483 9,179 9.142 114523 4,798 1 117 199,329 13,480 11,367 193,113 8,996 15,810 358 98 65,356 60,807 17,425 17.241 5,155 1.216 264.684 13,480 28,792 253,920 8.996 33.051 By far, the largest portion of the City's net position ($264.7 million or 86.2%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position ($13.5 million or 4.4%) represents resources that are subject to external restrictions on how they may be used. The business -type activities do not report any restrictions, so the entire $13.5 million is restricted in governmental activities funds. The majority is related to land and park acquisition, and street improvements. The remaining net position balance ($28.8 million, or 9.4%) is unrestricted and may be used to meet the City's ongoing obligations to its citizens and creditors. At the end of the current fiscal year, the City of Tukwila continued to report positive balances in all categories of net position. The City's overall net position increased $11.0 million (3.7%) from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business -type activities. 18 CITY OF TUKWILA. 2017 CAFR MANAGEMENT S DISCUSSION AND ANALYSIS CITY OF TUKWILA'S CHANGES IN NET POSITION (in thousands) Revenues. Program revenues Charges for services Operating grants and contribution Capital grants and contributions General revenues Property taxes Saks and use lazes Natural gas use tax Hotel/Motel taxes Ulii'ty taxes Interlard utility taxes Business taxes Excise taxes Investment earrings Miscelareous Total revenues Expenses: General government Public safety Transportation Physical ervironment Culture and recreation W Economic environment Interest on long-term debt Water/sewer Foster golf course Surface water Total expenses Increase (decrease) in net position before transfers $11,479 $11,904 $24,095 $22,963 $35,575 $34,867 2,446 1,079 8 25 2,454 1,104 6,127 5,001 834 768 6,961 5,769 17,668 14,563 - 17,668 14,563 18,807 18.908 - 18,807 18,908 737 710 - 737 710 4,175 4.046 - 4,175 4,046 2,266 2.147 - 2,266 2,147 2,698 2,716 2,698 2,716 5,381 6,509 - - 5,381 6,509 839 560 - - 839 560 2,329 2,916 - 2,329 2,916 74,951 71,058 24,938 23.756 99,889 94,813 9,835 9,662 - 9,835 9,662 31,190 31,419 - 31,190 31,419 12,237 11,188 12,237 11,188 2,545 2,554 - 2,545 2,554 5,582 5,431 - 5,582 5,431 4,524 4,411 - 4,524 4,411 2,482 1,076 - - 2,482 1,076 14,305 13,984 14,305 13,984 1,990 2,078 1,990 2,078 - - 4,209 4,088 4,209 4,088 68,395 65,741 20,505 20,150 88,899 85,892 6,556 5,316 4,434 3,605 10,990 8,922 Transfers (300) (300) 300 300 0 - Changeinnetposilion 6,256 5,016 4,734 3,905 10,990 8,922 Net position -beginning of period 217.919 212,903 78,048 74,142 295,967 287,045 CITY OF TUKWILA. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Governmental Activities During the current fiscal year, net position for governmental activities increased $6.3 million (2.9%) from the prior fiscal year for an ending balance of $224.2 million. The primary reasons for this increase are: • Property taxes increased $3.1 million (21.3%) from the prior year. In 2016, voters approved an excess property tax levy to be used for public safety purposes. This was the first year the City received the proceeds from that levy. • Grant revenues can fluctuate greatly from year to year, depending on several factors including duration of capital projects, and purpose of the grants. In 2017, the City received 41.0% more governmental grant revenue than 2016. Capital grants and contributions increased $1,1 million (22.5%), and operating grants increased $1.4 million (126.7%). The Arterial Street Fund was the recipient of $6.5 million of the total $8.6 million in grant revenue in 2017. REVENUES BY SOURCE -GOVERNMENTAL ACTIVITIES Other revenue 7% CITY OF TUKWILA'. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS PROGRAM REVENUES AND EXPENSES — GOVERNMENTAL ACTIVITIES $30,000,000 $27,000,000 $20,000,000 $21,000,000 $15,000,000 $15,000,000 $12,000,000 $9,000,000 $6,000,000 $3,000,000 $O ▪ Business -Type Activities ■ Program revenues: ■ Expenses For the City of Tukwila's business -type activities, the results for the current fiscal year were positive in that overall net position increased by $4.7 million (6.1%) to reach an ending balance of $82.8 million. The overall growth is attributable to the following factors: • In the Water Utility, total net position increased by $0.5 million (2.5%). This resulted from a 5.0% commercial rate increase effective January 1, 2017. • In the Sewer Utility, total net position increased $2.3 million (14.0%) primarily due to a 5.0% rate increase effective January 1, 2017, combined with a 10.3% reduction in operating and maintenance expenses. • In the Surface Water Utility, operating revenues increased $0.3 million (5.1 %) due to a 5.0% rate increase. • Operating income in the enterprise funds was $3.5 million, an increase of 25.8% from the prior year, mostly due to rate increases. • Of the $82.8 million total net position, $17.4 million (21.0%) is unrestricted and each utility can utilize their portion for any purpose. This operating balance is necessary for future planned infrastructure replacements and repairs. CITY OF TUKWILA: 2017 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 7% Surface water 46% Water 24% Sewer 23% 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: CITY OF TUKWILA. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS COMPARISON OF TOTAL NET POSITION TO SPENDABLE NET POSITION -BUSINESS-TYPE FUNDS r SpendG.,/'Not Netpo9no01 Surface water Foster goli ccur cci 01 - The following chart depicts the revenues and expenses for business -type funds: R12,000,000 $10,000,000 $8,000,000 $6,000,000 54,000,000 32,000,000 BUSINESS -TYPE ACTIVITY REVENUES & EXPENSES (before Capital Contributions & Transfers) 23 ■ Revenues r€xpenses—j. Foster Golf Course CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS The purpose of the City's governmental funds is to report on near -term inflows, oufflows, and balances of spendable resources. This information helps determine the City's financial requirements in the near future. Specifically, unassigned fund balance may serve as a useful measure of a government's net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City of Tukwila itself, or a group or individual that has been delegated authority to assign resources for use for a particular purpose. As of December 31, 2017, the City's governmental funds had combined fund balances of $80.6 million, an increase of $4.5 million (6.0%). The increase is primarily due to the issuance of $8.2 million in bonds in the Residential Street Fund. The change in fund balance for governmental funds compared to 2016 is as follows: • General Fund $ 40,981 • Arterial Street Fund (562,939) • Local Improvement District #33 (146,379) • Public Safety Plan 211,793 • Other Governmental Funds 4,996,074 The general fund is the primary operating fund of the City. All receipts and payments of ordinary City operations are processed through this fund unless they are required to be accounted for in another. At the end of 2017, the general fund had a fund balance of nearly $19.1 million, with $18.0 million (94.5%) of the balance classified as unassigned and available to meet the City's general obligations. Unassigned fund balance increased from $11.6 million in 2016 due to the reclassification of over $6.0 million in contingency fund balance which was reported as assigned last year. The arterial street fund decrease in fund balance is related to the planned use of reserves for capital projects. In 2017, a total of $9.5 million was spent on capital outlay. The fund balance in the local improvement district #33 fund decreased by the difference between the special assessment revenue received and the payment on the LID bonds issued. The following chart shows the relative fund balances for governmental funds: 24 CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA'. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS GOVERNMENTAL FUNDS — FUND BALANCES FINANCIAL ANALYSIS OF PROPRIETARY FUNDS The general fund revenue increase of $1.2 million is combined from the following sources: GENERAL FUND REVENUE INCREASES/DECREASES—BY SOURCE Saco,eso Taxes $697,628 5600,000 $700,000 $0 . (0200:0001 (5400,000) Licenses a nd permits $619,916 Charges for services (5239,499) Intergovernmental 5191,574 Fines an dforfeltures 56,757 Investment earnings ($2,760) Miscellaneous ($54,135) 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. Unrestricted net position in business -type activities ended 2017 at $17.4 million, an increase of almost $200 thousand (1.1%) from 2016. 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 significant budget amendments that occurred in 2017: Additional grant revenue and expenditures of approximately $86,000 were appropriated for a temporary FTE in the Police Records Unit. Increased funding for the Fire Department to cover: o Two pipeline positions totaling $240,000 o Firefighter deployment to assist with hurricane recovery efforts - $125,000 (100% reimbursed) o Increased costs for providing Emergency Medical Services - $35,000 (100% reimbursed) • Reduction of $120,000 in Finance expenditures due to lower Risk Management costs • Reduction of $120,000 in Community Development from vacancies • Adjustments in transfers from the General Fund to other funds, including: o $210,000 transfer to Fund 306 to pay project costs related to the City's Public Works Shops until bonds are issued in 2018. o $138,515 increase in transfer to the Contingency Fund in line with policy requirements. Reasons for the significant variances in the general fund between the final budget and actual results include: Sales tax revenue was $1.2 million lower than budget. This continues a slight decline that started in 2015 and resulted in sales tax collections 1 % lower than 2016. • Building permit revenue was (38%) over budget. This was due to a $28.5 million increase in the value of permits issued. A $1.5 million transfer in from the Facilities/Urban Renewal fund was budgeted but did not occur because an anticipated land sale did not happen in 2017 as funds were not needed. Expenditures were below budget by $2.7 million, or 4.5%. Specific examples include: o $641 K in salary savings, plus associated benefit savings, with Police accounting for almost half of the budget savings o $119K in overtime savings, nearly all from the Fire Department o $196K in claims and judgements in the Finance Department o $252K in rents and leases 25 26 CITY OF TUKWILA'. 2017 CAFR CAPITAL ASSETS MANAGEMENTS DISCUSSION AND ANALYSIS The City's investment in capital assets for both its governmental and business -type activities as of December 31, 2017 totaled $ 284.4 million (net of accumulated depreciation), an increase of $10.9 million (4.0%) from 2016. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission/distribution systems, roads, bridges, and infrastructure. CITY OF TU KWILA'S CAPITAL ASSETS (net of depreciation) Land $ 36,172,319 35,498,580 Buildings 11,115,434 11..834,146 Other Improvements 9,835,029 10,528,019 Machinery and Equipment 7,264,337 7,111.094 Infrastructure 139,281,317 131,110,688 Construction in Pro.ress 9,543,935 10,064,699 $ 2,396,230 7,935,440 58, 046, 974 378,464 2,462,779 2.346,230 $ 38.568,549 37,844,810 8,307.234 19,050,874 20,141,380 54,158.840 67,882,003 64,686,859 386,113 7,642,801 7,497,207 - 139,281,317 131,110,688 2,211.229 12, 006, 714 12, 275, 927 s More detailed information on capital assets is provided in Note 6 to the financial statements. General capital outlay purchases added $197,322 in machinery and equipment and included various technology purchases in the amount of $86,037 Parks & Recreational equipment for $24,683, Police and Fire equipment totaling $57,032 and Street Division speed alert radar devices in the amount of $22,679. Many of the projects in the Arterial Street Fund continue to be in the construction phase adding $9.5 million in ✓ construction -in -progress for the period. The major arterial street fund activities are comprised of the following: • TUC Pedestrian/Bicycle Bridge, $4.5 million • S 144'h St Phase II (42"° Ave S —TIB), $1.8 million • Interurban Ave S, $0 97 million • Baker Blvd Non -Motorized Improvements, $0.78 million • Beacon Ave 5 Bridge Improvements, $0.73 million • Various other Arterial Street Fund projects total $0.78 million Major construction projects completed in 2017 added $15.1 million to capitalized infrastructure for the Arterial Street Fund which included the TUC Pedestrian/Bicycle Bridge with total overall previous and current years' construction - in -progress costs totaling $9.2 million; S 144'h St Phase II (42n° Ave S — TIB) with costs of $2.3 million; and, Baker Blvd Non -Motorized Improvements at $0.78 million. Ongoing Residential Street Fund construction projects added $3.5 million to construction -in -progress and include the following: • 42. Ave S — Phase III, $1.9 million • Cascade View Safe Routes to School, $1.3 million • 53'd Ave S, $0.25 million Projects completed in 2017 for the Residential Street Fund include Cascade View Safe Routes to School with total overall previous and current years' construction -in -progress costs of $1.5 million. Land Acquisition, Recreation & Park Development activities consist of $187k for the Cascade View Park Playground and Dog Parks work in progress projects. Both projects were completed in 2017 with total overall current year construction costs of $146k and $32k and capitalized into parks improvement infrastructure. 27 CITY OF TUKWILA'. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Other governmental funds' activity in the areas of facilities improvements provided an additional $77k to construction -in -progress work for the year. The new Public Safety Plan Funds for the Fire Stations, Justice Center and Public Works Shops had work in progress activity totaling $1.3 million. Business -type activities consisted of $5.9 million in added construction in progress work for the year. Major projects in the utility funds comprise of the following: 40'"-42"d Ave S, $1,263,382 Andover Park East Waterline, $3,280,517 2017 Small Drainage, $588,276 A total of $794,461 in other utility construction projects were added to construction -in -progress during the current period. Major construction projects completed in 2017 include Andover Park East Waterline and 2017 Small Drainage projects with total overall previous and current years' construction -in -progress costs of $4.5 million and $0.7 million, respectively, which have both been capitalized into utilities infrastructure. LONG-TERM DEBT At the end of the current fiscal year, the City had total bonded debt outstanding of $63.6 million, excluding the premium on bonds issued. Of this amount, $59.2 million is general obligation bonds which is backed by the full faith and credit of the City, $1.5 million is revenue bonds for the water/sewer and surface water utilities, $4.4 million in public works trust fund loans, and the remaining $4.8 million is special assessment bonds which were issued to improve access to the City's urban center. The City issued $8.5 million (including premium) in general obligation debt in 2017 to finance two transportation projects in the Residential Street Fund. This new debt issuance, combined with redeemed debt, resulted in an overall general obligation bond increase of $5.1 million. The City currently maintains a rating of "AA" with Standard and Poor's and Fitch's Investor Service, and "Aa3" with Moody's for its general obligation debt. The following schedule summarizes the City's long-term debt' CITY OF TUKWILA'S LONG-TERM DEBT General obligation bonds Revenue bonds Premium on bonds issued Special assessment bonds Public Works Trust Fund Loans Due to other governments $ 59,214.505 $ 54.114,977 4.447,881 4,380,732 4,805,000 5,412,500 5,914,400 6,093,556 kek $ - $ - 1,454,422 1,597,704 4,447,523 $ 59,214,505 1,454 422 4,447.881 4,805,000 5,046.991 4,447 523 5,914,400 $ 54,114,977 1,597,704 4,380.732 5,412,500 5,046,991 6.093,556 More detailed information on long-term debt, including debt limitations, is provided in Note 10 to the financial statements. 28 CITY OF TUKWILA'. 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS ECONOMIC FACTORS AND THE UPCOMING BIENNIAL BUDGET The following economic factors currently affect the City of Tukwila and will be considered in developing the 2019- 2020 biennial budget: • The City's 2017 assessed value of $6.2 billion is 7.3% higher than 2017 and its growth reflects positively on the local economy. • Sales Tax is the City's largest revenue source and was conservatively estimated to increase 7.5% in 2017 and an additional 2.9% in 2018. However, actual 2017 sales tax came in $1.2 million (6%) under budget, so this revenue source is being closely monitored to see if there is a trend developing. • A significant focus of the 2019-2020 biennium will be the Public Safety Plan. The voters approved construction of a new Justice Center, 3 new fire stations, and fire equipment/apparatus purchases as part of a $77 million bond issued in 2016. The design phase of the projects are moving forward, and significant financial shortfalls have been identified. The City is currently working to identify options for filling the funding gap including potential new revenue sources, reductions to programs, and additional borrowing. • Rate increases of 5% annually are scheduled in the Water utility from 2017-2022 to cover the cost of purchasing water from the Cascade Water Alliance and maintain the utility's infrastructure. An additional increase of 3.5% in sewer rates is scheduled for 2018. • National Pollutant Discharge Elimination system (NPDES) permit requirements have significant costs for the surface water fund, which will result in a 5% rate increase in 2019 and 3% in 2020 for that utility. The City's reserve policy specifies that the General Fund ending fund balance shall equal or exceed 18% of the previous year's operating revenues. The policy also requires that a 10% minimum fund balance be maintained for the Contingency Fund. The biennial budget complies with both these requirements. 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. CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS 29 30 CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION DECEMBER 31, 2017 BASIC FINANCIAL STATEMENTS ASSETS: Cash and cash equivalents Investments Taxes receivable Other receivables Due from other governmental units Inventory of materials and supplies Restricted cash and cash equivalents Restricted investments Notes receivabk Real property held for resale Investment In joint ventures Non -depreciable capital assets Depreciable capital assets (net of accumulated depreciation) Net Pension asset MIL DEFERRED OUTFLOWS OF RESOURCES: Deferred loss on refunding Deferred outflows related to pensions LIABILITIES: Accounts payable Accrued wages and benefits payable Accrued interest payable Unearned revenue Other liabilities Bonds and other debt payable Due within one year Due in more than one year Net pension liability Net other post employment obligation MIL DEFERRED INFLOWS OF RESOURCES: Deferred inflows related to pensions Business taxes received in advance MMIMMtic NET POSITION: Net investment in capital assets Restricted tor'. Debt service Tourism promotion Arterial street improvements Drug investigation and enforcement Land and park acquisition. development Fire improvements Public safety facilities Unrestricted net position $ 25,846,613 $ 12 391,603 $ 38 238,215 10,059,656 6,446801 16506,406 6209,050 847 6.209,897 1,768,835 2,163,043 3931878 1,640,733 8,435 1649,167 18,761 53,879 72641 34,200,277 86,445 34.286,717 10,553,628 - 10,553,628 7.171448 233890 7,405,338 5.293,000 5,293,000 9,311805 - 9,311,805 45 716,254 4,859,009 50,575,253 167.495,117 66.360878 233,856,995 8.229,168 - 8,229.168 257,647 37,836 295,484 2,284,942 250,796 2 535,738 4,084,878 1.428,463 5513,341 1,840,214 169,709 2,009,923 456,114 15,765 471.879 86,974 16.130 103,104 2,418,496 105,354 2,523850 4,276,996 750,669 5,027,665 73,688,295 5,469,673 79,157,968 9.745,053 1,799,011 11,544, 064 10.487,883 10,487,883 MANN 3 927,242 357,509 4,284,751 870,425 - 870,425 AY 199328,594 65.355,778 254684,471 5.799,275 - 5,799,275 1,139,775 - 1139,775 146,762 - 146,762 227,244 - 227,244 3,856 032 - 3,856,032 7,210 - 7,210 2303,769 - 2,303,769 11,366,545 17 425,401 28791 946 The notes to the financial statements are an integral part of this statement. 31 CITY OF TUKWILA'. 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2017 FUNCTIONS I PROGRAMS: PRIMARY GOVERNMENT Governmental activities General Government $ 9,835,290 $ 4.144,986 $ 127,967 $ - $ (5,562,337) $ Public safety 31,190347 1,540,863 607851 - (29041633) Transportafion 12236,551 2,206,908 1597,857 5,894,908 (2,536,878) Physical environrrent 2.545,144 - - 13,436 (2,531,708) Culture and recreation 5,582,038 1,315,740 37,015 218.536 (4,010,746) Economic environment 4,523,596 2,270,759 75,308 - (2,177,529) Interest on Long-term debt 2481559 (2,481,559) - $ (5,562,336) - (29,041,633) (2,536,878) (2,531,708) (4,010,746) (2,177,529) (2,481,555) BUSINESS-TYPEACTIVITIES: Water Sewer Surface water Foster golf course 6.553,626 6,841,271 7,751,799 9,739,694 4,209,325 6,200,589 1,989,972 1 313.871 General Revenues: Taxes Property taxes Retail sales and use taxes HoteVmotel taxes 2lrty taxes Interfund utility taxes Business taxes Excise Taxes Unrestricted investment earning Miscellaneous 8,435 216,339 327,675 290,379 503,984 2,315,570 2,290,077 (676,101) 503,984 2,315 570 2,290,077 (676.101) $ 17,667.590 $ - $ 17,667,590 18,807,201 - 18,807,201 736,784 - 736,784 4,175,013 - 4,175,013 2,265.747 - 2,265,747 2,698,352 - 2,698,352 5,380,662 - 5,380,662 838,630 - 838.630 2,328,565 - 2,328565 Excess of revenues over expenses before transfers Transfers 6,556,152 4,433,529 10989,682 Net position - beginnin (300,000) 300,000 217,919,155 78,047,650 295,965.805 (0) The notes to the financial statements are an Integral part of this statement. 32 CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2017 BASIC FINANCIAL STATEMENTS ASSETS: Cash and cash equrakms hvestnents Taxes able Other romote n ernental units Restricted assets: Cash and cash eg talents Investments Special assessnen trecervable Notes recevable R9eellprcperty heN for resale $ 9,486,158 $ 349,939 $ 752,342 $ 484.266 $ 9,560,303 $ 20,632,129 6,322,974 794.797 955 308.537 143,659 1,140.105 1,158,263 8406 2,270.778 927 373 378.862 LIABILITIES, DEFERRED INFLOWS A. FUND BALAACES: Pebbles_ Accounts payable 1 007,900 1 4 Accrued wages & benefits 1 779,550 23,258 ggegrg, revenue I,:DI er sj.4tW.¢ rabblies 78270 eo e57 Deferred Inflow of resources navaPhle revenue -special assescnent Businesses receive in advance 0A25 navaibble laves -property tax. ogle, 329,358 Fund balance: Nonspendabk e teteVnetel tax esi entiale teelvenents Arterial street captatritprovenents Drug enforcement Parkinvestigation a. land acquisaion,devebpnent Riblb safety facklies b t service a eranty fun Debt service public safety plan Locallnproverrent District sned AsResidentil street inprovenents Arterial street Inprovenents Drug Seizure Lan & park FacdrtesS.a nu renewal General governr ant nA venents Rrbke sal elylao0tles 186 Arts bt Unes�sknedvr:e 527 373 105000 18040.352 4,315,171 531,560 6,854,534 270,594 6,209,050 64.060 15,481 1,696,611 173,933 1,040,733 25,903.447 0,553.528 1,250.000 6,017,641 34,200,272 10,553,628 4315,171 2.656,277 5,293,000 300,022 5,29000 280 501 1081,735 3869573 1.814 308 6,974 390,246 11,490 2.270 778 1,165,659 4,315,171 752,342 36,457,366 267,854 4,315,171 870.425 24,370 728 04 arJaalniaTial 927,373 1,139 775 1,139275 5794233 5794233 2.270,778 3,856,032 3.856.032 36,457,006 7,210 7,210 662,913 52,913 752,342 72 47,724 7,498369 368,801 164,030 388.245 382,185 1.165 659 72 47,724 498,169 368,601 267 854 84,000 105.000 388,245 18.040.352 The notes to the financial statements are an integral pa of this statement. 33 CITY OF TUKWILA: 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31, 2017 Total governmental fund balances as reported on this statement Capital assets used in governmental activities are notfinancial resources and therefore notreported in the funds. Non -depreciable assets Depreciable assets (net) Internal service fund assets The net pension asset is noten available resource and therefore 's notreparted in the funds. Deferred outflow of pension costs Deferred inflow of pension contributions The City has an equity interest In two joint ventures. This equity interest for the pro vis ion of governmental senoces is note current fine ncial resource and therefore Is not reported in the funds. Revenue that was not collected within the recognition period and therefore was not available to pay current liabilities: Unavailable revenue reported for propertyaxand other receivables Unavailable revenue reported for developer agreement Unavailable revenue reported for special assessment Some liabilities are notdue and payable in the current period and therefore are not reported in the funds. Long term liab flies due v✓ih'n one year Long term liabilities due in more than one year Unfunded otherpastemploymentbenefits Accrued interest payable Deferred outflow on refunding Internal service fund net position exclusive of capital assets, deferred outflow of pension costs and deferred inflow of pension contributions which are included with other reconciling items above Internal service funds are used by manage ment to charge the cost of certain activities. such as health Insurance and fleet maintenance, to individual funds. The assets and Ilablllties of these internal service funds are Included in governmental activities in the satementofnetpositon. The notes to the financial statements are an integral partof this statement. 34 76 $ 80,591,877 45 716.254 162,371.313 5.124804 213,212,371 8,229 168 2.284,942 (3927,242) (1,642,300) 9 311,805 353,728 1,959,104 4,315.171 6,628,003 (4,276,996) (83,153,922) (10,487E83) (456.114) 257.647 (98,117267) 5,961,651 CITY OF TUKWILA: 2017 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, 2017 REVENUES: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment earnings Special assessments Miscellaneous �•f COEXPENDITURES: Current. General government Econnnvc environment Physical environment Public safety Culture and recreation Transportation Debt service. Principal Interest Capital outlay $ 46.574.589 $ 912,333 $ 2,749.137 - 4,690.257 6.686,896 3,046.606 1.725,249 325,216 230.784 160,309 16,910 701,034 240,710 258,283 478,838 1.511 $ 4 168,153 $ 51,655,075 2,749,137 1,362,621 12,739,774 500,000 495,373 5,767,228 325,216 80,176 826,864 478,838 79,930 942,784 OTHER RNANCING SOURCES (USES): Transfers In Transfer out General obligation bonds issued Bond premium Pay rrent of refunded debt Gain/(loss) on sale of assets held for re L 9.358.235 - 4,098,765 - 1.733,400 - 29,968,635 - 4,395,696 - 3,026.013 2860,118 54 564,521 227,316 9,585,551 515262 4,614,027 1,733 400 366,256 30,899,412 268,433 4,664,129 646,064 6,532,195 - 607,500 - 3,106,428 3,713,928 259,939 - 2,343,930 2,603,869 117.679 9,545,242 998,969 4,099,825 14,761,715 300,000 1,800,000 (5.337,496) 1,017,000 3,237,496 6,354,496 (1,317.000) (6,654,496) 10,456,000 10 456,000 356,839 356,839 (2,250,000) (2,250,000) (100,000) (99,999) The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2017 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, 2017 Net change in fund balances per the Statement of Revenues, Expenditures, and Changes in Fund Balances Amount reported as change in net position In the Statement of Activities are different because. Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are: Capital Outlay Adjustments to construction in progress Donated capital assets Capital asset disposal Depreciation Expense (excludes internal service fund depreciation which Is reflected in internal serfAce fund change In net position listed below) Excess of Capital Outlay Over Depreciation Expense The net effect of various transactions involving the Citys pension plans are: Reduction in pension liability and expense Increase in pension contribution revenue Reduction in the Fireman's Pension liability and expense The City has equity interests in two joint ventures. The equity interests for the provision of governmental services are not current financial resources and therefore are not reported in the funds. Repayment of long-term debt is reported as an expenditure In governmental funds, butthe repayment reduces long-term liabilities in the Statement of Net Position. In the currentyear, these amounts consist of: Bond principal retirement Amortization expense Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. General Obligation Bonds issued General Obligation Bonds issued 14.761715 69,901 (3,325) (8,179,837) $ 4,539529 6,648,454 1.565,517 515,721 134.176 2,215,414 123,010 5,963 928 288690 6253,617 (356, 839) (10,276,800) Internal service funds are used by management to charge the costs of certain activities to individual funds. The change in net position of internal service funds is reported with governmental activities. (408.767) 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. Changes this year are for: Miscellaneous receivables 59,495 Developer agreements (852,667) Property taxes 76,273 Special assessment (478838) (1,195,736) 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 oh Increase in accrued Interest Amortization of deferred outflow on bond refunding Increase in compensated absences Increase in unfunded other post employment benefits Total additional expense (increase) decrease (100 767) (66,613) 190,696 (1,309.047) (1,285 731) Change In Net Position On The Statement Of Activities $ 6,256,152 The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2017 Current assets Cash antl cash equNalents $ 3.973.370 $ 3561,217 $ 572915 $ 4.284.100 $ 12391603 $ 5.214,483 Investments 2,161812 4,254,988 - - 6,446,801 3,205.071 Taxes receivable - - 847 - 547 Other receivables 550,121 1039564 - 578.35B 2.163043 72.224 BASIC FINANCIAL STATEMENTS CITY OF TUKWILA: 2017 CAFR Due lromother governmental units - - - 8,435 8.435 Inventory of rreter'als and supplies - - 53,879 - 53.879 18,760 Current assets restricted ‘Cash and cash equNalent23825 - 62,620 - 86445 BMW IWROMMLIMS:1 Noncurrent assetsNotes receMoble Capital assets Land Building Other improvements Nbchinery and equipment Less: accumulated deprecutbn Construction ns c ion in progress Total capital assets (net of accumulated dereciaton) Deferred Outfbws of Resources Deterred pension Deferred Loss on Refunding LIABILITIES: Current Liab,1'Rles Accounts payable Accrued wages and benefits Accrued interest payable Unearned revenue Other current rabikies Due to other governrents Compensated absences Noncurrent liabiRks. Reserve for unreported cblrrs Revenue bonds payable Net pension liabil8y Conpensated absences Due to ether governments vu'1:.•. 233.890 233,890 87,347 69,525 1,609,575 629.783 2,396,230 1416567 3.364,962 6,627.496 1875,395 13,284,419 - 24.597361 16.635380 3,559,992 49044,818 93.837,552 901,031 1.249,131 110.829 56,139 2,217,130 15.973,404 (11434,6271 (8,622,535) (6.400,487) (16,520,574) (42,978,223) (10,848,599) 193367 301308 - 1968,104 2462,779 15.661,045 12,997,771 5507,405 37,053,666 W 5,124,804 Deferred Inflows of Resources Deferred inlbw pension earnings E (;. nET POSITION'. Net investment in capital assets ttl 60,358 9,837 vv 373,132 41,202 2,525 6565 19,935 95,080 8 911 35,613 23,458 55.280 23,825 7,485 27,629 233,436 92,789 53,721 2,135 35,983 57,690 91,104 4,540 250,796 ��37936 997.916 1428 463 68,696 169.709 5,751 15,765 9,562 16,130 100 105,354 270,953 599,468 1,542 1,542 17,959 49.659 38,954 215.305 25 906 811,300 • 339.238 2,958 117.637 527,116 84.934 808,953 - 156572 1,304.763 255461 457,077 653.515 1,799011 33029 70818 95,372 316855 �t3 1,730,014 9z� \ 1.590.925 055 WIIMPIO&IMMO 216,950 279,426 50.885 90,954 130,736 357,509 55427 0 538 19, 156 038 5.690 592 8.696675 5,507.405 35021,798 65,355,778 5.124,805 39.327 2998,807 17.425,401 5,945,177 The notes to the financial statements are an integral part of this statement. 37 OPERATING REVENUES: Charges for services Other operating revenue OPERATING EXPENSES: Operating E. maintenance Adninistratrve and general Taxes Depreciation and amortization BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 $ 6,774,385 $ 9,706,584 $ 1,202,283 $ 6,147,930 $ 23831,182 $ 8,522,957 3,969 107,208 160 111, 337 114,545 4,316 007 724,537 979,237 519,778 5,616,964 623,175 1,107,991 367,729 1.435.736 181,399 59 348 313,489 1,842,352 643,643 688,572 1,019,917 13.211,060 2,172,754 2,835,148 2,220,912 959, 371 458,576 833,469 NON -OPERATING REVENUE IEXPENSIE: Investrrent earnings Interest expense Gain (loss) on disposal of capital assets Othernon-operat'n• revenue 62,912 33.110 4,380 52,938 153,341 (14,066) (35.941) - (14,841) (64,846) 4 - - (440) (436) 100,509 8,435 8,435 - 95,639 Capital contributions Transfers In 216,339 The notes to the financial statements are an integral part of this statement. 38 327,675 290,379 834,392 CITY OF TUKWILA'. 2017 CAFR BASIC FINANCIAL STATEMENTS CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash paid to supplier Cash paid for taxes Cash paid to or on behalf of employees Other cash received (paid) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating grant received Transfers in CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets Contributed capital Capital grants Principal paymenton debt Interest payment on debt Proceeds from sale of equipment other CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of investments Purchase of Investments Interestrece ivred Netincrease (decrease) in cash and Cash equivalents Cash and cash equivalents -be • lnnir Cash at end of year consists of. Cash and cash equivalents Restricted cash -customer deposits CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 $ 6,642,015 $ 9,432,575 $ 1,309,492 $ 6,041,224 $ 23,425,306 $ 8,591,726 (4,108,599) (5,966,291) (745,386) (612,296) (11432,573) (1,204753) (979,237) (1.107,991) (59348) (685,572) (2,835,148) (1) (798,896) (466,415) (946,234) (1,267,642) (3,479,187) (7,130,160) 3,969 - 8,012 160 12,141 - 8,435 300,000 8,435 300,000 9 (1.926,517) (1 473.226) 216,339 327,675 (132,333) (322,271) (14410) (39.553) 31 833 (20,742) (16,D43) (2,565,907) 104,998 241,768 (288,146) (15,660) (60,987) • (5,961,693) 649,011 241,768 (742,750) (69,622) (49,896) (1,250,161) 100,509 - 135,000 - (3,900,000) - - (3,900,000) (513,494) 35,687 158,795 4,380 52,938 251,800 171,089 (1,030,150) (3,377,444) (145,127) 950313 (3,602,409) (1.100,246) 5,027,345 6,938.662 780,662 3,333,787 16,080,456 6,314,729 2N114TOMPS 3973370 3,561,217 572,915 4,284,100 12,391603 $ 5,214,483 23,825 62,620 86,445 The notes to the financial statements are an integral part of this statement. 39 CITY OF TUKWILA 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 Page 2 of 2 RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Adjustments to reconcile operating income to net cash Provided (used) by operating activities: Deprecation Asset (Increase) decrease, Accounts receivable Inventory and other Deferred outflow of resources (increase) decrease Lability Increases (decreases): Accounts payable Other liabilities Wages 8 benefits payable Deferred inflow of resources increase (decrease) 519,778 367,729 313,489 1,019,917 (116,476) (274,009) 2.571 (106 706) (421) - 31,094 30,608 45358 70,388 186,293 (57,597) 3,108 45r 744 (154,313) (899) 735,967 5442 (18,090) 32,139 5458 28,406 (101001 (124000 (2106)4) 2,220,912 833,469 (494,620) (45,775) (421) (3,487) 177,458 25,394 767,048 107,588 (70,245) - 69,120 6,208 1481 359) 61 671 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Increase (decrease)In lair value of Investment $ (58,819) $ (58,819) $ 45,429 The notes to the F nanc'al statements are an integral part of this statement. 40 CITY OF TUKWILA2017 CAFR CITY OF TUKWILA, WASHINGTON STATEMENT OF FIDUCIARY NET POSITON FIDUCIARY FUND DECEMBER 31, 2017 ASSETSInterestreeenvabIe Investments aggAit.::Mratt :111115AbLiggai fla Accounts and other payables zaa US— Ankofito"' NET POSITION: 3 3: „NM BASIC FINANCIAL STATEMENTS CITY OF TUKWILA 2017 CAFR 925,014 $ 311 398 515.702 1771 2 934 ° SIMMI% :&5rz. 314,332 1,442,486 8899 The notes to the financial statements are an integral part of this statement. BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED DECEMBER 31, 2017 ADDITIONS: Contributions from nonemptoyer entities' Fire Insurance Premiums Transferred in Investment earnings/(loss) t*- DEDUCTIONS: Benefit payments Administrative expenses Net position - beginning VP..1•Th'fc:,?-1: $ 6873029) 51,486 3,500 1 429 083 The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2017 NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the City of Tukwila conform to generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The City's significant accounting policies are described in this note. A. The Reporting Entity The City of Tukwila was incorporated on June 23,1908 and operates under the laws of the State of Washington applicable to a non -charter optional code city with a Mayor/Council form of government. Tukwila is served by a Mayor and seven councilmembers, all elected at large to four-year terms. The City provides what are considered general government services including public safety, streets, parks, planning and zoning, permits and inspection, general administrative, water services, sanitary sewer collection, and storm drainage. The City of Tukwila has no component units (either blended or discretely presented) included in these statements. B. Basis of Presentation The City's basic financial statements consist of government -wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government -wide Financial Statements The statement of net position and the statement of activities report information on all of the nonfiduciary activities of the City. The activity of the internal service funds is eliminated to avoid "doubling up" revenues and expenses. The statements distinguish between governmental activities and business -type activities. The statement of net position presents the financial condition of the governmental and business -type activities of the City at year-end. The statement of activities presents a comparison between direct expenses and program activity of the City. Direct expenses are those specifically associated with a service, program, or department and therefore clearly identifiable to a particular function. Indirect costs are included in the program expense reported for individual functions and activities. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. For identifying 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. 43 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Revenues which are not classified as program revenues are presented as general revenues of the City, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the City. Fund Financial Statements During the year, the City segregates transactions related to certain City functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the City at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non -major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by type. While fiduciary funds are excluded from the government -wide statements, they are included in the fund financial statements. C. Fund Accounting The accounts of the City are organized on the basis of funds; each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self -balancing accounts that are comprised of assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to - and accounted for - in individual funds according to the purpose for which they are spent and how they are controlled. There are three categories of funds: governmental, proprietary and fiduciary. Governmental Funds All governmental funds are accounted for on a "flow of current financial resources" measurement focus. Their reported fund balance is considered a measure of "available spendable resources." Governmental fund operating statements focus on measuring changes in current financial position, rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. The following are the City's major governmental funds: • The general fund accounts for all the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. The general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. • The Arterial Street fund was established in accordance with RCW 82.36.020 for the administration of the State -levied motor vehicle half -cent gasoline tax distributed to Tukwila and is used primarily to account for capital arterial street projects. In addition to the State -levied motor vehicle gasoline tax, other revenue includes state and federal grants, impact fees, and transfers in from the general fund. • The Local Improvement District (LID) #33 accounts for assessments related to the LID and provides payment to the Fiscal Agent for principal and interest on bonds issued in November 2013. • The Public Safety Plan fund was established in 2016 after voters approved a 077.4 million bond measure to construct a justice center, rebuild 3 fire stations, and provide for life -cycle replacement of fire department apparatus and equipment. The other governmental funds of the City, account for the proceeds of specific revenue sources that are segregated to ensure that expenditures are made exclusively for qualified purposes. 44 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Proprietary Funds The City of Tukwila maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. 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 position. 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 internal and external 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. 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 enterprise activities 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. 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 and accounts for pension costs for firefighters who qualify for a City pension prior to 1971. 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. as CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS D. Measurement Focus Government -wide Financial Statements The government -wide financial statements are prepared using the economic resources measurement focus. All assets, deferred outflow of resources, liabilities, and deferred inflow of resources associated with the operation of the City are included on the Statement of Net Position. Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, current liabilities, and deferred inflow of resources generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the government activities of the government -wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government -wide statements and statements for governmental funds. Like the government -wide statements, all proprietary and internal service fund types are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net position. The statement of changes in activities presents increases (i.e., revenues) and decreases (i.e., expenses) in net total position. The statement of cash flows provides information about how the City finances and meets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resources measurement focus. E. Basis of Accounting Basis of accounting refers to the recognition of revenues and expenditures or expenses in the accounts and reporting them in the financial statements. Government -wide financial statements are prepared using the accrual basis of accounting. 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 sales, real estate, and utility taxes. Non -exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, sales and use taxes, admission taxes, gambling taxes, utility taxes, hotel/motel taxes, grants, entitlements, and donations. These revenues are on an accrual basis. On the accrual basis, the revenue is recognized in the period in which the income is earned. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. (See Note 3 on receivables). 46 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Other Revenue Sources Revenue sources which are not considered to meet the measurable and available criteria for revenue recognition include licenses and permits, fines and forfeitures, and other miscellaneous revenues since they are generally not measurable until received. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for principal and interest on general long-term debt and vacation and sick pay which are recorded when paid. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements via the process of consolidation. Internal service fund and similar internal activity has also 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. 2) The City Council conducts public hearings on the proposed budget in November. Public hearings are also held in December, if necessary. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve, by ordinance, any amendments that increase the total for the fund. Budget amounts presented in the financial schedules include both the original amounts and the final amended budget as approved 47 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS by the City Council. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Physical Environment Transportation Economic Development Culture and Recreation Includes all police and fire activities. Includes expenditures for the public works activities not chargeable to the enterprise funds. Includes all street and arterial street maintenance and construction. Reflects the planning and building inspection activities. Includes the parks and recreation activities. G. Assets, Liabilities, and Fund Equity Cash and Cash Equivalents The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Investments Investments are held separately by each fund with interest earned directly for the benefit of each fund. Investments are reported in the financial statements at fair value, based on quoted prices in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Washington State statutes provide for the City to hold investments consisting of obligations of the Federal Government, repurchase agreements, prime banker's acceptances, and time certificates of deposit. Additional deposit and investment information is presented in Note 2. Notes Receivable Notes receivable in the enterprise funds consists of sewer connection fees due from customers to the utility. In the governmental funds, it consists of the special assessment as well as developer agreements, of which the City currently has two current developer agreements. Amounts Due to and From Other Funds and Governments, Interfund Loans and Advances Receivable Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." As of December 31, 2017, there are no residual balances outstanding between the governmental activities and business -type activities. The non -current portion of interfund loans in the general fund and advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. See Note 4 on interfund transactions. 48 CITY OF TUKWILA-. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Special Assessments Special assessments are amounts levied against benefited properties to recover costs associated with the construction of Local Improvement District (LID) projects. A lien is recorded against benefited properties until the assessment has been paid. Special assessments receivable represents all outstanding assessment amounts including current assessments billed but not collected, delinquent assessments unpaid at year-end, and special assessment amounts due in future years, which are recorded in a deferred inflow of resources account in the fund financial statements. Since special assessments are secured by liens against related properties, no allowance for uncollectible amounts is made. Inventories Inventory is defined as items purchased for resale to external customers or other City departments or supplies and small tools used in normal operations that are considered material in amount. The inventory amount on this year's financial statements reflect only those items that will be resold. Inventory held for resale is valued at lower of cost or market and there is a physical inventory count taken annually at year-end. Governmental funds use the purchase method whereby inventory items are considered expenditures when purchased. Real Property Held for Resale Governmental funds do not report property, plant, and equipment because such assets normally are used in operations, and therefore will never be available for spending (they are not financial assets). However, specific items of property occasionally are acquired with the intent of sale. Examples include foreclosure properties, redevelopment properties, and donated assets held for resale rather than retained for use in operations. Governments often acquire redevelopment properties to attract private -sector investment in an economically depressed area and are willing to sell the property at a price that may be far less than the government's cost to acquire and improve the property. Since assets held for sale can never be reported at an amount higher than their net realizable value, any cost in excess of net realizable value must be excluded from the property value reported in the financial statements. The City acquired a number of redevelopment properties in its urban renewal area along Tukwila International Boulevard. For the Tukwila Village project, property acquisition began in 1999. The City acquired and cleared a total of 5.76 acres. In 2012 the City executed an agreement to sell the property to a developer and closed escrow on the sale of the first phase in 2017. The first phase is currently under construction and will be completed in 2018. As part of a crime -reduction project, the City purchased three crime -ridden motels in 2014 plus another motel and retail shop in 2015. All structures on those properties were demolished in 2016 and the vacant land will be sold for redevelopment. All redevelopment properties are reported at net realizable value in the financial statements. Deferred Outflows /Inflows o/ Resources Deferred outflow of resources represents a consumption of net position by the government that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. The City reports a deferred outflow related to pension and a deferred loss on refunding water/sewer bonds. Deferred inflow of resources represents an acquisition of net position by the government that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for reporting in this category. The City reports business taxes that are received in advance and a deferred inflow related to pensions. 4s CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. Capital assets acquired in governmental funds are accounted for as expenditures in the fund when the asset is purchased. These assets are reported in the governmental activities column of the government - wide statement of net position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business -type activities column of the government -wide statement of net position and in the respective funds. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Where historical cost is not known, assets are recorded at estimated historical costs. Donated assets are recorded at acquisition value at time of acquisition. The City maintains a capitalization threshold of five thousand ($5,000) dollars. The City's infrastructure consists of roads, bridges, storm sewers, water and sewer distribution and collection systems. Improvements are capitalized while the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Depreciation is computed using the straight-line method over estimated service lives, as follows: Buildings Non -Building Improvements Machinery and Equipment Intangibles Infrastructure See Note 6 for additional information on capital assets. Other Liabilities 25 to 50 years 25 to 50 years 2 to 50 years 2 to 50 years 25 to 50 years Other liabilities include retainage, deposits and the incurred -but -not -reported (IBNR) claims and claim reserve for the self -insured healthcare funds. The self-insurance fund for active employees includes an IBNR liability of $737,600 determined using actuarial methods. This liability is multiplied by a factor of 2.5 to meet the City's financial goal of maintaining reserves at 1 x IBNR for claim fluctuations plus 1.5 x IBNR for a claims reserve yielding a total liability of $1,844,000. The self-insurance fund for LEOFF 1 retirees includes an IBNR liability of $73,700 and total liability of $184,250 utilizing the same calculations as the active employees' self-insurance fund. Compensated Absences City policy and labor contracts with City of Tukwila employees call for the accumulation of vacation and sick leave. At termination of employment, employees with the required length of service may receive cash payments for all accumulated vacation leave to a maximum of 384 hours. Sick leave termination benefits are based on a percentage of accumulated sick leave up to a maximum of 180 hours. The payment is based on current wages at termination. The entire compensated absence liability, which includes salary and wages as well as related taxes, is reported on the government -wide financial statements. In the enterprise funds, the entire amount of compensated absences is reported as a fund liability. This reporting format is in compliance with GASB Statement No. 16. The current portion reported on the schedule of long-term liabilities is calculated using the last -in -first -out (LIFO) approach. Anticipated subsequent yearly usage is used to determine the current portion of the liability. There is 50 CITY OF TUKWILA-. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS no current portion to report when the anticipated leave usage is less than the anticipated leave to be accrued during the next year. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business - type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Long-term debt outstanding at year-end is outlined in Note 10. Fund Balance/Net Position A fund balance represents the difference between the current assets and current liabilities plus deferred inflows. The City restricts those portions of fund balance which are legally segregated for a specific future use or which do not represent available. spendable resources and therefore are not available for general appropriation or expenditure. Net position represents the difference between assets plus deferred outflow of resources and liabilities plus deferred inflow of resources. Net position invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the City has spent) for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The remaining balance is reported as unrestricted. In 2012 and again in 2015, the City revised the Reserve Policy which addresses the various types of the City's operating and restricted use funds. The objectives of this Policy are to establish, attain, and restore minimum fund balances, including self-insurance health care reserve funds, and specified review and reporting of fund balances. At the close of each fiscal year, the General Fund balance shall equal or exceed 18%, and the Contingency Reserve Fund balance shall each equal or exceed 10%, of the previous year General Fund revenue, exclusive of significant non -operating, non -recurring revenues such as real estate sales or transfers in from other funds. Additionally, 10% of the previous year one-time revenues shall be set aside in a one-time revenue reserve within the Contingency Reserve fund. Enterprise funds, at the close of each fiscal year, the unrestricted fund balance shall equal or exceed 20% of the previous year revenue, exclusive of non -operating, non -recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. The City shall maintain a reserve balance in each of its self -insured health care funds an amount equal to 2.5 times or 250%, of the actuarially determined IBNR liability. Fund Balance Components The fund balance amounts for governmental funds have been classified in accordance with GASB Statement No. 54 and are reported as nonspendable, restricted, committed, assigned or unassigned. 51 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts, long-term portion of loans/notes receivable, or property held for resale unless the proceeds are restricted, committed or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. The general fund's nonspendable fund balance of $937 thousand is the outstanding balance of a loan from the general fund to the Tukwila Metropolitan Park District. • Restricted fund balances have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation. • Committed fund balances can be used only for specific purposes pursuant to constraints imposed by a formal action in the form of ordinances and resolutions of Tukwila Councilmembers, the City's highest level of decision -making authority. This formal action is the passage of an ordinance by City Council creating, modifying, or rescinding an appropriation. These committed amounts cannot be used for any other purpose unless Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose but are neither restricted nor committed. Assigned also includes a contingency balance authorized via the City's Reserve Fund Balance policy. Intent of use and authority to assign amounts is determined through the budgetary process, either during adoption or amending, and the Finance Director has final authority. • Unassigned fund balance is the residual amount not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. Each fund has been analyzed to classify the fund balance in accordance with GASB Statement No. 54. Funds are created by the City Council and money is authorized to be transferred to the fund for a particular purpose. At this point, balances in these funds are at least committed, and may be further restricted depending on whether there is an external party, constitutional provision, or enabling legislation constraint involved. The City applies restricted resources first when an expense is incurred for purposes of which both restricted and unrestricted fund balance is available in the governmental funds. When expenditures are incurred for purposes, for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications can be used, it is the City's policy to spend committed resources first, the assigned second, followed by unassigned. Operating Revenues and Expenses Operating revenues are generated directly from the primary activity of the proprietary funds. For the City, these revenues are service fees for utilities, charges for services for the use of the golf course and the internal use of vehicles, computers, and facilities. Operating expenses are necessary costs incurred to provide the good or service that are the primary activity of each fund. All other revenues and expenses are classified as non -operating including investment earnings, interest expense and the gain or loss on the disposition of capital assets. Contributions of Capital Contributions of capital in proprietary fund financial statement arise from outside contributions of capital assets, for example, developers, and grants or outside contributions of resources restricted to capital acquisition and construction. It also includes water and sewer connection charges. 52 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Indirect Cost Allocation Indirect costs, also referred to as overhead costs, consist of the cost of central services or support functions shared across departments. They include accounting, human resources, payroll, information technology, janitorial services, and others. These services are paid through the general fund and charged back to the proprietary funds that directly benefit from them. The indirect costs allocated to the proprietary and other funds totaled $2,279,058 for 2017 and are reported as a reduction of general government expenditures on the Statement of Activities. Interfund Activity Exchange transactions between funds are reported as revenues in. the seller funds and as expenditures/expenses in the purchaser funds. On the government -wide statement of activities, the exchange transactions between the internal service funds and the user funds are eliminated. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non -operating revenues/expenses section in proprietary funds. Transfers between governmental and business -type activities on the government -wide statement of activities are reported separately after general revenues. Transfers between funds reported in the governmental activities column are eliminated. Transfers between funds reported in the business type activities column are eliminated. Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Risk Management It is the City of Tukwila's policy to self -insure for unemployment benefits because of the insignificant liability. Medical and dental self-insurance coverage is also provided for employees. All buildings, City equipment, and City vehicles are insured by carriers for property coverage at replacement value. The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA) as of January 1, 1984. WCIA is an organization of Washington entities numbering 161 as of December 31, 2017. WCIA provides pooled self- insurance coverage for general liability, vehicle liability, false arrest, and errors and omissions. See Note 13 for additional information on risk management. H. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans' fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. NOTE 2 —DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool available for use by all funds. Interest earned on pooled investments is recorded in the participating funds. Investments are also held separately by several of the funds, with interest earned directly for the benefit of each fund. Cash and Cash Equivalents 53 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Custodial credit risk is the risk associated with the failure of a depository financial institution. In the event of a depository financial institution's failure, it is the risk that the City would not be able to recover its deposits or collateralized securities that are in the possession of the outside parties. The City minimizes custodial credit risk by following the restrictions set forth in state law. At year-end, the carrying amount of the City's cash balance held in banks was $11,305,429. Of the bank balance, $250,000 was covered by Federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) insured the remainder. The City also maintains imprest funds totaling $14,950. The City participates in the State Treasurer's Investment Pool, which is a 2a7-like unrated pool, overseen by the State Treasurer's Office. A 2a7-like-pool is an external investment pool that is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC -registered mutual funds to use amortized cost, which approximates fair value, to report net assets and compute share prices. The fair value of the City's position in the pool is the same as the value of the pool shares. Because of its highly liquid nature, the Pool funds are considered cash equivalents. Investments The City's investment portfolio includes certificate of deposits insured by the Washington State Public Depository Commission, U.S. Government Agency Notes, and municipal bonds issued by state and local agencies. These investments are reported at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Also, the Firemen's Pension Fund is authorized to invest in stocks, bonds, and mutual funds. 54 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS At December 31, 2017, the City had the following deposits and investments. Certificates of deposits are measured at amortized cost, agencies and municipal bonds are measured at fair value. SCHEDULE OF INVESTMENTS BY MATURITY Certificates of Deposit: Sound Community Bank Bank of Washington Total Certificate of Deposits U.S. Government Agency Notes,' Federal Home Loan Mtg Corp Federal Farm Credit Bank Federal Home Loan Bank Federal Farm Credit Bank Farmer Mac Farmer Mac FNMA Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Bank Federal Farm Credit Bank Total U.S. Agency Notes 3/4/2019 6/2/2019 $ 3,242,622 250,000 3,492,622 5/25/2018 AA+ / Aaa 997,899 12/21/2018 AA+ / Aaa 994,692 1/30/2019 AA+ / Aaa 994,441 3/20/2019 AA+ / Aaa 1,989,224 7/23/2019 AA+ / Aaa 993,355 8/2/2019 AA+ / Aaa 2,484,920 10/9/2019 AA+ / Aaa 2,310,722 12/27/2019 AA+ / Aaa 990,552 6/29/2020 AA+ / Aaa 1,683,549 8/28/2020 AA+ / Aaa 2,272,586 5/9/2022 AA+ / Aaa 1,974,266 17,686,207 Municipal Bonds.' Washington State Biomedical Research' Revenue - Facilities 7/1/2019 Aa1 / AA+ Seattle. Washington' Limited General Obligation 11/1/2019 Aaa / AAA Auburn, Washington'. Limited General Obligation, Build America 12/1/2019 AA+ Port of Anacortes, Washington: Limited General Obligation 9/1/2020 Aa3 Douglas County School District, Washington'. Unlimited General Obligation 12/1/2020 Aa2 Port of Tacoma, Washington: Limited General Obligation, Taxable Refunding 12/1/2020 Aa2 / AA Multnomah County, Oregon: Limited General Obligation 6/1/2021 Aaa Burien, Washington: Limited General Obligation, Build America 12/1/2025 Aa2 Part of Seattle, Washington: Revenue, Taxable 5/1/2036 Aa2 / AA - Total Municipal Bonds No credit rating with certificate of deposit accounts; accounts are insured by the Public Depository Protection Commission, 519,700 392,962 312,282 352,175 1,188,822 515,702 456,125 531,560 2,127,580 55 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS RECONCILIATION OF ALL CASH, DEPOSITS AND INVESTMENTS Governmental Funds General Fund Arterial Street Local Improvement District #33 Public Safety Plan Facilities Urban Renewal Other Governmental Funds Internal Service Funds Proprietary Funds Water Sewer Foster Golf Course Surface Water Total as Reported on Statement of Net Position Firemen's Pension Trust Fund Agency Fund $ 9.486,158 $ 349,039 752,342 484,286 9. 560,304 5,214,483 8,406 $ 6,322,974 $ 2,270,778 - - $ 15,817,539 2,619,817 752,342 25,903,447 10,553,628 36,941,362 6,017,641 531,560 - 16,109,505 - 3,205,071 - 8,419,554 3,973,370 23,825 2,161,812 3,561,217 572,915 62,620 4,284,100 - 4,284,988 6,159,007 7,846,206 635,535 4,284,100 55 38,238,215 34,286,717 16,506,406 10,553,628 99,584,966 55 925,014 311,398 ee 515,702 1,440,716 311,398 Cash and Cash Equivalents: Local Government Investment Pool Money market account Cash on hand Cash in bank -book balance Total cash and cash equivalents Investments: Certificates of deposit U.S. Government Agency Notes Municipal bonds Total investments 56 $ 48,269,306 14,361,779 14,950 11,115,308 73,761,344 3,492,622 17, 686,207 6,396,908 27, 575, 736 CITY OF TUKWILA'. 2017 CAFR Cash & cash equivalents Deposits Drug Seizure funds - federal portion Debt Service Impact fees Investments Customer Deposits -Water Utility Customer Deposits -Golf Course Lease Deposits -Golf Course Fair Value Measurement NOTES TO THE FINANCIAL STATEMENTS $ 31,697,680 8,406 223,408 2,124, 016 146,762 10,553,628 23,825 47,620 15,000 CO The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. • Level 1 inputs are quoted prices in active markets for identical assets. These valuation inputs are considered most reliable. • Level 2 inputs are quoted prices for similar assets, quoted prices for identical or similar assets in markets that are not active, or other observables. These valuation inputs are considered to be reliable. • Level 3 inputs are significant unobservable inputs and are considered to be the least reliable. The City has the following recurring fair value measurements as of December 31, 2017: Irnestmenis by Fair Value Level US Government Agencies Municipal Bnds WOW iiiiiroaltliVir Interest Rate Risk Total $ 17,686,207 6,396,908 rtMEL : Quoted Prices in Active Significant Markets for Other Identical Observable Assets Inputs (Level 1) (Lesel 2) $ - $ 17,686,207 6,396,908 Significant Unobservable Inputs (Level 3) 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 investment maturities as follows: 57 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 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 %) years or forty-two (42) months. The City uses the weighted average maturity method to manage interest rate risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes and the City's investment policy limit the types of securities authorized for investment by the City. The principal governing statutes are RCW 39.59 and RCW 39.60. The Finance Director may further restrict eligible investments by this policy at his/her discretion. Authorized investments include (but are not limited to). 1) U.S. Treasury Securities. 2) U.S. Agency Securities (i.e., obligations of any government -sponsored corporation eligible for collateral purposes at the Federal Reserve). 3) Certificates of Deposit, Money Market Deposit Accounts and savings deposits with qualified depositories within statutory limits as promulgated by the WPDPC at the time of investment. 4) Bankers Acceptances (BA's) purchased on the secondary market with a rating of A-1, P-1, its equivalent or better. 5) General Obligation Bonds of a state or local government which have at the time of the investment one of the three highest credit ratings of a nationally -recognized rating agency. 6) The Washington State Local Government Investment Pool (LGIP). As of December 31, 2017, the City's investments in municipal bonds were rated Aaa to Aa3 by Moody's Investor Service. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City of Tukwila diversifies its investments by security type and institution as described below: 1) No more than fifty percent (50%) of the City's cash and investment portfolio, at the time of purchase, shall be in any single financial institution. 2) Except, that no more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in the Washington State Local Government Investment Pool, and 3) No more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in U.S. Treasury or Agency securities. NOTE 3 — RECEIVABLES Taxes receivable consists of property, sales and use, gambling, leasehold, and hotel/motel taxes. 58 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Customer accounts receivable consists of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial and the direct write-off method is used. Customer accounts receivable also includes the current portion of special assessments due from property owners within Local Improvement District No. 33. Other types of accounts receivable include utility taxes due from private organizations and customer accounts receivable for amounts owed which billings have not been prepared. Taxes Receivable Property Sales & Use Real Estate Excise Tax Utility Tax Admission/Gambling/Parking/Other Total Taxes Receivable Customer Receivable Miscellaneous Utility Accounts Total Customer Receivable Interest Notes due within one year Property Taxes Receivable $ 360,063 $ 3,685,904 198.258 671.411 1,293,415 6,209.050 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS the current period are reported as other unavailable revenue in the deferred inflow of resources section of the governmental funds financial statements. The tax rate for general City operations is limited to $3.60 per $1,000 of assessed value. An additional levy rate of $0.225 is available to the City because the City funds a Firemen's Pension Fund. The payment of principal and interest on limited tax (non -voted) bonds issued by the City is made from the general levy. Accordingly, the issuance of limited tax general obligation bonds has the effect of reducing property taxes available for the general operations of City government. State law also provides that the City's operating levy may not exceed 101% of the largest single levy since 1985. The State Constitution provides that the total of all taxes upon real and personal property by the State and all taxing entities, including the City, shall not in any year exceed 1% ($10 per $1,000) of the true and fair monetary value of such property. This limitation may be exceeded upon the approval of 60% of the City voters at an election in which the total vote exceeds 40 % of the votes cast at the last general election. Washington State Constitution and Washington State law, RCW 84.55.010, limit the rate. The City's regular levy in 2016 was $2.58592 per $1,000 of assessed valuation of $5,763,649,829 for a total regular levy of $14,869,800. Special levies approved by the voters are not subject to the limitations listed above. In 2017, the City levied an additional $0.47 per $1,000 for the Public Safety Plan approved by voters in November 2016. The total additional 1,418,586 1,418,586 levy in 2017 was $2,698,992 2,157,178 2,157,178 $ 360,063 - 3,685,904 198,258 671,411 847 1,294,262 847 6,209,897 1,418.586 2,157,178 138.778 211.471 5,865 3,575,765 144,643 211,471 MiJibh The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Collections are distributed daily via wire transfer. January 10 February 14° April 30° May 31'V October 31. Property Tax Calendar Taxes are levied and become an enforceable lien against properties. Tax bills are mailed. First of two equal installment payments is due. If taxes are less than $50, full payment is due. (RCW 84.56.020) Assessed value of property established for next year's levy at 100 percent of market value. Second installment is due. (RCW84.56.020) Assessed values are established by the County Assessor at 100% of fair market value. A revaluation of all property is required every two years. On May 31 of each year the assessed value of property is established for the next year's property tax levy. Property taxes levied by the County Assessor and collected by the County treasurer become a lien on the first day of the levy year and may be paid in two equal installments if the total amount is $50 or more. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. During the year, property tax revenues are recognized when cash is received. At year-end, unpaid property taxes are recorded as a receivable. Property tax receivables at year-end not expected to be collected within 60 days after 59 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, 2017, the majority represents grants. Notes Receivable Notes receivable for governmental activities consists of the long-term portion of the special assessments related to Local Improvement District (LID) No. 33. Special assessments are levied against certain property owners benefited by the improvement. The current portion of outstanding assessments is reported in the receivables category on the Statement of Net Position and consists of assessments which are due within one year and delinquent assessments from the prior year. Assessments are charged to property owners within the LID annually with payments due in October of each year. The repayment period for the assessments is 15 years with the first installment due in 2014 and the final installment due in 2028. The other note receivable category is related to developer agreements. There are two agreements with local developers to defer fire, parks and traffic impact fees, along with building permit fees as part of new, large construction projects. The first agreement, related to the Washington Place project, defers the developer's obligation to pay traffic, park, and fire impact fees until 2018. The second agreement is for the Tukwila South project which defers $1.75 million in fire impact fees, with annual payments due each December from 2017 through 2022. Notes receivable for business —type activities consists of outstanding payment plans for sewer connection fees. The City designed and constructed sewer infrastructure in both the Allentown and Foster Point neighborhoods, which was previously on septic. The project was completed and accepted by City Council in 2007. The connection fees to be paid by property owners were established by ordinance, effective in August, 2007. One option given to property owners was an installment payment plan. This option allowed owners to sign an agreement to have the connection charge added to their monthly water bill and repaid over 5, 10, or 15 years with a 4% annual interest rate. The balance reflects all principal outstanding at year-end. 60 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Notes Receivable Special Assessments De\eloper Agreements Sewer Payment Plan NOTE 4— INTERFUND TRANSACTIONS $ 4,315,171 $ 2,856,277 233,890 $ 4,315,171 2,856,277 233,890 Interfund activity is the term used to describe similar financial transactions between funds of the primary government. Reciprocal interfund activity involves the exchange of equal or almost equal value between funds. Services Provided/Used — Transactions that would be treated as revenues, expenditures or expenses if they involve external organizations, such as buying goods and services in return for equal or almost equal value, are similarly treated when they involve other funds of the City of Tukwila. Interfund Loans/Advances — Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans are offset by a reservation of fund equity. Interfund loans are subject to elimination upon consolidation. As of December 31, 2017, the City has no outstanding CO interfund loans or advances. W Nonreciprocal interfund activity does not involve the exchange of equal or almost equal value between funds. Transfers — Transactions to support the operations of other funds are recorded as "Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government -wide financial statements, Contributions — Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers of remaining balances when funds are closed are classified non -operating revenue. Reimbursements — Repayments from funds responsible for expenditures or expenses to the funds that initially paid for them. These transactions are expenditures/expense in the fund responsible and as a reduction of expenditure/expensed in the fund being reimbursed. Interfund transfers for the year were as follows: SUMMARY OF INTERFUND TRANSFERS Transfers In Transfers Out 58 $ 300,000 $ 1,017,000 $ 1,800.000 $ 3,237,496 $ 6,354,496 $ 300.000 $ 6,654,496 (5,737,496) - - (1,317,000) 6,654,496 - 6,654,496 61 CITY OF TUKWILA' 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS The principal purposes for interfund transfers include interfund subsidies and transfers into debt service and capital projects funds. NOTE 6—OPERATING LEASES During 2017 the City maintained operating lease agreements for City operated machinery and equipment. Tukwila leases office/ storage space for the purposes of the Police Archives Storage, Police Gym, and the Neighborhood Resource Center. Costs associated with these activities are as follows. SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS Neighborhood Resource Center Police Archives/Vehicle Storage Police Department Gym Postage Machines Office Equipment 20,400 20,400 20,400 20.400 20,400 57,424 59,144 60,916 58,652 58,652 15,091 15,542 16,012 6,780 6,780 6,948 4,055 - - 197,446 192,120 175,721 29,441 27,224 NOTE 6 — CAPITAL ASSETS Capital asset activity for the year ended December 31, 2017, was as follows: GOVERNMENTAL ACTIVITIES 62 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Governmental Activities Capital assets, not being depreciated: Land $ 35,498,580 $ 673,739 $ - $ 36,172,319 Construction in Progress Total capital assets. not being depreciated 10,064,699 14,604,067 (15,124,831) 9,543,935 45,563,279 15,277,806 (15,124,831) 45,716,254 Capital assets, being depreciated: Buildings 24,431,341 90,264 - 24,521,605 Other Improvements 23,354,321 333,445 23,687,766 Machinery and Equipment 21,495,035 1,515,864 (241,261) 22,769,638 Infrastructure 189,410,723 13,989,228 203,399,951 Total capital assets being depreciated 258,691,420 15,928,801 (241,261) 274,378,960 Less accumulated depreciation for Buildings (12.597,195) (808,977) (13,406,172) CO Other Improvements (12.826,302) (1,026,435) (13,852,737) W Machinery and Equipment (14,383,941) (1,359,296) 237,935 (15,505,302) C-T1 Infrastructure (58,300,035) (5,818,599) (64,118,634) Total accumulated depreciation Total capital assets, being depreciated, net Wink (98,107,472) (9,013,307) 237,935 (106,882,844) 160 583,948 6,915 494 (3,326) 167,496,116 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS BUSINESS -TYPE ACTIVITIES Business -Type Activities Capital assets, not being depreciated: Land $ 2,346,230 $ 50,000 $ - $ 2,396,230 Construction in Progress Total capital assets, not being depreciated Capital assets. being depreciated: Buildings Other Improvements Machinery and Equipment Total capital assets being depreciated Less accumulated depreciation for'. Buildings Other Improvements Machinery and Equipment Total accumulated depreciation Total capital assets, being depreciated, net fib 2,211,229 5,926,438 (5,674,888) 2,462,779 4,557,459 5,976,438 (5,674,888) 4.859,009 13,284,419 - - 13,284,419 88,164,649 5,745,460 (72,557) 93.837,552 2,174,632 42,499 - 2,217,130 103,623,700 5,787,958 (72,557) 109,339,101 (4,977,186) (371,794) (34,005,810) (1,798,971) (1,788,518) (50,147) (5,348,980) 14,202 (35.790,579) (1,838,666) (40,771,514) (2,220,912) 14,202 (42,978,225) 62,852,188 3,567,046 (58,355) 66,360,879 41, CITY OF TUKW ILA: 2017 CAFR DEPRECIATION NOTES TO THE FINANCIAL STATEMENTS Governmental Activities: General Govemment Public Safety Physical Environment Transportation Economic Environment Culture and Recreation Capital assets held by the government's Internal Service Funds are charged to the various functions based on their usage of the assets Water Utility - Depreciation Sewer Utility - Depreciation Foster Golf Course - Depreciation Surface WaterUtility - Depreciation NOTE 7 —JOINT VENTURES $ 282,846 145, 575 859,211 5,852,027 2,907 1,037,272 833,469 $ 519,778 367,729 313,489 1,019,917 A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on -going financial interest or (b) an on -going financial responsibility. The City participates in two joint ventures. A summary of the City's investment in joint ventures follows. Valley Com SCORE SUMMARY OF INVESTMENT IN JOINT VENTURES $ 2,677,983 719,422 5,914,400 $ 2,677,983 6,633,822 TOTAL $ 3,397,405 $ 5,914,400 $ 9,311,805 65 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 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. Federal Way was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies. Separate agreements between Valley Corn and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The allocation of prorated financial participation among the five participating cities is the percentage of estimated dispatched calls attributed to each jurisdiction compared to the total estimated dispatched calls for the current 12-month period ending December 31. The 2017 cost distribution for the five (5) participating cities is as follows: Renton Kent Auburn Tukwila Federal Wa 87,220 115,303 100,554 36.635 94,522 20.09% 26.55% 23.16% 8.44% 21.77% Valley Com is governed by an Administration Board composed of the Mayors from the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Board is responsible for the following functions: (1) Adopting an annual budget after review by participating legislative bodies; (2) Appointment and/or discharge of the Director; (3) Approves personnel policy and makes final decisions on all major policy changes; (4) Reviews and approves all contracts. In addition, an Operating Board was established and consists of two members of each participating City's Public Safety Departments, including the heads of such departments or their designees. The Operating Board performs the following functions: (1) Oversees the operation of Valley Com and advises and makes recommendations to the Administration Board; (2) Makes recommendation on Director selection; (3) Presents proposed policies and budgets to the Administration Board; (4) Approves disbursement of funds by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. The proposed budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each participating city, in accordance with the provisions of the Interlocal Agreement. The share of equity belonging to the five (5) participating cities is as follows: 66 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 1 Equity January 1. 2017 $ 4,531,544 $6,314,604 $4,504,828 $2,391,872 $ 3,484,568 $21,227.416 Current Year Increasef(Decrease) 681,177 900,497 785,310 286.111 738.204 3,391,299 Equity December 31, 2017 $ 5,212,721 $7,215,101 $5,290,138 $2,677,983 $ 4,222,772 $24,618,715 Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. In August 1993, Valley Com entered into an interlocal cooperation agreement, pursuant to RCW 39.34 RCW, with the sub- regions of King County, Seattle, and the Eastside Public Safety Communications Agency. This agreement governs the development, acquisition and installation of the 800 MHz emergency radio communications system funded by a $57 million King County levy approved in November 1992. This agreement provides that upon voluntary termination of any sub-region's participation in the system, it surrenders its radio frequencies, relinquishes its equipment and transfers any unexpended levy proceeds and associated equipment replacement reserves to another sub -region or consortium of sub -regions. Thus, in accordance with this agreement, the participating cities of Valley Com have no equity interest in Valley Com's 800-MHz communications system. During 2000, the Valley Communications Center Development Authority was created to issue $12,758,000 in General Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each of the five participating cities was responsible for one -fifth of the debt obligation, which originally was $2,551,600 per City. The basic agreement shall not be terminated until all bonds issued by Valley Communications Center Development Authority have been paid and retired. The final payment on the bonds was made in 2015. A complete set of financial statements are available from Valley Communications Center, 27519 1081h Ave SE, Kent, WA 98030, or by telephone 253-372-1300. South Correctional Entity (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpected funds or reserve funds shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE, a governmental administrative agency pursuant to RCW 39.34.030(3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility was provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35,21.730 through 35.21.755. The SCORE 67 2019 2,310,000 4,602,229 2020 2,385,000 4,484,854 2021 2,465,000 4363,604 2022 2,590,000 4,233,250 202 3-2027 14, 485, 000 18, 721798 2028-2032 17,725,000 13,590,820 2033-2037 21,855,000 7,082,263 2038-2039 10,115,090 676,321 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS PDA issued $86 million in special obligation bonds in 2009 (the "Bonds") to construct, develop, acquire and equip the SCORE Facility. Pursuant to the Formation Interlocal Agreement and the ordinances of each city, each Owner City (which includes the Cities of Auburn, Burien, Federal Way, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the principal of and interest on the Bonds as the same become due and payable. Each Owner City's obligation to pay its portion is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. The following is a summary of the debt service requirements for the Bonds: SUMMARY OF DEBT SERVICE REQUIREMENTS 2018 $ 2,240,000 $ 4,715,979 $ (1,512,496) $ 5,443,483 5,433,912 5,429,294 5.427,027 5,322,632 26.502,317 26,356,175 26.205,434 10.437,497 (1,478,317) (1,440,560) (1,401,577) (1,500,618) (6,710,481) (4,959,695) (2,731,829) 353,824 $ 1,687,480 $ 217,739 1,684,513 217,357 1,683,081 217,172 1.682,378 217,081 1650016 212,905 8,215,719 1,060,092 8,170,415 1,054,248 8,123,685 1048,217 3.235,624 417,500 $ 979,827 $ 1,959,654 978,104 1,956,208 977,273 1,954,546 976.865 1 953,730 958,074 1,916,147 4,770417 9,540,834 4,744,112 9,488,223 4,716,978 9,433,956 1,878,749 3.757,499 $ 163,305 163,017 162,879 162,811 159,679 795.070 790,685 786,163 313.125 $ 435 479 434.713 434 344 434,162 425 811 2,120,185 2,108,494 2,096,435 835.000 er The City of Tukwila reports its share of equity interest in the Governmental Activities column within the Government - wide financial statements under assets. The following is condensed (unaudited) financial information as of December 31, 2017 related to SCORE. The share of equity belonging to the seven participating cities are as follows: n�5 Equay January 1, 2017 Current Yearincreasel(0ecrerse) Equay December 31, 2017 Percent of Eqully $ 3,115,034 32,413 $ 3.147,747 $ 324,602 $ 166,583 22263 (3248) $ 346,865 $ 163336 $2,292.265 8 2,941,503 $ 434,029 $ 703,323 $ 0,977,639 61482 74,665 22,947 16,099 226,621 62353,747 $ 3,016,168 $ 456,976 $ 719,422 910,204,261 30.85% 3,40% 1.60% 23.07% 29.56% 4.4874 7.05% 100.00% The investment in joint venture for SCORE on the Statement of Net Position includes Tukwila's share of debt issued in 2009. The City's share of SCORE debt is $5,914,400. See Note 10 for additional information on long-term debt. Completed financial statements for SCORE and SCORE PDA can be obtained from the SCORE, Attn: Finance Manager, 20817 17'h Avenue South, Des Moines, WA 98198. NOTE 8 - PENSION PLANS The following table represents the aggregate pension amounts for all plans subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2017: 68 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension liabilities $ (11,613,653) Pension assets $ 8,229,168 Deferred outflows of resources $ 2,475,258 Deferred inflows of resources $ (4,284,751) Pension expense/expenditures $ 798,890 Washington State Department of Retirement Systems Substantially all City of Tukwila full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost -sharing, multiple -employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380, Olympia, WA 98504-8380 Or the DRS CAFR may be downloaded from the DRS website at www.drs. wa.gov. A. Public Employees Retirement System (PERS) Plans 1, 2, and 3 PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments, and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service. The AFC is the average of the member's 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of -living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2017 were as follows: 69 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Actual Contribution Rates: January — June 2017 PERS Plan 1 Employer 6 23 Employee 6.00% PERS Plan 1 UAAL 4.77 Administrative Fee 0.18% Total 11.18% 6.00 July — December 2107 PERS Plan 1 7.49% 6 00% PERS Plan 1 UAAL 5 030/0 Administrative Fee 0 18 Total 12 70% 6.00% The City of Tukwila did not contribute to PERS Plan in 2017 as there are no employees covered under this plan. Although, $789,712 of the PERS 2/3 contributions were allocated to the PERS 1 unfunded actuarial accrued liability (UAAL). PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member's 60 highest -paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2017 were as follows: 70 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Actual Contribution Rates: Employer 2/3 Employee 2 January — June 2017 PERS Plan 2/3 6.23% 6.12% PERS Plan 1 UAAL 4.77% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 11.18% 6.12% July — December 2107 PERS Plan 2/3 7.49% 7.38% PERS Plan 1 UAAL 5,03% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 12.70% 7.38% The City of Tukwila actual contributions to the plan were $1,902,973 for the year ended Decembe 31, 2017. Public Safety Employees' Retirement System (PSERS) PSERS Plan 2 was created by the 2004 Legislature and became effective July 1, 2006. To be eligible for membership, an employee must work on a full time basis and: • Have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job; or • Have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or • Function as a limited authority Washington peace officer, as defined in RCW 10,93.020 or • Have primary responsibility to supervise eligible members who meet the above criteria. PSERS membership includes: PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who met at least one of the PSERS eligibility criteria and elected membership during the period of July 1, 2006 to September 30 2006; and Employees hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. PSERS covered employers include. Certain State of Washington agencies (Department of Corrections, Department of Natural Resources, Gambling Commission, Liquor Control Board, Parks and Recreation Commission, and Washington State Patrol), Washington State Counties, 71 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • Washington State Cities (except for Seattle, Spokane, and Tacoma), • Correctional entities formed by PSERS employers under the Interlocal Cooperation Act, PSERS Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the average final compensation (AFC) for each year of service. The AFC is based on the member's 60 consecutive highest creditable months of service. Benefits are actuarially reduced for each year that the member's age is less than 60 (with ten or more service credit years in PSERS), or less than 65 (with fewer than ten service credit years). There is no cap on years of service credit. Members are eligible for retirement at the age of 65 with five years of service; or at the age of 60 with at least ten years of PSERS service credit; or at age 53 with 20 years of service. Retirement before age 60 is considered an early retirement. PSERS members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. PSERS Plan 2 retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PSERS Plan 2 members are vested after completing five years of eligible service. Contributions The PSERS Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The Plan 2 employer rates include components to address the PERS Plan 1 unfunded actuarial accrued liability and administrative expense currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates. In addition to the regular change in contribution rates on July 1, 2017, PSERS contribution rates changed again September 1, 2017 due to HB 1709, which allows PERS members meeting specific criteria to transfer service credit into PSERS as long as they and their employer pay the difference between the PERS and PSERS contribution rates. The PSERS Plan 2 required contribution rates (expressed as a percentage of current -year covered payroll) for 2017 were as follows: Actual Contribution Rates: Employer Employee January — June 2017 PSERS Plan 2 6.59% 6.59% PERS Plan 1 UAAL 4.77% Administrative Fee 0.18% Total 11.54% 6.59% July — August 2017 PSERS Plan 2 6.73% 6.73% PERS Plan 1 UAAL 5.03% Administrative Fee 0.18% Total 11.94% 6.73% September — December 2017 PSERS Plan 2 6.74% 6.74% PERS Plan 1 UAAL 5.03% Administrative Fee 0.18% Total 11.95% 6.74% The City of Tukwila actual contributions to the plan were $15,143 for the year ended December 31, 2017. 72 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows: • 20+ years of service — 2.0% of FAS • 10-19 years of service — 1.5% of FAS • 5-9 years of service — 1 % of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non -duty disability payments, a cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2017. Employers paid only the administrative expense of 0.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2017 were as follows: Actual Contribution Rates: Employer Employee January — June 2017 State and local governments 5.05% 8.41% Administrative Fee 0.18 Total 5.23 % 8.41% July — December 2017 State and local governments 5.25% 8.75% Administrative Fee 0.18 Total 5.43% 8.75% 73 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS The City of Tukwila actual contributions to the plan were $844,098 for the year ended December 31, 2017. The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2017, the state contributed $62,155,262 to LEOFF Plan 2. The amount recognized by the City of Tukwila as its proportionate share of this amount is $515,721. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2017 with a valuation date of June 30, 2016. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2007-2012 Experience Study and the 2015 Economic Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2016 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2017. Plan liabilities were rolled forward from June 30, 2016, to June 30, 2017, reflecting each plan's normal cost (using the entry -age cost method), assumed interest and actual benefit payments. • Inflation: 3.0 % total economic inflation; 3.75% salary inflation • Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are also expected to grow by promotions and longevity. Investment rate of return: 7.5% Mortality rates were based on the RP-2000 report's Combined Healthy Table and Combined Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime. There were changes in methods and assumptions since the last valuation. For all plans, except LEOFF Plan 1, how terminated and vested member benefits are valued was corrected. How the basic minimum COLA in PERS Plan 1 is valued for legal order payees was improved. For all plans, the average expected remaining service lives calculation was revised. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent. To determine that rate, an asset sufficiency test included an assumed 7.7 percent long-term discount rate to determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the long-term expected rate of return, a 7.5 percent future investment rate of return on invested assets was assumed for the test. Contributions from plan members and employers are assumed to continue being made at contractually required rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a component for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.5 percent was used to determine the total liability. 74 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Long -Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.5 percent was determined using a building -block -method. In selecting this assumption, the Office of the State Actuary (OSA) reviewed the historical experience data, considered the historical conditions that produced past annual investment returns, and considered capital market assumptions and simulated expected investment returns provided by the Washington State Investment Board (WSIB). The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment returns over various time horizons. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2017, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB's most recent long-term estimate of broad economic inflation. t&ixtlaa'. Fixed Income 20% It cL 1.70% Tangible Assets 5% 4.90% Real Estate 15% 5.80% Global Equity 37% 6.30 % Private Equity 23% 9.30% 100% Sensitivity of the Net Pension (Liability) Asset The table below presents the City of Tukwila proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City of Tukwila proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.5 percent) or 1-percentage point higher (8.5 percent) than the current rate. 1% Decrease 6.50% Current Rate 7.50% 1% Increase 8.50% PERS 1 12,963,094 10,641,264 8,630,063 PERS 2/3 25,137,481 9,330,551 (3,620,883) PSERS 2 380,741 56,704 (197,361) LEOFF 1 (1,532,542) (2,066,074) (2,524,257) LEOFF 2 1,679,272 (7,760,092) (15,450,892) Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. 