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Home My WebLink AboutCOW 2026-07-13 Item 5.B. - Ordinance - 2016 Unlimited Tax General Obligation (UTGO) Bond RefundingCity of Tukwila Thomas McLeod, Mayor Marty Wine, City Administrator ITEM NO. AGENDA BILL Agenda Item 2016 Unlimited Tax General Obligation (UTGO) Refunding Sponsor Aaron BeMiller, Finance Director Legislative History August 10, 2026 Special Meeting Recommended Motion ☐Discussion Only ☒Action Requested MOVE TO adopt an ordinance providing for the issuance and sale of one or more series of unlimited tax general obligation bonds. EXECUTIVE SUMMARY Bond refunding is a financial and debt management strategy governments use to lower interest costs on current debt to reduce debt service costs and save money. Like refinancing a mortgage, the City would issue new debt to pay off, or decrease, current debt. The new debt will include lower interest rates which will reduce interest costs over the remaining life of the bond. As of May 28, 2026, the net present value savings over 10 years is $1,483,239 or a 6.89% savings from the current bond. Bond rates change daily and per policy, we will not continue to pursue a refunding if the overall percent savings falls below 3%. Should rates shift unfavorably before pricing, we have the flexibility to pause the transaction to protect the City’s interests. Staff is requesting this item be forwarded to the July 13, 2026, Committee of the Whole Meeting for further consideration DISCUSSION On November 8, 2016, voters approved a $77.385 million bond measure to implement the City’s Public Safety Plan to include funding a Justice Center, rebuilding three (3) fire stations, and providing fire apparatus and life-safety equipment replacement. In 2016, the City issued UTGO (Unlimited Tax General Obligation) debt in the amount of $32,990,000 with a final maturity in 2036. Payment for this voter approved UTGO debt comes from property owners via an excess levy approved by Council annually. As a UTGO refunding, the savings over the life of the bond will lower the amount of the excess levy property owners pay. The City’s debt policy allows for refunding debt when the following conditions are met a) net present value (NPV), a metric used to compare the present value of future payments, of the overall savings is over 3% and b) the final maturity date of the obligation is not extended. Our refunding strategy meets both of those criteria. The 2016 bonds were issued with a redemption date or “call date” 10-years after issuance. The call date for the 2016 bonds is December 1, 2026. Since the City will be redeeming these bonds as a current refunding (within 90 days of the call date) we can take advantage of issuing tax-exempt bonds. The schedule of events has a bond closing date of September 10, 2026. June 8, 2026 Finance & Governance Committee July 13, 2026 Committee of the Whole 5.B. 66 https://tukwilawa.sharepoint.com/sites/clerksintranet/Council Agenda Items/06-08-26 FIN/Bond Refunding/Agenda Bill_Bond Refunding_Final.docx The finance department has engaged our municipal advisor, Piper Sandler; Bond Counsel, Pacifica Law Group; and underwriter, KeyBanc Capital Markets, to serve as the City’s refunding team. The City, along with the refunding team, began work on this process in May. Key upcoming dates: July 13 – Committee of the Whole Week of July 27 – Bond rating presentation with Standard & Poor’s (S&P) August 6 – Bond rating due from S&P August 10 – Bond Ordinance approved by City Council August 26 – Bond sale date September 10 – Bond closing and delivery of bond proceeds FINANCIAL IMPACT Expenditures: $1.483 million NPV savings over life of bond, as of 5/28/26 Fund Source: Voter approved excess levy. ATTACHMENTS A. Presentation B. Draft Bond Ordinance C. Debt Policy – Resolution No. 2120 67 July 13, 2026 | Bond Issuance Process/Refunding Mechanics City of Tukwila Committee of the Whole Justin Monwai Managing Director +1 206 628-2899 justin.monwai@psc.com 68 01 Debt Profile/Refunding Savings 69 Piper Sandler | 2 Unlimited Tax General Obligation Bonds, 2016 •Original Issuance Amount: $32,990,000 •Principal Amount of Callable Bonds: $21,520,000 •Maturities: December 1, 2027 – 2036 •Average Coupon of 2016 Bonds: 4.62% •Call Date and Price: December 1, 2026 @ par •Assumes tax-exempt current refunding based on interest rates as of July 2, 2026 Summary of Refunding Results Summary of Refunding Results Public Sale Average Annual Savings $180,765 All-In True Interest Cost (TIC)3.28% Nominal Savings $1,814,214 Net PV Savings $1,529,479 % Savings 7.11% 70 Piper Sandler | 3 How Does a Refunding Work? Issuer (City of Tukwila) Year 2023 2024 2025 2026 2027 2028 2029 2030 Existing Bond Schedule Principal Interest •Call Feature determines which bonds are callable. In the example, bonds 2027 through 2030 can be redeemed early. •Bonds can be either advance or current refunded depending on time to call date. December 1, 2026 Call Date Issue Refunding Bonds Proceeds used to fund escrow and call existing bonds at the call date Issuer pays lower interest rates offered by new investors $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 5% 5% 5% 5% 5% 5% 5% 5% Year 2023 2024 2025 2026 2027 2028 2029 2030 Refunding Bond Schedule Principal Interest $500,000 $500,000 $500,000 $500,000 4% 4% 4% 4% 71 02 Bond Issuance Process 72 Piper Sandler | 5 •A bond is a form of a borrowing, similar to but different than a loan •Bonds represent a debt obligation that is being paid back over time •Bondholders typically receive semi-annual payments from the issuer of the bonds over the life of the bonds •At the maturity date of the bond, bondholders are paid back the principal of the bond, along with any interest they are owed •Bonds are typically used for capital projects with a long useful life and can be refunded/refinanced •Publicly sold bonds are purchased from the municipal issuer by an underwriting firm (investment bank) and sold to investors such as money managers, institutional investors and retail What is a Municipal Bond? Investment to finance the project Tax collectionsPrincipal + Interest Repayments Investors Municipal Bond Flow of Funds 73 Piper Sandler | 6 Refunding Team Special Counsel that prepares all legal documents related to the bond issuance Bond Counsel Municipal Advisor Provides fiduciary oversight and helps guide the issuer through the process to protect issuer’s financial interest. Underwriter Investor(s) Escrow Agent Connects the issuer with the investors and can help provide advice on structure, timing and terms. A bank trust department acts as an escrow agent and holds refunding bond proceeds in an escrow account to pay existing bond holders until the call date. Issuer (City of Tukwila) 74 Piper Sandler | 7 Debt Issuance Flow Financing Team •Hire / Call Bond Counsel, Municipal Advisor and Underwriting Firm Develop Plan of Finance •Determine borrowing amount and how it fits with existing and future debt •Where to obtain the funding Prepare Documents •Bond Ordinance •Official Statement •Rating Presentation •Conduct due diligence call Sale •Interest rates are set •Bond Purchase Agreement signed (underwritten) Closing •Funds Available 75 Piper Sandler | 8 •A credit rating is an opinion about the relative risk and potential for default associated with a particular security •A credit rating is expressed in alphanumeric symbols across a spectrum from highest to lowest Overview of Credit Ratings Aaa AAA AAA Aa1 AA+AA+ Aa2 AA AA Aa3 AA-AA- A1 A+A+ A2 A A A3 A-A- Baa1 BBB+ BBB+ Baa2 BBB BBB Baa3 BBB-BBB- Ba1 BB+BB+ Ba2 BB BB Ba3 BB-BB- B1 B+B+ B2 B B B3 B-B- Caa1 CCC+ CCC+ Caa2 CCC CCC Caa3 CCC- CCC- Ca CC CC C C C D D D In v e s t m e n t G r a d e Sp e c u l a t i v e G r a d e Credit Rating Scale by AgencyWhat are they? •A credit rating is not a recommendation to buy, sell or hold a particular security •Ratings are not required, although they are helpful What aren’t they? •There are three primary rating agencies o Moody’s Investors Service o Standard & Poor’s o Fitch Ratings •A rating is an Evaluation of an issuer’s “Willingness” and “Ability” to pay on their debt •Primary categories of evaluation (general obligation): o Governance & management (budgeting practices, policies) o Financial position (liquidity, reserves) o Debt levels (net direct debt per capita) o Local economy (wealth levels, taxpayer concentration, tax revenue volatility) How is a rating assessed? 76 Piper Sandler | 9 Why Are Credit Ratings Important? An issuer’s borrowing cost is primarily made up of: 1)Market interest rates (influenced by global economy, Federal Reserve actions, etc.) 2)Issuer’s “credit spread” (amount of “extra” yield issuers must pay to investors, based on their creditworthiness) -Higher rating = lower credit spread resulting in lower all in borrowing cost -Lower rating = higher credit spread resulting in higher all in borrowing cost Estimated Change in Borrowing Cost for $20 Million General Obligation Bond Issuance (20-Year Maturity) TIC: 4.16% Annual DS: $1.493M Total DS:$29.9M A Rating TIC: 3.90% Annual DS: $1.458M Total DS:$29.2M AAA Rating TIC: 3.99% Annual DS: $1.473M Total DS: $29.4M AA Rating 0.310.09% 0.31%0.17% Interest Rate Savings 77 03 Schedule of Events 78 Piper Sandler | 11 Schedule of Events Date Event Participants Completed Circulate schedule and data requirements request PSC Completed Kickoff call Staff, PSC, BC Completed Distribute first draft Bond Ordinance for review BC Completed Send data requirements for POS BC Completed Materials due for F&G Committee meeting Staff, PSC Completed Comments due on first draft Bond Ordinance All Completed Distribute second draft Bond Ordinance for review BC Completed F&G Committee (5:30 pm) Staff, Council, PSC Completed Comments due on second draft Bond Ordinance All Completed POS data requirements due Staff Completed Distribute final draft Bond Ordinance for review BC Completed Distribute 1st draft POS for review BC Completed Comments due on final draft Bond Ordinance All Completed Materials due for Committee of the Whole meeting Staff, PSC, BC Completed Comments due on 1st draft POS All Completed Send information to S&P PSC Completed Rating presentation distributed for review Staff, PSC July 13 Committee of the Whole (7 pm) Council, Staff, PSC, BC July 13 Distribute 2nd draft POS BC July 24 Comments due on 2nd draft POS All Week of July 27 Practice rating presentation/conference call with S&P Staff, PSC July 31 Bond Ordinance available for Council packets BC Staff: City Staff Council: City Council PSC: Piper Sandler & Co. (Municipal Advisor) BC: Pacifica Law Group LLP (Bond Counsel) UW: KeyBanc Capital Markets (Underwriter) May 2026 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 June 2026 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 July 2026 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 79 Piper Sandler | 12 Schedule of Events Date Event Participants Aug. 3 Distribute 3rd draft POS for review BC Week of Aug. 3 Due diligence call All Aug. 6 Rating(s) due Aug. 10 Bond Ordinance approved by Council (delegated authority) Council, Staff, PSC, BC Aug. 12 Comments due on 3rd draft POS All Aug. 18 Post POS UW, BC Aug. 24 Review market conditions Staff, PSC, UW Aug. 26 Bond Pricing All Sept. 10 Bond Closing and delivery of bond proceeds All July 2026 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 August 2026 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 September 2026 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Staff: City Staff Council: City Council PSC: Piper Sandler & Co. (Municipal Advisor) BC: Pacifica Law Group LLP (Bond Counsel) UW: KeyBanc Capital Markets (Underwriter) 80 CITY OF TUKWILA, WASHINGTON UNLIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2026 ORDINANCE NO. _____ AN ORDINANCE OF THE CITY OF TUKWILA, WASHINGTON, PROVIDING FOR THE ISSUANCE AND SALE OF ONE OR MORE SERIES OF UNLIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $22,000,000 TO REFUND CERTAIN UNLIMITED TAX GENERAL OBLIGATION BONDS OF THE CITY, AND TO PAY COSTS OF ISSUANCE OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF SALE OF THE BONDS; DELEGATING THE AUTHORITY TO APPROVE THE METHOD OF SALE FOR AND FINAL TERMS OF THE BONDS; AND APPROVING RELATED MATTERS AS PROVIDED HEREIN. Passed: August 10, 2026 Prepared By PACIFICA LAW GROUP LLP Seattle, Washington DRAFT 81 CITY OF TUKWILA, WASHINGTON ORDINANCE NO. _____ TABLE OF CONTENTS* Page Section 1. Definitions and Interpretation of Terms ............................................................. 