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2015.11.23 Council Workshop Packet
AGENDA PASCO CITY COUNCIL Workshop Meeting 7:00 p.m. November 23, 2015 Page - 197 (h) Revenue Bonds for Waterworks Utility 1. CALL TO ORDER: (i) 2. ROLL CALL: 209-211 (a) Pledge of Allegiance Regulation of Hotels and Rooming Houses 3. VERBAL REPORTS FROM COUNCILMEMBERS: (k) 4. ITEMS FOR DISCUSSION: 3 -6 (a) 2016 Legislative Priorities 7 - 11 (b) Gordon Thomas Honeywell Federal Legislative Consulting Agreement 12-37 (c) Ambulance Utility Cost of Service and Rate Study 38-66 (d) Utility Rate Adjustments (Sanitary Sewer and Water) 67-78 (e) Utility Rate Adjustments Connection Fees (Sanitary Sewer and Water) 79-84 (f) Professional Services Agreement with C112M for Process Water Reuse Facility Engineering Report and Facility Plan 85-110 (g) Appointment of Members to Executive Committee of the Feasibility Traffic Study for Interchanges 111 - 197 (h) Revenue Bonds for Waterworks Utility 198-208 (i) Furniture/Fixtures for Police Facility 209-211 (j) Regulation of Hotels and Rooming Houses 212-224 (k) Consent to Transfer of TV Franchise Agreement 5. MISCELLANEOUS COUNCIL DISCUSSION: Page 1 of 224 Workshop Meeting 6. EXECUTIVE SESSION: 7. ADJOURNMENT. November 23, 2015 REMINDERS: 4:00 pm, Monday, November 23, 1000 Columbia Park Trail - Hanford Area Economic Investment Fund Committee Meeting. (COUNCILMEMBER AL YENNEY, Rep.; SAUL MARTINEZ, Alt.) 7:30 am, Wednesday, November 25, 7130 W. Grandridge Blvd - Visit Tri -Cities Board Meeting. (COUNCILMEMBER MIKE GARRISON, Rep.; TOM LARSEN, Alt.) This meeting is broadcast live on PSC -TV Channel 191 on Charter Cable and streamed at www.pasco-wa.2ov/psctvlive. Audio equipment available for the hearing impaired; contact the Clerk for assistance. City Hall will be closed Thursday, November 26 and Friday, November 27 for the Thanksgiving Holiday. Page 2 of 224 AGENDA REPORT FOR: City Council November 6, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Stan Strebel, Deputy City Manager SUBJECT: 2016 Legislative Priorities I. REFERENCE(S): 2016 Draft Legislative Priorities II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: IV. HISTORY AND FACTS BRIEF: The Washington State Legislature convenes on Monday, January 11, 2016. The upcoming session, commonly referred to as the "short session," is scheduled to end on March 10, 2016. Though shorter in duration than a "long" session (held in an odd - numbered year, the first year of a biennium), considerable activity is anticipated on major policy matters impacting Pasco and other municipalities. These proposals have the potential to favorably or adversely impact the City and its mission. Continuing as a large issue this year is the Washington State Supreme Court's McCleary decision relating to the funding of public schools and its impact on the state's financing. The City has maintained a proactive posture with the legislature regarding the interests of Pasco. One means by which Council has historically made their concerns and interests known to the legislature, and specifically its legislative delegation, is through the adoption of its City Legislative Priorities Statement. Given the breadth and scope of the City's priorities, in order to be effective, the City contracts with a legislative consultant based in Olympia to provide an on -the -ground presence in Olympia during session, monitor the state legislature throughout the year and advance the City's legislative agenda accordingly. Page 3 of 224 V. DISCUSSION: Attached is the proposed 2016 legislative priorities list which reflects modifications to the previous agenda as recommended by staff and the legislative consultant, Briahna Murray, Vice President, Gordon Thomas Honeywell Governmental Affairs. The proposed changes are intended to reflect changed circumstances over the past year, so that the new list of priorities more accurately reflects current circumstances and the policy direction of the City Council. Ms. Murray will attend the meeting to provide Council an overview of the upcoming session "What to Expect in 2016." Staff requests Council direction so that the priorities list can be put in resolution form for Council action at its December 7 meeting. Page 4 of 224 mi V11 City of Pasco 2016 State Legislative Priorities TRANSPORTATION FUNDING: LEWIS STREET OVERPASS The Lewis Street Overpass project replaces a deteriorating and functionally obsolete 1937 railroad underpass on a former state highway. The 2015 transportation package passed by the Legislature includes funding for completion of Lewis Street Overpass, including $15 million in state transportation funding and $11 million from local sources. The City will actively work to identify full funding for the project, including seeking state and grant funding. Pasco also requests project funding to begin in earlier biennia in order to realize design and permitting cost savings. CAPITAL FUNDING: EXTENSION OF UTILITIES AT ROAD 68 PROPERTY Pasco will be requesting funding in the 2017-2019 Capital Budget to extend water and sewer infrastructure onto the Road 68 Property. The Department of Natural Resources is in the process of selling 330 acres located in a prime area for commercial and residential development. There are currently plans to develop transportation right-of-way through this property, but not any water or sewer utilities. Extending water and sewer would substantially increase the value of the land, and would increase the return -on -investment for the state. CONSOLIDATION OF BENTON AND FRANKLIN COUNTY 911 CALL CENTERS Both Franklin and Benton Counties have explored the idea of consolidating emergency call centers as one element of improving emergency response in rapidly growing communities throughout the area. Consolidation of emergency dispatch will provide seamless service to residents, and will decrease response times by preventing jurisdictional confusion. Pasco supports the efforts of Benton and Franklin Counties to seek capital funding in the 2017-2019 biennium to consolidate the Benton and Franklin County emergency dispatch center. FUNDING FOR MENTAL HEALTH AND SUBSTANCE ABUSE PROGRAMS There exists a substantial need to provide assistance to individuals in need of housing, as well as treatment for mental health and substance abuse issues. Unfortunately, many of the programs currently in place are overburdened and constrained by a limited budget, which can lead to tragic consequences. Pasco supports efforts to provide sustainable funding to programs that will support housing as well as mental health and substance abuse treatment for community members in crisis. LOCAL GOVERNMENT ELECTION FLEXIBILITY Until 1994, local governments had the authority to determine the most appropriate way to conduct local elections. Presently, only first-class cities can change their election process from at -large to district -based voting in a general election. Pasco supports legislation to give local governments the ability to create a system of voting that will ensure the best outcomes for their community. Page 5 of 224 INFRASTRUCTURE AND PUBLIC WORKS FUNDING During the 2015 session, the Legislature passed budgets that included substantial funding for some infrastructure programs, including the Transportation Improvement Board (TIB) and County Economic Revitalization Board (CERB). Meanwhile, other programs, such as the Public Works Assistance Account (PWAA) faced substantial cuts. Pasco supports full funding of programs that support development and maintenance of local infrastructure. RESTORE "STATE -SHARED REVENUES" FOR CITIES Pasco receives approximately $1.3 million annually from the state, categorized as "state -shared revenues" (liquor excise tax, nuclear generating tax, sales tax mitigation, city/county assistance, etc.). Progress was made to strengthen these programs during the 2015 session, but additional resources are still needed to fund essential local services, including public safety. Pasco will continue to support preservation of these payments to cities; their loss will put in jeopardy the reliable delivery of important local public safety services. PUBLIC RECORDS REFORM Pasco supports reform to statutes governing public records requests. The 2015 Legislature directed the State Auditor's Office to conduct a study on the actual cost of providing public records, both paper and electronically. The City supports the completion of this study, and other reforms that will reduce city costs and address harassing records requests. In approaching this reform, the City recognizes the importance of transparency and accountability in government. MARIJUANA LAWS The new recreational marijuana industry is subject to a state excise tax, but very little of this revenue is directed to local governments to address public safety and other needs associated with this system. The City will monitor legislation associated with marijuana legalization, seek solutions to assist local governments in implementation of the recreational marijuana system, and support policies that retain local authority on regulations that govern marijuana production or sale. NOTIFICATION OF PRE -ANNEXATION AGREEMENTS Annexation agreements are signed by a property owner; the City agrees to provide city utility services, and, in return, the property owner agrees to be annexed into the City. When a property is sold, buyers are currently notified of existing pre -annexation agreements on a property's title report. Pasco has learned that homebuyers often overlook documentation provided with the title report, and purchase property unaware of whether such an agreement has been signed. The City supports legislation improving notification of existing pre -annexation agreements in the home buying process. ELECTION OF JUDGES Pasco opposes legislation mandating that part-time municipal court judges be elected rather than appointed. Appointed judges are equally qualified professionally and there is no compelling evidence that appointed judges are a threat to the administration of justice. In fact, requiring election of all judges would be very problematic for part-time courts, particularly in small and rural communities found throughout eastern Washington. LABOR REFORM One of Pasco's largest cost drivers is labor costs. The City supports legislation reducing these costs. For example, under state law, police and fire personnel are guaranteed binding arbitration for wages and benefits in lieu of the right to strike. While arbitration can be appropriate, current language obligates the arbitrator to give paramount consideration to what "comparable agencies" are paying rather than the ability of the employer to absorb the cost. Modification of the arbitration statute to provide clarity on comparability would better balance the interests of uniformed employees with those of the taxpayer. Page 6 of 224 AGENDA REPORT FOR: City Council November 6, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Stan Strebel, Deputy City Manager SUBJECT: Gordon Thomas Honeywell Federal Legislative Consulting Agreement I. REFERENCE(S): Proposed Federal Legislative Consulting Agreement II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: $60,000 annually IV. HISTORY AND FACTS BRIEF: The City has contracted with the consulting firm of Gordon Thomas Honeywell (GTH) for legislative assistance at the state level for several years. In early 2009, the City entered into a separate agreement with the Washington DC division of GTH to provide for legislative consulting services specifically geared to federal funding for the Lewis Street Overpass Project. The agreement with the Washington DC office is set to expire on December 31, 2015 and a new agreement is necessary to sustain the consulting effort on the City's behalf in Washington DC. V. DISCUSSION: The proposed agreement is similar to the prior agreements, except for the term and a provision which provides for automatic renewal of the agreement for successive one- year terms unless terminated by either party with sixty (60) days written notice. The parties agree to prepare a scope of work and compensation attachment (see Attachment "A") for each term. Page 7 of 224 The scope of work, as attached to the agreement, still focuses on funding for construction of the Lewis Street Overpass project as well as the more -recent emphasis on lowering Pasco Levee 12-2 as the final link in the Sacajawea Heritage River Trail and efforts to continue to establish relationships with the City's elected representatives (and their staff) in Congress. The expense of the contract remains unchanged at $5,000 monthly ($60,000 annually). The assistance of the consultant was beneficial in 2009 through Representative Hastings' effort to obtain a $750,000 allocation for the Lewis Street Overpass project in the 2010 federal budget. As was recently shared with Council, GTH has been of assistance in representing the City's interests in the lowering of Levee 12-2. It is also critical to continue working with the Washington State delegation and federal agency officials to assure the best opportunity to have Pasco's projects included in future federal funding bills and to project local influence on agency priorities. Staff recommends renewal of the agreement under the terms listed. Page 8 of 224 CONSULTING AGREEMENT GORDON THOMAS HONEYWELL & CITY OF PASCO 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 Attachment "A." D. Term. This Agreement shall commence on January 1, 2016, for a term of one (1) year terminating on December 31, 2016; unless terminated by either party with sixty (60) days written notice. This Agreement shall also be automatically renewed for annual terms thereafter, unless terminated by either party by written notice given six days (60) days prior to the date of termination. During each renewal term, the parties may renegotiate Attachment "A" providing for the annual Scope of Work and compensation. 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. F. 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. G. Release of Claims; Indemnity. Consultant hereby releases, and shall defend, indemnify 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 product liability of Consultant, and/or that of any permitted employee or subcontract or Consultant, pertaining to the Services hereunder. H. 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. Page 9 of 224 I. 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. J. 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 such dispute. In the event the dispute cannot be resolved by agreement of the parties, said dispute shall be resolved by arbitration pursuant to RCW 7.04A, as amended, with both parties waiving the right of a jury trial upon trial de novo, with venue placed in Franklin County Washington. The substantially prevailing party shall be entitled to its reasonable attorney fees and costs as additional award and judgment against the other. K. 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 remain 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. GORDON THOMAS HONEYWELL CITY OF PASCO GOVERNMENTAL AFFAIRS Dale Learn, Vice President Date: Dave Zabell, City Manager Date: Federal Consulting Agreement Gordon Thomas Honeywell & City of Pasco Page 2 of 3 Page 10 of 224 ATTACHMENT "A" TO CONSULTING AGREEMENT GORDON THOMAS HONEYWELL & CITY OF PASCO A. Scope of Work: Consultant shall provide the City of Pasco with the following federal governmental affairs services: Identify and track all federal grants and initiatives that are available to the City of Pasco that impact funding for priority transportation and economic development projects. Lobby the Washington State Congressional delegation and other federal officials as necessary to pursue federal grants and initiatives, including various federal infrastructure packages: 1) for a road and/or bridge projects related to the Lewis Street Overpass Project; 2) authorization and potential funding for lowering Pasco Levee 12-2 as the final link in the Sacajawea Heritage River Trail. Identify, track and lobby for federal grants and initiatives that benefit the City of Pasco. Work with the City's state legislative consultant to identify, track and lobby for joint state and federal initiatives, grants and programs that could benefit the City. Work as a liaison between the City of Pasco and federal officials, Members of Congress, congressional staff and Administration representatives to impact issues and projects important to the City. Assist in organizing meetings for City of Pasco officials, local community leaders and business leaders to support the congressional requests and provide the City of Pasco with periodic reports and updates on effort, status and progress. Work with local, regional, state, and federal organizations and entities with common interests to the City of Pasco and its partners on federal grants and initiatives that are mutually beneficial to all parties. Periodically meet in-person with City of Pasco officials to discuss issues, projects and the status of the City's federal program. B. Compensation/Expenses: The City of Pasco shall pay Consultant a monthly fee of $5,000 for the services listed above. Consultant shall only bill communication expenses. The expenses shall not exceed $2,500 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 the City's receipt and verification of invoice. D. Term of Agreement: Consultant's services shall commence on January 1, 2016 and shall terminate on December 31, 2016. Federal Consulting Agreement Gordon Thomas Honeywell & City of Pasco Page 3 of 3 Page 11 of 224 AGENDA REPORT FOR: City Council November 16, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Bob Gear, Fire Chief Fire Department SUBJECT: Ambulance Utility Cost of Service and Rate Study I. REFERENCE(S): Ambulance Utility Cost of Service and Rate Study II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion and presentation by Peter Moy of FCS Group III. FISCAL IMPACT: IV. HISTORY AND FACTS BRIEF: The City has operated an ambulance service through its Fire Department since 1979. In 2006 an ambulance utility rate study was conducted by an outside firm in compliance with RCW 35.21.766. A review by the Joint Legislative Audit and Review Committee in 2008 found that the 2006 Pasco study met "most of the statutory requirements, except the study did not calculate an ambulance utility rate". Council set a rate of $3.00 per month beginning in 2007. Since 2007 the rate has been adjusted from $3.00 to $7.75 based on internal analysis, but without the benefit of a formal study. V. DISCUSSION: This study is being presented to Council to help with establishing an ambulance utility rate for 2016 that is based on current information identifying the cost of providing ambulance and emergency medical services to the citizens and visitors to Pasco. The study will provide a snapshot of alternative funding levels projected over multiple Page 12 of 224 years. The study identified two terms which are central to the utility: "Availability costs" are those costs attributable to the basic infrastructure needed to respond to a single call for service within the utility's response criteria. Availability costs may include costs for dispatch, labor, training of personnel, equipment, patient care supplies and maintenance of equipment. "Demand costs" are those that are attributable to the burden placed on the ambulance service by individual calls for ambulance service. Demand costs shall include costs related to frequency of calls, distances from hospitals, and other factors identified in the cost -of- service study conducted to assess burdens imposed on the ambulance utility. Following the presentation it is hoped that Council will have the information necessary to consider the staff recommendation for adjusting the rates for the ambulance utility for 2016. Page 13 of 224 City of Pasco Ambulance Utility Cost of Service and Rate Study November 2015 FCS GROUP 7525 166th Avenue NE, Suite D-215 Redmond, WA 98052 T: 425.867.1802 1 F: 425.867.1937 This entire report is made of readily recyclable materials, including the bronze wire binding and the front and back cover, which are made from post -consumer recycled plastic bottles. Page 14 of 224 • Finn Headquarters Servingthe Western U.S. ••4 FC S GROUP Redmond Town Center and Canada since 1988 Solutions -Oriented Consulting 7525 1661h Ave NE Washington 1 425.867.1802 Suite D-215 Oregon 1 503.841.6543 Redmond, Washington 98052 November 18, 2015 Robert Gear, Fire Chief Pasco Fire Department 310 N. Oregon Street Pasco, WA 99301 Subject: Ambulance Cost of Service and Rate Study Dear Chief Gear: Attached is our final report on the results of our Ambulance Cost of Service and Rate Study. We want to thank you and all the City staff for their assistance and participation in helping us gather information for the study. If you have any questions, please feel free to contact me at (425) 867-1802 extension 228. Sincerely, Peter Moy Principal "- - L &1-7 Christine Elting Analyst Page 15 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 page i TABLE OF CONTENTS CHAPTER I: INTRODUCTION.......................................................................................................... 