75 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension (Liabilities)IAssets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the City of Tukwila reported a pension asset of $8,229,168 and a pension liability of $11,659,254 for its proportionate share of the net pension liabilities as follows: PERS 1 $ 6,029,001 PERS 2/3 $ 5,621,325 PSERS 2 $ 8.928 FIREMENS PENSION $ (45,601) LEOFF 1 $ (1,245,425) LEOFF 2 $ (6,983,743) The amount of the asset reported above for LEOFF Plan 1 and 2 reflects a reduction for State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension (liability)/asset, the related State support, and the total portion of the net pension asset that was associated with the City of Tukwila were as follows: LEOFF 1-employer's proportionate share (1,245,425) LEOFF 1-State's proportionate share of the net pension asset associated with the employer (8,424,025) TOTAL (9,669,450) LEOFF 2- employer's proportionate share (6,983,743) LEOFF 2- State's proportionate share of the net pension asset associated with the employer (4,530,224) TOTAL (11,513,967) At June 30, the City of Tukwila proportionate share of the collet ve net pension liabilities was as follows' 76 IV CITY OF TUKWILA' 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS �� na PERS 1 0.131354% 0.127058% -0.004296% PERS 2/3 0.166622% 0.161787% -0.004835% PSERS 2 0.048428% 0.045565% -0.002863% LEOFF 1 0.077890% 0.082086% 0.004196% LEOFF 2 0.510663% 0.503269% -0.007394% Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer's proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2017. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2017, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2017, the state of Washington contributed 39.35 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.65 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2017, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2016, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2017, the city of Tukwila recognized pension expense as follows: PERS 1 141,546 PERS 2/3 621,363 PSERS 2 12,312 LEOFF 1 (245,635) LEOFF 2 246,679 FIREMEN'S PENSION 22,625 TOTAL 798,890 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2017, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 77 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Differences between expected arid actual experience Net difference between projected and actual investment earnings on pension plan Investments (224,985) Changes of assumptions Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date $403,522 TOTAL $403,522 ($224,985) Differences between expected and actual experience $569,573 ($184,876) Net difference between projected and actual investment earnings on pension plan investments $0 (1,498, 510) Changes of assumptions $59,709 Changes in proportion and differences between contributions and proportionate share of contributions $0 (392,461) Contributions subsequent to the measurement date $591,332 TOTAL $1,220,614 ($2,075,847) 78 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Its ^ofe>Fct�it'cer '\ Differences between expected and actual experience $5,280 ie3 (634) Net difference between projected and actual investment earnings on pension plan investments 50 (6,262) Changes of assumptions $76 Changes in proportion and differences between contributions and proportionate share of contributions $0 (909) Contributions subsequent to the measurement date $3,307 TOTAL 58,663 ($7,805) ua Differences between expected and actual experience Net difference between projected and actual investment earnings on pension plan Investments $0 (115,729) Changes of assumptions Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date TOTAL SO ($115,729) 79 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS of Re r 3 Deferred InffatN: of Resources Differences between expected and actual experience $306,949 (264,835) Net difference between projected and actual investment earnings on pension plan investments $0 (1,567, 899) Changes of assumptions 58,410 Changes in proportion and differences between contributions and proportionate share of contributions 104,256 ($27,650) Contributions subsequent to the measurement date $422,845 TOTAL $842,459 (51,860,385) Deferred outflows of resources related to pensions resulting from the Ci y of Tukwila contr butions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: EMEINIII 84,743 • • MIEMIIIIII EMEI MMEall 2018 2019 2020 2021 2022 Thereafter TOTAL (739,269) 44,411 (172,268) (630,952) 22,397 29,116 (1,446,565) 80 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 2018 2019 2020 2021 2022 Thereafter TOTAL (72,630) 19,588 (7,822) (54, 865) (115,729) %ar Illignig (1,440,770) Firemen's Pension System Summary of Significant Accounting Policies Investments are valued and reported at fair value. Plan Description 81 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Plan Administration: The Firefighters" Pension Fund is administered by the City of Tukwila. The plan is a single - employer defined benefit pension plan that provides pensions for firefighters that were hired prior to 1970. The firefighters' pension board consists of the following five members: the chairperson of the fire commissioners for said district who shall be chairperson of the board, the county auditor, county treasurer, and in addition, two regularly employed or retired firefighters elected by secret ballot of the employed and retired firefighters. Retired members who are subject to the jurisdiction of the pension board have both the right to elect and the right to be elected under this section. The first members to be elected by the firefighters shall be elected annually for a two-year term. The two firefighter -elected members shall, in turn, select a third eligible member who shall serve in the event of an absence of one of the regularly elected members. Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970 and for providing the "excess benefit", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new members. At December 31, 2017, FPF membership consisted of the following: Inactive plan members retired prior to March 1, 1970 Inactive plan members retired March 1, 1970 or after Active Plan Members Benefits Provided 0 10 0 All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. All members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to the current salary of the rank from which the firefighter retired, or an increase proportionate to the increase in the Seattle -area CPI, with the change computed annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. The latter applies to all other types of monthly benefits. Contributions As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This statute require that each municipality levy up to $0.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. The actuarial assumptions were provided by an independent actuary. Investments 82 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS It is the policy of the City of Tukwila to invest public funds in a manner that will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City, while conforming to all state and local statutes governing the investment of public funds. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. Concentrations. Approximately 70% of investments are in a long-term government bond. City's Net Pension Liability The components of the City's net pension liability at December 31, 2017 are as follows: Total pension liability $ 1,414,962 Less: Plan fiduciary net position -1,460,563 City's net pension liability $-45,601 Plan fiduciary net position as a percentage of the total pension liability 83 103.22% CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Schedule of Changes in the City's Net Pension Liability and Related Ratios Total Pension Liability Service cost Interest Changes of benefit terms Difference between expected & actual experience Changes of assumptions Benefits payments, included refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) 2014 2015 2016 2017 50,098 49,716 49,332 38,796 (2,442) (311,190) - (62,728) (61,863) (58,277) (59,988) (69,186) (11,765) (11,003) (384,574) (30,390) 1,852,693 1,840,928 1,829,92 5 1,445,3 51 1,840,928 1,829,925 1,445, 3 51 1,414,9 61 Plan Fiduciary Net Position Contributions - employer 64,114 63,590 66,360 68,848 Contributions - employee Net investment income 1,805 2,667 7,988 39,157 Benefit payments, including refunds of employee contributions (61,863) (58,277) (59,988) (69,186) Administrative expense - (4,500) (4,500) (4,624) Other Net change in plan fiduciary net position 4,056 3,480 9,860 34,195 Plan fiduciary net position - beginning 1,408,970 1,413,026 1,416,506 1,426,366 Plan fiduciary net position - ending (b) 1,413,026 1,416,506 1,426,366 1,460,561 City's net pension liability - ending (a) - (b) Plan fiduciary net position as a percent of total pension liability Covered employee payroll City net pension liability as a percent of covered employee payroll 427,902 413,419 18,985 (45,600) 76.76% 77.41% 98.69% 103.22% n/a n/a n/a n/a Deferred Outflows of Resources and Deferred Inflows of Resources At December31, 2017, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 84 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Differences between expected and actual experience - - Net difference between projected and actual investment earnings on pension plan investments 60,482 - Totals $60,482 - Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 2018 22,625 2019 15,231 2020 15,231 2021 - 2022 - Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2016, using the following actuarial assumptions, applied to all periods included in the measurement. Inflation Salary increases Investment rate of return 2.75 3.75 2.75 Healthy life mortality rates were based on the RP-2014 mortality table, total dataset, fully generational projected with Scale MP-2014, set back one year for males and set forward one year for females. Disabled life mortality rates were based on the RP-2014 mortality table, total dataset, fully generational projected with Scale MP-2014, set back two years for males and females. The long-term expected rate of return on pension plan investments assumption was based on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The discount rate used to measure the total pension liability was 2.75%. The projection of cash flows used to determine the discount rate assumed City contributions were equal to revenue received from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75%. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payment of e5 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the Firemen's net pension liability of the City, calculated using the discount rate of 2.75%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower, 2.75%, or 1-percentage point higher, 3.75%, than the current rate: Firemen's net pension 1% Decrease Current Discount 1% Increase liability Rate $ 136,435 $ (45,601) $ (199,362) Basis of Valuation A general summary of the substantive plan used as the basis of the valuation follows. Applicable Statutes Benefits RCW 41.16, 41.18, 41.26 Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under LEOFF or FPF. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Service Retirement Benefit Member Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five years of service (RCW 41.26.090). Amount of benefit: 50% of salary plus an additional 2 %for each year of service in excess of 25 years. Maximum benefit of 60% of salary (does not apply for those retiring after July 1, 2006). Survivor Eligibility: spouse or child Amount of benefit: continuation of the firefighter's benefit. (If spouse — same, plus additional 5% of salary per child. If no spouse — 30% of salary for first child, 10% for each additional child. Maximum of 60% of salary). Duty Disability Retirement Benefit Member Survivor Eligibility: disabled after six-month waiting period. Amount of benefit: determined the same as Service Retirement Benefit. Recovery: restoration to service. See Survivor's Benefit section under Service Retirement. Non Duty Disability Retirement Benefit Member Eligibility: disabled after 90-day waiting period. Amount of benefit: 50% of salary, or service retirement benefit, if greater. Recovery: see Duty Disability Retirement. Limitations: no benefits payable if firefighter employed elsewhere when disabled. 86 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Survivor Duty Death Benefit Non Duty Death Benefit Special Provisions Vesting Deferred Benefit Postretirement Increase Benefits Payable Under LEOFF Type 1 Type 2 Applicability Minimum Benefit Funeral Benefit Participant Summary Eligibility: spouse or child Amount of benefit: 33.3% to widow or children only. 45.8% to widow and one child. 47.6% to widow and two children. 50.0o/a to widow and three children. Eligibility. spouse or child Amount of benefit: If spouse — 50% of salary plus an additional 5% of salary per child; maximum benefit of 60% of salary. If no spouse — 50% of salary to children. Eligibility: spouse or child Amount of benefit provisions the same as Survivor's Benefit under Non -Duty Disability Retirement. Under disability or death benefits, a surviving spouse may elect a lump -sum payment of $5,000 in lieu of future monthly benefits. Termination after 20 years of service (RCW 41.18.130) or five years of service (RCW 41.26.090). Commences: when a firefighter would have had 25 years of service (RCW 41.18.130) or age 50 (RCW 41.26.090). Amount of benefit: 2% of salary for each year of service. Other provisions apply, see statutes. Death while vested prior to commencement of benefits: payment of firefighters deferred benefit to spouse or child. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Escalation by salary in proportion to current salary or rank from which the firefighter retired. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. Type 2 applies to all other types of monthly benefits After April 25, 1973, a minimum benefit of $300 per month to all retired firefighters and their survivors. This minimum is increased by the CPI. $500 RCW 41.18.140, no provision under RCW 41.26. December 31, 2017 Age and service determined as of the census date. LEOFF Plan 1 (Firemen's Pension) Inactive Participants Age Service Retirees Disabled Retirees Surviving Spouses Total < 65 0 0 0 0 65 — 69 0 0 0 0 87 CITY OF TUKWILA' 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 70 — 74 1 1 1 3 75 — 79 1 1 2 4 80 — 84 0 1 1 2 85-89 1 0 0 1 90 + 0 0 0 0 Total 3 3 4 10 Monthly pension amounts as of January 1, 2017: Paid by City $4,928 Paid by LEOFF $36,752 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 December 31 valuation were: Assumption Rates Actuarial Cost Method Asset Valuation Method Measurement Date Inflation Rate Discount Rate (or Investment Return) Cost of Living Salary Increases (for calculated benefit increases based on rank) Healthy Mortality Disabled Mortality Turnover Disability Entry Age Fair Market Value December 31, 2016 (Projected to December 31, 2017) 2.75% We based the long-term expected rate of return on pension plan investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 2.75% was selected. 2.75%, based on SSA OASDI 2016 report. 3.750/o, based on SSA OASDI 2016 report. RP-2014 mortality table, total dataset, fully generational with mortality improvement scale MP-2016setback one year for males and set forward one year for females. RP-2014 mortality table, total dataset, fully generational with mortality improvement scale MP-2016 set forward two years for males and females. n/a n/a 88 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Retirement n/a Spouse Age We assumed that wives are three years younger than husbands. NOTE 9-OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLAN During the year ended December 31, 2008, the City elected to adopt the provisions of GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB No. 45), which requires the City to accrue other postemployment benefits (OPEB) expense related to its postretirement healthcare plan based on a computed annual required contribution (ARC) that includes the current period's service cost and an amount to amortize unfunded actuarial accrued liabilities. Instead of recording expense on a "pay-as- you-go" basis, the City, under GASB No. 45, has recorded a liability of $10,487,883 for the difference between the actuarially calculated ARC and the estimated contributions made since the adoption of GASB No. 45. This liability is included in other noncurrent liabilities in the accompanying December 31, 2017 statement of net position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess of revenue over expenses before capital contributions and the City's increase in net position for the year ended December 31, 2017 by $1,309,047. Plan Description The City of Tukwila's LEOFF Plan 1 (the Health Plan) is a single -employer defined -benefit healthcare plan administered by the City. The authority to establish and amend benefits is determined by the LEOFF board. The Health Plan provides medical, prescription drug, dental, Medicare Part B premiums, long-term care, and vision expenses for LEOFF Plan 1 retirees. Dependent spouses and children are not covered. The Health Plan's actuary is Healthcare Actuaries. The Health Plan does not issue a separate standalone financial report. Funding Policy The City does not require retiree contributions. All benefits are paid in full by the City. For the fiscal year ended December 31, 2017, the City contributed $943,150 to the Health Plan through use of existing fund balance. The City's contribution was entirely to fund 'pay-as-you-go' costs under the Health Plan and not to prefund benefits. There were no retiree contributions. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45, The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize unfunded actuarial liabilities over a period not to exceed ten years. The following tables show the components of the City's annual OPEB cost for the current year and prior two years, the amount actually contributed to the plan, and changes in the City's net OPEB obligation. ANNUAL OPEB COST AND NET OPEB OBLIGATION 89 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Annual required contribution (ARC) Interest on Net OPEB Obligation Adjustment to ARC Annual OPEB cost (expense) Employer contributions Change in Net OPEB Obligation Net OPEB Obligation at Beginning of year $ 2,585,779 $ 2,765,486 $ 2,883,884 146,904 (452, 441) 178,623 252,418 (634,666) (884,105) 2,280,242 2,309,443 2,252,197 (477,292) (275,530) (943,150) 1,802,950 2,033,913 5,341,973 7,144,923 0 , 8 7 The net OPEB obligation of $10,487,863 is included as a non -current Iiability on the Statement of Net Position. ANNUAL DEVELOPMENT OF OPEB COST 2008 $ 1,366,284 $ - $ - $1,366,284 $ 557,103 $ 809,181 $ 809,181 $809,181 2009 1,366,284 40,459 61,839 1,344,904 335,265 1,009,639 1,818,820 1,031,019 2010 1,366,284 90,941 143,332 1,313,893 317,771 996,122 2,814,942 1,048,513 2011 1,264,522 112,598 213,809 1,163,311 335,090 828,221 3,643,163 929,432 2012 1,264,522 145,727 287,945 1,122,304 404,007 718,297 4,361,460 860,515 2013 1,264,522 174,458 359,904 1,079,076 878,755 200,321 4,561,781 385,767 2014 1,903,679 171,067 388,580 1,686,166 905,974 780,192 5,341,973 997,705 2015 2,585,779 146,904 452,441 2,280,242 477,292 1,802,950 7,144,923 2,108,487 2016 2,765,486 178,623 634,666 2,309,443 275,530 2,033,913 9,178,836 2,489,956 2017 2,883,884 252,418 884,105 2,252,197 943,150 1,309,047 10,487,883 1,940,734 • Based on a 21-year closed amortization as of January 1, 2008 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows: PERCENTAGE OF ANNUAL OPEB COST CONTRIBUTED December 31, 2015 December 31, 2016 December31, 2017 2,280,242 2,309,443 2,252,197 90 477,292 275,530 943,150 20.9% 11.9 41.9% 7,144,923 9,178,836 10,487,883 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Funded Status and Funding Progress As of January 1, 2017, the most recent actuarial accounting update, the plan was 0% funded. The actuarial accrued liability for benefits was $29.1 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $29.1 million and a funded ratio of 0%. The funded ratio is 0%, because the City funds benefits on a pay-as-you-go basis. January 1. 2014 January 1, 2015 January 1, 2017 SCHEDULE OF FUNDING PROGRESS (rounded to thousands) 0 $21,264,000 $0 $29,538,048 $0 $29,054,716 $21,264,000 $29,538,048 $29,054,716 0.0% n/a 0.0% n/a 0.0% n/a n/a n/a n/a Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual CO results are compared with past expectations and new estimates are made about the future. GASB 45 requires that the schedule of fundingprogress,presented as required supplementary information followingthe notes to the � P 9 9 PP Y� CO financial statements, presents multi -year trend information that shows whether the actuarial value of Health Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions The basis of projections of benefits for financial reporting purposes is the substantive plan (the Health Plan as understood by the City and members of the Health Plan) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the City and Members of the Health Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The January 1, 2015 valuation used the entry age normal actuarial cost method. The actuarial assumptions included a 2.75% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 9.0% for pre -Medicare expenses, to an ultimate rate of 3.8% after 61 years. The Medicare trend assumption is 6.5%, to an ultimate rate of 3.8% after 61 years. The dental trend assumption is 5.5%, to an ultimate rate of 3.5% after 4 years. The Medicare premium trend rate is 5.4% for all years. The long-term care trend rate is 5.0% for all years. The trend for the Excise Tax threshold is 0% until 2020, when a trend rate of 4.24% is used. The trend for all future years after that year is 3.24%. All trend rates include a 3.0% inflation assumption. The UAAL is amortized as a level dollar amount on a closed basis over 21 years beginning January 1, 2008. The remaining amortization period at December 31, 2017 was 11.0 years. Assumption Actuarial Cost Method Rates Entry Age Normal method. 91 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Measurement Date January 1, 2015 (Projected to December 31, 2017) Inflation Rate 3.00% Discount Rate (or Investment Return) Selected the assumed discount rate of 2.75% based on the five - year average investment yield on the investments expected to finance the payment of benefits. Healthy Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP-2014 setback one year for males and set forward one year for females. Disabled Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP-2014 set forward two years for males and females. Turnover None assumed. All LEOFF 1 actives are fully eligible for retirement. Per Capita Claims Cost Assumed annual per capita claims costs are as follows: Age Medical/Rx Dental Vision LTC 55 $ 21,875 $ 966 $ 181 $ 133 60 28,071 966 181 220 65 15,406 966 181 448 70 16,924 966 181 1,183 75 17,984 966 181 3,028 80 18,348 966 181 6,499 Aging or Morbidity Factors Aging/morbidity factors are included in the per capita claims costs shown above (except dental and vision). Medicare Part B Premium Reimbursements The City reimburses Medicare retirees for Part B premiums. The 2015 annual premium is $1,258.80. Affordable Care Act (ACA) Excise Tax Threshold Ages 55-64 All Other Single $ 11,850 $ 10,200 ACA Base Premium Assumed annual plan costs upon which the ACA tax calculation is based: Medicare ineligible $ 28,071 Medicare eligible $ 16,557 ACA Tax • We assumed a 40% excise tax rate on premiums above the ACA threshold. • We assumed the City of Tukwila pays no federal taxes. • We assumed the excise tax will apply to medical/Rx and Medicare premium reimbursements. Trend Rates Medical Long -Term Trends* from Getzen SOA Model version 2014 b using baseline assumptions. 92 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Excise Pre- Part 8 toog-Term Tax Year Medicare Medicare Dental Vision Premiums Care Threshold 2015 9.00% 6-50% 5.5% 4.0%. 5.4% 5.0% 0.00% 2016 7.50% 6.50% 5.0% 4.0%. 5.4% 5.0% 0.00% 2017 6.50% 6_00% 4.5% 4.0% 5.4% 5.0% 0.00% 2018 5.50% 5.50% 4.0% 4.0%. 5.4% 5.0% 4.24% 2019 5.50% 5.50% 3.5% 3.5% 5.4% 5.0% 3.24% 2020.5.46%. 5.46% 3.5% 3.5%. 5.4% 5.0% 3.24% 2021.-2074 _- _.- 3.5% 3.5% 5.4% 5.0% 3.24% 2075• 3.80% 3.80% 3.5% 3.5%. 5.4% 5.0% 3.24% The trend ratesutctode assumed inflation of 3% fur all future years. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, provides the multi -year trend information showing whether the actuarial value of plan assets is increasing or decreasing over time relative to the actual. NOTE 10—LONG-TERM LIABILITIES Governmental Activities Long -Term Debt General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter -approved issues, of which the City has one, are funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes, sales taxes, or other general revenues, and is generally paid from debt service funds. The City currently maintains a rating of Aa3 from Moody's Investor Service and AA from Standard & Poor's. General Obligation Bonds outstanding at year-end are as follows: • 2008 LTGO bonds were issued to refund the remaining debt of the 1999 LTGO bonds. The 1999 LTGO bonds were issued to purchase an additional City Hall Annex (6300 building) and economic revitalization projects. • 2010 LTGO bonds were issued for the construction and realignment of Southcenter Parkway in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • 2011 LTGO refunding bonds were issued to refund a portion of the bonds issued in 2003 for the City's Arterial Street program. • 2013 LTGO bonds were issued and the proceeds loaned to the Tukwila Metropolitan Park District to pay for improvements to the pool. • 2014 LTGO bonds were issued to fund the purchase of land acquisition and capital costs of redevelopment activities within the City's Tukwila International Boulevard (TIB) urban renewal area. • 2015 LTGO bonds were issued to pay for improvements to Interurban Avenue South and reconstruct or retrofit Boeing Access Road Bridge. 93 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • 2016 UTGO bonds in the amount of $32.99 million were issued after voters approved a $77.385 million bond measure that will fund a justice center, rebuild 3 fire stations and provide fire apparatus and life -safety equipment replacement for 20 years. • 2017 LTGO bonds were issued to fund residential street improvements including adding sidewalks and undergrounding utilities on 42n° and 53'd Avenues. • 2017 refunding bond was issued to pay off the 2014 general obligation bond in the form of a line -of -credit that was utilized to purchase property and pay for capital costs of redevelopment activities within the City's Urban Renewal area. 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. Business -Type Activities Long -Term Debt Revenue bond indebtedness issued to fund proprietary activities is recorded in proprietary funds. Debt service payments are made from operating revenues generated by the proprietary funds. In proprietary funds, bonds are displayed net of unamortized premium or discount; annual interest expense is decreased by amortization of debt premium and increased by the amortization of debt discount. The City currently does not maintain a rating from any of the rating agencies because the outstanding revenue bonds are in private placement. Revenue bonds outstanding at year-end are as follows: • 2015 water/sewer/SWM bonds were issued to refund the remaining debt of the 2006 revenue bonds. The bonds were issued to provide neighborhood revitalization to Allentown and Foster Point Sewer system. State of Washington Public Works Trust Fund Loans are a low interest rate loans available from the State of Washington Department of Commerce, Local Government & Infrastructure Division for qualifying projects and are a direct responsibility of the City. This debt is repaid by proprietary fund revenues. Public Works Trust Fund loans outstanding at year-end are as follows: • 2003 loan to install new sewers in the Duwamish neighborhood. The project upgraded water and surface water infrastructure. • 2004 loan to install new water, sewer, and surface water infrastructure in Allentown and Foster Point neighborhoods. Additionally, 2 new sewer lift stations with generators, 33 manholes and catch basins, and 15 new fire hydrants were installed. • 2004 loan constructed an underground collection system in the Cascade View neighborhood. 94 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • 2014 loan to install sewer liners in the City's commercial business district of Southcenter. Relining the sewer main avoids full excavation for a significant savings and has minimal impact to the roadway. The City is in compliance with all Washington State debt limitation statutes and bond indenture agreements. The schedules that follow summarize the long-term debt transactions of the City for the year ended December 31, 2017. CHANGES IN LONG-TERM LIABILITIES SUMMARY -GOVERNMENTAL ACTIVITIES Outstanding 01/01/2017 Added Retired / redeemed Outstanding 12/31/2017 $54,114.932 $5,412,500 $ 3,774,201 $ 6,093,600 $ 9,178,836 $12.943,779 $ 91,517,848 10,456,000 - 3,607,977 - 1,309,047 - 15,373,024 (5,356,427) (607,500) (3,798,673) (179,200) - (3,198,726) (13,140,526) $59,214,505 $4,805,000 $ 3,583,505 $ 5,914,400 $10,487,883 $ 9.745.053 $ 93,750,346 Add Premiums. Subtract Discounts 4,447,881 $ 98,198,227 CO Debt Service to Maturity Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences, OPEB, and pensions. 2 1 2018 2019 2020 2021 2022 2023-2027 2028-2032 2033-2037 2038-2040 $ 3,607,196 $ 2,481,932 3,828,521 2,322,847 2,051,461 2,146,167 2,195, 560 5,147, 766 13,528,000 14,917,000 13,939,000 2,069,141 1,981,399 7,721,086 4,794,014 1,473,157 $ 184,800 $ 243,173 190,800 237,069 197,200 229,039 207,200 220,332 214,800 212,579 1,204,800 926,103 1,478,000 644,978 1,048,000 222,227 1,188,800 78,130 $ 485,000 $ 257,655 445,000 243,638 445,000 223,613 445,000 203,588 445,000 183,563 2,225,000 594,075 315,000 71,756 $ 7,259,755 7,267,875 5,292,479 5,340,821 8,185,106 26,199,064 22,220,748 16,682,384 1,266,930 95 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - GOVERNMENTAL ACTIVITIES GOVERNMENTAL ACTIVITIES, Limited General Oblioalion (LTGO) Bonds Payable'. 2008 Refunding-Streets/Facilities 4.00-6.00 12/01119 6,180,000 2,165,000 2010 Streets/Equipment 200-5.41 12/01/24 5,870000 3,575,000 2011 Refunding Streets (2003 GO) 125-4.00 12/01/23 4.620,000 3,360,000 2013 LTGO-MPD Pool Improve 200.400 12/01/22 1 000,000 609,932 2014 LTGO-Urban Renewal 085-486 12/01/34 3,850,000 3,560,000 2014 LTGO-Line of Credit 1 Mo. LIBOR + 1.0 % 12/01/17 2.250,000 2,250,000 2015 LTGO-Interurban, BAR 2.25-3.00 12/01/35 5,825,000 5,605,000 2017 LTGO-4264 & 53rd Streets 300-350 12/01/37 8,150,000 - 2017 Refunding Line of Credit 2.60-3.00 12/01/22 2,276,000 8,180,000 2,276,000 680,000 1,485.000 720,000 405,000 3,170 000 415,000 435,000 2,925.000 445,000 96,427 513,505 99,196 150,000 3 410,000 153,000 2,250,000 225.000 5380.000 230,000 8,180000 305,000 2.276,000 - Total LTGO Bonds Payable Unlimited General Obligation (UTG0) Bonds Payable: 40,051,000 21,124,932 10,456,000 4,241,427 27.339,505 2,367,196 2016 UTGO - Public Safety 4.50-5.00 12/01/35 77,385,000 32,990,000 115,000 31,875,000 1,240,000 Issuance premiums Due to other Governments 2009 Facility SCORE 4,380,732 (67,149) 4,447,881 3.00-6.62 01/01/39 6,898,800 6,093,600 179.200 5,914.400 164,800 Special Assessment Debt Krck tat Urban Access Project 3.150-5.375 01/15/29 6,687,500 5,412,500 607500 4805,000 485,000 All governmental funds debt is liquidated by the general fund except for the special assessment debt and the 2009 SCORE intergovernmental debt. The special assessment debt is liquidated from assessments collected annually from property owners within boundaries of Local Improvement District #33. The 2009 SCORE debt was paid by SCORE from user fees. 96 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES SUMMARY - BUSINESS -TYPE ACTIVITIES Outstanding 01/01/2017 Added Retired / redeemed Outstanding 12/31/2017 Debt Service to Maturity $1,597,704 $ 5,046,990 $ 298,359 $ 2,539,403 $ 9,482,456 - 329,386 - 329,386 (143,282) (599,468) (309,348) (740,392) (1,792,490) $1,454,422 $ 4,447,522 $ 318,397 $ 1,799,011 $ 8,019.352 $ 8,019,352 Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences and net pension liability. CO tJ 2018 2019 2020 2021 2022 2023-2027 2028-2032 2033 $ 149,659 $ 34,033 $ 150,736 30,531 156,614 27,004 157,178 23,339 162,531 19,662 677,704 40,168 97 599,468 599,468 599.468 599,447 573,417 1,270,359 205,875 20 $ 22.238 $ 805,396 19,240 799,976 16,243 799,329 13,246 793,210 10,248 765,858 16,219 2,004,450 3.088 208,963 20 Att CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES BUSINESS -TYPE ACTIVITIES: Bonds Payable', 2015 Wafer/Sewer/SWM Refunding 2.34 12/01/26 1,742.527 1,597,704 43,282 1,454,422 149,659 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 2014 Loan -Sewer 0.50 06/01/21 273,870 72,271 050 06/01/21 219,725 57.982 0.50-200 06/01/24 5,016.000 2,183.090 0.50-2,00 06/01/24 684,000 297.694 1,00 06/01/24 4,196,056 1,777,153 0,5 06101/32 750,000 658,800 LONG-TERM LIABILITIES RECONCILIATION 14,454 57,817 14,454 11,597 46,385 11,597 272,886 1,910,204 272,886 37,212 260.482 37.212 222,144 1,555.009 222,144 41,175 617,625 41.175 General obligation bonds Special assessment bonds Resenue bonds Public Works Trust Fund loans Due to Other Golernments Capital Leases Employee leaae benefits Net Premiums/Discounts Other Post -Employment Benefits Net Pension Liability $ 59,214,505 $ 4,805,000 - $ 59,214,505 - 4,805,000 1,454,422 1,454,422 4,447,522 4,447,522 5,914,400 5,914,400 3,583,505 318,397 3,901,902 4,447,881 4,447,881 10,487,883 10,487,883 9,745,053 1,799,011 11,544,064 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 98 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 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, 2017, the debt limits for the City were as follows: SUMMARY OF DEBT LIMIT CAPACITIES Legal Limit Outstanding Net Indebtedness $ 92,774,149 $ 154,623,582 $ 309,247,163 $ 463,870,745 69,188,921 69,188,921 69,188,921 69,188,921 Ti Prior Year Defeasance of Debt In 2015. the City defeased water and sewer bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly. the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At December 31, 2017, $1,755,000 of the defeased bonds were outstanding. Long-term Liabilities other than debt Claims are paid from one or more funds based on the nature of the transaction. Employees' compensable leave is the City's liability for all unused vacation, 25% of unused sick leave and unpaid overtime accrued by employees and, payable under specified conditions. This obligation is paid only at the time of termination, usually from the same funding source(s) from which the employee's salary or wage compensation was paid. The City does not report a liability for termination benefits because it is not reasonably estimable. Local Improvement District No. 33 Tukwila Urban Access Improvement Project Local Improvement District (LID) No. 33 was formed on November 16, 2009 by Ordinance No. 2260. The project was designed to improve congestion within the City's Urban Center. The project included a partial lid over Southcenter Parkway, removal of conflicting turning movements, and the widening of Southcenter Parkway. Construction for the project began in March 2011 and was completed in October 2011. The project was closed out and accepted as complete by City Council on February 19, 2013. A variety of funding sources were used to pay for the project including federal and state grants, impact fees, City funds, a right-of-way donation, and special assessments. The City chose to fund the project internally, rather than obtain external, short-term financing then apply special assessments to property owners after the project was completed. Fund 104 Arterial Streets, where the project was accounted for, loaned the project funds as needed using a draw method at an interest rate of 1.80%. This loan was repaid in 2013 when special assessment bonds were issued. The City confirmed the assessment roll with a final assessment of $9,475,894. The prepayment period for the special assessments was open in the fall of 2013 and during that time the City received $2,788,350 in prepayments. Once the prepayment window closed, the City issued bonds for the remaining outstanding assessments in the amount of $6,687,500. From these proceeds, the City deposited $668,750 to the guaranty fund. The third of 15 annual installments for the assessments was due by October 16, 2016. 99 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS As of December 31, 2017, all LID Special Assessments were current, nothing was delinquent. During 2017, several property owners chose to pay the assessment in full. Because of the additional principal payments received, the City has enough funds in the LID No. 33 funds to meet debt service requirements in 2018 and pay $40,000 additional principal. Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 2017 is $0 for its tax-exempt bond issues subject to the Tax Reform Act. NOTE 11 —COMMITMENTS Construction Commitments. As of December 31, 2017, contractual obligations to contractors for construction projects total $26,707,775. 42nd Ave S Phase III TUC Pedestrian/Bicycle Bridge Strander Blvd. Extension Phase III Public Safety Plan Major Maintenance on 3 Bridges S 144th Street Phase II Baker Bluff Non -Motorized BAR Bridge Rehab Other governmental projects GIS Inventory, Asset Management System Tukwila 205 Levee Certification Phase I & II Riverton Creek Flapgate Removal Macadam Road South Water Upgrade Andover Park East Sewer Replacement Other Utility related projects 11 $ 4,930,257 869,096 3,980,931 6,366,254 1,120,596 518,367 200,639 7,676,343 149,428 165,006 237,708 87,138 80,631 266,572 58,809 NOTE 12 — POTENTIAL POLLUTION REMEDIATION AND OTHER LIABILITIES There are several lawsuits in which the City is involved. The City Attorney estimates that the potential claims against the City to have no material financial impact. The City of Tukwila is expected to share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for sediment contamination within the Lower Duwamish Waterway 100 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Superfund site. The Environmental Protection Agency has estimated the total cost for the waterway cleanup to be $342 million with as many as 120, or more parties sharing in the liability. While it is not possible to provide an estimate of 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 City's recent ownership of the system, which began in 1989, means the City's share of liability should be low compared to other liable parties. A multi- year confidential process to allocate Duwamish Waterway cleanup costs is being undertaken by the major liable parties. Once that process is completed and communicated to the City, which could occur in 2018, the City will be in a better position to estimate its potential liability for cleanup costs within the Lower Duwamish Waterway Superfund site. NOTE 13 — RISK MANAGEMENT The city of Tukwila is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self -insuring, and/or jointly contracting for risk management services. WCIA has a total of 161 Members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, errors or omissions, stop gap, employment practices and employee benefits liability. Limits are $4 million per occurrence in the self -insured layer, and $21 million in limits above the self -insured layer is provided by reinsurance. Total limits are $25 million per occurrence subject to aggregates and sublimits. The Board of Directors determines the limits and terms of coverage annually. Insurance for property, automobile physical damage, fidelity, inland marine, and boiler and machinery coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property coverage is self -funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self -funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims and litigation administration. WCIA contracts for certain claims investigations, consultants for personnel and land use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. 101 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS The City insures its buildings, equipment, and vehicle property insurance with WCIA. They self -fund up to $250,000 with standard property insurance purchased above that amount. Traveler's insures boiler machinery and provides for employee dishonesty coverage. The City of Tukwila has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self -insures for unemployment benefits. This is budgeted expenditure each year and the City paid $15,077 in unemployment in 2017. This expense is budgeted in the Finance Department within the general fund and Foster Golf Course, and enterprise fund. 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 Symetra which provides an individual limit of $175,000 . Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported (IBNR's) and a contingency reserve equal to 2.5 times the IBNR liability. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 52.6 days for medical, 21.6 days for pharmacy, 31.6 days for dental, and 45.9 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of May 31, 2017. Next, the estimated IBNR liability as of December 31, 2017 was developed by trending the May 31, 2017 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. The following table reflects changes in the balances of claims liabilities for 2017 and 2016. SUMMARY OF HEALTH CARE CLAIM LIABILITIES Claim Liabilities at Beginning of Year Claim expenses: Current year and changes in estimates Claim payments and expenses $ 1,858,250 $ 1,947,500 $ 191,250 $ 221,250 6,329,189 5,938,336 (6, 255,191) (6, 027, 586) 430,289 524,274 (424,880) (554,274) NOTE 14—SUBSEQUENT EVENT In 2018, the City plans to purchase several parcels of land in order to begin construction of a justice center and fire stations as outlined in the voter -approved public safety plan. Additionally, in February 2018, the City Council approved an ordinance to sell up to $20 million in bonds in 2018 for the public safety plan. As of April 30, 2018, the city has expended approximately $8.7 million toward the purchase of four property parcels in connection with the Public Safety Plan. 102 CITY OF TUKWILA'. 2017 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 31,2017 REVENUES: Taxes Licenses and pernits Intergovernmental Charges for services Fines and Foreitures Investment earnings Mscellaneous CO � 'r (T (n EXPENDITURES: Current: General Government Economic environrrent Physical environment Public Safety Culture and recreation Transportation Capital outlay OTHER FINANCING SOURCES (USES): Sales of capital assets Transfers in Transfers out Net change in Fund balances Fund balances - beginning $ 47,803,644 2,278,940 4,398,660 3,248,316 306,129 163,091 203.600 $ 47,803,644 $ 2,278,940 4,545,160 3,286,316 306,129 163,091 211.271 46,574,589 2,749,137 4,690,257 3,046,606 325,216 230,784 160,309 $ (1,229,055) 470,197 145,097 (239,710) 19,087 67,693 (50,962) 9,953,670 4,573,353 1,975,786 30,596,784 4,708.136 3,081,092 234,000 9,863,670 4,469,853 1,975,786 30,996,784 4,726,307 3,081,092 234,000 1,800,000 1,800,000 (5,237,691) (5,447,691) 9,358,235 4,098,765 1,733,400 29,968,635 4,395,696 3,026,013 17.679 505,435 371,088 242,386 1,028,149 330,611 55,079 16,321 1 1 300,000 (1,500,000) (5,337,496) 110,195 (158,132) 17,216,048 (400,632) 40,981 17,216,048 19,031.744 441,613 1,815,696 • CITY OF TUKWILA'. 2017 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. The City Council must approve by ordinance any amendments that increase the total for the fund. Budget amounts presented in the basic financial statements include both the original amounts and the final amended budget as approved by the City Council. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Includes all police and fire activities. Physical Environment Includes expenditures for the public works activities not chargeable to the enterprise funds. Transportation Includes all street and arterial street maintenance and construction. Economic Environment Reflects the planning and building inspection activities. Culture and Recreation Includes expenditures related to parks and recreational activities. The information presented in the following required schedules was determined as part of the actuarial valuations at the dates indicated. 103 104 CITY OF TUKWILA 2017 CAFR REQUIRED SUPPLEMENTAL INFORMATION COST SHARING MULTIPLE EMPLOYER DEFINED BENEFIT PENSION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY June 30 2015 3573ti b $7 100,255 $ June 30 2016 0 131354,$ 7,054,328 5 June 30. 2017 0.127058, $ 6,020.001 5 PERS 2/ $ 55 $ 15,561 015 4003°R $ 5.328 $ 15,736,921 $ 6.029,001 $ 16 022 842 37.63, 61.024, June 30. 2015 0 173502, $ 6.202,541 5 - $6 202,541$ 15,406.589 40 26, 89 20, une 30, 2016 0 166622, 5 86 5 - 5 5 15 579 718 53.85, 85 8236 June 30. 2017 0 161787 % 5 5,621 325 $ 5 5.621.325 5 15 861 514 35.440 90.97, PSERS June 30, 2015 0.052748% June 30, 2016 June 39, 2017 0.455650 u LEOFF 1 $ 623, 95.08, 5 157,203 13.09% 90.41 F, 8,928 S 161.328 5.53b 96.26, June 30 2015 0.07794410 $ (939,3971 $ - $ (939,397) $ 76144-1233.71 A 127.36, June 30 2016 0.077990% $ (802490) 5 (5,428,021) $ (6 230 511) $ - Na 123.74, June 30 2017 0.08208610 $ (1,245 425) $ (a 421 025 00) $ (8.668 450) 5 - Na 135.96, LEOFF 2 June 30 2015 June 30 2016 June 30 2017 0.519159x $ 0.510663, $ 0 503269 A $ (5335,9161 $ (2,970,169) $ (6,963,743) $ (2.123 832) $ (7.459 748) $ (1.936 334) $ (4.906.503) $ (4,530 224) 5 (11,510 967) $ 16113,237 16480.062 16743,133 Until a lull 10.year trend is complied governments should present Information only for those years for Wuch infarmetion Is evadable 105 -49.06% -31 70 A -73,14 A 111.6, 11 044 113.3636 CITY OF TUKWILA 2017 CAFR REQUIRED SUPPLEMENTAL INFORMATION PERS I December 31, 2015 December 31, 2016 $ December 31, 2017 $ PERS 2/3 , 2015 $ December 31, 2016 $ December 31, 2017 $ PSERS December 31, 2015 December 31, 2016 $ December 31, 2017 5 LEOFF 2 December 31, 2015 $ December 31, 2016 $ December 31, 2017 $ SCHEDULE OF EMPLOYER CONTRIBUTIONS 686,881 $ 752,418 $ 789,712 $ 873,248 972,612 $ 1,090,715 $ (686,881) $ (752,418) S (789,712) $ (873,248) S (972,612) $ (1,090,715)'5 15,654,255 15,777,881 16,153,755 15,498,171 15,616,400 16,024,008 439% 4.77% 4.89% 5.63% 6.23% 681% 0,105) 3 - $ 156,084 6.47% 10,642 $ (10,642) $ - $ 161,481 6.59% 8,612 $ (e 612) '$ - $ 129,747 6.64% 776,719 $ 787,110 $ 815,548 $ (776,719) (787,110) $ (815,548) 5 - $ 15,380,541 5.05% - $ 15,586,296 - $ 15,860,571 5.05% 5.14% Until a full 10-year trend rs compiled, governments should present Information only for those years for Wllch Informah0n is available 106 CITY OF TUKWILA'. 2017 CAFR REQUIRED SUPPLEMENTAL INFORMATION FIREMEN'S PENSION TRUST FUND SCHEDULE OF FUNDING PROGRESS - PENSION (Rounded fo thousands) January 1, 2005 $1,265 $1.182 January 1,2007 1,336 1,310 January 1, 2009 1,445 1,610 January 1, 2011 1,430 1,582 January 1,2013 1,416 1,296 January 1,2014' 1,409 1,853 January 1,2015 1,417 1,830 January 1.2016 1,426 1,445 January 1, 2017 1,53D 1,415 ' January 1, 2014 change In actuary and adoption of GASH 67 ($83) 107% $608 -14 (26) 102 463 -6 165 90 442 37 152 90 0 N/A (120) 109 0 N/A 444 76 0 N/A 413 77 0 N/A 19 99 0 N/A (115) 108 0 N/A CITY OF TUKWILA. 2017 CAFR REQUIRED SUPPLEMENTAL INFORMATION Schedule of Changes in the City's Net Pension Liability and Related Ratios Total Pension Liability 2014 2015 2016 2017 Service cost - Interest 50,098 49,716 49,332 38,796 Changes of benefit terms - - Difference between expected & actual experience - (2,442) (311,190) - Changesofassumptions - - (62,728) Benefits payments, included refunds of employee contributions (61,863) (58,277) (59,988) (69,186) Net change in total pension liability (11,765) (11,003) (384,574) (30,390) Total pension liability- beginning 1,852,693 1,840,928 1,829,925 1,445,351 Total pension liability- ending (a) 1,840,928 1,829,925 1,445,351 1,414,961 Plan Fiduciary Net Position Contributions -employer 64,114 63,590 66,360 68,848 Contributions - employee Net investment income 1,805 2,667 7,988 39,157 Benefit payments, including refunds of employee contributions (61,863) (58,277) (59,988) (69,186) W Administrative expense - (4,500) (4,500) (4,624) Other Net change in plan fiduciary net position 4,056 3,480 9,860 34,195 Plan fiduciary net position - beginning 1,408,970 1,413,026 1,416,506 1,426,366 Plan fiduciary net position - ending (b) 1,413,026 1,416,506 1,426,366 1,460,561 City's net pension liability - ending (a) - (b) 427,902 413,419 18,985 (45,600) Plan fiduciary net position as a percent of total pension liability 76.76% 77.41% 98.69% 103.22% Covered employee payroll - City net pension liability as a percent of covered employee payroll n/a n/a n/a n/a 107 108 CITY OF TUKWILA: 2017 CAFR Schedule of Employer Contributions REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA. 2017 CAFR December 31, 2007 $ 50,555 $ 50,555 $ - $ Na December 31, 2008 52,571 52,571 - n/a December 31, 2009 48,537 48,537 - n/a December 31, 2010 49,989 49,989 - n/a December 31, 2011 54,865 54,865 - n/a December 31, 2012 52,249 52,249 - n/a December 31, 2013 56,962 56,962 - n/a December 31, 2014 64,114 64,114 - n/a December 31, 2015 63,590 63,590 - n/a December 31, 2016 66,360 66,360 - - n/a December 31, 2017 68,848 68,848 - - Na W Contributions are a portion of State Fire Insurance Premiums. Cn CO Schedule of Investment Returns 2011 0.12 % 2012 0.20% '.. 2013 0.17% '.. 2014 '............. 2015 2016 0.13% 0.19% 0.56% 2017 2 75% Ten-year schedule required. However, until a full 10-year trend is compiled, information is presented for those years where information is available. 109 REQUIRED SUPPLEMENTAL INFORMATION RETIREE MEDICAL AND LONG-TERM CARE BENEFITS FOR LEOFF 1 EMPLOYEES SCHEDULE OF FUNDING PROGRESS - OPEB January 1, 2014 $0 $21,264,000 January 1, 2015 $0 $29,538,048 January 1, 2017 $0 $29,054,716 $21,264,000 $29,538,048 $29,054,716 0.0% 0.0 % 0.0 % SCHEDULE OF EMPLOYER CONTRIBUTIONS - OPEB December 31, 2008 $557,103 $1,366,284 December 31, 2009 335,265 1,366,284 December 31, 2010 317,771 1,366,284 December 31, 2011 335,090 1,264,522 December 31, 2012 404,007 1,264,522 December 31, 2013 878,755 1,264,522 December 31, 2014 905,974 1,903,679 December 31, 2015 477,292 2,585,779 December 31, 2016 275,530 2,765,486 December 31, 2017 943,150 2,883,884 110 41% 25% 23% 26% 32% 69% 48% 18% 10% 33% n/a rile n/a n/a n/a CITY OF TUKWILA'' 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are established to account for proceeds of specific taxes or other specific revenue sources that are legally restricted to or committed for expenditures for particular purposes. • Hotel/Motel Tax Fund — Established to account for the proceeds of a 1 % special excise tax on overnight lodging in Tukwila. This tax provides resources to support tourism development and promotion activities in Tukwila. • Drug Seizure Fund —Accounts for monies and proceeds from the sale of property seized during drug and felony investigations. These funds are Legally required to be expended on drug and felony related police activities. Debt Service Funds Debt Service Funds are account for the accumulation of resources for and the payment of principal and interest on general obligation and special assessment bonds. • Local Improvement Guaranty Fund — Holds reserve funds required under state law to provide a means of paying local improvement district (LID) bond debt service obligations in the event there are insufficient resources in the LID debt service fund. Unlimited Tax G.O. 2016 — Accounts for principal and interest on voter approved bonds issued to pay for the construction of public safety facilities including a justice center and fire stations and fire equipment and apparatus for 20 years. Limited Tax G.O Fund — Accounts for principal and interest payments on bonds for all debt issues except for voter approved bonds. Capital Project Funds Capital Project Funds account for the acquisition or development of major capital facilities, except those projects financed by proprietary funds. Sources of revenue to these funds include general obligation bond proceeds, federal and state grants, real estate excise taxes, and transfers from the General Fund. • Residential Street — Established in accordance with RCW 35A.37.010 to account for maintenance and improvement of the City's residential streets. Major sources of support are the State -levied tax on motor vehicle fuels distributed to Tukwila, to be used for City street purposes, state and federal grants, and transfers in from the General Fund. • Land Acquisition, Recreation, and Park Development — Accounts for the acquisition of land, development of land, and construction of park facilities. 111 CITY OF TUKWILA. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Facilities (Urban Renewal) — Established in 1988, this fund accounts for costs associated with property owned by the City that will be utilized for redevelopment or renewal purposes. General Government Improvements — This fund was established in 1992 to provide funding for minor capital improvements not related to parks, land acquisition, or major building replacements. Fire Improvements — This fund is to be used for the acquisition of land, development of land and construction of fire facilities. Revenue for this fund comes primarily from fire impact fees. City Facilities — This fund was established in 2016 to pay for the costs of building a new public works shop facility. The public works shop facility is part of the City's public safety plan but is not included in the voter - approved bonds. 112 CITY OF TUKWILA'. 2017 CAFR ASSETS: Cash and cash equivalents Investments Taxes receivable Other receivables Due from other governmental units Restricted Assets: Cash and cash equivalents Notes receivable Capital assets held for resale FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR GOVERNMENT FUNDS DECEMBER 31, 2017 1,330,736 $ 571,617 $ 7,657,951 $ 9,560,304 531,560 531,560 87,787 39,065 143,742 270,594 2,135 13,346 15,481 173,933 173,933 223,408 5,794,233 300,022 5.293,000 6,017,641 300,022 5,293,000 LIABILITIES AND FUND BALANCES: Current liabifties Accounts payable Accrued wages and benefits Customer deposit 274,840 806,895 11,490 26,119 1,081,735 11,490 126,119 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -property tax Unavailable revenue- actfee Fund balances: Nonspendable Restricted Assigned Assigned - 1 % arts 24,370 24,370 313,368 313,368 1,367,019 72 731,762 388,245 9,657,476 8,296,879 164.000 11,756,256 8,685,196 164,000 113 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENT FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: TAXES: Taxes Charges for services Intergovernmental Investment earnings Miscellaneous 736,784 $ 2,674,622 $ 756,747 $ 4,168,153 - 495,373 495,373 57,504 1,305,117 1,362.621 5,767 79 74,330 80,176 79,930 - - 79,930 O(PD4DITURES: Current: General government Economic vironment Rbl ro safety Cultural and Recreation Transportation Debt service Principal Interest Capital Outlay 25,067 202,249 227,316 515,262 - - 515,262 366,256 - - 366,256 268,433 268,433 - - 646,064 646,064 3,106,428 2,343,930 39,969 3,106,428 2,343,930 4,059,856 4,099,825 OTHER FINANCING SOURCES (USES): Transfers in Transfers out Issuance of Debt Bond Premum Gain/(loss) on sale of assets held for resale Payment of refunded debt Net change in fund balances Fund balances - beginning 2,773,452 464,044 (1,317,000) 2,276,000 8,180,000 356,839 (100,000) (2,250,000) 3,237,496 (1,317,000) 10,456,000 356.839 (100,000) (2,250.000) (99,006) 1,466 097 56,232 1,063,774 5,038,848 13,079,507 4,996,074 15,609,378 114 CITY OF TUKWILA: 2017 CAFR ASSETS: Cash and cash equivalents Taxes receivables Current Assets Restricted: Cash and cash equivalen FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2017 LIABILITIES AND FUND BALANCES: Accounts payable Fund balances: Restricted Assigned Ent $ 1,323,528 $ 7,208 $ 1,330,736 87,787 87,787 - 223 408 223,408 271,540 3,300 274,840 1,139,775 227,244 1,367,019 72 72 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Investment earnings MSscellaneous IXPENDITURES: Current: Public safety Economic environment Capital outlay 736,784 $ - $ 736,784 5,695 72 5,767 - 79,930 79,930 Net change in fund balances 515,262 227,217 912,558 366,256 366,256 515,262 39,969 39,969 (326,223) (99,006) 553,539 1,466,097 CITY OF TUKWILA 2017 CAFR ASSETS: FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR DEBT SERVICE FUNDS DECEMBER 31, 2017 Cash and cash equivalents $ 135,534 $ 48,218 $ 387,865 $ 571,617 Investments 531,560 - - 531,560 RECENABLES Taxes Interest on investment LIABILITIES AND FUND BALANCES 39,065 39,065 2.135 DEFERRED INFLOWS OF RESOURCES: Unavailable revenue -property tax $ 668,849 24,370 62,913 24,370 731,762 380 - 387,865 388,245 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Intergovernmental Investment earnings EXPENDITURES: General Government Debt service Principal Interest $ - $ 2,674,622 $ - $ 2,674.622 - 57,504 57.504 79 - - 79 25,067 1.115.000 1,991,428 25,067 3,106,428 1496.709 847,222 2,343,930 Excess (deficiency) of revenues OTHER FINANCING SOURCES (USES): Transfers In General obligation bonds Issued Payment of refunded debt Net change in fund balances Fund balances - beginning 2,773,452 2,276,000 (2,250,000) 2,773,452 2,276,000 (2.250,000) 79 669.150 62,913 (6,760) 56,232 394,625 1,063,775 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR CAPITAL PROJECTS FUNDS DECEMBER 31, 2017 ASSETS: Cash and cash equivalents Taxes reservable Other receivables Due Irom other governmental units RESTRCTED ASSETS: Cash and cash equivalents Notes reservable Capital asset held for resale MMIMMIIMIMMUM LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Current payables'. Accounts payables Accrued w ages and banal,. Customer depoan $ 965.743 $ 3.945.978 $2290,732 44613 99.129 173,933 5,794,233 - 5293,000 $ 378,323 $ 7,210 $ 69,960 $ 7.657.951 1..742 13,3. - 13,346 173,933 5,794,233 300,022 5293.000 300,022 604,579 4.876 18 720 130111 1,649 19 525 85 563 2,245 4,966 2.311 69,960 806,895 11,490 126,119 Deterred Inflow of resources: Unavailable rev mead tee CO Fund balances: Restricted is Assigned Assigned �y{-��1 % arts °..At:3dl\v%.. 68 5.794.233 3,856032 - 382,185 47.724 7.498.169 164 000 368,801 7,210 9,657,476 8,296,879 164,000 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CTYOFTUIMALA WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANCES IN FUND BALANCES NON -MAJOR CAPITAL PROJECTS RINDS FOR THE YEAR ENDED DECEMBER 31,2017 UPENCITUEs: Current General government Culure and recreation Transportation Ca real wraaex OTHER RW1ttING SOURCES IUSSI: Transfers it Transfers out hsuance of debt Iona premium .floss) on eak of ascere hetl fare 646,064 492.805 268.433 205.879 77,463 54,124 .8,126 202,249 268,433 6.064 283.109 4059856 8.180,000 356,839 122,190 (300000) (1001300) 200.000 - (1017,000) 141.854 46,044 (1,317,000) 8.180,000 356,839 (100,000) .1 change in land balances Fund balances - beginning 5,511486 658,932 715,643 (441672) 3,352,113 7.940040 (23,102) (729.307) 391 903 236,518 5.033,848 13.079,507 CITY OF TUKWILA 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL ARTERIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31, 2017 REVENUES: Taxes Intergovernmental Charges for services Investment earnings Miscellaneous EXPENDITURES: Current Transportation Capital outlay Via. 9VINNIgg i Excees (deficiency) of revenuesCro OTHER FINANCING SOURCES (USES): Transfer Net change in fund balances Fund balance - beginning $ 600,00D $ 600,000 $ 912,333 $ 312,333 21,035,000 10,035,000 6,686,896 (3,348,104) 921,000 921,000 1,725,249 804249 5,000 5.000 16,910 11.910 1,037,000 1,037,000 701,034 (335,966) 1 6,556,000 6,556,000 2,860,118 3,695 882 22,581,579 10,281,579 9,545,242 736,337 1,800,000 800,000 (3.739,579) (2.439,579) (562,939) 1,876,640 3 786, 923 3 786,923 3,999,376 212,453 121 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LOCAL IMPROVEMENT DISTRICT #33 DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Special assessment Investment earnings Miscellaneous 408,593 $ 408,593 $ 478,838 $ 293,518 293,518 240,710 1,511 70,245 (52,808) 1,511 EXPENDITURES: Debt service. Principal Interest Net change in fund balances Fund balances - beginning 450,000 271,830 596,000 271,830 607,500 259,939 (19,719) (165,719) (146,379) 898,764 898,764 898,722 (11,500) 11,891 19,340 (42) 122 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL PUBLIC SAFETY PLAN CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Charges for services Investment earnings x,z EXPENDITURES: Current Public Safety Capital outlay OTHER FINANCING SOURCES (USES): Bond proceeds Transfers in Transfers out Net change In fund balances Fund balances - beginning $ 500.000 $ 500,000 $ 500. 000 $ 258,283 258,283 3.048. 000 3,048,000 564.521 IAA 2,483,479 1,139,000 998,969 10,140,031 23 343.000 23,343,000 - 1,017,000 1,017,000 (23,343,000) 9,656,000 10,673,000 211,793 (10,461,207) 36,513,127 36,513,127 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL HOTEL/MOTEL TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Investmnt earnlnos EXPENDITURES: Current Eco e environment Excess (deficiency) Net change In fund balances Fund balances - beginning 733,000 $ 3,000 733,000 $ 3,000 736,784 $ 5,695 3,784 2.695 440,700 722,500 515.262 207.238 itiritrAMBINMEMILIZAtai.:M W. TEA :„.4 295,300 906,875 13.500 906.875 227.217 912.558 213.717 5,683 CITY OF TUKWILA 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DRUG SEIZURE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Investment earnings Fines and forfe6ures RIZIM EXPENDITURES: Current: Public safety Capital outlay'. Public safety Net change in fund balances Fund Balances - beginning $ - $ 60,000 60,000 72 $ 79,930 72 19,930 45,000 15,000 461,635 425,000 (365,000) 461,635 366,256 58,744 39,969 (39,969) (326,223) 38,777 553,539 91,904 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL RESIDENTIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Intergovernmental Charges for services Investment earnings Miscellaneous EXPENDITURES: Current: Transportation Capital outla $ 1,894,000 $ 1,894,000 $ 1,073,144 $ 6,133 1,500 1,500 40,239 1,902,000 1,902,000 (820,856) 6,133 38,739 (1,902,000) 75,000 9,278,000 75,000 3,478,000 646,064 3,492,805 } (571.064) (14,805) 95 OTHER FINANCING SOURCES (USES): Bond proceeds Premium on Bonds Net change in fund balances Fund balances - beginning 5,600,000 5,600,000 8,180,000 2,580.000 356.839 356.839 44,500 5,844,500 5,517,486 (327,014) 833,331 833,331 658,932 (174,399) co CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LAND & PARK ACQUISITION CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Intergovernmental Investment earnings EXPENDITURES: Current: Culture and recreation Net change in fund balances Fund balances - beginning 400,000 $ 131,000 1,000 400,000 $ 131,000 1.000 756,747 $ 231,972 16,735 356,747 100,972 15,735 268,433 (268.433) 1,139,000 3,139,000 205,879 2933 (423,000) (2,423,000) 2,713,123 715,643 2,713.123 3,352,113 3,138.643 638.990 REVENUES: FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FACILITIES URBAN RENEWAL CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 Investment earnings EXPENDITURES: Current: General Government Capital outlay $ 3,600 $ 3,600 $ 12,252 $ 8.652 60,000 60,000 54,124 (54,124) 60,000 OTHER FINANCING SOURCES (USES): Sales of capital assets Transfers out Net change in fund balances before special item Fund balances - beginning 3,483,000 3,233,000 (100,000) (3,333,000) (1,800,000) (1,800.000) (300,000) 1,500,000 1,626,600 1,376.600 (441,872) (1,818,472) 370,706 370,706 7,940.040 7569,334 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL GOVERNMENT IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Investment earnings EXPENDITURES: Current: General Government Capital outlay OTHER FINANCING SOURCES (USES) Transfers in Net change in fund balances Fund balances - beginning 500 $ 500 2,487 ,987 200.000 148,126 77,463 200,000 200,000 (148.126) 213.331 (90,294) 334,349 (90,294) (23,102) 334,349 391,903 67,192 57,554 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FIRE IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Fire impact fees Investment earning EXPENDITURES: $ 32,000 $ 100 32,000 $ 00 285,075 $ 2,617 253,075 2,517 OTHER FINANCING SOURCES (USES): Transfers out (1,017,000) (1,017,000) Net change in fund balances Fund balances - beginning 32,100 645,631 (984.900) (729,307) 645,631 736,518 255,593 90,887 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL CITY FACILITIES CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: EXPENDITURES: Current: Public Safety Capital outlay Net change in fund balances Fund balances - beginning 150,000 6,000,000 150,000 6,000,000 150,000 283,709 5,716,291 420,000 (420,000) FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL SPECIAL ASSESSMENT BONDS GUARANTY FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: hvestrnent earnings EXPENDITURES: OTHER FINANCING SOURCES USES : 500 $ 500 $ 79 $ (421) Net change in fund balances Fund balances - beginning 500 669,151 500 669,151 79 669,150 (421) ( 1 ) CITY OF TUKWILA 2017 CAFR REVENUES: Taxes FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL UNLIMITED TAX GENERAL OBLIGATION DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2017 IXPENDITURES: Debt service' Rincipal Net change in fund balances Fund balances - beginning 2,699,000 $ 2,674,622 $ 1,115,000 1,115,000 1,496,709 1,496,709 87,291 Atak 62.913 (24,378) FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Intergovernmental EXPENDITURES: Current General Government Debt service. Rlnclpal Interest 61,667 $ 61,667 $ 57,504 $ (4 2,163.029 2,163.029 1,012,103 1,110,551 25,067 (25,067) 1,991.428 847.222 171,601 263,329 06 OTHER FINANCING SOURCES (USES): Bond proceeds Payment of refunded debt Transfers in Net change in fund balances Fund balances - beginning 427,461 2,777,461 2,276 000 (501,461) (2,339,000) (2,250,000) 89,000 2,686,004 2.773,452 2,773 452 (6,760) (6,760) 68,475 68,475 394 625 226 150 CITY OF TUKWILA. 2017 CAFR Internal Service Funds FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. 2017 CAFR NON -MAJOR INTERNAL SERVICE FUNDS The City's internal service funds are used to account for the financing of special services performed by designated departments within the City of Tukwila for the benefit of other departments within the City. The funds provide services then generate revenue by billing the department for which the service was provided. • Equipment Rental Fund — Accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates which are charged to each user department. • Insurance Fund Active Employees —Accounts for the costs of the City's self -insured medical plan. Medical and dental costs for covered employees are charged to the respective departments. All premiums, medical and dental costs and ancillary charges are included. • Insurance Fund LEOFF 1 Retirees — Accounts for the costs of the City's self -insured medical plan for LEOFF 1 retirees. Medical and dental costs for covered employees are charged to the respective departments, either the Police Department or the Fire Department. All premiums, medical and dental costs and ancillary charges are included, ASSETS: Current assets Cash and cash equralents Investments Receivables Inventory of neterials and supplies NONCURRENT ASSETS. Capital Assets Machinery and equipment Less'. accumulated depreciation Deferred Outflows of Resources FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS DECEMBER 31, 2017 Deferred outflow pension earnings LIABILITIES: Current liabilities: Accounts payable Accrued wages and benefits Claims incurred but not reported Noncurrent liabilities: Reserve for unreported claims Net pension f bility $ 4,185,067 $ 588,869 5 440,547 392.962 2,355. 984 456,125 18.235 53.989 18,760 5,214.483 3.205.071 72.224 18,760 .',... 15,973,404 (10,848 599) 15,973 404 (10,848, 599) 38,954 38,954 114,648 25.906 279,426 88,248 737.600 1,10fi 400 12,409 73,700 110,550 215,305 25,906 811,300 1,216,950 279,426 Deferred Inflows of Resources Deferred inflow pension earnings NET POSITION: Investment in capital assets Unrestricted 55,427 55 427 5,124,805 4,178,570 1,066,595 700,012 6,124, 805 5,945,177 135 136 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 OPERATING REVENUES: Charges for services Other operatfn. revenue OPERATING EXPENSES: Operations & maintenance Adirinstratue & general Depreciation $ 2.538,237 300 $ 5.731,274 $ 253,445 $ 8,522,957 114,244 114.545 1326,558 322,910 833,469 6,206,072 123.117 417,740 12,549 7,950.371 458,576 833.469 NON -OPERATING REVENUE (EXPENSE): hvestment earnings v Gain (loss) on disposal of capital assets 45,818 55,442 (5621) 95,639 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Gash received from users Cash paid to suppliers Cash paid for taxes Cashaid to, or on behalf of, employees S 2,522,836 $ (1,081,562) (1) 569,762 5,815 445 $ 253,445 $ (108,437) 6,146,754) (14,754) Pa. oft 8,591,726 (1,204,753) (1) (7,130,150) CASH FLOWS FROM CAPITAL AND RELATED RNANCINGACTNITIES: Proceed from sale of equipment Purchase of capital asset 100,509 1,250,161 100,509 (1,250,161 CASH FLOW FROM INVESTINGACTNITIES: Proceeds from sale of Investments Purchase of investments Interest received 135,000 42,497 (13,494) 90,339 (500,000) 38,254 135,000 (513,494) 171,089 Cash and cash equivalents -be Cash at end of year consists 0! Cash and cash equivalents 4,285.711 077,247 4,729 $ 4,185,067 $ 588,869 $ 440,547 5,214,483 CITY OF TUKWILA-. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATINGACTNITIES Adjustments to reconcile operating Income to net cash Provided (used) by operating activities' Depreciation Asset (increases) decreases: Accounts receivable Inventory Deferred outflow of resources (increase) decrease Liability increases (decreases)' Accounts payable Wages and benefits payable Deferred inflow of resources Increase (decrease) ;.DIU o WitiMr SCHEDULE OF NONCASH INVESTING CAPITAL AND FINANCINGACTIVITIES Increase in fair value of investment 833,469 (15,701) (3,487) 25,394 31,699 6,208 (61,671) (30,074) 73,998 1,890 833,469 (45,775) (3,487) 25,394 107,588 6,208 (61,671) 422 $ $ 422 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED DECEMBER 31, 2017 ASSETS Cash and cash equivalents Receivables $ 201,739 $ 1,026,290 $ (916,630) $ 311,398 55,543 175,027 (227,636) 2,934 A LIABILITIES Accounts and other payable 257,282 1,827,851 (1,770,800) 314,332 The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2017 CAFR City of Tukwila STATISTICAL SECTION December 31, 2017 STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net Position by Component 142 Schedule 2 Changes in Net Position 144 ScheduIIo 3 Hand Ralanres G'nvornmordal Fi lode .na Schedule 4 Changes in Fund Balances, Governmental Funds 148 Schedule 5 General Governmental Tax Revenues by Source 150 Revenue Capacity Information The objective of providing revenue capacity information is to help users understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Property Tax Levies and Collections 151 Schedule 7 Assessed and Estimated Actual Value of Taxable Property 152 Schedule 8 Property Tax Rates -Direct and Overlapping Governments 153 Schedule 9 Principal Property Taxpayers 154 Schedule 10 Retail Sales Tax Collections by Sector 156 Schedule 11 Sales Tax Rate Direct and Overlapping Governments 158 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of outstanding debt and ability to issue additional debt in the future. Schedule 12 Ratios of Outstanding Debt by Type 160 Schedule 13 Ratios of General Bonded Debt Outstanding 162 Schedule 14 Computation of Direct and Overlapping Debt 163 Schedule 15 Legal Debt Margin Information 164 Demographic and Economic Information These Schedules offer demographic and economic information to assist users in understanding certain aspects of the environment within which the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 16 Demographic Statistics 166 Schedule 17 Principal Employers.. 167 Operating Information These Schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedule 18 Full-time Equivalent Employee by Department 168 Schedule 19 Operating Indicators by Function 169 Schedule 20 Capital Assets by Function 170 STATISTICAL SECTION CITY OF TUKWILA SCHEDULE 1 NET POSITION BY COMPONENTta1 LAST TEN FISCAL YEARS Pa.e 1 of 2 Governmental activities: Net investment in capital assets $ 136,742,368 Restricted 1e,70,546 LErestricted 18,476,837 $ 155,847,012 6 360,097 16,031,473 $ 177,078,793 23,005,792 12,119,923 $ 199,511,779 5,019,817 21,479,064 Business -type activates: Net investment in capital assets $ 36,071,402 $ 38,052,488 $ 44,759,489 $ 52,134,799 Restricted 439,100 438,619 430,444 430,444 Unrestricted 13,335,836 10,987,162 11,158,081 10,225,558 Rimary government: Net investment in capital assets Restricted Unrestricted $ 172,813,770 20,159,646 31,812,673 $ 193,899.500 16,798,716 27,018,635 $ 221,838,282 23 436,236 23,278,004 $ 248,636,920 5,450,261 34,714,280 Notes: (a) All amounts are reported on the accrual basis Source: Tukwila Finance Department 141 142 CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR Pa 2 of 2 $ 203,206,940 2,749,680 20,194,333 $ 207.660,389 $ 191,081,461 $ 191,331.156 $ 193.113,026 $ 199,328,694 3,480,002 3,973,726 5,446,074 8,996,183 13.480,068 26,981,105 sa 25,009,212 V 16 125,592 I„ ',,.05,8 4 66,545 $ 52,911,741 430,444 11,011,319 $ 55,955,595 $ 57,677,764 $ 59,483,424 $ 60,807,030 $ 65,355,778 430.444 430,444 12,964, 539 13, 839,529 14,658,912 17,240 620 17,425,401 $ 253,253,170 3,180,123 34,071,164 $ 263,615,984 3,910,445 39,945,644 $ 248,759,225 4,404,170 38,848,741 $ 250,814,581 5,446,074 30 784,504 $ 253.920,056 8,996,183 33,050,565 $ 264,684,471 13,480,068 28,791,946 STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 2 CHANGES IN NET POSITION 1') Page 1 of Expenses GovarnrrenlalActnses wb Safety Physic.. Erennonnent Transpor.lonEcon.n E Menial and Rysciallealth .lure and Recreation Inter n Lang Term Debt Total Cnea tat Acl s Acto.s usWaterl6ewer Ler. Gel Course Surface Wafer U fty Total Business Type Aclvnes $ $ 659 $ 22 �147,99z 2 59.35z 25348,318 2 862,467 0575 405 2.633.394 0885,175 015,197 6872,708 5017,935 4 4 4,712,832 4,797,856 1,644,224 4753,904 40,262,067 52.075806 501291924 a3650,459 9J 362 ]655 62 11 020,374 2.050.172 999,394 13,643000 1,935.014 0476, 1170 13,75d 552 10.092,903 1086,747 0580098 14,667,7. Program Revenues nmentalAcloilies Gov Charges for Services GeneralGovernngnt $ 895.966 $ 1,136642 $ 1,080.801 8 .462,671 Pobl0 Safety t6 t 572, 2809606 'cal Environment 1,200 67,572 Transportation 103311 57110 345.373 Econ.., Enekormeet adRecreation and Recreatn ,543 647,354 811.679 1.001,117 Operating Gran a. 1.325.161 Capital Grants and Contributions n 23.992,563 .495,127 Total Gov ernmenlal Active. Program Rev enues 9008,131 21,631255 31207699 27,094,552 usTope Activities Charges Ior Services Water/Sewer Ugly 8,621,909 10124653 5095 11,711,242 Coster G3A.urse 1,56J681 11,424595 1.425,327 1,304,016 Surface Wafer (JUFry 2,642,325 2,641,313 3029,630 3355, 956 ll�S Opera.. Grants and Contributionsutions W Capital Granla and Oan1,0316 a 756400 515,633 7390,545 93,537 Dial Business type ,12566e Program Revenue. 13,584,31s 21510,597 18364751 JTotal Rico, Gov ernnenl Program Revenues 22,592,446 36,337,449 52718296 45.459303 O 1 Net(lEpease t'Reve nue ne ActvitBs 00,253,937) (30,444551) (20,884225) (26.555907) Business Type Acliaes 2,559941 1.063,194 7,756.045 3697003 Crteral Revenues a. Other Changes In Net Position Governmental Activities TaxesRoPelly Tax $ 11656,979 $ 11,901072 $ 13,363.096 $ 13443,137 P etal Sacs and the Tax 18009,297 10.588297 Natural Gas Use Tax 10 533.811 317,531 ILel Tax 587.216 489606 458092 555,682 U tility166749Tax 5.1364. 7390.860 5,600,683 7.534260 Alterfund Utilly Taxes Busness Tax 2.497,705 3,196,176 Excge Tax 3,0. 367,198 4507,790 2.170,293 State Entllenents 874,046 2,233,445 1,951,936 2085,740 Unreelnotert 0360rningc 801847 287 108, 275,477 Gain/Loss on Sale of CapAalAssets (186663) 980,267 Mscelkeneous Transfers 1,383.774 1,601,200 1,399310 525.864 Total Governrrental Activities 42,386,760 43.743382 42798557 43371717 Business Type Activities Retail Sales and Use Taxes 500,000 Unrestrcted Investment Interest 377.955 85.942 61,119 Ge.L ss on Sale of CapnalAssets - (264,032 ,093) N16celaneeus 97541 200,871 Trend ers 0.383,774) (1,601,200) (1399310) (525864) Total Bus Fe sType Ann Ass (505819) (1.431,262) oes300) (263.8741 Change Bel Position Before Special Hem Spec!. Nam Change in Net Position Governmental Actvles 4.186,945 12 930,763 29784,077 23248939 4.186.945 12,930,763 $ 2,132.823 $ 13,298.831 $ 21,914,332 8 16,815,810 2,054122 (368,068) Notes'. (e)All amounts are repo?. on Die accrual basis iLAw ib Finance Department 143 144 CITY OF TUKWILA'. 2017 CAFR Page 2 of 2 8 8643,107 $ 10,145,049 $ 10,289,399 $ 8002,254 $ 9,662,207 $ 9,835,290 26.598.032 25,938,946 29.292,587 29,403,206 31,418.713 34190,347 3,625696 2,610,591 11668,098 2,611,297 2,554,259 2,545,104 7,310,707 7.656,280 2,479,533 11,069,605 11,188,189 12,235 551 4801342 5,209,954 5.716,091 5,782,907 4,410,841 4,523596 4.242.725 5635,347 5.336,659 5,125,227 5,431326 5.682 038 1. 152063 1.038,851 1,204,771 1,033,440 1,075.729 2,481559 56078,072 58287,017 65,987,138 63667,935 65. 741262 68.394.526 10,109557 10.421,064 12,752,125 13,186,236 13984,368 14,305.625 1701,131 1707,993 1.945,789 2086,586 2,077,538 1989972 2099.767 2563,132 3.310,716 4,147,974 4,088,360 4.209.325 14,550.455 14,692,189 18,008,631 19,420,796 20.150,264 20,504,722 $ 1,332,418 $ 1495.438 $ 3858,862 $ 3,794,134 $ 3,742,937 $ 4,144,986 684,744 871.919 970,594 1,754856 4,130,701 15..863 4939 27,407 196,506 464 - 1004911 287.956 8,425 206,065 454,525 2,206908 2.323,528 2786,178 726,869 3,348,802 2,434546 2.270759 481404 744,014 2,793,185 644,283 1,140,558 1,315,740 4411618 3,289,818 2.563,002 893,070 1,079.020 2,445,998 1,581,882 16.947.529 8,053,435 6,431,537 5000,942 6,126,880 11,825,444 26,450,258 19,170,879 17,073,146 17,983694 20,052,136 11.756.658 13,146,131 14,308,945 15,572,709 15,661 118 16,580,965 1 448,729 1,004,260 14136,400 1 482,288 1,426,385 1,313,871 3827,010 3913,180 4.168,313 5,286,233 5,875,343 6.200589 0) - - - 732 8.035 135.603 338,943 1,548,280 2,039.890 ]6567,732 000 834.392 17,170,000 18,802,521 21,431,9]8 24,381,122 23,755,578 24,938,251 28995.444 45,252N 40,602,85] 41,454.268 41739272 44990.386 (44,252,628) (31 836,759) (46,816,260) (45,994,789) (47,757,566) (.642.390) 2619546 4,110,332 3,423,348 4,960,326 3605,314 4433.529 $ 14.131605 3 14510,201 $ 14.870,621 3 14,320,085 $ 14,562,501 $ 17,667.590 15,441,683 16,316,398 17,105,322 19334,152 16,908,190 18,807,201 232.208 204.457 - - - 522033 526,832 596,781 677,971 710,267 736.764 5535,966 3879,992 3855,544 4019,288 4045,916 4.175013 1686,859 1,851,013 2061098 2,146,515 2.265,747 2497606 2,570,111 2555999 2,749,140 2,716257 2,698,352 2860948 2,745,475 3512894 5,321231 6,508665 5.380,662 1,895,647 1,861,511 1,735,637 1,843.634 1,915,810 1, 915940 116694 102,486 444,282 475,345 559.733 538630 101688 304,704 179,394 280,551 1000,049 2,328565 1056843 1060,650 (600,000) - (300.000) (300000) 44.392921 45,769,716 46,107,488 51082545 52,773,904 56514,482 (1058843) (1,060,650) 600,000 (1,056,843) (1,060,650) 600,000 300.000 300,000 300,000 300.000 1 702996 16.982,640 3,314,576 10,048082 6,921,652 12905,621 (1,995,000) (956,798) - 1,702 996 16 982,640 1,319,576 9,091,285 8,921,652 12 905,621 $ 140293 $ 13,932,957 $ (2,703,772) S. 3,830,956 $ 5,016,337 $ 6,256,152 1,562703 3,049,682 4,023,346 5,260,326 3,905,314 4,733,529 145 STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE 3 FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Page 1 0f 2 STATISTICAL SECTION General Fund (GASB 54) Nonspendable Restricted Committed Assigned Unassigned General Fund (Prior to GASB 54) Reserved Unreserved 17,800 17,900 17,900 7,687,515 7,371,530 5,739,140 $ 5,000 18,000 8,237,141 All other governmental funds (GASB 54) Nonspendable- Restricted - - - 5,014,817 Committed - - - 402,306 Assigned - - - 11,127,221 Unassigned - - - All other governmental funds (Prior to GASB 54) Reserved - - - Unreserved,reportedin Special revenue funds 12,943,487 9,123,401 14,461,546 - Debtservicefunds 1,248,901 135,438 3,051 - Capital Projects funds 6.831,634 7,101,258 8.541,195 - Note: In 2011 the City of Tukwila implemented GASB Statement No. 54. which changed the categories for fund balances. Balances prior to 2011 were not restated to the new standards. Source Tukwila Finance Department $90 o $80 F $70 $60 $50 $40 $30 $20 $10 $- Fund Balances 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 146 All Other Governmental Funds General Fund CITY OF TUKWILA'. 2017 CAFR Page 2 of 2 $ 1,743,362 $ 1,544,022 $ 1,340.914 $ 1.141,484 $ 927,373 - 225,000 5,771,471 6,078,648 6,277,929 105,000 8,378,557 15,317,624 10,181,057 10,911,244 11,612,330 18,040,352 - $ - $ 7,370,000 $ 7,645.000 $ 7,645,000 $ - 2,749,681 3,480,001 3,973,726 5,446.074 45,986,463 51,236 443 7,021,183 4,510,623 4,076,803 7,221.870 3.389,139 10,282,709 - (1,566,175) (1,360,218) - - - STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 4 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS taI LAST TEN FISCAL YEARS a.e1 oft Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Special Assessrrents Mscelancous Total Revenues Expenditures General Government Nblic Safety Fhysical 6rvironrrent Transportation Economc Environment Mental & Physical Health Culture and Recreation Debt Service Rine pal Interest Capital outlay Total Expend'tures $ 37,412569 $ 37,167,281 $ 37,267,918 $ 38035681 2,022,851 1,283.463 1,618,830 3,473,910 5,697,598 17,596,486 14,525,872 24,059,907 2,569,381 1,443.680 2,366,174 2,359 600 259,991 301,761 390,079 308,027 926,913 282,604 1.258 275,479 816,054 701957 891,307 356,409 49,705,357 58,777,232 57,204,438 68 869 013 7,992,286 8,574563 8,387,317 8,253,440 22,878689 25,576.932 24,676,370 24,327498 2,255880 2058913 1,724,147 2060.482 2,783,077 2,334,298 2332,178 2,676511 4,995,514 4,601,391 4,541,845 4,682,646 4,173 4,332 4,539 4,591 4,293,658 4,365,023 4,163503 3,507,150 972,000 1,316, 297 1 555, 028 1,766.774 872.224 778,018 849.148 881,850 6,089,703 16,860362 11,513,976 25643704 53,137,204 66,470,129 59,748,051 73,80464e Excess (Deficiency) of Revenues (3,431 846) (7,692,894) (2,543,613) (4,935633) 2,1 IN _ - Over (Under) Expenditures Other Financing Sources (Uses) _ _ - _ _ Transfers In 2,515,982 3,865,744 2,461 806 11001.619 Transfers In - Assessnxnt Transfers ON (1,107,543) (2,234,444) (1,020,857) (10.061,205) Capital Leases - 110.509 15,468 Sale of Capital Assets 53592 1014608 27.308 21406 General Obligation Bonds Issued - 6,935,000 5.055 688 General Obligation Refunding Bands Issued 6,180,000 6,947,574 - - 147 LE) Bands Assessment Operating Loan-Tukw i6 MPD Premium On General Obligation Debt Renium on General Obligation Refunding Debt Issuance Costs on General Obligation Refunding Debt Payment to Refunded Bond Escrow Agent Total Other Financing Sources (Uses) Change in Fund Balance Before Special Item Special Item - - 112.151 483,599 - - (108,326) - - - (6555,273) (6,880,397) (1,069,000) (5.055688) 1462,031 2,713,085 7,556,917 977,288 (1,969,8151 (4,979,809) 5,013,304 (3.958,345) 14$1.1 '.mow 'a "Tu .e". "., i'...$0 OriON$WIL14, Ratio of Debt Service Expenditures To Total Non -Capital Evpew:Mures Note: (a) All amounts ere reported on the modified- accrual basis Source: Tukwila Finance Departrrent 148 4.4% CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION page 2 of 2 $ 41,502608 $ 42,402,070 $ 44.441,783 $ 48.548,116 $ 49,588492 $ 51.655,075 1,604,594 2,013,875 2,114,638 2,242,256 2,129,221 2,749,137 7,626 487 7,190,325 14,298,126 11,839,883 10,067 413 12,739 774 3.974,356 3,747,646 3,838.531 3,935,248 3,911673 5 767228 220,752 242,638 264,934 261,457 318459 325216 106,286 151,911 479,219 475,345 541,299 826,864 2,788,350 701,723 650,415 542,180 478,838 131,979 427,368 354,395 332,268 957,158 942,784 55,167062 58,964,183 66,493,348 68,284,989 68,055695 75.484915 8,504,511 9,303,742 7,505,173 24,918,306 25,720,884 27,254,312 3,022,516 1,935 895 1,807,993 2,769,182 3,111,493 5,820,601 4,767,944 5,224,964 5,226,832 3.373,000 4,386,392 4680,651 7,708,394 29,035,165 1,935 228 5,792,668 5,832,384 4,350,052 9,405,989 9.585,551 29,366,198 30,899412 1.955,031 1,733 400 5,238,468 6.532,195 4,493,210 4,614,027 4,543,339 4,664,129 1,991,540 5,024,991 2,288,988 2,480.507 2,602,782 3,713928 co 1.178,464 1,162,649 961,457 1,125,609 1,093,584 2,603869 12,099,293 5,854,962 10,150,912 11,426,274 8,358,450 14,761,715 00 62,624,756 61,725,970 65,696,921 69,686279 67057,051 79.108,226 (7457,694) (2,761,786) 796,428 (1,401,291) 998,643 (3,623,311) 7,625,792 20,918,983 7,300,080 5,633,846 4,025,831 6,354,496 2,788,350 - - (6,174,358) (23,301,516) (7,900,080) (5,933,846) (4,325,831) (6,654,496) 9,903 5,493 - - - (100,000) - 1,000,000 3,850,000 8,075,000 32,990,000 10456,000 6,687,500 (658,706) - 309,758 3,719,954 356,839 802,631 (6,655,063) 8,098,809 5,337,023 3250.000 4.046,428 (1,995,000) 8 084,758 36,409.954 10 412.839 6683,467 37,408.597 6789,528 (956,798) 6.7% 11.07% 6,65% 149 6.34% 6,30% 9.82% CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 5 GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS 2008 11,245,973 17,709,319 3,934,210 3,003,438 475,500 1,089,344 37457,785 2009 12,190,219 14,585,015 6,172,569 2,824,407 738,341 656,730 37,167,281 2010 13.188,942 14,251,312 6.134,494 2,488,357 727,151 301,867 37,092,122 2011 13.427,139 16,113.584 5,424,643 1,780,294 667,064 622,955 38,035,681 2012 14,072,015 15,441683 4,001,385 3,201,098 2,497,606 2,288,822 41,502,608 2013 14,510,241 16,316.398 3,879,992 2,745,475 2,570,111 2,418,148 42,440,365 2014 14.870,621 17,105.322 3,855,544 3,512,894 2,555,999 2,447,794 44.348,175 2015 14,320,085 19,334,152 4,019,288 5,321,280 2,749,140 2,739,070 48,483,015 2016 14,562,501 18,908.190 4,045,916 6,508,665 2,716,257 2,856,782 49,598,312 2017 17,667,590 18,807,201 4,175,013 5,380,662 2,698,352 3,002,531 51,731,348 Notes: rat Beginning in 2017, property tax includes a voter approved excess levy for public safety facilities. Uility taxes enacted beginning in 2003 for electric, natural gas, cable and telephone utilities are assessed at rates of 6.0%. A utility tax was added in 2009 for solid waste and recycling assessed at a 6.0% rate. A utility tax rate o110.0% was added in 2010 on the City's water, sewer, and stormwater utilities. 1`I Beginning in 2012, reporting of "Business" tax revenues include the Revenue Generating Regulatory License (RGRL) fees. 1tlf "Other Taxes" include a hotel/motel tax and interfund utility taxes. Source: Tukwila Finance Oepartrrent 550 $45 $40 535 530 $25 520 $15 510 55 50 Tax Revenue by Source 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 150 ■ Other ■ Business • Excise I# Utility ■ Sales & Use ■ Property CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE 6 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS STATISTICAL SECTION CITY OF TUKWILA. 2017 CAFR 2008 11410,664 11,194,247 98.10% 216,076 11,410,632 100.0000 32 2009 12,286,929 12,017,213 97.80% 264,905 12,282,118 99.96% 4,811 2010 13,233,796 13,152,012 99.38% 80,311 13,234,267 100.00% (470) 2011 13,383,153 13,225,338 98.82% 156,088 13,376,721 99.95% 6,431 2012 13,697,474 13,521,621 98.72% 173,716 13,697,982 100.00% (508) 2013 13,740,076 13,549,525 98.61% 175,699 13,742,487 100.02% (2,412) 2014 14,047,317 13,916,718 99.07% 126,155 14,042,872 99.97% 4,444 2015 14,245,846 14,113,739 99.07% 111,903 14,225,642 99.86% 20,204 2016 14,516,623 14,375,358 99.03% 97,341 14,472,699 99.70% 43,925 2017' 17,551,561 17,262,965 98.3600 17,262,965 98.36% 288,596 *First year of collection on 2016 voter -approved excess levy for Riblic Safety Plan Source: King County Office of Finance Property Tax Levies and Collections ■ Taxes Levied for Fiscal Year ■ Amount Collected Within Fiscal Year of Levy 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017" 151 STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 7 ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 2008 4,470,042,539 595,268,205 110,399,231 5,175,709,975 2.37324 2009 4,122,961,628 746,710,751 112,779,972 4,982,452,351 2.66345 2010 3,950,829,851 717,795,417 119,827,058 4,788452,326 2.82566 2011 3,833,295,985 712,607.656 129,726,102 4,675,629.743 2.95408 2012 3,778,571,709 736,480,616 134,138,983 4,649,191,308 2.98778 2013 3,824,448,044 779,103,146 152,822,498 4,756,373,688 2.97799 2014 4,146,952,417 744,616,273 162,510,057 5,054,078.747 2.84188 2015 4,409.931,075 810,422,092 174,971,951 5,395,325.118 2.71073 2016 4,763,568,175 849,695.435 150,386,219 5,763,649,829 3.05735 2017 5,242,264,743 780,938.084 161,740,436 6,184,943,263 2.91864 Note: 'Real, personal, and state public service property have been assessed at 100% of the estimated value. Source: King County Department of Assessrrents $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- Assessed Value By Type 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 152 61 Public Utilities ■ Personal Property ■ Real Property CITY OF TUKWILA' 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $1,000 OF ASSESSED VALUATION) LAST TEN FISCAL YEARS 2008 37324 - 2.37324 1.962. 1 51508 0.19700 0.27404 812360 0.09123 2009 286345 - 266345 2.22253 1.74.7 0.21597 030000 3.89183 0.10514 2010 2.82566 - 282566 2.27990 1.90797 022366 0.30000 5.03380 0.1.76 2011 2.95408 - 2.954. 2 42266 1 98580 022982 0.30000 5 44659 0.11616 2012 2.98778 - 2.98778 2.56720 2.11172 023324 0,30000 5.69832 0.13210 2013 2.97799 - 2,97799 2.47044 2,08129 0.21533 0.33500 5.89098 0.15369 2014 2.84188 - 2.84188 2.285. 1 84798 0 18885 0.30217 5 50160 0.13860 2015 2,71073 - 2.71073 81.98 1.96741 016954 0,28735 5.22858 0.12980 2016 2.58592 0.47143 305735 203205 183412 0.15334 0,25305 536954 0.11740 2017 2.46285 045579 2.91864 291820 132735 013518 0.23.0 5.17356 0.10708 Nte includes King County Library District faX and Ferry Source. King County Department of Ass essrrenls $3.50000 $3.00000 $2.50000 $2.00000 $1.50000 $1.00000 $0.50000 $0.00000 Direct Property Tax Rates 015000 01.44 0.14962 853 0.15653 0,15613 0.47141 0.53290 055753 0.50372 0.50000 050000 0.50000 050000 50089 6689 0 25000 0.22745 1100828 11,67769 1323828 13.95883 14.68036 14.77416 13.755. 1}29592 13.73.7 1365888 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 153 CITY OF TUKWILA' 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 9 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Boeing Nmany Westfield (WEA( Soulhcenter LLC Boeing Brpbyees Credit Unon La Ranla LPSegale Ropertes Sabey Corporation LR hdusirtial Grated Partnership KIR Tukwila 050 LLCJKNICO 3301 So. Norfolk LLC (Sea-Tuk Warehouse LLC) CPF Kent Valley LLC CenturyLmk Cormvncatens (Owest Corporator) International Gateway East Washington Towers LP BKM Tukwila 117 LLC (torrrerN ton Tukwila Owner Pool 1) Rigel Sound EnergylGts - Electric Harn'sh Group Incorporated Sterling Realty 014862abnn Lowe's HAN Incorporated RI Investment Company Rreel Amerce R. II Corporation E Property Tax Dept WAg Roperbes LLC (JC Panney) COSTCO Wnoksale Dank of China New York Branch (l ornwrN Anne Arundel Apartne0ts AMB Property kternetional Gateway West CLEF -Tukwila LP Seatas Hotel(Koar-Sealac Partners LPl somhcenter corporate Square GSMCom Federated Department Stores (Necys) Centerpoinl 8801 Marginal (Merrill Creek Ho0ings LLC) John C Radovch W v. Co. Talon Rwerview Plaza LLC (i ornery BRCP RNerview Raze LLC) CHA Tu.& LLC (Daubletree Inn) Aws Rent A Car System LLC Demme Trust Oxbow 2601 Jorgensen Forge Corporation Aapbne camany Department Stores Credit Union Commercial Properties Real Estate Development Business Services Comrercal Properties Food Dslmbution Commerotal Properties Telephone IMity Non -Residential popery Managene Real Estate Development Investrrent Property Beclmc(Gas Utilrly Truck Egulprrenl Commercial Properties ne krprov Trent Commercial Properties Comrercal Properties Commercial Properties Cumrercal Properties Department Stores Cash 8 Carry Warehouse Apa Realm Estate Development Nun -Residential Property Management Startup Company Lodging Commercial Ropertes Real Estate Development Department stores Properties Trust Co0nercal Ropertes Commercial Properties Lodging Car Rental Services Manufacturing Steel Manufacturer $ 649,477,382 10.55% 33189d672 5.39% 131.088.603 2.13% 121353.075 1.97% 112 815,028 1,83% 105.799200 1.72% 88.273 700 1 43% 87.512 300 1.42% 62,141 900 1 01% 60.616 151 0,98% 57 901 108 0.94% 57 294 500 505. 700 0.82% 37.261 348 0.61 h 00% 00% 00% 0.00% 0.00% 000% 000% 0.00% 000% 000% 000% 0 00% 000b 0.00% 000% 000% 3 548 000 475 106310 302,586 200 77,584 0.93% 117844,205 2.2. 95,680 480 35,598 100 069% 11 584 382 0 22% 28036 339 0.54% 17,26] 495 0.33% 35,981,100 0.70% 5508451 030% 8219300 016% 69421,300 135% 00% 30.831,200 0.60% 15,977900 0,3, 29,706200 058% 23,327.718 045% 26,465 000 31200.200 061% 21886.500 0.42% 27,088 600 053% 19 979.480 0.39% 26,115389 0.51% Males In 2017 Me total assessed property value in the Gaya Tukwla 045 $ 6,155 326,776 je1 In 2008 Me total assessed property value In the Myra` Tukwla vas $ 5,155,404.039 King County Department of Assessments 154 CITY OF TUKWILA. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 10 RETAIL SALES TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS a oft Construction and Contracting $ 1,967,785 $ 869,640 $ 917,250 $ 1,390,952 Finance, Insurance & Real Estate 118,780 119,121 99,975 115,123 Manufacturing 375,263 246,429 387,234 232,737 Transportation, Communications & Utilities 492,960 440,206 441,822 405,197 Wholesale - Durable/Non-durable Goods 1,760,449 1,436,045 1,346,750 1,119,527 Retail Trade - General Merchandise 2,231,745 2,072,356 2,068,263 2,003,947 Retail Trade - Furniture/Home Furnishings 1,830,576 1,304,234 1,380 407 1.771,083 Retail Trade - Nis cellaneous 1,718,898 1,473,496 1,521,741 1,626,452 Retail Trade - Clothing&Accessories 2,103,630 2,017,904 2,018,304 2.037,554 Retail Trade - Restaurants 1,312,603 1,292,252 1,342,964 1,337,067 Retail Trade -Automotive/Gas 1,066,183 748,482 664,310 670,806 Retail Trade - Building Materials 619,657 589,341 499,383 487,620 Service hdustries - Business 1,129 380 868,260 882,012 932,422 Service hdustries - Hotels 548,962 453,657 428,450 459,606 Service hdustries - Other 318,696 283,319 215,045 202,217 All Other Categories 185,312 208,467 366,925 553,493 Notes: By State law, the City of Tukwila is prohibited Bern reporting individual sales tax payers. Sources: Tukwila Finance Department and Washington State Department of Revenue. CITY OF TUKWILA2017 CAFR .a.e 20f2 IIMMINEATEIMIMM $ 961,125 $ 1,212,594 $ 829.073 $ 1,255.650 $ 1,383,624 143,792 174,705 141.010 163,161 175,060 139,872 390,252 386,964 322,189 281,501 269,117 179,593 432,608 475,688 549.126 743,746 746,115 721,414 1,077,613 1,108,771 1,592.613 2,016,722 1,295,141 1,175,064 2,000,865 2,154,523 2,137,256 2,205,778 2,202,158 2,131,267 1,537,143 1,405,274 1,431,965 1,527,377 1,623,926 1,613,643 1.703,741 1,870,200 1,973.478 1,954,150 2,032,967 2,077,249 2,082,930 2,070,198 2,013.796 2,159.647 2,089,128 2,066,858 1,472, 343 1,529,101 1,611,860 1,703,187 1,751,724 1,889,031 690,076 690,691 765.765 825,143 743.468 800,580 516,861 565,734 600,610 683,485 733,928 805,324 928,610 968,996 1,073,511 1,265,789 1,467,620 1,436,825 487,977 502,721 562.130 626,822 650,270 650,332 234,870 246,802 274.497 273,514 253,089 308,939 381,693 525,133 468,547 978,142 845,209 812,654 134 STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE 11 SALES TAX RATE DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS STATISTICAL SECTION MISSIESSEMPL "MSS BASIC SALES TAX RATES City of Tuko, l8 Washington Slate King County Regional Transit Authority Metro Crininal Justice Department of Revenue Administration Fee 0.84% 6.50% 0.25% 0.40% 0.90% 0.10% 0.01% 0.84% 6.50% 0.25% 0.90% 0.90% 0.10% 0.01% 0.84% 6.50% 0.25% 0.90% 0.90% 0.10% 0.01% 0,84% 6.50% 0.25% 0.90% 0.90% 0.10% 0.01% 0.84% 6.50% 0.25% 0.90% 0.90% 0.10% 0.01% 0.84% 6,50% 0.25% 0.90%% 0.90% 0.10% 0.01% 0.84% 6.50% 0.25% 0.90% 0.90% 0.10% 0.01% 0.84% 6.50% 0.25% 0.90% 0,90% 0.10% 0.01% 0.84% 0.84% 650% 6.50% 0,25% 0.25% 090% 1.40% 090% 0.90% 0.10% 0.10% 001% 0.01% 89 SPECIAL SALES TAX RATES Restaurants '•' loOtor Vehicles o' 0.50% 0.50% 0.50% 0.50%- 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 03016 0.30% Notes' '5 King County Food 4 Beverage fax is in addition to the combined sales lax rate for restaurants, taverns and bars. The funds are used to finance the professional 6 ase6 all stadium in Seattle. NOTE: This tax expired on October 1, 2011 as taxes Imposed to paythe construction bonds for the Seattle baseball stadium expired. j°' Effective July 1, 2003, all retail sales, leases and transfers of motor vehicles are subject to the additional sales tax 01 three -tenths of one percent (.003). The funds are used to finance transportation improvements. "' Effective April 1. 2008, King County increased the local sales 6 use tax rate one -tenth of one percent (001). C10 The fax dill be used for chemical dependency or mental health treatment seruces. N �e� Effective April 1, 2000, the Regional Transit Authority Tax increased five -tenths of one percent (005)_ Effective April 1, 2017, the Regional Transit Authority Tax increased five -tenths of one percent (.005), to one and four -tenths of one percent (014). The tax dill be used to expand and coordinate light -rail. commuter -rail, and express bus service, and improve access to transit facilities in King, Pierce, and Snohomish Counties. Sou Washington State Department of Revenue Local Sales and Use Tax Rates. 157 158 CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION 159 CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 12 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Page 1 of 2 GOVERNMENTAL ACTIVITIES General Obligation Bonds IF $17,261,348 $ 22,453,003 $ 26,763,975 $ 28,006,800 $ 25.752,600 $ 21,727.609 $ 23,851,376 Special Assessment 6,687,500 6,687.500 Leases 40.184 35,891 - - TotalGovernnentalActoities 17,261,348 22453,003 26,804,159 28,042,691 25.752,600 28415,109 30.538.876 BUSINESS -TYPE ACTIVITIES General Obligation Bonds Revenue Bonds Fublic Works Trust Fund Loans Leases Total Business -Type Acto10 Population (°' Per Capita Personal Income IP Percentage of Personal Income Debt Per Capita Notes'. Details regarding the City's outstanding debt can 6e found in the Notes (o the Financial Statements section. Reference SCHEDULE 16, Demographic Statistics, for popula(ion and personal income data. Includes amounts Due to Other Governments. ltlr Special assessment debt vas issued in 2013 for the Klickltat Urban Access Projec(. Data not available at time of publication. 