HomeMy WebLinkAbout2010.10.25 Council Workshop Packet AGENDA
PASCO CITY COUNCIL
Workshop Meeting 7:00 p.m. October 25,2010
1. CALL TO ORDER
2. ROLL CALL:
(a) Pledge of Allegiance.
3. VERBAL REPORTS FROM COUNCILMEMBERS:
4. ITEMS FOR DISCUSSION:
(a) Human Resources Division Presentation. (NO WRITTEN MATERIAL ON AGENDA)
Presented by Lynne Jackson,Human Resources Manager.
(b) Tourism Promotion Area:
1. Agenda Report from Gary Crutchfield, City Manager dated October 19, 2010.
2. 2011 TPA Business and Marketing Plan (Council packets only; copy available in City
Manager's office for public review).
3. 2011 TPA Budget Summary.
4. 2011 TPA Special Project Expenditure.
(c) Public Development Authority (PDA) Option for City of Pasco Involvement in Downtown
Revitalization:
1. Agenda Report from Rick White, Community & Economic Development Director dated
October 19,2010.
2. Downtown Revitalization Advisory Group Report.
3. Draft Charter of a possible PDA.
4. RCW 35.21.730-755 Public Corporations.
(d) Local Improvement District No. 145 Bond Ordinance:
1. Agenda Report from Stan Strebel, Deputy City Manager dated October 20,2010.
2. Proposed Ordinance.
3. Preliminary Official Statement.
(Council packets only, copies of both documents available for public review in the City
Manager's office, the Pasco Library or on the city's webpage at http://www.pasco-
wa.gov/webgpp/ciiycouncilreports).
5. OTHER ITEMS FOR DISCUSSION:
(a)
(b)
(c)
6. EXECUTIVE SESSION:
(a)
(b)
(c)
7. ADJOURNMENT
REMINDERS:
1. 4:00 p.m., Monday, October 25, Port of Benton — Hanford Area Economic Investment Fund
Committee Meeting. (COUNCILMEMBER AL YENNEY,Rep.; SAUL MARTINEZ,Alt.)
2. 7:30 a.m., Thursday, October 28, 7130 W. Grandridge Blvd — Tri-Cities Visitor & Convention
Bureau Board Meeting. (COUNCILMEMBER MIKE GARRISON,Rep.; TOM LARSEN,Alt.)
3. 3:30 p.m., Thursday, October 28, Franklin County Emergency Management Office—Franklin County
Emergency Management Board Meeting. (MAYOR MATT WATKINS, Rep.; COUNCILMEMBER
TOM LARSEN,Alt.)
4. 4:00 p.m., Thursday, October 28, 7130 W. Grandridge Blvd — TRIDEC Board Meeting.
(COUNCILMEMBER MIKE GARRISON,Rep.; TOM LARSEN,Alt.)
5. 5:30 p.m., Thursday, October 28, 710 W. Court Street — Benton-Franklin Community Action
Committee Meeting. (COUNCILMEMBER AL YENNEY,Rep.; REBECCA FRANCIK, Alt.)
CITY OF PASCO, WASHINGTON
ORDINANCE NO.
AN ORDINANCE relating to Local Improvement District No. 145; fixing
the amount, form, date, interest rates, maturity and denominations of the Local
hmprovement District No. 145 Bonds; providing for the sale and delivery thereof
to Piper Jaffray& Co. in Seattle, Washington; and fixing the interest rate on Local
Improvement District No. 145 assessment installments.
THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN as
follows:
Section 1. Recitals; LID Formation and Puraose.
(a) Pursuant to Ordinance 3872, passed August 4, 2008, the City of Pasco,
Washington (the "City"), created Local Improvement District No. 145 (the "District") to finance
the costs of certain street and sidewalk improvements to "A" Street between Elm Avenue and
East Road 40 within the City(the "Project").
(b) It appears to the City Council of the City that it is in the best interest of the City to
issue, sell and deliver the local improvement district bonds authorized and described in this
ordinance (the "Bonds") for the purpose of providing long-term financing for the Project.
(c) Piper Jaffray & Co., Seattle, Washington, has presented a purchase contract
(the"Bond Purchase Contract") to the City offering to purchase the Bonds under the terms and
conditions provided in the Bond Purchase Contract, which written Bond Purchase Contract is on
file with the City Clerk and is incorporated herein by this reference.
(d) The total amount of the assessment roll in the LID was $1,460,522.76. The
30-day period for making cash payments of assessments without interest to the District expired
on October 19, 2010, and $675,393.5 of assessments were paid during this period. The balance
of assessments unpaid on the assessment roll is therefore $785,129.25. Local Improvement
District No. 145 Bonds (the "Bonds") shall, therefore, be issued in the total principal sum of
$785,129.25.
Section 2. Authorization and Description of Bonds. The City shall issue "City of Pasco,
Washington, Local Improvement District No. 145 Bonds, 2010" (the "Bonds") to (i) pay the
costs of the Project, (ii) reimburse or repay funds obtained from interfund loans, interest-bearing
warrants, installment notes, or other short-term obligations issued to pay costs of the Project, and
(iii) to pay the costs of issuance of the Bonds.
The Bonds shall be issued in the total principal sum of $785,129.25, being the total
amount on the assessment roll of the LID subject to assessment and remaining uncollected after
the expiration of the 30-day interest-free prepayment period for assessments on the assessment
roll for that LID. The Bonds shall be dated the date of the initial delivery, shall mature on
November 15, 2022, and shall be numbered in such manner and with any additional designation
(including CUSIP numbers) as the fiscal agent of the State of Washington (as the same may be
designated by the State of Washington from time to time) (the "Bond Registrar") deems
necessary for the purpose of identification.
The Bonds shall mature on November 15, 2022, shall be in the denomination of
$5,000.00 each or any integral multiple thereof, except for one Bond within the first annual
group on the Estimated Redemption Schedule assigned CUSIP Number shall be in the
principal amount of$5,129.25, and shall bear interest from their date to the maturity or earlier
redemption of the Bonds, payable annually on November 15 of each year beginning November
15, 2011, at the rates per annum shown on the following Estimated Redemption Schedule:
ESTIMATED REDEMPTION SCHEDULE
Estimated
Redemption Dates CUSIP Estimated Interest
(November 15) Numbers Amounts Rates
2011 75,129.25
2012 75,000.00
2013 75,000.00
2014 75,000.00
2015 75,000.00
2016 75,000.00
2017 75,000.00
2018 75,000.00
2019 75,000.00
2020 110,000.00
Interest on the Bonds shall be calculated on the basis of a 360-day year with 30-day months. As
used in this ordinance, "CUSIP Numbers" shall mean the identification numbers (or replacement
identification numbers) assigned by the CUSIP Service Bureau or its successor to any of the Bonds.
Section 3. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on books or records
maintained by the Bond Registrar (the "Bond Register"). Such Bond Register shall contain the
name and mailing address of the owner of each Bond and the principal amount and number of
each of the Bonds held by each owner.
Bonds may be transferred only if endorsed in the manner provided thereon and
surrendered to the Bond Registrar. The transfer of a Bond shall be by the Bond Registrar's
receiving the Bond to be transferred, canceling it and issuing a new certificate in the form of the
Bonds to the transferee after registering the name and address of the transferee on the Bond
Register. The new certificate shall bear the same CUSIP number as the transferred Bond but
may have a different inventory reference number or control number. Any exchange or transfer
shall be without cost to the owner or transferee. The Bond Registrar shall not be obligated to
exchange or transfer any Bond during the 15 days preceding any principal payment or
redemption date.
The Bonds initially shall be registered in the name of Cede & Co., as the nominee of The
Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall be
held in fully immobilized form by DTC as depository in accordance with the provisions of a
Blanket Issuer Letter of Representations dated August 31, 1998,between the City and DTC (as it
may be amended from time to time, the "Letter of Representations"). Neither the City nor the
Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for
whom they act as nominees with respect to the Bonds regarding accuracy of any records
maintained by DTC or DTC participants of any amount in respect of principal of or interest on
the Bonds, or any notice which is permitted or required to be given to registered owners
hereunder(except such notice as is required to be given by the Bond Registrar to DTC).
For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its
successor depository shall be deemed to be the registered owner for all purposes hereunder and
all references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominee and, except for the purpose of the City's undertaking herein to provide continuing
disclosure, shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof,may not thereafter be transferred except: (i) to
any successor of DTC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
appointed by the City or such substitute depository's successor; or (iii) to any person if the
Bonds are no longer held in immobilized form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 4. Pavment of Bonds. Both principal of and interest on the Bonds shall be
payable solely out of the Local Improvement Fund, District No. 145 (the "Bond Fund"), created
pursuant to Section 5 of Ordinance No. 3872, and the Local Improvement Guaranty Fund of the
City (the "Guaranty Fund"), created pursuant to 3.08.010 of the Pasco Municipal Code. The
Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds
shall be paid by checks or drafts mailed on the interest payment date, or if requested in writing
prior to the Record Date by a Registered Owner of Bonds, by electronic transfer on the interest
payment date to Registered Owners of the Bonds as those Registered Owners and their addresses
and accounts appear on the Bond Register on the Record Date (or other record date established in
the Bond Resolution), but only if the requesting Registered Owner pays the costs of such
electronic transfer. Principal of and premium, if any, on the Bonds shall be payable at maturity
or on such date as may be specified for prior redemption upon presentation and surrender of the
Bonds by the Registered Owners to the Bond Register. Notwithstanding the foregoing, for as
long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and
interest on the Bonds shall be made in the manner set forth in the Letter of Representations.
Section 5. Guaranty Fund. The Guaranty Fund was established for the purposes of
guaranteeing, to the extent amounts are available, the payment of the City's current and future
local improvement bonds, including the Bonds. The City shall maintain an amount in the
Guaranty Fund equal to the greater of 10 percent of the principal amount of all outstanding local
improvement district bonds or the aggregate debt service due in the next calendar year based on
the Estimated Redemption Schedule shown in Section 2.
Section 6. Bond Redemption Fund. Prior to the issuance of the Bonds, any money on
hand representing collections pertaining to prepayments or installments of assessments, and
interest thereon, shall be transferred to and deposited in the Bond Fund; that money may be used
for costs of the Project or for the redemption of Bonds, as determined by the City Financial
Services Manager. All collections pertaining to assessments on the assessment roll of Local
Improvement District No. 145 that are collected after the issuance of the Bonds shall, when
received, be deposited in the Bond Fund, and until the Bonds are redeemed or otherwise
provided for, those collections shall be used to redeem Bonds or to pay for costs of collecting
delinquent assessments.
Accrued interest on the Bonds received from the sale and delivery of the Bonds, if any,
together with any net premium received from the sale and delivery of the Bonds that is not
necessary to pay the costs of issuance and sale of the Bonds, shall be paid or allocated into the
Bond Fund prior to the first debt service payment date with respect to those Bonds. Until needed
to pay the costs described herein, the City may invest principal proceeds of the Bonds
temporarily in any legal investment, and the investment earnings shall be deposited in the Bond
Fund. Earnings subject to a federal tax or rebate requirement may be withdrawn from any such
fund or account and used for those tax or rebate purposes.
Section 7. Redemption Provisions. The City reserves the right to redeem the Bonds prior
to their stated maturity on any interest payment date, in chronological order, beginning with the
lowest CUSIP number as described on the Estimated Redemption Schedule shown in Section 2,
as indicated by the respective CUSIP Numbers assigned to each annual group and shall call
Bonds for redemption in order of the Estimated Redemption Schedule whenever there shall be
sufficient money in the Bond Fund to pay the Bonds so called over and above the amount
required for the payment of the interest payable on that interest payment date on all unpaid
Bonds. All Bonds redeemed under this section shall be cancelled.
Portions of the principal amount of any Bond, in integral amounts of$5,000 (or $5,000
plus such other denomination within the first estimated redemption group assigned by CUSIP
number) may be redeemed, unless otherwise provided in the Bond Resolution. If fewer than all
of the outstanding Bonds of an annual group from the Estimated Redemption Schedule are to be
called for redemption, the selection of specific Bonds for redemption within that annual group
shall be at random, and for as long as the Bonds are registered in the name of DTC or its
nominee, the selection shall be in accordance with the operational arrangements of DTC, then in
effect, as referenced in the Letter of Representations.
Section 8. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 15 nor more than 30 days prior to the date fixed
for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be
redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by the registered
owner of any Bond. Interest on Bonds called for redemption shall cease to accrue on the date
fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant
to the call. In addition, the redemption notice shall be mailed within the same period to any
rating agency then maintaining a rating on the bonds at the request of the City, and to such other
persons and with such additional information as the Financial Services Manager shall determine,
or as specified in the Bond Resolution,but none of these additional mailings shall be a condition
precedent to the redemption of Bonds.