2 Section 2. Findings; Purpose and Authorization of Bonds .................................................. 7 Section 3. Bond Details; Registration, Exchange and Payments ......................................... 8 Section 4. Redemption and Purchase of Bonds ................................................................ 14 Section 5. Form of the Bonds .......................................................................................... 18 Section 6. Execution of the Bonds ................................................................................... 18 Section 7. Refunding Plan; Application of Bond Proceeds ............................................... 19 Section 8. Tax Covenants ................................................................................................ 21 Section 9. Debt Service Fund and Provision for Tax Levy Payments ............................... 23 Section 10. Defeasance ...................................................................................................... 24 Section 11. Sale of the Bonds ........................................................................................... 24 Section 12. Undertaking to Provide Ongoing Disclosure; Covenants ................................. 27 Section 13. Lost or Destroyed Bonds ................................................................................. 28 Section 14. Severability ..................................................................................................... 28 Section 15. Corrections ..................................................................................................... 28 Section 16. Effective Date ................................................................................................. 29 Exhibit A: Form of Bond * This Table of Contents is provided for reference only and does not constitute a part of the Ordinance for which it is provided. 82 ORDINANCE NO. _____ AN ORDINANCE OF THE CITY OF TUKWILA, WASHINGTON, PROVIDING FOR THE ISSUANCE AND SALE OF ONE OR MORE SERIES OF UNLIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $22,000,000 TO REFUND CERTAIN UNLIMITED TAX GENERAL OBLIGATION BONDS OF THE CITY, AND TO PAY COSTS OF ISSUANCE OF THE BONDS; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF SALE OF THE BONDS; DELEGATING THE AUTHORITY TO APPROVE THE METHOD OF SALE FOR AND FINAL TERMS OF THE BONDS; AND APPROVING RELATED MATTERS AS PROVIDED HEREIN. WHEREAS, the City of Tukwila, Washington (the “City”) has outstanding its Unlimited Tax General Obligation Bonds, 2016 (the “2016 Bonds”), issued pursuant to Ordinance No. 2514, passed by the City Council on November 21, 2016 (the “2016 Bond Ordinance”); and WHEREAS, pursuant to the 2016 Bond Ordinance, the City may call the 2016 Bonds maturing on or after December 1, 2027 (the “Refunding Candidates”) for redemption on or after December 1, 2026, in whole or in part on any date, at a price of par plus accrued interest, if any, to the date of redemption; and WHEREAS, after due consideration, it appears to the City Council that the City may defease and refund all or a portion of the Refunding Candidates with the proceeds of unlimited tax general obligation bonds, at a savings to the City and its taxpayers; and WHEREAS, the City Council deems it in the City’s best interest to issue one or more series of unlimited tax general obligation refunding bonds (the “Bonds”) to defease and/or refund all or a portion of the Refunding Candidates, and to pay costs of issuing the Refunding Bonds; and WHEREAS, the City Council wishes to delegate authority to the Finance Director of the City (the “Designated Representative”), for a limited time, to select the Refunding Candidates to 83 -2- refund (the “Refunded Bonds”) and the method of bond sale, and to approve the interest rates, maturity dates, tax status, redemption terms and principal maturities for the Bonds within the parameters set by this ordinance, as provided herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section 1. Definitions and Interpretation of Terms. As used in this ordinance, the following words shall have the following meanings, unless the context or use indicates another or different meaning or intent. Unless the context indicates otherwise, words importing the singular number shall include the plural number and vice versa. Acquired Obligations means the Government Obligations acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds, but only to the extent that the same are acquired at Fair Market Value. Beneficial Owner means any person that has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Underwritten Bonds (including persons holding Underwritten Bonds through nominees, depositories or other intermediaries). Bond Counsel means Pacifica Law Group LLP or an attorney at law or a firm of attorneys, selected by the City, of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions. Bond Purchase Contract means one or more contracts, if any, for the purchase of Underwritten Bonds sold by negotiated sale to the initial purchaser, executed pursuant to Section 11 of this ordinance. 84 -3- Bond Register means the registration books showing the name, address, and tax identification number of each Registered Owner of a series of Bonds, maintained pursuant to Section 149(a) of the Code. Bond Registrar means (a) for any Underwritten Bonds, initially, the State fiscal agent, and (b) for any Direct Purchase Bonds, the State fiscal agent or the City’s Finance Director. Bonds means the unlimited tax general obligation refunding bonds authorized to be issued from time to time, in one or more series, pursuant to this ordinance. Call Date means December 1, 2026, or date thereafter selected by the Designated Representative as the redemption date for the Refunded Bonds. Certificate of Award means one or more certificates, if any, for the purchase of any series of Underwritten Bonds sold by competitive sale, as set forth in Section 11 of 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. City Council means the legislative authority of the City as the same shall be duly and regularly constituted from time to time. Closing means the date of issuance and delivery of a series of Bonds to the applicable Underwriter or Direct Purchaser. Code means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary, and final regulations promulgated, and applicable official public guidance published, under the Code. 85 -4- Continuing Disclosure Certificate means one or more written undertakings for the benefit of the owners and Beneficial Owners of any series of Underwritten Bonds as required by Section (b)(5) of the Rule. Debt Service Fund means the fund or account established by the City for the purpose of paying debt service on the unlimited tax general obligation bonds. Designated Representative means the Finance Director and any successor to the functions of such office, and their designees. Direct Purchase Bonds means any Bonds or Bond sold to a Direct Purchaser pursuant to Section 11 of this ordinance. Direct Purchaser means any bank or other financial institution, or entity selected to purchase one or more Direct Purchase Bonds, or to accept delivery of one or more Direct Purchase Bonds to evidence the City’s obligations under a Loan Agreement, pursuant to Section 11 of this ordinance. DTC means The Depository Trust Company of New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for any Underwritten Bonds pursuant to this ordinance. Escrow Agent means the trust company or state or national bank having powers of a trust company selected by the City to serve as escrow agent pursuant to Section 7 of this ordinance. Escrow Agreement means one or more escrow deposit agreements between the City and the Escrow Agent, executed in connection with the redemption of the Refunded Bonds. Escrow Fund means the fund or account established by the Escrow Agent, executed in connection with the redemption of the Refunded Bonds. 86 -5- Fair Market Value means the price at which a willing buyer would purchase an investment from a willing seller in a bona fide, arm’s-length transaction, except for specified investments as described in U.S. Treasury Regulation § 1.148-5(d)(6), including United States Treasury obligations, certificates of deposit, guaranteed investment contracts, and investments for yield restricted defeasance escrows. Fair Market Value is generally determined on the date on w hich a contract to purchase or sell an investment becomes binding, and, to the extent required by the applicable regulations under the Code, the term “investment” will include a hedge. Federal Tax Certificate means one or more certificates executed by the Designated Representative setting forth the requirements of the Code for maintaining the tax status of the Tax- Exempt Bonds, and attachments thereto. Finance Director means the Finance Director of the City, and any successor to the functions of such office. Government Obligations means those obligations now or hereafter defined as such in chapter 39.53 RCW, as such chapter may be hereafter amended or restated. Letter of Representations means the Blanket Issuer Letter of Representations from the City to DTC, as amended from time to time. Loan Agreement means one or more loan or purchase agreements, if any, between the City and a Direct Purchaser under which the Direct Purchaser will make a loan to the City, evidenced by a Direct Purchase Bond, or under which the Direct Purchaser will purchase the Direct Purchase Bond. Record Date means the Bond Registrar’s close of business on the 15th day of the month preceding an interest or principal payment date, or for a maturity date. With respect to redemption of a Bond prior to its maturity, the Record Date shall mean the Bond Registrar’s close of business 87 -6- on the date on which the Bond Registrar sends the notice of redemption in accordance with this ordinance. Refunded Bonds means the Refunding Candidates that the Designated Representative selects for refunding pursuant to this ordinance. Refunding Account means the account by that name established pursuant to Section 7 of this ordinance. Refunding Candidates means the 2016 Bonds maturing on or after December 1, 2027. Registered Owner means the person named as the registered owner of a Bond in the Bond Register. For so long as the Bonds of a series are held in book entry only form, DTC or its nominee shall be deemed to be the sole Registered Owner. Rule means U.S. Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Sale Document means the Bond Purchase Contract, Certificate of Award, or Loan Agreement, if any, executed by the Designated Representative in connection with the sale of the Bonds, which shall provide for the name, principal and interest payment dates and amounts, redemption/prepayment rights, description of the Refunded Bonds, and other terms to describe such Bonds as the Designated Representative determines necessary. State means the State of Washington. Taxable Bonds means any Bonds of a series determined to be issued on a taxable basis pursuant to Section 11 of this ordinance. Tax-Exempt Bonds means any Bonds of a series determined to be issued on a tax-exempt basis under the Code pursuant to Section 11 of this ordinance. 88 -7- 2016 Bond Ordinance means Ordinance No. 2514 passed by the City Council on November 21, 2016, authorizing issuance of the 2016 Bonds. 2016 Bonds means the City’s Unlimited Tax General Obligation Bonds, 2016, as described in the recitals of this ordinance. Underwriter means any underwriter, in the case of a negotiated sale, or initial purchaser, in the case of a competitive sale, for any Underwritten Bonds selected pursuant to Section 11 of this ordinance. Underwritten Bonds means one or more series of Bonds sold pursuant to a negotiated or a competitive sale by the City to an Underwriter pursuant to Section 11 of this ordinance. Section 2. Findings; Purpose and Authorization of Bonds. (a) Purpose and Authorization of Bonds. For the purpose of defeasing and/or refunding all or a portion of the Refunding Candidates, if the Designated Representative determines that such refunding is in the best interest of the City, and paying related costs of issuance, the City is hereby authorized to issue and sell one or more series of unlimited tax general obligation refunding bonds in an aggregate principal amount not to exceed $22,000,000 (the “Bonds”). The Bonds of each series shall be general obligations of the City, shall be designated “City of Tukwila, Washington, Unlimited Tax General Obligation Refunding Bonds, 2026,” with any other such designation as set forth in the applicable Sale Document. The Bonds shall be dated as of the date of Closing. The Bonds of each series shall be fully registered as to both principal and interest and shall be sold as either Direct Purchase Bonds or Underwritten Bonds. The Bonds of each series may be issued simultaneously or from time to time under the terms of this ordinance as determined by the Designated Representative. The Bonds authorized herein may be combined with other unlimited tax general obligation bonds of the City and sold as 89 -8- one or more series and issue if determined to be in the best interest of the City. Section 3. Bond Details; Registration, Exchange and Payments. (a) Underwritten Bonds. (1) Bond Details. Any Bonds of a series may be sold as Underwritten Bonds. Underwritten Bonds shall be issued in denominations of $5,000, or any integral multiple thereof, within a series and maturity; shall be numbered separately in such manner and with any additional designations as the Bond Registrar deems necessary for purposes of identification; shall bear interest payable on the dates set forth in the applicable Sale Document; and shall be subject to optional and/or mandatory redemption and mature on the dates and in the principal amounts as set forth in the applicable Sale Document. (2) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of the State fiscal agent. The City shall cause a Bond Register to be maintained by the Bond Registrar. So long as any Underwritten Bonds of a series remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Underwritten Bonds at its designated office. The Bond Registrar may be removed at any time at the option of the Finance Director upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Underwritten Bonds transferred or exchanged in accordance with the provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar’s powers and duties under this ordinance. The 90 -9- Bond Registrar shall be responsible for its representations contained in the certificate of authentication of the Bonds. (3) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Underwritten Bond of a series as the absolute owner thereof for all purposes (except as provided in this ordinance or in the Continuing Disclosure Certificate), and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Underwritten Bond shall be made only as described in Section 3(a)(8) hereof, but such Underwritten Bond may be transferred as herein provided. All such payments made as described in Section 3(a)(8) shall be valid and shall satisfy and discharge the liability of the City upon such Underwritten Bond to the extent of the amount or amounts so paid. (4) DTC Acceptance/Letters of Representations. The Underwritten Bonds of a series initially shall be held in fully immobilized form by DTC acting as depository. The City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the Underwritten Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant, the payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on Underwritten Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Underwritten Bonds are held by DTC or its successor 91 -10- depository or its nominee, DTC, its successor depository or its nominee shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the Beneficial Owners of such Underwritten Bonds. (5) Use of Depository. (A) The Underwritten Bonds of a series shall be registered initially in the name of “Cede & Co.”, as nominee of DTC, with one Bond of a series maturing on each of the maturity dates for the Underwritten Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be transferred except (i) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any substitute depository appointed by the Finance Director pursuant to subsection (B) below or such substitute depository’s successor; or (iii) to any person as provided in subsection (D) below. (B) Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository or a determination by the Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Finance Director may thereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (C) In the case of any transfer pursuant to clause (i) or (ii) of subsection (A) above, the Bond Registrar shall, upon receipt of all outstanding Underwritten Bonds, together with a written request on behalf of the Finance Director, issue a single new 92 -11- Underwritten Bond for each maturity then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the Finance Director. (D) In the event that (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 Finance Director determines that it is in the best interest of the Beneficial Owners of the Underwritten Bonds that such owners be able to obtain such Bonds in the form of Bond certificates, the ownership of such Underwritten Bonds may then be transferred to any person or entity as herein provided, and such Bonds shall no longer be held in fully-immobilized form. The Finance Director shall deliver a written request to the Bond Registrar, together with a supply of physical Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Underwritten Bonds together with a written request on behalf of the Finance Director to the Bond Registrar, new Bonds of each series shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (6) Registration of Transfer of Ownership or Exchange; Change in Denominations. The transfer of any Underwritten Bond may be registered and Underwritten Bonds may be exchanged, but no transfer of any such Underwritten Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing on such Underwritten Bond duly executed by the Registered Owner or such Registered Owner’s duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Underwritten Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Underwritten Bond (or Underwritten Bonds at 93 -12- the option of the new Registered Owner) of the same series, date, maturity, and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Underwritten Bond, in exchange for such surrendered and canceled Underwritten Bond. Any Underwritten Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Underwritten Bonds of the same series, date, maturity, and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange any Underwritten Bond following the Record Date preceding any principal payment or redemption date. (7) Bond Registrar’s Ownership of Bonds. The Bond Registrar may become the Registered Owner of any Underwritten Bond with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as member s of, or in any other capacity with respect to, any committee formed to protect the right of the Registered Owners of Bonds. (8) Place and Medium of Payment. Both principal of and interest on the Underwritten Bonds shall be payable in lawful money of the United States of America. Interest on the Underwritten Bonds shall be calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all Underwritten Bonds are held by a depository, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Underwritten Bonds are no longer in fully immobilized form, interest on the Underwritten Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the Record Date, or upon the written request of a Registered Owner of more 94 -13- than $1,000,000 of Underwritten Bonds (received by the Bond Registrar at least by the Record Date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Underwritten Bonds shall be payable upon presentation and surrender of such Underwritten Bonds by the Registered Owners at the principal office of the Bond Registrar. (b) Direct Purchase Bonds. (1) Bond Details. Any Bonds may be sold as Direct Purchase Bonds. Direct Purchase Bonds shall be dated as of the date of delivery to the Direct Purchaser, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature on the date set forth in the applicable Sale Document. Direct Purchase Bonds shall bear interest from the dated date or the most recent date to which interest has been paid at the interest rate set forth in the applicable Sale Document. Interest on the principal amount of Direct Purchase Bonds shall be calculated per annum on a 30/360 basis, or as otherwise provided in the Bond and in the applicable Sale Document. Principal of and interest on Direct Purchase Bonds shall be payable at the times and in the amounts set forth in the payment schedule attached to the Direct Purchase Bond. (2) Registrar/Bond Registrar. The Finance Director or the State fiscal agent shall act as Bond Registrar for any Direct Purchase Bonds. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Direct Purchase Bonds if transferred or exchanged in accordance with the provisions of the Direct Purchase Bonds and this ordinance, and to carry out all of the Bond Registrar’s powers and duties under this ordinance with respect to Direct Purchase Bonds. 