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HomeMy WebLinkAboutFS 2011-09-20 COMPLETE AGENDA PACKETCity of Tukwila Distribution: K. Hougardy Finance and Safety 3. D Hernandez D. Robertson Committee A. Ekberg Mayor Haggerton S. Hunstock O Kathy Hougardy, Chair P. McCarthy O Joan Hernandez C. o'Raherty S. Kerslake O Dennis Robertson K. Mate] AGENDA TUESDAY, SEPTEMBER 20, 2011 CONFERENCE ROOM #3, 5:00 PM Item Recommended Action Page 1. PRESENTATION(S) 2. BUSINESS AGENDA a. Advertising agreement with Bonneville International for Seattle Southside. Katherine Kertzman, Tourism Manager b. Refunding of the 2003 General Obligation Bonds. Peggy McCarthy, Acting Finance Director c. Early redemption of 1995 revenue bonds. Peggy McCarthy, Acting Finance Director d. Revenue Generating Regulatory License Non Profit Fee Analysis. Jennifer Ferrer, Senior Fiscal Coordinator 3. ANNOUNCEMENTS 4. MISCELLANEOUS a. Forward to 9/26 C.O.W. Pg.1 and 10/3 Regular Mtg. b. Forward to 9/26 C.O.W. Pg.9 and 10/3 Regular Mtg. c. Information only Pg.31 d. Information only Pg.35 Next Scheduled Meeting: Tuesday, October 4, 2011 S The City of Tukwila strives to accommodate individuals with disabilities. Please contact the City Clerk's Office at 206 433 -1800 or (tukclerk @tukwilawa.gov) for assistance. x City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton FINANCE AND SAFETY COMMITTEE FROM: Katherine Kertzman TOURISM PROGRAM MANAGER DATE: September 14, 2011 SUBJECT: Multiple year multiple media advertising agreement with Bonneville International ISSUE The Council is being asked to authorize the Mayor to sign a multiple year multiple media advertising agreement with Bonneville International on behalf of Seattle Southside Visitor Services (SSVS). BACKGROUND SSVS is nearing completion of an exclusive 5 months multiple media advertising beta test with Bonneville International that includes on -air commercials during prime daytime drive times on KIRO -FM and KTTH -AM radio, on -line banner ads for MyNorthwest.com and RSS feed from SeattleSouthside.com /special deals to NorthwestTraveI Deals. com and utilization of an opt -in database collected through NorthwestTravel Deals. com to reconnect with prospects with e- communications and promos from Seattle Southside. The attached materials are from the SeaTac Hotel Motel Advisory Committee review providing the background information of the beta test outcomes. Seattle Southside.com continues to be one of SSVS' most successful marketing tools used to reach potential travelers, providing them with visitor information that generate sales leads. Consistently marketing the website in a variety of ways is the key to gaining exposure and getting a consistent flow of traffic into the website. Bonneville is an award winning, dynamic media company with radio, television, online, satellite, and advertising properties in Los Angeles, Seattle, Phoenix, and Salt Lake City. The company has a long- standing reputation and is known industry-wide for its innovative business model, its values- oriented programming, and for its nationally recognized commitment to serving the communities where it broadcasts. Through a multi -media strategy of radio commercials directs listeners to SeattleSouthside.com for details of Seattle Southside events and to MyNWtraveldeals.com for details regarding special offers available in Seattle Southside. MyNWtraveldeals.com in turn provides links to every page on the SSVS website that promotes a special offer. The SSVS web pages in turn allow visitors to book packages through our hotels. This strategy has garnered much success evidenced by the growth of: monthly unique website visits, page view rankings for packages and promotions, requests received through the SeattleSouthside.com website, conversions (hotel reservations made through the website). INFORMATIONAL MEMO Page 2 SeattleSouthside.com is currently the 4 most visited destination on the MyNorthwest.com website year to date. Additionally, the campaign offers excellent visibility throughout Western Washington with radio promotions for SSVS deals and local events such as the Backyard Wildlife Festival, Blues and Brews Festivals, and more. Bonneville estimated the radio and digital campaign for each promo or event reaches 350,000 people 2 -3 times each. Over 80% of the visits to the Seattle Southside website from the MyNorthwest.com website during the Beta period were from first -time visitors meaning this strategy is drawing people that were not finding the website through other means. Plus visitors stayed on the Seattle Southside website an average of 2.75 minutes and visited more than three pages long enough to make a positive decision to click to a lodging venue's website or to click to the reservation booking page. In addition, the strategy produced direct traffic to the Seattle Southside website through voice referrals in radio promotions. However, this traffic is more difficult to quantify but general awareness is achieved as is evidenced by the increase in attendees for the Backyard Wildlife Event, and more. The campaign began in April 2011 and ran for 5 months as a beta test at a cost of $6,000 monthly totaling $30,000. The campaign was funded jointly by lodging tax from the 4 SSVS participating cities: Tukwila, SeaTac, Kent and Des Moines. Seattle Southside has noted the following: Both the radio spots and the website layout are very well executed. Listener and website visitor volumes are significantly higher than similar radio stations and websites. Both the radio spots and website promote Seattle Southside area events and special offers. The website links to every page on Seattle Southside's website that promotes a special offer. Links are updated nightly via an automated RSS feed. Seattle Southside staff does not need to expend time reentering items that are already entered on the Seattle Southside website. Links pass Google Page Rank to Seattle Southside web pages. Links from the website to Seattle Southside began in mid -April 2011. Since that time the links have produced 487 visits. 