Notwithstanding the foregoing, for as long as the Bonds are registered in the name of
DTC or its nominee, notice of redemption shall be given in accordance with the Letter of
Representations.
Section 9. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at
the same rate provided in the Bond from and after its maturity or call date until that Bond, both
principal and interest, is paid in full or until sufficient money for its payment in full is on deposit
in the Bond Fund and the Bond has been called for payment by giving notice of that call, postage
prepaid, to the registered owner of each of those unpaid Bonds.
Section 10. Pledge of Assessment Payments. Assessments collected in the District,
together with interest and penalties, if any, are pledged to the payment of the Bonds which are
payable solely out of the Bond Fund and the Local Improvement Guaranty Fund of the City in
the manner provided by law. The Bonds are not general obligations of the City.
Section 11. Form and Execution of Bonds. The Bonds shall be prepared in a form
consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and
the City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of
the City or a facsimile reproduction thereof shall be impressed or printed thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Pasco, Washington, Local
Improvement District No. 145 Bonds, 2010 described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENT
Bond Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the
Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the
benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless
may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall
be as binding on the City as though that person had continued to be an officer of the City
authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person
who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds,
although he or she did not hold the required office on the date of issuance of the Bond.
Section 12. Bond Registrar. The fiscal agent of the State of Washington (as the same
may be designated by the State of Washington from time to time) is appointed as the Bond
Registrar for the Bonds. The Bond Registrar shall keep, or cause to be kept, sufficient books for
the registration and transfer of the Bonds which shall be open to inspection by the City at all
times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds
transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to
serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers
and duties under this ordinance and City Ordinance No. 2845 establishing a system of
registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the
extent permitted by law, may act as depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any committee formed to protect the
rights of Bond owners.
Section 13. Preservation of Tax Exemption for Interest on Bonds. The City covenants
that it will take all actions necessary to prevent interest on the Bonds from being included in
gross income for federal income tax purposes, and it will neither take any action nor make or
permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the
Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirement of Section 148 of the Internal Revenue Code of 1986,
as amended (the "Code"), is applicable to the Bonds, take all actions necessary to comply (or to
be treated as having complied) with that requirement in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative to
calculating rebatable arbitrage, and the payment of any other penalties if required under Section
148 of the Code to prevent interest on the Bonds from being included in gross income for federal
income tax purposes.
Section 14. Designation of Bonds as "Qualified Tax Exempt Obligations." The City has
determined and certifies that (a) the Bonds are not"private activity bonds"within the meaning of
Section 141 of the Code; (b) the reasonably anticipated amount of tax exempt obligations (other
than private activity bonds and other obligations not required to be included in such calculation)
which the City and any entity subordinate to the City (including any entity which the City
controls, which derives its authority to issue tax exempt obligations from the City or which
issues tax exempt obligations on behalf of the City) will issue during the calendar year in which
the Bonds are issued will not exceed $30,000,000; and (c) the amount of tax exempt obligations,
including the Bonds, designated by the City as "qualified tax exempt obligations" for the
purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are
issued does not exceed $30,000,000. The City designates the Bonds as "qualified tax exempt
obligations" for the purposes of Section 265(b)(3) of the Code.
Section 15. Use of Bond Proceeds. The principal proceeds of the Bonds shall be used to
finance the costs of carrying out improvements in the District and repaying interim financing for
District improvements and to pay the costs of issuance of the Bonds. Until needed to pay those
costs, the City may invest principal proceeds temporarily in any legal investment, and the
investment earnings may be retained in the Bond Fund and be spent for the purposes of that fund,
and earnings subject to a federal tax or rebate requirement may be used for those tax or rebate
purposes.
Section 16. Approval of Bond Purchase Contract. Piper Jaffray & Co., of Seattle,
Washington, has presented a purchase contract (the "Bond Purchase Contract") to the City
offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase
Contract, which written Bond Purchase Contract is on file with the City Clerk and is
incorporated herein by this reference. The City Council finds that entering into the Bond
Purchase Contract is in the City's best interest and therefore accepts the offer contained therein
and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, together with the approving legal opinion of Foster
Pepper PLLC,municipal bond counsel, regarding the Bonds.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser, including without limitation the execution of the
Official Statement on behalf of the City, and for the proper application and use of the proceeds of
the sale thereof.
Section 17. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated October _, 2010
(the"Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For
the sole purpose of the Bond purchaser's compliance with Securities and Exchange Commission
Rule 15c2-12(b)(1), the City "deems final" that Preliminary Official Statement as of its date,
except for the omission of information as to offering prices, interest rates, selling compensation,
aggregate principal amount, principal amount per maturity, maturity dates, options of
redemption, delivery dates,ratings and other terms of the Bonds dependent on such matters.
Section 18. Fixing Interest Rate on Assessments. The interest rate on installment
payments of special assessments are [revised/confirmed] and fixed at the rate of %. Each
delinquent installment is subject, at the time of delinquency, to a charge of 5%penalty levied on
both principal and interest due upon that installment, and all delinquent installments also will be
charged interest at the rate of 8%per annum as set forth in Pasco Municipal Code 14.04.050.
Section 19. Effective Date of Ordinance. This ordinance shall take effect and be in force
from and after its passage and five days following its publication as required by law.
PASSED by the City Council and APPROVED by the Mayor of the City of Pasco,
Washington, at a regular open public meeting thereof this 1St day of November, 2010.
Mayor
ATTEST:
Debra L. Clark, City Clerk
APPROVED AS TO FORM:
Leland B. Kerr, City Attorney
PUBLISHED:
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 21,2010
NEW ISSUE NON-RATED
BOOB-ENTRY ONLY BANK QUALIFIED
E F, Ir rise opinion oJBorrd Counsr�under existing lerlernl lain aria assuming mnrjrliarrde will)rrpplicanle regturcments of Ibc ruder;ra!Renenus Code ref 1986,as amended(the
E.a 'Code')that mdr,�7 he satisfied svbsequem to the issue date of the Bandr,intewt on the Bonds is e alurled/iorngrrirs iudome Jor federg�l sirrorne taxputposed mJd a roI
.ml jca t0 dfA'JCdC7%1l alfelYlallLY Ivia4im m tay. H&Awi er:hidena on Bonds fraiped by cezladn S cntomdow tv y"he sabiecY to tax.and rnteast on the Bonds received by
p JOJrtgn alrpola/eoru ryifh I;nL*ed States bmnthes mn),Ix.cu6jett to a 6 dgii hwneb prbfrh tax. Recept of interZSt on the Bourh=9 have other felon!tax rnnreguvues
,for da7tain ta.\Pa m See Ifie Cabdions'TAX EXEMP770;\"and'CER'l AIN O"THEK FEDERAL TAX CONSE2UM'�CES"herein.
� R
CITY OF PASCO,WASHINGTON
•Q u
$785,129.25M
LOCAL IMPROVEMENT DISTRICT NO.145 BONDS,2010
t; DATED: Date of Initial Delivery DUE:November 15,2022
�a
o
The City of Pasco,Vrashingron,Local Improvement District No. 145 Bonds,2010(the"Bonds")will be issued as fully registered
bonds under a book-entry only system,registered in the name of Cede&Co-as bondowner and nominee for DTC. DTC will act
as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entry form in the
r: r denomination of$5,000 or any integral multiple thereof, except for one Bond in the amount of$5,129.25. Purchasers will not
§ receive certificates representing their interest in the Bonds purchased.
" Interest on the Bonds will be paid annually on each November 15, begiuuung November 15,2011,to and including the maturity.
3! date or earlier redemption datc.'1"he principal of and interest on the Bonds are payable by the City's Bond Registrar,currently the
b a fiscal agent of the State of Washington (currently The Bank of New York Mellon in New York, Nea--York), to DTC,which is
"o obligated in turn to reinit such payments to its participants for subsequent disbursement to beneficial owners of the Bonds,as
s LA P Y P' P' 9
e described in"Description of the Bonds -Book-Entry Transfer System"and in appendix C.
c ° �
The Bonds are being issued to a for the costs of certain improvements (including with interest, an interfund loan
3 � � being pay P (� g
s T, drawn upon during construction of the improvements),as described herein under"Local Improvement District No. 145 - The
a Js' Project," and to pay the costs of issuance of the Bonds. See "Use of Proceeds." The Bonds may be redeemed prior to their
estimated redemption date on November IS of any year if sufficient assessment payments arc available in die Local Improvement
r Fund,District No. 145 (the "Bond Fund') for such puiposc,The Bonds will be redeemed in order of their CUSIP Numbers,as
shown on the inside front cover, in accordance with DTC procedures, in such amounts as are available in the Bond Fund in
excess of the amoiuit necessary to pay interest currently due on all unpaid Bonds. See"Description of the Bonds-Redemption."
° The principal amount of Bonds to be retired each year is only an estimate. Depending on the rate of payment of assessments,
d O c
Bonds may be called earlier or later than shown (but in no event later than November 15, 2022) wDiets could affect the yield on
the Bonds.
�� a
i_ tF The Bonds are special fluid obligations of the City of Pasco,Washington (the"Cited'),payable solely out of the Bond Fund,to be
r g horded from collections of local improvement district assessments le-cried against the benefited properties located within the
^o` boundaries of Local Improvement District No. 145,and the City's Local Improvement Guaranty Fund,as more fully described
" ? herein under "Security and Sources of Payment for the Bonds." The Bonds do not constitute an obligation of the State of
W6'ashin on or an political subdivision thereof other than the City,and neither the fiill faith and credit nor the taxin power of
.5 � any t}',. gP
R
g�g the City is pledged to the payment of the Bonds.
r City has designated the Bonds as "QUALIFIED T X-FXF.IIPT OBLIGATIONS" for banks, thrift institutions:aid other
b
3 Financial institutions.
ESTIMATED REDEMP'T'ION SCHEDULE LOCATED ON INSIDE FRONT COVER
ts.�
6-0.d
a The Bonds are offered for delivery by the Undenvriters when,as and if issued,subject to the approving legal opinion of Foster
do a Pepper PLLC, Seattle, Washington, Bond Counsel. The form of Bond Counsel's opinion is attached as Appendix B. It is
anticipated that the Bonds will be available for delivery at DTC's facilities in New York, New York, or delivered to the Bond
o.'^ Registrar on behalf of DTC by Fast Automated Securities Transfer on or about November 16,2010.
z This:-omrpage domains drrxain i*ixtatioit fir quick nfereno only. It it riot a rwnmarg of thu issue. Investors must rears the entire Offiaal Statement to obtain
cinformakoa ersenkal to the making ofau iufomied investimia dedarim.
R^ B '�Prefiminar subjea to c&,n e.
a a 4e
PiperJaffray.
ESTIMATED REDEMPTION SCHEDULE
CITY OF PASCO,WASHINGTON
$785,129.25'
LOCAL IMPROVEMENT DISTRICT NO. 145 BONDS,2010
TERM BONI)
ESTIMATED
REDEMPTION
DATE ESTIMATED INTEREST YIELD/
NOVEMBER 15(1) .AMOUNT(t) RATE PRICE CUSIP No.nl
2011 $75,129.25 702i62—
2012 75,,000.00 702562—
2013 75,000.00 7 02562—
2014 75,000.00 7 02562 ,
2015 75,000.00 702562 _
2016 75,000.00 702562—
2017 75,000.00 702562—
2018 75,000.00 702562—
2019 75,000.00 702502—
2020 110,000.00 702562—
(t) The maturity date of the.Bonds is November 15,2022. '11c estimated redemption schedule is hawed ran an assumpdon
that there will be uo additional prepayments of asses-,waents, but the City attticipatac there ,%iU be such prepayments,
although it is difficult to predict whether or when assessment prepayments would occur.Bonds may be called earlier than
shown above depending on the receipt of the payment of asscssincnts. See"Description of die Bonds - Redemption of
}fonds"
M Copyright Cc's 2010 CUS111 Global Services. The CUSIP numbers are included for cunvcnience of the holders and
potential holders of the Bondq. (:IISIP is a rgiistered trademark of the uncriean Bankers Association. CUSIP Global
Services (CC,,;) is managed on behalf of the American Bankers Association by Standa,d and Pour'r. No assucancc can be
given that the(XS1P numbers for the Bands will remain the same after the date of issuance and delivery of the Bond.
t Prelimitiavy snbjecr to change.
i
No dealer,broker, sales represcnrative or other person has been aurhori7-ed by the City ox Yiper.J,tffiay& Co.
