HomeMy WebLinkAbout2010.05.10 Council Workshop Packet AGENDA
PASCO CITY COUNCIL
Workshop Meeting 7:00 p.m. May 10, 2010
1. CALL TO ORDER
2. ROLL CALL:
(a) Pledge of Allegiance.
3. VERBAL REPORTS FROM COUNCILMEMBERS:
4. ITEMS FOR DISCUSSION:
(a) Staff Presentation: irrigation Systems. (NO WRITTEN MATF.,RIAL ON AGF,NDA)
Presented by Jess Greenough,Field Division Manager.
(b) Senior Services Advisory Committee Interviews:
1. Agenda Report from Gary Crutchfield, City Manager dated May 6,2010.
2. Applications (2) (Council packets only)
(c) Renewal of HOME Consortium Agreement for KenneNdck, Pasco and Richland for
Program Years 2011-2013:
1. Agenda Report from Angela Pitman, Block Grant Administrator dated May 6, 2010.
2. Resolution.
(d) 2010 Water and Sewer Utility Revenue Bonds:
I. Agenda Report from Stan Strebel, Deputy City Manager dated May 6,2010.
2. Proposed Ordinance.
3. Preliminary Official Statement.
(Attachments in Council packets only; copies available for public review in the City
Manager's office, the Pasco Library or on the city's webpage at: hltyJ /www.yasco-
wa.gQv
fweb!qpp/ci()&ouncih-e,orts.)
(e) Legislative Consultant Agreement:
1. Agenda Report from Gary Crutchfield,City Manager dated May 7, 2010.
2. Proposed Agreement.
5. OTHER ITEMS FOR DISCUSSION:
(a)
(b)
(c)
6. EXECUTIVE SESSION:
(a)
(b)
(c)
7. ADJOURNMENT
REMINDERS:
1. 11:00 a.m., Monday, May 10, 904 E. Ainsworth—Osprey Pointe—Business & Technology Progress
Celebration. (MAYOR PRO-TEM MATT WATKINS)
2. 12:00 p.m., Monday, May 10, Pasco Red Lion — Pasco Chamber of Commerce Membership
Luncheon. (Presenter: WSU Tri-Cities Chancellor Vicky L.Carwein)
3. 10:00 a.m., Tuesday, May 11, Senior Center -- Senior Citizens Advisory Committee Meeting.
(COUNCILMEMBER TOM LARSEN, Rep.; BOB HOFFMANN, Alt.)
4. 10:00 a.m., Wednesday, May 12, KONA — KONA Mayor's Report. (MAYOR PRO-TEM MATT
WATKINS)
5. 7:00 a.m., Thursday, May 13, Cousin's Pasco — BFCG Tri-Mats Policy Advisory Committee
Meeting. (COUNCILMEMBER BOB HOFFMANN,Rep.; REBECCA FRANCIK, Alt.)
6. 7:00 p.m., Thursday, May 13, Transit Facility — Ben-Franklin "Transit Board Meeting. (MAYOR
PRO-TEM MATT WATKINS, Rep.; COUNCILMEMBER MIKE GARRISON, Alt.)
7. 1:30 p.m., Friday, May 14, 7130 W. Grandridge Blvd. — Ridges to Rivers Jurisdictional Council
Meeting. (MAYOR PRO-TEM MATT WATKINS)
AGENDA REPORT
TO: City Council May 6, 2010
FROM: Gary Crutcl 9 Manager Workshop Mtg,: 5110110
SUBJECT: Senior Service. Advisory Committee Interviews
1. REFERENCE(S):
1. Applications (2) (Council packets only)
II. ACTION REQUESTED OF COUNCIL/STAFF RECOMMENDATIONS:
5110: Council to conduct brief interviews with Jim Michaud and Lynda Salgado.
Ill. HISTORY AND FACTS BRIEF:
A) The Senior Services Advisory Committee includes four appointed members (the
fifth board position is reserved for the Senior Citizens Association President);
terms are for three years. The committee meets on the second Tuesday of each
month at 10:00 a.m.
B) The Senior Services Advisory Committee advises the City Council on programs,
activities and interests of senior citizens as they relate to the Senior Citizen
Center,
C) At the present time there is one vacancy on the commission:
1. Position No. 2 tern expiration date of 411110
D) After Council screening committee review of all applications, the following have
been selected to interview for Position 2:
1. Jim Michaud ...............................................................9100 Court Street
2. Lynda Salgado.................... ....................—..............916 N. 24"' Avenue
IV. DISCUSSION:
A) After conduct of interviews at the May 10 Workshop meeting, it is proposed that
an appointment be made by the Mayor, subject to confirmation by the Council, at
the May 17 meeting.
4(b)
AGENDA REPORT
FOR: City Council May 4, 2010
TO: Gary Crutchfield, City ger Workshop Mtg.: 5110110
Rick White, �tl� Regular Mtg.: 5/17/10
Community &Economic Development Director
FROM: Angela R. Pitman, Block Grant Administrator
SUBJECT: Renewal of HOME Consortium A rrccment for Kennewick, Pasco and Richland
for Program Years 2011-2013
I. RJR FERENCI N:
A. Resolution
II. ACTION REQUESTED OF COUNCIL 1 STAFF RECONINMENDATIONS:
5110: DISCUSSION
5117: MOTION: I move to approve Resolution No. renewing the HOME
2005-2007 Cooperative Agreement between the Cities of Pasco,
Kennewick and Richland for Program Years 2011-2013.
III. FISCAL IMPACT:
Pasco's share of federal HOME fiinds in 2010 was $215,925. It is estimated that Pasco
will be awarded approximately $200,000 each of the next three years.
IV. HISTORY AND FACTS BRIEF:
A. Pasco entered into a HOME consortium agreement with Richland and Kennewick
in 1995, making the city eligible for federal HOME funds. The populations of the
individual cities alone do not meet the U.S. Department of Housing and Urban
Development (HUD) minimum. By joining together in a consortium, funds are
available to the three cities.
B. The original consortium agreement ran from 1995 through 1998. The cities then
agreed to enter into a new three-year agreement, as authorized by HUD through
2001. Thereafter, the agreement has been renewed every three years. In 2007, the
agreement was amended to renew automatically unless one of the cities objects.
However, the renewal clause still requires the City of Richland as lead
representative for the consortium to notify participating jurisdictions of their
opportunity to not participate in the subsequctnt three-year period(2011-2013).
C. Richland has expressed their willingness to continue as lead representative to the
consortium.
V. DISCUSSION:
A. Funding through the IiOME consortium allows Council to designate a variety of
programs designed to increase the supply of decent and affordable housing to low
income residents.
4(c)
RESOLUTION NO.
A RESOLUTION APPROVING RENEWAL TO THE HOME COOPERATIVE
AGREEMENT FOR TRI-CITIES HOME CONSORTIUM OF KENNEWICK, PASCO,
AND RICHLAND CONSORTIUM UNDER THE NATIONAL AFFORDABLE
HOUSING ACT FOR PROGRAM YEARS 2011-2013.
WHEREAS, the Cities of Kennewick, Pasco and Richland entered into a cooperative
agreement to form a consortium to increase the local supply of decent affordable housing to low
income residents as authorized by public Law 101-625, the National Affordable Housing Act of
1940 (NAHA); and
WHEREAS, the members of the Consortium extended the agreement for an additional
three years from 2008-2010, NOW TH EREORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO:
That the City Council approves renewal of the Cooperative Agreement with the Cities of
Kennewick and Richland for program years 2011-2013 to increase the supply of decent and
affordable housing to low income residents.
BE IT FURTHER RESOLVED that this Resolution shall take effect immediately.
PASSED by the City Council of the City of Pasco this day of . 2010
Matt Watkins
Mayor Pro-Tem
ATTEST: APPROVED AS TO FORM:
Debra L. Clark Leland B. Kerr
City Clerk City Attorney
AGENDA REPORT
FOR: City Council r May 6, 2010
TO. Gary Crutchti eanager Workshop Mtg.: 5/I0/10
Regular Mtg.: 5/17/10
FROM: Stan Strebel, L)e uty City Manag
SUBJECT: 2010 Water and Sewer Utility Revenue Bonds
I. REFERENCE(S):
I. Proposed Ordinance
2. Preliminary Official Statement
(Attachments in Council packets only; copies available for public review in the
City Manager's office, the Pasco Library or on the city's webpage at:
hzrl)://www.uasco-wa.2ov/webri r�i/eitycouncilrepor-ts.)
II. ACTION REQUESTED OF COUNCIL /STAFF RECOMMENDATIONS:
5/10: Discussion
5/17: MOTION: I move to adopt Ordinance No. , an ordinance relating
to the waterworks utility of the city, including the sanitary sewerage system and
the system of storm or surface water sewers as a part thereof; adopting a system
or plan of additions to and betterments and extensions of the waterworks utility
of the city; providing for the issuance and sale of $ par value of
water and sewer improvement and refunding revenue bonds, 2010A, for the
purpose of obtaining the funds with which to pay the cost of carrying out such
plan of additions, pay the cost of a current refunding of the city's outstanding
water and sewer revenue refunding bonds, 1998, Series B (tax-exempt), and the
administrative costs of such refunding, and fund a reserve for and pay the costs
of issuance of such bonds; providing for the issuance and sale of$
par value of water and sewer refunding revenue bonds, 2010T (taxable), for the
purpose of obtaining the funds with which to pay the cost of a current refunding
of the city's outstanding water and sewer revenue bonds, 1998, Series A
(taxable), and the administrative costs of such refunding, and pay the costs of
issuance of such bonds; fixing the date, form, denomination, maturities, interest
rates, terms and covenants of the bonds authorized herein; providing for and
authorizing the purchase of certain obligations out of the proceeds of the sale of
such bonds and for the use and application of the money derived from those
investments; authorizing the execution of an agreement with U.S. Bank National
Association of Seattle, Washington, as refunding trustee; providing for the call,
payment and redemption of the outstanding bonds to be refunded; and providing
for the sale and delivery of the bonds to Piper .laffray & Co. of Seattle,
Washington and, further, authorize publication only.
11I. FISCAL IMPACT:
IV. HISTORY AND FAC'T`S BRIEF:
A) It is proposed that the city issue a combined total of $10,615,000 in water and
sewer revenue bonds for completing approximately $3 million in water system
improvements (new west side water treatment plant); $3 million in sewer system
improvements (primary clarification at WWTP; pump stations at Highway 12 and
Commercial Avenue; and Court Street/]-182 north sewer extension); for refunding
some $4,070,000 of 1998 water and sewer revenue bonds; and providing
approximately $545,000 for the city's debt service reserve fund (preferable to
raising utility rates for this required set aside) and costs.
4(d)
B) The 2010 Water and Sewer Revenue Bonds would be issued in two series: 2010A
($9,390,000) and 2010T (taxable) in the amount of$1,225,000. The 2010A series
would be payable over 20 years with the taxable series payment over eight years.
The taxable series is necessary due to the fact that a portion of the refunded bonds
were originally issued as taxable due to private beneficiaries (PWRF).
C) Favorable interest rates support combining the sewer projects (some accelerated
fi•om the capital plan schedule) and the refunding with the balance of bonds
necessary to complete the water treatment plant. Refunding the 1998 bonds is
estimated to result in savings of$220,000.
D) Interest rates on the bonds are expected to range from 2.00% to 4.75% (the higher
rates will apply to the taxable series).
V. DISCUSSION:
A) Standard & Poor's again assigned a rating of AA- to the issue, reaffirming the
upgrade received on our 2009 revenue bonds. Given the favorable rating, it will
not be necessary to consider bond insurance in order to gain the most favorable
rates.
B) The bonds will be sold on May 17. The completed bond ordinance will be
available by the start of that Council meeting.
C) Jane Towery, Managing Director of Public Finance with Piper Jaffray, Inc. will be
present at the May 17 meeting to report on the sale of the bonds.
D) Staff recommends adoption of the proposed ordinance.
i PRELIMINARY OFFICIAL STATEMENT DATED MAY 7, 2010
r r NEW ISSUE RATING: AA-(S&P)
s BOOK-ORDER ENTRY BANK QUALIFIED—2010A Bonds
o "
a v In the opinion of Bond Counsel,under exi ting federal law and assuming compliance with applicable requirements of the Internal Revenue Code of 9986,as amended(the
v w `Code'), that must be satioed subsequent to the issue date of the 2090A Bonds, interest on the 2090A Bonds is excluded from gross income for federal income tax
a° purposes and is not an item of tax preference forpurposes of the alternative minimum tax applicable to individuals. However,while interest on the 2090A Bonds also is
not an item of tax preference forpurposes of the alternative minimum tax applicable to corporations, interest on the 2090A Bonds received by corporations is taken into
a" account in the computation of adjusted current earnings forpurposes of the alternative minimum tax applicable to corporations, interest on the 2090A Bonds received by
certain S corporations may be subject to tax, and interest on the 2090A Bonds received by foreign corporations with United States branches may be subject to a foreign
o branch profits tax. Receipt of interest on the 2090A Bonds may have other federal tax consequences for certain taxpayers. See `TAX MATTERS—Tax Exemption
v r of the Series 2090A Bonds"and"-Certain Other Federal Tax Consequences"herein.
° Interest on the 2090T Bonds is not excluded fromgross income forfederal income taxpurposes.
A $9,390,000* $1,225,000*
0 o CITY OF PASCO,WASHINGTON CITY OF PASCO,WASHINGTON
w WATER AND SEWER WATER AND SEWER
IMPROVEMENT AND REFUNDING REVENUE BONDS, REFUNDING REVENUE BONDS,
c 2010A 2010T (TAXABLE)
0
DATED: Date of Delivery DUE: June 1,as shown on inside cover
� 0 �
The City of Pasco, Washington (the "City', Water and Sewer Improvement and Refunding Revenue Bonds, 2010A (the
g "2010A Bonds") and Water and Sewer Refunding Revenue Bonds, 2010T (Taxable) (the "2010T Bonds" and, together with
y c the 2010A Bonds, the "Bonds"), will be issued as fully registered bonds under a book-entry only system, registered in the
0 ° name of Cede and Co. as bond owner and nominee for DTC. DTC will act as initial securities depository for the Bonds.
0 0 Individual purchases of the Bonds will be made in book-entry form, in the denomination of$5,000 or any integral multiple
thereof. Purchasers will not receive certificates representing their interests in the Bonds. Interest on the Bonds will be paid
vsemi-annually on each June 1 and December 1, beginning December 1, 2010, to the maturity or earlier redemption of the
o2 Bonds. The principal of and premium, if any, and interest on the Bonds are payable by the City's Bond Registrar, the fiscal
agent of the State of Washington currently The Bank of New York Mellon in New York,New York,to DTC,which,in turn,
is obligated to remit such payments to its participants for subsequent disbursement to beneficial owners of the Bonds, as
y .y- described under"DESCRIPTION OF THE BONDS"and in Appendix D.
o
Security: The Net Revenue of the City's Waterworks Utility,including any Utility Local Improvement District Assessments
8 w
00 ("ULID Assessments") in any ULID created to secure the payment of any Parity Bonds, are pledged to the payment of the
„
principal of and interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds when due. The lien and
w charge of the Bonds,the Outstanding Parity Bonds and any Future Parity Bonds on the Net Revenue and ULID Assessments
I is prior and superior to any other liens and charges whatsoever. See "SECURITY OF THE BONDS"herein. The Bonds do not
o constitute a debt or indebtedness of the State of Washington,or any other political subdivision thereof,other than the City.
¢ Optional Redemption: Bonds maturing on or prior June 1, 2019 shall not be subject to optional redemption by the City
3 prior to their stated maturity dates.The City reserves the right and option to redeem Bonds maturing on or after June 1,2020
cy �
o E a prior to their stated maturity date at any time on or after December 1,2019, as a whole or in part (randomly in such manner
as the Bond Registrar shall determine),at par plus accrued interest.
C 3 Bank Designation: The 2010A Bonds have been designated as "Qualified Tax Exempt Obligations." See "TAX
MATTERS-CERTAIN OTHER TAX CONSEQUENCES"herein.
oLegal Opinion: The Bonds are offered for delivery by the Purchaser when, as and if issued, subject to the approving legal
- n opinion of Foster Pepper PLLC,Seattle,Washington,Bond Counsel. The form of Bond Counsel's opinion is attached hereto
d _o as Appendix C. It is anticipated that the Bonds will be available for delivery through the facilities of DTC in New York,New
vYork,or to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer on or about June 3,2010.
s N This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official
Statement to obtain information essential to the making of an informed investment decision.
C
r
rt 9 r *Preliminary,subject to change
R b
Vi .w •ri
Pxperjaff ray.
CITY OF PASCO,WASHINGTON
$9,390,000*
WATER AND SEWER IMPROVEMENT AND REFUNDING REVENUE BONDS,2010A
MATURITY SCHEDULE
Due Interest Price or
Tune 1 Amount* Rate Yield CUSIP No.(1)
2011 $930,000 702571_
2012 955,000 702571_
2013 980,000 702571_
2014 1,010,000 702571_
2015 275,000 702571_
2016 285,000 702571_
2017 295,000 702571_
2018 310,000 702571_
2019 320,000 702571_
2020 335,000 702571_
$1,880,000 %Term Bond Maturing on June 1,2025 @ %(CUSIP No.(1)702571 )
$1,815,000 %Term Bond Maturing on June 1,2029 @ %(CUSIP No.(1)702571)
$1,225,000*
WATER AND SEWER REFUNDING REVENUE BONDS,2010T(TAXABLE)
MATURITY SCHEDULE
$1,225,000 %Term Bond Maturing on June 1,2018 @ %(CUSIP No.(1)702571)
(1) The CUSIP numbers are included in this Official Statement for convenience of the holders and potential holders of the Bonds. Copyright 2009,
American Bankers Association. The CUSIP numbers herein are provided by CUSIP Global Service.CUSIP Global Service is managed on behalf of
the American Bankers Association by Standard and Poor's. These numbers are not intended to create a database and do not serve in any way as a
substitute for the CUSIP Service. CUSIP numbers are subject to change. The City takes no responsibility for the accuracy of such CUSIP numbers.
*Preliminary,subject to change.
No dealer, broker, sales representative or other person has been authorized by the City or Piper Jaffray & Co. (the
"Underwriter") 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 not 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 by the City to be reliable but is not guaranteed as to accuracy or completeness and it is not to be construed as a
representation by the Underwriter. The Underwriter has reviewed the information in this Official Statement in
accordance with,and as a part of,its responsibilities to investors under the federal securities laws as applied to the facts
and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such
information. The information and expressions of opinion herein are subject to change without notice, and neither the
delivery of this Official Statement nor any sale hereunder shall create any implication that there has been no change in
the financial condition or operations of the City described herein since the date hereof. This Official Statement
contains,in part,estimates and matters of opinion that are not intended as statements of fact,and no representation or
warranty is made as to the correctness of such estimates and opinions or that they will be realized.
Certain statements contained in this Official Statement reflect not historical facts but are forecasts and"forward-looking
statements." No assurance can be given that the future results discussed herein will be achieved,and actual results may
differ materially from the forecasts described herein. In this respect, the words `estimate," "forecast," "project,"
"anticipate," "expect," "intend," "believe" and other similar expressions are intended to identify forward-looking
statements. The forward-looking statements in this Official Statement are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in or implied by such statements. All estimates,projections,
forecasts, assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary
statements set forth in this Official Statement. The City specifically disclaims any obligation to update any forward-
looking statements to reflect occurrences or unanticipated events or circumstances after the date of this Official
Statement,except as other expressly provided in"CONTINUING DISCLOSURE."
The Bonds have not been registered with the Securities 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 registration or
qualification under the securities laws of various states,and may not be transferred in violation of such state laws. The
registration or qualification of the Bonds in accordance with applicable provisions of the securities laws of the states in
which the Bonds have been registered or qualified, if any, and exemption from registration or qualification in other
states,shall not be regarded 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 Commission except for the omission of offering 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(b)(1) of Chapter 11 of Title 17 of the Code of Federal
Regulations. The City has also undertaken to provide continuing disclosure on certain matters, including annual
financial information and specific material events, as more fully described herein under "CONTINUING
DISCLOSURE."
CITY OF PASCO, WASHINGTON
525 NORTH THIRD AVENUE
P.O.Box 293
PASCO,WA 99301
(509)545-3404
www.pasco-wa.gov*
ELECTED OFFICIALS
Members Position Term Expires
Matt Watkins Mayor December 31, 2011
Vacant Mayor Pro-Tem December 31, 2011
Robert Hoffmann Council Member December 31, 2013
Michael Garrison Council Member December 31,2013
Rebecca Francik Council Member December 31, 2011
Tom Larsen Council Member December 31, 2013
Al Yenney Council Member December 31, 2011
CITY ADMINISTRATIVE STAFF
Gary Crutchfield City Manager
Richard Terway Administrative and Community Services Director
Robert Alberts Public Works Director
Michael McShane City Engineer
Denis Austin Police Chief
Robert Gear Fire Chief
BOND REGISTRAR AND PAYING AGENT
The Bank of New York Mellon
New York, New York
BOND COUNSEL
Foster Pepper PLLC
Seattle,Washington
* The City's website is not part of this Official Statement, and investors should not rely on information presented in
the City's website in determining whether to purchase the Bonds. This inactive textual reference to the City's website is
not a hyperlink and does not incorporate the City's website by reference.
TABLE OF CONTENTS
INTRODUCTION.............................................................................................................................................................................1
DESCRIPTIONOF THE BONDS................................................................................................................................................1
General..............................................................................................................................................................................................1
RedemptionProvisions..................................................................................................................................................................1
Noticeof Redemption....................................................................................................................................................................2
OpenMarket Purchase of Bonds..................................................................................................................................................2
Form,Denomination and Registration.........................................................................................................................................3
Failureto Redeem the Bonds........................................................................................................................................................3
Defeasanceof the Bonds................................................................................................................................................................3
Book-Entry Bonds..........................................................................................................................................................................3
Purposeand Use of Proceeds........................................................................................................................................................3
SOURCES AND USES OF FUNDS..............................................................................................................................................4
SECURITY FOR THE BONDS......................................................................................................................................................5
Pledge of Revenue and Lien Position...........................................................................................................................................5
CoverageRequirement....................................................................................................................................................................5
BondFund........................................................................................................................................................................................5
ReserveAccount..............................................................................................................................................................................5
Flowof Funds..................................................................................................................................................................................6
Covenantsof the City.....................................................................................................................................................................6
FutureParity Bonds........................................................................................................................................................................7
THEWATERWORKS UTILITY....................................................................................................................................................9
TheWater System...........................................................................................................................................................................9
TheSewer System..........................................................................................................................................................................10
RateComparisons.........................................................................................................................................................................11
TheProcess Water Reuse Facility...............................................................................................................................................12
StormwaterManagement Utility..................................................................................................................................................13
IrrigationUtility.............................................................................................................................................................................13
CapitalImprovement Plan...........................................................................................................................................................13
OtherWaterworks Utility Debt...................................................................................................................................................14
HistoricalOperating Results........................................................................................................................................................15
ProjectedOperating Results.........................................................................................................................................................16
DEBTPAYMENT RECORD........................................................................................................................................................17
OTHERFINANCINGS..................................................................................................................................................................17
CITYPROFILE................................................................................................................................................................................18
CityCouncil....................................................................................................................................................................................18
KeyAdministrative Staff..............................................................................................................................................................18
LaborRelations..............................................................................................................................................................................18
TheCity's Investments.................................................................................................................................................................19
PensionSystem..............................................................................................................................................................................19
OtherPost-Employment Benefits..............................................................................................................................................21
Accountingand Budgeting Policies............................................................................................................................................21
Auditingof City Finances.............................................................................................................................................................21
Local Government Investment Pool..........................................................................................................................................21
Insurance........................................................................................................................................................................................21
Liability,Claims and Litigation....................................................................................................................................................22
GENERAL AND ECONOMIC INFORMATION...................................................................................................................22
Population......................................................................................................................................................................................22
LargestEmployers.........................................................................................................................................................................22
EconomicData..............................................................................................................................................................................23
INITIATIVEAND REFERENDUM..........................................................................................................................................25
TAXMATTERS ...............................................................................................................................................................................25
The2010A Bonds..........................................................................................................................................................................25
Certain Other Federal Tax Consequences.................................................................................................................................26
Preservation of Tax Exemption of 2010A Bonds....................................................................................................................26
NoTax Exemption for 2010T Bonds........................................................................................................................................26
CONTINUINGDISCLOSURE....................................................................................................................................................26
Basic Undertaking to Provide Annual Financial Information and Notice of Material Events...........................................26
AnnualFinancial Information.....................................................................................................................................................27
Amendmentof Undertaking........................................................................................................................................................27
Terminationof Undertaking........................................................................................................................................................27
Remedy for the Failure to Comply with Undertaking..............................................................................................................27
Prior Compliance with Continuing Disclosure Undertakings.................................................................................................27
LEGALINFORMATION..............................................................................................................................................................28
Absence of Litigation Affecting the Bonds...............................................................................................................................28
Approvalof Bond Counsel..........................................................................................................................................................28
BONDRATING...............................................................................................................................................................................28
CONFLICTSOF INTEREST........................................................................................................................................................28
UNDERWRITING..........................................................................................................................................................................28
CONCLUDING STATEMENT....................................................................................................................................................29
CERTAIN DEFINITIONS.........................................................................................................................................APPENDix A
EXERPTS OF 2008 AUDITED FINANCIAL STATEMENTS..........................................................................APPENDix B
FORMOF LEGAL OPINION...................................................................................................................................APPENDIX C
DTC&BOOK ENTRY SYSTEM.............................................................................................................................APPENDIX D
PRELIMINARY OFFICIAL STATEMENT
$9,390,000* $1,225,000*
CITY OF PASCO,WASHINGTON CITY OF PASCO,WASHINGTON
WATER AND SEWER WATER AND SEWER
IMPROVEMENT AND REFUNDING REVENUE REFUNDING REVENUE
BONDS,2010A BONDS,2010T(TAXABLE)
INTRODUCTION
This Official Statement,including the cover page and any appendices attached hereto,is being distributed by the City of
Pasco,Washington (the"City"),a municipal corporation duly organized and existing under and by virtue of the laws of
the State of Washington,to furnish information in connection with the issuance and sale by the City of Water and Sewer
Improvement and Refunding Revenue Bonds, 2010A (the "2010A Bonds") and Water and Sewer Refunding Revenue
Bonds,2010T(Taxable) (the"2010T Bonds"and,together with the 2010A Bonds,the"Bonds").
The Bonds are being issued in accordance with the provisions of the Constitution and applicable Statutes of the State
and pursuant to Ordinance No._(the"Bond Ordinance"),passed by the City Council on May 17,2010.
Capitalized terms used herein, if not specifically defined herein, are used as defined in the Bond Ordinance. See
APPENDIX A-"CERTAIN DEFINITIONS."
DESCRIPTION OF THE BONDS
General
The Series 2010A Bonds will be issued in the principal amount of$9,390,000*and the Series 2010T Bonds will be issued
in the principal amount of$1,225,000*. The Bonds will be dated and bear interest from the date of their initial delivery.
The Bonds will mature on the dates and in the principal amounts and will bear interest payable semiannually on each
June 1 and December 1, beginning December 1, 2010, at the respective rates as set forth on the inside cover of this
Official Statement. Interest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day
months.
The Bonds will be issued in registered form,as to both principal and interest,initially registered in the name Cede&Co.,
as nominee for The Depository Trust Company,New York,New York("DTC"),in the denomination of$5,000 each or
any integral multiple thereof within a single maturity. Individual purchases of the Bonds will be made initially in
book-entry form only and purchasers will not receive certificates representing their interest in the Bonds purchased. See
Appendix D—"DTC&BOOK-ENTRY SYSTEM."
The Bonds are being issued on a parity with the City's 1998C Bonds, 1999 Bonds,2001 Bonds,2005 Bonds,2007 Bonds
and 2009 Bonds (the"Outstanding Parity Bonds"and,together with the Bonds and any Future Parity Bonds the"Parity
Bonds").
THE BONDS ARE NOT A GENERAL OBLIGATION OF THE CITY, AND NEITHER THE FULL FAITH
AND CREDIT NOR THE TAXING POWER OF THE CITY, FRANKLIN COUNTY, THE STATE OF
WASHINGTON OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF
THE PRINCIPAL OF OR INTEREST ON THE BONDS.
Redemption Provisions
Optional Re"lion. Bonds maturing on or prior to June 1,2019 shall not be subject to optional redemption by the City
prior to their stated maturity dates. The City reserves the right and option to redeem Bonds maturing on or after June 1,
2020 prior to their stated maturity date at any time on or after December 1,2019, as a whole or in part (randomly in
such manner as the Bond Registrar shall determine),at par plus accrued interest.
