HomeMy WebLinkAboutCOW 2008-11-24 Item 5I - Motion - Refund 1999 Bond IssueCAS NUMBER 08-155
%Meeting Date Prepared by 1 Mayor's review 1 review
11/24/08 SH /r i
12/01/08 SH I 1 1
AG END 1 THEE Refunding of 1999 Bond Issue.
COUNCIL AGENDA SYNOPSIS
Initials
ITEM INFORMATION
1 ORIGINAL AGENDA DATE: NOVEMBER 24, 2008
I TEMNO.
5
C.1"i'I iC(RY Discussion Motion n Resolution n Ordinance n BzdAward 1 1 Public Hearing n Other
AItg Date 11/24/08 Mtg Date 12/01/08 Altg Date illtg Date Altg Date
Mtg Date Altg Date
Si' )NSOR Council IVlayor Adrn Svcs DCD Finance Fire (J Legal P&R n Police I I PI/
Si ON S( )It's
SUNI\IARY
The City has an opportunity to save $60,557.48 on debt service during the 2009 -2010
biennium by refunding the 1999 bond issue. The potential savings over the entire ten
years remaining on the bond issue is $326,048.68.
RI; \'II\X'ED BY COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
Utilities Cmte n Arts Comm. Parks Comm. Planning Comm.
DATE: 11/18/08
RECOMMENDATIONS:
SPONSOR /ADMIN. Approve refunding plan as submitted
COM\.IPITEE Unanimous approval; forward to Committee of the Whole
COST IMPACT FUND SOURCE
Fund Source:
Comments:
1 MTG. DATE
1 11/24/08
EXPI ?NDITURIs REQUIRED
MTG. DATE 1 ATTACHMENTS
11/24/08 Informational memorandum dated 11/19/08
Minutes from the Finance and Safety Committee meeting of 11/18/08
12/01/08
AMOUNT BUDGETED
RECORD OF COUNCIL ACTION
APPROPRIATION REQUIRED
City of Tukwila Jim Haggerton, Mayor
Finance Department Shawn Hunstock, Director
Mayor Haggerton
Committee of the Whole
From: Shawn Hunstock, Finance Director
Date: November 19, 2008
Subject: Proposed Refunding of 1999 Bond Issue
To:
As mentioned at the Finance and Safety Committee meeting on November 18,
2008, an opportunity recently came about to refund the 1999 bond issue. Of the
original $10,000,000 issue, $6,260,000 remains outstanding. The bond issue was
used for parking lot improvements and purchase of the 6300 building as well as
the purchase of property at Tukwila Village.
The potential savings for 2009 -2010 is $60,557.48, and for the entire ten years
remaining on the bonds, the possible savings is $326,048.68.
As this is a recently emerging opportunity, and one which needs to be acted
upon before year -end to participate in the cost savings, I do not yet have bond
documents or ordinances /resolutions for Council review. I am hoping to have
drafts available by the end of this week, and if so I will make sure each Council
member receives a copy to review prior to the November 24 Committee of the
Whole meeting.
cc: Rhonda Berry, City Administrator
Attachments
Date
SAVINGS
City of Tukwila, Washington
Proposed Refunding of 1999 LTGO Bonds
Insured /BQ Scale
Prior Refunding
Debt Service Debt Service
Savings
Present Value
Annual to 12/01/2008
Savings 3.8058471%
06/01/2009 172,458.75 131,444.38 41,014.37 40,248.47
12/01/2009 172,458.75 181,444.38 8,985.63 32,028 74 8,653.I7
06/01/2010 172,458.75 130,694.38 41,764.37 39,468.08
12/01/2010 662,458.75 675,694.38 13,235.63 28,528.74 12,274.34
06/01/2011 159,718.75 121,156.88 38,561 87 35,093.35
12/01/2011 674,718.75 686,156.88 -11,438 13 27,123.74 10,214 92
06/01/2012 146,200.00 111,269.38 34,930.62 30,612.57
12/01/2012 686,200.00 691.269.38 5,069.38 29,861.24 4,359 75
06/01/2013 131,890.00 101,1 19.38 30,770.62 25,969 07
12/01/2013 701,890.00 701,119.38 770.62 31.54124 638.23
06/01/2014 116.571.25 89,1 19.38 27,451 87 22,310 99
12/01/2014 716,571.25 714,119.38 2,451.87 29.903.74 1.955.50
06/01/2015 100,221.25 76,619.38 23,601.87 18,472.26
12/01/2015 735,221.25 731.619.38 3.601 87 27,203.74 2,766 40
06/01/2016 82,600 00 63,1 10.00 19,490.00 14,689.67
12/01/2016 752,600.00 743,1 10.00 9,490.00 28,980.00 7,019 08
06/01/2017 63,840.00 48,660 00 15,180.00 11,017 90
12/01/2017 768,840.00 753,660 00 15,180.00 30,360 00 10,812.15
06/01/2018 43,747.50 33,678.75 10,068.75 7,037 68
12/01/2018 788,747.50 768,678.75 20,068 75 30, 137.50 13,765.36
06/01/2019 22,515.00 17,325.00 5,190.00 3,493.40
12/01/2019 812,515.00 787,325.00 25,190.00 30,380.00 16,638.80
8,684,442.50 8,358,393.82 326,048.68 326,048 68 266.506.77
Savings Summary
PV of savings from cash flow
Plus: Refunding funds on hand
Net PV Savings
266,506 77
4,419.37
270, 926.14
Nov 14, 2008 3:51 pm Prepared by Seattle Northwest Securities Corp JMW k:\. \Tukwila.TUKWILA- R99LT,R99LT) Page 2
Finance Safety Committee Minutes November 18. 2008 Page 2
C. A Resolution Regarding Non Represented Employee Wages and Benefits for 2009
Staff presented recommendations for non represented wages and benefits for 2009. In a departure from a
wage increase based on a percentage of the CPI -W, the Mayor is recommending the following
compensation package for the non- represented employees for 2009:
A flat rate 4.5% increase to the non represented wages, effective January 1, 2009
Updated benefits schedule
Implementation of a longevity schedule, effective January 1, 2009
Committee members requested the total cost to the City for both the proposed 4.5% increase and the
longevity proposal be provided to full Council. UNANIMOUS APPROVAL. FORWARD TO
NOVEMBER 24 COW FOR DISCUSSION.
D. Final 2008 Budget Amendment
Each year the Finance Department assesses the actual financial performance of the City compared to the
adopted budget. As part of this annual analysis, staff is proposing an amendment to the 2008 Budget.
The amendment calls for the reallocation of unspent appropriations to budgets with potential deficits.
Budgets increased are: finance, related to unbudgeted claims and judgments of $299,000; and legal,
related to unexpected legal representation, prosecutorial and other expenses of $340,000. UNANIMOUS
APPROVAL. FORWARD TO NOVEMBER 24 COW FOR DISCUSSION.
E. An Ordinance Adopting the 2009 -2010 Budget and a Resolution Adopting the 2009 -2014 Capital
Improvement Program
Staff indicated the adjustments identified during the Proposed Budget review have been completed and
the ordinance in draft form is attached to the Committee Agenda. After discussion, the Committee was in
favor of forwarding to the COW for discussion. UNANIMOUS APPROVAL. FORWARD TO
NOVEMBER 24 COW FOR DISCUSSION.
F. Eden Svstem License Proposal
Shawn Hunstock indicated that the EDEN Financial Systems application is currently limited to a small
number of users throughout the City. Some depai fttients do not have a single user of EDEN, and a few
departments have only one or two users. The purchase of a site license for EDEN will give departments
the ability to have an unlimited number of users increasing the functionality and usefulness of the
program. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 24 COW FOR
DISCUSSION.
G. Proposed Refunding of 1999 Bond Issue
Staff has recently indentified an opportunity to possibly refund the 1999 bond issue and save an
estimated $326,048, over the remaining ten years of the bond. The original bond issue was $10,000,000
4
and approximately $6,260,000 remains outstanding. The potential impact on the proposed 2009 -210
Budget is a savings of $60,557.
This amount represents a decrease in sales taxes that would be needed to pay for debt service, and could
be used in the General Fund or elsewhere. Committee members asked clarifying questions on bond
status, and restrictions associated with the refunding. UNANIMOUS APPROVAL,. FORWARD TO
NOVEMBER 24 COW FOR DISCUSSION.
H. S.C.O.R.E. Interlocal Agreement
Due to time constraints, this item was removed from the agenda and will return to Committee on
December 2.
III. MISCELLANEOUS Meeting adjourned at 7:10 p.m.
Next meeting: Monday, December 2 5:00 p.m. Conference Room #3
h14Y Committee Chair Approval
Minute y MH.
City of Tukwila Z 6 a Jim Haggerton, Mayor
Finance Department Shawn Hunstock, Director
Mayor Haggerton
Committee of the Whole
From: Shawn Hunstock, Finance Directo
Date: November 20, 2008
Subject: Bond Refunding Documents
To:
Attached you will find a Preliminary Offering Statement and draft ordinance prepared by
the bond counsel, Foster Pepper, for refunding of the 1999 series bonds Unfortunately,
these items were not available when the agenda was prepared for Committee of the
Whole on November 24 The ordinance will be in final form for consideration by Council
at the December 1 meeting.
The bonds will be priced on December 1st at market rates in effect on that date. At that
time a final determination will be made regarding the cost savings to the city for future
debt service payments This information will be presented at the City Council meeting
that night prior to taking action on the bond refunding.
cc: Rhonda Berry, City Administrator
Attachments
Draft Ordinance
Preliminary Offering Statement
sp95219; 1
CITY OF TUKWILA, WASHINGTON
ORDINANCE NO.
AN ORDINANCE of the City of Tukwila, Washington,
relating to contracting indebtedness; providing for the issuance of
$[6,510,000] par value of Limited Tax General Obligation
Refunding Bonds, 2008, of the City for general City purposes to
provide funds with which to pay the cost of advance refunding a
portion of the City's outstanding Limited Tax General Obligation
Bonds, 1999, and paying the administrative costs of such refunding
and the costs of issuance and sale of such bonds; fixing the date,
form, maturities, interest rates, terms and covenants of the bonds;
establishing a bond fund; providing for and authorizing the purchase
of certain obligations out of the proceeds of the sale of the bonds
herein authorized and for the use and application of the money
derived from those investments; authorizing the execution of an
agreement with U.S. Bank National Association of Seattle,
Washington, as refunding trustee; providing for the call, payment and
redemption of the outstanding bonds to be refunded; providing for
the purchase of bond insurance; and approving the sale and providing
for the delivery of the bonds to Seattle- Northwest Securities
Corporation of Seattle, Washington.
Adopted on December 1, 2008
This document prepared by
Foster Pepper PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447 -4400
DRAFT DATED 11/21/08
Section 1. Definitions. 2
Section 2. Debt Capacity 3
Section 3. Authorization of Bonds 3
Section 4. Description of Bonds. 4
Section 5. Registration and Transfer of Bonds. 4
Section 6. Payment of Bonds. 5
Section 7. Redemption Provisions and Open Market Purchase of Bonds 5
Section 8. Failure to Redeem Bonds 5
Section 9. Pledge of Taxes. 5
Section 10. Form and Execution of Bonds 6
Section 11. Bond Registrar. 6
Section 12. Preservation of Tax Exemption for Interest on Bonds 7
Section 13. Designation of Bonds as "Qualified Tax- Exempt Obligations." 7
Section 14. Refunding or Defeasance of the Bonds 7
Section 15. Bond Fund 8
Section 16. Refunding of Refunded Bonds 8
Section 17. Call for Redemption of the Refunded Bonds...... 10
Section 18. City Findings with Respect to Refunding 10
Section 19. Approval of Bond Purchase Contract. 10
Section 20. Preliminary Official Statement Deemed Final 10
Section 21. Undertaking to Provide Continuing Disclosure. 11
Section 22. Bond Insurance 13
Section 23. Severability. 13
Section 24. Effective Date. 14
50952195 1
TABLE OF CONTENTS
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CITY OF TUKSVILA, WASHINGTON
ORDINANCE NO.
AN ORDINANCE of the City of Tukwila, Washington,
relating to contracting indebtedness; providing for the issuance of
$[6,510,000] par value of Limited Tax General Obligation
Refunding Bonds, 2008, of the City for general City purposes to
provide funds with which to pay the cost of advance refunding a
portion of the City's outstanding Limited Tax General Obligation
Bonds, 1999, and paying the administrative costs of such refunding
and the costs of issuance and sale of such bonds; fixing the date,
form, maturities, interest rates, terms and covenants of the bonds;
establishing a bond fund; providing for and authorizing the purchase
of certain obligations out of the proceeds of the sale of the bonds
herein authorized and for the use and application of the money
derived from those investments; authorizing the execution of an
agreement with U.S. Bank National Association of Seattle,
Washington, as refunding trustee; providing for the call, payment and
redemption of the outstanding bonds to be refunded; providing for
the purchase of bond insurance; and approving the sale and providing
for the delivery of the bonds to Seattle- Northwest Securities
Corporation of Seattle, Washington.
WHEREAS, pursuant to Ordinance No. 1884 (the "Refunded Bond Ordinance the City
of Tukwila, Washington (the "City issued and sold its $10,000,000 par value Limited Tax
General Obligation Bonds, 1999 (the "1999 Bonds for the purpose of providing funds with which
to pay and redeem the City's outstanding Limited Tax General Obligation Bond Anticipation Note.