3,642,500 3,423,797 3,238,825 - - - 5,112,231 4,790,000 4,395,000 3,980.000 3,540,000 3,075.000 2,580,000 9,021,951 8,405,397 7.788,843 7,179,635 6.621,342 6,063.071 5,742,866 11,666 - - - - - - 17,788,348 16,619,194 15,422,668 11,159635 10,161,342 9.138.071 8,322,866 18,080 18,170 $ 62,329 $ 55,569 $ 3.11% 3.87% $ 1,939 $ 2,150 $ Sour ces: U.S.Census Bureau WA State Office of Financial Management City of Tukwila Fnance Department $90 $80 5 $70 $60 $50 540 530 $20 510 19,107 19,486 19,611 19,765 19,920 55,503 $ 58,688 $ 63,345 $ 66,073 $ 71,882 3.98% 3.43% 2.89% 288% 2.71% 2,210 $ 2,012 $ 1,831 $ 1,900 $ 1,951 Total Debt 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 160 CITY OF TUKWILA'. 2017 CAFR Pa.e 2 of 2 $ 25.752,600 $ 21,727,609 $ 23,851,376 $ 30,084.437 $ 64,589,264 $ 69.576,786 - 6,687,500 6,687,500 6,082,500 5,412,500 4,805,000 25,752,600 28,415,109 30,538,876 36,166,937 70.001,764 74,381,786 3,540,000 3,075,000 2,580,000 1,742,527 1,597,704 1,454,422 6,621,342 6,063,071 5,742,866 5,646,458 5.046,900 4,447,522 19,611 19,765 19.920 19,300 19,540 19,660 $ 63,345 $ 66,073 $ 71,882 $ 77,518 $ 77,213 "'" 2.89% 2.88% 2.71% 2.91% 5,08% '*" $ 1,831 $ 1,900 $ 1,951 $ 2,257 $ 3,923 $ 4,084 STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING 2008 18,080 5,175709.975 23,125,007 2009 18,170 4,973,984,133 25,876,800 2010 19,107 4,809,486,786 29,950,150 2011 19,486 4,752,606030 28,006,800 2012 19,611 4.649,191.308 25,752,600 2013 19,765 4,756,373,688 21 727,609 2014 19,920 5,054,078,747 23,851,376 2015 19,300 5,395325,118 30,084,437 2016 19,540 5,763,649,829 64,589.264 2017 19 660 6,155,826.776 69,576,786 LAST TEN FISCAL YEARS 1,250,275 3,542,500 18.232,231 0.35 % 1,008 135,438 3,423,797 22,317,565 0.45% 1,228 3,050 3,238,825 26,708,275 0.56% 1398 - 3,330,312 - 24,676,488 0.52% 1266 - 3012,381 - 22.740,219 04955 1,160 6,687,500 696,346 - 27.718,763 0.58% 1,402 6,687,500 1687,497 - 28,851,379 0.57% 1448 6,082,500 1,910940 - 34.255,997 0.63% 1775 5,412,500 1,962,497 - 68039,257 1.18% 3,482 4,805,000 1.323,959 - 73057,826 1.1955 3,716 Note'. (a) Special assessment debt eves issued in 2013 for the Klickitet Urban Access Project. (b) Includes both restricted and assigned fund balance available for debt service payment. (c) These amounts are the general obligation bands that are being repaid b y the Foster Golf Course Fund nts section. Sources'. U.S, Census Bureau State of Washington Office of Financial Management 60 King County Department of Assessments ,A Tukwila Finance Department $su 2. 57o $60 540 $30 -- 510 Net Bonded Debt 2008 SONS 2010 2011 2012 2013 2011 2015 301E 2097 CITY OF TUKWILA: 2017 CAFR Direct: City of Tukwila CITY OF TUKWILA, WASHINGTON SCHEDULE 14 COMPUTATION OF DIRECT AND OVERLAPPING DEBT AS OF DECEMBER 31, 2017 $ 69,576,786 STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR 100.00% $ 69,576,786 Overlapping: King County 724,994,000 1.22% 8,844,927 King County Library 87,869,746 2.14% 1,880,413 Port of Seattle 388,360,000 1.22% 4,737,992 Tukwila School District #406 57,560,005 91.55% 52,696,185 Hospital Dstrict #1 - 4.91 % Total Overlapping Debt: 1,258,783,751 68,159,516 Total Direct and Overlapping Debt: $ 1,328,360,537 Sou King County Office of Finance King County Office of Assessments $ 137,736,302 "'The percentage of overlapping debt applicable is estimated using taxable county assessed property values. Direct and Overlapping Debt • City of Tukwila ■ King County ® King County Library ■ Port of Seattle ■Tukwila School Distric ■ Hospital District 163 STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 15 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Page 1 of 2 Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Debt Limit (7.5% of assessed value) Debt applicable to limit: General obligation bonds Other long-term debt Less: Amount set aside for repayment of general obligation debt and contracts payable Total net debt applicable to limit Source_ Tukwila Finance Department $ 388,178,248 $ 373,048,810 $ 360,711,509 $ 356,445,452 21,881,765 28,291,920 32,919,123 29,703,995 $ 366,296,483 $ 344,756.890 $ 327,792,386 $ 326,741,457 5.64% 7.58% 461,687,008 65,128,905 396,558.104 65,128,905 164 9.13% 8.33% CITY OF TUKWILA. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR Pape 2 of 2 $ 348,689,348 $ 356,728,027 $ 379,055,906 $ 404,649,384 $ 432,273,737 $ 461,687,008 25,884,632 21,727,609 23,288,621 29,322,914 60,208,532 65,128,905 $ 322,804,716 $ 335,000,418 $ 355,767,285 $ 375,326,470 $ 372,065,205 $ 396,558,104 7.42% 6.09% 6.14% 7.25% 13.93% 14.11% STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 16 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS 2008 18,080 62,329 1,126,908 3,884 4,107 2,769 2009 18,170 55,569 1,009,689 3,885 4,107 2,795 2010 19,107 55,503 1,060,496 3,892 4,107 2,907 2011 19,486 58,688 1,143,594 3,894 4,094 2,870 2012 19,611 63,345 1,242,259 3,896 4,094 2,902 2013 19,765 66,073 1,305,933 3,915 4,094 2,882 2014 19,920 71,882 1,431,889 3,920 4,103 2,978 2015 19,300 75,518 1,457,497 3,940 4,103 2,910 2016 19,540 77,213 1,508,742 3,969 4,103 2,873 2017 19,660 «` '"" 3,995 4,103 2,961 5.9% 10.9% 11.7% 7.6% 7.4% 5.2% 4.1 % 4.5% 4.2% 3.5% Notes: (a) Per Capita Personal Income data shown is for King County. Specific data for City of Tukwila is not available. (b) Personal Income estimates are calculated by multiplying TukWlla population by the Per Capita Personal Income ID estimates for Tukwila and are based on a revised methodology that provides for more accuracy. See also Footnote (a). Qp (c) Unemployment rates are listed and estimated using the census -share method. "' Data not available at time of publication. Sources: Tukwila Harming Division, Department of Community Development State of Washington Office of Financial Management Work Force Development Council of Seattle - King County (Unemployment Data) Tukwila School District #406 US Bureau of Economic Analysis 165 Unemployment Rate 14.0% 12.0 10.0% 8.0% 6.0% 4.0% ......... 2.0% 0.0% 2008 2009 2010 201..1. 201.2 2013 2014 2015 201.6 201.7 166 CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION Boeing Company Macy's West Stores Inc King County Metro Boeing Employee's Credit Union Nordstrom Hat Club LLC Zonar Systerrs Inc United Parcel Service Coster/ Wholesale Cheesecake Factory CITY OF TUKWILA, WASHINGTON SCHEDULE 17 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Aircraft Manufacturing Department Store Transit Operating Base Credit Union Family Clothing Store Clothing Accessories Miscellaneous Store Courier and Express DelNery Warehouse Club Full -Service Restaurant Source Tukwila Finance Department - Business Licenses 4,644 11.73 % 877 2.22% 806 2.04% 658 1.66% 616 1.56% 586 1.48% 409 1.03% 388 0.98% 362 0.91% 340 0.86% 8,043 376 644 376 334 18.98 0.89 % 1.52 % 0.89% 0.79 % 0.00% 0.00% 0.00% 0.00% 0.00% CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 18 FULL TIME EQUIVALENT EMPLOYEE BY DEPARTMENT LAST TEN FISCAL YEARS DEPARTMENT Administrative Services °' 19.75 - - - - - - - - Council 7.00 700 7.00 7.00 7.00 7.00 700 7.00 700 7.00 Mayor''' 11.00 16.00 17.00 15.75 16,75 17.75 21.00 2000 17.00 17.00 Hunan Resources"' - 4,00 4.00 4.00 4.00 4.00 400 400 400 3.00 Finance 12.00 12.00 13.00 11.00 12.00 12.00 12,00 1200 12.00 11.00 Recreation 23.50 22.50 20,75 16.25 16.25 16.25 16.00 16.75 17.25 16.25 Community Development 24.25 24.25 23.00 22.63 23.38 22.13 21.63 21.00 23.75 23.00 Court0' - 9.75 8.75 8.75 9.00 9.00 9.10 8.10 9.10 10,40 Police"' 83.00 82.00 80.00 83.00 68,00 87,50 89,00 93.00 93.75 92.75 Fire 64.00 63.00 65.00 66.00 67.00 67.00 67.00 70.0D 71.00 73.00 Information Technology '°' - 8.00 8.00 8.00 8,00 7.00 6,00 6.00 7.00 9,00 Rlblic Works 33.00 32.00 30.00 30.00 30.00 31.00 31.00 32.00 32.00 31,00 Parks 7.50 7.50 7.50 7.50 7.50 6,00 700 7.00 8.00 9.00 Street 12.00 12.00 11.00 12.00 12.00 1250 11.50 10.00 1200 11.00 Water 7.00 7.00 7.00 7.00 7.00 7.00 7.00 6.00 7,00 700 Sewer 2.00 2.00 1.00 200 200 2.00 2.00 2.00 200 3.00 Golf 9.75 9.75 10.00 9.25 8.25 9.25 8.25 8.25 775 875 Surface Water 8.00 8.00 7.00 8.00 8.00 8.00 8.00 900 9.00 9.00 Equipment Rental 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Metropolitan Park District Pool2.00 2.00 2.00 2.00 - Notes' Based on filled positions not budgeted positions. The departments for Human Resources, Court, City Clerk and Information Technology were previously reported under Administrative Services. mi The department of City Clerk began reporting to the Mayor's department in 2009. mI On September 12, 2011, Ole 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, statistical information is nowincluded for the MPD end presented as a blended component unit Source Tukwila Finance Department CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 19 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS FUNCTION Police Number of Calls for Serves 35,816 33,095 32889 30,272 31,916 31,355 29,840 32,946 34,229 33,123 Fire Number of Responses 4824 4654 4.574 4649 4.844 4,604 5,156 5549 5.754 5,840 Total Fire Loss 52,300,665 91934596 91.655571 91601596 $675.847 8343495 92738,080 $1926,944 52,821,016 $1,142486 Total Inspections 6,787 6787 `°I 1,550 illi 1360 '° 4,541 3,380 3,850 2,331 1,860 1951 Parks and Recreation Class Participants 109,273 103,603 85693 64,049 58,260 52319 45.514 68970 54,782 83,030 F0e: CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 20 CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS ibitm FUNCTION General Government Total City Area (Square Mies) Public Safety Police: Number of Vehicle Units 8.6 9.7 9.7 9.7 9.63 9 63 9.63 9.63 9.63 9.63 67 70 76 84 88 81 89 89 93 93 662085ne700 Admssions 117533 134,183 134,275 115,728 116.136 114,748 132397 136,984 141,218 143.872 Number of Fire Stations 4 4 4 4 4 4 4 4 4 4 Rounds of Golf Rayed 53,565 53,800 50,445 45,947 47.392 47,757 47,267 51,017 47,595 43,568 Number of Engines/Rescue Trucks/Ladders 9 9 8 7 7 7 9 9 8 Pool Attendance " 59,077 80,727 101,128 66,213 69,332 71233 79,537 - - - Number of Medical Aid Vehicles 2 2 2 1 1 1 1 1 1 1 Number of Hazardous Materu7 Trailer Units 2 2 2 2 2 2 2 2 2 2 street Mles 79 79 79 79 79 799 79 79 79 79 Transportation Hours Maintaining 19.840 22,140 20.360 20,360 22.920 16,767 627 4,716 4,836 0936 Paved Streets (lane riles) 163 178 178 178 188.2 188.2 188.2 188.2 188.2 188.2 Signalized klersections 63 59 59 59 62 a 62 62 64 66 Sidewalks (m44s) 54 56 56 56 64.8 64.8 64.6 64.8 64.6 64.8 Hours lamintaining 7,540 6,700 6925 6,925 7,000 8615 3,012 2.408 2,135 2986 Number of Traffic Signals 57 59 59 59 64 63 63 63 74 76 Water Utility Services Total Customers 2,109 2,112 2.100 2,109 2,117 21(8 2.126 2,145 2,160 2176 Total GabnsMOterlin thousands) 660,915 731,469 630755 525,976 650,659 645982 668,740 697.147 655472 697.210 Sanitary Sewer Total Customers 1,684 1,694 1,699 1,710 1,727 1.742 1,752 1,775 1,789 1,808 Surface Water Total Customers 5,164 5,204 5207 5207 5,212 5,226 5,239 5,242 5,249 5,282 Licenses Business Licenses 2,523 2,422 2454 2,611 2,030 1,877 2,208 2,220 1909 2123 Outside Contractors - - - - r" 1,366 1,132 1.216 1,215 945 1437 Permits BuiH'ng Permits 423 265 290 389 354 374 347 277 311 348 Mechanical Perrrats 256 159 160 180 101 221 216 154 192 198 Electrical Arnits 1.533 821 955 1,158 1.175 1337 1223 1.119 1.175 1047 Plumbing PermRs 264 145 163 187 210 167 184 .0 105 165 Rlblic Wed. Armes 154 131 136 100 126 155 152 163 175 136 Libraries Number of Libraries Total Circulation 2 2 303.665 318991 327,004 333,451 332,509 313571 284.667 214520 184492 157,168 Notes ` w clubhouse completed and opened in 2003. Duetoinformation system and data programtrans boning. 156 total does not include fire preventon staff inspections at this toe as reported in prior years. 'r During 2012, Outside Conhactors began their own business licensing category. Prior to this, outs contractors were consolidated with current year issued licenses. •nlorrretAn not available. Pool facilities acquired f mom King County in 2003. Sources. Tukwila Departments. King County Library System Number of Streetlights Owned by Seattle Crty Light 1,180 1,180 1,335 1,335 `I 901 901 902 902 902 902 Number of Streetlghts Owned by Puget Sound Energy 670 696 696 623 `1I 187 187 187 187 187 187 Number of Streetlights Owned by City of Tukwila - - - - r`1 1.210 1,216 1,224 1.224 1,224 1,224 Culture and Recreation Parks Acreage tali 152 16 16 162 175.6 175.6 175.6 190 190 191 Number of Parks 18 1 1 18 19 19 19 19 18 20 Golf Course Acreage 67 6 6 67 77.26 T7.26 77.26 77.26 77.26 77.26 Maintained Trails (riles) 11 1 1 15 15 15 15 15 15 15 Number of Playgrounds 13 1 1 11 11 11 11 11 11 11 Swimming Pool 1 - - - - - VAR. Center 1 1 1 1 1 1 Community Center/Recreation Facilites 1 1 1 1 1 1 Number of Libraries 2 2 2 2 2 Water Water Distribution Mains (riles) Maximum Daily Capacity (moons of gallons) Number of Fire Hydrants (Owned by City of Tukwila) Vehicles Sewer Sanitary Sewers (miss) Maximum Daily Treatrrent Capacity trillions of gallons) Vehicles 4 1 57 3 6.3 4 1 54 3 6.3 4 1 54 3 6.3 Surface Water Storm Drains (riles) j°I 6 6 6 Vehicles Notes'. la1 Reflects the correct reporting of dale for Culture and Recreation - Parks Acreage or the years 2001 through 2006. Parks acreage previously reported included golf course acreage. m1 Reflects the correct reporting of data for Surface Wafer- Storm Drains (miles) for he years 2001 through 2006. Miles previously reported ✓ere incorrect data estimates. into the Cih/s meters. Also, additional street lights sere added due to newconstruchon for Southcenter Parkway Extension end Klickitet Projects. Sources: Various Departments-Tukw ilia 2 41 41 41 49 49 49 49 10 10 10 10 10 10 10 554 576 576 576 577 577 579 8 8 8 9 9 9 9 37 37 37 37 37 37 39 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6 6 5 4 4 5 5 169 170 70 70 70 70 71 70.5 97.4 4 4 4 8 8 8 8 APPENDIX C DTC AND ITS BOOK -ENTRY SYSTEM DTC AND ITS BOOK -ENTRY SYSTEM The information in this section concerning the Depository Trust Company, New York, New York (`DTC') and DTC's book -entry system has been obtained from DTC's website at www.dtcc.com and the City takes no responsibility for the accuracy thereof. Beneficial Owners (as hereinafter defined) should therefore confirm the following with DTC or the Participants (as hereinafter defined). For purposes of this section, references to the Issuer mean the City, references to Agent mean the Bond Registrar and references to Securities means the Bonds. For the purposes of this Official Statement, the term "Beneficial Owner" includes the person for whom the Participant acquires an interest in the Bonds. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such maturity and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of the Securities under the DTC system, must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. C-1 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.] 6. [Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. [A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book -entry -only transfers through DTC. C-2 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this "Certificate") is executed and delivered by the City of Tukwila, Washington (the "City"), in connection with the issuance by the City of its Limited Tax General Obligation Bonds, 2018 (the "Bonds") pursuant to Ordinance No. 2559 of the City Council of the City (the "Council"), passed on December 4, 2017, as amended (the "Bond Ordinance"). Pursuant to the Bond Ordinance, the City hereby covenants and agrees as follows: Section 1. Purpose of this Certificate. This Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (each as defined below). Section 2. Definitions. In addition to the definitions set forth herein, in the Bond Ordinance or in the Official Statement, which apply to any capitalized term used in this Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings: Commission means the Securities and Exchange Commission. MSRB means the Municipal Securities Rulemaking Board. Official Statement means the Official Statement related to the Bonds. Participating Underwriter means the original underwriter of the Bonds required to comply with the Rule in connection with offering the Bonds. Rule means Section (b)(5) of Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provisions of Annual Information. (a) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to the MSRB, the following annual financial information and operating data for the prior fiscal year (commencing in 2019 for the fiscal year ended December 31, 2018): (1) Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the Official Statement; (2) Principal amount of general obligation debt outstanding at the end of the applicable fiscal year; (3) Assessed valuation of taxable property in the City for that fiscal year; and (4) Property tax levy amounts and rates for that fiscal year. Items (2)-(4) shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before the last day of the ninth month after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross refer to other documents available to the public on the MSRB's internet website or filed with the Commission. D-1 If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to the MSRB. (b) Listed Events. The City further agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: • Principal and interest payment delinquencies; • Non-payment related defaults, if material; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; • Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; • Modifications to the rights of Bondholders, if material; • Optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856, if material, and tender offers; • Defeasances; • Release, substitution, or sale of property securing repayment of the Bonds, if material; • Rating changes; • Bankruptcy, insolvency, receivership or similar event of the City; • The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and Appointment of a successor or additional trustee or the change of name of a trustee, if material. Section 4. Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in above on or prior to the date set forth in above. Section 5. EMMA; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination/Modification. The City's obligations to provide annual financial information and notices of listed events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this undertaking shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of all or any portion of this undertaking. Notwithstanding any other provision of this certificate, the City may amend this certificate, and any provision of the undertaking contained herein may be waived, in accordance with Rule, which, as currently interpreted by the Commission, requires that (i) the amendment or waiver be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the City, or type of business conducted; (ii) the undertaking, as amended or waived, would have complied with the requirements of Rule at the time of the primary offering, after taking into account any amendments or interpretations of Rule, as well as any change in circumstances; and (iii) the amendment or waiver does not materially impair the interests of holders of the Bonds, as determined either by parties unaffiliated with the City (such as bond counsel) or by the approving vote of holders of the Bonds. D-2 In the event of any amendment or waiver of the undertaking provided for in this certificate, the City shall describe such amendment or waiver in the next annual report, and shall include a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed event above, and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Bond Owner's Remedies. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under this undertaking, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. For purposes of this Certificate, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Certificate, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent. DATED this day of , 2018. CITY OF TUKWILA, WASHINGTON Peggy McCarthy, Finance Director D-3 CERTIFICATE OF AWARD CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2018 With respect to the above -captioned bonds (the "Bonds"), the undersigned certifies as follows: 1. The undersigned is the Finance Director (the "Designated Representative") of the City of Tukwila, Washington (the "City"), and makes this certification for and on behalf of the City pursuant to the authorization and direction contained in Ordinance No. 2559 of the City passed by the City Council on December 4, 2017, as amended by Ordinance No. 2574 passed by the City Council on May 7, 2018 (as so amended, the "Ordinance"). 2. Pursuant to Section 12(a) of the Ordinance, the Designated Representative determined that it was in the best interest of the City for the Bonds to be sold at a competitive public sale. 3. In accordance with the Ordinance, the Official Notice of Sale dated July 24, 2018 ("Notice of Sale"), has been prepared and distributed. Attached as Exhibit A hereto is the Notice of Sale, together with any amendments or supplements. 4. On July 31, 2018, bids for the purchase of the Bonds, as summarized on Exhibit B hereto, were received and opened in accordance with the Notice of Sale. 5. The sale of the Bonds is hereby awarded to Citigroup Global Markets, Inc. (the "Purchaser"), the Purchaser's bid being the best responsible bid determined by the method of calculation therefor contained in the Notice of Sale as follows: True Interest Cost: 3.353260% (as resized from the original bid of 3.349766%). A copy of the Purchaser's bid setting forth interest rates and purchase price for the Bonds is attached as Exhibit C hereto. 6. The Bonds shall be dated, mature, bear interest and be subject to redemption and other terms, all as set forth in Exhibit D hereto. The Bonds are being issued for the purpose of providing funds to finance and/or reimburse the City for costs of acquiring certain parcels of land and constructing, improving and equipping maintenance and other City facilities, and to pay costs of issuance for the Bonds. 10076 00005 hg26dr2787 7. All bids received other than that of the Purchaser are hereby rejected. Dated: July 31, 2018 CITY OF-TUKWILA, WASHINGTON Peggy Finance Director Designat "esentative 10076 00005 hg26dr2787 EXHIBIT A OFFICIAL NOTICE OF SALE 10076 00005 hg26dr2787 OFFICIAL NOTICE OF SALE $18,525,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 NOTICE IS HEREBY GIVEN that electronic bids will be received by the City of Tukwila, Washington (the "City"), for purchase of the above described bonds (the "Bonds") at 8:30 a.m. Pacific Time on July 31, 2018 or such other day or time and under such other terms and conditions as may be established by the City and communicated as described under "Modification; Cancellation; Postponement." The Bonds will be sold on an all -or -none basis. Bids must be submitted electronically as described below. Bids must be submitted electronically via the Qualified Electronic Bid Provider in accordance with this Official Notice of Sale. The City has designated PARITY® as the Qualified Electronic Bid Provider for purposes of receiving electronic bids for the Bonds. Electronic bids will be received via PARITY® until the time and date of sale, and no bid will be accepted after that time. For further information about PARITY® including any fees charged, potential bidders may contact PARITY® at (212) 849-5021. By designating a bidding service as a Qualified Electronic Bid Provider, the City does not endorse the use of such bidding service. See "BIDDING INFORMATION AND AWARD — Submission of Bids" below. All bids properly received will be considered and acted on by the City Finance Director on behalf of the City by 12:00 p.m. Pacific Time on the sale date. Bidders are referred to the attached Preliminary Official Statement for additional information regarding the City, the Bond Ordinance (as defined herein), the Bonds, the security therefor, and other matters. Modification; Cancellation; Postponement. Bidders are advised that the City may modify the terms of this Official Notice of Sale prior to the time set for the receipt of bids. Any such modifications will be provided to the Qualified Electronic Bid Provider and i-Deal Prospectus on or prior to the time bids are due. In addition, the City may cancel or postpone the date and time for the receipt of bids for the Bonds at any time prior to the time bids are due. Notice of such cancellation or postponement will be communicated to the Qualified Electronic Bid Provider and i-Deal Prospectus as soon as practical following such cancellation or postponement. If a postponement occurs, bids will be received at the time and in the manner the City will determine. As an accommodation to bidders, telephonic, or electronic notice of any amendment or modification of this Official Notice of Sale will be given to any bidder requesting such notice from the City's Financial Advisor, PFM Financial Advisors LLC, telephone: (206) 858-5363 or e-mail at: sea-advisors@pfm.com. Failure of any bidder to receive such notice by telephone, the Qualified Electronic Bid Provider or i-Deal Prospectus will not affect the legality of the sale. Each bidder (and not the City or its Financial Advisor) is responsible for the timely delivery of its bid. The official time will be determined by the City and not by any bidder or Qualified Electronic Bid Provider. • Preliminary, subject to change. vii Description of the Bonds Bond Details. Each Bond will be dated its date of initial delivery. The Bonds will bear interest payable semiannually on each June 1 and December 1, beginning December 1, 2018, 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 (1) Amount (') 2022 $ 745,000 2031 $1,125,000 2023 780,000 2032 1,165,000 2024 820,000 2033 1,215,000 2025 860,000 2034 1,265,000 2026 905,000 2035 1,315,000 2027 950,000 2036 1,365,000 2028 1,000,000 2037 1,420,000 2029 1,040,000 2038 1,475,000 2030 1,080,000 (') Preliminary; subject to adjustment by the City as provided in this Official Notice of Sale. These amounts will represent serial maturities unless term bonds are specified, by the successful bidder, as described in this Official Notice of Sale, in which case these amounts will represent mandatory redemption amounts of term bonds. See "Redemption Provisions —Mandatory Redemption" below. Adjustment of Principal Amount of Bonds and Bid Price for the Bonds Before Bid Opening. Bidders are advised that the City may increase or decrease the total principal amount and/or the amounts of individual maturities of Bonds stated in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus) prior to the bidding. If such changes are made, they will be reflected in the Official Bid Form to be made available through the Qualified Electronic Bid Provider. After Receipt of the Bids. Following the time bids are due, the City reserves the right to increase or decrease the aggregate principal amount of the Bonds by an amount not to exceed 15 percent, rounded up to the nearest $5,000. Adjustments of the aggregate principal amount in excess of 15 percent, rounded up to the nearest $5,000, may be made with approval of the successful bidder. The price bid by the successful bidder will be adjusted by the City to reflect an increase or decrease in the principal amount and maturity schedule for the Bonds, taking into account the interest rates and underwriting compensation in the bid as submitted. In the event the City elects to adjust the bond size after the bid pursuant to this Official Notice of Sale, the underwriter's discount (net of bond insurance expense, if any), expressed in dollars per thousand, will be held constant. The City will not be responsible in the event and to the extent that any adjustment affects the net compensation to be realized by the successful bidder, or the true interest cost of the winning bid or its ranking relative to other bids. Redemption Provisions Optional Redemption. The Bonds maturing on December 1, 2022 through December 1, 2026 are not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after December 1, 2027, are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027, at a price of par plus accrued interest, if any, to the date fixed for redemption. Mandatory Redemption. Bidders have the option to designate part or all of the Bonds maturing on or after December 1, 2027, as term bonds subject to mandatory redemption at a price of par plus accrued interest, in the years and in the amounts set forth in the serial maturity schedule for the Bonds, subject to adjustment as described herein. Any term bonds so designated must consist of the total principal payments for two or more consecutive years and mature on the latest of such years. If no term bonds are designated, the Bonds will mature in the amounts and on the dates set forth in the serial maturity schedule set forth above and subject to adjustment as described herein. See "DESCRIPTION OF THE BONDS —Redemption Provisions" in the Preliminary Official Statement. Purpose of the Bonds Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for costs related to the acquisition of land and the construction, improvement and equipping of maintenance and other City facilities, and (ii) to pay the costs of issuance of the Bonds. Preliminary, subject to change. viii Security for the Bonds The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in the Preliminary Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit, and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest on the Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. See "SECURITY FOR THE BONDS" in the Preliminary Official Statement. Registration and Book -Entry Transfer System The Bonds will be issued as fully registered bonds and, when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denomination of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive physical certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee for DTC, references to the Registered Owners herein will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. See APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM" in the Preliminary Official Statement for the Bonds. BIDDING INFORMATION AND AWARD Submission of Bids Bids for the Bonds are to be submitted electronically via the Qualified Electronic Bid Provider. Hard copy bids will not be accepted. By submitting a bid for the Bonds, such bidder thereby agrees to the following terms and conditions: (i) If any provision in this Official Notice of Sale with respect to the Bonds conflicts with information or terms provided or required by the Qualified Electronic Bid Provider, this Official Notice of Sale, including any amendments issued through the Qualified Electronic Bid Provider and i-Deal Prospectus, shall control. (ii) Each bidder is solely responsible for making necessary arrangements to access the Qualified Electronic Bid Provider for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). (iii) The City has no duty or obligation to provide or assure access to the Qualified Electronic Bid Provider to any bidder, and the City shall not be responsible for proper operation of, or have any liability for, any delays, interruptions or damages caused by use or attempted use of the Qualified Electronic Bid Provider or any incomplete, inaccurate or untimely bid submitted by any bidder through the Qualified Electronic Bid Provider. (iv) The City is permitting the use of the Qualified Electronic Bid Provider as a communication mechanism, and not as the City's agent, to conduct the electronic bidding for the Bonds. The Qualified Electronic Bid Provider is acting as an independent contractor, and is not acting for or on behalf of the City. (v) The City is not responsible for ensuring or verifying bidder compliance with any Qualified Electronic Bid Provider procedures. (vi) If a bid is accepted by the City, this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus) and the information that is submitted electronically through the Qualified Electronic Bid Provider shall form a contract, and the bidder shall be bound by the terms of such contract. (vii) Information provided by the Qualified Electronic Bid Provider to bidders shall form no part of any bid or of any contract between the successful bidder and the City unless that information is included in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). ix Bid Details and Parameters Form of Bids. Bids for the Bonds must be unconditional, and for not less than the entire offering of the Bonds. By submitting a bid, each bidder agrees to all of the terms and conditions of this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). Bids must be submitted electronically via the Qualified Electronic Bid Provider. Bids may not be withdrawn or revised after the time that bids are due. Interest Rates Bid. Bids may specify any number of interest rates in multiples of one -eighth of one percent (1/8 of 1 percent) or one -hundredth of one percent (1/100 of 1 percent). All Bonds of the same maturity must bear interest at the same rate and no Bond shall bear interest at more than one rate. No rate of interest may exceed 5.0 percent. Bonds maturing on or after December 1, 2027, must bear interest at a rate not lower than 4.0 percent. Premium and Discount. No bid will be considered for a price that is less than 100 percent or more than 125 percent of the par value of the Bonds. Each maturity must be reoffered at a yield that will produce a price of not less than 98 percent of the principal amount for that maturity. For purposes of the preceding sentences, "price" means the price as calculated using the lesser of the yield to the redemption date, if any, or the yield to the maturity date. Good Faith Deposit The successful bidder for the Bonds shall deliver a good faith deposit in the amount of $190,000 to the City Finance Director. The good faith deposit must be paid by federal funds wire transfer delivered no later than two hours following the successful bidder's receipt of the verbal award. Wiring instructions will be provided to the successful bidder at the time of the verbal award. The good faith deposit will be retained by the City as security for the performance of the successful bidder and shall be applied to the purchase price of the Bonds upon delivery of the Bonds to the successful bidder. Pending delivery of the Bonds, the good faith deposit may be invested for the sole benefit of the City. If the Bonds are ready for delivery and the successful bidder fails or neglects to complete the purchase within 30 days following acceptance of its bid, the good faith deposit shall be retained by the City as reasonable liquidated damages, and not as a penalty. Such retention will constitute a full release and discharge of all claims by the City against the successful bidder and, in that event, the City may call for additional proposals. The City's actual damages may be higher or lower than the amount of such good faith deposit. Such amount constitutes a good faith estimate of the City's actual damages. Each bidder waives the right to claim that actual damages arising from such default are less than such amount. Selection of the Successful Bidder The bids for the Bonds will be considered by the City at the date and time set for sale. The Bonds will be sold to the bidder submitting a bid in conformance with this Official Notice of Sale that produces the lowest true interest cost to the City, based on the bid price, the interest rates specified in the bid and the principal amounts identified in this Official Notice of Sale. The true interest cost will be the rate necessary, on a 30/360 basis and semiannual compounding, to discount the debt service payments from the payment dates to the date of the Bonds and to the price bid. The true interest cost calculations will be performed by the City's Financial Advisor, and the City will base its determination of the best bid solely on such calculations. The successful bidder for the Bonds will be bound to purchase the Bonds in the principal amount, at such price, and with such interest rates as are specified in its bid, unless there is an adjustment in the principal amounts of the Bonds, in which case the successful bidder shall be bound to purchase the Bonds in the adjusted principal amounts at the revised bid amount, as described above under the heading "Adjustment of Principal Amount of Bonds and Bid Price for the Bonds." The City reserves the right to reject any or all bids and to waive any irregularity in any bid or the bidding process. If all bids are rejected, then the Bonds may be sold in any manner provided by law. Any bid presented after the time specified for receipt of the bids will not be accepted, and any bid not backed by the required good faith deposit will not be considered. The successful bid shall remain in effect until 5:00 p.m. Pacific Time, on the date set for the receipt of bids. Bond Insurance; Rating Bond Insurance. The purchase of any insurance policy for the Bonds or the issuance of any commitment therefor will be at the sole option and expense of the successful bidder for such Bonds. Bids may not be conditioned upon qualification for or the receipt of municipal bond insurance. Any increased costs of issuance of the Bonds resulting from such purchase of insurance will be paid by the successful bidder for the Bonds and will not, in any event, be paid by the City. Payment of any bond insurance premium and satisfaction of any conditions to the issuance of the municipal bond insurance policy will be the sole responsibility of the successful bidder. In particular, the City will not provide any opinions or enter into any agreements with respect to the provisions of any such policy. Failure of any municipal bond insurer to issue or deliver its policy will not in any way relieve the successful bidder of its contractual obligations arising from acceptance of its proposal for the purchase of the Bonds. The successful bidder must provide the City with the municipal bond insurance commitment and information with respect to the municipal bond insurance policy and the insurance provider within two business days following the award of the bid by the City. The City will require delivery, on or prior to the date of initial delivery of the Bonds, of: (i) a certificate from the insurance provider regarding the accuracy and completeness of the information provided for inclusion in the Official Statement, (ii) an opinion of counsel to the insurance provider regarding the validity and enforceability of the municipal bond insurance policy, and (iii) a certificate with respect to certain tax matters, each in a form reasonably satisfactory to the City and Bond Counsel. Rating. The City has received a rating from S&P Global Ratings as shown on the cover of the Preliminary Official Statement. The City will pay the fees for the rating. Any other ratings are the responsibility of the successful bidder. See "RATING" in the Preliminary Official Statement. Delivery of Bonds The Bonds will be delivered to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, less payment of the purchase price to the City in immediately available federal funds, less the amount of the applicable good faith deposit. Closing is expected to occur on the closing date set forth on the cover page of the Preliminary Official Statement. If, prior to delivery of the Bonds, the interest receivable by the owners of such Bonds becomes includable in gross income for federal income tax purposes, or becomes subject to federal income tax other than as described in the Preliminary Official Statement, the successful bidder, at its option, may be relieved of its obligation to purchase the Bonds and, in that case, the good faith deposit accompanying its bid will be returned without interest. The Bonds will be delivered in "book -entry only" form in accordance with the letter of representations from the City to DTC. As of the date of the award of the Bonds, each successful bidder must either participate in DTC or clear through or maintain a custodial relationship with an entity that participates in DTC. The City will furnish to the successful bidder one electronic transcript of proceedings; additional transcripts will be furnished at the successful bidder's cost. Issue Price Information The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at closing an "issue price" or similar certificate setting forth the reasonably expected initial offering price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form attached to this Official Notice of Sale as Exhibit A, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel. The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the "competitive sale requirements") because: (i) the City shall disseminate this Official Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (ii) all bidders shall have an equal opportunity to bid; (iii) the City may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and xi (iv) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the Bonds at the highest price (or lowest interest cost), as set forth in this Official Notice of Sale. Any bid submitted pursuant to this Official Notice of Sale shall be considered a firm offer for the purchase of the Bonds, as specified in the bid. By submitting a bid for the Bonds, each bidder certifies that has an established industry reputation for underwriting new issuance of municipal bonds unless specifically noted in the bid. In the event that the competitive sale requirements are not satisfied, the City shall advise the winning bidder that such requirements are not satisfied and the following section will apply: Hold -the -Offering -Price Rule May Apply. In the event that the competitive sale requirements are not satisfied, the City will so advise the winning bidder. The City will treat the first price at which 10% of a maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity if such maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. With respect to those maturities of the Bonds that do not meet the 10% test as of the date and time of the award of the Bonds, the City will treat the initial offering price to the public as of the sale date of any maturity of the Bonds as the issue price of that maturity (the "hold -the -offering -price rule"), in each case applied on a maturity -by -maturity basis. The winning bidder shall advise the City if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. As stated above, the hold -the -offering -price rule will apply to those maturities of the Bonds that do not meet the 10% test as of the sale date. By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold -the -offering -price rule shall apply to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The winning bidder shall promptly advise the City when the underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. The City acknowledges that, in making the representation set forth above, the winning bidder will rely on (i) the agreement of each underwriter to comply with the hold -the -offering -price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the -offering -price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the hold -the -offering -price rule, as set forth in the retail distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold -the -offering -price rule and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker -dealer that is a party to a retail distribution agreement to comply with its corresponding agreement regarding the hold -the -offering -price rule as applicable to the Bonds. By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker -dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if applicable), in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either xii the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if applicable), in each case if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Bonds to any person who is a related party to an underwriter shall not constitute sales to the public for purposes of this Official Notice of Sale. Further, for purposes of this Official Notice of Sale: (i) "public" means any person other than an underwriter or a related party, (ii) "underwriter" means (i) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder. CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds; however, neither the failure to print CUSIP numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds. The City's Financial Advisor will obtain CUSIP numbers on behalf of the City. The charge of the CUSIP Service Bureau shall be paid by the successful bidder. Bond Counsel Opinion The City will furnish to the purchaser of the Bonds the bond counsel opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, in substantially the form attached to the Preliminary Official Statement in Appendix A. Continuing Disclosure The City has entered into an undertaking for the benefit of the owners of the Bonds to provide certain financial information and operating data and notice of certain events to the Municipal Securities Rulemaking Board ("MSRB") pursuant to the requirements of paragraph (b)(5)(i) of Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule"). See Appendix D in the Preliminary Official Statement. Closing Documents As a condition to the obligation of the successful bidder to accept delivery of and pay for the Bonds, the City will furnish a certificate of an official or officials of the City stating that to the best knowledge of such official(s), as of the date of the Official Statement and as of the date of delivery of the Bonds, the information (including financial information) contained in the Official Statement was, as of its date, and is, as of the date of closing, true and correct in all material respects and did not and does not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance, if any, or other credit facility). A no -litigation certificate will also be included in the closing documents for the Bonds. Official Statement The Preliminary Official Statement is in a form deemed final by the City for the purpose of the Rule, but is subject to revision, amendment and completion in a final Official Statement which the City will deliver, to the successful bidder, at the City's expense, not later than seven business days after the City's acceptance of the successful bidder's proposal, in sufficient quantities to permit the successful bidder to comply with the Rule. The successful bidder shall file, or cause to be filed, the final Official Statement with the MSRB within one business day following the receipt of the Official Statement from the City. The successful bidder also agrees: (i) to provide to the City, in writing, promptly after the acceptance of the bid, pricing and other related information, including initial reoffering prices of the Bonds, necessary for completion of the final Official Statement; (ii) to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any amendments or supplements prepared by the City; and (iii) to take any and all actions necessary to comply with applicable SEC and MSRB rules governing the offering, sale and delivery of the Bonds to ultimate purchasers, including without limitation, the delivery of a final Official Statement to each investor who purchases Bonds. Additional Information The Preliminary Official Statement may be obtained www.i-dealprospectus.com, telephone (212) 849-5021. obtained upon request to the City's Financial Advisor. Financial Advisor, PFM Financial Advisors LLC sea-advisors@pfm .com). from i-Deal Prospectus, a service of i-Deal LLC, at In addition, the Preliminary Official Statement may be Additional information may be obtained from the City's (by telephone: (206) 858-5363; or by e-mail: CITY OF TUKWILA, WASHINGTON By: /s/ Peggv McCarthy Peggy McCarthy, Finance Director xiv EXHIBIT A FORM OF CERTIFICATE OF UNDERWRITER , has acted as underwriter (the "Underwriter") in connection with the sale and delivery of the , Washington (the "Issuer") in the aggregate principal amount of $ (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. [If competitive sale safe harbors are met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the respective prices for each Maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. c. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the Bonds, being the Expected Offering Price of each Maturity, is $ (the "Issue Price"). [If competitive sale safe harbors are not met:] 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Date"). a. With respect to the Bonds maturing in (the "General Rule Maturities"), at least 10% of the principal amount of each Maturity of the Bonds was sold to the Public at the respective price for that Maturity shown in Schedule A (the "Sale Price"). b. With respect to the Bonds maturing in (the "Unsold Maturities"), the Underwriter offered the Unsold Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Price") on or before the Sale Date. A copy of the pricing wire for the Bonds is attached as Schedule B. 3. As set forth in the Notice of Sale and Certificate of Award, the Underwriter [and all members of the Underwriting Group] agreed in writing that (i) for the Unsold Maturities ("Hold -the -Offering -Price Maturities"), [it] would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the applicable Initial Offering Price during the Holding Period (the "hold -the -offering -price rule"), and (ii) any selling group agreement will contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement will contain the agreement of each broker -dealer who is a party to the retail distribution agreement, to comply with the hold -the -offering -price rule. During the Holding Period, no Underwriter (as defined in Treasury Regulation 1.148(f)) has offered or sold any of the Hold -the -Offering -Price Maturities at a price that is higher than the respective Initial Offering Price. "Holding Period" means, with respect to a Hold -the -Offering -Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the 5th business day after the Sale Date or (ii) the date on which the Underwriter has sold at least 10% of such Maturity to the Public at prices that are no higher than the applicable Initial Offering Price. 4. The expected aggregate issue price of the Bonds, being the Sale Price of each General Rule Maturity and the Initial Offering Price of each Hold -the -Offering -Price Maturity, is $ (the "Issue Price"). A-i [For all transactions:] Provided that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Code, the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes Pacifica Law Group LLP ("Bond Counsel") to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2, in Treasury Regulation 1.148-1(f). A-ii EXHIBIT B COPY OF BIDS RECEIVED FOR THE BONDS 10076 00005 hg26dr2787 PARITY Result Screen Page 1 of 1 08:37:47 a.m. PDST Upcoming Calendar Overview Compare Summary Bid Results Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC Reoffering Citiqroup Global Markets, Inc. 3.349766 ❑ J.P. Morgan Securities LLC 3.349898 ❑ Morgan Stanley & Co, LLC 3.372961 ❑ Mesirow Financial, Inc. 3.405207 ❑ Piper Jaffray 3.415376 ❑ Robert W. Baird & Co., Inc. 3.416603 ❑ J.J.B. Hilliard, W.L. Lyons, Inc. 3.448660 ❑ Jefferies LLC 3.477015 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. © 1981-2002 i-Deal LLC, All rights reserved Trademarks http s : //www. newi ssuehome. i-deal. com/Parity/asp/main. asp?frame=content&page=parityR... 7/31 /2 018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Citigroup Global Markets, Inc. - Denver , CO's Bid ,:.1FIj'r.'" Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $20,272,443.09, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 5.0000 12/01/2029 1,040M 5.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,424,444.44 $1,747,443.09 $8,677,001.35 3.349766 Time Last Bid Received On:07/31/2018 8:29:28 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Citigroup Global Markets, Inc., Denver , CO Contact: Elizabeth Funk Title: Telephone:303-728-8468 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: http s://www. newi ssuehome. i -deal. com/Parity/asp/main. asp?frame=content&page=parityB i... 7/31 /2018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/31 /2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel J.P. Morgan Securities LLC - New York , NY's Bid Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $20,293,814.54, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 4.0000 12/01/2029 1,040M 5.0000 12/01/2030 1,080M 5.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,454,282.22 $1,768,814.54 $8,685,467.68 3.349898 Time Last Bid Received On:07/31/2018 8:26:22 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: J.P. Morgan Securities LLC, New York , NY Contact: Jaclyn Mischler Title: Vice President Telephone:212-834-7155 Fax: 917-464-9300 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https : //www. newi s suehome. i-dea1. com/Parity/asp/main. asp?frame=content&page=parityBi... 7/31 /2018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/3 1/2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Morgan Stanley & Co, LLC - New York , NY's Bid Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $20,041,875.69, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the foliowinq rate(s): Maturity Date Amount $ Coupon 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 4.0000 12/01/2029 1,040M 4.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 12/01/2038 2,895M 4.0000 Total Int Premium: Net Interest Cost: TIC: $10,203,981.11 $1,516,875.69 $8,687,105.42 3.372961 Time Last Bid Received On:07/31/2018 8:29:46 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Morgan Stanley & Co, LLC, New York , NY Contact: Daniel Kelly Title: Executive Director Telephone:212-761-1541 Fax: 212-507-2510 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https : //www. newi s suehome. i-deal. com/Parity/asp/main. asp?frame=content&page=parityB i... 7/31 /2 018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https://www.newissuehome. i-dea1. com/Parity/asp/main. asp?frame=content&page=parityBi... 7/31 /2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Mesirow Financial, Inc. - Chicago , IL's Bid -. 4 I Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $19,976,903.65, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 4.0000 12/01/2029 1,040M 4.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,2 3,981.11 $1,451,903.65 $8,752,077.46 3.405207 Time Last Bid Received On:07/31/2018 8:29:57 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Mesirow Financial, Inc., Chicago , IL Contact: Dave Officer Title: Telephone:212-530-7661 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https : //www. newi s suehome. i-deal. com/Parity/asp/main. asp?frame=content&page=parityB i... 7/31 /2 018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks http s: //www. newissuehome. i-deal. com/Parity/asp/main. asp?frame=content&page=parityB i... 7/31 /2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Piper Jaffray - Minneapolis , MN's Bid Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $20,042,684.01, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 5.0000 12/01/2029 1,040M 4.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,306,953.33 $1,517,684.01 $8,789,269.32 3.415376 Time Last Bid Received On:07/31/2018 8:29:52 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Piper Jaffray, Minneapolis , MN Contact: Mike Frederickson Title: Managing Director Tele pho ne:612-303-6666 Fax: 612-303-1626 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/31 /2018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/31/2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Robert W. Baird & Co., Inc. - Red Bank , NJ's Bid AltPUTY. Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $19,878,873.66, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate (sl: Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 4.0000 12/01/2028 1,000M 4.0000 12/01/2029 1,040M 4.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Int Premium: Net Interest Cost: TIC: $10,115,657.50 $1, 353, 873.66 $8,761,783.84 3.416603 Time Last Bid Received On:07/31/2018 8:09:02 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Robert W. Baird & Co., Inc., Red Bank , NJ Contact: charles massaro Title: director Telephone:732-576-4410 Fax: 732-576-4420 Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https : //www. newi s suehome. i-deal. com/Parity/asp/main. asp?frame=content&pate=paritvB i... 7/31 /2018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks hops://www.newissuehome. i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/31 /2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel J.J.B. Hilliard, W.L. Lyons, Inc. - Indianapolis , IN's Bid .;. 4RI'T'& Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $19,814,771.30, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 4.0000 12/01/2028 1,000M 4.0000 12/01/2029 1,040M 4.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,115,657.50 $1,289,771.30 $8,825,886.20 3.448660 Time Last Bid Received On:07/31/2018 8:27:28 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: J.J.B. Hilliard, W.L. Lyons, Inc., Indianapolis , IN Contact: Robert Bond Title: Telephone:317-991-9135 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: http s ://www.newissuehome. i-de a1. com/Parity/asp/main. asp?frame=content&page=parityB i... 7/31 /2 018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https://www.newissuehome. i-deal.com/Parity/asp/main. asp?frame=content&page=parityB i.. 7/31 /2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Jefferies LLC - New York , NY's Bid Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $20,515,581.80, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon % 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 5.0000 12/01/2029 1,040M 5.0000 12/01/2030 1,080M 5.0000 12/01/2031 1,125M 5.0000 12/01/2032 1,165M 5.0000 12/01/2033 1,215M 5.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $11,059,272.08 $1,990,581.80 $9,068,690.28 3.477015 Time Last Bid Received On:07/31/2018 8:27:54 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Jefferies LLC, New York , NY Contact: Kurt Ahrens Title: Te l e p h o n e: 212-3 36-7154 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/31/2018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https://www.newissuehome. i-deal. com/Parity/asp/main. asp?frame=content&page=parityBi... 7/31 /2018 EXHIBIT C COPY OF WINNING BID OF THE PURCHASER 10076 00005 hg26dr2787 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Citigroup Global Markets, Inc. - Denver , CO's Bid .:;PARITY.' Tukwila $18,525,000 Limited Tax General Obligation Bonds, 2018 For the aggregate principal amount of $18,525,000.00, we will pay you $20,272,443.09, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon 12/01/2022 745M 5.0000 12/01/2023 780M 5.0000 12/01/2024 820M 5.0000 12/01/2025 860M 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 5.0000 12/01/2029 1,040M 5.0000 12/01/2030 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1,165M 4.0000 12/01/2033 1,215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,424,444.44 $1,747,443.09 $8,677,001.35 3.349766 Time Last Bid Received On:07/31/2018 8:29:28 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Citigroup Global Markets, Inc., Denver , CO Contact: Elizabeth Funk Title: Telephone:303-728-8468 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityBi... 7/31/2018 PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 i-Deal LLC, All rights reserved Trademarks https : //www. newi s suehome. i-de al. com/Parity/asp/main. asp?frame=content&page=parityB i... 7/31 /2018 EXHIBIT D TERMS OF THE BONDS CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2018 (THE "BONDS") Maturity Year Principal Interest December 1 Amounts Rates Yields Prices 2022 $ 730,000 5.00% 1.95% 112.511 2023 765,000 5.00 2.05 114.733 2024 805,000 5.00 2.20 116.378 2025 845,000 5.00 2.33 117.818 2026 885,000 5.00 2.45 119.037 2027 930,000 5.00 2.52 119.454(1) 2028 975,000 5.00 2.60 118.760(11 2029 1,025,000 5.00 2.70 117.899(1) 2030 1,080,000 4.00 2.95 108.080(1) 2031 1,120,000 4.00 3.05 107.278(1) 2032 1,165,000 4.00 3.15 106.483(1) 2033 1,210,000 4.00 3.25 105.694(1) 2034 1,260,000 4.00 3.34 104.991(1) 2035 1,310,000 4.00 3.38 104.680(1) 2036 1,365,000 4.00 3.43 104.292(1) 2037 1,420,000 4.00 3.48 103.907(1) 2038 1,475,000 4.00 3.50 103.753(1) ('1 Priced to the par call date of June 1, 2027. Aggregate Purchase Price: 109.850% True Interest Cost: 3.353260% Final Maturity Date: December 1, 2038 Redemption: Optional Redemption. The Bonds maturing on or after December 1 in the years 2022 through 2026, inclusive, are not subject to redemption prior to their state maturity. The Bonds maturing on or after December 1, 2027 are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redemption. 10076 00005 hg26dr2787 OFFICIAL STATEMENT DATED JULY 31, 2018 NEW ISSUE S&P Rating: AA BOOK -ENTRY ONLY See "RATING" herein In the opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel, under existing law and subject to certain qualifications described herein, the interest on the Bonds is excludable from gross income for federal income tax purposes. In addition, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. See "TAX MATTERS." $18,365,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 Dated: As of the Delivery Date Due: December 1, as shown on the inside cover The City of Tukwila, Washington (the "City"), is issuing its Limited Tax General Obligation Bonds, 2018 (the "Bonds"), in fully registered form under a book -entry only system. When issued, the Bonds initially will be registered to Cede & Co., as bond owner and nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in the principal amount of $5,000 or integral multiples thereof within a maturity. Purchasers of the Bonds (the "Beneficial Owners") will not receive certificates representing their beneficial ownership interest in the Bonds purchased. The fiscal agent of the state of Washington (the "State"), currently U.S. Bank National Association, will act as the registrar, paying agent, transfer agent and authenticating agent for the Bonds (the "Bond Registrar"). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2018, to the maturity or earlier redemption of the Bonds. The Bonds will mature on the dates and in the amounts and bear interest at the rates set forth on the inside cover. For so long as the Bonds are held in book -entry only form, the principal of and interest on the Bonds will be paid by the Bond Registrar to DTC, which in turn is obligated to remit such payments to its broker -dealer participants for subsequent disbursement to the Beneficial Owners. See "DESCRIPTION OF THE BONDS —Registration and Payment" and APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM." Maturity Schedule on Inside Cover Proceeds of the Bonds will be used to provide funds (i) to pay and/or reimburse the City for costs related to the acquisition of land and the construction, improvement and equipping of maintenance and other City facilities, and (ii) to pay the costs of issuance of the Bonds. See "PURPOSE" herein. The Bonds are subject to redemption prior to their stated dates of maturity as described herein. See "DESCRIPTION OF THE BONDS —Redemption Provisions" herein. The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money of the City as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money of the City that is lawfully available, to pay when due the principal of and interest on the Bonds. The full faith, credit and resources of the City have been pledged irrevocably for the prompt payment of the principal of and interest on the Bonds. See "SECURITY FOR THE BONDS" herein. The City's authority to collect taxes, including its property tax levy, is subject to various limitations. See "CITY TAXING AUTHORITY —Property Tax" and "PROPERTY TAX LIMITATIONS." The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See "TAX MATTERS." This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. The Bonds are offered when, as and if executed and delivered, and are subject to receipt of the approving legal opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel to the City, and certain other conditions. It is expected that the Bonds will be available for delivery in New York, New York through the facilities of DTC or to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer on or about August 14, 2018 (the "Delivery Date"). Maturity Date (December 1) (1) (2) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 $18,365,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 Maturity Amount $ 730,000 765,000 805,000 845,000 885,000 930,000 975,000 1,025,000 1,080,000 1,120, 000 1,165, 000 1,210,000 1,260,000 1,310,000 1,365,000 1,420, 000 1,475, 000 Interest Rate 5.00% 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Yield Price CUSIP No. (1) 1.95% 112.511 899052LM4 2.05 114.733 899052LN2 2.20 116.378 899052LP7 2.33 117.818 899052LQ5 2.45 119.037 899052LR3 2.52 119.454 (2) 899052LS1 2.60 118.760 (2) 899052LT9 2.70 117.899 (2) 899052LU6 2.95 108.080(2) 899052LV4 3.05 107.278 (2) 899052LW2 3.15 106.483 (2) 899052LX0 3.25 105.694 (2) 899052LY8 3.34 104.991 (2) 899052LZ5 3.38 104.680 (2) 899052MA9 3.43 104.292 (2) 899052MB7 3.48 103.907 (2) 899052MC5 3.50 103.753 (2) 899052MD3 The CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Global Market Intelligence. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the City and are provided solely for convenience and reference. CUSIP numbers for a specific maturity are subject to change after the issuance of the Bonds. The City takes no responsibility for the accuracy of such CUSIP numbers. Priced the first optional call date of June 1, 2027. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the cover page and Appendices, must be considered in its entirety. The offering of the Bonds is made only by means of this entire Official Statement. The information within this Official Statement has been compiled from sources considered reliable and, while not guaranteed as to accuracy, is believed to be correct as of its date. The City makes no representation regarding the accuracy or completeness of the information in APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM," which has been obtained from DTC's website, the form of opinion of Bond Counsel, or the information provided by or obtained from any entity providing bond insurance or other credit facility. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the information set forth herein since the date hereof. Information on website addresses set forth in this Official Statement is not incorporated into this Official Statement and cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon in making investment decisions regarding the Bonds. No dealer, broker, sales representative, or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement and, if given or made, such information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such persons to make such offer, solicitation or sale. Certain statements contained in this Official Statement do not reflect historical facts, but rather are forecasts and "forward -looking statements." No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts shown. In this respect, the words "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward - looking statements. The achievement of certain results or other expectations contained in forward -looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward -looking statements. All estimates, projections, forecasts, assumptions and other forward -looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. These forward -looking statements speak only as of the date they were prepared. The City does not plan to issue any updates or revisions to those forward -looking statements if or when their expectations or events, conditions or circumstances on which such statements are based occur and specifically disclaims any such obligation. The presentation of certain information, including tables of receipts from taxes and other revenues, is intended to show recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue to be repeated in the future. Information relating to debt and tax limitations is based on existing statutes and constitutional provisions. Changes in State law could alter these provisions. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Bond Ordinance has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such Acts. No federal or state securities commission or regulatory authority has passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. CITY OF TUKWILA, WASHINGTON 6200 Southcenter Boulevard Tukwila, Washington 98188 (206) 433-1800 www.tukwilawa.gov MAYOR AND COUNCIL MEMBERS MAYOR Allan Ekberg CITY COUNCIL Verna Seal Zak Idan Kathy Hougardy Kate Kruller Thomas McLeod De"Sean Quinn Dennis Robertson Mayor Council President Council Member Council Member Council Member Council Member Council Member Council Member CERTAIN APPOINTED OFFICIALS David Cline Peggy McCarthy Rachel Turpin, Kenyon Disend, PLLC BOND COUNSEL Pacifica Law Group LLP Seattle, Washington City Administrator Finance Director City Attorney FINANCIAL ADVISOR PFM Financial Advisors LLC Seattle, Washington (206) 858-5363 sea-advisors@pfm.com BOND REGISTRAR Washington State Fiscal Agent (Currently, U.S. Bank National Association, Seattle, Washington) The City's website is not part of this Official Statement, and investors should not rely on information presented in the City's website in determining whether to purchase the Bonds. This inactive textual reference to the City's website is not a hyperlink and does not incorporate such website by reference. iii Table of Contents DESCRIPTION OF THE BONDS 1 General 1 Authorization 1 Registration and Payment 1 Redemption Provisions 2 Purchase 3 Failure to Pay Bonds 3 Defeasance 3 PURPOSE 3 Sources and Uses of Funds 3 SECURITY FOR THE BONDS 4 CITY TAXING AUTHORITY 4 Property Tax 5 Retail Sales and Use Taxes 5 Utility Taxes 6 PROPERTY TAX LIMITATIONS 7 Uniformity Requirement 7 Limitations on Regular Property Taxes 7 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES 9 Assessed Valuation 9 Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City 9 Property Tax Collection Procedures 10 Overlapping Levy Rates 11 GENERAL OBLIGATION DEBT 12 Authorization of Debt 12 Limits of Indebtedness 12 Outstanding General Obligation Debt 13 Debt Capacity Computation 14 Direct and Estimated Overlapping Debt 15 Debt Service Requirements 16 Future Financing 16 Debt Payment Record 16 CITY FUNDS AND ACCOUNTING 17 City Investments and Investment Policy 17 Historical General Fund Operating Results19 Management Discussion of Fiscal Year 2017 Financial Results 20 General Fund Budgets 20 THE CITY 21 Governance 21 Employees and Bargaining Groups 22 Pension Plans 22 Other Post -Employment Benefits 26 Risk Management 26 GENERAL AND ECONOMIC INFORMATION 27 General 27 Population 27 Economic Indicators for the City and the County 28 TAX MATTERS 29 General 29 Original Issue Premium and Discount 29 Post Issuance Matters 30 Bank Qualified 30 CONTINUING DISCLOSURE UNDERTAKING 30 CERTAIN INVESTMENT CONSIDERATIONS 31 Initiative and Referendum 31 Limitations on Remedies 31 No Acceleration 32 Bankruptcy 32 RATING 32 LITIGATION 32 APPROVAL OF COUNSEL 32 FINANCIAL ADVISOR 33 UNDERWRITING 33 CONFLICTS OF INTEREST 33 OFFICIAL STATEMENT 33 APPENDICES: FORM OF LEGAL OPINION APPENDIX A 2017AUDITED FINANCIAL STATEMENTS APPENDIX B DTC AND ITS BOOK -ENTRY SYSTEMAPPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX D v OFFICIAL STATEMENT $18,365,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 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, 2018 (the "Bonds"). This Official Statement, which includes the cover page, inside cover page, the table of contents and appendices, provides information concerning the City and the Bonds. Capitalized terms not defined herein shall have the meanings assigned to them in the Bond Ordinance, as defined below. All of the summaries of provisions of the Constitution and laws of the State, of ordinances and resolutions of the City, and of other documents contained herein are subject to the complete provisions thereof and do not purport to be complete statements of such laws or documents, copies of which may be obtained from the City upon request. A full review should be made of the entire Official Statement. The offering of the Bonds to prospective investors is made only by means of the entire Official Statement. DESCRIPTION OF THE BONDS General The Bonds will be dated as of their initial date of delivery (the "Delivery Date") and will bear interest from their dated date (or the most recent date to which interest has been paid thereon). Interest on the Bonds will be payable semiannually on each June 1 and December 1, commencing December 1, 2018, to maturity or prior redemption. The Bonds will bear interest at the rates and will mature on the dates and in the amounts set forth on the inside cover of this Official Statement. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Authorization The Bonds are issued pursuant to the provisions of the Constitution of the State, chapters 39.36 and 39.46 of the Revised Code of Washington ("RCW'), and other applicable laws of the State, and Ordinance No. 2559 passed by the City Council (the "Council") at a regular meeting on December 4, 2017 as amended by Ordinance No. 2574 passed by the Council at a regular meeting on May 7, 2018 (as so amended, the "Bond Ordinance"). Registration and Payment Book -Entry System. The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"). DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denominations of $5,000 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive certificates representing their interests in the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee of DTC, references herein to the Registered Owners will mean Cede & Co. or its successor and will not mean the Beneficial Owners of the Bonds. For information about DTC and its book -entry system, see APPENDIX C—"DTC AND ITS BOOK -ENTRY SYSTEM." The City makes no representation as to the accuracy or completeness of the information in Appendix C provided by DTC. Purchasers of the Bonds should confirm this information with DTC or its broker -dealer participants. Bond Registrar. The City has adopted the system of registration for the Bonds approved, from time to time, by the State Finance Committee (the "Committee"). Pursuant to chapter 43.80 RCW, the Committee designates one or more fiscal agents for bonds issued within the State. The State's fiscal agent, currently U.S. Bank National Association (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal of and interest on the Bonds, recording the purchase and registration, exchange or transfer, and payment of Bonds and performing the other obligations of the paying agent and registrar. No resignation or removal of the Bond Registrar shall become effective until a successor has been appointed and has accepted the duties of Bond Registrar. 1 Payments. To pay the principal of and interest on the Bonds when due, the City will remit money from the fund or account held under the Bond Ordinance for the purpose of paying debt service on the Bonds (the "Debt Service Fund") to the Bond Registrar. The Bond Registrar is obligated to remit such payments to DTC participants for subsequent disbursement to the Beneficial Owners of the Bonds as described in Appendix C. For so long as the Bonds are held by a depository, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are no longer held by a depository, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the Record Date (as defined below), or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least by the Record Date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Underwritten Bonds by the Registered Owners at the designated office of the Bond Registrar. "Record Date" is defined in the Bond Ordinance as the close of business for the Bond Registrar that is 15 days preceding any interest and/or principal payment or redemption date. Transfer and Exchange. The transfer of any Bond may be registered and Bonds may be exchanged as provided in the Bond Ordinance. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registered Owner) of the same date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer of or to exchange any Bond during the period between the preceding Record Date and the principal payment or redemption date. Redemption Provisions Optional Redemption. The Bonds maturing on December 1 in the years 2022 through 2026, inclusive, are not subject to redemption prior to their stated maturity. The Bonds maturing on or after December 1, 2027 are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027 at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redemption. Selection of Bonds for Redemption. For as long as the Bonds are held in book -entry form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held by a depository, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the Bond Ordinance. If the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of bonds of such maturity to be redeemed shall be selected by lot (or in such manner as determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the sum of a Bond is redeemed, upon surrender of such Bond the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the rest of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. Notice of Redemption. For so long as the Bonds are held by a depository, notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar shall provide any notice of redemption to any Beneficial Owners. The notice of redemption may be conditional. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. 2 On or prior to any redemption date, unless such redemption has been rescinded or revoked, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. Effect of Call for Redemption. If notice of redemption has been given and not rescinded or revoked, or if the conditions set forth in a conditional notice of redemption have been satisfied or waived, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. Purchase The City reserves the right to purchase any or all of the Bonds offered to the City at a time at a price deemed reasonable by the City plus accrued interest to the date of purchase. Failure to Pay Bonds If any Bond is duly presented for payment and funds have not been provided by the City on the applicable payment date, then interest will continue to accrue thereafter on the unpaid principal thereof at the rate stated on the Bond until the Bond is paid. Defeasance In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Debt Service Fund or in another special account, cash or noncallable Government Obligations (as defined below), or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Debt Service Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of the Bond Ordinance except the right to receive payment of principal, premium, if any, and interest from the Debt Service Fund or such special account, and such Bond shall be deemed to be not outstanding under the Bond Ordinance. The term "Government Obligations" is defined in the Bond Ordinance to mean direct or indirect obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America. PURPOSE Proceeds of the Bonds will be used to provide funds (i) to pay and/or reimburse the City for costs related to the acquisition of land and construction, improvement and equipping of maintenance and other City facilities, and (ii) to pay the costs of issuance and sale of the Bonds. Sources and Uses of Funds (1) Sources of Funds The Bonds Par Amount of Bonds $18,365,000 Plus Premium 1,809,036 Total Sources of Funds $20,174,036 Uses of Funds Deposit to Project Fund $20,000,000 Estimated Costs of Issuance (1) 174,036 Total Uses of Funds $20,174,036 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. 3 SECURITY FOR THE BONDS The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For as long as any of the Bonds are outstanding, the City irrevocably has pledged that it will, in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters, include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Bonds as the same become due. Any such tax levy is subject to certain limitations, as more fully described in this Official Statement under "PROPERTY TAX LIMITATIONS." The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of the taxes and for the prompt payment of the principal of and interest of the Bonds. See "CITY TAXING AUTHORITY" for a summary of property taxes and other taxes imposed by the City. The City may, subject to applicable laws, apply other funds available to make payments with respect to the Bonds. The City expects to apply revenues of its water, wastewater, and surface water utilities to pay a portion of debt service on the Bonds, commensurate with each utility's usage of the City maintenance facility financed with proceeds of the Bonds. Such revenues are not pledged as security for the Bonds. Bond owners do not have a perfected security interest in or lien on particular revenues or assets of the City. The Bonds do not constitute a debt or indebtedness of the County, the State, or any political subdivision thereof other than the City. State law provides that the payment of general obligation bonds is 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. 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." CITY TAXING AUTHORITY The City has statutory authority to levy various taxes within its boundaries, including local option sales and use taxes, excise taxes, utility taxes, property taxes, and other taxes. In some cases, State law specifies the purposes for which various taxes can be used. The City's major sources of General Fund tax revenue are its regular property tax levy and sales and use taxes. Additionally, the City levies utility taxes and other taxes which include gambling tax, excise tax, admissions tax, and penalties and interest. The State Constitution requires that all taxes on property be uniform. The Washington Supreme Court has ruled that personal income is considered property, overturning prior attempts within the state to impose graduated income taxes. Additionally, RCW 36.65.030 prohibits counties and cities from levying taxes on net income. On July 10, 2017, the City of Seattle adopted a local personal total income tax on high -income residents; the Seattle income tax has been challenged. A Superior Court judge ruled Seattle's income tax illegal in November 2017. The City of Seattle subsequently filed an appeal to the State Supreme Court, although it is unknown whether the State Supreme Court will decide to hear the case. Therefore, it is unknown at this time what the outcome of this case may be. The City does not currently impose an income tax, and has no plans to do so. The following table shows the tax revenue in the City's General Fund, by source, for 2013 through 2017. General Fund Tax Revenues by Source Fiscal Property Sales and Utility Other Total Year Taxes Use Taxes Taxes (1) Taxes (2) Taxes (1) (2) (3) 2017 $14,857,788 $18,807,201 $6,440,759 $6,468,841 $46,574,589 2016 14,494,747 18,908,190 6,192,432 6,291,392 45,886,761 2015 14,323,133 19,334,152 (3) 6,080,387 5,463,697 45,201,369 2014 14,186,753 17,105,322 5,706,558 5,220,393 42,219,026 2013 13,757,092 16,520,856 5,566,851 4,771,091 40,615,890 Includes taxes on City -owned utilities, which represent approximately 30-35 percent of Utility Tax revenue each year. See "Utility Taxes" below. Includes gambling tax, excise tax, admissions tax, full-time equivalent employee tax, and penalties and interest. The increase in Sales and Use Taxes for 2015 include multiple one-time purchases, including over $380,000 in equipment purchases by one taxpayer. Source: The City of Tukwila audited financial statements for each year 2013 to 2017 4 Property Tax Under the State's laws and Constitution, property taxes are classified as either "regular" property taxes or "excess" property taxes. The City is authorized to levy both types of taxes. It submits a levy amount request to the King County (the "County") Assessor (the "Assessor"), a County elected official, who calculates the levy rate by spreading the levy amount across the assessed valuation on the tax rolls, following procedures established by the State Department of Revenue. The Assessor confirms that the levy is within applicable statutory and constitutional limitations and makes any necessary reductions before the County Treasurer (the "Treasurer") may begin to collect the levy on behalf of the City. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES" below. Regular Property Tax. Regular property taxes are subject to constitutional and statutory limitations as to rate and amount. See "PROPERTY TAX LIMITATIONS" herein. Regular property taxes are usually levied for general municipal purposes, though certain statutes authorize additional levies for particular limited purposes. General purpose levies may be used for the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, but State law does not provide any priority of use. In general, regular property taxes do not require voter approval, though certain statutes authorizing limited purpose levies may require voter approval. Certain tax limitations may be exceeded upon voter approval. Excess Property Tax. Excess property taxes for cities are not subject to constitutional or statutory limitations as to rate or amount, but must be authorized by a at least 60 percent approving vote in an election meeting minimum voter turnout requirements. Excess property tax levies may be made (1) by any taxing district for the repayment of bonds issued for capital purposes, excluding replacement of equipment; (2) by any taxing district for one year for any governmental purpose; or (3) without a vote when necessary to prevent impairment of an obligation of contract, if ordered by a court of last resort. Excess levies for the repayment of unlimited tax general obligation bonds must meet the minimum voter requirements set forth below under "GENERAL OBLIGATION DEBT — Limits of Indebtedness." Retail Sales and Use Taxes The State imposes a sales and use tax, and local governments (cities, counties and certain other municipal corporations) are authorized to levy additional "local option" sales and use taxes. In general, sales taxes are imposed on the purchase by consumers of a broad base of tangible personal property and selected services (including construction (labor and materials), machinery and supplies, services and repair of real and personal property). The use tax supplements the sales tax by taxing the use of certain services and personal property on which a sales tax has not been paid. Sales taxes upon applicable retail sales are collected by the seller from the consumer. Use taxes are payable by the consumer upon applicable rendering of services or uses of personal property. Each seller is required to hold taxes collected until remitted to the State Department of Revenue (the "DOR"), typically occurs on a monthly basis. The DOR collects and distributes all sales and use tax revenue in the State and retains one percent of all taxes collected to offset administration costs. Distribution to the local governments occurs on a monthly basis and lags approximately two months behind collections. Among the items currently exempt are most personal services, motor vehicle fuel, most food sold for consumption off premises, trade-ins of items (e.g., automobiles) and purchases for resale. The State Legislature, and the voters through the initiative process, have changed the base of the sales and use tax on occasion. State law does not provide a general exemption for businesses, nonprofits or governmental entities from payment of sales and use taxes. The State Legislature approved legislation that changed the State sales tax system from an origin -based system to a destination -based system, effective July 1, 2008. Under destination sourcing, sales taxes are credited to the taxing jurisdiction where the purchaser takes delivery of the goods (based on the local tax rate), which may differ from the point of sale with respect to goods delivered to the purchaser. Local option sales and use taxes may be imposed on any sale or use upon which the State also imposes a sales and use tax. As described below, some sales and use tax authority is for general purposes and some is restricted as to use. Additionally, some local option taxes are subject to approval of the voters within the local jurisdiction. Historical retail sales subject to the sales and use taxes in the City are shown under "GENERAL AND ECONOMIC INFORMATION —Economic Indicators for the City and the County." 5 Overview of Sales and Use Taxes within the City. The State sales and use tax rate is 6.5 percent. The City imposes the basic and optional sales and use taxes described below at a rate totaling 1.0 percent. The County imposes a criminal justice sales and use tax and a chemical dependency or mental health treatment services sales and use tax, for a combined rate of 0.2 percent within the City. The County also imposes a transit system sales and use tax at a rate of 0.9 percent within its boundaries. The Central Puget Sound Regional Authority ("Sound Transit") imposes a regional transit authority tax of 1.4 percent. Therefore, the total sales and use tax rate in the City is currently 10.0 percent. Basic and Optional Sales and Use Taxes. The City imposes a basic sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(1), and an optional sales and use tax at a rate of 0.5 percent as provided by RCW 82.14.030(2). The revenue collected from the sales and use tax is not restricted, and therefore may be used for general City purposes. The City receives 85 percent of the tax collected within the City and the balance is distributed to the County per State law. Taxes from this source are part of the City's General Fund, and therefore are available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. Criminal Justice Sales and Use Tax. The County imposes a local sales and use tax of 0.1 percent for funding criminal justice programs, as provided in State law. While the criminal justice sales tax is levied countywide, a portion of the revenues are distributed to the cities within the County, based on a formula in State law. Ten percent of the revenue from this tax is distributed to the County and 90 percent to the cities and the County on a per capita basis, based on their estimated population as determined by the State Office of Financial Management as of April 1 each year. Revenues from the criminal justice sales tax are deposited into the City's General Fund and may be used only for criminal justice purposes, including the construction, improvement, and expansion of jails, court facilities, juvenile justice facilities, and services with ancillary benefits to the civil justice system (such as domestic violence programs and services). To the extent proceeds of the Bonds are applied to such purposes, taxes from this source are available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. Sales & Use Tax Streamlining Mitigation Payments. The State currently provides payments to certain jurisdictions to mitigate net losses in sales and use tax collections of local taxing jurisdictions resulting from the change to a destination -based system. Mitigation payments are distributed at the end of each quarter for the net loss experienced in the preceding quarter. The City has received mitigation payments averaging approximately $280,000 per quarter in each of the last three years. The City received mitigation payments totaling $1.22 million in 2016 and $1,099,090 in 2017 and expects to receive $1,090,000 in 2018. In 2017, the State Legislature enacted Engrossed House Bill 2163, Chapter 28, Laws of 2017, 3rd special session ("EHB 2163"). Pursuant to EHB 2163, the State will cease mitigation payments to local governments on September 30, 2019; however, EHB 2163 is expected to increase revenues from local sales and use taxes remitted by customers within the State and by sellers and "marketplace facilitators" located outside the State, including from certain online purchases. In South Dakota v. Wayfair (No. 17-494, June 21, 2018), the U.S. Supreme Court held for the first time that states have the authority to collect sales taxes directly from out-of-state sellers having no physical presence in the taxing state. The City cannot predict the effects of EHB 2163 or South Dakota v. Wayfair, including any impact on future collections of sales tax. Utility Taxes The City levies a tax on public utility businesses (the "Utility Tax"), which is based on gross receipts from service provided or revenues generated within the City. It is collected from Puget Sound Energy (an investor -owned utility) and utilities operated by the City and other municipal corporations. Seattle City Light, which provides electric service to portions of the City, pays the City an annual franchise fee in lieu of the Utility Tax. Legal authority to impose the tax on public utilities (other than electric utilities) owned by other municipal corporations is not settled. Under State law, the tax rate for electric, phone and natural gas utilities is limited to six percent without voter approval; there is no limitation on tax rates on other utilities. The City collects a six percent utility tax on electricity, telecommunications, natural gas, cable utilities, and solid waste utilities. The City collects a 10 percent utility tax on revenue from City -owned stormwater, water, and sewer utilities. Taxes from this source may be available (but are not pledged under the Bond Ordinance) to pay debt service on the Bonds. 6 PROPERTY TAX LIMITATIONS The authority of a city to levy taxes without voter approval for general city purposes, including the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the limitations described below. Information relating to regular property tax limitations is based on existing statutes and constitutional provisions, and is subject to change. Changes in such laws could alter the impact of other interrelated tax limitations on the City. Uniformity Requirement The State Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. The State Constitution also provides that all real estate constitutes a single class, except for certain agricultural properties eligible for special use classification, which may be valued based on current use. It is possible, because of different overlapping taxing district boundaries, the maximum permissible levy might vary within the boundaries of a particular taxing district. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of a taxing district would be applied to the entire taxing district. Limitations on Regular Property Taxes City Regular Levy Rates and Limitations. Cities in the State are authorized to impose a regular property tax levy of not to exceed $3.375 per $1,000 of assessed value. This amount is increased to an amount not to exceed $3.60 per $1,000 of assessed value if the city is annexed into a library district, a regional fire service protection authority, and/or a fire protection district, less the actual regular levy made by the library district, regional fire service protection authority, and/or fire protection district. Further, a city may impose an additional $0.225 per $1,000 of assessed value beyond the $3.375 or $3.60 (for annexed cities) if the city has a fire pension fund, which must be used to the extent necessary for firefighters' pension funding purposes, otherwise this tax may be levied and used for any other municipal purpose. The City's regular levy authority reflects certain of the adjustments described above. The City is annexed to the King County Rural Library District, which imposed a regular levy of $0.367 per $1,000 of assessed valuation within the City in 2018. The City also has a pre-LEOFF firefighters pension fund (see "THE CITY —Pension Plans" 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 2018 to a maximum regular property tax levy rate of $3.233 per $1,000 of assessed valuation, plus the $0.225 pension fund levy. The City's actual 2018 regular property tax rate is $2.463 per $1,000 of assessed valuation, and it is not currently levying a firefighters' pension fund levy. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES —Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" below. Aggregate Levy Rate Limitations. The State Constitution and statutes limit the aggregate of all regular property tax levies imposed on any given tax parcel by the State and all overlapping taxing districts, except port districts and public utility districts, to one percent of the true and fair value of property. Within the one percent limitation, the levy by the State may not exceed $3.60 per $1,000 of assessed valuation and the aggregate of all regular levies by all taxing districts (other than the State and other than certain specified levies) may not exceed $5.90 per $1,000 of assessed valuation (the "$5.90 limitation"). Those specified levies excluded from the $5.90 limitation include port or public utility district levies; excess property tax levies; levies for acquiring conservation futures; levies for emergency medical care or emergency medical services; levies to finance affordable housing for very low-income residents; certain portions of levies by metropolitan park districts; certain levies imposed by ferry districts; levies for criminal justice purposes; certain portions of levies by fire protection districts; levies by counties for transit -related purposes; portions of certain levies by certain flood control zone districts; and levies imposed by a regional transit authority. The list of levies excluded from the $5.90 limitation is statutory and subject to change by the State Legislature at any time; certain of these exclusions expired in 2018. 