Mandatory Re"tion. The Series 2010A Bonds maturing on June 1, 2025 are subject to mandatory redemption prior to
maturity at the redemption price of 100% of the principal amount thereof(without premium) plus accrued interest to
the date fined for redemption,on June 1,in the years and in the amounts set forth below:
2025 Term Bond
Due June 1 Mandatory Redemption* Due June 1 Mandatory Redemption*
2021 $345,000 2024 $390,000
2022 360,000 20250) 410,000
2023 375,000
(1)Maturity
*Preliminary,subject to change.
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The Series 2010A Bonds maturing on June 1, 2029 are subject to mandatory redemption prior to maturity at the
redemption price of 100%of the principal amount thereof(without premium)plus accrued interest to the date fixed for
redemption,on June 1,in the years and in the amounts set forth below:
2029 Term Bond
Due June 1 Mandatory Redemption*
2026 $425,000
2027 445,000
2028 460,000
2029(t) 485,000
(l)Maturity
*Preliminary,subject to change.
The Series 2010T Bonds maturing on June 1, 2018 are subject to mandatory redemption prior to maturity at the
redemption price of 100%of the principal amount thereof(without premium)plus accrued interest to the date fixed for
redemption,on June 1,in the years and in the amounts set forth below:
2018 Term Bond
Due June 1 Mandatory Redemption* Due june 1 Mandatory Redemption*
2011 $130,000 2015 $155,000
2012 135,000 2016 165,000
2013 140,000 2017 170,000
2014 150,000 20180) 180,000
(1)Maturity
*Preliminary,subject to change.
If the City redeems under the optional redemption provisions,purchases in the open market or defeases Term Bonds,
the par amount of the Term Bonds so redeemed, purchased or defeased (irrespective of their actual redemption or
purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for those Term Bonds.
The City shall determine the manner in which the credit is to be allocated and shall notify the Bond Registrar in writing
of its allocation at least 60 days prior to the earliest mandatory redemption date for that maturity of Term Bonds for
which notice of redemption has not already been given.
Notice of Redemption
So long as the Bonds are in book-entry only form,the Fiscal Agent will notify DTC of an early redemption not less than
30 days prior to the date fixed for redemption, and will provide such information as required by the Letter of
Representations between the City and DTC.
During any period in which the Bonds are not in book-entry form, unless waived by an Owner of the Bonds to be
redeemed,notice of any intended redemption of Bonds will be given by the Fiscal Agent on behalf of the City not less
than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the
registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond
Registrar prepares the notice,as described in the Bond Ordinance. Interest on Bonds called for redemption will 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 the case of an optional redemption, the notice may state that the City retains the right to rescind the redemption
notice and the related optional redemption of Bonds by giving a notice of rescission to the affected registered owners at
any time prior to the scheduled optional redemption date. Any notice of optional redemption that is no rescinded will
be of no effect,and the Bonds for which the notice of optional redemption has been rescinded will remain outstanding.
Open Market Purchase of Bonds
The City reserves the right and option to purchase any or all of the Bonds in the open market at any time at any price
plus accrued interest to the date of purchase.
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Form,Denomination and Registration
The Bonds will be issued in fully registered form as to both principal and interest in the denomination of$5,000 each or
any integral multiple thereof within a single maturity. The Bonds,when issued,will be registered in the name of Cede&
Co.,as registered owner and nominee of DTC.
DTC will act as securities depository for the Bonds. Individual purchases may be made in Book-Entry form only.
Purchasers will not receive certificates representing their interest in the Bonds purchased. So long as Cede&Co.is the
registered owner of the Bonds, as nominee of DTC, references herein to the registered owners or bond owners will
mean Cede & Co. and will not mean the `Beneficial Owners" of the Bonds. In this Official Statement, the term
"Beneficial Owner"will mean the person for which a DTC participant acquires an interest in the Bonds. See Appendix
D-"DTC&BOOK-ENTRY SYSTEM".
Failure to Redeem the Bonds
If any Bond is not redeemed when properly presented at its maturity or call date,the City will pay interest on that Bond
at the same rate provided on 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 to the registered owner of each of those unpaid Bonds.
Defeasance of the Bonds
If money and/or government obligations (as defined in chapter RCW 39.53.010(9)) are irrevocably set aside in a special
account of the City to effect redemption and retirement of all or a portion of the Bonds, and such amounts (including
interest earning thereon) are pledged for such purpose,then no further payments need be made into the Bond Fund for
the payment of the principal of and interest on the Bonds,and such Bonds shall cease to be entitled to any lien,benefit
or security of the Bond Ordinance except the right to receive the moneys so set aside and pledged,and such Bonds shall
be deemed not to be outstanding.
Book-Entry Bonds
DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity of
the Bonds, as set forth on the inside cover of this Official Statement, each in the aggregate principal amount of such
maturity, will be registered in the name of Cede & Co., as nominee for DTC. See Appendix C — `BOOK-ENTRY
TRANSFER SYSTEM."
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for
whom they act as nominees with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or
any successor depository) or any DTC participant, the payment by DTC (or any successor depository) or any DTC
participant of any amount in respect of the principal of or interest on Bonds,any notice which is permitted or required
to be given to registered owners under the Bond Ordinances (except such notices as are required to be given by the City
to the Bond Registrar or to DTC (or any successor depository)),or any consent given or other action taken by DTC (or
any successor depository) as the registered owner. For so long as any Bonds are held in fully immobilized form under
the Bond Ordinance, DTC or its successor depository will be deemed to be the registered owner for all purposes
thereunder, and all references therein to the registered owners will mean DTC (or any successor depository) or its
nominee and will not mean the owners of any beneficial interest in such Bonds.
In the event that the Bonds are no longer in fully immobilized form, interest on the Bonds shall be paid by check or
draft mailed to the registered owners at the addresses for such registered owners appearing on the Bond Register on the
15th day of the month preceding the interest payment date,and principal of the Bonds will be payable upon presentation
and surrender of such Bonds by the registered owners at the principal office of the Bond Registrar.
Purpose and Use of Proceeds
The 2010A Bonds
The 2010A Bonds are being issued for the purpose of providing a portion of the funds to pay the cost of carrying out
certain improvements to the water and sewer system,to current refund the City's outstanding Water and Sewer Revenue
Refunding Bonds, 1998,Series B (the"1998B Bonds"),and to pay costs of issuance. See"Refunding Plan"below.
The 2010T Bonds
The 2010T Bonds are being issued for the purpose of providing a portion of the funds to current refund the City's
outstanding Water and Sewer Revenue Bonds, 1998,Series A(Taxable) (the"1998A Bonds"),to fund the balance of the
Debt Service Reserve requirement,and to pay costs of issuance. See"Refunding Plan"below.
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Refunding Plan
Upon issuance of the Bonds, certain proceeds of the Bonds, together with other money of the City,will be deposited
with U.S. Bank National Association,the Refunding Trustee,and held in cash or used to acquire Acquired Obligations
in an amount sufficient to call,pay and redeem on July 6,2010,all of the then-outstanding Refunded Bonds at a price of
par plus accrued interest thereon.
The following tables provide a listing of the Refunded Bonds.
Refunded Bonds
Water and Sewer Revenue Bonds,1998,Series A(Taxable)
Maturity Years Principal Interest Call Call CUSIP Nos.
(June 1) Amounts Rates Date Price(%) (702571)
2013 $380,000* 6.25% 06/16/10 100% FGO,FH8
FJ4,FK1
2018 825,000* 6.45 06/16/10 100 FL9,FM7,FN5,
FPO,FQ8
Total $1,205,000
*Term Bond
Water and Sewer Revenue Refunding Bonds,1998,Series B
Maturity Years Principal Interest can Call CUSIP Nos.
(June 1) Amounts Rates Date Price (%) (702571)
2011 $665,000 4.40% 06/16/10 100% GC8
2012 700,000 4.45 06/16/10 100 GD6
2013 735,000 4.55 06/16/10 100 GE4
2014 765,000 4.60 06/16/10 100 GF1
Total $2,865,000
Tlerification of Matbemahcal Calculations
Verification shall be obtained from Piper Jaffray & Co. stating that the cash and Acquired Obligations held by the
Refunding Trustee shall be sufficient to pay when due, pursuant to stated maturity or call for redemption, as the case
may be,the principal of and interest on the Refunded Bonds.
SOURCES AND USES OF FUNDS
Proceeds of the 2010A Bonds are to be applied as follows:
Sources of Funds
Par Amount of 2010A Bonds $9,390,000
Reoffering Premium
Total Sources of Funds $
Uses of Funds
Deposit to Project Funds $
Refund 1998B Bonds
Debt Service Reserve Contribution
Issuance Expenses,Underwriter's Discount,and Contingency
Total Uses of Funds $
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Proceeds of the Series 2010T Bonds are to be applied as follows:
Sources of Funds
Par Amount of 2010T Bonds $1,225,000
Reoffering Premium
Total Sources of Funds $
Uses of Funds
Refund 1998A Bonds $
Issuance Expenses,Underwriter's Discount,and Contingency
Total Uses of Funds $
SECURITY FOR THE BONDS
Pledge of Revenue and Lien Position
The Net Revenue of the Waterworks Utility and ULID Assessments are pledged to the payment of the principal of and
interest on the Bonds when due and shall constitute alien and charge upon that Net Revenue of the Waterworks Utility
and ULID Assessments prior and superior to any other charges whatsoever, except that the lien and charge upon such
Net Revenue and ULID Assessments for the Bonds shall be on a parity with the lien and charge thereon for any
outstanding Parity Bonds.
Coverage Requirement
"Coverage Requirement"' in any year means an amount of Net Revenue of the Waterworks Utility, together with the
ULID Assessments collected in that year,equal to at least the Maximum Annual Debt Service on all Assessment Bonds
plus an amount of the Net Revenue of the Waterworks Utility not used to calculate the Coverage Requirement on
Assessment Bonds equal to at least 1.25 times Maximum Annual Debt Service on all bonds payable from the Bond Fund
that are not Assessment Bonds.
Bond Fund
The Bond Fund has been previously created and established in the office of the Finance Director as a special fund
known and designated as the Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991,which fund has
been divided into two accounts, namely, the Principal and Interest Account and the Reserve Account. So long as any
Parity Bonds are outstanding against the Bond Fund,the Finance Director shall set aside and pay into the Bond Fund all
ULID Assessments upon their collection and,out of the Net Revenue of the Waterworks Utility,certain fixed amounts
without regard to any fixed proportion, namely, amounts, together with any ULID Assessments collected by the City
and deposited into the applicable account in the Bond Fund and investment earnings in that account,as follows:
a) Into the Principal and Interest Account, on or before each interest or principal and interest payment date, an
amount equal to the interest or the principal and interest to become due and payable on that interest or
principal and interest payment date of all Parity Bonds;and
b) Into the Reserve Account, on the issue date of the Bonds, an amount sufficient, together with the Reserve
Insurance,to fully fund the Reserve Requirement for all Parity Bonds.
Money deposited in the Reserve Account for the Reserve Requirement for all Parity Bonds may be decreased for any
issue of Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve Insurance for
those bonds.
The City may establish additional accounts in the Bond Fund for the deposit of ULID Assessments after the deposit of
the required amount in the other funds.
Reserve Account
The Reserve Account for any Future Parity Bonds may be accumulated from any other funds which the City legally may
have available for such purpose in addition to using ULID Assessments and Net Revenue of the Waterworks Utility.
The City further agrees that when the required amounts have been paid into the Reserve Account in the Bond Fund,the
City will maintain those amounts therein at all times,except for withdrawals therefrom as authorized herein,until there is
sufficient money in the Bond Fund, including the Reserve Account therein,to pay the principal of and interest to
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maturity on all outstanding bonds payable from the Bond Fund, at which time no further payments need be made into
the Bond Fund,and the money in the Bond Fund,including the Reserve Account,may be used to pay that principal and
interest.
If there shall be a deficiency in the Principal and Interest Account to meet maturing installments of either principal or
interest, as the case may be, on the Bonds, the deficiency shall be made up from the Reserve Account by first the
withdrawal of cash and investments therefrom and after all cash and investments have been depleted,then by the draws
on the Reserve Insurance for that purpose on a pro rata basis. Any deficiency created in the Reserve Account by reason
of any withdrawal shall then be made up from the Net Revenue of the Waterworks Utility first available after making
necessary provisions for the required payments into the Principal and Interest Account. The Reserve Insurer shall be
reimbursed first,within one year, to reinstate the Reserve Insurance, before the balance of the Reserve Requirement is
restored.
All money in the Reserve Account not needed to meet the payments of principal and interest when due may be kept on
deposit in the official bank depository of the City or in any national bank or may be invested in any legal investment for
City funds maturing not later than the interest or principal and interest payment date when the money will be needed.
Interest on any of those investments or on that bank account shall be deposited in and become a part of the Reserve
Account until the Reserve Requirement shall have been accumulated therein, after which time the interest shall be
deposited in the Principal and Interest Account.
Notwithstanding the provisions for the deposit or maintenance of earnings in accounts of the Bond Fund,any earnings
which are subject to a federal tax or rebate requirement may be withdrawn from the Bond Fund for deposit into a
separate fund or account for that purpose.
If the City shall fail to set aside and pay into the Bond Fund the amounts which it has obligated itself by the Bond
Ordinance to set aside and pay therein,the owner of any Bond may bring suit against the City to compel it to do so.
The City currently has in place,to meet a portion of the Reserve Requirement for Parity Bonds,a surety bond issued by
Ambac Assurance Corporation in the amount of$2,176,230,which expires in 2019. The City will fund the balance of its
Reserve Requirement of approximately$ with Bond proceeds. See Appendix A—"CERTAIN DEFINITIONS."
Flow of Funds
Funds in the Water and Sewer Revenue Fund shall be used in the following order of priority:
a) To pay Operating and Maintenance Expenses;
b) To make all payments required to be made into the Bond Fund to pay and secure the payment of the Annual
Debt Service on all outstanding Parity Bonds;
c) To make all payments required to be made into the Reserve Account and to make all payments (principal and
interest) required to be made in connection with Reserve Insurance and any Alternate Security, except if there
is not sufficient money to make all payments for Reserve Insurance and any Alternate Security, the payments
shall be made on a pro rata basis with deposits in the Reserve Account.
d) To make all payments required to be made into the loan redemption funds or accounts, and other revenue
bond redemption funds created to pay the debt service on any revenue obligation having alien upon the Net
Revenue of the Waterworks Utility subordinate to the lien of the Bonds;and
e) To make necessary additions,betterments,improvements or repairs to the Waterworks Utility,and to retire by
redemption or purchase any outstanding Parity Bonds,or for any other lawful purpose.
Covenants of the City
The City covenants and agrees with the owner of each of the Bonds as follows:
a) It will not sell,lease,mortgage,or in any manner encumber or dispose of all the properties of the Waterworks
Utility unless provision is made for payment into the Bond Fund of an amount sufficient either to defease all
outstanding Parity Bonds or to pay the principal of and interest on all the outstanding Parity Bonds in
accordance with the terms, thereof; and further binds itself irrevocably not to mortgage, sell, lease or in any
manner dispose of any part of the Waterworks Utility that is used,useful and material to the operation of such
utility unless provision is made for replacement thereof or for payment into the Bond Fund of an amount
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which shall bear the same ratio to the amount of outstanding Parity Bonds as the Net Revenue available for
debt service for such bonds for the twelve months preceding such sale, lease, encumbrance or disposal from
the portion of the Waterworks Utility so leased,encumbered or disposed of bears to the Net Revenue available
for debt service for such bonds from the entire Waterworks Utility for the same period. Any such money so
paid into the Bond Fund shall be used to retire outstanding Parity Bonds at the earliest possible date.
b) It will maintain and keep the Waterworks Utility in good repair,working order and condition and operate such
utility and the business in connection therewith in an efficient manner and at a reasonable cost.
c) It will maintain and collect such rates as will produce sufficient Net Revenue of the Waterworks Utility,
together with ULID Assessment collections, as will make available for the payment of the principal of and
interest on the Parity Bonds as they come due and for payments as required to be made into the Reserve
Account an amount at least equal to the Coverage Requirement and, in addition thereto, that it will pay all
Operating and Maintenance Expenses and otherwise meet the obligations of the City as set forth in the Bond
Ordinance.
d) It will keep proper books of accounts and records separate and apart from other accounts and records, in
which complete and correct entries will be made of all transactions relating to the Waterworks Utility of the
City, and it will make available to any Bondowner on written request the annual operating and income
statements of the Waterworks Utility.
e) Except to aid the poor or infirm,to provide for resource conservation or to provide for the proper handling of
hazardous materials, it will not furnish water or sewerage service to any customer whatsoever free of charge
and it shall,not later than 60 days after the end of each calendar year,take such legal action as may be feasible
to enforce collection of all collectible delinquent accounts and,in addition thereto, shall promptly avail itself of
its utility lien rights,as set forth in applicable statutes.
f) It will carry the types of insurance on its Waterworks Utility properties in the amounts normally carried by
private water and sewer companies engaged in the operation of water and sewerage systems, and the cost of
such insurance shall be considered a part of Operating and Maintenance Expenses, or it will implement and
maintain a self insurance program or an insurance pool program with reserves adequate,in the judgment of the
City Council,to protect the owners of the Parity Bonds against loss.
g) To the extent permitted by State law,it will maintain its corporate identity and existence so long as any Bonds
remain outstanding.
h) It will not grant any competing utility service franchise and will use all legal means to prevent competition with
the Waterworks Utility.
i) If on the first day of January in any year,two installments of any ULID Assessment are delinquent,or the final
installment of any ULID Assessment has been delinquent for more than one year, the City will proceed with
the foreclosure of the delinquent assessment or delinquent installments thereof in the manner provided by law.
Future Parity Bonds
The City reserves the right to issue Future Parity Bonds if the following conditions are met and complied with at the
time of the issuance of those Future Parity Bonds:
a) There shall be no deficiency in the Bond Fund.
b) The ordinance providing for the issuance of the Future Parity Bonds shall provide that all ULID Assessments
shall be paid directly into the Bond Fund,except for any prepaid assessments permitted by law to be paid into a
construction fund or account.
c) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into the
Reserve Account of(i) an amount equal to the Reserve Requirement for those Future Parity Bonds from the
Future Parity Bond proceeds, or (ii)Reserve Insurance or Alternate Security or an amount plus Reserve
Insurance or Alternate Security equal to the Reserve Requirement for those Future Parity Bonds,or (iii) to the
extent that the Reserve Requirement is not funded from Future Parity Bond proceeds or Reserve Insurance or
Alternate Security at the time of issuance of those Future Parity Bonds, by no later than the fifth anniversary
date from the dated date of the respective issue of Future Parity Bonds from ULID Assessments,if any,levied
and first collected for the payment of the principal of and interest on those Future Parity Bonds and, to the
extent that ULID Assessments are insufficient, then from the Net Revenue of the Waterworks Utility in
approximately equal annual payments,the Reserve Requirement for those Future Parity Bonds. No Reserve
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Insurance or Alternate Security may be used to satisfy the Reserve Requirement for Future Parity Bonds unless
(i)the insurance policy or Alternate Security is non cancelable and (ii)the insurer or provider of the Alternate
Security as of the time of issuance of such insurance or Alternate Security is rated in the highest rating
categories by both Moody's Investors Service,Inc.,and Standard&Poor's Ratings Group.
d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the payment of
mandatory redemption or sinking fund requirements into the Bond Fund for any Term Bonds to be issued and
for regular payments to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to their maturity date
from money in the Principal and Interest Account.
e) There shall be on file from a licensed professional engineer experienced in the design, construction and
operation of municipal utilities, or from an independent certified public accountant, a certificate showing that
in his or her professional opinion the Net Revenue of the Waterworks Utility for any 12 consecutive calendar
months out of the immediately preceding 24 calendar months shall be equal to the Coverage Requirement for
each year thereafter, except that such certificate may be provided by a City representative if it is based solely
upon actual historical Net Revenue of the Waterworks Utility without any adjustment.
The certificate,in estimating the Net Revenue of the Waterworks Utility available for debt service,shall use the
historical Net Revenue of the Waterworks Utility for any 12 consecutive months out of the 24 months
immediately preceding the month of delivery of the Future Parity Bonds. Net Revenue of the Waterworks
Utility may be adjusted to reflect:
1) Any changes in rates in effect and being charged or expressly adopted by ordinance to take effect
within 180 days after the date of this Certificate;
2) Income derived from customers of the Waterworks Utility that have become customers during the 12
consecutive month period or thereafter adjusted to reflect one year's net revenue from those
customers;
3) Revenue from any customers to be connected to the Waterworks Utility who have paid the required
connection charges;
4) Revenue received or to be received which is derived from any person,firm,corporation or municipal
corporation under any executed contract for water, sewage disposal or other utility service, which
revenue was not included in the historical Net Revenue of the Waterworks Utility;
5) The engineer's or accountant's estimate of the Net Revenue of the Waterworks Utility to be derived
from customers to connect within 180 days after the date of the completion of the additions to and
improvements and extensions of the Waterworks Utility to be paid for out of the proceeds of the sale
of the additional Future Parity Bonds or from other additions to and improvements and extensions of
the Waterworks Utility then under construction and not fully connected to the facilities of the
Waterworks Utility when such additions,improvements and extensions are completed;and
6) Any increases or decreases in Net Revenue as a result of any actual or reasonably anticipated changes
in Operating and Maintenance Expense subsequent to the 12 month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of refunding outstanding bonds payable from
the Bond Fund, such certification of coverage shall not be required if the amount required for the payment of the
principal and interest in each year for the refunding bonds is not increased over the amount for that year required for the
bonds to be refunded thereby and if the maturities of such refunding bonds are not extended beyond the maturities of
the bonds to be refunded thereby.
Nothing contained in the Bond Ordinance shall prevent the City from issuing Future Parity Bonds to refund any
maturing Parity Bonds then outstanding,money for the payment of which is not otherwise available.
Nothing contained in the Bond Ordinance shall prevent the City from issuing revenue bonds or incurring other
obligations that are a charge upon the Net Revenue of the Waterworks Utility of the City subordinate or inferior to the
payments required to be made therefrom into the Bond Fund for the payment of Parity Bonds or from pledging the
payment of utility local improvement district assessments into a redemption fund created for the payment of the
principal of and interest on those subordinate lien bonds or obligations as long as such utility local improvement district
assessments are levied for improvements constructed from the proceeds of those subordinate lien bonds or obligations.
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THE WATERWORKS UTILITY
The Waterworks Utility's primary activity is the operation and maintenance of a domestic water system which supplies
and distributes potable water and water for fire protection purposes for City residents (the "Water System"), a sanitary
system which collects sanitary sewage and delivers it to a regional sewage treatment facility (the "Sewer System"), a
stormwater management system to manage surface and stormwater and delivery to the City's stormwater facilities (the
"Stormwater System"), an irrigation system for residential landscaping (the "Irrigation System") and a process water
reuse facility for food preparation process wastewater(the"Process Water Reuse Facility"). The City owns and operates
the Waterworks Utility as a separate enterprise fund that provides water and/or sewer service to virtually all of the City's
residents.
The City operates its Waterworks Utility in compliance with federal and State environmental and health laws.
The Water System
The Water System receives its water supply from the Columbia River via an intake structure in the river. The intake
facility has multiple pumps with a total pumping capacity of 24 million gallons per day("mgd"). The raw or untreated
water is pumped through three lines to a treatment plant.
The water treatment plant was originally constructed in 1949, expanded in 1958, and upgraded and automated in 1987.
The treatment plant consists of the following main process components: two flocculation basins, two sedimentation
basins, eight dual media filters, a clearwell and five treated water pumps which discharge into the
transmission/distribution system. The plant is automated and routinely operates in an unmanned mode 16 hours out of
each 24-hour day.
Present water demands on the water system can vary from a minimum winter day demand of 3.6 mgd to a peak summer
day demand of 22.6 mgd.The year-round average daily flow is 13.1 mgd.
The treated water from the metered plant is pumped into the transmission and distribution system which consists of 290
miles of main line varying in size from 6 to 36 inches. The distribution system is divided into three separate zones,with
each zone servicing its respective elevation.
Storage is provided by a one 10 million gallon ground level reservoir,a 1 million gallon reservoir,and a 2.5 million gallon
water tower.
Customers. The City's Water System presently serves approximately 16,390 customers, of which approximately 88% are
single-family residential customers. Historical customer statistics are shown in the following charts.
WATER SYSTEM CUSTOMERS
Customer Class 2009 2008 2007 2006 2005
Single Family Residential 14,344 13,549 13,172 12,364 11,850
Multi-Family Residential 507 504 495 493 479
Commercial 1,112 1,058 1,042 1,022 957
Other(1) 426 456 458 449 257
TOTAL 16,389 15,567 15,167 14,328 13,543
(1)Industrial,Irrigation,the City and schools.
Source:The City of Pam
Vater Kates and Charles. Water rates include a charge for the amount of water used plus a monthly service charge
determined by the size of the waterline serving the premises. The following rates and charges were approved on April
26,2010 and go into effect on July 1,2010. The most recent rate increase by the City prior to the 2010 increase was in
2004.
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WATER RATES AND CHARGES
Multi-Family Residential
Single-Family Residential &Commercial
Size of Service Service Charge Size of Service Service Charge
3/4 inch $12.50 3/a inch $17.61
1 inch 18.74 1 inch 25.43
1 1/2 inch 49.61
2 inch 79.59
3 inch 108.69
4 inch 156.60
6 inch 224.46
8 inch 338.77
Source:The City of Pasco.
In addition to the monthly service charge,users pay$0.65 per 100 cubic feet of water.
A 90%surcharge is added to accounts located outside the City limits. Users qualifying for a senior low income discount
receive services at one-third of the normal applicable rate.
The Sewer System
The City's sewage treatment plant was originally constructed in 1954, upgraded from primary treatment to secondary
treatment in 1970,and upgraded to advanced secondary treatment and expanded in 1997. The upgrade in 1997 included
a new digester,aeration basins,an ultraviolet disinfection system,and additional drying beds. The plant currently has an
average flow capacity of 4.5 mgd,with a peak of 8.5 mgd and is capable of serving a population of 80,000 people. The
current average flow is 3.2 mgd and the peak in 2009 was approximately 3.6 mgd.
The sewer collection system has been expanded and consists of 210 miles of 8-inch to 36-inch diameter collection
pipelines. The sewer collection system is being expanded into residential areas currently utilizing septic tanks in which
utility local improvement districts are being formed to convert properties from septic tanks to City sewers. The
collection system is also being expanded into both the residential and industrial growth areas of the City
Customers. The City's Sewer System presently serves approximately 13,600 customers, of which 90% are single-family
residential customers.
SEWER SYSTEM CUSTOMERS
Customer Class 2009 2008 2007 2006 2005
Single-Family Residential 12,148 11,887 11,632 10,726 9,905
Multi-Family Residential 482 504 495 487 467
Commercial 1,017 921 901 881 847
TOTAL 13,647 13,212 13,028 12,094 11,219
Source:The City of Pasco.
Sewer Charges. The following rates and charges were approved on April 26,2010 and go into effect on July 1,2010.
SEWER RATES
Monthly
Customer Class Base Charge
Residential dwellings or four units or less $26.00
Residential dwellings more than four units 20.95
Sr.Citizen/Low Income 8.72
Commercial 34.95
Hotel/Motel 5.51
Source: The City of Pasco.
Effective November 2000,for commercial users and hotel/motels consuming in excess of 1,000 cubic feet,the overage
is charged at $1.29 per 100 cubic feet of water used. A 50% surcharge is added to accounts located outside the City
limits.
10
Delinquencies. After notice of delinquency of a water and/or sewer bill is given and the bill remains unpaid,the City staff
is directed to cut off water service to the premises and enforce a lien upon the property. Such a lien is superior to all
other liens or encumbrances, except those for general taxes and special assessments. Less than one-half of one percent
of water and sewer bills were uncollected by the City in 2009.