(tine "Undenvuter") to give. any information or to make any representations with respect to the Bonds other
than those contained herein and,if given or made,such other information or representations must not be relied
upon as having been authorized by any of the foregoing. This Official Statement does nut constitute an offer
to sell or the solicitation of an offer to buy, nor there be any sale of the Bonds by any person, in any
jurisdiction in which it is unlawful for such person to make such offer,solicitation or sale.
The information set forth or included in this Official Statement has been provided by the City and from other
sources believed bN the City to be reliable but is not guaranteed as to accLuacy or completeness and it is not to
be construed as a representation by the Underwriter. The Undemriter has reviewed the information in this
Official Statement in accordance with, and as a part of, its responsibilitics to investors under the federal
securities haws as applied to the facts and circumstances of this transaction, but the Underwriter does not
guarantee the accuracy or completeness of such information. The information and expressions of opinion
hereiui are subject to change without notice, and neither the delivery of this Official Statement nor ,uny sale
hereunder shall create any implication that there has been no change in the funaii6d condition or operations of
the City described herein since the date hereof. Thin Official Statement contaians,in part,estimates and matters
of opinion that ate not untended as sratcsnctnts of fact, and no represcntation or warranty-is made as to the
corxcctness of Ruch estimates and opinions or that they will be realized.
The Bonds have nor been registered with the Secwiries and Exchange Commission under the Securities Act of
1933, in reliance upon a specific exemption contained in such act. The Bonds may, however, be subject to
regisnation or qualification under the securities laws of various states, and may nor be transferred in violation
of such state laws. The registration or qualification of the Bonds in accordance with appticable provisions of
the securities laws of the Mates in which the Bonds have been registered or qualified,if any, and exemption
from registration or qualification in other states,shall not be,-egarded as a recommendation thereof No state
nor any state or federal agency has passed upon the merits of these Bonds or the accuracy or completeness of
this Official Statement. Any representation to the contrary may be a criminal offense.
This Preliminary Official Statement has been"deemed final"as of its date by the City pursuant to Rule 15c2-12
of the Securities and Exchange Cortltnissnon except for the omission of offmi ng prices, interest rates, selling
compensation,aggregate principal amount, principal amount per maturity, delivery dates, and other terms of
the Bonds depending on such matters,in accordance with Section 240.15c2.12(h)(1) of Chapter 11 of Title 17
of the Code of Federal Regulations. The City has also undertaken to provide continuing disclosure on ceLrain
matters, including annual funancial information and specific material events, as more frilly described herein
under"CONTINUING DISCLOSURE UNDERT A K I N CY."
ii
CITY OF PASCO,WASHINGTON
525 NORTH THIRD AVENUE
P.O.BOX 293
PAsCo,WA 99301
(509)545-3404
www.pasco-wa.gov*
ELECTED OFFICIALS
fVletnbels Term W'igpirES
Matt\Watkins Mayor December 31,2011
Rebecca Fraticik Mayor Pro-Tem December 31,2011
Robert Iloffmann Council Member December 31,2013
Michael Garrison Council Member December 31,2013
Tom Larsen Council Member December 31,2013
Saul Martinez Council Member December 31,2011
Al Yenncy Council Member December 31,2011
CITY ADMINISTRATIVE STAFF
Gary Crutchfield City Manager
Richard Tenvay Administrative and Community Scirviccs Director
Dunyele Mason Financial Services Manager
Ahmad Qayouni Public\Yorks Director
Michael McShane City Engineer
Denis Austin Police Chief
Robert Gear Fire Chief
BOND REGISTRA.RAND PAYINGAGENT
The Bank of New York Mellon
New York,New York
BOND COUNSEL
Foster Pepper PLLC
Seattle,Washington
UNDERWRITER
Piper Jaffray
Seattle,Washington
The City's website is not part of this Official Staternen,and investors should not rely on iniforinadOn
presented in the City's ;vebsite in determining whether to purchase the Bonds. This inactive textual
reference to the City's website is not a hyperlink and does not incorporatc the City's websire by reference,
iii
TABLE OF CONTENTS
INTRODUCTION............................................. 1 CITY PROFILE(Cont.')
Budgeting Process..........................................._ 12
DESCRIPTION OF THE BONDS ...................... 1 Auditing of City Finances.................................. 12
General .............................................. I Authorized Investments.................................... 13
Redemption of Bonds...................................... I
City Failure to Pny Bonds„- .................... 2 GENERAL AND ECONOMIC INFORMATION.. 14
Book Enrry Transfer System.............................. 2 Population..................................................... 14
Pa)anent of the Bonds...................................... 2 Largest Employcis------------------- ....................... 14
Economic Data............................................... 14
USE OF PROCEEDS ......................................... 3
Sources and Uses of Funds ............................... 3 INITIATIVE AND REFERENDUM.................... 16
SECURITY AND SOURCES OF PAYMENT TAX MATTERS................................................. 16
FOR THE BONDS ......................................... 3 Exclusion from Gross Income .------------------........ 16
Sources of Payment-------------- 3 Continuing Requirements....... __,_-_____......•__.... 16
Payment of Assessment....---,-•-------------------------- 3 Alternative Minimum`fax ................................. 16
Delinquent Assessments,Assessment Lien Tax on Certain Passive investment Income
and Foreclosure...................----------------------- 4 of S Corpotations ----.- 16
Guaranty Fund............................................... 4 Foreign Branch Profits Tax................................ 17
----------------------------
Possible Consequences of Tax Compliance Audit... 17
LOCAL IMPROVEMENT DISTRICT NO.145..... 5 Certain Other Federal Tax Consequences.............. 17
Local Improvement Districts-Generally.............. 5
The Pn-oject anti Subject Properties...................... 5 ABSENCE OF MATERIAL LITIGA'T'ION ........... 17
Assessed Valuation Determination...................•.. 6
Assessments .................................................. 8 CONTINUING DISCLOSURE ........................... 17
BONDOWNERS'CONSIDERATIONS............... 8 BOND RATING................................................. IS
Special Obligations of the City........................... S
Estimated Redcrnption Dams ............................ h APPROVAL OF BOND COUNSEL ..................... 18
Secondary Market...... .................................... 8
Debt Service Payr ncn t______________________________________ 8 CONFLICTS OF INTEREST.............................. 18
Foreclosure ... .................... ---------- -------------- 9
Priority of Lien----------------------------------------------- 9 LT NDERWRITING.--....------------........•----..........._. 18
Debt Pa}nnent Record-------------- 9
Future LID Financings...... ..................... 9 CONCLUDING STATEMENT........................... 18
CITY PROFILE........................ ------------- .......... 9
City Council ..................................... 9 APPENDIX A: 2()09 A1JD1T1!',I)FINANCIAL
Key A dministra6veStaff..--------------------------------- 9 STAT&NIENTS
Labor Relations................................. ------------ 10
Rctircment Plans ---------------------•....... .............. 10 APPENDIX B: FORM OF LEGAL OPINION
Other Post-Employment Bane&......................... 11
Insurance Cove-rage......................................... 12 APPENDIX C: DTC c4:BOOK-ENTRY SYSTEM
iv
PRELIMINA R Y OFFICLILL STATEML'NT
CITY OF PASCO,WASHINGTON
$785,129.25*
LOCAL IMPROVEMENT DISTRICT NO.145 BONDS,2010
INTRODUCTION
The City of Pasco,Washington(the"City"),a municipal corporation duly organized and existing under and by virtue of the
lams of the State of Washington (the "State"), furnishes this Official Statement ul connection with the offering of
$787,129.25*principal amount of Local Improvement District No. 145 Bonds (the"Bonds"),dated the date of their initial
delivery. 1'he aggregate principal amount of the Bonds represents the portion of the assessment roll for Local
Improvement District No. 145 (the"Lill")remaining uncollected after the expiration of the 30-day prepayment period for
making cash payments without interest penalty or cost. This Official Statement, which includes the cover page and the
appendices, contains certain information rrlated to such offering and sale concerning the City and the Bonds.
The Bonds are being issued to pay for the costs of certain improvements, as described under "Use of Proceeds." The
Bonds are issued by the City pursuant to Titles 35 and 39 Revised Code of Washington ("RCW") and as authorized by
Ordinance (the"Bond Ordinance")of the City Council passed on November 1,2010.
Appendix A to the Official Statement contains excerpts of the City's 2009 ?audited Financial Statements. appendix B
includes the form of legal opinion of Foster Pepper PLLC of Seattle,NNashington (the "Bond Counsel"). Appendix C is a
description of DTC procedures with respect to book-entry=bonds. Capitalized terms that are not defined herein have tine
meanings set forth in the Bond Ordinance.
DESCRIPTION OF THE BONDS
General
The Bonds will be dated the date of their initial delivery and will be issued in the principal amount of$787,129.25*. The
Bonds will bear interest at the rate and mature oil the dates set forth on the inside cover page of this Official Statement.
Interest on the Bonds shall be calculated on the basis of a 360 day year consisting of twelve 30 day months, and shall be
payable annually on each November 15,cotmnencing November 15,2011.
The Bonds will be issued only as fully registered bonds under a book entry system,initially registered in the name of Cede
& Co., as notninee for DTC,which will act as securities depository for the Bonds. Individual purchases of the Bonds will
be made in the principal amount of$5,000 each or any integral multiple thereof within a single mattu-ity, except for one
Bond in the amount of$5,129.25. Both principal of and itnterest on the Bonds shall be payable in lawful money of the
United States of America. The fiscal agency of the State of Washington in New York,New York (cnruentlti The Bank of
New York Mellon) will act as Bond Registrar for the Bonds. Purchasers will not receive certificates representing their
interest in the Bonds. Sec Appendix C.—"BOOK-ENTRY SYSTEM."
Redemption of Bonds
The Bonds may be redeemed prior to their estimated redemption date oil any interest payment date (i.e., any November
15).The Bonds will be redeemed at par in order of their CUSIP numbers from lowest to highest (as indicated on the inside
front cover) if sufficient assessment payments are available in the Local Improvement fund, District No. 145 (the "Bond
Fund") over and above the amount necessary to pay interest currently due on all outstanding Bonds. All Bonds so
redeemed will be canceled.
The principal amount of Bonds to be redeemed each year is only an estimate.The Bonds may be redeemed earlier or later
than indicated by the estimated redemption schedule shown on the inside front coves of this Official Statement,dclxnding
on the rate at which property assessments are paid (but no later than November 15,2022) which could affect the yield on
the Bonds. The estimated redemption schedule and the interest rates on the Bonds are based on an assumption that the
assessments not paid at the expiration of the 30-day prepayment period will be paid in 10 equal annual principal
installments.Property owners may prepay those assessments at any time,arith interest to the next installment due date.Tile
estimated redemption schedule on the uiside front cover is based on an assumption that there will be no additional
prepayments of assessments,but the City anticipates that there will be such repayments,recognizing that it is difficult to
Trclimtnary,subject to change.
1
to predict whether or when prepayinnents might occur. In addition, it is possible that some property owners will not liay
their assessments when due. See "Security and Sources of Payment for the Bonds - Payment of assessments" for tnore
information on the estunated redemption schedule and delinquent assessments.
For as long as the Bonds are in book-entry only form, if fewer than all of the Bonds of a CUSIP number are called for
redemption, the selection of Bonds within a CUSIP number to be redeemed will be made by DTC in accordance with its
operational procedures then in effect. See .ipl-)endix C attached hereto. If the Bond-, are too longer held in boob-entry only
form, then the Bond Registrar would randomly select Bonds within a CUSIP number for redemption in increments of
$5,000(or$5,000 plus such other denominations within the first estimated redemption group assigned by CUSIP number).
Notice nt'Redenrption. Notice of any intended redemption will be given not less than 15 nor more than 30 days prior to the
redemption date by first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address
appearing on the Bond Register at the time the Bond Registrar prepares the notice.The requirements of this section will be
deemed to have been fulfilled when notice is mailed,whether or not it actually is received by the Registered Owner of any
Bond. As long as the Bonds are held in book entry form, notices will follow procedures established by the securities
depository, See"Descriptiun of the Bonds—Book-Entry Transfer System"
Interest on the Bonds will cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not
redeemed when presented. The redemption notice will be mailed wwitivn the same period to any rating agency then
maintaining a rating on the Bonds at the request of the City,and to such other person and with such additional information
as the Financial Services'Manager determines or as specified in the Bond Ordinance. None of the mailings are a condition
precedent to redemption of the Bonds.