1 AmbulanceUtility Legislation......................................................................................................................1 ThePasco Fire Department.........................................................................................................................2 ResponseHistory.......................................................................................................................................3 CHAPTER II: COST OF SERVICE ANALYSIS................................................................................... 4 LaborCosts.....................................................................................................................................................5 Supplies, Services, and Other Costs..........................................................................................................5 Ambulance Availability and Demand Costs...........................................................................................6 CHAPTER III: RATE ANALYSIS......................................................................................................... 8 CustomerClasses..........................................................................................................................................8 Availabilityand Demand Costs..................................................................................................................9 RateAlternatives.........................................................................................................................................10 CHAPTER IV: FORECAST.............................................................................................................. 12 APPENDIX A: COST OF SERVICE ANALYSIS DETAILS ':;% FCS GROUP Page 16 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 1 CHAPTER I: INTRODUCTION To ensure ambulance utility rates sufficiently cover the cost of providing ambulance and emergency medical services (EMS), the City of Pasco is reviewing its cost of service and the rates. The City has not conducted a recent cost of service study, and the City wants to determine what rates are needed to fully support the cost of providing its services. About 79% of the City's call volume is related to EMS, while only 21% are associated with fires, hazardous materials, technical rescues, and fire safety activities. The City's 2015 budget for the Fire Department is supported 60% by the General Fund and 40% by ambulance related revenues. The 2014 call volume was 4,725, and the number of calls is expected to increase to 5,906 calls by 2019. To meet this demand and improve its response times, the Fire Department is anticipating adding an engine company at Station 84. To help the City understand the impacts of adding another engine company and increased incidents, a five year forecast was also developed. AMBULANCE UTILITY LEGISLATION The Revised Code of Washington (RCW) Section 35.21.766 gives all cities and towns the authority to establish an ambulance service to be operated as a public utility. This includes the authority for a City Council to set and collect rates and charges for regulating, operating, and maintaining an ambulance utility. It also identifies the policies with regard to classifying costs and setting rates for an ambulance utility. In July 2011 the Washington State Legislature amended RCW 35.21.766 by eliminating the requirement that the General Fund continue to provide support to ambulance utilities at 70% of the May 2004 funding level. As a result, cities now have more freedom to decide how much support their General Fund will provide to their ambulance utility. However, a city must do the following before implementing the additional support: • Hold a public hearing, preceded by at least 30 days notice provided in each ratepayer's utility bill. • During the public hearing, allow for public comment and present the following information: ■ The utility's most recent cost of service study, ■ A summary of the utility's current revenues sources, ■ A proposed budget reflecting the reduced allocation of General Fund revenues, ■ Any proposed changes to utility rates, and ■ Any anticipated impact to the utility's level of service. According to RCW 35.21.766, a cost of service study is required to identify the total cost necessary to regulate, operate, and maintain the ambulance utility. FCS GROUP was engaged by the City to develop a cost of service study and the related ambulance utility rates. FCS GROUP's scope of work included: • Reviewing and analyzing fire department and ambulance costs and workload data, ':;� FCS GROUP Page 17 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 2 • Developing the cost of service framework and establishing the cost of service for fire and emergency medical services, • Establishing and identifying customer classes and cost allocation methods for the ambulance utility, • Calculating availability and demand rates for each customer class, consistent with RCW 35.21.766, and • Developing a five year forecast identifying the impacts of an additional engine company on the ambulance utility rates. To accomplish the scope of work, FCS GROUP worked with City staff members in analyzing the cost of service, EMS response data, and customer class data. We want to thank all the City staff that participated and assisted us in gathering and analyzing the data. THE PASCO FIRE DEPARTMENT The mission of the Pasco Fire Department is to make the best use of department resources to provide the Pasco community with effective mitigation of fire, rescue, hazardous materials and medical emergencies with compassion, integrity, and respect for its citizens. The department operates out of three stations dispersed throughout the City and employs 49 career firefighters. The Department's Operations Division is composed of three shifts that work an alternating schedule of 24 hour shifts. The Division includes four battalion chiefs, six captains, three paramedic captains, one lieutenant/paramedic, two lieutenants, eighteen firefighter/paramedics, and eighteen firefighters. The Operations Division of the Pasco Fire Department is responsible for emergency medical services, fire suppression, mitigation of disasters, and rescue activities. Three specialized units within the Operations Division include the Hazardous Materials Response Team, Technical Rescue Team, and Aircraft Rescue Firefighting (ARFF) duties at the Tri -Cities Airport. The City currently budgets its Fire Department costs in the General Fund and in its Ambulance Fund. The 2015 budget for the Fire Department is displayed below in Exhibit 1. The total combined cost of providing fire and EMS services was $9,612,925. Exhibit 1 2015 General Fund and Ambulance Fund Budget Expense Category General Fund Ambulance Fund Total Personnel $4877,115 $2,386,975 $7,264,090 Supplies & Services $912,976 $1,388,338 $2,301,314 Capital $7,521 $40,000 $47,521 Total $5,797,612 $3,815,313 $9,612,925 Exhibit 2 displays the expenditure history of the Fire Department for fire and EMS services over the past five years separated into the General Fund and the Ambulance Fund. ':;� FCS GROUP Page 18 of 224 City of Pasco, Washington November, 2015 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Ambulance Cost of Service and Rate Study Page 3 Exhibit 2 Fire Department Expenditure History 2010 Actual 2011 Actual 2012 Actual 2013 Actual 2014 Budget ■ General Fund ■ Ambulance Fund Call Volume History As previously mentioned, the Pasco Fire Department responded to a total of 4,725 emergency incidents in 2014 that included 3,715 EMS incidents. Exhibit 3 displays the City's call volume history since 2007. Total and EMS calls have grown more than an 80% since 2007. Exhibit 3 Call Volume History 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 4234 4399 4331 3856 3807 3715 3546 3474 3594 3337 3005 3016 9774 253 201 2007 2008 2009 2010 2011 2012 2013 2014 Total Calls --W-EMS Source: City of Pasco Ambulance Utility Review PowerPoint Presentation and Revised Incident Forecast The following chapters discuss and analyze the City's cost of service and ambulance rates and forecast the future rate impacts of adding an engine company. FCS GROUP Page 19 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 4 CHAPTER II: COST OF SERVICE ANALYSIS As noted in Chapter I, the Pasco Fire Department operates as an integrated fire and EMS department, and the station personnel respond to both types of incidents. To determine the cost of service, the Department's costs must be divided between fire and ambulance/EMS activities. To establish the cost of service of fire and ambulance/EMS services, several cost allocation steps were used. The allocation process consisted of the following steps. • Allocating the costs within the 2015 General Fund and Ambulance Fund budgets between those related to fire services and ambulance/EMS services, • Dividing the ambulance costs between availability and demand costs, and • Determining City ambulance/EMS costs versus Out of City ambulance/EMS costs. Exhibit 4 shows the framework for the overall allocation process to determine the cost of service for ambulance services. The amounts shown at each step represent the allocated costs. ao aU "; y ea +� U ° H Exhibit 4 2015 Cost of Service Framework General Fund Ambulance Fund $5,797,612 $3,815,313 Department Costs $9,612,925 Fire Ambulance/EMS G� $2,578,238 $7,034,687 b a a a City Availability City Demand Out of City Cost $6,244,899 $707,657 $82,131 •:;i FCS GROUP Page 20 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 5 KEY ASSUMPTIONS The first step in determining the cost of service analyzed the 2015 General Fund and Ambulance Fund budgets to determine the total costs of providing fire and EMS/ambulance services. To establish costs for these categories, the following sections discuss the assumptions and allocation factors that were used to allocate costs between fire and ambulance services and between availability and demand for In City and Out of City services. Labor Costs The City budgets for fire and suppression personnel costs in the General Fund and paramedic personnel costs in the Ambulance Fund. Total combined personnel costs were provided by City staff for each full-time position. The staff costs were allocated between fire and EMS based on the time spent responding to fire and EMS emergency calls. Based on the calculations and assumptions described below, 16% of the labor costs were allocated to fire and 84% to EMS. The time spent on fire and EMS calls was calculated by estimating the total time spent on calls and stand-by time for each activity. • The City provided time data for each engine, medic unit, or apparatus that responded to emergency calls in 2014. Under the assumption that two people are on each engine and medic unit, the total time they are out on call and are unavailable to respond to another call for service is calculated as demand time. • The remaining time is considered as stand-by or availability time, which represents the time staff is waiting and available to respond to a call for either fire or ambulance/EMS services. Any time that a firefighter, paramedic, or battalion chief is not responding to a call is considered availability time. • For other programs and resources that were not related to the station staffing, the costs were allocated to either fire or EMS depending on the program's purpose. For example, all costs related to fire prevention were allocated to fire services. Supplies, Services, and Other Costs • All administration costs were allocated based on the fire and EMS demand time assuming that the costs should be proportionate to the Department's demand time. • The supplies, services, and other costs under fire suppression, Hazmat, ARF Service, and Emergency Tech Rescue were all allocated to fire. • The supplies and services in the ambulance budget were allocated only to EMS. • The ambulance training and fire training costs were allocated to EMS and fire, respectively. • Facility costs were allocated based on square footage use for fire or ambulance/EMS and common and administrative spaces were split evenly between the two. Revenues To allocate and forecast the revenues associated with the City's ambulance/EMS services, RCW 35.21.766 requires that only revenues received through direct billing to the individual user of the ambulance service are allocated to the demand related costs. • All transport fees, mileage fees, non -transport med service fees, and Medicare and Medicaid discounts were used to offset demand cost. ':;� FCS GROUP Page 21 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 6 • Miscellaneous revenues and the Department of Health Grant were allocated to offset availability cost. • Based on the number of Out of City transports, the transport revenues were assumed to be non- resident and were subtracted from the budgeted In City transport revenues. The County Fire District and Contract Ambulance Services revenues were considered Out of City revenue and allocated to Out of City availability. Any positive net revenue from mutual aid transports was added back to the In City transport revenues. AMBULANCE AVAILABILITY AND DEMAND COSTS The costs listed in the ambulance/EMS category represent the costs of the City for providing ambulance services both inside City limits and outside City limits. Once these ambulance costs were identified, they were then divided between availability and demand costs. According to RCW 35.21.766, availability costs are attributable to the basic infrastructure needed to respond to a single call for service and may include dispatch, labor, training, equipment, patient care supplies, and equipment maintenance costs, while demand costs are attributable to the burden placed on the ambulance service by individual calls, such as those associated with the frequency of calls or the distance from hospitals. To determine availability and demand costs, the following assumptions and allocation factors were used. • The 2014 ratio of total time spent responding to calls compared to stand-by time for ambulance/EMS calls was used to allocate the personnel costs of responding firefighters and paramedics. This availability demand ratio was further split into City and Out of City availability and demand and resulted in 83% City availability, City 7% demand, 9% availability for Out of City, and 1% demand for Out of City. • Administrative EMS costs were all allocated to availability since they do not respond to emergency calls. • Training costs were allocated to availability since they were trained during time not spent responding to EMS calls. Based on the above assumptions, the total ambulance/EMS costs were $7,034,687 representing 73% of the total Department costs. The total City ambulance/EMS costs were 6,952,555. City availability costs were $5,595,483, while City demand costs were $707,657. Out of City availability costs were $649,416, while demand costs were $82,131. Because the Department is responding to Out of City calls usually as mutual aid, the total City costs include all Out of City availability costs, which increases the City's availability total to $6,244,899. The spreadsheets showing how costs were assigned to the availability and demand categories can be found in Appendix A. The City currently has contracts and receives payment from North Franklin County Hospital and Walla Walla #5 for their EMS services. Exhibit 5 displays the proportion of Out of City costs per jurisdiction based on percentage of incidents the City transported. The transport revenues displayed were calculated based on the proportion of transports in each jurisdiction and the overall average reimbursement per call ($393). ':;� FCS GROUP Page 22 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 7 Exhibit 5 2015 Estimated Out of City Cost of Service Average Cost per Transport $ 1,746 $ 1,746 Transports PerJurisdiction Kennewick North County Richland Other Walla Walla #5 Total 4 i 2014 167 49 64 112 27 419 Percentage 40% 12% 15% 27% 6% 100% North Franklin County Hospital currently pays $600 for assistance from the City, but has a combined availability and demand cost of $85,551. Walla Walla #5 is paying for more than their demand costs, but is still not fully recovering their total cost of service. The average cost per Out of City transport is $1,746 for North Franklin County Hospital and Walla Walla #5. The combined In City and Out of City availability costs are $6,244,899 and the In City demand costs are $707,657. Based on the customer class incident data of 3,579 incidents in 2014, the average In City availability and demand cost per incident is shown in Exhibit 6. The per incident cost within the City is slightly higher because the Out of City availability costs are included in the costs. The average cost per incident for In City incidents is $1,943, and currently, the average transport fee and utility rate revenue only support $952 of the cost. This is about a 49% cost recovery per incident. $2,500 $2,000 $1,500 $1,000 $500 •:;> FCS GR©UP Exhibit 6 2015 Average In City Cost per Incident $1,943 In City Cost $1,943 Revenue Sources Page 23 of 224 Kennewick North County Richland Other Walla Walla #5 Total Costs per Jurisdiction $ 291,571 $ 85,551 $ 111,740 $ 195,545 $ 47,140 $ 731,547 Availability Cost $ 258,836 $ 75,946 $ 99,195 $ 173,591 $ 41,848 $ 649,416 Demand Cost $ 32,735 $ 9,605 $ 12,545 $ 21,954 $ 5,292 $ 82,131 Revenue per Jurisdiction What they paid 600 25,000 25,600 Transport revenues 77,388 22,707 29,658 51,901 12,512 1 194,165 Net Cost of Service $ 214,183 $ 62,244 $ 82,082 $ 143,644 $ 9,628 1 $ 511,782 Average Cost per Transport $ 1,746 $ 1,746 Transports PerJurisdiction Kennewick North County Richland Other Walla Walla #5 Total 4 i 2014 167 49 64 112 27 419 Percentage 40% 12% 15% 27% 6% 100% North Franklin County Hospital currently pays $600 for assistance from the City, but has a combined availability and demand cost of $85,551. Walla Walla #5 is paying for more than their demand costs, but is still not fully recovering their total cost of service. The average cost per Out of City transport is $1,746 for North Franklin County Hospital and Walla Walla #5. The combined In City and Out of City availability costs are $6,244,899 and the In City demand costs are $707,657. Based on the customer class incident data of 3,579 incidents in 2014, the average In City availability and demand cost per incident is shown in Exhibit 6. The per incident cost within the City is slightly higher because the Out of City availability costs are included in the costs. The average cost per incident for In City incidents is $1,943, and currently, the average transport fee and utility rate revenue only support $952 of the cost. This is about a 49% cost recovery per incident. $2,500 $2,000 $1,500 $1,000 $500 •:;> FCS GR©UP Exhibit 6 2015 Average In City Cost per Incident $1,943 In City Cost $1,943 Revenue Sources Page 23 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 8 CHAPTER III: RATE ANALYSIS Once the availability and demand costs were identified, the next step was to determine the availability and demand rates. RCW 35.21.766 establishes the following rate policies. • Availability costs must be uniformly applied across user classifications, • Demand costs must be based on each user classification's burden on the utility, • The costs for exemptions or reductions are a general expense of the utility and are designated as an availability cost to be spread uniformly across the utility user classifications, • Medicaid eligible persons who reside in a nursing home, boarding home or adult family home, or who receive in-home services are exempt, and • Designated classes consistent with Article VIII, section 7 of the state Constitution may be exempt from or have reduced rates. CUSTOMER CLASSES To determine the rates, the total number of customers in the City also had to be identified. FCS GROUP first worked with the City to identify the various classes that the City uses to classify its current ambulance utility customers. Next, the City provided the total number of existing ambulance accounts and billing units per account classified by single family, multi -family, commercial/business, nursing homes, public, and miscellaneous. It should be noted that not all the nursing/care facilities were included in the City's existing account data. The City determined to treat each nursing home as one billing unit and keep them listed in their current billing category. Exhibit 7 shows the customer classes and the corresponding number of accounts. Since the nursing homes are billed as a single unit rather than by individual customers, we are assuming no Medicaid accounts. Exhibit 7 Number of Billing Units by Customer Class In addition to the number of billing units, the number of City EMS responses by customer class was provided by the City for 2014. Exhibit 8 shows a breakdown of the 3,579 City EMS responses based on the customer class incident data. The Medicaid calls were estimated from the total nursing home calls based on the percentage of Medicaid billing units in those facilities. ':;� FCS GROUP Page 24 of 224 Percent of Percent of Percent of Billing Medicaid Total Billing Total Billing Customer Class Regular Units Medicaid Billing Units Units Units Single Family 15,793 69% 0% 15,793 69% Mufti -Family 5,768 25% 0% 5,768 25% Commercial/Business 1,211 68 5% 0.3% 0% 0% 1,211 68 5% 0% Public Total 22,840 100% - 0% 22,840 100% In addition to the number of billing units, the number of City EMS responses by customer class was provided by the City for 2014. Exhibit 8 shows a breakdown of the 3,579 City EMS responses based on the customer class incident data. The Medicaid calls were estimated from the total nursing home calls based on the percentage of Medicaid billing units in those facilities. ':;� FCS GROUP Page 24 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 9 Exhibit 8 Number of Responses by Customer Class Customer Class Pasco Regular Calls Percentage of Regular Calls Pasco Medicaid Percentage of Calls Medicaid Calls Total Percentage of Total Calls Single Family 1362 39% 0% _ 1,362 38% Multi -Family 815 24% 0% 815 23% Commercial/Business 577 17% 0% 577 16% Nursing Homes 109 3% 114 100% 223 6% Public 541 16% 0% 541 15% Miscellaneous 61 2% 0% 61 21X Total 3,465 100% 114 100% 3,579 100% AVAILABILITY AND DEMAND COSTS The law requires that revenues such as ambulance charges and grants be subtracted from the revenue needed for the ambulance utility. The 2015 budget included ambulance transport fee revenues as well as fees for non -transport medical service, Medicare and Medicaid discounts, a state grant, and miscellaneous revenues. To calculate the cost that can be recovered from rates, these revenues were subtracted from the availability and demand costs as identified and discussed above in Chapter II. Because the Out of City responses are for mutual aid and not a result of contracts for services, the $649,416 calculated for Out of City availability costs is absorbed by the City. This assumption results in Out of City revenues being larger than Out of City demand costs by $137,633. These additional revenues are used to help offset the City's availability costs. Because the transport fee revenue was greater than the City's $707,657 in demand costs, there are no demand related costs and the remaining net costs of $5,790,137 are all availability costs. Exhibit 9 shows the details of this calculation. Exhibit 9 Adjusted 2015 Availability and Demand Costs Ambulance Utility Revenue Requirement Availability Demand Total Annual In City Cost $ 6,244,899 $ 707,657 $ 6,952,555 Offsetting Revenues Availability Demand Total NonTransport Med Service $ 25,000 $ 25,000 Transport Fee - Resident $ 1,475,000 $ 1,475,000 Transport Fee - NonResident $ 235,333 $ 235,333 Mileage Fees $ 150,502 $ 150,502 Medicare Discounts $ (395,000) $ (395,000) Medicaid/DSHS Discounts $ (463,000) $ (463,000) Net Out of City Revenue $ 137,633 $ 137,633 Misc Amb Discounts $ (5,000) $ (5,000) AR & Collection Interest $ 750 $ 750 Miscellaneous Revenues $ - General Fund Subsidy $ - State Grant Dept Health $ 1,200 $ 1,200 Total Revenues $ (3,050) $ 1,165,469 $ 1,162,419 Adjusted Cost $ 6,247,949 $ 457,812 $ 5,790,137 ':;% FCS GROUP Page 25 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 10 Based on the net ambulance utility costs of $5,790,137 and 22,840 regular billing units, the ambulance rate per unit is $253.51 a year, or $21.13 a month as shown below in Exhibit 10. This represents a 173% increase over the current rate of $93.00 a year, or $7.75 a month. Exhibit 10 Monthly Ambulance Utility Rate Comparison Rate Schedule 2015 Existing 2015 Calculated % Increase Single Family $7.75 $ 21.13 173% Multi -Family $7.75 $ 21.13 173% Commercial/Business $7.75 $ 21.13 173% Nursing Homes $7.75 $ 21.13 173% Public $7.75 $ 21.13 173% RATE COMPARISONS The City's current rate structure requires a contribution from the General Fund to support the ambulance cost of service. The rates calculated in Exhibit 10 are based on full cost recovery, meaning the ambulance utility rates along with transportation revenues will recover the total EMS cost of service without support from the General Fund. Because the rates significantly increase based on the cost of service analysis, the City has proposed a 2016 increase that is less than full cost recovery. Exhibit 11 presents the proposed rate increase for 2016 with the corresponding General Fund contribution and savings in comparison to the current budget and the combined 2016 budget. Exhibit 11 Ambulance Rate Comparisons Cost Recovery 2015 Current Cost Recovery 2015 Full Cost Recovery 2016 Total Calculated Cost 2016 Proposed Ambulance Budget* Monthly Fee $ 7.75 $ 21.13 $ 12.65 $ 12.65 Annual Fee $ 93.00 $ 253.51 $ 151.75 $ 151.75 Total Annual Cost $ 7,034,687 $ 7,034,687 $ 7,764,249 $5,660,577 Annual In City Cost $ 6,952,555 $ 6,952,555 $ 7,714,990 Revenue Ambulance Utility Fee $ 2,000,000 $ 5,790,137 $ 3,466,019 $3,466,019 Net Transportation Fees $ 1,027,835 $ 1,027,835 $ 1,310,835 $1,530,600 Miscellaneous Fees $ (3,050) $ (3,050) $ (2,950) $ (2,950) Net Out of City Revenue $ 137,633 $ 137,633 $ 170,505 Fund Balance $ 570,763 $ - $ 246,908 $ 246,908 General Fund Contribution $ 3,219,374 $ - $ 2,523,672 $ 420,000 Total Revenue $ 6,952,555 $ 6,952,555 $ 7,714,990 $5,660,577 Out of City Demand Cost $ 82,131 $ 82,131 $ 49,260 Total Annual Cost $ 7,034,687 $ 7,034,687 $ 7,764,249 $5,660,577 *Represents proposed 2016 Ambulance Fund budget In the 2015 budget, expected revenue was $3,244,550 in the Ambulance Fund. This is $570,763 lower than the budgeted expenses of $3,815,313 suggesting support from Ambulance Fund's fund ':;% FCS GROUP Page 26 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 11 balance. The 2016 proposed rate indicates that even with the increase in EMS costs in the 2016 budget, there will be a General Fund savings of $695,702 compared to the current budget. With a rate of $12.65 per month, 33% of total EMS costs will still be subsidized by the General Fund as an interfund contribution to the Ambulance Fund and as part of the General Fund Fire budget. RATE AND ACCOUNT IMPLEMENTATION ISSUES During our review of the account classifications and discussions with the City and Department staff, there were a number of issues that the City might want to address concerning equity in how the monthly rate is charged. These issues include the following: • According to the City, it currently exempts nursing homes from paying the monthly ambulance rate because the City says that it has exempted both Medicare and Medicaid patients. RCW 35.721.766 only provides for an exemption for persons who are Medicaid eligible and who reside in a nursing facility, assisted living facility, adult family home, or receive in-home services. The legislation does not exempt Medicare patients. Because nursing homes, assisted living, and other types of care facilities generally have a high number of calls relative to the number of people served, the City might not want to exempt all such facilities from the monthly fee. In some cities, the rate is charged for each non -Medicaid patient or client. The City should review whether such an exemption is still warranted, and if not, the City's municipal code and its definitions should be reviewed to determine whether any changes should be made to the code. • Another issue that is often discussed is how commercial, industrial, and other businesses and properties should pay and whether how the rate charged is equitable. Some considerations include the following: ■ Should a large business pay the same as a small business and a single family residence and should a property owner with several businesses on a property (e.g. a strip mall) pay the same as a property with one business on the property? ■ Should hotels and motels pay a single monthly fee like businesses or should they pay the monthly rate on per unit basis? ■ The City already makes a distinction for multi -family residences and counts each multi- family unit as a separate billing unit. Some cities have addressed these issues by charging the rate on per business basis using their business license data to help identify the businesses. Another city charges businesses based on the number of equivalent residential units which is calculated by dividing the number of employees by the average household size in the city. In a city with many hotels, the number of billing units for hotels is based on the average number of units occupied in the previous year. Any change in how the City addresses these issues can increase the number of billing units, and as a result, the rate can be lowered because the costs are spread across more billing units. These changes, however, primarily affect rates paid by businesses. ':;� FCS GROUP Page 27 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 12 CHAPTER IV: FIVE YEAR FORECAST As part of this study, the City wanted to identify the impacts of adding an engine company and responding to an increased number of EMS incidents over the next five years. City staff provided projected incidents for 2019 as well as the costs and response data associated with adding an engine company at Station 84. Using 2015 as the base year, the expected costs and revenues of providing ambulance/EMS services for 2016-2019 were forecasted. The following assumptions were made to create the forecast: • City incident growth is evenly spread over the next five years. • Out of City incidents will stay constant over the next five years. • Using the most recent forecast from the Washington State Economic and Revenue Forecast Council, personnel costs will inflate according to the Seattle Non-farm Annual Wage Index by an average of 3.7%. • All other costs will inflate by an average of 2.0% based on the Seattle CPI forecast from the Washington State Economic and Revenue Forecast Council. • Two customer account growth rate scenarios were analyzed: ■ Under the OFM Growth Rate scenario, single family and multi -family accounts will grow at the average housing growth over the past five years for Franklin County as determined by the Office of Financial Management (April 2015). Single family will grow at 3.1% and multi- family at 2.4%. ■ Under the 1% Growth Rate scenario used in the City's utility rate study, both single family and multi -family accounts will grow at only 1% per year. • All Out of City transport revenues are considered Non -Resident, and are calculated using the average reimbursement per call ($393). • Projected In City transport revenues are calculated assuming 27% of transports are Medicaid. • The City will pay for all Out of City availability costs. • Availability and demand costs across jurisdictions are based on their percentage of transports: Kennewick -40%, North County -12%, Richland -15%, and Other -33%. • The additional engine company at Station 84 is planned for in 2017 with a staffing complement of three captains, three firefighters and three paramedics. The City has forecasted that this additional engine company would respond to 19% of the existing incidents. • Under HB 2007 legislation, it is assumed that starting the last quarter of 2016 Medicaid reimbursements are going to increase from $168 to the same payment amount as Medicare ($431). • The collection percentage for new accounts will be equivalent to the current 95% collection rate. Given the actual EMS and fire incident numbers for 2014, projected 2015 and 2016 incident numbers, and projected incident growth for 2019, the growth was evenly spread over the forecasted years. Exhibit 12 presents the Fire Department's estimated number of incidents for each year. ':; FCS GROUP Page 28 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 13 Exhibit 12 Projected Incident Growth 6000 5,523 5,651 5,114 5000 4,725 4,404 4,484 4,040 4000 3,715 3000 2000 1,010 1,074 1,119 1,167 1,214 1,262 1000 0 2014 2015 2016 2017 2018 2019 LEMS —0—Fire Notal 5,778 5,906 4,564 4,644 With the additional engine company at Station 84, the distribution of incidents per station will be affected. Exhibit 13 shows the distribution of 2014 incidents per station compared to what it might be with the addition of another engine company at Station 84. The majority of Station 84's responses would be for incidents previously responded to by Station 82. Exhibit 13 Redistribution of 2014 Incidents with Station 84 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1,526 1,520 1.429 1,560 1,528 Station 81 Station 82 Station 83 Station 84 ■ Before Addition s' After Addition Of the total EMS incidents, 76% of the incidents are expected to need ambulance transportation each year, and 27% of these transports will be Medicaid customers. Beginning the last quarter of 2016 with an increase in Medicaid payments to $431, transport revenue per year starting in 2017 is expected to increase by about $250,000. Conversely, the added engine company at Station 84 in 2017 leads to a large increase in costs with the addition of personnel, supplies, and facility costs. Exhibit •:;i FCS GROUP Page 29 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Page 14 14 shows these forecasted expenditures and revenues from 2015 through 2019 assuming full cost recovery for ambulance/EMS services. The General Fund is only used to cover fire associated costs. Exhibit 14 Projected Expenditures and Revenues Based on Full Cost Recovery $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2015 2016 2017 2018 2019 ■ EMS Cost ■ Fire Cost ■ Rate & Transport Revenues ■ General Fund Contribution To ensure full cost recovery under the assumption that the collection factor for rates is 95%, 5% of the revenues were added back into the total costs as bad debts before the rates were calculated. Therefore, the rate revenues shown above are 5% higher than actually expected assuming 100% payment, but if the City only collects 95% of the ambulance utility fees, it will still achieve full cost recovery. In comparison, the City 2016 budget projects the General Fund contribution to be 7% of the Ambulance Fund. Assuming the City will continue this level of funding, Exhibit 15 displays the forecasted expenditures and revenues with the General Fund partially subsidizing ambulance /EMS services in the Ambulance Fund. Exhibit 15 Projected Expenditures and Revenues Based on Proposed General Fund Contribution $14,000,000 -1 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2015 2016 2017 2018 ■ EMS Cost ■ Fire Cost ■ Rate & Transport Revenues ■ General Fund Contribution 2019 ':;4 FC5 �ZRQ� Page 30 of 224 City of Pasco, Washington Ambulance Cost of Service and Rate Study November, 2015 Page 15 As previously mentioned, two rate scenarios were used to account for different growth rates. The OFM average housing growth over the past five years was 3.1% for single family and 2.4% for multi- family. A more conservative growth rate of 1% was also considered because it is the assumed growth rate for utilities in the City. With lower customer account growth, the rate per customer will increase annually. With the addition of another engine company, there is a dramatic increase in rates between 2016 and 2017. Exhibit 16 displays the forecasted monthly rates under the two growth scenarios with full cost recovery, as well as the forecasted monthly rates assuming the 2016 proposed Ambulance Fund and the General Fund contribution to the Fund. Exhibit 16 Comparison of the 2015-2019 Forecasted Monthly Rates Based on Full Cost Recovery and Based on the Proposed 2016 Ambulance Fund Budget $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 �t _ _.. 