LARGEST WATERWORKS UTILITY CUSTOMERS FOR 2009
Usage Usage %of Water %of Sewer %of
(Cubic Feet) (Gallons) Total Charges Total Charges Total
Pasco Processing LLC 33,328,710 249,298,751 6.31% $114,758 2.13% $745,318 12.15%
Twin City Foods 22,808,675 170,608,889 4.32 126,735 2.36 332,927 5.43
Bybee Foods 20,214,500 151,204,460 3.83 114,824 2.13 340,409 5.55
City of Pasco 12,418,892 92,893,312 2.35 116,552 2.17 23,642 0.39
Reser's Fine Foods 11,886,800 88,913,264 2.25 68,592 1.27 309,474 5.04
Pasco Housing Authority 7,572,165 56,639,794 1.43 58,436 1.09 104,174 1.70
Lake View Mobile Home Park 4,453,480 33,312,030 0.84 25,145 0.47 25,931 0.42
Sundance Home Park 3,686,650 27,576,142 0.70 21,487 0.40 32,281 0.53
Silver Creek Apartments 3,238,430 24,223,456 0.61 21,404 0.40 64,033 1.04
Pasco School District 3,004,069 22,470,436 0.57 54,279 1.01 23,048 0.38
Remainder of Customers 405,237,788 3,031,178,654 76.77 4,658,006 86.58 4,135,074 67.39
527,850,159 3,948,319,189 100.00% $5,380,219 100.00% $6,136,310 100.00%
Source:The City of Pasco.
Rate Comparisons
The following table provides rate comparisons for similar utilities. A one-month period is assumed with a water usage
of 1,000 cubic feet and a 3/4 inch meter. This level of usage is representative of single family residential usage less any
irrigation or lawn watering.
COMPARATIVE MONTHLY
SINGLE FAMILY RESIDENTIAL WATER SERVICE RATES
Single Family Average
Number of Connections Monthly Charge(1,000/cf) Daily Flow
City Residential Commercial Inside City Outside City (million gal)
City of Pasco 14,851 1,112 $15.90 $30.25 12.1
City of Richland 15,032 1,859 30.20 n/a 14.7
City of Kennewick 19,494 2,127 19.89 43.76 10.8
City of Yakima 16,192 2,865 32.41 35.02 11.72
City of Bellevue 34,590 2,460 38.74 38.74 16.72
City of Moses Lake 6,595 1,119 24.60 24.60 8.7
Source: Individual utilities,the City of Pasco and Association of Washington Cities Survey of Water and Server Fees.
COMPARATIVE MONTHLY
SINGLE FAMILY RESIDENTIAL SEWER SERVICE RATES
Single Family
Number of Connections Monthly Charge(1,000/cf)
City Residential Commercial Inside City Outside City
City of Pasco 12,900 1,017 $27.53 $41.30
City of Richland 18,752 941 25.35 n/a
City of Kennewick 15,285 1,555 19.24 57.72
City of Yakima 21,986 2,188 40.69 48.09
City of Bellevue 34,130 2,370 56.10 56.10
City of Moses Lake 6,517 859 30.45 30.45
Source:The City of Pasco and Association of Washington Cities Survey of Water and Sewer Fees.
11
RECENT HISTORICAL WATER AND SEWER RATE CHANGES
Percent Change for In City Service
Year Water Sewer
2010 19.0-20.3% 5.0-5.6% reduction
2007 0.0% 10.0% reduction
2004 3.9%-4.9% 2.0%-4.0%
2003 4.1%-5.2% 2.0%-4.2%
2000 0.0%0 0.0%-4.5%
Source:The City of Pasco
The Process Water Reuse Facility
The Process Water Reuse Facility (the "Facility's was constructed by the City and placed in operation in 1995. The
Facility services food processing plants. The food processing wastewater is pumped and sprayed onto farmland crop
circles as the means of disposal. The system and processing plants operate year-round,with peak usage in March and
December. The facility originally consisted of two pump stations,pipelines,a 5 million gallon equalization basin and 10
irrigation circles totaling 1,200 acres. In 1997, a 115 million gallon winter storage pond was added. In 2002, four
additional circles were added to the operation, increasing the irrigated total to 1800 acres. The winter storage pond
allows food processors at the Pasco Processing Center to operate year round. The City issued its 1994 Water and Sewer
Revenue Bonds to finance the initial construction of the Facility, which bonds were refunded in 1998. The food
processing users are responsible for payment of the debt service and operation and maintenance costs of the Facility
through the rates and charges described as follows.
Rates and Cbarnes. Food processing users are subject to rates and charges established by the City in Ordinance No. 3291,
passed on April 6,1998. This ordinance requires the industrial users connecting to the Facility to pay the following rates
and charges, which are subject to annual adjustments. In addition, the City may negotiate a special operation and
maintenance or contract rate with individual customers or industrial users of the Facility.
Monthly Charges.
Base Operation and Maintenance Charges - Actual costs of operating and maintaining the Facility are shared
proportionally among all users based on estimated annual flows of each user. Minimum annual charge for each user is
$12,000.
Customized Operation and Maintenance Charges - The actual costs of operation and maintenance associated with any
specifically constructed or customized facility are charged directly to the user(s)based upon actual monthly flows of each
during the period.
Overage Charges (for effluent characteristics) -These charges are based on individual wastewater discharge permits.The
average charges to be assessed and paid monthly by the user when exceeding a 15-day accumulation allowance are as
follows:
Effluent Characteristic Overage Rate
Volume/Hydraulic(Millions of Gallons) $800.00/MG
Bio-Chemical Oxygen Demand 0.03/lb
Total Suspended Solids 0.01/lb
Total Nitrogen 0.90/lb
Capital Charges - All capital charges related to all outstanding debt of the Facility are allocated to the users, based on
their proportionate share of the total permitted combined annual flows, as determined in each user's discharge permit.
The minimum annual capital charge for any user is$12,000 per year.
Customized Specific Capital Charges - In addition to the capital charges described above, any capital projects which
benefit a single user are directly charged to and paid by such user. For any new customer, a rate will be established
which is considered reimbursement of any non-capital charges made by the City for establishment and reservation of
excess capacity.
12
Stormwater Management Utility
The Stormwater System was established by the City in 1999 pursuant to Chapters 35.67 and 35A.80.010 of the Revised
Code of Washington("RCW"). Its purpose is to promote public health,safety and welfare by promoting an approach to
the management of surface and stormwater runoff created on City streets and delivery to City-owned stormwater
facilities.
Stormwater Kates & Charges. Effective beginning in 1999, the following monthly rates for the Stormwater System are
billed to property owners throughout the City using the following general classifications.
STORMWATER RATES
Customer Class Rate per Month
Single Family Residential $1.80
Apartments (per unit) 0.90
Multi-Family Residential(per unit) 0.90
Undeveloped Parcels 0.00
Vacant Buildings 1.80
Industrial/Commercial
Parking for 0-5 vehicles $1.80
Parking for 6-10 vehicles 3.60
Parking for 11-15 vehicles 7.20
Parking for 16 plus vehicles 9.00
Additional Charges
Property runoff to City systems ($0.90 min.) $30.00/acre
State Highway right-of-way 10.00/acre
Beginning in 2008,the Sewer utility provides additional funding to the Stormwater utility. The City Council determined
the Sewer utility and the Stormwater utility share a common goal: the prevention of contamination of existing
groundwater supplies. In place of a rate increase in the Stormwater utility, the Sewer utility will provide ongoing
operating transfers of up to 50%of the annual operating expenses of the Stormwater utility. This funding is estimated at
$276,000 for 2009.
Irrigation Utility
The Irrigation Utility was purchased by the City in 2002 from a private utility. At the time of purchase the system
serviced approximately 900 customers in an area where new homes were being built. Since the purchase and through
expansion of the utility,it now services approximately 4,450 residential customers. At the time of purchase, customers
were being charged $32 per month for 7 months during the irrigation season, April through October. In 2004, after
evaluating the increase in customer base and projected annual expenditures, the monthly fee was reduced to $24 per
month. Effective January 1,2011,the base fee will be increased to$26.00 per month.
Capital Improvement Plan
The City annually adopts a six-year Capital Improvement Plan ("CIP"), which includes a water and sewer system
component.The current CIP includes the following projects.
CIP COSTS FOR PROJECTED WATER AND SEWER PROJECTS
Project Type 2010 2011 2012 2013 2014
Water Supply,Treatment,
Distribution&Storage $1,610,000 $820,000 $820,000 $1,320,000 $820,000
Sewer Treatment&Collection 1,900,000 1,400,000 2,420,000 1,000,000 1,000,000
Process Water Reuse Facility 110,000 110,000 80,000 80,000 80,000
Stormwater Collection 210,000 160,000 160,000 160,000 110,000
Irrigation 250,000 100,000 50,000 50 000 50,000
Total $4,080,000 $2,590,000 $3,530,000 $2,610,000 $2,060,000
13
The City intends to pay for CIP projects through Bond proceeds, ULID assessments, State Revolving Fund ("SRF'�
loans and Public Works Trust Fund("PWTF'�loans,existing reserves,and water and sewer customer charges. The SRF
and PWTF loans, subordinate debt to the Bonds, have already been obtained and are described below under "Other
Waterworks Utility Debt."
Other Waterworks Utility Debt
In addition to the Outstanding Parity Bonds,the City has loans outstanding in the combined total principal amount of
$13,837,108,as of January 1,2010,through the State Department of Ecology State Revolving Fund Loan program.The
next payment will be due in July 2010. These SRF Loans were originally issued on a parity with the City's then
outstanding Parity Bonds. In 2001,the Washington State Department of Ecology modified the terms of the SRF Loans
to be subordinate to the Parity Bonds.
The City has used money obtained from the SRF Loans to upgrade the City's wastewater treatment facility,construct an
interceptor and pumping station serving West Pasco, and an interceptor serving the eastern part of the central business
district.
The City also has PWTF Loans outstanding in the combined principal amount of$2,124,865 as of December 31,2009.
This debt has a subordinate lien to the Parity Bonds.
(REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK
14
Historical Operating Results
The following shows historical operating results for the years 2005 through 2009 for the Waterworks Utility.
WATERWORKS UTILITY HISTORICAL OPERATING RESULTS
(as of December 31)
Audited Audited Audited Audited Unaudited
2005 2006 2007 2008 2009
Operating Revenues
Water Sales(1) $ 4,910,473 $ 5,455,176 $ 5,619,985 $ 5,982,662 $ 6,233,590
Sewer Sales(2) 7,472,547 7,838,131 7,809,425 8,094,866 8,448,302
Charges for Services(3) 375,033 448,174 497,912 545,480 660,952
Total Operating Revenue $12,758,053 $13,741,481 $13,927,322 $14,623,008 $15,342,844
Operating Expenses
Personnel Servion $ 1,712,641 $ 1,800,937 $ 2,014,749 $ 2,205,180 $ 2,662,206
Benefits 436,186 501,301 682,213 841,052 929,642
Supplies 234,713 282,130 361,443 673,461 633,415
Operations&Maint 2,122,568 2,268,073 2,417,706 2,299,382 2,876,780
Administrative Serv.Fees 712,204 747,780 770,280 743,400 760,800
State Services 46,813 49,397 52,723 61,269 64,072
Property/Leasehold Ex Taxes 75,880 81,380 89,064 98,064 122,799
State Revenue Taxes 418,027 434,590 420,911 444,915 481,815
Total Operating Expenses $ 5,759,032 $ 6,165,588 $ 6,809,089 $ 7,366,723 $ 8,531,529
Operating Income $ 6,999,021 $ 7,575,893 $ 7,118,233 $ 7,256,285 $ 6,811,315
Non-Operating Rev(Exp)
Interest Income $ 491,592 $ 572,283 $ 579,418 $ 373,009 $ 194,658
Farmland Rental 582,630 626,292 686,140 756,230 948,870
Miscellaneous Revenues - - - - -
Total Non-Open.Rev. $ 1,074,222 $ 1,198,575 $ 1,265,558 $ 1,129,239 $ 1,143,528
Net Revenue $ 8,073,243 $ 8,774,468 $ 8,383,791 $ 8,385,524 $ 7,954,843
Other Sources of Funds
Cap Expansion Charges(4) $ 2,915,729 $ 2,428,529 $ 1,847,089 $ 1,271,650 $ 1,710,995
ROW/Water Rights 55,386 104,121 63,904 34,230 6,960
MiscReoeipts 382,136 23,262 9,600 11,100 -
Total Other Sour(rs $ 3,353,251 $ 2,555,912 $ 1,920,593 $ 1,316,980 $ 1,717,955
Actual UIdD/CLID Payments $ 309,611 $ 306,036 $ 297,186 $ 562,590 $ 369,606
Balance Available for Debt Servcco $11,736,104 $11,636,416 $10,601,570 $10,265,094 $10,042,404
Outstanding Non-Assessment Debt $ 1,734,065 $ 2,038,365 $ 2,050,932 $ 2,320,586 $ 2,308,184
Non-Assessment Debt Service Coverage(5) 6.77 5.71 5.17 4.42 4.35
Balance Available for Other Purposes $10,002,039 $ 9,598,051 $ 8,550,638 $ 7,944,508 $ 7,734,220
(1) Includes irrigation water sales.
(2) Includes storm water utility and Water Reuse Facility charge.
(3) Excludes bad debt expense.
(4) Charges paid by new customers.
(5) The coverage presented is only for non-assessment bonds since the assessment bonds paid are greater than Maximum Annual as required.
Source:The City of Pasco audited financial repws and 2009 figures
15
Projected Operating Results
The following shows projected operating results for the years 2010 through 2014 for the Waterworks Utility. The
projections reflect rate changes to be effective July 1, 2010. No assurance can be given that the future results shown
below will be achieved,and actual results may differ materially.
WATERWORKS UTILITY PROJECTED OPERATING RESULTS
(as of December 31)
Estimated Estimated Estimated Estimated Estimated
2010 2011 2012 2013 2014
Operating Revenues
Water Sales(1) $ 6,880,256 $ 7,600,141 $ 7,771,436 $ 7,945,428 $ 8,122,173
Sewer Sales(2) 8,384,582 8,443,073 8,655,292 8,873,349 9,097,418
Charges for Services(3) 683,397 776,961 800,994 825,865 851,603
Total Operating Revenue $15,948,235 $16,820,174 $17,227,722 $17,644,643 $18,071,194
Operating Expenses
Personnel Services $ 2,748,284 $ 2,837,240 $ 2,929,173 $ 3,024,188 $ 3,122,393
Benefits 975,664 1,023,968 1,074,669 1,127,884 1,183,740
Supplies 665,086 698,340 733,257 769,920 808,416
Operations&Maint 3,020,619 3,171,650 3,330,232 3,496,744 3,671,581
Administrative Serv.Fees 796,536 834,013 873,316 914,537 957,770
State Services 66,956 69,974 73,133 76,440 79,902
Property/Leasehold Ex Taxes 77,995 78,040 78,088 78,138 78,190
State Revenue Taxes 562,859 607,632 619,636 631,927 644,512
Total Operating Expenses $ 8,913,999 $ 9,320,856 $ 9,711,504 $10,119,777 $10,546,504
Operating Income $ 7,034,236 $ 7,499,318 $ 7,516,218 $ 7,524,865 $ 7,524,690
Non-Operating Rev(Exp)
Interest Income $ 352,650 $ 222,175 $ 159,894 $ 185,536 $ 222,136
Farmland Rental 600,000 600,000 600,000 600,000 600,000
Miscellaneous Revenues - - - - -
Total Non-Open.Rev. $ 952,650 $ 822,175 $ 759,894 $ 785,536 $ 822,136
Net Revenue $ 7,986,886 $ 8,321,493 $ 8,276,112 $ 8,310,402 $ 8,346,826
Other Sources of Funds
Cap Expansion Charges(4) $ 1,200,000 $ 1,395,000 $ 1,395,000 $ 1,395,000 $ 1,395,000
ROW/Water Rights - - - - -
MiscReceipts - - - - -
Total Other Sources $ 1,200,000 $ 1,395,000 $ 1,395,000 $ 1,395,000 $ 1,395,000
Actual ULID/CLID Payments $ 479,190 $ 446,623 $ 329,880 $ 320,278 $ 315,353
Balance Available for Debt Service $ 9,666,076 $10,163,116 $10,000,992 $10,025,680 $10,057,179
Outstanding Non-Assessment Debt $ 2,406,988 $ 1,443,025 $ 1,441,500 $ 1,438,438 $ 1,443,600
2010 Non-Assessment Bonds $ 189,171 $ 1,430,206 $ 1,435,063 $ 1,434,281 $ 1,437,544
Non-Assessment Debt Service Coverage 3.72 3.54 3.48 3.49 3.49
Balance Available for Other Purposes(5) $ 7,259,088 $ 8,720,091 $ 8,559,492 $ 8,587,242 $ 8,613,579
(1) Includes irrigation water sales.
(2) Includes storm water utility and Water Reuse Facility charge.
(3) Excludes bad debt expense.
(4) Charges paid by new customers.
(5) Other purposes include capital projects and repayment of PWTF Loans and SRF Loan as follows: 2010-$2,002,731;2011-$2,000,127;
2012-$1,997,500;2013-$1,994,890;and 2014-$1,992270.
Sourre:The City of Pasco
16
WATERWORKS UTILITY DEBT SERVICE SCHEDULE (1)
OUTSTANDING BONDS(" THE BONDS(3)
Assessment Bonds Non-Assessment Bonds Non-Assessment Bonds
Series 2010A Bonds Series 2010T Bonds
Year Principal Interest Principal Interest Principal Interest Principal Interest TOTAL
2010 $ 335,000 $144,190 $ 1,490,000 $ 916,988 $ 160,401 $ 28,770 $ 3,075,349
2011 335,000 111,623 775,000 668,025 $ 930,000 315,106 $ 130,000 55,100 3,319,854
2012 230,000 99,880 800,000 641,500 955,000 296,256 135,000 48,806 3,206,443
2013 230,000 90,278 825,000 613,438 980,000 272,006 140,000 42,275 3,192,996
2014 235,000 80,353 860,000 583,600 1,010,000 242,156 150,000 35,388 3,196,496
2015 325,000 69,955 885,000 550,825 275,000 222,881 155,000 28,144 2,511,805
2016 405,000 53,908 925,000 515,950 285,000 213,056 165,000 20,544 2,583,458
2017 110,000 34,043 960,000 478,690 295,000 201,456 170,000 12,588 2,261,776
2018 110,000 29,268 1,005,000 439,465 310,000 189,356 180,000 4,275 2,267,364
2019 110,000 24,493 1,050,000 397,978 320,000 176,756 - - 2,079,226
2020 115,000 19,718 1,090,000 354,290 335,000 163,656 - 2,077,664
2021 55,000 15,905 1,140,000 308,558 345,000 149,841 - 2,014,303
2022 175,000 10,653 1,180,000 259,743 360,000 135,300 - 2,120,695
2023 - 5,400 790,000 208,213 375,000 120,141 - 1,498,753
2024 120,000 2,700 825,000 174,385 390,000 104,363 - 1,616,448
2025 - - 860,000 138,569 410,000 87,863 - 1,496,431
2026 - 575,000 100,425 425,000 70,109 - 1,170,534
2027 - 600,000 73,988 445,000 51,078 - 1,170,066
2028 - 630,000 45,919 460,000 31,281 - 1,167,200
2029 - 660,000 15,675 485,000 10,609 - - 1,171;284
$2,890,000 $792,363 $17,925,000 $7,486,220 $9,390,000 $3,213,673 $1,225,000 $275,889 $43,198,145
(1) All Bonds are Parity Bonds. Assessment Bonds and Non-Assessment Bonds are shown separately for analysis purposes only.
(2) Figures shown for 2010 include debt service on the Refunded Bonds.
(3) Interest on the Bond is estimated at interest rates ranging from 2.00%to 4.75%.
DEBT PAYMENT RECORD
The City has always promptly met principal and interest payments on outstanding bonds,notes and warrants when due.
Additionally,no refunding bonds have been issued or other debt received for the purpose of preventing an impending
default.
OTHER FINANCINGS
The City does not anticipate issuing additional water and sewer revenue bonds within the next year.
17
CITY PROFILE
The City of Pasco, located in Southeastern Washington, encompasses approximately 33.6 square miles and has a 2009
estimated population of 54,490. The City and the adjacent cities of Richland and Kennewick make 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 city-wide elections. The Council is comprised of seven members,one of whom is selected by
the members to serve as Mayor for a two-year term.
The City provides a full range of services normally associated with a municipality. These services 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/stormwater 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
Vacant Mayor Pro-Tem December 31,2011
Robert Hoffmann Council Member December 31,2013
Michael Garrison Council Member December 31,2013
Rebecca Francik Council Member December 31,2011
Tom Larsen Council Member December 31,2013
Al Yenney Council Member December 31,2011
Key Administrative Staff
Gary Crutcbfield, City 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 City Manager,Mr. Crutchfield served as Community
Development Director of the City between 1978 and 1984.
Kick Terway, Administrative and Community Services Director, began serving as the Director of the City's Department of
Administrative and Community Services Department on July 13, 2009. The department consists of five service
divisions: Administration, Facilities, Finance, Information Systems, and Recreation. Prior to coming to Pasco, Mr.
Terway served as Parks, Recreation and Forestry Manager for the City of Fergus Falls, MN for 3 years and as Public
Service Director for the City of Vadnais Heights,MN. His experience also includes 12+ years working for Washington
State Parks. Mr.Terway holds a BS in Applied Management from National American University and an AAS in Natural
Resources from the University of Minnesota.
Robert Alberts, Public Vorks Director, was hired as Public Works Director for the City of Pasco in 1994. Mr. Albert's
previous employment includes nine years with the City of Edmonds as the City Engineer and as a project manager.
Prior to that, he held positions with CH2M Hill, Consultants Northwest and Columbia Engineers. Mr. Alberts is a
graduate of Washington State University with a BS in civil engineering and is a registered Professional Engineer.
Labor Relations
The City currently employs 288 people including part-time workers. There are 184 employees represented by 5
bargaining units as follows:
Number of Current Contract
Bargaining Unit Employees Expiration Date
International Union of Operating Engineers,Local No.280 60 December 31,2012
International Association of Firefighters 48 December 31,2010
Pasco Police Officers Assoc"Uniformed"Employee Bargaining Unit 63 December 31,2007*
Pasco Police Officers Assoc"Non-uniformed"Employee Bargaining Unit 8 December 31,2008*
Pasco Code Enforcement Officer's and Permit Technicians 5 December 31,2010
TOTAL 184
*Currently under negotiations.
The City considers labor relations with its bargaining units to be good. There have been no recent strikes or major labor
relations problems.
18
The City's Investments
As required by State law,all investments (except as noted below) are obligations of the U.S. Government or its agencies
or deposits with Washington state banks and savings and loan institutions. Investments of (pension nonexpendable)
trust funds are not subject to the preceding limitations.
The City's deposits and certificates of deposits are entirely covered by federal depository insurance or by collateral held
in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission.
RCW 43.250.040 authorizes the City to invest in the Washington State Local Government Investment Pool (the
"LGIP'� which is a 2a-7 like pool. The LGIP is comparable to a Rule 2a-7 money market fund recognized by the
Securities and Exchange Commission (17CFR.270.2a-7). Rule 2a-7 funds are limited to high quality obligations with
limited maximum and average maturities, the effect of which is to minimize both market and credit risk. See "Local
Government Investment Pool."
The City's investments are categorized to give an indication of the risk assumed at year-end. The following summary
shows the City's investments at year-end categorized by risk. Category 1 includes investments that are either insured or
registered and held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered
investments that are held by the counterparty's trust department or agent in the City's name. Category 3 includes
uninsured and unregistered investments for which the securities are held by the counterparty, or its trust 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 book value,are as follows:
Fair
Market
Investment Category 11 Category 2 Category 33 Total Value
Federal Agency Securities $30,498,791 $30,498,791 $30,506,543
Mutual Funds $1,938,019 1,938,019 2 365 742
TOTAL 530.498.791 1 1 32.436.810 $32.872.285
Investments not subject to Categorization
LGIP $8,876,203 $8,876,203
Municipal Investor's Savings Acct 27,939 27,939
Money Market Fund 22A80 22,480
TOTAL INVESTMENTS �41,3�3,431 9641,798 207
Pension System
Public Employees'Retirement System (`PERS'). Substantially all of the City's full-time and qualifying part-time employees,
other than those covered under union plans, participate in PERS. This is a statewide local government retirement
system administered by the Washington State Department of Retirement Systems,under cost-sharing,multiple-employer
defined benefit public employee retirement plans. The PERS system includes three plans.
Participants who joined the system by September 30, 1977, are PERS Plan I members. Those joining thereafter are
enrolled in PERS Plan II. A third plan,entitled PERS Plan III,provides members with a defined benefit plan similar to
PERS Plan 11 and the opportunity to invest their retirement contributions in a defined contribution plan.
PERS Plan I members are eligible for retirement at any age after 30 years of service,at age 60 with five years of service,
or at age 55 with 25 years of service. The annual pension is two percent of the average final compensation per year of
service,capped at 60 percent. The average final compensation is based on the greatest compensation earned during any
24 eligible consecutive compensation months.
PERS Plan I1 members may retire at age 65 with five years of service or at 55 with 20 years of service. The annual
pension is two percent of the average final compensation per year of service. PERS Plan 11 retirements prior to 65 are
actuarially reduced. On July 1 of each year following the first full year of retirement service,the benefit will be adjusted
by the percentage change in the Consumer Price Index("CPI") of Seattle,capped at three percent annually.
PERS Plan III is structured as a dual benefit program that will provide members with the following benefits:
• A defined benefit allowance similar to PERS Plan II calculated as one percent of the average final
compensation per year of service (versus a two percent formula) and funded entirely by employer
contributions.
• A defined contribution account consisting of member contributions plus the full investment return on
those contributions.
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Each biennium, the State Pension Funding Council adopts PERS Plan I employer contribution rates and PERS Plan II
employer and employee contribution rates. Employee contribution rates for PERS Plan I are established by statute at six
percent and do not vary from year to year. The employer and employee contribution rates for PERS Plan II are set by the
director of the Department of Retirement Systems, based on recommendations by the Office of the State Actuary, to
continue to fully fund PERS Plan II. Unlike PERS Plan II, which has a single contribution rate, with PERS Plan III, the
employee chooses how much to contribute from one to six contribution rate options. Once an option has been selected,the
contribution rate choice is irrevocable unless the employee changes employers.
All employers are required to contribute at the level established by State law. The methods used to determine the
contribution requirements are established under State statute in accordance with chapters 41.40 and 41.26 RCW.
For the year ended December 31, 2009, the City's contribution of $628,462, which represents its full liability under the
system.
Lazy Enforcement Officers'and Fire Fighters'Retirement System (LEOFF'). LEOFF is a cost-sharing multiple-employer defined
benefit pension plan. Membership in the plan includes all full-time, fully compensated local law enforcement officers, and
fire fighters. The LEOFF system includes two plans.
Participants who joined the system by September 30, 1977, are LEOFF Plan I members. Those joining thereafter are
enrolled in LEOFF Plan II. Retirement benefits are financed from employee and employer contributions, investment
earnings, and State contributions. Retirement benefits in both LEOFF Plan I and LEOFF Plan II are vested after
completion of five years of eligible service.
LEOFF Plan I members are eligible to retire with five years of service at age 50. The service retirement benefit is dependent
upon the final average salary and service credit years at retirement.
LEOFF Plan II members are eligible to retire at the age of 50 with 20 years of service or at 53 with five years of service.
Retirement benefits prior to age 53 are actuarially reduced at a rate of three percent per year. The benefit is two percent of
the final average salary per year of service. The final average salary is determined as the 60 highest paid consecutive service
months. There is no limit on the number of service credit years,which may be included in the benefit calculation.
LEOFF Plan I employer and employee contribution rates are established by statute, and the State is responsible for the
balance of the funding at rates set by the Pension Funding Council to fully amortize the total costs of the plan. Employer
and employee rates for LEOFF Plan II are set by the director of the Department of Retirement Systems, based on
recommendations by the Office of the State Actuary, to continue to fully fund the plan. LEOFF Plan II employers and
employees are required to contribute at the level required by State law. The methods used to determine the contribution
rates are established under State statute in accordance with chapters 41.26 and 41.45 RCW.
For the year ending December 31, 2009, the City's contribution to LEOFF II totaled $444,345,representing its full liability
under the system.
Fireman's Pension Fund (`FPF'). The City is the administrator of the Fireman's Pension Systems, which is shown as the
pension trust fund in the City's financial statements. FPF is a single-employer closed pension system that was established in
conformance with Revised Code of Washington (RCW) Chapter 41.18. Membership is limited to fire fighters employed
prior to Match 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 March 1, 1970, and excess benefits over amounts
provided by LEOFF for covered fire fighters retired after March 1, 1970. Under the FPF, eligible fire 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 the plan.
As of December 31, 2009, there were a total of eight individuals covered by this system.. Seven of these individuals are
retirees and one is actively employed. There are also four widows drawing benefits. All of the retirees are drawing excess
pension benefits under the system over the amount of full benefit provided through LEOFF.