1998 (City Hall), and to pay a part of the cost of acquiring property for and constructing a City
office and resource facility, parking area and other developments in connection with the Tukwila
Village Program, and by that ordinance reserved the right to redeem the 1999 Bonds maturing on
or after December 1, 2010, prior to their maturity at any time on or after December 1, 2009, at a
price of par plus accrued interest to the date fixed for redemption; and
WHEREAS, there are presently outstanding $6,260,000 par value of 1999 Bonds
maturing on December 1 of each of the years 2010 through 2016 (inclusive), and 2019. and
bearing various interest rates from 5.20% to 5.70% (the "Refunded Bonds and
WHEREAS, after due consideration, it appears to the City Council that the Refunded
Bonds may be refunded by the issuance and sale of the limited tax general obligation refunding
bonds authorized herein (the "Bonds so that a substantial savings will be effected by the
difference between the principal and interest cost over the life of the Bonds and the principal and
interest cost over the life of the Refunded Bonds but for such refunding, which refunding will be
effected by carrying out the Refunding Plan, as defined below; and
509,214
1
WHEREAS, to effect that refunding in the manner that will be most advantageous to the
City, it is found necessary and advisable that certain Acquired Obligations (defined below)
bearing interest and maturing at such time or times as necessary to accomplish the refunding, as
aforesaid be purchased out of a portion of the proceeds of the Bonds; and
WHEREAS, the City Council deems it to be in the best interests of the City to issue and
sell the Bonds to pay part of the cost of advance refunding the Refunded Bonds and to pay the
administrative costs of such refunding and the costs of issuance and sale of the Bonds; and
WHEREAS, Seattle- Northwest Securities Corporation has offered to purchase the Bonds
authorized herein under the terms and conditions set forth in this ordinance in the form of a bond
purchase contract; and
[WHEREAS,
has made a commitment to issue an
insurance policy (the "Financial Guaranty Insurance Policy insuring the payment when due of
the principal of and interest on the Bonds as provided therein, and the City Council deems that
the purchase of the Financial Guaranty Insurance Policy is in the best interest of the City ;J
NOW, THEREFORE, the City Council of the City of the City of Tukwila,
Washington, do ordain as follows:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
"Acquired Obligations" means those United States Treasury Certificates of Indebtedness,
Notes, and Bonds -State and Local Government Series and other direct, noncallable obligations
of the United States of America purchased to accomplish the refunding of the Refunded Bonds
as authorized by this ordinance.
"Bond Fund" means the Limited Tax General Obligation Refunding Bond Fund, 2008,
created by this ordinance for the payment of the Bonds.
"Bond Insurer" means .1
"Bond Register" means the books or records maintained by the Bond Registrar
containing the name and mailing address of the owner of each Bond and the principal amount
and number of Bonds held by each owner.
>09 +119$ 1
"Bond Registrar" means the Fiscal Agent.
"Bonds" means the $[6,510,000] par value Limited Tax General Obligation Refunding
Bonds, 2008, of the City issued pursuant to and for the purposes provided in this ordinance.
"City" means the City of Tukwila, Washington, a municipal corporation duly organized
and existing under and by virtue of the laws of the state of Washington.
"Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder.
"DTC" means The Depository Trust Company, New York, New York.
2
"Financial Guaranty Insurance Policy" means the financial guaranty insurance policy
issued by Ambac Assurance insuring the pay7ment when due of the principal of and interest on
the Bonds as provided therein.
"Fiscal Agent" means the fiscal agent of the State of Washington, as the same may be
designated by the State from time to time.
"Letter of Representations" means the Blanket Issuer Letter of Representations dated
October 18, 1999, between the City and DTC, as it may be amended from time to time.
"Refunded Bonds" means all of the outstanding Limited Tax General Obligation Bonds,
1999, of the City maturing in the years 2010 through 2016, inclusive, and in 2019, issued
pursuant to Ordinance No. 1884, the refunding of which has been provided for by this ordinance
"Refunding Plan" means:
(i) the deposit of a sufficient amount of the proceeds of the Bonds
with the Refunding Trustee for the purchase of the Acquired Obligations;
(ii) the payment of the interest on the Refunded Bonds when due up to
and including December 1, 2009, and the call, payment, and redemption on
December 1, 2009, of all of the outstanding Refunded Bonds at a price of par; and
(iii) the payment of the costs of issuing the Bonds and the costs of
carrying out the foregoing elements of the Refunding Plan.
"Refunding Trust Agreement' means a Refunding Trust Agreement between the City and
the Refunding Trustee substantially in the form of that which is on file with the City Clerk and by
this reference incorporated herein.
"Refunding Trustee" means U.S. Bank National Association of Seattle, Washington,
serving as trustee or escrow agent or any successor trustee or escrow agent.
Section 2. Debt Capacity. The assessed valuation of the taxable property within the
City as ascertained by the last preceding assessment for City purposes for the calendar year 2008
is $4,437,340,786, and the City has outstanding general- indebtedness evidenced by limited tax
general obligation bonds in the principal amount of $120,843,000] incurred within the limit of up
to 1' /2% of the value of the taxable property withinnt e Citypelmitted for general municipal
purposes without a vote of the qualified voters therein, no outstanding unlimited tax general
obligation bonds issued pursuant to a vote of the qualified voters of the City, and the amount of
indebtedness for which bonds are authorized herein to be issued is $[6,510,000].
Section 3. Authorization of Bonds. The City shall borrow money on the credit of
the City and issue negotiable limited tax general obligation bonds evidencing that indebtedness
in the amount of $[6,510,000] for general City purposes to provide the funds to advance refund
the Refunded Bonds by carrying out the Refunding Plan. The general indebtedness to be
incurred shall be within the limit of up to 1 V2% of the value of the taxable property within the
City permitted for general municipal purposes without a vote of the qualified voters therein.
509521951
Section 4. Description of Bonds. The Bonds shall be called Limited Tax General
Obligation Refunding Bonds, 2008. The Bonds shall be dated the date of their initial delivery;
shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity;
shall be numbered separately in the manner and with any additional designation as the Bond
Registrar deems necessary for purposes of identification; shall bear interest (computed on the
basis of a 360 -day year of twelve 30 -day months) payable semiannually on each June 1 and
December 1, commencing June 1, 2009 to the maturity or earlier redemption of the Bonds; and
shall mature on December 1 in years and amounts and bear interest at the rates per annum as
follows:
Section 5. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on books or records
maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the
naive and mailing address of the owner of each Bond and the principal amount and number of
each of the Bonds held by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee.
The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal payment or redemption date.
The Bonds initially shall be registered in the name of Cede Co., as the nominee of
DTC. The Bonds so registered shall be held in fully immobilized form by DTC as depository in
accordance with the provisions of the 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 with respect to the Bonds regarding accuracy of any records maintained by
DTC or DTC participants of any amount in respect of principal of or interest on the Bonds, or
any notice which is permitted or required to be given to registered owners hereunder (except
such notice as is required to be given by the Bond Registrar to DTC).
For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its
successor depository shall be deemed to be the registered owner for all purposes hereunder and
all references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominee and shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
any successor of DTC or its nominee, if that successor shall be qualified under any applicable
CO9i219i
Maturity Interest Maturity Interest
Years Amounts Rates Years Amounts Rates
2009 2015
2010 2016
2011 2017
2012 2018
2013 2019
2014
4
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
appointed by the City or such substitute depository's successor; or (iii) to any person if the
Bonds are no longer held in immobilized form.
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 City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may 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.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 6. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Interest on the Bonds shall be paid by
checks or drafts of the Bond Registrar mailed on the interest pa Trent date to the registered
owners at the addresses appearing on the Bond Register on the 15` day of the month preceding
the interest payment date or, if requested in writing by a registered owner of 1,000,000 or more
in principal amount of Bonds prior to the applicable record date, by wire transfer on the interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the
Bonds by the registered owners to the Bond Registrar. Notwithstanding the foregoing, for as
long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and
interest on the Bonds shall be made in the manner set forth in the Letter of Representations.
Section 7. Redemption Provisions and Open Market Purchase of Bonds. The
Bonds shall be issued without the right or option of the City to redeem the Bonds prior to their
stated maturity dates.
The City reserves the right and option to purchase any or all of the Bonds in the open
market at any time at any price plus accrued interest to the date of purchase. All Bonds
purchased under this section shall be cancelled.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity, the City shall be obligated to pay interest on that Bond at the same rate
provided in the Bond from and after its maturity until that Bond, both principal and interest, is
paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund and
the Bond has been called for payment by giving notice of that call to the Registered Owner of
each of those unpaid Bonds.
Section 9. Pledge of Taxes. For as long as any of the Bonds are outstanding. the
City irrevocably pledges to include in its budget and levy taxes annually within the constitutional
and statutory tax limitations provided by law without a vote of the electors of the City on all of
the taxable property within the City in an amount sufficient, together with other money legally
available and to be used therefor, to pay when due the principal of and interest on the Bonds, and
the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and interest.
SO952195 1
5
Section 10. Form and Execution of Bonds. The Bonds shall be printed on good
bond paper in a form consistent with the provisions of this ordinance and state law and shall be
signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in
facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or
printed thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
50953195 1
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Tukwila,
Washington, Limited Tax General Obligation Refunding Bonds,
2008, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENT
Bond Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the
Bonds so authenticated have been duly executed, authenticated and delivered and are entitled to the
benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless
may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall
be as binding on the City as though that person had continued to be an officer of the City
authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person
who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds,
although he or she did not hold the required office on the date of issuance of the Bonds.
Section 11. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its
principal corporate trust office, sufficient books for the registration and transfer of the Bonds,
which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on
behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with
the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds
and to carry out all of the Bond Registrar's powers and duties under this ordinance and City
Ordinance No. 1338 establishing a system of registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not the Bond Registrar and. to the
extent permitted by law, may act as depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any committee formed to protect the
rights of Bond owners.
6
Section 12. Preservation of Tax Exemption for Interest on Bonds. The City
covenants that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any action nor
make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of
the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirement of Section 148 of the Code is applicable to the Bonds.
take all actions necessary to comply (or to be treated as having complied) with that requirement
in connection with the Bonds, including the calculation and payment of any penalties that the
City has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of
any other penalties if required under Section 148 of the Code to prevent interest on the Bonds
from being included in gross income for federal income tax purposes.
Section 13. Designation of Bonds as "Qualified Tax- Exempt Obligations." The
City has determined and certifies that (a) the Bonds are not "private activity bonds" within the
meaning of Section 141 of the Code; (b) the reasonably anticipated amount of tax exempt
obligations (other than private activity bonds and other obligations not required to be included in
such calculation) which the City and any entity subordinate to the City (including any entity that
the City controls, that derives its authority. to issue tax exempt obligations from the City. or that
issues tax exempt obligations on behalf of the City) will issue during the calendar year in which
the Bonds are issued will not exceed $10,000,000; and (c) the amount of tax exempt obligations,
including the Bonds, designated by the City as "qualified tax exempt obligations" for the
purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are
issued does not exceed $10,000,000. The City designates the Bonds as "qualified tax exempt
obligations" for the purposes of Section 265(b)(3) of the Code.
Section 14. Refunding or Defeasance of the Bonds. The City may issue refunding
bonds pursuant to the laws of the State of 'Washington or use money available from any other
lawful source to pay when due the principal of and interest on the Bonds, or any portion thereof
included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such
then outstanding Bonds (hereinafter collectively called the "defeased Bonds and to pay the
costs of the refunding or defeasance. If money and /or direct obligations of the United States of
America maturing at a time or times and bearing interest in amounts (together with money, if
necessary) sufficient to redeem and retire, refund or defease the defeased Bonds in accordance
with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that
redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account
then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance
and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and
become void. The owners of defeased Bonds shall have the right to receive payment of the
principal of and interest on the defeased Bonds from the trust account. The City shall include in
the refunding or defeasance plan such provisions as the City deems necessary for the random
selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds,
for notice of the defeasance to be given to the owners of the defeased Bonds and to such other
persons as the City shall determine, and for any required replacement of Bond certificates for
defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may
apply any money in any other fund or account established for the payment or redemption of the
defeased Bonds to any lawful purposes as it shall determine.
7
If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds.
Notwithstanding anything in this section to the contrary, if the principal of and/or interest
due on the Bonds is paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy,
the Bonds shall remain outstanding for all purposes, not be defeased or otherwise satisfied and not
be considered paid by the City, and all covenants, agreements and other obligations of the City to
the registered owners of the Bonds shall continue to exist and run to the benefit of the bond Insurer,
and the Bond Insurer shall be subrogated to the rights of the registered owners.
Section 15. Bond Fund. The Bond Fund is created and established in the office of the
City Finance Director as a special fund designated the Limited Tax General Obligation Bond
Fund, 2008 (the "Bond Fund for the purpose of paying principal of and interest on the Bonds.
Accrued interest on the Bonds, if any, received from the sale and delivery of those Bonds shall
be paid into the Fund. All taxes collected for and allocated to the payment of the principal of and
interest on the Bonds shall be deposited in the Bond Fund.
Section 16. Refunding of Refunded Bonds.
A. Appointment of Refunding Trustee. U S. Bank National Association of Seattle.
Washington, is appointed Refunding Trustee.
B. Use of Bond Proceeds; Acquisition of Acquired Obligations. All of the proceeds
of the sale of the Bonds, exclusive of the accrued interest thereon (if any) which shall be paid
into the Bond Fund, shall be deposited immediately upon the receipt thereof with the Refunding
Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under
Ordinance No. 1884 by providing for the payment of the amounts required to be paid by the
Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the
Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest
and maturing as to principal and interest in such amounts and at such times so as to provide,
together with a beginning cash balance, if necessary, for the payment of the amount required to
be paid by the Refunding Plan. The Acquired Obligations are listed and more particularly
described in Exhibit A attached to the Refunding Trust Agreement between the City and the
Refunding Trustee, but are subject to substitution as set forth below. Any Bond proceeds or
other money deposited with the Refunding Trustee not needed to purchase the Acquired
Obligations and provide a beginning cash balance, if any, and pay the costs of issuance of the
Bonds shall be returned to the City at the time of delivery of the Bonds to the initial purchaser
thereof and deposited in the Bond Fund to pay interest on the Bonds on the first interest payment
date.