83.16% of these visits were new visits to the Seattle Southside website. The visits have resulted in an average of 3.16 pages /visit and 2 minutes 46 seconds on site (long enough to make a positive decision or to link out to partner sites). Lodging properties have reported reservations that specifically were generated from visitors that originated from this website. As of August 3 rd Bonneville has procured an email list of 730 members. Once this number reaches 1,000 an e- newsletter will be launched and Seattle Southside events and special offers will be promoted in this additional medium. It is expected that this will occur before year end. ANALYSIS The second phase of the campaign will begin Nov. 2011 at $6,000 a month for 14 months not to exceed $84,000. Staff was able to negotiate lock in pricing, bonus radio time and an exclusivity M2011 Info MemosWemo to Fin Safety Boneville 2011 (Version4).docx 2 INFORMATIONAL MEMO Page 3 agreement on Northwest Travel Deals for each paid month locking out Seattle, Renton, Federal Way, Auburn SSVS's nearby competition. The Bonneville International multiple media advertising strategies were reviewed by the SeaTac Hotel Motel Tax Advisory Committee on June 8, 2011 and recommended for continuance. The agreement is scheduled to be reviewed at the Monday, September 19, 2011 Tukwila Lodging Tax Advisory Committee meeting. Budget impacts: There is no additional budget request for this item. The cost for this work is included within the Council approved 2011 -2012 Budget; some months will be paid by "SeaTac Only" account that is funded 100% by the City of SeaTac; the balance will be paid out of the "Joint Media Buy" account that is funded by the 4 SSVS participating cities: Tukwila, SeaTac, Kent and Des Moines. However, because the proposal amount is over $40,000, it requires Council approval. Since this is a tourism program item, the costs will be paid out of lodging taxes, not the City's general fund. RECOMMENDATION The Council is also asked to consider this item at the September 26, 2011 Committee of the Whole meeting and subsequent October 3, 2011 Regular meeting. ATTACHMENTS Bonneville International Agreement Website Activity Report WA2011 Info Memos\Memo to Fin Safety Boneville 2011 (Version4).docx 3 rd Continuing Campaign Agreement Sept -Oct 2011 Campaign - delivery total and Approximate Value Total /mo $23,500/mo Value On -Air 20 :10 commercials during prime dayparts primarily in morning drive. 20 $3,000 Northwest Travel Deals radio commercials - special mentions of your specific events or packages Over the radio 45+ $6,500 Over the Stream 100+ $1,500 On -Line Dedicated SSS 300X600 Banner Ads on MyNorthwest.com above the fold. These can include info on upcoming events /or ongoing Fly -Fresh $5,000 300,000+ impression per month. NorthwestTravelDeals.com $7,500 RSS Feed from your web specials section to our nwtraveldeals.com special deals section. RSS Feed from your web calendar of events section to our nwtraveldeals.com events and activities section. Featured vacation give away package for one month both on -line and on air. Two months a year. Northwest Travel Deals Exclusivity for each paid month/ locking out - Seattle, Renton, Federal Way, Auburn Estimated Total Delivery per month Net reach 490,000 Impressions 1,200,000 ++ Seattle Southside Net Investment September and October 2011 Lock in pricing, exclusivity, & get bonus $6,000 net per month. Agreement Payment the first of each month. Signed Date PDF created with pdfFactory trial version www.pdffactory.com EKID N - S• T A L K 770 e 6) Continuing Campaign Agreement Nov '11 - Dec '12 Total /mo $23,500/mo Value Campaign - delivery total and Approximate Value On -Air 20 :10 commercials during prime dayparts primarily in morning drive. 20 $3,000 Northwest Travel Deals radio commercials - special mentions of your specific events or packages Over the radio Over the Stream On -Line Dedicated SSS 300X600 Banner Ads on MyNorthwest.com above the fold. These can include info on upcoming events /or ongoing Fly -Fresh 45+ 100+ $6,500 $1,500 $5,000 300,000+ impression per month. NorthwestTravelDeals.com $7,500 RSS Feed from your web specials section to our nwtraveldeals.com special deals section. RSS Feed from your web calendar of events section to our nwtraveldeals.com events and activities section. Featured vacation give away package for one month both on -line and on air. Two months a year. Northwest Travel Deals Exclusivity for each paid month/ locking out - Seattle, Renton, Federal Way, Auburn Estimated Total Delivery per month Net reach 490,000 Impressions 1,200,000 ++ Seattle Southside Net Investment November 2011 through December 2012 Lock in pricing, exclusivity, & get bonus Bonus - 100 :10 commercials 5a -10p M -Su over the 14 months. Agreement Payment the first of each month. Signed Date PDF created with pdfFactory trial version www.pdffactory.com II KTT1 NEWS •'TALK 770 $6,000 net per month. Website Activity Report Seattle Southside Monthly Unique Visitors 35,D00 30,000 25,000 20,DOO Ar 15,000 10.000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 4A 2007 5706 5494 5 152 2008 5,840 5,576 6,812 7,958 8,133 9.467 9509 8.148 6,317 5.304 6.856 6,811 A 2009 7,018 6.724 8 136 7.823 8 173 15 095 15,801 15832 12.792 12,210 12,087 11 058 —6-2010 11,867 11,243 12.576 11.763 12,072 10 13 326 21,935 18.218 20A84 20073 19.094 2011 29.495 24 ,796 26,213 30,460 30,332 31 098 31,839 30008 x City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance Safety Committee FROM: Peggy McCarthy, Acting Finance Director DATE: September 14, 2011 SUBJECT: Refunding of Limited Tax General Obligation Bonds 2003 ISSUE Approve the refunding of Limited Tax General Obligation Bonds 2003. BACKGROUND The City issued $12,050,000 of limited tax general obligation bonds in 2003 to finance Arterial Street Fund -104 capital improvements, the South Park Bridge transfer and various other projects, and to finance the construction of the golf course clubhouse. Of the total issue, $6,277,500 was allocated to the Arterial Street Fund -104 and $5,772,500 was allocated to the Golf Course Fund -411. The outstanding balance of these bonds is currently $8,930,000 with $5,691,175 owing on the arterial street allocation and $3,238,825 owing on the golf course allocation. Since these bonds cannot be called, or redeemed, until December 1, 2013, the refunding would defease, or set aside sufficient funds from the refunding proceeds, to pay -off the bonds maturing through December 13, 2013 and then to pay the redemption price (face value) for the bonds remaining at December 1, 2013. At December 1, 2013, $7,270,000 of the bond issue will be outstanding with $4,633,241 of the arterial street allocation outstanding and $2,636,759 of the golf course allocation outstanding. If the bonds are refunded, the new bonds would not be available for early redemption until December 1, 2022. The net benefit to the City of this refunding $122,376 for the 411 Golf Course Fund, and $215,037 for the 104 Arterial Street Fund, for an estimated total savings of $337,413. DISCUSSION The City will benefit financially by refunding these bonds. If early redemption of the golf course bond allocation is being considered, the arterial street portion of the bond issue could be refunded now and the golf course portion of the bond issue could be redeemed on December 1, 2013. The outstanding balance of the golf course portion of the bond issue would be $2,636,759 on December 1, 2013. RECOMMENDATION The Council is being asked to consider this item at the September 26, 2011 Committee of the Whole meeting and the subsequent October 3, 2011 Regular Meeting. ATTACHMENT Draft of bond ordinance W A2011 Info Memos \Info Memo Refunding of GO Bonds 2003 Funds 209 411.docx W i" A Et 7 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, RELATING TO CONTRACTING INDEBTEDNESS; PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF NOT TO EXCEED PAR VALUE OF LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2011, TO