2015 2016 2017 2018 2019 � OFM Account Growth - Full Cost � 1% Account Growth - Full Cost —a-1%Account Growth - Ambulance Fund Based on 2016 Proposed Budget With the added engine company, the monthly ambulance utility rate based on full cost recovery in 2017 increases about $5 per month compared to the calculated 2016 rate and more than $19 per month than the current rate, which means that the annual cost for full cost recovery increases from the existing $93 to $266 to $322. In comparison, the proposed 2016 budget rate assumes the General Fund will subsidize the Ambulance Fund at a rate of 7% with I% account growth annually. The forecasted rates are about $10 lower each month. It should be noted that while the General Fund is only subsidizing 7% of the Ambulance Fund under this scenario, it will be subsidizing another $3,233,593 from the Fire General Fund in 2017 to pay for the full EMS cost of service of $9,354,893 with a 95% collection factor. If the City decides to fully recover all costs through the ambulance utility rates or to partially subsidize the ambulance utility as it currently does, the future forecasted rates and costs might change. With such large increases from the current rate to 2015's calculated full cost recovery rate to 2016's forecasted rate, the City might experience an increase in the percentage of non -payments from the current five percent to a higher percentage. If a higher non- payment percentage occurs, the City would have to increase its rates further to offset the higher non- payment rate. However, the City could develop a policy to recover all costs by 2019 or later and reduce the subsidy each year over the next four to five years or it could continue to subsidize a percentage of the costs with General Fund support rather than changing to a full cost recovery policy such as proposed in the 2016 Ambulance Fund budget. FCS GROUP Page 31 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Appendix A APPENDIX A: COST OF SERVICE ANALYSIS DETAILS ':;% FCS GROUP Page 32 of 224 City of Pasco, Washington November, 2015 General Fund Ambulance Cost of Service and Rate Study Appendix A-1 Prog 151 - Suppression 2015 Budget Allocation Method Fire EMS Total Availability Method Availability Demand Availability Demand Availability Demand Out of City Out of City Total Prog 150 - FD Admin 2015 Budget Allocation Method $ 412,506 _$ 2,169,324 $ 2,581,830 $ 35,092 $ 154,546 $ 219,638 $ 23,949 $ 125,943 $ 149,892 $ 1,150 $ 6,050 $ 7,200 $ 991 $ 5,209 $ 6,200 $ - $ - $ - $ 6,623 $ 34,829 $ 41,452 $ 26,792 $ 140,895 $ 167,687 $ 15,212 $ 79,996 $ 95,208 $ 87,369 $ 459,463 $ 546,832 $ 6,924 $ 36,412 $ 43,336 $ 12,950 $ - $ 12,950 $ 21,744 $ - $ 21,744 $ 25,866 $ - $ 25,866 $ 3,928 $ - $ 3,928 Fire EMS Total Availability Method In City In City Out of City Out of City Total Wages $ 84,560 Allocated Time $ 13,510 $ 71,050 $ 84,560 All to Availability $ 63,661 $ - $ 7,389 $ - $ 71,050 Wages - Overtime $ 503 Allocated Time $ 80 $ 423 $ 503 All to Availability $ 379 $ - $ 44 _$ - $ 423 Social Security $ 2,751 Allocated Time $ 440 $ 2,311 $ 2,751 All to Availability $ 2,071 $ - $ 240 $ - $ 2,311 State Retirement $ 2,607 Allocated Time $ 417 $ 2,190 $ 2,607 All to Availability $ 1,963 $ - $ 228 $ - $ 2,190 Life Vision Worker Comp $ 360 Allocated Time $ 58 $ 302 $ 360 Al to Availability $ 271 $ - $ 31 $ - $ 302 I/F Medical Vision Prem $ 13,338 Allocated Time $ 2,131 $ 11,207 $ 13,338 All to Availability $ 10,042 $ - $ 1,165 $ - $ 11,207 I/F Dental Premium $ 1,252 Allocated Time $ 200 $ 1,052 $ 1,252 All to Availability $ 943 $_ $ 109 $ $ 1,052 O&M Supplies $ 1,000 Allocated Time $ 160 $ 840 $ 1,000 All to Availability $ 753 $ $ 87 $ - $ 840 Clothing Uniforms $ 500 Allocated Time $ 80 $ 420 $ 500 All to Availability $ 376 $ - _$ 44 $ - _$ 420 Dues Subscription Memberships $ 4,200 Allocated Time $ 671 $ 3,529 $ 4,200 Al to Availability $ 3,162 $ - $ 367 $ - $ 3,529 Train Registration Tuition $ 500 Allocated Time $ 80 $ 420 $ 500 All to Availability $ 376 $ - $ 44 $ - $ 420 Lodging Meals Miles Airfare $ 1,000Allocated Time $ 160 $ 840 $ 1,000 All to Availability $ 753$ - $ 87 $ - $ 840 Professional Services $ 884 .Allocated Time $ 141 _$ 743 $ 884 All to Availability $ 666 _$ - $ 77 $ - $ 743 R&M Service Contracts $ 250 Allocated Time $ 40 $ 210 $ 250 All to Availability 185 $ - $ 22 $ - $ 210 Vehicle Equip Other Rentals $ 5,100 Allocated Time $ 815 $ 4,285 $ 5,100 All to Availability _$ $ 3,840 $ - $ 446 $ - $ 4,285 $ 1,080 Allocated Time $ 173 $ 907 $ 1,080 All to Availability Telephone Cell Pagers $ 813 $ - $ 94 $ - $ 907 Internet Web Communications $ 2,925 Allocated Time $ 467 $ 2,458 $ 2,925 Al to Availability $ 2,2021 $ - $ 256 $ - $ 2,458 $ 810 Allocated Time $ 129 $ 681 $ 810 All to Availability Insurance Premiums &Claims $ 610$ - $ 71 $ - $ 681 I/F ER Replacement $ 1,995 Allocated Time $ 319 $ 1,676 $ 1,995 All to Availability $ 1,502 $ - $ 174 $ $ 1,676 I/F ER O&M $ 2,308 Allocated Time $ 369 $ $ 2,308 All to Availability 1,738 $ - 202_$ - $ 1,939 I/F ER Fuel $ 985 Allocated Time $ 157 _1,939 $ 828 $ 985 Ali to Availability _$ $ 742 $ - _$ $ 86 $ - $ 828 $ FD Admin Budget Total: $ 128,908 $ 20,596 $ 108,312 $ 128,908 $ 97,048 $ - $ 11,264 $ - $ 108,312 Prog 151 - Suppression 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In City Demand In City Availability Demand Out of City Out of City Total Wages Wages - Overtime Holiday Pay Call Out Pay Upgrade pay Reimb Wages Jury Duty L&I Social Security State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Clothing Uniforms Strucl Personal Protect Equip Ballistics Person Protect Equip Wildland Protect Clothing Tools Equip Furn <$5,000 City Mgr Discretionary Items Laundry Laundry Person Protection Medical Services Professional Services Other Contract Services R&M Service Contracts Telephone Cell Pagers Internet Web Communications Insurance Premiums & Claims I/F ER Replacement I/F ER O&M I/F ER Fuel Wages -Battalion Chief $ 2,581,830 .Allocated Time $ 219,638 Allocated Time $ 149,892 Allocated Time $ 7,200 Allocated Time $ 6,200 Allocated Time Allocated Time $ 41,452 .Allocated Time $ 167,687 .Allocated Time $ 95,208 Allocated Time $ 546,832 :Allocated Time $ 43,336 Allocated Time $ 12,950 All to Fire $ 21,744 .All to Fire $ 25,866 All to Fire $ 3,928 All to Fire $ 412,506 _$ 2,169,324 $ 2,581,830 $ 35,092 $ 154,546 $ 219,638 $ 23,949 $ 125,943 $ 149,892 $ 1,150 $ 6,050 $ 7,200 $ 991 $ 5,209 $ 6,200 $ - $ - $ - $ 6,623 $ 34,829 $ 41,452 $ 26,792 $ 140,895 $ 167,687 $ 15,212 $ 79,996 $ 95,208 $ 87,369 $ 459,463 $ 546,832 $ 6,924 $ 36,412 $ 43,336 $ 12,950 $ - $ 12,950 $ 21,744 $ - $ 21,744 $ 25,866 $ - $ 25,866 $ 3,928 $ - $ 3,928 Availability Demand Ratio $ 1,793,689 Availability Demand Ratio $ 152,590 Availability Demand Ratio $ 104,135 Availability Demand Ratio $ 5,002 Availability Demand Ratio $ 4,307 _$ - Availability Demand Ratio $ 28,795 Availability Demand Ratio _$ 116,498 Availability Demand Ratio $ 66,144 Availability Demand Ratio $ 379,904 Availability Demand Ratio $ 30,1_07 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ _ - 5 _ - $ - $150,044 $ 208,177 $ 17,414 $ 12,764 $ 17,710 $ 1,451 $ 8,711 $ 12,086 $ 1,011 $ 418 $ 581 $ 49 $ 360 $ 500 $ 42 $ - $ - $ _ $ 2,409 $ 3,342$ 280 $ 9,745 $ 13,521 $ 1,131 $ 5,533 $ 7,677 $ 642 $ 31,779 $ 44,092 $ 3,658 $ 2,518 $ 3,494 $ 292 $ - $ - $ - $ - $ - $ - $ $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 2,169,324 $ 184,546 $ 125,943 _ $ 6,050 $ 5,209 $ - 34,829 _$ 140,895 _$ $ 79,996 $ 459,463 $ 36,412 $ - $ - $ - $ - $ 4,378 All to Fire $ 4,378 $ - $ 4,378 $ $ 30,529 All to Fire $ 30,529 $ - $ 30,529 $ - $ 30,000 All to Fire $ 30,000 $ - $ 30,000 $ $ 10,000 All to Fire $ 10,000 $ - $ 10,000 $ - $ 10,000 All to Fine $ 7,500 .All to Fire $ 10,000 $ - $ 10,000 $ - $ 7,500 $ - $ 7,500 $ - $ 7,350 All to Fire $ 7,350 $ 13,680 All to Fire $ 13,680 $ 16,550 .All to Fire $ 16,550 $ 6,570 All to Fire $ 6,570 $ 2,700 All to Fire $ 2,700 $ 24,505 All to Fin, $ 24,505 $ 239,440 ,Allocated Time - Engines $ 71,577 $ 121,861 Allocated Time - Engines $ 36,429 $ - $ 7,350 $ - $ - $ 13,680 $ $ - $ 16,550 $ - $ - $ 6,570 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Availability Demand Ratio $ 135,796 $ 11,610 $ 16,109 $ 1,348 _$ $ - $ 2,700 $ - $ - $ 24,505 $ - $ 167,863 $ 239,440 $ 167,863 $ 85,432 85,432 $ 121,861 Availability Demand Ratio $ 70,639 $ 5,909 $ 8,198 $ 686 _$ $ 33,720 Allocated Time - Engines $ 10,080 $ 23,640 $ 33,720 $ 391,440 Allocated Time - Battalion Chief $ 251,588 $ 139,852 $ 391,440 Availability Demand Ratio $ 19,546 $ 1,635 $ 2,269 $ 190 $ 23,640 Availability Demand Ratio $ 115,636 $ 9,673 $ 13,421 $ 1,123 $ 139,852 Suppression Budget Total: $ 4,873,986 $1,214,531 $3,659,455 1 $4,873,986 1 $ 3,025,792 $253,111 $ 351,176 $ 29,376 1 $3,659,455 Prog 153 - Fire Prev/Investig 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In City Demand In City Availability Demand Out of City Out of City Total Wages Wages - Overtime Social Security Life Vision Worker Comp Forms Stationary Bus Cards O&M Supplies Train Registration Tuition Lodging Meals Miles Airfare Advertising Insurance Premiums & Claims $ 18,720 All to Fire $ 6,002 All to Fire $ 15,720 $ 6,002 $ - $ $ - $ 15,720 6,002 $ - $ - $ - $ - $ $ - $ - $ - $ - $ - $ 1,891 All to Fire $ 1,891 $ - $ 1,891 $ 86 ,All to Fire $ 86 $ - $ 86 $ 200 All to Film $ _200 $ - $ 200 $ 500 All to Fire $ 500 $ - $ 500 $ 3,750 .All to Fire $ 3,750 $ - $ 3,750 $ 3,000 All to Fire $ 3,000 $ - $ 3,000 $ 1,800 .AII to Fire $ 1,800 $ - $ 1,800 $ 135 All to Fire $ 135 $ - $ 135 $ - $ $ - $- $ - $ $ - $ - $ - $ $ - $ - $ - $ - _$ - $ - $ - $ - $ $ - $ - $ $ $ - $ - $ - $ - $ - $ - $ - $ - $ - - $ - $ - _$ $ - $ - $ - $ - Fire Prev/Investig Budget Total: $ 36,084 $ 36,084 $ - $ 36,084 $ - $ - $ - $ - $ -4*4 FCS GROUP Page 33 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Appendix A-2 Prog 156 - FD Facilities 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In City Availability Demand Availability Demand $ 2,000 Square Feet $ 4,175 Square Feet $ 6,700 Square Feet $ 7,500 Square Feet $ 16,000 square Feet $ 6,000 Square Feet $ 26,642 Square Feet $ 2,750 Square Feet $ 16,000 squareFeet $ 7,000 .Square. Feet $ 4,000 Square Feet $ 7,000 Square Feet $ 5,640 .Square Feet Prog 155 - FD Train EE 2015 Budget. Allocation Method 2,000 Fire EMS $ $ $ Total Availability Method In City In City Out of City Out of City Total Wages $ 104,214 All to Fire $ 104,214 $ - $ 104,214 $ - $ - $ - $ - $ - $ 30,994 All to Fire $ 30,994 $ - $ _ 30,994 $ - $ - $ - $ - $ - Wages - Overtime Call Out Pay $ 360 All to Fire $ 360 $ - $ 360 $ - $ - $ - $ - $ Social Security $ 1,961 All to Fire $ 1,961 $ - $ 1,951 $ - $ - $ - $ - $ - State Retirement $ 7,090 All to Fire $ 7,090 $ - $ 7,090 $ - $ - $ - $ - $ - Life Vision Worker Comp $ 3,012 .All to Fire $ 3,012 $ - $ 3,012 $ $ - $ - $ - $ - $ 15,848 All to Fire $ 15,848 $ - $ 15,848 $ - $ - $ - $ - $ - I/F Medical Vision Prem I/F Dental Premium $ 1,256 All to Fire _$ 1,256 $ - $ 1,256 $ - $ - $ - $ - $ O&M Supplies $ 2,140 .All to Fire $ 2,140 $ - $ 2,140 $ - $ - $ - $ - $ - Grant & Other Reimb Items $ 9,788 All to Fire $ 9,788 $ - $ 9,788 $ - $ - $ - $ - $ Clothing Uniforms $ 800 All to Fire $ 800 $ - $ 800 $ - $ - $ - $ - $ - Tools Equip Furn <$5,000 $ 5,725 All to Fire $ 5,725 _$ - $ 5,725 $ - $ - $ - $ - $ Train Registration Tuition $ 20,875 All to Fire $ 20,87,$ - $ 20,875 $ - $ - $ - $ - $ - Lodging Meals Miles Airfare $ 10,000 All to Fire $ 10,000 $ - $ 10,000 $ - $ - $ - $ - $ - Professional Services $ 3,000 All to Fire $ 3,000 $ - $ 3,000 $ - $ - $ - $ - $ R&M Service Contracts $ 1,400 All to Fire $ 1,400 $ - $ 1,400 $ - $ - $ - $ - $ - Facility Rentals $ 5,200 All to Fire $ 5,200 $ - $ 5,200 $ _ - $ - $ - $ - $ - Insurance Premiums & Claims $ 740 All to Fire $ 740 $ - $ 740 $ - $ -. $ - $ - $ - I/F ER Replacement $ 1,910 All to Fire $ 1,910 $ - $ 1,910 $ - $ - $ - $ - $ - I/F ER O&M $ 5,478 All to Fire $ 5,478 $ - $ 5,478 $ - $ - $ - $ - $ - I/F ER Fuel $ 1,680 All to Fire $ 1,680 $ - $ 1,680 $ - $ - $ - $ - $ - $ $ FD Train EE Budget Total: $ 233,471 $ 233,471 $ - $ 233,471 $ - $ - $ $ - $ Prog 156 - FD Facilities 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In City Demand Availability Demand In City Out of City Out of City Total Office Janitorial Supplies O&M Supplies Tools Equip Furn <$5,000 Laundry Professional Services R&M Service Contracts R&M Other Services Water (City - Non Tax) Electricity Natural Gas Garbage Waste Disposal Insurance Premiums & Claims I/F Facilities Services $ 2,000 Square Feet $ 4,175 Square Feet $ 6,700 Square Feet $ 7,500 Square Feet $ 16,000 square Feet $ 6,000 Square Feet $ 26,642 Square Feet $ 2,750 Square Feet $ 16,000 squareFeet $ 7,000 .Square. Feet $ 4,000 Square Feet $ 7,000 Square Feet $ 5,640 .Square Feet $ 1,194 $ 806 $ 2,000 Ail to Availability All to Availability All to Availability Al to Availability All to Availability All to Availability $ 722 $ 1,507 $ 2,419 $ $ $ - $ -. $ - $ 84 $ - 175 $ - 281 $ - $ 806 $ 2,493 $ $ 4,175 $ 1,682 _1,682 $ 4,001 $ 2,699 $ 6,700 $ 4,479 $ 3,021 $ 7,500 $ 9,554 $ 6,446 $ 16,000 $ 3,583 $ 2,417 $ 6,000 $ 15,909 $ 10,733 $ 26,642 $ 1,642 $ 1,108 $ 2,750 $ 9,554 $ 6,446 $ 16,000 $ 2,699 $ 2,707 $ - $ 314 $ - $_5,776 $ - $ 670 $ $ 2,166 $ - $ 251 $ - $ 3,021 $ 6,446 $ 2,417 $ 10,733 All to Availability $ 9,617 $ - $ 1,116 $ - All to Availability $ 993 $ - $ 115 $ - $ 1,108 Al to Availability All to Availability AII to Availability $ 5,776 $ - $ 670 $ - $ 2,527 $ $ 293 $ $ 1,444 $ - $ 168 1 $ - $ 6,446 $ 2,820 $ 4,180 $ 2,820 $ 7,000 $ 2,389 $ 1,611 $ 4,000 $ 4,180 $ 2,820 $ 7,000 $ 3,368 $ 2,272 $ 5,640 $ 1,611 All to Availability $ 2,527 $ - $ 293 $ -_ $ 2,036 $ $ 236 $ - $ 2,820 All to Availability $ 2,272 $ $ - $ 95 $ FD Facilities Budget Total: $ 111,407 $ 66,525 $ 44,882 $ 111,407 $ 29,987 $ 40,215 $ - $ 4,667 $ - $ 44,882 Prog 157 - Hazmat 2015 Budget Allocation Method Fire EMS Total Availability Availability Method In City Demand In City Availability Out of City Demand Out of City Total Wages - Overtime Social Security State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Train Registration Tuition Lodging Meals Miles Airfare Organizational Services Insurance Premiums & Claims $ 8,228 All to Fire $ 8,228 $ - $ 8,228 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ $ $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 5 - $ $ - $ - $ - $ 119 All to Fire $ 119 $ - $ 119 $ - $ $ - $ - $ 431 All to Fire $ 431 $ - $ 431 $ 240 All to Fire $ 240 $ - $ 240 $ 1,262 All to Fire $ 1,262 $ - $ 1,262 $ 100 All to Fire $ 100 _$ - $ 100 $ 2,500 All to Fire $ 2,500 $ - $ 2,500 $ 1,600 All to Fire $ 1,600 $ - $ 1,600 $ 1,000 All to Fire $ 1,000 $ - $ 1,000 $ 5,250 All to Fire $ 5,250 $ - $ 5,250 $ 110 All to Fire $ 110 $ - $ 110 $ $ $ $ $ $ $ $ $ $ $ $ Hazmat Budget Total: $ 20,840 $ 20,840 $ - $ 20,840 $ • $ $ - $ - $ Prog 158 - Emerg Tech Rescue 2015 Budget Allocation Method Fire EMS Total Availability Availability Method In C' Demand In City Availability Out of City Demand Out of City Total Wages - Overtime Social Security State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Tools Equip Furn <$5,000 Train Registration Tuition Lodging Meals Miles Airfare Insurance Premiums & Claims $ 13,487 All to Fire $ 13,487 $ 196 All to Fire $ 196 $ 705 All to Fire $ 705 $ 405 All to Fire $ 405 $ 2,130AII to Fire $ 2_,130 $ 169 AII to Fire $ 169 $ 500 All to Fire $ 500 $ 9,300 All to Fire $ 9,300 $ 2,000 All to Fire $ 2,000 $ 1,000 All to Fire $ 11000 $ 95 All to Fire $ 95 $ $ - $ - $ 13,487 196 $ - $ - $ - $ - $ $ - $ $ - $ - $ - $ - $ $ - $ 705 $ - $ - $ - $ - $ - $ - $ - $ - $ $ $ $ $ - $ 405 $ - $ $ - $ 2,130 $ - $ - - $ 169 $ - $ - _$ $ - $ 500 r$ - $ - $ _ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 9,300 $ - $ - $ $ - $ 2,000 $ - $ - $ $ - $ 11000_ $ - $ - $ - $ - $ $ - $ 95 $ Emerg Tech Rescue Budget Total: $ 29,987 $ 29,987 $ - $ 29,987 $ - $ - $ - $ - $ -4*4 FCS GROLT�' Page 34 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Appendix A-3 Pro 159 -ARF Service 2015 Budget Allocation Method Availability Demand Availability Method In City In City Fire EMS Other Mach Equip > $5,000 Total Availabilit Method Availability In Cit Demand Availability Demand In Cit Out of City Out of City Total Clothing Uniforms Struct Personal Protect Equip Tools Equip Furn <$5,000 Laundry Person Protection Miscellaneous Services Telephone Cell Pagers $ 3,750 All to Fire $ 10,650 All to Fire $ 250 All to Fire $ 1,050 All to Fire $ 3,025 All to Fire $ 600 All to Fire $ $ $ $ $ $ 3,750 10,650 250 1,050 3,025 600 $ - $ 3,750 _ $ - $ - $ - $ - $ - $ - $ - $ - $ - $- $ - $ - _ $ - $ - $ - $- $ - $ -_ $ - _$ - F ' $ - $ - $ - $ - $ $ $ $ - $ $ - $ 10_,650 $ - $ 250 $ - $ 1,050 $ - $ 3,025 $ - $ 600 $ ARF Service Budget Total: $ 19,325 $ 19,325 $ - $ 19,325 $ - $ - $ - $ - $ Prog 160 - ARF Train 2015 Budget Allocation Method Availability Demand Availability Method In City In City Fire EMS Other Mach Equip > $5,000 Total Availability Availability Method In City Demand In City Availability Demand �OutofCity Out of City Total Wages Wages - Overtime Holiday Pay Social Security State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Dues Subscription Memberships Train Registration Tuition Lodging Meals Miles Airfare Insurance Premiums & Claims $ 204,360 All to Fire $ 10,661 .All to Fire $ 10,374 .All to Fire $ 3,269 All to Fire $ 11,247 All to Fire $ 8,677 All to Fire $ $ $ $ $ $ 204,360 $ 10,661 $ 10,374 $ 3,269 $ 11,247 $ 8,877 5 - $ - $ - $ - $ - $ - $ 204,360 10,661 10,374 3,269 11,247 8,877 $ - $ - $ - $ - $ - $ - 1 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ $ - $ - $ - $ $ - $ - $ - $ - $ - $ - $ - $ $ $ - $ - $ - $ $ - $ - $ $ - $ - $ _ $ - $ $ -_ $ $ - $ $ - $ $ - $ $ - $ $ - $ $ - $ - $ - $ - $ - $ - $ - $ - $ - $ $ 49,449 All to Fire $ 49,449 $ - $ 49,449 $ 3,886 All to Fire $ 3,886 $ 600 All to Fire $ 800 $ 200 All to Fire $ 200 $ - $ 3,886 $ - $ 800 $ - $ 200 $ 29,400 All to Fire $ 29,400 $ 3,500 All to Fire $ 3,500 [$ - $ 29,400 1 $ - $ 3,500 $ 60 All to Fire $ 60 $ - $ 60 ARF Train Budget Total: $ 336,083 $ 336,083 $ - $ 336,083 $ - $ - $ - $ - $ Prog 620 - Capital Fire/Ambulance 2015 Budget Allocation Method Fire EMS Total Availability Demand Availability Method In City In City Availability Demand