C. Substitution of Acquired Obligations. Prior to the purchase of any Acquired
Obligations by the Refunding Trustee, the City reserves the right to substitute other direct,
noncallable obligations of the United States of America "Substitute Obligations for any of the
Acquired Obligations and to use any savings created thereby for any lawful City purpose if,
(a) in the opinion of Foster Pepper PLLC, the City's bond counsel, the interest on the Bonds and
the Refunded Bonds will remain excluded from gross income for federal income tax purposes
under Sections 103, 148, and 149(d) of the Code, and (b) such substitution shall not impair the
50952195 1
8
timely payment of the amounts required to be paid by the Refunding Plan, as verified by a
nationally recognized independent certified public accounting firm
After the purchase of the Acquired Obligations by the Refunding Trustee, the City
reserves the right to substitute therefor cash or Substitute Obligations subject to the conditions
that such money or securities held by the Refunding Trustee shall be sufficient to carry out the
Refunding Plan, that such substitution will not cause the Bonds and the Refunded Bonds to be
arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in
effect on the date of such substitution and applicable to obligations issued on the issue date of the
Bonds, and that the City obtain, at its expense: (i) a verification by a nationally recognized
independent certified public accounting firm acceptable to the Refunding Trustee confirming, that
the payments of principal of and interest on the substitute securities, if paid when due, and any
other money held by the Refunding Trustee will be sufficient to carry out the Refunding Plan;
and (ii) an opinion from Foster Pepper PLLC, bond counsel to the City, its successor, or other
nationally recognized bond counsel to the City, to the effect that the disposition and substitution
or purchase of such securities, under the statutes, rules, and regulations then in force and
applicable to the Bonds, will not cause the interest on the Bonds or the Refunded Bonds to be
included in gross income for federal income tax purposes and that such disposition and
substitution or purchase is in compliance with the statutes and regulations applicable to the
Bonds. Any surplus money resulting from the sale, transfer, other disposition, or redemption of
the Acquired Obligations and the substitutions therefor shall be released from the trust estate and
transferred to the City to be used for any lawful City purpose.
D. Administration of Refunding Plan. The Refunding Trustee is authorized and
directed to purchase the Acquired Obligations (or substitute obligations) and to make the
payments required to be made by the Refunding Plan from the Acquired Obligations (or
substitute obligations) and money deposited with the Refunding Trustee pursuant to this
ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with
the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied
in accordance with the provisions of Ordinance No. 1884, this ordinance, chapter 39.53 RCW
and other applicable statutes of the State of Washington and the Refunding Trust Agreement.
All necessary and proper fees, compensation, and expenses of the Refunding Trustee for the
Bonds and all other costs incidental to the setting up of the escrow to accomplish the refunding
of the Refunded Bonds and costs related to the issuance and delivery of the Bonds, including
bond printing, verification fees, bond insurance premium, bond counsel's fees, and other related
expenses, shall be paid out of the proceeds of the Bonds.
E. Authorization for Refunding Trust Agreement. To carry out the Refunding Plan
provided for by this ordinance, the Mayor or the Finance Director of the City is authorized and
directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement
substantially in the form on file with the City Clerk and by this reference made a part hereof
setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection
with the payment, redemption, and retirement of the Refunded Bonds as provided herein and
stating that the provisions for payment of the fees, compensation, and expenses of such
Refunding Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust
Agreement, the Mayor or Finance Director of the City is authorized to make such changes
therein that do not change the substance and purpose thereof or that assure that the escrow
provided therein and the Bonds are in compliance with the requirements of federal law go'verning
the exclusion of interest on the Bonds from gross income for federal income tax purposes.
50952195 1
9
Section .17. Call for Redemption of the Refunded Bonds. The City calls for
redemption on December 1, 2009, all of the outstanding Refunded Bonds at a price of par plus
accrued interest. Such call for redemption shall be irrevocable after the delivery of the Bonds to
the initial purchaser thereof. The date on which the Refunded Bonds are herein called for
redemption is the first date on which those bonds may be called. The proper City officials are
authorized and directed to give or cause to be given such notices as required, at the times and in
the manner required, pursuant to Ordinance No. 1884 in order to effect the redemption prior to
their maturity of the Refunded Bonds.
Section 18. City Findings with Respect to Refunding. The City Council of the City
finds and determines that the issuance and sale of the Bonds at this time will effect a savings to
the City and is in the best interest of the City and its taxpayers and in the public interest. In
making such finding and determination, the City Council has given consideration to the fixed
maturities of the Bonds and the Refunded Bonds, the costs of issuance of the Bonds and the
known earned income from the investment of the proceeds of the issuance and sale of the Bonds
and other money of the City, if any, used in the Refunding Plan pending payment and
redemption of the Refunded Bonds.
The City Council further finds and determines that the money to be deposited with the
Refunding Trustee for the Refunded Bonds in accordance with Section 16 of this ordinance will
discharge and satisfy the obligations of the City under Ordinance No. 1884 with respect to the
Refunded Bonds, and the pledges, charges, trusts, covenants, and agreements of the City therein
made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be
deemed to be outstanding under such ordinance immediately upon the deposit of such money
with the Refunding Trustee.
Section 19. Approval of\ and Purchase Contracj,) Seattle Northwest Securities
Corporation of Seattle, Washington, leas presented a _piir-eh contract (the "Bond Purchase
Contract to the City offering to purchase the Bonds under the terms and conditions provided in
the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk
and is incorporated herein by this reference. The City Council finds that the purchase price
offered is acceptable to the City and that entering into the Bond Purchase Contract is in the
City's best interest. The City therefore approves the Bond Purchase Contract, accepts the offer
contained therein, and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster Pepper
PLLC, municipal bond counsel of Seattle, Washington, regarding the Bonds.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the
proceeds of the sale thereof. All prior actions taken by the City consistent with the provisions of
this ordinance are ratified, confirmed and approved.
Section 20. Preliminary Official Statement Deemed Final. The City Council has
been provided with copies of a preliminary official statement dated November 2098 (the
"Preliminary Official Statement prepared in connection with the sale of the Bonds and' hereby
ratifies and approves the distribution of that preliminary official statement and the inal official
statement by the Bond purchaser. For the sole purpose of the Bond purchaser's compliance with
SU9S2 I')5
10
United States Securities and Exchange Commission (`SEC Rule 15c2- 12(b)(1), the City
"deems final" that 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, options of redemption, delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 21. Undertaking to Provide Continuing Disclosure. To meet the
requirements of SEC Rule 15c2- 12(b)(5) (the "Rule as applicable to a participating
underwriter for the Bonds, the City makes the following written undertaking (the "Undertaking
for the benefit of holders of the Bonds:
(a) Undertakine to Provide Annual Financial Information and Notice of Material
Events. The City undertakes to provide or cause to be provided, either directly or through a
designated agent:
(i) To each nationally recognized municipal securities information repository
designated by the SEC in accordance with the Rule "NRI\4SIR and to a state information
depository, if any, established in the State of Washington (the "SID annual financial
information and operating data of the type included in the final official statement for the Bonds
and described in subsection (b) of this section (`annual financial information
(ii) To each NRiMSIR or the Municipal Securities Rulemaking Board
"MSRB and to the SID, timely notice of the occurrence of any of the following events with
respect to the Bonds, if material:
(1) principal and interest payment delinquencies;
(2) non payment related defaults;
(3) unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) substitution of credit or liquidity providers, or their failure to perform;
(6) adverse tax opinions or events affecting the tax exempt status of the
Bonds;
(7) modifications to rights of holders of the Bonds;
(8) Bond calls (other than scheduled mandatory redemptions of Term Bonds);
(9) defeasances;
(10) release, substitution, or sale of property securing repayment of the Bonds,
and
(11) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely notice of a
failure by the City to provide required annual financial information on or before the date
specified in subsection (b) of this section.
50952195 1
11
(b) Tvoe of Annual Financial Information Undertaken to be Provided. The annual
financial information that the City undertakes to provide in subsection (a) of this section:
(i) Shall consist of annual financial statements prepared (except as noted in
the financial statements) in accordance with applicable generally accepted accounting principles
applicable to governmental units in Washington State, as such principles may be changed from
time to time and in conformity with state law and regulations pertaining to cities, which
statements shall not be audited, except, however, that if and when audited financial statements
are otherwise prepared and available to the City they will be provided; (ii) authorized, issued and
outstanding balance of general obligation debt of the City; (iii) the assessed value of the property
within the City subject to ad valorem taxation; and (iv) ad valorem tax levy rates and amounts
and percentage of taxes collected;
(ii) Shall be provided to each NRMSIR and the SID, not later than the last day
of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending
December 31), as such fiscal year may be changed as required or permitted by State law.
commencing with the City's fiscal year ending December 31, 2008; and
(iii) May be provided in a single or multiple documents, and may be
incorporated by reference to other documents that have been filed with each NRMSIR and the
SID, or, if the document incorporated by reference is a "final official statement" with respect to
other obligations of the City, that has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to amendment after the
primary offering of the Bonds without the consent of any holder of any Bond, or of any broker,
dealer, municipal securities dealer, participating underwriter, rating agency, NRMSIR, the SID
or the MSRB, under the circumstances and in the manner permitted by the Rule.
Te City will give notice to each NRMSIR or the MSRB, and the SID, of the substance (or
provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for
the amendment. If the amendment changes the type of annual financial information to be
provided, the annual financial information containing the amended financial information will
include a narrative explanation of the effect of that change on the type of information to be
provided.
(d) Beneficiaries. The Undertaking evidenced by this section shall inure to the
benefit of the City and any holder of Bonds, and shall not inure to the benefit of or create any
rights in any other person.
(e) Termination of Undertaking. The City's obligations under this Undertaking shall
terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under
this Undertaking shall terminate if those provisions of the Rule which require the City to comply
with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as
confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with
federal securities laws delivered to the City, and the City provides timely notice of such
termination to each NRMSIR or the MSRB and the SID.
(f) Remedy for Failure to Comely with Undertaking. As soon as practicable after the
City learns of any failure to comply with the Undertaking, the City will proceed with due
'095319+ 1
12
diligence to cause such noncompliance to be corrected. No failure by the City or other obligated
person to comply with the Undertaking shall constitute a default in respect of the Bonds. The
sole remedy of any holder of a Bond shall be to take such actions as that holder deems necessary,
including seeking an order of specific performance from an appropriate court, to compel the City
or other obligated person to comply with the Undertaking.
(g) Designation of Official Resnonsible to Administer Undertaking. The Finance
Director of the City (or such other officer of the City who may in the future perform the duties of
that office) or his or her designee is authorized and directed in his or her discretion to take such
further actions as may be necessary, appropriate or convenient to carry out the Undertaking of
the City in respect of the Bonds set forth in this section and in accordance with the Rule,
including, without limitation, the following actions:
provided;
(ii) Determining whether any event specified in subsection a has occurred,
assessing its materiality with respect to the Bonds, and, if material, preparing and disseminating
notice of its occurrence;
(iii) Determining whether any person other than the City is an "obligated
person" within the meaning of the Rule with respect to the Bonds, and obtaining from such
person an undertaking to provide any annual financial information and notice of material events
for that person in accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents and consultants,
including but not limited to financial advisors and legal counsel, to assist and advise the City in
carrying out the Undertaking; and
+09;219 I
(i)
Preparing and filing the annual financial information undertaken to be
Effecting any necessary amendment of the Undertaking.
(h) Centralized Dissemination Aaent. To the extent authorized by the SEC, the City
may satisfy the Undertaking by transmitting the required filings using
http /www.disclosureusa.org (or such other centralized dissemination agent as may be approved
by the SEC).
Section 22. Bond Insurance[. The City is authorized to purchase from the Bond
Insurer the Financial Guaranty Insurance Policy insuring the prompt payment of the principal of
and interest on the Bonds and agrees to the conditions for obtaining that policy, including the
payment of the premium therefor. Any notice required to be given to the Bond Insurer shall be
sent by certified or registered mail to
[INSERT APPROPRIATE INSURANCE LANGUAGE WHEN AVAILABLE]
Section 23. 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 to 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
13
Section 24. 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 force five days following its
passage and publication as required by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a regular open public meeting thereof, this first day of December, 2008
ATTEST /AUTHENTICATED:
City Clerk
APHS I'O FORM
Office of the City Attorney
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.:
14
Mayor
2008.
50952195 1
CERTIFICATION
I, the undersigned, City Clerk of the City of Tukwila, Washington (the "City hereby
certify as follows:
1. The attached copy of Ordinance No. (the "Ordinance is a full, true and correct
copy of an ordinance duly passed at a regular meeting thereof on December 1, 2008, as that
ordinance appears on the minute book of the City; and the Ordinance will be in full force and
effect five days after publication in the City's official newspaper as provided by law; and
2. A quorum of the members of the City Council was present throughout the meeting
and a majority of those members present voted in the proper manner for the passage of the
Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this day of December,
CITY OF TUKWILA, WASHINGTON
City Clerk
o
PRELIMINARY OFFTCIAI. STATE\1E \T D -\TED 200S
$6,510,000*
City of Tukwila, Washington
Limited Tax General Obligation Refunding Bonds, 2008
DATED: Date of Initial Delivery DUE: December 1, as shown below
MOODY'S RATING Applied for; see "Ratings" herein.
BANK QUALIFIED —The City of Tukwila, Washington (the "City has designated the Bonds as "qualified tax- exempt
obligations" for purposes of Section 265(b)(3)(B) of the Code relating to the deductibility of interest expense by
certain financial institutions. See "Tax Exemption" herein for a discussion of this designation.
BOOK -ENTRY ONLY —The Bonds will be issued as fully registered bonds in denominations of $5,000, or integral multiples
thereof, and will be registered in the name of Cede Co., as bond owner and nominee for The Depository Trust
Company "DTC DTC will act as securities depository for the Bonds. Purchasers will not receive certificates
representing their interest in the Bonds purchased.
PRINCIPAL AND INTEREST PAYMENTS— Interest on the Bonds will be payable semiannually on each June 1 and
December 1, commencing on June 1, 2009, to maturity or earlier redemption. Principal of and interest on the Bonds will
be payable by the fiscal agency of the State of Washington, currently The Bank of New York Mellon (the "Bond
Registrar as further described herein. For so long as the Bonds remain in a "book -entry only" transfer system, the
fiscal agent will make such payments only to DTC, which in turn is obligated to remit such principal and interest to its
Participants for subsequent disbursement to Beneficial Owners of the Bonds as further described herein in
Appendix B— Book -Entry Transfer System.
MATURITY SCHEDULE
Due Interest Price or Due Interest Price or
Dec. 1 Amount* Rate Yield CUSIP Dec. 1 Amount* Rate Yield CUSIP
2009 50,000 2015 655,000
2010 545,000 2016 680,000
2011 565,000 2017 705,000
2012 580,000 2018 735,000
2013 600,000 2019 770,000
2014 625,000
NO OPTIONAL REDEMPTION —The Bonds are not subject to optional redemption prior to their stated maturities.