PROVIDE THE FUNDS WITH WHICH -TO CARRY OUT AN ADVANCE REFUNDING OF THE CALLABLE PORTION OF THE CITY'S LIMITED TAX GENERAL OBLIGATION BONDS, SERIES 2003A, AND TO PAY THE ADMINISTRATIVE COSTS OF THE REFUNDING AND THE COSTS OF ISSUANCE AND SALE OF THE BONDS; AUTHORIZING THE EXECUTION OF AN AGREEMENT WITH U.S. BANK NATIONAL ASSOCIATION, AS REFUNDING TRUSTEE; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE OUTSTANDING BONDS TO BE REFUNDED; FIXING THE TERMS AND COVENANTS OF THE BONDS; PROVIDING FOR RELATED MATTERS; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, pursuant to Ordinance No. 2027, the City heretofore issued the 2003A Bonds, and by that ordinance reserved the right to redeem the 2003A Bonds prior to their maturity on December 1, 2013, at a price of par plus accrued interest to the date fixed for redemption; and WHEREAS, there are presently outstanding $7,270,000 par value of 2003A Bonds maturing on December 1 of each of the years 2014 through 2021, inclusive, and 2023, and bearing various interest rates from 3.95% to 4.65% (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 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; and 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 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 other money of the City, if necessary]; and W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 1 of 19 11 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: "2003A Bonds" means the City's $9,850,000 par value Limited Tax General Obligation Bonds, Series 2003A, issued for the purpose of providing funds with which to reimburse itself for a part of the cost of transferring certain property between the City and King County, to pay or reimburse itself for a part of the cost of making various arterial street improvements, to redeem the City's outstanding Limited Tax General Obligation Bond Anticipation Note, 2000 (Foster Golf Course) for other City purposes, and to pay the costs of issuance of the Series 2003A Bonds. "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. "Authorized Denomination" means $5,000 or any integral multiple thereof within a maturity. "Beneficial Owner" means the owner of any beneficial interests in the Bonds. "Bond Fund" means the Limited Tax General Obligation Refunding Bond Fund, 2011, created by this ordinance for the payment of the Bonds. "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of the Bonds. "Bond Registrar" means the Fiscal Agent. "Bonds" means the par value Limited Tax General Obligation Refunding Bonds, 2011; 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 the laws of the State. "City Council" means the governing body of the City, acting in its legislative capacity. "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. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 2 of 19 12 "Finance Director" means the Finance Director of the City or the successor officer. "Fiscal Agent" means the fiscal agent of the State, 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. "MSRB" means the Municipal Securities Rulemaking Board. "Owners" means, without distinction, the Registered Owner(s) and the Beneficial Owner(s). "Refunded Bonds" means the outstanding Limited Tax General Obligation Bonds, Series 2003A, of the City maturing in the years 2014 through 2021, inclusive, and in 2023, issued pursuant to Ordinance No. 2027, the refunding of which has been provided for by this ordinance. "Refunding Plan" means: (a) the placement of sufficient proceeds of the Bonds which, with other money of the City, if necessary, will acquire the Acquired Obligations to be deposited, with cash, if necessary, with the Refunding Trustee, (b) the payment of the principal of and interest on the Refunded Bonds when due up to and including December 1, 2013, and the call, payment, and redemption on December 1, 2013, of all of the then outstanding Refunded Bonds at a price of par; and (c) 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. "Registered Owner" means the person in whose name a Bond is registered on the Bond Register. For so long as the City utilizes the book —entry system for the Bonds under the Letter of Representations, Registered Owner shall mean DTC. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrn Page 3 of 19 13 "Registration Ordinance" means City Ordinance No. 1338 establishing a system of registration for the City's bonds and other obligations. "Rule 15c2 -12" means Rule 15c2 -12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. "SEC" means the United States Securities and Exchange Commission. "State" means the State of Washington. "Term Bonds" means those Bonds maturing in "Undertaking" means the continuing disclosure agreement set forth in Section of this ordinance. "Underwriter" means Seattle- Northwest Securities Corporation of Seattle, Washington. Section 2. Recitals and Findings. 1. Pursuant to Ordinance No. 2027, the City heretofore issued the 2003A Bonds, and by that ordinance reserved the right to redeem the 2003A Bonds prior to their maturity on December 1, 2013, at a price of par plus accrued interest to the date fixed for redemption. 2. There are presently outstanding $7,270,000 par value of 2003A Bonds maturing on December 1 of each of the years 2014 through 2021, inclusive, and 2023, and bearing various interest rates from 3.95% to 4.65% (the "Refunded Bonds 3. 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 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. 4. 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 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 other money of the City, if necessary]. 5. The City Council deems it to be in the best interests of the City to issue and sell the Bonds to pay the cost of carrying out the Refunding Plan. Section 3. 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 2011 is $4,775,732.512. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 4 of 19 14 A. The City has outstanding general indebtedness as follows: (i) Limited tax general obligation bonds[, notes] [,leases] [and conditional sales contracts] outstanding in the principal amount of which is incurred within the limit of up to 1Y2% of the value of the taxable property within the City permitted for general municipal purposes. (ii) Unlimited tax general obligation bonds for capital purposes only [or notes] outstanding in the principal amount of for general municipal purposes; for City -owned water, artificial light, and sewers; and for acquiring or developing open space, park facilities, and capital facilities associated with economic development. The debt described in this paragraph is incurred with the approval of the requisite number of the City's qualified voters, within the limit of up to 2Y2% of the value of the taxable property within the City for general municipal purposes (when combined with the outstanding limited tax general obligation indebtedness), 2%2% for utility purposes and 2Y2% for open space and economic development purposes. B. The amount of indebtedness authorized by this