7 Because various taxing districts may overlap, the aggregate levy rate applied to any two tax parcels within a single taxing district may not be identical. If the aggregate levy rate exceeds the aggregate rate limitation on any single parcel within a taxing district, the regular levy rates of certain taxing districts that include that parcel may be reduced. Because of the constitutional requirement for uniformity of taxation within a taxing district (described above), any reduction affects the entire taxing district. If reductions are required, they are made by the County Assessor, in accordance with State statutes and guidance from the DOR setting forth a prioritization of regular levies. The regular levies of the State, counties, road districts, cities, towns, port districts, and public utility districts are considered "senior" levies; the regular levies of all other taxing districts are considered "junior" levies. State statute prescribes the order in which the levies of the various junior levies are reduced or eliminated in order to comply with the aggregate rate limitations. Senior levies, such as the City's, are not subject to reduction or elimination based on aggregate rate limitations. The regular levy rates within the City are below both the individual and aggregate levy rate limitations. Maximum Amount Increase Limitation. State law also limits the amount of a regular levy for any particular year to the highest amount that could have been levied in any prior year, multiplied by a specified percentage (the "limit factor") plus an adjustment for new construction, annexations, certain improvements to property, and state assessed property. The limit factor is defined as the greater of (i) the lesser of 101 percent or 100 percent plus inflation, or (ii) if approved by a majority plus one vote of the governing body upon a finding of substantial need, any percentage up to 101 percent. If a taxing district levies less than its highest allowable levy, the amount not levied is nonetheless included in the base for determining the maximum amount limitation for succeeding years. This difference between the highest allowable levy amount and the amount actually levied is sometimes referred to as "banked" levy capacity. The City has no "banked" levy capacity. See table titled "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES —Current and Historical Assessed Valuation and Property Tax Levy Rates and Levy Amounts for the City" herein. The maximum amount increase limitation may be exceeded upon approval of a simple majority of voters. This is known as a "levy lid lift." A levy lid lift permits a levy amount increase greater than would otherwise be allowed, which increase may be effective indefinitely or for a limited period of time. Tax receipts from the incremental increase may be (but are not required to be) restricted in the ballot proposition to satisfy a limited purpose. A levy lid lift will not increase the levy if it would cause the taxing district's levy to exceed the applicable maximum rate limitations or the aggregate rate limitations described above. The City does not have any levy lid lifts in effect and does not have current plans to seek voter approval for a levy lid lift. Relationship Between Rate and Amount Limitations. Regular levies are limited by both the rate limitations and the amount limitations described above and, therefore, may need to be reduced below one threshold to avoid exceeding the other. Because the regular property tax increase limitation applies to the total dollar amount levied rather than to the levy rate, increases in the assessed value of all property in the taxing district (excluding new construction, improvements, annexations and State -assessed property) which exceed the rate of growth in taxes allowed by the limit factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses banked levy capacity. Decreases in the assessed value of all property in the taxing district (including new construction, improvements, annexations and State -assessed property) or increases in such assessed value that are less than the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates. Thus, as assessed values rise, the levy amount increase limitation may restrict levy rate growth. As assessed values fall, the levy rate limitation may restrict growth in the levy amount. See "PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES —Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City" herein for a table showing the City's historical assessed valuation, and regular property tax levy rates and amounts. Guaranty Fund Levies. Outside of the $3.60 per $1,000 and $5.90 per $1,000 limitations described above, but within the constitutional one percent aggregate levy limitation, the City may impose a levy for the maintenance of a local improvement guaranty fund to secure debt of any local improvement district that may be created by the City. The amount of a guaranty fund levy in any given collection year may not exceed the greater of (i) 12 percent of the outstanding obligations guaranteed by the fund, or (ii) the total amount of delinquent assessments and interest accumulated on the delinquent assessments (RCW 35.54.060). The taxes levied for the maintenance of the guaranty fund will be in addition to and, if need be, in excess of all statutory and charter limitations applicable to tax levies in any city or town. In 2013 the City issued $6,687,500 of Local Improvement District No. 33 Bonds, of which $4,805,000 principal is currently outstanding and guaranteed by the local improvement guaranty fund. As of December 31, 2017, the balance in the guaranty fund is $669,229, which was funded by a deposit of proceeds of the Local Improvement District No. 33 Bonds. 8 PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES Assessed Valuation The Assessor determines the value of all real and personal property throughout the County that is subject to ad valorem taxation, except certain utility properties that are valued by the DOR. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the DOR. The assessed value is equal to 100 percent of fair market value, as determined by the Assessor using procedures prescribed by the DOR. Three approaches may be used to determine the fair market value of real property: market data, replacement cost and income generating capacity. In the County, all property is subject to revaluation every year based on market statistics and an on -site appraisal every six years. Though the intent is that the assessed value reflect 100 percent of market value, the infrequency of on -site appraisals can lead to assessed valuations that lag market and other adjustments. Personal property is valued each year based on affidavits filed by the property owner. The property is listed by the Assessor on a roll at its current assessed value and the roll is filed in the Assessor's office. The Assessor's determinations are subject to revision by the County Board of Equalization and, for certain property, subject to further revision by the State Board of Equalization. Current and Historical Assessed Valuation and Property Tax Levy Rates and Amounts for the City The following table shows the current and historical assessed valuation, and property tax levy rates and levy amounts for the City from 2014 to 2018. Assessed Valuation and Property Tax Levy Rates and Levy Amounts Tax Assessed Regular Excess Total Regular Excess Levy Year Valuation (1 Levy Rate Levy Rate (2) Levy Rate Levy Amount Amount (2) 2018 $6,184,943,263 $2.46282 2017 5,763,649,829 2.58592 2016 5,395,325,118 2.71073 2015 5,054,078,747 2.84188 2014 4,756,373,688 2.97799 (I) (2) $0.45582 0.47143 N/A N/A N/A $2.91864 3.05735 2.71073 2.84188 2.97799 $15,199,659 14, 869, 800 14,592,910 14,327,468 14,129,531 $2,807,019 2,698,992 N/A N/A N/A Total assessed valuation used for computation of debt capacity. Equal to regular assessed valuation assessed valuation. The City's voters approved an unlimited tax general obligation bond measure in November 2016. property fax levy associated with these bonds became effective for collection in 2017. Source: King County Department of Assessments Largest Property Taxpayers in the City of Tukwila — 2018 Tax Year Assessed Valuation Taxpayer Type of Business Boeing Company Westfield Southcenter Boeing Employees Credit Union Segale Properties Sabey Corporation LIT Industrial Ltd. Partnership KIR Tukwila 050 LLC/KIMCO Prologis Re Tax (formerly 3301 South Norfolk LLC) CPF Kent Valley LLC CenturyLink Communication All other property tax payers Source: King County Department of Assessments Aerospace Shopping Center Credit Union Commercial Properties Commercial Properties Commercial Properties Commercial Properties Property Management Shopping Center Utility Total $ 649,477,382 331,894,672 131,088,803 121, 353, 075 112,816,028 105,799,200 88,273,700 87,512,300 62,141, 900 60,616,151 $1,750,973,211 4, 399, 715, 567 $6,184,943,263 Total Levy Amount $18,006,678 17,568,792 14, 592, 910 14,327,468 14,129,531 plus timber The excess % of Total A.V. 10.50% 5.37 2.12 1.96 1.82 1.71 1.43 1.41 1.00 0.98 28.31% 71.69 100.00% 9 Property Tax Collection Procedures Property taxes are levied in specific amounts by the taxing districts. The levy rate is calculated and fixed by the Assessor, based upon the assessed value of the taxable property within the taxing district and adjusted, in accordance with detailed guidelines from the DOR, to comply with the statutory and constitutional rate and amount limitations. See "PROPERTY TAX LIMITATIONS" above. The Assessor extends the taxes to be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the Treasurer by January 15 of each year. The Treasurer creates a tax account for each taxpayer and is responsible for the collection of taxes due for each account. All taxes are due and payable on April 30 of each year, but if the amount due from a taxpayer exceeds $50, one-half may be paid then and the balance no later than October 31 of that year. Delinquent taxes are subject to interest at the rate of 12 percent per year computed on a monthly basis from the date of delinquency until paid. In addition, a penalty of three percent is imposed on June 1 of the year in which the tax is due and eight percent on December 1 of the year due. Penalties are credited to the account of the taxing district; interest on delinquent taxes is credited to the County's current expense fund. The method of giving notice of payment of taxes due, the Treasurer's accounting for the money collected, the division of the taxes among the various taxing districts, notices of delinquency and collection procedures are all covered by detailed statutes and regulations. Property taxes and all charges and expenses relating to the taxes constitute a statutory lien on the property taxed. The lien attaches to the property from and including January 1 in the year in which the tax is levied, and is discharged only when the taxes are paid. By law, the Treasurer may commence foreclosure of a tax lien on real property after three years have passed since the first delinquency. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation except for federal civil judgment liens and the possible application of the State "homestead exemption" described below. A federal lien on personal property that is filed before the personal property tax is levied is senior to the local personal property tax lien. In addition, a federal civil judgment lien (but not a federal tax lien) is senior to real property taxes that are imposed after the judgment lien has been recorded. The State's courts have not decided whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain the first $125,000 of proceeds of a forced sale of the family residence or other "homestead property" for delinquent property taxes. The United States Bankruptcy Court for the Western District of Washington has held that the homestead exemption applies to the lien securing property taxes, while the State Attorney General has taken the position that it does not. See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982) (holding that liens securing improvement district assessments are subject to the homestead exemption). The following table shows the City's regular property tax collection record. Regular Property Tax Collection Record for the City Amount Amount Collected Percent Collected Amount Collected Percent Collected Year Levied (1) Year of Levy Year of Levy As of 6/30/18 As of 6/30/18 2018 (2) $15,199,659 $ 8,059,088 53.02% $ 8,059,088 53.02% 2017 14,885,710 14,606,179 98.32 14,744,629 99.25 2016 14,516,623 14,375,358 99.03 14,483,738 99.77 2015 14,245,846 14,113,739 99.07 14,231,473 99.90 2014 14,058,979 13,916,718 98.99 14,056,478 99.98 co The amount levied each year does not include supplements or cancellations of taxes or delinquent taxes collected in that year. (2) In process of collection. Source: King County Finance and Business Operations Division 10 Overlapping Levy Rates The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the following rates, subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved property taxes. For purposes of demonstration, representative levy rates (regular and excess) for "levy code 2310," the highest levy rate within the City, as well as the statutory regular levy authority of each type of overlapping district, are listed below. There is no statutory limitation on excess tax levies. Representative 2018 Levy Rate and Statutory Regular Levy Authority King County King County Rural Library District Port of Seattle Fire Protection District or Authority The City King County Hospital District No. 1 State Schools Highline School District No. 401 King County Emergency Medical Services King County Flood Control District Sound Transit Tukwila Metropolitan Park District (6) (7) Statutory Regular Levy Authority Per $1,000 of Assessed Value $1.80(1) 0.50 0.45 (2) 1.50 3.42 (3) 0.75 3.60 (4) -- (6) 0.50 0.25 0.50 0.75 Total Representative 2018 Regular Levy Rates Per $1,000 of Assessed Value $1.29474 0.36681 0.05361 2.46282 0.45689 2.91820 (5) Representative 2018 Excess Levy Rates Per $1,000 of Assessed Value $0.03261 0.04509 0.08157 0.45582 5.32819 (7) 0.23940 0.10708 0.22745 0.15513 Rate for King County Levy Code 2310: Representative Total Levy Rates Per $1,000 of Assessed Value $ 1.32735 0.41190 0.13518 2.91864 0.45689 2.91820 5.32819 0.23940 0.10708 0.22745 0.15513 $14.22541 A county may increase its levy up to $2.475 per $1, 000 of assessed value for general county purposes if the total levies for both general and road purposes do not exceed $4.05 per $1, 000 of assessed value, and no other taxing district has its levy reduced as a result of the increased county levy. The County road levy is imposed on properties located in unincorporated areas of the County. Port districts may exceed this limitation if necessary to pay debt service on general obligation indebtedness. Pursuant to RCW 41.16.060, cities that maintain a pre-LEOFF firefighter pension fund (such as the City) may levy an additional $0.225 for firefighter pension funding purposes. If not actuarially required for that purpose, such a city may use this levy for any other municipal purpose. Additionally, the City's levy authority is reduced by the actual regular levy rate of the King County Rural Library District, which levied $0.40118 per $1,000 of assessed value in 2017. Pursuant to RCW 84.52.043(1), the levy by the State may not exceed $3.60 per $1, 000 of assessed value adjusted to the State equalized value in accordance with a ratio fixed by the State Department of Revenue. Pursuant to RCW 84.52.065, the aggregate rate of property taxes levied by the State exclusively for the support of the common schools for collection in calendar years 2018, 2020 and 2021 will be $2.70 per $1,000 of assessed value adjusted to the State equalized value in accordance with a ratio fixed by the State Department of Revenue; however, this levy rate will be reduced in 2019 to $2.40 per $1, 000 of assessed value adjusted to the State equalized ratio. The rate may be greater than $2.70 in certain counties due to equalization ratios greater than 100%. School districts do not have non -voted regular levy authority. Pursuant to RCW 84.52.053, local school district excess property levies (excluding bonds) will be capped beginning in 2019 at the lesser of $1.50 per $1, 000 of assessed valuation or an amount equal to $2, 500 per student (adjusted for inflation in subsequent years). Source: King County Department of Assessments 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. As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to 60 percent voter approval, is limited to 2.5 percent of assessed value for general purposes, an additional 2.5 percent of assessed value for certain utility purposes and an additional 2.5 percent of assessed value for open space, park facilities and capital facilities associated with economic development. The minimum turnout must be at least 40 percent of city voters who voted at the last preceding State general election. If the ballot proposition approving issuance of voter -approved debt also approved the levy of taxes without limitation in amounts sufficient to repay those voter -approved bonds, then bonds will be payable from an excess property tax levy. See "PROPERTY TAX LIMITATIONS" above. Within the 2.5 percent of assessed value for general purposes, the City may, without voter approval, incur general obligation indebtedness, such as the Bonds, in an amount not to exceed 1.5 percent of assessed value. Additionally, within the 2.5 percent of assessed value for general purposes, the City may, also without voter approval, enter into financing leases and conditional sale contracts if the total principal component of the lease and contract payments, together with the other non -voted general obligation indebtedness of the City, does not exceed 1.5 percent of assessed value. The Bonds constitute non -voted debt. There is no express provision in the State's laws or Constitution on the priority of payment of debt service on general obligation bonds as compared to the payment of other general obligations of the municipality. Aggregate Debt Limitations. The combination of voter -approved and non -voted general obligation debt for general municipal purposes may not exceed 2.5 percent of the City's assessed valuation. The total of all general obligation debt for all purposes may not exceed 7.5 percent of the City's assessed valuation. Short -Term Obligations. Within the limitations described above, State law permits municipal corporations to borrow money and issue short-term obligations for any lawful purpose, including the anticipation of the receipt of revenues, taxes, or grants or the sale of bonds, if the bonds have been authorized by the governing body or the voters, as applicable. Short-term obligations issued in anticipation of taxes must be repaid within six months after the end of the fiscal year in which they are issued. 12 Outstanding General Obligation Debt As of June 1, 2018 the City had the following outstanding general obligation indebtedness. Outstanding General Obligation Debt Limited Tax General Obligation Debt Principal Date of Final Principal Amount Amount Issued Maturity Outstanding Limited Tax General Obligation Refunding Bonds, 2008 $ 6,180,000 12/1/2019 $ 1,485,000 South Correctional Entity Facility Public Development 6,898,800 1/1/2039 5,914,400 Authority Bonds, Series 2009A and 2009B (Taxable Build America Bonds — Direct Payment) (1) Limited Tax General Obligation Bonds, 2010E 3,970,000 12/1/2024 3,170,000 Limited Tax General Obligation Bonds, 2011 4,620,000 12/1/2023 2,925,000 Limited Tax General Obligation Bond, 2013 (2) 1,000,000 12/1/2022 513,549 Limited Tax General Obligation Bond, 2014 (Taxable) 3,850,000 12/1/2034 3,410,000 Limited Tax General Obligation Bonds, 2015 5,825,000 12/1/2035 5,380,000 Limited Tax General Obligation Bonds, 2017 8,180,000 12/1/2037 8,180,000 Limited Tax General Obligation Bond, 2017 (Taxable) 2,276,000 12/1/2022 2,276,000 Total Outstanding Limited Tax General Obligation Debt $33,253,949 The Bonds 18,365,000 12/1/2038 18,365,000 Total Limited Tax General Obligation Debt $51,618,949 Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Bonds, 2016 Total General Obligation Debt w (2) $32,990,000 12/1/2036 $31,875,000 $83,493,949 The South Correctional Entity Facility Public Development Authority issued bonds for a correctional facility (the "SCORE Bonds"). Pursuant to an interlocal agreement, the City is obligated to pay eight percent of the debt service on the SCORE Bonds in each year so long as the SCORE Bonds are outstanding, which obligation constitutes a limited tax general obligation debt of the City secured by the City's full faith and credit. The amounts shown in the table above represent the portion of the outstanding principal amount that is allocable to the City's obligation. In recent years, debt service obligations for the SCORE Bonds allocable to the City have been paid with operating revenues of the correctional facility. The proceeds of this obligation were loaned to the Tukwila Metropolitan Park District (the "MPD") to pay for improvements to a pool. The MPD is a separate taxing district. Pursuant to the terms of an interlocal agreement, the MPD has irrevocably pledged to levy and collect taxes and other revenues in amounts sufficient to pay debt service on the 2013 Bond. These amounts are required to be paid to the City not later than June 1 and December 1 of each year, so long as the 2013 Bond remains outstanding. Source: The City 13 Debt Capacity Computation The City may issue general obligation debt if, at the time the debt is issued, the City has sufficient debt capacity. Once the debt has been issued, changes in assessed valuation have no effect on the validity of outstanding debt or the City's ability to refund outstanding debt. Future declines in assessed valuation can impact the ability to issue future general obligation debt. The following information is based on the 2017 assessed valuation of property within the City for collection of taxes in 2018 and the anticipated general obligation debt of the City (including the Bonds) as of the issue date of the Bonds. Calculation of Debt Capacity Assessed Valuation (2018 tax year) General Purposes Non -Voted Debt Capacity (1.5% of Assessed Valuation) Outstanding Non -Voted General Obligation Debt The Bonds Net Non -Voted General Obligation Debt Remaining Non -Voted General Purpose Debt Capacity Voted and Non -Voted Debt Capacity (2.5% of Assessed Valuation) Outstanding Voted General Obligation Debt Plus: Net Non -Voted General Obligation Debt (calculated above) Direct Debt Remaining Debt Capacity for General Municipal Purposes Utility Purposes Debt Capacity (2.5% of Assessed Valuation) Utility Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose Parks and Open Space and Economic Development Purposes Debt Capacity (2.5% of Assessed Valuation) Park and Open Space and Economic Development Purpose Bonds Outstanding Remaining General Obligation Debt Capacity for This Purpose $6,184,943,263 $ 92,774,149 $33,253,949 18,365,000 $51,618,949 $ (51,618,949) $ 41,155,200 $ 154,623,582 $31,875,000 51,618,949 $83,493,949 $ (83,493,949) $ 71,129,633 $ 154,623,582 $ 154,623,582 $ 154,623,582 $ 154,623,582 14 Direct and Estimated Overlapping Debt The following table sets forth the outstanding principal amount of general obligation debt of the City including the Bonds (the "Direct Debt") and the estimated allocable share of the outstanding principal amount of general obligation bonds payable from property tax revenues of other taxing districts whose boundaries overlap a part or all of the City (the "Overlapping Debt"). The estimated allocable share of Overlapping Debt is calculated based on a percentage of the overlapping taxing district's assessed valuation that lies within the boundaries of the City. The City has obtained the information regarding the overlapping debt from the overlapping taxing districts, the County and other sources the City believes to be reliable, but the City has not independently verified the accuracy or completeness of such information. No person should rely upon such information as being accurate or complete. Furthermore, the amounts described below relate only to general obligation bonds issued by the various taxing districts and may not reflect certain leases or other contracts that may constitute indebtedness under State law. The table below reflects only existing general obligations payable from property taxes and does not reflect obligations secured by a pledge of other revenues such as utility revenues, excise taxes, sales taxes, and/or motor vehicle excise taxes (such as the obligations of Sound Transit), paid from sales taxes and/or motor vehicle taxes). The taxing districts listed below may have issued additional general obligation debt since the dates indicated below and these and other taxing districts may have plans for future general obligation debt issuances. Direct and Estimated Overlapping Debt As of June 1, 2018 2017 Assessed Valuation for 2018 Tax Year - $6,184,943,263 2018 City Population — 19,800 Direct Debt (calculated above) $ 83,493,949 Estimated Overlapping Debt: The County $ 9,438,403 Port of Seattle 5,094,819 School Districts 86,050,302 King County Rural Library District 2,016,934 Total Estimated Overlapping Debt $102,600,459 Total Net Direct and Estimated Overlapping Debt $186,094,408 Certain Ratios Direct Debt to Assessed Valuation 1.35% Direct and Estimated Overlapping Debt to Assessed Valuation 3.01% Direct Debt per Capita $ 4,217 Direct and Estimated Overlapping Debt per Capita $ 9,399 Per Capita Assessed Valuation $ 312,371 Sources: The City, King County Finance and Business Operations Division and Department of Assessments, and the Port of Seattle 15 Debt Service Requirements The following table provides the debt service schedule for the City's outstanding limited tax general obligation bonds and loans and debt service for the Bonds. n) (2) Schedule of Limited Tax General Obligation Bond Debt Service Outstanding Limited Tax General Obligation Debt (1 The Bonds Year Principal Interest (2) Principal Interest 2018 $ 2,546,396 $ 1,325,535 $ - $ 239,026 2019 2,643,321 1,219,350 - 804,200 2020 1,932,261 1,101,780 804,200 2021 1,992,760 1,030, 555 804,200 2022 4,350,010 952,384 730,000 804,200 2023 2,028,800 802,996 765,000 767,700 2024 1,549,400 721,639 805,000 729,450 2025 1,087,800 652,563 845,000 689,200 2026 1,117,400 612,032 885,000 646,950 2027 1,153,400 572,455 930,000 602,700 2028 1,194,800 529,278 975,000 556,200 2029 1,226,600 484,500 1,025,000 507,450 2030 1,268,800 438,111 1,080,000 456,200 2031 1,308,200 389,750 1,120,000 413,000 2032 1,351,600 339,769 1,165,000 368,200 2033 1,396,800 288,020 1,210,000 321,600 2034 1,447,800 234,422 1,260,000 273,200 2035 1,229,200 177,560 1,310,000 222,800 2036 884,000 126,317 1,365,000 170,400 2037 914,600 84,819 1,420,000 115,800 2038 396,000 40,437 1,475,000 59,000 2039 413,200 13,669 Total $33,433,148 $12,137,941 $18,365,000 $10,355,676 Total Debt Service $ 4,110, 957 4,666,871 3,838,241 3,827,515 6,836,594 4,364,496 3,805,489 3,274,563 3,261,382 3,258,555 3,255,278 3,243,550 3,243,111 3,230,950 3,224,569 3,216,420 3,215,422 2,939,560 2,545,717 2,535,219 1,970,437 426,869 $74,291,765 Includes certain assumptions for the SCORE Bonds and the general obligation loans. For the SCORE Bonds, it is assumed the City will pay the full amount of its allocable debt service in each year and that none of its obligation will be offset by other sources of funds as provided in the interlocal agreement for the SCORE Bonds. In recent years, debt service obligations for the SCORE Bonds allocable to the City have been paid with operating revenues of the correctional facility. For the Limited Tax General Obligation Bond, 2014, it is assumed the interest rate on the 2034 maturity remains unchanged at 2.85 percent at each of its interest rate reset dates (2019, 2024, and 2029). Reflects interest prior to the application of the federal credit payments relating to the SCORE Bonds. Future Financing The City has $40,885,000 of its 2016 unlimited tax general obligation bond authorization (the "2016 Authorization") remaining. Over the next 18 months, the City anticipates issuing unlimited tax general obligation bonds for the remainder of the 2016 Authorization in order to fund a justice center and construction of new fire stations. The issuance of any such debt is preliminary, subject to change, and has not been approved by the City Council. The City periodically reviews its outstanding bonds for refunding opportunities and may issue bonds for refunding purposes if market conditions warrant. Debt Payment Record The City has always promptly met principal and interest payments on outstanding bonds, and other obligations when due. No debt has been incurred for the purpose of avoiding an impending default. 16 CITY FUNDS AND ACCOUNTING The accounting and reporting policies of the City conform to those methods prescribed by the State Auditor under chapter 43.09 RCW. The Finance Director of the City maintains general supervision over financial transactions for all City funds. The accounts of the City are organized by fund and account group, each of which is considered a separate accounting entity. Each fund has a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to, and accounted for in, individual funds according to the purposes for which they are spent and the means by which spending activities are controlled. See APPENDIX B—"2017 AUDITED FINANCIAL STATEMENTS." Basis of Accounting. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Governmental funds use the modified accrual basis of accounting and proprietary and fiduciary funds use the accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. For the City, available means expected to be received within 60 days of year-end. On the accrual basis, the revenue is recognized in the period in which the income is earned. Auditing of City Finances. Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance with RCW 43.09.200 and RCW 43.09.230. The City complies with the systems and controls prescribed by the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of assets and the reliability of financial reporting (see "City Investments and Investment Policy" below). The State Auditor is required to examine the affairs of cities regularly and on a schedule determined by risk factors and financial activity. The City has been subject to financial statement and accountability audits. Financial statement audits are performed for the purpose of forming an opinion on the financial statements taken as a whole. Also considered are the City's internal controls over financial reporting and tests of compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. Accountability audits include, among other things, review of the financial condition and resources of the City, whether the laws and constitution of the State are being complied with, the methods and accuracy of the accounts and reports as well as other matters (potential areas of risk related to citizen concerns, payroll, inter -fund transactions, etc.). Reports of the auditor's examinations are filed in the office of the State Auditor and in the Finance Department of the City. The audited financial statements of the City for the year ended December 31, 2017, attached as Appendix B, are incorporated by reference to this Official Statement. The most recent accountability audit covers the period January 1, 2016 through December 31, 2016. The State Auditor performs accountability audits of the City every year and the City has been free of financial audit findings for at least the last 10 years. Budgetary Process. The City prepares biennial budgets in accordance with chapter 35A.33 RCW. Biennial appropriated budgets for all funds are adopted. These budgets are appropriated at the fund level. The budget constitutes the legal authority for expenditures at that level. Appropriations for these funds lapse at the end of the biennium. Appropriated budgets are adopted on the same basis of accounting used for financial reporting. The Council is required to hold public hearings prior to budget adoption, property tax levies and municipal revenues. Prior to November 1 on even numbered years, the Mayor submits a proposed budget to the City Council. The budget is based on priorities established by Council and estimates provided by the City departments during the preceding months, and balanced with revenue estimates made by the Mayor. The Council conducts public hearings on the proposed budget in November and December. The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. The final operating budget as adopted is published and distributed within the first month of the following year. The City Council must approve by ordinance any amendments that increase the total for the fund. City Investments and Investment Policy In November 2010, the Council reviewed and updated the City's formal investment policy regarding the investment risks to which the City is exposed. The policy conforms to applicable State and local laws governing the investment of public funds. The primary objectives of the City's policy, in order of priority (high to low), are (i) legality, to ensure the compliance with all statutes governing the investment of public funds in the State, (ii) safety, to ensure the preservation of capital in the overall investment portfolio, (iii) liquidity, to enable to City to meet all operating requirements, and (iv) yield, to attain a market rate of return throughout budgetary and economic cycles, while taking into account the City's investment risk constraints and cash flow requirements. 17 Authorized Investments. Chapter 35.39 RCW authorizes the investment of funds of local governments in the following instruments: (i) bonds of the State or any local government in the State, (ii) general obligation bonds of any other state or local government thereof which have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency, (iii) registered warrants of a local government in the same county as the local government making the investment, (iv) obligations of the U.S. government, its agencies and wholly owned corporations, or obligations issued or guaranteed by supranational institutions, provided, that at the time of investment, the United States government is the largest shareholder of such institution, (v) obligations of the Federal Home Loan Bank, Federal Land Bank and Fannie Mae, and obligations of other government - sponsored corporations whose obligations are or may become eligible as collateral for advances to member banks of the Federal Reserve System, (vi) bankers' acceptances purchased on the secondary market, (vii) commercial paper purchased on the secondary market, subject to State Investment Board policies, and (viii) corporate notes purchased on the secondary market, subject to State Investment Board policies. Money available for investment may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio. All income derived from such investment may be either apportioned to and used by the various participating funds or for the benefit of the general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be reinvested or used in such manner as the authorizing ordinances, resolutions, or bond covenants may lawfully prescribe. Local Government Investment Pool. The State Treasurer's Office administers the Local Government Investment Pool (the "LGIP"), a $16.127 billion dollar fund that invests money on behalf of more than 540 local governments (as of May 2018). In its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to meet all cash flow demands. The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants increased safety of principal and the ability to achieve a higher investment yield than would otherwise be available to them. Although not regulated by the U.S. Securities and Exchange Commission (the "SEC"), the LGIP is invested in a manner generally consistent with the SEC guidelines for Rule 2a-7 money market funds; for example, currently it has a maximum weighted average maturity of 60 days and a maximum weighted average life of 120 days. The maximum final maturity is 397 days except for floating and variable -rate securities and securities that are used for repurchase agreements. The weighted average maturity of the LGIP generally ranges from 30 to 60 days. Investments permitted under the pool's guidelines include U.S. government and agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified State depositories. The City may withdraw funds in their entirety on less than 24 hours' notice. Authorized Investments for Bond Proceeds. In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less than four years; municipal securities rated in one of the four highest categories; and money market funds consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money market funds with portfolios of securities otherwise authorized by law for investment by local governments (RCW 39.59.030). Under the Bond Ordinance, any investment of Bond proceeds must be obtained at fair market value. The following table shows cash and investments for the City as of December 31, 2016 and December 31, 2017. (I) Cash and Investments Cash, Banks, Savings and Loan Institutions LGIP Investments Non -Pool Investments (1) Total Cash and Investments Amount as of December 31, 2017 $ 28,984,659 48,269, 306 24, 083,115 $101,337,080 Includes U.S. Treasury and U.S. Agency securities, bank notes and municipal bonds. Amount as of December 31, 2016 $43,362,731 43,001,758 7,147,342 $93,511,831 18 Historical General Fund Operating Results The General Fund financial information shown below was extracted from the City's audited annual financial statements for the fiscal years ending December 31, 2013 through 2017. Additional information that may interpret, clarify or modify the data presented below may be contained in the complete financial statements, including the accompanying notes. Statement of Revenues, Expenditures and Changes in Fund Balances General Fund Fiscal Years Ending December 31 Audited Audited Audited Audited Audited 2017 2016 2015 2014 2013 REVENUES Taxes $46,574,589 $45,886,761 $45,201,369 $42,219,026 $40,615,890 Licenses and permits 2,749,137 2,129,221 2,242,256 2,114,638 2,013,875 Intergovernmental revenues 4,690,257 4,498,683 4,626,463 5,307,861 4,719,583 Charges for services 3,046,606 3,286,105 2,896,446 2,553,690 2,202,307 Fines and forfeitures 325,216 318,459 261,457 264,934 242,638 Investment earnings 230,784 233,544 163,618 130,859 108,053 Miscellaneous 160,309 214,444 120,887 137,237 110,317 Total revenue $57,776,899 $56,567,217 $55,512,496 $52,728,245 $50,012,664 EXPENDITURES General Government $ 9,358,235 $ 8,315,631 $ 7,247,117 $ 7,146,956 (1) $ 9,266,330 Economic Environment 4,098,765 4,070,805 4,328,177 3,662,211 3,893,111 Physical Environment 1,733,400 1,955,028 1,919,306 1,789,658 1,766,087 Public Safety 29,968,635 29,100,506 28,973,651 27,204,740 25,650,155 Culture and Recreation 4,395,696 4,408,302 4,259,532 3,808,476 3,631,819 Transportation 3,026,013 2,879,996 2,820,022 2,605,602 2,759,506 Capital outlay 117,679 810,180 196,589 407,400 250,482 Total expenditures $52,698,423 $51,540,448 $49,744,394 $46,625,043 $47,217,490 Excess (deficiency) of revenue over $ 5,078,476 $ 5,026,769 $ 5,768,102 $ 6,103,202 $ 2,795,174 (under) expenditures OTHER FINANCING SOURCES (USES) Transfers In (2) $ 300,000 $ - $ 500,000 $ 1,000,000 $14,919,606 Transfers Out (3) (5,337,496) (4,325,831) (5,433,846) (6,900,080) (10,662,843) GO Bonds Issued - - 1,000,000 Proceeds from Sales of Capital Assets 1 7,441 5,493 Total Other Financing Sources and Uses $ (5,037,495) $ (4,325,831) $ (4,933,846) $ (5,892,639) $ 5,262,256 Net Change in Fund Balances $ 40,981 $ 700,938 $ 834,256 $ 210,563 $ 8,057,430 Fund Balances - Beginning $19,031,744 $18,330,806 $17,496,550 $17,285,986 $ 8,378,557 Change in Accounting Principle (4) - - 850,000 Fund Balances - Beginning as Restated 19,031,744 18,330,806 17,496,550 17,285,986 9,228,557 Fund Balances - Ending $19,072,725 $19,031,744 $18,330,806 $17,496,549 $17,285,986 (1) (2) (3) (4) 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. For the years 2013 and prior, Transfers In represents indirect cost allocation from proprietary funds. In 2013, Transfers In also includes $8.5 million reimbursement from Local Improvement District No. 33, and a transfer from the General Fund to the Contingency Fund. For 2014 and 2015, Transfers In represents transfers of unrestricted funds that can be used for General Fund purposes. 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. Through 2012, the City had loaned $850,000 to the MPD. With the implementation of Governmental Accounting Standards Board Statement 61 in 2013, the City was required to report the MPD as a "blended" component unit, and as such, the loan to the MPD was reclassified as an interfund loan rather than a General Fund expenditure, necessitating an adjustment for the change in accounting principle. As of December 31, 2015, the MPD was no longer a component unit of the City and the financial data associated with it was removed from the City's financial statements. Source: The City of Tukwila 19 Management Discussion of Fiscal Year 2017 Financial Results The City's General Fund balance increased by approximately $40,000 from December 31, 2016 to December 31, 2017. The City ended fiscal year 2017 with sales tax revenue approximately 6.0 percent under budget but within 0.5 percent of 2016 sales tax revenue. The City's 2017 building permit revenue was 38 percent above budget, and 49 percent higher than 2016. 2017 gambling tax revenue exceeded budget by 1.4 percent and outperformed 2016 by 5.2 percent. The General Fund expenditures were under budget by 4.3 percent in fiscal year 2017. Citywide governmental fund balances increased $5 million in 2017 due primarily to the issuance of debt of $8.1 million and funding of construction expenditures. In 2018, the largest capital expenditures are expected to occur in the Public Safety Plan Fund, representing site acquisition for a new justice center and relocation of a fire station. These expenditures will be funded primarily from proceeds of the City's Unlimited Tax General Obligation Bonds, 2016. See APPENDIX B—"2017 AUDITED FINANCIAL STATEMENTS." General Fund Budgets The City has elected to prepare and use biennial budgets, as provided in State law. Adopted Budgets for the General Fund, for the years 2017 and 2018 are shown below and do not include any budget amendments. 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. (I) General Fund Budget For the Period January 1, 2017 through December 31, 2018 2017 2018 Adopted Budget Adopted Budget REVENUES Taxes $47,803,644 $49,073,331 Licenses and Permits 2,278,940 2,347,090 Intergovernmental 4,475,160 4,393,530 Charges for Services 2,821,177 2,847,080 Fines and Forfeits 254,129 254,129 Miscellaneous 1,030,083 1,043,084 Other Financing Sources 4,079,058 8,375,643 Total Revenue $62,742,191 $68,333,887 EXPENDITURES Salaries and Wages $30,496,507 $30,988,318 Personnel Benefits 11,030,151 11,628,711 Supplies 1,286,641 1,285,322 Other Services and Charges 11,350,783 11,505,008 Intergovernmental Services 3,003,797 3,191,124 Capital Outlay 234,000 30,000 Transfers Out 5,237,691 9,539,621 Total Expenditure $62,639,570 $68,168,104 Net Increase (Decrease) in Fund Balance $ 102,621 $ 165,783 Beginning Fund Balance(') $11,500,000 $11,602,621 Ending Fund Balance (1) $11,602,621 $11,768,404 The 2018 budgeted beginning balance is based on the 2017 ending fund balances as estimated at the time of budget development. 20 (I) (2) THE CITY The City was incorporated in 1908 and now is a non -charter code city, organized under Title 35A RCW. The City provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities and cultural events. The City provides sewer, water and surface water services and has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail and 911 dispatch services to the City. City residents receive library services from the King County Rural Library District. In addition, the City operates an equipment maintenance/rental fund and an 18-hole municipal golf course. Governance The City operates under a Mayor -Council form of government, with the Mayor and seven -member Council elected by the voters of the City for four-year terms. Council members are elected at large. The Mayor appoints the City Administrator who serves as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and Council. The Council is responsible for, among other things, passing ordinances and resolutions, adopting the budget, and adopting general policies and goals for the City. The Council holds regular meetings two times a month and special meetings as needed. All meetings are open to the public as provided by law and agenda items are prepared in advance. The following are the Mayor and members of the City Council. Elected Official Position Initially Elected Current Term Expires Allan Ekberg Mayor November 2015 December 31, 2019 Verna Seal Council President November 2005 December 31, 2021 Kathy Hougardy Council Member November 2007 December 31, 2019 Zak Idan Council Member November 2017 December 31, 2021 Kate Kruller Council Member November 2011 December 31, 2019 Thomas McLeod Council Member November 2015 December 31, 2021 De'Sean Quinn Council Member November 2008 (1) December 31, 2021 Dennis Robertson Council Member November 1987 (2) December 31, 2019 Council Member Quinn was first appointed in to the position in 2008 and won election to his first full term in November 2009. 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 23 years of public service, including economic development, long-range financial planning, capital planning and financing, community consensus building and managing municipal departments. He is a Board Member of Washington City/County Manger's Association and serves on the State LEOFF 2 Retirement Board. Mr. Cline holds a Bachelor of Arts in Public Policy from Stanford University with Honors and Distinction and is credentialed by the International City/County Management Association. Peggy McCarthy, Finance Director. Ms. McCarthy was hired as the City's Deputy Finance Director in November 2008 and has been serving as the Finance Director since 2011. Prior to joining the City, Ms. McCarthy was the Financial Reporting Manager for the King County Housing Authority. Ms. McCarthy's experience includes over 18 years in municipal finance, as well as industry experience with a Fortune 500 company, and public accounting experience at Deloitte. Ms. McCarthy holds a Bachelor Degree in Business Administration from Washington State University and graduated Summa Cum Laude with Honors. 21 Employees and Bargaining Groups The number of full-time equivalent City employees for the years 2013 through 2017 are shown below. Full -Time Year Equivalent 2017 350.60 2016 344.60 2015 343.10 2014 332.48 2013 330.38 Source: The City Certain City employees are represented by one of five bargaining groups, and the City enters into written bargaining agreements with each bargaining group. The City negotiates labor contracts through a management team with support from a consultant. The following provides information on unions and bargaining groups representing City employees as of April 2018. The City considers its relations with all employees and bargaining units to be good. Employees/Department Number of Contract Union or Bargaining Group Represented Employee Expires s Admin, Clerical, Maintenance, Supervisory, Senior Program Teamsters Managers 152 12/31/2018 International Association of Firefighters Firefighters 62 12/31/2016 (1) Police Guild Police 69 12/31/2018 Police Non -Commissioned United Steelworkers Officers 13 12/31/2018 Tukwila Police Commanders Police Commanders 4 12/31/2016 (1) Association Total 300 (') The International Association of Firefighters union and Tukwila Police Commanders and the City are in mediation. Source: The City of Tukwila Pension Plans Introduction. Substantially all City full-time and qualifying part-time employees are eligible for participation in one of the following statewide cost -sharing multiple -employer plans administered by the State's Department of Retirement Systems ("DRS"): Public Employees Retirement System ("PERS") Plans 1, 2 and 3; the Public Safety Employees Retirement System ("PSERS") Plan 2; and the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF") Plans 1 and 2. The State Legislature establishes, and from time to time amends, laws pertaining to the creation and administration of these public retirement systems; however, employees are contractually entitled to receive plan benefits. The information in this section has been obtained from the City's financial statements and information on the websites of DRS and of the Office of the State Actuary (the "State Actuary"), a nonpartisan legislative agency charged with advising the Legislature and Governor on pension benefits and funding policy. DRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for each plan. The DRS Comprehensive Annual Financial Report ("DRS CAFR") may be obtained from the DRS website at www.drs.wa.gov. In addition to the State sponsored pension plans that the City participates in, the City also administers one local single employer defined benefit pension plan for pre-LEOFF fire retirees. LEOFF Plan 1 participants who joined prior to and were active on March 1, 1970 are entitled to the greater of the benefits under LEOFF Plan 1 or the Fire Pension Fund maintained by the City. This local plan is described below under "City Administered Firefighters' Pension Plan." 22 State Sponsored Plan Descriptions. All PERS, PSERS and LEOFF plans provide retirement, disability and death benefits. Plans 1 and 2 (both PERS and LEOFF) are defined benefit plans. PERS Plan 3 is a hybrid defined benefit/defined contribution plan in which the employer contributes to the defined benefit portion and the employee contributes to the defined contribution portion. Contributions by both employees and employers are based on gross wages. PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. Those PERS participants who joined on or after October 1, 1977, are Plan 2 members, unless they exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002, have the irrevocable option of choosing membership in PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977, are Plan 2 members. PSERS Plan 2 is a defined benefit plan. Benefits provided by each plan are based on a percentage of the member's average final compensation ("AFC"), multiplied by years of service. The percentages and methods for calculating AFC vary among the plans, as do vesting and retirement eligibility (age and years of service) requirements. Additional detail about each Plan is available in the DRS CAFR and in Note 9 to the City's Annual Financial Statements, attached as Appendix B. Contribution Rates and Amounts. Under State statute, contribution rates are adopted by the Pension Funding Council ("PFC") and, for LEOFF Plan 2, by the LEOFF Plan 2 Retirement Board (the "LEOFF 2 Board"), in even - numbered years for the next ensuing State biennium, which runs for a two year period beginning on July 1 and ending on June 30. The rate -setting process begins with an actuarial valuation by the State Actuary, who makes non -binding recommendations to the State Legislature's Select Committee on Pension Policy, which then recommends contribution rates to the PFC and the LEOFF 2 Board. No later than the end of July in even - numbered years, the PFC and LEOFF 2 Board adopt contribution rates, which are subject to revision by the Legislature. The City's total contribution for the year ended December 31, 2017, was $2,762,214, which was made up of $1,902,973 to PERS, $15,143 to PSERS and $844,098 to LEOFF. For additional information see Note 9 to the City's Annual Financial Statements attached as Appendix B. The following table outlines the current contribution rates of employees and employers in the State Biennium ending June 30, 2019. While the City's contributions in fiscal year 2017 represented its full statutorily required contribution under the PERS, PSERS and LEOFF, any unfunded pension benefit obligations within the systems could be reflected in future years as higher contribution rates. Employer and Employee Pension Contribution Rates (1) (2) (3) (a) (5) (6) PERS Plan 1 Plan 2 Plan 3 PSERS Plan 2 LEOFF Plan 1 Plan 2 2017-19 Biennium (1) Employee Employer (2) 6.00%(3) 12.70% 7.38 12.70 Variable(4) 12.70 6.74 (5) 11.95 (5) 0.00% 0.18% 8.75 5.43 (6) Rates shown for 2017-2019 are those that have been adopted by the PFC and the LEOFF 2 Board, respectively. Rates shown for 2017-2019 are based on the 2015 Actuarial Valuation Report, using a long-term investment rate of return assumption of 7.70% for PERS and 7.50% for LEOFF. Includes 0.18% DRS administrative expense rate. Rate statutorily set at 6.0%. Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. Effective September 1, 2017. Between July 1, 2017 and August 31, 2017, contribution rates to PSERS Plan 2 were 6.73% for employees and 11.94% for employers. The State makes an additional contribution of 3.50% of each participating employer's covered payroll. Source: Office of the State Actuary 23 Rates shown above for the 2017-19 Biennium are adopted by the PFC and LEOFF 2 Board. Projected contribution rates have been prepared by the State Actuary for the 2019-2021 Biennium, projecting a need for increases to contribution rates for PERS plans and no increases for LEOFF plans. In addition, the State Legislature has established certain minimum contribution rates (the "UAAL Rate") 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. In the 2017-19 Biennium, the UAAL Rate for all PERS and PSERS Plans is 5.03% and is included in the employer contribution rate shown above. These rates are subject to change by future legislation enacted by the State Legislature to address future changes in actuarial and economic assumptions and investment performance. Actuarial Valuation Methods and Assumptions. State law requires systematic actuarial funding to finance the ongoing cost of the State retirement systems. Actuarial calculations to determine the sufficiency of employer and employee contributions are prepared by the State Actuary. To calculate employer and employee contribution rates necessary to prefund the plans' benefits, the State Actuary uses actuarial cost and asset valuation methods selected by the Legislature as well as economic and demographic assumptions. The State Actuary uses the Entry Age Normal ("EAN") cost method to report each Plan's funded status. The annual cost of benefits under EAN is comprised of two components: normal cost, plus amortization of the unfunded liability. The normal cost is most commonly determined on an individual basis, from a member's age at plan entry, and is designed to be a level percentage of pay throughout a member's career. Comparing the EAN liabilities to the actuarial value of assets ("AVA") on the valuation date provides an appropriate measure of a plan's funded status and is acceptable according to current Governmental Accounting Standards Board ("GASB") Statements 67 and 68. For purposes of determining the actuarial accrued liability of each plan and the unfunded portion thereof, the State Actuary uses actuarial cost and asset valuation methods determined by the Legislature, which requirements differ from plan to plan. For purposes of calculating contribution rates the Legislature determines the long-term assumed rate of investment return to be used by the State Actuary, which was reduced in 2015 to 7.70% (from 7.80%) for all plans except the LEOFF Plan 2, which remains at 7.50%. The State Actuary further assumes a salary growth rate of 3.75% per year, an inflation rate of 3.00% per year and a plan membership growth rate of 0.95% per year. Plan Funding Status and Unfunded Actuarial Liability. All DRS administered retirement plans are funded by a combination of funding sources: (i) contributions from the State; (ii) contributions from employers (including the State as employer and the City and other governmental employers); (iii) contributions from employees; and (iv) investment returns. The retirement funds (the "Commingled Trust Fund" or "CTF") are invested by the Washington State Investment Board, a 15-member board created by the Legislature in 1981. The average annualized return on the investment of the CTF for the 10-year period from July 1, 2007 through June 30, 2017 was 5.47%. PERS Plans 2 and 3 are accounted for in the same pension trust fund and may legally be used to pay the defined benefits of any PERS Plan 2 or 3 participant. Otherwise, assets for one plan may not be used to fund benefits for another plan; however, all employers in PERS Plan 2 and 3 and PSERS Plan 2 are required to make contributions at rates determined by the State Actuary every two years for the purpose of amortizing within a rolling 10-year period the unfunded actuarial accrued liability in PERS Plan 1. The State's Actuary August 2017 actuarial valuation, as of June 30, 2016, was as follows: Funded Status on an Actuarial Value Basis (1) ($ millions) i1) Unfunded Actuarial Actuarial Actuarial Accrued Value of Accrued Plan Liability Assets Liability/(Surplus) Funded Ratio PERS Plan 1 $12,323 $ 6,958 $5,365 56% PERS Plans 2/3 34,759 30,262 4,497 87 PSERS Plan 2 425 402 24 94 LEOFF Plan 1 4,197 5,275 (1,078) 126 LEOFF Plan 2 9,571 10,021 (450) 105 As of June 30, 2016, the most recent actuarial valuation date. Liabilities valued using the EAN cost method at an interest rate of 7.7% (7.5% for LEOFF2). All assets valued under the actuarial asset method. Source: Office of State Actuary, 2016 Actuarial Valuation (August 2017) 24 GASB 67/68 Reporting. GASB Statement 68, Accounting and Financial Reporting for Pensions ("GASB 68") became effective for the City for the year ended December 31, 2015. Among the changes imposed by GASB 68 are that lower discount rates are required to be used for underfunded plans in certain cases and the difference between expected and actual investment returns each year will be recognized over a closed five-year smoothing period. GASB 68 also requires employers that participate in the State sponsored plans to report their proportionate share of Net Pension Liability, Deferred Inflows of Resources, Deferred Outflows of Resources, and Pension Expense for the State plans. DRS determines each participating employer's proportionate share of overall plan liability and the State Actuary determines each plan's accounting valuation. GASB 68 affects the accounting for pensions, but does not change the funding status of the plans calculated by State Actuary or pension contribution rates that are set based on statutory assumptions. Total Pension Liability Fiduciary Net Position Net Pension Liability (Asset) FNP as % of TPL City Proportionate Share of Net Pension Liability (Asset) City Proportionate Share n) PERS 1 $12,241,998 (7,496,920) $ 4,745,078 61.24% 0.127058% $ 6,029 Schedule of Net Pension Liability (1) ($ thousands) PERS 2/3 $38,475,325 (35,000,803) $ 3,474,522 90.97% PSERS 2 LEOFF 1 LEOFF 2 $523,270 $ 4,219,277 (503,677) (5,736,797) $ 19,593 $(1,517,220) 96.26% 136.0% $10,388,451 (11, 776,127) $ (1,387,676) 113.4% 0.161787% 0.045565% 0.082086% 0.503269% $ 5,621 $ 9 $ (1,245) $ (6,984) As of June 30, 2017. The Total Pension Liability and Net Pension Liability for the State fiscal year ended June 30, 2017 were determined based on the Actuarial Valuation (as of June 30, 2016), with the results rolled forward to June 30, 2017. The following actuarial assumptions were used and were applied to all prior periods included in the measurement: 3.0% total economic inflation, 3.75% salary inflation (plus growth by promotions and longevity) and 7.50% rate of investment returns. Source: 2017 DRS CAFR and DRS Participating Employer Financial Information for the fiscal year ended June 30, 2017 The actuarial assumptions used in the 2016 Actuarial Valuation report were based on the results of the State Actuary's 2007-2012 Experience Study Report and the 2015 Economic Experience Study. Additional assumptions for subsequent events and law changes were current as of the 2015 Actuarial Valuation report. The long-term investment return assumption is used as the discount rate for determining the liabilities for each Plan. The following table represents the aggregate pension amounts for all City -administered plans subject to the requirements of GASB 68 for the year ended December 31, 2017. City of Tukwila — Aggregate Pension Amounts — All Plans Pension Liabilities Pension Assets Deferred Outflows of Resources Deferred Inflows of Resources Pension Expense/Expenditures $(11,613,653) 8,229,168 2,475,258 (4,284,751) 798,890 Source: The City of Tukwila audited financial statements for 2017 City Administered Firefighters' Pension Plan. The City administers the Firefighters' Pension Plan, which is a closed, single -employer, defined benefit pension plan that was established in conformance with chapter 41.18 RCW. This plan provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries. Membership is limited to fire fighters employed prior to May 1, 1970 when the LEOFF retirement system was established. The City currently has 10 inactive members receiving benefits through this Plan, and the City contributed $66,360 to the plan in 2016. Under State law, the Firefighters' Pension Plan is provided an allocation of all monies received by the State from taxes on fire insurance premiums, interest earnings, member contributions made prior to the inception of LEOFF and City contributions required to meet projected future pension obligations. An actuarial valuation was completed by Healthcare Actuaries as of December 31, 2017, with a net pension liability of $45,601, and a plan fiduciary net position of $1,460,563 for a funded ratio of 103.22 percent. 25 Additional information about the Fire Pension plan is available in the City's Annual Financial Statements attached as Appendix B. Other Post -Employment Benefits City -funded other post -employment benefits ("OPEB") consists of certain medical and disability benefits to retired firefighters and police officers who were hired prior to 1978 as required by RCW 41.26.150. Entry into this system is now closed. As of December 31, 2017, 35 retirees were eligible for OPEB from the City. Because its OPEB plan is not pre -funded on an actuarial basis, the City funds OPEB on a pay-as-you-go basis from its fund balance or other available sources. The City's annual contribution to the cost of OPEB was $477,292 in 2015 $275,530 in 2016 and $943,150 in 2017. In accordance with the GASB standard concerning Accounting and Financial Reporting by Employers for Post - Employment Benefits Other than Pensions ("GASB 45"), the City prepares an actuarial valuation of its OPEB plan. As of January 1, 2017, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $29.1 million and the OPEB plan had a funded ratio of zero percent. Additional information about the City's OPEB plan is available in the City's CAFR, Note 9, which was prepared in accordance with GASB 45. Risk Management The City is a member of the Washington Cities Insurance Authority ("WCIA"). Utilizing chapter 48.62 RCW (self- insurance regulation) and chapter 39.34 RCW (the Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self -insuring, and/or jointly contracting for risk management services. As of December 31, 2017, WCIA has a total of 161 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 $21 million per occurrence in the re -insured layer excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $25 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 coverage is self - funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self -funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, claims and litigation administration. WCIA contracts for certain claims investigation, consultants for personnel and land use issues, insurance brokerage, actuarial and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A board of directors governs WCIA, which is comprised of one designated representative from each member. The board elects an executive committee and appoints a treasurer to provide general policy direction for the 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. 26 The City has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self -insures for unemployment benefits. This is budgeted each year and City paid $15,077 in unemployment in 2017. This expense is budgeted in the Finance Department within the General Fund, Foster Golf Course and enterprise fund. 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 Symetra, which provides an individual limit of $175,000. Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported ("IBNR") and a contingency reserve equal to 2.5 times the IBNR reserve. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 52.6 days for medical, 21.6 days for pharmacy, 31.6 days for dental, and 45.9 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of May 31, 2017. Next, the estimated IBNR liability as of December 31, 2017 was developed by trending the May 31, 2017 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. GENERAL AND ECONOMIC INFORMATION General The City is located in King County, Washington approximately 12 miles south of the downtown area of the City of Seattle and 17 miles north of the City of Tacoma, at the intersection of Interstates 5 and 405. The City is adjacent to the western city limits of the City of Renton and the eastern city limits of the City of SeaTac and is one mile east of the Seattle -Tacoma International Airport. The City encompasses nine square miles and is home to a major regional shopping center (Westfield Southcenter). Population Historical and current population figures for the City and the County are provided below. Population Year The City King County 2018 19,800 2,190,200 2017 19,660 2,153,700 2016 19,540 2,105,100 2015 19,300 2,052,800 2014 19,210 2,017,250 Source: Washington State Office of Financial Management 27 Economic Indicators for the City and the County The following tables present historical information on certain major economic indicators for the City and the County. City of Tukwila Major Employers, as of December 2017 Employer Type of Business Boeing Company Macy's King County Metro Boeing Employees Credit Union Nordstrom Hat Club LLC Zonar Systems Inc. United Parcel Service Costco Wholesale Cheesecake Factory Aerospace Department Store Transit Operating Base Banking/Credit Union Department Store Clothing Accessories Miscellaneous Store Postal Delivery Service Cash/Carry Warehouse Full -Service Restaurant Employees (FTE) 4,644 877 806 658 616 586 409 388 362 340 Source: The City of Tukwila Finance Department - Business Licenses Civilian Labor Force and Employment Annual Average Feb 2018 Feb 2017 2017 2016 2015 2014 2013 King County Civilian Labor Force Employment Unemployment Unemployment Rate Washington State Civilian Labor Force Employment Unemployment Unemployment Rate 1,272,915 1,225,543 47,372 3.7% 3,763,800 3,564,501 199,299 5.3% Source: Bureau of Labor Statistics Source: Year 2017 2016 2015 2014 2013 1,233,709 1,231,276 1,208,334 1,193,452 1,187,646 1,160,734 40,257 43,630 47,600 3.3% 3.5% 3.9% 3,685,135 3,486,712 198,423 5.4% 3,724,722 3,547,430 177,292 4.8% 1,178,606 1,160,967 1,138,720 1,128,497 1,106,769 1,081,827 50,109 54,198 56,893 4.3% 4.7% 5.0% 3,685,135 3,545,904 3,489,666 3,463,869 3,444,126 3,345,496 3,275,753 3,219,842 191,074 200,408 213,913 244,027 5.3% 5.7% 6.1% 7.0% Taxable Retail Sales King County City Taxable Taxable Retail Sales $65,826,124,662 62,235,630,017 57,615,757,451 52,335,343,480 48,553,937,856 Retail Sales $2,114,786,442 2,128,200,205 2,174,715,850 1,929,431,815 1,846,436,835 Washington State Department of Revenue Per Capita Personal Income Seattle -Tacoma -Bellevue King State of Year Metropolitan Area County Washington National 2016 2015 2014 2013 2012 2011 N/A $61,021 59,449 55,908 55,201 50,724 N/A $72,530 70,854 66,016 65,331 58,685 Source: U.S. Department of Commerce Bureau of Economic Analysis $53,493 51,971 50,421 47,814 47,338 44,202 $49,571 48,190 46,464 44,493 44,282 42,461 28 (I) Year City Building Permit Statistics Residential Commercial Number of Value of Number of Value of Permits Permits Permits Permits 2018(1) 45 $ 7,530,763 878 $ 84,215,082 2017 98 18,103,138 1,652 104,143,909 2016 84 13,622,432 1,779 80,071,224 2015 71 13,121, 808 1,618 176, 915, 972 2014 104 8,226,593 1,866 83,077,607 2013 106 19,499,672 1,993 76,909,102 Information is through June 2018. Source: The City of Tukwila TAX MATTERS General In the opinion of Bond Counsel, under existing law and subject to certain qualifications described below, interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. The proposed form of opinion of Bond Counsel with respect to the Bonds to be delivered on the date of issuance of the Bonds set forth in Appendix A. The Code contains a number of requirements that apply to the Bonds, and the City has made certain representations and has covenanted to comply with each such requirement. Bond Counsel's opinion assumes the accuracy of the representations made by the City and is subject to the condition that the City comply with the above -referenced covenants. If the City fails to comply with such covenants or if the City's representations are inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated herein, Bond Counsel expresses no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds Original Issue Premium and Discount If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes. De minimis original issue discount and original issue premium is disregarded. Under the Code, original issue discount is treated as interest excluded from federal gross income to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes. 29 Under the Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to federal income tax consequences of owning such Bonds. Post Issuance Matters The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City and its appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the City or the Owners to incur significant expense. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Bank Qualified The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code. CONTINUING DISCLOSURE UNDERTAKING Pursuant to a certificate to be executed by the City on or prior to the date of issuance and delivery of the Bonds (a "Continuing Disclosure Certificate"), the City will covenant for the benefit of the owners and the "Beneficial Owners" (as defined in the Continuing Disclosure Certificate) of the Bonds pursuant to Securities and Exchange Commission Rule 15c2-12 to provide certain financial information and operating data not later than the end of nine months after the end of each of the City's fiscal years (presently, December 31), commencing with the report for the fiscal year ended December 31, 2018, and to provide notices of the occurrence of certain enumerated events with respect to the Bonds. The information will be filed by or on behalf of the City with the Municipal Securities Rulemaking Board ("MSRB") through its Electronic Municipal Market Access ("EMMA") system. See Appendix D for a form of the Continuing Disclosure Certificate. 30 Compliance With Continuing Disclosure Obligations. The City has entered into certain written undertakings under the Rule in connection with the issuance of certain of its outstanding obligations (the "Prior Undertakings"). With the exceptions noted below, the City believes that in the past five years it has complied in all material respects with its Prior Undertakings. The City notes certain exceptions to the foregoing statement as follows: • Under continuing disclosure agreements relating to the City's then outstanding water and sewer system revenue bonds, the City failed to timely file certain utility customer statistics for the water and sewer system revenue bonds for fiscal years 2012 and 2013. The general customer statistics and a notice of failure to file have since been filed on EMMA. The City no longer has any outstanding water and sewer revenue bonds which are subject to a Prior Undertaking. • The City was an obligated party with respect to the Valley Communications Center Development Authority Refunding Bonds, 2010 (the "Valley Com Bonds"). The City filed its audited financial statements for fiscal 2012 on EMMA on time. However, the City failed to link that filing to the CUSIPs for the Valley Com Bonds. The audited financial statements have since been linked to the Valley Com Bond CUSIPs, which are no longer outstanding. • The City is an obligated party with respect to the SCORE Bonds. See notes to table titled "Outstanding General Obligation Debt" under "GENERAL OBLIGATION DEBT" above. In several of the past five years, City financial information was not linked to the SCORE Bond CUSIPs in a timely manner. However, under the continuing disclosure agreement, the City's obligation consisted of providing timely financial information to SCORE, which 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 the preceding regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or repealed by the State Legislature within a period of two years following enactment, except by a vote of two—thirds of all the members elected to each house of the State Legislature. After two years, the law is subject to amendment or repeal by the State Legislature in the same manner as other laws. In recent years there has been an increase in the number of initiatives and referenda filed in the State, including initiatives affecting the powers of local jurisdictions. The City cannot predict whether this trend will continue, whether any filed initiatives will receive the requisite signatures to be certified to the ballot, and whether such initiatives will be approved by the voters and, if challenged, upheld by the courts. Local Initiative and Referendum. The City Municipal Code provides for local initiatives and referenda as provided for in RCW 35A.11.080, as it may be amended from time to time. Under the City Municipal Code, City voters may initiate local legislation and Code amendments, and modify existing legislation, through powers of initiative and referendum. The City cannot predict when or if any such measures would be filed, or what the subject or effect of any such potential measure may be. Under State law, the Bond Ordinance may not be a proper subject for a referendum petition. Nevertheless, the referendum period relating to the Bond Ordinance will have expired and the Bond Ordinance has become effective. As of the date of this Preliminary Official Statement, no referendum petition has been filed. Limitations on Remedies Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Bond Ordinance are in many respects dependent upon judicial actions, which are in turn often subject to discretion and delay and could be both expensive and time consuming to obtain. If the City fails to comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Bonds. 31 In addition to the limitations on remedies contained in the Bond Ordinance, the rights and obligations under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws relating to or affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. The opinion to be delivered by Pacifica Law Group LLP, as Bond Counsel, concurrently with the issuance of the Bonds, will be subject to limitations regarding bankruptcy, insolvency and other laws relating to or affecting creditors' rights. A copy of the form of legal opinion of Bond Counsel is set forth in Appendix A. No Acceleration The Bonds are not subject to acceleration upon the occurrence of a default. The City is liable for principal and interest payments only as they become due. In the event of multiple defaults in payment of principal of or interest on the Bonds, the registered owners would be required to bring a separate action for each such payment not made. This could give rise to a difference in interests between registered owners of earlier and later maturing Bonds. Bankruptcy Under current State law, local governments, such as the City, may be able to file for bankruptcy under Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code"). A creditor, however, cannot bring an involuntary bankruptcy proceeding against a municipality, including the City. The federal bankruptcy courts have broad discretionary powers under the Bankruptcy Code. Taxing districts in the State are expressly authorized to carry out a plan of readjustment if approved by the appropriate court. If the City were to become a debtor in a federal bankruptcy case, owners of the Bonds may not be able to exercise any of their remedies under the Bond Ordinance during the course of a proceeding. Legal proceedings to resolve issues could be time- consuming and expensive, and substantial delays and/or reductions in payments could result. RATING As noted on the cover page of this Official Statement, the Bonds have been rated "AA" by S&P Global Ratings ("S&P"). The rating reflects only the view of the rating agency and an explanation of the significance of the rating may be obtained from S&P. There is no assurance that the rating will be retained for any given period of time or that it will not be revised downward, suspended or withdrawn entirely by the rating agency if, in the judgment of the agency, circumstances so warrant. Any such downward revision or withdrawal of the rating would likely have an adverse effect on the market price of the Bonds. The City does not have any obligation to take any action, other than file a listed event notification, if the rating on the Bonds is changed, suspended or withdrawn. LITIGATION There is no litigation pending or threatened questioning the validity of the Bonds or the power and authority of the City to issue the Bonds. There is no litigation pending or threatened which would materially affect the City's ability to meet debt service requirements on the Bonds. Because of the nature of its activities, the City is subject to certain pending legal actions which arise in the ordinary course of business. Based on the information presently known, the City believes that the ultimate liability for any of such legal actions will not be material to the financial position of the City. The City 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. APPROVAL OF COUNSEL Legal matters incident to the authorization, execution and delivery of the Bonds are subject to the unqualified approving legal opinion of Pacifica Law Group LLP, Seattle, Washington, Bond Counsel. The form of the opinion is included in Appendix A of this Official Statement. Bond Counsel has not been retained to review and has not reviewed this Official Statement for completeness or accuracy and will not offer an opinion concerning this Official Statement. 32 FINANCIAL ADVISOR PFM Financial Advisors LLC has served as Financial Advisor to the City relative to the preparation of the Bonds for sale, timing of the sale and other factors relating to the Bonds. The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in this Official Statement or other information provided relative to the Bonds. PFM Financial Advisors LLC makes no guaranty, warranty or other representation on any matter related to the information contained in the Official Statement. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, marketing, trading or distributing municipal securities. UNDERWRITING The Bonds are being purchased by Citigroup Global Markets Inc. (the "Underwriter"), at a price of $20,087,773.43. The Bonds will be re -offered at a price of $20,174,035.65. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the initial offering prices set forth on the inside cover hereof, and such initial offering prices may be changed from time to time by the Underwriter. CONFLICTS OF INTEREST Some or all of the fees of the Financial Advisor and Bond Counsel are contingent upon the issuance and sale of the Bonds. None of the members of the City Council or other officers of the City have interests in the issuance of the Bonds that are prohibited by applicable law. OFFICIAL STATEMENT At the time of delivery of the Bonds, one or more officials of the City will furnish a certificate stating that to the best of his, her or their knowledge this Official Statement, as of its date and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond insurance, if any, or other credit facility). The execution and distribution of this Official Statement have been authorized by the City. CITY OF TUKWILA, WASHINGTON By: /s/ Peggy McCarthy Peggy McCarthy, Finance Director 33 APPENDIX A FORM OF LEGAL OPINION August 14, 2018 City of Tukwila Tukwila, Washington Citigroup Global Markets Inc. New York, New York Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 - $18,365,000 Ladies and Gentlemen: We have acted as bond counsel to the City of Tukwila, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bonds, 2018 (the "Bonds"), dated as of the date hereof, in the aggregate principal amount of $18,365,000, issued pursuant to City Ordinance No. 2559 passed on December 4, 2017, as amended (the "Bond Ordinance") for the purpose of providing funds to pay or reimburse the City for costs of acquiring certain parcels of land and constructing, improving and equipping maintenance and other City facilities, and to pay the costs of issuance of the Bonds. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Official Statement prepared in connection with the issuance of the Bonds. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts that, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. A-1 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. The opinion set forth in the preceding sentence is subject to the condition that the City must comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated above, we express no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PACIFICA LAW GROUP LLP A-2 City of Tukwila, Washington STRATEGIC GOALS AND OBJECTIVES © A community of inviting neighborhoods and vibrant business districts + Cultivate community ownership of shared spaces. + Build a broad and collaborative approach to preventing crime and increasing the sense of safety. + Focus City planning and investments on creating a connected, dynamic urban environment. ♦ Use City efforts and investments to realize established visions for specific sub -areas. © A solid foundation for all Tukwila residents i Partner with organizations that help meet the basic needs of all residents. 4 Strive for excellent education, vocational supports, and personal growth opportunities through effective partnerships and City services. ♦ Encourage maintenance, improvements and diversity in the City's housing stock. A diverse and regionally competitive economy ♦ Embrace the City's economic potential and strengthen the City's role as a regional business and employment center. ♦ Strengthen the City's engagement and partnership with the business community. A high -performing and effective organization + Use Tukwila's Vision, Mission, and Strategic Plan to focus and prioritize City efforts. ♦ Advance Tukwila's interests through participation in regional partnerships. + Continue to develop as an organization and support individual growth. + Ensure City facilities are safe, efficient and inviting to the public. ♦ Ensure the long-term fiscal sustainability of the City. A positive community identity and image ♦ Improve the City's ability to build trust and work with all members of the Tukwila community. 4 Facilitate connections among Tukwila's communities. ♦ Promote a positive identity and image of Tukwila. 0 S1N3IN31V1S 1VI3NVNII a311a11d LI.OZ 8 XION3ddV The City of Tukwila, Washington COMPREHENSIVE ANNUAL FINANCIAL REPORT D7 For the Year Ended December 31, 2017 N Prepared by the City of Tukwila, Finance Department Peggy McCarthy, Finance Director Allan Ekberg, MAYOR TUKWILA CITY COUNCIL Verna Seal, Council President Dennis Robertson De'Sean Quinn Thomas McLeod Kathy Hougardy Kate Kruller Zak Idan CITY OF TUKWILA: 2017 CAFR TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2017 TABLE OF CONTENTS I. INTRODUCTORY SECTION Page Administrative Organizational Structure, Principal Officials, and Council Committees 1 Letterof Transmittal_.... _.......... _................... ...._ ... __.. _............................ _....... .. _.. ... ... 3 Certificate of Achievement .................. _........--_.. ........._.................................. ... 9 II. FINANCIAL SECTION Auditor's Report ...... ............._........ ........_ ..... ......_ ............ ....... ....._._._11 Management's Discussion and Analysis......... ..... ......................_15 Basic Financial Statements Government -wide Financial Statements: Statement of Net Position........ _.............. _............ _.. _....................... _....._... Statement of Activities._........__.............._.........._......................................... Fund Financial Statements: Balance Sheet — Governmental Funds....... _.................. ............ _............ _...._... Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ... ..... ..,....... ............ ........ ......................... ............... Statement of Revenues, Expenditures, and Changes in Fund Balance — Governmental Funds ............ ................................... _... _. Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities......... _. _... _36 Statement of Net Position — Proprietary Funds......... __........ ............._ ..... _. _37 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds. Statement of Cash Flows — Proprietary Funds Statement of Fiduciary Net Position — Fiduciary Fund... _............................. _..................., Statement of Changes in Fiduciary Net Position — Fiduciary Fund... _........................... _ Notes to the Financial Statements ......... _............... _........................ ................. _... _..... _ Required Supplemental Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual GeneralFund..... ......... ........... _........................... ......... ................ ..._103 Notes to the Required Supplementary Information. 104 Firemen's Pension Trust Fund.............................................................................. ........ 107 Retiree Medical and Long -Term Care Benefits for LEOFF I Employees. 110 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet — Non -Major Governmental Funds ..................... 113 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Governmental Funds........ ...... ............. 114 Combining Balance Sheet — Non -Major Special Revenue Funds ..................... 115 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Special Revenue Funds .................. _._......... _.116 31 32 33 34 35 38 39 41 42 43 CITY OF TUKWILA: 2017 CAFR TABLE OF CONTENTS TABLE OF CONTENTS - continued Page Combining Balance Sheet — Non -Major Debt Service Funds.......... _... ............ _117 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Debt Service Funds ................................................ 118 Combining Balance Sheet — Non -Major Capital Project Funds ..................... 119 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Non -Major Capital Project Funds 120 Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: Arterial Street Capital Project Fund.......... _. _................_ _........... _... _........ _............ _.121 Local Improvement District #33 Debt Service Fund122 Public Safety Plan Capital Project Fund_._.................................._.._....._123 Hotel/Motel Special Revenue Fund ........................_._....... ........ ...................... ............. 124 Drug Seizure Special Revenue Fund... ..... ........... ..... .............. ..... ................ 125 Residential Street Capital Project Fund 126 Land & Park Acquisition Capital Project Fund ........................ _.... _........... _...._ 127 Facilities Urban Renewal Capital Project Fund__ ...................... 128 General Government Improvements Capital Project Fund... _..._.._......_129 Fire Improvements Capital Project Fund 130 City Facilities Capital Project Fund..............._.......................................... _....................... 131 Special Assessment Bonds Guaranty Funds............._..................................._......_132 Unlimited Tax General Obligation Debt Service Fund 133 DebtService Fund ............. _................. ...... ... _................... ....................... _................. 134 Combining Statements of Net Position — Internal Service Funds 136 Combining Statement of Revenues, Expenses, and Changes in Net Position — Internal Service Funds .. 137 Combining Statement of Cash Flows — Internal Service Funds . . . 138 Statement of Changes in Assets and Liabilities —Agency Fund ............................................. 140 III. STATISTICAL SECTION Schedule Net Position by Component 1 Changes in Net Position 2 Fund Balances, Governmental Funds 3 Changes in Fund Balances of Governmental Funds.. 4 General Government Tax Revenues by Source 5 Property Tax Levies and Collections 6 Assessed and Estimated Actual Value of Taxable Property 7 Property Tax Rates — Direct and Overlapping Governments 8 Principal Property Taxpayers 9 Retail Sales Tax Collections by Sector 10 Sales Tax Rate Direct and Overlapping Governments 11 Ratios of Outstanding Debt by Type 12 Ratios of General Bonded Debt Outstanding 13 Computation of Direct and Overlapping Debt 14 Legal Debt Margin Information 15 Demographic Statistics 16 Principal Employers 17 Full -Time Equivalent City Government Employees by Department 18 Operating Indicators by Function 19 Capital Assets by Function 20 142 144 146 148 150 151 152 153 154 156 158 160 162 163 164 166 167 168 169 170 CITY OF TUKWILA: 2017 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS ADMINISTRATIVE ORGANIZATIONAL STRUCTURE AND PRINCIPAL OFFICIALS CITIZENS OF TUKWILA COUNCIL MEMBERS MAYOR Allan Ekberg r � CITY ADMINISTRATOR David Cline i MUNICIPAL COURT Kimberly Walden ♦ • CITY ATTORNEY Kenyon D'send PLLC Cont(acted) • HUMAN RESOURCES Stephanie Brown TECHNOLOGY INFORMATION SERVICES Joseph Todd FINANCE Peggy McCarthy 1 � COMMUNITY DEVELOPMENT Jack Pace \ /• FINANCE COMMITTEE De'Sean Quinn, Chairperson Dennis Robertson, Member Kate Kruller, Member PARKS AND RECREATION Rick Still F RE Jay W ittwe r COUNCIL COMMITTEES COUNCIL PRESIDENT Dennis Robertson COMMUNITY DEVELOPMENT& NEIGHBORHOODS Kate Kruller, Chairperson Kathy Hougardy, Member Zak Idan, Member PUBLIC WORKS Henry Hash 1 POLICE Bruce Linton TRANSPORTATION & INFRASTRUCTURE Thomas McLeod, Chairperson De'Sean Quinn, Member Zak Idan, Member PUBLIC SAFETY Kathy Hougardy, Chairperson Dennis Robertson, Member Thomas McLeod, Member CITY OF TUKWILA: 2017 CAFR ADMINISTRATIVE ORGANIZATIONAL STRUCTURE PRINCIPAL OFFICIALS Ut City of Tukwila 6200 Southcenter Blvd, Tukwila, WA 98188 June 27, 2018 Honorable Allan Ekberg, Mayor Members of the Tukwila City Council Citizens of Tukwila City of Tukwila 6200 Southcenter Boulevard Tukwila, Washington 98188-2599 Allan Ekberg, Mayor Subject: TRANSMITTAL OF 2017 COMPREHENSIVE ANNUAL FINANCIAL REPORT I am pleased to transmit the City of Tukwila's Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2017. This transmittal letter provides an overview of the report and the financial condition of the City. State law requires that cities publish financial statements annually in conformity with Generally Accepted Accounting Principles (GAAP), which are audited in accordance with generally accepted auditing standards by the State Auditor's Office, under the Revised Code of Washington (RCW) 43.09.230. The CAFR has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is used as a reference by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the CAFR is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded and funds are expended as they were legally appropriated in the adopted budget. The Tukwila Finance Department prepared the report and accepts responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that the data is presented in a manner that fairly sets forth the results of operations and financial position of the City, as measured by the financial activity of the City's various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activity have been included. The report has been prepared in conformance with GAAP and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance is based on the assumption that the cost of internal controls should not exceed the benefits expected to be derived. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. CITY OF TUKWILA'. 2017 CAFR LETTER OF TRANSMITTAL As a recipient of federal, state and county financial assistance, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act amendments of 1996 and U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The audit is conducted by the State Auditor's Office in conjunction with the City's annual independent audit. Information related to this single audit includes the Schedule of Expenditures of Federal Awards, findings, and recommendations, if applicable, and auditor's reports on internal control and compliance with applicable laws, regulations, contracts, and agreements. The results of the City's annual single audit for the fiscal year ended December 31, 2016 provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws. Management's Discussion and Analysis (MD&A) immediately follows the State Auditor's report and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. PROFILE OF THE CITY Incorporated in 1908, the City of Tukwila is in the heart of the Puget Sound region, 12 miles south of downtown Seattle, 17 miles north of Tacoma, and one mile east of Seattle -Tacoma International Airport. Tukwila has a small residential population of 19,660, making it the 551h largest of 281 cities in the State of Washington. However, the daytime shopper/visitor and working population can reach over 150,000 during the holiday shopping season. The City of Tukwila is a non -charter optional code City, operating under Section 35A of the Revised Code of Washington. It has a strong Mayor form of government with a seven -member City Council elected by the voters of the City to serve a four-year term. Councilmembers are elected at large rather than by district and are responsible for establishing the general guidelines and policies for the City. The Mayor appoints the City Administrator as the City's chief administrative officer responsible for carrying out the policies and direction set by the Mayor and City Council. The City of Tukwila provides a full range of local government services. These services include police and fire protection, emergency medical services, construction and maintenance of streets and traditional municipal infrastructure, planning and zoning, park and recreational activities, and cultural events. In addition, the City operates an equipment maintenance/rental fund. The City operates its own municipal 18-hole golf course and provides sewer, water, and surface water services. Tukwila has a municipal court for traffic infractions, misdemeanors, and gross misdemeanors. Other jurisdictions provide jail services to the City. Tukwila residents receive library services from the King County Library System. Since the 2009-2010 biennium, the City has adopted a biennial budget in accordance with RCW 35A.34. The Council is required to adopt a biennial budget prior to the first of each odd -numbered calendar year. Budget reviews are conducted at mid -biennium and any changes for the second half of the biennium are adopted by the City Council. The biennial budget serves as the foundation for the City of Tukwila's financial planning and control. The budget is adopted at the fund level and any increases or decreases to a fund must be authorized by Council. Appropriation changes within a fund may be authorized by the Mayor. The General Fund, two special revenue funds, one debt service fund, and eight capital project funds are included in the biennially appropriated operating budget and have budget to actual statements presented for 2017. As demonstrated by the statements and schedules included in the financial section of this report, the city continues to meet its responsibility for sound financial management. CITY OF TUKWILA'. 