SECURITY —The Bonds are limited tax general obligations of the City. The City has covenanted and agreed irrevocably that
it will include in its annual budget and levy taxes annually, within the constitutional and statutory tax limitations
provided by law without a vote of the electors of the City, upon all the taxable property in the City in amounts sufficient,
together with all other money legally available and to be used therefor, to pay the principal of and interest on the Bonds
when due. The full faith, credit and resources of the City have been pledged irrevocably for the annual levy and
collection of such taxes and the prompt payment of such principal and interest. The City's ability to raise taxes is subject
to certain limitations as described herein. The Bonds do not constitute a debt or indebtedness of the State of
Washington, or any political subdivision thereof other than the City.
TAX EXEMPTION —In the opinion of Foster Pepper PLLC, Seattle, Washington "Bond Counsel under existing federal law and
assuming compliance by the City with applicable requirements of the Internal Revenue Code of 1986, as emended (the "Code that
must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds is excluded from gross income for federal income
tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals. However,
while interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to
corporations, interest on the Bonds received by corporations is taken into account in the computation of adjusted current earnings
for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by certain S corporations may
be subject to tax, and interest on the Bonds received In] foreign corporations with United States branches may be subject to a foreign
branch profits tax. Receipt of interest on the Bonds may have other federal tax consequences for certain taxpayers. See the captions
"Tax Exemption" and "Certain Other Federal Tax Consequences."
DELIVERY —The Bonds are offered for sale to the original purchaser subject to the final approving legal opinion of Bond
Counsel. It is expected that the Bonds will be available for delivery to the Bond Registrar on behalf of DTC by Fast
Automated Securities Transfer, on or about December 16, 2008.
Preliminary, subject to change.
This cover page contains certain information for quick reference only. It is not n summary of the issue. Investors must read the entire Official Statement to
obtain information essential to the making of an informed investment decision. W
EMI
Jim Haggerton, Mayor
Joe Duffie, Council President
Verna Griffin, Councilmember
Joan Hernandez, Councilmember
Kathy Hougardy, Councilmember
Pam Linder, Councilmember
De'Sean Quinn, Councilmember
Dennis Robertson, Councilmember
Rhonda Berry
Shawn Hunstock
Viki Jessop
Christy O'Flaherty
City of Tukwila
6200 Southcenter Boulevard
Tukwila, Washington 98188
Phone: (206) 433 -1800
Fax: (206) 433-1833
www.ci.tukwila.wa.us (1)
Mayor and City Council
Certain Appointed Officials
Bond Counsel
Foster Pepper PLLC
Seattle, Washington
(206) 447 -4400
Bond Registrar
The Bank of New York Mellon
New York, New York
1- 800 438 -5473
December 31, 2011
December 31, 2009
December 31, 2009
December 31, 2011
December 31, 2011
December 31, 2009
December 31, 2009
December 31, 2011
City Administrator
Finance Director
Administrative Services Director
City Clerk
(1) 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 the City's website by reference.
This Official Statement does not constitute an offer to sell the Bonds in any jurisdiction in which or to n person to whom it is
unlawful to make such an offer No dealer, salesperson or other person has been authorized by the Cite/ or the Underwriter to
give any information or to make any representations, other than those contained herein, in connection with the offering of the
Bonds and, if given or made, such information or representations must not be relied upon. The information and expressions of
opinion 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 an implication that there has been no change in the affairs of the Cite/ since the
date hereof.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the
information in this Official Statement in accordance with, and as part of, its responsibilihj to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy
or completeness of such information.
This Preliminary Official Statement will be "deemed final" by the City, pursuant to Rule 15c2 -12 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended, except for information which is permitted to
be excluded frorn this Preliminary Official Statement under said Rule 15c2 -12.
In connection with this offering, the Underwriter may over -allot or effect transactions that stabilize or maintain the market price
of the Bonds at levels above those which might otherwise prevail in the open market Such stabilizing, if commenced, rimy be
discontinued at any time.
The CUS1P numbers are included on the front cover of this Official Statement for convenience of the holders and potential
holders of the Bonds. No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of
issuance and delivery of the Bonds.
Table of Contents
Page
Description of the Bonds 1
Authorization for Issuance .....1
Principal Amount, Date, Interest Rates and Maturities 1
No Optional Redemption 1
Open Market Purchase .....1
Bond Registrar and Registration Features 1
Book -Entry Bonds 1
Purpose and Use of Proceeds 2
Purpose 2
Refunding Procedure 2
Estimated Sources and Uses of Funds 3
Verification of Mathematical Calculations...... 3
Security for the Bonds 3
General 3
Bonded Indebtedness 3
Summary of Limited Tax General Obligation Bonds Debt Service Requirements 5
Net Direct and Overlapping Debt 6
Debt Payment Record 6
Future Financings 6
Taxing Authority 7
Authorized Property Tax Levies 7
Regular Property Tax Limitations 7
Overlapping Taxing Districts 9
Assessed Value 9
Tax Collection Procedure 9
2008 Major Property Taxpayers 11
Authorized Investments .11
Local Government Investment Pool 11
Authorized Investments for Bond Proceeds 12
Comparative General Fund Balance Sheet (Years Ending December 31).. ..14
The City 15
City Administration 15
Labor Relations 15
Pension System ....16
Other Post Employment Benefits 17
Basis of Accounting ..17
Budgetary Policies 18
Risk Management 18
Auditing of City Finances 19
Demographic Information ..19
Initiative and Referendum 22
State Initiatives
Tax Exemption 23
Certain Other Federal Tax Consequences 24
Rating
Continuing Disclosure ..24
Legal and Underwriting.... .26
Approval of Counsel 26
Litigation 26
Conflicts of Interest
Underwriting .26
Concluding Statement 26
Form of Opinion of Bond Counsel Appendix A
Book -Entry Transfer System Appendix B
2007 Audited Financial Statements Appendix C
ii
Preliminary, subject to change.
OFFICIAL STATEMENT
$6,510,000*
City of Tukwila, Washington
Limited Tax General Obligation Refunding Bonds, 2008
The City of Tukwila, Washington (the "City a municipal corporation duly organized and existing under and
by virtue of the laws of the State of Washington (the "State furnishes this Official Statement in connection
with the offering of $6,510,000* aggregate principal amount of the above- referenced bonds (the "Bonds This
Official Statement provides information concerning the City and the Bonds.
Description of the Bonds
Authorization for Issuance
The Bonds are issued pursuant to Ordinance No. (the "Ordinance passed by the City Council (the
"Council on 2008, and under the authority of chapters 35A.40, 39.36, 39.44, 39 46 and 39.53
Revised Code of Washington "RCW The Bonds may be issued without a vote of the electors of the City.
Principal Amount, Date, Interest Rates and Maturities
The Bonds will be issued in the aggregate principal amount of $6,510,000 and will be dated and bear interest
from their date of initial delivery to the Underwriter. The Bonds will mature on the dates and in the principal
amounts and will bear interest (payable semiannually on each June 1 and December 1, commencing June 1,
2009) until the maturity or earlier redemption of the Bonds at the rates set forth on the inside cover of this
Official Statement. Interest on the Bonds will be computed on the basis of a 360 -day year consisting of twelve
30 -day months. Principal of and interest on the Bonds will be payable by the fiscal agency of the State of
Washington in New York, New York, currently The Bank of New York Mellon (the "Bond Registrar
No Optional Redemption
The Bonds are not subject to redemption prior to their scheduled maturities
Open Market Purchase
The City reserves the right and option to purchase any or all of the Bonds in the open market at any time at
any price acceptable to the City. All Bonds so purchased shall be canceled.
Bond Registrar and Registration Features
The Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede
Co. as Bond Owner and as nominee for DTC. DTC will act as securities depository for the Bonds. Individual
purchases and sales of the Bonds may be made in book -entry form only in minimum denominations of $5,000
within a single maturity and integral multiples thereof. Purchasers "Beneficial Owners will not receive
certificates representing their interest in the Bonds.
Principal of and interest on the Bonds will be payable by the Bond Registrar (or such other fiscal agency or
agencies as the State or the City may from time to time designate). So long as Cede Co. is the registered
owner of the Bonds, principal of and interest on the Bonds are payable by wire transfer by the Bond Registrar
to DTC, which in turn is obligated to remit such principal and interest to its Participants for subsequent
disbursement to the Beneficial Owners of the Bonds, as further described herein in Appendix B.
Book -Entry Bonds
DTC will act as securities depository for the Bonds The ownership of one fully registered Bond for each
maturity of the Bonds, as set forth on the cover of this Official Statement, each in the aggregate principal
amount of such maturity, will be registered in the name of Cede Co., as nominee for DTC. See Appendix B
attached hereto for additional information.
Procedure in the Event of Revisions of Book -Entry Transfer System. If DTC resigns as the securities depository and
the City is unable to retain a qualified successor to DTC, or the City has determined that it is in the best
interest of the City not to continue the book -entry system of transfer or that interests of the Beneficial Owners
of the Bonds might be affected adversely if the book -entry system of transfer is continued, the City will
execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their nominees Bonds in
fully registered form, in the denomination of $5,000 or any integral multiple thereof within a maturity. In the
event the Bonds are transferred by the City to fully registered form, the Bonds may be payable by the Bond
Registrar. Thereafter, the principal of the Bonds will be payable upon due presentment and surrender thereof
at the principal office of the Bond Registrar; interest on the Bonds will be payable by check or draft mailed on
the interest payment date to the owners of the Bonds at the address appearing on the Bond Register on the 15th
day of the month next preceding the interest payment date, and the Bonds will be transferable as provided in
the Ordinance (defined below).
Purpose and Use of Proceeds
Purpose
The proceeds from the sale of the Bonds will be used to (i) refund a portion of the City's outstanding debt to
obtain the benefit of savings in annual and total debt service requirements and (ii) pay costs of issuance of the
Bonds.
Refunding Procedure
If interest rates are favorable, the proceeds from the sale of the Bonds will be used to refund $6,260,000 of the
City's Limited Tax General Obligation Bonds, 1999 maturing on December 1 in years 2010 through 2016 and
2019 (the "Refunded Bonds The proceeds of the Bonds allocated to the refunding of the Refunded Bonds
will be escrowed to the call date for the Refunded Bonds (December 1, 2009) at which time they will be called
at a price of par plus accrued interest.
From the proceeds of the Bonds, the City will purchase certain direct non callable United States Government
Obligations "Government Obligations These Government Obligations will be deposited in the custody of
U.S. Bank National Association, or such other duly appointed successor(s) "Refunding Trustee The
maturing principal of the Government Obligations, interest earned thereon, and necessary cash balance, if any,
will provide payment of:
(a) Interest on the Refunded Bonds up to and including December 1, 2009;
(b) On December 1, 2009, the redemption price (par) of the Refunded Bonds;
The Government Obligations, interest earned thereon, and necessary cash balance, if any, will irrevocably be
pledged to and held in trust for the benefit of the owners of the Refunded Bonds by the Refunding Trustee,
pursuant to an escrow deposit agreement to be executed by the City and the Refunding Trustee.
Information on the Refunded Bonds is as follows:
Refunded Bonds
Maturity Years Principal Interest CUSIP
(Dec. 1) Amounts Rates Numbers
2010 490,000 5.200% 899052DF8
2011 515,000 5.250 899052DG6
2012 540,000 5.300 899052DH4
2013 570,000 5.375 899052DJ0
2014 600,000 5.450 899052DK7
2015 635,000 5.550 899052DM3
2016 670,000 5 600 899052DN1
2019* 2,240,000 5.700 899052DL5
*Term Bond.
Estimated Sources and Uses of Funds
The proceeds from the Bonds will be applied as follows:
Sources of Funds
Par Amount
Net Premium /(Discount)
Total Sources of Funds
Uses of Funds
Escrow Requirements
Costs of Issuance (2)
Total Uses of Funds
Security for the Bonds
Bonded Indebtedness
3
6,510,000
S
s
(1) Preliminary, subject to change.
(2) Includes bond counsel fee, rating fee, [bond insurance premium) underwriter's discount, and other costs associated
with the issuance of the Bonds.
Verification of Mathematical Calculations
Grant Thornton LLP, a firm of independent public accountants, will deliver on or before the delivery date of
the Bonds, its verification report indicating that it has verified, in accordance with attestation standards
established by the American Institute of Certified Public Accountants, the mathematical accuracy of (a) the
mathematical computations of the adequacy of the cash and the maturing principal of and interest on the
Government Obligations, to pay, when due, the interest on and redemption price of the Refunded Bonds and
(b) the mathematical computations of yield used by Bond Counsel to support its opinion that interest on the
Bonds will be excluded from gross income for federal income tax purposes
General
The Bonds are limited tax general obligation bonds of the City. The City, as authorized by law and the
Ordinance, has irrevocably pledged that it will make annual levies of taxes, within the constitutional and
statutory tax limitations provided by law without a vote of the electors of the City, upon all of the property in
the City subject to taxation in amounts sufficient together with other money legally available and to be used
therefore, to pay such principal and interest as the same shall become due. The City's imposition of regular
property taxes is subject to various limitations (see "Taxing Authority Regular Property Tax Limitations"
herein).
Subject to applicable laws, the City may apply other funds available to make payments with respect to the
Bonds and thereby reduce the amount of future tax levies for such purpose.
The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than
the City
As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to
n 60 percent majority vote of registered voters, is limited to 2.5 percent of assessed value for general purposes, 2.5
percent for utilities and 2.5 percent for open space /park facilities. Within the 2.5 percent of assessed value for
general purposes, the City may, without a vote of the electors, 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 a vote of the electors, enter into leases if the
total principal component of the lease payments, together with the other nonvoted general obligation
indebtedness of the City, does not exceed 1.5 percent of assessed value. The combination of unlimited tax and
limited tax general obligation debt for general purposes, including leases, cannot exceed 2.5 percent of
assessed value and for all purposes cannot exceed 7.5 percent of assessed value.