ordinance is and is issued within the limitation permitted for general municipal purposes without a vote. Section 4. Purpose and Authorization of Bonds. The City shall borrow money on the credit of the City and issue negotiable limited tax general obligation refunding bonds evidencing that indebtedness in the amount of to finance the cost of the Refunding Plan and to pay the costs of issuance and sale of the Bonds. Section 5. Description of Bonds. The Bonds shall be called the City of Tukwila, Washington, Limited Tax General Obligation Refunding Bonds, 2011. The Bonds shall be issued in the aggregate principal amount of shall be dated their date of initial delivery to the Underwriter; shalt be in Authorized Denominations; and shall be numbered separately in the manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification. The Bonds 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, 2012, to the maturity or earlier redemption of the Bonds; and shall mature or be subject to mandatory redemption on December 1 in years and amounts and bear interest at the rates per annum as set forth in Exhibit A, which is attached to this ordinance and incorporated by this reference. The interest rate or rates and the maturity schedule, including the designation of Term Bonds, if any, shall be set forth in the Bond Purchase Contract consistent with Section 18; however, the net interest cost for the Bonds shall not exceed a weighted average rate of [5.0]% per annum. Section 6. Bond Registrar; Registration and Transfer of Bonds. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 5 of 19 15 A. Registration of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and shall be recorded on the Bond Register. B. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond Register shall contain the name and mailing address of the Registered Owner of each Bond and the principal amount and number of each of the Bonds held by each Registered Owner. 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's Registration Ordinance. 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 either a Registered or Beneficial 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 Beneficial Owners. 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. C. DTC and the Book Entry System. 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, except for the purpose of the City's undertaking herein to provide continuing disclosure, shall not mean the Beneficial Owners. Registered ownership of such Bonds, or any portions thereof, may not thereafter be W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 6 of 19 I. transferred except: (i) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable 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 7. Form and Execution of Bonds. The Bonds shall be prepared 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: "Certificate Of Authentication. This Bond is one of the fully registered City of Tukwila, Washington, Limited Tax General Obligation Refunding Bonds, 2011, described in the Bond Ordinance." The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. If any officer whose manual or 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 manual or 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 8. Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. For as long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and interest W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 7 of 19 17 on the Bonds shall be made in the manner set forth in the Letter of Representations. If the Bonds cease to be in book entry-only form, interest on the Bonds shall be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to the Registered Owners at the addresses appearing on the Bond Register on the 15th day of the month preceding the interest payment date or by electronic transfer on the interest payment date. The City shall not be required to make electronic transfers except to a Registered Owner of Bonds pursuant to a request in writing (and at the sole expense of that Registered Owner) received at least 10 days before an 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. Section 9. Redemption Provisions and Open Market Purchase of Bonds. A. Optional Redemption. The Bonds maturing in the years 2012 through 2021, inclusive, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Bonds maturing on or after December 1, 2022, prior to their stated maturity dates at any time on or after December 1, 2021, as a whole or in part (within one or more maturities selected by the City), at par plus accrued interest to the date fixed for redemption. B. Mandatory Redemption. Bonds maturing in 20_ are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption at par plus accrued interest on December 1 in years and amounts as set forth in Exhibit A. If the City redeems under the optional redemption provisions, purchases in the open market or defeases Term Bonds, the par amount of the Term Bonds so redeemed, purchased or defeased (irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for those Term Bonds. The City shall determine the manner in which the credit is to be allocated and shall notify the Bond Registrar in writing of its allocation prior to the earliest mandatory redemption date for that maturity of Term Bonds for which notice of redemption has not already been given. C. Partial Redemptions. Portions of the principal amount of any Bond, in any Authorized Denomination, may be redeemed. If less than all of the principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the Registered Owner, without charge, a new Bond (or Bonds, at the option of the Registered Owner) of the same maturity and interest rate in any Authorized Denomination in the aggregate principal amount remaining unredeemed. D. Open Market Purchase. The City further 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 plus accrued interest to the date of purchase. E. Selection of Bonds for Redemption. If fewer than all of the outstanding Bonds within a maturity are to be redeemed prior to maturity, selection of Bonds for W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 8 of 19 in redemption shall be randomly within a maturity in such manner as the Bond Registrar shall determine. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of Representations. F. Cancellation of Bonds. All Bonds purchased or redeemed under this section shall be canceled. G. Notice of Redemption. While the Bonds are held by DTC in book -entry only form, any notice of redemption shall be given at the time, to the entity and in the manner required by DTC in accordance with the Letter of Representations, and the Bond Registrar shall not be required to give any other notice of redemption. If the Bonds cease to be in book -entry only form unless waived by any Registered Owner of the Bonds to be redeemed, the City shall cause notice of any intended redemption of Bonds to be given by the Bond Registrar not less than 20 nor more than 60 days prior to the date fixed for redemption by first -class mail, postage prepaid, to the Registered Owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the Registered or Beneficial Owner of any Bond. In the case of an optional redemption, the notice may state that the City retains the right to rescind the redemption notice and the related optional redemption of Bonds by giving a notice of rescission to the affected Registered Owners at any time prior to the scheduled optional redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB, consistent with the Undertaking, to any nationally recognized rating agency which at the time maintains a rating on the Bonds at the request of the City, and to such other persons and with such additional information as the Finance Director shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. H. Effect of Redemption. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption, except in the case of a rescinded optional redemption as described above, or unless the Bond or Bonds called are not redeemed when presented pursuant to the call. I. Failure To Redeem Bonds. If any Bond is not redeemed when properly presented at its maturity or date set for redemption, the City shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or date set for redemption until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund and the Bond has been called for payment by giving notice of that call to the Registered Owner. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 9 of 19 19 Section 10. 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. 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. Section 11. Refunding of the 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. A sufficient amount of the proceeds of the sale of the Bonds, 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. 2027 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 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 W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 10 of 19 7 Bonds or 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 dates of the Bonds and the Refunded Bonds, as applicable, and that the City obtain, at its expense: (1) 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 (2) 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. 2027, 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, certification fees, 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 or 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 [[Finance Director 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 or 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 governing the exclusion of interest on the Bonds from gross income for federal income tax purposes. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 11 of 19 21 Section 12. Call for Redemption of the Refunded Bonds. The City calls for redemption on December 1, 2013, all of the Refunded Bonds at 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. 2027 in order to effect the redemption prior to their maturity of the Refunded Bonds. Section 13. City Findings with Respect to Refunding. Prior to the issuance of the Bonds, the Finance Director must find and determine, on behalf of the City, that the issuance, sale and delivery of the Bonds will effect a net present value savings to the City and its taxpayers of at least [5.0 (based on the amount of the refunded bonds), which the City Council determines is a substantial savings and is in the best interest of the City and in the public interest. In making such finding and determination, the Finance Director shall give consideration to the fixed maturities of the Bonds and the Refunded Bonds, the costs related to the issuance, sale and delivery of the Bonds and the known earned income from the investment of the proceeds of the issuance and sale of the Bonds used in the Refunding Plan pending payment and redemption of the Refunded Bonds. Prior to the issuance of the Bonds, the Finance Director must further find and determine that the money to be deposited with the Refunding Trustee for the Refunded Bonds in accordance with Section 11 of this resolution will discharge and satisfy the obligations of the district under Ordinance No. 2027 with respect to the Refunded Bonds, and the pledges, charges, trusts, covenants and agreements of the District therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed to be outstanding under Ordinance No. 2027 immediately upon the deposit of such money with the Refunding Trustee. Section 14. Tax Covenants; Designation of Bonds as "Qualified Tax Exempt Obligations." A. Preservation of Tax Exemption for Interest on Bonds. The City covenants that it will take all actions necessary to prevent interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds 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 requirements of Section 148 of the Code are applicable to the Bonds, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with the Bonds, 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 W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 12 of 19 22 interest on the Bonds from being included in gross income for federal income tax purposes. B. 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 15. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to the laws of the State 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 "government obligations" (as defined in chapter 39.53 RCW, as now or hereafter amended) 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. 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. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 13 of 19 iK Section 16. Bond Fund and Deposit of Bond Proceeds. The Bond Fund is hereby created and established in the office of the Finance Director as a special fund designated the Limited Tax General Obligation Refunding Bond Fund, 2011, for the purpose of paying principal of and interest on the Bonds. All taxes and other amounts allocated to the payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund. Section 17. Undertaking to Provide Continuing Disclosure. To meet the requirements of paragraph (b)(5) of Rule 15c2 -12, as applicable to a participating underwriter for the Bonds, the City makes the following written Undertaking for the benefit of holders of the Bonds: A. Undertaking to Provide Annual Financial Information and Notice of Listed Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB: (i) Annual financial information and operating data of the type included in the final official statement for the Bonds and described in subsection (b) of this section "annual financial information (ii) Timely notice (not in excess of 10 business days after the occurrence of the event) of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 TEB) or other material notices or determinations with respect to the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined in Rule 15c2 -12; (13) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 14 of 19 24 (iii) 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. B. Type 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 (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles applicable to State local governmental units such as the City, as such principles may be changed from time to time, 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; (2) outstanding general obligation bonds; (3) assessed valuation for the fiscal year; (4) regular property tax levy rate and regular property tax levy rate limit for the fiscal year; and (5) general fund revenues from other major tax sources; (ii) Shall be provided not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending December 31, 2012; and (iii) May be provided in a single or multiple documents, and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. C. Amendment of Undertaking. The Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, rating agency or the MSRB, under the circumstances and in the manner permitted by Rule 15c2 -12. The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. D. Beneficiaries. The Undertaking evidenced by this section shall inure to the benefit of the City and any Beneficial Owner 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 Rule 15c2 -12 W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 15 of 19 25 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 the MSRB. F. Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with the Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with the Undertaking shall constitute a default in respect of the Bonds. The sole remedy of any Beneficial Owner of a Bond shall be to take such actions as that Beneficial Owner 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 Responsible 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 Rule 15c2 -12, including, without limitation, the following actions: (i) Preparing and filing the annual financial information undertaken to be provided, (ii) Determining whether any event specified in subsection (a) has occurred, assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any required notice of its occurrence, (iii) Determining whether any person other than the City is an "obligated person" within the meaning of Rule 15c2 -12 with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of listed events for that person in accordance with Rule 15c2 -12; (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 (v) Effecting any necessary amendment of the Undertaking. Section 18. Execution of Bond Purchase Contract; Delegation of Final Bond Terms. The Underwriter is expected to present a purchase contract (the "Bond Purchase Contract to the City offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract. Pursuant to the terms of RCW 39.46.040, the Finance Director is hereby authorized to serve as the designated W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 16 of 19 7 representative of the Mayor and the City Council and to accept, on behalf of the City, the Bond Purchase Contract consistent with the terms of this ordinance. 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. Section 19. Official Statement. The City has been provided with copies of a preliminary official statement prepared in connection with the sale of the Bonds. For the sole purpose of the Underwriter's compliance with paragraph (b)(1) of Rule 15c2 -12, the Finance Director is authorized on behalf of the City, to "deem final" that Preliminary Official Statement as of its date, except for the omission of information permitted to be omitted by Rule 15c2 -12 and ratifies the distribution by the Underwriter of that preliminary official statement to potential purchasers of the Bonds. The City authorizes and approves the preparation, execution by proper City officials and delivery to the Underwriter of a final official statement for the Bonds, in the form of the preliminary official statement, with such modifications and amendments thereto as shall be deemed necessary or desirable by the City. The City authorizes and approves the distribution by the Underwriter of that final official statement to potential purchasers and purchasers of the Bonds. Section 20. Supplemental Ordinances. The City Council from time to time and at any time may pass an ordinance or ordinances supplemental to this ordinance which supplemental ordinance or ordinances thereafter shall become a part of this ordinance, for any one or more of the following purposes: A. To add to the covenants and agreements of the City in this ordinance such other covenants and agreements thereafter to be observed, which shall not adversely affect the interests of the holders and owners of the Bonds, or to surrender any right or power herein reserved to or conferred upon the City. B. To make such provisions for the purpose of curing any ambiguities or of curing, correcting or supplementing any defective provision contained in this ordinance in regard to matters or questions arising under such ordinances as the City Council may deem necessary or desirable and not inconsistent with such ordinances and which shall not materially adversely affect the interest of the holders and owners of the Bonds. Section 21. General Authorization and Ratification. The Mayor, City Administrator, Finance Director, and other appropriate officers of the City are severally authorized and directed to take any actions and to execute documents as in their judgment may be necessary or desirable to carry out the terms of, and complete the transactions contemplated by, this ordinance and the Bond Purchase Contract (including everything necessary for the prompt delivery of the Bonds to the Underwriter and for the proper application, use and investment of the proceeds of the sale thereof), and all actions heretofore taken in furtherance thereof and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 17 of 19 27 Section 22. Severability. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. Section 23. Effective Date of Ordinance. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 2011. ATTEST /AUTHENTICATED: Christy O'Flaherty, CMC, City Clerk APPROVED AS TO FORM BY Shelley M. Kerslake, City Attorney Jim Haggerton, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number: Attachment: Exhibit A W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 18 of 19 W EXHIBIT A Bond Maturitv Schedule: Maturity Years I Amounts I Interest Rates Mandatory Redemption Schedule: Term Bonds Maturing Mandatory Mandatory Redemption Redemption Years Amounts *Maturity Term Bonds Maturing Mandatory Mandatory Redemption Redemption Years Amounts *Maturity W: Word Processing \Ordinances\2003 Bond Refunding 9 -14 -2011 PM:mrh Page 19 of 19 29 30 City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance Safety Committee FROM: Peggy McCarthy, Acting Finance Director DATE: September 14, 2011 SUBJECT: Early Redemption of Revenue Bonds 1995 ISSUE On September 13, 2011, the Utilities Committee approved the early redemption of Revenue Bonds 1995 and unanimously agreed to move this item forward to the September 19, 2011 Committee of the Whole Council meeting. This memorandum is for your information only. BACKGROUND The City issued $4,500,000 of revenue bonds