City Failure to Pay Bonds
If any Bond is not paid when properly presented at its maturity or call date, the City is obligated to pay interest on that
Bond at the rate shown on the inside front co-ver until that Bond is paid in full or until sufficient money for its payment in
fill is on deposit in the Bond Fund and that Bond has been called for payment_
Book-Entry Transfer System
Book Ewliy Bomh-. DTC will act as initial securities depository for the Bonds. The ownership of one fully registered Bond
for each estimated annual redemption date group (i.e., for each CUSIP number) of the Bonds, as set forth on the inside
front cover of this Official Statement, each in the aggregate principal amount of all the Bonds in that group (CUSIP
number),will be registered in the name of Cede and Co.,as nominee for DTC. See appendix C for additional information.
As indicakd themin, certain in{arnsation in Appendix C bas been provided by DTC. The City makes no presentation as to the accxracy or
completener.r Mary' purchasers of the Bonds shxild coeiiom dais inn iimation with D'1.'C or its panhipants.
Termination of Book-Entry Transfer System. If DTC resigns as the securities depository and the City is unable to retain a
qualified successor to DTC,or if the City determines that a continuation of the book-entry transfer system is not in the best
interest of the City, the City will deliver at no cost to the beneficial o-wners of the Bonds or their nominees Bonds in
registered certificate form,in the denomination of$5,000(or$5,000 plus such other denomination) or any integral multiple
thereof.Thereafter,the principal of the Bonds will be.payable upon due presentment and surrender thereof at the principal
office of the Bond Registrar.interest on the Bonds ,will be payable by check or draft mailed on the interest pal^nietnt date to
the persons in whose name the Bonds are registered,at the address appearing upon the Bond Register on the 15th day of
the month prcccding an into•cst payment date.
Payment of the Bonds
Both principal of and interest on the Bands are payable solely out of the Local Improvement Fund,District No. 145 (the
"Bond Fund'} and the Local Improvement Guaranty Fund of the City, created pursuant to chapter 3.08 of the Pasco
Municipal Code. See "Security and Sources of Payment for. the Bonds." The Bonds are payable in lawful money of the
United States of America. Interest on the Bonds will be paid by checks or drafts of the Bond Registrar nnailed on the
interest payment date, or,if requested in writing prior to the Record Date by a Registered Owner of Bonds, by electronic
transfer on die interest payment date to Registered Owners of the Bond-, as those Registered ClNvners and their addresses,
and accounts appear on the Bond Register on the Record Date (or other record date established in the Bond Resolution),
but only if the requesting Registered Owner pays the costs of such electronic transfer. Principal of and premium,if any,on
the Bonds shall be payable at muaturity or on such date as may be specified for prior redemption upon presentation and
surrender of the Bonds by the Registered Owners at the principal corporate trust office or offices of the Bond Registrar.
Noty ithstanding the foregoing, payment of any Bonds registered in the name of DTC or its nominee will be made in
accordance,x ith the Fetter of Rept;esentations.
2
USE OF PROCEEDS
The proceeds of the Bonds will be used(i) to pay for costs of improvements to "A"Street(from Him Ave. to East Rd 40)
to the City's standards, includuig curb, gutter, storm water utility system, bicycle path and roadway and certain water and
sewer utility system improvcrnents (the "Project"), and (ii) to pay the costs of issuance of the Bonds. See "Local
Improvement District No. 145-The Project."
Sources and Uses of Funds
The proceeds of the Bonds will be applied as follows:
SOURCES OF FUNDS
Par:Irnount of Bonds
USES OF FUNDS
Deposit to Project Fund $
Costs of Issuance
Total Uscs of Funds __
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Sources of Payment
Both the principal of and interest on the I3onds are payable solely from (i) the amounts deposited into the Local
Improvement 1{imd, District No, 145 (the "Bond Fund!') collected from assessments made in the LID, together with
interest and any penalties thereon, and (ii) the Local Improvement Guaranty fund (the "Guaranty Fund") of the City,
created pursuant to chapter 3.08 of the Pascu-Municipal Code,
The Bonds are not general obligations of the City, the State, or any other municipal corporation, and neither the
full faith and credit nor the taxing power of the City are pledged to the payment of the Bonds. The payment of
assessment installments are secured by a lieu on each of the properties within the LID that are subject to
assessment.The remedy of the holder or owner of a bond is confined to the enforcement of the assessment and to
the Guaranty Fund, as set forth in RCW 35.45.070. See "Delinquent Assessments, Assessment Lien and
Foreclosure"below.
Payment of Assessments
The Bonds are a special fund obligation of the City, payable ftotn certain amounts in the Bond Fund and the Guaranty
Fund.Local Improvement District(LID)No. 145 was fortned to improve"A"Street (from Elm Ave. to East Rd 40) to the
City's standards, including curb,gutter, storm water utility system, bicycle path and roadway and certain water and sewer
utility system improvements, and was formed pursuant to Ordinance. No. 3872, adopted and passed by the Pasco City
Council (the"City Council")on August 4,2008 and filed with the City Clerk.
The City is required by law ro deposit assessments (and interest and penalties)Ictizcd within LID No. 145 in the Bond Fund
as received. The City levied assessments against the benefiting property within I.ID No, 145 by adoption of Ordinance No.
3966. The £trial assessment roll was confl=ed in the amount of$1,460,522.76 by ordinance passed on July 26, 2010. Of
this total amount, $675,393.51 has been prepaid as of October 19, 2010, leaving the balance of $785,129.25 payable as
described below.
Assessments are payable in 10 equal annual installs cents of principal, together with interest on the unpaid principal. The
first annual installment is due and payable during the 30-day period fallowing the date that is one year from the date the
City first published notice that the assessment roll is in its hands for collection.The end of this period,and due date for the
First installment, is Nuvember la, 2011. Thereafter, each succeeding installment, together with the interest due on the
remaining unpaid balance, will become due annually each November 15. It is anticipated that interest on outstanding
assessments will be charged at a rate of 0.50% above the City's cost of borrowing on the Bonds. A 5% penalty on the
principal and interest due upnn that installment,and all delinquent installments will be charged interest at the rate.of 8%per
annum.
3
Property owners may elect to prepay some or all of the outstanding annual installment,payments at any time;however,any
payment made must be accompanied by interest on the ai-now-a prepaid that wound accrue to the next annual installttrent
due date. Any installment not paid when due will become delinquent. The method for enforcing the collection of
delinquent installments is described below.
Delinquent Assessments,Assessment Lien and Foreclosure
Payment of the principal of and interest on the Bonds is dependent on the timely collection of assessments when due.
tinder Washington lativ,the special assessments on the unproved and unimproved property=within the LID are secured by a
lien thereon which is superior to any other lien or encumbrances, except any lien For general property taxes. If pruperty
owners fail to make assessment pavments when due,the City=is required,as described below,to pursue foreclosure and sale
of the liened property on which delinquencies occur to collect unpaid assessments.
The City's ordinance provides that each delinquent installment is subject to a 5.0% penalty on both the principal of the
installment and interest due on that installment.All delinquent installments also continue to be charged interest at the rate
of 8% per annum applicable to all unpaid assessment installments in the LID. A City ordinance also pro-'ides that upon
failure to pay any installment due, the assessment becomes immediately due and payable, and the collection is enforced by
foreclosure. Lander State law and City ordinance, foreclosure proceedings must be commenced at any time on or before
November 15 of the year in which, on the first day of January of such year, two installments were delinquent or the final
installment was delinquent for more than one year. Once a foreclosure lawsuit has begun, a property owner with a
delinquent LID assessment must pay the delinquent balance,including interest,penalties and City attorney fees incurred,in
order to avoid foreclosure. If a judgment is taken against the o,.ner,the property will be sold at public auction.The owner
has the right to prevent the sale by paying the amount of the judgment at any time prior to the sale. If the property is sold,
it may be redeemed by the owner or any junior lienholder at any time up to two years after the date of the sale, by paying
the amount for which the property was sold,phis interest and costs of the sale. Any money received by the City as a result
of such foreclosure action is deposited in the Bond Fund and used to repay the Bonds. If the Bonds have been fully
redeemed,money received from a foreclosure is deposited in the Guaranty Fund.
Chapter 6.13 RCS'permits any head of a family to protect a certain portion of the homestead(residence) from forced sale.
In 0y ofl4lgonu tl SJ)arp, 30 11%'arjr..�1 . 837, 638 P.29 627,decided January 4, 1982,Division I of the Washington Co-art of
Appeals held that the filing of a homestead exemption before a scheduled foreclosure sale of a residential property valued at
$25,000 or less effectively exempted that property from a forced sale to enforce delinquent special assessments in a special
benefit assessment district such as a local improvement district or utility local improvement district. The statutory
homestead exemption has been raised to$125,000.
Guaranty Fund
The City,in chapter 3.08 of the Pasco 'Municipal Code,has established the Guaranty Fund pursuant to chapter 35.54 RCNX
for the purpose of guaranteeing, to the extent amounts are available in the Guaranty Fund,the payment of its cturcnt and
future local improvement bonds (including the Bonds),warrants or other obligations issued to pay for local improvements
within the City.Defaulted bonds,notes and warrants will be purchased with funds on deposit in the Guaranty Fund in the
order of their presentation without preference.Warrants against the Guaranty=Fund bearing interest at a rate not to exceed
6% may be issued by the City to meet any liability accruing against the Guaranty* Fund; provided, that the warrants so
issued crust not exceed five percent of the outstandung obligations guaranteed by the Guaranty Fund. The balance in the
Guaranty Fund as of September 30,2010 was approximately* $ $778,464, Other than the Bonds, the City currently has no
local improvement bonds outstanding.
The City may at any time issue additional local improvement bonds guaranteed by the Guaranty Fund, and there is no
statutory requirement that the amount in the Guaranty Fund be increased upon the issuance of such bonds. However,the
Citv has covenanted in the Bond Ordinance to maintain an amount in the Guaranty Fund equal to the greater of 10 percent
of the principal amount of all outstanding local improvement district bonds or the aggregate debt service due in the next
calendar year based on the estimated redemption schedule shown on the inside front cover of this Official Statement.
For the purpose of maintaining the Guaranty Rind,the City is required by statute to protide for the annual levy of a Bunn
sufficient, together with other sources of the Guaranty Fund, to pay warrants issued against the Guaranty Fund during the
preceding fiscal year,if any, and to establish a balance therein; provided that the levy in any one year will not exceed the
greater of either (i) 12 percent of the outstanding obligations guaranteed by the Guaranty Fund, or(i) the total amount of
delinquent assessments and interest acctuuulated on the delinquent assessments before the levy, as of September 1. RCV,
35.54,060 provides that the taxes levied for the maintenance of the Guaranty Fund would be in addition to and,if need be,
in excess of all statutory and charter limitations applicable to tax levies in the City.
4
LOCAL IMPROVEMENT DISTRICT NO. 145
By Resolution No, 3089 adopted July 7,2008, the City Council declared its intention to £grin a LID in order to finance the
Project (as described below). LID No. 145 was formed pursuant to Ordinance No. 3872, passed by the City Council on
Augusr 4,2008 and filed with the City Clerk(the"Lill Ordinance").
Local Ttnprovemeint Districts—Generally
In Washington State, the State constitution and State law authorize the formation of special a�sessmctlt districts (generauy
known as local improvement districts when formed by cities) for the purpose of paying the costs of improvements that are.
deemed by a an to Provide special benefits to certaui properties within the city. Local improvement projects are initiated
either by petition of property owners or by resolution of the city council. Eligible projects are limited to those local
improvements described in RCW 35.43.040. Upon the filing of a sufficient petition, and also in the case of a local
improvement district initiated by city council resolution,a city board,officer or authority designated by ordinance causes an
estimate to be made of the cost and expense of the proposed improvement and certifies it to the city coruncil together with
a description of the boundaries of the local improvement district and a statement of what portion of the cost and expense
should be borne by the property within the proposed district.A preliminary assessment roll or other document is prepared
and placed on file,listisig the lots, tracts, and parcels of land or other property in the proposed local improvement district
that will be specially benefited by the proposed improvements and estimating the amount of the cost and expense to be
borne by each lot,tract,or parcel of land or other property.
Before an improvement project is approved,a public notice and hearing is required (M V35.43.125).35.43.125).Notices are mailed to
the affected property owners as well as published. The notice provides each owner with the proposed project description
and an estimate of benefits and costs.