Without a vote of the electorate, the City may incur debt as follows:
(1)
(2)
(3)
Pursuant to an ordinance specifying the amount and object of the expenditure of the proceeds,
the City Council may borrow money for corporate purposes and issue bonds and notes within
the constitutional and statutory limitations on indebtedness.
The City may execute conditional sales contracts for the purchase of real or personal property.
The City may execute leases with or without an option to purchase.
General Obligations: Non -voted
Computation of Debt Capacity
2008 Collection Year Regular Assessed Value 4,437,340,786
Nonvoted Debt Capacity
1.5% of Assessed Value 66,560,111
Less: Outstanding Nonvoted Debt (1) (14,333,000)
Less: The Bonds (2) (6,510,000)
Remaining Nonvoted Debt Capacity 8 45.717.111
Voted and Nonvoted Debt Capacity
2.5% of Assessed Value S 110,933,519
Less: Outstanding Nonvoted Debt (1) (14,333,000)
Less: The Bonds (2) (6,510,000)
Less: Outstanding Voted Debt 0
Total Remaining Voted and Nonvoted Debt Capacity S 90.090.519
(1) Includes limited tax general obligation bonds; excludes the Refunded Bonds.
(2) Preliminary, subject to change.
Source: City of Tukwila.
Outstanding Debt
Long Term Borrowing
Date of Date of Amount Amount
Limited Tax General Obligations Issue Maturity Issued Outstanding
LTGO 1999 10/15/99 12/01/09 0) 10,000,000 465,000
LTGO 2000 09/15/00 12/01/15 2,551,600 1,428,000
LTGO 2003A 09/25/03 12/01/23 9,850,000 9,850,000
LTGO 2003T (Taxable) 09/25/03 12/01/09 2,200,000 70,000
LTGO 2003B 11/05/03 12/01/14 4,195,000 2,520,000
The Bonds (this issue) 12/16/08 12/01/19 6,510,000 (3) 6,510,000 (3)
LTGO Bond Total 8 35.306.600 8 20.843.000
(1) Valley Communications Center Development Authority issued special obligation bonds on September 15, 2000 in the
total aggregate principal amount of 812,758,000 of which the City is responsible for 20 percent of the debt service.
(2) The Date of Maturity reflects the redemption of the Refunded Bonds. The December 1, 2009 principal payment
remains after this refunding.
(3) Preliminary, subject to change.
4
Summary of Limited Tax General Obligation Bonds Debt Service Requirements (1)
Cal. Outstanding LTGO Bonds (2) The Bonds (3) Total Debt
Years Principal Interest Principal Interest Service
2009 1,500,000 638,560 50,000 262,889 S 2,451,448
2010 1,089,000 570,990 545,000 261,389 2,466,379
2011 1,133,000 524,315 565,000 242,314 2,464,629
2012 1,182,000 475,740 580,000 222,539 2,460,279
2013 1,240,000 425,053 600,000 202,239 2,467,291
2014 1,286,000 367,978 625,000 178,239 2,457,216
2015 858,000 308,320 655,000 153,239 1,974,559
2016 650,000 269,610 680,000 126,220 1,725,830
2017 675,000 242,635 705,000 97,320 1,719,955
2018 705,000 213,948 735,000 67,358 1,721,305
2019 735,000 183,280 770,000 34,650 1,722,930
2020 765,000 150,573 0 0 915,573
2021 800,000 116,148 0 0 916,148
2022 840,000 79,748 0 0 919,748
2023 875,000 40,688 0 0 915,688
Total 14,333,000 4,607,582 6,510,000 1,848,394 27,298,976
(1) Totals may not foot due to rounding.
(2) Principal and interest payments outstanding as of December 16, 2008; excludes the Refunded Bonds.
(3) Preliminary, subject to change; assumed interest rates range from 3.00% to 4.50
5
Overlapping Taxing Districts
School District No. 406
School District No. 401
School District No. 403
Hospital District No. 1
Rural Library District
King County 0)
Port of Seattle
School District No. 1
Total
Direct Debt to Assessed Value
Direct and Overlapping Debt
to Assessed Value
Per Capita Assessed Value
Per Capita Direct Debt
Per Capita Total Direct and Net Overlapping Debt
Summary of Overlapping Debt
(As of December 1, 2008)
2008 Assessed
Value
2,666,893,369
14,680,786,703
16,296,912,864
36,870,805,357
208,324, 650,275
340,995,439,577
340,995,439,577
122,454,516,435
Source: King County Assessor and Treasurer and individual taxing districts.
Net Direct and Overlapping Debt
The following tables present information regarding the City's direct
estimated portion of the debt of overlapping taxing districts allocated to
Regular Assessed Value (2008 Collection Year)
Estimated 2008 Population
Debt Information
Direct Debt*
Estimated Net Overlapping Debt (as previously detailed herein)
Total Net Direct and Overlapping Debt
Includes the Bonds and limited tax general obligation bonds; excludes the Refunded Bonds.
Bonded Debt Ratios
Debt Payment Record
The City has promptly met all debt service payments on outstanding obligations No refunding bonds have
been issued to prevent an impending default.
Future Financings
Other than the Bonds, the City has no authorized but unissued bonds outstanding The City plans to issue
limited tax general obligation bonds in 2010 in the estimated amount of $2.8 million for arterial road
improvements. In addition, the City is a participant in the South Correctional Entity Facility Development
Authority "SCORE which plans to issue approximately 580 million in limited tax general obligation bonds
to build a jail. SCORE will either issue bonds in 2010 or issue bond anticipation notes in 2010 and subsequent
bonds in 2012. The City will be responsible for eight percent of the debt payment.
6
Percent
Overlap
99.92%
30.31
6.47
4.53
2.14
1.31
1.31
0.46
Outstanding
GO Debt
33,335,000
321, 630, 799
212,550,000
41,270,000
66,845,000
1,110,099,513
378, 065,000
399,626,780
4,437,340,786
18,080
20,843,000
169.116.266
S 189.959.266
4.28%
245,428
1,153
10,507
Estimated
Overlapping
Debt
33,307,893
97,497,189
13,745,041
1,867,826
1,427,947
14,487,623
4,934,029
1,848,718
169.116.266
debt (including the Bonds) and the
the City's residents.
0.47%
Taxing Authority
Authorized Property Tax Levies
The following provides a general description of the City's taxing authority and limitations thereon, the method
of determining the assessed value of real and personal property, tax collection procedures, and tax collection
information.
Cities are authorized to impose (1) a regular levy (up to S3.60/$1,000 of assessed value Tess any regular levy
made by a library district and /or a fire protection district within the city) and (2) excess levies (unlimited as to
rate or amount). The City's regular levy for the 2008 collection year is 52.56911/$1,000 The regular levy is
imposed without a vote of the people for general purposes, including payment of debt service on the Bonds,
and is subject to limitations (see "General Property Taxes Regular Property Tax Limitations" herein). Excess
levies are imposed, upon voter approval, to pay debt service on unlimited tax general obligation bonds, or for
any other City purpose if limited to one year. An excess levy also may be imposed without a vote to prevent
the impairment of a contract (RCW 84.52.052).
Authorized Property Taxes The City is authorized to levy both "regular" property taxes and "excess" property
taxes.
(1) Regular Property Taxes. Regular property taxes are subject to constitutional and statutory limitations
as to rates and amounts and commonly are imposed by taxing districts for general municipal
purposes, including the payment of debt service on limited tax general obligation indebtedness, such
as the Bonds. Changes in such laws could alter the impact of other interrelated tax limitations on the
City. Regular property taxes do not require voter approval except as described below.
(2) Excess Properhj Taxes. Excess property taxes are not subject to limitation as to rates or amounts but
must be authorized by a 60 percent approving popular vote, as provided in Article VII, Section 2, of
the State Constitution and RCW 84.52.052. To be valid, such popular vote must have a minimum
voter turnout of 40 percent of the number who voted at the last City general election, except that one
year excess tax levies also are valid if the turnout is less than 40 percent and the measure receives a
number of affirmative votes equal to or greater than 24 percent of the number who voted at the last
City general election. Excess levies may be imposed without a popular vote when necessary to
prevent impairment of the obligations of contracts
Regular Property Tax Limitations
Regular property tax levies are subject to rate limitations and amount limitations and to the uniformity
requirement of Article VII, Section 1 of the State Constitution, which specifies that a taxing district must levy
the same rate on similarly classified property throughout the district. Aggregate property taxes vary within
the county because of its different overlapping taxing districts. In the event that the maximum permissible
levy varies within the City, the lowest permissible rate for any part of the City would be applied to the entire
City.
Maximum Rate Limitation. Title 84 RCW authorizes the imposition of regular tax levies to various statutory
maximums (see "Overlapping Taxing Districts" herein).
The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of the Washington Constitution limits
aggregate regular property tax levies by the State and all taxing districts, except port districts and public utility
districts, to one percent of the true and fair value of property. RCW 84.52.050 provides the same limitation by
statute.
S5.90/$1,000 Aggregate Regular Levy Limitation Within the one percent limitation described above,
RCW 84.52.043(2) imposes an aggregate limitation on regular tax levies by all taxing districts, other than the
State, of $5.90/$1,000 of assessed value, except levies for any port or public utility district; excess levies
authorized in Article V11, Section 2 of the State Constitution; and certain levies for acquiring conservation
futures, for emergency medical services or care, and to finance affordable housing.
Uniformity Requirement Article VII, Section 1 of the Washington 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
7
such taxes. It is possible because of different overlapping taxing districts in different areas of the City that the
maximum permissible levy might vary within the City. In that event, to comply with the constitutional
requirement for uniformity of taxation, the lowest permissible rate for any part of the City would be applied to
the entire City.
Prioritization of Levies. RCW 84.52.010 provides that if aggregate levies certified by all taxing districts exceed
the aggregate levy limitations described above, levies certified by junior taxing districts are reduced or
eliminated in order to bring the aggregate levy into compliance with the statutory maximum prescribed by
RCW 04.52.050 and 84.52.043. RCW 84.52.043 defines "junior taxing districts" as all taxing districts other than
the state, counties, road districts, cities, towns, port districts, and public utility districts
The tax levy for unlimited tax general obligation bonds is a special excess levy approved by the voters, and as
such, is not subject to the limitations on regular levies described above.
The Levy Limitation. The regular property tax increase limitation (chapter 84.55 RCW) limits the total dollar
amount of regular property taxes collected by an individual local taxing district such as the City to the amount
of such taxes levied in the highest of the three most recent years multiplied by a limit factor, plus an
adjustment to account for taxes on new construction, annexations, improvements and State assessed property
at the previous year's rate. The limit factor is the lesser of 101 percent of the highest levy in the three previous
years (excluding new construction, improvements, and State- assessed property) or 100 percent plus inflation,
unless a greater amount is approved by a simple majority of the voters With a supermajority vote of the
Council, the limit factor is a flat 101 percent.
RCW 84.55.092 allows the property tax levy to be set at the amount that would be allowed if the tax levy for
taxes due in each year since 1986 had been set at the full amount allowed under Chapter 84.55 RCW This is
sometimes referred to as "banked" levy capacity. The City does not have any banked levy capacity
With a majority vote of its electors, a taxing district may levy, within the rate limitations described above,
more than what otherwise would be allowed by the tax increase limitation indefinitely or for a limited period
or to satisfy a limited purpose, as allowed by RCW 84.55.050. This is known as a "levy lid lift." A newly
created taxing district can initiate its levy at the maximum permitted statutory levy rate, unless that rate would
exceed any of the limitations described above.
Since the regular property tax increase limitation applies to the total dollar amount levied rather than to levy
rates, increases in the assessed value of all property in the taxing district (excluding new construction,
improvements 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 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.
Special excess levies approved by a 60 percent majority of the voters and meeting minimum voter turnout
requirements are not subject to the rate or amount limitations on regular levies described above.
8
Overlapping Taxing Districts
The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the
following rates subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved
property taxes. For purposes of demonstration, representative levy rates for "levy code 2340" of King County
(the "County"), as well as the statutory levy authority of each type of potential overlapping district, are listed
below. Levy code 2340 is wholly within the City, but it does not include all of the property within the City; as
a result, additional taxing districts, not listed below, levy taxes within the City.
Total Representative Total Statutory
Levy Rates Levy Authority
Per $1,000 of Per 31,000 of
Assessed Value Assessed Value
King County 1.20770 $1.80
County (Road Levy) n/a 2.25
Library District 0.41836 0.50
Fire Protection District n/a 1.50
Port of Seattle 0.22359 0 45
The City 2.56911 3 10 (3X4)
Hospital District No. 1 0.50854 0.75
State Schools 2.13233 3.60 (5)
School District No 403 2.62654 n/a (b)
Emergency Medical Services 0.30000
Flood Zone 0.10000
Ferry District 0.05500
Total rate for King County levy code 2340: 10 14117
(1) King County levy code 2340 is included within the incorporated portion of King County and therefore does not have a
road levy; likewise, it does not contain a fire protection district.
(2) Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per $1,000 to a rate not to exceed 32.475 per
31,000 for general county purposes if (i) the total levies for both the county and any road district within the county do
not exceed $4.05 per 31,000 and (ii) no other taxing district has its levy reduced as a result of the increased county levy.
(3) RCW 41.16 060. 30.225 of the total 33.60 can be used for pension funding purposes, if required; otherwise this tax may
be levied and used for any other municipal purpose.
(4) The City's levy authority of $3.60 per 31,000 is impacted due to its annexation to the King County Rural Library
District. The Library District has the authority to levy up to 30.50 per 31,000 thereby reducing the City's levy authority
to 33 10 per 31,000.
(5) RCW 84.52.043(1). The levy by the State shall not exceed 33.60 per $1,000 assessed value adjusted to the State
equalized value in accordance with the indicated ratio fixed by the State Department of Revenue to be used
exclusively for the support of the common schools.
(6) Washington school districts do not have nonvoted regular levy authority
Source: King Counhj Assessor's Office.
Assessed Value
The County Assessor, or equivalent thereof "Assessor determines the value of all real and personal
property throughout the County that is subject to ad valorem taxation, except certain utility properties which
are valued by the State Department of Revenue. 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
State Department of Revenue.