in 1995 to finance Water Fund -401 capital improvements. The outstanding balance of these bonds is $1,370,000 (face value) with the next mandatory bond redemption occurring February 1, 2012 and the last mandatory bond redemption occurring February 1, 2015. An optional redemption clause allows the City to redeem, or pay -off, these bonds at 100% of face value on February 1, 2007 and thereafter. Interest payments that would be made over this three year period (February 1, 2012 to February 1, 2015) should the bonds not be redeemed before the next interest payment date total $188,813 and represent a 4.6% per annum interest rate ($188,813 interest $1,370,000 balance 3 year period). If the bonds were redeemed on November 1, 2011, the total pay -off would approximate $1,392,690 comprised of the bond principal of $1,370,000 and the estimated accrued interest of $22,690. Under this scenario, the interest cost savings to the City would be $166,123 (total interest payments of $188,813 due February 1, 2012 to February 1, 2015 less accrued interest from August 1, 2011 through November 1, 2011 of $22,690). The Water Fund -401 had $4 million in cash and investments as of July 31, 2011. DISCUSSION The City will benefit financially by early redemption of these bonds. If the $1,370,000 were invested in a 3 -year Treasury note at today's interest rate of .35 $4,795 would be generated in annual investment earnings or $14,385 for the 3 -year period. The net benefit to the City of using these funds to pay -off the bonds would be over $150,000 represented by the bond interest cost savings of $166,123 less the investment earnings opportunity cost of $14,385. RECOMMENDATION For information only ATTACHMENTS Revenue Bond 1995 amortization schedule. Excerpts from the Revenue Bond 1995 Official Statement 31 i995 Revenue Bonds Date Principal i Interest Total Principal 01S 2/1/18S6 EV1/188G 122,770 122,770 �/1/1Q97 14bUUU T2 /ZU 8/1/1087 119,7i _-'----_-f -b7�67 119,711 8/1/1O98 116,418 116418 2/1/1999 00U 811/1988 1l28 8 3/�/2000 17O0OO 1 T1 2,938 1 282,938 3,870,000 0/1/2OO8 109,155 109,155 2/1/20O1 1750OO 1 2/1/2UO2 18�00O 1O5174 8/1/2002- 2/1/20D3 19b00U 8/1/2OD3 BO241 2/1/2O04 2OO,OOO 8 8/1/2004 B1 391 0 91,391 1 30f,391 1 2,905,000 811/2005 H0141 2/1/�U�O --'.UUD �O I 31171 2,680,000 8/1/2O0G 805�� OO51O 2/1/20O7 2��,0O0 �051� 31551O 2/ 8/1/2087 74406 7440� 2/1/2D08 250 744O0 32�40� 2,_1 9 8/1/2OO8 O7�5� �7050 2/1/20U O 8/1/20UQ 0003� GO63S 2/1/2O .000 80G30 -_-.-30 �'08O.00O 8/1 /201 53%11 3 11 2/1/�O11 2QO.0OO �3211 343,211 1��7O.DD0 8/1/2O11 4S381 45381 2/i/2O1- '2 OOO 31O�- ---'_----z 4S�81 35�5�.38� 8/112012 35113 351i 33O.O0O 35 3�O T 8/1/2013 24181 24181 2/1/2Oi4 3��5,0OO 24 379^18 375,000 81112014 1242 1242 4,500,000 3,192,245 DESCRIPTION OF THE BONDS General The Bonds will be issued as fully registered bonds in denominations of $5,000, or integral multiples thereof within a single maturity, will be in the aggregate principal amount of $4,500,000", will be dated June 1, 1995, and will mature on February 1 in the years and in the amounts set forth on the cover page of this Official Statement. The Bonds shall bear interest from their date at the respective rates set forth on the cover of this Official Statement. Interest shall be calculated on the basis of a 360 -day year consisting of twelve 30 -day months, and shall be payable commencing February 1, 1996, and semiannually thereafter on each August 1 and February 1 to the respective dates of maturity of the Bonds. Method of Payment The principal of and interest on the Bonds shall be payable in lawful money of the United States of America to the Registered Owners thereof whose names and addresses appear on the Bond Register. Payment of each installment of interest shall be made to the Registered Owner whose name appears on the Bond Register at the close of business on the fifteenth day of the calendar month preceding each semiannual interest payment date, and shall be paid by check or draft of the Bond Registrar mailed to such Registered Owner on the due date, at the address appearing on the Bond Register, or at such other .address as may be furnished in writing by such Registered Owner to the Bond Registrar. Interest installments may be paid by wire transfer to a Registered Owner of $1,000,000 or more aggregate principal amount of Bonds if a written request of such Registered Owner is submitted to the Bond Registrar at least 10 days prior to the interest payment date. The principal of each Bond shall be paid to the Registered Owner thereof, upon presentation and surrender of each Bond on or after the stated date of maturity, at either of the principal corporate trust offices of the Bond Registrar. The City and the Bond Registrar may deem and treat the Registered Owner of each Bond as the absolute owner of such Bond for the purpose of receiving payments of principal and interest due on such Bond and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Redemption Provisions Optional Redemption. The Bonds maturing in the years 1997 through 2005, inclusive, are not subject- to redemption prior to their stated dates of maturity. The City has reserved the right to redeem and call the Bonds maturing on or after February 1, 2006, prior to their stated maturity, on or after February 1, 2005, in whole or in part (maturities to be selected by the City and by lot within a maturity in such manner as the Bond Registrar shall determine) at any time, at the following prices (expressed as a percentage of the principal amount of the Bonds to be redeemed), plus accrued interest, if any, to the date of redemption: Preliminary, subject to change. El 33 Redemption Dates Redemption Prices February 1, 2005, through January 31, 2006 102% February 1, 2006, through January 31, 2007 101 February 1, 2007 and thereafter 100 Mandatory Sinking Fund Redemption. The Bonds maturing on February 1, 2015, are Term Bonds and are subject to mandatory sinking fund redemption prior to :maturity, in part, by lot in such manner as the Bond Registrar shall determine, at 100 percent of the principal arnount thereof plus accrued interest to the date of redemption, from mandatory sinking fund deposits into the Principal and Interest Account in the years and principal amounts set forth below: Mandatory Sinking Fund Redemption Dates Mandatory Sinking Fund Redemption Amounts February 1, 2008 February 1, 2009 February 1, 2010 February 1, 2011 February 1, 2012 February 1, 2013 February 1, 2014 February 1, 2015 (Maturity) $255,000 270,000 285,000 305,000 320,000 340,000. 