Out of City Out of C'y Total Other Mach Equip > $5,000 $ 7,521 Allocated T- $ 1,202 $ 6,319 $ 7,521 Availability Demand Ratio $ 5,225 $ 437 $ 606 $ 51 $ 6,319 $ - S Capital Fire/ Ambulance Budget Total: $ 7,521 $ 1,202 $ 6,319 $ 7,521 $ 5,225 $ 437 $ 606 $ 51 $ 6,319 General Fund Budget Grand Total 1 $ 5,797,612 $1,978,643 $3,818,969 1 $5,797,612 1 $ 3,168,281 $253,548 1 $ 367,713 $ 29,427 $3,818,969 ':.i FCS GR��F Page 35 of 224 City of Pasco, Washington November, 2015 Ambulance Fund Ambulance Cost of Service and Rate Study Appendix A-4 Prog 400 - Amb Admin 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In City Demand InAvailability City Demand Out of City Out of City Total Wages _ Wages - Overtime Social Security State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Clothing Uniforms Dues Subscription Memberships Train Registration Tuifion Lodging Meals Miles Airfare Professional Services Vehicle Equip Other Rentals Telephone Cell Pagers Internet Web Communications Insurance Premiums & Claims I/F ER Replacement I/F ER O&M I/F ER Fuel $ 84,560 Allocated Time $ 503 Allocated Time $ 2,751 Allocated Time $ 2,606 Allocated Time $ 360 Allocated Mme $ 13,336 Allocated Time $ 1,252 Allocated Time $ 1,500 Allocated Time $ 500 Allocated Time $ 625 Allocated Time $ 1,000 Allocated Time $ 1,500 Allocated Time $ 250 Allocated Time _ $ 3,000 Allocated Time $ 2,160 Allocated Time $ 2,925 Allocated Time $ 530 Allocated Time $ 5,715 Allocated Time $ 2,607 Allocated Time $ 1,880 Allocated Time. $ 13,510 $ 71,050 $ 84,560 All to Availability $ 63,661 $ - $ $ 379 $ - $ $ 2,071 $ - $ $ 1,962 $ - $ $ 271 _$ - $ $ 10,040 $ - $ $ 943 $ - $ $ 1,129 $ - $ $ 376 $ - $ $ 471 $ - $ $ 753$ - $ $ 1,129 $ - $ 188 $ - $ $ 2,259 $ - $ $ 1,626 $ - $ $ 2,202 $ - $ $ 399 $ - $ $ 4,303 $ - $ $ 1,963 $ - $ $ 1,415 $ - $ 7,389 $ _ _ _44 $ _ 240 $ 228 $ - 31 $ 1,165 $ - 109 _$ - 131 $ - 44 $ 55 $ 87 $ - 131 $ - 22 $ - 262 $ 189 $ 256 $ 46 $ - 499 $ - 228 $ - 164 $ - 71,050 423 2,311 2,190 302 11,205 1,052 1,260_ 420 525 840 1,260 210 _ 2,521 1,815 2,458 445 4,802 2,190 _ 1,580 $ 80 $ 423 $ 503 2,751 All to Availability MI to Availability $ 440 $ 2,311 $ 416 21190 _$ $ 2,606 All to Availability $ 58 _$ $ 302 $ 360 All to Availability $ 2131T$ 11,205 $ 13,336 All to Availability $ 200 $ 1,052 $ 1,252 All to Availability $ 240 $ 1,260_ $ 80 $ 420_ $ 1o0 $ 525_ $ 160 $ 840 $ 1,500 All to Availability $ 500 NI to Availability $ 625 All to Availability $ 1,000 NI to Availability $ 240 $ 1,260 $ 1,500 250 All to Availability All to Availability$ $ 40 $ 210 $ 479 $ 2,521 _$ $ 3,000 All to Availability $ 345 $ 1,815 $ 2,160 All to Availability $ 467 $ 2,458 $ 2,925 All to Availability $ 85 $ 445 $ 530 Al to Availability $ 913 $ 4,802 $ 5,715 All to Availability $ 417 $ 2,190 $ 2,607 NI to Availability $ 300 $ 1,580 $ 1,880 All to Availability $ - $i $ 2,995,815 $ 3,508,685 Amb Admin Budget Total: $ 129,560 $ 20,700 $ 108,860 $ 129,560 $ 52 $ 97,539 $ - $ 11,320 $ Frog 402 Ambulance Services 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In Demand In City City Availability Demand Out of City Out of City Total Wages Wages - Overtime Holiday Pay Call Out Pay Upgrade Pay Social Security State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Medical Supplies Grant & Other Reimb Items Clothing Uniforms Struct Personal Protect Equip Ballistics Person Protect Equip Wildland Protect Clothing Tools Equip Furn <$5,000 Laundry Laundry Person Protection Medical Services Organizational Services Professional Services Otter Contract Services R&M Service Contracts R&M Other Services Telephone Cell Pagers Internet Web Communications Insurance Premiums & Claims State Taxes Bad Debt Expense I/F Admin Services I/F ER Replacement I/F ER O&M I/F ER Fuel Tools Equip Furn > $5,000 Wages - Medical Officer $ 1,441,541 Allocated Time $ 155,474 Allocated Time $ 73,823 Allocated Time $ 2,430 Allocated Time $ 1,200 Allocated Time $ 23,094 Allocated Time $ 85,700 Allocated Time $ 50,680 Allocated Time $ 282,090 Allocated Time $ 22,367 Allocated Time $ 15,750 All To EMS $ 70,000 All To EMS $ 1,400 Allocated Time. $ 13,519 Allocated Time $ 12,732 All to Fire $ 3,928 All to Fire $ 3,688 All to Fire $ 26,620 Allocated Time $ 10,000 Allocated Time $ 7,000 Allocated Time $ 7,500 Allocated Time $ 54,720 Allocated Time $ 5,330 Allocated Time $ 54,720 Allocated Time $ 9,100 Allocated Time $ 9,950 Allocated Mme $ 2,370 Allocated Time $ 5,220 Allocated Time $ 15,443 Allocated Time $ 42,000 Allocated Time $ 210,000 All To EMS $ 341,830 Allocated Time $ 207,240 Allocated Time - Ambulance $ 88,429 Allocated Time - Ambulance $ 29,390 Allocated Time -Ambulance All To EMS $ 122,407 Allocated Time - Medical officer $ 230,319 $ 24,841 $ 11,795 $ 1,211,222 $ 1,441,541 Availability Demand Ratio $ 130,633 $ 155,474 Availability Demand Ratio $ 62,028 $ 73,823 Availability Demand Ratio $ 1,_001,490 $ 83,776 $ 108,013 $ 9,035 $ 51,287 $ 4,290 $ 1,688 $ 141 $ 834 $ 70 $ 16,044 $ 1,342 $ 59,539 $ 4,980 $ 35,209 $ 2,945 $ 195,978 $ 16,394 $ 15,539 $ 1,300 $ 14,112 $ - $ - $ 62,721 $ 1,054 $- $ 116,234 $ $ 12,536 $ $ 5,952 $ $ 196 $ $ 97 $ $ 1,862 $ $ 6,910 $ $ 4,086 $ $ 22,745 $ $ 1,803 $ $ 1,638 $ $ - $ $ 122 $ 9,723 1,049 498 16 8 156 578 342 1,903 151 - 7,279 1,211,222 130,633 62,028 2,042 _ 11008 19,404 72,007 42,583 237,020 18,793 15,750_ 70,000 1,176 $ 388 $ 2,042 $ 2,430 Availability Demand Ratio $ 192 _ $ 1,008 $ 1,200 Availability Demand Ratio $ 3,690 $ 19,404 $ 23,094 Availability Demand Ratio $ 13,693 $ 72,007 $ 85,700 Availability Demand Ratio _ $ 8,097 $ 42,583 $ 50,680 Availability Demand Ratio $ 45,070 $ 237,020 $ 282,090 Availability Demand Ratio $ 3,574 $ 18,793 $ 22,367 Availability Demand Ratio $ - $ 15,7_50 $ 15,750 AN to Availability $ - $ 70,000 $ 70,000 All to Demand _ $ 224 $ 1,176 $ 1,400 All to Availability $ 2,160__$ 11,359 $ 13,519 All to Availability $ 10,178 $ _ $ 1,181 _$ $ - 5 _ - $ - $ $ - $ - $ - $ $ - $ - $ - $ $ 18,494 $ 1,547 $ 2,146 $ 180 $ 7,529 $ - $ 874 $ $ 5,270 $ - $ 612 $ $ 5,646 $ - $ 655 $ $ 41,196. $ - $ 4_,781 _$ $ 4,013 $ - $ 466 $ $ 41,196 $ $ 4,781 $ $ 6,851 $ - $ 795 $ $ 7,491 $ - $ 869 $ $ 1,784 $ - $ 207 $ - $ 3,930 $ - $ 456 $ - $ - $ 11,626 $ - $ 1,349 $ - $ 31,620 $ - $ 3,670 $ - $ 188,162 $ - $ 21,838 $ 257,347 $ $ 29,868 $ $ 167,4_40 $ _ $ 19,433 $ 1 $ 71,446 $ $ 8,292 $ $ - $ 23,746 $ $ 2,756 $ - $ - $ - $ _ 11,359 22,367 8,402 5,882 6,302 45,977 4,478 45,977 7,646 8,360_ 1,991 4,386 12,976 35,290 210,000 _ 287,215 186,873 79,739 26,502 $ 12,732 $ - $ 12,732 $ 3,928 $ - $ 3,928 $ 3,688 $ - $ 3,688 $ 4,253 $ 22,367 $ 26,620 Availability Demand Ratio $ 1,598 $ 8,402 $ 10,000 All to Availability $ 1,118 $ 5,882 $ 7,000 All to Availability $ 1,198 $ 6,302 $ 7,500 All to Availability $ 8,743 $ 45,977 $ 54,720 All to Availability $ 852 $ 4,478 $ 5,330 Al to Availability $ 8,743 $ 45,977 $ 54,720 All to Availability $ 1,454 $ 7,646 $ 9,100 All to AvallabiNy $ 1,590 $ 8,360 9,950 All to Availability _$ $ 379 $ 1,991 $ 2,370 All to Availability $ 834 $ 4,386 _$ 5,220 All to Availability $ 2,467 $ 12,976 15,443 All to Demand _$ $ 6,710 $ 35,290 $ 42,000 All to Demand $ - $ 210,000 $ 210,000 At to Demand $ 54,615 $ 287,215 $ 341,830 All to Availability 20,367 $ 186,873 $ 207,240 All to Availability _$ $ 8,690 $ 79,739 $ 88,429 All to A:vailabifity $ 2,888 $ 26,502 $ 29,390 All to Demand $ - $ - $ - All to Availability $ 21,981 $ 100,426 $ 122,407 Availability Demand Ratio $ 83,036 $ 6,946 $ 9,637 $ 806 _ 100,425 $ 500 $ 500 All to Availability Ambulance Services Budget Total: $ 3,508,685 $ 512,870 $ 2,995,815 $ 3,508,685 $ 2,233,635 $ 450,641 $ 259,237 $ 52,302 $ 2,995,815 Pro 404 - Amb Training2015 Budget Allocation Method Fire EMS Availability In Total AvailabilityMethod Cit Demand In City Availability Demand Out of City Out of City Total Wages - Overtime Social Security _ State Retirement Life Vision Worker Comp I/F Medical Vision Prem I/F Dental Premium O&M Supplies Tools Equip <$5,000 Train Registration Tuition Lodging Meals Miles Airfare Professional Services R&M Other Services $ 16,528 All To EMS $ 240 All To EMS $ 865 All To EMS $ 474 All To EMS $ 2,496 All To EMS $ 198 All To EMS $ 1,500 All To EMS $ 3,000 All To EMS $ 8,900 All To EMS $ 2,000 All To EMS $ 500 All To EMS $ 500 All To EMS $ - $ 16,528 $ 16,528 Availability Demand Ratio $ 240 All to Availability $ 13,666 $ 1,_143 $ 1,586 133 16,528 $ - $ 240 $ 215 $ $ 25 _$ $ - 240 $ - $ 865 $ 474 $ 2,496 $ 865 Al to Availability $ 775 _ $ $ 90 $ 865 $ - $ 474 All to Availability $ 425 $ - $ 49 - 474 $ - $ Nl to Availabil' $ 2,236 $ - $ 260 _$ $ 2,496 $ - $ 198 _2,496 $ 198 All to Availability $ 177 $ - $ 21 $ 198 $ - $ 1,500 $ 1,500 NI to Availability $ 1,344 $ - $ 156 $ 1,500 $ - $ 3,000 $ 3,000 Al to Availability $ 2,688 $ - $ 312 $ 3,000 $ - $ 8,900 $ 8,900 All to Availability $ 7,974 $ - $ 926 $ 8,900 $ - $ 2,000 $ 2,000 All to Availability $ 1,792 $ - $ 208 $ 2,000 $ - $ 500 $ 500 All to Availability $ 448 $ - $ 52 $ Soo $ - $ 500 $ 500 All to Availability $ 448 $ - $ 52 $ 500 Amb TrainingBudget Total: $ 37,201 $ - $ 37,201 $ 37,201 $ 32,189 $ 1,143 $ 3,736 $ 133 $ 37,201 ':;i FCS GROUP Page 36 of 224 City of Pasco, Washington November, 2015 Ambulance Cost of Service and Rate Study Appendix A-5 Prog 406 - Amb Facilities 2015 Budget Allocation Method Fire EMS Total Availability Method Availability In Demand In City City Availability Demand Out of City Out of City Total Office Janitorial Supplies O&M Supplies Tools Equip Furn <$5,000 Laundry Professional SeNces R&M Service Contracts R&M Other Services Water (City - Non Tax) Electricity Natural Cas Garbage Waste Disposal $ 2,000 square Feet $ 4,175 Square Feet $ 6,700 square Feet $ 6,500 Square Feet $ 16,000 square Feet $ 6,000 Square Feet $ 28,642 Square Feet $ 2,850 square Feet $ 16,000 Square Feet $ 7,000 square Feet $ 4,000 square Feet $ 1,194 $ $ 2,493 $ $ 4,001 $ $ 3,881 $ $ _9,554 $ $ 3,583 $ $ 17,103 $ $ 1,702 $ $ 9,554 $ $ 4,180 $ $ 2,389 $ 806 1,682 2,699 2,619 6,446 2,417 11,539 1,148 6,446 2,820 1,611 $ 2,000_ $ 4,175 All to Availability All to Availability All to Availability Al to Availability NI to Availability_ Al to Availability All to Availably All to Availability All to Availability All to Availability All to Availability $ $ $ $ $ $ $ $ $ $ $ 722 $ 1,507 $ _ - 2,419 $ - 2,346 i $ - 5,776 - 2,166 $ - 10,339 $ - 1,029 $ - 5,776 $ - 2,527 $ - 1,444 $ - $ 84 $ _ $ 175 $ $ 281 $ _ $ 272 $ $ 670 $ $ 251 $ $ 1,200 $ $ 119_ $ $ 670 $ $ 293 $ $ 168 $ - 806 1,682 $ 6,700 2,699 $ 6,500 2,619 $ 16,000 6,446 $ 6,000 2,417 $ _28,642 $ 2,850 $ 16,000 $ 7,000 11,5_39 1,148 6,44_6 2,820 $ 4,000 1,611 Amb Facilities Budget Total: $ 99,867 $ 59,634 $ 40,233 $ 99,867 $ 36,049 $ - $ 4,184 $ - $ 40,233 Ambulance Fund Budget Grand Total $ 3,815,313 $ 599,595 $ 3,215,718 $ 3,815,313 $ 2,427,202 $ 454,109 $ 281,703 $ 52,704 $ 3,215,718 General and Ambulance Fund Grand Total $ 9,612,925 $ 2,578,238 $ 7,034,687 $ 9,612,925 $ 5,595,483 $ 707,657 $ 649,416 $ 82,131 $ 7,034,687 -4*4 FCS GROLT�' Page 37 of 224 Availability In Demand In Availabilhy Demand Prog 620 - Capital Fire/Amb 2015 Budget Allocation Method Fire EMS Total Availability Method City City I Out of City Out of City Total Tools Equip Furn > $5,000 $ 40,000 Allocated Time $ 6,391 $ 33,609 $ 40,000 Availability Demand Ratio $ 27,789 $ 2,325 $ 3,225 $ 270 33,609 Capital FlretAmb Budget Total: $ 40,000 $ 6,391 I $ 33,609 $ 40,000 $ 27,789 $ 2,325 1 $ 3,225 $ 270 $ 33,609 Ambulance Fund Budget Grand Total $ 3,815,313 $ 599,595 $ 3,215,718 $ 3,815,313 $ 2,427,202 $ 454,109 $ 281,703 $ 52,704 $ 3,215,718 General and Ambulance Fund Grand Total $ 9,612,925 $ 2,578,238 $ 7,034,687 $ 9,612,925 $ 5,595,483 $ 707,657 $ 649,416 $ 82,131 $ 7,034,687 -4*4 FCS GROLT�' Page 37 of 224 AGENDA REPORT FOR: City Council November 16, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Ahmad Qayoumi, Director Public Works SUBJECT: Utility Rate Adjustments (Sanitary Sewer and Water) I. REFERENCE(S): Proposed Ordinance FCS Presentation date November 9, 2015 II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Utility Rates IV. HISTORY AND FACTS BRIEF: In preparation for the issuance of $15 million of water and sewer revenue bonds to pay for a portion of old bonds ($4 million), new water distribution projects ($4 million), the Primary Clarifier Upgrade at the Wastewater Treatment Plant (WWTP) and other sewer projects ($7 million), staff and our consultant FCS have prepared an analysis of the projected revenues and expenses for the water and sewer fund over the next several years. Our staff and FCS has utilized the 6 -year Capital Improvement Plans (CIP) plan adopted by City Council on September 8, 2015 (Resolution #3654), and the adopted Sewer and Water Master Plans to recommend the revenue projections and needed funds to meet the infrastructure needs for both sewer and water. FSC made a detailed presentation on November 9, 2015 that outlined their assumption and needs of sewer and water revenues for the next three to six years. They will address the irrigation and stormwater rates at a later date in 2016. The analysis suggests that the sewer and water fund will shortly be lacking the resources necessary to cover operating expenses, meet debt service obligations and accomplish smaller, but necessary, capital projects. Page 38 of 224 The sanitary sewer rates have changed a number of times as shown below: $35.00 $1&00 07 U 30.4D Zffi $29.40 $300 $30. $24.80 $200 $10.4!] $4.80 $24SEi 524M 15A $610 $10A $5.00 2002 M3 2004 2005 2006 Z{G7 2008 2009 2410 2011 2012 2013 2914 21415 The water rates have changed as follows: Irrigation and stormwater rates will be evaluated in 2016. The City completed and adopted the master plan for the irrigation system in 2014. Staff is working on developing a CIP based on the recommendation and project list. The master plan for stormwater will be completed in the first half of 2016. Staff is working on selecting a consultant firm to help develop a plan that will outline the current and future projects, as well as prepare a plan to address the upcoming regulation changes for stormwater. Based on our current understanding, the upcoming regulation with take effect for our NPDES permit renewal in 2019 and will contain very stringent requirements. Page 39 of 224 $1&00 $1 $1440Oro�$16.25 $1200 $10.4!] a I 5103[p $1230 $12.50 $10.50 $10.50 $8.070 —i x0 $610 $4.00 $210 M 2003 2M 2DM 2T1&76 2170E 2M 2409 2(114 2011 M12 2013 2414 2415 Irrigation and stormwater rates will be evaluated in 2016. The City completed and adopted the master plan for the irrigation system in 2014. Staff is working on developing a CIP based on the recommendation and project list. The master plan for stormwater will be completed in the first half of 2016. Staff is working on selecting a consultant firm to help develop a plan that will outline the current and future projects, as well as prepare a plan to address the upcoming regulation changes for stormwater. Based on our current understanding, the upcoming regulation with take effect for our NPDES permit renewal in 2019 and will contain very stringent requirements. Page 39 of 224 V. DISCUSSION: Since 2002, there have been 6 rate changes in the sanitary sewer rates. In 2002, the sanitary sewer rate was $29.40. In 2004 there was modest increase to $30.59 to pay for construction of some infrastructure at the WWTP. However, there was approximately a $6 reduction in the sanitary sewer rates between 2006 and 2011 and an $8 reduction in irrigation rates in one year in 2004 . According to our records, there was no formal study on justification behind the rate changes. In 2010 there was a modest increase in the stormwater rate to pay for Operations & Maintenance (O&M) of the utility and to reimburse the sewer utility. When the stormwater utility was setup, it was initially subsidized by sewer utility funds. However, there was an audit finding where one utility is not permitted to subsidize another utility. Since 2002, the City population has more than doubled (population was approx. 30,000 in 2002 and in 2015 is over 70,000). While the City was managing and keeping up with growth, there was a lot of deferred maintenance. Additionally, there were a number of areas that were annexed that had aged water systems. Some of the areas outside of the current city limits, but within the service area, also contain an older water distribution pipe system that requires a lot of repair and replacement. Currently, citywide, there are 300 miles of water main pipes (approximately $180 million), two water treatment facilities, a 10 million gallon reservoir, a 2.5 million gallon water tower and two one million gallon water reservoirs (approximately $60 million) valued at a total of Page 40 of 224 UTILITY RATE HISTORY --*---Storm flrriptfori —*—Water Surer 52.4(1 x:311.59 $30.00 - 9�-9� 1];54 X52 99 $27,5 X1.535 7 01 $26, 26,00 $2COO $26.00 116.E 25.03 5,0 aa.aa Zkg 2+1,80 $24,W S 4,84 $coo �24_Go $24j 0 724 M M4.70S2'4.46 24104 0.0 X15.04 SSS i5:2Sr�-�5 125AU-50I } W 12,54 SIOLOG STaau sza�4 x4.s� 5,711 S4AO $ , 4 S so S3 S3 -W rsm sa l St,e $tea 4 s�.eo $. six 2042' 2003 2W4 2045 20x5 2007 ZOOS 204'9 2010 2011 2012 2013 2014 2()1.5 Since 2002, the City population has more than doubled (population was approx. 30,000 in 2002 and in 2015 is over 70,000). While the City was managing and keeping up with growth, there was a lot of deferred maintenance. Additionally, there were a number of areas that were annexed that had aged water systems. Some of the areas outside of the current city limits, but within the service area, also contain an older water distribution pipe system that requires a lot of repair and replacement. Currently, citywide, there are 300 miles of water main pipes (approximately $180 million), two water treatment facilities, a 10 million gallon reservoir, a 2.5 million gallon water tower and two one million gallon water reservoirs (approximately $60 million) valued at a total of Page 40 of 224 approximately $240 million. The City water service has over 18,300 customers. 