2017 CAFR LETTER OF TRANSMITTAL LOCAL ECONOMY Tukwila is a great place for business. With nearly 40,000 jobs, more people are employed in the City of Tukwila than in 27 of the 39 counties in the State of Washington. Approximately one third of the jobs are retail, one third are in manufacturing, and the remainder span everything from entertainment to real estate. Many well-known companies such as Boeing, Costco and United Parcel Service employ thousands of people in Tukwila. Further, Tukwila is home to the global headquarters of Boeing Employees Credit Union (BECU), Continental Mills, Odin Brewing Company, Red Dot Corporation, Sabey Corporation, and Seattle Chocolates. Tukwila is also home to hundreds of small businesses, many of which are owned by members of the city's diverse international community. The strong local economy is evident in the low unemployment rate of 3.5%, down significantly from a 10-year high of 11.7% in 2010. Tukwila enjoys a strong position in the Puget Sound region as well as the state of Washington. Tukwila's location is at the crossroads of the State's most significant freeway network (the 1-5 and 1-405 interchange), and includes all modes of public transportation. Tukwila's transit stations include the commuter Sounder train, Sound Transit's light rail, and the Tukwila Transit Center that all reinforce the well -established advantages of Tukwila as an employment and retail hub. These major transportation systems, the strategic access to Seattle, Tacoma, Sea-Tac Airport, and the population base of the south Puget Sound region provide a natural setting for commercial and industrial activity. Tukwila is a retail powerhouse with one of the largest local retail sales tax bases in the state of Washington. Anchored by Westfield Southcenter, which is the largest mall in the Pacific Northwest, Tukwila generated almost $2.2 billion dollars in taxable retail sales in 2017. The total retail sales tax 66 > revenue amounted to $18.7 million in 2017, representing slight decrease from the $18.9 million collected in the prior year. LONG-TERM FINANCIAL PLANNING The city uses its six -year financial planning model and Capital Improvement Program (CIP) as long-term financial planning tools. These tools, along with regular review and revisions to the financial policies, ensure the City incorporates current economic conditions and financial projections into its long-range financial plans. In mid-2015, the City revised its financial reserve policy to increase the General Fund reserve level from 10% to 18%, and added a one-time 10% revenue reserve in the Contingency Fund. These changes will ensure the City's policies are in alignment with the Government Finance Officers Association's "Best Practices" and provide additional protection from future downturns in the economy. The City's diversified revenue base is supported by an assessed valuation of $6.2 billion, which is an increase of 7.3% from 2016, allowing the City to pursue a long-term capital investment program. The City's 2017-2022 Capital Improvement Program anticipates just over $200 million in general government capital projects, with only $11.2 million of that paid by City funding sources. These improvements are vital to the economic health of the City which must continue to efficiently move employees, shoppers, and goods into and out of the area. CITY OF TUKWILA: 2017 CAFR LETTER OF TRANSMITTAL MAJOR INITIATIVES The City made significant investments of time and financial resources into key public projects in 2017. These projects represent Council's commitment to meeting their five Strategic Goals and Objectives: • A community of inviting neighborhoods and vibrant business districts • A solid foundation for all Tukwila residents • A diverse and regionally competitive economy • A high -performing and effective organization, and • A positive community identity and image The new $10 million pedestrian/bicycle bridge was finalized in 2017. The non -motorized bridge crosses the Green River and provides a connection between Southcenter and the West Valley Highway area, including the Tukwila Station (Sounder/Amtrak station). The pedestrian bridge was funded with a $6.87 million State Regional Mobility Grant from WSDOT, federal grant funds, park impact fees, and City funding. The City of Tukwila began construction on 42"d Avenue, which will include new street improvements, drainage, curbs, gutters, and driveway adjustments. It will also bring new sidewalks and bike facilities to this important residential corridor, as well as undergrounding various utility wires along 42"d. The project includes building a new culvert at Gilliam Creek that will make the stream crossing fish passable and improve roadway safety. The City issued bonds to cover the General Fund portion of the project, the bulk of the financing. Surface Water fees collected by the City will pay for the culvert replacement portion, and Seattle City Light and other communication utilities wit cover a portion of the costs associated with undergrounding the utilities. Construction has also started on 53'd Avenue South, from South 137'h St to South 144'h Street, to improve pedestrian and vehicle safety, drainage, and neighborhood revitalization. The project will include residential street improvements such as curb, gutter, sidewalk, utility undergrounding, and illumination. This project is anticipated to be complete in 2018, and will be funded by bonds, a state TIB grant, and support from utility funds. The City of Tukwila has an on -going extensive rehabilitation program in the Sewer Fund for the Southcenter Commercial Business District. As the sewer mains are reaching their 50-year life span, the City has budgeted over $1 million for 5 years to reline the asbestos concrete pipes in the Southcenter area. The relining of the sewer pipes will extend the life span approximately 50 years and reinforce the strength with little impact to the roadway and minimal excavation. The City continued its partnership with Tukwila Village Development Associates (TVDA) to develop six acres of City -owned land on Tukwila International Boulevard at South 144th Street, known as Tukwila Village. In 2017 the King County Library System opened the new Tukwila Library and TVDA completed the plaza and opened Kona Kai Coffee. Construction continued on two mixed -use apartment buildings including 193 units for seniors which will open in 2018. TVDA will re -start construction on the remaining two mixed -use senior apartment buildings in 2018 with scheduled openings in 2019 and 2020. When fully open, the development will include 398 senior apartments and 4 live/work units, plus 13,000 square feet of office and 16,000 square feet of retail in addition to the plaza and library. When completed, the entire Tukwila Village project costs will be over $100 million. Adjacent to Tukwila Village, the City substantially completed street and frontage improvements on South 144'h Street between Tukwila International Blvd and 42"d Avenue South. This project includes a new traffic signal next to Tukwila School District's Foster High School. CITY OF TUKW ILA'. 2017 CAFR LETTER OF TRANSMITTAL CITY OF TUKWILA: 2017 CAFR The Public Safety Plan continues to be a primary focus for the City, with voters approving $77 million in bonds in 2016 to finance a new Justice Center, three fire stations, and replacement fire equipment and apparatus. The design phase is moving forward, and properties have been identified for the new structures. This project will remain a high priority. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tukwila for its comprehensive annual financial report for the fiscal year that ended December 31, 2016. This was the 30th consecutive year that Tukwila has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the entire staff of the Finance Department and the cooperation of other City departments. Their long hours of assistance with the preparation and review of this report are greatly appreciated. The Mayor, City Administrator and City Council are to be complimented for their encouragement, interest, and support in conducting the financial operations of the City in a fiscally sound and progressive manner. The efficient assistance of examiners from the Office of the State Auditor is also appreciated. Staff who had a direct role in preparing Tukwila's 2017 Comprehensive Annual Financial Report take great pride in their work, and the entire team who worked on this project is to be commended. Respectfully submitted, ff / Peggy McCarthy, CPA Finance Director 7 LETTER OF TRANSMITTAL CITY OF TUKWILA'. 2017 CAFR Govern Certificate of Achievement. for Excellence in Financial Reporting COPresented to O0 City of Tukwila Washington For its Gunprehensive Annual Financial Report for the Fiscal You Ended December 31, 2016 LETTER OF TRANSMITTAL CITY OF TUKWILA'. 2017 CAFR LETTER OF TRANSMITTAL 10 Office of the Washington State Auditor Pat McCarthy INDEPENDENTUTDJTOR'S RI PORT ON FINANCIAL STATEMENTS June 27, 2018 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, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the CO table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the 11 Insurance Building, P 0 Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • Pat.McCarthy@sao wa.gov 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. 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, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information listed in the table of contents 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 ass 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 combining financial statements and schedules are 12 presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Our audit was conducted for the sole purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The Introductory and Statistical Sections presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 27, 2018, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, Pat McCarthy State Auditor Olympia, WA CITY OF TUKWILA'. 2017 CAFR AUDITOR'S OPINION LETTER 14 CITY OF TUKWILA'. 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2017 The management discussion and analysis section of the City of Tukwila's Comprehensive Annual Financial Report provides an overview of the City's financial activities for the year ended December 31, 2017. The intent of this discussion and analysis is to look at the City's financial performance as a whole. Readers should also review the transmittal letter, and the basic financial statements to enhance their understanding of the City's financial performance. FINANCIAL HIGHLIGHTS As of December 31, 2017, the City of Tukwila's total assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $307.0 million. Of this amount, $28.8 million represents unrestricted net position, which may be used to meet the government's ongoing obligations to citizens and creditors. The City of Tukwila's total net position increased $11.0 million, or 3.7%. Governmental activities increased $6.3 million partially due to growth in property taxes to cover voted debt principal and interest. Business -type activities increased $4.7 million due in part to rate increases in all three utility funds. At the close of the current fiscal year, the City of Tukwila's governmental funds reported combined fund balances of $80.6 million, an increase of $4.5 million (6.0 % ). Approximately 22.4% ($18.0 million) of the fund balance is available for spending at the City's discretion (unassigned fund balance). OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis is intended to serve as an introduction to the City of Tukwila's basic financial statements. The City's basic financial statements are presented in three parts: 1) Government -wide financial statements 2) Fund financial statements 3) Notes to the financial statements This report also includes supplementary information intended to furnish additional detail to support the basic financial statements. Government -wide Financial Statements The government -wide financial statements provide both long-term and short-term information about the City's overall financial status, in a manner similar to private -sector business. The Statement of Net Position presents financial information on all the City's Tukwila's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Tukwila is improving or deteriorating. The Statement of Activities presents information designed to show how the City's net position changed during the year. The statement distinguishes revenue generated by specific functions from revenue provided by taxes and other sources not related to a specific function. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show the degree to which each function supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Items such 15 CITY OF TUKWILA' 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS as (but not limited to) uncollected taxes, unpaid vendor invoices for goods or services received during the year, and earned but unused vacation leave are included in the statement of activities as revenue and expenses even though no cash has changed hands. Both the government -wide financial statements distinguish functions of the City of Tukwila that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Tukwila include general government (finance, executive, legal, court, and human resources), public safety (police and fire), physical environment, economic environment, transportation, mental/physical health, and culture and recreation. The City's business -type activities include a water, sewer, and surface water utilities, and a municipal golf course. Governmental activities are primarily supported by taxes, charges for services, and grants. Business -type activities are primarily self-supporting through user fees and charges. Fund Financial Statements The annual financial report includes fund financial statements in addition to the government -wide financial statements. A fund is a fiscal and accounting entity with a self -balancing set of accounts used to account for specific activities or meet certain objectives. The City of Tukwila Funds are often set up in accordance with special regulations, restrictions or limitations. The City of Tukwila, like other state and local governments, uses fund accounting to ensure and show compliance with finance -related legal requirements. The City's funds are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions that are reported as governmental activities in the government -wide financial statements. The governmental fund statements focus on the near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. The information in the governmental fund statements can be used to evaluate the City's near -term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government -wide statements can help the reader better understand the long-term impact of the City's current year financing decisions. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains fourteen individual governmental funds. Of these, four are considered major (the general fund, the arterial street fund, the local improvement district #33 fund, and the public safety plan fund) and are presented separately in the governmental funds' Balance Sheet and the governmental funds' Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single column labeled "Other Governmental Funds." Individual fund data for each of these non -major governmental funds is presented in the combining and individual fund statements and schedules section of this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. A budgetary comparison schedule is presented for the general fund in the Required Supplemental Information section of the report. Other budgetary comparison schedules are included following the other governmental funds' combining statements in this report. 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. CITY OF TUKWILA'. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided internally to various City departments. The same basis of accounting is used for proprietary funds in both the government -wide and individual fund statements. Enterprise funds report the same functions presented as business -type activities in the government -wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's three utilities (water, sanitary sewer, surface water) as wet as the City -owned golf course. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet of vehicles, and its insurance premiums for active employees and LEOFF 1 retirees. Internal service fund activities are predominantly governmental and have been included in the governmental activities columns of the government -wide statements. Individual fund data for the internal service funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government -wide financial statements because the resources of those funds are not available to support the City of Tukwila's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City maintains two different types of fiduciary funds. The Firemen's Pension Trust Fund is used to report resources held in trust for retirees and beneficiaries covered by the Firemen's Pension plan, The agency fund reports resources held by Tukwila in a custodial capacity for individuals, private organizations, and other governments. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found immediately following the fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including a budget and actual schedule for the City's general fund and schedules of progress in funding its obligation to provide pension and OPEB benefits to its former employees. Additional pension benefit information is found in Note 8. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information on pensions and OPEB. 17 CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position over time, may serve as a useful indicator of a government's financial position. In the case of the City of Tukwila, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by nearly $307.0 million at the close of the most recent fiscal year. Total net position increased by $11.0 million (3.7%) when compared to 2016, CITY OF TUKWILA'S NET POSITION in thousands Current and other assets Capital assets, net of accumulated depreciation Total assets Deferred Outflows of Resources Long-term liabilities Net pension liability Net CEEB obligation Other liabilities Total liabilities Deferred Inflows of Resources Net position Net investment in capital assets Restricted Unrestricted $120,303 $112,308 $21,385 $20,741 $141,688 $133,049 213,212 206,147 71,220 67,410 284,432 273.557 333,515 318,455 92,605 88.151 426,120 406,606 2,543 4,629 289 470 2,831 5,100 77,965 73,776 6,220 6,943 84,186 80.719 9,745 12,944 1.799 2,539 11,544 15,483 10,488 9,179 0 0 10,488 9.179 8.887 8,149 1,735 993 10,622 9.142 107,085 104,048 9,755 10,475 116,840 114.523 4.798 1,117 358 98 5,155 1.216 199,329 193,113 65,356 60,807 264,684 253,920 13,480 8,996 - - 13,480 8.996 11,367 15,810 17.425 17,241 28,792 33,051 By far, the largest portion of the City's net position ($264.7 million or 86.2%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position ($13.5 million or 4.4%) represents resources that are subject to external restrictions on how they may be used. The business -type activities do not report any restrictions, so the entire $13.5 million is restricted in governmental activities funds. The majority is related to land and park acquisition, and street improvements. The remaining net position balance ($28.8 million, or 9.4%) is unrestricted and may be used to meet the City's ongoing obligations to its citizens and creditors. At the end of the current fiscal year, the City of Tukwila continued to report positive balances in all categories of net position. The City's overall net position increased $11,0 million (3.7%) from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business -type activities. 18 CITY OF TUKWILA 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS CITY OF TUKWILA. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA'S CHANGES IN NET POSITION Governmental Activities (in thousands) Revenues: Program revenues Charges for services $11,479 $11,904 $24,095 $22,963 $35,575 $34,867 Operating grants and contributions 2,446 1,079 6 25 2,454 1,104 Capital grants and contributions 6,127 5,001 834 768 6,961 5,769 General revenues Property taxes 17,668 14,563 - 17,668 14,563 Saks and use taxes 18,807 18,908 - 18,807 18,908 Natural gas use tax - - - - HoteVMoleltaxes 737 710 - - 737 710 Utility taxes 4,175 4,046 - - 4,175 4,046 Interfurd utility taxes 2,266 2.147 - 2,266 2,147 Business taxes 2,698 2,716 - 2,698 2,716 Excise taxes 5,381 6,509 - 5,381 6,509 Investment earnings 839 560 - 839 560 Miscellaneous 2,329 2,916 - 2.329 2,916 Total revenues 74,951 71,058 24,938 23,755 99,889 94,813 Expenses: Generalgovemnent 9,835 9,662 - - 9,835 9,662 Public safety 31.190 31,419 - - 31,190 31,419 Transportation 12,237 11,188 - - 12,237 11,188 Physicalen+ironment 2,545 2,554 - 2,545 2,554 Culture and recreation 5,582 5,431 - - 5,582 5,431 CO Economic environment 4,524 4,411 - - 4,524 4,411 Interest on long-term debt 2,482 1,076 - - 2,482 1,076 Waterlsevser 14,305 13,984 14,305 13,984 Foster got course - 1,990 2,078 1,990 2,078 Surface water - - 4,209 4,088 4,209 4,088 Total expenses 68,395 65,741 20,505 20,150 88,899 85,892 Increase (decrease) in net position before 6.556 5,316 4,434 3.605 10,990 8,922 transfers Transfers (300) (300) Change in net position 6,256 5,016 Net position -beginning of period 217,919 212,903 300 300 0 4,734 3,905 10,990 8,922 78,048 74,142 295,967 287,045 . t During the current fiscal year, net position for governmental activities increased $6.3 million (2.9%) from the prior fiscal year for an ending balance of $224.2 million. The primary reasons for this increase are: • Property taxes increased $3.1 million (21.3%) from the prior year. In 2016, voters approved an excess property tax levy to be used for public safety purposes. This was the first year the City received the proceeds from that levy. • Grant revenues can fluctuate greatly from year to year, depending on several factors including duration of capital projects, and purpose of the grants. In 2017, the City received 41,0% more governmental grant revenue than 2016. Capital grants and contributions increased $1.1 million (22.5 % ), and operating grants increased $1.4 million (126.7 %). The Arterial Street Fund was the recipient of $6.5 million of the total $8.6 million in grant revenue in 2017. REVENUES BY SOURCE -GOVERNMENTAL ACTIVITIES Other revenue 7% Charges for ser CITY OF TUKWILA 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS PROGRAM REVENUES AND EXPENSES —GOVERNMENTAL ACTIVITIES __._........ $311,000,000 $27,000,000 $24,000,000 $21,000,000 $18,000,000 $15,000,000 $12,000,000 $9,000,000 $6,000,000 53,000,000 $0 Business -Type Activities ■ Program revenues: For the City of Tukwila's business -type activities, the results for the current fiscal year were positive in that overall net position increased by $4.7 million (6.1%) to reach an ending balance of $82.8 million. The overall growth is attributable to the following factors: • In the Water Utility, total net position increased by $0.5 million (2.5%). This resulted from a 5.0% commercial rate increase effective January 1, 2017. • In the Sewer Utility, total net position increased $2.3 million (14.0%) primarily due to a 5.0% rate increase effective January 1, 2017, combined with a 10.3% reduction in operating and maintenance expenses. • In the Surface Water Utility, operating revenues increased $0.3 million (5.1%) due to a 5.0% rate increase. • Operating income in the enterprise funds was $3.5 million, an increase of 25.8% from the prior year, mostly due to rate increases. • Of the $82.8 million total net position, $17.4 million (21.0%) is unrestricted and each utility can utilize their portion for any purpose. This operating balance is necessary for future planned infrastructure replacements and repairs. CITY OF TUKWILA: 2017 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 7% Surface Ovate 46% Water 24% Sewer 23% 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: CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS COMPARISON OF TOTAL NET POSITION TO SPENDABLE NET POSITION -BUSINESS-TYPE FUNDS water se«m D (71 The following chart depicts the revenues and expenses for business -type funds: I ■ Sp endait Net Position: BUSINESS -TYPE ACTIVITY REVENUES & EXPENSES (before Capital Contributions & Transfers) 23 CITY OF TUKWILA. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS The purpose of the City's governmental funds is to report on near -term inflows, outflows, and balances of spendable resources. This information helps determine the City's financial requirements in the near future. Specifically, unassigned fund balance may serve as a useful measure of a government's net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City of Tukwila itself, or a group or individual that has been delegated authority to assign resources for use for a particular purpose. As of December 31, 2017, the City's governmental funds had combined fund balances of $80.6 million, an increase of $4.5 million (6.0%). The increase is primarily due to the issuance of $8.2 million in bonds in the Residential Street Fund. The change in fund balance for governmental funds compared to 2016 is as follows: • General Fund $ 40,981 • Arterial Street Fund (562,939) • Local Improvement District #33 (146,379) • Public Safety Plan 211,793 • Other Governmental Funds 4,996,074 The general fund is the primary operating fund of the City. All receipts and payments of ordinary City operations are processed through this fund unless they are required to be accounted for in another. At the end of 2017, the general fund had a fund balance of nearly $19.1 million, with $18.0 million (94.5%) of the balance classified as unassigned and available to meet the City's general obligations. Unassigned fund balance increased from $11.6 million in 2016 due to the reclassification of over $6.0 million in contingency fund balance which was reported as assigned last year. The arterial street fund decrease in fund balance is related to the planned use of reserves for capital projects. In 2017, a total of $9.5 million was spent on capital outlay. The fund balance in the local improvement district #33 fund decreased by the difference between the special assessment revenue received and the payment on the LID bonds issued. The following chart shows the relative fund balances for governmental funds: 24 CITY OF TUKWILA'. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF TUKWILA. 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS GOVERNMENTAL FUNDS — FUND BALANCES FINANCIAL ANALYSIS OF PROPRIETARY FUNDS 6eneral fund The general fund revenue increase of $1.2 million is combined from the following sources: GENERAL FUND REVENUE INCREASES/DECREASES — BY SOURCE S800,000 Taxes $687,828 600,000 $400,000 5200,000 (520o,c00) $400,0001 Li ce nses a nd permits $619,916 Charges for services ($239,499) Intergovernmental 0191,574 Fines an dforfeltures 56,757 Investment earnings (52,750) Miscellaneous ($54,135) 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. Unrestricted net position in business -type activities ended 2017 at $17.4 million, an increase of almost $200 thousand (1.1%) from 2016. 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 significant budget amendments that occurred in 2017: Additional grant revenue and expenditures of approximately $86,000 were appropriated for a temporary FTE in the Police Records Unit. Increased funding for the Fire Department to cover: o Two pipeline positions totaling $240,000 o Firefighter deployment to assist with hurricane recovery efforts - $125,000 (100% reimbursed) o Increased costs for providing Emergency Medical Services - $35,000 (100% reimbursed) • Reduction of $120,000 in Finance expenditures due to lower Risk Management costs • Reduction of $120,000 in Community Development from vacancies • Adjustments in transfers from the General Fund to other funds, including. o $210,000 transfer to Fund 306 to pay project costs related to the City's Public Works Shops until bonds are issued in 2018. o $138,515 increase in transfer to the Contingency Fund in line with policy requirements. Reasons for the significant variances in the general fund between the final budget and actual results include: • Sales tax revenue was $1.2 million lower than budget. This continues a slight decline that started in 2015 and resulted in sales tax collections 1 % lower than 2016. • Building permit revenue was (38%) over budget. This was due to a $28.5 million increase in the value of permits issued. • A $1.5 million transfer in from the Facilities/Urban Renewal fund was budgeted but did not occur because an anticipated land sale did not happen in 2017 as funds were not needed. • Expenditures were below budget by $2.7 million, or 4.5 % . Specific examples include: o $641 K in salary savings, plus associated benefit savings, with Police accounting for almost half of the budget savings O $119K in overtime savings, nearly all from the Fire Department O $196K in claims and judgements in the Finance Department o $252K in rents and leases 25 26 CITY OF TUKWILA: 2017 CAFR CAPITAL ASSETS MANAGEMENT'S DISCUSSION AND ANALYSIS The City's investment in capital assets for both its governmental and business -type activities as of December 31, 2017 totaled $ 284.4 million (net of accumulated depreciation), an increase of $10.9 million (4.0%) from 2016. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission/distribution systems, roads, bridges, and infrastructure. CITY OF TU KWILA'S CAPITAL ASSETS (net of depreciation) Land Buildings Other Improvements Machinery and Equipment Infrastructure Construction in Progress 1 $ 36,172,319 35,498,580 $ 2,396,230 2,346,230 $ 38,568,549 37,844,810 11,115,434 11.834,146 7,935,440 8,307,234 19,050,874 20,141,380 9,835,029 10,528,019 58,046,974 54,158,840 67,882,003 64,686,859 7,264,337 7,111,094 378,464 386,113 7,642,801 7,497,207 139,281,317 131,110,688 - 139,281,317 131,110,688 9,543,935 10.064.699 2,462,779 2,211,229 12,006,714 12,275,927 More detailed information on capital assets is provided in Note 6 to the financial statements. General capital outlay purchases added $197,322 in machinery and equipment and included various technology purchases in the amount of $86,037 Parks 8 Recreational equipment for $24,683, Police and Fire equipment totaling $57,032 and Street Division speed alert radar devices in the amount of $22,679. L. Many of the projects in the Arterial Street Fund continue to be in the construction phase adding $9.5 million in v construction -in -progress for the period. The major arterial street fund activities are comprised of the following: • TUC Pedestrian/Bicycle Bridge, $4.5 million • S 1441^ St Phase II (42. Ave S -TIB), $1.8 million • Interurban Ave S, $0.97 million • Baker Blvd Non -Motorized Improvements, $0.78 million • Beacon Ave S Bridge Improvements, $0.73 million • Various other Arterial Street Fund projects total $0.78 million Major construction projects completed in 2017 added $15.1 million to capitalized infrastructure for the Arterial Street Fund which included the TUC Pedestrian/Bicycle Bridge with total overall previous and current years' construction - in -progress costs totaling $9.2 million; S 1441^ St Phase II (42. Ave S - TIB) with costs of $2.3 million: and, Baker Blvd Non -Motorized Improvements at $0.78 million. Ongoing Residential Street Fund construction projects added $3.5 million to construction -in -progress and include the following: • 42. Ave S - Phase III, $1.9 million • Cascade View Safe Routes to School, $1.3 million • 53. Ave S, $0.25 million Projects completed in 2017 for the Residential Street Fund include Cascade View Safe Routes to School with total overall previous and current years' construction -in -progress costs of $1.5 million, Land Acquisition, Recreation 8 Park Development activities consist of $187k for the Cascade View Park Playground and Dog Parks work in progress projects. Both projects were completed in 2017 with total overall current year construction costs of $146k and $32k and capitalized into parks improvement infrastructure. 27 CITY OF TUKWILA: 2017 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Other governmental funds' activity in the areas of facilities improvements provided an additional $77k to construction -in -progress work for the year. The new Public Safety Plan Funds for the Fire Stations, Justice Center and Public Works Shops had work in progress activity totaling $1.3 million. Business -type activities consisted of $5.9 million in added construction in progress work for the year. Major projects in the utility funds comprise of the following: • 401^-42. Ave S, $1,263,382 • Andover Park East Waterline, $3,280,517 • 2017 Small Drainage, $588,276 A total of $794,461 in other utility construction projects were added to construction -in -progress during the current period. Major construction projects completed in 2017 include Andover Park East Waterline and 2017 Small Drainage projects with total overall previous and current years' construction -in -progress costs of $4.5 million and $0.7 million, respectively, which have both been capitalized into utilities infrastructure, LONG-TERM DEBT At the end of the current fiscal year, the City had total bonded debt outstanding of $63.6 million, excluding the premium on bonds issued. Of this amount, $59.2 million is general obligation bonds which is backed by the full faith and credit of the City, $1.5 million is revenue bonds for the water/sewer and surface water utilities, $4.4 million in public works trust fund loans, and the remaining $4.8 million is special assessment bonds which were issued to improve access to the City's urban center. The City issued $8.5 million (including premium) in general obligation debt in 2017 to finance two transportation projects in the Residential Street Fund. This new debt issuance, combined with redeemed debt, resulted in an overall general obligation bond increase of $5.1 million. The City currently maintains a rating of "AA" with Standard and Poor's and Fitch's Investor Service, and "Aa3" with Moody's for its general obligation debt. The following schedule summarizes the City's long-term debt: CITY OF TUKWILA'S LONG-TERM DEBT General obligation bonds Revenue bonds Premium on bonds issued Special assessment bonds Public Works Trust Fund Loans Due to other governments $ 59.214,505 $ 54.114,977 4.447,881 4.380,732 4,805,000 5,412.500 5,914,400 6,093,556 $ - $ - 1454,422 1,597,704 4.447.523 5,046.. 991 59.214,505 $ 54.114,977 1,454,422 1,597,704 4,447.881 4,380,732 4,805,000 5,412,500 4,447,523 5.046,991 5,914,400 6.093,556 0a More detailed information on long-term debt, including debt limitations, is provided in Note 10 to the financial statements. 28 CITY OF TUKWILA: 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS ECONOMIC FACTORS AND THE UPCOMING BIENNIAL BUDGET The following economic factors currently affect the City of Tukwila and will be considered in developing the 2019- 2020 biennial budget: • The City's 2017 assessed value of $6.2 billion is 7.3% higher than 2017 and its growth reflects positively on the local economy. • Sales Tax is the City's largest revenue source and was conservatively estimated to increase 7.5% in 2017 and an additional 2.9% in 2018. However, actual 2017 sales tax came in $1.2 million (6%) under budget, so this revenue source is being closely monitored to see if there is a trend developing. • A significant focus of the 2019-2020 biennium will be the Public Safety Plan. The voters approved construction of a new Justice Center, 3 new fire stations, and fire equipmenUapparatus purchases as part of a $77 million bond issued in 2016. The design phase of the projects are moving forward, and significant financial shortfalls have been identified. The City is currently working to identify options for filling the funding gap including potential new revenue sources, reductions to programs, and additional borrowing. • Rate increases of 5% annually are scheduled in the Water utility from 2017-2022 to cover the cost of purchasing water from the Cascade Water Alliance and maintain the utility's infrastructure. An additional increase of 3.5% in sewer rates is scheduled for 2018. • National Pollutant Discharge Elimination system (NPDES) permit requirements have significant costs for the surface water fund, which will result in a 5% rate increase in 2019 and 3% in 2020 for that utility. The City's reserve policy specifies that the General Fund ending fund balance shall equal or exceed 18% of the previous year's operating revenues. The policy also requires that a 10% minimum fund balance be maintained for the Contingency Fund. The biennial budget complies with both these requirements. 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. CITY OF TUKWILA: 2017 CAFR MANAGEMENTS DISCUSSION AND ANALYSIS 29 30 CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION DECEMBER 31, 2017 BASIC FINANCIAL STATEMENTS ASSETS: Cash and cash equivalents Investments Taxes receivable Other receivables Due from other governmental units Inventory of materials and supplies Restricted cash and cash equivalents Restricted investments Notes receivable Real property held for resale Investment in joint ventures Non -depreciable capital assets Depreciable capital assets (net of accumulated depreciation) Net Pension asset DEFERRED OUTFLOWS OF RESOURCES: Deferred loss on refunding Deferred outflows related to pensions LIABILITIES: Accounts payable Accrued wages and benefits payable Accrued interest payable Unearned revenue Other liabilities Bands and other debt payable Due within one year Due in more than one year Net pension liability Net other post employment obligation DEFERRED INFLOWS OF RESOURCES: Deferred Inflows related to pensions s received in advance Business lase NET POSITION: Net investment in capital assets Restricted for: Debt service Tourism promotion Arterial street Improvements Drug Investigation and enforcement Land and park acquisition, development Fire improvements Public safety facilities Unrestricted net position The notes to the financial statements are an in 25,846,613 $ 12391,603 $ 38236,215 10,059,606 6.446 801 16 506.406 6.209,050 847 6.209.897 1 768 835 2,163,043 3,931,878 1640,733 8,435 1649,167 18,761 53.879 72,641 34,200,272 86,445 34,286,717 10,553 628 - 10 553 628 7.171,449 233,890 7,405338 5.293,000 5.293,000 9,311805 - 9311,805 45,716,254 4,859.009 50.575,263 167 496.117 8,229,168 257,647 2,284,942 4084,878 1.840.214 456,114 86,974 2,418,496 4,276,996 73,688,295 9,745,053 10,487,883 66.360.878 233.856,995 8,229,168 37,836 295,464 250,796 2,535,738 1,428,463 169,709 15,765 16,130 105,354 750,669 5,469,673 1,799,011 5,513,341 2.009.923 471.879 103,104 2,523,850 5,027,665 79,157,968 11.544,064 10 487,883 3,927,242 870. 425 357 509 4284,751 870,425 199 328,694 65,355,778 264,684,471 5,799,275 1,139,775 146,762 227,244 3,856,032 7,210 2,303,769 1,366 545 5,799.275 1,139,775 146,762 227.244 3.856,032 7,210 - 2,303,769 7,425,401 28 791,946 egret part of this statement. 31 CITY OF TUKWILA: 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2017 FUNCTIONS / PROGRAMS: PRIMARY GOV ERNM ENT Governmental activities General Government $ 9,835,290 $ 4,144,986 $ 127.967 $ - $ (5,562,337) $ - $ (5,562,336) Public safety 31,190,347 1,540,863 607,851 - (29,041,633) - (29,041,633) Transportation 12.236,551 2,206,908 1597,857 5,894,908 (2,536,878) - (2,536,878) Physical environment 2.545,144 - - 13436 (2,531,708) - (2,531708) Culture and recreation 5.582,038 1,315,740 37,015 218536 (4,010,746) - (4,010,746) Ecanomc environment 4,523,596 2,270,759 75,308 - (2,177,529) - (2,177,529) rest on longterm debt 2481,559 - - - (2,481,559) - (2,481,559) BUSINESS -TYPE ACTIVITIES: Nhkr Sewer Surface water Foster •oll course 6,553,626 6,841,271 - 216,339 7,751,799 9,739,694 - 327,675 4,209325 6,200,589 8,435 290,379 1989.972 1,313,871 - - General Revenues: Taxes Property taxes Retail sales and use taxes Hotel/motel taxes Utit8y taxes Interfund u81dy taxes Business taxes Excise Taxes Unrestricted investment earning Miscelaneous $ 17,667,590 $ 18,807,201 736,784 4,175,013 2,265,747 2,698,352 5,380,662 838,630 2,328,565 503,954 2.315,570 2.290,077 503,984 2,315,570 2,290,077 - $ 17,667,590 18,807,201 736. 784 4,175.013 - 2,265,747 - 2,598,352 5,380 662 838,630 - 2,328,565 Excess of revenues over expenses before transfers Transfers 6.556,152 4,433,529 10,989682 (300,000) 300.000 217,919,155 78047,650 295966805 Net position - be lnnin (0) The notes to the financial statements are an Integral part of this statement. 32 CITY OF TUKWILA 2017 CAFR CITY OF TUKWILA, WASHINGTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2017 BASIC FINANCIAL STATEMENTS ASSETS: Cash and cash equate.. tngeggrgnts Cash and cash equrvalems nvestmeres Special assessment receivable Notes recevabk Reel property heH for resale $ 0,486,158 $ 349,039 $ 752,342 $ 484286 $ 9.560,303 $ 6,322,974 - 26.854.534 Taxes receUable 5.794.797 143.659 270,594 6.209.050 Other receivables - 1.690.611 One I rromolher governmental units 308,637 1158.263 - - 173.933 1,640.733 Restricted assets. 8.406 2270.778 4,315,171 927.373 378882 25,903.447 10,553.628 6,017,641 34.200.272 10.553.62B 4.315.171 1250.000 300,022 2,850277 5.293,000 5,293,000 LIABILITIES, offHM®INFLOWS AND FUND BALANCES: Liabilities: Accounts payable Accrued wages 8 benefits uneprned revnu ee Other kabilnies 1,007.908 1.499 428 1.779.550 23268 86.974 178270 85.857 CODeferred inlaw of resources W Unavailable t even cial assessment NBusiness taxes received in advance 670.925 O u vaibbb revenue-propertyvenue lee rax. other agreen nt 329,358 Unavailable re - velepe e Fund balance: Nenspendable teM Re HoieVrmbl lax Residential street irrprovenents Arterial street capital'nproverrents investigationDrug and enforcement Park an n uusrmn/development Rib. safety faclfrliee fire hprovemenis Debt service guraranry fund t service public safety pan Local Improvement District Assigned: Residential street Inprmvenents Arterial street mproverrents Dug Secure Land 8 perk acquis'Aan Facilities 8 urban renewal General government improvements Ruble safety facilities 186 Arts Debt senora Unassigned 4,315,771 00,737 280501 1,081,4355 3,869,573 .814,308 86,974 28,119 390,246 0.090 4,171 870 425 70 53,728 68 1.958.104 927373 2.270.778 1,16 659 105,000 18.040.352 752,342 36 457,066 267,854 927,373 39,775 1.109,775 5,794,233 5.794.233 3.856.032 36,457,066 7,210 7.210 068,849 668,849 752.342 382,185 72 47,724 7,498,169 308.801 104.000 388,245 382,185 1.165.659 72 47,724 7,498,169 368,801 267,854 164.000 105,000 388.245 18,O. 352 The notes to the financial statements are an integral part of this statement. 33 CITY OF TUKWILA. 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31, 2017 Total governmental fund balances as reported on this statement Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. Non -depreciable assets Depreciable assets (net) Internal service fund assets The net pension asset is not an available resource and, therefore, is not repo Fled In the funds. Deferred outflow of pension costs Deferred inflow of pension contributions The City has an equity interest in two jointventilres. This equity interest for the provision of governmental services is not a currentfinancial resource and therefore is not reported in the funds. Revenue that was not collected within the recognition period and therefore was not available to pay current Ilabllities: Unavailable revenue reported for property We and other receivables Unavailable revenue reported for developer agreement Unavailable revenue reported for special assessment Some liabilities are notdue and payable in the current period and therefore are notreporrd in the funds. Long term liabilities due within one year Long term liabilities due in more than one year Unfunded other post employment benefits Accrued i merest payable Deferred outflow on refunding Internal service fund net position exclusive of capital assets, deferred outflow of pension costs and deferred Inflow of pension contributions which are Included with other reconciling items ab01e Internal service funds are used by manage ment to charge the cost of certain activities, such as health insurance and fleet maintenance, to Indiadual funds. The assets and liabilities of these Internal service funds are Included In governmental activities in the statement of net position. $ 80,591,877 45 716.. 254 162,371.313 5. 124,804 213212371 8229,168 2,284,942 (3,927242) (1642300) 9 311 805 353,728 1,959 4 315.171 6,628 003 (4,276,996) (83,153,922) (10,487,883) (456,114) 257.647 (98,117267) 5961,651 biat The notes to the financial statements are an integral part of this statement. 34 9,358.235 4,098,765 1.733.400 29,968,635 4,395.696 3.026 D13 7,679 2.860,118 9.545, 242 300,000 1,800,000 (5,337,496) 607,500 259,939 CITY OF TUKWILA: 2017 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, 2017 REVENUES: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment earnings Special assessments Miscellaneous DJ EXPENDITURES Current: General government Economic environment Physical environment Public safety Culture and recreation Transportation Debt service: Principal Interest Capital outlay $ 46,574, 589 $ 912,333 $ 2,749,137 4,690,257 6.686,896 3,046 606 1 725,249 325,216 - 230,784 16,910 701,034 - - $ 4,168,153 $ 51,655.075 - - - 2,749,137 - 1,362 621 12,739,774 500,000 495.373 5,767,228 325,216 240.710 258,283 80.176 826,864 478,838 - 478,838 1,511 - 79,930 942,784 OTHER RNANCING SOURCES (USES): Transfers in Transfer out General obligation bonds issued Bond premium Payrrent of refunded debt GaiN(loss ) on sale of assets held for res 227,316 9,585,551 515.262 4,614,027 - 1,733,400 564,521 366,256 30,899,412 268.433 4,664,129 646.064 6,532,195 3,10fi 428 2,343.930 998,969 4,099,825 3,713,928 2,603,869 14,761,715 1,017,000 3,237,495 6,354,496 (1,317.000) (6,654,496) 10,458,000 10, 456, 000 - 356,839 356,839 - (2,250.000) (2,250,000) (100,000) (99,999) CITY OF TUKWILA'. 2017 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, 2017 Net change in fund balances per the Statement of Revenues, Expenditures, and Changes In Fund Balances Amount reported as change in net position in the Statement of Activities are different because. Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets Is allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are: Capital Outlay Adjustments to construction in progress Donated capital assets Capital asset As posal Depreciation Expense (excludes internal service fund depreciation which is reflected In Internal serqce fund change In net position listed below) Excess of Capital Outlay Over Depreciation Expense The net effect of various transactions Involving the CIt5's pension plans are: Reduction In pension liability and expense Increase in pension contribution revenue Reduction In the Fireman's Pension liability and expense The City has equity interests in two joint ventures. The equity interests for the provision of governmental services are not current financial resources and therefore are not reported in the funds. Repayment of long-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 currentyear, these amounts consist of: Bond principal retirement Amortinali on expense Bond proceeds provide current financial resources to governmental funds, but Issuing debt Increases long-term liabilities in the statement of net position. General Obligation Bonds issued General Obligation Bands issued 14 761 715 69,901 (3,325) (8,179,837) $ 4,539,529 6,648,454 1,565,517 515,721 134.176 2,215,414 123,010 5 963. 928 289,690 6.253,617 (356 839) (10,276,800) Internal service funds are used by management to charge the costs of certain activities to individual funds. The change in net position of Internal service funds is reported with governmental activities. (408.767) Because some revenues will not be collected for several months after the City/s fiscal year ends. they are not considered "available" revenues in the governmentfunds. Changes this year are for: Miscellaneous receivables Developer agreements Property taxes Special assessment 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: Increase in accrued interest Amortization of deferred outflow on bond refunding Increase in compensated absences Increase in unfunded other post employment benefits Total additional expense (increase) decrease 59,495 (852,667) 76,273 (478. 838) (100,767) (66,613) 190,695 (1,309,047) (1,195,736) (1,285,731) Change In Net Position On The Statement Of Activities $ 6,256,152 The notes to the financial statements are an integral part of this statement. The notes to the financial statements are an integral part of this statement. 35 36 CITY OF TUKWILA'. 2017 CAFR Current assets: Cash and cash equivalents hveshrents Taxes receivable Other receivables Due Iromother governmental ands hvenlory of ,reterels and supplies Current assets reslroted Cash and cash equ0alenl BASIC FINANCIAL STATEMENTS CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2017 $ 3,973,370 $ 3561,217 8 572915 $ 4284,100 3 12391603 $ 5,214,083 2.161612 4,284988 - - 8.6,801 3205571 847 847 550.121 1034,564 - 576358 2,163,043 72,224 8,435 53,879 e435 53679 ,e25 62620 - 86,445 18, 760 Noncurrent assets Notes receivable 233.890 capital assets Land 87,347 69525 1608575 629783 2,396.230 - Budding 1,416.567 3.364,962 6622495 1875,395 13,284419 Other Improvements 24.597.361 16535383 3,559,992 49,044,818 93,83] 552 Nechineryandequipnent 601031 1249.131 110.829 56139 2,217,130 15973,404 Less. accumulated depreciation (11,434627) (8,622535) (6000.487) (16520,570) (42,978,223) (10648599) Cqns rat ion in progress 193367 301.308 - 1,968,104 2,462,79 Total capTal assets (net of ac cumulate 15,661,045 12,991771 5,507,405 37053.666 71,219,887 5,124804 1S6g:i 233,890 Del erred Oudbws of Resources Deterred pension MDeferred Loss on RefundinAW LIAMLITIES: Current Liabilities Accounts payable Accrued wages and benefts Accrued interest payable Unearned revenue Other current liabilities Due to other governments Compensated absences Revenue bond pa able Noncurrent haled., Reserve for unreported claims Revenue bonds payable Net pension liability Compensated absences Ore to other governments Deferred Mbws of Resources Deterred Inlbw pension earning NET POSITION: Net investment capital assets 60,358 9,837 35613 23,458 63,721 91,104 4,540 250,796 3].836 38,954 373,132 55380 2,135 997,916 1428,463 215,305 41,202 23828 35,983 6B696 169,709 25,906 2.528 7485 - 5,751 15,765 6,568 - - 9,562 16,130 19935 27,629 57,690 100 105354 811,300 95080 233.436 - 270,953 599468 1542 1,542 38,911 92.789 - 17,959 149,659 - 339,238 432,958 117.637 537,116 808,953 355061 33,029 ,730 014 457.077 70,818 156.572 1,300763 653,515 1,799,011 95572 316.855 1,590,925 3,848,055 1,216,950 279,426 84,93 50,885 90,954 357.509 55, 7 5507,405 35 021.798 65.355.778 5.124,805 39327 2.998,807 17 425001 5 945,177 VERMEMMrtrarlignEEMMStrattairraitYre 14 670,538 5,690592 10,156 038 8.696.675 The notes to the financial statements are an integral part of this statam ant. 37 BASIC FINANCIAL STATEMENTS OPERATING REVENUES: Charges for services Other o er Iln revenue OPERATING EXPENSES: Operating 8 maintenance Admnislralrve and general Taxes Depreclalicn and anortizaton CITY OF TUKWILA, WASHINGTON STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 $ 6,774,385 $ 9,706584 $ 1,202,283 $ 6,147930 $ 23831,182 $ 8522,057 3,969 107,208 160 111,337 114,545 4,316,007 5,616964 724.537 623,175 979,237 1,107,991 519 778 367,729 1,435,736 181,399 59,348 313489 1,042,352 643,643 688,572 13.211,060 7,950.371 2.172,754 458,576 2.825.148 2,220,912 833,469 NON -OPERATING REVENUE ( EXPESJLSE): Investment earnings Interest expense Gain floss) on disposal of capital assets Other non -operating revenue 62,912 33,110 (14,066) (35,941) 4 4,380 52,938 153,341 95,639 (14,841) (64,848) (440) (436) 100,509 8,435 8435 - Cap8al contributions Transfers in Total net p6sebn - beginning 216,339 327,675 9,857,146 16,537.143 300 000 5,922,833 290,379 834,392 300 000 5,730,527 78047,649 ,478,749 0 OZAZ The notes to the financial statements are an integral part of this statement. 38 CITY OF TUKWILA: 2017 CAFR CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash paid to supplier Cash paid for taxes Cash paid to or on behalf of employees Other cash received (paid) CASH FLOWS FROM NONCAPITAL FINANCINGACTMTIES: Operating grant received Transfers In BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 $ 6,642,015 $ 9,432575 $ 1309492 $ 6,041,224 $ 23425306 $ 8,591,726 (4,108599) (5,966,291) (745,386) (612,296) (11,432573) (1204,753) (979.237) (1,107.991) (59,348) (688,572) (2,835,148) (1) (798,896) (466,415) (946,234) (1,267,642) (3,479,187) (7,130,160) 3.969 8,012 160 12,141 - 8,435 300,000 8,435 300,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets Contributed capital Capital grants Principal paymenton debt Interest paymenton debt Proceeds from sale of equipment Other CASH FLOW FROM INVESTINGACTIVITIES: Proceeds from sale of investments Purchase of investments Interest received Net Increase (decrease) In cash and Cash equivalents Cash and cash e,guivalen:fs-bejtnnIng Cash atend of year consists of. Cash and cash equivalents Restricted cashcustomer deposits (1926517) (1,473,226) 216,339 327,675 (132,333) (322,271) (14,910) (39,553) 31,833 (20,742) (16,043) (2,565,907) 104,998 241,768 (288,146) (15.660) (60,987) (5,981,693) 649,011 241,768 (742,750) (69,622) (49,896) (1.250.161) 100,509 135,000 - (3,900 000) - - (3,900,000) (513,494) 35687 158,795 9380 52,938 251.800 171089 WanalltnotanallEMPAWMUMNdkowatiRM (1,030,150) (3,377,444) (145,127) 950,313 (3. 602.409) (1,100,246) 5,027 345 6 938 662 780,662 3 333,787 16 080 456 6,314,729 3.973,370 3561 217 572915 4,284,100 12391603 $ 5,214,483 23 825 62,620 86,445 The notes to the financial statements are an integral part of this statement. 39 CITY OF TUKWILA: 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 2017 RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Adjustments to reconcile operating income to net cash Provided (used) by operating activities'. Depreciation Asset (Increase) decrease. Accounts receivable Inventory and other Deferred oulllow of resources (increase) decrease Liability increases (decreases). Accounts payable Other l'atill'es Wages 8 benefits payable Deferred inflow of resources increase (decrease) 519,778 367729 313,489 1,019,917 2220,912 833,469 (116,476) (274,009) 2,571 (106,706) (494,620) (45,775) (421) - (421) (3,487) 31094 30,608 45,368 70,388 177,458 25,394 186,293 (154,313) (899) 735,967 767,048 107,588 (57,597) - 5,442 (18,090) (70,245) - 3,108 32,139 5,468 28,406 69,120 6,208 45,744 101,001 (124000 (210614) 481,359) y(_6-1671)041 • SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Increase (decrease) in fair value of investment $ $ (58,819) $ $ (58,819) $ 45,429 The notes to the financial statements are an integral part of this statement. 40 CITY OF TUKWILA 2017 CAFR ASSETS( Cash and cash equivalents Investments Customer accounts Interest receivable CITY OF TUKWILA, WASHINGTON STATEMENT OF FIDUCIARY NET POSITON FIDUCIARY FUND DECEMBER 31, 2017 a a LIABILITIES: Accounts and other payables NET POSITION: - • ca, BASIC FINANCIAL STATEMENTS $ 925,014 $ 311 398 515.702 2,934 1,771 AmiaNkM.1 . 1,442,486 -""71111114.1E1M111., '07 • • 11111MilNk '1, 1 314 332 CITY OF TUKWILA 2017 CAFR BASIC FINANCIAL STATEMENTS CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED DECEMBER 31, 2017 ADDITIONS: Contributions from nonemployer entities: Fire Insurance Premiums Transferred in Investment earnings/(loss) DEDUCTIONS: Benefit payments Administrative expenses Net position - beginning KW CZ 111-7 69 $ 68,709 (320) .1.. • a; .11 $ 51,486 3,500 AIL ,F MUM, 1,429,053 EN= The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2017 NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the City of Tukwila conform to generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The City's significant accounting policies are described in this note. A. The Reporting Entity The City of Tukwila was incorporated on June 23,1908 and operates under the laws of the State of Washington applicable to a non -charter optional code city with a Mayor/Council form of government. Tukwila is served by a Mayor and seven councilmembers, all elected at large to four-year terms. The City provides what are considered general government services including public safety, streets, parks, planning and zoning, permits and inspection, general administrative, water services, sanitary sewer collection, and storm drainage. The City of Tukwila has no component units (either blended or discretely presented) included in these statements. B. Basis of Presentation The City's basic financial statements consist of government -wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government -wide Financial Statements The statement of net position and the statement of activities report information on all of the nonfiduciary activities of the City. The activity of the internal service funds is eliminated to avoid "doubling up" revenues and expenses. The statements distinguish between governmental activities and business -type activities. The statement of net position presents the financial condition of the governmental and business -type activities of the City at year-end. The statement of activities presents a comparison between direct expenses and program activity of the City. Direct expenses are those specifically associated with a service, program, or department and therefore clearly identifiable to a particular function. Indirect costs are included in the program expense reported for individual functions and activities. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. For identifying 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. 43 CITY OF TUKWILA' 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Revenues which are not classified as program revenues are presented as general revenues of the City, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the City. Fund Financial Statements During the year, the City segregates transactions related to certain City functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the City at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Non -major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by type. While fiduciary funds are excluded from the government -wide statements, they are included in the fund financial statements. C. Fund Accounting The accounts of the City are organized on the basis of funds; each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self -balancing accounts that are comprised of assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues and expenditures or expenses, as appropriate. The City's resources are allocated to - and accounted for - in individual funds according to the purpose for which they are spent and how they are controlled. There are three categories of funds: governmental, proprietary and fiduciary. Governmental Funds All governmental funds are accounted for on a "flow of current financial resources" measurement focus. Their reported fund balance is considered a measure of "available spendable resources." Governmental fund operating statements focus on measuring changes in current financial position, rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. The following are the City's major governmental funds: • The general fund accounts for all the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. The general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. • The Arterial Street fund was established in accordance with RCW 82.36.020 for the administration of the State -levied motor vehicle half -cent gasoline tax distributed to Tukwila and is used primarily to account for capital arterial street projects. In addition to the State -levied motor vehicle gasoline tax, other revenue includes state and federal grants, impact fees, and transfers in from the general fund. • The Local Improvement District (LID) #33 accounts for assessments related to the LID and provides payment to the Fiscal Agent for principal and interest on bonds issued in November 2013. • The Public Safety Plan fund was established in 2016 after voters approved a $77.4 million bond measure to construct a justice center, rebuild 3 fire stations, and provide for life -cycle replacement of fire department apparatus and equipment. The other governmental funds of the City, account for the proceeds of specific revenue sources that are segregated to ensure that expenditures are made exclusively for qualified purposes. 44 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Proprietary Funds The City of Tukwila maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. 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 position. 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 internal and external 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. 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 enterprise activities 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. 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 and accounts for pension costs for firefighters who qualify for a City pension prior to 1971. 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. 45 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS D. Measurement Focus Government -wide Financial Statements The government -wide financial statements are prepared using the economic resources measurement focus. All assets, deferred outflow of resources, liabilities, and deferred inflow of resources associated with the operation of the City are included on the Statement of Net Position. Fund Financial Statements All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, current liabilities, and deferred inflow of resources generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. This approach differs from the manner in which the government activities of the government -wide financial statements are prepared. Governmental fund financial statements therefore include a reconciliation with brief explanations to better identify the relationship between the government -wide statements and statements for governmental funds. Like the government -wide statements, all proprietary and internal service fund types are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net position. The statement of changes in activities presents increases (i.e., revenues) and decreases (i.e., expenses) in net total position. The statement of cash flows provides information about how the City finances and meets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resources measurement focus. E. Basis of Accounting Basis of accounting refers to the recognition of revenues and expenditures or expenses in the accounts and reporting them in the financial statements. Government -wide financial statements are prepared using the accrual basis of accounting. 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 sales, real estate, and utility taxes. Non -exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, sales and use taxes, admission taxes, gambling taxes, utility taxes, hotel/motel taxes, grants, entitlements, and donations. These revenues are on an accrual basis. On the accrual basis, the revenue is recognized in the period in which the income is earned. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. (See Note 3 on receivables). 46 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Other Revenue Sources Revenue sources which are not considered to meet the measurable and available criteria for revenue recognition include licenses and permits, fines and forfeitures, and other miscellaneous revenues since they are generally not measurable until received. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for principal and interest on general long-term debt and vacation and sick pay which are recorded when paid. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements via the process of consolidation. Internal service fund and similar internal activity has also 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. 2) The City Council conducts public hearings on the proposed budget in November. Public hearings are also held in December, if necessary. 3) The Council makes its adjustments to the proposed budget and adopts by ordinance a final balanced budget no later than December 31. 4) The final operating budget as adopted is published and distributed within the first month of the following year. Copies of the budget are made available to the public. The City Council must approve, by ordinance, any amendments that increase the total for the fund. Budget amounts presented in the financial schedules include both the original amounts and the final amended budget as approved 47 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS by the City Council. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year. Expenditure Categories General Government Public Safety Physical 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. Transportation Includes all street and arterial street maintenance and construction. Economic Development 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 The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Investments Investments are held separately by each fund with interest earned directly for the benefit of each fund. Investments are reported in the financial statements at fair value, based on quoted prices in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Washington State statutes provide for the City to hold investments consisting of obligations of the Federal Government, repurchase agreements, prime banker's acceptances, and time certificates of deposit. Additional deposit and investment information is presented in Note 2. Notes Receivable Notes receivable in the enterprise funds consists of sewer connection fees due from customers to the utility. In the governmental funds, it consists of the special assessment as well as developer agreements, of which the City currently has two current developer agreements. Amounts Due to and From Other Funds and Governments, Interfund Loans and Advances Receivable Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund loans receivable/payable" or "advances to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." As of December 31, 2017, there are no residual balances outstanding between the governmental activities and business -type activities. The non -current portion of interfund loans in the general fund and advances between funds, as reported in the fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. See Note 4 on interfund transactions. 48 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Special Assessments Special assessments are amounts levied against benefited properties to recover costs associated with the construction of Local Improvement District (LID) projects. A lien is recorded against benefited properties until the assessment has been paid. Special assessments receivable represents at outstanding assessment amounts including current assessments billed but not collected, delinquent assessments unpaid at year-end, and special assessment amounts due in future years, which are recorded in a deferred inflow of resources account in the fund financial statements. Since special assessments are secured by liens against related properties, no allowance for uncollectible amounts is made. Inventories Inventory is defined as items purchased for resale to external customers or other City departments or supplies and small tools used in normal operations that are considered material in amount. The inventory amount on this year's financial statements reflect only those items that will be resold. Inventory held for resale is valued at lower of cost or market and there is a physical inventory count taken annually at year-end. Governmental funds use the purchase method whereby inventory items are considered expenditures when purchased. Real Property Held for Resale Governmental funds do not report property, plant, and equipment because such assets normally are used in operations, and therefore will never be available for spending (they are not financial assets). However, specific items of property occasionally are acquired with the intent of sale. Examples include foreclosure properties, redevelopment properties, and donated assets held for resale rather than retained for use in operations. Governments often acquire redevelopment properties to attract private -sector investment in an economically depressed area and are willing to sell the property at a price that may be far less than the government's cost to acquire and improve the property. Since assets held for sale can never be reported at an amount higher than their net realizable value, any cost in excess of net realizable value must be excluded from the property value reported in the financial statements. The City acquired a number of redevelopment properties in its urban renewal area along Tukwila International Boulevard. For the Tukwila Village project, property acquisition began in 1999. The City acquired and cleared a total of 5.76 acres. In 2012 the City executed an agreement to sell the property to a developer and closed escrow on the sale of the first phase in 2017. The first phase is currently under construction and will be completed in 2018. As part of a crime -reduction project, the City purchased three crime -ridden motels in 2014 plus another motel and retail shop in 2015. All structures on those properties were demolished in 2016 and the vacant land will be sold for redevelopment. All redevelopment properties are reported at net realizable value in the financial statements. Deferred Outflows /Inflows of Resources Deferred outflow of resources represents a consumption of net position by the government that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. The City reports a deferred outflow related to pension and a deferred loss on refunding water/sewer bonds. Deferred inflow of resources represents an acquisition of net position by the government that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for reporting in this category. The City reports business taxes that are received in advance and a deferred inflow related to pensions. 49 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. Capital assets acquired in governmental funds are accounted for as expenditures in the fund when the asset is purchased. These assets are reported in the governmental activities column of the government - wide statement of net position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business -type activities column of the government -wide statement of net position and in the respective funds. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Where historical cost is not known, assets are recorded at estimated historical costs. Donated assets are recorded at acquisition value at time of acquisition. The City maintains a capitalization threshold of five thousand ($5,000) dollars. The City's infrastructure consists of roads, bridges, storm sewers, water and sewer distribution and collection systems. Improvements are capitalized while the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Depreciation is computed using the straight-line method over estimated service lives, as follows: Buildings Non -Building Improvements Machinery and Equipment Intangibles Infrastructure See Note 6 for additional information on capital assets. Other Liabilities 25 to 50 years 25 to 50 years 2 to 50 years 2 to 50 years 25 to 50 years Other liabilities include retainage, deposits and the incurred -but -not -reported (IBNR) claims and claim reserve for the self -insured healthcare funds. The self-insurance fund for active employees includes an IBNR liability of $737,600 determined using actuarial methods. This liability is multiplied by a factor of 2.5 to meet the City's financial goal of maintaining reserves at 1 x IBNR for claim fluctuations plus 1.5 x IBNR for a claims reserve yielding a total liability of $1,844,000. The self-insurance fund for LEOFF 1 retirees includes an IBNR liability of $73,700 and total liability of $184,250 utilizing the same calculations as the active employees' self-insurance fund. Compensated Absences City policy and labor contracts with City of Tukwila employees call for the accumulation of vacation and sick leave. At termination of employment, employees with the required length of service may receive cash payments for all accumulated vacation leave to a maximum of 384 hours. Sick leave termination benefits are based on a percentage of accumulated sick leave up to a maximum of 180 hours. The payment is based on current wages at termination. The entire compensated absence liability, which includes salary and wages as well as related taxes, is reported on the government -wide financial statements. In the enterprise funds, the entire amount of compensated absences is reported as a fund liability. This reporting format is in compliance with GASB Statement No. 16. The current portion reported on the schedule of long-term liabilities is calculated using the last -in -first -out (LIFO) approach. Anticipated subsequent yearly usage is used to determine the current portion of the liability. There is 50 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS no current portion to report when the anticipated leave usage is less than the anticipated leave to be accrued during the next year. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business - type activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Long-term debt outstanding at year-end is outlined in Note 10. Fund Balance/Net Position A fund balance represents the difference between the current assets and current liabilities plus deferred inflows. The City restricts those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and therefore are not available for general appropriation or expenditure. Net position represents the difference between assets plus deferred outflow of resources and liabilities plus deferred inflow of resources. Net position invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the City has spent) for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The remaining balance is reported as unrestricted. In 2012 and again in 2015, the City revised the Reserve Policy which addresses the various types of the City's operating and restricted use funds. The objectives of this Policy are to establish, attain, and restore minimum fund balances, including self-insurance health care reserve funds, and specified review and reporting of fund balances. At the close of each fiscal year, the General Fund balance shall equal or exceed 18%, and the Contingency Reserve Fund balance shall each equal or exceed 10%, of the previous year General Fund revenue, exclusive of significant non -operating, non -recurring revenues such as real estate sales or transfers in from other funds. Additionally, 10% of the previous year one-time revenues shall be set aside in a one-time revenue reserve within the Contingency Reserve fund. Enterprise funds, at the close of each fiscal year, the unrestricted fund balance shall equal or exceed 20% of the previous year revenue, exclusive of non -operating, non -recurring revenues such as real estate sales, transfers in from other funds or debt proceeds. The City shall maintain a reserve balance in each of its self -insured health care funds an amount equal to 2.5 times or 250%, of the actuarially determined IBNR liability. Fund Balance Components The fund balance amounts for governmental funds have been classified in accordance with GASB Statement No. 54 and are reported as nonspendable, restricted, committed, assigned or unassigned. 51 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts, long-term portion of loans/notes receivable, or property held for resale unless the proceeds are restricted, committed or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. The general fund's nonspendable fund balance of $937 thousand is the outstanding balance of a loan from the general fund to the Tukwila Metropolitan Park District. • Restricted fund balances have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation. • Committed fund balances can be used only for specific purposes pursuant to constraints imposed by a formal action in the form of ordinances and resolutions of Tukwila Councilmembers, the City's highest level of decision -making authority. This formal action is the passage of an ordinance by City Council creating, modifying, or rescinding an appropriation. These committed amounts cannot be used for any other purpose unless Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. • Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose but are neither restricted nor committed. Assigned also includes a contingency balance authorized via the City's Reserve Fund Balance policy. Intent of use and authority to assign amounts is determined through the budgetary process, either during adoption or amending, and the Finance Director has final authority. • Unassigned fund balance is the residual amount not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. Each fund has been analyzed to classify the fund balance in accordance with GASB Statement No. 54. Funds are created by the City Council and money is authorized to be transferred to the fund for a particular purpose. At this point, balances in these funds are at least committed, and may be further restricted depending on whether there is an external party, constitutional provision, or enabling legislation constraint involved. The City applies restricted resources first when an expense is incurred for purposes of which both restricted and unrestricted fund balance is available in the governmental funds. When expenditures are incurred for purposes, for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications can be used, it is the City's policy to spend committed resources first, the assigned second, followed by unassigned. Operating Revenues and Expenses Operating revenues are generated directly from the primary activity of the proprietary funds. For the City. these revenues are service fees for utilities, charges for services for the use of the golf course and the internal use of vehicles, computers, and facilities. Operating expenses are necessary costs incurred to provide the good or service that are the primary activity of each fund. All other revenues and expenses are classified as non -operating including investment earnings, interest expense and the gain or loss on the disposition of capital assets. Contributions of Capital Contributions of capital in proprietary fund financial statement arise from outside contributions of capital assets, for example, developers, and grants or outside contributions of resources restricted to capital acquisition and construction. It also includes water and sewer connection charges. 52 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Indirect Cost Allocation Indirect costs, also referred to as overhead costs, consist of the cost of central services or support functions shared across departments. They include accounting, human resources, payroll, information technology, janitorial services, and others. These services are paid through the general fund and charged back to the proprietary funds that directly benefit from them. The indirect costs allocated to the proprietary and other funds totaled $2,279,058 for 2017 and are reported as a reduction of general government expenditures on the Statement of Activities. Interfund Activity Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. On the government -wide statement of activities, the exchange transactions between the internal service funds and the user funds are eliminated. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non -operating revenues/expenses section in proprietary funds. Transfers between governmental and business -type activities on the government -wide statement of activities are reported separately after general revenues. Transfers between funds reported in the governmental activities column are eliminated. Transfers between funds reported in the business type activities column are eliminated. Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Risk Management It is the City of Tukwila's policy to self -insure for unemployment benefits because of the insignificant liability. Medical and dental self-insurance coverage is also provided for employees. All buildings, City equipment, and City vehicles are insured by carriers for property coverage at replacement value. The City of Tukwila is a member of the Washington Cities Insurance Authority (WCIA) as of January 1, 1984. WCIA is an organization of Washington entities numbering 161 as of December 31, 2017. WCIA provides pooled self- insurance coverage for general liability, vehicle liability, false arrest, and errors and omissions. See Note 13 for additional information on risk management. H. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans' fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. NOTE 2—DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool available for use by all funds. Interest earned on pooled investments is recorded in the participating funds. Investments are also held separately by several of the funds, with interest earned directly for the benefit of each fund. Cash and Cash Equivalents 53 CITY OF TUKWILA' 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Custodial credit risk is the risk associated with the failure of a depository financial institution. In the event of a depository financial institution's failure, it is the risk that the City would not be able to recover its deposits or collateralized securities that are in the possession of the outside parties. The City minimizes custodial credit risk by following the restrictions set forth in state law. At year-end, the carrying amount of the City's cash balance held in banks was $11,305,429. Of the bank balance, $250,000 was covered by Federal depository insurance and the Washington Public Deposit Protection Commission (WPDPC) insured the remainder. The City also maintains imprest funds totaling $14,950. The City participates in the State Treasurer's Investment Pool, which is a 2a7-like unrated pool, overseen by the State Treasurer's Office. A 2a7-like-pool is an external investment pool that is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC -registered mutual funds to use amortized cost, which approximates fair value, to report net assets and compute share prices. The fair value of the City's position in the pool is the same as the value of the pool shares. Because of its highly liquid nature, the Pool funds are considered cash equivalents. Investments The City's investment portfolio includes certificate of deposits insured by the Washington State Public Depository Commission, U.S. Government Agency Notes, and municipal bonds issued by state and local agencies. These investments are reported at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Also, the Firemen's Pension Fund is authorized to invest in stocks. bonds, and mutual funds. 54 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS At December 31, 2017, the City had the following deposits and investments. Certificates of deposits are measured at amortized cost, agencies and municipal bonds are measured at fair value. SCHEDULE OF INVESTMENTS BY MATURITY Certificates of Deposit: Sound Community Bank Bank of Washington Total Certificate of Deposits U.S. Government Agency Notes: Federal Home Loan Mtg Corp Federal Farm Credit Bank Federal Horne Loan Bank Federal Farm Credit Bank Farmer Mac Farmer Mac FNMA Federal Farm Credit Bank Federal Horne Loan Bank Federal Horne Loan Bank Federal Farm Credit Bank Total U.S. Agency Notes Municipal Bonds: Washington State Biomedical Research: Revenue - Facilities Seattle. Washington: Limited General Obligation Auburn, Washington: Limited General Obligation, Build America Port of Anacortes, Washington: Limited General Obligation Douglas County School District, Washington: Unlimited General Obligation Port of Tacoma, Washington: Limited General Obligation, Taxable Refunding Multnomah County, Oregon: Limited General Obligation Burien, Washington: Limited General Obligation, Build America Port of Seattle, Washington: Revenue, Taxable Total Municipal Bonds 3/4/2019 6/2/2019 5/25/2018 12/21/2018 1/30/2019 3/20/2019 7/23/2019 8/2/2019 10/9/2019 12/27/2019 6/29/2020 8/28/2020 5/9/2022 7/1/2019 11/1/2019 12/1/2019 9/1/2020 12/1/2020 12/1/2020 6/1/2021 12/1/2025 5/1/2036 AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa AA+ / Aaa Aa1 / AA+ Aaa / AAA AA+ Aa3 Aa2 Aa2 / AA Aaa Aa2 Aa2 / AA- $ 3,242,622 250,000 3,492,622 997,899 994,692 994,441 1,989,224 993,355 2,484,920 2,310,722 990,552 1,683,549 2,272,586 1,974,266 17,686,207 519,700 392,962 312,282 352,175 1,188,822 515,702 456,125 531,560 2,127,580 6,396,908 ` No credit rating with certificate of deposit accounts; accounts are insured by the Public Depository Protection Commis 55 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS RECONCILIATION OF ALL CASH, DEPOSITS AND INVESTMENTS Governmental Funds General Fund Arterial Street Local Improvement District #33 Public Safety Plan Facilities Urban Renewal Other Governmental Funds Internal Service Funds Proprietary Funds Water Sewer Foster Golf Course Surface Water Total as Reported on Statement of Net Position Firemen's Pension Trust Fund Agency Fund 9.486,158 $ 8,406 $ 6,322,974 $ 349,039 2,270,778 752,342 - 484,286 25,903,447 - 9,560,304 6,017,641 531,560 5,214,483 3,205,071 3.973,370 23,825 2,161,812 3,561,217 - 4,284,988 572,915 62,620 4,284,100 38,238,215 34,286,717 16,506,406 $ 15,817,539 2,619,817 752,342 10,553,628 36,941.362 16,109,505 8,419,554 6,159,007 7,846.206 635,535 - 4,284,100 10,553,628 99,584,966 925,014 515,702 311,398 - 1,440,716 311,398 Cash and Cash Equivalents: Local Government Investment Pool Money market account Cash on hand Cash in bank -book balance Total cash and cash equivalents Investments: Certificates of deposit U.S. Government Agency Notes Municipal bonds Total investments 56 $ 48,269,306 14,361,779 14,950 11,115,308 73,761,344 3,492,622 17,686,207 6,396,908 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Cash & cash equivalents Deposits Drug Seizure funds - federal portion Debt Service Impact fees Investments $ 31,697,680 8,406 223,408 2,124,016 146,762 10,553,628 Customer Deposits -Water Utility Customer Deposits -Golf Course Lease Deposits -Golf Course Fair Value Measurement $ 23,825 47,620 15,000 W The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted W accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. These valuation inputs are considered most reliable. Level 2 inputs are quoted prices for similar assets, quoted prices for identical or similar assets in markets that are not active, or other observables. These valuation inputs are considered to be reliable. Level 3 inputs are significant unobservable inputs and are considered to be the least reliable. The City has the following recurring fair value measurements as of December 31, 2017: tiTa Investments by Fair Value Level Total US Government Agencies $ 17,686,207 Municipal Bonds 6,396,908 a' Interest Rate Risk Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) $ - $ 17,686,207 $ - - 6,396,908 - 18 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 investment maturities as follows: 57 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 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 15) years or forty-two (42) months. The City uses the weighted average maturity method to manage interest rate risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes and the City's investment policy limit the types of securities authorized for investment by the City. The principal governing statutes are RCW 39.59 and RCW 39.60. The Finance Director may further restrict eligible investments by this policy at his/her discretion. Authorized investments include (but are not limited to): 1) U.S. Treasury Securities. 2) U.S. Agency Securities (i.e., obligations of any government -sponsored corporation eligible for collateral purposes at the Federal Reserve). 3) Certificates of Deposit, Money Market Deposit Accounts and savings deposits with qualified depositories within statutory limits as promulgated by the WPDPC at the time of investment. 4) Bankers Acceptances (BA's) purchased on the secondary market with a rating of A-1, P-1, its equivalent or better. 5) General Obligation Bonds of a state or local government which have at the time of the investment one of the three highest credit ratings of a nationally -recognized rating agency. 6) The Washington State Local Government Investment Pool (LGIP). As of December 31, 2017, the City's investments in municipal bonds were rated Aaa to Aa3 by Moody's Investor Service. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City of Tukwila diversifies its investments by security type and institution as described below: 1) No more than fifty percent (50%) of the City's cash and investment portfolio, at the time of purchase, shall be in any single financial institution. 2) Except, that no more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shall be invested in the Washington State Local Government Investment Pool, and 3) No more than seventy-five percent (75%) of the City's portfolio, at the time of purchase, shalt be invested in U.S. Treasury or Agency securities. NOTE 3 — RECEIVABLES Taxes receivable consists of property, sales and use, gambling, leasehold, and hotel/motel taxes. 58 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Customer accounts receivable consists of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial and the direct write-off method is used. Customer accounts receivable also includes the current portion of special assessments due from property owners within Local Improvement District No. 33. Other types of accounts receivable include utility taxes due from private organizations and customer accounts receivable for amounts owed which billings have not been prepared. Taxes Receivable Property Sales 8 Use Real Estate Excise Tax Utility Tax Admission/Gambling/Parking/Other Total Taxes Receivable Customer Receivable Miscellaneous Utility Accounts Total Customer Receivable Interest Notes due at hin one year Property Taxes Receivable $ 360,063 $ 3,685,904 198.258 671,411 1,293,415 6,209,050 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS the current period are reported as other unavailable revenue in the deferred inflow of resources section of the governmental funds financial statements. The tax rate for general City operations is limited to $3.60 per $1,000 of assessed value. An additional levy rate of $0.225 is available to the City because the City funds a Firemen's Pension Fund. The payment of principal and interest on limited tax (non -voted) bonds issued by the City is made from the general levy. Accordingly, the issuance of limited tax general obligation bonds has the effect of reducing property taxes available for the general operations of City government. State law also provides that the City's operating levy may not exceed 101% of the largest single levy since 1985. The State Constitution provides that the total of all taxes upon real and personal property by the State and at taxing entities, including the City, shall not in any year exceed 1% ($10 per $1,000) of the true and fair monetary value of such property. This limitation may be exceeded upon the approval of 60% of the City voters at an election in which the total vote exceeds 40% of the votes cast at the last general election. Washington State Constitution and Washington State law, RCW 84.55.010, limit the rate. The City's regular levy in 2016 was $2.58592 per $1,000 of assessed valuation of $5,763,649,829 for a total regular levy of $14,869,800. Special levies approved by the voters are not subject to the limitations listed above. In 2017, the City levied an additional $0.47 per $1,000 for the Public Safety Plan approved by voters in November 2016. The total additional 1,418,586 - 1,418,586 levy in 2017 was $2,698,992 2,157,178 2,157,178 $ 360,063 3,685,904 198,258 671,411 847 1,294,262 847 6,209,897 1,418.586 2,157,178 138,778 5,865 3,575,765 144,643 211,471 - 211,471 The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Collections are distributed daily via wire transfer. January 10 February 14,, April 30. May 31. October 31. Property Tax Calendar Taxes are levied and become an enforceable lien against properties. Tax bills are mailed. First of two equal installment payments is due. If taxes are less than $50, full payment is due. (RCW 84.56.020) Assessed value of property established for next year's levy at 100 percent of market value. Second installment is due. (RCW84.56.020) Assessed values are established by the County Assessor at 100% of fair market value. A revaluation of all property is required every two years. On May 31 of each year the assessed value of property is established for the next year's property tax levy. Property taxes levied by the County Assessor and collected by the County treasurer become a lien on the first day of the levy year and may be paid in two equal installments if the total amount is $50 or more. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. During the year, property tax revenues are recognized when cash is received. At year-end, unpaid property taxes are recorded as a receivable. Property tax receivables at year-end not expected to be collected within 60 days after 59 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, 2017, the majority represents grants. Notes Receivable Notes receivable for governmental activities consists of the long-term portion of the special assessments related to Local Improvement District (LID) No. 33. Special assessments are levied against certain property owners benefited by the improvement. The current portion of outstanding assessments is reported in the receivables category on the Statement of Net Position and consists of assessments which are due within one year and delinquent assessments from the prior year. Assessments are charged to property owners within the LID annually with payments due in October of each year. The repayment period for the assessments is 15 years with the first installment due in 2014 and the final installment due in 2028. The other note receivable category is related to developer agreements. There are two agreements with local developers to defer fire, parks and traffic impact fees, along with building permit fees as part of new, large construction projects. The first agreement, related to the Washington Place project, defers the developer's obligation to pay traffic, park, and fire impact fees until 2018. The second agreement is for the Tukwila South project which defers $1.75 million in fire impact fees, with annual payments due each December from 2017 through 2022. Notes receivable for business —type activities consists of outstanding payment plans for sewer connection fees. The City designed and constructed sewer infrastructure in both the Allentown and Foster Point neighborhoods, which was previously on septic. The project was completed and accepted by City Council in 2007. The connection fees to be paid by property owners were established by ordinance, effective in August, 2007. One option given to property owners was an installment payment plan. This option allowed owners to sign an agreement to have the connection charge added to their monthly water bill and repaid over 5, 10, or 15 years with a 4% annual interest rate. The balance reflects all principal outstanding at year-end. 60 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Notes Receivable Special Assessments Developer Agreements Sewer Payment Plan NOTE 4 -INTERFUND TRANSACTIONS $ 4,315,171 $ 2,856,277 - $ 4,315,171 2,856,277 390 233,890 Interfund activity is the term used to describe similar financial transactions between funds of the primary government. Reciprocal interfund activity involves the exchange of equal or almost equal value between funds. Services Provided/Used - Transactions that would be treated as revenues, expenditures or expenses if they involve external organizations, such as buying goods and services in return for equal or almost equal value, are similarly treated when they involve other funds of the City of Tukwila. Interfund Loans/Advances - Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans are offset by a reservation of fund equity. Interfund loans are subject to elimination upon consolidation. As of December 31, 2017, the City has no outstanding interfund loans or advances. Nonreciprocal interfund activity does not involve the exchange of equal or almost equal value between funds. Transfers - Transactions to support the operations of other funds are recorded as 'Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government -wide financial statements. Contributions - Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers of remaining balances when funds are closed are classified non -operating revenue. Reimbursements - Repayments from funds responsible for expenditures or expenses to the funds that initially paid for them. These transactions are expenditures/expense in the fund responsible and as a reduction of expenditure/expensed in the fund being reimbursed. Interfund transfers for the year were as follows: SUMMARY OF INTERFUND TRANSFERS Transfers In Transfers Out $ 300,000 $ 1,017,000 $ 1,800.000 $ 3.237,496 $ 6,354,496 $ 300,000 $ 6,654,496 5,337,496 - - 1,317,000 6,654,496 - 6.654.496 61 CITY OF TUKWILA-. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS The principal purposes for interfund transfers include interfund subsidies and transfers into debt service and capital projects funds. NOTE 6-OPERATING LEASES During 2017 the City maintained operating lease agreements for City operated machinery and equipment. Tukwila leases office/ storage space for the purposes of the Police Archives Storage, Police Gym, and the Neighborhood Resource Center. Costs associated with these activities are as follows. SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS Neighborhood Resource Center Police Archives/Vehicle Storage Police Department Gym Postage Machines Office Equipment 20.400 57,424 15,091 6,948 197,446 20,400 59,144 15,542 4,055 192,120 20,400 60,916 16,012 175,721 20.400 58,652 6,780 29,441 20,400 58,652 6,780 27,224 NOTE 6-CAPITAL ASSETS Capital asset activity for the year ended December 31, 2017, was as follows: GOVERNMENTAL ACTIVITIES 62 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Governmental Activities Capital assets, not being depreciated: Land $ 35,498,580 $ 673,739 $ - $ 36,172,319 Construction in Progress Total capital assets, not being depreciated 10,064,699 14,604,067 (15,124,831) 9,543,935 45.563,279 15,277,806 (15,124,831) 45,716,254 Capital assets, being depreciated: Buildings 24,431,341 90,264 Other Improvements 23,354,321 333,445 Machinery and Equipment 21,495.035 1,515,864 Infrastructure 189,410,723 13,989,228 (241,261) 24,521,605 23, 687, 766 22,769,638 203, 399, 951 Total capital assets being depreciated 258,691,420 15,928,801 (241,261) 274,378,960 Less accumulated depreciation for: Buildings Other Improvements Machinery and Equipment (Jt Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net (12,597,195) (808,977) (12.826,302) (1,026,435) (14,383,941) (1,359,296) (58,300,035) (5,818,599) (13,406,172) (13,852,737) 237,935 (15,505,302) (64,118, 634) (98,107,472) (9,013,307) 237,935 (106,882,844) 160,583,948 4444014 6,915494 (3,326) 167,496,116 CITY OF TUKWILA'. 2017 CAFR BUSINESS -TYPE ACTIVITIES NOTES TO THE FINANCIAL STATEMENTS Business -Type Activities Capital assets, not being depreciated: Land $ 2,346,230 $ 50,000 $ - $ 2,396,230 Construction in Progress Total capital assets, not being depreciated 2,211,229 5,926,438 (5,674,888) 2,462,779 4,557,459 5,976,438 (5,674,888) 4,859,009 Capital assets, being depreciated: Buildings 13,284,419 - - 13,284,419 Other Improvements 88,164,649 5,745,460 (72,557) 93,837,552 Machinery and Equipment 2,174,632 42,499 - 2,217,130 Total capital assets being depreciated 103,623,700 5,787,958 (72,557) 109,339,101 Less accumulated depreciation for: Buildings Other Improvements Machinery and Equipment Total accumulated depreciation Total capital assets, being depreciated, net (4,977,186) (371,794) (5,348,980) (34,005,810) (1,798,971) 14,202 (35,790,579) (1,788,518) (50,147) - (1,838,666) (40,771,514) (2,220,912) 14,202 (42,978,225) 62,852,188 3,567,046 (58,355) 66,360,879 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS DEPRECIATION Governmental Activities: General Govemment Public Safety Physical Environment Transportation Economic Environment Culture and Recreation Capital assets held by the government's Internal Service Funds are charged to the various functions based on their usage of the assets Sstigair, jai€ viz._! Water Utility - Depreciation Sewer Utility - Depreciation Foster Golf Course - Depreciation Surface Water Utility - Depreciation n ••:'3i1 'S Wei !?-: 1 NOTE 7—JOINT VENTURES $ 282,846 145,575 859,211 5,852,027 2,907 1,037,272 833,469 '3. eg $ 519,778 367,729 313,489 1,019,917 A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on -going financial interest or (b) an on -going financial responsibility. The City participates in two joint ventures. A summary of the City's investment in joint ventures follows. Valley Com SCORE SUMMARY OF INVESTMENT IN JOINT VENTURES $ 2,677,983 719,422 5,914,400 $ 2,677,983 6,633,822 TOTAL $ 3,397,405 $ 5,914,400 9,311,805 65 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 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. Federal Way was formally admitted during 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to RCW 39.34. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies. Separate agreements between Valley 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 2017 cost distribution for the five (5) participating cities is as follows: Renton Kent Auburn Tukwila Federal Wa 87,220 115,303 100,554 36,635 94,522 20.09% 26.55% 23.16% 8.44% 21.77% Valley Com is governed by an Administration Board composed of the Mayors from the five participating cities of Renton, Kent, Auburn, Tukwila, and Federal Way. The Board is responsible for the following functions: (1) Adopting an annual budget after review by participating legislative bodies; (2) Appointment and/or discharge of the Director; (3) Approves personnel policy and makes final decisions on all major policy changes; (4) Reviews and approves all contracts. In addition, an Operating Board was established and consists of two members of each participating City's Public Safety Departments, including the heads of such departments or their designees. The Operating Board performs the following functions: (1) Oversees the operation of Valley Com and advises and makes recommendations to the Administration Board; (2) Makes recommendation on Director selection; (3) Presents proposed policies and budgets to the Administration Board; (4) Approves disbursement of funds by the Director. The Director presents a proposed budget to the Operating Board on or before August 15 of each year. The proposed budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each participating city, in accordance with the provisions of the Interlocal Agreement. The share of equity belonging to the five (5) participating cities is as follows: 66 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Equity January 1 2017 $ 4 531.544 06,314,604 $4,504,828 $2,391,872 $ 3,484,568 Current Year Increase/(Decrease) 681, 177 900. 497 785.310 286.111 738,204 Equity December 31. 2017 $ 5.212.721 57,215,101 $5,290,138 $2,677,983 $ 4,222,772 $ 21, 227.416 3,391,299 $24,618.715 Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. In August 1993, Valley Com entered into an interlocal cooperation agreement, pursuant to RCW 39.34 RCW, with the sub- regions of King County, Seattle, and the Eastside Public Safety Communications Agency. This agreement governs the development, acquisition and installation of the 800 MHz emergency radio communications system funded by a $57 million King County levy approved in November 1992. This agreement provides that upon voluntary termination of any sub-region's participation in the system, it surrenders its radio frequencies, relinquishes its equipment and transfers any unexpended levy proceeds and associated equipment replacement reserves to another sub -region or consortium of sub -regions, Thus, in accordance with this agreement, the participating cities of Valley Com have no equity interest in Valley Com's 800-MHz communications system. During 2000, the Valley Communications Center Development Authority was created to issue $12,758,000 in General Obligation Bonds to finance construction, equipment, and land for a new facility completed in 2002. Each of the five participating cities was responsible for one -fifth of the debt obligation, which originally was $2,551,600 per City. The basic agreement shall not be terminated until all bonds issued by Valley Communications Center Development Authority have been paid and retired. The final payment on the bonds was made in 2015. CO W A complete set of financial statements are available from Valley Communications Center, 27519 108'h Ave SE, ▪ Kent, WA 98030, or by telephone 253-372-1300. South Correctional Entity (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpected funds or reserve funds shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE, a governmental administrative agency pursuant to RCW 39,34,030(3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility was provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35,21,730 through 35.21.755. The SCORE 67 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS PDA issued $86 million in special obligation bonds in 2009 (the "Bonds") to construct, develop, acquire and equip the SCORE Facility. Pursuant to the Formation Interlocal Agreement and the ordinances of each city, each Owner City (which includes the Cities of Auburn, Burien, Federal Way, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the principal of and interest on the Bonds as the same become due and payable. Each Owner City's obligation to pay its portion is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. The following is a summary of the debt service requirements for the Bonds: SUMMARY OF DEBT SERVICE REQUIREMENTS 2018 $ 2,240,000 $ 4,715979 $ (1,512,496) $ 5,443,483 $ 1,687,480 $ 217,739 2019 2,310,000 4602,229 (1478,317) 5,433,912 1,684,513 217,357 2020 2.385,000 4,484,854 (1,440,560) 5,429,294 1,683,081 217,172 2021 2,465,000 4,363,604 (1,401577) 5,427,027 1,682,378 217,081 2022 2,590,090 4,233,250 (1500,618) 5,322632 1,650,016 212,905 2023-2027 14,485,090 18,727,798 (6,710,481) 26,502,317 8,215,719 1,060,092 2028-2032 17,725,090 13,590,870 (4,959,695) 26,356,175 8,170,415 1,054,248 2033-2037 21,855,000 7,082,263 (2,731829) 26,205,434 8,123,685 1,048,217 2038-2039 10,115,000 676321 353824 10.437,497 3,235. 624 417,500 $ 979,827 978,104 977,273 976,865 958,074 4,770.417 4,744,112 4,716 978 1,878,749 $ 1,959,654 1.956,208 1,954,546 1.953,730 1,916,147 9,540,834 9,488,223 9 433,956 3.757,499 163,305 163,017 162.879 162,811 159,679 795,070 790,685 786,163 313.125 $ 435,479 434,713 434,344 434,162 425,811 2.120,185 2,108,494 2,096,435 835 000 dElEY2111.14 The City of Tukwila reports its share of equity interest in the Governmental Activities column within the Government - wide financial statements under assets. The following is condensed (unaudited) financial information as of December 31, 2017 related to SCORE. The share of equity belonging to the seven participating cities are as follows: batr Equity January 1, 2017 Current veer Inc rease))Dec rease) Equity December 31, 2017 Percent of Equity $ 3,115,334 $ 32,413 $ 3,147,747 $ 3085% 324,602 $ 166,583 22,263 (3,248) 346,865 $ 163,336 3.40% 1.60% $2.292,265 $ 2,941,503 $ 434,029 $ 703,323 $ 9,977,639 61482 74,665 22947 16,099 226,621 92363,747 $ 3016.166 $ 456.976 $ 719,422 $10,204,261 23.07% 29.56% 4.48% 7.05% 100.00% The investment in joint venture for SCORE on the Statement of Net Position includes Tukwila's share of debt issued in 2009. The City's share of SCORE debt is $5,914,400. See Note 10 for additional information on long-term debt. Completed financial statements for SCORE and SCORE PDA can be obtained from the SCORE, Attn: Finance Manager, 20817 17th Avenue South, Des Moines, WA 98198. NOTE 8 - PENSION PLANS The following table represents the aggregate pension amounts for all plans subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2017: 68 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension liabilities $ (11,613,653)) Pension assets $ 8,229,168 Deferred outflows of resources $ 2,475,258 Deferred inflows of resources $ (4,284,751) Pension expense/expenditures $ 798,890 Washington State Department of Retirement Systems Substantially all City of Tukwila full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost -sharing, multiple -employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380, Olympia, WA 98504-8380 Or the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov. A. Public Employees Retirement System (PERS) Plans 1, 2, and 3 PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the members average final compensation (AFC) times the member's years of service. The AFC is the average of the members 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of -living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2017 were as follows: 69 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Actual Contribution Rates: January — June 2017 PERS Plan 1 Employer 6.23% Employee 6.00% PERS Plan 1 UAAL 4.77% Administrative Fee 0.18% Total 11.18% 6.00% July — December 2107 PERS Plan 1 7.49% 6.00% PERS Plan 1 UAAL 5.03% Administrative Fee 0.18% Total 12.70% 6.00% The City of Tukwila did not contribute to PERS Plan 1 in 2017 as there a e no employees covered under this plan. Although, $789,712 of the PERS 2/3 contributions were allocated to the PERS 1 unfunded actuarial accrued liability (UAAL). PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member's 60 highest -paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2017 were as follows: 70 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Actual Contribution Rates: Employer 213 Employee 2 January — June 2017 PERS Plan 2/3 6.23% 6.12% PERS Plan 1 UAAL 4.77% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 11.18% 6.12% July — December 2107 PERS Plan 2/3 7.49% 7.38% PERS Plan 1 UAAL 5.03% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 12.70 % 7.38% The City of Tukwila actual contributions to the plan were $1,902,973 for the year ended Decembe 31, 2017. Public Safety Employees' Retirement System (PSERS) PSERS Plan 2 was created by the 2004 Legislature and became effective July 1, 2006. To be eligible for membership, an employee must work on a full time basis and: • Have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job; or • Have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or • Function as a limited authority Washington peace officer, as defined in RCW 10.93.020' or • Have primary responsibility to supervise eligible members who meet the above criteria. PSERS membership includes: PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who met at least one of the PSERS eligibility criteria and elected membership during the period of July 1, 2006 to September 30 2006; and Employees hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. PSERS covered employers include: Certain State of Washington agencies (Department of Corrections, Department of Natural Resources, Gambling Commission, Liquor Control Board, Parks and Recreation Commission, and Washington State Patrol), Washington State Counties, 71 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • Washington State Cities (except for Seattle, Spokane, and Tacoma), • Correctional entities formed by PSERS employers under the Interlocal Cooperation Act. PSERS Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the average final compensation (AFC) for each year of service. The AFC is based on the member's 60 consecutive highest creditable months of service. Benefits are actuarially reduced for each year that the member's age is less than 60 (with ten or more service credit years in PSERS), or less than 65 (with fewer than ten service credit years). There is no cap on years of service credit. Members are eligible for retirement at the age of 65 with five years of service; or at the age of 60 with at least ten years of PSERS service credit; or at age 53 with 20 years of service. Retirement before age 60 is considered an early retirement. PSERS members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. PSERS Plan 2 retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, an optional cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. PSERS Plan 2 members are vested after completing five years of eligible service. Contributions The PSERS Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The Plan 2 employer rates include components to address the PERS Plan 1 unfunded actuarial accrued liability and administrative expense currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates. In addition to the regular change in contribution rates on July 1, 2017, PSERS contribution rates changed again September 1, 2017 due to HB 1709, which allows PERS members meeting specific criteria to transfer service credit into PSERS as long as they and their employer pay the difference between the PERS and PSERS contribution rates. The PSERS Plan 2 required contribution rates (expressed as a percentage of current -year covered payroll) for 2017 were as follows: Actual Contribution Rates: Employer Employee January — June 2017 PSERS Plan 2 6.59% 6.59% PERS Plan 1 UAAL 4.77% Administrative Fee 0.18% Total 11.54% 6.59% July — August 2017 PSERS Plant 6.73% 6.73% PERS Plan 1 UAAL 5.03% Administrative Fee 0.18% Total 11.94% 6.73% September — December 2017 PSERS Plant 6.74% 6.74% PERS Plan 1 UAAL 5.03% Administrative Fee 0.18% Total 11.95% 6.74% The City of Tukwila actual contributions to the plan were $15,143 for the year ended December 31, 2017. 72 CITY OF TUKW ILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows. • 20+ years of service — 2.0 % of FAS • 10-19 years of service — 1.5% of FAS • 5-9 years of service — 1 % of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non -duty disability payments, a cost -of living adjustment (COLA), and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2017. Employers paid only the administrative expense of 0.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non -duty disability payments, a cost -of -living allowance (based on the CPI), capped at three percent annually and a one-time duty -related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2017 were as follows: Actual Contribution Rates: ENSIVVVINIMM Employer Employee January — June 2017 State and local governments 5.05% 8.41 % Administrative Fee 0.18% Total 5.23% 8.41% July — December 2017 State and local governments 5.25% 8. 75% Administrative Fee 0.18% Total 5.43% 8.75% 73 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS The City of Tukwila actual contributions to the plan were $844,098 for the year ended December 31, 2017. The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2017, the state contributed $62,155,262 to LEOFF Plan 2. The amount recognized by the City of Tukwila as its proportionate share of this amount is $515,721. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2017 with a valuation date of June 30, 2016. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2007-2012 Experience Study and the 2015 Economic Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2016 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2017. Plan liabilities were rolled forward from June 30, 2016, to June 30, 2017, reflecting each plan's normal cost (using the entry -age cost method), assumed interest and actual benefit payments. • Inflation: 3.0% total economic inflation; 3.75% salary inflation • Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are also expected to grow by promotions and longevity. • Investment rate of return: 7.5 % Mortality rates were based on the RP-2000 report's Combined Healthy Table and Combined Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime. There were changes in methods and assumptions since the last valuation. • For all plans, except LEOFF Plan 1, how terminated and vested member benefits are valued was corrected. • How the basic minimum COLA in PERS Plan 1 is valued for legal order payees was improved. • For all plans, the average expected remaining service lives calculation was revised. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent. To determine that rate, an asset sufficiency test included an assumed 7.7 percent long-term discount rate to determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the long-term expected rate of return, a 7.5 percent future investment rate of return on invested assets was assumed for the test. Contributions from plan members and employers are assumed to continue being made at contractually required rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a component for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.5 percent was used to determine the total liability. 74 CITY OF TUKWILA 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Long -Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.5 percent was determined using a building -block -method. In selecting this assumption, the Office of the State Actuary (OSA) reviewed the historical experience data, considered the historical conditions that produced past annual investment returns, and considered capital market assumptions and simulated expected investment returns provided by the Washington State Investment Board (WSIB). The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment returns over various time horizons. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2017, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB's most recent long-term estimate of broad economic inflation. CO Sensitivity of the Net Pension (Liability) Asset iiinundiiiii IES 20% 1.70% .11.1MEZI 4,90% 6.30% '� 6.30 BE -IEMIIIMIKIEI 9,30% 100% The table below presents the City of Tukwila proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City of Tukwila proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.5 percent) or 1-percentage point higher (8.5 percent) than the current rate. 1% Decrease 6.50% Current Rate 7.50% 1% Increase 8.50% PERS 1 12,963,094 10,641,264 8,630,063 PERS 2/3 25,137,481 9,330,551 (3,620,883) PSERS 2 380,741 56,704 (197,361) LEOFF 1 (1,532,542) (2,066,074) (2,524,257) LEOFF 2 1,679,272 (7,760,092) (15,450,892) Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. 75 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Pension (Liabilities)/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the City of Tukwila reported a pension asset of $8,229,168 and a pension liability of $11,659,254 for its proportionate share of the net pension liabilities as follows: PERS 1 $ 6,029,001 PERS 2/3 $ 5,621,325 PSERS 2 $ 8,928 FIREMENS PENSION $ (45,601) LEOFF 1 $ (1,245,425) LEOFF 2 $ (6,983,743) The amount of the asset reported above for LEOFF Plan 1 and 2 reflects a reduction for State pension support provided to the City of Tukwila. The amount recognized by the City of Tukwila as its proportionate share of the net pension (liability)/asset, the related State support, and the total portion of the net pension asset that was associated with the City of Tukwila were as follows: LEOFF 1 - employer's proportionate share (1,245,425) LEOFF 1- State's proportionate share of the net pension asset associated with the employer (8,424,025) TOTAL (9,669,450) LEOFF 2- employer's proportionate share (6,983,743) LEOFF 2- State's proportionate share of the net pension asset associated with the employer (4,530,224) TOTAL (11,513,967) At June 30, the City of Tukwila proportionate share of the collective net pension liabilities was as follows: 76 IV CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS PERS 1 0.131354% 0.127058% -0.004296% PERS 2/3 0.166622% 0.161787% -0.004835% PSERS 2 0.048428% 0.045565% -0.002863% LEOFF 1 0.077890% 0.082086 % 0.004196% LEOFF 2 0.510663% 0.503269% -0.007394% Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer's proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2017. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2017, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2017, the state of Washington contributed 39.35 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.65 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2017, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2016, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2017, the city of Tukwila recognized pension expense as follows: PERS 1 141,546 PERS 2/3 621,363 PSERS 2 12,312 LEOFF 1 (245,635) LEOFF 2 246,679 FIREMEN'S PENSION 22,625 TOTAL 798,890 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2017, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 77 CITY OF TUKWILA' 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Differences between expected and actual experience Net difference between projected and actual investment earnings on pension plan investments (224,985) Changes of assumptions Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date $403,522 TOTAL 5403,522 ($224,985) Differences between expected and actual experience $569,573 Af (5184,876) Net difference between projected and actual investment earnings on pension plan investments 50 (1,498, 510) Changes of assumptions 559,709 Changes in proportion and differences between contributions and proportionate share of contributions 50 (392,461) Contributions subsequent to the measurement date 5591,332 TOTAL $1,220,614 ($2,075,847) 78 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Differences between expected and actual experience Deferred Mufti:; of Resources $5, 280 iu (634) Net difference between projected and actual investment earnings on pension plan investments $0 (6,262) Changes of assumptions $76 Changes in proportion and differences between contributions and proportionate share of contributions $o (909) Contributions subsequent to the measurement date $3,307 TOTAL $8,663 $7,805) Differences between expected and actual experience Net difference between projected and actual investment earnings on pension plan investments $0 (115,729) Changes of assumptions Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date TOTAL $0 ($115,729) 79 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Differences between expected and actual experience $306,949 et ttQsaUr (264,835) Net difference between projected and actual investment earnings on pension plan investments 50 (1,567,899) Changes of assumptions 58,410 Changes in proportion and differences between contributions and proportionate share of contributions 104,256 ($27,650) Contributions subsequent to the measurement date 6422,845 TOTAL $842,459 (51,860,385) Deferred outflows of resources related to pensions resulting from the Ci y of Tukwila contr butions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018, Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 2018 2019 2020 2021 2022 Thereafter (739,269) 44,411 TOTAL (172,268) (630,952) 22,397 29,116 (1,446,565) 80 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 2018 2019 2020 2021 2022 Thereafter TOTAL (72, 630) 19,588 (7,822) (54,865) (115,729) EBIIIIIIIIILERMII Weill IIREZ231 EIRIMINIIICEBEESI EillIMISMII MIIMIIMESM (1,440,770) Firemen's Pension System Summary of Significant Accounting Policies Investments are valued and reported at fair value. Plan Description 81 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Plan Administration: The Firefighters" Pension Fund is administered by the City of Tukwila. The plan is a single - employer defined benefit pension plan that provides pensions for firefighters that were hired prior to 1970. The firefighters' pension board consists of the following five members: the chairperson of the fire commissioners for said district who shall be chairperson of the board, the county auditor, county treasurer, and in addition, two regularly employed or retired firefighters elected by secret ballot of the employed and retired firefighters. Retired members who are subject to the jurisdiction of the pension board have both the right to elect and the right to be elected under this section. The first members to be elected by the firefighters shall be elected annually for a two-year term. The two firefighter -elected members shall, in turn, select a third eligible member who shall serve in the event of an absence of one of the regularly elected members. Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970 and for providing the "excess benefit", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new members. At December 31, 2017, FPF membership consisted of the following: Inactive plan members retired prior to March 1, 1970 Inactive plan members retired March 1, 1970 or after Active Plan Members 0 10 0 Benefits Provided All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. At members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to the current salary of the rank from which the firefighter retired, or an increase proportionate to the increase in the Seattle -area CPI, with the change computed annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. The latter applies to all other types of monthly benefits. Contributions As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This statute require that each municipality levy up to 50.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. The actuarial assumptions were provided by an independent actuary. Investments 82 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS It is the policy of the City of Tukwila to invest public funds in a manner that will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City, while conforming to all state and local statutes governing the investment of public funds. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. Concentrations. Approximately 70% of investments are in a long-term government bond. City's Net Pension Liability The components of the City's net pension liability at December 31, 2017 are as follows: Total pension liability $ 1,414,962 Less: Plan fiduciary net position -1,460,563 City's net pension liability $-45,601 Plan fiduciary net position as a percentage of the total pension liability 83 103.22% CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Schedule of Changes in the City's Net Pension Liability and Related Ratios Total Pension Liability Service cost Interest Changes of benefit terms Difference between expected & actual experience Changes of assumptions Benefits payments, included refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan Fiduciary Net Position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) City's net pension liability - ending (a) - (b) Plan fiduciary net position as a percent of total pension liability Covered employee payroll City net pension liability as a percent of covered employee payroll 2014 2015 2016 2017 50,098 49,716 49,332 38,796 (2,442) (311,190) - (62,728) (61,863) (58,277) (59,988) (69,186) (11,765) (11,003) (384,574) (30,390) 1,852,693 1,840,928 1, 8 2 9, 925 1, 4 4 5, 351 1, 840,928 1, 829,925 1, 4 4 5, 351 1, 414, 96 64,114 63,590 66,360 68,848 1,805 2,667 7,988 39,157 (61,863) (58,277) (59,988) (69,186) - (4,500) (4,500) (4,624) 4,056 3,480 9,860 34,195 1,408,970 1,413,026 1,416, 506 1,426,366 1,413,026 1,416,506 1,426,366 1,460,561 427,902 413,419 18,985 (45,600) 76.76% 77.41% 98.69% 103.22% n/a n/a n/a n/a Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2017, the City of Tukwila reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 84 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Differences between expected and actual experience Net difference between projected and actual investment earnings on pension plan investments 60,482 Totals $60,482 Deferred outflows of resources related to pensions resulting from the City of Tukwila contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 2018 22,625 2019 15,231 2020 15,231 2021 - 2022 - Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.75% 3.75% 2.75% Healthy life mortality rates were based on the RP-2014 mortality table, total dataset, fully generational projected with Scale MP-2014, set back one year for males and set forward one year for females. Disabled life mortality rates were based on the RP-2014 mortality table, total dataset, fully generational projected with Scale MP-2014, set back two years for males and females. The long-term expected rate of return on pension plan investments assumption was based on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The discount rate used to measure the total pension liability was 2.75%. The projection of cash flows used to determine the discount rate assumed City contributions were equal to revenue received from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75%. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payment of 85 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the Firemen's net pension liability of the City, calculated using the discount rate of 2.75%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower, 2.75%, or 1-percentage point higher, 3.75%, than the current rate: Firemen's net pension 1% Decrease Current Discount 1% Increase liability Rate $ 136,435 $ (45,601) $ (199,362) Basis of Valuation A general summary of the substantive plan used as the basis of the valuation follows. Applicable Statutes Benefits RCW 41.16, 41.18, 41.26 Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under LEOFF or FPF. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Service Retirement Benefit Member Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five years of service (RCW 41.26.090). Survivor Amount of benefit: 50% of salary plus an additional 2% for each year of service in excess of 25 years. Maximum benefit of 60% of salary (does not apply for those retiring after July 1, 2006). Eligibility: spouse or child Amount of benefit: continuation of the firefighter's benefit. (If spouse — same, plus additional 5% of salary per child. If no spouse — 30% of salary for first child, 10% for each additional child. Maximum of 60% of salary). Duty Disability Retirement Benefit Member Survivor Eligibility: disabled after six-month waiting period. Amount of benefit: determined the same as Service Retirement Benefit. Recovery: restoration to service. See Survivor's Benefit section under Service Retirement. Non Duty Disability Retirement Benefit Member Eligibility: disabled after 90-day waiting period. Amount of benefit: 50% of salary, or service retirement benefit, if greater. Recovery: see Duty Disability Retirement. Limitations: no benefits payable if firefighter employed elsewhere when disabled. 86 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Survivor Duty Death Benefit Non Duty Death Benefit Special Provisions Vesting Deferred Benefit Postretirement Increase Benefits Payable Under LEOFF Type 1 Type 2 Applicability Minimum Benefit Funeral Benefit Participant Summary Eligibility: spouse or child Amount of benefit: 33.3% to widow or children only. 45.8% to widow and one child. 47.6% to widow and two children. 50.0 % to widow and three children. Eligibility: spouse or child Amount of benefit: If spouse — 50% of salary plus an additional 5% of salary per child; maximum benefit of 60% of salary. If no spouse — 50% of salary to children. Eligibility: spouse or child Amount of benefit: provisions the same as Survivor's Benefit under Non -Duty Disability Retirement. Under disability or death benefits, a surviving spouse may elect a lump -sum payment of $5,000 in lieu of future monthly benefits. Termination after 20 years of service (RCW 41.18.130) or five years of service (RCW 41.26.090). Commences: when a firefighter would have had 25 years of service (RCW 41.18.130) or age 50 (RCW 41.26.090). Amount of benefit: 2% of salary for each year of service. Other provisions apply, see statutes. Death while vested prior to commencement of benefits: payment of firefighters deferred benefit to spouse or child. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Escalation by salary in proportion to current salary or rank from which the firefighter retired. Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. Type 2 applies to all other types of monthly benefits After April 25, 1973, a minimum benefit of $300 per month to all retired firefighters and their survivors. This minimum is increased by the CPI. $500 RCW 41.18.140, no provision under RCW 41.26. December 31, 2017 Age and service determined as of the census date. LEOFF Plan 1 (Firemen's Pension) Inactive Participants Age Service Retirees Disabled Retirees Surviving Spouses Total < 65 0 0 0 0 65 — 69 0 0 0 0 87 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 70 — 74 1 1 1 3 75-79 1 1 2 4 80 — 84 0 1 1 2 85 - 89 1 0 0 1 90 + 0 0 0 0 Total 3 3 4 10 Monthly pension amounts as of January 1, 2017: Paid by City $4,928 Paid by LEOFF $36,752 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 December 31 valuation were: 1 Assumption Rates Actuarial Cost Method Asset Valuation Method Measurement Date Inflation Rate Discount Rate (or Investment Return) Cost of Living Salary Increases (for calculated benefit increases based on rank) Healthy Mortality Disabled Mortality Turnover Disability Entry Age Fair Market Value December 31, 2016 (Projected to December 31, 2017) 2.75% We based the long-term expected rate of return on pension plan investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 2.75 % was selected. 2 75%, based on SSA OASDI 2016 report. 3.75%, based on SSA OASDI 2016 report. RP-2014 mortality table, total dataset, fully generational with mortality improvement scale MP-2016setback one year for males and set forward one year for females. RP-2014 mortality table, total dataset, fully generational with mortality improvement scale MP-2016 set forward two years for males and females. n/a n/a 88 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Retirement n/a Spouse Age We assumed that wives are three years younger than husbands. NOTE 9 - OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLAN During the year ended December 31, 2008, the City elected to adopt the provisions of GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB No. 45), which requires the City to accrue other postemployment benefits (OPEB) expense related to its postretirement healthcare plan based on a computed annual required contribution (ARC) that includes the current period's service cost and an amount to amortize unfunded actuarial accrued liabilities. Instead of recording expense on a "pay-as- you-go" basis, the City, under GASB No. 45, has recorded a liability of $10,487,883 for the difference between the actuarially calculated ARC and the estimated contributions made since the adoption of GASB No. 45. This liability is included in other noncurrent liabilities in the accompanying December 31, 2017 statement of net position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess of revenue over expenses before capital contributions and the City's increase in net position for the year ended December 31, 2017 by $1,309,047. Plan Description The City of Tukwila's LEOFF Plan 1 (the Health Plan) is a single -employer defined -benefit healthcare plan administered by the City. The authority to establish and amend benefits is determined by the LEOFF board. The Health Plan provides medical, prescription drug, dental, Medicare Part B premiums, long-term care, and vision expenses for LEOFF Plan 1 retirees. Dependent spouses and children are not covered. The Health Plan's actuary is Healthcare Actuaries. The Health Plan does not issue a separate standalone financial report. Funding Policy The City does not require retiree contributions. All benefits are paid in full by the City. For the fiscal year ended December 31, 2017, the City contributed $943,150 to the Health Plan through use of existing fund balance. The City's contribution was entirely to fund 'pay-as-you-go' costs under the Health Plan and not to prefund benefits. There were no retiree contributions. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize unfunded actuarial liabilities over a period not to exceed ten years. The following tables show the components of the City's annual OPEB cost for the current year and prior two years, the amount actually contributed to the plan, and changes in the City's net OPEB obligation. ANNUAL OPEB COST AND NET OPEB OBLIGATION 89 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Annual required contribution (ARC) Interest on Net OPEB Obligation Adjustment to ARC Annual OPEB cost (expense) Employer contributions Change in Net OPEB Obligation Net OPEB Obligation at Beginning of year $ 2,585,779 $ 2,765,486 $ 2,883,884 146,904 178,623 252,418 (452,441) (634,666) (884,105) 2,280,242 2,309,443 2,252,197 (477,292) (275,530) (943,150) 1,802,950 2,033,913 1,309,047 5,341,973 7,144, 923 9,178,836 The net OPEB obligation of $10,487,883 is included as a non -current liability on the Statement of Net Position. ANNUAL DEVELOPMENT OF OPEB COST 2008 $ 1,366,284 $ - $ - $1,366,284 $ 557,103 $ 809,181 $ 809,181 $809,181 2009 1,366,284 40,459 61,839 1,344,904 335,265 1,009,639 1,818,820 1,031,019 2010 1,366,284 90,941 143,332 1,313,893 317,771 996,122 2,814,942 1,048,513 2011 1,264,522 112,598 213,809 1,163,311 335,090 828,221 3,643,163 929,432 2012 1,264,522 145,727 287,945 1,122,304 404,007 718.297 4,361,460 860,515 2013 1,264,522 174,458 359,904 1,079,076 878,755 200,321 4.561,781 385,767 2014 1,903.679 171,067 388,580 1,686,166 905,974 780,192 5.341,973 997,705 2015 2,585,779 146,904 452,441 2,280,242 477.292 1,802,950 7.144,923 2,108,487 2016 2,765,486 178,623 634,666 2,309,443 275,530 2,033,913 9,178,836 2,489,956 2017 2,883,884 252,418 884,105 2,252,197 943,150 1,309,047 10,487,883 1,940,734 Based on a 21-year closed amortization as of January 1, 2008 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows: PERCENTAGE OF ANNUAL OPEB COST CONTRIBUTED December 31, 2015 December31, 2016 December 31, 2017 2,280.242 2,309,443 2,252,197 90 477,292 275,530 943,150 20.9% 11.9% 41.9% 7,144,923 9,178,836 10,487,883 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Funded Status and Funding Progress As of January 1, 2017, the most recent actuarial accounting update, the plan was 0% funded. The actuarial accrued liability for benefits was $29.1 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $29.1 million and a funded ratio of 0%. The funded ratio is 0%, because the City funds benefits on a pay-as-you-go basis. January 1. 2014 January 1, 2015 January 1, 2017 SCHEDULE OF FUNDING PROGRESS (rounded to thousands) $0 $0 $0 $21,264,000 $29,538,048 $29,054,716 $21,264,000 $29,538,048 $29,054,716 0.0% 0.0% 0.0% n/a n/a n/a n/a n/a n/a Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual CO results are compared with past expectations and new estimates are made about the future. GASB 45 requires that r the schedule of fundingprogress,presented as required supplementary information followingthe notes to the ? P 9 q PP Y� CO financial statements, presents multi -year trend information that shows whether the actuarial value of Health Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions The basis of projections of benefits for financial reporting purposes is the substantive plan (the Health Plan as understood by the City and members of the Health Plan) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the City and Members of the Health Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The January 1, 2015 valuation used the entry age normal actuarial cost method. The actuarial assumptions included a 2.75% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 9.0% for pre -Medicare expenses, to an ultimate rate of 3.8% after 61 years. The Medicare trend assumption is 6.5 %, to an ultimate rate of 3.8% after 61 years. The dental trend assumption is 5.5%, to an ultimate rate of 3.5% after 4 years. The Medicare premium trend rate is 5.4% for all years. The Tong -term care trend rate is 5.0% for all years. The trend for the Excise Tax threshold is 0% until 2020, when a trend rate of 4.24% is used. The trend for all future years after that year is 3.24%. All trend rates include a 3.0% inflation assumption. The UAAL is amortized as a level dollar amount on a closed basis over 21 years beginning January 1, 2008. The remaining amortization period at December 31, 2017 was 11.0 years. Assumption Actuarial Cost Method Rates Entry Age Normal method. 91 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Measurement Date January 1, 2015 (Projected to December 31, 2017) Inflation Rate 3.00% Discount Rate (or Investment Return) Selected the assumed discount rate of 2.75% based on the five - year average investment yield on the investments expected to finance the payment of benefits. Healthy Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP-2014 setback one year for males and set forward one year for females. Disabled Mortality RPH-2014 mortality table (headcount weighted), total dataset, fully generational with mortality improvement scale MP-2014 set forward two years for males and females. Turnover None assumed. All LEOFF 1 actives are fully eligible for retirement. Per Capita Claims Cost Assumed annual per capita claims costs are as follows: Age Medical/Rx Dental Vision LTC 55 $ 21,875 $ 966 $ 181 $ 133 60 28,071 966 181 220 65 15,406 966 181 448 70 16,924 966 181 1,183 75 17,984 966 181 3,028 80 18,348 966 181 6,499 Aging or Morbidity Factors Aging/morbidity factors are included in the per capita claims costs shown above (except dental and vision). Medicare Part B Premium Reimbursements The City reimburses Medicare retirees for Part B premiums. The 2015 annual premium is $1,258.80. Affordable Care Act (ACA) Excise Tax Threshold Ages 55-64 All Other Single $ 11,850 $ 10,200 ACA Base Premium Assumed annual plan costs upon which the ACA tax calculation is based: Medicare ineligible $ 28,071 Medicare eligible $ 16,557 ACA Tax • We assumed a 40% excise tax rate on premiums above the ACA threshold. • We assumed the City of Tukwila pays no federal taxes. • We assumed the excise tax will apply to medical/Rx and Medicare premium reimbursements. Trend Rates Medical Long -Term Trends* from Getzen SOA Model version 2014 b using baseline assumptions. 92 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Excise Pre- Part 8 Long -Term Tax Year Medicare Medicare Dental Vision Premiums Care Threshold 2015 9.00% 6_50% 5.5% 4.0%. 5.4% 5.0% 0.00% 2016 7.50% 6.50% 5.0% 4.0% 5.41. 5.0% 0.00% 2017 6.50% 6.00% 4.5% 4.0% 5.4% 5.0% 0.00% 2018 5.50% 5.50% 4.0% 4.0% 5.4%. 5.0% 4.24% 2019 5.508 5.50% 3.5% 3.5% 5.4% 5.0% 3.24% 2020 5.46% 5.46% 3.5% 3.5% 5.4% 5.0% 3.24% 2021-2074 _.. __ 3.5% 3.5% 5.4% 5.0% 3.24% 2075. 3.80% 3.80% 3.5% 3.5% 5.4% 5.0% 3.24% • The treed rates atctuc assruner! esflatinu u13% for all future vears. 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. NOTE 10 - LONG-TERM LIABILITIES Governmental Activities Long -Term Debt General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter -approved issues, of which the City has one, are funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes, sales taxes, or other general revenues, and is generally paid from debt service funds. The City currently maintains a rating of Aa3 from Moody's Investor Service and AA from Standard & Poor's. General Obligation Bonds outstanding at year-end are as follows: • 2008 LTGO bonds were issued to refund the remaining debt of the 1999 LTGO bonds. The 1999 LTGO bonds were issued to purchase an additional City Hall Annex (6300 building) and economic revitalization projects. • 2010 LTGO bonds were issued for the construction and realignment of Southcenter Parkway in the Tukwila South Annexation area and for the cost of emergency preparedness capital and other equipment. • 2011 LTGO refunding bonds were issued to refund a portion of the bonds issued in 2003 for the City's Arterial Street program. • 2013 LTGO bonds were issued and the proceeds loaned to the Tukwila Metropolitan Park District to pay for improvements to the pool. • 2014 LTGO bonds were issued to fund the purchase of land acquisition and capital costs of redevelopment activities within the City's Tukwila International Boulevard (TIB) urban renewal area. • 2015 LTGO bonds were issued to pay for improvements to Interurban Avenue South and reconstruct or retrofit Boeing Access Road Bridge. 93 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • 2016 UTGO bonds in the amount of $32.99 million were issued after voters approved a $77.385 million bond measure that will fund a justice center, rebuild 3 fire stations and provide fire apparatus and life -safety equipment replacement for 20 years. • 2017 LTGO bonds were issued to fund residential street improvements including adding sidewalks and undergrounding utilities on 42n° and 53'd Avenues. • 2017 refunding bond was issued to pay off the 2014 general obligation bond in the form of a line -of -credit that was utilized to purchase property and pay for capital costs of redevelopment activities within the City's Urban Renewal area. 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. Business -Type Activities Long -Term Debt Revenue bond indebtedness issued to fund proprietary activities is recorded in proprietary funds. Debt service payments are made from operating revenues generated by the proprietary funds. In proprietary funds, bonds are displayed net of unamortized premium or discount; annual interest expense is decreased by amortization of debt premium and increased by the amortization of debt discount. The City currently does not maintain a rating from any of the rating agencies because the outstanding revenue bonds are in private placement. Revenue bonds outstanding at year-end are as follows: • 2015 water/sewer/SWM bonds were issued to refund the remaining debt of the 2006 revenue bonds. The bonds were issued to provide neighborhood revitalization to Allentown and Foster Point Sewer system. State of Washington Public Works Trust Fund Loans are a low interest rate loans available from the State of Washington Department of Commerce, Local Government & Infrastructure Division for qualifying projects and are a direct responsibility of the City. This debt is repaid by proprietary fund revenues. Public Works Trust Fund loans outstanding at year-end are as follows: • 2003 loan to install new sewers in the Duwamish neighborhood. The project upgraded water and surface water infrastructure. • 2004 loan to install new water, sewer, and surface water infrastructure in Allentown and Foster Point neighborhoods. Additionally, 2 new sewer lift stations with generators, 33 manholes and catch basins, and 15 new fire hydrants were installed. • 2004 loan constructed an underground collection system in the Cascade View neighborhood. 94 CITY OF TUKWILA. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS • 2014 loan to install sewer liners in the City's commercial business district of Southcenter. Relining the sewer main avoids full excavation for a significant savings and has minimal impact to the roadway. The City is in compliance with all Washington State debt limitation statutes and bond indenture agreements. The schedules that follow summarize the long-term debt transactions of the City for the year ended December 31, 2017. CHANGES IN LONG-TERM LIABILITIES SUMMARY -GOVERNMENTAL ACTIVITIES Outstanding 01/01/2017 $54,114,932 $5,412,500 $ 3,774,201 $ 6,093,600 $ 9,178,836 $12.943,779 $ 91,517,848 Added 10,456,000 - 3,607,977 - 1,309,047 - 15,373,024 Retired/redeemed (5,356,427) (607,500) (3,798,673) (179,200) - (3,198,726) (13,140,526) Outstanding 12/31/2017 $59,214,505 $4,805,000 $ 3,583,505 $ 5,914,400 $10,487,883 $ 9,745.053 $ 93,750,346 Add Premiums, Subtract Discounts 4,447,881 $ 98,198,227 Debt Service to Maturity Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences, OPEB, and pensions. 2018 $ 3,607,196 $ 2,481,932 $ 184,800 $ 243,173 $ 485,000 $ 257,655 2019 3,828,521 2,322,847 190,800 237,069 445,000 243,638 2020 2,051,461 2,146,167 197,200 229,039 445.000 223,613 2021 2,195,560 2,069,141 207,200 220,332 445,000 203,588 2022 5,147,766 1,981,399 214,800 212,579 445,000 183,563 2023-2027 13,528,000 7,721,086 1,204,800 926,103 2,225,000 594,075 2028-2032 14,917,000 4,794,014 1.478,000 644,978 315,000 71,756 2033-2037 13,939,000 1,473,157 1,048,000 222,227 2038-2040 - 1,188,800 78,130 $ 7,259,755 7,267,875 5,292,479 5,340,821 8,185,106 26,199,064 22,220,748 16,682,384 1,266,930 FTAM' 95 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - GOVERNMENTAL ACTIVITIES GOVERNMENTAL ACTIVITIES: Limited General Obligation (LTGO) Bonds Payable: 2008 Refunding-Streets/Facilities 4.00-6,00 12/01/19 5,180,000 2,165,000 2010 Streets/Equipment 2.00.5.41 12/01/24 5,870,000 3.575,000 2011 Refunding Streets (2003 00) 1.25.4.00 12/01/23 4,620,000 3.360,000 2013 LTGO-MPD Pool Improve 2.00-4,00 12/01/22 1,000,000 609,932 2014 LTGO-Urban Renewal 0.854.86 12/01/34 3,850,000 3.560,000 2014 LTGO-Line of Credit 1 Mo. LIBOR * 1 0% 12/01/17 2,250,000 2.250,000 2015 LTGO-Interurban, BAR 225300 12/01/35 5,825,000 5,605,000 2017 LTGO-42nd & 53rd Streets 3.00.3,50 12/01/37 8,180,000 - 2017 Refunding Line of Credit 2,60.3,00 12/01/22 2,276,000 8,180,000 2,276,000 680,000 1,485,000 720,000 405,000 3,170,000 415,000 435,000 2,925.000 445,000 96.427 513.505 99,196 150.000 3,410.000 153,000 2,250.000 - 225000 5,380,000 230,000 8.180000 305,000 2,276.000 Total LTGO Bonds Payable 40,051,000 21,124,932 10,456,000 4,241427 27,339,505 2,367,196 Unlimited General Obligation (UTGO) Bonds Payable, 2016 UTGO - Public Safety 4.50-5 00 12/01/35 77,385 000 32,990,000 15000 31,875,000 1,240,000 Issuance premium Due to Other Governments 2009 Facility SCORE 4.380,732 (67,149) 4,447,881 300-6.62 01/01/39 6,898,800 6,093,600 179200 5,914,400 184,800 Special Assessment Debt Klickilat Urban Access Project 3.150-5.375 01/15/29 6,687,500 5,412,500 607,500 4,805.000 485,000 ladeNNIVO All governmental funds debt is liquidated by the general fund except for the special assessment debt and the 2009 SCORE intergovernmental debt. The special assessment debt is liquidated from assessments collected annually from property owners within boundaries of Local Improvement District #33. The 2009 SCORE debt was paid by SCORE from user fees. 96 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES SUMMARY - BUSINESS -TYPE ACTIVITIES Outstanding 01/01/2017 Added Retired / redeemed Outstanding 12/31/2017 Debt Service to Maturity $1,597,704 $ 5,046,990 $ 298,359 $ 2,539,403 $ 9,482,456 - 329,386 - 329.386 (143,282) (599,468) (309,348) (740,392) (1,792,490) $1,454,422 $ 4,447,522 $ 318,397 $ 1,799,011 $ 8,019,352 $ 8,019,352 Following are schedules showing the debt service requirements to maturity for the City's long-term debt, excluding compensated absences and net pension liability. 2018 2019 2020 2021 2022 2023-2027 2028-2032 2033 149,659 $ 34,033 $ 599,468 $ 22,238 $ 150,736 30,531 599,468 19,240 156,614 27,004 599.468 16,243 157,178 23,339 599,447 13,246 162,531 19,662 573,417 10,248 677,704 40,168 1,270,359 16,219 205,875 3.088 20 - 805,398 799,976 799,329 793,210 765,858 2,004,450 208,963 20 97 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS CHANGES IN LONG-TERM LIABILITIES - BUSINESS -TYPE ACTIVITIES BUSINESS -TYPE ACTMTIES. Bonds Payable'. 2015 Waler4Sewer/SWM Refunding 2.34 12101126 1,742,527 1597.704 143,282 1,454,422 149,659 44799 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 2014 Loan -Sewer 0,50 06/01/21 273,870 72,271 0.50 06/01/21 219,725 57,982 0.50-2.00 06/01/24 5,016,000 2,183,090 0.50-2.00 06/01/24 684,000 297,694 1.00 06/01/24 4,196,056 1.777,153 0.5 06/01132 750,000 658,800 LONG-TERM LIABILITIES RECONCILIATION 14,454 57,817 14,454 11,597 46,385 11,597 272,886 1,910,204 272.886 37,212 260,482 37,212 222,144 1,555.009 222,144 41,175 617,625 41,175 General obligation bonds Special assessment bonds Revenue bonds Public Works Trust Fund loans Due to Other Governments Capital Leases Employee leave benefits Net Premiums/Discounts Other Post -Employment Benefits Net Pension Liability $ 59,214,505 $ 4,805,000 - $ 59,214,505 4,805,000 1,454,422 1,454,422 4,447,522 4,447,522 5,914,400 5,914,400 3,583,505 318,397 3,901,902 4,447,881 4,447,881 10,487,883 10,487,883 9,745,053 1, 799,011 11, 544,064 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 98 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS 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, 2017, the debt limits for the City were as follows: SUMMARY OF DEBT LIMIT CAPACITIES Legal Limit Outstanding Net Indebtedness $ 92,774,149 $ 154,623,582 $ 309,247,163 $ 463,870,745 69,188,921 69,188,921 69,188,921 69,188,921 Prior Year Defeasance of Debt In 2015, the City defeased water and sewer bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At December 31, 2017, $1,755,000 of the defeased bonds were outstanding. Long-term Liabilities other than debt Claims are paid from one or more funds based on the nature of the transaction. Employees' compensable leave is the City's liability for all unused vacation, 25% of unused sick leave and unpaid overtime accrued by employees and, payable under specified conditions. This obligation is paid only at the time of termination, usually from the same funding source(s) from which the employee's salary or wage compensation was paid. The City does not report a liability for termination benefits because it is not reasonably estimable. Local Improvement District No. 33 Tukwila Urban Access Improvement Project Local Improvement District (LID) No. 33 was formed on November 16, 2009 by Ordinance No. 2260. The project was designed to improve congestion within the City's Urban Center. The project included a partial lid over Southcenter Parkway, removal of conflicting turning movements, and the widening of Southcenter Parkway. Construction for the project began in March 2011 and was completed in October 2011. The project was closed out and accepted as complete by City Council on February 19, 2013. A variety of funding sources were used to pay for the project including federal and state grants, impact fees, City funds, a right-of-way donation, and special assessments. The City chose to fund the project internally, rather than obtain external, short-term financing then apply special assessments to property owners after the project was completed. Fund 104 Arterial Streets, where the project was accounted for, loaned the project funds as needed using a draw method at an interest rate of 1.80%. This loan was repaid in 2013 when special assessment bonds were issued. The City confirmed the assessment roll with a final assessment of $9,475,894. The prepayment period for the special assessments was open in the fall of 2013 and during that time the City received $2,788,350 in prepayments. Once the prepayment window closed, the City issued bonds for the remaining outstanding assessments in the amount of $6,687,500. From these proceeds, the City deposited $668,750 to the guaranty fund. The third of 15 annual installments for the assessments was due by October 16, 2016. 99 CITY OF TUKWILA'. 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS As of December 31, 2017, all LID Special Assessments were current, nothing was delinquent. During 2017, several property owners chose to pay the assessment in full. Because of the additional principal payments received, the City has enough funds in the LID No. 33 funds to meet debt service requirements in 2018 and pay $40,000 additional principal. Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated rebatable arbitrage amount as of December 31, 2017 is $0 for its tax-exempt bond issues subject to the Tax Reform Act. NOTE 11 —COMMITMENTS Construction Commitments. As of December 31, 2017, contractual obligations to contractors for construction projects total $26,707,775. 42nd Ave S Phase III TUC Pedestrian/Bicycle Bridge Strander Bluff. Extension Phase III Public Safety Plan Major Maintenance on 3 Bridges S 144th Street Phase II Baker Bluff Non -Motorized BAR Bridge Rehab Other governmental projects GIS Inventory, Asset Management System Tukwila 205 Levee Certification Phase 18 II Riverton Creek Flapgate Removal Macadam Road South Water Upgrade Andover Park East Sewer Replacement Other Utility related project NOTE 12 — POTENTIAL POLLUTION REMEDIATION AND OTHER LIABILITIES $ 4,930,257 869,096 3,980,931 6,366,254 1,120,596 518,367 200,639 7,676,343 149,428 $ 165,006 237,708 87,138 80,631 266,572 58,809 There are several lawsuits in which the City is involved. The City Attorney estimates that the potential claims against the City to have no material financial impact. The City of Tukwila is expected to share in potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for sediment contamination within the Lower Duwamish Waterway 100 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS Superfund site. The Environmental Protection Agency has estimated the total cost for the waterway cleanup to be $342 million with as many as 120, or more parties sharing in the liability. While it is not possible to provide an estimate of 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 City's recent ownership of the system, which began in 1989, means the City's share of liability should be low compared to other liable parties. A multi- year confidential process to allocate Duwamish Waterway cleanup costs is being undertaken by the major liable parties. Once that process is completed and communicated to the City, which could occur in 2018, the City will be in a better position to estimate its potential liability for cleanup costs within the Lower Duwamish Waterway Superfund site. NOTE 13 — RISK MANAGEMENT The city of Tukwila is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self -insuring, and/or jointly contracting for risk management services. WCIA has a total of 161 Members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, errors or omissions, stop gap, employment practices and employee benefits liability. Limits are $4 million per occurrence in the self -insured layer, and $21 million in limits above the self -insured layer is provided by reinsurance. Total limits are $25 million per occurrence subject to aggregates and sublimity. The Board of Directors determines the limits and terms of coverage annually. Insurance for property, automobile physical damage, fidelity, inland marine, and boiler and machinery coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property coverage is self -funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self -funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims and litigation administration. WCIA contracts for certain claims investigations, consultants for personnel and land use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. 101 CITY OF TUKWILA: 2017 CAFR NOTES TO THE FINANCIAL STATEMENTS The City insures its buildings, equipment, and vehicle property insurance with WCIA. They self -fund up to $250,000 with standard property insurance purchased above that amount. Traveler's insures boiler machinery and provides for employee dishonesty coverage. The City of Tukwila has a Risk Management and a Safety Committee to oversee risk management. In addition, the WCIA provides support for a proactive risk analysis program and a loss control manual. There were no significant reductions in insurance coverage in the past year. During the year under audit and in the past three years, no settlement has exceeded insurance coverage. The City self -insures for unemployment benefits. This is budgeted expenditure each year and the City paid $15,077 in unemployment in 2017. This expense is budgeted in the Finance Department within the general fund and Foster Golf Course, and enterprise fund. 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 Symetra which provides an individual limit of $175,000 . Each fund contributes an appropriate amount each year to pay premiums and claims. Liabilities include an actuarially determined amount for claims that have been incurred but not reported (IBNR's) and a contingency reserve equal to 2.5 times the IBNR liability. The IBNR liability is estimated using actuarial methods. Based on results as well as a review of actual run -out, average lag days of 52.6 days for medical, 21.6 days for pharmacy, 31.6 days for dental, and 45.9 days for vision were selected. Using average lag days and net adjusted paid claims, the IBNR liability was estimated as of May 31, 2017. Next, the estimated IBNR liability as of December 31, 2017 was developed by trending the May 31, 2017 estimates to year-end. No explicit margin for claims fluctuations was added because the amount of the reserve in the fund balance is sufficient to cover expected claims fluctuations. Administrative costs were then added. The following table reflects changes in the balances of claims liabilities for 2017 and 2016. SUMMARY OF HEALTH CARE CLAIM LIABILITIES Claim Liabilities at Beginning of Year Claim expenses: Current year and changes in estimates Claim payments and expenses NOTE 14—SUBSEQUENT EVENT $ 1,858,250 $ 1,947,500 $ 191,250 $ 221,250 6,329,189 5,938,336 (6,255,191) (6,027,586) 430,289 524,274 (424,880) (554,274) In 2018, the City plans to purchase several parcels of land in order to begin construction of a justice center and fire stations as outlined in the voter -approved public safety plan. Additionally, in February 2018, the City Council approved an ordinance to sell up to $20 million in bonds in 2018 for the public safety plan. As of April 30, 2018, the city has expended approximately $8.7 million toward the purchase of four property parcels in connection with the Public Safety Plan. 102 CITY OF TUKWILA'. 2017 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 31,2017 REVENUES: Taxes Licenses and per nits Intergovernmental Charges for services Fines and Foreitures Investment earnings Msceflaneous 01 EXPENDITURES: Current: General Government Economic environment Physical environment Public Safety Culture and recreation Transportation Capital outlay $ 47,803,644 $ 47,803,644 $ 46,574,589 $ (1,229,055) 2,278,940 2,278,940 2,749,137 470,197 4,398,660 4,545,160 4,690,257 145,097 3,248,316 3,286,316 3,046,606 (239,710) 306,129 306,129 325,216 19,087 163,091 163,091 230,784 67,693 203,600 211,271 160,309 (50,962) 9,953,670 4,573,353 1,975,786 30,596.784 4,708.136 3,081,092 234,000 9,863,670 4,469,853 1,975.786 30,996,784 4,726,307 3,081,092 234,000 9,358,235 4,098,765 1,733,400 29,968,635 4,395,696 3,026,013 117,679 505,435 371,088 242,386 1,028,149 330,611 55,079 116,321 OTHER FINANCING SOURCES (USES): Sales of capital assets Transfers in Transfers out Net change in fund balances Fund balances - beginning 1 1 1,800,000 1,800,000 300,000 (1,500,000) (5,237,691) (5,447,691) (5,337,496) 110,195 (158.132) (400.632) 40,981 17,216,048 17,216, 048 19,031, 744 441,613 815,696 CITY OF TUKWILA'. 2017 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. The City Council must approve by ordinance any amendments that increase the total for the fund. Budget amounts presented in the basic financial statements include both the original amounts and the final amended budget as approved by the City Council. Expenditure Categories General Government Includes administration, finance, municipal court, attorney, and city clerk activities. Public Safety Includes all police and fire activities. Physical Environment Includes expenditures for the public works activities not chargeable to the enterprise funds. Transportation Includes all street and arterial street maintenance and construction. Economic Environment Reflects the planning and building inspection activities. Culture and Recreation Includes expenditures related to parks and recreational activities. The information presented in the following required schedules was determined as part of the actuarial valuations at the dates indicated. 103 104 CITY OF TUKWILA 2017 CAFR PERS I REQUIRED SUPPLEMENTAL INFORMATION COST SHARING MULTIPLE EMPLOYER DEFINED BENEFIT PENSION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY June30 2015 013573612 $ 7,100,255 $ - 5 7 100 255 $ 15,561015 456312 June 30, 2016 0 131354% $ 7,054,328 5 - S 7 054 328 $ 15,736 921 44,8312 June 30, 2017 012795812 $ 6,029.001 $ - $ 6 929 001 $ 16.022 842 376312 PERS 2/3 June 30 2015 0 173592% $ 6 202 54 $ June 30 2016 0 16.22% $ 8 3. 286 $ June 30, 2017 0 161787% $ 5 621,325 $ PSERS June 30 2015 June 30 2016 June 30, 2017 LEOFF 1 June 30 2015 June 30 2016 June 30 2017 LEOFF 2 0 052748% $ 0 5565 40% �+ + $ 5 0 077944% 0 077890% 09 2086% 6 $ $ 8 928 $ 59 10% 57 03% 61 24% $ 6.202.541 $ 15406,589 402812 $ 8399,28E $ 15 579 718 538512 $ 5621325 5 15 861 514 354414 5 9628 5 $ 20 581 $ 5 8 928 S 5 (939397) $ - $ 5 (802490) $ (5428021) 5 $ (1245425) 5 (842402500) $ (930 397) $ (6 230 511) 5 (96b9450) $ 154.426 7,203 161 328 89 20% 85 82% 6 23% 13 09% 553% 761.-123371% Na 95 08% 9041% 96 26% 12374. 135 96% June 30. 2015 0 519159% $ (5 335,916) $ (2 123,032) $ (7 459 748) 5 15 113 237 49 3b% 6712 t June 30 3015 U 51.53% $ (2.970169) $ (1936334) 5 (4,906503) $ 15, 480062 J17012 W0412 June 30. 2017 0503269. 5 (6,983,743) $ (4,530,224) 5 (11,513967) $ 15,743133 -731412 1133612 • unto a full 10-year trend is campdeb governments should present Infotma0on only for those years for Wvch mfonnonon la ,sellable 105 CITY OF TUKWILA 2017 CAFR PERS December 31, 2015 $ December 31, 2016 December 31, 2017 5 December 31, 2016 5 December 31, 2017 $ PSERS December 31, 2015 $ December 31, 2016 $ December 31, 2017 $ LEOFF 2 REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS 686,881 $ 752,418 5 789,712 $ 873,248 $ 972,612 $ 1,090,715 $ 10,105 $ 10,642 $ 8,612 (686,881) $ (752,418) $ (789,712) 5 (873,24a) 5 (972,612) $ (1,090,715) e5 (10,105) $ (10,642) $ (8,612) a5 15,654,255 - $ 15,777,881 - $ 16,153,755 4.39% 4.77% 4 89% $ 15,498,171 5.63% - 5 15,616,400 6 23% - 5 16,024,008 6.81% December 31, 2015 $ 776,719 5 (776,719) $ - $ December 31, 2016 $ 787,110 5 (787,110) 5 - December 31, 2017 5 815,548 5 (815,548) 5 - $ 156,084 161,481 129 747 15,586,296 15,860,571 6.47% 659% 6.64% 505% 505% 5 14% Until a full 10-year trend rs compiled governments should present Inf0rmabon only for those years for which mformatron Is available 106 CITY OF TUKWILA: 2017 CAFR REQUIRED SUPPLEMENTAL INFORMATION FIREMEN'S PENSION TRUST FUND SCHEDULE OF FUNDING PROGRESS - PENSION (Rounded to thousands) January 1, 2005 $1,265 $1,182 January 1, 2007 1,336 1,310 January 1, 2009 1,445 1,610 January 1, 2011 1,430 1,582 January 1, 2013 1,416 1,296 January 1,2014* 1,409 1,853 January 1, 2015 1,417 1,830 January 1, 2016 1,426 1,445 January 1, 2017 1,530 1,415 • January 1, 2014 change in actuary and adoption of GASB 67 ($83) 107% $608 -14 (26) 102 463 -6 165 90 442 37 152 90 0 N/A (120) 109 0 N/A 444 76 N/A 413 77 N/A 19 99 N/A (115) 108 N/A CITY OF TUKWILA: 2017 CAFR REQUIRED SUPPLEMENTAL INFORMATION Schedule of Changes in the City's Net Pension Liability and Related Ratios Total Pension Liability 2014 2015 2016 2017 Service cost - Interest 50,098 49,716 49,332 38,796 Changes of benefit terms Difference between expected & actual experience - (2,442) (311,190) - Changes of assumptions - - (62,728) Benefits payments, included refunds of employee contributions (61,863) (58,277) (59,988) (69,186) Net change in total pension liability (11,765) (11,003) (384,574) (30,390) Total pension liability- beginning 1,852,693 1,840,928 1,829,925 1,445,351 Total pension liability- ending (a) 1,840,928 1,829,925 1,445,351 1,414,961 Plan Fiduciary Net Position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of 64,114 63,590 66,360 68,848 1,805 2,667 7,988 39,157 employee contributions (61,863) (58,277) (59,988) (69,186) Administrative expense - (4,500) (4,500) (4,624) [r Other Net change in plan fiduciary net position 4,056 Plan fiduciary net position - beginning 1,408,970 Plan fiduciary net position - ending (b) 1,413,026 City's net pension liability - ending (a) - (b) Plan fiduciary net position as a percent of total pension liability Covered employee payroll City net pension liability as a percent of covered employee payroll 3,480 1,413,026 1,416,506 9,860 1,416,506 1,426,366 34,195 1,426,366 1,460,561 427,902 413,419 18,985 (45,600) 76.76% 77.41% 98.69% 103.22% n/a n/a n/a n/a CITY OF TUKW ILA-. 2017 CAFR Schedule of Employer Contributions REQUIRED SUPPLEMENTAL INFORMATION CITY OF TUKWILA'. 2017 CAFR December 31, 2007 $ 50,555 $ 50,555 $ - $ - n/a December 31, 2008 52,571 52,571 - - n/a December 31, 2009 48,537 48,537 - n/a December 31, 2010 49,989 49,989 - n/a December 31, 2011 54,865 54,865 n/a December 31, 2012 52,249 52,249 - n/a December 31, 2013 56,962 56,962 - - n/a December 31, 2014 64,114 64,114 - - n/a December 31, 2015 63,590 63,590 - - n/a December 31, 2016 66,360 66,360 - - n/a December 31, 2017 68,848 68,848 - - n/a Contributions are a portion of State Fire Insurance Premiums. C)7 Co Schedule of Investment Returns 2011 0.12% 2012 0.20% 2013 0.17% 2014 0.13% 2015 0.19% 2016 0.56% 2017 2 75% Ten-year schedule required. However, until a full 10-year trend is compiled, information is presented for those years where information is available. 109 REQUIRED SUPPLEMENTAL INFORMATION RETIREE MEDICAL AND LONG-TERM CARE BENEFITS FOR LEOFF 1 EMPLOYEES SCHEDULE OF FUNDING PROGRESS - OPER January 1, 2014 $0 $21,264,000 $21,264,000 0.0% n/a n/a January 1, 2015 $0 $29,538,048 $29,538,048 0.0% n/a n/a January 1, 2017 $0 $29,054,716 $29,054,716 0.0% n/a n/a SCHEDULE OF EMPLOYER CONTRIBUTIONS - OPEB December 31, 2008 $557,103 $1,366,284 41 % December31, 2009 335,265 1,366,284 25% December 31, 2010 317,771 1,366,284 23% December 31, 2011 335,090 1,264,522 26% December 31, 2012 404,007 1,264,522 32% December 31, 2013 878,755 1,264,522 69% December 31, 2014 905,974 1,903,679 48% December 31, 2015 477,292 2,585,779 18% December 31, 2016 275,530 2,765,486 10% December 31, 2017 943,150 2,883,884 33% 110 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are established to account for proceeds of specific taxes or other specific revenue sources that are legally restricted to or committed for expenditures for particular purposes. • Hotel/Motel Tax Fund — Established to account for the proceeds of a 1 % special excise tax on overnight lodging in Tukwila. This tax provides resources to support tourism development and promotion activities in Tukwila. • Drug Seizure Fund —Accounts for monies and proceeds from the sale of property seized during drug and felony investigations. These funds are legally required to be expended on drug and felony related police activities. Debt Service Funds Debt Service Funds are account for the accumulation of resources for and the payment of principal and interest on general obligation and special assessment bonds. • Local Improvement Guaranty Fund —Holds reserve funds required under state law to provide a means of paying local improvement district (LID) bond debt service obligations in the event there are insufficient resources in the LID debt service fund. Unlimited Tax G.O. 2016 — Accounts for principal and interest on voter approved bonds issued to pay for the construction of public safety facilities including a justice center and fire stations and fire equipment and apparatus for 20 years. Limited Tax G.O Fund — Accounts for principal and interest payments on bonds for all debt issues except for voter approved bonds. Capital Project Funds Capital Project Funds account for the acquisition or development of major capital facilities, except those projects financed by proprietary funds. Sources of revenue to these funds include general obligation bond proceeds, federal and state grants, real estate excise taxes, and transfers from the General Fund. • Residential Street — Established in accordance with RCW 35A.37.010 to account for maintenance and improvement of the City's residential streets. Major sources of support are the State -levied tax on motor vehicle fuels distributed to Tukwila, to be used for City street purposes, state and federal grants, and transfers in from the General Fund. • Land Acquisition, Recreation, and Park Development — Accounts for the acquisition of land, development of land, and construction of park facilities. 111 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Facilities (Urban Renewal) — Established in 1988, this fund accounts for costs associated with property owned by the City that will be utilized for redevelopment or renewal purposes. General Government Improvements — This fund was established in 1992 to provide funding for minor capital improvements not related to parks, land acquisition, or major building replacements. Fire Improvements — This fund is to be used for the acquisition of land, development of land and construction of fire facilities. Revenue for this fund comes primarily from fire impact fees. City Facilities — This fund was established in 2016 to pay for the costs of building a new public works shop facility. The public works shop facility is part of the City's public safety plan but is not included in the voter - approved bonds. 112 IJJ O CITY OF TUKWILA 2017 CAFR ASSETS: Cash and cash equivalents Investments Taxes receivable Other receNables Due from other governmental units Restricted Assets'. Cash and cash equivalents Notes receivable Capital assets held for resale LIABILITIES AND FUND BALANCES: Current liabilities Accounts payable Accrued wages and benefits Customer deposit DEFERRED INFLOWS OF RESOURCES Unavailable revenue -property tax Unavailable re act fee Fund balances: Nonspendable Restricted Assigned Assigned - 1 % arts FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR GOVERNMENT FUNDS DECEMBER 31, 2017 $ 1,330,736 $ 571,617 $ 7,657,951 $ 9,560,304 531,560 531,560 87,787 39,065 143,742 270,594 2,135 13,346 15,481 173,933 173,933 223,408 5,794,233 300,022 5.293,000 6,017,641 300,022 5.293.000 274,840 806,895 1,081,735 11,490 11,490 126,119 126,119 24,370 24,370 313,368 313,368 1,367,019 72 113 731,762 388,245 9,657,476 8,296,879 164,000 11,756,256 8,685,196 164,000 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR GOVERNMENT FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: TAXES: Taxes Charges for services Intergovernmental Investment earnings Miscellaneous EXPENDITURES: Current: General government Econ environment Public safety Cultural and Recreation Transportation Debt service Principal Interest Capital Outlay OTHER FINANCING SOURCES (USES): Transfers in Transfers out Issuance of Debt Bond Premium Gain/(loss) on sale of assets held for resale Payment of refunded debt $ 736,784 $ 5,767 79,930 2,674,622 $ 756,747 $ 495,373 57,504 1,305,117 79 74,330 4,168,153 495.373 1,362,621 80,176 79,930 515.262 366,256 25,067 3,106,428 2,343,930 2.773,452 2,276,000 (2,250,000) 202,249 227,316 515,262 366,256 268,433 268 433 646,064 646,064 3,106 428 - 2,343,930 4,059,856 4,099,825 464,044 3,237,496 (1,317,000) (1,317,000) 8,180,000 10,456,000 356,839 356,839 (100,000) (100,000) (2,250.000) Net change in fund balances Fund balances - be.innin (99,006) 56,232 5,038,848 4,996,074 1,466,097 1,063,774 13,079,507 15,609,378 114 CITY OF TUKWILA'. 2017 CAFR ASSETS: Cash and cash equivalents Taxes receivables Current Assets Restricted: Cash and cash equivalents FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR SPECIAL REVENUE FUNDS DECEMBER 31 2017 LIABILITIES AND FUND BALANCES: Accounts payable Fund balances: Restricted Assigned $ 1,323,528 $ 7,208 $ 1,330,736 87,787 87,787 223,408 223,408 271,540 3.300 274,840 1,139,775 227,244 1,367,019 72 72 (63 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Investment earnings fv5scellaneous EXPENDITURES: Current: Rsblic safety Economic environment Capital outlay Net change in fund balances Fund balances - beginning 736,784 $ - $ 736,784 5,695 72 5,767 - 79,930 79,930 515,262 366,256 366,256 515,262 39,969 39,969 227,217 (326,223) (99,006) 912,558 553,539 1,466,097 CITY OF TUKWILA 2017 CAFR ASSETS: FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR DEBT SERVICE FUNDS DECEMBER 31, 2017 Cash and cash equivalents $ 135,534 $ 48,218 $ 387,865 $ 571,617 Investments 531,560 - - 531,560 RECEIVABLES Taxes Interest on investments 2,135 39,065 39.065 2,135 LIABILITIES AND FUND BALANCES: DEFERRED INFLOWS OF RESOURCES: Unavailable revenue -property tax $ 668,849 24,370 62,913 - 380 - 387,865 24.370 731,762 388.245 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Intergovernmental hvestrrent earnings - $ 2,674,622 $ - $ 2,674,622 - - 57,504 57,504 79 - - 79 EXPENDITURES: General Government Debt service Principal Interest Excess (deficiency) of revenues OTHER FINANCING SOURCES (USESI: Transfers In General obligation bonds issued Payment of refunded debt Net change in fund balances Fund balances - beginning 1.115,000 25,067 1,991,428 25,067 3,106,428 1,496,709 847,222 2,343,930 79 669,150 62,913 2,773,452 2,773,452 2,276,000 2,276,000 (2.250,000) (2,250,000) t9SF�lSf:. :4.: (6,760) 56,232 394,625 1.063,775 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES ASSETS: Cash and cash equivalents Taxes receivable Other recevables Due i rom other governmental units RESTRICTED ASSETS. Cash and cash equivalents Notes receive!. Capital asset nator le 19 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Current payables: CITY OF TUKWILA, WASHINGTON COMBINING BALANCE SHEET NON -MAJOR CAPITAL PROJECTS FUNDS DECEMBER 31, 2017 $ 965.748 $ 3,945 978 82.290,732 $ 378,323 $ 7.210 $ 69,960 $ 7,657.951 44613 99.129 - - _ - 143,742 5,794 233 173.933 - 5.293.000 13 3. 13,346 173,933 300,022 5,794,233 300,022 5,293000 Accounts payables 604579 130.111 - 2,245 - 69,960 806895 Accrued wages and benefits 4.876 1.649 - 4,966 - - 11.490 Cu t ner deposil 18720 19,525 85563 2311 126119 li AMIROMITiSmet. 1. r :MOWN.- aOS NEVENIVWM Deferred Mow of resources. Unavailable revenue -impact fee - Fund balances: Restricted Assigned Assigned - 1%ar 13,368 313.368 5,794.233 3,856032 382,185 47.724 7.498169 164.000 368,801 7,210 9,657,476 8,29fi 879 164,000 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CRYOFTUKVNLA WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON -MAJOR CAPITAL PROJECTS RINDS FOR THE YEAR ENDED DECEMBER 31 2017 E Taxes servicesCharges for Hier lal Investment earnmgs • $ 756.747 $ 6,133 62,310 1073,144 231.972 40.239 16.735 2,252 $ - $756,747 255 075 141854 495,373 1,308117 74.330 .61 a CITUF.s: CurrentGeneral government Galore and recreation Tran P lal Oulla arpn THEY FINANCING SOURCES (USES,: Transfers le Transfers Bond prem. GaiN(bss) on sale of assets 1e11 for resale filet change In Fund balances Fund balances - beginning 606.064 3892,805 8.180.000 356.539 5.519986 658,932 54124 148.126 258,433 205,879 122.190 (300,900) (100000) 715643 (.1.872) 3,352,113 7940040 308.433 646,060 283709 4059,856 igNAIWB 200.000 - (1 017 000) mac. alat,.gomln 4g54 a (23.102) 391,903 (729.307) 736 518 0.044 (1 31i7,000) 180,000 e 356.839 (100000) s,o30,eas CCI CITY OF TUKWILA 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL ARTERIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31, 2017 REVENUES: Taxes Intergovernmental Charges for services Investment earnings Miscellaneous EXPENDITURES: Current Transportation Capital ou Excees (deficiency) of revenues OTHER FINANCING SOURCES (USES): Transfers in Net change in fund balances Fund balance - beginning 600,000 $ 600,000 $ 912,333 $ 312,333 21,035,000 10,035,000 6,686,896 (3,348,104) 921,000 921,000 1,725,249 804 249 5,000 5.000 16,910 11,910 1.037,000 1,037,000 701,034 (335,966) 6,556,000 6,556,000 2,860,118 3,695,882 22,581,579 10,281,579 9,545,242 736,337 1,800,000 1,800,000 1,800, 000 (3,739,579) (2,439,579) (562,939) 1,876,640 3,786,923 3,786,923 3,999,376 212,453 121 REVENUES: FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LOCAL IMPROVEMENT DISTRICT #33 DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2017 Special assessment Investment earnings Miscellaneous EXPENDITURES: Debt service: Principal Interest $ 408,593 $ 408,593 $ 478,838 $ 70,245 240,710 (52,808) 1,511 1,511 293,518 293,518 450,000 271,830 596,000 271,830 607,500 259,939 (11,500) 11,891 • Net change in fund balances Fund balances - beginning (19,719) (165,719) (146,379) 898,764 898,764 898,722 19,340 (42) 122 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL PUBLIC SAFETY PLAN CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Charges for services Investment earnings EXPENDITURES: Current' Public Safety Capeal outlay OTHER FINANCING SOURCES (USES): Bond proceeds Transfers in Transfers out Net change In fund balances Fund balances - beginning 500,000 $ 500,000 $ 500,000 $ 258,283 258.283 3,048,000 3,048,000 564521 2,483,479 1,139,000 998,969 10,140,031 23,343,000 23,343,000 - 1,017,000 1,017, 000 (23,343,000) 9,656,000 10,673,000 211,793 (10,461,207) 36, 513,127 36,513,127 \ FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL HOTEL/MOTEL TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Investment °arm D(PFNDITURES: Current: Economc environment 733,000 $ 3,000 440,700 733,000 $ 3,000 722,500 515,262 3,784 2,695 207.238 IMAM Excess (deficiency) of revenues Net change in fund balances Fund balances - beginning A 295,300 13,500 227,217 906,875 906,875 912,558 213.717 5,683 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DRUG SEIZURE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Investment earnings Fines and forfeitures EXPENDITURES: Current Pubic safety Capital outlay'. Public safety Excess (deficiency) o Net change in fund balances Fund Balances be inn $ - $ 60,000 60. 000 72 $ 72 79,930 19,930 45.000 15,000 461,635 425,000 (365.000) 461 635 366,256 58,744 39,969 (39,969) (326,223) 38,777 553.539 91. 904 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL RESIDENTIAL STREET CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Intergovernmental Charges for services Investment earnings Miscellaneous EXPENDITURES: Current'. Transportation Capital outlay $ 1,894,000 $ 1,894,000 $ 1,073,144 $ (820,856) - 6,133 6,133 1,500 1,500 40,239 38.739 1,902,000 1,902,000 - (1,902.000) 75,000 9,278,000 75,000 3,478,000 646,064 3,492,805 (571,064) (14, 805) OTHER FINANCING SOURCES (USES): Bond proceeds Renaum on Bonds 55 5,600,000 5,600,000 8,180,000 2,580,000 356.839 356,839 Net change in fund balances Fund balances - beginning 44,500 5,844,500 5.517,486 (327,014) 833,331 833,331 658,932 (174,399) CITY OF TUKWILA 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL LAND 8, PARK ACQUISITION CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Taxes Intergovernmental Investment earnings $ 400,000 $ 131,000 1,000 400,000 $ 131,000 1.000 756,747 $ 231,972 16,735 356,747 100,972 15,735 EXPENDITURES: Current: Culture and recreation Captal outlay 1,139,000 3,139,000 268,433 205,879 (268,433) 2,933,121 {itif } Net change in fund balances Fund balances - beginning (423,000) (2,423,000) 2,713,123 715,643 2,713,123 3,352,113 3,138,643 638.990 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FACILITIES URBAN RENEWAL CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Investment earnings $ 3,600 $ 3,600 $ 12,252 $ 8,652 EXPENDITURES: Current: General Government Capital outlay 60,000 60,000 54,124 (54,124) 60,000 OTHER FINANCINGSOURCES (USES): Sales of capital assets Transfers out 05 Net change in fund balances before special hem Fund balances - beginning 3,483,000 3,233,000 (100,000) (3,333,000) (1,800,000) (1,800,000) (300,000) 1,500,000 1,626,600 1,376.600 (441,872) (1,818,472) 370,706 370,706 7,940,040 7,569,334 CITY OF TUKWILA 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL GOVERNMENT IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Investment earnin.s EXPENDITURES: Current General Government Capital outlay 500 $ 500 $ 2,487 $ 1,987 OTHER RNANCINGSOURCES (USES): Transfers in Net change In fund balances Fund balances - beginning 148,126 (148,126) 290 794 290, 794 77,463 213.331 200,000 200,000 200,000 (90,294) 334 349 (90,294) (23,102) 334,349 391,903 67,192 57,554 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FIRE IMPROVEMENTS CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: Fire impact fees Investment earnin • s 32,000 $ 32,000 $ 285,075 $ 253,075 100 100 2,617 2,517 EXPENDITURES: OTHER FINANCINGSOURCES (USES): Transfers out Net change in fund balances Fund balances - beginning (1,017,000) 017,000) 32,100 (984.900) (729,307) 645,631 645,631 736 518 255,593 90,887 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL CITY FACILITIES CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: EXPENDITURES: Current: Ribtic Safety Caudal outlay WOR Net change in fund balances Fund 11 0,0070 150,000 6,000,000 ris1r1Fo, 150,000 6,000,000 283,709 150,000 5,716,291 420,000 ° (420,000) LI; 111 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL SPECIAL ASSESSMENT BONDS GUARANTY FUNDS FOR THE YEAR ENDED DECEMBER 31,2017 REVENUES: hvestrnent earnings "0".2 EXPENDITURES: 500 $ 500 , 79 $ (421) i05rn '11111111111tik. Ittilli"rtioPillitautilliffillillif1411111111111111111111111111E OTHER FINANCING SOURCES USES : shi11„ 111111' Netchange in fund balances Fund balances - beginning 500 669,151 500 669,151 (421) (1) N4r 79 669,150 balances - bouinning 21. 211Vr? CITY OF TUKWILA 2017 CAFR REVENUES: Taxes FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL UNLIMITED TAX GENERAL OBLIGATION DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2017 Net change in fund balances Fund balances - beginnin 2,699,000 $ 2,674,622 $ (24.378) 1,115,000 1,496,709 1,115,000 1.496.709 87,291 62.913 (24,378) REVENUES: FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED DECEMBER 31,2017 Intergovernmental EXPENDITURES: Current General Government Debt service Principal Interest $ 61,667 $ 61,667 $ 57,504 $ (4.163) 2,163,029 2,163,029 1,012,103 1,110,551 25,067 (25,067) 1,991.428 847.222 171,601 263, 329 OTHER FINANCING SOURCES (USES): Bond proceeds Payment of refunded debt Transfers in Net change in fund balances Fund balances - beginning 427,461 2.777,461 (2,339,000) 2,686,004 2,773,452 2,276 000 (2,250,000) 2,773,452 (501,461) 89,000 168,475 168,475 (6,760) 394,625 (6,760) 226 150 CITY OF TUKWILA'. 2017 CAFR Internal Service Funds FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA: 2017 CAFR NON -MAJOR INTERNAL SERVICE FUNDS The City's internal service funds are used to account for the financing of special services performed by designated departments within the City of Tukwila for the benefit of other departments within the City. The funds provide services then generate revenue by biting the department for which the service was provided. • Equipment Rental Fund — Accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment. All equipment costs, including depreciation, are factors in calculating the rates which are charged to each user department. • Insurance Fund Active Employees —Accounts for the costs of the City's self -insured medical plan. Medical and dental costs for covered employees are charged to the respective departments. All premiums, medical and dental costs and ancillary charges are included. • Insurance Fund LEOFF 1 Retirees — Accounts for the costs of the City's self -insured medical plan for LEOFF 1 retirees. Medical and dental costs for covered employees are charged to the respective departments, either the Police Department or the Fire Department. All premiums, medical and dental costs and ancillary charges are included. FUND FINANCIAL STATEMENTS AND SCHEDULES ASSETS: Current assets Cash and cash equivalents Investments Receivables Inventory of materials and supple CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS DECEMBER 31, 2017 $ 4,185,067 392,962 18.235 8,760 $ 588,869 $ 440,547 $ 5,214.483 2,355,984 456,125 3.205.071 53.989 72.224 8,760 NONCURRENT ASSETS: Capital Assets: Machinery and equipment Less: accumulated depreciation Deferred Outflows of Resources Deferred outflow pension earnings LIABILITIES: Current liabilities: Accounts payable Accrued wages and benefits Claims Incurred but not reported Noncurrent liabllties: Reserve for unreported claims Net pension liability Deferred Inflows of Resources 15,973,404 10,848,599) 38,954 15,973,404 (10,848, 599) 38,954 114,648 25 906 1,106.400 279.426 88,248 12,409 737,600 73,700 .. f.. 110,550 215,305 25 906 611,300 1,216,950 279.426 Deferred inflow pension earnin NET POSITION: Investment in capital assets Unrestricted 55,427 55,427 5,124.805 4,178,570 1,066,595 700,012 5,124.805 5,945.177 135 136 CITY OF TUKWILA: 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 OPERATING REVENUES: Charges for services Other operatln. revenue OPERATING EXPENSES: Operations & maintenance Admnistratae & general Depreciation NON -OPERATING REVENUE (EXPENSE): OJ Investment earnings •4 Gain (loss) on on disposal of capital assets $ 2,538,237 $ 5,731274 300 114.244 $ 253.445 $ 8,522,957 114 545 1.326.558 322,910 633,469 6,206,072 123, 117 417,740 12,549 7,950,371 458.576 833.469 45,818 55,442 (5,621) 95,639 100.509 9,101,447 1,494.823 882,478 11 478,749 CITY OF TUKWILA'. 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31. 2017 CASH FLOWS FROM OPERATINGACTNITIES: Cash received from users Cash paid to suppliers Cash paid for faxes Cash pdtc or on behalf of employees Pa.e 1 of2 $ 2,522,836 $ 5,815,445 $ 253,445 $ 8,591,726 (1,081,562) (108,437) (14,754) (1.204753) (1) - - (1) (569,762) (6,146754) (413,645) (7,130.160) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceed from sale of equipment Purchase of capital asset CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of Investments Purchase of investments Interestreceived Cash and cash equivalents-beo inning of Year Cash at end of year consists of Cash and cash equivalents 100,509 250,161 100,509 1,250,161 135,000 (13,494) 90.339 4285.711 (500,000) 38 254 077 247 135.000 (513,494) 171,089 6,314,729 $ 4,185,067 $ 588,869 $ 440,547 5,214,483 CITY OF TUKWILA 2017 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31. 2017 RECONCILIATION OF NET OPERATING INCOME TO NET CASH PROVIDED BYOPERATINGACTNITIES Adjustments to reconcile operating income to net cash Provided (used) by operating actiMbes: Depreciation Asset (incra es)decreases . A.ccountsreceivable (15,701) Inventory (3,487) Deferred outflow of resources (Increase) decrease 25,394 Liability increases (decreases)'. Accounts payable Wages and benefits payable Deferred inflow of resources increase (decrease) 833,469 31,699 6,208 (61,671) (30,074) 73,998 1,890 833,469 (45,775) (3.487) 25,394 107,588 6,208 (61,571) SCHEDULE OF NONCASH INVESTING CAPITAL AND FINANCINGACTIVRIES Increase in fair value of investment 422 $ 422 FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF TUKWILA, WASHINGTON STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED DECEMBER 31, 2017 ASSETS Cash and cash equivalents Receivables $ 201,739 $ 1,026,290 $ 55,543 175,027 (916,630) $ (227,636) 311,398 2 LIABILITIES Accounts and other payables 257,282 1,827,851 (1,770,800) 314,332 'The notes to the financial statements are an integral part of this statement. CITY OF TUKWILA'. 2017 CAFR City of Tukwila STATISTICAL SECTION December 31, 2017 STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net Position by Component 142 Schedule 2 Changes in Net Position 144 Schedule 3 Fund Balances, Governmental Funds 146 Schedule 4 Changes in Fund Balances, Governmental Funds 148 Schedule 5 General Governmental Tax Revenues by Source 150 Revenue Capacity Information The objective of providing revenue capacity information is to help users understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Property Tax Levies and Collections 151 Schedule 7 Assessed and Estimated Actual Value of Taxable Property 152 Schedule 8 Property Tax Rates -Direct and Overlapping Governments 153 Schedule 9 Principal Property Taxpayers 154 Schedule 10 Retail Sales Tax Collections by Sector 156 Schedule 11 Sales Tax Rate Direct and Overlapping Governments 158 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of outstanding debt and ability to issue additional debt in the future. v Schedule 12 Ratios of Outstanding Debt by Type 160 Schedule 13 Ratios of General Bonded Debt Outstanding 162 Schedule 14 Computation of Direct and Overlapping Debt 163 Schedule 15 Legal Debt Margin Information 164 Demographic and Economic Information These Schedules offer demographic and economic information to assist users in understanding certain aspects of the environment within which the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 16 Demographic Statistics 166 Schedule 17 Principal Employers 167 Operating Information These Schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedule 18 Full-time Equivalent Employee by Department 168 Schedule 19 Operating Indicators by Function 169 Schedule 20 Capital Assets by Function 170 STATISTICAL SECTION CITY OF TUKWILA SCHEDULE 1 NET POSITION BY COMPONENTI.I LAST TEN FISCAL YEARS Pa.e 1 of 2 Governmental activities: Net investment in capital assets Restricted Unrestricted $ 136,742,368 19,720,546 18,476,837 $ 155.847,012 16,360,097 16,031,473 $ 177,078,793 23,005,792 12,119,923 $ 199,511,779 5,019,817 21 .479.064 Business -type activites: Net investment in capital assets $ 36,071,402 $ 38,052,488 $ 44,759,489 $ 52,134,799 Restricted 439,100 438,619 430,444 430,444 Unrestricted _ 13,335,836 10,987,162 11,158,081 10,225,558 Rinrary government: Net investment in capital assets Restricted Unrestricted $ 172,813,770 20,159,646 31,812,673 $ 193,899,500 16,798,716 27,018,635 $ 221,838,282 23 436,236 23,278,004 $ 248,636,920 5,450,261 34,714,280 Notes. (a) All amounts are reported on the accrual basis Source: Tukwila Finance Department 141 142 CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION Paae 2 of 2 $ 203,206,940 2,749,680 20,194,333 $ 207,660,389 3,480,002 26,981,105 $ 191,081,461 3,973,726 25,009,212 $ 191,331,156 5,446,074 16,125,592 $ 193,113,026 8,996,183 15,809,945 $ 199,328,694 13,480.068 11 ,366,545 S 52,911,741 $ 55,955,595 $ 57,677,764 $ 59,483,424 $ 60,807,030 $ 65,355,778 430,444 430,444 430,444 - - - 11,011,319 12,964,539 13,839,529 14,658,912 17,240,620 17,425,401 $ 253,253,170 $ 263,615,984 3,180,123 3,910,445 34,071,164 39.945,644 $ 248,759,225 $ 250,814,581 4,404,170 5,446,074 38,848 741 30,784,504 $ 253,920,056 8,996,183 33 050,565 $ 264,684,471 13,480,068 28,791,946 CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 2 CHANGES IN NET POSITION. Expenses GovernnentalAclyiles W left Safety Physical Environment Transportation Economic Einvironnent nfal and Rhysmal Health Culture and Recreation Inlerest on Long Term Debt Total Govemrrenfal Actn1e s Business Type Aaty'aes Water/Sewer UaAy Foster Go. Course Surface water Unity Total Business Type A runes Program Revenues GovernmenlatAclicies Chargesfor Services eral Governnenl Rd. Safety Physical vuonnent ycnapnrtalinn Economic Environment Cultural and Recreaton Operating Grants and contributions Capital Grants and Contributions $ 0723,103 s s 0.150,573 20141992 25.959.352 286,644 25,346,318 2,862.487 2,575,405 2.533.394 2.885,175 5.854297 5541J67 6,015,197 5,872,708 5,017,935 4,637,531 4519,338 0712,832 4.173 932 4,539 0,591 97,856 0914,256 4,756,676 4,203,820 1,844,224 472,438 49,262067 52075,806 52091924 53050459 7,293,352 68,595 1,752017 11,020374 9.293.434 9,343 356 2,050,172 1,935,014 2.299.394 2075,170 13643000 13,750,552 A 985,747 14 667,748 $ 895,966 $ 1.36 642 5 1,080.801 $ 2.462,671 1 1,184530 619003 809.606 1,200 572 71,fl0 3..373 542 647,354 I25.163 z 139029 2.250.601 14,784,974 23,992,563 18,495,127 TotalGovernnenlal ActiWies Program Revenues 9,008.131 21631255 31,207,699 27094,552 Business Type Activities Charges slot Services Water/Sewer Uilly 8,621,909 10,124,653 11,242 Foster Gob Course 1,563.681 1,420595 1,425,327 1,300016 Surface Wafer UFly 2,642.325 2.641.313 ]029,6]0 3,355656 11TT1 andOperating Contributions y,A Caplet Grantsend Contributions 756,400 515633 7,390,545 1,993537 44 Total..Type Actrvnes Program Revenues 584 315 14,706,194 21,510597 836,51 Total Primary Government Program Revenues 22592446 3693/449 52,718.295 45459303 (n Net (Expense gReve nue Governmental Activities (40.253,937) (30..4,551) (20,884.225) (26.555.907) Business Type ActWes 2,559.941 1,063, 194 7756045 3.697,003 General Revenues and Other changes In Net Position ntal Activities Governmental Taxes e Property Tax $ 11,656,979 $ 11,901,072 $ 13,363,096 $ 13,4.637 Retail Sales and Ilse Tax 18009,297 4,588.297 14 15,796054 Natural Gas Use Tax 643,037 748.772 533,811317,531 vbtel Tax 587,216 489,606 458.0'32 555582 L8843 UNy Tax 5.136,444 7,390.550 5,600.683 7,530260 Harland Uilty Taxes Business Tax 2.497,705 3,196,178 4,205,574 557.579 Excise Tax 983,076 367.198 507,798 2.170.293 Slate Fntelenenls 874,046 2,29445 1,951,936 Uiresirbled In 9731 nl Earnings 801,847 108,929 2 2275,477 Gan/Loss on Sale of Capital Assets (186,6631 980.267 - Niscebneous Transfers 1,383,774 1001,200 Total GovernmenlalAclviles 42385,750 43.743362 42.798557 43371,717 Business Type Activities Relail Sales and Use Texas 500,000 327,999 329527 Unrestricted Investment Interest 377,955 106032 85942 Gain/Loss on Sale of Capital AS5. - (264,093) lascellaneous Transfers Total Business Type Acl'viles (1,383,774) (505,819) (1,601,200) (1.4J1.262) 97 541 (1,399,310) SOO) 61,119 200.871 (525.864) (263.874) Change in Net Posh:m Before Special rem Special imn Change in Net Position 4.185,945 12,930,753 28.784077 20,208,939 Governmental Act'Oles $ 2,132,623 $ 13,298.831 $ 21.914.332 $ 16,815010 Business Actvnns 2.060133 (368068) 5060745 3..0620 4,185,945 12930,763 28,780077 20.208939 Notes (a) All amounts are repotted un flee accrual basis Source Tawas Finance L9spadrren1 143 144 CITY OF TUKWILA: 2017 CAFR Page 2 of 2 5 5343.10/ 5 10.195,049 $ 10288399 $ 8,042,254 $ 9662,207 $ 9,835,290 26598432 25,938,946 29292,587 29,403,206 31418.713 31,190,347 3,625,596 2610591 11,668,098 2611297 2,554,259 2545144 7.314,707 7.658280 2,479,533 11069.605 11,188,189 12236551 4,801,342 5209,954 5,716,091 5,782907 4,410,841 4523596 4242725 5,635,347 5336,659 5,125,227 5,431324 5,582,038 1.152063 1038,851 1,204,771 1033440 1,075,729 2,481.559 56078.072 58,287,017 55,987,138 63067,935 65.741,262 68394,526 10,149.557 10,421,064 12, 752,125 13,186,236 13,984,368 14,305,425 1,701,131 1,707.993 1,945,789 2,086586 2,077,536 1,989972 2699.767 2,563,132 3.310,716 4,147,974 4,088,360 4,209325 14,550455 14,692.189 18,008,631 19420,796 20,150.264 20504,722 $ 1332418 $ 1d95,438 $ 3,858,862 $ 3,794,134 $ 3,742937 $ 4,144,985 684.744 871919 970,594 1,754856 4,130,701 1540,863 4939 27,407 196506 464 - 1004911 287,956 8,425 205,065 454,525 2,206,908 2.323.528 2,786,178 726,869 3,348,802 2434,545 2,270,759 481,404 744,014 2,793,185 644,283 1,140,558 1,315,740 4.411,18 3,289,818 2563002 893,470 1,079,020 2,445,998 1 581 882 16,947,529 8053,435 6,431,537 5,000,942 6,126,880 11,825,444 25450,258 19,170,579 17,073,146 17,983,694 20,052,136 rr�� 11,758.658 13,146,131 14,308,945 15,572,708 15,661,118 16,580,965 4�/ 1448.729 1 404,264 1,406,440 1,482 288 1626,385 1,313,871 3.827.010 3.913,184 4,168,313 5,286233 5875343 6.200,589 - - - - 25,000 8,435 135.603 338,943 1,548,280 2039890 ]67.732 834,392 17,170.000 16802,521 21,431978 24,381,122 23.755,57E 24938,251 28995,444 45,252,7/9 40,602,857 41,454,268 41.739,272 44990,385 (44.252,628) (31836,759) (46,816,260) (45994.789) (47.757566) (48,342390) 2619546 4,110 332 3,423348 4,960326 3,605314 4433,529 $ 14.131.605 $ 14510,241 $ 14,870,621 $ 14,320,085 $ 14,562,501 $ 17,661590 15.441.683 16 316,398 17,105,322 19 334,152 18,908,190 18,807,201 232.208 204.457 - - - - 522.033 526,832 595,781 577.971 710267 736,784 5,535966 3879,992 3,855,544 4,019,288 4,045916 4.175013 1686,859 1,851,013 2,061098 2,146,515 2.2.,747 2497,606 2,570,111 2,555,999 2749,140 2.715,257 2,6..352 2.860,948 2,745,475 3,512,894 5,321281 6508665 5,380,562 1895 647 1861,511 1 735,637 1.843.534 1,915,810 1,915,940 116694 102,485 444,282 475.345 559,733 836630 101.688 304,704 179,394 280,551 1606049 2.328,565 1,056,843 1,960,650 (500,0001 (300.000) (300,000) 44.392,921 45,769,716 46107,488 51,082545 52.773904 56514.482 (1 060,650) 600,000 - 300.000 300,050 (1 080,650) 600000 - 300000 702996 16 982,640 3,314.576 10,048,082 8,921.652 12,905621 (1995000) (956798) 1,702 996 16 982640 1,319,576 9,091 285 8,921 652 12 905,521 $ 140.293 $ 13 932.957 $ (2.703,772) $ 3,830,958 $ 5,016337 $ 6,256,152 1562.703 3.049 662 4023348 5260326 3.905,314 4 733 529 145 STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE 3 FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Page 1 of 2 STATISTICAL SECTION General Fund (GASB 54) Nonspendable Restricted Committed Assigned Unassigned General Fund (Prior to GASB 54) Reserved Unreserved 17,800 7,687,515 17,900 7,371,530 $ 17,900 5.739.140 $ 5,000 18,000 8,237,141 All other governmental funds (GASS 54) Nonspendable $ - Restricted - Committed - Assigned - Unassigned All other governmental funds (Prior to GASB 54) Reserved Unreserved, reported in'. Special revenue funds Debt service funds Capital Projects funds 12,943,487 1,248,901 S831,634 9,123,401 14,461,546 135,438 3,051 7,101,258 8,541,195 5,014,817 402,306 11,127,221 Note'. In 2011 the City of Tukwila Implemented GASB Statement No. 54, which changed the categories for fund balances. Balances prior to 2011 were not restated to the new standards. Sou Tukwila Finance Department $90 c $80 $70 $60 $50 $40 $30 $20 $10 Fund Balances 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 146 All Other Governmental Funds General Fund CITY OF TUKWILA'. 