For tax purposes, the assessed value of property is 100 percent of its market value. Three approaches may be
used to determine real property value: market data, replacement cost and income generating capacity. In
King County, all property is subject to an annual property valuation and an on -site revaluation every six years.
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 revisions by the County Board of Equalization
and, for certain property, subject to further revisions by the State Board of Tax Appeals
Tax Collection Procedure
Property taxes are levied in specific amounts and the rate for all taxes levied for all taxing districts in the
County is determined, calculated and fixed by the Assessor based upon the assessed value of the property
9
within the various taxing districts. The Assessor extends the taxes to be Levied within each taxing district on a
tax roll that contains the total amount of taxes to be so levied and collected. By January 15 of each year, the tax
roll is delivered to the County Treasurer, or equivalent thereof, who creates a tax account for each taxpayer
and is responsible for the collection of taxes due to each account. All such 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 assessed on June 1st of the year in which the tax was due and eight percent on December 1st of the year due.
Al] collections of interest on delinquent taxes are credited to the County's current expense fund. The method
of giving notice of payment of taxes due, the accounting for the money collected, the division of the taxes
among the various taxing districts, notices of delinquency, and collection procedures are covered by detailed
statutes. The lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal
property subject to taxation. By law the County Treasurer may not commence foreclosure of a tax lien on real
property until three years have passed since the first delinquency. 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 the forced sale of the family residence or other "homestead" property for delinquent
general property taxes. (See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982), holding the homestead
right superior to the improvement district assessments.) The United States Bankruptcy Court for the Western
District of Washington has held that the Homestead Exemption applies to the lien for property taxes, while the
State Attorney General has taken the position that it does not.
Tax Collection Record
Regular Tax Collection
Collection Assessed Ad Valorem Ad Valorem Year As of
Year Valuationo Levv Rate Tax Lew of Levv 10/31/08
2008 4,437,340,786 2.56911 11,406,135 (2) (2)
2007 3,931,150,961 2.84033 11,138,233 98.7% 99.5%
2006 3,610,529,967 3.03706 10,952,602 98.8 99 8
2005 3,440,958,505 3.11712 10,669,344 98.7 100 0
2004 3,373,231,785 3.10754 10,430,585 98 6 100 0
2003 3,478,611,208 2.91064 9,975,198 97 9 100 0
(1) Assessed value is based upon 100 percent of estimated actual valuation The preliminary assessed value for
collection year 2009 is $5,149,272,398.
(2) In process of collection.
NOTE: Taxes are due and payable on April 30 of each year of the levy. The entire tax or first half must be paid on or
before April 30, otherwise the total amount becomes delinquent on May 1. The second half of the tax is payable
on or before October 31, becoming delinquent November 1
Source: King County Assessor's and Treasurer's Offices.
10
Taxnaver
The Boeing Company
Westfield Shopping Center
KIR Tukwila 050 LLC
La Pianta LP
Rreef America Reit II Corp.
Heitman
Sterling Realty Organization
Walton CWWA Southcenter
TTA /E Property Tax Department
Anne Arundel Apartments
Subtotal —Ten of the City's Largest
All Other City Taxpayers
Total City Taxpayers
Sources: King County Assessor's Office.
2008 Major Property Taxpayers
Type of Business
Aerospace
Shopping center
Commercial properties
Commercial properties
Commercial properties
Commercial properties
Commercial properties
Commercial properties
Investment property
Apartments
Taxpayers
Authorized Investments
11
Percent of
2008 Collection Year City's
Assessed Valuation Total A.V.
S 523,137,982 11.79%
117,384,365 2.65
96,063,800 2.16
85,320,368 1.92
63,451,550 1.43
57,055,700 1.29
35,693,100 0 80
31,782,500 0 72
31,162,700 0 70
29.944,400 0.67
1,070,996,465 2414
3,366,344,321 75.86
4.437.340,786 100.00%
Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess of
current needs to the following authorized investments: United States bonds; United States certificates of
indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or warrants
of a local improvement district which are within the protection of the local improvement guaranty fund law;
and any other investment authorized by law for any other taxing district or the State Treasurer Under chapter
43.84 RCW, the State Treasurer may invest in non negotiable certificates of deposit in designated qualified
public depositories; in obligations of the U.S. government, its agencies and wholly owned corporations; in
bankers' acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national
mortgage association and other government corporations subject to statutory provisions and may enter into
repurchase agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local
improvement district are also eligible investments (RCW 35.39.030)
Money available for investment may be invested on an individual fund basis or may, unless otherwise
restricted by law, be commingled within one common investment portfolio All income derived from such
investment may be either apportioned to and used by the various participating funds or for the benefit of the
general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds
or other instruments of indebtedness will be invested 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 Washington State Local Government Investment Pool (the
"LGIP a fund that invests money on behalf of more than 350 cities, counties and special taxing districts. 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. The pool is restricted to investments with maturities of one year or less, and the average life
typically is less than 90 days. Investments permitted under the pool's guidelines include U.S. government and
agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase
agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified Washington State
depositories.
As of December 31, 2007, the City's investment portfolio, at fair value, totaled 532,416,780 of which 520,540,726
was invested in the LGIP and the remaining of which was invested in various U.S. government securities.
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).
12
Source: Cihj of Tukwila.
Comparative General Fund Statement
of Revenues, Expenditures and Changes in Fund Balance
(Years Ending December 31)
Audited
2007 2006 2005 2004 2003
Revenues
Taxes 31,660,507 29,250,083 26,852,064 5 28,886,770 5 27,525,877
Licenses and permits 1,827,709 1,273,228 1,002,683 808,821 785,823
Intergovernmental 2,562,870 2,962,522 2,334,340 1,757,235 1,873,139
Charges for services 2,024,892 2,345,931 2,649,678 2,919,115 1,796,946
Fines and forfeits 266,188 221,097 116,737 147,137 245,585
investment income 488,252 423,820 250,609 132,078 31,083
Miscellaneous 643,538 420,518 438,264 547,977 442,115
Total Revenues 39,473,956 36,897,199 33,644,375 35,199,133 32,700,568
Expenditures
Current:
General government 7,034,602 6,882,596 6,136,540 5,982,594 5,892,912
Public safety 21,038,810 20,352,873 18,859,476 18,012,473 16,964,726
Physical environment 1,946,806 1,895,390 624,041 661,203 682,922
Transportation 2,039,304 2,086,394 1,442,309 1,151,872 1,013,399
Economic environment 2,961,588 2,819,441 2,632,575 2,826,030 2,769,883
Mental and physical health 4,204 3,683 0 0 0
Culture and recreation 3,938,779 3,689,560 3,274,273 3,089,080 2,879,441
Debt service 0 1,034 0 0 0
Capital outlay 268,479 388,326 215,696 344,606 114,731
Total Expenditures 39,232,572 38,119,300 33,184,910 32,067,858 30,318,014
Excess (deficiency) of revenues
over (under) expenditures 241,384 (1,222,101) 459,465 3,131,275 2,382,554
Other Financing Sources (Uses)
Transfers in 1,966,349 1,993,581 0 0 1,260,000
Transfers out (397,260) (499,940) (585,000) (900,000) (175,358)
Sale of capital assets 100 (530,869) 0 0 0
Total Other Financing Sources (Uses) 1,569,189 962,772 (585,000) (900,000) 1,084,642
Net change in fund balances 1,810,573 (259,329) (125,535) 2,231,275 3,467,196
Fund balance beginning of year 8,706,465 8,965,794 9,091,329 6,860,054 3,392,858
Fund Balance End of Year 10,517,038 8,706,465 S 8,965,794 9,091,329 6,860,054
13
Comparative General Fund Balance Sheet
(Years Ending December 31)
Audited
2007 2006 2005 2004 2003
Assets
Cash and cash equivalents 5,524,756 217,714 95,273 85,823 203,114
Deposit with fiscal agent /trustee 0 25,351 6,771 9,750 25,295
Investments 3,465,024 7,669,051 6,410,284 6,817,048 3,195,708
Receivables:
Taxes 3,386,463 2,732,013 2,430,481 2,838,192 3,138,853
Customer accounts 153,932 99,224 134,987 114,389 39,117
Interest on investments 49,261 56,386 48,084 41,837 0
Interfund loans receivable 0 0 544,440 544,440 600,000
Due from other governments 134.221 177.375 163.685 254.711 770.516
Total Assets S 12.713,658 S 10,977,114 S 9.834.005 S 10.706.190 S 7.972,603
Liabilities and Fund Balances
Liabilities:
Accounts payable 24,266 23,149 9,262 546,354 52,808
Accrued wages Sr benefits 1,049,077 1,038,180 0 0 0
Due to other governmental units 13,074 97,335 66,763 114,956 125,859
Revenues collected in advance 101,143 103,140 75,200 82,166 87,874
Other current liabilities 399,635 379,625 279,866 387,937 269,172
Deferred revenues 609.065 629,220 437.120 483.448 576.836
Total Liabilities 2,196,260 2,270,649 868.211 1.614.861 1.112.549
Fund balances:
Reserved for:
Imprest funds 12,650 13,250 13,250 13,250 13,000
Loans receivable 0 0 544,440 544,440 600,000
Unreserved, designated for:
Unknown contingent liabilities 3,763,990 2,539,443 2,816,822 2,816,822 2,816,822
Unreserved, undesignated
General fund 6,740.398 6,153.772 5,591,282 5.716.817 3,430,232
Total Fund Balances 10,517,038 8.706,465 8.965,794 9.091.329 6,860,054
Total Liabilities and Fund Balances S 12,713,298 S 10,977.114 S 9,834,005 S 10,706,190 5 7.972,603
Source: Cihj of Tukwila.
14
The City
The City, a non charter code city of the State, was incorporated on June 29, 1908, and has a Mayor- Council
form of government. Qualified electors elect the Mayor and seven council members at large. The Mayor
appoints the City Administrator (with the majority approval of the City Council) to provide administrative
direction to the City.
The City Council is the legislative authority of the City and establishes City policy The Mayor and City
Administrator work together to implement such policy. The qualified electors of the City elect council
members to staggered four -year terms. If a council member is appointed to fill a vacancy on the City Council,
the council member serves for the unexpired portion of the vacated term.
Member Position Term Expires
Jim Haggerton Mayor 12/31/2011
Joe Duffie Council President 12/31/2009
Verna Griffin Councilmember 12/31/2009
Joan Hernandez Councilmember 12/31/2011
Kathy Hougardy Councilmember 12/31/2011
Pam Linder Councilmember 12/31/2009
De'Sean Quinn Councilmember 12/31/2009
Dennis Robertson Councilmember 12/31/2011
City Administration
Rhonda Berry, City Administrator. Ms. Berry has been with the City since 1990 and became the City
Administrator in 2004. Prior to joining the City, Ms. Berry worked for the City of Oklahoma City, Oklahoma
the IBM Corporation for 12 years. Ms. Berry holds a Bachelor's Degree in Business Education and a Masters of
Business Administration.
Ms. Berry has been involved in a wide variety of civic activities that include volunteer work in schools in both
the cities of Seattle and Tukwila, as well as with the Junior Achievement program. lvIs Berry has served on the
Board of Directors for the Southeast Seattle Senior Foundation; the University Preparatory Academy and
Seattle Academy of Arts and Sciences Board of Trustees; the Board of Directors for Emerald City Outreach
Ministries; and the Executive Committee of the Tukwila Community Schools Collaboration. She is currently
on the Board of the Committee to End Homelessness and is on the United Way Community Building
Committee.
Shawn Hunstock, CPA, Finance Director. Mr Hunstock is responsible for all financial aspects of the City.
Mr. Hunstock has been employed by the City as Finance Director since September 2008 Prior to joining the
City, Mr Hunstock was the Assistant Finance Director at the City of Auburn, Washington. Mr. Hunstock's
previous experience- includes over 13 years of public sector financial management in state and local
government, as well as higher education and public accounting experience.
Labor Relations
The City currently has 336 full -time and 123 part -time or seasonal employees. The majority of City employees
who are eligible under State law to be represented by a labor organization are employed under provisions of
negotiated contracts with seven bargaining units. The City considers its relationship with the bargaining units
as excellent.
No. of
Bareainine Unit Employees Expiration Date
Teamsters 156 December 31, 2008
IAFF (Firefighters) 60 December 31, 2008
Police Guild 61 December 31, 2010
United Steelworkers 13 December 31, 2008
15
Pension System
Public Employees' Retirement System "PERS Substantially all of the City's full -time and qualifying part -time
employees, other than those covered under union plans, participate in PERS This is a statewide local
government retirement system administered by the Washington State Department of Retirement Systems,
under cost- sharing, multiple employer defined benefit public employee retirement plans. The PERS system
includes three plans.
Participants who joined the system by September 30, 1977, are PERS Plan 1 members Those joining thereafter
are enrolled in PERS Plan II. A third plan, entitled PERS Plan III, provides members with a defined benefit
plan similar to PERS Plan II and the opportunity to invest their retirement contributions in a defined
contribution plan.
PERS Plan I members are eligible for retirement at any age after 30 years of service, at age 60 with five years of
service, or at age 55 with 25 years of service. The annual pension is two percent of the average final
compensation per year of service, capped at 60 percent. The average final compensation is based on the
greatest compensation earned during any 24 eligible consecutive compensation months.
PERS Plan II members may retire at age 65 with five years of service or at 55 with 20 years of service. The
annual pension is two percent of the average final compensation per year of service. PERS Plan II retirements
prior to 65 are actuarially reduced. On July 1 of each year following the first full year of retirement service, the
benefit will be adjusted by the percentage change in the Consumer Price Index "CPI of Seattle, capped at
three percent annually.
PERS Plan III is structured as a dual benefit program that will provide members with the following benefits:
A defined benefit allowance similar to PERS Plan II calculated as one percent of the average final
compensation per year of service (versus a two percent formula) and funded entirely by employer
contributions.
A defined contribution account consisting of member contributions plus the full investment return
on those contributions.
Each biennium, the State Pension Funding Council adopts PERS Plan I employer contribution rates and PERS
Plan II employer and employee contribution rates. Employee contribution rates for PERS Plan I are
established by statute at six percent and do not vary from year to year. The employer and employee
contribution rates for PERS Plan II are set by the director of the Department of Retirement Systems, based on
recommendations by the Office of the State Actuary, to continue to fully fund PERS Plan II. Unlike PERS
Plan II, which has a single contribution rate, with PERS Plan III, the employee chooses how much to contribute
from one to six contribution rate options. Once an option has been selected, the contribution rate choice is
irrevocable unless the employee changes employers.