After:the hearing,the city council dctcinnines whether the local improvement district should be formed. If the district-was
initiated by resolution of the city(as the LID was initiated), and within 30 days after passage of the ordinance foinning the
local improvement district, property owners representing at least 60 Percent of the proposed assessments protest the
formation of the local improvement district, the local improvement district may not be formed. Within a period of 30 days
following the 30-day protest period, a lawsuit challenging the local improvement district formation may be filed, This 30-
day period expired without the filing of a lawsuit.
Upon completion of construction, or earlier, as in the case of the LID, the final costs are determined and assessments
calculated and levied after a hearing. The method of assessment is normally selected at this tithe. When a property owner
receives a notice of that property's final assessment collection, he or she has the option of making a cash payment in frill
during a period of 30 days following the notice or making annual installment payments. Alien against the property secures
timely payment. There is no prepayment penalty if a property owner prepays all or some instalhnnents, and prepayments of
assessments are common.
The Project and Subject Properties
The Project consists of improvements to "A" Street (from Elm.Ave. to East Rd 40) to the City's standards,including curb,
gutter,storm water utility system,bicycle path and roadnvay and certain water and sewer utility system improvements:
The largest assessment of the LID is for Columbia East LLC with a proposed combined assessment of $417,091.
Columbia Fast is a partnership tLit owns about 400 acres, the northern portion of which is adjacent to and served by A
Street; consequently, their entire acreage is enhanced by the improvements. Ail of the acreage is zoned for industrial use
and, though it is currently being faimed, the owner is actively marketing the acreage for industrial sale/use and is working
with Burlington Northern Santa Fc Railway("BNSF"),which also considers this acreage prime rail use. The City and Port
of Pasco have collaborated with this uwnnr to arrange for extension of a rail spur line from BNSF. The rail switch, an
investment of$600,000,is already in place and can be readily extended when needed by an industrial user,
The second largest assessment is for CASH LLC which is for$345,004. CASA LLC is owner of about 90 acres along the
North side of A Street, all of which was approved as preliminary plat several years ago. Phase I of the plat has been
finished (residential} and Phase II includes street and utility improvements along 1 Street. The owner has supported the
LID to finance the required improvements to facilitate phase II. The new phase of development (about 20 acres) will
include commercial and higher density residential(apartments),all on the North side of A Street(the south side of A Street
is all zoned for commercial/industrial use). The pxiuiaiy member in CASA LLC is Broetje Orchards, a large Walla`Walla
counA,agricultural producer. The housing portion of the development is partially used by Broetje's employees while the
balance is to be sold on the open market.
5
These.are.a total of 24 tax parcels (otaliug approximately 84,5 acres within the I.M. "Me C3«7iers include the following.
(1) Percent Assessment
Account No.of Zoning Assessed Total orTotal Paid as of
Chmer/Mopiyor Numbers Parcels Classification Value Assessment Assessments 10/19/10
C Wumbia r-no LLC 17,19.2,19.3 3 1 S 307,(xx) s 417,M).81 2836'
CASA l.f,L' 4.6 2 C.R13 519,600 345,1814.31 23.62 345,(x}4.31
Cite of 1'nsco 16 1 (, 114,100 151,738.74 10.39 157,738,74
ROJO v enuae LLC: 18,19.1 2 I 308,900 126259.92 8.64 126.259.42
Dororh)•b,0511 n(rrustcc) 20,21 22 3 1 5118,200 121,24954 8.30 12,124.95
mc(ireery t•:nterprises LT.(: 1,2 2 (; 237,200 66,687.25 4.57 -
Kenneth L.Reisinger 11,1) 1; 3 12'1' 85,800 5x),614.36 4.03
luau 7,9 2 RT los,G1x1 44,710,77 3.06 -
J uhilee foundation 5 1 C 868,70(1 30,599 41 2.51 36,598.41
Turner&Liliana(ETA1)1+,liia n6, f 4 1 51,00() 29,990.63 2,05 -
KL Laud LLC 15 1 C 5],01x) 29,996.63 2.05
Gnn7alc,Alciandtn 1)&Tcresa M S 1 C 33,000 16,671.81 1.14 1,667.18
Edna1>.l`%ants tr,t11 2 RT 8,800 14,903.58 1.02 2,000.00
Totals; 24 3,201.900 51,46Q,322J6 100,W°'o 5675,393,51
(1) Zunaig Classifications: C(Cointnercial),RT(Residential Transit ion;;R•3(Rc•idcntiaI Medium Density);I(Industrial)
Assessed Valuation Determination
The assessed value of the properties is determined by the Franklin County assessor, (the "assessor"). The assessor
determines the value of all teal proper and personal property that is subject to ad ialorem taxadorl, with the exception of
certain utility properties which are valued by the State Department of Revenue. The Assessor is an elected official whose
duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promt42ted
by the State Department of Revenue. For tax purposes, the assessed value of property is 100 percent of its market value..
Assessed valuations for all properties are statistically updated each year. Physical inspections are performed by the Assessot
for each property even}-six pears. The property is hstcd by the Assessor on a roll at its current assessed value and the roll is
tiled in the Assessors office. The Assessor's deteruvnations are subject to revision by the County Board of Equalization.
After all administrative procedures are completed, the County Commissioners receive the Assessor's final certificates of
assessed value of property within the County.
Follo-wing is a snap of LID No, 145 showing the parcels that are contained within the LID,
6
LID No.145"A}}STREET IMPROVEMFNTS
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Assessments
The City levied assessments against the benefited properties located within the LID pursuant to the LTD Ordinance. The
final assessment roll for the LID was confirmed by Ordinance No. 3966.
LOCAL IMPROVEMENT DISTRICT No.145
LID assessment Roll $ 1,460,522.76
Less:Prepayments $ 675,393.51
Remainingrlssessment Balance $ 785,129.25
Number of Parcels in LID 24
Number of Parccls Paid in Full 6
Numher of Parcels with Assessments Remaining 18
Franklin County Assessed Value for Total LID,with Improvements $4,662,423.00
Fra:ilclin County Assessed Value for Non-Prepaid parcels $3,719,823.00
Ratio of Remaining Assessment Balance to assessed Value
For Non-Prepaid Parcels 21.1%
Average Franklin County Assessed Value per Non-Prepaid Parcel $206,657
Average LID assessment per Non-Prepaid Parcel $43,618
BONDOWNERS' CONSIDERATIONS
Prospective purchasers of the Bonds should carefully consider the follou*ing factors,as well as other information contained
in this Official Statement,prior to purchasing the Bonds.This list is not intended to be exhaustive.
Special Obligations of the City
The Bonds are special fund obligations of the City, payable solely from collections of installments of assessments and the
ar
Guanty Fund. The Bonds are not general obligations of the City, and neither the full faith and credit nor the taxing
power of the City is pledged to the payment of the Bonds. No money raised from taxation by the City,other than to the
extent required for deposit into the Guaranty Fund, will be available to pay principal of or interest on the Bonds. See
"Security and Source of Payment for the Bonds"herein.
Estimated Redemption Dates
The Bonds are sold based on an estimated redemption schedule. The Principal of and interest on the Bonds are payable
from special assessments levied against real property in the LID, and property owners may prepay their assessments in
whole at any time after the assessment is levied by paying the assessment plus interest accrued and accruing thereon
through the next interest payment date. 11ne amount of principal which will be redeemed on any payment date depends
upon the amount of payments and prepayments received and any delinquencies of assessments. To the extent that funds
from assessment payments are available above and beyond the interest currently due on the Bonds on any payment date,
the Ciih- may redeem more Bonds than indicated by the estimated redemption schedule. Early payment of assessments is
on
comm , but thrse can be no assurance that Bonds will be redeemed in the amounts or on the dates in the estimated
redemption schedule;Bonds may be,and likely will be,redeemed earlier or later than estimated.
Secondary Market
There can be no assurance that a secondary market for the Bonds can or will be maintained by the Unnderwritex or others
after their issuance, and purchasers of the Bonds should be prepared to hold their Bonds to maturity or an earlier
redemption date. The secondary market for assessment bonds, such as the Bonds, is not as liquid as it is for many other
types of municipal obligations.
Debt Service Payment
Payment of the prisncipal and interest on the Bonds is dependent on the ability of property owners within the LID to pay
special assessments on their property. Makeup of any Bond Fund shortages caused by nonpayment of assessments is
dependent upon the City's ability to draw upon the funds in the Guaranty Fund and/or to collect taxes for the Guamnty
Fund in an annowit sufficient to cover delinquent assessments and in pursuing the foreclosure and site of the property on
which delinquencies occur. See"Security and Sources of Payment for tine Bonds - (;uaxanty Fund."
8
Foreclosure
State statute and City ordinance provide that foreclosure of property may begin on or before November 15 of the year
following the date when two annual installments of assessments are delinquent. Proceeds from the foreclosure of property
in the LID may be subject to considerable delay and may not be sufficient to cover delinquent assessments and interest.See
"Security and Sources of Payment for the Bonds—Assessment Lien and Foreclosure."
Priority of Lien
Under State law, any future overlapping local improvement district assessments will have the same priority of lien as the
assessments levied in the LID. Special assessments on unproved and unimproved property within a local improvement
district are secured by a lien which is superior to all other liens or encumbrances except any lien for general property taxes.
Debt Payment Record
The City has promptly met all debt service requirements on outstanding obligations. No refua&ig bonds have been issued
to avoid an impending default.
Future LID Financings
The City reserves the right to issue,at any tune,additional local improvement district bonds secured by the Guaranty Fund,
and the City is not required to increase the amount in,or to be deposited in,the Guaranty fund upon the issuance of future
LID bonds.
CITY PROFILE
The City of Pasco, located in southeastern Washington, encompasses approximately 33.6 square miles and has a 2010
estimated population of 56,300. The City and the adjacent cities of Richland and Kennewick snake up what is known as the
Tri-Cities. The City serves as the Franklin County (the "County") Seat and is the largest city in the County. The City was
incorporated in 1891.
The City has a Council-Manager form of government.The City Manager is appointed by the City Council and is responsible
for the administration of all aspects of City operations. Council members are part-time officials, elected every four years
through rite-wide elections. The Cowicil is comprised of seven members, one of whonn is selected by the members to
serve as Mayor for a two-year temi.
The City provides a full range of services normally associated with a municipality. These sen^iccs include police and fire
protection, ambulance service,parks and recreational activities, street maintenance and construction, planning and zoning
and general administrative services. The City owns and operates a water/sewer/stom-water utility and a cemetery. The
City owns a golf course which is leased to an operator.
City Council
Following are the current members of the City Council and their term expiration dates.
Members Position Term Expires
'Matt Watkins Mayor December 31,2011
Rebecca Ytancik Mayor Pro-Tern December 31,2011
Robert Hoffmann Council Nlember December 31,2013
.\lichael Garrison Council Alember December 31,2013
Tour Larsen Council?Member December 31,2013
Saul Nfartine7. Council Member December 31,2011
.'l Yenney Council Member December 31,2011
Key Administrative Staff
Gary Crutchfield, Cif Manager, was appointed City Manager in October 1984. He has 35 years of experience in municipal
government as a planner and manager. Prior to being appointed Citv h-lanager, fix Crutchfield setved as Community
Development Director of the City between 19'8 and 1981.
9
Rut.-A Towety, Adrminix1ratiwe and Gomrrcvdi ! Services Dhraor, began sen•ing as the Director of the City's Department of
,Wrninistrative and Comtnuriity-Services Department on July 13, 2009. The department consists of fivc sciirice divisions:
Administration,Facilittes, Finance,Infonnation Systems, and Recreation. Prior to corning to the City, Air. Terway served
as Parks, Recreation and Forestry lfanager for the City of Fergus balls, tliutnesota for three. years and as Public Service
Director for the City of 11"adnais Heights, Minnesota. His experience also includes more than 12 years working for
Washington State barks. Air. Tenvay holds a Bachelor of Science in Applied Management from National American
University and an associate of Applied Science in Natural Resources from the University of Minnesota,
Dugyele Mason, Financial Seruicer Manager, began as the Financial Services Manager for the City on august 10, 2010. The
Financial Services division is responsible for internal and external financial reporting,financial analysis and cost accountin&
budget preparation, city,audit coordination as well as utility, special asecssment, ambulance, grant and other miscellaneous
billings, payables and debt management and city investments. Prior to coming to Pasco, 14Ss. Mason worked as Finance
Manager for the cities of auburn and Walla Walla and as r\ccounting Operations Supenisor fur the City of Richland. Her
professional experience includes over '19 years of government accounting experience and five years of professional audit
experience.She holds a Bachelor of arts degree in Business/Accounting from the University of Washington and has been a
licensed Certified Public accountant for 24 years.