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 FPF 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 levying 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.The City has
met full 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 East Union Street
P.O.Box 48380
Olympia,WA 98504-8380
Internet Address:www.drs.wa.gov
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Other Post-Employment Benefits
The Governmental Accounting Standards Board ("GASB") has issued a new standard concerning Accounting and
Financial Reporting by Employers for Post-Employment Benefits Other than Pensions (GASB 45). In addition to
pensions,many State and local governmental employers provide other post-employment benefits ("OPEB") as a part of
total compensation to attract and retain the services of qualified employees. OPEB includes post-employment health
care as well as other forms of post-employment benefits when provided separately from a pension plan. The new
standard provides for the measurement, recognition and display of OPEB expenses/expenditures, related liabilities
(assets),note disclosures,and,if applicable,required supplementary information in the financial reports. The City plans
to meet its obligations under GASB 45. This pronouncement is effective for the City for the fiscal year ending on
December 31,2009.
The City is required by State law to pay for the full medical costs of its retired LEOFF Plan I employees. The City has
30 such retired employees. As required, the City reimburses 100% of the health care costs of these retired employees.
The reimbursements are financed on a pay-as-you-go basis, although the City has taken out a long-term care insurance
policy for the City's benefit to guard against major future costs. During the years 2008, 2007, 2006 and 2005,
expenditures of$232,067, $307,328, $256,866 and $211,212, respectively,were recognized for post-employment health
care. Expenditures for 2009 were$208,890.
The City provides certain healthcare benefits to retired firefighters and police officers who were hired prior to 1978 as
required by RCW 41.26.150.Entry into this system is now closed.
The City is currently preparing to do additional work to calculate the City's Annual Required Contribution to consider
funding the anticipated costs associated with OPEB. At present, it has 10 former firemen and 20 former police
employees subject to OPEB.
Accounting and Budgeting Policies
The accounts of the City are organized on the basis of funds and account groups,each of which is considered a separate
accounting entity. Each fund is accounted for with a separate set of self-balancing accounts that comprise its assets,
liabilities,fund equity,revenues and expenditures,as appropriate.The City's resources are allocated to and accounted for
in individual funds depending on their intended purpose.
Annual appropriated budgets are adopted at the fund level,except in the general fund,where expenditures are adopted
at the department level.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 State Auditor is required to examine the affairs of the cities at least once every two years. The City is audited
annually.The examination must include,among other things,the financial condition and resources of the City,whether
the laws and constitution of the State are being complied with, and the methods and accuracy of the accounts and
reports of the City.Reports of the auditor's examinations are required to be filed in the office of the State Auditor and in
the auditing department of the City.The most recent audit of the City's finances is for the year 2008.
Local Government Investment Pool
The Office of the State Treasurer administers the Local Government Investment Pool(the"LGIP"),a$6.5 billion dollar
fund that invests money on behalf of approximately 450 participants, including cities, counties and special taxing
districts. The LGIP, authorized by Chapter 43.250 RCW, is a voluntary pool which provides its participants the
opportunity to benefit from the economies of scale inherent in poling. The LGIP is a managed by the State Treasurer's
Office and is modeled after 2A-7 (money market) funds, although it is not a registered money market fund and is not
rated by a rating agency. The pool is restricted to investments with maturities of 762 days or less, and the average life
typically is less than 90 days. Permissible investments include U.S. government and agency securities, bankers"
acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, and certificates of deposit
issued by qualified State depositories.
Insurance
The City is a member of the Washington Cities Insurance Authority ("WCIA") of Washington and its insurance pool
(the "Pool"). WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as
determined by an outside, independent actuary. The assessment covers loss, loss adjustment and administrative
expenses. WCIA retains the right to additionally assess the membership for any finding shortfall. WCIA offers a
combination of self-insurance and standard insurance to cover liability and property risks and provides related risk
management services.
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Liability coverage is written on an occurrence basis,without deductibles. Coverage includes general, automobile, police
professional, public officials errors and omissions, stop gap and employee benefits liability. Limits are $4 million per
occurrence in the self insured layer,$16 million per occurrence in the reinsured excess layer. The excess layer is insured
by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per
occurrence subject to aggregate and sub-limits in the excess layer. The Board of Directors determines the limits and
terms of the coverage annually.
Liability,Claims and Litigation
In the normal course of its various operations,the City is involved in lawsuits and is the recipient of claims for damages
alleging the City is responsible for damage incurred by third parties. These claims or lawsuits are a consequence of
conducting the City's business.The City self-insures to cover the majority of its liability risk.
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, approximately 200 miles southeast of Seattle, 150 miles southwest of Spokane 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
With a 2009 estimated population of 54,490, the City is the largest of four incorporated communities in Franklin
County. Historical populations for the City and Franklin County are as follows:
POPULATION
City of Franklin
Year Pasco Coun
2009 54,490 72,700
2008 52,290 70,200
2007 50,210 67,400
2006 47,610 64,200
2005 44,190 60,500
Source: Wasbington State Office of FinancialManagement
Largest Employers
The three largest employers in the City are involved with food processing. The table below shows a list of the top ten
employers ranked by number of employees.
PASCO AREA MAJOR EMPLOYERS 2009
Employer Service/Product Employ
Pasco School District Schools 2100
Lourdes Health Network Health Care 807
Wal-Mart Grocery-Retail 410
Columbia Basin College Schools—Universities 552
Pasco Processing LLC Frozen Food Processing 350
Con Agra Foods Lamb-Weston Frozen Food Processing 320
City of Pasco Government 305
Franklin County Government 257
Zirkle Fruit Company Farms 200-400
Sagemoor Farms Agriculture 150-275
Resers Fine Foods Food Products—Retail 190
La Clinica Community Health Care Health Care 184
McCurley Integrity Dealerships Automobile Sales 160
Lowes Hardware 117
Source: City of Pasco 2010
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Economic Data
Following are additional economic indicators for the City,Franklin County and the Tri-Cities Area.
CITY OF PASCO BUILDING PERMITS
Residential(t) Commercial Total
Year Permits Value Permits Value Permits Value
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 43,807,699 842 177,057,403
2005 1,028 181,006,886 61 34,886,778 1,089 215,893,664
(1)Includes Single Family,Two Family,Three or more families.
Source: City of Pasco Building Department
TAXABLE RETAIL SALES
City of Franklin
Year Pasco County
2009(l) $599,590,518 $685,896,285
2008 877,529,074 1,052,102,171
2007 856,422,037 1,057,004,462
2006 811,292,511 929,717,630
2005 781,596,534 862,138,345
(1) Through 31d Quarter 2009
Source: Washington State Office of Financial Management
PERSONAL INCOME
Franklin County State of Washington
Total Personal Per Capita Total Personal Per Capita
Year Income(000's) Personal Income Income (000's) Personal Income
2008 N/A N/A $280,677,561 $42,857
2007 $1,528,030 $22,106 265,783,395 41,203
2006 1,412,813 21,466 245,764,517 38,639
2005 1,322,468 21,184 226,585,245 36,227
2004 1,210,453 20,509 218,431,726 35,347
2003 1,177,407 20,999 202,942,123 33,214
Source: U.S.Department of Commerce,Bureau of Economic Analysis
*Most RecentAvaila&le
MEDIAN HOUSEHOLD INCOME M
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 preliminary estimate,2009 are projected and all are presented in current dollars.
Source: IYIa rhington State Ofice of Financial Management
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RESIDENT CIVILIAN LABOR FORCE AND EMPLOYMENT
Average Annual
Feb.2010 2009 2008 2007 2006 2005
State of Washington
Labor Force 3,500,870 3,528,710 3,476,370 3,390,410 3,317,390 3,255,530
Employed 3,135,210 3,214,500 3,290,090 3,235,960 3,154,420 3,075,970
Unemployed 10.4% 8.9% 5.4% 4.6% 4.9% 5.5%
Franklin County
Labor Force 36,410 35,980 33,630 32,080 30,020 29,340
Employed 32,560 33,100 31,540 30,090 27,920 27,280
%Unemployed 10.6% 8.0% 6.2% 6.2% 7.0% 7.0%
Source: Vasbington State Employment Security Department.
NON-AGRICULTURE WAGE AND SALARY WORKERS
EMPLOYED IN KENNEWICK-RICHLAND-PASCO MSA(000x)(1)
Employment Sector Feb.2010 2009 2008 2007 2006 2005
Goods Producing 12,900 12,900 12,900 12,700 11,900 11,600
Natural Resources&Mining 6,100 5,900 6,500 6,600 6,000 5,900
Manufacturing 6,800 7,000 6,400 6,100 5,800 5,800
Services Providing 82,900 82,900 80,700 78,900 74,800 75,300
Private Services Providing 64,800 65,600 63,700 62,500 58,900 59,300
Trade, Transportation,Warehousing&Utilities 15,200 15,800 16,700 16,800 16,000 14,900
Retail Trade 11,700 12,000 11,700 11,900 11,400 10,600
Financial Activities 3,200 3,300 3,600 3,600 3,500 3,400
Professional&Business Services 22,600 22,700 20,600 20,300 18,500 20,600
Administrative&Support Services 11,400 11,600 9,400 9,800 9,000 10,000
Education&Health Services 10,600 10,700 10,100 9,700 9,200 8,600
Leisure and Hospitality 8,400 8,500 8,600 8,100 7,900 7,900
Food Services 6,100 6,200 6,300 6,000 5,600 5,600
Government 18,100 17,400 17,000 16,400 16,000 16,000
Federal&State Government 4,100 3,700 3,700 3,700 3,600 3,600
Local Government 14,000 13,700 13,300 12,700 12,400 12,400
Total Non-Agriculture 95,800 95,800 93,600 91,600 86,700 86,900
Total Private 77,700 78,400 76,600 75,200 70,700 70,900
(1) Detail may not add to indicate totals due to rounding. Excludes proprietors, agriculture, self-employed,unpaid family,domestic workers and
military. Includes all full and part-time wage and salary workers receiving pay during the period including the 121h of the month by place of work.
Source: llasbington State Employment Security Department.
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INITIATIVE AND REFERENDUM
Under the State Constitution,the voters of the State have the ability to initiate 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 preceding regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be
amended or repealed by the Legislature within a period of two years following enactment,except by a vote of two-thirds
of all the members elected to each house of the Legislature. After two years,the law is subject to amendment or repeal
by the Legislature in the same manner as other laws.
Tax and fee initiative measures have been and may be filed from time to time. It cannot be predicted whether any such
initiatives might gain sufficient signatures to qualify for submission to the Legislature and/or the voters or,if submitted,
whether they ultimately would be approved.
TAX MATTERS
The 2010A Bonds
Exclusion From Gross Income. In the opinion of Bond Counsel,under existing federal law and assuming compliance with
applicable requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied
subsequent to the issue date of the 2010A Bonds, interest on the 2010A Bonds is excluded from gross income for
federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable
to individuals.
Continuing Requirements. The City is required to comply with certain requirements of the Code after the date of issuance
of the 2010A Bonds in order to maintain the exclusion of the interest on the 2010A Bonds from gross 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 2010A Bonds
in higher yielding investments in certain circumstances and the requirement to comply with arbitrage rebate
requirements to the extent applicable to the 2010A Bonds. The City has covenanted in the Bond Ordinance to comply
with those requirements, but if the City fails to comply with those requirements, interest on the 2010A Bonds could
become taxable retroactive to the date of issuance of the 2010A Bonds. Bond Counsel has not undertaken and does not
undertake to monitor the City's compliance with such requirements.
Corporate Alternative Minimum Tax. While interest on the 2010A Bonds also is not an item of tax preference for purposes
of the alternative minimum tax applicable to corporations,under Section 55 of the Code,tax exempt interest,including
interest on the 2010A Bonds, received by corporations is taken into account in the computation of adjusted current
earnings for purposes of the alternative minimum tax applicable to corporations (as defined for federal income tax
purposes). Under the Code, alternative minimum taxable income of a corporation will be increased by 75% of the
excess of the corporation's adjusted current earnings (including any tax exempt interest) over the corporation's
alternative minimum taxable income determined without regard to such increase. A corporation's alternative minimum
taxable income, so computed, that is in excess of an exemption of$40,000,which exemption will be reduced (but not
below zero) by 25%of the amount by which the corporation's alternative minimum taxable income exceeds$150,000,is
then subject to a 20%minimum tax.
A small business corporation is exempt from the corporate alternative minimum tax for any taxable year beginning after
December 31,1997,if its average annual gross receipts during the three-taxable-year period beginning after December
31, 1993, did not exceed $5,000,000, and its average annual gross receipts during each successive three-taxable-year
period thereafter ending before the relevant taxable year did not exceed$7,500,000.
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 2010A Bonds, received by an S corporation (a corporation treated as a
partnership for most federal tax purposes) that has Subchapter C earnings and profits at the close of the taxable year
may be subject to federal income taxation at the highest rate applicable to corporations if more than 25% of the gross
receipts of such S corporation is passive investment income.
Foreign Branch Props Tax. Interest on the 2010A Bonds may be subject to the foreign branch profits tax imposed by
Section 884 of the Code when the 2010A Bonds are owned by,and effectively connected with a trade or business of,a
United States branch of a foreign corporation.
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Possible Consequences of Tax Comfiliance Audit. The Internal Revenue Service (the "IRS") has established a general audit
program to determine whether issuers of tax-exempt obligations, such as the 2010A 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 predict whether the IRS will
commence an audit of the 2010A Bonds. Depending on all the facts and circumstances and the type of audit involved,it
is possible that commencement of an audit of the 2010A Bonds cod adversely affect the market value and liquidity of
the 2010A Bonds until the audit is concluded,regardless of its ultimate outcome.
Certain Other Federal Tax Consequences
The 2010A Bonds Are `Qual ied Tax-Exembt Obligations" 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 are obligations other than certain private activity bonds,are issued by a governmental unit that,together with
all entities subordinate 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 subordinate 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 year, and has designated the 2010A Bonds as "qualified tax-
exempt obligations" for purposes of Section 265(6)(3) of the Code. Therefore, only 20% of the interest expense
deduction of a financial institution allocable to the 2010A Bonds will be disallowed for federal income tax purposes.
Reduction of Loss Reserve Deductions for Property &Casualty Insurance Companies. Under Section 832 of the Code,interest on
the 2010A Bonds received by property and casualty insurance companies will reduce tax deductions for loss reserves
otherwise available to such companies by an amount equal to 15% of tax-exempt interest received during the taxable
year.
Effect on Certain Social Security and Retirement Bents. 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 2010A Bonds into account in
determining gross income.
Other Possible Federal Tax Consequences. Receipt of interest on the 2010A Bonds may have other federal tax consequences
as to which prospective purchasers of the 2010A Bonds may wish to consult their own tax advisors.
Preservation of Tax Exemption of 2010A Bonds
The City covenants, by the Bond Ordinance, that it will take all actions necessary to prevent interest on the 2010A
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 2010A Bonds or other funds of the City treated as proceeds of the 2010A Bonds at
any time during the term of the 2010A Bonds which will cause interest on the 2010A Bonds to be included in gross
income for federal income tax purposes.
No Tax Exemption for 2010T Bonds
Interest on the 2010T Bonds is not excluded from gross income for federal income taxation. Prospective purchasers of
the 2010T Bonds should consult their own tax advisors regarding federal tax consequences of owning Series 2010T
Bonds.
CONTINUING DISCLOSURE
Basic Undertaking to Provide Annual Financial Information and Notice of Material Events
To meet the requirements of United States Securities and Exchange Commission ("SEC") Rule 15c2-12(b)(5) (the
"Rule"), as applicable to a participating underwriter for the Bonds, the City will undertake (the "Undertaking") for the
benefit of holders of the Bonds to provide or cause to be provided,either directly or through a designated agent,to the
Municipal Securities Rulemaking Board ("MSRB"),in an electronic format as prescribed by the MSRB,accompanied by
identifying information as prescribed by the MSRB: (a) annual financial information and operating data of the type
included in this Official Statement as generally described below ("annual financial information"), and (b) to the MSRB
timely notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) principal and
interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves
reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v)
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substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the
tax-exempt status of the Bonds; (vii) modifications to rights of holders of the Bonds; (viii) Bond calls (other than
scheduled mandatory redemption of Term Bonds); (ix) defeasances; (x) release, substitution,or sale of property securing
repayment of the Bonds;and(xi)rating changes.The City will also provide to the MSRB timely notice of a failure by the
City to provide required annual financial information on or before the date specified below.
Annual Financial Information
The annual financial information that the City undertakes to provide will consist of: (1) the City's annual financial
statements prepared (except as noted in the financial statements) in accordance with generally accepted accounting
principles applicable to Washington governmental units such as the City, as such principles may be changed from time
to time, which statements shall not be audited, except, however, that if and when audited financial statements are
otherwise prepared and available to the City they will be provided; (2) a statement of authorized,issued and outstanding
bonded debt secured by the Net Revenue of the Waterworks Utility; (3) debt service coverage ratios; and (4) general
customer statistics for the Waterworks Utility.
The annual financial information that the City undertakes to provide will be provided to the MSRB not later than the last
day of the ninth month after the end of each fiscal year of the City(currently,a fiscal year ending December 31),as such
fiscal year may be changed as permitted or required by State law, commencing with the City's fiscal year ending
December 31,2010.
The annual financial information may be provided in a single or multiple documents and may be incorporated by
reference to other documents available to the public on the Internet website of the MSRB or filed with the SEC.
Amendment of Undertaking
The Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of
any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, rating agency, or the MSRB,
under the circumstances and in the manner permitted by the Rule.
The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a
brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information
to be provided,the notice also will include a narrative explanation of the effect of that change in the type of information
to be provided.
Termination of Undertaking
The City's obligations under the Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition,
the City's obligations under the Undertaking shall terminate if those provisions of the Rule which require the City to
comply with the Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an
opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws delivered to the City,
and the City provides timely notice of such termination to the MSRB.
Remedy for the Failure to Comply with Undertaking
If the City or any other obligated person fails to comply with the Undertaking,the City will proceed with due diligence
to cause such noncompliance to be corrected as soon as practicable after the City learns of that failure. No failure by the
City or other obligated person to comply with the Undertaking will constitute a default in respect of the Bonds. The
sole remedy of any holder of a Bond will be to take such actions as that holder deems necessary,including seeking an
order of specific performance from an appropriate court, to compel the City or other obligated person to comply with
the Undertaking.
Prior Compliance with Continuing Disclosure Undertakings
Pursuant to the Rule, and beginning in 1997, the City entered into undertakings with respect to several prior issues of
general obligation and revenue bonds. The City believes that it is in compliance with its continuing disclosure
undertakings in all respects.
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LEGAL INFORMATION
Absence of Litigation Affecting the Bonds
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 questioning the proceedings and authority under which the Bonds
are issued or affecting the ability of the City to pay the principal of or the interest on the Bonds.
Approval of Bond Counsel
Legal matters incident to the authorization, issuance and sale of Bonds by the City are subject to the approving legal
opinion of Foster Pepper PLLC, Seattle,Washington,Bond Counsel. The form of the opinion of Bond Counsel with
respect to the Bonds is attached hereto as Appendix C.
The opinion of Bond Counsel is given based on factual representations made to Bond Counsel,and under existing law,
as of the date of initial delivery of the Bonds, and Bond Counsel assumes no obligation to revise or supplement its
opinion to reflect any facts or circumstances that may thereafter come to its attention, or any changes in law that may
thereafter occur. The opinion of Bond Counsel is an expression of its professional judgment on the matters expressly
addressed in its opinion and does not constitute a guarantee of result. Bond Counsel will be compensated only upon the
issuance and sale of Bonds.
BOND RATING
The City received an underlying rating of"AA-" from Standard&Poor's ("S&P'�. A municipal bond rating reflects a
rating agency's current assessment of a number of factors relating to the issuer of any debt,including the likelihood of
repayment of such debt,the perceived quality of management and administration of the entity, the nature and relative
health of the local economy in which the issuer exists and the overall financial condition and operational controls which
exist for the issuer. The existence of a bond rating does not imply a recommendation by a rating agency to purchase,sell
or hold any such security, inasmuch as it does not take into account a number of subjective variables, including the
market price of any such security or suitability of such security for any particular investor.
A credit rating is based on current information furnished by the issuer or obtained by a rating agency from sources
which it considers to be reliable. S&P does not perform an audit in connection with any credit rating it may assign and
may,on occasion,rely on un-audited financial information. A bond rating may be changed,suspended or withdrawn as
a result of changes in,or unavailability of,such information,or for other circumstances.
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 Bonds that are prohibited by applicable law.
UNDERWRITING
The Underwriter has agreed, subject to certain conditions, to purchase all of the 2010A Bonds, at a price equal to the
principal amount thereof,plus an original issue premium of$ ,less an underwriting discount of$
The Underwriter has agreed, subject to certain conditions, to purchase all of the 2010T Bonds, at a price equal to the
principal amount thereof,plus an original issue premium of$ ,less an underwriting discount of$
The Underwriter has represented that the Bonds will be reoffered at the prices or yields set forth on the inside 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.
Piper Jaffray & Co., ("Piper' has entered into an agreement (the "Distribution Agreement") with Advisors Asset
Management,Inc. ("AAM") for the distribution of certain municipal securities offerings allocated to Piper at the original
offering prices. Under the Distribution Agreement, if applicable to the Bonds,Piper will share with AAM a portion of
the fee or commission,exclusive of management fees,paid to Piper.
28
CONCLUDING STATEMENT
All estimates, assumptions, 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 herein should not be construed as representing all conditions affecting the City or the Bonds.
Additional information may be obtained directly from the City or the Underwriter.
The foregoing statements relating to the Ordinance 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 Preliminary Official Statement, which has been approved by the City. The City has represented to the
Underwriter that the portions of this Preliminary Official Statement directly pertaining to the City neither contain any
misrepresentation 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,WASHINGTON
By:
Its: City Manager
29
APPENDIX A
CERTAIN DEFINITIONS
Certain terms used in this Preliminary Official Statement that are not specifically defined herein have the
meanings as set forth in the Bond Ordinance. The following terms shall have the following meanings in this
Official Statement as defined in the Bond Ordinance:
"Acquired Obligations" means those United States Treasury Certificates of Indebtedness,Notes, and Bonds--State and
Local Government Series and other direct, noncallable obligations of the United States of America purchased to
accomplish the refunding of the Refunded Bonds as authorized by the Bond Ordinance.
"Alternate Security" means any bond insurance, collateral, security, letter of credit, guaranty, surety bond or similar
credit enhancement device providing for or securing the payment of all or part of the principal of and interest on any
specified Parity Bonds, issued by an institution which has been assigned a credit rating at the time of issuance of the
applicable Parity Bonds,respectively,secured by such Alternate Security in the highest rating categories by both Moody's
Investors Service,Inc.,and Standard&Poor's Ratings Services.
"Annual Debt Service"for any or all Parity Bonds for any year means all the interest,plus all principal which will mature
or come due in such year,less all bond interest payable from the proceeds of any such bonds in that year.
"Assessment Bonds" means, at the time of determination, Parity Bonds then outstanding equal to the sum of the
nondelinquent unpaid principal amount of ULID Assessments then outstanding plus any UL113 Assessment payments
then on deposit in the Principal and Interest Account of the Bond Fund. Assessment Bonds shall be allocated to each
remaining maturity of Parity Bonds in the same proportion as the total of the Assessment Bonds relates to the total of
the Parity Bonds then outstanding.
"Average Annual Debt Service" means, at the time of its calculation, the sum of the Annual Debt Service for the
remaining years to the last scheduled maturity of the applicable Parity Bonds divided by the number of those years.
"Bond Fund" means the Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991, of the City created
and established by Ordinance No.2846 in the office of the Finance Director of the City.
"Bond Register"means the registration books of the Bond Registrar on which are recorded the names of the owners of
the Bonds.
"Bond Registrar"means the Fiscal Agent.
"Bonds"means,collectively,the 2010A Bonds and the 2010T Bonds.
"1998A Bonds" means the Water and Sewer Revenue Bonds, 1998, Series A (Taxable), issued pursuant to Ordinance
No.3314.
"199813 Bonds" means the Water and Sewer Revenue Refunding Bonds, 1998, Series B (Tax-Exempt),issued pursuant
to Ordinance No.3314.
"1998C Bonds" means the Water and Sewer Revenue Bonds, 1998, Series C (Tax-Exempt), issued pursuant to
Ordinance No.3314.
"1999 Bonds"means the Water and Sewer Revenue Bonds,1999,issued pursuant to Ordinance No. 3378.
"2001 Bonds"means the Water and Sewer Revenue Bonds,2001,issued pursuant to Ordinance No.3503.
"2002 Bonds"means the Water and Sewer Revenue Bonds,2002,issued pursuant to Ordinance No.3567.
"2005 Bonds"means the Water and Sewer Revenue Bonds,2005,issued pursuant to Ordinance No.3740.
"2007 Bonds"means the Water and Sewer Revenue Bonds,2007,issued pursuant to Ordinance No.3835.
"2009 Bonds"means the Water and Sewer Revenue Bonds,2009,issued pursuant to Ordinance No.3195.
"2010A Bonds" means the Water and Sewer Improvement and Refunding Revenue Bonds, 2010A,issued pursuant to
the Bond Ordinance.
"2010T Bonds"means the Water and Sewer Refunding Revenue Bonds, 2010T (Taxable),issued pursuant to the Bond
Ordinance.
"City"means the City of Pasco,Washington,a duly organized code city.
A-1
"Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations
promulgated thereunder.
"Coverage Requirement" in any year means an amount of Net Revenue of the Waterworks Utility, together with the
ULID Assessments collected in that year,equal to at least the Maximum Annual Debt Service on all Assessment Bonds
plus an amount of the Net Revenue of the Waterworks Utility not used to calculate the Coverage Requirement on
Assessment Bonds equal to at least 1.25 times Maximum Annual Debt Service on all bonds payable from the Bond Fund
that are not Assessment Bonds.
"DTC"means The Depository Trust Company,New York,New York.
"Fiscal Agent" means the fiscal agent of the State of Washington as the same may be designated by the State of
Washington from time to time.
"Future Parity Bonds" means any and all water and sewer revenue bonds or other obligations of the City issued or
incurred after the date of the issuance of the Bonds pursuant to the provisions of the Parity Bond Ordinances, the
payment of the principal of and interest on which constitutes a lien and charge upon the Net Revenue of the
Waterworks Utility and ULID Assessments on a parity with the lien and charge upon such Net Revenue and ULID
Assessments for the Outstanding Parity Bonds and the Bonds,but shall not include variable rate obligations.
"Government Obligations" means those government obligations defined by RCW 39.53.010(9) as it now reads or
hereafter may be amended and which are otherwise lawful investments of the City at the time of such investment.
"Gross Revenue of the Waterworks Utility"or"Gross Revenue"means all of the earnings and revenues received by the
City from the maintenance and operation of the Waterworks Utility and all earnings from the investment of money on
deposit in the Bond Fund,except ULID Assessments,government grants,proceeds from the sale of Waterworks Utility
property, City taxes collected by or through the Waterworks Utility, principal proceeds of bonds and earnings or
proceeds from any investments in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility
obligations (until commingled with other earnings and revenues of the Waterworks Utility) or held in a special account
for the purpose of paying a rebate to the United States Government under the Code.
"Letter of Representations" means the Blanket Issuer Letter of Representations between the City and DTC dated
August 31, 1998.
"Maximum Annual Debt Service"means, at the time of calculation,the maximum amount of Annual Debt Service that
will mature or come due in the current year or any future year on the outstanding Parity Bonds.
"MSRB"means the Municipal Securities Rulemaking Board.
"Net Revenue of the Waterworks Utility"or"Net Revenue"means the Gross Revenue less Operating and Maintenance
Expenses.
"Operating and Maintenance Expenses"means all reasonable expenses incurred by the City in causing the Waterworks
Utility to be operated and maintained in good repair, working order and condition, including payments made to any
other municipal corporation or private entity for water service and for sewage treatment and disposal service or other
utility service in the event the City combines such service in the Waterworks Utility and enters into a contract for such
service,but not including any depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes,
or capital additions or capital replacements to the Waterworks Utility.
"Outstanding Parity Bonds"means the outstanding 1998C Bonds, 1999 Bonds,2001 Bonds, 2002 Bonds, 2005 Bonds,
2007 Bonds and 2009 Bonds.
"Parity Bond Ordinances"means Ordinance No.3314,Ordinance No.3378,Ordinance No.3503,Ordinance No.3567,
Ordinance No.3740,Ordinance No.3835,Ordinance No.3195 and the Bond Ordinance.
"Parity Bonds"means the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds.
"Plan of Additions"means the system or plan of additions to and betterments and extensions of the Waterworks Utility
specified,adopted and ordered to be carried out by the Bond Ordinance.
"Principal and Interest Account" means the account of that name created in the Bond Fund for the payment of the
principal of and interest on all Parity Bonds.