95 -14- (3) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered Owner of any Direct Purchase Bond as the absolute owner for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. (4) Transfer or Exchange of Registered Ownership. Direct Purchase Bonds shall not be transferrable without the consent of the City unless (i) the Direct Purchaser’s corporate name is changed and the transfer is necessary to reflect such change, or (ii) the transferee is a successor in interest of the Direct Purchaser by means of a corporate merger, an exchange of stock, or a sale of assets. Notwithstanding the foregoing, Direct Purchase Bonds may be transferred upon satisfaction of the requirements, if any, set forth in the applicable Sale Document and the Direct Purchase Bonds. (5) Place and Medium of Payment. Both principal of and interest on Direct Purchase Bonds shall be payable in lawful money of the United States of America. Principal and interest on Direct Purchase Bonds shall be payable by check, warrant, ACH transfer or by other means mutually acceptable to the Direct Purchaser and the City as set forth in the Sale Document. Section 4. Redemption and Purchase of Bonds. (a) Mandatory Redemption of Term Bonds and Optional Redemption, if any. The Bonds of each series shall be subject to optional redemption on the dates, at the prices and under the terms set forth in the applicable Sale Document and as approved by the Designated Representative pursuant to Section 11 of this ordinance. The Bonds of each series shall be subject to mandatory redemption to the extent, if any, set forth in the applicable Sale Document approved by the Designated Representative pursuant to Section 11 of this ordinance. (b) Purchase of Bonds. The City reserves the right to purchase any of the Bonds offered to it at any time at a price deemed reasonable by the Finance Director. 96 -15- (c) Selection of Bonds for Redemption. If the Underwritten Bonds are held in book-entry only form, the selection of particular Underwritten Bonds within a series and maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Underwritten Bonds are no longer held by a depository, the selection of such Underwritten Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c). Except as otherwise provided in the applicable Sale Document, if the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Underwritten Bonds or portions of Underwritten Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of $5,000. In the case of an Underwritten Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Underwritten Bond as representing such number of separate Underwritten Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Underwritten Bond by $5,000. In the event that only a portion of the principal sum of a Underwritten Bond is redeemed, upon surrender of such Underwritten Bond at the designated office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, an Underwritten Bond or Bonds of like series maturity and interest rate in any of the denominations herein authorized. (d) Notice of Redemption. (1) Official Notice. Notice of any prepayment of Direct Purchase Bonds shall be provided by the City to the Direct Purchaser as provided in the applicable Sale Document. 97 -16- For so long as the Underwritten Bonds of a series are held by a depository, notice of redemption (which notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial Owners. Thereafter (if the Underwritten Bonds are no longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter provided. Unless waived by any owner of Underwritten Bonds to be redeemed, official notice of any such redemption shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Underwritten Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. All official notices of redemption shall be dated and shall state: (A) the redemption date, (B) the redemption price, (C) if fewer than all outstanding Underwritten Bonds are to be redeemed, the identification by series and maturity (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (D) any conditions to redemption, (E) that (unless such notice is conditional) on the redemption date the redemption price will become due and payable upon each such Underwritten Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, and (F) the place where such Underwritten Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the designated office of the Bond Registrar. On or prior to any redemption date, unless any condition to such redemption has not been satisfied or waived or notice of such redemption has been rescinded, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the 98 -17- Underwritten Bonds or portions of Underwritten Bonds which are to be redeemed on that date. The City retains the right to rescind any redemption notice and the related optional redemption of Underwritten Bonds by giving notice of rescission to the affected registered owners at any time on or prior to the scheduled redemption date. Any notice of optional redemption that is so rescinded shall be of no effect, and the Underwritten Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. (2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has been given as aforesaid, or if the conditions to redemption have been satisfied or waived, and the notice of such redemption has not been rescinded, the Underwritten Bonds or portions of Underwritten Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date, unless the City defaults in the payment of the redemption price, such Underwritten Bonds or portions of Underwritten Bonds shall cease to bear interest. Upon surrender of such Underwritten Bonds for redemption in accordance with said notice, such Underwritten Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Underwritten Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. (3) Additional Notice. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a cal l for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (A) the CUSIP numbers of all Underwritten Bonds being redeemed; (B) the date of issue of the 99 -18- Underwritten Bonds as originally issued; (C) the rate of interest borne by each Underwritten Bond being redeemed; (D) the maturity date of each Underwritten Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Underwritten Bonds being redeemed. Each further notice of redemption may be sent at least 20 days before the redemption date to each party entitled to receive notice pursuant to the Continuing Disclosure Certificate and with such additional information as the City shall deem appropriate, but such mailings shall not be a condition precedent to the redemption of such Underwritten Bonds. (4) Amendment of Notice Provisions. The foregoing notice provisions of this Section 4, including but not limited to the information to be included in redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. Section 5. Form of the Bonds. The Bonds of each series shall be in substantially the form set forth in Exhibit A, which is incorporated herein by this reference. Section 6. Execution of the Bonds. The Bonds of each series shall be executed on behalf of the City with the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the City Clerk and the seal of the City shall be impressed, imprinted or otherwise reproduced thereon. In case either or both of the officers who have signed or attested any of the Bonds cease to be such officer before such Bonds have been actually issued and delivered, such Bonds shall be valid nevertheless and may be issued by the City with the same effect as though the persons who had signed or attested such Bonds had not ceased to be such officers, and any Bond may be signed or attested on behalf of the City by officers who at the date 100 -19- of actual execution of such Bond are the proper officers, although at the nominal date of execution of such Bond such officer was not an officer of the City. Only Bonds that bear a Certificate of Authentication in the form set forth in Exhibit A, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered and are entitled to the benefits of this ordinance. Section 7. Refunding Plan. If market conditions allow for debt service savings, the City proposes to refund and defease the Refunded Bonds, as set forth in this refunding plan. If the Designated Representative determines that it is in the best interest of the City to proceed with the refunding authorized herein, the Designated Representative shall designate all or a portion of the Refunding Candidates as Refunded Bonds and such designation shall be set forth in the Sale Document and the Escrow Agreement, if any. The Designated Representative is hereby authorized to select the Refunded Bonds from the Refunding Candidates, to establish the Call Date for the Refunded Bonds, if necessary, to provide or cause to be provided notice of redemption of the Refunded Bonds in accordance with the applicable provisions of the 2016 Bond Ordinance authorizing the issuance of the Refunded Bonds, and to take any action as determined to be necessary and in the best interest of the City to refund the Refunded Bonds. Net proceeds of the Bonds shall either be remitted to the City or deposited with the Escrow Agent pursuant to an Escrow Agreement, and shall be used immediately upon receipt thereof to defease and refund the Refunded Bonds as authorized by the 2016 Bond Ordinance and to pay costs of issuance of the Bonds as set forth in the closing memorandum prepared in connection with the issuance of the Bonds. 101 -20- Any Bond proceeds and any other available funds of the City, if any, deposited with the Escrow Agent shall be used to defease and refund the Refunded Bonds and discharge the obligations thereon by either being held uninvested as cash or by the purchase of Acquired Obligations bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance, will provide for the payment of interest on such Refunded Bonds on the Call Date and the redemption price of such Refunded Bonds on the Call Date. Such Acquired Obligations, if any, shall be purchased at a yield not greater than the yield permitted by the Code and regulations relating to acquired obligations in connection with refunding the bond issues. (b) Escrow Agent /Escrow Agreement. The City hereby appoints U.S. Bank Trust Company, National Association, Seattle, Washington, as the Escrow Agent for the Refunded Bonds (the “Escrow Agent”). To carry out the purposes of this Section 7, the Designated Representative is authorized and directed to execute and deliver to the Escrow Agent an Escrow Agreement. A beginning cash balance, if any, and the Acquired Obligations shall be deposited irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The proceeds of the Bonds remaining after acquisition of the Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired Obligations and costs of issuance of the Bonds. (c) Call for Redemption of Refunded Bonds. The City hereby sets aside sufficient funds out of the purchase of Acquired Obligations from proceeds of the Bonds to make the payments described above. The City further calls the Refunded Bonds for redemption on their Call Date in accordance with the provisions of the ordinances authorizing the redemption and retirement of the Refunded Bonds prior to their fixed maturities. Said defeasance and call for redemption of the 102 -21- Refunded Bonds shall be irrevocable after the issuance of the Bonds and delivery of the Acquired Obligations to the Escrow Agent. If the Designated Representative determines to proceed with the refunding of all or a portion of the Refunding Candidates, the City hereby agrees to set aside available funds of the City and sufficient funds out of proceeds of the Bonds, including from the purchase of the Acquired Obligations, if any, to make payments described above. The City authorizes the Designated Representative to call the Refunded Bonds for redemption in accordance with the provisions of the 2016 Bond Ordinance. Such defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the issuance of the Bonds. The Escrow Agent is hereby authorized to carry out the terms of the Escrow Agreement on behalf of the City, including the giving of notice of defeasance and redemption of the Refunded Bonds in accordance with the applicable provisions of the 2016 Bond Ordinance. Section 8. Tax