All employers are required to contribute at the level established by State law The methods used to determine
the contribution requirements are established under State statute in accordance with chapters 41.40 and 41.26
RCW.
For the year ended December 31, 2007, the City's contribution of $702,317, or 6.13 percent of covered payroll,
represents its full liability under the system, except that future rates may be adjusted to meet system needs.
Law Enforcement Officers' and Fire Fighters' Retirement System "LEOFF LEOFF is a cost sharing multiple
employer defined benefit pension plan. Membership in the plan includes all full -time, fully compensated local
law enforcement officers, and fire fighters. The LEOFF system includes two plans
Participants who joined the system by September 30, 1977, are LEOFF Plan I members. Those joining
thereafter are enrolled in LEOFF Plan II. Retirement benefits are financed from employee and employer
contributions, investment earnings, and State contributions. Retirement benefits in both LEOFF Plan 1 and
LEOFF Plan II are vested after completion of five years of eligible service
16
LEOFF Plan I members are eligible to retire with five years of service at age 50. The service retirement benefit
is dependent upon the final average salary and service credit years at retirement.
LEOFF Plan II members are eligible to retire at the age of 50 with 20 years of service or at 53 with five years of
service. Retirement benefits prior to age 53 are actuarially reduced at a rate of three percent per year. The
benefit is two percent of the final average salary per year of service. The final average salary is determined as
the 60 highest paid consecutive service months. There is no limit on the number of service credit years, which
may be included in the benefit calculation.
LEOFF Plan I employer and employee contribution rates are established by statute, and the State is responsible
for the balance of the funding at rates set by the Pension Funding Council to fully amortize the total costs of
the plan. Employer and employee rates for LEOFF Plan II are set by the director of the Department of
Retirement Systems, based on recommendations by the Office of the State Actuary, to continue to fully fund
the plan. LEOFF Plan Il employers and employees are required to contribute at the level required by State
law. The methods used to determine the contribution rates are established under State statute in accordance
with chapters 41.26 and 41.45 RCW.
For the year ending December 31, 2007, the City's contribution to LEOFF I of 0.16 percent and to LEOFF II of
5.35 percent of covered payroll totaled $548,848, representing its full liability under the system, except that
future rates may be adjusted to meet the system needs.
Historical trend information regarding all of these plans is presented in Washington State's Department of
Retirement Systems' annual financial report. A copy of this report may be obtained at:
Department of Retirement Systems
Point Plaza West
1025 East Union Street
P.O. Box 48380
Olympia, WA 98504 -8380
Internet Address: www.drs.wa.gov
According to information provided by the Office of State Actuary, the LEOFF System currently has no
unfunded actuarial accrued liability.
Other Post Employment Benefits
The Governmental Accounting Standards Board "GASB has issued a new standard concerning Accounting
and Financial Reporting by Employers for Post Employment Benefits Other than Pensions (GASB 45). In
addition to pensions, many State and local governmental employers provide other post employment benefits
"OPEB as a part of total compensation to attract and retain the services of qualified employees OPEB
includes post employment health care as well as other forms of post employment benefits when provided
separately from a pension plan. The new standard provides for the measurement, recognition and display of
OPEB expenses /expenditures, related liabilities (assets), note disclosures, and, if applicable, required
supplementary information in the financial reports.
The City provides post employment benefits in accordance with State statute to all LEOFF retirees. The City
provides medical insurance and reimburses for all validated claims for medical, dental and hospitalization
costs incurred by retirees. Currently, 39 retirees meet those eligibility requirements Expenditures for post
retirement health care benefits are recognized as retirees report claims. During 2007, expenditures of $542,868
were recognized for post retirement health care. This represents a $26,967 increase from 2006.
Basis of Accounting
The City's financial statements are prepared in accordance with generally accepted accounting principles
"GAAP as applied to governmental units and are regulated by the State Auditor's Office. The accounts of
the City are organized on the basis of funds and account groups, each of which is considered a separate
accounting entity Each fund is accounted for with a separate set of self balancing accounts that comprise its
assets, liabilities, fund equity, revenues, and expenditures or expenses as appropriate. The City's resources are
17
allocated to and accounted for in individual funds depending on what they are to be spent and how they are
controlled
All governmental funds are presented using the flow of current financial resources focus. This means that
generally only current assets and current liabilities are included on their balance sheets. Governmental fund
operating statements focus on measuring changes in financial position, rather than net income. They present
increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in
spendable resources. The reported fund balance is considered a measure of "available expendable resources."
Budgetary Policies
The City budgets its funds in accordance with chapter 35A.33 RCW. Annual appropriated budgets are
adopted for the general, special revenue, debt service, and capital projects funds on the modified accrual basis
of accounting and include fund balances. For governmental funds, there are no differences between the
budgetary basis and GAAP.
The Council annually adopts a budget by ordinance establishing appropriations for City funds, and during the
year may authorize supplemental appropriations Administrative and legal budgetary control is established at
the fund level, i.e., expenditures for a fund may not exceed the total appropriation amount The Mayor may
authorize transfers of appropriations within a fund or use of a fund balance, however any amendments that
increase the total for the fund must be approved by Council ordinance.
Risk Management
The City is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48 62 RCW
(self- insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed
WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly
purchasing insurance, jointly self insuring, and /or jointly contracting for risk management services. WCIA
currently has a total of 121 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.
WCIA is governed by a Board of Directors, 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 the WCIA.
Liability coverage is written on an occurrence basis without deductibles. Coverage includes general,
automobile, public officials' errors or omissions, stop -gap, and employee benefits liability. Limits are
$3 million per occurrence self insured layer, and $12 million per occurrence in the re- insured excess layer The
excess layer is insured by the purchase of reinsurance and is subject to aggregate limits. Total limits are $15
million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines
the limits and terms of coverage annually.
Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and
machinery are purchased on a group basis. Insurance coverage for underground storage tanks are purchased
under a separate policy. Various deductibles apply by type of coverage. Property insurance and auto physical
damage coverage are self funded from the members' deductible to $500,000, for all perils other than flood and
earthquake, and insured above that amount by the purchase of reinsurance
In -house services include risk management consultation, loss control field services, claims and litigation
administration, and loss analyses. WCIA contracts for claims investigation consultants for personnel issues
and land use problems, insurance brokerage, and lobbyist services.
WCIA is fully funded by its members who make annual assessments on a prospectively rated basis, as
determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and
18
administrative expenses. As outlined in the interlocal, «CIA retains the right to additionally assess the
membership for any funding shortfall.
An investment committee, using investment brokers, produces additional revenue by investment of WCIA's
assets in financial instruments which comply with all State guidelines These revenues directly offset portions
of the membership's annual assessment.
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. State statutes require audits for cities to be conducted by the Office
of the State Auditor. 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.
The State Auditor is required to examine the affairs of cities at least once every two years. The City is audited
annually. The examination must include, among other things, the financial condition and resources of the
City, whether the laws and constitution of the State are being complied with, and the methods and accuracy of
the accounts and reports of the City. Reports of the auditor's examinations are required to be filed in the office
of the State Auditor and in the finance department of the City
The financial statements of the City for the year ended December 31, 2007, attached as Appendix C, are
incorporated by reference to this Official Statement.
Demographic Information
The City is located in King County, Washington, in the Green River valley,
approximately 12 miles south of downtown Seattle and 17 miles north of Tacoma, at
the intersection of Interstate Highways 5 and 405. The City is adjacent to the western
city limits of Renton and the eastern city limits of SeaTac and is one mile east of the
Seattle- Tacoma International Airport. The City encompasses nine square miles and
has an estimated 2008 population of 18,080
The City was primarily a residential community until completion of an interstate
highway interchange in the late 1960s, when it began to develop as a major south
King County industrial and commercial center. This growth began with the
construction of Westfield Southcenter Shoppingtown, a shopping mall, Andover
Industrial Park, Gateway Industrial Parks and Parkway Plaza, all within the City
limits.
Historical population growth of the City and the County are shown below.
Population
Historical population for the City and County are as follows:
Population
City of King
Year Tukwila County
2008 18,080 1,884,200
2007 18,000 1,861,300
2006 17,930 1,835,300
2005 17,110 1,808,300
2004 17,240 1,788,300
Source: Washington State Office of Financial Management.
19
King County
Washington
King County
The County is located on Puget Sound in Washington and covers more than 2,200 square miles. The County is
the largest metropolitan county in the State in terms of population, number of cities, and employment, with
more than one quarter of the State's population.
Income. Historic personal income and per capita income levels for the County and the State are shown below:
King County and State of Washington
Total Personal and Per Capita Income
Year
2007
2006
2005
2004
2003
2002
King County
Total Personal
Income (in thousands)
N/A
$96,579,228
88,065,435
87,407,884
79,199,166
77,940,608
Per Capita
Income
N/A
$52,655
48,789
49,533
44,704
44,153
State of Washington
Total Personal
Income (in thousands)
$261,415,126
243,597,024
224,736,003
218,431,726
202,942,123
197,451,578
Per Capita
Income
$40,414
38,212
35,838
35,289
33,166
32,573
(1) Preliminary estimate.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
Taxable Retail Sales. Taxable retail sales reflect only those sales subject to retail sales tax. Historic taxable retail
sales for the City and the County are shown below:
Year
2008
2007
2006
2005
2004
Units
1,805
5,206
5,770
6,331
6,947
2008 t'?
2007
2006
2005
2004
2003
(1) Data through June 2008 only
Source 11.5 Census Bureau, July 2008.
New Single Family Units
Taxable Retail Sales
City of
Tukwila
1,004,674,512
2,189,941,072
2,045,733,563
2,045,733,563
1,917,878,233
1,844,654,350
(1) Through second quarter only.
Source: Washington State Department of Revenue
Building Permits. The number and valuation of new single family and multi- family residential building permits
in the County are listed below:
King County
Residential Building Permits
Valuation
532,651,518
1,506,180,957
1,622,174,594
1,741,241,527
1,684,139,845
20
King Countv
22,761,952,403
47,766,338,769
43,993,478,514
40,498,328,830
37,253,103,540
35,156,210,451
New Multi Family Units
Units
4,636
10,212
8,305
5,703
4,998
Total
Valuation Valuation
702,490,004 5 1,235,141,522
1,246,804,898 2,752,985,855
1,023,922,267 2,646,096,861
556,297,096 2,297,538,623
451,908,793 2,136,048,638
Employment. Total employment within the City in 2007 is estimated at 42,368. The top 10 employers within
the City include the following:
Employer
The Boeing Company
Group Health Cooperative
King County Metro
Carlyle, Inc.
Red Dot Corporation
Macy's
Group Health Cooperative
Boeing's Employee Credit Union
JC Penney Company
Nordstrom, Inc.
Source: City of Tukwila.
State -wide employment figures (rounded) for major employers located primarily within the central Puget
Sound region (King, Pierce and Snohomish counties) include the following.
Central Puget Sound Region I"
Major Employers
Employer
The Boeing Company
Microsoft Corp.
University of Washington
Wal -Mart Stores, Inc.
Naval Base Kitsap
Providence Health Services
King County Government
Fred Meyer Stores
City of Seattle
Alaska Air Group
City of Tukwila
2007 Major Employers
Type of Business
Aerospace
Data center /lab /pharmacy
Transit operating base
Wire /cable connectors
Heater /air conditioning equipment
Department store
Health care administration
Credit union
Department store
Department store
Type of Business
Aerospace and defense manufacturer
Software and internet technologies
Major public research university
Retail super center
Fleet of the U.S Navy
Comprehensive healthcare
Local county government
Multi- department stores
Local city government
Holding company for Alaska and Horizon airlines
(1) Central Puget Sound Region includes King, Kitsap, Pierce, and Snohomish counties.
Source: Puget Sound Business Journal's Book of Lists 2008.
2]
Employees
8,043
1,100
664
447
444
400
376
376
375
334
Employees
71,353
33,053
24,443
16,597
15,268
14,838
12,678
11,800
9,798
8,030
Civilian Labor Force data is based on household surveys of residents. North American Industry Classification
System (NAICS) data are estimates based on surveys of employers and benchmarked based on covered
employment as reported by all employers.
Civilian Labor Force
Total Employment
Total Unemployment
Percent of Labor Force
King County
Nonagricultural Wage Salary Workers
and Labor Force and Employment Data
Annual Averae_ e
2008 2007 2006 2005 2004
1,081,980 1,070,870 1,047,740 1,012,940 994,800
1,042,730 1,031,700 1,005,240 965,940 943,420
39,250 39,170 42,500 47,000 51,380
3.6 3 7 4.1 4 6 5.2
*NAICS INDUSTRY 2008( 2007 2006 2005 2004
Total Nonfarm 1,215,667 1,198,392 1,176,683 1,143,675 1,119,167
Total Private 1,049,500 1,035,483 1,014,800 982,475 957,008
Goods Producing 189,100 188,125 183,108 170,850 163,667
Natural Resources and Mining 700 675 658 658 825
Construction 76,067 74,467 70,075 62,808 58,992
Manufacturing 112,317 113,000 112,367 106,900 103,392
Services Providing 1,026,583 1,010,258 993,583 973,300 955,950
Trade, Transportation, and Utilities 224,667 224,125 224,283 222,858 222,700
Information 77,550 75,642 72,500 69,283 67,717
Financial Activities 76,850 76,908 77,567 76,467 77,242
Professional and Business Services 195,233 189,917 182,233 173,225 163,708
Educational and Health Services 130,150 127,300 124,717 122,750 118,142
Leisure and Hospitality 114,100 111,617 108,575 106,092 103,783
Other Services 41,833 41,842 41,808 41,392 40,533
Government 166,133 162,917 161,892 161,208 162,150
Federal Government 20,900 21,317 21,375 21,800 22,525
State Government 56,283 54,575 54,417 34,167 54,208
Local Government 88,933 87,042 86,117 85,225 85,442
Workers in Labor /Management Disputes 0 0 8 850 83
(1) Data through June 2008
Source: Washington State Employment Security Department.