"Purchaser"means Piper Jaffray&Co. of Seattle,Washington.
"Refunded Bonds" means the outstanding 1998A Bonds maturing in the years 2013 and 2018 and the 1998B Bonds
maturing in the years 2010 through 2014, inclusive, the refunding of which has been provided for by the Bond
Ordinance.
A-2
"Refunding Plan"means:
(a) the placement of sufficient proceeds of the Bonds which,with other money of the City,if necessary,
will acquire the Acquired Obligations to be deposited,with cash,with the Refunding Trustee;
(b) pay the principal of and interest on the Refunded Bonds when due on June 1,2010;
(C) the call,payment,and redemption on June 16,2010,of all of the then outstanding Refunded Bonds at
a price of par plus accrued interest;and
(d) the payment of the costs of carrying out the foregoing elements of the Refunding Plan.
"Refunding Trust Agreement" means a Refunding Trust Agreement between the City and the Refunding Trustee
substantially in the form of that which is on file with the City Clerk.
"Refunding Trustee"means U.S.Bank national Association of Seattle,Washington,serving as trustee or escrow agent or
any successor trustee or escrow agent.
"Reserve Account"means the account of that name created in the Bond Fund for the purpose of securing the payment
of the principal of and interest on the Parity Bonds.
"Reserve Insurance" means, in lieu of cash and investments,insurance obtained by the City to fund all or a portion of
the Reserve Requirement for any Parity Bonds then outstanding for which such insurance is obtained; and for the
Outstanding Parity Bonds and the Bonds means the Surety Bond provided by the Reserve Insurer.
"Reserve Insurer"means Ambac Assurance Corporation for the Outstanding Parity Bonds and the Bonds.
"Reserve Requirement"means:
(1) For the Outstanding Parity Bonds and the Bonds,an amount equal to the least of(a) 10%of the
issue price of the then outstanding Parity Bonds, (b)Maximum Annual Debt Service on the then outstanding
Parity Bonds and (c) 1.25 times Average Annual Debt Service on the outstanding Parity Bonds. For the
purposes of determining Maximum Annual Debt Service and Average Annual Debt Service for calculating the
Reserve Requirement,all bonds payable or proposed to be paid from the Bond Fund shall be treated as a single
issue and the number of years to the last scheduled maturity for any of those issues shall be used as the
denominator.
(2) For any Future Parity Bonds, an amount equal to the difference between the Reserve
Requirement for the then outstanding Parity Bonds and the least of (a) 10% of the issue price of the then
outstanding Parity Bonds and the Future Parity Bonds proposed to be issued, (b)Maximum Annual Debt
Service on the then outstanding Parity Bonds and the Future Parity Bonds proposed to be issued and (c) 1.25
times Average Annual Debt Service on the outstanding Parity Bonds and the Future Parity Bonds proposed to
be issued, but in no event to exceed an amount equal to the least of 10% of the issue price of the proposed
Future Parity Bonds, Maximum Annual Debt Service on those bonds and 1.25 times Average Annual Debt
Service on the proposed bonds. For the purposes of determining Maximum Annual Debt Service and Average
Annual Debt Service for calculating the Reserve Requirement, all bonds payable or proposed to be paid from
the Bond Fund shall be treated as a single issue and the number of years to the last scheduled maturity for any
of those issues shall be used as the denominator.
"SEC"means the United States Securities and Exchange Commission.
"Surety Bond" means the surety bond issued by the Reserve Insurer guaranteeing certain payments into the Reserve
Account with respect to the Outstanding Parity Bonds and the Bonds as provided in and subject to the limitations set
forth in that surety bond.
"Term Bonds" means those bonds of any single issue or series of Parity Bonds designated as such in the ordinance
providing for those bonds.
"ULID"means utility local improvement district.
"ULID Assessments"means all ULID assessments and installments thereof, plus interest and penalties thereon,in any
ULID created to secure the payment of any Parity Bonds and pledged to be paid into the Bond Fund.
"Water and Sewer Revenue Fund" means that special fund of the City into which all of the Gross Revenue of the
Waterworks Utility of the City shall be deposited.
"Waterworks Utility" means the combined sewerage system and water system of the City, together with the storm or
surface water sewers and agricultural/industrial wastewater treatment facilities heretofore or hereafter authorized to be
constructed and installed as a part of such combined systems, and together with all additions thereto and betterments
and extensions thereof now or hereafter made.
A-3
APPENDIX B
EXERPTS OF 2008 AUDITED FINANCIAL STATEMENTS
Washington State Auditor's Office
Independent Auditor's Report on Financial
Financial Statements and Federal Single Audit Report Statements
City of Pasco
Franklin County
January 1,2008 through December 31,2008
City of Pasco
Franklin Count Mayor and City Council
County City of Pasco
Pasco,Washington
Audit Period We have audited the accompanying financial statements of the governmental activities, the
January 1,2008 through December 31,2008 business-type activities,each major fund and the aggregate remaining fund information of the
City of Pasco,Franklin County,Washington,as of and for the year ended December 31,2008,
which collectively comprise the City's basic financial statements as listed on page 15. These
Report No. 1002255 financial statements are the responsibility of the City's management. Our responsibility is to
express opinions on these financial statements based on our audit. The prior year comparative
information has been derived from the City's 2007 financial statements and, in our audited
report dated September 11,2008,we expressed unqualified opinions on the respective financial
statement of the governmental activities, business-type activities, each major fund and the
aggregate remaining information.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards,issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining,on a test
basis,evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinions.
In our opinion,the financial statements referred to above present fairly,in all material respects,
the respective financial position of the governmental activities,the business-type activities,each
major fund and the aggregate remaining fund information of the City of Pasco, as of
December 31, 2008, and the respective changes in financial position and, where applicable,
cash flows thereof for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
As described in Note 19, during the year ended December 31, 2008, the City implemented
WASHINGTON Governmental Accounting Standards Board Statement 45,Accounting and Financial Reporting
Issued September 28, 2009 ? 17 i� hT (y � f'+ by Employers for Postemployment Benefits Other Than Pensions.
Reissued February 1,2010 j�j�j
STATE In accordance with Government Auditing Standards, we have also issued our report on our
$TATS A[Jt�ITC]R consideration of the City's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and
Washington State Auditor's Office
13
C%t1�of Pasco,VashhVton 2008
Statement of Net Assets
other matters. The purpose of that report is to describe the scope of our testing of internal December 31,2008
control over financial reporting and compliance and the results of that testing,and not to provide Governmental Business-Type
an opinion on the internal control over financial reporting or on compliance. That report is an ASSETS Activities Activities 2008 2007
integral part of an audit performed in accordance with Government Auditing Standards and Current Cash R Cash Equivalents $ 948,723 $ 907,938 $ 1,856,661 $ 17,342,336
should be considered in assessing the results of our audit. Investments 25,969,010 6,769,049 32,738,059 20,308,415
Receivables(net of allowances)
The financial statements include partial prior year comparative information. Such information rakes 2,573, 2,573,202 2,719,114
Customer Acw unls 6,672,7711 11 835,946 7,508,657 6,073,332
does not include all of the information required for a presentation in conformity with accounting Due from Other Funds (17,000) 17,000 - 48,100
principles generally accepted in the United States of America. Accordingly, such information Interest Receivable 155,064 64,314 219,378 203,997
should be read in conjunction with the City's financial statements for the year ended Other Receivables 723,023 294,018 1,017,041 1,210,917
December 31,2007,from which such partial information was derived. Inventories 8,357 284,357 292,714 312,381
Prepaid Insurance - 20,036 20,036 19,226
Joint Ventures 278,229 - 278,229 299,984
The management's discussion and analysis on pages 16 through 26 and budgetary comparison Land 5,855,166 317,786 6,172,952 6,028,233
information on page 73 are not a required part of the basic financial statements but are Capital Assets,Net of Depreciation 33,827,168 42,438,098 76,265,266 81,553,741
supplementary information required by the Governmental Accounting Standards Board. We Construction Work In Progress 986,569 3,213,130 4,199,699 6,101,715
have applied certain limited procedures,which consisted principally of inquiries of management Infrastructure,Net of Depreciation 58,092,092 97,350,872 155,442,964 130,153,182
regarding the methods of measurement and presentation of the required supplementary Deferred Charges - 162,601 162,601 183,290
information. However,we did not audit the information and express no opinion on it. TOTAL ASSETS 136,072,314 152,675,145 288,747,459 272,557,963
Our audit was performed for the purpose of forming an opinion on the financial statements that LIABILmES
collectively comprise the City's basic financial statements. The accompanying Schedule of current
Accourrts Payable 712,844 244,149 956,993 2,298,844
Expenditures of Federal Awards is presented for purposes of additional analysis as required by Bank Overdraft 1,768,775 - 1,768,775 -
U.S.Office of Management and Budget Circular A-133,Audits of States,Local Governments, Due to Other Govemmental Units 8,792 30,729 39,521 175,445
and Non-Profit Organizations. This schedule is not a required part of the basic financial Retainage Payable - 201,181 201,181 180,777
statements. Such information has been subjected to the auditing procedures applied in the Deposits Payable 404,691 93,510 498,201 471,055
audit of the basic financial statements and, in our opinion, is fair) stated, in all material Interest Payable 359,901 359,901 392,113
p y Other 501,095 - 501,095 115,145
respects,in relation to the basic financial statements taken as a whole. Deferred Revenue - 1,262,101 1,262,101 1,114,327
Non-Current Liabilities -
Deferred Revenue 5,583,891 - 5,583,891 4,100,410
. Unclaimed Properly 5,434 25,082 30,516 24,410
Claims Incurred Not Reported 550,000 550,000 125,000
Due within One Year 2,728,583 3,049,667 5,778,250 5,549,717
Due in More than One Year 10,759,710 31,213,808 41,973,518 46,213,474
Total Liabilities 23,023,815 36.480,128 59.503,943 60,760.717
BRIAN SONNTAG,CGFM
STATE AUDITOR NETASSETS
Invested in Capital Assets,Net of Related Debt 85,293,636 109,736,474 195,030,110 171,693,558
January 25,2010 Restricted for
Debt Service 2,173,622 747,042 2,920,664 3,071,215
Capital Improvements 15,165 - 15,165 15,165
Other Restricted 1,815,716 - 1,815,716 1,648,705
Unrestricted(deficit) 23,750,360 5,711,501 29,461,861 35,368,603
Total Net Assets $113,048,499 $116,195,017 $229,243,516 $211,797,246
See accompanying notes to the basic financial statements.
Washington State Auditor's Office Washington State Auditor's Office
14 27
City ofTasco,'Washington 2008 Comprehensive Annuaf financiaCReport C%t1�of Pasco,VashhVton 2008
Balance Sheet
m y m Governmental Funds
'x December31,2008 Total
Other Govemmental
�- "" Mj n - - General Govemmental Funds
Fund Funds 2008 2007
ASSETS
Current Cash&Cash Equivalents $ 80,425 $ 736,606 $ 817,032 $ 9,442,809
Investments 7,962,112 14,071,475 22,033,586 11,541,211
Receivables(net of allowances)
Taxes 2,465,934 107,268 2,573,202 2,719,114
u Customer Accounts 1,376,020 5,270,983 6,647,003 5,129,442
m Intertund Loans Receivable 676,800 1,100 677,900 1,505,900
m W Interest Receivable 53,970 75,962 129,932 117,732
m E - Other Receivables 233,763 489,260 723,023 957,646
d �'L 'e�aomN e a
TOTAL ASSETS 12,849,024 20,752,654 33,601,678 31,413,854
`m mQ f
LIABILMES AND FUND BALANCES
Liabilities
m m v Accounts Payable 218,747 460029 678,776 1,586,1-
40
1 2 m IBankOvrdr 1, 1,_ 768775 768,775
Mertund
Loans Payable - 634,900 634,900 1,704,000
Due to Other Governmental Units 7,887 905 8,792 76,320
Bonds,Notes,Loans Payable - 120,000 120,000 120,000
Deposits Payable 404,691 - 404,691 383,822
a m f ,, Other p - 501,095 583 1,095 115,145
a♦?a 11 $� o g Nl 11 Deferred Revenue 1,250,177 4,333,714 5,583,891 4,100,410
E Unclaimed Property 5,434 - 5.434 3.422
v «, Total Liabilities 1.886.936 7.819,418 9.706.354 8.089.259
P o , , , , Fund Balances
"a w Reserved for:
E a E Advances to Other Funds 676,800 1,100 677,900 1,505,900
E o ci w z Debt Service - 2,073,622 2,073,622 2,257,622
Capital Improvements 15,165 - 15,165 15,165
y a Other Reserves - 1,815,716 1,815,716 1,648,705
Unreserved,Reported in:
P. n - General Fund 10,270,1-2 3 - 10270123 9087,738
A Special Revenue Funds 9,871,5 9,7 ,58 ,
825914
921,004 921,004 773,275 Debt Service Funds
Cp
Total ital Project Funds - (1,749,795) (1,749,795) (223,724
)
Fund Balances 10,962,088 12,933,236 23.895.324 23,324,595 W m
"8 - - - - - W 16 Iz 4 rc mm'arm� Em m° m m
o ., a
w v n ui o o o q o e a S ¢ TOTAL LIABILITIES AND FUND BALANCES $ 12,849,024 $ 20.752.654
�Faaw r v za` z
g
a _ Amounts reported for governmental activities in the statements of net assets
°a are different because:balance in government funds 23,895,324
Capital Assets used in governmental activities are not financial resources and
E.s E E e e m a & o €' therefore are not reported in the govemment funds. 96,733,027
2 m a o .W x'w '2'm z Internal Service funds are used by management to charge the costs of certain
uy y o F.E d° a 3 0`� E activities to individual funds.The assets and liabilities of internal service funds are
d"
E E Z 8 u 2 a E ,°-� °_ $ included in the governmental activities in the Statement of Net Assets. 5,767,507
8 E u a' i w v s m 3 u,3 o s Some liabilities,including bonds payable,are not due and payable in the current
ai o" i 0 w period and therefore are not reported in the funds. (13,347,359)
Net assets ofgovemmental activities $ 113,048,499
See accompanying rotes to the basic financial statements.
Washington State Auditor's Office Washington State Auditor's Office
28 29
City of Pasco,1WashinWton 2oo8 C%t1�of Pasco,"WashhVton 2oo8
Statement of Revenues,Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31,2008 Reconciliation of the Statement of Revenues,Expenditures,and
Total Changes in Fund Balance of Govemmental Funds to the Statement ofActivifies
Other Governmental For the Year Ended December 31,2008
General Governmental Funds
REVENUES Fund Funds 2008 2007 Netchange infund balances-total govemmental funds $ 569,101
Taxes $ 22,969,749 $ 2,746,707 $ 25,716,456 $ 24,516,433 Amounts reported forgovemmental activities in the Statement ofAcbvifies are
Licenses&Permits 1,364,996 250,739 1,615,735 1,923,553 different because ofthe following reconciling items:
Intergovernmental Revenue 2,081,152 3,212,074 5,293,226 4,719,252
Charges for Services 2,726,668 2,044,253 4,770,921 4,737,984 Govemmental funds report capital outlays as expenditures.However,in the Statement
Fines&Forfeitures 980,468 36,271 1,016,739 1,054,334 of Net Assets they are reported net of depreciation as a capital asset.This is the
Investment Income 311,637 546,499 858,136 960,833 amountbywhich capital outlays exceeded depreciation inthe current period. (985,821)
Miscellaneous Revenue 588,946 863,375 1,452,321 1,772,971
Total Revenues 31,023,616 9,699,918 40,723,534 39,685,360 The Statement of Net Assets shows a decrease in the value of Joint Ventures. (21,755)
EXPENDITURES Repayment of bond pri ncipal is an expenditure in the governmental funds,but the
Current: payment reduces long-term liabilities in the Statement of Net Assets.This is the
General Government 4,526,556 - 4,526,556 4,251,117 amount of debt service payments for bonds.This amount comes from the Statement
Judicial 813,800 - 813,800 750,294 of Revenues,Expenditures,and Changes in Fund Balances for Government Funds. 1,108,336
Public Safety 15,621,460 2,089,859 17,711,319 16,819,676
Physical Environment 1,821,202 256,394 2,077,596 1,825,137 Adjustmentfor interfund transfers recorded as expenditures in govemmentalfunds
Transportation - 1,536,157 1,536,157 1,537,483 but are reconciled in Statement of Activities.This amount comes from the Statement
Health and Human Services 14,483 42,169 56,652 39,740 of Activities. (551,722)
Economic Environment 326,182 344,936 671,118 745,388 Non-cashcapital contributions reported in the Statement of Activities do not involve the use
Culture and Recreation 3,532,304 747,034 4,279,338 4,117,179
Capital Outlay 1,101,091 6,243,922 7,345,013 5,737,339 of current financial resources and,therefore,are not reported as revenues in governmental funds. 12,164,171
Debt Service Some expenses reported in the Statement of Activities do not involve the me of current
Interest 374,006 213,415 587,4421 21 639,570
Principal 533,853 574,483 1,108, 1,162,174 financial resources and,therefore,are not reported as expenditures in governmental funds. (154,898)
Total Expenditures 28,664,937 12,048,369 40,713,306 37,625,097 Internal service funds are used by management to charge the costs of certain activities to
individual funds.The net revenue of internal service funds is reported with governmental
Excess of Revenues Over(Under)Expenditures 2,358,679 (2,348,451) 10,228 2,060,263 activities.This amount comes from the Combining Statement of Revenues,Expenditures
and Changes in Net Fund Assets for Intemal Service Funds,Net Operating Income. 636,275
OTHER FINANCING SOURCES(USES)
Disposition of Capital Assets 7,076 - 7,076 157,018 Change in net assets of governmental activities $ 12,763.687
Proceeds of General L-T Debt - - - -
Insurance Recoveries - 75 75 (103)
Operating Transfers-(In) 82,561 5,011,193 5,093,754 4,984,301 See accompanying rates to the basic financial statements.
Operating Transfers-(Out) (2,089,963) (2,452,069) (4,542,032) (4,246,752)
Total Other Financing Sources(Uses) (2,000,326) 2,559,199 558,873 894,464
Net Change in Fund Balances 358,353 210,748 569,101 2,954,727
Prior Year Adjustments (968) 2,595 1,627 262,007
Fund Balance Beginning 10,604,703 12,719,892 23,324,595 20,107,861
Fund Balance,Ending $ 10,962,088 $ 12,933,235 $ 23,895,323 $ 23,324,595
See accompanying notes to the basic financial statements.
Washington State Auditor's Office Washington State Auditor's Office
30 31
City of Pasco,-Washington 2oo8 Cit1�of Pasco,-VashhVton 2oo8
Statement of Net Assets
Proprietary Funds
For the Year Ended December 31,2008
2008 2007 2008 2007
Business Type Business Type Business Type Business Type
Activities Governmental Business Type Activities Governmental Business Type Activities Governmental Business Type Activifies Governmental Business Type
Enterprise Funds Activities Activities Enterprise Funds Activities Activities Enterprise Funds Activities Activities Enterprise Funds Activities Activities
Water/Sewer internal Service Internal Service Water/Sewer Internal Service Internal Service Water/Sewer Menial Service Internal Service Water/Sewer Menial Service krtemal Service
Fund Funds Funds Fund Funds Funds Fund Funds Funds Fund Funds Funds
ASSETS LIABILRIES
Current Assets: Current Liabilities:
Current Cash&Cash Equivalents $ 55,588 $ 131,692 $ 122,308 $ 5,373,636 $1,296,699 $ 502,831 Accounts Payable 238,330 34,068 5,819 631,385 78,914 2,405
Receivables(natofallowances) Due to Other Governments 30,729 - - 71,025 - -
Utility Receivables 835,946 - - 911,823 - _ Retainage Payable 201,181 - - 180,777 - -
.1 Receivables 294,018 - - 253,271 - _ Matured G.O.Bonds - - - - - -
Notes Receivable - _ _ _ _ _ Current Portion Bonds Payable 1,405,000 - - 1,375,000 - -
Interfund Loans Receivable 17,000 100,000 - 28,100 170,000 _ Current Portion Loans Payable 1,507,037 160,000 - 7,466,661 -interest Receivable 53,910 25,132 10,404 65,250 14,432 6,583 Deposits 93,570 - - 87,233 - -
Due from Governmental Units - 25,708 - - 32,067 _ Merest Payable 359,901 - - 392,113 - -
Deferred Credits 1.262.101 1.114.327
Merohandise inventory 284,357 8,357 - 303,026 9,355 - Total Current Liabilities 5,097,789 194,068 5,819 5,318,521 78,914 2,405
Prepaid Insurance 20,036 19,226
Non-Current Liabilities
Total Current Assets 1,560,855 290,889 132,712 6,954,332 1,522,553 509,414 Compensated Absences 129,746 20,934 7,883 160,156 16,791 7,884
Non-Curtest Assets: Claims Incurred Not Reported - 550,000 - - 125,000 -
Investments 5,503,193 3,935,423 1,265,856 6,567,778 1,584,855 614,572 Unclaimed Property 25,082 - - 20,988 - -
Restricted Assets Bonds Payable:
Debt Service: 1998 Revenue Bonds Series A 1,420,000 - - 1,520,000 - -
ash 8 Cash Equivalents 730,042 - - 726,360 - - 1998 Refunding Bonds Series 8 4,120,000 - - 4,710,000
C - -
Capital Assets 1998 Revenue Bonds Series C 315,000 - - 415,000 - -
Land 317,786 - - 317,786 _ _ 1999 Revenue Bonds 535,000 - - 585,000 - -
Baldi /Structures/Inc rovements/ 2001 Revanus Bonds 435,000 - - 675,000 - -
n9s P 2002 Revenue Bonds 4,550,000 - - 4,810,000 - -
Equipment&Systems 68,372,350 5,357,490 2,104,799 70,947,967 4,859,150 1,866,638 2005 Revenue Bonds 3,900,000 - - 4,060,000 - -
Less Accumulated Depreciation (26,935,535) (3,051,293) (1,103,516) (24,953,457) (2,612,474) (879,547) 2007 Revenue Bonds 795,000 - - 845,000 - -
Infrastructure 115,594,180 - - 101,775,946 - - Less:Current Portion (1,405,000) - - (1,375,000) - -
Less Accumulated Depreciation (18,243,308) - - (16,486,587) - - Loans Payable:
Construction Work In Progress 3,213,130 - - 2,754,080 - - PWTF Loans 2,447,951 - - 2,771,040 - -
Deferred Charges 162,601 - - 183,290 - - SRF Loan 15,607,895 - - 16,751,468 - -
Total Non-Cument Assets 148714,439 6,241,620 2,267 39 141.833,163 3.831,531 1.607,663 Interfund Loans - 160,000 - - - -
Less:CurrentPortion (1,507,037) (160,000) (1,466,661)
TOTALASSETS $150,275,294 $6,532,509 $ 2,399,851 $148,787,495 $5,354,084 $2,111,077 Total Non-Current Liabilities 31,368,637 570.934 7,883 34.481,991 141,791 7.884
Total Liabilifies 36,466,426 765,002 13,702 39,800,512 220,705 70,289
See accompanying notes to the financial statements.
NETASSETS
Investment in Capital Assets:
Net of Related Debt 107,631,675 2,306,197 2,104,799 96,648,274 2,246,676 987,091
Restricted for Debt Service 747,042 100,000 - 841,693 170,000 -
Unrestricted 5,430,151 3,361,310 281,350 11,497,016 2,716,703 1.,113,697
Total Net Assets $113,808,868 $5,767,507 $ 2,386,149 $708.986983 $5,133,379 $2,700,768
See accompanying notes to the basic financial statements.
Washington State Auditor's Office Washington State Auditor's Office
32 33
City of Pasco,1WashinWton 2oo8 City of Pasco,"Washington 2oo8
Statement of Revenues,E>yenses,and C hanges i n Fund Net Asseb SM.e ntof Cash Flows
Propnetery Funds Propnafery Funds
For the Years Ended December 31,2008 and 2007 Forthe Year EMed December 31,2008
2008 2007
2008 2007 3-1 4 G-mmerdal Busirress-lype
Gosemm.-I Busiress-type Goeemmertsl Busiress-type Busirzss-type AcWfie ActiHties Business-type AcWies Acd,ni
Business-type Activities Activities Business-type Activities Activitles Actirties Irrtemal Intemal ActiHties IrRemal Mernal
Activities Intemal hternel ActiHties Intemal kRernal Enterprise Fund s Service Funtls Service Furls Enterprise Funtls Sernce Funds Service Funds
Enterprise Funds Service Funds Service Funds Enterprise Furls Sewe Funds Service Funds Water/Sewer WaterlSewer
Waler/Sewer Water/Sewer Fund Total Total Fund Total Total
Fund Total Total Fund Total Total
CASH FLOW FROM OPERATING ACTIVITIES:
OPERATING REVENUES Receipt nnmCustomers $16,826,992 $ 5,186,441 $ 531,505 $16.038,078 $ 4,560,656 $ 490,129
Pay. for Maintenance&Ops. - (1,465,135) (257,186) - (1,406,887) (257,681)
Chafgesfor Services-Memel $ - $ 4,499,715 $ 525,120 $ - $ 4,012,717 $ 474,960 Payments.Merchandise (654,790) - - (368,384) - -
ChargesforServices-Other 14,440,301 725,659 6,424 13,816,835 586,872 14,950 PaymeMS for Wages (3,076,641) - - (2,688,916) - -
MlacellaneousRevenue 1,332,057 - - 1,952,100 - - Payments for Operating Emenses (5,278,755) - - (3,055,937) - -
TotalOpmngRevenues 15,772.358 5.225.374 531,544 15.768,935 4,599,589 489,910 Int-1 ACWbes-paymeris to other Mnds - - - -
PeymenlsfprTa (1,903,025) - (1,775,130) -
OPERATING EXPENSES Payments to Employxes (2,628.376) (2,486.796)
Personal Services 3,046,231 749,983 18,000 2,697,082 593,979 18,600 Net Cash prnfded(used)by operating.c bes 5.913.781 1,092,930 274:319 8.149.711 666.973 232,448
Supplies 673,459 - - 365,282 - -
OtherSenytces&Charges 4,024,418 - - 3,433,020 - - CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: - -
Taxes 1,862,729 - - 1,815,355 - -
MaintenanceEgierees - 766,902 225,973 - 639,582 159,803 Pnor Year Adjustinents (426,290) - 551,470 23,291 (]02,579)
Insurance Claims and 6penses - 2,628,228 - 2,486,648 - Trasfers in(0.) (561,244) 61,222 - (777,075) 109,086 (88,869)
Depreciation 4,502,037 438,819 223,970 4,535,918 338,132 69,375 Non-0perating Revenue 928,453 - - 756.698 - -
CapitalOWays 5,167 16,627 - 230,243 79,431 Net Cash provided from m-pital financial activities 367209 (365068) - 531.091 132,377 (791.448)
Total Operating EV..es 14,108,874 4.589,099 484,570 12,866,657 4,288,584 327,209 CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
OPERATING INCOME(LOSS) 1,663.484 636,275. 46.974 2,902,278 311,005 162.701 Acquisition of Capital Assets (3,685,501) 234,525 238,162 (8,332,556) 382,698 295,906
NON-OPERATING REVENUES(EXPENSES) Pnncipai Paid on BOMS&Loans (3,016,662) - - (2,697,663) - -
InlereslaMlnvaslmentRownue 373,099 128,396 51,925 579,419 109,516 59,701 Merest Paid on Bonds&Lpare (1,377415) - - (1,133,242) - -
CoreWC WO in Process (7,800,560) - - (4,908,721) -
ProceedsfromDebtlssuance - - 835,650 - - Proceeds of Bonds - - 835,650 - -
Fannrand Rsnlals 756,230 - - 686,140 - - PaymeMS received fin.Notes and L.- 11,100 1,029,600
nI., lExpense (1,344,208) - - (1,436,785) - - Net Cash Used by Capital&Related Financing ActiHties 05.869o381 234.525 238.162 (15.206.9321 382698 295.906
AmortizationE�erse (44,054) - - (43,430) - -
Miscell aneous NOn-Operzting Revenues 172,223 - - 70,556 - - CASH FLOWS FROM INVESTING ACTIVTIES:
,IAI Non-Operating Revenues(Elgenses) (86,710) 128,396 51,925 691,550 109.516 59,701
Intedurd Loans (75,000) (30,000) (75,000) (30,000)
I....(Loss)before CorMbugars end InveslmeMAdiHfi-rn. 384439 128.396 51925 575,390 109.516 59.701
Transfers 1.576,774 764,671 98,899 3,593,828 420,521 MA02 Net Cash Provided from Investing ActiHties 384,439 53,396 21,925 575,390 34,516 29,701
Capital Concibudons 3,015,396 234,525 238,162 6,061,445 736,145 489,688 NON CASH ACTIVITIES:
Transfers In 826,680 61,222 - 947,186 108,869 -
Tr'a-(0.) (1387924) - (51 700) (1724261) (88,869) Capital C.ntdbuti- 2.824.658 - - 6.769.301 - -
ChMge3ln Net Assets 4,030,926 1,060,418 285,361 8,898,198 1,265,535 623,219
Net Iwrease(Decrease)in Cash aM
Pnor Year Adjust.erlts 790,959 (426,290) - 551,478 24,939 (702,579) Cash Equivalents (6,378,951) 1,015,783 534,406 818,561 1,216,564 (233,393)
NETASSETS-BEGINNING 108.986,983 5.133,379 2,100,788 99,537.307 3,842,905 2,180,148 Cash and Cash Equiva1-January1 12.667.775 2.871,535 1.117403 11.849.213 1.fifi4.990 1.350,796
NETASSETS-ENDING $113.808,868 $ 5,767.507 $ 2,386,149 $108,986,983 $ 5,133,379 $ 2.100,788 Cash and Cash Egdi le December 31 S 6.288,824 $ 3,887:318 $ 1,651,809 $12.667.774 $ 2,881.554 $ 1.117,403
See accompanying notes In the basic fins.ial s.temeMS. See acco.panyfng notes to the basic financial sW[emeMS.