Labor Relations
The (amity currently employs 286 (not including 83 seasonal employees) people including part-time workers. There are 183
employees represented by 5 bargaining units as follows:
Number of Current Contract
Bargaining Unit Employees Expiration Date
International 1.7nion of Opetating Engineers,local Nu.280 60 December 31,2012
International Association of Firefighters 48 December 31,2010
Pasco Police Officers Assoc"Uniformed"Employee Bargaining Unit 62 December 31,2010
Pasco Police Officers Assoc"Nun-uniformed" Employee Bargaining Unit 8 December 31,2011
Pasco Code.Enlforcement Officer's and Permit Technicians 5 December 31,2010
TOTAL 183
The City considers labor relations with its bargaining units to be good. There have been no recent strikes or major labor
reLntions problems.
Retirement Plans
Substantially all full-time-arid qualifying part-time employees participate in one of the following statewide local government
retirement systems adnunistered by the Washington State Department of Retirement Systems,mider cost-sharing,multiple-
employer public employee retirement systems. Actuarial information is on a system-wide basis. Police officers and
firefighters are covered by the Law Enforcenacrrt Officers and Fire Fighters Retirement System (r'LEOFF"). Other City
employees are covered by the Public Employees' Retirement System ("PERS"). Contributions to the systems by both
employee and employer are based upon gross wages covered by plan benefits.
PERS and LEOFF participants who joined the system by September 30, 19�7 are Plan i members. Those PERS
participants who joined on or after October 1, 1977 are Plan 2 members, runless they exercise an option to transfer to
Plan 3. PERS participants joining on or after September 1, 2002 have the irrevocable option of choosing membership in
PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977 are Plan 2 members. The City
contributed $657,196 to PERS and $496,483 to LEOFF in 2009 for all of the City's employees that are covered under
PERS and I.EOFF. The following tables outline the contribution rates of employees and employers under PERS and
LEOFF.
FERS_Cantribution lutes as of Dccembrr 31,20
Plan 1 Plan 2 Plan 3
Employer(1) 5.31% 5.31% 5.31%
Employee 6.00% 3.90% Variable(2%
(1) Includer a O.i ou admix ieva6un fee.
(�} Rares eary from 5.0%minimum to 15.(11%maumum ha cud nn rate:selected by the P1 ILS 3 member.
10
LEOFF CgaUi Lmdan 13 rite®m,of I3eeerxaber 31.?rO1F9
Plan 1 Plan 2
Employer(1) 0.16% 5.24%
Employee 0.00 8.46
State N/A 3.38
(1) 111CILLdN�3{1.1G"S,3�inuniFlrutinn fee.
Wvhile the City's contributions in 2009 represent its full current liability under the Systems, any unfunded pension benefit
obligations could be reflected i, future years as higher contribution rates. It is expected that the contribution rates for
employees and employers in the 11125 Plaits will increase in the coming years. The State Act iary's website (which is not
incorporated into this Official Statement by reference) includes information regarding the values and funnding levels of these
retirement plans,including the underfilnding of PERS Plan 1.
Defined Compensadon. The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan permits employees to defer a portion of their salary until future years. The defined
compensation is not available to employees or their beneficiaries until tenritration,retirement, or unforeseeable emergency
or upon death.
Firrrnun'.r Pensim Fund. The City is the administrator of the Fireman's Pension Svatems C 1 PF'}, which is shown as the
pension trust fund in the City's financial statements. 14TF is a single-employer closed pension system that was established in
conformance with Revised Code of'Washington (RC\X,) Chapter 41.18. Membership is limited to fire fighters employed
prior to March 1, 1970 when the LEOFF retirement system was established. The City's liability under the FPF consists of
all benefits, including payments to beneficiaries, for firemen retired prior to !\•larch 1, 1970, and excess benefits over
aruounts provided by LROFF for covered fire fighters retired after 2,farch 1, 1970. Under the FPF, eligible fie fighters
may retire at age 50 with 25 years of service. Death and disability benefits are also provided, as established under the
governing State law. Individuals -who terminate employment prior to retirement may withdraw their contributions to the
plan plus accumulated interest, but by doing so, forfeit their rights to future pension benefits. No separate financial
reporting is issued for die plan.
As of December 31, 2009, there were a total of 12 individuals covered by this system. Seven of these individuals were
retirees,one was actively employed and four were widows drawing benefits. All of the retirees are drawing excess petasion
benefits under the system over the amotunt of frill benefit provided through LF,OFF.
The most recent actuarial study of the Fireman's Pension System was done to determine future funding requirements as of
January 1,2007. The City's obligations under the PPF are limited to the benefits provided to firefighters retired prior to
March 1, 1970, plus payments of excess retirement benefits to active members as of that date. In order to meet these
obligations, the City may contribute annually to the FPF the amount raised by IcN7 itng all or part of a tax of up to$0.45 per
$1,000 of true and fair market value. of assessed property, the maximum provided by law for retaining the FPF. '111e City
has inet frill liability under the system.
Historical trend information regarding all of these plans is presented in Washington State's Department of Retirement
Systems'annual financial report.A copy of this report may be obtained at
Department of Retirement Systems
Point Plaza West
1025 Last Union Street
P.O.Box 48380
Olympia,WA 98504-8380
Internet Address:,v!xw.drs.wa.m)i
Other Post-Employment Benefits
The City is required by State law to pay for the full medical costs of its LEOFF flan 1 employees. Currently,30 members
meet those eligibility requirements. The City provides medical insurance and reimbursements for all necessary hospital,
medical and nursing care expenses not payable by worker's compensation, social security, insurance provided by another
employer,other pension flan or any other sinular source are covered. Medical insurance for the retirees is provided by the
City's employee medical insurance program. Direct paymcnt is made for other retiree medical expenses not covered by
11
standard medical plan benefits provisions. The City ales pays the Medicare premium for qualifying LEOFF 1 retirees as
outlined in Chapter 41 RCW The cost of this preiniutn of approximately $96 per month in 2009, is offset by a lower
insurance prennium. The City's funding policy for these benefits is based upon pay-as-you-go financing requirements.
During the years 2008,200-1,2006 and 2005,expenditures of$232,067,$307,328,$256,866 and$211,212,respectively,were
recognized for post-employinent health care. Expenditures for 2009 were$367,014.
The City provides certain healthcare benefits to retired firefighters and police officers who tivere hissed prior to 1978 as
required by RCV/41.26.150.Entry into this system is now Bused.
The City is currently preparing to do a study to calculate the City's Annual Required Contribution to consider funding the
anticipated costs associated with Other Post Employment Benefits ("OPEB"). At present, the City= has 17 former
firefighters,21 former police and five employed firefighters subject to OPEB.
Insurance Coverage
Tlme City is a member of the Washington Cities Insurance authority (the `.authority") which now includes over 120
members. Liability coverage is written on an occurrence basis, without deductibles. The authority provides coverage for
comprehensive general liability, automobile, police, public official errors or omissions, stop gap and employee benefits
liability. Limits are $4,000,000 per occurrence self-insured layer, and$16,000,000 per occurrence in the re-insured excess
layer. The excess layer is insured by the purchaser of reinsurance. Total Ianits are$20,000,000 per occurrence. The Board
of Directors of the Authority determines the limits and terns of rho coverage annually.
Accounting and Budgeting Process
BCUtt Of A roynff qg. The accounting and reporting policies of the City conform to the Budgeting,Accounting and Reporting
Srstern (R:1RS) as prescribed by the State Auditor. The accounts of the City arc organized on the basis of funds, each of
which is considered a separate accounting entity. Each fund is accounted for with a separate set of self-balancing accounts
that comprise its assets,liabilities,fund equity,revenues and expenditures,as appropriate. The City's resources are allocated
to and accounted for in individual funds depending on their iimtended purpose.
The Budget Prowess V%ashington law,chapter 35A.33 RCW, prescribes the method and schedule for annual budgeting for the
City. Annual appioprLated budgets arc adopted at [lie fund level. Local improvement district debt seiN-ice and certain
custodial agency fluids,however,are not budgeted. A budget increase or decrease to a fund must be authorized by the City
Council,while appropriation transfers within a fund may be authorized by the City Manager. All budgets are controlled oil
an organizational basis. The budgets constitute the legal authority for expenditures at that level.Annual appropriations for
all funds lapse at the fiscal period end.
Auditing of City Finances
The City's financial statet-petits are prepared in conformity -,6th generally accepted accounting principles ("GAAP") as
applied to governmen[al units, and are regulated by the Washington State ,Auditor's Office, division of Audit. The
Government accounting Standards Board ("C.sASB") is the accepted standard setting body for establishing goverrimental
accounting and financial reporting principles.
Accounting systems and budgetaiv controls are prescribed by the Office of the State Auditor ("SAO'S in accordance with
RCV7 43.09.200, RCW 43.09,230 and GAAP. State statutes require audits for cities to be conducted by the SAO. The City
complies with the systems and controls prescribed by the SAC) and establishes procedures and records which reasonably
assure safeguarding of assets and the reliability of financial reporting.
The SAO is required to examine the affairs of cities;. The City is audited annually. The examination must include, among
other things, the financial condition and resources of the City, whether the laws and constitution of the State are being
complied with,and the methods and accuracy of the accounts and reports of the City. The City's 2009 audited Financial
Report is attached at appendix A. The SAO revieured the City's financial statemments and accounting practices for fiscal
year 2009, and issued an unqualified opinion on the financial statements of the governmental activities, the business-type
activities,each major fund,and the aggregate.remaining fund information. However,the SAO made a finding of significant
deficiency,while noting that there were no instances of noncompliance that were material to the financial statcmctits of the
City.
Specifically,the SAO noted finding that the City lacked intmuil controls for fuiaticial reporting. The deficiency noted was a
result of the turnover of key personnel in the accounting department. Tlie City has since replaced all personnel with
experienced professionals and has made it a priority to train key staff.
12
Authorized Investments
Chapter 35.39 RCW limits the investment by a city or town of its inactive thuds or other funds in excess of current needs to
the following authorized investments: United States bonds;United States certificates of indebtedness;bonds or warrants of
the State and any local government in the State;its own bonds or warrants of a local improvement district winch are within
the protection of the local trnprovernent guaranih, fund law; and any other investment authorized by law for any other
taxing districr or the State 'Treasurer. Under chapter 43.84 RCW, the State Treasurer may invest in non-negotiable
certificates of deposit in designated qualified public depositories;in obligations of the U.S.govertunelit,its agencies, and
wholly owned corporations;in bankers'acceptances;in commercial paper;in the obligations of the federal home loan bank,
federal national mortgage association, and other government corporations subject to statutory provisions; and may enter
into repurchase agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local improvement
district are also eligible investments (RCW 35.39.030).
Money available for investment may be invested nn an individual fund basis or may,unless other,visc restricted by law, be
commingled within one common investment portfolio. All income derived from such innvestment may be either
apportioned to and used by the carious participating funds or for the berncfxt of the general government in accordance with
city ord nmices or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be invested
or used is such manner as the authorizing ordinances,resolutions,or bond covenants may lawfully prescribe.
Local Government Inivstment Pool. The State Treasurer's Office administers the Washington State Local Goverrnnent
Investment Pool (the "LGIP"), a $8.7 billion fund that invests money on behalf of more than 460 participants (as of
December 31, 2009). In its management of LGIP, the State Treasurer is required to adhere., at all times, to the principles
appropriate for the prudent investment of public fiends. 'l'hese are, ui priority order, (i) the safety of principal; (ii) the
assurance of sufficient liquidity to meet cash flow demands; and (iii) to attaun the highest possible yield within the
constraints of the first two goals. Historically,the LGIP has had sufficient liquidity to meet all cash flow demands.
The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provider. its participants the opportunity to
benefit from the econornies of scale inherent in pooling, It is also untended to offer participants increased safety of
principal and the ability to achieve a higher investment yield than would otherwise be available to them. The pool is
restricted to investments with maturities of one year or less,and the average life typically is less than 90 days. Investments
permitted under the pool's guidelines include U.S.government and agency securities, bankers' acceptances, high quality
commercial paper,repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit
issued by qualified Washington State depositories.
.4xtboriZerllntestnrerte for t3onr!Proceeds. In addition to the eligible investments discussed above,bond proceeds max also be
invested in mutual funds ,with portfolios consisting of U.S.government and guaranteed agency securities with average
maturities of less than four years;municipal securities rated ii-i one of the four highest categories;and money market funds
consisting of the same,so long as municipal securities held in the Rind(s)are in one of the two highest rating categories of a
nationally recognized rating agency. Bond proceeds may also be invested in shares of money market fiords with portfolios
of securities otherwise authorized by law for investment by local governments (R(-,W 39.59.030).