2017 CAFR Page 2 of 2 $ - $ 1,743,362 0 1,544,022 $ 1,340,914 $ 1,141,484 $ 927,373 - 225,000 5,771,471 6,078,648 6,277,929 105,000 8,378,557 15,317,624 10,181,057 10,911,244 11,612,330 18,040,352 $ - $ - $ 7,370,000 $ 7,645,000 $ 7,645,000 $ - 2,749,681 3,480,001 3,973,726 5,446,074 45,986,463 51,236,443 7,021,183 4,510,623 4,076,803 7,221,870 3,389,139 10,282 709 - (1,566.175) (1,360,218) - - - STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS lal LAST TEN FISCAL YEARS a•e 1 oft Revenues Taxes $ 37,412,569 $ 37,167,281 $ 37,267,918 $ 38,035681 Licenses and Permis Intergovernmental Charges for Servhes Fines and Forfeitures Investment income Specal Assessments Mscelanecus Total Revenues Expenditures General Government Nbltc Saely Physical Environment Transportation Economic Fnvironmenl Mental 8 8Tysical Health Culture and Recreation Debt Service Principal Interest Capital ONlav Total Expenditures 2,022,851 1,283,453 1,618,830 3,473,910 5,697,598 1 ] 59Q486 14,525,872 24,059 907 2,569,381 1443,680 2,366,174 2,359,600 259.991 301,761 390,079 308,027 926,913 282,604 144,258 275,479 816,054 701,957 891,307 356,409 49,705,357 58,777,232 57,204638 69869013 7,992,286 8,574,563 8,387,317 8,253,440 22,878,689 25576932 24,676,370 24,327498 2,255880 2,058,913 1,724,147 2,060,482 2,783,077 2,334,298 2.332,178 2,576,511 4,995,514 4,601,391 65418. 4,682,646 4,173 4,332 4,539 4591 4,293,658 4,365,023 4,163,503 3,507,150 972000 1,316,297 1,555,028 1,766,774 872,224 778,018 849148 881,850 6,089,703 15,860,362 11 513,976 25,543,704 53,137,204 66470,129 59,748,051 73804646 CO Excess (Deficiency) of Revenues 431,846) 692.894) 43,613) 6,935,633) I Over (Under) Expenditures Other Financing Sources (Uses) V Transfers In 2.515,982 3,865,744 2,451,806 11001.619 Transfers In - Assessnenl Transfers Out (1,107,543) (2,234,444) (1,020,857) (10,061205) Capital Leases - - 110.509 15,468 Sae of Capdal Assets 53592 1,016508 21308 21,406 General Obligalnn Bands ksued - - 6935,000 5,055.688 General°Neaten Refunding Bonds Issued 6,180,000 6,947.574 - - ;Wow 147 LID Bonds Assessment Operating Loan-Tukw ie MED Remum on General Obligation Debt Denims on General Oblgalion Refunding Debt Issuance Costs on General Oblgat00 Refunding Debt Paymentto Refunded Bond Escrow Agent Total Other Financing Sources (Uses) Change in Fund Balance Before Special Item Special Item 112.151 483,599 - - (108,326) - - (6,555,273) (5,880,397) (1,069,000) (5,055.688) 1462.031 2,713,085 7,556,917 977.269 (1,959,815) (4,979,809) 5,013,304 (3.958,345) t Rain of Debt Service Ex pendeures To Total Non -Capital Ex pendeures Imte'. (a) All amounts ere reported on the modified - accrual basis Source. Tukwila Finance Department 4.1 b 148 5.2% CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION age 2 of2 $ 41,502,608 $ 42,402,070 $ 44,441,783 $ 48,548,116 $ 49,588,492 $ 51,655,075 1604,594 2,013,875 2 114,638 2,242,256 2,129,221 2.749,137 7,626 487 7,190,325 14 298,126 11.839,883 10,067,413 12,739,774 3.974,356 3,747,646 3.838,531 3 935,248 3911,473 5.767,228 220,752 242,638 264,934 261,457 318,459 325,216 106,286 151,911 479,219 475,345 541,299 826,864 2,788,350 701,723 650,415 542,180 478,838 131,979 427,368 354,395 332,268 957,158 942,784 55. 167,062 58,964,183 66.493,348 68,284,989 68,055,695 75484,915 8,504,511 24.918,306 3,022,516 2,769,182 4,767,944 9,303,742 7,505,173 7.708,394 25,720,884 27.254,312 29.035,165 1,935,895 1.807,993 1,935 228 3,111,493 5,820,601 5,792,668 5.224,964 5,226,832 5,832,384 3,373,000 4,386,392 4,580,551 4,350,052 9,405,989 9.585,551 29,366,198 30,899,412 1,955,031 1,733,400 5.238,468 6 532,195 4,493,210 4.614,027 4,543,339 4.664,129 1,991,540 5024,991 2,288.988 2,480,507 2602,782 3,713,928 W 1,178,464 1,162,649 961,457 1,125,609 1,093,584 2.603,869 J 12,099,293 5,854962 10,150,912 11.426,274 8,358,450 14,761,715 62,624,756 61,725970 65696,921 69,686,279 67,057,051 79,108,226 CO (7,457,694) (2.761,786) 796,428 (1,401,291) 995,643 (3623,311) 7,625,792 20,918953 7,300,080 5.633846 4,025,831 6,354,496 2,788,350 - - - - (6,174,358) (23,301,516) (7,900,080) (5,933,846) (4,325,831) (6,654,496) 9,903 5,493 - - (100,000) 1,000,000 3,850,000 8,075,000 32,990,000 10.456,000 6,687,500 (658,706) - - 309,758 3.719,954 356,839 802,631 (6,655. 063) 8 098,809 5.337,023 3,250,000 4,046,428 (1 995 000) 8,084,758 6,683 467 (956,798) 36,409 954 37,408,597 10.412,839 6,789 528 6.7% 11,07% 6.65 % 149 6.34% 6.30% 9.82% CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 5 GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS 2008 11,245,973 17,709,319 3,934,210 3,003,438 475,500 1,089,344 37,457,785 2009 12,190,219 14,585,015 6,172,569 2,824,407 738,341 656,730 37,167,281 2010 13,188,942 14,251,312 6,134,494 2,488,357 727,151 301,867 37,092,122 2011 13.427,139 16,113,584 5,424,643 1,780,294 667,064 622,955 38,035,681 2012 14,072,015 15,441,683 4,001,385 3,201,098 2,497,606 2,288,822 41,502,608 2013 14,510,241 16,316,398 3,879,992 2,745,475 2,570,111 2,418,148 42,440,365 2014 14,870,621 17,105,322 3,855,544 3,512,894 2,555,999 2,447,794 44,348,175 2015 14,320,085 19,334,152 4,019,288 5,321,280 2,749,140 2,739,070 48483,015 2016 14.562,501 18,908.190 4,045,916 6,508,665 2,716,257 2,856,782 49,598,312 2017 17,667,590 18,807,201 4,175,013 5,380,662 2,698,352 3,002,531 51,731,348 Notes: rai Beginning in 2017, property tax includes a voter approved excess levy, for public safety facilities. 10f Unity taxes enacted beginning in 2003 for electric, natural gas, cable and telephone utilities are assessed at rates of 6.0%. A utility tax was added in 2009 for solid waste and recycling assessed at a 6.0% rate, A utility tax rate of 100% was added in 2010 on the Citys water, seer, and stormwafer utilities. Beginning in 2012, reporting of "Business" tax revenues include the Revenue Generating Regulatory License (RGRL) fees. "Other Taxes" include a hotel/motel tax andinterfund utility taxes. Source: Tukwila Finance Department $50 $45 o $40 $35 $30 $25 $20 $15 $10 $5 $0 Tax Revenue by Source 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ■ other ■ Business • Excise M Utility ■ Sales & Use ■ Property 150 CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS STATISTICAL SECTION 2008 11,410,664 11,194,247 98.10% 216,076 11,410,632 100.00% 32 2009 12,286,929 12,017,213 97.80% 264,905 12,282,118 99.96% 4,811 2010 13,233,796 13,152,012 99.38% 80,311 13,234,267 100.00% (470) 2011 13,383,153 13,225,338 98.82% 156,088 13,376,721 99.95% 6,431 2012 13,697,474 13,521,621 98.72% 173,716 13,697,982 100.00% (508) 2013 13,740,076 13,549,525 98.61 % 175,699 13,742,487 100.02% (2,412) 2014 14,047,317 13,916,718 99.07% 126,155 14,042,872 99.97% 4,444 2015 14,245,846 14,113,739 99.07% 111,903 14,225,642 99.86% 20,204 2016 14,516,623 14,375,358 99.03% 97,341 14,472,699 99.70% 43,925 2017' 17,551,561 17,262,965 98.36% - 17,262,965 98.36% 288,596 'First year of collection on 2016 voter -approved excess levy for Rrblic Safety Ran Source: King County Office of Finance Property Tax Levies and Collections ■ Taxes Levied for Fiscal Year • Amount Collected Within Fiscal Year of Levy 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017. 151 CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 7 ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 2008 4470.042,539 595,268,205 110,399,231 5,175,709,975 2.37324 2009 4,122,961,628 746,710,751 112,779,972 4,982,452,351 2.66345 2010 3,950.829,851 717,795,417 119,827,058 4,788,452,326 2.82566 2011 3,833,295,9135 712,607,656 129,726,102 4,675,629,743 2.95408 2012 3,778,571,709 736,480,616 134,138,983 4,649,191,308 2.98778 2013 3,824,448,044 779,103,146 152,822,498 4,756,373,688 2.97799 2014 4,146,952,417 744,616,273 162,510,057 5,054,078,747 2.84188 2015 4,409.931,075 810,422.092 174,971,951 5,395,325,118 2.71073 2016 4,763,568,175 849,695,435 150,386,219 5,763,649,829 3.05735 2017 5,242,264,743 780,938,084 161,740,436 6,184,943,263 2.91864 Note: `Real, personal, and state public service property have been assessed at 100% of the estimated value. Source: King County Department of Assessments „ 57,000 ▪ 56,000 F $ 5,000 $4,000 53,000 $2,000 $1,000 5- Assessed Value By Type 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Public Utilities ■ Personal Property ■ Real Property 152 CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $1,000 OF ASSESSED VALUATION) LAST TEN FISCAL YEARS 200E 2.37324 - 2.37324 1.9626E 1.61.8 0.19700 0.27404 4.12360 009123 2009 266345 - 266345 2.22253 1.74587 0.21597 0.30000 389183 0.10514 2010 282566 - 282566 2.27990 1.90797 0.22366 0.30000 503380 0.10976 2011 2.95408 - 2.95408 2,42266 1.98580 022982 0.30000 5.44659 011616 2012 2.98778 - 2.9E778 2,56720 2.11172 0.23324 0.30000 5.69832 0,13210 2013 2.97799 - 2.97799 2.47044 2,08129 0.21533 0.33500 5,89098 015369 2014 2.84188 - 2.84188 2.28514 1,54798 0.15885 0.30217 050160 0.13860 2015 2.71073 - 271073 2,16898 195741 0.16954 0.25235 5.22858 0.12980 2016 2.58592 0.47143 3.05735 203205 1.53412 0.15334 025305 5.36954 0.11740 2017 246285 0.45579 291864 2.91820 1.32735 0.13515 0.23940 5,17356 0.10708 No• e Includes Kmng County Library D,snicf fax and Fe, Source: King County Department of As ses s ,rents 0.15000 0.14944 0.14962 0.14853 0.15653 0,15513 STATISTICAL SECTION 0.47141 0.53290 0.55753 0.50372 0,50000 0.50000 0.50000 0,50000 050089 045689 0.25000 022745 11.00828 11.67759 13.231325 13.95883 14.68036 14.77416 13.75584 13.29592 13.73427 13,65885 $3.50000 $3.00000 $2.50000 $2.00000 $1.50000 $1.00000 $0.50000 $0.00000 Direct Property Tax Rates 2008 2009 2010 2011 2012 153 2013 2014 2015 2016 2017 CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION Boeing ConOany Westfield (WEA) Soulhcenter LLC Boeing Eirybyees Credit Union La Rants LPSegae Ropertes Sabey E.orpnration LIT hdustrt'ral Lirriled Partnership KR Tukwih 050 LLGKWEO 3301 South Norfolk LLC(Sea•Tuk Warehouse LLC) CFF Kent Valley LLC Century Link Co mmancatbns (Qw est Corporation) hternational Gateway East Washington Towers LP 13KM Tukwila 117 LLC (formerly Icon Tukwila Owner Roll) gat Sound Energy/Gas - Electric Harnsh Group hcorporated Sterling Realty Organization Lowe's HMJhcorporaled Hl Investment Company Rreef Anerea Red II Corporation Heitman E Property Tax Dept Vr1g Properties LLC (LC Penney) COSMO Wholesale CITY OF TUKWILA, WASHINGTON SCHEDULE 9 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Airphne company Department Stores Gadd Union Corm ercel Ropertes Reel Estate Development Business Services Comrerchl Properties Food Ostributhn Commercial Properties Telephone Uliky NomRes denlial Roper%Manager,. Real Estate Development Investment Roper% 9ectr9/Gas Ulihy Truck Equipment Commercial Ropertes Horns brprovement Cerrrercial Ropertes Commercial Ropertes Commercial Properties Commercial Ropertes Oepartrrent Stores Cash 8 Carry Warehouse Bank of China New York Branch (fon/errs Anne Arundel Apartments Apartments AMB Property hternational Gateway West CLPF-Tukwb LP Beatac Hote1(Soar-Sealac Partners LP) Soulhcenter Corporate Square GSM Grp Federated Department Stares (Meow) Go nlerpoinl 8801 Marginal (Merril C,eek Holdings LLC) Jahn C Radovch Oev. Go. Talon Kme,view Rasa LLC (1orner6 BRCPRverview Rana LLC) CHA TukwiN LLC (Deubletree inn) Avis Rent A Car System LLC Demo ne Trust Oxbow 2601 Jorgensen Forge Corparatbn $ 649477.382 10.555 3318..672 5.396 131,088803 2,13% 121,353,075 1.97% 112,816.028 1.53% 105,799,200 1.72% 88,273,700 1.43% 87,512,300 1.42% 62141900 1.01. 60616151 0.98% 57901108 094% 57.294500 093% 50,555700 0.82°b 37.261,348 0.61 h Real Estate Development Non -Residential Roper% Management Startup Company Lodging 5mmercel Ropertees Real Estate Devebpmnsnt Department Stores Properties Trust Commercial Roperties Commercial Properties Lodging Car RendlServices Manufacturing Steel Manufacturer 000, 00056 a00, 0.0056 0.00% 0.00°2. 0.00% 0.00% 0.00. 0.00, 0.00, 000. 0.00°u 000% 0.00% 0.00% 0.00% 4 548.000,475 302.586.200 47,77] 5. 117,844.205 1063% 587% 093% 95880 480 1.86 35,598,100 0.69 11 584,382 0,22% 28 036,339 17,267495 0,3356 35 981,100 0]0% 15 508451 0.30% 8219300 0.16% 59.421 300 1.35% 0.00% 30,831200 % 15,977,900 0.30% 297.200 0.58% 23,327 718 0.45% 26.465,000 31,200200 0.61% 21,886.500 0.42% 27,058600 0.53% 19,979480 0.39% 25,11E359 0.51% Nor I'r In 2017 the fore) assessed property value in the Crfy of T9kwls vas $ 6,155826.776 r°1 In 2008 the tote/ assessed property value in the Cityof Tukwle vas $ 5155404 039. Source' King Coup% De02,I82nt of Assessments 154 CITY OF TUKWILA. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 10 RETAIL SALES TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS a 1 of 2 55 Construction and Contracting $ 1,967,785 $ 869,640 $ 917,250 $ 1,390,952 Finance, Insurance & Real Estate 118,780 119,121 99,975 115,123 Manufacturing 375,263 246,429 387,234 232,737 Transportation, Communications & Utilities 492,960 440,206 441,822 405,197 Wholesale - Durable/Non-durable Goods 1,760,449 1,436,045 1,346,750 1,119,527 Retail Trade- General Merchandise 2,231,745 2,072,356 2,068,263 2,003,947 Retail Trade - Furniture/Home Furnishings 1,830,576 1,304,234 1,380,407 1,771,083 Retail Trade - Niscellaneous 1,718,898 1,473,496 1,521,741 1,626 452 Retail Trade - Clothing & Accessories 2,103,630 2,017,904 2,018,304 2,037,554 Retail Trade - Restaurants 1,312,603 1,292,252 1,342,964 1,337,067 Retail Trade - Automotive/Gas 1,066,183 748,482 664,310 670,806 Retail Trade - Building Materials 619,657 589,341 499,383 487,620 Service hdustries -Business 1,129,380 868,260 882,012 932,422 Service hdustries - Hotels 548,962 453,657 428,450 459,606 Service hdustries - Other 318,696 283,319 215,045 202,217 All Other Categories 185,312 208,467 366,925 553,493 Notes, By State law the City of Tukwila is prohibited from reporting individual sales tax payers. Sources: Tukwila Finance Department and Washington State Department of Revenue. CITY OF TUKWILA'. 2017 CAFR a.e 2 oft $ 961,125 $ 1,212,594 $ 829.073 $ 1,255,650 $ 1,383,624 143,792 174,705 141.010 163,161 175,060 139,872 390,252 386,964 322,189 281,501 269,117 179,593 432,608 475,688 549.126 743,746 746,115 721,414 1.077,613 1,108,771 1,592.613 2,016.722 1,295.141 1,175,064 2.000,865 2,154,523 2,137.256 2,205.778 2,202,158 2,131,267 1,537,143 1,405,274 1,431,965 1,527,377 1,623, 926 1,613,643 1.703,741 1,870,200 1,973.478 1,954,150 2032.967 2,077,249 2,082,930 2,070,198 2,013,796 2,159.647 2,089,128 2,066,858 1,472,343 1,529,101 1,611,860 1,703.187 1,751,724 1,889,031 690,076 690,691 765.765 825,143 743,468 800,580 516,861 565,734 600,610 683,485 733.928 805,324 928,610 968,996 1,073,511 1,265.789 1,467,620 1,436,825 487,977 502,721 562.130 626,822 650.270 650,332 234,870 246,802 274,497 273,514 253,089 308,939 381,693 525,133 468.547 978.142 845,209 812,654 STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 11 SALES TAX RATE DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS BASIC SALES TAX RATES CRy of Tukwila Washington State King County Regional Transt Authoriy Metro Crininal Justice Department of Revenue Administration Fee 0.84% 0.84% 0.84% 0.84% 0.84% 0.84% 0840 0.840 0.84% 0.84% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.400 0.90% 0.9016 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 1.40% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% D.90% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.1016 0.10% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% SPECIAL SALES TAX RATES Restaurants of Motor Vehic ks'"' 0.50% 0.50% 0.50% 0.50% - - - 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0300 0.30% 0.30% 0.30% Notes' '' King County Food & Beverage fax is in addition to the combined sales tax rate for restaurants, taverns and bars. The funds are used to finance the professional baseball stadium in Seattle. NOTE: This taxexolrad on October 1, 2011 as faxes Imposed to pay the construction bonds for the Seattle baseball stadium expired. Effective July 1, 2003, all retail sales, leases and transfers of motor vehicles are subject to the additional sales tax of three -tenths of one percent (.003). The funds are used to finance transportation improvements. Effective April 1, 2008. King County increased the local sales 6 use tax rate one -tenth of one percent (.001). The tax wll be used far chemical dependency or mental health treatment services. '16 Effective April 1, 2009, the Regional Transit Authorty Tax increased five -tenths acne percent (005). Effec90 April 1, 2017, the Regional Transit Authority Tax increased five -tenths 01 one percent (.005), to one and four -tenths of one percent (.014). The tax wll be used to expand and coordinate light -rail, commuter -rail, and express bus service, and improve access to transit facilities in King, Pierce, and Snohomish Counties. Sou Washington State Department of Revenue Local Saks and Use Tax Rates. 157 158 CITY OF TUKWILA: 2017 CAFR 159 STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 12 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Pa 1 of 2 GOVERNMENTAL ACTIVITIES General Obligation Bonds Special Assessment IOI Leases Total Governmental Act'o6ies BUSINESS -TYPE ACTIVITIES General Obligation Bonds Revenue Bonds Public Works Trust Fund Loans Leases Total Business -Type Actvities $17,261,348 $ 22,453,003 $ 26,763,975 $ 28,006,800 $ 25,752,600 $ 21.727.609 $ 23,851,376 - - - - 6.687,500 6,687,500 40,184 35,891 17,261,348 22,453,003 26,804,159 28,042,691 25,752,600 28,415,109 30,538,876 3,642,500 3,423,797 5,112,231 4,790,000 9,021,951 8,405,397 11,666 - 3,238,825 4,395,000 7,788,843 3,980.000 7,179 635 3,540,000 6.621.342 3.075.000 6,063,071 2,580,000 5,742,866 17,788,348 16,619,194 15.422,668 11,159,635 10,161,342 9,138,071 8,322,866 Population t°t Per Capita Personal Income Percentage of Personal Income Debt Per Capita Notes. �a1 Details regarding the Cify's outstanding debt can be found in the Notes fo the Financial Statements section. tDI Reference SCHEDULE 16, Demographic Statistics, for population and personal income data. Includes amounts Due to Other Governments. Special assessment dell was issued in 2013 for the Klickitat Urban Access Project. Data not available at time of publication. 18,080 $ 62.329 $ 3.11% $ 1,939 $ Sources' U.S. Census Bureau WA State Office of Financial Managerrent City of Tukwila Finance Department $90 $80 $70 $60 $$0 $40 $30 $20 $10 $ 18,170 19,107 19,486 19,611 19,765 55,569 $ 55,503 $ 58,688 $ 63,345 $ 66,073 $ 3.87% 3.98% 3.43% 2.89% 2.88% 2,150 $ 2,210 $ 2,012 $ 1,831 $ 1,900 $ Total Debt 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 160 19,920 71,882 2.71 % 1,951 CITY OF TUKWILA: 2017 CAFR Pa.e 2 of2 $ 25,752,600 $ 21,727,609 $ 23,851,376 $ 30,084,437 $ 64,589,264 $ 69.576,786 - fi 6137,500 6,687,500 6,082,500 5,412,500 4,805,000 25,752,600 28,415.109 30,538,876 36,166,937 70,001,764 74,381,786 3,540,000 3,075,000 2,580,000 1,742,527 1,597,704 1,454,422 6,621,342 6,063071 5,742,866 5,646,458 5,046,900 4,447,522 10,161 ,342 9,138,071 8,322,866 7,388,985 6,644,604 5,901,944 19,611 19,765 19,920 19.300 19,540 19,660 $ 63,345 $ 66,073 $ 71,882 $ 77,518 $ 77,213 "' 2.89 , 2.88% 2.71 % 2.91 % 5.08 % '" $ 1,831 $ 1,900 $ 1,951 $ 2.257 $ 3,923 $ 4,084 STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING 2008 18,080 5,175 709.975 23,125,007 2009 18,170 4,973 984,133 25,876,800 2010 19,107 4,809.486.786 29,950,150 2011 19,486 4,752.606.030 28,006,800 2012 19,611 4,649.191.308 25,752,500 2013 19,765 4,756.373.688 21,727,609 2014 19,920 5,054,078,747 23,851,376 2015 19,300 5,395,325.118 30,084,437 2016 19,540 5,763,649829 64,589,264 2017 19,660 6,155,826,776 69,576,786 LAST TEN FISCAL YEARS 1.250.275 3 642 500 10,232.231 0.35% 1,008 135,438 3,423,797 22,317,565 0.45% 1,228 3,050 3,238,825 26,708,275 0.5650 1,398 3.330312 - 24.676,488 0.52% 1,266 3.012381 - 22.740,219 0.49% 1,160 6,687,500 696,346 - 27.718,763 0.58% 1,402 6,687,500 1.687,497 - 28,851,379 0.57'/ 1,448 6,082,500 1,910,940 - 34.255,997 0.63% 1,775 5,412,500 1962497 - 68,039,267 1.18"/ 3,482 4,805,000 1.323,959 - 73.057.826 1.19% 3,716 Note.. (a) Special assessment debt ores issued in 2013 for the Klichilat Urban Access Project. (b) Includes both restricted and assigned fund balance available for debt service paynent. (c) These amounts ere the general obligation bonds that are being repaid by the Foster Golf Course Fund. nfs secflon. Sources: U.S. Census Bureau State of Washington Office of Financial Nenagenent King County Depart rent of Assessments Tukwila Finance Departrent CITY OF TUKWILA'. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE 14 COMPUTATION OF DIRECT AND OVERLAPPING DEBT AS OF DECEMBER 31, 2017 Direct: City of Tukwila $ 69,576,786 Overlapping: King County 724,994,000 King County Library 87,869,746 Port o1 Seattle 388,360,000 Tukwila School District #406 57,560,005 Hospital District #1 - Total Overlapping Debt: 1,258,783,751 Total Direct and Overlapping Debt: $ 1,328,360,537 Sources: King County Office of Finance King County Office of Assessments 100.00% STATISTICAL SECTION CITY OF TUKWILA'. 2017 CAFR $ 69,576,786 1.22% 8,844,927 2.14% 1,880,413 1.22% 4,737,992 91.55% 52,696,185 4.91 % - 68,159,516 $ 137,736,302 r+l The percentage of overlapping debt applicable is estimated using taxable county assessed property values. 580 f o $70 $60 $50 $40 $30 520 SID Direct and Overlapping Debt 163 ■ City of Tukwila ■ King County ■ King County Library ■ Port of Seattle RI Tukwila School District ■ Hospital District STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 15 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Pa.e 1 of2 Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Debt Limit (7.5% of assessed value) Debt applicable to limit: General obligation bonds Other long-term debt Less: Amount set aside for repayment of general obligation debt and contracts payable Total net debt applicable to limit Source: Tukwila Finance Department $ 388,178,248 $373,048,810 $ 360,711,509 $ 356,445,452 21,881,765 28,291,920 32,919,123 29,703,995 $ 366,296,483 $ 344,756,890 $ 327,792,386 $ 326.741,457 5.64% 7.58% 461,687,008 65,128,905 396,558,104 65,128,905 164 9.13% 8.33% CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA: 2017 CAFR Pa.e2of2 $ 348,689,348 $ 356,728,027 $ 379,055,906 $ 404,649,384 $ 432,273,737 $ 461,687,008 25,884,632 21,727,609 23,288,621 29,322,914 60,208,532 65,128,905 $ 322,804,716 $ 335,000,418 $ 355,767,285 $ 375,326,470 $ 372,065,205 $ 396,558,104 7.42% 6.09% 6.14% 7.25% 13.93% 14.11% CITY OF TUKWILA, WASHINGTON SCHEDULE 16 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS 2008 18,080 62,329 1,126,908 3,884 4,107 2,769 2009 18,170 55,569 1,009,689 3,885 4,107 2,795 2010 19,107 55,503 1,060,496 3,892 4,107 2,907 2011 19,486 58,688 1,143,594 3,894 4,094 2,870 2012 19,611 63,345 1,242,259 3,896 4,094 2,902 2013 19,765 66,073 1,305,933 3,915 4,094 2,882 2014 19,920 71,882 1,431,889 3,920 4,103 2,978 2015 19,300 75,518 1,457,497 3,940 4,103 2,910 2016 19,540 77,213 1,508,742 3,969 4,103 2,873 2017 19,660 "" "` 3,995 4,103 2,961 STATISTICAL SECTION 5 9% 10.9% 11.7% 7.6% 7.4% 5.2% 4.1 % 4.5% 4.2% 3.5% Notes: (a) Per Capita Personal Income data shown is for King County. Specific data for City of Tukwila is not available. (b) Personal Income estimates are calculated by multiplying Tukwila population by the Per Capita Personal Income CO estimates for Tukwila and are based on a revised methodology that provides for more accuracy. See also Footnote (a). Qp (c) Unemployment rates are listed and estimated using the census -share method. O) "** Data not available at time of publication. Sources: Tukw ila Banning Division, Departnenl of Community Development State of Washington Office of Financial Management Work Force Development Council of Seattle - King County (Unemployment Data) Tukw ila School District #406 US Bureau of Economic Analysis 165 Unemployment Rate 2008 2009 2010 2.01.1 2012 2013 2014 2015 2016 2017 166 CITY OF TUKWILA'. 2017 CAFR Boeing Company Macy's West Stores Inc King County Metro Boeing Employee's Credk Union Nordstrom Hat Club LLC Zonar Systems Inc Untied Parcel Service Costco Wholesale Cheesecake Factory CITY OF TUKWILA, WASHINGTON SCHEDULE 17 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Aircraft Manufacturing Department Store Transit Operating Base Credit Union Family Clothing Store Clothing Accessories Miscellaneous Store Courier and Express Delivery Warehouse Club Full -Service Restaurant Source. Tukwila Finance Department- Business Licenses 4,644 11.73 % 877 2.22% 806 2.04% 658 1.66% 616 1.56% 586 1.48% 409 1.03% 388 0.98% 362 0.91% 340 0.86% STATISTICAL SECTION 8,043 376 644 376 334 18.98 % 0.89% 1.52% 0.89% 0.79% 0.00% 0.00% 0.00% 0.00% 0,00% CITY OF TUKWILA: 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 18 FULL TIME EQUIVALENT EMPLOYEE BY DEPARTMENT LAST TEN FISCAL YEARS DEPARTMENT Administrative Services 11 19.75- Council 7.00 7.00 7.00 7.00 7.00 7.00 7.00 700 7.00 7.00 Mayor '°' 11.00 1600 17.00 15.75 16.75 17.75 21.00 20.00 17.00 17.00 Hunan Resources" - 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.00 Finance 12.00 12.00 13.00 11.00 12.00 12.00 12.00 12.00 12.00 11.00 Recreation 23.50 22.50 20.75 16.25 16.25 16.25 16.00 16.75 17.25 16.25 Community Development 24.25 24.25 23.00 22.63 23.38 22.13 21.63 21.00 23.75 23.00 Court"' - 9.75 8.75 8.75 9.00 9.00 9.10 8.10 9.10 10.40 Police "' 83.00 82.00 80.00 83.00 88.00 87.50 89.00 93.00 93.75 92.75 Fire 64.00 63.00 65.00 66.00 67.00 67.00 67.00 70.00 71.00 73.00 hlorneeon Technology8.00 8.00 8.00 8.00 7.00 6.00 6.00 7.00 9.00 Public VVorks 33.00 32.00 30.00 30.00 30.00 31.00 31.00 32.00 32.00 31.00 Parks 7.50 7.50 7.50 7.50 7.50 6.00 7.00 7.00 8.00 9.00 Street 12.00 12.00 11.00 12.00 12.00 12.50 11.50 10.00 12.00 11.00 Water 7.00 7.00 7.00 7.00 7.00 7.00 7.00 6.00 7.00 7.00 Sewer 2.00 2.00 100 2.00 2.00 200 2.00 200 2.00 3.00 Golf 9.75 9.75 10.00 9.25 8.25 9.25 8.25 8.25 7.75 875 Surface Water 8.00 8.00 7.00 800 8.00 800 8.00 9.00 900 9.00 Equipment Rental 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Metropolitan Park Datrbt Pool1°I - - - 2.00 2.00 2.00 2.00 - Notes. Based on filled positions not budgeted positions. The departments for Human Resources, Court. City Clerk and Information Technology were previously reported under Administrative Services. ml The department of City Clerk began reporting to the Mayor's department in 2009. Itl1 On September 12, 2011, the Board of Commissioners approved the formation of the Tukoila Metropolitan Park District (MPD) Pool. For the comprehensive annual financial report years o12011 and 2012, the MPD Pool was treated as a discretely presented component unit. Effective with the report year 2013, statistical information is now included for the MPD and presented as a blended component unit. Source Tukwila Finance Department CITY OF TUKWILA. 2017 CAFR CITY OF TUKWILA, WASHINGTON SCHEDULE 19 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS STATISTICAL SECTION i•i FUNCTION Police Number of Calk for Servoe 35816 33,0'35 32889 30,272 31916 31,355 29,840 32946 34,229 63,123 Fire Number of Responses 4.824 4654 4.574 4649 4,844 4,604 5,1. 5.549 5,754 5640 Total Fre Loss 32,300685 91934596 91,655571 91661596 3675,847 3343495 32736080 21.926,944 32,821,016 91,142486 Total Inspections 6,787 6,787 "1 1,550 1360 a 4,541 3,339 3,850 2,331 1,860 1,951 Parks and Recr eatimn Class Participants 109,273 103,603 85693 64.049 58260 52,319 45,514 68976 64.782 83,030 Fife' Cormunily Ctr Adrrissons 117,533 134,183 134,275 115.728 116.136 114,748 132,397 136,984 141,218 143,872 Number of Fire Stations 4 4 4 4 4 4 4 4 4 Rounds of Goo Rayed 53,565 53,800 50,445 45,947 47,392 47,757 47,267 51.017 47,595 43.568 Number of Engines/Rescue Trucks/Ladders 9 9 8 7 7 7 9 9 9 Fbol Attendance -- 59077 80,727 101,128 66.213 69,332 71,233 79,537 - - - Number of Medical Aid Vehicles 2 2 2 1 1 1 1 1 1 CITY OF TUKWILA'. 2017 CAFR STATISTICAL SECTION CITY OF TUKWILA, WASHINGTON SCHEDULE 20 CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS 8.6 9.7 9.7 9.7 9.63 9.63 9.63 9.63 9.63 9.63 Street Mks 79 79 79 79 79 79 79 79 79 79 Transportation Hours Nb 'maiming 19,840 22.140 20360 20360 22920 16,767 627 4,716 4835 4,936 Paved Streets (lane riles) 163 178 178 178 188.2 188.2 188.2 188.2 188.2 188.2 Signalized Intersections 63 59 59 59 62 62 a 62 62 66 Sidewalks (miles) 54 56 56 56 64.5 64.8 64.8 64.8 64.8 64.8 Hours k4a'ntainimg 7,540 6,700 6.925 6,925 7,000 8,815 3,012 2,408 2,135 2,986 Dunbar of Traffic Signals 57 59 59 59 64 63 63 63 74 76 Water Utility Services Number of Streetlights Owned by Seattle City Light 1,180 1,180 1,335 1,335 "I 901 901 902 902 902 902 Total Customers 2,109 2,112 2,100 2,109 2,117 2,118 2,126 2,145 2,160 2,176 Number of Streetlights Owned by Puget Sound Energy 670 696 696 623 "' 187 187 187 187 187 187 Total CabnsMlater(in Number of Streetlights Owned by City of Tukwila - - I`I 1,210 1.216 1,224 1.224 1.224 1.224 thousands) .0915 731,469 630,755 625,976 650,659 .5,982 668,740 697.147 655.472 697,210 FUNCTION General Government Total City Area (Square Mies) Public Safety Poke: Number of Vehicle Units 67 70 76 84 88 89 89 93 93 sanitary sewer Total Customers 1684 1694 1699 1,710 1,727 1742 1,752 1775 1789 1,808 Surface Water Total Customers 5,164 5.204 5,207 5.207 5212 5226 5,239 5,242 5,249 5282 Licenses Business Licenses 2523 2422 2,454 2611 2,030 1,877 2.206 2,220 1,909 2,120 ONstde Contractors - - - - 6' 1066 1,132 1.216 1,216 945 1,437 Permits Building Permits 423 265 2389 354 374 347 277 311 348 14e0701'64186rn40 256 159 160 180 191 221 216 154 192 198 Electrical 861386 1,533 821 955 1,158 1,175 1,337 1,223 1,119 1,175 1,047 Numbing Permits 264 145 163 187 210 167 184 140 185 165 Wbkc Works Pormis 154 131 138 106 126 155 1. 163 175 136 Libraries Number of Libraries Total Circulator 2 2 2 2 303.665 318,991 327,004 333,451 332.509 313571 284,667 214,520 184,492 157,168 4' Notes: of new clubhouse completed and opened in 2003. Due to inf orrrelion syslemand data programlransitonhg, this total does not'nclude fire prevention staff inspections at Ihk tine as reported in prior years. ` g2012, Outside Contractors began their own business&sensing category. Prior to this, outside contractors were consolNated with current year issued ken • Information o available. Pool lac�ilit'as acquired from King County 'm 2003, Sources Tukwila Cepartrrenis. King County Library System Number of Hazardous Materials Trailer LA its 2 2 2 2 2 2 2 2 2 Culture and Recreation Parks Acreage I'I Number of Parks Golf Course Acreage Maintained Trails (mks) 0Lrber of Flaygrounds Swinrring Pool Visitor Center Community Center/Recreation Facilities Number of Libraries Water Water Distribution Mains (riles) MaxinvmTily Capacity (mAions of gallons) Number of Ere Hydrants (Owned by City of Tukwila) Vehicles 1 5 Sewer Sanitary Sewers (mikes) Meximum0aily Treatirent Capacity (millions of gallons) 6. Vehicles 6 16 1 6 4 1 54 3 6.3 162 162 175.6 175,6 175.6 190 190 191 18 18 19 19 19 19 19 20 67 67 77.26 77.26 77.26 77.26 77,26 77.26 15 15 15 15 15 15 15 15 11 11 11 11 11 11 11 11 1 _ 1 1 1 1 1 1 1 1 1 11 1 1 1 2 2 2 2 2 2 2 41 41 41 41 49 49 49 49 10 10 10 10 10 10 10 10 542 554 576 576 576 577 577 579 8 8 8 8 9 9 9 9 37 37 37 37 37 37 37 39 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6.33 6 6 6 5 4 4 5 5 Surface Water Storm Drains (miles) let 6 6 69 70 70 70 70 71 70.5 97.4 Vehicles 4 4 4 4 8 8 8 8 Wes: r'I Reflects the correct reporting of date ler Culture and Recreation - Parks creage for the years 2001 through 2006. Parks acreage previously reported included golf course acre g j°1 Reflects the correct reporting of data for Surface Water - Storm Drains (miles) for the years 2001 through 2006. Miles previously reported were incorrect data estimates. into the City's meters. Also, additional street lights were added due to new construction for Southcenter Parkway Extension and Klickitet Projects. Sou Various Departments -Tukwila 169 170 APPENDIX C DTC AND ITS BOOK -ENTRY SYSTEM DTC AND ITS BOOK -ENTRY SYSTEM The information in this section concerning the Depository Trust Company, New York, New York ("DTC') and DTC's book -entry system has been obtained from DTC's website at www.dtcc.com and the City takes no responsibility for the accuracy thereof. Beneficial Owners (as hereinafter defined) should therefore confirm the following with DTC or the Participants (as hereinafter defined). For purposes of this section, references to the Issuer mean the City, references to Agent mean the Bond Registrar and references to Securities means the Bonds. For the purposes of this Official Statement, the term "Beneficial Owner" includes the person for whom the Participant acquires an interest in the Bonds. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such maturity and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post - trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of the Securities under the DTC system, must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial C-1 Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.] 6. [Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. [A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book -entry -only transfers through DTC. C-2 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this "Certificate") is executed and delivered by the City of Tukwila, Washington (the "City"), in connection with the issuance by the City of its Limited Tax General Obligation Bonds, 2018 (the "Bonds") pursuant to Ordinance No. 2559 of the City Council of the City (the "Council"), passed on December 4, 2017, as amended (the "Bond Ordinance"). Pursuant to the Bond Ordinance, the City hereby covenants and agrees as follows: Section 1. Purpose of this Certificate. This Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (each as defined below). Section 2. Definitions. In addition to the definitions set forth herein, in the Bond Ordinance or in the Official Statement, which apply to any capitalized term used in this Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings: Commission means the Securities and Exchange Commission. MSRB means the Municipal Securities Rulemaking Board. Official Statement means the Official Statement related to the Bonds. Participating Underwriter means the original underwriter of the Bonds required to comply with the Rule in connection with offering the Bonds. Rule means Section (b)(5) of Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provisions of Annual Information. (a) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to the MSRB, the following annual financial information and operating data for the prior fiscal year (commencing in 2019 for the fiscal year ended December 31, 2018): (1) Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the Official Statement; (2) Principal amount of general obligation debt outstanding at the end of the applicable fiscal year; (3) Assessed valuation of taxable property in the City for that fiscal year; and (4) Property tax levy amounts and rates for that fiscal year. Items (2)-(4) shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before the last day of the ninth month after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such D-1 annual financial information and operating data, the City may cross refer to other documents available to the public on the MSRB's internet website or filed with the Commission. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to the MSRB. (b) Listed Events. The City further agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: • Principal and interest payment delinquencies; • Non-payment related defaults, if material; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; • Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; • Modifications to the rights of Bondholders, if material; • Optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856, if material, and tender offers; • Defeasances; • Release, substitution, or sale of property securing repayment of the Bonds, if material; • Rating changes; • Bankruptcy, insolvency, receivership or similar event of the City; • The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and • Appointment of a successor or additional trustee or the change of name of a trustee, if material. Section 4. Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in above on or prior to the date set forth in above. Section 5. EMMA; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination/Modification. The City's obligations to provide annual financial information and notices of listed events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this undertaking shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of all or any portion of this undertaking. Notwithstanding any other provision of this certificate, the City may amend this certificate, and any provision of the undertaking contained herein may be waived, in accordance with Rule, which, as currently interpreted by the Commission, requires that (i) the amendment or waiver be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the City, or type of business conducted; (ii) the undertaking, as amended or waived, would have D-2 complied with the requirements of Rule at the time of the primary offering, after taking into account any amendments or interpretations of Rule, as well as any change in circumstances; and (iii) the amendment or waiver does not materially impair the interests of holders of the Bonds, as determined either by parties unaffiliated with the City (such as bond counsel) or by the approving vote of holders of the Bonds. In the event of any amendment or waiver of the undertaking provided for in this certificate, the City shall describe such amendment or waiver in the next annual report, and shall include a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed event above, and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Bond Owner's Remedies. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under this undertaking, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. For purposes of this Certificate, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Certificate, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent. DATED this 14th day of August, 2018. CITY OF TUKWILA, WASHINGTON Peggy McCarthy, Finance Director D-3 S&P Global Ratings July 24, 2018 City of Tukwila 6200 Southcenter Boulevard Tukwila, WA 98188 Attention: Ms. Peggy McCarthy, Finance Director One California Street, 31st Floor San Francisco, CA 94111-5432 tel 415 371-5000 reference no.: 1522867 Re: US$20,000,000 Tukwila, Washington, Limited General Obligation Bonds, Series 2018, dated: Date of delivery, due: December 01, 2038 Dear Ms. McCarthy: Pursuant to your request for an S&P Global Ratings rating on the above -referenced obligations, S&P Global Ratings has assigned a rating of "AA" . S&P Global Ratings views the outlook for this rating as stable. A copy of the rationale supporting the rating is enclosed. This letter constitutes S&P Global Ratings' permission for you to disseminate the above - assigned ratings to interested parties in accordance with applicable laws and regulations. However, permission for such dissemination (other than to professional advisors bound by appropriate confidentiality arrangements) will become effective only after we have released the rating on standardandpoors.com. Any dissemination on any Website by you or your agents shall include the full analysis for the rating, including any updates, where applicable. To maintain the rating, S&P Global Ratings must receive all relevant financial and other information, including notice of material changes to financial and other information provided to us and in relevant documents, as soon as such information is available. Relevant financial and other information includes, but is not limited to, information about direct bank loans and debt and debt -like instruments issued to, or entered into with, financial institutions, insurance companies and/or other entities, whether or not disclosure of such information would be required under S.E.C. Rule 15c2-12. You understand that S&P Global Ratings relies on you and your agents and advisors for the accuracy, timeliness and completeness of the information submitted in connection with the rating and the continued flow of material information as part of the surveillance process. Please send all information via electronic delivery to: pubfin_statelocalgovtna,spglobal.com. If SEC rule 17g-5 is applicable, you may post such information on the appropriate website. For any information not available in electronic format or posted on the applicable website, Please send hard copies to: S&P Global Ratings Public Finance Department 55 Water Street New York, NY 10041-0003 The rating is subject to the Terms and Conditions, if any, attached to the Engagement Letter applicable to the rating. In the absence of such Engagement Letter and Terms and Conditions, the rating is subject to the attached Terms and Conditions. The applicable Terms and Conditions are incorporated herein by reference. PF Ratings U.S. (4/28/16) Page I 1 S&P Global Ratings is pleased to have the opportunity to provide its rating opinion. For more information please visit our website at www.standardandpoors.com. If you have any questions, please contact us. Thank you for choosing S&P Global Ratings. Sincerely yours, S&P Global Ratings a division of Standard & Poor's Financial Services LLC gt enclosures cc: Ms. Johanna Crane, Senior Financial Advisory Associate Public Financial Management, Inc. PF Ratings U.S. (4/28/16) Page 12 S&P Global Ratings S&P Global Ratings Terms and Conditions Applicable To Public Finance Credit Ratings General. The credit ratings and other views of S&P Global Ratings are statements of opinion and not statements of fact. Credit ratings and other views of S&P Global Ratings are not recommendations to purchase, hold, or sell any securities and do not comment on market price, marketability, investor preference or suitability of any security. While S&P Global Ratings bases its credit ratings and other views on information provided by issuers and their agents and advisors, and other information from sources it believes to be reliable, S&P Global Ratings does not perform an audit, and undertakes no duty of due diligence or independent verification, of any information it receives. Such information and S&P Global Ratings' opinions should not be relied upon in making any investment decision. S&P Global Ratings does not act as a "fiduciary" or an investment advisor. S&P Global Ratings neither recommends nor will recommend how an issuer can or should achieve a particular credit rating outcome nor provides or will provide consulting, advisory, financial or structuring advice. Unless otherwise indicated, the term "issuer" means both the issuer and the obligor if the obligor is not the issuer. All Credit Rating Actions in S&P Global Ratings' Sole Discretion. S&P Global Ratings may assign, raise, lower, suspend, place on CreditWatch, or withdraw a credit rating, and assign or revise an Outlook, at any time, in S&P Global Ratings' sole discretion. S&P Global Ratings may take any of the foregoing actions notwithstanding any request for a confidential or private credit rating or a withdrawal of a credit rating, or termination of a credit rating engagement. S&P Global Ratings will not convert a public credit rating to a confidential or private credit rating, or a private credit rating to a confidential credit rating. Publication. S&P Global Ratings reserves the right to use, publish, disseminate, or license others to use, publish or disseminate a credit rating and any related analytical reports, including the rationale for the credit rating, unless the issuer specifically requests in connection with the initial credit rating that the credit rating be assigned and maintained on a confidential or private basis. If, however, a confidential or private credit rating or the existence of a confidential or private credit rating subsequently becomes public through disclosure other than by an act of S&P Global Ratings or its affiliates, S&P Global Ratings reserves the right to treat the credit rating as a public credit rating, including, without limitation, publishing the credit rating and any related analytical reports. Any analytical reports published by S&P Global Ratings are not issued by or on behalf of the issuer or at the issuer's request. S&P Global Ratings reserves the right to use, publish, disseminate or license others to use, publish or disseminate analytical reports with respect to public credit ratings that have been withdrawn, regardless of the reason for such withdrawal. S&P Global Ratings may publish explanations of S&P Global Ratings' credit ratings criteria from time to time and S&P Global Ratings may modify or refine its credit ratings criteria at any time as S&P Global Ratings deems appropriate. Reliance on Information. S&P Global Ratings relies on issuers and their agents and advisors for the accuracy and completeness of the information submitted in connection with credit ratings and the surveillance of credit ratings including, without limitation, information on material changes to information previously provided by issuers, their agents or advisors. Credit ratings, and the maintenance of credit ratings, may be affected by S&P Global Ratings' opinion of the information received from issuers, their agents or advisors. PF Ratings U.S. (4/28/16) Page 13 Confidential Information. S&P Global Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received from issuers, their agents or advisors. For these purposes, "Confidential Information" shall mean verbal or written information that the issuer or its agents or advisors have provided to S&P Global Ratings and, in a specific and particularized manner, have marked or otherwise indicated in writing (either prior to or promptly following such disclosure) that such information is "Confidential." S&P Global Ratings Not an Expert, Underwriter or Seller under Securities Laws. S&P Global Ratings has not consented to and will not consent to being named an "expert" or any similar designation under any applicable securities laws or other regulatory guidance, rules or recommendations, including without limitation, Section 7 of the U.S. Securities Act of 1933. S&P Global Ratings has not performed and will not perform the role or tasks associated with an "underwriter" or "seller" under the United States federal securities laws or other regulatory guidance, rules or recommendations in connection with a credit rating engagement. Disclaimer of Liability. S&P Global Ratings does not and cannot guarantee the accuracy, completeness, or timeliness of the information relied on in connection with a credit rating or the results obtained from the use of such information. S&P GLOBAL RATINGS GIVES NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. S&P Global Ratings, its affiliates or third party providers, or any of their officers, directors, shareholders, employees or agents shall not be liable to any person for any inaccuracies, errors, or omissions, in each case regardless of cause, actions, damages (consequential, special, indirect, incidental, punitive, compensatory, exemplary or otherwise), claims, liabilities, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in any way arising out of or relating to a credit rating or the related analytic services even if advised of the possibility of such damages or other amounts. No Third Party Beneficiaries. Nothing in any credit rating engagement, or a credit rating when issued, is intended or should be construed as creating any rights on behalf of any third parties, including, without limitation, any recipient of a credit rating. No person is intended as a third party beneficiary of any credit rating engagement or of a credit rating when issued. PF Ratings U.S. (4/28/16) Page 14 Blanket Issuer Letter of Representations To be Completed by Issuer) CITY OF TUKWILA, WASHINGTON (Name of Issuer October 18, 1999 !Due. Attention: Underwriting Department — Eligbitity he D Trust Company 55 Water 50th New Yorlt, hY 10041-0099 Ladies and Cendemen:- This letter sets forth our undemanding with respect to all issues (the "Securities) that Issuer shall request be made eligible for deposit.by The Depository Trust Company ("DTC"). To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in accordance with DTCs Rules with respect to the Securities, Issuer represents to DTC that Issuer will comply with the requirements stated in DTCs Operational Arrangements, as they may be amended from time to time. Note: Schedule A contains statements that DTC believes accurately descnle DTC, the method of effecting book - entry t ansfas of seonities related did through DTC. and Received and Accepted: Very truly yours. City of Tukwila,- Washington Alan R.•Doerschel, Finance Director (Typewrite Name dt Tide) THE D RY TRU ► O.MPA 6200 Southcenter Boulevard e...? O net Addreu) Tukwila, Washington 98188 (Grey) (206) 433-1800 IStaoe) Rip? (Pbone Number) SCHEDULE A (To Blanket Issuer Letter of Representations! SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK -ENTRY -ONLY ISSUANCE (Prepared by DTC—bracketed material may be applicable only to certain issues) 1. The Depositor). Trust Company ('DTC"). New York. NY. will act as securities depository for the securities %the "Securities":. The Securities mill be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other naune as may. be requested by an authorized representative of DTC. One fully registered Security certificate will be issued for [each issue . ot] the Securities. [each] in the aggregate principal amount of such issue. and will be deposited with • DTC. [If, however. the aggregate principal amount of [any] issue exceeds 8200 million. one certificate will be issued with respect to each 8200 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue.) • 2. DTC is'a limited -purpose trust company organized under the New York Banking Law. a "banking, organization" within the meaning of the New York Banldng Law. a member of the Federal Reserve System; a clearing corporation- within the meaning of the New York Uniform Commercial Code, and a -clearing agency- registered pursuant to the provisions of Section I T A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC aho facilitates the settlement among Participants of securities transactions. such as transfers and pledges. in deposited securities through electronic computerized book -entry changes in Participants' accounts. thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers. banks. trust companies, clearing corporations. and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Eechange. Inc.. the American Stock Exchange. Inc., and the National Association of Securities Dealers. Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks. and trust companies that clear through or maintain a custodial relationship with a Direct Participant. either directly or indirectly !`Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants. which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which mar• or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notice's and other communications by DTC to Direct Participants. by Direct Participants to Indirect Partcip► nts. and" bv Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them. subject to any statutory or regulatory requirements as may be in et:ect 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 Pray 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 ina listing attached to the Omnibus Pray')_ 8. Principal and interest payments on the Securities will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and correspond'mg detail Information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTCs records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices. as is the case with securities held for the accounts of customers in bearer form or registered in -street name." and will be the responsibility of such Participant and not of DTC (nor its nominee). .Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested bv an authorized representative of' DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to Beneficial Owners is the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing) Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to (Tender/Remarketing) Agent. The requirement for physical delivery of Securities in connection with an _optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTCs 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 depositor• 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 CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (this "Certificate") is executed and delivered by the City of Tukwila, Washington (the "City"), in connection with the issuance by the City of its Limited Tax General Obligation Bonds, 2018 (the "Bonds") pursuant to Ordinance No. 2559 of the City Council of the City (the "Council"), passed on December 4, 2017, as amended (the "Bond Ordinance"). Pursuant to the Bond Ordinance, the City hereby covenants and agrees as follows: Section 1. Purpose of this Certificate. This Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (each as defined below). Section 2. Definitions. In addition to the definitions set forth herein, in the Bond Ordinance or in the Official Statement, which apply to any capitalized term used in this Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings: Commission means the Securities and Exchange Commission. MSRB means the Municipal Securities Rulemaking Board. Official Statement means the Official Statement related to the Bonds. Participating Underwriter means the original underwriter of the Bonds required to comply with the Rule in connection with offering the Bonds. Rule means Section (b)(5) of Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provisions of Annual Information. (a) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to the MSRB, the following annual financial information and operating data for the prior fiscal year (commencing in 2019 for the fiscal year ended December 31, 2018): (1) Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the Official Statement; (2) Principal amount of general obligation debt outstanding at the end of the applicable fiscal year; (3) Assessed valuation of taxable property in the City for that fiscal year; and 10076 00005 ha24ce509b (4) Property tax levy amounts and rates for that fiscal year. Items (2)-(4) shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before the last day of the ninth month after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross refer to other documents available to the public on the MSRB's interne website or filed with the Commission. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to the MSRB. (b) Listed Events. The City further agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: • Principal and interest payment delinquencies; • Non-payment related defaults, if material; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; • Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; • Modifications to the rights of Bondholders, if material; • Optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856, if material, and tender offers; • Defeasances; • Release, substitution, or sale of property securing repayment of the Bonds, if material; • Rating changes; • Bankruptcy, insolvency, receivership or similar event of the City; • The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and • Appointment of a successor or additional trustee or the change of name of a 111n7A nnnnr hn7drer11ah trustee, if material. Section 4. Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in above on or prior to the date set forth in above. Section 5. EMMA; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination/Modification. The City's obligations to provide annual financial information and notices of listed events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this undertaking shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of all or any portion of this undertaking. Notwithstanding any other provision of this certificate, the City may amend this certificate, and any provision of the undertaking contained herein may be waived, in accordance with Rule, which, as currently interpreted by the Commission, requires that (i) the amendment or waiver be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the City, or type of business conducted; (ii) the undertaking, as amended or waived, would have complied with the requirements of Rule at the time of the primary offering, after taking into account any amendments or interpretations of Rule, as well as any change in circumstances; and (iii) the amendment or waiver does not materially impair the interests of holders of the Bonds, as determined either by parties unaffiliated with the City (such as bond counsel) or by the approving vote of holders of the Bonds. In the event of any amendment or waiver of the undertaking provided for in this certificate, the City shall describe such amendment or waiver in the next annual report, and shall include a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a listed event above, and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. 1(1(17k (Hiring hn74rpcflQh Section 7. Bond Owner's Remedies. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the City's obligations under this undertaking, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. For purposes of this Certificate, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Certificate, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent. DATED this 14th day of August, 2018. CITY OF TUKWILA, WASHINGTON �n c McCarthy, FinarC„e Director 1 flf7F flflflfl5 hn94c fl9h SIGNATURE IDENTIFICATION AND NONLITIGATION CERTIFICATE We, ALLAN EKBERG and CHRISTY O'FLAHERTY, the duly chosen, qualified and acting Mayor and City Clerk, respectively, of the City of Tukwila, Washington, DO HEREBY CERTIFY that our facsimile signatures appearing on each of the following -described limited tax general obligation bonds of the City are true and genuine facsimiles of our signatures. The bonds are dated August 14, 2018 are in the total principal amount of $18,365,000, are designated "City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018," are in fully registered form, are issuable in the denomination of $5,000 each or any integral multiple of $5,000, provided no bond represents more than one maturity, are payable, both principal and interest, in lawful money of the United States of America, bear interest payable semiannually on the first day of June and December, commencing on December 1, 2018, at the following rates and mature on the following dates in the following principal amounts: Maturity Year Principal Interest (December 1) Amount Rate 2022 $ 730,000 5.00% 2023 765,000 5.00 2024 805,000 5.00 2025 845,000 5.00 2026 885,000 5.00 2027 930,000 5.00 2028 975,000 5.00 2029 1,025,000 5.00 2030 1,080,000 4.00 2031 1,120,000 4.00 2032 1,165,000 4.00 2033 1,210,000 4.00 2034 1,260,000 4.00 2035 1,310,000 4.00 2036 1,365,000 4.00 2037 1,420,000 4.00 2038 1,475,000 4.00 WE FURTHER CERTIFY that there is no controversy or litigation pending or to the best of our knowledge threatened affecting the issuance and delivery of said bonds, the levy and collection of taxes and other revenue pledged to pay the principal thereof and interest thereon, the proceedings and authority under which said bonds are issued and said taxes levied, the validity of said bonds, the corporate existence or boundaries of the City, or the title of the present officers to their respective offices, and that no authority or proceedings for the issuance of said bonds has or have been repealed, revoked or rescinded. DATED as of this 14th day of August, 2018. Signatures Title Mayor City Clerk 10076 00005 ha17a827kv ********** STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this (ONI"' day of August, 2018, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared ALLAN EKBERG, to me known to be the Mayor of the City of Tukwila, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that he signed said instrument as his free and voluntary act and deed for the uses and purposes therein mentioned. !Om., a Lcrib4-o dk-u,, Notary Public NNN`NNt11111 ire 4:4V itel I I I , i0vs��`_ O ig.N �j�lllIfOF WAS \\? STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this ! U day of August, 2018, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared CHRISTY O'FLAHERTY, to me known to be the City Clerk of the City of Tukwila, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that she signed said instrument as her free and voluntary act and deed for the uses and purposes therein mentioned. - i Ct Op WAsickW 1Dc,`.n— At rn [Printed Name] My appointment expires: l a - / 9 - 11 oAN- (,LPrY) d� Notary Public T»Lno\ 41 mbe d c vL [Printed Name] My appointment expires: 102 • / 9 - °f 10076 00005 ha17a827kv I, CERTIFICATE OF MAILING Holli B. Van Valkenburg the duly chosen (PRINT OR TYPE NAME) qualified and acting Paralegal (POSITION) of the law firm of Pacifica Law Group LLP DO HEREBY CERTIFY that on the 19th day of December, 2016, I mailed to the Secretary of State of the State of Washington, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials: Name Position ALLAN EKBERG Mayor, City of Tukwila King County, Washington Dated: December 19, 2016 10076 00002 fm16gh2850 CERTIFICATE OF MANUAL SIGNATURE STATE OF WASHINGT ) ss: COUNTY OF KING I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Allan Ekberg (print or type) I have been duly chosen and am qualified and acting as Mayor for (title orposition) City of Tukwila, Washington (name of ntunlctpality) The signature appearing above is my true manual signature. This affidavit is made to comply with 39.62.020 Revised Code of Washington (Ch. 86, Wash. Sess. Laws of 1969). Signature SUBSCRIBED AND SWORN TO before me this 02 I day of December, 2016. 440 y NOTARY PUBLIC in and fhr the State of Washington, residing at `T U K-w ;I Printed Name:'00k-n r, be , D d c rl My Commission Expires: I, CERTIFICATE OF MAILING Holli B. Van Valkenburg the duly chosen (PRINT OR TYPF. NAME) qualified and acting Paralegal of the of (POSITION) law firm Pacifica Law Group LLP DO HEREBY CERTIFY that on the 19th day of December, 2016, I mailed to the Secretary of State of the State of Washington, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials: Name Position CHRISTY O'FLAHERTY City Clerk, City of Tukwila King County, Washington Dated: December 19, 2016 10076 00002 fm16gj2819 CERTIFICATE OF MANUAL SIGNATURE v4- .4j'-) Signature STATE OF WASHINGTON ) ss: COUNTY OF KING I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Christy O'Flaherty (print or type) I have been duly chosen and am qualified and acting as City Clerk (title or position) for City of Tukwila, Washington (name of municipality) The signature appearing above is my true manual signature. This affidavit is made to comply with 39.62.020 Revised Code of Washington (Ch. 86, Wash. Sess. Laws of 1969). x/10D 17-7/67j3e Signature SUBSCRIBED AND SWORN TO before me this I day of December, 2016. ao, wC n 1 " � NOTARY PUBLIC in anefor the State of r Washington, residing at iin..16-4.� , i t '� •• " Z Printed Name: t.�'1 A l rnbtu .0; c1 rl N 444� d ��° ...." My Commission Expires: i a - i �) - 19 ' a ��i��go ` CERTIFICATE OF AUTHORIZATION OF AUTHORIZED SIGNER ON BEHALF OF THE FISCAL AGENT FOR THE STATE OF WASHINGTON I, Greg E. Skutnik, certify that I am an Assistant Vice President, of U.S. Bank National Association (the `Bank"), fiscal agent for the State of Washington and Registrar for the City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2018, in the aggregate principal amount of $18,365,000; and I further certify that Carolyn Morrison is authorized by the Bank to sign the above bonds as an Authorized Signer for the Bank; and I further certify that the signature set forth below is the true and correct signature of that Authorized Signer. DATED as of this 14th day of August 2018. U.S. BANK NATIONAL ASSOCIATION, fiscal agent for the State of Washington By: Name: reg E. Skutnik Title: Assistant Vice President Authorized Signer CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2018 $18,365,000 CERTIFICATE OF AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS U.S. Bank National Association, fiscal agent for the State of Washington (the "Registrar"), hereby certifies as follows: (1) The Registrar hereby acknowledges receipt in Seattle, Washington, of the following numbers of unauthenticated bonds of the following issue: Bond Issue Number of Unauthenticated Bonds Received City of Tukwila, Washington, Limited Tax General 17 Obligation Bonds, 2018 - $18,365,000 (2) On the date hereof the Registrar authenticated and registered the City of Tukwila, Washington, Limited Tax General Obligation Bonds, 2018, in the aggregate principal amount of $18,365,000 (the "Bonds"), by manually executing the Certificate of Authentication and by entering the names and addresses of the Bond owners or their nominees in records maintained for such purpose and shall hold the Bonds on behalf of The Depository Trust Company. (3) All unauthenticated bonds delivered to the Registrar shall be held by it and shall be subject to the terms of the Agreement for Fiscal Agency Services dated as of February 1, 2015, between the Washington State Finance Committee, as agent of the state of Washington, and U.S. Bank National Association (the "Fiscal Agency Contract"), and the duties and obligations created therein. The Registrar shall be liable for the safekeeping thereof and for the performance of its duties and obligations as specifically set forth therein and for the actions and omissions of its agent(s). The Registrar shall act in good faith, and no implied duties or obligations shall be incurred by the Registrar other than those specifically in the Fiscal Agency Contract. (4) CUSIP numbers have been assigned to the Bonds as follows: Maturity Year Principal Interest CUSIP (December 1) Amount Rate No. 2022 $ 730,000 5.00% 899052LM4 2023 765,000 5.00 899052LN2 2024 805,000 5.00 899052LP7 2025 845,000 5.00 899052LQ5 2026 885,000 5.00 899052LR3 2027 930,000 5.00 899052LS1 2028 975,000 5.00 899052LT9 2029 1,025,000 5.00 899052LU6 2030 1,080,000 4.00 899052LV4 2031 1,120,000 4.00 899052LW2 2032 1,165,000 4.00 899052LX0 2033 1,210,000 4.00 899052LY8 2034 1,260,000 4.00 899052LZ5 2035 1,310,000 4.00 899052MA9 2036 1,365,000 4.00 899052MB7 2037 1,420,000 4.00 899052MC5 2038 1,475,000 4.00 899052MD3 DATED as of this 14th day of August, 2018. U.S. BANK NATIONAL ASSOCIATION, fiscal agent for the State of Washington, as Registrar OFFICIAL STATEMENT CERTIFICATE I, Peggy McCarthy, Finance Director of the City of Tukwila, Washington (the "City"), acting in my official capacity, DO HEREBY CERTIFY that to the best of my knowledge and belief, and after reasonable investigation, (a) the Preliminary Official Statement relating to the Bonds as of its date was, and the final Official Statement relating to the Bonds as of its date and as of the date hereof was and is, accurate and complete in all material respects and did not (in the case of the Preliminary Official Statement) and did not and does not (in the case of the final Official Statement) contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading (except that no representation is made with respect to the information in Appendix C—"DTC AND ITS BOOK -ENTRY SYSTEM," which has been obtained from The Depository Trust Company, or the form of opinion of bond counsel); and (b) there has been no material adverse change in the financial condition and affairs of the City or relating to the economy of the City since the dated date of such Official Statement. The City has satisfied in all material respects all conditions contemplated by Ordinance No. 2559, as amended by Ordinance No. 2574, authorizing the issuance of the Bonds, and has taken all actions required on the City's part to be taken or satisfied at or prior to the delivery of the Bonds. Execution of this certificate shall have the same effect as the manual execution of the final Official Statement. Dated this 14th day of August, 2018. CITY OF TUKWILA, WASHINGTON P ]„j cCarthy, Finart Director $18,365,000 CITY OF TUKWILA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BONDS, 2018 FEDERAL TAX CERTIFICATE I, the undersigned, am the duly chosen, qualified and acting Finance Director of the City of Tukwila, Washington (the "Issuer"), and am one of the officers of the Issuer duly charged (by ordinance of the governing body of the Issuer), with others, with the responsibility of issuing the above -referenced bonds (the "Bonds"), on the date hereof. I am familiar with the facts certified herein and I am duly authorized to execute and deliver this certificate on behalf of the Issuer. I hereby certify and covenant in good faith on behalf of the Issuer as follows: Part A: General 1. Reliance by Bond Counsel. I understand and agree that the facts, representations and covenants in this Certificate will be relied upon by Pacifica Law Group LLP, bond counsel, in expressing the opinion that the interest on the Bonds is excludable from gross income for Federal income tax purposes. 2. Code and Regulations. The Bonds are subject to the provisions of Sections 103, 141, 148, 149 and 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the related Treasury Regulations (the "Regulations"). These provisions of the Code and Regulations impose restrictions on the use of bond -financed facilities and on the investment of bond proceeds. The Issuer acknowledges its responsibility to set forth herein all facts and other matters relevant to the determination of whether the Bonds are in compliance with relevant provisions of the Code and the Regulations, and acknowledges that if such facts are incorrect, the Bonds may be invalid or the interest on the Bonds may not be tax exempt. 3. Defined Terms. The Bonds are being issued pursuant to Ordinance No. 2559 passed by the governing body of the Issuer on December 4, 2017, as amended by Ordinance No. 2574 passed by the governing body of the Issuer on May 7, 2018, authorizing the issuance and sale of the Bonds (the "Bond Ordinance"). All terms defined in the Code or Regulations will have the same meanings as given to those terms in the Code and Regulations unless the context clearly requires otherwise. Any additional capitalized terms used but not defined in this Certificate will have the same meanings as given to those terms in the Bond Ordinance. 4. Purpose of Financing. The Bonds are being issued for the primary purpose of financing all or a portion of certain capital expenditures (the "Project") described in Part I of Exhibit A that is attached to this Certificate and incorporated herein. 5. Reasonable Expectations; Exhibits. The facts and estimates set forth in this Certificate are accurate, and the expectations set forth in this Certificate are reasonable in light of such facts and estimates. There are no other facts or estimates that would materially change such expectations. I have, to the extent necessary, reviewed the certifications in this Certificate with other representatives of the Issuer as to their accuracy and reasonableness. I have also relied, to 1 (V17L (1(1(l(1C L...1 7.17')A(1... the extent appropriate, on representations set forth in the following exhibits that are attached to this Certificate and incorporated herein: Exhibit B — Certificate of Underwriter Exhibit C — Certificate of Financial Advisor I am aware of no fact, estimate or circumstance that would create any doubt regarding the accuracy or reasonableness of all or any portion of such documents. 6. Confirmation of Covenants. The Issuer has made certain covenants with respect to the tax exemption of the Bonds in Section 9 of the Bond Ordinance (the "Tax Covenants"). The Issuer acknowledges that if the Tax Covenants are not complied with, interest on the Bonds may become taxable in the future, either at that time or with retroactive effect back to the date of issuance of the Bonds. Certain of the Tax Covenants in the Bond Ordinance and in this Certificate will survive payment in full or defeasance of the Bonds. 7. Qualification of the Issuer. The Issuer is a political subdivision of the State of Washington (the "State"), duly organized and existing as a municipal corporation with the power of taxation under the laws of the State, including Article XI of the Washington State Constitution. Part B: Issue; Sale Proceeds 1. Bond Terms. The Bonds will be dated as of and issued on the date hereof (the "Issue Date"), and bear interest from the Issue Date, payable semiannually on each June 1 and December 1, beginning on December 1, 2018. The Bonds will mature on December 1 in the years and amounts, and bear interest at the rates as set forth in the Schedules attached to this Certificate. 2. Net Sale Proceeds. The Bonds were sold to Citigroup Global Markets, Inc. (the "Underwriter") on July 31, 2018 (the "Sale Date"), as follows: Face Amount of Bonds $18,365,000.00 Plus Original Premium 1,809,035.65 Sale Proceeds of Bonds $20,174,035.65 The Bonds are being delivered on this date in exchange for good funds. 3. Use of Sale Proceeds. The Issuer expects to use the Sale Proceeds of the Bonds as follows: Underwriter's Discount $86,262.22 Issuance Costs 87,773.43 Costs of the Project 20,000,000.00 Total Sale Proceeds $20,174,035.65 -2- 1 nmc nnnnr h i 7rl ]4An... Earnings on the proceeds of the Bonds are expected to be used for the above purposes or for payment of debt service on the Bonds, as described in Part D. 4. No Refunding. No portion of the receipts derived from the sale of the Bonds will be used to pay the principal of or interest on another issue of governmental obligations. 5. No Aggregated Issues. No tax-exempt obligations of the Issuer have been sold within 15 days before or after the Sale Date that will be paid from substantially the same source of funds as the Bonds (excluding guarantees from unrelated parties). 6. No Pooled Financing. No portion of the purchase price of any of the Bonds is being provided by the issuance of any other obligations of the Issuer or any other governmental entity. The proceeds of the Bonds will not be loaned to any governmental entity. Part C: Private Activity and Other Project Limitations 1. Expectations Regarding Project Use for Life of Bonds. The Issuer reasonably expects to use the Project for governmental purposes of the Issuer during the entire term of the Bonds. 2. Private Uses of Project. Part II of Exhibit A describes the Issuer's reasonable expectations regarding: a. each use to be made of the Project by any private person or entity (that is, any entity other than (i) the Issuer, (ii) other state or local governmental entities, or (iii) members of the public generally), and b. all payments (if any) directly or indirectly in respect of any use to be made of the Project by any private person or entity, which are to be made after the Issue Date. The Issuer does not expect (i) any private business use that is not related to a use of the Project for governmental purposes or (ii) private business use that is related to such governmental purposes but is greater than governmental purposes financed with the Bonds. 3. No Private Loans. No portion of the proceeds of the Bonds will be used, directly or indirectly, to make or finance a loan to any person (other than a State or local government unit). 4. Reimbursement. No portion of the proceeds of the Bonds will be used for reimbursement of expenditures paid by the Issuer prior to the Issue Date except for (i) expenditures paid for costs of issuance of the Bonds, (ii) amounts not in excess of the lesser of $100,000 or 5% of the proceeds of the Bonds, (iii) preliminary capital expenditures (such as architectural, engineering surveying, soil testing and similar costs incurred before commencement of acquisition or construction of the Project) that do not exceed 20% of the issue price of the Bonds, and (iv) capital expenditures that (A) were paid no earlier than 60 days before the date of the adoption by the Issuer of a declaration of intent (a "Reimbursement Declaration") to reimburse such expenditures from the proceeds of obligations, and (B) are reimbursed no later than 18 months after the later of the date the expenditure was paid or the date -3- the Project is placed in service (but no later than three years after the expenditure is paid). The Bond Ordinance is also the Reimbursement Declaration for the Bonds. The Reimbursement Declaration was not declared as a matter of course, and is not in an amount substantially in excess of the amount expected to be necessary for the Project. Proceeds (if any) used for reimbursement of expenditures will be deposited in the general funds of the Issuer and will not be used to replace funds of the Issuer to be used to refund debt of the Issuer, to create a sinking or pledged fund for such debt or the Bonds or otherwise to create replacement proceeds for such debt or for the Bonds. 5. Qualified Equity. The Issuer does not expect to contribute funds (the "Qualified Equity") for costs of the Project, consisting of proceeds of obligations that are not tax - advantaged obligations or funds that are not derived from proceeds of a borrowing. 6. Costs of Project. The total cost of the Project is anticipated to be not less than $28,000,000. Any costs of the Project not financed out of sale or investment proceeds of the Bonds will be financed out of the Issuer's available funds and additional tax exempt obligations. Part D: Flow of Funds; Temporary Periods 1. Flow of Funds. The Bond Ordinance creates the "Debt Service Fund" and the "Project Fund," which are described in more detail below. The Debt Service Fund and the Project Fund are held by the Issuer pursuant to the terms of the Bond Ordinance 2. Issuance Costs. The Underwriter will retain $86,262.22 in Bond proceeds as payment of underwriter's discount. Bond proceeds in the amount of $87,773.43 will be deposited in the Project Fund used for payment of legal fees, financial advisor fees, printing costs and other costs incurred in connection with the issuance of the Bonds and will be fully expended promptly upon receipt of invoices. Any amounts not spent on issuance costs will be transferred to the Debt Service Fund and used to pay capitalized interest on the Bonds. 3. Project Fund. a. Capital Expenditures. Other than amounts spending on issuance costs, all expenditures from the Project Fund will be for (i) costs that are chargeable to the capital accounts of the Project and (ii) interest on the Bonds in an amount that does not exceed the interest on the Bonds for the period that commences on the Issue Date and ends on the later of (A) the date that is three years from the Issue Date or (B) the date that is one year after the date on which the Project is placed in service; however, up to 5% of the Sale Proceeds of the Bonds may be spent on working capital costs directly related to the Proj ect. b. Completion of Project. The Issuer has entered into a contract for acquisition of a portion of the Project, which contract constitutes a substantial binding obligation of the Issuer to a third party to expend at least 5% of the Net Sale Proceeds of the Bonds (being the Sale Proceeds of the Bonds, as shown above). Not less than 85% of the Net Sale Proceeds will be spent within three years of the Issue Date. The Issuer will proceed with due diligence to complete the Project and to allocate the proceeds of the -4- Bonds to expenditures for the Project. Completion of the portion of the Project financed with the Bonds is expected by December 2020. Part III of Exhibit A contains a schedule of reasonably expected expenditures of proceeds of the Bonds from the Project Fund for costs of the Project (the "Draw Down Schedule"). The Issuer has documentation (e.g., architectural and engineering reports, plans and drawings, agreements and contracts) supporting its expectations regarding the expenditures set forth in the Draw Down Schedule. c. Investment of Project Fund. Amounts deposited in the Project Fund will be invested without yield restrictions for the period from the Issue Date to the date that is three years after the Issue Date unless earlier expended (the "3-year Temporary Period"). Interest earnings and gains resulting from investment of the Project Fund will be retained in that Fund and used for the payment of costs of the Project. Proceeds of the Bonds and any interest earnings and gains remaining in the Project Fund following the 3-year Temporary Period will be invested at a yield not in excess of the yield of the Bonds or yield reduction payments will be made with respect to such investment. Amounts, if any, remaining in the Project Fund upon completion of the Project will be retained in the Project Fund and used for capital expenditures in furtherance of the governmental purposes of the Issuer or transferred to the Debt Service Fund and used for payment of debt service on the Bonds, as directed by the Issuer. 4. Pledge of Revenues; General Fund. The Issuer has pledged the receipts from certain levies of ad valorem property taxes and other available revenues (the "Revenues") to the payment of debt service on the Bonds. The Issuer expects that the Revenues will be sufficient each year to pay debt service. Upon receipt, the Revenues will be deposited in the general funds (the "General Fund") of the Issuer. Amounts in the General Fund may be used for any lawful purposes of the Issuer. While on deposit in the General Fund, there is no assurance that the Revenues will be available for the payment of debt service on the Bonds if the Issuer encounters financial difficulties. The Revenues, and other amounts in the General Fund, may be invested without yield restrictions. 5. Debt Service Fund. The Issuer will transfer Revenues from its General Fund to the Debt Service Fund when required for payment of debt service on the Bonds. The Debt Service Fund has been established primarily to achieve a proper matching of Revenues and debt service due on the Bonds during each year that the Bonds are outstanding. Amounts deposited in the Debt Service Fund will be spent within 13 months of the date of deposit, and the Debt Service Fund will be depleted at least once a year except for a reasonable carryover amount not in excess of the greater of earnings on said Fund during the preceding bond year for the Bonds or 1/12th of debt service on the Bonds during the preceding bond year for the Bonds. Amounts in the Debt Service Fund will be invested without yield restrictions. Interest earnings and gains resulting from investment of the Debt Service Fund will be retained in the Debt Service Fund and used for the payment of debt service on the Bonds. 6. No Reserve Fund. No debt service reserve fund has been established with respect to the Bonds. -5- 1 nn7G nnnnr 4.r.1 71141nn,.. 7. Minor Portion. The Issuer does not expect to invest any proceeds of the Bonds at a yield which is higher than the yield on the Bonds if such amounts are subject to yield restriction under the Code; however, under the Code, the Issuer may invest a Minor Portion of otherwise restricted amounts at an unrestricted yield. The Minor Portion is an amount not to exceed in the aggregate the lesser of $100,000 or 5% of the Sale Proceeds of the Bonds. Part E: Other Replacement Proceeds 1. No Other Pledged Amounts or Investment -Type Property. Except as described herein, no amounts have been pledged to, or are reasonably expected to be used directly or indirectly to pay, principal or interest on the Bonds, nor are there any amounts that have been reserved or otherwise set aside such that there is a reasonable assurance that such amounts will be available to pay principal or interest on the Bonds. 2. No Negative Pledges. There are no amounts held under any agreement requiring the maintenance of amounts at a particular level for the direct or indirect benefit of the owners of the Bonds or any guarantor of the Bonds, excluding for this purpose amounts in which the Issuer may grant rights that are superior to the rights of the owners of the Bonds or any guarantor of the Bonds and amounts that do not exceed reasonable needs for which they are maintained and as to which the required level is tested no more frequently than every 6 months and the amount may be spent without any substantial restriction other than a requirement to replenish the amount by the next testing date. 3. No Other Replacement Proceeds. There are no amounts not described herein that have a sufficiently direct nexus to the Bonds or to the Project to conclude that the amounts would have been used for debt service on the Bonds or for the Project if the proceeds of the Bonds were not being used for those purposes. 4. Safe Harbor. The weighted average maturity of the Bonds (13.1099 years) does not exceed 120% of the average reasonably expected economic life of the Project (25 years for land acquisition and 40 years for building construction). The weighted average maturity of the Bonds was computed by the Financial Advisor as set forth in Exhibit C. The average reasonably expected economic life of the Project was determined in accordance with Section 147(b) of the Code. Part F: Yield 1. Yield of the Bonds. The Financial Advisor has computed that the yield of the Bonds is 2.9870%. For purposes of computing yield, the Underwriter has represented that the issue price of the Bonds is $20,174,035.65 (being the face amount of the Bonds of $18,365,000.00, plus original issue premium of $1,809,035.65). The Underwriter and the Financial Advisor have made certain representations regarding the issue price of the Bonds in Exhibit B and Exhibit C. 2. No Hedge Contracts. The Issuer has not entered into, and does not reasonably expect to enter into, a hedge contract primarily for the purpose of reducing the Issuer's risk of interest rate changes with respect to the Bonds. -6- i nn-?gz nnnnc 3. Yield on Investments. The yield on investments acquired with proceeds of the Bonds will be calculated in an identical manner and by use of the same frequency interval of compounding interest used to calculate the yield on the Bonds. For certain investments subject to yield restriction, the Issuer may make yield reduction payments to the federal government under Section 148 of the Code and such payments will be treated as a payment for that investment that reduces the yield on that investment. Part G: Compliance with Rebate 1. Bond Year for the Bonds. The Issuer selects each period from December 2 through December 1 of the following calendar year as the bond years for the Bonds, except that the first bond year will commence on the Issue Date and the last bond year will end on the date of payment of the Bonds in full. 2. Rebate Requirement. The Issuer has covenanted in the Bond Ordinance to comply with requirements for rebate of excess investment earnings to the federal government to the extent applicable and acknowledges that the first payment of excess investment earnings, if any, is required to be paid to the federal government no later than 60 days after the end of the 5th bond year for the Bonds. 3. Special Limitation. No portion of the Bonds will constitute a private activity bond within the meaning of Section 141(a) of the Code, the average maturity of the Bonds is greater than five years and none of the interest rates on the Bonds vary during the term of the Bonds. As a result, investment earnings on the Debt Service Fund will be excluded for the purposes of computation of the amount required to be rebated to the federal government without regard to the total amount of said earnings. 4. Rebate Spending Exceptions. If certain spending requirements are met, certain Bond proceeds may qualify for an exception to the payment of rebate. The Issuer elects the use of actual facts for purposes of determining eligibility for and compliance with any expenditure exceptions to arbitrage rebate; however, the Issuer does not currently expect to meet a rebate spending exception. Part H: No Abusive Devices; Other Requirements 1. No Abusive Arbitrage Device. The issuance of the Bonds does not exploit the difference between tax-exempt and taxable interest rates to obtain a material financial advantage and does not overburden the tax-exempt bond market in that the Issuer is not issuing more Bonds, issuing the Bonds earlier, or allowing the Bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bonds. 2. No Hedge Bonds. At least 85% of the Net Sale Proceeds will be used to carry out the governmental purposes of the Bonds within three years of the Issue Date, and not more than 50% of the proceeds of the Bonds, if any, are invested in investments having a substantially guaranteed yield for four or more years. 3. No Federal Guarantee. No portion of the debt service on the Bonds is being guaranteed, directly or indirectly, by the United States or any agency or instrumentality of the -7- 1 / 117G !V1AV1C F.n1 lt- ndQ,e, United States and no proceeds of the Bonds will be invested in federally insured accounts. A federal guarantee will not be deemed to arise if proceeds are invested during a temporary period or as part of a bona fide debt service fund or if invested in United States Treasury obligations. 4. Form 8038-G. I have examined the completed Form 8038-G, Information Return for Tax -Exempt Governmental Obligations, and to the best of my knowledge and belief, it is true, correct, and complete. Part I: Allocation and Accounting 1. General. The Issuer will use a consistently applied accounting method to account for investments and expenditures of proceeds of the Bonds. Allocations of Bond proceeds to expenditures will be made only with respect to a current outlay of cash for the expenditures. No proceeds of the Bonds will be allocated to any expenditure to which proceeds of any other obligations have been allocated. 2. Final Allocation. The Issuer will identify any deviations in the Project financed from the description in Exhibit A, confirm the amount of Qualified Equity allocated to the Project, and allocate proceeds of the Bonds to expenditures with respect to the Project no later than 18 months after the later of the date the expenditure is paid or the date the Project is placed in service. In the event allocations of Bond proceeds to expenditures are not made within 60 days after the date that is five years after the Issue Date, the Issuer acknowledges that the Internal Revenue Service may apply a specific tracing accounting method to account for investment and expenditures of proceeds of the Bonds. 3. No Commingled Funds. The Issuer expects to invest all proceeds of the Bonds in segregated accounts or within a commingled fund where Bond proceeds are invested and accounted for separately. If any Bond proceeds are invested commingled accounts that are invested and accounted for collectively, all payments and receipts of any investments will be allocated based on a consistently applied, reasonably ratable allocation method in accordance with Section 1.148-6(e) of the Regulations. 4. Books and Records. The Issuer will maintain books and records until three years after the date of retirement or redemption of the Bonds relating to the Tax Covenants and the representations and certifications set forth herein. Such records include, but are not limited to, documents (i) establishing the accounting method used, (ii) accounting for all investments of proceeds of the Bonds, (iii) establishing compliance with rebate requirements, (iv) substantiating the allocation of proceeds of the Bonds to expenditures, and (v) tracking the use of the Projects. 5. Written Procedures. The Issuer has implemented the practices and procedures (the "Written Procedures") set forth in Exhibit D in order to assure that the proceeds of the Bonds are used in such a manner so as not to violate the provisions of the Code and the applicable Regulations and to take remedial actions in the event of a violation. These Written Procedures generally account for and monitor (i) the expenditure and investment of Bond proceeds, (ii) the use of the Project financed with the proceeds of the Bonds, and (iii) any changes in the underlying structure of the Bond financing. -8- 6. Amendment. This Tax Certificate may be amended or supplemented to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Bonds without consent of the holders of the Bonds. [Signature page follows] -9- 1 nn7c nnnnr F.n1 ler2/An... On the basis of the foregoing, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be private activity bonds under Section 141 of the Code or to be arbitrage bonds under Section 148 of the Code and applicable Regulations. Dated: August 14, 2018 CITY OF TUKWILA McCarthy, Fit}aice Director -10- 10076 0000S ha17d3349w Schedule of Exhibits Exhibit A — I. Description of Project II. Description of Private Use III. Schedule of Expected Expenditures Exhibit B — Certificate of the Underwriter Exhibit C — Certificate of the Financial Advisor, together with Schedules Exhibit D — Written Procedures -11- 1 nn7F nnnnr hnl7/-1.114Q1A, Exhibit A PART I. Description of Project The Project consists of acquisition of parcels of land, including through eminent domain, and construction, improvement and equipping of maintenance and other City facilities. Except as part of the 5% working capital allowance under Section 1.148-6(d)(3)(ii)(5), settlement payments for relocation or other non -capital costs with respect to land acquisition will not be paid with Bond proceeds. PART II. Description of Private Use A. Describe each use to be made of the Project by any private person or entity (that is, any entity other than (i) the Issuer, (ii) other State or local governmental entities, or (iii) members of the general public), applying the following rules: (A) any activity carried on by a person other than a natural person or a state or local governmental unit will be treated as a trade or business of a nongovernmental person; (B) the use of all or any portion of the Project is treated as the direct use of proceeds; (C) a nongovernmental person will be treated as a private business user of proceeds of the Bonds as a result of ownership, actual or beneficial use pursuant to a lease, or a management or incentive payment contract, or certain other arrangements such as a take -or -pay or other output -type contract; and (D) the private business use test is met if a nongovernmental person has special legal entitlements to use directly or indirectly the Project. If the Project is not available for general public use, describe any special economic benefit from the Project to any nongovernmental persons. None B. Payments to be made on or after the Issue Date with respect to the private uses described above. None A-1 1 nn7F nnnnE hnl 7r1114Q\nl Exhibit A (continued) PART III. Schedule of Expected Expenditures The table below lists all reasonably expected expenditures of the Bond proceeds deposited in the Project Fund (including investment earnings to the extent those earnings remain on deposit in the Project Fund). The Issuer reasonably expects that all Bond proceeds will be spent within three years after the Issue Date. On the Issue Date, the Issuer expects to use $6,000,000 from proceeds of the Bonds to reimburse expenditures relating to the Project. Expenditure Date (by month or quarter) Expenditure Amount By 3rd Quarter 2018 $7,000,000* 4th Quarter 2018 $1,000,000 1st Quarter 2019 $12,000,000 Total: $20,000,000 *Includes reimbursement at closing. A-2 1 nn7A nnnnS nn1 9r1 4Qw CERTIFICATE OF UNDERWRITER Citigroup Global Markets Inc. has acted as underwriter (the "Underwriter") in connection with the sale and delivery of the City of Tukwila, Washington (the "Issuer") Limited Tax General Obligation Bonds, 2018 in the aggregate principal amount of $18,365,000 (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. 2. The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated July 31, 2018 (the "Sale Date"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the respective prices for each maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. c. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the Bonds, being the Expected Offering Price of each maturity, is $20,174,035.65 (the "Issue Price"). Provided that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Code, the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes Pacifica Law Group LLP to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2, in Treasury Regulation 1.148- 1(f). Nothing in this certificate represents the Underwriter's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. B-1 10076 00005 hg314427em Dated August 14, 2018. CITIGROUP GLOBAL MARKETS INC. B Its 10076 00005 hg314427em 07/31/2018 09:40:48 AM MOST Page 1 of 1 Bond Report $18,525,000.00 Tukwila, WA Limited Tax General Obligation Bonds, 2018 S&P: AA / Moody: 1 Fitch: ( Kroll: Description: WATUKWILA0718 Sale Date: 07/3112018 08:30:00 AM PDST Citigroup Delivery Date: 08/14/2018 Dated Date: 08/14/2018 First Int Date: 12/01/2018 Int Accrue Date: 08/14/2018 Submitted via Parity: 07/31/2018 09:29:28 AM MOST No. Maturity Coupon Price Computed Conc. Takedown Price of Date or Price To Bonds Basis Yield Date 745 12/01/2022 780 12101/2023 820 12/01/2024 860 12/01/2025 905 12/01 /2026 5.0000 5.0000 5.0000 5.0000 5.0000 1.9500 2.0500 2.2000 2.3300 2.4500 1125110 114.7330 116.3780 117.8180 119.0370 0.2500 0.2500 0.3750 0.3750 0.3750 950 12/01/2027 1,000 12/01/2028 1,040 12/01/2029 1,080 12/01/2030 1,125 12/01/2031 5.0000 5.0000 5.0000 4.0000 4.0000 2.5200 2.6000 2.7000 2.9500 3.0500 119.4540 118.7600 117.8990 108.0800 107.2780 0.3750 12/01/2027 0.3750 12/01/2028 0.3750 12/01/2029 0.3750 12101 /2030 0.3750 12/01/2031 1,165 12/01/2032 1,215 12/01 /2033 1,265 12/01/2034 1,315 12/01/2035 1,365 12/01/2036 4.0000 4.0000 4.0000 4.0000 4.0000 3.1500 3.2500 3.3400 3.3800 3.4300 106.4830 105.6940 104.9910 104.6800 104.2920 0.3750 12/01/2032 0.3750 12/01/2033 0.3750 12/01/2034 0.3750 06101/2027 0.3750 06101/2027 1,420 12/01/2037 4.0000 3.4800 103.9070 1,475 12/01/2038 4.0000 3.5000 103.7530 Summary 0.3750 12(01/2037 0.3750 12/01/2038 Total Per $100 Par Amount: 18,525,000.00 100.000000 Gross Prod: 20,359,456.85 109.902601 Spread: 87,013.76 0.469710 Bid: 20, 272, 443.09 109.432891 Accrued Int: 0.00 0.000000 Bond Yrs: 246, 321.04 Avg Life: 13,2967 13 Years Gross Int Cost: 10,424,444.44 - Net Premium: 1,747.443.09 (+Prod:1,834,456.85-Spread:87,013.76) Net Int Cost: 8,677.001.35 NIC: 3.522639 TIC -- NIC Date*: 3.349766 Avg Takedown: 3.647099 Call Schedule 3 Months 17 Days Bonds due 12/01(2027 to 12/01/2038 callable 06101/2027 at par. 86Z:609L 6£Inf PARITY Bid Form. K Overview | Upcoming Calendar �vew Result ) Excel U | CNUgmoWp ;Narkets,Inc. - Denver, C � � .te � � III � AV � � � � 0f, For the aggregate principal amount of $18,525,000.00, we will pay you $20,272,443.09, plus accrued interest from the date of issue to the date of delivery The Bonds are to bear interest at the followina rate(s): 5.00P Tota||nUareo Coot: Premium: Net Interest Cost: $10.424.444.44 $1.747.443.09 $8.677.001�35 3.349766 Time Last Bid Received On:07/31/2U188:2S:28PDST This proposal ismade subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder CitigroupG|oba| Markets, Inc., Denver, CO Contact: Elizabeth Funk Title: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: P.A.R1TY Bid Fsm. Page 2 of 2 Date. Date: 1981-2002 ii-t)eall 11...11...C, All rights reserved, J:t.fmlignatig,, haps://w issueho.... ei-deaLcorn./Parity/ sp/rnairLasp?frameItert rityai„. 