80.000 70,000 60.000 4U,QGC1 ci 10,000 E Population �� ,yam -6 ,P '65 As the area grows, the need to produce more water to maintain the existing system, additionally, the need for expansion and construction of major facilities, will increase. For example, the City is in need of a new raw water intake to increase the production of the West Pasco Water Treatment Plant (WPWTP) from 6 million gallons a day (MGD) to 18 MGD, an additional booster station and additional reservoirs to meet the demand and fire flows, as well as to purchase additional water rights to meet the supply demand. The City is required complete a water system master plan (or update) every 6 years per the Department of Health, Department of Ecology and the Quad Cities Water Rights Agreement. In the master plan, there are a number of identified projects for the existing deficiencies, including improvements to and replacement of our current water system. The 6 -year CIP has projects from the master plan and it also includes the Comprehensive Water Master Plan update. The City's sewer system includes 240 miles of collection system (6 inches to 36 inches in size), 14 lift stations (the backbone of the collection system) and a WWTP. The City treats approximately 5 million gallons (MG) of wastewater each day for over 15,700 customers. The last major improvement to the WWTP was in 1995. The sanitary sewer system is currently valued at approximately $200 million. In 2014, City Council adopted the Sanitary Sewer Master Plan which includes approximately $90 million of projects in the next 20 years to meet the current projected growth needs. The major improvements are part of the new or upcoming regulations and to meet the growth needs, such as the 30" Sanitary Sewer Trunk Line project. There are a number of identified improvements and upgrades to the existing WWTP to replace functionally obsolete equipment, to add staff to maintain the system adequately, to meet the projected 12 MG treatment capacity for growth and to meet the upcoming regulations for the WWTP. Page 41 of 224 Staff recommends a water service rate increase in accordance with the FCS analysis and recommendation: 1. Water Nates: Sample hi for 5i8' readenlial olsWer wilh average usage of 9 of 2. Sewer Sevver Existing 2015 2017 2018r r0 2021 Proposed Increases 9.75% 9.ao% 6.00% 6.00% 6.00% 6.00% Sample Residential $24.80 $27.22 $29.67 $31.5 $33.33 $35.33 $37.5 Monthly Bill Difference $0.00 $2.42 $2.45 $1.78 $1.89 $2.00 $2.12 With the proposed rate adjustments, the City's overall utility rates would still compare favorably to those of neighboring cities as shown below: 2015 Existing Sewer RateComparison Yalfma Ellensburg 53126 hoses Losse $315 Pasco 2616 Proposed , 527.22 RicHwid $25.60 Pasco , UU10 We>othee M $23.92 KemE%ick $21.22 $41.2# $5210 Page 42 of 224 2015 Existing Water Fate Comparison Wain Walla $40.20 Rluhland Ellensburg $32 14 Wenatchee $26.25 Moses Lake25.'9� Pascfl 2016 Proposed N $23.68 Pasco D 4 $22.55 Yakima $21.91 Kennewick $20.77 There has been a lot of effort expended by our consultant and staff to find a reasonable way to meet the maintenance and regulatory requirements of the sanitary sewer and water systems. Therefore, we recommend Council approve the ordinance increasing the current rates. The ordinance includes the rate increases for the next three years. Staff will present an updated study of the rates prior to conclusion of the third year, in 2019. Page 43 of 224 ORDINANCE NO AN ORDINANCE of the City of Pasco, amending Pasco Municipal Code Sections 3.07.160 (Water User Fees), 3.07.170 (Sewer User Fees) and 3.07.210 (Irrigation Water Utility) regarding utility rates. WHEREAS, The City completed a rate study with the assistance of FCS in October of 2015 to determine the impact of needed improvements and system expansion for regulatory compliance and to provide continuous service to customers. WHEREAS, The City Council has determined that certain amendments to the water and sewer user fees are needed. The rate changes will be effective for three years, 2016, 2017 and 2018, with certain rates for water and sewer each year. NOW, THEREFORE, the City Council of the City of Pasco, Washington, does ordain a water rate increase of 5% for each of the three years and a sewer rate increase of 9.75% for 2016, a 9% increase for 2017 and a 6% increase for 2018 as follows: Section 1. PMC Section 3.07.160, subsections A), B) and C) are amended to read as follows: 3.07.160 WATER USER FEES EFFECTIVE 01/01/2016: A) Inside City: Fee/Charge Reference 1) Consumption — per 100 cubic foot $4,70 $0.74 13.20.050 2) Bulk — per 1000 gallons $1.15-$1.21 13.20.070 B) Residential — single family base fees: Effective Dates: 1/1/15 1/1/16 1) 3/4 and 5/8 inch — per month Q'� $17.06 13.20.020 2) 1 inch — per month X4-35 $25.57 13.20.020 3) Outside City; effective 11/1/02 90% surcharge 13.20.080 Sr. Citizen/Low Income: 4) 3/4 and 5/8 inch — per month $540 $5.67 13.20.040 5) 1 inch — per month "44 $8.56 13.20.040 6) Outside City; effective 11/1/02 90% surcharge C) Commercial — multi -family, irrigation, commercial base fees: 1) 3/4 inch — per month $22.90 $24.05 13.20.030 2) 1 inch — per month $33.50 $35.18 13.20.030 3) 1-1/2 inch —per month X4-50 $67.73 13.20.030 4) 2 inch — per month Q,� $108.62 13.20.030 5) 3 inch — per month $141.30 $148.37 13.20.030 6) 4 inch — per month $203.60 $213.78 13.20.030 7) 6 inch — per month $317.80 $333.69 13.20.030 8) 8 inch — per month $440.40 $462.42 13.20.080 9) Outside City; effective 11/1/02 90% surcharge Page 44 of 224 Section 2. PMC Section 3.07.170 subsection A) is amended to read as follows: 3.07.170 SEWER USE FEES in EFFECTIVE 01/01/2016: A) Residential and Commercial Base Fee Fee/Charge Reference Effective 7/1/10 1) Residential: C) Commercial - multi -family, irrigation, a) 1-4 Units - per month $24.90 $27.22 13.40.020 1) b) 5 and over - per month $20.00-$21.95 13.40.020 2) c) Outside City 50% surcharge 13.40.060 3) d) Consumption None 13.20.030 4) Sr. Citizen/Low Income: Q'� $114.05 13.20.030 5) a) Single Dwelling Unit $8-30 $9.11 13.40.050 6) b) Outside City 50% surcharge 13.40.060 2) Commercial a) Base Fee: per month $335 $36.60 13.40.040 b) Consumption per 100 cubic feet over 1000 $4-.N $1.42 13.40.040 cubic feet 3) Hotel/Motel: a) Base Fee: per unit/per month $5-.2-5 $5.76 13.40.030 b) Consumption per 100 cubic feet over 1000 $4-.29 $1.42 13.40.040 cubic feet c) Outside City 50% surcharge 13.40.060 3.07.160 WATER USER FEES EFFECTIVE 01/01/2017: A) Inside City: Fee/Charge Reference 1) Consumption - per 100 cubic foot $0-74 $0.77 13.20.050 2) Bulk - per 1000 gallons $4-.24 $1.27 13.20.070 B) Residential - single family base fees: Effective Dates: 1/1/16 1/1/17 1) 3/4 and 5/8 inch - per month $17.06 $17.92 13.20.020 2) 1 inch - per month $25.57 $26.85 13.20.020 3) Outside City; effective 11/1/02 90% surcharge 13.20.080 Sr. Citizen/Low Income: 4) 3/4 and 5/8 inch - per month $-57 $5.95 13.20.040 5) 1 inch - per month $S56 $8.99 13.20.040 6) Outside City; effective 11/1/02 90% surcharge C) Commercial - multi -family, irrigation, Ordinance Amending PMC 3.07.160, 3.07.170 and 3.07.210 Page 2 Page 45 of 224 commercial base fees: 1) 3/4 inch - per month $24.05 $25.25 13.20.030 2) 1 inch - per month $35.18 $36.93 13.20.030 3) 1-1/2 inch - per month $67.73 $71.11 13.20.030 4) 2 inch - per month Q'� $114.05 13.20.030 5) 3 inch - per month $148.37 $155.78 13.20.030 6) 4 inch - per month X3.78 $224.47 13.20.030 Ordinance Amending PMC 3.07.160, 3.07.170 and 3.07.210 Page 2 Page 45 of 224 7) 6 inch — per month $9 $350.37 13.20.030 8) 8 inch — per month $^� $485.54 13.20.080 9) Outside City; effective 11/1/02 90% surcharge Section 2. PMC Section 3.07.170 subsection A) is amended to read as follows: 3.07.170 SEWER USE FEES in EFFECTIVE 01/01/2017: A) Residential and Commercial Base Fee Fee/Charge Reference Effective 1/1/2017 1) Residential: a) 1-4 Units — per month $27.03 $29.67 13.40.020 b) 5 and over — per month $21.80 $23.93 13.40.020 c) Outside City 50% surcharge 13.40.060 d) Consumption None Sr. Citizen/Low Income: a) Single Dwelling Unit $9-.0-5 $9.93 13.40.050 b) Outside City 50% surcharge 13.40.060 2) Commercial a) Base Fee: per month $36.35 $39.90 13.40.040 b) Consumption per 100 cubic feet over 1000 $442$1.54 13.40.040 cubic feet 3) Hotel/Motel: a) Base Fee: per unit/per month W.72 $6.28 13.40.030 b) Consumption per 100 cubic feet over 1000 $4 42 $1.54 13.40.040 cubic feet c) Outside City 50% surcharge 13.40.060 3.07.160 WATER USER FEES EFFECTIVE 01/01/2018: A) Inside City: Fee/Charge 1) Consumption — per 100 cubic foot $0,77 $0.81 2) Bulk — per 1000 gallons $4-.N $1.33 B) Residential — single family base fees: 1) 3/4 and 5/8 inch — per month 2) 1 inch — per month 3) Outside City; effective 11/1/02 Sr. Citizen/Low Income: 4) 3/4 and 5/8 inch — per month 5) 1 inch —per month 6) Outside City; effective 11/1/02 Effective Dates: 1/1/17 1/1/18 Q'�°2 $18.81 Q'� $28.19 90% surcharge $5-.9-5 $6.25 $-99 $9.43 90% surcharge C) Commercial — multi -family, irrigation, commercial base fees: 1) 3/4 inch — per month $25.25 $26.51 2) 1 inch — per month $36-93 $38.78 Ordinance Amending PMC 3.07.160, 3.07.170 and 3.07.210 Page 3 Reference 13.20.050 13.20.070 13.20.020 13.20.020 13.20.080 13.20.040 13.20.040 13.20.030 13.20.030 Page 46 of 224 3) 1-1/2 inch — per month $7i.1 1 $74.67 13.20.030 4) 2 inch — per month $11405 $119.76 13.20.030 5) 3 inch — per month Q'� $163.57 13.20.030 6) 4 inch — per month $224.47 $235.69 13.20.030 7) 6 inch — per month $350.37 $367.89 13.20.030 8) 8 inch — per month Q^� $509.82 13.20.080 9) Outside City; effective 11/1/02 90% surcharge 2) Commercial Section 2. PMC Section 3.07.170 subsection A) is amended to read as follows: 3.07.170 SEWER USE FEES in EFFECTIVE 01/01/2018: A) Residential and Commercial Base Fee Fee/Charge Reference Effective 1/1/18 1) Residential: a) 1-4 Units — per month Q'� $31.45 13.40.020 b) 5 and over — per month $23.76 $25.36 13.40.020 c) Outside City 50% surcharge 13.40.060 d) Consumption None Sr. Citizen/Low Income: a) Single Dwelling Unit $9.86 $10.52 13.40.050 b) Outside City 50% surcharge 13.40.060 2) Commercial a) Base Fee: per month $39.662 $42.29 13.40.040 b) Consumption per 100 cubic feet over 1000 X54 $1.64 13.40.040 cubic feet 3) Hotel/Motel: a) Base Fee: per unit/per month $6-.24 $6.66 13.40.030 b) Consumption per 100 cubic feet over 1000 X54 $1.64 13.40.040 cubic feet c) Outside City 50% surcharge 13.40.060 Section 4. This ordinance shall be in full force and effect on and after January 1, 2016 after passage and publication, as provided by law. PASSED by the City Council of the City of Pasco at a regular meeting the 7th day of December 2015. Matt Watkins, Mayor ATTEST: Debra L. Clark, City Clerk APPROVED AS TO FORM: Leland B. Kerr, City Attorney Ordinance Amending PMC 3.07.160, 3.07.170 and 3.07.210 Page 4 Page 47 of 224 CITY OF PACO w Utilities Rate Study Angie Sanchez Virnoche, Principle Sergey Tarasov, Project Manager November 10, 2015 Discussion Outline • Overview of study process Key assumptions Fiscal policy targets Summary of findings Water Sewer Stormwater in progress for mid 2016 Irrigation in progress for mid 2016 Next steps • Questions Page 2 'Revenue Requirement Process CAPITAL FUNDING Adi L FISCAL POLICIES REVENUE REQUIREMENT RATE DESIGN Page 3 v m 0 N N •:�� Ke AssumDtions • Study period 2015-2021 Projected rate revenue based on 2014 customer data 2016 budget used as baseline — the following escalation factors used for future years: General Cost Inflation: 2.29% Construction Cost Inflation: 3.26% Customer Growth: 1.00-1.50% New Debt Revenue Bonds: 20 year term, 4.5% interest, 1.0% issuance Page 4 v m Cn N O N N •:�� Fiscal Policy Targets Page 5 Purpose Target Operating To provide sufficient cash flow to meet daily operating Days 0&M Water: 55 Dayay - $1.3 mil Reserve expenses (short-term, annual revenue cycles) Sewer: $773- $860 k Capital p To provide a source of funding for emergency repairs, 2% of Plant -In -Service: Water: $2.0-$2.7 mil Contingency unanticipated capital, and project cost overruns. Sewer: $2.143.1 mil System To ensure ongoing system integrity through Currently no assumed system reinvestment funding Reinvestment reinvestment in the system. Phased in throughout the study period for: Water: $500k in 2018 - $650k by 2021 Funding Sewer: $250k in 2018 - $725k by 2021 Debt Service To ensure compliance with existing loan/debt Minimum Requirements Coverage covenants and maintain credit worthiness for future Revenue Bond Requirement: 1.25 debt issuance. Page 5 Water v c� m 0 N N •:�� Ke Components - Water Description Existing Rate Revenue 0&M Expenses Water $8.7 - $9.2 mil $7.3 - $8.4 mil Existing Debt Service $1.6 - $1.8 mil New Debt Service $420 k - $1.9 mil System Reinvestment $0 k- $650 k Total CIP (2015-2021) L- I$35,829,374 Annual Capital Costs $12,000,000 $10,000,000 $9,821,080 $8,000,000 $7,522,253 $6,264,686 $6,000,000 $5,459,860 $4,000,000 $2,589,858$2,794-,658 $2,000,000 1,376,978 2015 2016 2017 2018 2019 2020 2021 Total CIP of $35.8M funded by cash, grants, capital expansion/front footage fees, DWSRF loan and new debt New Revenue Bond Debt: $22.01M required for 2015-2021 Secured DWSRF Loan: $6.8M Draws in 2016 and 2017 *Note: Revenue bonds assume first issuance in 2015, no payments until 2016 Page 7 v c� m cn 0 N N •:�� Water Revenue Reauirement Summa $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 il 2015 2016 2017 2018 2019 2020 2021 r Casks Operating Expenses Existing Debt Service New Debt Service t Reserve Funding a Rate Funded System Reinvestment—Total Existing Revenue Tota! Revenue After Rate Increase Notes: Sample bill for 5/8" residential customer with average usage of 9 ccf Page 8 -v v c0 m Cn 0 N N Rate Comparison 2015 Existing Water Rate Comparison Walla Walla $48.20 Richland i $35.80 Ellensburg $32.14 Wenatchee $26.25 Moses Lake $25.96 Pasco 2016 1 I $24.13 Pasco $22.55 Yakima $21.91 Kennewick $20.77 Note: Assumes 9 ccf monthly usage; 5/8" or 3/4" meter Page 9 Sewer •:�� Ke Components - Sewer Description Sewer i Existing Rate Revenue $6.7 - $7.3 mil 0&M Expenses Existing Debt Service New Debt Service $5.0 - $5.7 mil $570 k - $2.6 mil $246 k - $3.7 mil System Reinvestment $0 k - $725 k Total CIP (2015-2021) $53,201,408 $167000;000 $14,000.000 $12,000.000 $10,000.000 S8,000.000 $6,000,000 S4,000.000 $2,000,000 S_ Annual Capital Costs 2015 2016 2017 2018 2099 2020 2021 Total CIP of $53.2M funded by cash, grants, capital expansion/front footage fees, restricted bond funds and new debt New Revenue Bond Debt: $41.5M required for 2015-2021 *Note: Revenue bonds assume: -first issuance in 2015, no payments until 2016 -interest only debt until 2020 Page 11 v m Ul co 0 N N •: � Sewer Revenue Reauirement: Option 1 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2015 2016 2017 2018 2019 2020 2021 r Cash Operating Expenses Existing Debt Service +New Debt Service o Reserve Funding oRate Funded System Reinvestment —Total Existing Revenue $1.4M of reserves used over years 2015, 2016 and 2017 Page 12 v m rn 0 0 N N Sewer Revenue Reauirement ODtion 2 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2015 2016 2017 2018 2019 2020 2021 i Gash Operating Expenses Existing Debt Service New Debt Service o Reserve Funding oRate Funded System Reinvestment —Total Existing Revenue —Total Revenue After Rate Increase Assumes full principle and interest payments begin in 2016 $1.6M of reserves used in 2015, 2016 and 2017 Page 13 m rn 0 N N ❖ Sewer H Rate Review $35.00 $29.40 $29.99 $30.59 $30.59 $30.59 $30.00----------_---------------------------- - - - - -- 3 27.53 27.53 $7.53 $26.00 $27.5 $24.80 $24.80 $24.80 $24.80 $24.80 $25.00 $20.00 $15.00 - $10.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 --4-- Historical Rates — — — 20042006 Rates Highest proposed rate increase (2016 Option 2) of 11.00% would hold rates below 2004-2006 levels Page 14 Rate Comparison Walla Walla Yakima Ellensburg Moses Lake Pasco 2016 Option 2 Pasco 2016 Option 1 Richland Pasco Wenatchee Kennewick 2015 Existing Sewer Rate Comparison Note: Assumes one single family residence $52.10 Page 15 •:�� Combined Rate Impact Difference $ 3.81 $ 3.64 $ 3.03 $ 3.20 $ 3.38 $ 3.57 Difference $ 4.31 $ 4.23 $ 3.18 $ 3.28 $ 3.46 $ 3.66 Water: Assumes 9 ccf monthly usage; 5/8" meter Sewer: Assumes 1 single family resident v cQ m rn w 0 N N •.,� Combined Ellensburg Yakima Richland Moses Lake Pasco 2016 Option 2 Pasco 2016 Option 1 Wenatchee Pasco Kennewick Water: Assumes 9 ccf monthly usage; %" meter Sewer: Assumes 1 single family resident Rate Comparison 2015 Existing Utility Rate Comparison S- $10 $eo $ao $ao S50 $60 $70 ■Water ■Sewer v m rn cn 0 N N •:�� Next Steps Incorporate feedback Adopt proposed rate increases by utility: Water: Assumes 9 ccf monthly usage; %" meter Sewer: Assumes 1 single family resident — No rate structure changes, equal increases to all rate components New rates effective January 1St, 2016 2016 Goals Stormwater & Irrigation Revenue Requirement Cost of Service (equity) for water and sewer Revisit capital expansion fees Page 18 CD 0) 0 N N uestionslDiscussion W-0 1 AGENDA REPORT FOR: City Council November 20, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Ahmad Qayoumi, Public Works Director Public Works SUBJECT: Utility Rate Adjustments Connection Fees (Sanitary Sewer and Water) I. REFERENCE(S): Justification Memo Proposed Ordinance II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Utility Rates IV. HISTORY AND FACTS BRIEF: Staff, with the help of our consultant FCS, completed a rate study for the water and sewer rates to accommodate the growth, infrastructure expansion and improvements and deferred maintenance. Staff also evaluated the connection fees. The last time the fees were updated was in 2008. Since then, the cost of material and labor has increased. According to our records, there has been a $20,000 annual shortfall of revenue associated with the cost of new connections. Staff performs taps into the City's water main lines for outside contractors. This ensures quality and maintains the integrity of water quality and infrastructure. The tap fee is $150.00. This fee has not been adjusted for over 20 years. The labor rate and equipment cost has increased over the years. The recommended rate for cost recovery is $275. Based on our records, the cost for installation of service and meters has increased significantly since the last time the cost sheets were adjusted, in June 2008. Upon review, the average service and meter installation cost has increased by 10% to 15%. Page 67 of 224 In more recent years, a new regulation became effective requiring meters to be lead free. The City typically installs about 50 new services and meters and about 200 to 300 drop-in meters per year. During construction, a contractor rents fire hydrant meters for dust control and other activities. In many cases, the meter is stolen or lost and/or readings of the meter are suspicious. The penalty for lost hydrant meters is currently $1,500, which does not cover the replacement cost. The average replacement cost is $2,000. The penalty also does not cover the water that may have been used. V. DISCUSSION: There has been a lot effort expended by our staff to find a reasonable way to meet the maintenance and regulatory requirements of sewer and water. Therefore, we recommend Council approve the ordinance which increases the rate for meters and tap - in fees to ensure cost recovery. Page 68 of 224 Memo To: Ahmad Qayoumi From: Jess Greenough Date: 6/17/14 Re: Fees and Charges Public Works Department Operations Division As you requested, listed are several fees/charges that need to be revised due to increase of cost for materials. I have also provided some history on the fire hydrant meters that have been lost or stolen over the last few years. When performing hot taps on the City's main lines for outside contractors, there is a tap fee of $150.00. The fee has not been increased for over twenty years. The labor rate and equipment cost has increased over the years, therefore the City should consider a fee increase. The average hot tap takes two Heavy Equipment Operators about an hour and half to perform. The cost is approx. $180.00 labor, equipment charges $60.00 and material/supplies $35.00, for a total cost of $275.00. There are about 20 taps a year performed by the Water Division. As I stated in the email I sent you back in 2012, the cost for installation of service and meters has increased significantly from the last time the cost sheets were adjusted (6/2008). In review the average service and meter installation shows that it has gone up approx. 