The City's investments arc categorized to give an indication of the risk assumed at Year-end. The following suurmaty shows
the City's investments at`ear-end categorized by risk. Category 1 includes investments that are either insured or legistered
and held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments that arc
held by the cotunerparty's trust department of agent in the City's name Category 3 includes uninsured and unregistered
investments for which the securities are held by the counterparty, or its oust department or agent, but not in the City's
name. The fair market value of investments is based upon quoted market prices as of December 31,2009.
The City's investments at December 31, 2009,at boos:value,are as follows:
Fail
Investrrterrt __ _ Mattuities Market Value
Pederal Securities $30,489,791 $30,498,791
Mutual Funds 1,938,019 2,365,742
LGTP 8,876,203 8,876,203
Savings:accounts 50,419 50.419
Total 41.363.432 $41.79]_155
13
GENERAL AND ECONOMIC INFORMATION
The City is located in southeastern Washington in Franklin County (the "County") at the confluence of the Columbia and
the Yakima rivers,npprowimately 200 miles southeast of Seatde, 150 miles southwest of Spokanc and 200 miles northeast of
Portland, Oregon. Pasco is one of three cities which make up the urban area known as the Tri-Cities, the others being
Kennewick and Richland in neighboring Benton County.
Population
Vrith a 2010 estimated population of 56,300, the City is the largest of four incorporated communities in Franklin County.
Historical pol uLations for the City and Franklin County are as follows:
City of Franklin
Year aSCO Colin
2010 56,300 75.500
2009 54,490 72,700
2008 52,290 70,200
2007 50,210 67,400
2006 47,610 64,200
Cnrrnr: IY'ur/kn{Jnn Srarr Oj,re uJ Fiilam:ruLllar„roourni
Largest Employers
The table below shows a list of the top ten employers ranked by number of employees.
PASCO AREA MAJOR EMPLOYERS 2009
FInpinyer — SenicelProduci P.ni}rlo{•ecs
Pasco School District Schools 2,100
Lourdes Health Network Health Care 807
Wal-NIart Grocery-Retail 410
Columbia Basin College Schools—Universities 552
Pasco Processing LLC Frozen Food Processing 350
Con Agra Foods Lamb-1lreston Frozen Food Processing 320
City of Pasco Government 286
Franklin County Government 257
Zirkle Fruit Company Farms 200-400
Sagemoor Fauna Agriculture 150-27 5
Rcscrs Fine Foods food Products—Retail 190
La Cliriica Community Health Care Health Care 184
McCurley Integrity Dealerships Autntnobile Sales 160
Lowes Hardware 117
Samar: Pasco 2010
Economic Data
Following are additional economic indicators for the City,Franklin County and the Tri-Cities Area.
CITY OF PASCO BUILDING PERMrrS
Residential Cl> Commercial Total
Year Permits Value Permits Value Permits Value
2010(2) 1,232 $82,485,645 144 $17,569,311 1,376 $100,054,956
2009 1,499 102,114,296 350 59,980,045 1,849 162,094,341
2008 1,403 82,936.295 274 40,022,768 1,677 122,959,064
2007 1,577 106,210,440 310 81,570,866 1,887 187,781,328
2006 1,221 136,939,576 98 43,807,691 842 177,057,403
(t)Includes S;nglc family,Two F nn0y,Three or more ramifies,
0 Aa of August 1,201(1
Sawa: City of Paaa hidle ir{G 1),p Y mwl
14
TAXABLE RETAIL SALES
City of Franklin
Year Pasco County 11;
2010(2) $414,735,294 $480,109,396
2009 802,641,083 917,095,762
2008 877,529,074 1,052,102,171
2007 856,422,037 1,057,004,462
2000 811,292,311 929,717,630
2005 781,596,534 862,138,345
1i)14anklin cJuunty Agurci including City of Pasco.
P Through the.2nd quartet'of 2010, 'Taxable rcmil;alas rhroiigh die 2nd quarter n,2069 for the City was$379,654,324 and$438,251,856 fur Franklin Council.
.Sarre•: !6"itrlvr;tau Stcrlc Ure ofltinu»idl:1?:a�,Uetrral
PERSONAL AND PER CAPITA INCOME
Franklin County State of W�ffh�Lmn
Total Personal Per Capita Total Personal Per Capita
Year Income(000's) Personal Income income(000's) Personal Income
2008'i) $1,827,068 $24,965 $280,677,561 $42,747
2007 1,684.,797 24,235 271,007,842 41,919
2006 1,498,163 22,650 252,022,976 39,55()
2005 1,388,493 22,187 230,001,881 36,734
2004 1,276,722 19,831 222,378,678 35,959
it1 Most trcent arailablc.
Sown,: („S',Otparlivew rrf U.9ime re.R-irrou of hojuowic 41na6,.4a
MEDIAN HOUSEHOLD INCOMEM
Franklin Washington
Year County State
2009 $37,818 $52,413
2008 39,299 54,086
2007 40,876 55,771
2006 43,230 56,808
2005 42,533 54,618
(1)figures for 2008 and prtUnn%taq eetunate,2[x19 art.pruiceted.
Sam,, 1S'd Augton State Office of Pirtnnaialfl?arragelrrer�t
RESIDENT CIVILIAN LABOR FORCE AND EAfPLO"IIENT
Ayc.Ldgc_Annual _—
20100) 2009 2008 2007 2006 2005
State of Washington
Labor Force 3,534,900 3,528,710 3,476,370 3,390,410 3,317,390 3,255,530
Employed 3,207,610 3,214,500 3,290,090 3,235,960 3,154,420 3,075,970
%Unemployed 9.30/) 8.9% 5.4% 4.61/16 4.9% 5.5%
Franklin County
Tabor route 37,590 35,980 34,090 31,180 29,7510 29,140
Employed 34,560 33,100 32,040 29,250 27,720 27,090
%Unemployed 8.10/0 8.0% 6A 9/6 6.2% 7.0% 7.0%
(1)AcernXe through September 2010,moat rccenr available, Not seasonally adjusted.
,S'orme: 11 irrlau��ton SYrrte Euif.+Io}wecnl.t`anrri$1)t/rmtmeul.
15
AVERAGE CIVILIAN NON-AGtucuLTun,WAGE AND SALARY EMPLOYMENT
KENNEwicx-RICIILAND-PAsco MSA
Employment Sector 20100) 2009 2008 2007 2006 2008
Natural Resources and Construction 5,900 6,300 7,000 5,800 6,000 5,800
lfanufacturing 6,800 6,900 6,500 6,200 5,800 5,800
Trade, Transportation&Utilities 16,400 16,200 16,400 16,200 15,900 15,000
Financial Activities 3,400 3,400 3,600 3,500 3,500 3,400
Professional&Business Services 24,000 21,900 20,800 19,700 18,800 20,500
Education&Health Services 10,800 10,500 10,100 9,600 9,200 8,700
Leisure and Hospitality 8,900 8,800 8,900 8,300 7,900 7,900
Government 17,700 17,400 16,700 16,300 16,000 16,000
{1) Ari�i�r through Srphemhrr 2l!]tl.
lumix: 1!'a 1Jg1dn S'&Or fear ly Deplaftleul.
INITIATIVE AND REFERENDUM
Under the State Constitution, the voters of the State have the ability to iniri<ate legislation and modify existing legislation
through the powers of initiative and referendum, respectively. The initiative power in Washington may not be used to
amend the State Constitution. Initiatives and referenda are submitted to the voters upon receipt of a petition signed by at
least 8% (initiatives) and 4% (referenda) of the number of voters registered and voting for the office of Governor at the
prece6ig regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended
or repealed by the Legislature within a period of two years fulluwing enactment, except by a vote of taro-thirds of all the
members elected to each house of the Legislature. after two years, the late is subject to amendment or repeal by the
Legislature in the same matuaer as other laws.
TAX MATTERS
Exclusion from Gross Income
In the opinion of Bond Counsel, under existing federal law and assuming compliance with applicable requirements of the
Internal Revenue Cade of 1986,as amended(the"Code"), that must be satisfied subsequent to the issue date of the Bonds,
interest on the Bonds is excluded from gros s income for federal income tax purposes.
Continuing Requirements
The City is regttired to comply with certain requirements of the Code after the date of issuance of the Bonds in order to
maintain the exclusion of the interest on the Bonds from grass income for federal income tax purposes,including,without
limitation, requirements concerning the qualified use of bond proceeds and the facilities financed or refinanced with bond
proceeds,limitations on investing gross proceeds of the Bonds in higher yielding investments in certain circumstances and
the requirement to comply arith arbitrage rebate requirements to the extent applicable to the Bonds. The City has
covenanted in the Bond Oklinance to comply with those requirements, but if the City fails to comply with those
requirements,interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Bond Counsel
has not undertaken and does not undertake to monitor the City's compliance with such requirements.
Alternative Minimum Tax
Under the existing federal laws,interest on the Bonds received by individuals and corporations is not treated as an item of
tax preference for purposes of the federal alternative rr ini+rmum tax, and interest on the Bonds received by corporations is
not taken into account in determining adjusted current earnings of corporations for purposes of the federal alternative
minimum tax.
Tax on Certain Passive Investment Income of S Corporations
Under Section 1375 of the Code,certain excess net passive investment income,including interest on the Bonds,received b,,
an S corporation(a corporation treated as a partnership for most federal tax purposes) that has Subchapter C earnings and
profits at the close of tine taxable year may be subject to federal income taxation at the highest rate applicable to
corporations if more than 25%of the gross receipts of such S corporation is passive investment income.
16
Foreign Branch Profits Tax
Interest on the Bonds may be subject to the foreign branch profits tax imposed by Section 884 of the Code when the
Bonds are owned by,and effectively connected with a trade or business of,a t)nited States branch of a foreign corporation.
Possible Consequences of Tax Compliance Audit
The Internal Revenue Scn,7ce (the "IRS") has established a general audit program to detcrnnine. whether issuers of tax-
exempt obligations,such as the Bonds, are in compliance with requirements of the Code that must be satisfied in order for
the interest on those obligations to be., and continue to be,excluded from gross income for federal income tax purposes.
Bond Counsel cannot predicr whether the IRS will continence an audit of the Bonds. Depending on all the facts and
circumstances and the hpe of audit involved, it is possible that connmencenmenr of an audit of the Bonds could adversely
affect the market value and liquidity of the Bonds until the audit is concluded,regardless of its ultimate outcome.
Certain Other Federal Tax Consequences
'1..'he.Bonds Am `,Quali#ed Tax-Exempt Obliggataons"for Financial institutions Section 265 of the Code generally provides that
100% of any interest expense incurred by banks and other financial institutions that is allocable to tax-exempt obligations
acquired after.august 7, 1986,will be disallowed as a tax deduction. However,if the tax-exempt obligations arc obligations
other than certain private activity bonds, are issued by a governmental unit that, together with all entities suboidinatc to it,
does not reasonably anticipate issuing more than$30,000,000 of tax-exempt obligations (other than certain private activity
bonds and other obligations not required to be included in such calculation)in the current calendar year,and are designated
by the governmental unit as "qualified tax-exempt obligations," only 20% of any interest expense deduction allocable to
those obligations will be disallowed.
The City is a governmental unit that, together with all suburd riate entities, reasonably anticipates issuing less than
$30,000,000 of tax-exempt obligations (other than certain private activity bonds and other obligations not required to be
included in such calculation) during the current calendar bear, and has designated the Bonds as "qualified tax-exempt
obligations" for purposes of Section 265(b)(3) of the Code. Therefore, only 20'/+- of the interest expense deduction of a
financial institution allocable to the Bonds will be disallowed for federal income tax purpose,.
Redlue on of v,-i-Reserve Deditelions for Properly &Caauall?lnsutaw C:omparaiej. Under Section 832 of the Code,interest on the
Bonds received by property and casualt}� insurance companies will reduce tax deductions for loss reserves otherwise
available to such companies by an amount equal to I i%of tax-exempt interest received during the taxable year.
Let on C er4ain Social Semrz} and Retitrmetat iiertts. Section 86 of the Code requires recipients of certain Social Security and
certain Railroad Retirement benefits to take receipts or accruals of interest on the Bonds into account in detemnining gross
income.
Other Possible Pedetal Tax Consequences. Receipt of interest on the Bonds may have other federal tax consequences as to which
prospective purchasei's of the.Bonds may wish to consult their okrn tax advisors.