Covenants. The City will take all actions necessary to assure the exclusion of interest on the Tax-Exempt Bonds from the gross income of the owners of the Tax- Exempt Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Tax-Exempt Bonds, including but not limited to the following, except as otherwise set forth in the Federal Tax Certificate: (a) Private Activity Bond Limitation. The City will assure that the proceeds of the Tax- Exempt Bonds are not so used as to cause the Tax-Exempt Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. (b) Limitations on Disposition of Project. The City will not sell or otherwise transfer or dispose of (i) any personal property components of the projects refinanced with proceeds of the Tax-Exempt Bonds (the “Tax-Exempt Projects”) other than in the ordinary course of an established 103 -22- government program under U.S. Treasury Regulation § 1.141-2(d)(4) or (ii) any real property components of the Tax-Exempt Projects, unless it has received an opinion of Bond Counsel to the effect that such disposition will not adversely affect the treatment of interest on the Tax-Exempt Bonds as excludable from gross income for federal income tax purposes. (c) Federal Guarantee Prohibition. The City will not take any action or permit or suffer any action to be taken if the result of such action would be to cause the Tax-Exempt Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code. (d) Rebate Requirement. The City will take any and all actions necessary to assure compliance with Section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Tax-Exempt Bonds. (e) No Arbitrage. The City will not take, or permit or suffer to be taken any action with respect to the proceeds of the Tax-Exempt Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Tax-Exempt Bonds would have caused the Tax-Exempt Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code. (f) Registration Covenant. The City will maintain a system for recording the ownership of the Tax-Exempt Bonds that complies with the provisions of Section 149 of the Code until the Bonds have been surrendered and canceled. (g) Record Retention. The City will retain its records of all accounting and monitoring it carries out with respect to the Tax-Exempt Bonds for at least three years after the Tax-Exempt Bonds mature or are redeemed (whichever is earlier); however, if the Tax-Exempt Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least three 104 -23- years after the earlier of the maturity or redemption of the obligations that refunded the Tax- Exempt Bonds. (h) Compliance with Federal Tax Certificate. The City will comply with the provisions of the Federal Tax Certificate with respect to the Tax-Exempt Bonds, which provisions are incorporated herein as if fully set forth herein. In the event of any conflict between this section and the Federal Tax Certificate, the provisions of the Federal Tax Certificate will prevail. The covenants of this section will survive payment in full or defeasance of the Tax-Exempt Bonds. Section 9. Debt Service Fund and Provision for Tax Levy Payments. The City has created a fund to be used for the payment of debt service on the Bonds, designated as the Debt Service Fund. No later than the date each payment of principal of or interest on the Bonds becomes due, the City shall transmit sufficient funds, from the Debt Service Fund or from other legally available sources, to the Bond Registrar for the payment of such principal or interest. Money in the Debt Service Fund may be invested in legal investments for City funds. Any interest or profit from the investment of such money shall be deposited in the Debt Service Fund, but only to the extent that the same are acquired, valued and disposed of at Fair Market Value. The City hereby irrevocably covenants that, unless the principal of and interest on the Bonds are paid from other sources, it will make annual levies of taxes without limitation as to rate or amount upon all of the property in the City subject to taxation in amounts sufficient to pay such principal and interest as the same shall become due. All of such taxes and any of such other money so collected shall be paid into the Debt Service Fund. None of the money in the Debt Service Fund shall be used for any other purpose than the payment of the principal of and interest on the Bonds. 105 -24- The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and for the prompt payment of the principal of and interest on the Bonds when due. Section 10. Defeasance. In the event that money and/or noncallable Government Obligations, maturing at such time or times and bearing interest to be earned thereon in amounts (together with such money, if necessary) sufficient to redeem and retire part or all of the Bonds in accordance with their terms, are set aside in a special account of the City to effect such redemption and retirement, and such money and the principal of and interest on such Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Debt Service Fund for the payment of the principal of and interest on the Bonds so provided for, and such Bonds shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive the money so set aside and pledged, and such Bonds shall be deemed not to be outstanding hereunder. The City shall give or cause to be given written notice of defeasance in accordance with the Continuing Disclosure Certificate. Section 11. Sale of the Bonds. (a) Bond Sale. The City has determined that it is in the best interest of the City to delegate to the Designated Representative for a limited time the authority to authorize the Bonds to be issued in one or more series, to designate each series of Bonds, Tax-Exempt Bonds or Taxable Bonds, to determine the method of sale for each series of Bonds, to approve the selection of the Refunded Bonds, and to approve the final interest rates, maturity dates, redemption terms and principal maturities for each series of Bonds issued hereunder. The Designated Representative is hereby authorized to approve the issuance of each series of Bonds issued from time to time under this ordinance and to approve whether each series of Bonds shall be sold in a private placement to 106 -25- a Direct Purchaser or to an Underwriter through a competitive public sale or a negotiated sale , as set forth below. (b) Direct Purchase. If the Designated Representative determines that each series of Bonds are to be sold by private placement, the Designated Representative shall solicit proposals to purchase the Direct Purchase Bonds and shall select the Direct Purchaser that submits the proposal that is in the best interest of the City. Direct Purchase Bonds shall be sold to the Direct Purchaser pursuant to the terms of a Loan Agreement. (c) Negotiated Bond Sale. If the Designated Representative determines that each series of Bonds are to be sold by negotiated public sale, the Designated Representative shall solicit bond underwriting proposals and shall select the Underwriter that submits the proposal that is in the best interest of the City. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Bond Purchase Contract. (d) Competitive Sale. If the Designated Representative determines that each series of Bonds are to be sold at a competitive public sale, the Designated Representative shall: (1) establish the date of the public sale; (2) establish the criteria by which the successful bidder will be determined; (3) request that a good faith deposit in an amount not less than one percent of the principal amount of the offering accompany each bid; and (4) provide for such other matters pertaining to the public sale as they deem necessary or desirable. The Designated Representative shall cause the notice of sale to be given and provide for such other matters pertaining to the public sale as they deem necessary or desirable. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Certificate of Award. (e) Sale Parameters. The Designated Representative is hereby authorized to approve the method of sale for each Series of Bonds, designate such series as Tax-Exempt or Taxable 107 -26- Bonds, select the Refunded Bonds, and determine the final interest rates, aggregate principal amount, principal maturities, and redemption terms for each series of Bonds in the manner provided hereafter so long as: (1) the aggregate principal amount of all Bonds issued pursuant to this ordinance does not exceed $22,000,000; (2) the final maturity date for each series Bonds is no later than December 1, 2036; (3) the true interest cost for any Tax-Exempt Bonds of a series (in the aggregate) does not exceed 4.00%; (4) the true interest cost for any Taxable Bonds of a series (in the aggregate) does not exceed 4.00%; (5) each series of Bonds are sold (in the aggregate) at a price not less than 98% and not greater than 120%; (6) the issuance of the Bonds results in a minimum net present value debt service savings equal to or greater than 3.00%; and (7) the Bonds conform to all other terms of this ordinance. Subject to the terms and conditions set forth in this Section 11, the Designated Representative is hereby authorized to execute the applicable Sale Document for the Bonds. Following the execution of a Sale Document, the Designated Representative shall provide a report to the City describing the final terms of the Bonds approved pursuant to the authority delegated in this section. The authority granted to the Designated Representative by this Section 11 to execute a Sale Document shall expire one year after the effective date of this ordinance. If a Sale Document for the Bonds has not been executed by such date, the authorization for the issuance of such Bonds 108 -27- shall be rescinded, and such Bonds shall not be issued nor their sale approved unless such Bonds shall have been reauthorized by resolution of the City. (f) Delivery of Bonds; Documentation. Upon the passage and approval of this ordinance, the proper officials of the City, including the Designated Representative, are authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Underwriter thereof and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds. (g) Preliminary and Final Official Statements. The City authorizes the Designated Representative to approve the preliminary official statement for the Bonds and authorizes the distribution of the preliminary official statement in connection with the offering of the Bonds. Pursuant to the Rule, the Designated Representative is hereby authorized to deem the preliminary official statement as final as of its date except for the omission of information dependent upon the pricing of the Bonds. The City agrees to cooperate with the Underwriter to deliver or cause to be delivered, within seven business days from the date of the sale of the Bonds and in sufficient time to accompany any confirmation that requests payment from any customer of the Underwriter, copies of a final official statement in sufficient quantity to comply with paragraph (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board. The Designated Representative is authorized to approve, supplement or amend the final official statement. Section 12. Undertaking to Provide Ongoing Disclosure; Covenants. (a) The City covenants to execute and deliver at the time of Closing of any Underwritten Bonds a Continuing Disclosure Certificate. The Designated Representative is hereby authorized to execute and deliver a Continuing Disclosure Certificate upon the issuance, 109 -28- delivery and sale of any Underwritten Bonds with such terms and provisions as such individuals shall deem appropriate and in the best interests of the City. (b) The City may agree to provide the Direct Purchaser certain financial or other information and agree to such additional covenants as determined to be necessary by the Designated Representative and as set forth in any Loan Agreement and approved by the Designated Representative pursuant to Section 11. Section 13. Lost or Destroyed Bonds. If any Bond or Bonds are lost, stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like series, date, number and tenor to the Registered Owner upon the owner paying the expenses and charges of the Bond Registrar and the City in connection therewith and upon the owner’s filing with the Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or destroyed and of ownership, and upon furnishing the City and the Bond Registrar with indemnity satisfactory to the City and the Bond Registrar. Section 14. Severability. If any provision in this ordinance is declared by any court of competent jurisdiction to be contrary to law, then such provision shall be null and void and shall be deemed separable from the remaining provisions of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. Section 15. Corrections. Upon approval of the City Attorney and Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to this ordinance, including but not limited to the correction of clerical errors; references to other local, state, or federal laws, codes, rules, or regulations; ordinance numbering and section/subsection numbering; and other similar necessary corrections. 