10% - 15% (3/4" service and meter $1,158.00 and 2" service and meter $3,888.00). It was projected to be higher than that due to the lead free requirements that were put in place after the first of the year. There are about 50 new services and meters installed and about 200 to 300 meters drop -ins performed a year. • As you can see from the notes below, the cost of replacing a meter has gone up and the City is losing money when one is not returned. Also, there is some history on past practice on how the reading of the water was handled (there was a $1,500 penalty). • Page 1 1. There is an issue with fire hydrant meters coming back with no usage or a lower reading than when it was check out, the question is would the $1,500 penalty apply in this case (same as a lost or stolen meter)? 2. The total cost to the City for a replacement fire hydrant meter is $1,218.92. (This includes meter, fittings, valve and cap) 3. The existing cost/deposit to check out a meter is $850.00 and $50.00 is not refundable. 4. The following two Fire Hydrant Meters have just been reported to us as stolen. #492 Apollo Inc. (Checked out 4-18-14) Reported Stolen 5-21-14 #855 TTAP Construction (Check out 6-17-13) Reported Stolen 6-5-14, Last Read 0052100 Dated 4-23-14 Page 69 of 224 • Page 2 Past history can only find records of 4 stolen meters that were processed through Finance from 2008 to 2010. There were 4 other stolen or lost meters prior to 2008, but no records were found on whether the contractor was charged or not. #225 Booth & Sons Reported lost/stolen 12-14-10. Per email dated 1-21-11 Booth & Sons was to be charged $1,500 for the loss of the meter since they were unable to provide any type of estimated water usage. **** It should be noted that in speaking with Carol Mercado in Finance it looks like this was never charged to Booth and in fact Finance did not have any record of Booth having FHM #225. The application was faxed over on 4/27/2010 to Finance from PW Operations. So in fact, Booth really forfeited their deposit of $800 for the lost meter. #972 Booth & Sons Reported stolen 4-26-10. Booth estimated water usage 5,481 cubic feet. Booth was charged $780.15 for the cost of a replacement meter plus water usage. This was done through an adjustment on their bill and the $800 deposit was applied to this. #635 Copper Basin Construction Reported lost on 9-15-08. No water usage estimated. Copper Basin Construction was charged $934.63 for the replacement cost of the meter. This was done through an adjustment on their bill and the $800 deposit was applied to this. Page 70 of 224 ORDINANCE NO. AN ORDINANCE of the City of Pasco, Washington Amending PMC 3.07.150 "Utilities - - Billing", increasing the application fee for water tap applications; PMC 3.07.160 "Water User Fees"; and PMC 13.36.010 "New Service Lines Inside City" WHEREAS, the City is required by RCW 35.92.025 to establish charges for the connection to the City's water or sewage system providing the property owners shall bear their equitable share of the costs of such system; and WHEREAS, costs associated with such connection shall have substantially increased since the previous cost study for such installation and service and meters was accomplished in 2008; and WHEREAS, a review has been made of the current fees and charges associated with connection to the City's water system, including the placement of water meter and fire hydrant meter rentals to determine the actual cost of the City incurred for providing such services; and WHEREAS, the study has demonstrated that the cost for such connections to the City was system and placement of water meters, has increased substantially since they were last established in 2008, and such sturdy had established the actual cost for providing such services. NOW, THEREFORE. THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. That Section 3.07.150 of the Pasco Municipal Code entitled "Utilities -- Billing" shall be and hereby is amended and shall read as follows: Page 1 of 8 Page 71 of 224 3.07.150 UTILITIES - - BILLING: Fee/Charge Reference A) Application Fee 1) Service to new connection $15.00 13.16.010 2) Service to existing connection $15.00 3.200.140 (A) B) Utility Deposit Water Consumption $75.00 3.200.040 Factor C) Disconnect Collection Fee $50.00 3.200.140(C) D) Field Service 1) Field Service Fee $15.00 3.200.140(D) Page 1 of 8 Page 71 of 224 (Ord. 4096, 2013; Ord. 3958, 2010; Ord. 3610, 2003; Ord. 3553, 2002; Ord. 3543, 2002). Section 2. That Section 3.07.160 of the Pasco Municipal Code entitled "Water Use Fees" shall be and hereby is amended and shall read as follows: 3.07.160 WATER USER FEES: A) Inside City: Fee/Charge Reference 1) Consumption - per 100 cubic foot $0.68 13.20.050 Effective 2/1/2014 Consumption - per 100 cubic foot $0.70 Effective 1/1/2015 2) Bulk - per 1000 gallons $1.15 13.20.070 B) Residential - single family base fees: Page 2 of 8 Page 72 of 224 2) After Hours Fee $75.00 3.200.140(E) 3) After Hours Fee/Collection $25.00 3.200.140(F) E) Unauthorized Reconnect Penalty $50.00 3.200.110 F) Late Pay Penalty $10.00 3.200.140(B) G) Collection Notification Fee $10.00 3.200.140(B) H) Debit Card Convenience Fee (Counter) $0.50 3.200.140(G) I) Debit/Credit Card Convenience Fee $1.50 3.200.140(G) (Web) J) Online Processing Assistance Fee $3.00 3.200.140(H) K) Phone No Assist Payment Fee $2.00 3.200.140(H) L) Meter test (accuracy test of meter) $60.00 13.24.030 M) Fire Line — per month $8.00 13.28.060 N) Meter repair $100.00 plus 13.24.100 time/material O) Sewer tap and inspection (In/ Out City $75.00 13.52.140 P) Water tap application fee (each) $150.00275.00 (Ord. 4096, 2013; Ord. 3958, 2010; Ord. 3610, 2003; Ord. 3553, 2002; Ord. 3543, 2002). Section 2. That Section 3.07.160 of the Pasco Municipal Code entitled "Water Use Fees" shall be and hereby is amended and shall read as follows: 3.07.160 WATER USER FEES: A) Inside City: Fee/Charge Reference 1) Consumption - per 100 cubic foot $0.68 13.20.050 Effective 2/1/2014 Consumption - per 100 cubic foot $0.70 Effective 1/1/2015 2) Bulk - per 1000 gallons $1.15 13.20.070 B) Residential - single family base fees: Page 2 of 8 Page 72 of 224 C) K 1) 3/4 and 5/8 inch - per month $16.25 13.20.020 2) 1 inch - per month $24.35 13.20.020 3) Outside City 90% surcharge 13.20.080 Sr. Citizen/Low Income: 4) 3/4 and 5/8 inch - per month $5.40 3.200.150 5) 1 inch - per month $8.15 3.200.150 6) Outside City 90% surcharge 13.20.080 Commercial - Multi -family, irrigation, commercial base fees: 1) 3/4 -per month $22.90 13.20.030 2) 1 inch - per month $33.05 13.20.030 3) 1 1/2 inch - per month $64.50 13.20.030 4) 2 inch - per month $103.45 13.20.030 5) 3 inch - per month $141.30 13.20.030 6) 4 inch - per month $203.60 13.20.030 7) 6 inch - per month $317.80 13.20.030 8) 8 inch - per month $440.40 13.20.030 9) Outside City 90% surcharge 13.20.080 Fire Hydrants: 1) Meter Rental: a) Refundable Deposit Not to exeeoa 13.20.070 detet!niined by -the Finanee 1 300.00 b) Non-refundable Removal Fee $30.0050.00 13.20.070 Page 3 of 8 Page 73 of 224 C) Monthly Base Rental Fee $62.00 d) Late Payment and Not Returning $50.00 Meter after 48 hrs. (per day) 2) Hydrant Rental - outside corporate $20.00 13.20.060 limits, per year E) Charges for Water Meters and Services: 3) Change meter- size Cost =4 0 1) 3/4 inch service and meter (with backflow assembly or set up for $1,290.00 13.36.010 backflow assembly) 2) 3/4 inch meter only (drop-in) $280.00 13.36.010 (with backflow assembly or set up for backflow assembly) 3) 3/4 inch service only $1,010.00 13.36.010 4) 1 inch service and meter 51.460.00 13.36.010 (with backflow assembly or set up for backflow assembly) 5) 1 inch meter only (drop-in) $455.00 13.36.010 (with backflow assembly or set up for backflow assembly) 1 inch service onlv $1.010.00 13.36.010 7) 1 1/2 inch service and meter $2,965.00 13.36.010 8) 2 inch service and meter a. Displacement $3,200.00 13.36.010 b) Compound $4.200.00 13.36.010 9) 2 inch meter only (drop-in) Page 4 of 8 Page 74 of 224 a, Displacement $800.00 13.36.010 b) Compound $1.800.00 13.36.010 10) 3 inch service and meter $9,000.00 13.36.010 (compound meter) 11) 3 inch meter only (drop-in) $2,800.00 13.36.010 (compound meter) 12) 4 inch service and meter $9.800.00 13.36.010 13) 4 inch meter only (drop-in) $3,600.00 13.36.010 (compound meter) 14) 6 inch service and meter $12.400.00 13.36.010 (compound meter) 6 inch meter onlv (drop-in) 55.700.00 13.36.010 (compound meter) 16) 6 inch service and single detector $9,000.00 13.36.010 check valve (compound meter) 17) 6 inch single detector check valve $2,300.00 13.36.010 only (drop-in) 18) 8 inch service and meter $16,800.00 13.36.010 (compound meter) 19) 8 inch meter only (drop-in) $8,500.00 13.36.010 (compound meter) 20) 8 inch service and single detector $11,100.00 13.36.010 check valve (compound meter) 21) 8 inch single detector check valve $3,400.00 13.36.010 only (drop-in) 22) 10 inch service and single detector $13,800.00 13.36.010 check valve (compound meter) F) Water System Capital Expansion/ Replacement Charges Page 5 of 8 Page 75 of 224 G) H) IF 1) Inside City Limits: a) 3/4 inch meter b) 1 inch meter C) 1-1/2 inch meter d) 2 inch meter e) 3 inch meter f) 4 inch meter g) 6 inch meter h) 8 inch meter i) 10 inch meter 2) Outside City Limits: a) 3/4 - 1" meter Front Footage (per ft); (Ord. 3693 Sec. 1, 2004) 1) Residential - in and out City limits 2) Commercial - in and out City limits Square Footage (per sq ft): 1) Residential - in and out City limits 2) Commercial - in and out City limits Water Rights Acquisition Feet - per acre foot 1) Base Water Rights Acquisition Fee - per Residential Unit ($1,725.00 per acre foot x potable use factor .30) 2) Potable Water Irrigation Fee Page 6 of 8 $360.00 13.22.010 $601.00 13.22.010 $1,198.00 13.22.010 $1,918.00 13.22.010 $3,599.00 13.22.010 $5,999.00 13.22.010 $11,995.00 13.22.010 $19,192.00 13.22.010 $27,591.00 13.22.010 90% surcharge 13.22.020 $20.00 13.36.020 $25.00 13.36.020 $0.0388 13.36.020 $0.0426 13.26.020 $1,725.00 13.36.070(B) 26.04.115(B) $517.50 13.16.012(A) equal to 50% of 13.16.012(A) Page 76 of 224 (no irrigation water available) 3) Water Rights Transfer Fee the area of the lot or parcel to be served expressed in acres or portion of acres x 3.5 acre feet of water x $1,725.00 (per acre foot) $1,000.00 13.16.012(E) (Ord. 4160, 2014; Ord. 4139, 2014; Ord. 3961, 2010; Ord. 3827, 2007; Ord. 3693, 2004; Ord. 3655, 2004; Ord. 3610, 2003; Ord. 3575, 2002; Ord. 3553, 2002; Ord. 3543, 2002). Section 4. That Section 13.36.010 of the Pasco Municipal Code entitled "New Service Lines Inside City" shall be and hereby is amended and shall read as follows: 13.36.010 NEW SERVICE LINES INSIDE CITY. For each water connection there shall be a charge for the service and water meter in an amount as set forth in Chapter 3.07 of this Cod -equal to the average eest to the Git-y of the se i tion md installation ineWding the water- meter- eever-ing both pat4s and labon The aver -age eest to the City shall be deteffflined annually by the City Finanee Dir-eeter- based tipen the avefage eest to the City of sueh servi eonneetions and installations in the previous ealendar- year-. ►�;s'ssa= In addition to the above charges, when it becomes necessary to open a paved street and replace pavement a fee, as set forth in Chapter 3.07 of this code, shall be charged. In those areas where it is not possible to determine asphalt patch quantities in advance, they will be computed from field measurements after completion of the work and will be billed to the applicant or deducted from the deposit. (Ord. 3608 Sec. 17, 2003; Ord. 2997, Sec. 1, 1998; Ord. 2961, Sec. 6, 1993; Ord. 1784 Sec. 1, 1976; Ord. 1759 Sec. 1, 1976; Prior code Sec. 4-3.190.) Section 5. This Ordinance shall take full force and effect on the 1st day of January, 2016. PASSED by the City Council of the City of Pasco, Washington, and approved as provided by law this day of 92015. Matt Watkins, Mayor Page 7 of 8 Page 77 of 224 ATTEST: Debra L. Clark, City Clerk APPROVED AS TO FORM Leland B. Kerr, City Attorney Page 8 of 8 Page 78 of 224 AGENDA REPORT FOR: City Council October 13, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Ahmad Qayoumi, Director Public Works SUBJECT: Professional Services Agreement with C112M for Process Water Reuse Facility Engineering Report and Facility Plan I. REFERENCE(S): Vicinity Map Facility Planning Map Professional Services Agreement Summary IL ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Process Water Reuse Facility - $120,000 Private Contribution (potential food processor) - $50,000 IV. HISTORY AND FACTS BRIEF: The PWRF was established 25 years ago with only one food processor. Now, we have 6 food processors utilizing the facility. Initially, the process was simple. The wastewater was conveyed from the food processors and it was applied to the farms for treatment. However, the facility had a lot of deferred maintenance and changes to the quality of wastewater. Also, there were not many updates to address the changes in regulation, nor to address changes in water quality. The recent improvements have addressed long standing concerns on reducing the daily and weekly maintenance such as clogging of pivots, septic issues with wastewater and coding of ground saturations. The improvements also include farm management to help with water application based on the need of water for each circle rather than uneducated guesses. Page 79 of 224 Now that the majority of the improvements have been completed, the Department Ecology has requested a full engineering report on the improvements and changes. The changes include quality of wastewater and additional capacity created as part of the facility including a winter storage pond. In the fall of 2011, CES completed the optimization plan that included improvement plans divided into four phases. Phases I and II included improvements to remove some of the BOD and grit and sedimentation that were causing a reduction in agronomic capacity and could violate the NPDES permit. Staff employed the services of CES to design Phase III of the improvements as outlined in the optimization study. Phase III involved the construction of two lined ponds at the facility. A 35 million gallon (MG) pond for additional winter storage and an 8 MG pond for further treatment by aeration. The objectives of the completed improvements were to: 1) maintain NPDES permit compliance, 2) reduce the constant maintenance by the farmers and City staff, 3) prevent frequent shut down of pivots for maintenance, 4) avoid clogging of pivots and wastewater going septic, and 5) to reduce wear and tear of pumps and pivot equipment. The improvements have made a significant difference in addressing many of the concerns. According to the current engineering report, the City has 1.9 billion gallons of hydraulic capacity. However, due to limitation nitrates, we can only apply up to 650 million gallons of processed water. With improvements of Phases I, II and III; 170 to 200 MG of additional water can be applied to land. This will meet the demand of the current food processors' expansion needs. V. DISCUSSION: Components of this proposed work include a Facility Plan, an engineering report, and planning and concept design for a new food processor. The engineering report will be used to document the capacity gained at the facility for the new ponds constructed. This report will be submitted to Ecology for their approval. The Facility Plan will be used by the City to develop a long-range capital expansion plan. This plan will evaluate the flow and characteristics of the process water, the effluent discharge alternatives, treatment sequencing, and solids handling. The plan will evaluate the current operations and provide recommendations for more efficient ways to operate the facility and to create additional capacity. It will also include recommendations for capital improvements, applying the latest technology to create additional capacity for current food processors and the ability to attract more food processors. Page 80 of 224 One of the ways to expand capacity is to purchase additional farmland. Unfortunately, purchasing additional farm land is cost prohibitive. Today, farms cost approximately $15,000 per acre. Therefore, we need to explore other ways to increase capacity, including long term leases with other farmers. The goal is to have a true reuse facility. We have been approached by a large food processor to evaluate the possibility of using the City PWRF for their wastewater discharge and treatment. They are contributing $50,000 toward the study and will therefore be included as part of the Facility Study. If the food processor joins the City facility, it will double the City's operation in wastewater volume handling. Staff recommends the approval of the agreement with CH2M. Page 81 of 224 __ � 1 � _� I' Page 83 of 224 Professional Services Agreement (Summary Sheet) Project: Process Water Reuse Facility (PWRF) Engineering Report and Facility Plan Consultant: CH2M Address: 295 Bradley Blvd. #300, Richland, WA 99352 Scope of Services: To prepare an Engineering Report as required by the Washington State Department of Ecology which will include those improvements installed to date plus prelimin4a design elements being developed under the separate aeration improvements project. Develop a Facility Plan for the PWRF that will be used by the City to develop a long-range capital expansion plan and may be used to obtain Ecology Pproval as required under WAC 173-240-130 for a Facility Plan. Term: Completion Date: June 30, 2016 Payments to Consultant: ❑ Hourly Rate: $ © Fixed Sum of: $171,400 ❑ Other: Insurance to be Provided: 1. Commercial General Liability: ❑ $1,000,000 each occurrence; ❑ $2,000,000 general aggregate; or © $1,000,000 each occurrence; and $2,000,000 general aggregate 2. Professional Liability: ® $1,000,000 per claim; ❑ $1,000,000 policy aggregate limit; or ❑ $ per claim; and $ per policy aggregate limit Other Information: Signature by: ❑ Mayor ❑X City Manager Page 84 of 224 AGENDA REPORT FOR: City Council October 27, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Ahmad Qayoumi, Director Public Works SUBJECT: Appointment of Members to Executive Committee of the Feasibility Traffic Study for Interchanges L REFERENCE(S): Vicinity Map Methods and Assumptions Report Chartering Agreement II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: N/A IV. HISTORY AND FACTS BRIEF: Growth in the past five years has