Washington State Auditor's Office Washington State Auditor's Office
34 35
City of Pasco,1WashinWton 2oo8 Cit1�of Pasco,"Washington 2008
Statmentof Cash Flows Statement of Fiduciary Net Assets
Pm ph-,Fund. Fiduciary Funds
Forttre Year Er.d December 31.2008 uca ry
zoos zoo] December 31,2008
Govemmernal Buafne..4wa GoeemmeMal sc.iness-type
Busim.a-type Acwr.. A=fl- Suam.aa-type Actiw6es AcIl.b.s 2008 2007
AcUwties IMemal Intmal ActlwUes Ntrnal h mat
Enterprise Funds Service Furls Service Furls Enterprise Funds SeNce Funds Sernce Funds
wat.ris.wer walens.w.r Fire Pension Agency Fire Pension Agency
Furl T..1 IDti Fund Total T..I Fund Funds Fund Funds
ASSETS
RECONCILATION OF OPERATING INCOME(LOSS)TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net O,Wng Income S 1,663,484 S 636,275 S 46.974 $ 3.087,512 $ 311.005 $ 162.701 Cash&Cash Equivalents $ 107,328 $ 285,357 $ 486,208 $ 164,503
ADJUSTMENTS TO RECONCILE OPERATING Receivables(net of allowances)
NCOME TO NET CASH PROVIDED(USED)BY Interest Receivable 15,597 - 9,204 -
OPERATNGACTfVRIES Investments,at FMV 3,113,361 3,818,323
Depreciafion 4,502,037 438,819 223,9]0 4,535,918 338,132 69,375
Cn.rg..In a...t and li.billn.a: Total Assets 3,236,286 285,357 4,313,735 164,503
(hcreaseyDecrease in Customer Receivables 33,958 (38,933) (39) (97,229) (38,933) 219
(HCreaseyD.. in Prepaid E>pense. (810) - - 7,367 - -
(nnrea.eyD.d sa In lmrenmd.a lass - - 1s,898 - - LIABILITIES
(IncreaseYDec in G..Receivable 1,1]2 - - (1,172) - -
Increa se/(Decrease)in Customer Deposits 6,2]] - - 2,832 - -
Ycreesel(Decrease)in Accc-Peyabl. (393,055) 56,064 3,414 184,482 Sa,os4 153 Due to Others - 285,357 - 164,503
ncreasel(Decreas.)in Unclei--!Property 4,094 - - 3,416 - -
m.reaae�(oepreaae>inDaemomerFanda - - - (1,337) - - Total Liabilities 285,357 164,503
Increasel(Decrease)in Deferred Remus 867 - - 887 - -
lure::./(Decrease)In Te..Payable (40,296) - 41,562 -
Increasel(Decrease)in Compensated Abseces (30,410) 705 - 8,166 705 - NET ASSETS
Iureasel(Decrease)in Latecomer Payable - - (2,108) - -
Increas:l(Decrease)In Advance Minimum Deposits 147.774 - - 382.517 -
Net Cash Prewde by Operating ACtiwtiea $ 5913.781 $ 1,092,930 $ 274,319 $ 8,149,711 _L__L6_6973 $ 232,448 Held in Trust for Pension Benefits&Other
Purposes $ 3,236,286 $ $ 4,313,735 $
See accompanying notes to the basic financial statement.
See accompanying notes to the basic financial statements.
Washington State Auditor's Office Washington State Auditor's Office
36 37
City of Pasco,-Washington 2oo8 City of Pasco,"Washington 2008
Statement of Changes in Fiduciary Net Assets NOTES TO FINANCIAL STATEMENTS
Fiduciary Funds
For the Year Ended December 31,2008
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2008 2007
Fire Pension Fire Pension The financial statements of the City of Pasco have been prepared in conformity with generally
Fund Fund accepted accounting principals (GAAP) as applied to government units. The Governmental
ADDITIONS Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
Taxes $ 41,723 $ 40,123 governmental accounting and financial reporting principles. The significant accounting policies
Investment Earnings
Interest 61,372 77,005 are described below.
Dividends 86,101 212,990
Net Increase(Decrease)in Fair Value of Investments (1,064,918) (66,493) A. REPORTING ENTITY
Loan Interest
The City of Pasco was incorporated on May 4,1891 and operates under the laws of the State
Total Additions (875,722) 263,625 of Washington applicable to a Non-Charter Code City with a council/manager form of
government. As required by the generally accepted accounting principles the financial
DEDUCTIONS statements present the City of Pasco as a primary government unit.
Pension Benefits 106,764 88,581
Medical Premiums 82,963 81,954
Administrative Expenses 12,000 11,100 The City's primary government major operations include police and fire protection including
emergency medical response, a municipal court, engineering, street construction and
Total Deductions 201,727 181,635 maintenance,planning and zoning,parks and recreation services,a public library and general
administrative functions. The City also owns and operates a cemetery, a water system, a
Change In Net Assets (1,077,449) 81,990 sewer system, a process water reuse system, a storm water management system and an
irrigation system.
Prior Year Adjustments - -
NET ASSETS-BEGINNING 4,313,735 4,231,745 B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
NET ASSETS-ENDING $ 3,236,286 $ 4,313,735 The government—wide financial statements (i.e., the Statement of Net Assets and the
Statement of Activities) report information on all of the non-fiduciary activities of the
primary government. For the most part,the effect of interfund activity has been removed
from these statements. Governmental activities,which normally are supported by taxes and
intergovernmental revenues,are reported separately from business-type activities,which rely
See accompanying notes to the basic financial statements. to a significant extent on fees and charges for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment.Our policy is to allocate indirect costs to a
specific function or segment.Program revenues include 1)charges to customers or applicants
who purchase,use,or directly benefit from goods,services,or privileges provided by a given
function or segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements for a particular function or segment. Taxes and other
items not properly included among program revenues are reported instead as general
revenues.
Washington State Auditor's Office Washington State Auditor's Office
38 39
City of Pasco,Vashington 2oo8 City of Pasco,"Washington 2oo8
Separate fund financial statements are provided for governmental funds,proprietary funds, The Pension Trust Fund is used to account for the sources and uses of funds to meet the
and fiduciary funds,even though the latter are excluded from the government-wide financial pension benefit rights of those firemen covered under the Plan prior to the creation of Law
statements. Major individual governmental funds and major individual enterprise funds are Enforcement Officers and Fire Fighters(LEOFF)pension system in 1970.
reported as separate columns in the fund financial statements. Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both government-wide and proprietary fund financial
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL statements to the extent that those standards do not conflict with or contradict guidance of the
STATEMENT PRESENTATION Governmental Accounting Standards Board. Governments also have the option of following
subsequent private sector guidance for their business-type activities and enterprise funds,
The government-wide financial statements are reported using the economic resources subject to this same limitation.
measurement focus and the accrual basis of accounting, as are the proprietary fund and The City has elected not to follow subsequent private-sector guidance.
fiduciary fund financial statements. Revenues are recorded when earned and expenses are
recorded when a liability is incurred,regardless of the timing of related cash flows. Property As a general rule the effect of the interfund activity has been eliminated for the government-
taxes are recognized as revenues in the year for which they are levied. Grants and similar wide financial statements.
items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. Amounts reported as program revenues include 1)charges to customers,2)operating grants
and contributions, and 3) capital grants and contributions, including special assessments.
Governmental fund financial statements are reported using the current financial resources Internally dedicated resources are reported as general revenues rather than as program
measurement focus and the modified accrual basis of accounting. Revenues are recognized revenues. General revenues include all taxes.
as soon as they are both measurable and available. Revenues are considered to be available
when they are collectible within the current period or soon enough thereafter to pay liabilities Proprietary funds distinguish operating revenues and expenses from non-operating items.
of the current period. For this purpose,the City considers revenues to be available if they are Operating revenues and expenses generally result from providing services and producing and
collected within 60 days of the end of the current fiscal period. Expenditures generally are delivering goods in connection with a proprietary fund's principal ongoing operations. The
recorded when a liability is incurred,as under accrual accounting. However, debt service principal operating revenues of the Water/Sewer Fund are charges to customers.The major
expenditures, as well as expenditures related to compensated absences and claim and services provided by the proprietary fund are water, sewer, storm drain, irrigation and
judgments,are recorded only when payment is due. industrial waste water processing. Operating expenses for enterprise funds and internal
service funds include the cost of sales and services,administrative expenses,and depreciation
Property taxes,licenses,and interest associated within the current period are all considered to on capital assets. All revenues and expenses not meeting this definition are reported as non-
be susceptible to accrual and so have been recognized as revenues of the current fiscal period. operating revenues and expenses.
Only the portion of special assessment receivable due within the current fiscal period is When both restricted and unrestricted resources are available for use,it is the City's policy to
considered to be susceptible to accrual as revenue of the current period. All other revenue use restricted resources first,then unrestricted resources as needed.
items are considered to be measurable and available only when cash is received by the City.
D. BUDGETARY INFORMATION
The City of Pasco reports the following major governmental fund:
1. Scone of Budget
The General Fund is the City's operating fund. It accounts for all financial resources of the
general government,except those required to be accounted for in another fund. Annual appropriated budgets are adopted for the general and special revenue funds and
The City reports the following major proprietary fund: for all proprietary funds on the modified accrual basis of accounting. Budgets for debt
service and capital project funds are adopted at the level of the individual debt issue or
Water/Sewer fund - includes water, sewer,process water reuse, stormwater and irrigation project and for fiscal periods that correspond to the lives of debt issues or projects.
operations.
Annual appropriated budgets are adopted at the level of the fund,except in the general
Additionally,the City reports the following fund types: fund,where expenditures may not exceed appropriations at the department level and the
budgets constitute the legal authority for expenditures at that level.
Internal Service Funds account for equipment replacement and operation,central stores,and
medical/dental insurance services provided to other departments of the City on a cost Appropriations for general and special revenue funds lapse at year-end, except for
reimbursement basis. appropriations for capital outlays,which are carried forward from year to year until fully
expended or the purpose of the appropriations has been accomplished or abandoned.
Washington State Auditor's Office Washington State Auditor's Office
40 41
City of Pasco,"Wasfungton 2oo8 City of Pasco,"Washington 2oo8
Encumbrances accounting is employed in governmental funds. Encumbrances (e.g., 5. Deficit Fund Equity
purchase orders, contracts)outstanding at year end are reported as reservation of fund
balances and do not constitute expenditures or liabilities because the commitments will be The following funds report a deficit fund equity position at December 31,2008.
re-appropriated and honored during the subsequent year.
DEFICIT EQUITY BALANCE
2.Procedures for Adopting the Original Budget
Cemetery Fund $ (23,345)
The City's budget procedures are mandated by RCW 35A.33. The steps in the budget LID Construction Fund (1,842,631)
process are as follows:
The following steps have been taken to eliminate the above deficits:
1. Prior to the first Tuesday in November,the City Manager submits a proposed budget
to the Council. This budget is based on priorities established by the Council and The Cemetery Fund continues to try and increase sales in excess of costs to assist in the
estimates provided by departments during the preceding months,and balanced with elimination of its deficit. The fund was able to reduce the deficit in 2008 as a result of
revenue estimates made by the Finance Manager. operating transfers and sales revenues.
2. The Council conducts public hearings on the proposed budget in November and/or The Trade,Recreation and Agricultural Center continue to operate at a loss. The City and
December. Franklin County share in the losses. The County has oversight authority. Operating transfers
will be made to eliminate the deficit.
3. The Council makes its adjustments to the proposed budget and adopts by ordinance a
final balanced budget no later than December 31. The LID Construction Fund will receive a funds transfer in 2009 for ULID 143 when bonds
are sold to finance this project.
4. Within 30 days of adoption,the final budget is available to the public.
E. ASSETS,LIABILITIES AND EQUITIES
3. Amending the Budget
1. Cash and Equivalents
The budget, as adopted, constitutes the legal authority for expenditures. The City's
budget is adopted at the fund level, so that expenditures may not legally exceed It is the City's policy to invest all temporary cash surpluses. At December 31,2008,the
appropriations at that level of detail. The City Manager is authorized to transfer budgeted treasurer was holding$6,953,922 in short-term residual investments of surplus cash and
amounts between departments within any fund;however,any revisions that alter the total $28,897,499 in investments longer than one year. Investment amounts maturing within
expenditures of a fund,or that affect the number of authorized employee positions,salary one year are classified on the balance sheet as Cash and Cash Equivalents in various
ranges,hours,or other conditions of employment must be approved by the City Council. funds. Investments with maturity beyond one year are classified as Investments. The
interest earnings on these investments are prorated to the various funds based on cash
When the City Council determines that it is in the best interest of the City to increase or balances.
decrease the appropriation for a particular fund,it may do so by ordinance approved by
one more than the majority after holding one public hearing. The amounts reported as cash and cash equivalents also include compensating balances
maintained with certain banks in lieu of payment for services rendered. The average
The budget amounts shown in the financial statements are the final authorized amounts as compensating balances maintained during 2008 were approximately$2 million.
revised during the year.
For purposes of the Statement of Cash Flows, the City considers all highly liquid
The financial statements contain the original and final budget information. The original investments (including restricted assets) with maturity of three months or less when
budget is the first complete appropriated budget. The final budget is the original budget purchased to be cash equivalents.
adjusted by all reserves, transfers, allocations, supplemental appropriations, and other
legally authorized changes applicable for the fiscal year. 2. Investments-See Note 4.
4. Excess of Expenditures Over Appropriations
The Senior Citizens Center Fund exceeded budgeted appropriations by$611.
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City of Pasco,Vashington 2oo8 City of Pasco,"Washington 2oo8
3. Receivables The restricted assets of the enterprise fund as of December 31,2008 are composed of the
following:
Taxes receivable consists of property, sales, gambling,utility taxes and related interest
and penalties. (See Note 16) Accrued interest receivable consists of amounts earned on Cash and Investments-Debt Service $730,043
investments,notes,and contracts at the end of the year. Cash Deposits 93,510
Special assessments are recorded when levied. Special assessments receivable consist of
current and delinquent assessments. Deferred assessments on the fund financial Total Restricted Assets 823 553
statements consist of unbilled special assessments that are liens against the property
benefited. As of December 31, 2008, $92,470 in special assessments receivable was
delinquent. Of this delinquent amount,$53,806 or 58.2%is on property that is owned by 7. Capital Assets and Depreciation-See Note 6.
the City and will be recovered as part of the sale price of the property.
Capital assets,which include property,plant,and equipment and infrastructure assets,are
Customer accounts receivable consists of amounts owed from private individuals or reported in the applicable governmental or business-type columns in the government-
organizations for goods and services including amounts owed for which billings have not wide financial statements. Capital assets are defined by the City as assets with an initial,
been prepared. Notes and contracts receivable consists of amounts owed on open individual cost of more than$5,000 and an estimated useful life in excess of 3 years.
accounts from private individuals or organizations for goods and services rendered. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date
4. Amounts Due to and from Other Funds and Governments, Interfund Loans and of donation.
Advances Receivable
The cost of normal maintenance and repairs that do not add to the value of the asset or
Activity between funds that are representative of lending/borrowing arrangements materially expend assets lives are not capitalized.
outstanding at the end of the fiscal year are referred to either "interfund loans
receivable/payable"or"advances to/from other funds." All other outstanding balances Major outlays for capital assets and improvements are reported as Construction Work in
between funds are reported as "due to/from other funds." Any residual balances Progress as projects are constructed.Interest incurred during the construction phase of the
outstanding between funds are reported in the government-wide financial statements as capital assets of business-type activities is included as part of the capitalized value of the
"internal balances." A separate schedule of interfund loans receivable and payable is assets constructed. Capital Assets and improvements are capitalized once the project is
furnished in Note 15. completed. There were no capitalized interest costs incurred by the City during fiscal
year 2008.
Advances between funds,as reported in the fund financial statements,are offset by a fund
balance reserve account in applicable governmental funds to indicate that they are not Property, plant and equipment of the primary government are depreciated using the
available for appropriation and are not expendable available financial resources. straight-line method over the following estimated useful lives:
5. Inventories ASSETS YEARS
Buildings 40
Inventories in governmental funds consist of expendable supplies held for consumption. Improvements 20
The cost is recorded as expenditures when individual inventory items are purchased. The Machinery&Equipment 10
reserve for inventory is equal to the ending amount of inventory to indicate that a portion
of the fund balance is not available for future expenditures. A comparison to market
value is not considered necessary. 8. Other Property and Investments—See Note 4.
Inventories in proprietary funds are valued using a floating average of costs for each item. 9. Compensated Absences
6. Restricted Assets and Liabilities The City accrues accumulated unpaid vacation and sick leave and associated employee
related costs when earned(or estimated to be earned)by the employee. All vacation and
These accounts contain resources for construction and debt service in enterprise funds. sick pay is accrued when incurred in the government-wide,proprietary, and fiduciary
The current portion of related liabilities is shown as Pavables from Restricted Assets. fund financial statements.
Specific debt service requirements are described in Note 10.
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City of Pasco,-Washington 2oo8 C%ty of Pasco,"WashhWton 2oo8
Sick leave may be accumulated up to a maximum of 960 hours for all employees except B. Explanation of Certain Differences Between the Governmental Funds
firefighters. Firefighter sick leave may be accumulated up to a maximum of 840 hours. Statement of Revenues,Expenditures,and Changes in Fund Balances
Sick leave is payable at a rate of 25% up to a maximum of 720 payout hours upon and the Government-Wide Statement of Activities
resignation,retirement or death.
The governmental funds' statement of revenues, expenditures, and changes in fund
Vacation leave may be accumulated up to a maximum of one and a half time the balances includes a reconciliation between net changes in fund balances — total
employee's annual vacation accrual rate and is payable upon resignation,retirement or governmental funds and changes in net assets of governmental activities as reported in the
death. government-wide statement of activities. This information can be found on the
Reconciliation of the Statement of Revenues,Expenditures and Changes in Fund Balance
10. Other Accrued Liabilities of Governmental Funds to the Statement of Activities.
These accounts consist of accrued wages and accrued employee benefits. NOTE 3. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY
11. Long-Term Debt—See Note 10. There have been no material violations of finance-related legal or contractual provisions.
12. Deferred Revenue NOTE 4. DEPOSITS AND INVESTMENTS
This account includes amounts recognized as receivables but not revenues in A. DEPOSITS
governmental funds because the revenue recognition criterion has not been met.
The City's deposits and certificates of deposit are covered by federal depository insurance
13. Fund Reserves and Designations (FDIC)or by collateral held in a multiple financial institution collateral pool administered by
the Washington Public Deposit Protection Commision(PDPC). The PDPC is a statutory
In the fund financial statements,governmental funds report reservations of fund balance authority established under Chapter 39.58 of the Revised Code of Washington.
for amounts that are not available for appropriation or are legally restricted by outside
parties for use for a specific purpose. Designations of fund balance represent tentative B. INVESTMENTS
management plans that are subject to change.
As required by state law, all investments of the City's funds (except as noted below) are
14. Reclassification of Prior Year in the Statement of Activities obligations of the U. S. Government, U. S. agency issues, obligations of the State of
Washington, general obligations of Washington State municipalities,the State Treasurer's
Comparative total data for the prior year have been presented in order to provide an Investment Pool,or certificates of deposits with Washington State banks and savings and
understanding of the changes in financial position and operations. Certain amounts loan institutions. Investments of(pension/nonexpendable)trust funds are not subject to the
presented in prior year data have been reclassified in order to be consistent with current preceding limitations. All temporary investments are stated at purchase price.
year's presentation.
Investments are shown on entity-wide Statement of Net Assets at fair market value.
NOTE 2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL Investments are reported within Cash&Cash Equivalents or Investments of Governmental
STATEMENTS Activities and within Cash&Cash Equivalents or Investments of Business-type Activities.
A. Explanation of Certain Differences Between the Governmental Funds The fair market value of investments is based upon quoted market prices as of December 31,
Balance Sheet and the Government-Wide Statement of Assets 2008.
The governmental funds'balance sheet includes a reconciliation between fund balance—
total governmental funds and net assets — governmental activities as reported in the
government-wide statement of net assets.This information can be found on the Balance
Sheet for Government Funds.
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City of Pasco,Washington 2008 City of Pasco,"Washington 2008
As of December 31,2008,the City had the following investments:
Franklin County,Washington
2008 Property Tax Calendar
FAIR MARKET
MATURITIES VALUE City of Pasco
INVESTMENTS January 1.........Taxes levied and become an enforceable lien against properties.
Federal Agency Securities 28,050,266 28,481,183 February 15......Tax bills are mailed.
Mutual Funds 1,854,512 1,929,598
State Treasurer's Investment Pool 3,334,062 3,334,062 April 30..........First of two equal installment payments is due.
Savings Accounts 2,106,578 2,106,578
May 31...........Assessed value of property established for next year's levy at
Total Investments 35.345.418 35.851.420 100 percent of market value.
October 31.......Second installment is due.
Custodial credit risk is the risk that in event of a failure of the counterparty to an investment
transaction the city would not be able to recover the value of the investment or collateral
securities. Of the city's total position of$35,851,420 in 2008, $1,500,420 is exposed to Property taxes are recorded as a receivable and revenue when levied. Property taxes collected in
custodial credit risk because the investments are held by the city's brokerage firm,which is advance of the fiscal year to which they apply are recorded as deferred revenue and recognized as
also the counterparty in those particular securities. revenue of the period to which they apply. No allowance for uncollected taxes is established
because delinquent taxes are considered fully collectible. Prior year tax levies were recorded
NOTE 5. PROPERTY TAXES using the same principal,and delinquent taxes are evaluated annually.
The County Treasurer acts as an agent to collect property taxes levied within Franklin County for The City may levy up to $3.60 per $1,000 of assessed valuation for general governmental
all taxing authorities. Taxes are levied annually on January 1,on property value listed as of the services,subject to two limitations:
prior May 31. Assessed values are established by the County Assessor at 100%of fair market
value. At least once every six years by law,the Assessor is required to physically inspect and Washington State Constitution and Washington State law,RCW 84.5 5.010 limits the rate.
value all taxable real property in the County. Currently,the Assessor uses a four year review
cycle. The City's general levy for 2008 was $2.2205 per $1,000 on an assessed valuation of
Taxes are due in two equal installments on April 30 and October 31. The County Treasurer $2,483,166,932 for a total regular levy of$5,513,967.
remits collections weekly to the appropriate district.
The following Property Tax Calendar for Franklin County, Washington provides the relevant
property tax data for the 2008 tax year.
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City of Pasco,-Washington 2oo8 City of Pasco."Washington 2oo8
NOTE 6. CAPITAL ASSETS
Beginning Ending
A. Capital Assets Balance Balance
Business Activities 01/01108 Increases Decreases 12/31/2008
Capital assets activity for the year ended December 31,2008 was as follows: Capital assets,not being depreciated
Land $ 317,786 $ - $ - $ 317,786
Beginning Ending Construction in progress 2,754,080 459,050 3,213,130
Balance Balance Total capital assets,not being depreciated 3,071,866 459,050 3,530,916
Governmental Activities 01/01/08 Increases Decreases 12/31/2008
Capital assets being depreciated
Capital assets,not being depreciated Source of Supply 326,976 - - 326,976
Land $ 5,710,447 $ 146,552 $ 1,833 $ 5,855,166 Pumping Plants 8,593,671 - - 8,593,671
Construction in progress 3,347,635 4,564,419 6,925,485 986,569 Treatment Plants 37,983,487 566,940 - 38,550,427
Total capital assets,not being depreciated 9,058,082 4,710,971 6,927,318 6,841,735 Transmission,Distribution&Collection Lines 83,495,596 10,045,704 44,053 93,497,247
General Plant Assets 3,603,575 5,332 - 3,608,907
Capital assets being depreciated West Pasco Water System 1,328,485 - - 1,328,485
Buildings 32,264,968 446,070 113,076 32,597,962 Plant Acquisition 700,961 - - 700,961
Improvements other than buildings 8,193,230 1,034,200 138,411 9,089,019 Process Water Reuse Plant 15,203,332 59,591 - 15,262,923
Machinery&Equipment 2,291,657 313,500 128,820 2,476,337 Storm water 3,207,481 364,628 - 3,572,109
Infrastructure 69,244,519 17,548,043 - 86,792,562 Irrigation 18,324,401 200,422 - 18,524,823
Equipment rental 4,788,732 476,708 - 5,265,440 Equipment Rental 1,866,638 238,161 2,104,799
Equipment-Animal control 70,418 21,632 - 92,050 Total capital assets being depreciated 174,634,603 11,480,778 44,053 186,071,328
Total capital assets being depreciated 116,853,524 19,840,153 380,307 136,313,370
Less accumulated depreciation
Less accumulated depreciation
Source of Supply 229,799 6,540 - 236,339
Buildings 8,182,655 922,677 - 9,105,332 Pumping Plants 3,461,285 359,220 - 3,820,505
Improvements other than buildings 1,775,824 567,979 - 2,343,803 Treatment Plants 14,947,731 1,544,335 208,864 16,283,202
Machinery&Equipment 465,911 727,301 - 1,193,212 Transmission,Distribution&Collection Lines 15,360,386 1,636,739 423,090 16,574,035
Infrastructure 25,292,097 4,319,774 911,401 28,700,470 General Plant Assets 1,781,829 177,359 21,286 1,937,902
Equipment rental 2,587,387 424,180 - 3,011,567 West Pasco Water System 966,759 34,918 33,251 968,426
Equipment-Animal control 25,087 14,639 - 39,726 Plant Acquisition 373,845 23,365 - 397,210
Total accumulated depreciation 38,328,961 6,976,550 911,401 44,394,110 Process Water Reuse Plant 2,994,174 307,370 9,594 3,291,950
Total capital assets being depreciated,net 78,524,563 12,863,603 (531,094) 91,919,260 Storm water 198,034 64,150 54,011 208,173
Irrigation 1,126,202 371,407 36,509 1,461,100
Governmental activities capital assets,net $ 87,582,645 $ 17,574,574 $ 6,396,224 $ 98,760,995 Equipment Rental 879,546 223,970 - 1,103,516 Total accumulated depreciation 42,319,590 4,749,373 786,605 46,282,358
Total capital assets being depreciated,net 132,315,013 6,731,405 (742,552) 139,788,970
Depreciation expense was charged to functions/programs of the primary government as
follows: Business activities capital assets,net $135,386,879 $ 7,190,455 $ (742,552) $143,319,886
Governmental Activities
General Government $ 443,974 NOTE 7. PENSION PLANS
Security of Persons&Property 125,123
Physical Environment 50,159 Substantially all City of Pasco full-time employees and qualifying part-time employees
Transportation 5,280,805 participate in one of the following statewide retirement systems administered by the Washington
Economic Environment 349,325 State Department of Retirement Systems,under cost-sharing,multiple-employer public employee
Culture&Recreation 721,314
Judicial 5,850 p p defined benefit and defined contribution retirement plans. The Department of Retirement
Total Depreciation-Governmental Activities $ 6,976,550 Systems(DRS),a department within the primary government of the State of Washington,issues
a publicly available comprehensive annual financial report (CAFR) that includes financial
statements and required supplementary information for each plan. The DRS CAFR may be
obtained from the Department of Retirement Systems,Communications Unit,P.O.Box 48380,
Olympia,WA 98504-8380. The following disclosures are made pursuant to GASB Statement
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City of Pasco."Wasfungton 2oo8 City of Pasco."WashhVton 2oo8
27,Accounting for Pensions by State and Local Government Employers and No. 50,Pension PERS Plan 2 members are vested after the completion of five years of eligible service.