Initiative and Referendum
State Initiatives
Under the State Constitution, the voters of the State have the ability to initiate legislation and require the
Legislature to refer legislation to the voters through the powers of initiative and referendum, respectively. The
initiative power in Washington may not be used to amend the State Constitution. Initiatives and referenda are
submitted to the voters upon receipt of a petition signed by at least eight percent (initiative) 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 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 Legislature. After two years, the law is subject to amendment or
repeal by the Legislature in the same manner as other laws.
Current and Future Initiative Legislation. Tax and fee initiative measures have been and may be filed from time
to time. It cannot be predicted whether any such initiatives might gain sufficient signatures to qualify for
submission to the Legislature and /or the voters or, if submitted, whether they ultimately would be approved
22
Tax Exemption
Exclusion from Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming
compliance by the City with applicable requirements of the Internal Revenue Code of 1986, as amended (the
"Code that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds is excluded
from gross income for federal income tax purposes and is not an item of tax preference for purposes of the
alternative minimum tax applicable to individuals.
Continuing Requirements. The City is required to comply with certain requirements of the Code after the date
of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for
federal income tax purposes, including, without limitation, requirements concerning the qualified use of
proceeds of the Bonds and the facilities financed or refinanced with those proceeds, limitations on investing
gross proceeds of the Bonds in higher yielding investments in certain circumstances, and the requirement to
comply with the arbitrage rebate requirements to the extent applicable to the Bonds. The City has covenanted
in the Ordinance to comply with those requirements, but if the City fails to comply with those requirements,
interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Bond Counsel has
not undertaken and does not undertake to monitor the City's compliance with such requirements.
Corporate Alternative Minimum Tax. While interest on the Bonds also is not an item of tax preference for
purposes of the alternative minimum tax applicable to corporations, under Section 55 of the Code, tax exempt
interest, including interest on the Bonds, received by corporations is taken into account in the computation of
adjusted current earnings for purposes of the alternative minimum tax applicable to corporations (as defined
for federal income tax purposes). Under the Code, alternative minimum taxable income of a corporation will
be increased by 75 percent of the excess of the corporation's adjusted current earnings (including any tax
exempt interest) over the corporation's alternative minimum taxable income determined without regard to
such increase. A corporation's alternative minimum taxable income, so computed, that is in excess of an
exemption of $40,000, which exemption will be reduced (but not below zero) by 25 percent of the amount by
which the corporation's alternative minimum taxable income exceeds $150,000, is then subject to a 20 percent
minimum tax.
A small business corporation is exempt from the corporate alternative minimum tax for any taxable year
beginning after December 31, 1997, if its average annual gross receipts during the three taxable -year period
beginning after December 31, 1993, did not exceed 55,000,000, and its average annual gross receipts during
each successive three taxable -year period thereafter ending before the relevant taxable year did not exceed 57.5
million.
Tax on Certain Passive Investment Income of S Corporations. Under Section 1375 of the Code, certain excess net
passive investment income, including interest on the Bonds, received by an S corporation (a corporation
treated as a partnership for most federal tax purposes) that has Subchapter C earnings and profits at the close
of the taxable year may be subject to federal income taxation at the highest rate applicable to corporations if
more than 25 percent of the gross receipts of such S corporation is passive investment income.
Foreign Branch Profits Tax. Interest on the Bonds may be subject to the foreign branch profits tax imposed by
Section 884 of the Code when the Bonds are owned by, and effectively connected with a trade or business of, a
United States branch of a foreign corporation.
Possible Consequences of Tax Compliance Audit. The Internal Revenue Service (the "IRS has established a
general audit program to determine whether issuers of tax exempt obligations, such as the Bonds, are rn
compliance with requirements of the Code that must be satisfied in order for interest on those obligations to
be, and continue to be, excluded from gross income for federal income tax purposes Bond Counsel cannot
predict whether the IRS would commence an audit of the Bonds. Depending on all the facts and
circumstances and the type of audit involved, it is possible that commencement of an audit of the Bonds could
adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of its
ultimate outcome.
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Certain Other Federal Tax Consequences
Bonds are "Qualified Tax- Exempt Obligations" for Financial Institutions. Section 265 of the Code provides that
100 percent of any interest expense incurred by banks and other financial institutions for interest allocable to
tax- exempt obligations acquired after August 7, 1986, will be disallowed as a tax deduction. However, if the
tax exempt obligations are obligations other than private activity bonds, issued by a governmental unit that,
together with all entities subordinate to it, does not reasonably anticipate issuing more than $10,000,000 of tax
exempt obligations (other than private activity bonds and other obligations not required to be included in such
calculation) in the calendar year in which the bonds are issued and are designated by the governmental unit
as "qualified tax exempt obligations," only 20 percent of any interest expense deduction allocable to those
obligations will be disallowed.
The City is a governmental unit that, together with all subordinate entities, reasonably anticipates issuing less
than $10,000,000 of tax exempt obligations (other than private activity bonds and other obligations not
required to be included in such calculation) during the calendar year in which the Bonds are issued and has
designated the Bonds as "qualified tax exempt obligations" for purposes of the 80 percent financial institution
interest expense deduction. Therefore, only 20 percent of the interest expense of a financial institution
allocable to the Bonds is deductible for federal income tax purposes.
Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies. Under Section 832 of the
Code, interest on the Bonds received by property and casualty insurance companies will reduce tax deductions
for Toss reserves otherwise available to such companies by an amount equal to 15 percent of tax exempt
interest received during the taxable year.
Effect on Certain Social Secunty and Retirement Benefits. Section 86 of the Code requires recipients of certain
Social Security and certain Railroad Retirement benefits to take receipts or accruals of interest on the Bonds
into account in determining gross income.
Other Possible Federal Tax Consequences. Receipt of interest on the Bonds may have other federal tax
consequences as to which prospective purchasers of the Bonds may wish to consult their own tax advisors.
Rating
As noted on the cover page of this Official Statement, the City will apply for a rating for the Bonds from
Moody's Investors Service. When and if. obtained, the rating will reflect only the views of the rating agency
and an explanation of the significance of the rating may be obtained from the rating agency. There is no
assurance that the rating, once obtained, will be retained for any given period of time or that the rating will not
be revised downward or withdrawn entirely by the rating agency if, in its judgment, circumstances so
warrant. Any such downward revision or withdrawal of the rating will be likely to have an adverse effect on
the market price of the Bonds.
Continuing Disclosure
Basic Undertaking to Provide Annual Financial Information and Notice of Material Events. To meet the requirements
of United States Securities and Exchange Commission "SEC Rule 15c2- 12(b)(5) (the "Rule as applicable to
a participating underwriter for the Bonds, the City will undertake (the "Undertaking for the benefit of
holders of the Bonds to provide or cause to be provided, either directly or through a designated agent, to each
nationally recognized municipal securities information repository designated by the SEC in accordance with
the Rule "NRMSIR and to a state information depository, if any, established in the State of Washington (the
"SID annual financial information and operating data of the type included in this Official Statement as
generally described below "annual financial information and to each NRMSIR or the Municipal Securities
Rulemaking Board "MSRB and to the SID, timely notice of the occurrence of any of the following events
with respect to the Bonds, if material: (i) principal and interest payment delinquencies; (ii) non payment
related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv)
unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or
liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax exempt
24
status of the Bonds; (vii) modifications to rights of holders of the Bonds; (viii) Bond calls (other than scheduled
mandatory redemptions of Term Bonds); (ix) defeasances; (x) release, substitution, or sale of property securing
repayment of the Bonds; and (xi) rating changes. The City also will provide to each NRMSIR or to the MSRB,
and to the SID, timely notice of a failure by the City to provide required annual financial information on or
before the date specified below.
Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City
undertakes to provide will consist of
(i) annual financial statements prepared (except as noted in the financial statements) in accordance
with generally accepted accounting principles promulgated by the Government Accounting
Standards Boards, as such principles may be changed from time to time and as permitted by State
law which statements need not be audited, except that if and when audited financial statements
are otherwise prepared and available to the City they will be provided,
(ii) a statement of authorized, issued and outstanding balance of general obligation debt;
(iii) the assessed value of property within the City subject to ad valorem taxation; and
(iv) ad valorem tax levy rates and amounts and percentage of taxes collected
Such annual financial information will be provided to each NRMSIR and the SID not later than the last day of
the ninth month after the end of each fiscal year of the City (currently, the fiscal year ending December 31), as
such fiscal year may be changed as required by State law, commencing with the City's fiscal year ending
December 31, 2008.
The annual financial information may be provided in a single or multiple document, and may be incorporated
by reference to other documents that have been filed with each NRMSIR and the SID, or, if the document
incorporated by reference is a "final official statement" with respect to other obligations of the City, one that
has been filed with the MSRB.
Amendment of Undertaking. The Undertaking is subject to amendment after the primary offering of the Bonds
without the consent of any holder of any Bond, or any broker, dealer, municipal securities dealer, participating
underwriter, rating agency, NRMSIR, the SID or the MSRB, under the circumstances and in the manner
permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of the substance (or provide a copy) of
any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the
amendment changes the type of annual financial information to be provided, the notice also will include a
narrative explanation of the effect of that change on the type of information to be provided
Termination of Undertaking. The City's obligations under the Undertaking shall terminate upon the legal
defeasance of all of the Bonds. In addition, the City's obligations under the Undertaking will terminate if those
provisions of the Rule which require the City to comply with the Undertaking become legally inapplicable in
respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other
counsel familiar with federal securities laws delivered to the City, and the City provides timely notice of such
termination to each NRMSIR or the MSRB and the SID.
Remedy for Failure to Comply with Undertaking. If the City or any other obligated person fails to comply with
the Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected as soon
as practicable after the City learns of that failure. No failure by the City or other obligated person to comply
with the Undertaking will constitute a default in respect of the Bonds The sole remedy of any holder of a
Bond will be to take such actions as that holder deems necessary, including seeking an order of specific
performance from an appropriate court, to compel the City or other obligated person to comply with the
Undertaking.
Centralized Dissemination Agent To the extent authorized by the SEC, the City may satisfy the Undertaking by
transmitting the required filings using http: /www.disclosureusa.org (or such other centralized dissemination
agent as may be provided by the SEC).
25
Prior Continuing Disclosure Undertakings of the City. The City is required to file its annual financial information
by the end of the ninth month following the fiscal year end; the City failed to do so for the fiscal years ended
December 31 for the years 2004 through 2007. The City filed its annual financial information for the fiscal
years ended December 31 for the years 2004 through 2007 on November 19, 2008. The City has provided
notice of its failure to file its annual financial information by the required deadline. The City has otherwise
complied with the provisions of its various continuing disclosure undertakings. The failure of the City in any
respect to comply with the terms related to continuing disclosure undertaking under the Bond Ordinance or
with the terms of any other commitment for ongoing disclosure under the Rule shall not constitute an Event of
Default under the Bond Ordinance.
Legal and Underwriting
Approval of Counsel
Legal matters incident to the authorization, issuance and sale of Bonds by the City are subject to the approving
legal opinion of Foster Pepper PLLC, Seattle, Washington, Bond Counsel. The form of the opinion of Bond
Counsel with respect to the Bonds is attached as Appendix A. The opinion of Bond Counsel is given based on
factual representations made to Bond Counsel, and under existing law, as of the date of initial delivery of the
Bonds, and Bond Counsel assumes no obligation to revise or supplement its opinion to reflect any facts or
circumstances that may thereafter come to its attention, or any changes in law that may thereafter occur. The
opinion of Bond Counsel is an expression of its professional judgment on the matters expressly addressed in
its opinion and does not constitute a guarantee of result.
Litigation
The City, in the normal course of its activities, is involved in various claims and litigation. There is no
controversy or litigation pending or, to the best knowledge of the City, threatened, which will affect the
issuance and delivery of the Bonds, the levy and collection of taxes and other revenues to pay the principal
and interest thereon, the proceedings and authority under which the Bonds are issued, or the validity of the
Bonds.
Conflicts of Interest
All or a portion of the fees of the Underwriter and Bond Counsel are contingent upon the issuance and sale of
the Bonds. In addition, Bond Counsel from time to time serves as counsel to the Underwriter with respect to
bonds issued by issuers other than the City. None of the Members of the Commission or other officers of the
City have any conflict of interest in the issuance of the Bonds that is prohibited by applicable law.
Underwriting
The Bonds are being purchased by Seattle Northwest Securities Corporation, the Underwriter. The purchase
contract provides that the Underwriter will purchase all of the Bonds, if any are purchased, at a price of
percent of the par value of the Bonds The Bonds will be reoffered at an average price of percent of the
par value of the Bonds. After the initial public offering, the public offering prices may be varied from time to
time.
Concluding Statement
All estimates, assumptions, statistical information and other statements contained herein, while taken from
sources considered reliable, are not guaranteed by the Underwriter or the City. So far as any statement herein
includes matters of opinion, or estimates of future expenses and income, whether or not expressly so stated,
they are intended merely as such and not as representations of fact.
The information contained herein should not be construed as representing all conditions affecting the City or
the Bonds. Additional information may be obtained from the City. The statements relating to the Bond
Ordinance are in summarized form, and in all respects are subject to and qualified in their entirety by express
reference to the provisions of such document in its complete form.
26
The agreements of the City are set forth in such documents, and the information assembled herein is not to be
construed as a contract with the Owners of the Bonds Information with respect to the City set forth in this
Official Statement has been supplied by the City, and the Underwriter has relied on the City with respect to
the accuracy and sufficiency of such information.
27
Appendix A
Form of Opinion of Bond Counsel
Appendix B
Book -Entry Transfer System
THE DEPOSITORY TRUST COMPANY
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK ENTRY -ONLY ISSUANCE
(Prepared by DTC-- bracketed material may apply only to certain issues)
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 Security certificate will be issued for [each issue
of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC.
[If, however, the aggregate principal amount of [any] issue exceeds $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
highest rating: AAA. 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 and www.dtc.org.
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. 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
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 (or a successor securities depository). In that event, Security certificates will be printed and
delivered to DTC.
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.
[03 /08]
Appendix C
2007 Audited Financial Statements