110 -29- Section 16. Effective Date. This ordinance shall be published in the official newspaper of the City, and shall take effect and be in full force five (5) days after the date of the publication. PASSED THIS 10th DAY OF AUGUST, 2026, by the City Council of the City of Tukwila, and signed in approval therewith this ___ day of ____ , 2026. ATTEST/AUTHENTICATED: __________________________________ Andy Youn-Barnett, City Clerk CITY OF TUKWILA, WASHINGTON ____________________________________ Thomas McLeod, Mayor Approved as to form: __________________________________ Pacifica Law Group LLP Filed with the City Clerk: ______________ Passed by the City Council: _____________ Published: __________________________ Effective Date: _______________________ Ordinance Number: ___________________ 111 Exhibit A Form of Bond [DTC LANGUAGE] [TRANSFER RESTRICTIONS] UNITED STATES OF AMERICA NO. ________ $_________ STATE OF WASHINGTON CITY OF TUKWILA UNLIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2026 INTEREST RATE: % MATURITY DATE: [CUSIP NO.:] REGISTERED OWNER: PRINCIPAL AMOUNT: [The City of Tukwila, Washington (the “City”) hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay inter est thereon from the date of delivery, or the most recent date to which interest has been paid, at the Interest Rate set forth above. Interest on this bond shall accrue from its dated date until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. Princi pal of and accrued interest on this bond shall be payable on the dates set forth in the payment schedule attached hereto. Both principal of and interest on this bond are payable in lawful money of the United States of America.] [The City of Tukwila, Washington, (the “City”), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay interest thereon from ___________, 20___, or the most recent date to which interest has been paid at the Interest Rate set forth above payable ________ 1, 20__, and semiannually thereafter on the first days of each succeeding _____ 1 and ____________ 1. Interest on this bond shall accrue from its dated date until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agent of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the “Bond Registrar”). For so long as the bonds of this issue are held in fully immobilized form, payments of principal thereof and interest thereon shall be made as provided in accordance with the operational arrangements of The Depository Trust Company (“DTC”) referred to in the Blanket Issuer Letter of Representations (the “Letter of Representations”) from the City to DTC.] The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. _______ duly passed by the City Council on August 10, 2026 (the “Bond Ordinance”). Capitalized terms used in this bond have the meanings give such terms in the Bond Ordinance. 112 This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed on behalf of the Bond Registrar or its duly designated agent. This bond is one of an authorized issue of bonds in the aggregate principal amount of $___________, issued pursuant to the Bond Ordinance to provide a portion of the funds necessary to refund certain outstanding unlimited tax general obligations of the City, and to pay costs of issuance of the Bonds. The bonds of this issue are [not] subject to redemption prior to their stated maturities as stated in the Sale Document. The City has irrevocably covenanted with the owner of this bond that it will levy taxes annually upon all the taxable property in the City without limitation as to rate or amount and in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond when due. The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The pledge of tax levies for payment of principal of and interest on this bond may be discharged prior to maturity of this bond by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist and to have happened, been done and performed precedent to and in the issuance of this bond exist and have happened, been done and performed and that the issuance of this bond and the bonds of this issue does not violate any constitutional statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Tukwila, Washington, has caused this bond to be executed by the manual or facsimile signature of the Mayor the Clerk of the City, and the seal of the City imprinted, impressed or otherwise reproduced hereon as of this _____ day of ___________, 2026. [SEAL] CITY OF TUKWILA, WASHINGTON By /s/ manual or facsimile Mayor 113 ATTEST: /s/ manual or facsimile City Clerk [FOR UNDERWRITTEN BONDS] The Certificate of Authentication for the Bonds shall be in substantially the following form and shall appear on each Bond: CERTIFICATE OF AUTHENTICATION Date of Authentication: _______________ This bond is one of the bonds described in the within-mentioned Bond Ordinance and is one of the Unlimited Tax General Obligation Refunding Bonds, 2026 of the City of Tukwila, Washington, dated ___________, 2026. WASHINGTON STATE FISCAL AGENT, as Registrar By Authorized Officer [FOR DIRECT PURCHASE BONDS] REGISTRATION CERTIFICATE This bond is registered in the name of the Registered Owner on the books of the City, in the office of the ___________ (the “Bond Registrar”), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City as provided in the Bond Ordinance. Date of Registration Name and Address of Registered Owner Signature of Bond Registrar ____________ __, 2026 ___________________ PAYMENT SCHEDULE Principal and interest on this bond shall be payable as set forth in the following schedule: Date Principal Interest Total Payment 114 CERTIFICATE I, the undersigned, Clerk of the City of Tukwila, Washington, DO HEREBY CERTIFY: 1. That the attached ordinance is a true and correct copy of Ordinance No. _____ (the “Ordinance”) of the City duly passed at a regular meeting of the City Council (the “Council”) of the City held on the 10th day of August, 2026. 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said ordinance; that all other requirements and proceedings incident to the proper adoption or passage of said ordinance have been fully fulfilled, carried out and otherwise observed, and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of August, 2026. City Clerk 115 Clety of T Washington Resolution No. 14 k A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ADOPTING A DEBT POLICY; AND REPEALING RESOLUTION NO. 1840 WHEREAS, on September 2, 2014, the City Council adopted Resolution No. 1840 adopting a debt policy; and WHEREAS, a debt policy and appropriate management of debt issued by the City is an important factor in measuring the City's financial performance and condition and WHEREAS, the proper management of borrowing can yield significant advantages; and WHEREAS, debt issuance planning with the City's Capital Improvement Program CIP), will ensure alignment between financing strategies and long-term capital priorities; and WHEREAS, the use of long-term debt for operating or maintenance costs, except in declared emergencies authorized by the City Council, promotes fiscal discipline and responsible debt management, and WHEREAS, clear delineation of the roles and responsibilities of the City Council and Finance Director, including authority over inter -fund loans, delegation of bond issuance approvals, and oversight of post -issuance compliance activities, will ensure appropriate checks and balances; and WHEREAS, expanding the range of eligible financing tools and debt instruments, including interfund loans, state and federal loan programs, and other legal financing contracts, provides the City with greater flexibility and cost-effective funding options; and WHEREAS, enhancing compliance with federal and state laws by establishing comprehensive procedures for continuing disclosure, arbitrage rebate monitoring. and Legislation: Debt Policy Page 1 of 2 Version: 6/16i2025 Staff, T. Cullerton 116 post -issuance compliance with IRS and SEC regulations, thereby safeguards the City's credit standing and legal obligations. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Repealer. Resolution No. 1840 is hereby repealed. Section 2. Findings Incorporated and Adoption. The above "whereas recitals are adopted as findings in support of this resolution, and the City of Tukwila Debt Policy attached hereto as Exhibit A is adopted. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this `- day of 2025. ATTEST/AUTH E NTI CATE D: 411AAv n You Barnett; MC, City Clerk Tosh Sharp, Co X esiden t APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: 0") 1 Resolution Number: office of the City Attorney Attachment: Exhibit A— City of Tukwila Debt Policy - 2025 Legislation: Debt Policy Version: 6/ 16/2025 Staff: T, Cullerton Page 2 of 2 117 City of Tukwila Debt Policy Adapted 2025 City of Tukwila Debt Policy Page 1 of 10 118 TABLE 01"CONTENTS SECTION L INTRODUCTION SECTION M, GOVERNING PRINCIPLES SECTION V. TRANSAMON-SPECIrIC POLICIES SECTION Vt. COMPUANCE POLIC]ES SECTION V111. OTHCR POLICIE5 3 3 4 51 6 91 10 City,of Tukwila Debt Pohcy Rage 2 of 10, 119 Sectilon 1. Introduction The objective of thiis policy is to provide general guidance for the issuance and rnanagement of all City Of Tiuk,wiJa (the City) debt. Further, this policy estabhshe5 criteria to protect the, UtV's financial integrity whlhe providing a mechanism to fund the City's capital needs prudently and cost effectively. Adherence to this policy is essential to enisure that the City Council (Council) maintains a debt position which allows the Counc'(I to protect the City, its functionality, and the credit quality of its obligations. The City's Finance Department is charged with ensuring, comphance with all debt policy requirements, Capital Plannin The City shall integrate, its debt issuance with its Capital Improvement Program, (referred to herein as CiP or Capital Facilities Pian) spending to ensure that planned financing coinform!s to policy, targets regarding the level and, composition of outstanding debt. This planning considers the long-term horizon, paying particular attention to financing priorities, capital outlays and competing projects. Long-term borrowing shall be confined to the acquisidon and/or construction of capital improvernents and shall not be used to fund operating or maintenance costs. The issuance of debt to fund operating deficits is not permitted aexcept in ernergend'es as adopted by formal action, by the City Couincil. For afl capital projects, under consideration, the City shall budget and set aside sufficient revenue from operations to fund ongoing maintenance needs and to provide reserves for periodic replacement and renewal. The source of funds for the project should reflect the intended use of bond flinaincing. Section, It. Governing Principles in the issuance and management of debt, the City hall comply with the State of Washington (State) constitution and with, aR, other legal requirements imposed by federal, State, and local rules and regulations, as appnCale, The foflowing, section highlights the legal framework, for debt issuance. State Statutes, The City issues debt in accordance with the Revised Code of Washington (RCW), in particular chapters 3936, 39.46, and 39.53, the State constitution along with all other City, State, and federa Ill laws, rules, and regulations. Federal Rules and Regulations. The, City shall issue and manage debt in accordance with, the lirnitatiions and constiraints, imposed Iby federal rules and regulations, Including but: not firnited to, Internal Revenue Code of 1996, as amended, and Treasury Department Regulations thereunder, (Tax Law'), and the Securities, Acts oaf' 1933 and 19,34 (Securities Law). Local Rules and Regulations. The City shall issue and sell debt in accordance with the limitations and constraints imposed by the Tukwila Municipal Code (TMC), including but not limited to Tide 3 (Revenue and Finance) and City ordinances, resolutions, policies, procedures, and bond covenants, City of Tukwila Debit Policy Page 3 of 10 120 Legal Debt Limits for GO Debt State law (RCW 39.36,0201) alilows for the issuance of genera I obligation, (GO) debt, through a public vote, of up to 7.5% of the City's, assessed property valuation. The limit of 7.5% of assessed valuation for GO, debt is divided between three different uise types,; 1) 25% for municipally owned water, sewer, or electric facilities; 2) 2. 5% for open space and parks, and 3) 2.5% for general government purposes. Within the 2. 5% limit for general) government purposes, State law allows the Council to issue debt without a vote of the people. This non -voted debt (also called councilmanic debit) cannot be greater than, 1.5%, of the assessed property valuation of the City. rIT"o mm. Responsib ILfies of City Council Approve this policy and any updates/changes to this policy to help ensure compliance with all applicable rules and regulations, for debt issuance, Approve projects to be financed as part of the City Capital Facilities Plan. Adopt an ordinance authorizing, the issuance and sale of debt, and, as applicable, setting forth the delegation requirements provided for in RC W 39.46,040 when appointing a designated representative, the City Finance Director or their designee, to approve the finall terms of the debt. Approve budgets sufficient to, iprovide forthe firnely payment of principal and interest on all debt, Resnsibifities of the Finance Director 0 Apply and promote prudent fiscal practices. 0 Oversee any debt issuance including sale of bonds and review and approval of disclosure documents, 0 Approve the issuance of debit at the lowest acceptable cost and risk withiiin the pararnieters authorized by City Council in the bond! ordinance. 0 Provide for the timely payment of principal and interest payinient on all debt and ensure the fiscal agent receives funds for payment of debt service on or prior to the payment date, 0 Ensure compliance with all Tax Laws, Securities Laws, contractual requirements, and other ruiles and regulations governing the issuance of debt, 0 Ensure compliance with all terms, conditions, post -issuance requirements, and Tax Law requirements imposed by law and /orthe legal docurnents governing the debt issued, 0 Ensure any annual disclosure reports and notices regarding the occurrence of certain events are timely posted to the EMMA (Electronic )'Municipal Market Access) system in accordance with continuing disclosure undertakings of the City pursuant to Securities Law, 0 Maintain records for all outstanding debt. Oversee all aspects of debt management, solicit and select professional services providers as necessary, to administer debt financing. 0 Consult with the City's contracted municipal advisor to determine the method of sale best suited for each issue of debt (competitive saile, negotiated sale, or bank/direct placernent). 0 Select the manner of sale of debt. 0i Monitor opportunities to refund debt and recommend such refunding as appropriate,, City of Tukwila Debt Poliicy Page, 4 of 1,01 121 Provide pertinent information to credit rating agencies when issuing debt and as, routine credit reviews occur. I'he City"s Finance Director will be responsible for the solicitation and selection of professional services as necessary to administer the City's debt program. Professional service providers necessary to issue debt may, include, but are not limited to bond counsel, discllosure counsel (which, may be bond counsel), municipal advisor, underwwriters,, banks, rating agencies, and fiscal agent, Selection of the service providers will consider availability, professional knowledge, accountability, cost, as well as successful partnerships in previous debt issuances, The City wilil issue debt considering cost and associated risk. Professional Service Providers Bond Counsel — Debt issued by the City will generally include a written opinion by bond counsel, affirming that the City is legally authorized to issue the proposed debt., The opinion shall provide that the obligation is ilegal, valid and blinding, and enforceable against the City. in the case of taix exempt financing, the llega!l opinion will address the treatment of interest for, purposes, of Tax Law. Municipal Advisor — A Municipal Advisor may be used to, assist in the issuance of the City's debt. The Municipal Advisor will provide the City with objective advice and analysis on debt issuance, This includes, but is not llimited to, coordinating of finance team, monitoring of market opportunities, structuring and pricing of debt, competitive sale execution, and reviewing the preliminary and final official statements. Disclosure Counsel - The Disclosure Counsel (which may be bond counsel) plays a critical role in ensuhrig that the City's preliminary and final official statements comply with Securities Laws and ldusclosure req uirerne nits, Disclosure Counsel provides legal guidaince on the accuracy, completeness, aind transparency of the information Presented to investors, helping to mitigate the risk of material misstatements or omissions. Working closely wrth the Oty's finance team, bond counsel, and irnunicipal advisor, Disclosure Counsel reviews finainicial and operational disclosures, drafts legal sections of the official statements, and provides legal advice in conniection with the City's obligations under SEC Rule 15c2-12 and other applicable regulations, Their expertise helps protect the City from potential legal and regulaitory risks while maintaining investor confidence in the bond Issuance process, Underwriters —An Underwriter willl be selected in advance for all debt issued in a negotiated sale method, The Underwriter is responsible for purchasing debt and reselling the debt to investors, Arbitrage Rebate Consultant -As necessary, the City may engage with an arbitrage rebate consultant to ensure the City is compliant with Tax Law on taxi exempt bonds by calculating potential arbitrage rebate liabilitlies, The consultant: will analyze investment earnings, determine rebate amounts owed under IR,S Code 148(f), and assist with documentation, deadlines, and best practices to rmniimize exposure, and aivoid penalties, City of Tukwila Debt Policy Page 5 of 10 122 Fiscal Agent —A fiscal agent away be used to provide accurate and timelysecurities processing andpayrnen't to bondholders. As provided under RCW43,80,the City will work with the Fiscal Agent that is determined by the State. WIFSONUM For any City project planned to be funded through debt, an analysis will be, done to consider: (a) other potential ways to finance the project; (b) future operating and maintenance costs, inclludiing debt repayment; (c) expected cash inflows that could help, offset the amount borrowed; and (d) anticipated cash outflows for construction or equipment to ensure cornpliance with, arbitrage rules. Me_t 9 . LS _al ca The Finance Director, in consultation with the City's municipal advisor, will determine the method of sale best suited foir each issue of debt (competitive saille, negotiated sallei, or bank/direct placement). The type of debt to be issued and manners of the sale will be submitted to the City Council for approval in the bond ordinance. The bond ordinance will authorize the issuance and sale of debt, and, as applicable, set forth, the delegation requirements provided for in, RCW 39.46.040 when appointing a designated representative, the City finance Director or their designee, to approve the final terms of the debt. Bond Insurance For each, issue, the City, in conjunction with its municipal advisor, will evaluate the costs and benefilts, of bond insurance or other credit entrancements. Any credit enhancement purchases by the City must be competitively procured in a mariner deemed reasonable by the City Finance Director. goad BaLlipt Leasjjres Prior to any unlimited t,ax general obligation bond (described belowl) proposition being placed before the voters, the capitall project under consideration must, unless otherwise justified and have found to be in the best interest of the City, have been inicluided in the City's Capital Faidlities Plain, The source of funds for the project should reflect the intended use of bond financing. investor a nd The City will maintain good) communications with, bond rating agencies and investors about its fiscal condition. The City will provide full, accurate and complete disclosure on financial reports, and in disclosure documents to comply with the anti -fraud requirements of Securities Laws. Short-term i debt The City rimy use short-term debt, defined as a period not to exceed three years, to fund cash flow needs, which may be caused by a delay in receipting tax revenues or issuing long-term dlebt. The City will not Issue short-term debt for current operations, except in the event of an, emergency. The City may issue interfund loans rather than issuing outside debt to rneet short-term cash flow needs. The issuance of an interfund loan will be permissible only after an analysis of the loaning fund(s) indicate(s) that excess funds are available, and the use of these funds will not impact the loaning fund(s) current City of Tukwilai Debt Policy Page 6 of 10 123 operations or constitute a pennanient diversion of funds, All interfund borrowing will bear interest based upon at least the Prevailing LGIP (Local Government investment Pool) ratie. Council authorizes the City's Finance Director to, approve short-term interfund loans for a period not to exceed three calendar months and the City Admirilstrator to approve short-term interfund loans for a period not to exceed 12 calendar months. See long-term debt