Disclosures,an Amendment of GASB Statements No.25 and No.27. Plan 2 members may retire at the age of 65 with five years of service with an allowance
of two percent of the AFC per year of service. (The AFC is based on the greatest
A. Public Employees'Retirement System(PERS)Plans 1,2 and 3 compensation during any eligible consecutive 60 month period.) Plan 2 members who
retire prior to age 65 receive reduced benefits.If retirement is at age 55 or older with at
I. Plan Description least 30 years of service,a three percent per year reduction applies;otherwise an actuarial
reduction will apply. The benefit is also actuarially reduced to reflect the choice of a
PERS is a cost sharing multiple-employer retirement system comprised of three separate survivor option. There is no cap on years of service credit;and a cost-of-living allowance
plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a is granted(based on the Consumer Price Index),capped at three percent annually.
defined benefit plan with a defined contribution component.
Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit
Membership in the system includes:elected officials;state employees;employees of the component,and member contributions finance a defined contribution component. The
Supreme,Appeals,and Superior courts(other than judges in a judicial retirement system); defined benefit portion provides a benefit calculated at one percent of the AFC per year of
employees of legislative committees; community and technical colleges, college and service. (The AFC is based on the greatest compensation during any eligible consecutive
university employees(not in national higher education retirement programs);judges of 60-month period.) Effective July 7, 2006, Plan 3 members are vested in the defined
districts and municipal courts;and employees of local governments. benefit portion of their plan after ten years of service;or after five years of service, if
twelve months of that service are earned after age 44; or after five service credit years
PERS participants who joined the system by September 30, 1977,are Plan 1 members. earned in PERS Plan 2 prior to June 1,2003. Plan 3 members are immediately vested in
Those who joined on or after October 1, 1977 and by either,February 28,2002 for state the defined contribution portion of their plan. Vested Plan 3 members are eligible to
and higher education employees,or August 31,2002 for local government employees,are retire with full benefits at age of 65,or they may retire at age 55 with 10 years of service.
Plan 2 members unless they exercise an option to transfer their membership to Plan 3. Plan 3 members who retire prior to the age of 65 receive reduced benefits. If retirement is
PERS participants joining the system on or after March 1, 2002 for state and higher at age 55 or older with at least 30 years of service,a 3 percent per year reduction applies;
education employees, or September 1, 2002 for local government employees have the otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to
irrivocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The reflect the choice of a survivor option. There is no cap on years of service credit,and
option must be exercised within 90 days of employment. An employee is reported in Plan Plan 3 provides the same cost-of-living allowance as Plan 2.
2 until a choice is made. Employees who fail to choose within 90 days default to PERS
Plan 3. Notwithstanding, PERS Plan 2 and Plan 3 members may opt out of plan The defined contribution portion can be distributed in accordance with an option selected
membership if terminally ill,with less than five years to live. by the member, either as a lump sum or pursuant to other options authorized by the
Employee Retirement Benefits Board.
PERS defined benefit retirement benefits are financed from a combination of investment
earnings and employee and employer contributions. PERS retirement benefit provisions Judicial Benefit Multiplier
are established in state statute and may be amended only by the State Legislature. Beginning January 1,2007 through December 31,2007,judicial members of PERS were
given the choice to participate in the Judicial Benefit Multiplier Program(JBM). Justices
PERS Plan 1 members are vested after the completion of five years of eligible service. and judges in PERS Plan 1 and 2 were able to make a one-time irrevocable election to pay
Plan 1 members are eligible for retirement after 30 years of service,or at the age of 60 increased contributions that would fund a retirement benefit with a 3.5%multiplier. The
with 5 years of service,or at the age of 55 with 25 years of service. The annual benefit is benefit would be capped at 75%of AFC. Judges in PERS Plan 3 could elect a 1.6%of
two percent of the average final compensation(AFC)per year of service,capped at 60 pay per year of service benefit,capped at 37.5%of average compensation.
percent. (The AFC is based on the greatest compensation during any 24 eligible
consecutive compensation months.)Plan 1 members who retire from inactive status prior Members who chose to participate in JBM would: accrue service credit at the higher
to the age of 65 may receive actuarially reduced benefits. The benefit is actuarially multiplier beginning with the date of their election,be subject to the benefit cap of 75%of
reduced to reflect the choice of a survivor option. A cost-of-living allowance(COLA)is AFC, pay higher contributions, stop contributing to the Judicial Retirement Account
granted at age 66 based upon years of service times the COLA amount,increased by three (JRA), and be given the option to increase the multiplier on past judicial service.
percent annually. Plan 1 members may also elect to receive an optional COLA amount Members who did not choose to participate would:continue to accrue service credit at the
that provides an automatic annual adjustment based on the Consumer Price Index. The regular multiplier;continue to participate in the IRA,if applicable;never be a participant
adjustment is capped at three percent annually. To offset the cost of this annual in the JBM Program;and continue to pay contributions at the regular PERS rate.
adjustment,the benefit is reduced.
Newly elected or appointed justices and judges who chose to become PERS members on
or after January 1,2007,or who had not previously opted into PERS membership,were
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City of Pasco,-Washington 2oo8 C%tt�of Pasco,"WashhWton 2008
required to participate in the JBM Program. Members required into the JBM program Members not participating in JBM:
would: return to prior PERS Plan if membership had previously been established; be
mandated into Plan 2 and not have a Plan 3 transfer choice, if a new PERS member;
accrue the higher multiplier for all judicial service;not contribute to JRA;and not have PERS Plan 1 PERS Plan 2 PERS Plan 3
the option to increase the multiplier for past judicial service.
Employer* 8.31%** 8.31%** 8.31%***
There are 1,190 participating employers in PERS. Membership in PERS consisted of the Employee 6.00%**** 5.45%**** *****
latest actuarial valuation data for the plans of June 30,2007:
*The employer rates do not include the employer administrative expense fee currently set at 0.16%.
Retirees and Beneficiaries Receiving Benefits 71,244 **The employer rate for state elected officials is 12.39%for Plan 1 and 8.31%for Plan 2 and 3.
Terminated Plan Members Entitled To but not yet Receiving Benefits 26,583 R**Plan 3 defined benefit portion only.
Active Plan Members Vested 105,447 **The employee rate for state elected officials is 7.50%for Plan 1 and 5.45%for Plan 2.
*****Variable from 5.0%minimum to 15.0%maximum based on rate selected by the PERS 3 member.
Active Plan Members Non-vested 52,575
Total 255,849
Members participating in JBM:
2. Funding Policy
PERS Plan 1 PERS Plan 2 PERS Plan 3
Each biennium,the State Pension Funding Council adopts Plan 1 employer contribution Employer-State Agency* 10.81% 10.81% 10.81%**
rates,Plan 2 employer and employee contribution rates,and Plan 3 employer contribution Employer-Local Govt.* 8.31% 8.31% 8.31%**
rates. Employee contribution rates for Plan 1 are established by statute at 6%for state Employee-State Agency 9.76% 11.13% 7.50%***
agencies and local government unit employees,and at 7.5%for state government elected Employee-Local Govt. 12.26% 13.63% 7.50%***
officials. The employer and employee contribution rates for Plan 2 and the Employer
contribution rate for Plan 3 are developed by the Office of the State Actuary to continue
to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required
to contribute at the level established b the Legislature.Under PERS Plan 3,employer *The employer rates do not include the employer administrative expense fee currently set at 0.16%.
y g **Plan 3 defined benefit portion only.
contributions finance the defined benefit portion of the plan,and member contributions ***Minimum rate.
finance the defined contribution portion. The Employee Retirement Benefits Board sets
PERS Plan 3 employee contribution rates. Six rate options are available ranging from 5% Both the City and the employees made the required contribution. The City's required
to 15%;two of the options are graduated rates dependent on the employee's age. As a contributions for the years ended December 31,were as follows:
result of the implementation of the Judicial Benefit Multiplier Program in January 2007,a
second tier of employer and employee rates was developed to fund,along with investment
earnings,the increased retirement benefits of those justices and judges that participate in PERS Plan 1 PERS Plan 2 PERS Plan 3
the program. The methods used to determine the contribution requirements are
established under state statute in accordance with chapters 41.40 and 41.45 RCW. 2008 $40,277 $482,824 $84,170
2007 33,638 356,299 62,010
The required contribution rates expressed as a percentage of current-year covered payroll, 2006 19,131 180,984 35,058
as of December 31,2008,were as follows:
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City of Pasco,-WashinWton 2oo8 City of Pasco."WashhVton 2008
B. Law Enforcement Officers and Fire Fighters(LEOFF)Plans 1 and 2 age of 53 receive reduced benefits.Benefits are actuarially reduced for each year that the
benefit commences prior to age 53 and to reflect the choice of a survivor option. If the
1. Plan Description member has at least 20 years of service and is age 50,the reduction is three percent for each
year prior to age 53. There is no cap on years of service credit; and a cost-of-living
LEOFF is a cost sharing multiple employer retirement system comprised of two separate allowance is granted(based on the Consumer Price Index)capped at three percent annually.
defined benefit plans. LEOFF participants who joined the system by September 30,1977
are Plan 1 members. Those who joined on or after October 1,1977 are Plan 2 members. There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the
Membership in the system includes all full-time, fully compensated, local law following as of the latest actuarial valuation date for the plans of June 30,2007:
enforcement officers, firefighters, and as of July 24, 2005, those emergency medical
technicians who were given the option and chose LEOFF Plan 2 membership. LEOFF
membership is comprised primarily of non-state employees,with Department of Fish and Retirees and Beneficiaries Receiving Benefits 9,085
Wildlife enforcement officers,who were first included prospectively effective July 27, Terminated Plan Members Entitled to but not yet Receiving Benefits 633
2003,being an exception. Active Plan Members Vested 12,904
Active Plan Members Non-vested 3,708
Effective July 1,2003,the LEOFF Plan 2 Retirement Board was established by Initiative Total 26,330
790 to provide governance of LEOFF Plan 2. The Board's duties include adopting
contribution rates and recommending policy changes to the Legislature for the LEOFF
Plan 2 retirement plan.
LEOFF defined benefits are financed from a combination of investment earnings, 2. Funding Policy
employee and employer contributions,and a special funding situation in which the state Starting on July 1,2000,LEOFF Plan 1 employers and employees contribute zero percent
pays the remainder through state legislative appropriations. LEOFF retirement benefit as long as the plan remains fully funded. Employer and employee contribution rates are
provisions are established in state statute and may be amended only by the State developed by the Office of the State Actuary to fully fund the plan. LEOFF Plan 2
Legislature. employers and employees are required to pay at the level adopted by the LEOFF Plan 2
LEOFF Plan 1 members are vested after completion of five years of eligible service. Plan Retirement Board. All employers are required to contribute at the level required by state
I members are eligible for retirement with five years of service at age 50. The benefit per law. The Legislature,by means of a special funding arrangement,appropriated money
year of service calculated as a percent of final average salary(FAS)is as follows: from the state General Fund to supplement the current service liability and fund the prior
service costs of LEOFF Plan 2 in accordance with the requirements of the Pension
Funding Council and the LEOFF Plan 2 Retirement Board. However,this special funding
situation is not mandated by the state constitution and this funding requirement could be
Term Of Service Percent Of Final Average returned to the employers by a change of statute.
20 or more years 2.0% The required contribution rates expressed as a percentage of current-year covered payroll,
10 but less than 20 years 1.5% as of December 31,2008 were as follows:
5 but less that 10 years 1.0%
LEOFF Plan 1 LEOFF Plan 2
The FAS is the basic monthly salary received at the time of retirement,provided a member Employer* 0.16% 5.46%**
has held the same position or rank for 12 months preceding the date of retirement. Employee 0.00% 8.83%
Otherwise,it is the average of the highest consecutive 24 month's salary within the last 10 State N/A 3.53%
years of service. A cost-of-living allowance is granted(based on the Consumer Price Index).
LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan *The employer rates includes the employer administrative expense fee currently set at 0.16%.
2 members may retire at the age of 50 with 20 years of service,or at the age of 53 with five **The employer rate for ports and universities is 8.99%.
years of service,with an allowance of two percent of the FAS per year of service. The final
average salary is based on the highest consecutive 60 months. Plan 2 who retire prior to the
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City of Pasco,-Washington 2oo8 C%t�of Pasco,"WashhWton 2008
Both the City and the employees made the required contributions. The City's required The following 10-year table of historical trend information shows the system's progress in
contributions for the year ended December 31 were as follows: accumulating sufficient assets to pay benefits when due:
Unfunded Unfunded Pension
LEOFF Plan 1 LEOFF Plan 2 Net Assets Pension Pension Annual Benefit as a
Fiscal AvaiIablefor Benefit Percent Benefit Covered %of Covered
2008 $812 $444,557 Year Benefit* Obligation** Funded Obligation Payroll Payroll
2007 765 404,634 2008 $ 3,214,175 $ 3,035,160 105.90% $ (179,015) $ 78,486 -228.09%
2006 815 351,698 2007 4,316,568 2,963,247 145.67% (1,353,321) 80,074 -1690.09%
2006 1 4,231,745 2,890,973 146.38% (1,340,772) 92,979 -1442.02%
2005 3,946,652 2,820,461 139.93% (1,126,191) 70,376 -1600.25%
2004 3,913,393 2,792,414 140.14% (1,120,979) 69,939 -1602.80%
The City does not have any employees enrolled in the Public Safety Employee's Retirement 2003 3,774,259 2,724,306 138.54% (1,049,953) 72,770 -1442.84%
System(PSERS)Plan 2. 2002 3,384,775 2,657,860 127.35% (726,915) 88,284 -823.38%
C. Firemen's Pension 2001 3,668,413 2,593,034 141.47% (1,075,379) 69,173 -1554.62%
2000 3,663,819 2,529,789 144.83% (1,134,030) 63,364 -1789.71%
The City administers a closed, small single-employer defined benefit plan called the 1999 1 3,467,0251 2,468,0871 140.47% (998,938) 61,989 -1611.48%
Firemen's Pension Fund. The system is shown as a trust fund in the financial reports of the
City. * Market Value
** Actuarial study completed in2005.
As of December 31,2008,there were a total of 12 individuals covered by this system of
which one is currently still employed and 11 were drawing benefits.
The Fire Pension Fund has no Schedule of Contributions for 2008. The liabilities for future fund
The most recent actuarial study of the system was performed by EFI Actuaries to determine benefits are less than the market value of fund assets; consequently,no City contributions are
the funding requirements as of September 30,2005. As of this date,the market value(based required.
on market quotes)of the plan assets was$3,920,949 and the present value of future benefits
was$2,820,461.The actuarial computation was performed using the entry age normal cost
method. Under this method the projected benefits are allocated on a level basis as a Schedule of Funding Progress
percentage of salary over the earnings of each individual between entry age and assumed exit
age. The actuarial accrued liability is amortized as a level dollar amount over a closed 30- Unfunded
year period beginning September 30,2005. The actuarial assumptions used in this valuation
are as follows: Investment Return—6.25%per year net of investment and administrative Actuarial Actuarial Pension
Valuation Value of Value of expenses;Consumer Price Index Increases—3%per year;Salary Increases—5%per year in Benefit Percentage
each member's rank at retirement;Medical Cost Inflation—5.75%per year;Pre-retirement Date Assets Liabilities Obligation Funded
decrements—No termination, death disablement,or mortality rates are assumed for active 09/30/2005 $3,920,949 $2,820,461 ($1,100,488) 139.02%
employees;Retirement—Active employees are assumed to retire at the later of age 50 or 25 087 468
025 $2
467, , ,
12/31/1999 $3, °
years of service;Post retirement mortality—RP-2000 male and female mortality rates,and ($ 998,938) 140.47%
Family Composition—all members are assumed to be married with no children eligible for 12/31/1984 $ 869,788 $1,501,537 $ 238,724 57.93%
benefits. Wives are assumed to be three years younger than their husbands. Surviving
spouses are assumed not to remarry.
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The following is the three-year historical data of Revenues and Expenditures.
In-house services include risk management consultation,loss control field services,claims and
litigation administration, and loss analyses. WCIA contracts for the claims investigation
Revenues Expenditures consultants for personnel issues and land use problems, insurance brokerage and lobbyist
Interest Fire Ins. Total services.
Income Prem.Tax Revenues Pension Costs
WCIA is fully funded by its members,who make annual assessments on a prospectively rated
2008 $147,473 $41,723 $189,196 $201,727 basis, as determined by an outside, independent actuary. The assessment covers loss, loss
2007 292,828 40,123 332,951 181,635 adjustment,and administrative expenses. As outlined in the interlocal,WCIA retains the right to
2006 200,080 34,834 234,914 227,162 additionally assess the membership for any funding shortfall.
An investment committee,using investment brokers,produces additional revenue by investment
of WCIA's assets in financial instruments which comply with all State guidelines. These
NOTE 8. RISK MANAGEMENT revenues directly offset portions of the membership's assessment.
The City maintains insurance against most normal hazards except for unemployment insurance A Board of Directors governs WCIA,which is comprised of one designated representative from
and automobile collision where it has elected to become self-insured. each member. The Board elects an Executive Committee and appoints a Treasurer to provide
general policy direction for the organization. The WCIA Executive Director reports to the
For unemployment claims,the City is on a 100%reimbursable program with the State where the Executive Committee and is responsible for conducting the day-to-day operations of WCIA.
City pays all unemployment claims charged against it. Fire and employee fidelity insurance is purchased through commercial insurance brokers.
The City of Pasco is a member of the Washington Cities hfsurance Authority(WCIA). The City is self-insured for medical and dental coverage for its employees. A third party
Utilizing Chapter 48.62 RCW(self-insurance regulations)and Chapter 39.34 RCW(Interlocal administrator, Benefits Management, Inc. processes all claims for reimbursement. The third
Cooperation Act),nine cities originally formed WCIA on January 1, 1981. WCIA was created party administrator provides utilization management services and requires pre-authorization for
for the purpose of providing a pooling mechanism for jointly purchasing insurance,jointly elf- all non-emergency hospital confinements. It is the City's policy to maintain at least four months
P P g p g I y P g total of average monthly claims in cash reserves. To limit the exposure for large claims, the City
insuring,and/or jointly contracting for risk management services. WCIA has a total of 129 purchases individual stop-loss coverage from a commercial insurance carrier that limits the City's
members. exposure for claim losses to$70,000 per individual or$2,789,000 aggregate per year.
New members initially contract for a three-year term,and thereafter automatically renew on an NOTE 9. SHORT-TERM DEBT
annual basis. A one-year withdrawal notice is required before membership can be terminated.
Termination does not relieve a former member from its unresolved loss history incurred during The City does not currently have any short-term debt issuances in either governmental or
membership.
proprietary activities.
Liability coverage is written on an occurrence basis,without deductibles. Coverage includes NOTE 10. LONG-TERM DEBT
general, automobile,police professional,public officials' errors and omissions, stop gap, and
employee benefits liability. Limits are$4 million per occurrence in the self insured layer,and A. Long-Term Debt
$16 million per occurrence in the re-insured excess layer. The excess layer is insured by the
purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 The City issues general obligations and revenue bonds to finance capital improvements such as
million per occurrence subject to aggregate sub-limits in the excess layers. The Board of bridges,streets,municipal buildings and enterprise facilities such as water and sewer utilities.
Directors determines the limits and terms of coverage annually. Bonded indebtedness has also been entered into(currently and in prior years)to advance refund
Insurance coverage for property,automobile physical damage,fidelity bonds,inland marine,and several general obligation and revenue bonds. General obligation bonds have been issued for
boiler and machinery are purchased on a group basis. Various deductibles apply by type of both general government and business-type activities and are being repaid from the applicable
coverage. Property insurance and auto physical damage are self-funded from the member's resources. Proprietary fund revenues are used to repay revenue and refunding bonds. The City
deductible to$500,000,for all perils other than flood and earthquake, and insured above that is also liable for notes that were entered into for the purchase of the TRAC Facility,a fire truck,
amount by the purchase of reinsurance. Animal Control facilities and Police equipment. These notes are considered obligations of the
general government and are being repaid with general governmental revenue sources.
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Revenue bond debt service requirements to maturity are as follows:
The City also has outstanding notes for Special Assessments. These represent Interfand loans
from the Water/Sewer Fund to the Special Assessment Funds. These assessments are for sewer Year Ending December 31 Principal Interest
lines and street improvements. 2009 $ 1,405,000 $ 627,209
2010 1,460,000 644,913
General obligation bonds currently outstanding are as follows: 2011 1,505,000 580,698
2012 1,455,000 516,419
2013 1,515,000 450,483
Interest Maturity Original Remaining 2014-2018 5,005,000 1,398,779
Purpose Rate Date Amount Balance 2019-2023 3,120,000 504,153
1999 GOB Library Bond 4.50-5.50% 12/1/2019 $ 1,700,000 $ 1,100,000 2024-2028 605,000 38,743
2001 CLID 135 Bond 5.75% 11/2012 536,975 120,000 Total $16,070,000 $4,761,394
2001 LTGO Bond 2.00-4.70% 12/1/2020 6,900,000 5,360,000
2002 LTGO&Refunding Bond 5.72% 4/1/2022 3,635,000 2,765,000 Loan and Note obligations currently outstanding are as follows:
2002 UTGO Refunding Bond 2.50-4.00% 12/1/2013 3,155,000 1,690,000
Total $15,926,975 $11,035,000 Original
Interest Maturity Bond Remaining
Purpose Rate Date Amount Balance
The annual debt service requirements to maturity for general obligation bonds are as follows: State LOCAL Loan-Fire Truck 5.72% 6/l/2009 $ 225,000 $ 28,477
State LOCAL Loan-Animal Control 6.24% 12/1/2016 275,500 176,922
Governmental Activities Business Type Activities TRAC Loan 4.50-5.50% 12/1/2014 1,197,931 527,587
Year Ending December 31 Principal Interest Principal Interest Port of Pasco Airport Fire Building 4.00% 7/12/2016 120,000 95,231
2009 $ 990,000 $ 495,025 0 0 PWTF Loan#89036-Water Tank 3.00% 7/24/2009 1,245,000 61,561
2010 1,055,000 455,200 0 0 State Revolving Loan 1.00% 10/31/2015 23,700,000 15,607,895
2011 1,085,000 410,878 0 0 PWTF Loan#95025-Sewer Plant 1.00% 6/30/2015 812,700 301,079
2012 1,075,000 364,634 0 0 PWTF Loan#95026-Water Reservoir 1.00% 6/30/2015 2,687,300 751,627
2013 1,110,000 318,776 0 0 PWTF Loan#691043 1.00% 6/30/2020 1,890,000 1,333,684
2014-2018 3,815,000 997,330 0 0 Total $32,153,431 $18,884,063
2019-2023 1,905,000 156,245 0 0
Total $11,035,000 $3,198,088 0 0
Loan and Note debt service requirements to maturity are as follows:
The revenue bonds currently outstanding are as follows: Governmental Activities Business-Type Activities
Year Ending December 31 Principal Interest Principal Interest
Original 2009 $133,507 $ 40,794 $ 1,507,037 $ 561,102
Interest Maturity Bond Remaining 2010 109,951 34,570 1,487,276 515,454
Purpose Rate Date Amount Balance 2011 120,281 29,148 1,530,553 469,563
1998 Water/Sewer Series A Bonds 5.50-6.45% 6/1/2018 $ 2,255,000 $ 1,420,000 2012 121,894 23,167 1,575,358 422,143
1998 Water/Sewer Series B Bonds 3.80-4.60% 6/1/2014 6,725,000 4,120,000 2013 124,675 17,091 1,621,744 373,141
1998 Water/Sewer Series C Bonds 3.70-4.80% 6/1/2014 1,515,000 315,000 2014-2018 217,908 16,246 8,412,744 1,075,804
1999 Water/Sewer Bonds 4.10-5.80% 9/1/2016 985,000 535,000 2019-2023 0 0 1,921,134 48,892
2001 Water/Sewer Bonds 3.50-4.85% 9/1/2016 995,000 435,000 2024-2028 0 0 0 0
2002 Water/Sewer Bonds 2.00-4.70% 12/l/2022 5,945,000 4,550,000 Total $828,216 $161,016 $18,055,847 $3,466,098
2005 Water/Sewer Bonds 3.50-4.25% 12/5/2025 4,400,000 3,900,000
2007 Water/Sewer Bonds 4.25-4.75% 9/01/2022 845,000 795,000
Total $23,665,000 $16,070,000
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In proprietary funds,unamortized debt issue costs are recorded as deferred charges and bonds Internal Service funds are separate for governmental and proprietary activities. Long-term
are displayed net of premium or discount; annual interest expense is decreased by liabilities for them are included as part of the above totals under their respective activity.
amortization of debt premium and increased by the amortization of debt issue costs and Compensated absences are included in the above amounts.Also,for the governmental activities,
discount. claims and judgments and compensated absences are generally liquidated by the general fund.
At December 31,2008,the City has$312,275 available in the debt service funds to service NOTE 13. CONTINGENCIES AND LITIGATION
the general bonded debt,which is not unusual because the major portion of debt service is
paid out towards the end of the year. Restricted assets in proprietary funds contain$730,043 The City has recorded in its financial statements all material liabilities, including applicable
in sinking funds and reserves as required by bond indentures. estimates for situations that are not yet resolved but where, based on available information,
management believes it is probable that the City will have to make payment. In the opinion of
B. Refunded Debt management,the City's insurance policies and self-insurance reserves are adequate to pay all
known or pending claims.
The City did not issue any refunded debt during 2008.
As discussed in Note 10,the City is contingently liable for repayment of refunded debt.
NOTE 11. LEASES
The City participates in a number of federal and state assisted programs. These grants are subject
The City does not currently have any capital or operating leases. to audit by the grantor or representative. Such audits could result in requests for reimbursement
to grantor agencies for expenditures disallowed under the terms of the grants. However,City
NOTE 12. CHANGES IN LONG-TERM LIABILITIES management believes that such disallowances,if any,will be immaterial.
During the year ended December 31, 2008, the following changes occurred in long-tern NOTE 14. RESTRICTED NET ASSETS
liabilities:
The government-wide statement of net assets reports$4,004,503 of restricted net assets,of which
Beginning Ending $4,004,503 is restricted by enabling legislation.
Balance Balance Due Within
01/01/08 Additions Reductions 12/31/08 One Year NOTE 15. INTERFUND BALANCES AND TRANSFERS
Governmental Activities:
Bonds Payable: A. Classification of Interfund Transactions
General obligation bonds,
special assessment debt hnterfund transactions are classified as follows:
with govt.commitment $11,970,000 $ 0 $ 935,000 $11,035,000 $ 990,000
Loans and Notes 1,050,551 0 222,335 828,216 133,507 1. Transactions that would be treated as revenues, expenditures or expenses if they
Compensated Absences 1,432,092 172,050 0 1,604,142 1,604,142 involved external organizations,such as buying goods and services or payments in lieu
Governmental Activity of taxes,are similarly treated when they involve other funds of the City.
Lon -Term Liabilities $14,452,643 $172,050 $1,157,335 $13,467,358 $2,727,649
Beginning Ending 2. Transfers to support the operations of other funds are recorded as "Transfers" and
Balance Balance Due Within classified with"Other Financing Sources or Uses."
01/01/08 Additions Reductions 12/31/08 One Year
Business-Type Activities: 3. Contributions to the capital of enterprise or internal service funds,(transfers between
Bonds Payable: those funds and the general fixed assets account group)transfers to establish or reduce
General obligation bonds, working capital in other funds, and transfers of remaining balances when funds are
revenue bonds $17,620,000 $ 0 $1,550,000 16,070,000 1,405,000 closed,are classified as"Transfers"and are reported as direct additions to or deductions
Loans and Notes 19,522,508 0 1,466,661 18,055,847 1,507,037 from net assets.
Compensated Absences 168,040 0 30,410 137,630 137,630 4. Loans between funds are classified as Interfund loans receivable and payable or as
Business-Type Activity advances to and from other funds on the fund balance sheets depending on the time
Long-Term Liabilities $37,310,548 $ 0 $3,026,137 $34,263,477 $3,049,667 period for which the loan was made. Interfund loans do not affect total fund equity,but
advances to other funds are offset by a reservation of fund equity.
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A. Interfund Loan Balances Special Assessment receivables represent $4,655,977 of the balance of outstanding Customer
Accounts receivable at year end December 31, 2008. Of this amount $92,470 represents
Interfund balances at December 31,2008 were as follows: delinquent Special Assessments receivable.