7/31/2018 EXHIBIT C CERTIFICATE OF FINANCIAL ADVISOR I, the undersigned representative of PFM Financial Advisors LLC (the "Financial Advisor"), make this certificate for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest on the Bonds. Each capitalized term used herein has the meaning specified for such term in the Federal Tax Certificate to which this Exhibit C is attached (the "Federal Tax Certificate"). I hereby certify as follows as of the Issue Date: 1. I am the duly chosen, qualified and acting representative of the Financial Advisor for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Financial Advisor. Financial Advisor has worked with representatives of the Issuer in structuring the financial terms of the Bonds and has assisted the Issuer in soliciting and receiving bids from potential underwriters in connection with the sale of the Bonds in a competitive bidding process. 2. The Bonds were offered for sale at specified written terms more particularly described in the Notice of Sale, which was distributed to potential bidders, a copy of which is attached as Attachment 1. 3. To the knowledge of the Financial Advisor, all bidders were offered an equal opportunity to bid to purchase the Bonds. 4. The Issuer received bids from at least three bidders who represented that they have established industry reputations for underwriting new issuances of municipal bonds. Copies of the bids received are attached as Attachment 2. 5. The winning bidder was Citigroup Global Markets, Inc. (the "Underwriter"), whose bid was determined to be the best conforming bid in accordance with the terms set forth in the Notice of Sale, as shown in the bid comparison attached as Attachment 3. The Issuer awarded the Bonds to the Underwriter. 6. To the best of Financial Advisor's knowledge, which was acquired in the course of structuring the Bonds on behalf of the Issuer, (i) the Bonds were not structured to take advantage of the difference between tax exempt and taxable rates except as identified in the Federal Tax Certificate with respect to permissible investments subject to arbitrage rebate, and (ii) the Bonds were not issued earlier, in a greater amount, with reserves or sinking funds larger, or with a maturity longer than was reasonably necessary to finance the projects financed by the Bonds. 7. As shown on the Schedules, the yield on the Bonds has been calculated to be 2.9870%. For purposes of this certificate, we have computed yield as the discount rate that, when used in computing the present value of all principal and interest payments to be made under each applicable maturity of the Bonds from the date of issuance, to maturity, produces an amount equal to the Issue Price; provided that, the Issuer is assumed to exercise or not exercise an option or combination of options (including an optional redemption provision) in a manner that minimizes yield on the debt instrument. 8. As shown on the attached Schedules, the weighted average maturity of the Bonds is 13.1099 years. For purposes of this certificate, the weighted average maturity of the Bonds is the sum of the products of the issue price of each group of identical Bonds and the number of years to maturity (determined separately for each group of identical Bonds and taking into account mandatory redemptions), divided by the aggregate issue price of the Bonds. To the extent that Financial Advisor provided the Issuer and Pacifica Law Group LLP ("Bond Counsel") with certain computations that show a bond yield, issue price, weighted average maturity and certain other information with respect to the Bonds, these computations are provided for informational purposes and are based on our understanding of directions that we have received from Bond Counsel regarding interpretation of the applicable law. Financial Advisor expresses no view regarding the legal sufficiency of any such computations or the correctness of any legal interpretation made by Bond Counsel. The Issuer may rely on the statements made herein in connection with making the representations set forth in the Certificate and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. Bond Counsel also may rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. PFM Financial Advisors LLC By: Name: Michael Berwa r Title: Managing Director Date: August 8, 2018 Attachment 1: Notice of Sale Attachment 2: Bids Received Attachment 3: Bid Comparison Schedules OFFICIAL NOTICE OFSALE $18'526'000' City ofTukwila, Washington Limited Tax General Obligation Bonds, 2O18 NOTICE IS HEREBY GIVEN that electronic bids will be received by the City of Tukwila, Washington (the "City"), for purchase ofthe above described bonds (the ^Bondo^)at 8:30 a.m. Pacific Time on July 31' 3018 or such other day ortime 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 besold onanedl-or-nonebasis. Bids must besubmitted electronically endescribed below. Bids must be submitted electronically via the Qualified Electronic Bid Provider in accordance with this Official Notice of Sale. The City has designated PAR|TY8ao the Qualified Electronic Bid Provider for purposes of receiving electronic bids for the Bonds. Electronic bids will be received via PARITY8 until the time and date of sale, and no bid will baaccepted after that time. For further information about PARITYO including any fees charged, potential bidders may contact PAR|TYOat (212)849'5021. By designating a bidding oemiva as a Qualified Electronic Bid Provider. the City does not endorse the use of such bidding service. Sea "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 ae|e date. Bidders are referred to the attached Preliminary Official Statement for additional information regarding the City, the Bond Ordinance (as defined herein), the Bonds, the security therefor, and other matters. Modification; Cancellation; Postponement. Bidders are advised that the City may modify the terms of this Official Notice of Sale prior to the time set for the receipt ofbids. Any such modifications will be provided to the Qualified Electronic Bid Provider and i-Deal Prospectus on or prior to the time bids are due. |naddition, 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 cenue||eUnn or postponement will be communicated to the Qualified Electronic Bid Provider and i'Dea| Prospectus as soon as practical following such cancellation or postponement. |fepostponement occurs, bids will be received at the time and in the manner the City will determine. An an accommodation to biddera, te|ephonio, or electronic notice ofany amendment nrmodification ofthis Official Notice ofSale will begiven toany bidder requesting such notice from the City'o Financial Advisor, PFN1 Financial Advisors LLC. telephone: (206) 858-5363 or e-mail at sea-adviuoro@pfm.nom. Failure of any bidder to receive such notice by telephone, the Qualified Electronic Bid Provider nri'Dea|Prospectus will not affect the legality ofthe 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. ^RreVminory,subject tochange. w/ Description ofthe Bonds Bond Details. Each Bond will badated its date cfinitial delivery. The Bonds will bear interest payable semiannually on each June 1 and December 1. beginning December 1. 2018. 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 Dec.1n/ Amountm 2022 $ 746.000 2023 780.000 2024 820.000 2025 860.000 2026 905.000 2027 950.000 2028 1.000.000 2029 1.040.000 2030 1.080.000 Due Dec. 1m 2031 2032 2033 2034 2035 2036 2037 2038 Amnountn> 1,165,000 1,215,000 1,265,000 1,315,000 1,365,000 1,420,000 1,475,000 Preliminary-subjectto adjustment by the City as provided in this Official Notice of Sale. These amounts will represent serial maturities unless term bonds are specified, by the successful bidder, as described in this Official Notice ofSale, inwhich case these amounts will represent mandatory mdonm0bn amounts of term bonds. Doo "Redemption Provisions —Mandatory Redemption" below. Adjustment ofPrincipal Amount ofBonds 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 Offiuie| Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus) prior to the bidding, |fsuch changes are made, they will be reflected in the Official Bid Form to be made available through the Qualified Electronic Bid Provider. AfterRaoe/pt of the Bids. Following the time bids are due. the City ramarvae the right to increase or decrease the aggregate principal amount of the Bonds by an amount not to exceed 15 percent, rounded up to the nearest $5,000. Adjustments of the aggregate principal amount in axuaea of 15 percent, rounded up to the neenaet$S.0OO. may be made with approval ofthe successful bidder. The price bid bythe successful bidder will beadjusted bythe City ho reflect an increase or decrease in the principal amount and maturity schedule for the Bonds, taking into account the interest rates and underwriting compensation inthe bid aasubmitted. |nthe event the City elects tuadjust the bond size after the bid pursuant to this Official Notice of Sale, the underwriter's discount (net of bond insurance expense, ifany).expressed indollars per thousand, will beheld constant. The City will not beresponsible inthe event and to the extent that any adjustment affects the net compensation to be realized by the auooeoefu| bidder, orthe true interest cost ofthe winning bid orits ranking relative toother bids. Redemption Provisions ^ Optional Redemption. The Bonds maturing on December1. 2022 through December 1. 2026 are not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after December 1. 2027, are subject to optional redemption, as a whole or in part (and if in part, with maturities to be selected by the City), on any date on or after June 1, 2027, at a price of par plus accrued interest, if any, to the date fixed for redemption. Mandatory Redemption. Bidders have the option to designate part or all of the Bonds maturing on or after Demamber1. 2027. as term bonds subject to mandatory redemption at phoa of par plus accrued intanant, 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 onthe latest ofsuch years. |fnoterm bonds are designated, the Bonds will mature inthe amounts and on the dates set forth in the serial maturity schedule set forth above and subject to adjustment as described herein. See "DESCRIPTION OF THE BONDS —Redemption Provisions" in the Preliminary Official Statement. Purpose ofthe Bonds Proceeds of the Bonds will be used to provide funds (i) to pay or reimburse the City for costs related to the acquisition of land and the construction, improvement and equipping of maintenance and other City facilities, and (ii) to pay the costs ofissuance ufthe Bonds. 'frelhninafy,subject hrchange vni Security for the Bonds The Bonds are limited tax general obligations of the City payable from property tax revenues of the City and such other money as is lawfully available. For on 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 ofthe principal ofand interest onthe Bonds. Bond owners do not have a security interest in particular revenues or assets of the City. The Bonds dnnot constitute a debt or indebtedness of the State or any political subdivision thereof other than the City. See "SECURITY FOR THE BONDS" in the Preliminary Official Statement. Registration and Book -Entry Transfer System The Bonds will be issued as fully registered bonds and, when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (^DTC^). New York, New York. DTC will act as the initial securities depository for the Bonds. Individual purchases and sales of the Bonds will be made in book -entry form only in minimum denomination of$5.UO0 or integral multiples thereof within a maturity. Purchasers ("Beneficial Owners") will not receive physical certificates representing their interests in the Bonds. Solong aaCede & Co. iathe 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 nfthe Bonds. See APPENDIX C--^DTCAND ITS BOOK -ENTRY SYSTEM" in the Preliminary Official Statement for the Bonds. BIDDING INFORMATION AND AWARD Submission ufBids Bids for the Bonds are to be submitted electronically via the Qualified Electronic Bid Provider, Herd copy bids will not be accepted. By submitting n bid for the Bonda, such bidder thereby agrees to the following terms and conditions: (i) If any provision in this Official Notice of Sale with respect to the Bonds conflicts with information or terms provided or required by the Qualified Electronic Bid Provider, this Official Notice of Se|e, including any amendments issued through the Qualified Electronic Bid Provider and i-Deal Prospectus, shall control. (ii) Each bidder is solely responsible for making necessary arrangements to access the Qualified Electronic Bid Provider for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of 8o|e (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Dee|Proapectue). (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 mechoniam, and not aothe Cit/magent, toconduct the electronic bidding for the Bonds, The Qualified Electronic Bid Provider is acting as an independent contractor, and is not acting for or on behalf of the City. (v) The City is not responsible for ensuring or verifying bidder compliance with any Qualified Electronic Bid Provider procedures. (vi) If a bid is accepted by the City. this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Oao| Prospectus) and the information that is submitted electronically through the Qualified Electronic Bid Provider shall form a oontront, and the bidder shall be bound bythe terms nfsuch contract. (vii)|nformaUon provided by the Qualified Electronic Bid Provider to bidders shall form no pad of any bid or of any contract between the successful bidder and the City unless that information is included in this Official Notice of Sale (including any amendments issued by the City through the Qualified Electronic Bid Provider and i'Deo|Prnapeoiva). ix Bid Details and Parameters Form of Bids. Bids for the Bonds must bounconditional, and for not less than the entire offering ofthe Bonds. By submitting o bid, each bidder agrees to all of the terms and conditions of this Official Notice of Se|a (including any amendments issued by the City through the Qualified Electronic Bid Provider and i-Deal Prospectus). Bids must be submitted electronically via the Qualified Electronic Bid Provider. Bids may not bewithdrawn orrevised 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) orone-hundredth ofone percent (1/10Onf1 percent). All Bonds ofthe same maturity must bear interest otthe same rate and noBond shall bear interest otmore than one rate. Norate ofinterest may exceed 5.Opercent. Bonds maturing on or after December 1. 2027. must boar interest at o rate not lower than 4.0 percent. Premium and Discount. No bid will be considered for a price that is less than 100 percent or more than 125 percent of the per value of the Bonds. Each maturity must be reoffered at a yield that will produce a price of not |ean than 98 percent of the principal amount for that maturity. For purposes of the preceding sentences, "price" means the price as calculated using the lesser of the yield to the redemption date, if any, or the yield to the maturity date. Good Faith Deposit The successful bidder for the Bonds shall deliver a good faith deposit in the amount of $190,000 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 nucoemdb| bidder at the time of the verbal award. The good faith deposit will be retained by the City on security for the performance of the ouooeoafu| 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 eaepenalty. Such retention will constitute a full release and discharge of all claims by the City against the successful bidder and, inthat event, the City may call for additional proposals. The City'eactual damages may behigher orlower than the amount of such good faith deposit. Such amount constitutes m good faith estimate of the City'o actual damages. Each bidder waives the right to claim that actual damages arising from such default are less than such amount. Selection mfthe Successful Bidder The bids for the Bonds will be considered by the City at the date and time set for sale. The Bonds will besold hothe bidder submitting a bid in conformance with this Official Notice ofSale that produces the lowest true interest cost to the City, based onthe 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 nec000ary, on e 30360 basis and semiannual oompnunding, to discount the debt oewioa 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 ofthe best bid solely onsuch 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 Bondn.^ The City reserves the right toreject any nrall bids and towaive any irregularity inany bid orthe bidding process. U all bids are nejechad, 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 aocepted, and any bid not backed by the required good faith deposit will not be considered. The successful bid shall remain in effect until 5:00 p.m. Pacific Time, on the date set for the receipt ofbids. x Bond Insurance; Rating Bond Insurance. The purchase of any insurance policy for the Bonds or the issuance of any commitment therefor will be at the sole option and expense of the successful bidder for such Bonds. Bids may not baconditioned upon qualification for orthe receipt ofmunicipal bond insurance. Any increased costs nfissuance ofthe 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. |nparticular, the City will not provide any opinions orenter into any agreements with respect huthe provisions ofany such policy. Failure ofany municipal bond insurer to issue or deliver its policy will not in any way relieve the successful bidder of its contractual obligations arising from acceptance of its proposal for the purchase of the Bonds. The successful bidder must provide the City with the municipal bond insurance commitment and information with respect to the municipal bond insurance policy and the insurance provider within two business days following the award ofthe bid bythe City. The City will require delivery, on or prior to the date of initial delivery of the Bonds, of: (0 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) acertificate with respect tocertain tax matters, each inaform reasonably satisfactory tothe City and Bond Counsel. Rating. The City has received a rating from S&P Global Ratings as shown on the cover of the Preliminary Official Statement. The City will pay the fees for the rating. Any other ratings are the responsibility ofthe successful bidder. See ^RAT|NG^inthe Preliminary Official Statement. Delivery ofBonds The Bonds will be delivered to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer. |eoo payment of the purchase price to the City in immediately available federal funds, |eeo the amount of the applicable good faith deposit. Closing is expected to occur on the closing date set forth on the cover page of the Preliminary Official Statement. If, prior to delivery of the Bonda, the interest receivable by the owners of such Bonds becomes includable in gross income for federal income tax purpoaen, or becomes subject hnfederal income tax other than as described in the Preliminary Official Statement, the successful biddar, 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 electronic transcript of proceedings; additional transcripts will be furnished at the successful bidder's cost. Issue Price Information The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City etclosing an "issue price" orsimilar certificate setting forththoneaeonob|yexpoub*d initial offering price to the public or the ee|ea price or prices of the 8ondm, together with the supporting pricing wires or equivalent communications, substantially in the form attached to this Official Notice of Sale as Exhibit A, with such modifications as may be appropriate or naceaeary, in the reasonable judgment of the winning bidder. the City and Bond Counsel. The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the "competitive sale requirements") because: (i) the City shall disseminate this Official Notice of Sale to potential underwriters in a manner that is reasonably designed tnreach potential underwriters; (ii) all bidders shall have onequal opportunity tobid; (iii) the City may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances ofmunicipal bonds; and X� (iv) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the Bonds atthe highest price (or lowest interest uoaU.aaset forth inthis Official Notice ofSale. Any bid submitted pursuant to this Official Notice of Sale shall be considered o firm offer for the purchase of the Bonds, enspecified inthe bid. By submitting a bid for the Bonds, each bidder certifies that has an established industry reputation for underwriting new issuance of municipal bonds unless specifically noted in the bid. In the event that the competitive sale requirements are not satisfied, the City shall advise the winning bidder that such requirements are not satisfied and the following section will apply: Hok-bho-Offering-FhceRule May Apply. |nthe event that the competitive sale requirements are not satisfied, the City will nn advise the winning bidder. The City will treat the first price at which 1096 of maturity ofthe Bonds (the ^1D%taat^) is sold tothe public aethe issue price ofthat maturity ifsuch maturity ofthe Bonds satisfies the 10% teat eeofthe date and time ofthe award ofthe Bonds. With respect tothose maturities ofthe Bonds that donot meet the 10% test as of the date and time of the award of the Bonds, the City will treat the initial offering price tothe public as of the sale date of any maturity of the Bonds as the issue price of that maturity (the " ho I d-the-offering- price rule"), ineach case applied onamaturity-by-maturitybasis. The winning bidder shall advise the City ifany maturity nfthe Bonds satisfies the 1O96test oeofthe date and time ofthe award ofthe Bonds. As stated above, the hold -the -offering -price rule will apply to those maturities of the Bonds that do not meet the 10% test aaofthe sale date. By submitting a bid, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the "initial offering priue^), oratthe corresponding yield or yie|de, set forth in the bid submitted by the winning bidder and (ii) mgree, on behalf ufthe underwriters participating inthe purchase ofthe Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold -the -offering -price rule shall apply to any person eta price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier ofthe following: (i) the close ofthe fifth (5th)business day after the sale date; or (ii) the date on which the underwriters have sold at least 1096 of that maturity ofthe Bonds to the public at a price that is no higher than the initial offering price to the public. The winning bidder shall promptly advise the City when the underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th)business day after the sale date. The City acknowledges that, in making the representation set forth obove, the winning bidder will rely on (i)the agreement of each underwriter to comply with the ho|d-the-offehng-price ru|a, as set forth in an agreement among underwriters and the related pricing wires, (ii)inthe event aselling group has been created inconnection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold -the -offering -price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is e party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the hold -the -offering -price rule. as set forth in the retail distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be ao|o|y liable for its failure to comply with its agreement regarding the hold -the -offering -price rule and that no underwriter shall be liable for the failure of any other underwriter, orofany dealer who is a member ofo selling group, orofany brokapdaa|er(hat is a party to a retail distribution agreement to comply with its corresponding agreement regarding the h ol d-th e-offeri ng- price rule as applicable to the Bonds. Bysubmitting abid, each bidder confirms that: (i)any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder iaaparty) relating tothe initial sale ofthe Bonds hothe pub|iu, together with the na|ob*d pricing winan, contains or will contain language obligating each undenw/itar, each dealer who is a member of the selling group, and each broker -dealer that is a party to such retail distribution ogreoment, as applicable, to (A) report the prices at which itsells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold -the -offering -price rule (if applicable), in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the na|ohed pricing vvirao, contains or will contain |engueQn obligating each underwriter that in a party to u retail distribution agreement to be employed in connection with the initial ne|e of the Bonds to the public to require each broker -dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either xii the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of thatmaturity have been sold hnthe public and (B) comply with the hold -the -offering -price rule (if applicable), in each 000e if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Bonds to any person who is a related party to an underwriter shall not constitute sales to the public for purposes ofthis Official Notice ofSale. Further, for purposes ofthis Official Notice ofSale: (i) ^pub|ic^means any person other than anunderwriter ororelated party, (ii) "underwriter" means (i) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (ii) any person that agrees pursuant toowritten contract directly orindirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are oubjeot, directly or indirectly, to (i) at least 5096 common ownership of the voting power orthe total value of their ehock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their oepda| interests or profit interestn, if both entities are partnerships (including direct ownership by one partnership of another), or(iii) more than 5096 common ownership ofthe value ofthe outstanding stock ofthe corporation orthe capital interests urprofit interests of the portnerahip, as epp|iceb|e, if one entity is a corporation and the other entity io a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder, CU8|P Numbers It is anticipated that CUS|P identification numbers will be printed on the Bonds; however, neither the failure to print CUS|P numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser thereof toaccept delivery ofand pay for the Bonds. The City'oFinancial Advisor will obtain CUS|Pnumbers onbehalf ofthe City. The charge ofthe CUG|PService Bureau shall bepaid bythe successful bidder. Bond Counsel Opinion The City will furnish to the purchaser of the Bonds the bond counsel opinion of Pacifica Lovv Group LLP, Seatt|e, VVamhington, Bond Cnuneo|, in substantially the form attached tothe Preliminary Official Statement inAppendix A. Continuing Disclosure The City has entered into an undertaking for the benefit of the owners of the Bonds to provide certain financial information and operating data and notice of certain events to the Municipal Securities Rulemaking Board ("MSRB") pursuant to the requirements of paragraph (b)(5)(i) of Securities and Exchange Commission ("SEC") Rule 15c2-12 (the '.Rule"). See Appendix Dinthe 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 Bonda, the information (including financial information) contained in the Official Statement was, as of its dete, and is, as of the date of closing, true and correct in all material respects and did not and does not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by or obtained from DTC or any entity providing bond inouranoe, if any, 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 isinoform deemed final bythe City for the purpose ofthe Rule, but is subject to revision, amendment and completion in a final Official Statement which the City will deliver, to the successful bidder, at the City'o expense, not later than seven business days after the City'n acceptance of the uu0000sfu| bidder's proposal, in sufficient quantities to permit the successful bidder to comply with the Rule. The successful bidder shall h|e, or cause to be fi|ed, the final Official Statement with the K8SRB within one business day following the receipt of the Official Statement from the City. X�U The successful bidder also agrees: (0 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 ayndioate, if any, copies of the final Official Statement, including any amendments orsupplements prepared bythe 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 purohueera, including without |imitation, the delivery of a final Official Statement toeach investor who purchases Bonds. Additional Information The Preliminary Official Statement may be obtained from �Dea| Prospectus, a service of �Dea| LLC, at vvv1v. i-dealproupactuo.com. telephone (212) 849-5021. In addition. the Preliminary Official Statement may be obtained upon request to the City'o Financial Advisor. Additional information maybe obtained from the City'u Financial Advieor, PFM Financial Advisors LLC (by telephone: (206) 858'5363; or by e-mail: aee'adviaoxs@pfn.com). CITY OF TUKWILA, WASHINGTON Peggy McCarthy, Finance Director xiv EXHIBIT A FORM OFCERTIFICATE OFUNDERWRITER . has acted as underwriter (the "Underwriter") in connection with the sale and delivery ofthe. 'Washington (the ^|aauar") inthe aggregate principal amount of(the ^Bondn'').|.the undersigned, hereby certify uafollows onbehalf ofthe Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, | am familiar with the facts herein certified and | am duly authorized to execute and deliver this certificate on behalf of the Underwriter. | am the officer of the Underwriter chargad, along with other officers of the Underwriter, with responsibility for the Bonds. [if competitive sale safe harbors are mnet] 2The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Ooha"). a. As of the Sale Date, the Underwriter reasonably expected the initial offering prices of the Bonds to the Public to be the respective prices for each Maturity shown in Schedule A (the "Expected Offering Price"). The Expected Offering Prices are the prices used by the Underwriter in formulating its bid to purchase the Bonds, which is attached as Schedule B (the "Bid"). b. The Underwriter was not given the opportunity to review other bids prior to submitting its Bid. o. The Bid submitted by the Underwriter constituted a firm offer to purchase the Bonds. d. The aggregate issue price of the 8onda, being the Expected Offering Price of each Maturity, is $ (the "Issue Price^). [if competitive sale safe harbors are not met:] 2 The Underwriter has purchased the Bonds from the Issuer pursuant to a Certificate of Award dated (the "Sale Oate�. e. With respect tothe Bonds maturing in (the "General Rule [Notuhdem^).cdleast 1UY6 of the principal amount of each K8sduhty of the Bonds was sold to the Public at the naopaotivo price for that Maturity shown inSchedule A(the "Sale Phoe^). b. With respect tothe Bonds maturing in(the "Unsold N1oduritian^). the Underwriter offered the Unsold Maturities tothe Public for purchase atthe respective initial offering prices listed inSchedule A(the "Initial Offering Prioe^)onnrbefore the Sale Date. Acopy nfthe pricing wire for the Bonds isattached uaSchedule 8. 3. As set forth in the Notice of Sale and Certificate of Award, the Underwriter [and all members of the Underwriting Group] agreed in writing that (i) for the Unsold Maturities (" Hold -the- Offering- Price Maturities"), [it] would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the applicable Initial Offering phma during the Holding Period (the "hold -the -offering -price m|e^). and (ii) any selling group agreement will contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement will contain the agreement ofeach brukepdea|erwhu is e party tothe retail distribution agreement, to comply with the hold -the -offering -price rule. During the Holding Period, no Underwriter (as defined in Treasury Regulation 1.148(f)) has offered or sold any of the Ho|d-tho-Offehng'Price Maturities at e price that is higher than the respective Initial Offering Price. "Holding Pahud^ meana, with respect to e Ho|d-the-Offehng-Price yNoturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the 5th business day after the Sale Date or (ii) the date on which the Underwriter has sold at least 10% of such Maturity to the Public at prices that are no higher than the applicable Initial Offering Price. 4. The expected aggregate issue price of the Bonds, being the Sale Price of each General Rule Maturity and the Initial Offering Price of each H old-the-Offeri ng-P rice Maturity, is (the 'Issue lPrice'') Ai [For all trmnemcdono:] Provided that nothing herein represents our interpretation of any lawo, and in partixular, regulations under Section 148 of the Code. the Underwriter hereby authorizes the Issuer to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income oftheir owners. The Underwriter herebyoufhorizeaPacifioaLawQrnupLLP(^8ondCounue|^)ho rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached or, with respect to Paragraph 2.inTreasury Regulation 1.148'1UD. PARITY Result Screen Page I of I [08:37:47 a.m. PDST I Upcoming Calendar Overview Compare Summary 'd es u Its 1 1 L ite • Tu ila Tax eneral 0 li • ation on • s 1 • • The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* rReoffering Bidder Name TIC Ctig!ouR Global Markets, Inc. 3.349766 JP an an Securities LLC .3.349898 _organ Stantey 3.372961 Viesirow Financial, Inc 3.405207 Piper Jaffrey 3415376 Robert W Baird Inc 3.416603 111 J.J.B. Hilliard. WL. Lyons, Inc. 3.448660 Jefferies LLC 3.477015 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields © 1981-2002 kiDedi Ali rights reserved, :rofigoods,§. https://www.newissuehomei-dea Parity/asp/m.ain.asp fra ...e""""C page:=T rityR,„. '7/31/2018 PARITY Bid Fon-n. Page 1. of 2 Upcoming Calendar I Overview Result Excel � � -t e � * .s � � Tu '1'11,�%�~U . *v � � � � � � � � � � For the aggregate principal amount of$18.525.00U.00.wewill pay you $20.272.443.O8.plus accrued interest from the date of issue to the date of delivery, The Bonds are to bear interest at the following rate(s): 2/U1/2O23 201/2U24 12/01/2026 QO5K8 5.0000 12/O1/2D28 ___1__-.0OOW1 _____-_'_6�OOOO—_~ 5.0000 12/01/2031 | 1.125K8 1.215N1 2/01/2034 1285M 13/O1/2035 1.315KA \ 4.0000 4.0000 4.0000 4.0000 4OOOO ^ 12/01/2038 1.475yW Total |nterestCost� Premium: Net Interest Cost: � 4.0000 4.0000 1 � $10,424,444.44 $1.747.443.09 $8.877.001.35 3.349766 Time Last Bid Received On:07/31/2018 8:29:28 PDST This proposal iomade subject toall ofthe terms and conditions ofthe OfficiaOff icial Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder:Citignoup GlobalMarkets, Inc., Danvar, CO Contact: Elizabeth Funk TitleTelephone: 303-728-8468 : Issuer Name: City of Tukwila AccepbadBy: Company Name-, . _ AocepbadBv� ° PARITY Bid Form Page 2 of 2 Date Date: (0 1981-2002 i-Deal LLC, All rights reserved, IIDAtitiligisiz https://www.newissuelhome.i-deaLcorn/Parity/asp/maimasp?frarne=conterrt ager=parityBi. 7/3 1 /201 8 PARITY Bid Foon. Page I of 2 [ | Upcoming Ca|endar U Overview Result � 6011, A, � T0U�^Ua K -0--te4r, Tax ��eneraU 1* � 0 W � � For the aggregate principal amount of$18.525.DOO.00.wowill pay you $20'293.814.54.plus accrued interest from the date of issue to the date of delivery, The Bonds are to bear interest at the following rate(s): 'Maturity Date Amount $toupon % Total Interest Cost'. Premium: Net Interest Cost: $10�54.282.22 $1.788.814.54 $8.686.467.68 3.349898 Time Last Bid Received On:07C31/20188:28:22 POST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made o part horenf. Bidder: J.P. Morgan Securities LLC. New York, NY Contact: Jac|ynPWiuoh|ar Title: Vice President Ta|ephono:212'834'7155 Fax: 917'464'9300 Issuer Name: City of Tukwila Company Nam& Accepted By: Accepted By, PARITY Bid Form Page 2 of 2 Date: Date: © 1981-2002 iiDea0 All rights reserved, Trademarks Ilittps://www,newissuch e.i-dealcom/Parity/asp/main.asp?frame=content&pageparityBi„. 7/3 1 /2018 Y Bid Form. Page 1 of 2 Upcoming Calendar Overview Result Excel organ Stanley 1 Co, LLC - 1 L ew York , Y's id Tu il ite Tax -ner I • • • ti • n on • s AP 1 411 For the aggregate principal amount of $18,525,000.00, we will pay you $20,041,875.69, plus accrued interest from the date of issue to the date of defivery The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ 12/01/2022 745M 12/01/2023 12/01/2024 12/01/2025 12/01/2026 12/01/2027 12/01/2028 12/01/2029 12/01/2030 12/01/2031 12/01/2032 12/01/2033 12/01/2034 12/01/2035 12/01/2036 12401.12027 12/01/2038 Coupon % 5.0000 780M 5.0000 820M 860M 905M 950M 1,000M 1,040M 1,080M 1,125M 1,165M 1,215M 1,265M 1,315M 1,365M 2,895M 5.0000 5.0000 5 0000 5 0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 I 4.0000 4.0000 4.0000 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,203,981.11 $1,516,875.69 $8,687,105.42 3.372961 Time Last Bid Received On:07/31/2018 829:46 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Contact: Title: Telephone:212-761-1541 Fax: 212-507-2510 Issuer Name: City of Tukwila Accepted By Morgan Stanley & Co, LLC, New York , NY Daniel Kelly Executive Director Company Name: Accepted By: haps://www„fl.e.. issuehome,i-eleal,com./Parity/asp/mairLasp?firame=content&page=parityB1,,„ 7/31./2018 PAT TY Bid Form Page 2 of 2 Date: Date: © 1981-2002 ....11:DeaO L.LC, AGI rights reserved, Trademarks https://wwwnewissuehome.i-deal le•orn/Parity/asp/maimasp?frarne=content&page=parityBi, 7/3 1 /201 8 PARITY M Form Page .. of 2 Upcoming Calendar 1 Overview 1 Result Excel esirow Financial, Inc. - Chicago , IL's 1 • 1 1 L Ito • T. x id Tu ila n r 0 • 11 • ati • n on s, For the aggregate principal amount of $18,525,000.00, we will pay you $19,976,903.65, plus accrued interest from the date of issue to the date of delivery The Bonds are to bear interest at the following rate s : Maturity Date 12/01/2022 12/01/2023 Amount $ 745M 780M Coupon % 5.0000 5.0000 5.0000 5.0000 12/01/2026 905M 5.0000 12/01/2027 950M 5.0000 12/01/2028 1,000M 4.0000 12/01/2029 1,040M 4.0000 12/01/2030 , 1,080M 4.0000 12/01/2031 1,125M 4.0000 12/01/2032 1, 165M 4.0000 12/01/2033 1215M 4.0000 12/01/2034 1,265M 4.0000 12/01/2035 1,315M 4.0000 12/01/2036 1,365M 4.0000 I 12/01/2037 1,420M 4.0000 12/01/2038 1,475M 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,203,981.11 $1,451,903.65 $8,752,077.46 3.405207 Time Last Bid Received On:07/31/2018 8:29:57 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Mesirow Financial, Inc., Chicago , IL Contact: Dave Officer Title: Telephone:212-530-7661 Fax: Issuer Name: City of Tukwila Company Name: Accepted By: Accepted By: haps://wwwnewissu.ehome.i-deaLcom/Parity/asp/maimasp?firame=content&pagerzTarityBit_ 7/3 1/2018 PARITY Bid Form Page 2 of 2 Date: Date: Cr) 11981-2002 All rights reserved, Irildstagggi, hilps://www.riewissueh ei-deal.com/Parity/asp/maimasp?frarrie=coritent&page::::::Tarity 1 '7/31/2018 PARITY Bid Form |Upcoming Calendar U T � , Overview Result Piper Jaffray - KDiOneapo|[s , � � 1 d Excel � � ~ � � � � For the aggregate principal amount of$18.525.00O.00.vvewill pay you $20.O42.884.O1.plus accrued interest from the date of issue to the date of delivery, The Bonds are to bear interest at the following rate(s): Maturity Date 12/01/2022 12/O1/2O23 ~---- 12/O1/2O24 12/O1/2O25 ���^ 12/U1/2O2G Amount $ Coupon % 745M 78OM � 82OM 12/01/2027 12K]1/2O28 5.0000 1.00OM 5.0000 12/01/2030 12/01/2031 12/01/2032 12/01/2033 1.080M .315KA 12/01/2034 2/01/2035 2/O1/2O3G �_ 01/2037 12/O1/2O38 Total Interest |ntareotCost Premium: Net Interest Cost: 1.265M 4.0000 4.0000 1.315M 1.365yW 1,�475M '- 4.0000 4�OO 40000 4.0000 � _x $70.3�)6.953.33 $1.517.684�01 $8.789.269.32 3.415376 Time Last Bid Received On:07/31/2018 8:29:52 PDST This proposal is made subject to all of the barnns and conditions of the Official Bid Form. the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder Piper Jaffray.Minneapolis .K4N Contact: Mike Frederickson Title: Managing Director Te|ephone:612'303-6668 Fax: 612'303-1626 Issuer Name: City of Tukwila Accepted By: Accepted By: Company Name, PARITY Bid Form Page 2 of 2 Date: Date: ©1981-2002 II...II...C, AU rights reserved, Trademeric.!5' https://www,newissuelaame,i-deaLcom/Parity/- sp/maimasp?frame,:::::::coritent&pagoparityBi„. '7/31 /20 1 8 PARITY Bid Form. � U�mmingCa�_�ar _ ____ obert1�aiyd� � � � Dven�ew ResubExce| Co',Inc. - "( 4" � 'te * ank, J's �141'�1 d TK8~U� Tax "","'­,,t,,ner U � � � lt on * ma J), � � � � � � For the aggregate principal amount of$18.525.00O.00,vvewill pay you $1Q.878.873.GG'plus accrued interest from the date ofissue tothe date ofdelivery, The Bonds are bobear interest atthe following rabe(o)� Maturity Date Amount $ CouponY4 5.0000 12/01/2025 12/01/2026 QOSM 50000 --------F-- --'----- 12/01/2027 � 950W1 J 4.0000 12K}1/3O31 12/01/2032 1.125K8 1.185M 12801/2033 1,2154.0000 .` ��, 12/O1/2034 � 13/01/2035 1,31Sy� � 4.0000 ~�~�~___~�.' _� 12/O1/2O3G 1.38SyT 4�0000 � /2037 38 Total Interest Coat: Premium: Net Interest Cost: 1.420M 4.0000 1.475M 4.0000 810.115.657.50 $1.353.873.66 $8.761.78&84 3.416603 Time Last Bid Received On:O7/31/2O188:OS:O2 POST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: RobertVK Baird & Co, Inc., Red Bank, NJ Contact: ohadesmaoaaro Title: director Ta|ephone:732-576-4410 Fax: 732-576-4420 Issuer Name: City of Tukwila Accepted By, Accepted By� Company Name PARITY Bid Form Page 2 of 2 Date: Date: ©1981-2002 [-Deal LILL, AD r[ghts reserved, -Frad„enarks 1-ittps://www.newissuehome,i-dealx'om/Parity/asp/mairLasp?frame::::::::content&page,::::::,parityBi,_ 7/31/2018 PARITY Bid Form Page 1 of 2 Upcoming Calendar J.J. . Hilliard, 1 • Overview Result Excel .L. Lyons, Inc. - Indianapolis, I 's T 11 Li ite Tax e r.11 1 • 'cl li • ati • n 0 1 • For the aggregate principal amount of $18,525,000.00, we will pay you $19,814,771.30, plus accrued interest from the date of issue to the date of delivery The Bonds are to bear interest at the following rate(s) Maturity Date Amount $ 12/01/2022 745M 12/01/2023 780M 12/01/2024 12/01/2025 12/01/2026 12/01/2027 12/01/2028 12/01/2029 12/01/2030 12/01/2031 12/01/2032 12/01/2033 12/01/2034 12/01/2035 12/01/2036 12/01/20 7 12/01/2038 820M 860M 905M 950M 1,000M 1,040M 1,080M 1,125M 1,165M 1,215M 1,265M 1,315M 1,365M 1,420M 1,475M Coupon % 5.0000 5.0000 5.0000 5.0000 5.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 Total Interest Cost: Premium: Net Interest Cost: TIC: $10,115,657.50 $1,289,771.30 $8,825,886.20 3.448660 Time Last Bid Received On:07/31/2018 8:27:28 PDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: J.J.B. Hilliard, W.L. Lyons, Inc., Indianapolis , IN Contact: Robert Bond Title: Telephone:317-991-9135 Fax Issuer Name: City of Tukwila Accepted By Company Name. Accepted By: lutps://wwwsiewiss ei•••deal.com/Parity/asp/rnain.asp?frame=content&page=parityBi,.. 7/31/2018 PARITY Bid Form Page 2 of 2 Date: © 1981-2002 i-Deal LLC, All rights resented, Trademark hittps://www.newissuehome,i-dealxom/Parity/asp/maimasp?tramecontent&page=parityBi„ 7/31/2018 , � K l � Upcoming Calendar U Overview| RResultU l Excel � � J( '* ite i d ,,* Tu 1,,� ^Ua ���������� �U ��. � � � � � jr � � Alf" For the aggregate principal amount of$18.525'0OO.UO.wawill pay you $2O.516,581.8O.plus accrued interest from the date of issue to the date of delivery, The Bonds are to bear interest at the following rate(s)� 12K)1/2O2Q 1.O4ON1 -_ 12X01/2030 1080N1 ~-------|'------ 12/01/2031 1 125PN � 12/01/2032 1.165PW 2/01/2033 12/01/2034 Total Interest Net Interest Coot TIC: 1.2S5PW 4.0000 $11.059.272M $1.990.581.80 $9.068.680.28 3.477015 Time Last Bid Received On:07/31/20188:27:54 PDST This proposal ksmade subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder Jefferiea LLC. New York, NY Contact: Kurt Ahrens Title: Issuer Name: City ofTukwila Company Name: Accepted By: _ _ _ ____ Accepted By: PARITY Biid Form I • e 2 of 2 Date: Date: © 1 981-2002 i-Deal NI rights reserved, "„1:rjs1gramEtil htitps://wwwnewissueho e„i-deal.com/Parity/asp/main.aspfframecon:tent&pageparityBi._ 7/3 1/2018 PARITY Result Screen Page I of I [08:37:47 a.m. PDST I Upcoming Calendar Overview Compare Summary 'd es u Its 1 1 L ite • Tu ila Tax eneral 0 li • ation on • s 1 • • The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* rReoffering Bidder Name TIC Ctig!ouR Global Markets, Inc. 3.349766 JP an an Securities LLC .3.349898 _organ Stantey 3.372961 Viesirow Financial, Inc 3.405207 Piper Jaffrey 3415376 Robert W Baird Inc 3.416603 111 J.J.B. Hilliard. WL. Lyons, Inc. 3.448660 Jefferies LLC 3.477015 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields © 1981-2002 kiDedi Ali rights reserved, :rofigoods,§. https://www.newissuehomei-dea Parity/asp/m.ain.asp fra ...e""""C page:=T rityR,„. '7/31/2018 pr TABLE OF CONTENTS City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Report Page Sources and Uses of Funds Bond Summary Statistics Bond Pricing Bond Debt Service Cost of Issuance Underwriter's Discount Form 8038 Statistics 1 2 3 4 6 7 8 Prepared by PFM prm SOURCES AND USES OF FUNDS City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Dated Date Delivery Date Sources: 08/14/2018 08/14/2018 Bond Proceeds: Par Amount 18,365,000.00 Premium 1,809,035.65 20,174,035.65 Uses: Project Fund Deposits: Project Fund Delivery Date Expenses: Cost of Issuance Underwriter's Discount 20,000,000.00 87,773.43 86,262.22 174,035.65 20,174,035.65 Prepared by PFM Page 1 prm Bond Component BOND SUMMARY STATISTICS City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Dated Date 08/14/2018 Delivery Date 08/14/2018 Last Maturity 12/01/2038 Arbitrage Yield 2.987050% True Interest Cost (TIC) 3.353260% Net Interest Cost (NIC) 3.525310% All -In TIC 3.396810% Average Coupon 4.228818% Average Life (years) 13.334 Duration of Issue (years) 10.232 Par Amount 18,365,000.00 Bond Proceeds 20,174,035.65 Total Interest 10,355,676.11 Net Interest 8,632,902.68 Total Debt Service 28,720,676.11 Maximum Annual Debt Service 1,536,200.00 Average Annual Debt Service 1,415,005.26 Underwriter's Fees (per $1000) Average Takedown Other Fee 4.697099 Total Underwriter's Discount 4.697099 Bid Price 109.380743 Par Average Average PV of 1 bp Value Price Coupon Life change Serial Bonds 18,365,000.00 109.850 4.229% 13.334 14,061.40 18,365,000.00 13.334 14,061.40 Par Value + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense - Other Amounts TIC All -In Arbitrage TIC Yield 18,365,000.00 1,809,035.65 -86,262.22 18, 365, 000.00 18, 365, 000.00 1,809,035.65 - 86,262.22 - 87,773.43 1,809,035.65 Target Value 20,087,773.43 20,000,000.00 20,174,035.65 Target Date 08/14/2018 08/14/2018 08/14/2018 Yield 3.353260% 3.396810% 2.987050% Prepared by PFM Page 2 prm Bond Component BOND PRICING City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Maturity Date Amount Rate Yield Price Serial Bonds: 12/01/2022 12/01/2023 12/01/2024 12/01/2025 12/01/2026 12/01/2027 12/01/2028 12/01/2029 12/01/2030 12/01/2031 12/01/2032 12/01/2033 12/01/2034 12/01/2035 12/01/2036 12/01/2037 12/01/2038 730,000 5.000% 1.950% 112.511 765,000 5.000% 2.050% 114.733 805,000 5.000% 2.200% 116.378 845,000 5.000% 2.330% 117.818 885,000 5.000% 2.450% 119.037 930,000 5.000% 2.520% 119.454 C 975,000 5.000% 2.600% 118.760 C 1,025,000 5.000% 2.700% 117.899 C 1,080,000 4.000% 2.950% 108.080 C 1,120,000 4.000% 3.050% 107.278 C 1,165,000 4.000% 3.150% 106.483 C 1,210,000 4.000% 3.250% 105.694 C 1,260,000 4.000% 3.340% 104.991 C 1,310,000 4.000% 3.380% 104.680 C 1,365,000 4.000% 3.430% 104.292 C 1,420,000 4.000% 3.480% 103.907 C 1,475,000 4.000% 3.500% 103.753 C 18,365,000 Dated Date Delivery Date First Coupon 08/14/2018 08/14/2018 12/01/2018 Prepared by PFM Page 3 prm BOND DEBT SERVICE City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Dated Date Delivery Date 08/14/2018 08/14/2018 Period Ending Principal Coupon Interest Debt Service 12/01/2018 239,026.11 239,026.11 12/01/2019 804,200.00 804,200.00 12/01/2020 804,200.00 804,200.00 12/01/2021 804,200.00 804,200.00 12/01/2022 730,000 5.000% 804,200.00 1,534,200.00 12/01/2023 765,000 5.000% 767,700.00 1,532,700.00 12/01/2024 805,000 5.000% 729,450.00 1,534,450.00 12/01/2025 845,000 5.000% 689,200.00 1,534,200.00 12/01/2026 885,000 5.000% 646,950.00 1,531,950.00 12/01/2027 930,000 5.000% 602,700.00 1,532,700.00 12/01/2028 975,000 5.000% 556,200.00 1,531,200.00 12/01/2029 1,025,000 5.000% 507,450.00 1,532,450.00 12/01/2030 1,080,000 4.000% 456,200.00 1,536,200.00 12/01/2031 1,120,000 4.000% 413,000.00 1,533,000.00 12/01/2032 1,165,000 4.000% 368,200.00 1,533,200.00 12/01/2033 1,210,000 4.000% 321,600.00 1,531,600.00 12/01/2034 1,260,000 4.000% 273,200.00 1,533,200.00 12/01/2035 1,310,000 4.000% 222,800.00 1,532,800.00 12/01/2036 1,365,000 4.000% 170,400.00 1,535,400.00 12/01/2037 1,420,000 4.000% 115,800.00 1,535,800.00 12/01/2038 1,475,000 4.000% 59,000.00 1,534,000.00 18,365,000 10,355,676.11 28,720,676.11 Prepared by PFM Page 4 prm BOND DEBT SERVICE City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Dated Date Delivery Date 08/14/2018 08/14/2018 Period Ending Principal Coupon Interest Debt Service 12/01/2018 239,026.11 239,026.11 06/01/2019 402,100.00 402,100.00 12/01/2019 402,100.00 402,100.00 06/01/2020 402,100.00 402,100.00 12/01/2020 402,100.00 402,100.00 06/01/2021 402,100.00 402,100.00 12/01/2021 402,100.00 402,100.00 06/01/2022 402,100.00 402,100.00 12/01/2022 730,000 5.000% 402,100.00 1,132,100.00 06/01/2023 383,850.00 383,850.00 12/01/2023 765,000 5.000% 383,850.00 1,148,850.00 06/01/2024 364,725.00 364,725.00 12/01/2024 805,000 5.000% 364,725.00 1,169,725.00 06/01/2025 344,600.00 344,600.00 12/01/2025 845,000 5.000% 344,600.00 1,189,600.00 06/01/2026 323,475.00 323,475.00 12/01/2026 885,000 5.000% 323,475.00 1,208,475.00 06/01/2027 301,350.00 301,350.00 12/01/2027 930,000 5.000% 301,350.00 1,231,350.00 06/01/2028 278,100.00 278,100.00 12/01/2028 975,000 5.000% 278,100.00 1,253,100.00 06/01/2029 253,725.00 253,725.00 12/01/2029 1,025,000 5.000% 253,725.00 1,278,725.00 06/01/2030 228,100.00 228,100.00 12/01/2030 1,080,000 4.000% 228,100.00 1,308,100.00 06/01/2031 206,500.00 206,500.00 12/01/2031 1,120,000 4.000% 206,500.00 1,326,500.00 06/01/2032 184,100.00 184,100.00 12/01/2032 1,165,000 4.000% 184,100.00 1,349,100.00 06/01/2033 160,800.00 160,800.00 12/01/2033 1,210,000 4.000% 160,800.00 1,370,800.00 06/01/2034 136,600.00 136,600.00 12/01/2034 1,260,000 4.000% 136,600.00 1,396,600.00 06/01/2035 111,400.00 111,400.00 12/01/2035 1,310,000 4.000% 111,400.00 1,421,400.00 06/01/2036 85,200.00 85,200.00 12/01/2036 1,365,000 4.000% 85,200.00 1,450,200.00 06/01/2037 57,900.00 57,900.00 12/01/2037 1,420,000 4.000% 57,900.00 1,477,900.00 06/01/2038 29,500.00 29,500.00 12/01/2038 1,475,000 4.000% 29,500.00 1,504,500.00 18,365,000 10,355,676.11 28,720,676.11 Prepared by PFM Page 5 prm Cost of Issuance COST OF ISSUANCE City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** $/1000 Amount Financial Advisor (PFM Financial Advisors LLC) 1.50000 27,547.50 Bond Counsel (Pacifica Law Group) 1.51593 27,840.00 Rating Agency (S&P Global Ratings) 1.03458 19,000.00 Official Statement (PFM Financial Advisors LLC) 0.46284 8,500.00 i-Deal 0.06806 1,250.00 PFM Financial Advisors Expenses 0.05445 1,000.00 Contingency 0.14353 2,635.93 4.77939 87,773.43 Prepared by PFM Page 6 pr UNDERWRITER'S DISCOUNT City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Underwriter's Discount $/1000 Amount Other Underwriter's Discount 4.69710 86,262.22 4.69710 86,262.22 Prepared by PFM Page 7 prm FORM 8038 STATISTICS City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 **Final Numbers** Dated Date Delivery Date 08/14/2018 08/14/2018 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Serial Bonds: 12/01/2022 730,000.00 5.000% 112.511 821,330.30 730,000.00 12/01/2023 765,000.00 5.000% 114.733 877,707.45 765,000.00 12/01/2024 805,000.00 5.000% 116.378 936,842.90 805,000.00 12/01/2025 845,000.00 5.000% 117.818 995,562.10 845,000.00 12/01/2026 885,000.00 5.000% 119.037 1,053,477.45 885,000.00 12/01/2027 930,000.00 5.000% 119.454 1,110,922.20 930,000.00 12/01/2028 975,000.00 5.000% 118.760 1,157,910.00 975,000.00 12/01/2029 1,025,000.00 5.000% 117.899 1,208,464.75 1,025,000.00 12/01/2030 1,080,000.00 4.000% 108.080 1,167,264.00 1,080,000.00 12/01/2031 1,120,000.00 4.000% 107.278 1,201,513.60 1,120,000.00 12/01/2032 1,165,000.00 4.000% 106.483 1,240,526.95 1,165,000.00 12/01/2033 1,210,000.00 4.000% 105.694 1,278,897.40 1,210,000.00 12/01/2034 1,260,000.00 4.000% 104.991 1,322,886.60 1,260,000.00 12/01/2035 1,310,000.00 4.000% 104.680 1,371,308.00 1,310,000.00 12/01/2036 1,365,000.00 4.000% 104.292 1,423,585.80 1,365,000.00 12/01/2037 1,420,000.00 4.000% 103.907 1,475,479.40 1,420,000.00 12/01/2038 1,475,000.00 4.000% 103.753 1,530,356.75 1,475,000.00 18,365,000.00 20,174,035.65 18,365,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity Entire Issue 12/01/2038 4.000% 1,530,356.75 20,174,035.65 1,475,000.00 18,365,000.00 13.1099 2.9870% Proceeds used for accrued interest Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund 0.00 174,035.65 0.00 0.00 Prepared by PFM Page 8 CITY OF TUKWILA DEBT POLICY A debt policy and appropriate management of debt issued by the City of Tukwila (the "City") is an important factor in measuring its financial performance and condition. Proper use and management of borrowing can yield significant advantages. From a policy perspective, the City uses debt as a mechanism to equalize the costs of needed improvements to both present and future citizens. SECTION 1. PURPOSE, TYPE AND USE OF DEBT In the issuance and management of debt, the City shall comply with the Washington State constitution and with all other applicable legal requirements imposed by federal, state and local laws, rules and regulations. Approval from the City Council (the "Council") is required prior to the issuance of all debt. Long-term debt will only be used for improvements that cannot be financed from current revenues or to fulfill the purposes set forth in the first paragraph of this Debt Policy (the "Policy"). Long-term debt will only be issued after reviewing the impact on the Six Year Financial Planning Model and its policy guidelines. When both tax exempt and taxable debt is under consideration, priority will be given to issuing the tax exempt debt, unless otherwise justified. Limited Tax General Obligation (LTGO) Bonds. The City is authorized to sell LTGO bonds under RCW 39.36.020, subject to the approval of the Council. LTGO bonds will be issued only if: (1) a project requires funding not available from alternative sources; (2) the project has a useful life longer than five years, and the Council determines it is appropriate to spread the cost over that useful life, to achieve intergenerational equity, so those benefiting will also be the ones paying; (3) matching money is available which may be lost if not applied for in a timely manner; or (4) emergency conditions exist as determined by the Council. LTGO (non -voted) debt of the City shall not exceed an aggregate total of 1.5 percent of the City's assessed value of taxable property within the City. Unlimited Tax General Obligation (UTGO) Bonds. The City is authorized to sell UTGO bonds under RCW 39.36.020, subject to the approval of the Council, and subject to voter approval. UTGO debt will be used for capital purposes when the use of an excess tax levy is necessary for debt service payments. No combination of UTGO (voter approved) debt and LTGO debt of the City shall exceed an aggregate total of: (a) 2.5 percent of the City's assessed value of the taxable property within the City for general purposes; (b) 2.5 percent of the City's assessed value of the taxable property within the City for parks, open spaces and capital facilities associated with economic development; and (c) 2.5 percent of the City's assessed value of the taxable property within the City for utility purposes. Revenue Bonds. The City is authorized to sell revenue bonds under RCW 35.41.030, subject to the approval of the Council. Revenue bonds will be issued to finance the acquisition, construction or improvements to facilities of enterprise systems operated by the City, in accordance with a system and plan of improvements. The enterprise system must be legally authorized for operation by the City. There are no legal limits to the amount of revenue bonds the City can issue, but the City will not incur revenue obligations without first ensuring the ability of an enterprise system to meet all pledges and covenants customarily required by investors in such obligations during the term of the obligation. 1 Local Improvement District Bonds. The City is authorized to sell local improvement district (special assessment) bonds ("LID bonds") under RCW 35.45.010, subject to the approval of the Council. LID bonds are issued to finance projects that will provide special benefit to certain property owners. The specially benefiting property owners are levied an assessment, based upon a formula developed to fairly reflect the benefit received by each property owner in the local improvement district. After consideration and review, the City may form local improvement districts upon petition of benefiting property owner(s), unless the Council determines to establish such districts by resolution, pursuant to statutory authority. LIDs for utility improvements may be authorized as ULIDs, which may be financed through issuance of Revenue Bonds. Lease Purchase Financing. Lease purchase financing may be used when the cost of borrowing or other factors make it in the City's best interest. Short -Term Debt. The City is authorized to incur short-term debt under chapter 39.50 RCW, subject to the approval of the Council. Short-term debt may be issued to meet: (1) the immediate financing needs of a project for which long-term financing has been identified and is likely or secured but not yet received; or (2) cash flow needs within authorized budgets and anticipated receipts for the budget year. The Finance Director is authorized to make loans from one City fund to another City fund for periods not exceeding twelve months. The Finance Director or designee is required to assure that the loaning fund will have adequate cash balances to continue to meet current expenses after the loan is made and until repayment from the receiving fund. All interfund short-term borrowing will bear interest based upon prevailing Local Government Investment Pool rates. SECTION 2. RESPONSIBILITIES The primary responsibility for debt management rests with the City's Finance Director. The Finance Director shall (or shall cause the following to occur): • Provide for the issuance of debt at the lowest cost and risk; • Determine the available debt capacity; • Provide for the issuance of debt at appropriate intervals and in reasonable amounts as required to fund approved projects; - Recommend to the Council the manner of sale of debt; • Monitor opportunities to refund debt and recommend such refunding as appropriate; • Comply with all Internal Revenue Service (IRS), Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) rules and regulations governing the issuance of debt pursuant to the City's Post Issuance Compliance Policy; • Provide information for and participate in the preparation and review of bond offering or disclosure documents; • Comply with all terms, conditions and disclosures required by Ordinances governing the debt issued; • Submit to the Council all recommendations to issue debt; • Distribute to appropriate repositories, such as the EMMA repository managed by the Municipal Securities Rulemaking Board, information regarding financial condition and affairs at such times and in the form required by contract, regulation and general practice, including Rule 15c2-12 regarding continuing disclosure; 2 • Provide for the distribution of pertinent information to rating agencies; • Coordinate and lead presentations to rating agencies, when appropriate; • Maintain a database with all outstanding debt; • Apply and promote prudent fiscal practices; • Select a qualified financial advisor with experience in municipal finance in Washington, and registered with the SEC and MSRB as a "municipal advisor," and • Account for and pay all bonded indebtedness for the City , by specifically providing for the timely payment of principal of and interest on all debt; and ensuring that the fiscal agent receives funds for payment of debt service on or before the payment date. The Council shall: • Approve the Debt Policy; • Approve indebtedness; • Approve budgets sufficient to provide for the timely payment of principal and interest on debt; • Determine the most appropriate financing plan for proposed debt, based on recommendation from the Finance Director, upon advice of the City's financial advisor; and • By Ordinance, delegate broad or limited authority to the Finance Director relative to execution of a financing plan approved by the Council. SECTION 3: METHOD OF SALE OF BONDS Competitive Sale. The Finance Director may, upon the advice of the City's financial advisor, submit to the Council a recommendation to sell debt on a competitive bid basis. City debt issued on a competitive bid basis will be sold to the bidder proposing the lowest true interest cost to the City. Such bid may take the form of electronically transmitted offers to purchase the bonds. Negotiated Sale. The Finance Director may, upon the advice of the City's financial advisor, submit to the Council a recommendation to sell debt on a negotiated basis. If debt is sold on a negotiated basis, the negotiations of terms and conditions shall include, but not be limited to, prices, interest rates, redemption provisions and underwriting compensation. The Finance Director, with the assistance of its financial advisor, shall evaluate the terms offered by the underwriter including comparison of terms with prevailing terms and conditions in the marketplace for comparable issues. If more than one underwriter is included in the negotiated sale of debt, the Finance Director shall establish appropriate levels of liability, participation and priority of orders and, with the assistance of its financial advisor, oversee the bond allocation process. Private or Direct Placement. When deemed appropriate to minimize the direct or indirect costs and risks of a debt issue, the Finance Director will, upon the advice of the City's financial advisor, submit. to the Council a request to incur debt issue through a private placement or direct bank placement. SECTION 4. REFUNDING BONDS OR NOTES Refundings will be conducted in accordance with chapter 39.53 RCW. Unless otherwise justified, the City will refinance debt to either achieve debt service savings as market opportunities arise, or to eliminate restrictive covenants. 3 Unless otherwise justified, an "advance refunding" transaction will require a present value savings of five percent of the principal amount of the debt being refunded. In addition to the savings, any determination to refund debt should take into consideration all costs and negative arbitrage in the refunding escrow. A "current refunding" transaction will require present value savings in an amount or percentage to be determined by the Finance Director based upon the advice of the City's financial advisor. SECTION 5. STRUCTURAL ELEMENTS Maturity Term. The City shall issue debt with an average life less than or equal to the average life of the assets being financed. Unless otherwise stated in law, the final maturity of the debt shall be no longer than 40 years (RCW 39.46.110). Debt Service Structure. Unless otherwise justified and deemed necessary, debt service should be structured on a level annual basis. Refunding bonds should be structured to produce debt service savings as determined by the Finance Director, based upon the advice of the City's financial advisor, to be in the best interest of the City. Unless specifically justified and deemed necessary. debt shall not have capitalized interest. If appropriate, debt service reserve funds may be used for revenue bonds. Maturity Structure. The City's long-term debt may include serial and term bonds. Unless otherwise justified, term bonds should be sold with mandatory sinking fund requirements. Price Structure. The City's long-term debt may include par, discount and premium bonds. Discount and premium bonds must be demonstrated to be advantageous relative to par bond structures, given applicable market conditions and the City's financing goals. Interest Payments. Unless otherwise justified and deemed necessary, long-term debt will bear interest payable semiannually. Redemption Features. For each transaction, the City shall evaluate the costs and benefits of call provisions. Capitalization. Debt service reserves may be capitalized for enterprise activities only. Costs of issuance may be capitalized for all debt. Interest costs may be capitalized upon the advice of the City's financial advisor for any type of debt. Bond Insurance. The City may evaluate the costs and benefits of bond insurance or other credit enhancements. Any credit enhancement purchased by the City shall be competitively procured unless otherwise justified. Tax -exemption. Unless otherwise justified and deemed necessary, the City shall issue its debt on a tax-exempt basis. Taxable debt may be justified based on a need for flexibility in use of proceeds, or when expected to reduce burdens relative to IRS rules. SECTION 6. CREDIT OBJECTIVE The City shall seek to maintain and improve its bond rating or ratings, as applicable. 4 SECTION 7. USE OF PROFESSIONALS AND OTHER SERVICE PROVIDERS Bond Counsel. All debt issued by the City will include a written opinion by bond counsel affirming that the City is authorized to issue the debt, and that all statutory requirements have been met. The bond counsel opinion and other documents relating to the issuance of debt will be prepared by nationally recognized bond counsel with extensive experience in public finance and tax issues. Bond counsel will be appointed by the Finance Director consistent with the City's general authority to contract. . Financial Advisor. The Finance Director will appoint a financial advisor for each debt issue, or for a specified term, consistent with the City's general authority to contract. The financial advisor shall be nationally recognized, have comprehensive municipal debt experience, including debt structuring and pricing of municipal securities, be registered as a "municipal advisor" with the MSRB and SEC, and have knowledge of State laws relating to City finances. The City financial advisor is to be available for general purposes, and will assist the City with all financing issues. In no case shall the .financial advisor serve as underwriterfor the City's debt issues. Underwriter. The Finance Director in consultation with the City's financial advisor will select an underwriter for any negotiated sale of bonds. The selection of an underwriter may be for an individual bond issue, series of financings or a specified time period, as determined by the Finance Director. Depending upon the nature and amount of each financing, the Finance Director is authorized, in consultation with the City's financial advisor, to appoint more than one underwriter for each financing and to designate one underwriting firm as the managing underwriter. Other Service Providers. Professional services such as verification agent, escrow agent or rebate analyst shall be appointed by the Finance Director in consultation with the City's financial advisor and/or bond counsel. Other City Policies and Procedures. The City shall comply with its Post -Issuance Tax Compliance Policy, and shall provide the appropriate department heads and staff with educational opportunities to ensure they are aware of requirements that may pertain to bond financed facilities and assets relating to their duties. SECTION 8. POST -ISSUANCE COMPLIANCE PROCEDURES Continuing Disclosure Obligations for All Bonds Purpose. At the time of issuance of any Bonds, regardless of tax status, the City is required to enter into a Continuing Disclosure Undertaking ("Undertaking") in order to allow the underwriter of the Bonds to comply with Securities and Exchange ("SEC") Rule 15(c)2-12. The Undertaking is a contract between the City and the underwriter in which the City agrees to provide certain information to an "information repository" operated by the Municipal Securities Rulemaking Board ("MSRB") to ensure investors have access to annual updates and related events that occur during the year. Responsibility for Undertaking. The Finance Director is responsible for negotiating the terms of and complying with each of the City's Undertakings. The Finance Director will negotiate the terms of the Undertaking at the time of each bond issuance, with a goal of meeting the 5 requirements of Rule 15(c)2-12, without undue burden on the City. The Finance Director will strive to ensure that each Undertaking is similar to prior Undertakings to the extent possible, to simplify future compliance. Compliance with Undertaking. The Finance Director will have responsibility for ensuring compliance with each Undertaking, which activities may be delegated to staff within the finance department. This will require certain annual filings, by a set due date, as well as periodic filings as certain specified events arise. Filings are to be made through the Electronic Municipal Market Access ("EMMA") portal, managed by the MSRB. The Finance Director is responsible for knowing the terms of the City's Undertakings, and ensuring appropriate staff within the finance department and other departments of the City are aware of the events that may require a filing. Certification of Compliance. At the time of each subsequent bond issue, the Finance Director is responsible for reviewing all prior compliance, and providing a statement as to that prior compliance, as required by Rule 15(c)2-12. Each official statement will include a statement that describes compliance (or non-compliance) with each prior undertaking, which statement will be certified by the Finance Director. Compliance Relating to Tax Exempt Bonds Purpose. The purpose of these post -issuance compliance procedures ("Compliance Procedures") for tax-exempt bonds and other obligations issued by the City for which federal tax exemption is provided by the Internal Revenue Code of 1986, as amended (the "Code"), is to facilitate compliance by the City with the applicable requirements of the Code that must be satisfied after the issue date of the bonds to maintain the tax exemption for the bonds after the issue date. Responsibility for Monitoring Post -Issuance Tax Compliance. The City Council of the City has the overall, final responsibility for monitoring whether the City is in compliance with post - issuance federal tax requirements for the City's tax-exempt bonds. However, the City Council has delegated the primary operating responsibility to monitor the City's compliance with post - issuance federal tax requirements for the City's bonds to the Finance Director and has authorized and directed the Finance Director of the City to adopt and implement on behalf of the City these Compliance Procedures. Arbitrage Yield Restriction and Rebate Requirements. The Finance Director will maintain or cause to be maintained records of: (a) purchases and sales of investments made with bond proceeds (including amounts treated as "gross proceeds" of bonds under section 148 of the Code) and receipts of earnings on those investments; (b) expenditures made with bond proceeds (including investment earnings on bond proceeds) in a timely and diligent manner for the governmental purposes of the bonds, such as for the costs of purchasing, constructing and/or renovating property and facilities; (c) information showing, where applicable for a particular calendar year, that the City was eligible to be treated as a "small City" in respect of bonds issued in that calendar year because the City did not reasonably expect to issue more than $5,000,000 of tax-exempt bonds in that calendar year; (d) calculations that will be sufficient to demonstrate to the Internal Revenue Service ("IRS") upon an audit of a bond issue that, where applicable, the City has complied with an available spending exception to the arbitrage rebate requirement in respect of that bond issue; 6 (e) calculations that will be sufficient to demonstrate to the IRS upon an audit of a bond issue for which no exception to the arbitrage rebate requirement was applicable, that the rebate amount, if any, that was payable to the United States of America in respect of investments made with gross proceeds of that bond issue was calculated and timely paid with Form 8038- T timely filed with the IRS; and (f) information and records showing that investments held in yield -restricted advance refunding or defeasance escrows for bonds, and investments made with unspent bond proceeds after the expiration of the applicable temporary period, were not invested in higher -yielding investments. Restrictions on Private Business Use and Private Loans. The Finance Director will adopt procedures calculated to educate and inform the principal operating officials of those departments, including utility departments, if any, of the City (the "users") for which land, buildings, facilities and equipment ("property") are financed with proceeds of tax-exempt bonds about the restrictions on private business use that apply to that property after the bonds have been issued, and of the restriction on the use of proceeds of tax-exempt bonds to make or finance any loan to any person other than a state or local government unit. In particular, following the issuance of bonds for the financing of property, the Finance Director shall provide to the users of the property a copy of these Compliance Procedures and other appropriate written guidance advising that: (a) "private business use" means use by any person other than a state or local government unit, including business corporations, partnerships, limited liability companies, associations, nonprofit corporations, natural persons engaged in trade or business activity, and the United States of America and any federal agency, as a result of ownership of the property or use of the property under a lease, management or service contract (except for certain "qualified" management or service contracts), output contract for the purchase of electricity or water, privately sponsored research contract (except for certain "qualified" research contracts), "naming rights" contract, "public -private partnership" arrangement, or any similar use arrangement that provides special legal entitlements for the use of the bond-fmanced property; (b) under section 141 of the Code, no more than 10% of the proceeds of any tax-exempt bond issue (including the property financed with the bonds) may be used for private business use, of which no more than 5% of the proceeds of the tax-exempt bond issue (including the property financed with the bonds) may be used for any "unrelated" private business use — that is, generally, a private business use that is not functionally related to the governmental purposes of the bonds; and no more than the lesser of $5,000,000 or 5% of the proceeds of a tax-exempt bond issue may be used to make or finance a loan to any person other than a state or local government unit; (c) before entering into any special use arrangement with a nongovernmental person that involves the use of bond -financed property, the user must consult with the Finance Director, provide the Finance Director with a description of the proposed nongovernmental use arrangement, and determine whether that use arrangement, if put into effect, will be consistent with the restrictions on private business use of the bond -financed property; (d) the Finance Director is to communicate with the City's bond counsel and/or financial advisor relative to any proposed change in use or special use arrangement that may impact the status of the bonds, before entering into such agreement. 7 G PACIFICA LAW GROUP September 18, 2018 VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED Department of the Treasury Internal Revenue Service Center Ogden, UT 84201 Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 - $18,365,000 Ladies and Gentlemen: T 206.245.1700 1191 2nd Avenue, Suite 2000 Seattle, WA 98101-3404 pacificalawgroup.com Enclosed please find an IRS Form 8038-G relative to the above -captioned issue. Very truly yours, PACIFICA LAW GROUP LLP By Mei He Paralegal 10076 00005 h1174m39dm Form 8038-G (Rev. September 2011) Department of the Treasury Internal Revenue Service Information Return for Tax -Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) ►See separate instructions. Caution: If the issue price is under $100,000; use Form 8038-GC. OMB No. 1545-0720 Part I Reporting Authori If Amended Return, check here ► ❑ 1 Issuer's name City of Tukwila, Washington 2 Issuer's employer identification number (EIN) 91-6001519 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a 4 Number and street (or P.O. box if mail is not delivered to street address) 6200 Southcenter Boulevard Room/suite 5 Report number (For IRS Use Only) 13 6 City, town, or post office, state, and ZIP code Tukwila, WA 98188-2544 7 Date of issue August 14, 2018 8 Name of issue Limited Tax General Obligation Bonds, 2018 9 CUSIP number 899052LM4 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see instructions) Peggy McCarthy, Finance Director 10b Telephone number of officer or other employee shown on 10a (206) 433-1838 Part la 11 12 Health and hospital 13 Transportation 14 Public safety 15 Environment (including sewage bonds) 16 Housing 17 Utilities 18 Other. Describe ► acquire parcels of land, construct maintenance and other City facilities 19 If obligations are TANs or RANs, check only box 19a ► ❑ If obligations are BANs, check only box 19b ► ❑ 20 If obligations are in the form of a lease or installment sale, check box ► ❑ Type of Issue (enter the issue price). See the instructions and attach schedule. Education 11 12 13 14 15 16 17 18 20,174,036 Part III Description of Obligations. Complete for the entire issue for which this form is being filed. (a) Final maturity date 21 12/01/2038 $ (b) Issue price 20,174,036 (c) Stated redemption price at maturity 18,365,000 Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 23 Issue price of entire issue (enter amount from line 21, column (b)) 24 Proceeds used for bond issuance costs (including underwriters' discount) . 25 Proceeds used for credit enhancement 26 Proceeds allocated to reasonably required reserve or replacement fund 27 Proceeds used to currently refund prior issues 28 Proceeds used to advance refund prior issues 29 30 (d) Weighted average maturity 13.1099 Total (add lines 24 through 28) Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) years (e) Yield 2.9870 % 30 1 20,000,000 Part V 31 32 33 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/YYYY) For Paperwork Reduction Act Notice, see separate instructions. Description of Refunded Bonds. Complete this part only for refunding bonds. Enter the remaining weighted average maturity of the bonds to be currently refunded . Enter the remaining weighted average maturity of the bonds to be advance refunded . Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) • ► N/A Cat. No. 63773S N/A N/A N/A years years Form 8038-G (Rev. 9-2011) Form 8038-G (Rev. 9-2011) Page 2 38a b c d 39 40 Part VI Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) b Enter the final maturity date of the GIC ► c Enter the name of the GIC provider 0- 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units If this issue is a loan made from the proceeds of another tax-exempt issue, check box 0- Enter the date of the master pool obligation 0- Enter the EIN of the issuer of the master pool obligation ► Enter the name of the issuer of the master pool obligation 0- If the issuer has designated the issue under section 265(b)(3)(B)(i)(Ul) (small issuer exception), check box If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box 35 36a 37 ❑ and enter the following information: . ► ❑ 41a If the issuer has identified a hedge, check here ► ❑ and enter the following information: b Name of hedge provider c Type of hedge d Term of hedge ► 42 If the issuer has superintegrated the hedge, check box ► ❑ 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box ► 44 If the issuer has established written procedures to monitor the requirements of section 148, check box ► 45a If some portion of the proceeds was used to reimburse expenditures, check here ► ✓❑ and enter the amount of reimbursement ► $6,000,000 b Enter the date the official intent was adopted ► 12/4/2017 Signature and Consent Paid Preparer Use Only Alison J. Benge Firm's name ► Pacifica Law Group LLP Under penalties of perjury, 1 declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belie hey are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to process return, to the person that I have authorized above. Signat is authorized repress ive Date Peggy McCarthy, Finance Director Type or print name and title Print/Ty•=".r-:'f-r's name Preparers signature 0.70.er Firm's address ► 1191 Second Avenue, Suite 2000, Seattle, Washington 98101 Date Check ❑ if PTIN $ '+ % self-employed P01066582 Firm's EIN ► 45 1446871 Phone no. (206) 245-1700 Form 8038-G (Rev. 9-2011) AFFIDAVIT OF MAILING STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) Rachael Rapp, being duly sworn, deposes and says that she is a citizen of the United States and over the age of eighteen years; that she is a resident of King County, Washington. That on September /6 , 2018, at /0.3$ m p.m., she caused IRS Form 8038-G completed by the City of Tukwila, with respect to its imited Tax General Obligation Bonds, 2018, to be mailed by depositing the same in the United States mail, in a sealed envelope, certified delivery, first class, postage prepaid, properly addressed to the Department of the Treasury, Internal Revenue Service Center, Ogden, Utah 84201. I certify that I know or have satisfactory evidence that Rachael Rapp is the person who appeared before me, and said person acknowledged that she signed this instrument, and acknowledged it to be her free and voluntary act for the uses and purposes mentioned in the instrument. Dated: fq tO E1 He �14h 1 re 5S 29-20 C~= OF WAS ' ... (Use this space for notarial stamp/seal) Notary Public . Print Name t4e4 (€ My commission expires 0 6 (a 9/ a1{j 0000 4353 3754 m N ra N U.S. Postal Service'" CERTIFIED MAIL° RECEIPT Domestic Mail Only For delivery information, visit our website at www.usps.com'. i? 1-' Certified Mail Fee $ 4^Sdki -vr Extra Services & Fees (check box, add fee a ❑ Retum Receipt (hardcopy) $ ❑ Retum Receipt (electronic) $ ❑ Certified Mall Restricted Delivery $ ❑Adult Signature Required $ ❑Adult Signature Restricted Delivery $ Postage Total Postage and Fees $ l3 Sent Tr, StreDEPT. OF THE TREASURY IRS CENTER .Cft4OGDEN, UTAH 84201 1 n117G nnnfC L.;17n....�na... PS Form 3800, April 2015 PSN 7530-02-000-9047 See Reverse for Instructions SENDER: COMPLETE THIS SECTION • Complete items 1, 2, and 3. • Print your name and address on the reverse so that we can return the card to you. a Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: DEPT. OF THE TREASUF! IRS CENTER OGDEN, UTAH 84201 L A. Signature X ERY ❑ Agent ❑ Addressee C.,Date of Delivery Yes No 0 Priority Mali Express® nature 3. Service Type -I ❑Registered MaiITM \'iIl\I\ I'll I'IIII II I'III II II�I"II'II III I 1II 0 Adult ❑ Adult Signature Restricted Delivery 0 Delivery Mail Restricted edified Mail® ❑ Return Receipt for 9590 9402 3484 7275 2329 97 ❑ Certified Mail Restricted Delivery Merchandise ❑ Collect on Delivery CI Signature Confirmation"'❑_ Collect on Delivery Restricted Delivery 0 Signature Confirmation pgi ed Delivery 2. Article Number (Transfer from service label) 5 3 3754 De 7 017 3040 0000 Domestic Return Receipt Ps Form3811, July 2015 PSN 7530-02-000-9053 nnnAA. n .n __ nnnn n nnnn UNITED STATES OF AMERICA , UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANYPERSONIS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 4 o/ iz R-I g re 7074,161,410.707.0'/.07.07.MIMIT/1 $730,000 STATE OF WASHINGTON CITY OF TUKWILA LIMITED TAX GENERAL OBLIGATION BONDS, 2018 INTEREST RATE: MATURITY DATE: CUSIP NO.: 5.00% DECEMBER 1, 2022 899052LM4 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: SEVEN HUNDRED THIRTY THOUSAND AND NO/100 DOLLARS The City of Tukwila, Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay interest thereon from August 14, 2018, or the most recent date to which interest has been paid or duly provided for until payment of this bond at the Interest Rate set forth above, payable on December 1, 2018, and semiannually thereafter on the first days of each succeeding June and December. Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agent of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so long as the bonds of this issue are held in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of Representations (the "Letter of Representations") from the City to DTC. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. 2559 duly passed by the City Council on December 4, 2017, as amended by Ordinance No. 2574 duly passed by the City Council on May 7, 2018 (as so amended the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. 4 This bond is one of an authorized issue of bonds of like date, tenor, rate of interest and date of maturity, except as to number and amount in the aggregate principal amount of $18,365,000 is issued pursuant to the Bond Ordinance to provide a portion of the funds necessary to pay the cost of the acquisition of land and construction of city maintenance facilities and to pay costs of issuance. The bonds of this issue are subject to redemption prior to their stated maturities as provided in the Certificate of Award. The City has not designated the Bonds as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code. The City has irrevocably covenanted with the owner of this bond that it shall include in its annual budget and levy taxes annually, within and a part of the tax levy permitted to the City without a vote of the electorate, upon all the taxable property in the City without limitation as to rate or amount and in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond when due. The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The pledge of tax levies for payment of principal of and interest on the bonds may be discharged prior to maturity of the bonds by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. Owners of this bond do not have a security interest in particular revenues or assets of the City. This bond is not a debt or indebtedness of the State of Washington, or any political subdivision thereof other than the City. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist and to have happened, been done and performed precedent to and in the issuance of this bond exist and have happened, been done and performed and that the issuance of this bond and the bonds of this issue does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. A. !\!___ .I\1\ \ / /1/1 /_\ /\ I CERTIFICATE OF AUTHENTICATION Date of Authentication: el:/ / I it IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signatures of the Mayor and the City Clerk and the seal of the City to be imprinted, impressed or otherwise reproduced hereon as of this 14th day of August, 2018. ATTEST: City Clerk CITY OF TUKWILA, WASHINGTON By aCfrk..G .._s Mayor This bond is one of the bonds described in the within -mentioned Bond Ordinance and is one of the Limited Tax General Obligation Bonds, 2018, of the City of Tukwila, Washington, dated August 14, 2018. WASHINGTON STATE FISCAL AGENT, as Bond Registrar By vvvvvvvv v v vvv CERTIFICATE REGARDING PAYMENT AND DELIVERY I, Peggy McCarthy, Finance Director of the City of Tukwila, Washington (the "City"), DO HEREBY CERTIFY, with respect to the issuance of the City's Limited Tax General Obligation Bonds, 2018 (the "Bonds"), that I have received payment from Citigroup Global Markets Inc., or their duly appointed agent, in the amount of $20,087,773.43, as follows: Sources of Funds: Principal Amount of the Bonds Plus: Original Issue Premium Less: Underwriter's Discount Less: Good Faith Deposit Previously Paid Subtotal: Amount received on August 14, 2018 Good Faith Deposit Previously Received Total Sources: Uses of Funds Project Fund Costs of Issuance Total Uses: $ 18,365,000.00 1,809,035.65 (86,262.22) (190,000.00) $ 19,897,773.43 190,000.00 $ 20,087,773.43 $ 20,000,000.00 87,773.43 $ 20,087,773.43 Receipt of proceeds of the Bonds as set forth above is hereby acknowledged and confirmed on behalf of the City. On this date, the City delivered the Bonds to Citigroup Global Markets Inc., as underwriter. Dated this 14th day of August, 2018. CITY OF TUKWILA, WASHINGTON 77A c‘t9, gy McCarthy, Finance Director 1 nfY7A nnnnE n,,i 7.13:7k , Aug 101812:51p p.1 RECEIPT FOR BONDS Receipt of the City of Tukwila, Washington, Limited Tax General Obligation Bonds. 2018, dated as of the date hereof, in the principal amount of S18,365,000 is hereby acknowledged on behalf of Citigroup Global Markets Inc. Dated this loth day of August, 2018. CITIGROUP GLOBAL MARKETS INC. By��J Name: *7644)(14`] g/- Title: prm CLOSING MEMORANDUM To: Peggy McCarthy, City of Tukwila Vicky Carlsen, City of Tukwila David Cline, City of Tukwila Stacey Crawshaw-Lewis, Pacifica Law Group LLP Deanna Gregory, Pacifica Law Group LLP Alison Benge, Pacifica Law Group LLP Will Singer, Pacifica Law Group LLP From: Duncan Brown, PFM Financial Advisors LLC Johanna Crane, PFM Financial Advisors LLC Steven Amano, PFM Financial Advisors LLC Date: August 13, 2018 Re: $18,365,000 City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 Mei He, Pacifica Law Group LLP Elizabeth Funk, Citigroup Global Markets, Inc. Mary Jo Murphy, Citigroup Global Markets, Inc. James Quinn, Citigroup Global Markets, Inc. Emmanuel Kitcher, Citigroup Global Markets, Inc. Carolyn Morrison, U.S. Bank National Association Ryan Brennan, U.S. Bank National Association Closing for the above referenced Bonds will occur on the morning of: Tuesday, August 14, 2018 All wires and transfers should be initiated early in the morning, so that closing can be completed by 8:30 a.m. Pacific Time. Parties to the closing do not need to be present, but should be available by telephone. Promptly upon receiving funds from Citigroup Global Markets, Inc. (the "Underwriter"), the City of Tukwila (the "City") is to notify Deanna Gregory (deanna.gregory@pacificalawgroup.com) or Stacey Crawshaw-Lewis (stacey.lewis@pacificalawgroup.com) at Pacifica Law Group LLP ("Bond Counsel") via email or by phone at (206) 245-1716 or (206) 245-1714, respectively. At 8:30 a.m. Pacific Time, all interested parties (including but not limited to representatives from Bond Counsel, U.S. Bank National Association (as paying agent and registrar), and the Underwriter) will join by conference call and call The Depository Trust Company to close the Bonds. Please use the following call in information for the closing call: Dial -in: 877-577-9567 Pin #: 940-209-3758 The total purchase price to be paid to the City by the Underwriter is $20,087,773.43, which includes the $190,000.00 good faith deposit. The total due at closing is $19,897,773.43, which is calculated as follows: Par Amount of Bonds Plus: Premium Less: Underwriter's Discount Less: Good Faith Deposit Total Due at Closing $18,365,000.00 1,809,035.65 (86,262.22) (190,000.00) $19,897,773.43 Note: For security purposes, wire instructions for the City's account will be provided in a separate document. Closing Memorandum City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 Page 2of2 The City will apply the bond proceeds of $20,087,773.43 as follows. SOURCES AND USES OF FUNDS Sources: Wire Transfer on Closing Date Good Faith Deposit Total Sources Uses: Deposit to Project Fund Costs of Issuance Total Uses $19,897,773.43 190,000.00 $20,087,773.43 $20,000,000.00 87,773.43 $20,087,773.43 The City will pay costs of issuance as set forth below upon receipt of invoices from the service providers. COSTS OF ISSUANCE PFM Financial Advisors (Financial Advisor) $28,547.50 Pacifica Law Group LLP (Bond Counsel) 27,840.00 S&P Global Ratings (Rating Agency) 19,000.00 PFM Financial Advisors (Official Statement) 8,500.00 i-Deal (Electronic Posting) 1,250.00 Contingency(1) 2,635.93 Total Estimated Costs of Issuance $87,773.43 (1) Estimated; any funds remaining after payment of costs of issuance are to be transferred to the Debt Service Fund, in accordance with the Bond Ordinance. It has been a pleasure working with you on this transaction. If you have any questions please contact Duncan Brown at (206) 406-9920 or Steven Amano at (206) 858-5366. Departmento Con Wirer e BOND 101 REPORT FORM 1011 Plum Street SE P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-2733 Email: buc@commerce.wa.gov Issue ID: 1808-026 Date Submitted: 08/17/2018 Name of Issuer: Address of Issuer: Issue Type: Principle User, if different than issuer: Counties in which the entity using the bond proceeds is located: Was this bond voter approved? Exact title of issue: Issue Sale Method: Debt Type: Debt Category: Series: 6-DIGIT CUSIP: New/Refund/Combo: CUSIP(S) of Refunded Bonds: Private Placement Number(s): Series or Issue Year of Refunded Bonds: Advance Refund? Net Present Value Savings: City of Tukwila 6200 Southcenter Boulevard Tukwila, WA 98188 City/Town King ❑ Various Counties - More than four ❑ Statewide O Yes • No Limited Tax General Obligation Bonds, 2018 Competitive Bid If Competitive Bid, number of bids: 8 GO Bond Bond 899052 New Issue ❑ Yes • No Dated Date of Issue: 08/14/2018 Date of Issue Sale: 07/31/2018 Purpose Type: Purpose of Proceeds: Issue Closing Date: 08/14/2018 Issue Maturity Date: 12/01/2039 Public Facilities To provide funds to pay or reimburse the City for costs of acquiring certain parcels of land and constructing, improving and equipping maintenance and other City facilities. Printed on 8/17/2018 11:45:16 AM Page 1 of 3 Depa ment of Commerce 1011 Plum Street SE P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-2733 Email: buc@commerce.wa.gov Is this a Bond Cap issuance? Tax -Exempt Par Value: Taxable par Value: Total Par Value: Net Tax -Exempt Interest Rate: Net Taxable Interest Rate: Discount: Premium: Yield: Underlying Security Gross Underwriting Spread: Underwriting Spread per $1,000: Bond Counsel Fee: Legal/Underwriter's Counsel Fee: Adminsitrative/Commission Fee: Feasiblity Study Cost: Rating Agency Fee: Trustee Fee: Credit Enhancement: Escrow Costs: Financial Advisor Fee: Placement Agent: Bond Insurance: Printing, inc. Office Statement: Out -of -State Travel: Miscellaneous: Name of Financial Advisor: Name of Bond Counsel: Name Of Lead Underwiter(s): ❑ Yes ■ No If yes: Bond Cap Use Category: Project Title: Bond Cap Amount: NEW $18,365,000.00 $0.00 $18,365,000.00 3.52531 % ❑ Variable 0% ❑ Variable ❑ Estimate $1,809,035.65 ❑ Estimate 2.987% REFUND ❑ Variable ❑ Variable ❑ Estimate ❑ Estimate Taxes $86,262.22 $4.70 $27,840.00 $0.00 $0.00 $0.00 $19, 000.00 $0.00 $0.00 $0.00 $37,047.50 $0.00 $0.00 $0.00 $0.00 $3,885.93 ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate ❑ Estimate PFM Financial Advisors LLC Pacifica Law Group LLP Citigroup Global Markets, Inc. Printed on 8/17/2018 11:45:16 AM Page 2 of 3 Depa men ofComcoerce 1011 Plum Street SE P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-2733 Email: buc@commerce.wa.gov Name Of Company Insuring Bond: Name of Bond Registrar: Escrow Agent/Trustee: Standard & Poor's: Moody's: Fitch: Other Are bond covenants available? Is an Official Statement available? Reporter Name: Title: Affiliation: Address: Email: Phone: U.S. Bank National Association AA ■ Yes ❑ No ■ Yes ❑ No Mei He Paralegal Pacifica Law Group LLP 1191 2nd Avenue Ste. 2000 Seattle, WA 98101 mei.he@pacificalawgroup.com (206) 245-1704 Printed on 8/17/2018 11:45:16 AM Page 3 of 3 o PACIFICA LAW GROUP August 14, 2018 City of Tukwila Tukwila, Washington Citigroup Global Markets, Inc. New York, New York Re: City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 - $18,365,000 Ladies and Gentlemen: T 206.245.1700 1191 2nd Avenue, Suite 2000 Seattle, WA 98101-3404 pacifica lawgrou p.com We have acted as bond counsel to the City of Tukwila, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bonds, 2018 (the "Bonds"), dated as of the date hereof, in the aggregate principal amount of $18,365,000, issued pursuant to City Ordinance No. 2559 passed on December 4, 2017, as amended (the "Bond Ordinance") for the purpose of providing funds to pay or reimburse the City for costs of acquiring certain parcels of land and constructing, improving and equipping maintenance and other City facilities, and to pay the costs of issuance of the Bonds. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Official Statement prepared in connection with the issuance of the Bonds. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. The City has not designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 10076 00005 ha24ce27ee City of Tukwila Citigroup Global Markets, Inc. August 14, 2018 Page 2 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts that, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. The opinion set forth in the preceding sentence is subject to the condition that the City must comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Except as expressly stated above, we express no opinion regarding any tax consequences related to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PAACCIFICA LAW GROUP LLP CACA - ‘C a, Lai—) i nmti norms hn74rP77PP