section below for policy oni loans exceeding 12 calendar, months. The Finance Directolir shaill notify the Finance & Governance Colimmitteel and/or City Colonicil of any use of directorial or administrator approved interfund Moans at the 'first reasonable opportunity. Interfund loans are not considered "debt" for puirposes of State law, Securities, Law, or Tax Law, on - Le Lrn_lit The City will issue long-term debt, defined as a, period greater than three years, for caplital projects which cainnolt reasonably be financed on a pay-as-you-go 'funding strategy frorn anticipated cash flows. Acceptable uses of bond proceeds are one-time capitall projects that can be capitalized aind depreciated in accordance with the City's accounting principles. (Refunding debt is also an acceptable use. See refunding debt section, bellow,) The City Council may issue long -terra interfund loans rather than issuing outside debt instruments as a means of financing capital improvements, The issuance of an interfund loan will be permissible only after an analysis of the Icianing funds) indicate that excess funds, are available, and the use of these funds will not impact the loaning fund(s) current operations or constitute a plerirnanent diversion of funds. All interfund borrowing will blear interest based upon at least the pirevalling LGIP (Local Government Investment Pool) rate, The decision to use an interfund loan rather than outside debt to fuind capital projects will be based on which is deemed to be the most cost-effective approach to meet City capital needs, The City's Finance Departni responsible for making such ain assessment, Interfund loans are not considered "clebti" for purposes of State llawl, Securities Law, or Tax Law. The City willl not issue long-literm, debt for current operational needs,, except in the, event of an emergency, Types of long-term debt the City may issue,,, i nrTrn p l_Lq.&,p ,Sn.g.[A[q 9 _aTGO Bonds: LTaGO, debt isbypledgeofthefullfaithandcreditJ_ ofthe City and is payable frorn regular property taxes and other legally available funds. These bonds can be issued without a vote of registered voters, but are limited in, that debit service payments must be paid frorn legally available City revenue sources. The arnounit of LTG O outstanding debit cannot exceed the threshold stated above, Unlimited Tax General Ob il debt is secured by a pledge of the full faith and credit of the City and is Payable from excess property taxes and other legally ava4able funds. These blonds cain only be issued when authorized by a 610% majority vote of registered voters, (meeting the minimium voter turnout requirement), As part of the bialllot proposition, voters will approve the issuance of the UTGO debt and an excess property taix levy, as a completely new and dedicated source of revenue, to pay the debt service. The amount of UTGO, debt cannot exceed the thresholds stated above. Proceeds of UTGO debt are limited to capital purposes only and not the replacement of equipment. City of Tukwila Debit Policy Paige 7 of 10 124 Revenue Bonds: Revenue bondis are used to finance construction of and/'or improvements to facilities of enterprise systerns operated by the City in accordance with the Capiital Facilities Plain and are payable from and secured by a pledge of revenue of the enterprise, No taxing power or general fund pledge is provided as security, with the exceptilon, of double barrel bonds. Double -barrel bonds aire a type of municipalbond that are backed by enterprise funds and the I°ulli faith and credit of the City, Unlike geri obhgation bonds, revenue bonds are riot subject to the City's statutory debt limitation nor is voter approval required. Revenue bonds, may contain certahi covenants and obligations of the City, including but not limited to, future parity bond tests, annuai debt service coverage requirements, restrictions on disposal of the enterprise facility/utifty, and other terrnis to protect the stream, of revenue, pledged to the repayment of the revenue bonds. Reserve accounts may be created on a transaction-by-trainsaictiialriI basis. Any reserve account created shall be maintained and! funded as required by bond ordinances and as deemed advisable by the City Council) or the designated representative on behalf of the City. The City shall structure any debt service reserve fund to not violate the Tax Code. The City will strive for annual revenue bond diebit coverage of at least 1-5 times the annual debt service paid in such year. Additional bonds issued may be subject to additional bonds tests as described in, bond ordinances. Also referred to as Loral Improvement District (U11)), bonds, this type of debt is used to finance capital improvements that benefit pricil owners within, the LID, LID debit is repaid from annual assessments plaid to the City by property owners within the LID. LiDs, are formed by City Council following the process outlined in State statutes and chapter 13.0,4 TIVIC, The cost is borne, only by those who receive a, speclal benefit from the, improvements. LID debt is not part of the debt capacity calcullation, Other Debt llnstrurneintsInstruni such as public Works Trust Fund loal% or other financing, contracts issued through the State of Washington, federal grant loans, bond anticipation notes (BAN), tax anticipation notes ( TAN), bank loans, and/or other legal debit issues mialy Ibe iincurred ais allowed by law, Egiva rMR041 Refunding debit may be issued by the City in accordance with chapter 391.53 RCW. Refunding debt is typically issued to, taike advantage of lower interest rates for overall cost savings, restructure debt, or rnodify blond covenants, Refunding bonds are an acceptable use of bond proceeds provided that, and unless otherwise justifled and found to be in the best interest of the City, a) the net present vallue (NPV') of the overall savings (not by, rniaturity), is at least 3% and b) the finial] maturity date of the obligation is not extended. Other ConsideratJons The follovilling terms, shall be applied to the City's debt transactions, as appropriate. Individual terms may change as dictated by the marketplace or the unique qualities of the transaction. City of TiAwfla Debit Policy page 8 of 10 125 6 Maturity —The City shall Issue debt,with an average llife le ss than or equal to the average life oaf the assets being financed. U!nless otherwise stated in law, the final maturity of the debt shall be no longer than 40 years (RC'VV 39.46, 1 :to). 0 Debt Service Structure — Ulnlless otherwise justified, debt service should be structured on a level baisis ('i.e., level annual payments). Refunding bondls should be structured to, produce, equal savings by fiscal year. Unless otherwise Justified, debt shall not have capitalized interest, If appropriate, debt service reserve funds may be used for revenue bonds, 0 Price Structure — The City's long-term debt may include par, discount, and premium bonds. Cali Provisions — For each transaction, the City shall evaluate the costs and benefits of callll iprovrsllons, In general, the City shall opt for a call date no later than 10 Y, years from, the date of the bonds. 0 Tax -exemption — Ulnless otherwise justified and deemed necessary, the City shall issue its debt on a tax-exempt basis, 0 Reimbursement declaration -- Must be made prior to bond Issuance if the City intends to be reimbursed out of tax exempt bond proceeds for capital costs paid prior to the closing date. 0 The City will not use derivatives in, connection with any new financirigs, The City will not become obligated for any new City debt or otherwise be iinvolllved in, ainy new financing that would include a variable rate of interest or variable debt, service (excluding of any additional rent payable under a financing lease or other obligation for ongoing transaction fees), The City vwill comply with all federal, State, contractual restrictions and City policies regarding the investment of bond proceeds and associated funds subject to debt -related investment limitations. Such requirernents may include restrictions on, the type of securities allowed the yield on, such securities, and the length, of time that such proceeds and funds may be invested, For refunding escrows, the City may invest funds in State and Local Government Series (SLGSl securities issued by the US, Treasury, or, after satisfying requirements of Tax Law and if deterrnmed advisable after consultation, with the City's municipM advisor and bond counsel, in open -market securities as permitted under State law and relevant bond covenants, The City will maintain a system for tracking bond proceeds, Including how proceeds are invested, when they are spent, and for what purpose, Bond proceeds shall, unless otherwise permitted, be tracked separately from other City funds and on an issue by issue basis, The City shall maintain records related to the bonds for the life of the bonds (plus any refunding bonds) plus three years,, The City will, unless otherwise permitted, spend at least 85%, of tax-exeryipt bond proceeds within, three years frorn the date of issuance pursuant to Tax Law, and take such steps as necessary to avoid or manage arbitrage. The City will maintain a system, of recordkeeping and reporting to meet the arbitrage rebate compliance requirement of the IRS (Internal Revenue Service, IRC 148) regulation, For each bond issue, the recorcilkeeping will Include tracking the yield and Investment earnings on bondproceeds, calculating rebate payments, and remitting any rebate earnings to, the federal go vernment in a timely manner to preserve the tax-exempt status of the outstanding, debt obligation. Any bond proceeds invested will comply with the City's investment policy and strate,Oes, unless further restricted by bond covenant. "r'hie City of Tukwila Debt Policy Page 91 of 10 126 City may, when determined to be in the best interest of the City or required, contract with an arbitrage rebate consultant to assist with the arbitrage rebate calculation. The City will repay principal' plus interest in accordance, with the paynienitteirms of the bond or contract. Furthermore,, the City, will comply wlth all bond or contract covenants. This includes, but is not limited to, any undertakings to provide ongoing disclosure and notice of certain listed events under Securities Laws, Annual disclosure will take the form of the City's audited annual financial statements as well as other information required by the bond or contract that is not reasonably contained in the annual report, The City Finance Director will develop ands comply with all post -issuance compliance polides an dl procedures related to Tax Law and policies and procedures relating to, initial' and! ongoing disclosure under Securities Laws. The Finance Director and bond counsel wM coordinate their activities and reviiew all debt issuance to ensure that all secuiritilies are issued in, com:plliance with State and federal legal and regulatory requirements by the State law, Tax Law, Secuiriities Law, rules and regulations, The Finance Director may institute procedures to inipiernent this policy and other bond covenants and Provisions related to State law, Tax Law, Securities Law, rules and regulations applicable to the City's, debt. No derivative products shall be used in connection with City debt. MWOMM This debt policy must be adopted by Councill. The policy wiH be reviewed at least every four years by the Finance Department and modifications must be submitted to and approved by the Council, City of Tukwila Debt Policy Page, 10 of 10 127