365 385,000 Partial Redemptions. In accordance with the preceding two paragraphs, portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple of $5 may be redeemed. If less than all of the principal amount of any Bond is redeemed, upon surrender of such Bond at either of the principal corporate trust offices of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal amount thereof, a new Bond or Bonds, at the option of the Registered Owner, with like maturity and interest rate, in any authorized denomination. Notice of Redemption. Unless waived by the Registered Owner of any Bond to be redeemed, notice of any such redemption shall be sent by the Bond Registrar by first -class mail, postage prepaid, not less than 30 or more than 60 days prior to the date fixed for redemption to the Registered Owner of each Bond to be redeemed at the address shown on the Bond Register, or at such other address as may be furnished in writing by such Registered Owner to the Bond Registrar. Such notice requirement shall be deemed to be complied with when notice is mailed as herein provided, regardless of whether or not it is actually received by the Registered Owner of any Bond. Effect of Redemption. When so called for redemption, the Bonds will cease to accrue interest on the specified redemption date, provided funds for redemption are on deposit at the place of payment at that time, and shall not be deemed to be Outstanding as of such redemption date. Open Market Purchase and Cancellation. The City has reserved the right to purchase the Bonds on the open market at any time and at any price. The Bonds so purchased or redeemed shall be canceled. To the extent the City purchases Term Bonds or redeemed under the optional redemption provisions described above, the City, at its discretion, may reduce the amount of any mandatory 5 34 City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: FROM: DATE: SUBJECT ISSUE Mayor Haggerton Finance and Safety Committee Jennifer Ferrer -Santa Ines, Senior Fiscal Coordinator September 14, 2011 Revenue Generating Regulatory License (RGRL) Information on Non Profit businesses The Finance Department is responding to information requested by members of the Finance and Safety Committee regarding the non profit exemption status in the City and the impact on revenues should that exemption be lifted. BACKGROUND At the June 7, 2011 Finance and Safety Committee meeting, committee members requested additional information from staff regarding the revenue impacts if the City decided to remove the non profit exemption from businesses with certain employee count thresholds as follows: Impact on revenue upon removing the non profit exemption from businesses with more than 20 employees Impact on revenue upon removing the non profit exemption from businesses with more than 50 employees Impact on revenue upon removing the non profit exemption from businesses with more than 75 employees Impact on revenue upon removing the non profit exemption from businesses with more than 100 employees DISCUSSION Tukwila Municipal Code Section 5.62.040.A.1 provides an exemption from the RGRL fee of $55 per full -time equivalent employee for IRS 501(c)(3) tax exempt organizations, governmental entities, non profits operating for religious purposes, as well as civic groups, service clubs and social organizations. The second largest employer in the City is a tax exempt 501(c)(3) organization. There are currently 76 businesses in Tukwila operating under a non profit exemption employing over 4,000 employees. Not including governmental agencies, if all of the businesses who qualified for a non- profit exemption had paid the RGRL fee, the City would have received over $146,000. 35 INFORMATIONAL MEMO Page 2 There are 52 businesses with counts of less than 20 full -time equivalent employees. If these businesses were to be assessed the RGRL fees, it would generate approximately $14,000 in revenues to the City. Of the nine non profit employers in Tukwila with more than 20 but less than 50 full -time equivalent employees, it could produce over $15,000 in revenue from additional RGRL fees. One organization having over 50 but less than 75 full -time equivalent employees would create $3,800 in additional revenue from RGRL assessed fees. There are two governmental entities having over 75 full -time equivalent employees, however, they are excluded from this analysis. There are two Tukwila businesses with over 100 full -time equivalent employees which could generate approximately $114,000 in additional City revenue from RGRL fees. RECOMMENDATION This item is for information only. No recommendation on changes to the RGRL ordinance is made at this time. Any proposed changes by committee members will be incorporated into a future agenda item for the Finance and Safety Committee. ATTACHMENT Non Profit RGRL Analysis Spreadsheet W:12011 Info MemosllnfoMemo_Nonprofit Assessed Fee Analysis REV.doc 36 Exempt Organizations Includes IRS 501 ( c ) (3) organizations, governmental entities, non - proftis, civic groups, service clubs, and social organizations u of Total d of FTE Count Businesses Businesses Employees FTE Count for Businesses less Govtl Agencies 0 5 King County Correction Guild, Kubota Garden Foundation, Teamsters Life w /Dues Trust, Tukwila Skyway Soccer Club, XCIRA, Inc. 5 5 1 7 AFT Washington, Delta Whie Ctr Masonic Lodg, IAMAW Local 2202, Seattle Area Ministries, Somali American Association, Sustainable Works, University of Washington 7 7 2 4 East African Youth Sports, Industrial Areas Fnd NW /IAF, Somali American Autism Speak. United Food & Comm Workers 8 8 3 6 Community 1st Credit Union, Friendz Cafe, Heat & Frost Insulat/Local 7, Seniors Making Art, SW King Co. Chamber of Comm, Teamsters Bldg Assn of Sea 15 15 4 6 Joint Councit'Teamsters #28, NW Minority Suppl Devel Cncl, SES INC, SGI -USA Seattle Culture Ctr, Washington Research Council, Washington State Beef Comm i6 i6 5 3 WA State Auto Dealers Assoc., WA State Liquor Store, Washington Ctr for Nursing 10 10 6 3 Bricklayers/Crftwkrs Local 1, Pacific NW Ironwkrs ApprTrst, Sound Alliance 18 18 7 1 Water District No. 125 7 7 8 3 Cement Masons/Plasterers 528, Family /Children's Ombudsman, Seattle Metro Credit Union 16 16 9 3 ENSO, Salal Credit Union, Watermark Credit Union 27 27 10 2 NTD TV Seattle, Teamsters Local 763 20 20 12 1 BATTELLE MEMORIAL INSTITUTE 12 12 13 1 US Courts 14 1 Academy Schools 14 14 15 2 King County Housing Authorty, Valley View Sewer District - 18 2 Domestic Abuse Women's Netwk, Habitat for Humanity 36 36 19 1 Wash. Cities Insurance Auth. 19 19 20 1 General Teamsters Local 174 20 20 21 2 Laborers Intl. Union of NA, Bethesda Lutheran Commun Inc 42 42 22 2 SPEEA, Washington Schools Risk Management Association 44 44 23 1 Community Schools Collab /CSC 23 23 34 1 Puget Sound Blood Center 34 34 42 1 WA State Nurses Assn., Inc. 42 42 43 1 Stature 43 43 49 1 Teamsters 49 49 60 1 King County Metro 62 1 KCHA 69 1 Sound Mental Health 69 69 70 1 King County Elections 80 2 KCHA, L &I 111 1 King County Metro 132 1 Museum of Flight 132 132 200 1 OHS 340 1 Group Health Cooperative 340 340 500 1 Group Health Cooperative 500 500 664 1 King County Metro - 1100 1 Group Health Cooperative 1100 1,100 (blank) 2 Grand Total 76 Total FTE Count 2,668 250 277 69 - 2,072 (AN Sor prnfitst (23 or Pnrs Es)p) (23 -50 Ernp) 51-'75 En:p) i75 -1S0 E,on ( "10(1 Ernp) $ 146,740.00 $ 13,750.00 $ 15,235.00 $ 3,795.00 $ - $ 113,960.00 • Anything without a number in this column would still be exempt because they are governmental agencies. gu;