ABSENCE OF MATERIAL LITIGATION
There is no litigation of any kind now pending or,to the knowledge of the City,threatened to restrain or enjoin the issuance
or delivery of the Bonds or in any manner gucstioning the proceedings and authority under which the Bonds are issued or
affecting(lie ability of the City to pay the principal of or the interest on the Bonds.
CONTINUING DISCLOSURE
The aggregate principal amount of the Bonds does not exceed$1 million,thus the issuance of the Bonds does not constitute an
"Offering" under Securities and Rxchange Commission Rule 15c2-12 (the "Rule"). The City is not required to enter into an
undertaking with respect to the Bonds to comply with the requirements under the Rule to provide certain financial information
and operating data and notices of certain material events with respect to the Bonds.
Prior Cotrrpliawr ii,#b Canlintdag Disclosure Undrizakings.The City has not faded to comply with any prior undertaking under the Rule
in the past five yews.
17
BOND XKf ING
The City will not apply for a rating on the Bonds.
APPROVAL OF BOND COUNSEL
Legal matters incident to the authorization, issuatrcc and sale of Bonds by the City are subject to the approving legal
opinion of Foster. Pepper PLLC;, Seattle, Washington, Bond Counsel. The form of the opinion of Bond Counsel with
respect to the Bonds is attached hereto as Appendix B.
The opinion of Bund Counsel is given based on factual representations made to Bond Counsel,and under existing law, as
of the date of initial delivery of the Bonds,and Bond Counsel assumes no obligation to re Axe or supplement its opinion to
reflect any facts or circumstances that may thereafter come to its attention,or any changes in law that may thereafter occur.
The opinion of Bond Counscl is an expression of its professional judgment on the matters expressly addressed in its
opinion and does not constitute a guarantee of result. Bond Counsel will be compensated only upon the issuance and sale
of Bonds.
CONFLICTS OF INTEREST
Some or all of the fees of the. Underwriter and Bond Counsel are contingent upon the issuance and sale of the Bonds.
Furthermore, Bond Counsel from time to time serves as counsel to the Underwriter with respect to issuers other than the
City and transactions other than the issuance of the Bonds. None of the council members or other officers of the City have
interests in the issuance of the Bowls that arc prohibited by applicable law.
UNDERWRITING
The Underwriter has agreed, subject to certain conditions, to purchase all of the Bonds, at a price equal to the principal
amount thereof, less an underwriting discount of$ . The Underwriter has represented that the Bonds will be
reoffered at the prices or yields set foith on the cover hereof,and such initial offering prices may be changed from time to
time by the Underwriter. After the initial public offering the public offering prices may be varied from time to time.
The Underwriter has entered into an agreement (the "Distribution Agreement") ;xith Advisors Asset 1�lanagement, Inc.
("A M'J, for the distribution of certain municipal securities offerings allocated to the Underwriter at the original offering
prices, Under the Distribution Agreement,if applicable to the Bonds, the Underwriter will share with AANf a portion of
the fee or commission,exclusive of management fees,paid to the Underwriter.
CONCLUDING STATEMENT
11 estimates, asswnptrons, statistical information and other statements contained herein, while taken from sources
considered reliable,are not guaranteed by the City or the Underwriter. So far as any statement herein includes matters of
opinion,or estimates of future expenses and income,whether or not expressly so stated, they are intended merely as such
and not as representations of fact.
The information contained hereiii should not be construed as representing all conditions affecting the City or the Bonds.
Additional mfortmation may be obtained directly from the City or the Underwriter.
The foregoing statements relating to the Bond Ordinances and other documents are in all respects subject to and qualified
in their entirety by provisions of such documents.
This Official Statement, starting with the cover page and all subsequent pages, including any appendices, comprise the
entire Official Statement, which has been approved by the City. The City has represented to the Underwriter that the
portions of this Official Statement directly pertaining to the City neither contain any rr isrepresentatio,i of material fact nor
omit any material fact necessary to understand the financial, economic or legal nature of the City or any information
presented herein.
CITY OF PASCO,WASHTNG TON
By.
Authorized RepresentatiVe
18
APPENDIX A
2009 AUDITED FINANCIAL STATEMENTS
APPENDIX B
FORM OF LEGAL OPINION
FOSTER PEPPER ,,,,
November 16,2010
City of Pasco,Washington
Re: City of Pasco,Washington,
$ Local Improvement District No. 145 Bonds
We have ser%ed as bond counsel to the City of Pasco, Washington (the "City"), in connection with the
issuance of the above referenced bonds (the "Bonds"), and in that capacity have examined such law and such certified
proceedings and other documents as we have deemed necessary to render this opinion. As to matters of fact material
to this opinion,we have relied upon represCntations contained in the certified proceedings and other certifications of
public officials furnished to us,without undertaking to v erifs the same by independent investigation.
The Bonds are issued by the City pursuant to Ordinance No. (the"Bond Ordinance") for the purpose
of providing the funds necessan, to pay so much of the cost and expense of the improvements as provided by
Ordinance No. 3872 establishing Local Improvement District No. 145 as is levied and assessed against the property
included hi the local improvement district and benefited by those improvements. The Bonds are payable solely from
special assessments levied in Local Improvement District No. 145 and paid into the Local Improvement Fund,
District No. 145,of the City(the"Bond Fund"),and from the Local Improvement Guaranty!Fund of the City.
We have not been engaged to review and thus express no opinion concerning the completeness or accuracy
of any official statement, offering circular or other sales or disclosure material relating to the issuance of the Bonds or
otherwise used iin conection with the Bonds.
Under the Internal Revenue Code of 1980, as amended (the "Code', the City is required to comply with
certain requirements after the date of issuance of the Bonds in order to maintain the exclusion of the interest on the
Bonds from gross income for federal income tax purposes,including,without lirnitatiori,requirements concerning the
qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing
gross proceeds of the Bonds in higher yielding investments in certain circumstances and the arbitrage rebate
requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with
those requirements, but if the City fails to comply with such requirements, interest on the Bonds could become
taxable retroactive to the date of issuance of the Bonds. We have not undertaken and do not undertake to monitor
the 0 ty's compliance with such requirements.
City of Pasco,Washington
November 16,24]4
Page 2
Based upon the foregoing,as of the date of initial delivery of the Bonds to the purchaser thereof and full
payment therefor,it is our opij-iion that under existing law:
1, The City is a duly organized and legally existing axle city under the laws of the State of NY'a."hington;
2. The Bonds have been dull authorized and executed by the City and are issued in full compliance
with die provisions of the Constitution and laws of the State of NI ashington and the ordinances of the City relating
thereto;
3. The Bonds constitute valid and binding obligations of the Bond Fund and the Local Improvement
Guaranty Fund of the City, except only to the extent that enforcement of payment may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights and by the application of equitable principles and the exercise of
judicial discretion in appropriate cases;
4. The Bonds are not general obligations of the City;and
5. Assuming compliance by the City after the date of issuance of the Bonds with applicable
requirements of the Code, the interest on the Bonds is excluded from gross income for federal income tax purposes
and is not an item of tax preference for purposes of the alternative nuitiintun tax applicable to individuals; however,
interest on the Bonds received by certain S corporations may be subject to tax, and interest on die Bonds received by
foreign corporations with United States branches may be subject to a foreign branch profits tax. We express no
opinion regarding any other federal tax consequences of receipt of interest on die Bonds.
This opinion is given m of the date hereof, and use assume no obligation to revise or supplement thus opinion
to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may
hereafter occur.
We bring to your attention the fact that the foregoing opinions are expressions of our professional judgment
on the matters expressly addressed and do not constitute guarantees of result.
Respectfully submitted,
FOSTER h)EPPER PTIC
APPENDIX C
DTC& BOOK-ENTRY SYSTEM
The in/ormation in this,redion concerning the Deposhgy Tinst Coritpaly.Nop York,Vew Fork (`DTC' and DTC's book-envy syrtew bas
been obtained firont sources that the Di idd believes to be rrliable, but/ht Uiririet rakes no responnbik,.2,for the aawmr y thereo%' BenejiJa!
Ormers(ar beraittafle,r defttred)slmuld tberefore confirm tbe.folkwittg nitb DTC or the l)atricipants(as hetpinatler defrned). For purposes of this
section, r-eferences to the I ewer mean the D4rf&l, and rrfmoces to Agent mean the Bond Registrar: I'or the purposes a f this Offrcial.Statemenl,
the term `Bens0 al Owner"includes the petson for ndium ibe Ilat Y pant acq;dres an ialerest in the Bonds.
1. DTC will act as securities depositors for the. Bonds. The Bonds will be issued as fully-registered in the. name of
Cede&Co. (DTC's partnership notninee) or such other nature as may be requested by an autltotimd representative
of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds in the principal
ainount of such maturity and will be deposited with DTC.
2. DTC, the world's largest securities depository,is a limited-purpose trust company organized under the flew York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Resen*e System, a "cleaning corporation" within the meaning of the New York Uniform Commercial
Code,and a"clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act
of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S, and non-U.S. equity issues,
corporate and municipal debt issues, and money- market instruments (froth over 100 countries) that DTC's
participants ("Direct Participants") deposit with DTC.DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities through electronic computerized
book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and
dealers, batiks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsicliary of The Depository Trust,&, Clearing Corporation ("DTC;C"). DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are. registered
clearing seniees. DTC:C is owned by the users of its regulated subsidiaries. A.ecer;s to the ll'1'C: system is also
available to others such as both U.S. and non-U.S. securities brokers and dealers,banks,and trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either
directly or.indirectly ("Indirect Participants"). DTC has Standard& Poor's highest rating. A. A. The DTC Rides
applicable to its Participants are on file with the Securities and Exchange Commission. More information about
D'1 7C can be found at www.dtcc.com and www.dtc.org.
3. Purehascs of the Bonds under the DTC system,in denominations of$5,000 or any integral multiple thereof,must
be trade by or through Direct Participants, which xU receive a credit for the Bonds on 91'C's records. The
ownership interest of each actual purchaser of each Bond ("Beneficial Chvner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Chvners grill not receive written confirmation from DTC of
their purchase. Beneficial Owners are, however,expected to receive written confirmations protdding details of the
transaction, as well as periodic statements of their holdings, from the Director Indirect Participant.through-,%>hich
the Beneficial Owner entered isito the transaction. Transfers of ownership interests in the Bonds are to be
accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Boiids,except
in the event that use of the book-entry system for the Bonds is discontinued.
4. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede&Co. or such other name as may be requested by an authorized representative
of DTC. The deposit of Bonds with DTC and their registration in the name of Cede& Co. or such other DTC
nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners
of the Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are
credited, which may of may not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings can behalf of their customers.
5. When notices are given, they will be sent by the Bond Registrar to DTC only. Conveyance of notices and other
communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them,subject
to any statutory or regulatory=requirements as may be in effect from time to tune.
6. Redemption notices will be sent to DTC. if less than all of the Bonds are being redeemed, DTC's practice 1fi to
detennine by lot the amount of the interest of each Dircct Participant in such issue to be redeemed.
7. Neither DTC not Cede&Co. (nor any other DTC nominee)will consent or%-ote with respccr to the Bonds unless
authorized by a Direct Participant in accordance with DTC's N241 Procedures. Under its usual procedures, DTC
mails an Omnibus Pro%7, to the District as soon as possible after the record date. The Omnibus Proxy assigns
Cede&Co.'s consenting or toting rights to those Direct Participants to whose accounts Bonds are credited on the
record date(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede& Cu. or such
other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct
Participants'accounts upon DTC's receipt of fuads and corresponding detail information from the District or the
Bond Registrar,on payable date in accordance with their respective holdings shuwn on DTC's records. Payments
by Participants to Beneficial Owners will he.governed by standing instructions and customary practices, as is the
case with seciuities held for the accounts of customers in bearer form or registered in "street name," and will be
the responsibility of such Participant and not of ITC, the Bond Registrar,or the District, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions,
and dividend payments to Cede.&Co. (or any, other nominee as may be requested by an authorized representative
of DTC) is the responsibility of the [District) or the Bond Registrar, disbursement of such payrnetits to Direct
Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will
be the responsibility of Direct and Tndireet Participants.
9. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by
giving reasonable notice to the [District] and the Bond Registrar. Under such circumstances, iii the event that a
successor sectuities depository is not obtained,Bond certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of the book-entry transfers through DTC (or a successor
securities depository).In that event,Bond certificates will be printed and delivered to DTC.
The infoniantion in this section concerning DTC and DTC's book-entry system has been obtained Sion: sources
that Issuer believes to be reliable,but Issuer takes no responsibility for the accuracy thereof.