Due From B. Payables at December 31,2008,were as follows:
All Other
Purpose Funds Total ACCOUNTS: AMOUNTS
General Fund Start-up loans for new funds&neg. Governmental Activities:
cash balance loans $676,800 $676,800 Accounts Payable $ 712,844
Q Water/Sewer Fund LID loans&Equip Rental Op 17,000 17,000 Due to Other Govt.Units 8,792
All Other Funds LID and Capital Improvement loans 101,100 101,100 Deposits Payable 404,691
Total $794,900 $794,900 Unclaimed Property 5,434
Other Payables 501,095
B. Interfund Transfers Claims htcurred Not Reported 550,000
Deferred Revenue 5,583,891
Interfand transfers at December 31,2008 were as follows: Due within One Year 2,728,583
Due in More than One Year 10,759,710
Transfer From Total Governmental Activities $21,255,040
General Water/Sewer All Other Business-type Activities:
H Fund Fund Funds Total Accounts Payable $ 244,149
w General Fund $ 0 $ 0 $ 82,561 $ 82,561 Due to Other Govt.Units 30,729
Water/Sewer Fund 0 0 0 0 Retainage Payable 201,181
F All Other Funds 1,305,907 1,123,925 1,336,992 3,766,824 Interest Payable 359,901
Total $1,305,907 $1,123,925 $1,336,992 $3,849,385 Deposits Payable 93,510
Deferred Revenue 1,262,101
Interfund transfers are used to fund ongoing operations such as ambulance services, senior Unclaimed Property 25,082
center activities,recreation activities, street repair and maintenance,and transfers between Due within One Year 3,049,667
Local Improvement District funds and the Water/Sewer Fund. Due in More than One Year $31,213,808
Total Business-type Activities: $36,480,128
NOTE 16. RECEIVABLE AND PAYABLES BALANCES
A. Receivables at December 31,2008 were as follows: NOTE 17. SEGMENT INFORMATION
ACCOUNTS: AMOUNTS The City's only Enterprise Fund is the Water/Sewer Fund. The services provided by this
Governmental Activities: fund are water, sewer,process water reuse,storm water and irrigation operations. These
Taxes $ 2,573,202 services are not broken out into separate segments but are reported as one fund in the fund
Customer Accounts 6,672,711 statements.
Due from Other Funds -17,000
Interest Receivable 155,064 NOTE 18. JOINT VENTURES
Other Receivables 723,023
Total Governmental Activities $ 10,107,000 A. Bi-County Police Information Network
Business-type Activities:
Utility Receivables $ 835,946 The Bi-County Police Information Network(BI-PIN)was established November 24, 1982,
Other Receivables 294,018 when an Interlocal Agreement was entered into by five participating municipal corporations,
Due from Other Funds 17,000 the cities of Kennewick,Pasco,and Richland,and Benton and Franklin Counties. BI-PIN
Interest Receivable 64,314 was established to assist the participating police and sheriffs departments in the deterrence
Total Business-type Activities: $ 1,211,270 and solution of criminal incidents. BI-PIN is served by an Executive Committee composed
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of the City Manager of each of the cities and a member from each of the Boards of County Effective January 1, 1990, the City of Pasco assumed responsibility for the operation of
Commissioners of Benton and Franklin Counties. A liaison from the Bi-County Chiefs and Metro. As the Operating Jurisdiction,the City provides all necessary support services for the
Sheriffs is an ex officio,non-voting member. operation of Metro such as accounting,legal services and risk management.
The allocation of financial participation among the participating jurisdictions is based upon The City of Pasco's equity interest in Metro was$34,535 on June 30,2008,which is reported
the approved budget for that year and is billed quarterly in advance to each agency. On as an investment in joint ventures in the government-wide statement of net assets. The
dissolution of the Interlocal Agreement,the net assets will be shared based upon participant change in equity is reflected in the government-wide statement of activities under Public
contribution. Safety. The City does not anticipate any income distribution from Metro since charges are
assessed only to recover anticipated expenses.
Effective January 1,1992,the City of Kennewick assumed responsibility for the operation of
the BI-PIN system. As the Operating Jurisdiction,the City provides all necessary support Complete separate financial statements for Metro may be obtained at the City of Pasco,525
services for the operation of BI-PIN such as accounting,legal services,risk management and North Third Street,Pasco,Washington.
information systems. The total amount paid by BI-PIN in 2008 for these transactions was
$126,785. D. Trade,Recreation,Agricultural Center
The City of Pasco's equity interest in BI-PIN was$243,694 on December 31,2008,which is In 1994 the City entered into an agreement with Franklin County for the Trade,Recreation,
reported as investment in joint ventures in the government-wide statement of net assets. The and Agricultural Center(TRAC). The City shares with Franklin County the expenses to
change in equity is reflected in the government-wide statement of activities under Public operate and cover debt service. Franklin County handles all operating decisions and financial
Safety. The City does not anticipate any income distribution from BI-PIN since charges are reporting for TRAC.
assessed only to recover anticipated expenses.
Complete financial statements for TRAC may be obtained at Franklin County, 1016 N.4`h
Complete separate financial statements for BI-PIN may be obtained at the City of Avenue,Pasco,Washington.
Kennewick,210 West Sixth Avenue,Kennewick,Washington.
For calendar year 2008, the City of Pasco paid Franklin County $169,231 in operating
B. Emergency Medical Services expenses and$102,990 in debt service expenses.
The Emergency Medical Services(EMS)joint venture was dissolved in the fall of 2007,at The City's obligation for debt service is included in the debt service schedule in Note 10.
which time the net assets were distributed based on the direction of the EMS Administrative
Board. In conjunction with the dissolution of EMS,the City of Pasco entered into a series of NOTE 19. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Interlocal Agreements with each participating agency to provide oversight for the
administrative clerical support for the emergency medical services Medical Program Director Plan Description
(MPD)for Benton and Franklin Counties.
As required by the Revised Code of Washington(RCW)Chapter 41.26,the City provides
C. Metro Drug Forfeiture Fund lifetime medical care for members of the Law Enforcement Officers and Firefighters
(LEOFF)retirement system hued before October 1, 1977 under a defined benefit healthcare
The Metropolitan Controlled Substance Enforcement Group(Metro)was established prior to plan administered by the City. The members necessary hospital,medical,and nursing care
1987,when six participating municipal corporations entered into an Interlocal Agreement. expenses not payable by worker's compensation, social security, insurance provided by
These entities include the cities of Kennewick, Pasco, Richland, and West Richland, and another employer, or other pension plan, or any other similar source are covered. Most
Benton and Franklin Counties. Metro was established to account for the proceeds of medical coverage for eligible retirees is provided by City's employee medical insurance
forfeitures,federal grants,and court ordered contributions,and to facilitate the disbursement program. Under authorization of the LEOFF Disability Board,direct payment is made for
of those proceeds for the purpose of drug enforcement and investigations. Metro is served by other retiree medical expenses not covered by standard medical plan benefit provisions.
an Executive Committee composed of the City Manager,or designee,of each of the cities and Financial reporting for the LEOFF retiree healthcare plan is included in the City's
a member from each of the Boards of County Commissioners of Benton and Franklin Comprehensive Annual Financial Report.
Counties. In addition,a Governing Board,consisting of the Police Chiefs from each of the
cities and the Sheriffs and Prosecuting Attorneys from the two counties,administers daily Funding Policy
activity.
Funding for LEOFF retiree healthcare costs is provided entirely by the City as required by the
RCW. The City's funding policy is based upon pay-as-you-go financing requirements.
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Annual OPEB Costs and Net OPEB Obligation Other Postemolovment Benefit(OPEB)Plans
The City's annual Other Post Employment Benefits(OPEB)cost is calculated based upon the The City does not have any OPEB plans other than those listed above.
annual required contribution(ARC),an amount actuarially determined in accordance with the
parameters of Governmental Accounting Standards Board(GASB)Statement 45. The ARC NOTE 20. CLOSURE AND POSTCLOSURE CARE COSTS
represents a level of funding that,if paid on an ongoing basis,is projected to cover the normal
costs each year and amortize any unfunded actuarial liabilities over a period of thirty years. The City does not own a landfill but it does have a Landfill Remediation Fund. The purpose
This is the City's first year of implementation for GASB Statement 45. of this fund is to provide Pasco with the means fund liability and or/pay expenses related to
third party claims asserted against Pasco with respect to the implementation and enforcement
The GASB statement allows entities with fewer than 100 retired LEOFF members the option of the Institutional Controls Program.
to either hire an actuary to perform a valuation of the plan,or,do the valuation in-house. The
Office of the State Actuary for Washington State has provided a tool to do the in-house NOTE 21. TERMINATION BENEFITS
evaluation.
The City currently does not have an inducement program to hasten the termination of an
The City of Pasco has a total of 43 LEOFF plan 1 members. Thirty-seven of those members employee's services or ask for voluntary terminations.
are retired and 6 are still active employees.
Upon termination,an employee is paid 100%of their unused accrued Vacation balance and
Seven of those 37 retired members are a part of the Old Firemen's Pension Plan and are fully unused accrued Compensation Time balance. Unused Sick time balance is paid out at the
funded through the Old Fire Pension Fund. Based on the in-house evaluation,the Actuarial rate of 25%up to a maximum of 720 hours. These amounts are paid to the employee in their
Accrued Liability for the Fire Pension Fund is$1,735,160. The Fund also supplements the last check which is processed in the next available payroll period. Payroll is processed every
LEOFF Retirement System retirement payments. As shown in note 7, the total amount other week.
needed to fund both medical insurance and future pension requirements is$3,035,160. As of
December 31,2008,the fund had assets of$3,236,286. Accrued employee leave payable,or Compensated Absences,is reflected in the Statement of
Net Assets.
Performing the valuation for the remaining 30 members, it is determined the Unfunded
Actuarial Accrued Liability(UAAL)is$9,942,533. This amount can be funded over the next NOTE 22. POLLUTION REMEDIATION OBLIGATIONS
30 years. As mentioned previously,the City pays the medical premiums on an annual basis.
Dividing the UAAL by 30 years equals$331,418. During 2008,The City made payments The City does not have any pollution remediation obligations.
totaling$349,680 for postemployment health care in the General Fund for those members.
NOTE 23. OTHER DISCLOSURES
The City uses the alternative measurement method permitted under GASB Statement No.45.
A single retirement age of 56.22 was assumed for all active members for the purpose of A. Prior Period Adiustments
determining the actuarial accrued liability. Termination and mortality rates were assumed to
follow the LEOFF 1 termination and mortality rates used in the September 30,2006 actuarial Prior period adjustments consist of the following:
valuation report issued by the office of the State Actuary(OSA). Healthcare costs and trends
were determined by Milliman and used by OSA in the state-wide LEOFF 1 medical study An adjustment of$425,000 was made to the Medical Dental Fund to increase Claims
performed in 2007. The results were based on grouped data with 4 active groupings and 4 Incurred But Not Recorded and for$1,291 for a refund check for a prior period.
inactive groupings. The actuarial cost method used to determine the actuarial accrued
liability was Projected Unit Credit. These assumptions are individually and collectively An adjustment of $792,603 was made in the Water/Sewer Fund to correct assets and
reasonable for the purpose of this valuation. accumulated depreciation and$1,644 to adjust debt service.
The city reimburses 100%of the amount of validated claims for medical,prescription,and B. Subsequent Events
hospitalization costs incurred by pre-Medicare retirees.
None.
Employer contributions are financed on pay-as-you-go basis. Expenditures for
postemployment health care benefits are recognized as retirees report claims and include a
provision for estimated claims incurred but not yet reported to the City.
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C. Related Organization
Pursuant to RCW 35.57(the"City PFD Act")the Pasco Public Facilities District was formed
and created by Ordinance No.3558 on July 15,2002,coextensive with the boundaries of the
City,with the powers and authority set forth in the City PFD Act. The District is established
for the purpose of acquiring,constructing,owning,remodeling,maintaining,equipping,re-
equipping,repairing,financing,operating one or more Regional Centers,as defined by the
RCW 35.57.020 and/or participating with any other qualified public facilities district in a
cooperative and joint development of a Regional Center in the Tri-Cities area by interlocal
agreement.
The members of the board of directors of the District(the"PFD Board")shall be selected and
appointed by the Council,as required by the RCW. The PFD Board consisted of five
members. Three of the members will be appointed based on recommendations from local
organizations. The members will serve four-year terms. Of the initial members,one will be
appointed for a one year term,one for a two year term,one for a three year term,and the
remainder for four year terms. The Council may,by resolution,remove a member for any
reason. Vacancies will be filled by appointment by the Council.
All corporate powers of the District will be exercised by or under the authority of the PFD
Board;and the business,property and affairs of the District shall be managed under the
direction of the PFD Board,except as may be otherwise provided for by law herein,or in the
Charter.
Washington State Auditor's Office
72
APPENDIX C
FORM OF LEGAL OPINION
RP FOSTER PEPPER
[FORM OF APPROVING LEGAL OPINION]
City of Pasco, Washington
Re: City of Pasco, Washington, $ Water and Sewer Improvement and
Refunding Revenue Bonds, 2010A, and $ Water and Sewer
Refunding Revenue Bonds, 2010T (Taxable)
We have served as bond counsel to the City of Pasco, Washington (the "City"), in
connection with the issuance of the above-referenced bonds (the "2010A Bonds" and the "2010T
Bonds," and together, 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 representations contained in the
certified proceedings and other certifications of public officials furnished to us, without
undertaking to verify the same by independent investigation.
The 2010A Bonds are issued by the City pursuant to Ordinance No. (the "Bond
Ordinance") to provide funds to pay the cost of carrying out the Plan of Additions adopted by the
Bond Ordinance, to pay part of the cost of a current refunding of the City's outstanding Water and
Sewer Revenue Refunding Bonds, 1998, Series B (Tax-Exempt), and the administrative costs of
such refunding, and to pay the costs of issuance and sale of the 2010A Bonds, all as set forth in the
Bond Ordinance.
The 2010T Bonds are issued by the City pursuant to Bond Ordinance to provide funds to
pay part of the cost of a current refunding of the City's outstanding Water and Sewer Revenue
Bonds, 1998, Series A (Taxable), and the administrative costs of such refunding, and to pay the
costs of issuance and sale of the 2010T Bonds, all as set forth in the Bond Ordinance.
Reference is made to the Bonds and the Bond Ordinance for the definitions of capitalized
terms used and not otherwise defined herein.
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 in connection with the Bonds.
Under the Internal Revenue Code of 1986, as amended(the "Code"), the City is required to
comply with certain requirements after the date of issuance of the 2010A Bonds in order to
maintain the exclusion of the interest on the 2010A Bonds ftom gross income for federal income
TEL:206.447.4400 FAX:206.447.9700 1111 THIRD AVENUE,SUITE 3400 SEATTLE,WASHINGTON 98101-3299 www.FOSTER.com
SEATTLE WASHINGTON SPOKANE WASHINGTON
City of Pasco, Washington
[Date]
Page 2
tax purposes, including, without limitation, requirements concerning the qualified use of 2010A
Bond proceeds and the facilities financed or refinanced with 2010A Bond proceeds, limitations on
investing gross proceeds of the 2010A Bonds in higher yielding investments in certain
circumstances and the arbitrage rebate requirement to the extent applicable to the 2010A Bonds.
The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City
fails to comply with those requirements, interest on the 2010A Bonds could become taxable
retroactive to the date of issuance of the Bonds. We have not undertaken and do not undertake to
monitor the City's compliance with such requirements.
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 opinion that under existing law:
1. The City is a duly organized and legally existing code city under the laws of the
State of Washington;
2. The Bonds have been duly authorized and executed by the City and are issued in
full compliance with the provisions of the Constitution and laws of the State of Washington and
the ordinances of the City relating thereto;
3. The Bonds constitute valid obligations of the City payable solely out of the Net
Revenue of the Waterworks Utility and ULID Assessments to be paid into the Bond Fund, 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 2010A Bonds
with applicable requirements of the Code, the interest on the 2010A Bonds is excluded from gross
income for federal income tax purposes and is not an item of tax preference for purposes of the
alternative minimum tax applicable to individuals; however, while interest on the 2010A Bonds
also is not an item of tax preference for purposes of the alternative minimum tax applicable to
corporations, interest on the 2010A Bonds received by corporations is to be taken into account in
the computation of adjusted current earnings for purposes of the alternative minimum tax
applicable to corporations, interest on the 2010A Bonds received by certain S corporations may be
subject to tax, and interest on the 2010A 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 the 2010A Bonds.
The City, in the Bond Ordinance, has declared its intention that the interest on the 2010T
Bonds be includable in gross income for federal tax purposes. We express no opinion regarding
any federal tax consequences of receipt of interest on the 2010T Bonds.
This opinion is given as of the date hereof, and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention, or any changes in law that may hereafter occur.
City of Pasco, Washington
[Date]
Page 3
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,
APPENDIX D
DTC & BOOK-ENTRY SYSTEM
The following information has been provided by DTC. The City makes no representation regarding the accuracy or completeness thereof.
Beneficial Owners(as hereinafter defined)should therefore confirm the fallowing with DTC or the Participants(as hereinafter defined).
General Description
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities in the name
of Cede&Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds in the principal amount of
such maturity and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization"within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC
holds and provides asset servicing for over 3.5 million issues of U.S.and non-U.S.equity issues,corporate and municipal
debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants'
deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants
include both U.S. and non-U.S. securities brokers and dealers,banks,trust companies,clearing corporations,and certain
other organizations. DTC is a wholly-owned subsidiary of The Depository Trust Clearing Corporation ("DTCC").
DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing
Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries.
Access to the DTC system is also available to others such as 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 S&P's highest rating: AAA. The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com and www.dtc.org.
Purchases of the Bonds under the DTC system, in denominations of$5,000 or any integral multiple thereof, must be
made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership
interest of each actual purchaser of each Bond(`Beneficial Owner")is in turn to be recorded on the Direct and Indirect
Participants'records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial
Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the 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 Bonds,except in the event that use of the book-entry system for the Bonds
is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's
partnership nominee, Cede& Co. The deposit of Bonds with DTC and their registration in the name of Cede& Co.
effect no 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 or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Neither DTC nor Cede& Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds, unless
authorized by a Direct participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede& Co.'s
consenting voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to DTC. DTC's practice is to
credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to
D-1
Beneficial Owners will be governed by standing instructions and customary practices,as is the case with Bonds held for
the accounts of customers in bearer form or registered in"street name,"and will be the responsibility of such Participant
and not of DTC,the Registrar,or the City, 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 City or the Registrar,
disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as Bonds depository with respect to the Bonds at any time by giving
reasonable notice to the City or the Registrar. Under such circumstances,in the event that a successor Bonds depository
is not obtained,Bond certificates are required to be printed and delivered. The City may decide to discontinue use of
the system of book-entry transfers through DTC (or a successor Bonds depository). In that event,Bond certificates will
be printed and delivered to DTC.
With respect to Bonds registered on the Bond Register in the name of Cede&Co.,as nominee of DTC,the City and the
Registrar shall have no responsibility or obligation to any Participant or to any person on behalf of whom a Participant
holds an interest in the Bonds with respect to (i) the accuracy of the records of DTC,Cede&Co.or any Participant with
respect to any ownership interest in the Bonds;(ii)the delivery to any Participant or any other person,other than a Bond
owner as shown on the Bond Register, of any notice with respect to the Bonds, including any notice of redemption;
(iii)the payment to any Participant or any other person,other than a Bond owner as shown on the Bond Register,of any
amount with respect to principal of,premium,if any,or interest on the Bonds; (iv) any consent given or action taken by
DTC as registered owner; or (v) any other matter. The City and the Registrar may treat and consider Cede& Co., in
whose name each Security is registered on the Bond Register,as the holder and absolute owner of such Security for the
purpose of payment of principal and interest with respect to such Security, for the purpose of giving notices of
redemption and other matters with respect to such Security,for the purpose of registering transfers with respect to such
Security, and for all other purposes whatsoever. For the purposes of this Official Statement, the term `Beneficial
Owner"shall include the person for whom the Participant acquires an interest in the Bonds.
Unless the book-entry system will have been discontinued,the City and the Registrar will recognize DTC or its nominee
as the registered owner of the Bonds. Conveyance of notices and other communications by DTC to DTC Participants
and by DTC Participants to Beneficial Owners will be governed by arrangements between them,subject to any statutory
and regulatory requirements as may be in effect from time to time.
D-2
AGENDA REPORT
TO: City Council t'' May 7, 2010
FROM: Gary Crutchfie it anager Workshop Mtg.: 5/10/10
Regular Mtg.: 5/17/10
SUBJECT. Legislative Corlsu tant Agreement
I. REFERENCE(S):
1. Proposcd Agreement
II. ACTION REQUESTED OF COUNCIL !STAFF RECOMMENDATIONS:
5110: Discussion
5/17: MOTION: I move to approve the agreement with Gordon Thomas Honeywell
Governmental Affairs for legislative consultant services and, further,
authorize the City Manager to sign the agreement.
III. FISCAL IMPACT:
Total: $41,000 maximum
IV. HISTORY AND FACTS BRIEF:
A) The city has employed the services of a legislative consultant for each of the past five
years. In doing so, the city has realized the following accomplishments that would
likely not have happened if not for the particular services of the consultant work:
• $5.2 million legislative appropriation for construction of the Ainsworth Overpass
Project;
$400,000 legislative appropriation for construction of the Court Street Pedestrian
Overpass of SR395;
• $3 million legislative appropriation for Lewis Street Overpass project.
B) GTH has offered to continue services for Pasco, at their standard rate of$3,150 per
month, with a contract term of one year; the resulting cost is $37,800 (plus S3,000 in
reiinbursables). While the consultant will perform the general legislative duties
listed, the greatest value will be the consultant's effort to obtain additional state
funding assistance for the Lewis Street overpass, a priority project of the city which
is simply too costly for the city to construct on its own.
V. DISCUSSION:
A) The value of an effective legislative consultant is cleat-when measured by the success
the city has realized over the past five years. Continuing such a relationship is
imperative if the city desires to continue to seek assistance via the state legislature
(whether by appropriation or statutory language).
B) GTH accomplished no small feat in the 2009 session by helping obtain the legislative
appropriation of $3,000,000 for the Lewis Street Overpass. In addition, GTH was
instrumental in guiding the regional PFD legislation through the 2010 legislature.
While our legislators were also instrumental in these endeavors, they were aided
greatly by the effort of GTH coordinating with many other legislators to assure the
local objective was not lost in the details of the process.
C) GTH has the advantage of a Washington D.C. office; thus, the opportunity to pursue
a coordinated effort (state and federal) to obtain the funding assistance necessary for
construction of the Lewis Street Overpass project. The proposed scope of work will
address the city's 2011 legislative agenda.
D) In view of the potential 2011 legislative benefits, staff recommends approval of the
proposed contract.
4(e)
CITY OF PASCO
CONSULTING AGREEMENT
This Agreement is entered into by and between City of Pasco and Gordon Thomas Honeywell
Governmental Affairs (hereinafter referred to as "Consultant"), upon the following terms and
conditions;
A. Scope of Work. Consultant will advise and assist the City of Pasco in accordance with
Consultant's Scope of Work, described in Attachment "A" hereto and incorporated herein, and
Consultant will do and produce such other things as are set forth in the Scope of Work (the
"Services"), Consultant's Services will be in compliance with applicable laws, regulations, rules,
orders, licenses and permits; now or hereinafter in effect, and Consultant shall furnish such
documents as may be required to effect or evidence such compliance.
B. Compensation; Expenses. 'The City of Pasco will pay Consultant for satisfactorily rendered
Services in accordance with the specific terms set forth in Attachment "A."
C. Invoices; Payment, Consultant will furnish the City of Pasco invoices at regular intervals, as
set forth in Attachincnt "A."
D. Term. Consultant shall promptly begin the Services hereunder on the date set forth in
Attachment "A" and shall terminate same on the date set forth in Attachment "A," unless earlier
terminated by mutual agreement. The City of Pasco or consultant may terminate consultant services
for convenience at any time prior to the termination date set forth in Attachment A, provided that
either party provides 30-days notice.
E. Ownership of Work Product. The product of all work performed under this agreement,
including reports, and other related materials shall be the property of the City of Pasco or its
nominees, and the City of Pasco or its nominees shall have the sole right to use, sell, license, publish
or otherwise disseminate or transfer rights in such work product.
G. Independent Contractor. Consultant is an independent contractor and nothing contained
herein shall be deemed to make Consultant an employee of the City of Pasco, or to empower
consultant to bind or obligate the City of Pasco in any way. Consultant is solely responsible for
paying all of Consultant's own tax obligations, as well as those due for any employee/subcontractor
permitted to work for Consultant hereunder.
H. Release of Claims; Indemnity. Consultant hereby releases, and shall dcfend, indernnify and
hold harmless the City of Pasco from and against all claims, liabilities, damages and costs arising
directly or indirectly out of, or related to, Consultant's fault, negligence, strict liability or produce
liability of Consultant, and/or that of any pen-pitted employee or subcontract or Consultant,
pertaining to the Services hereunder,
1. Assignment. Consultant's rights and obligations hereunder shall not be assigned or
transferred without the City of Pasco's prior written consent; subject thereto, this Agreement shall be
binding upon and inure to the benefit of the parties' heirs, and successors.
J. Governing Law; Severability. This Agreement shall be governed by the laws of the State of
Washington, U.S.A. (excluding conflict of laws provisions). If any term or provision of this
Agreement is determined to be legally invalid or unenforceable by a court with lawful jurisdiction
hereover (excluding arbitrators), such term or provision shall not affect the validity or enforceability
of any remaining terms or provisions of this Agreement, and the court shall, so far as possible,
construe the invalid portion to implement the original intent thereof.
K. Arbitration. Should any dispute arise concerning the enforcement, breach or
interpretation of this Agreement, the parties shall first meet in a good faith attempt to resolve the
dispute. In the event such dispute cannot be resolved by agreement of the parties, such dispute
shall be resolved by binding arbitration pursuant to RCW 7.04A, as amended, and the Mandatory
Rules of Arbitration (MAR); venue shall he placed in Pasco, Franklin County, Washington, the
laws of the State of Washington shall apply, and the prevailing party shall be entitled to its
reasonable attorney fees and costs.
L. Entire Agreement; Etc. This Agreement, and its incorporated attachments hereto, state the
entire agreement between the parties regarding the subject matter hereof and supersede any prior
agreements or understandings pertaining thereto. Any modification to this Agreement must be made
in writing and signed by authorized representatives of both parties. Any provision hereof which may
be reasonably deemed to survive the expiration or termination of this Agreement shall so survive,
and rernain in continuing effect. No delay or failure in exercising any right hereunder shall be
deemed to constitute a waiver of any right granted hereunder or at law by either party,
Consultant: City of Pasco:
Gordon Thomas Honeywell
Governmental Affairs
Tina Schellberg, President Gary Crutchfield, City Manager
Date; Date:
2010-2011 Legislative Services Agreement
Page 2
ATTACHMENT "A" TO
CITY OF PASCO CONSULTING AGREEMENT
A. Scope of Work: Consultant shall provide the City of Pasco with the following
governmental affairs services:
General Washington State Legislative Services
• Identify and track all relevant legislation.
• During the legislative session, provide the City with weekly reports and tracking
lists.
• Attend all relevant legislative hearings.
• Attend all relevant legislative meetings.
• Coordinate City officials to testify at relevant legislative hearings.
• Lobby to amend, defeat or pass legislation or budgets that directly affect the
City's interests.
• Strengthen relevant legislative relationships between the City, state legislators,
and executive offices.
• Work with the City to develop a state budget request and lobby the Legislature to
fund the request.
Sj2ecific Legislative Issues:
• Obtain specific allocations for the Lewis Street Overpass within the Capital
and/or Transportation budgets.
• Work with the Association of Washington Cities on municipal legislation,
including development standard.-, within urban growth areas.
* Begin lobbying on selected 2012 Budget requests during the legislative inter'm.
B. Compensation/Expenses: The City of Pasco shall pay Consultant a monthly fee of
$3,150 for the services listed above. Consultant shall only bill communication expenses,
such as travel to Pasco. The expenses shall not exceed $3,000 for the term of the
contract.
C_ Invoices/Payments: (a) Consultant shall furnish the City of Pasco with invoices for
services performed on a monthly basis, and (b) the City of Pasco shall pay each of
Consultant's invoices within thirty (30) days after City's receipt and verification of
invoices,
D. Term of Agreement: Consultant's services shall commence on July 1, 2010 and shall
terminate on June 30, 2011,
2010-2011 Legislative Services Agreetnetit
Page 3