resulted in high levels of congestion, particularly in corridors that provide access to regional facilities. Current planning efforts estimate additional population growth between 50 and 75 percent over the next 20 years. Existing population levels, as well as expected growth, are driving the need to identify the best way to redistribute regional traffic within the City's transportation network. There have been a number of indications that there is a need for another access point to/from I-182 between SR -395 and the Road 100 Interchange. In the past 5-6 years, staff began working with the Washington State Department of Transportation (WSDOT) and Federal Highway Administration (FHWA) to allow commencement of an Interchange Justification Report (IJR). At that time, the agencies indicated that more sections of the internal city street network would have to be completed before there could be further consideration. Page 85 of 224 The City completed the Road 68 Corridor Study which indicates congestion for commuters in the residential area west of the airport. These commuters utilize the interchange at Road 68 to access their homes, putting additional demand on the interchange. In late 2012, staff met with key personnel at WSDOT and FHWA to discuss the City's growth and the rising need to provide additional transportation improvements. After sharing the City's growth experience, FHWA indicated that a Feasibility Traffic Study would need to be completed prior to permitting an IJR. The Feasibility Traffic Study is the first phase of a multi -phased project to identify, recommend, approve, and design a solution to the traffic congestion throughout the City. Under this scope of work, the consultant is analyzing the feasibility of redistributing traffic to meet current and future traffic demands and identify transportation improvement projects to reduce congestion. Based on the results of the Feasibility Traffic Study, future phases of the project could include completion of an IJR, environmental documentation, and a Preliminary Study and Engineering document. The projected limits center along I-182 from the Columbia River Bridge east to SR 395 and is bounded by Court Street on the south and Powerline Road on the north. The roads, intersections, and interchange improvements, if implemented, would reduce congestion at the I-182/Road 68 Interchange and improve regional traffic mobility in this area. A Technical Committee has been formed with FHWA, WSDOT, Port of Pasco staff, City staff, BFCOG members, among others. Two meetings were held in Olympia in the months of June and July 2015. In said meetings, consensus was reached on the methods and assumptions the consultant used to develop the traffic model, as well as the definition of the study Mission Statement, which is clearly stated in the Chartering Agreement. V. DISCUSSION: As part of the study, an Executive Committee needs to be formed. The Executive Committee will need to include at least three members, one member each from the following organizations: 1. City Council; 2. Planning Commission and Chamber of Commerce; and 3. Port of Pasco or neighborhood representatives. The appointments must be by Mayoral appointment. Page 86 of 224 Vicinity Map Feasibility Traffic Study for Interchanges Methods and Assumptions Memorandum - DRAFT City of Pasco Feasibility of Traffic Study for Interchanges Project Submitted to City of Pasco Pasco, Washington 2 April 2015 Prepared by BergerABAM In Association with DKS Associates Job No. A15.0064.00 Page 88 of 224 METHODS AND ASSUMPTIONS MEMORANDUM - DRAFT City of Pasco Feasibility Traffic Study for Interchanges Project TABLE OF CONTENTS SECTION STAKEHOLDER ACCEPTANCE.....................................................................................................1 INTRODUCTION AND PROJECT DESCRIPTION............................................................................2 ANALYSIS YEARS AND TIME PERIODS.......................................................................................2 PROJECT AND STUDY AREAS......................................................................................................3 ProjectArea....................................................................................................................3 StudyArea.......................................................................................................................3 TRAFFIC OPERATIONS ANALYSIS...............................................................................................6 AnalysisData..................................................................................................................6 Existing Year Traffic Data Collection 7 TRAVEL FORECASTING................................................................................................................7 Travel Demand Model Process.......................................................................................7 Year2040 Travel Demand..............................................................................................8 PAGE Assumptions in the Travel Demand Model....................................................................13 Post Process for Volume Adjustments..........................................................................14 SAFETYISSUES...........................................................................................................................14 SELECTION OF MEASURES OF EFFECTIVENESS.......................................................................14 DEVIATIONS/JUSTIFICATIONS....................................................................................................15 CONCLUSION...............................................................................................................................15 City of Pasco BergerABAM, A] 5.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Pe89 of 224 LIST OF FIGURES Figure1 Study Area Map....................................................................................................... 5 Figure2 TAZ Map................................................................................................................... 9 LIST OF APPENDICES AppendixA - To Be Determined................................................................................................. # City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington FR#gp 90 of 224 STAKEHOLDER ACCEPTANCE The undersigned parties, including all members of the team from the City of Pasco Washington State Department of Transportation (WSDOT), Federal Highway Administration (FHWA), and Benton -Franklin Council of Governments (BFCG), concur with the Methods and Assumptions for the City of Pasco Feasibility Traffic Study for Interchanges project presented in this document." BFCG: Signature: Title: Date: FHWA: Signature: Title: Date: WSDOT: Signature: Title: Date: City of Pasco: Signature: Title: Date: (1) Participation on the Project Decision Team and/or signing of this document does not constitute approval for the City of Pasco Feasibility Traffic Study for Interchanges Report. (2) All members of the Project Decision Team accept this document as a guide and reference as the study progresses through the various stages of project development. If there are any changes to the assumptions in this document a revision will be created and signed by all the stakeholders. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington RaWp 91 of 224 INTRODUCTION AND PROJECT DESCRIPTION The City of Pasco has experienced recession -defying growth over the past five years. This growth has resulted in high levels of congestion on corridors that provide access to regional facilities along the I-182 Corridor, such as the Tri -Cities Airport, the Columbia Basin College, and the Trade Recreation Agricultural Center (TRAC - a regional complex hosting conventions, concerts, and recreational sporting events, including Gesa Stadium). In particular, Road 68 between I-182 and Sandifur Parkway experiences significant congestion during typical weekdays that is compounded during events at TRAC. Current planning efforts estimate continued growth of 2% to 3% per year over the next 20 years in Pasco, driving the need to determine transportation network solutions that can serve both local and regional traffic. The Feasibility Traffic Study for Interchanges Project is the first phase of a multi -phased project to develop solutions to manage increasing congestion, accommodate future growth, and maintain adequate access to regional facilities along the I-182 Corridor. The study will: Examine the nature of regional and local traffic demands on key corridors connecting to the regional facilities (e.g., Road 68 and Argent Road), including future growth. Evaluate the effects of transportation system options that redistribute traffic routing, including completing a local grid system, improving crossings of I-182, and providing new access to I-182 (between Road 68 and SR 395). • Recommend next steps for project development. Based on the results of the Feasibility Traffic Study, future phases of the project could include completion of an Interchange Justification Report (IJR), environmental documentation, and PS&E document. ANALYSIS YEARS AND TIME PERIODS The traffic analysis will be performed for the following analysis years: • Existing Year 2015 • 20 -year Design Horizon 2040 (assumed opening year of 2020) The Scenarios will include weekday p.m. peak hour analysis. Weekends and other special event periods will not be included as a specific analysis time period. It is recognized that weekends and special events at the nearby TRAC Center are also periods when the local road network is congested. However, these periods will not be the focus of this analysis, in part since there are no regional forecasting tools developed for such periods. Existing data sources (as available) will be reviewed to qualitatively describe the system conditions during special event periods. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Rapop 92 of 224 PROJECT AND STUDY AREAS The study area limits for the City of Pasco Feasibility Traffic Study for Interchanges is larger than the project area limits. The larger study area is intended to capture land use, population, employment, and traffic volumes throughout the surrounding local network that may influence the project area. For travel modeling purposes, the entire BFCG regional travel demand model area will be included in the model area. The BFCG model represents the immediate Tri -Cities area and includes the cities of Pasco, Kennewick, Richland, and West Richland, as well as the Hanford Site. Any project based refinements to the regional travel demand model will occur within the study area. Project Area The project area will focus on the segment of I-182 between SR 395 and Road 68 to identify potential interchange locations. An interchange on this freeway segment would likely either include or directly impact the configuration of Argent Road, and possibly other collector streets such as Road 52, Road 48, and Road 44. Project Area refinements for future phases of evaluation may be identified through the course of the Feasibility Study. Study Area The study area is a larger area that captures potential benefits or impacts for traffic capacity analysis and includes the following corridors • Freeway o I-182 - from the Columbia River (west of Broadmoor Boulevard) to 20th Avenue • Roadways o Court Street - from Road 68 to 2011h Avenue 0 20th Avenue - from Court Street to Powerline Road o Powerline Road - from 20th Avenue to Road 68 o Road 68 - from Powerline Road to Court Street The study area includes facilities under City of Pasco, Franklin County, and WSDOT jurisdiction, and is located near the center of the BFCG Metropolitan Planning Area. The study area also falls within the City of Pasco Urban Growth Boundary (UGB). The primary congestion within study area today occurs on the Road 68 corridor between I-182 and Sandifur Parkway. The project study intersections are representative of the key traffic growth locations within the study area limits. Freeway ramp intersections provide measures of regional growth within the study area limits and therefore are included as study intersections in the analysis. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Ra 93 of 224 Freeway Ramp Intersections include: 1. I-182 Westbound Ramps/Broadmoor Blvd (Road 100) 2. I-182 Eastbound Ramps/Broadmoor Blvd (Road 100) 3. I-182 Westbound Ramps/Road 68 4. I-182 Eastbound Ramps/Road 68 5. SR 395 Northbound Off-Ramp/I-182 Westbound On-Ramp/Argent St 6. I-182 Westbound Ramps/201hAve 7. 1-182 Eastbound Ramps/201hAve 8. SR 395 Southbound Ramps/Court St 9. SR 395 Northbound Ramps/ Court St The project team selected the other study intersections based on regional model traffic growth projections, roadway classification, and connectivity functions within the project limits. Other Selected Intersections include: 10. Burden Blvd/Road 68 11. Burden Blvd/Convention PI 12. Argent St/Road 68 13. Argent St/Road 52 14. Argent St/Road 48 15. Argent St/Road 44 16. Argent St/20111 Ave 17. Sandifur Pkwy/Road 68 18. Court St/Road 68 19. Burden Blvd/Road 44 20. Argent St/Road 36 21. Wernett Rd/Road 68 22. Sandifur Pkwy/Broadmoor Blvd 23. Burden Blvd/Road 60 24. Chapel Hill/Road 68 25. Chapel Hill/Broadmoor Blvd 26. Wrigley Dr/Road 68 27. Court St/48111 Ave 28. Sandifur Parkway/Convention PI These intersections are shown in Figure 1. The project team will select additional study intersections based on proposed future freeway, arterial and collector connections. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Ray�w 94 of 224 FIGURE 1 STUDY AREA MAP � 7v H'Lw f4 -�+ \ � CmCffQ k City 4Pasco sgerABa«a5.m6lm RasG,ity Traffic Stua for Interchanges Project April 2015 Pasco, Wmgto n RNp 95 0 224 \ � i � ( 00 ® / ( / / m ) t ) E _ . __ m cu / . . e n J 0 & 2 § 2- A § . . a _. 3 ® - 2 § c U § 0 7 § 0 2 2 0 / § £ x / - r @ ± I z Jv 00 0 0 J City 4Pasco sgerABa«a5.m6lm RasG,ity Traffic Stua for Interchanges Project April 2015 Pasco, Wmgto n RNp 95 0 224 TRAFFIC OPERATIONS ANALYSIS The traffic operations analysis will use two primary types of software tools to analyze the components of existing and future traffic performance: 2010 Highway Capacity Software Version 6.65 (HCS 2010): Freeway mainline, ramp merge & diverge Synchro (version 8): Capacity analysis of signalized and unsignalized intersections (no queuing analysis) The first step will be to analyze existing conditions, including calibration to match results to actual data collected from the field such as traffic signal operations. Then the Future No -Build Operations will be conducted using the forecasted traffic volumes for the design year (2040), coupled with roadway network updates to the travel demand model based on funded transportation projects expected to exist at those times. Following the Future No -Build Operations Analysis, the project team will analyze multiple design alternatives for the Future Build Operations. Other performance measures are discussed in the Selected Measures of Effectiveness section of this document. Analysis Data The base year traffic analysis will be conducted for year 2015 traffic levels. The project team will compile traffic counts and existing peak hour factors (PHFs) for the study intersections that have had traffic counts collected since 2013 (where available, as identified in the Travel Forecast Section). New 2015 peak hour traffic counts will be collected at all other study intersections. The intersection count data from 2013/2014 counts will be balanced and adjusted with the new count locations to form a year 2015 dataset. When considering 20 years of traffic growth, it is likely that the duration of the traffic peak will spread and the maximum 15 minutes of traffic volume will be lower relative to the total traffic during the peak hour (i,e,. PHF will increase). Peaking characteristics in 2040 at study area intersections will be assessed based on the variation of existing peaking characteristics, with possibly a minimum PHF of 0.95 assumed for all intersections in 2040. Peak hour factors for freeway analysis will be based on the lesser (conservative value) of the measured peak hour factors at the critical ramp terminals. Truck percentage estimates for the study area are based on tube count data collected by the City of Pasco and WSDOT since 2013. At this time the estimated truck percentages are not expected to change for future analysis years. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Ray�w 96 of 224 Existing Year Traffic Data Collection Previous data collection efforts within the project limits provided PM peak hour turn movement counts at the following study intersections: • I-182 Westbound Ramps/Road 68 (Collected in 2013) • I-182 Eastbound Ramps/Road 68 (Collected in 2013) • SR 395 Northbound Off-Ramp/I-182 Westbound On-Ramp/Argent St (Collected in 2013) • Burden Blvd/Road 68 (Collected in 2013) • Burden Blvd/Convention Place (Collected in 2013) • Argent St/201h Ave (Collected in 2013) • Argent St/Road 36 (Collected in 2013) • Court St/2011, Ave (Collected in 2014) • Burden Blvd/Road 60 (Collected in 2013) The City of Pasco will conduct peak turn movement traffic counts during the spring of 2015. The counts will occur during a two-hour PM peak period on a Tuesday, Wednesday, or Thursday. The count locations will include all study intersections without a similar count within the past two years. Traffic data from the permanent traffic recorder (PTR) stations will provide the peak hour traffic volumes on I-182 and SR 395 for weaving, merging, and diverging base year analysis. TRAVEL FORECASTING Future roadway and intersection volume forecasts will use the existing year 2015 traffic volume count data' with applied growth forecasts from the BFCG regional travel demand model.. The following section provides background on the regional travel demand model and the forecasting process. Travel Demand Model Process The BFCG updated the regional travel demand model as part of the 2011-2032 Regional/Metropolitan Transportation Plan (MTP). The model area represents the immediate Tri -Cities area and includes the cities of Pasco, Kennewick, Richland, and West Richland. The model also includes a transportation analysis zone (TAZ) representing the Hanford Site. The current model has a 2010 base year and 2020 and 2030 horizon years. The model uses the TransCAD software platform and follows a standard four -step process, as described in the 1 Depending on the trends observed through the new 2015 traffic counts, the 2013 and 2014 counts may be adjusted to account for recent growth (through balancing adjacent locations) to form a year 2015 traffic dataset. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Rapop 97 of 224 2011-2032 Regional/Metropolitan Transportation Plan.' The model will be updated in the next few years to support projections needed for future Comprehensive Plan and transportation plan updates in the region. However, this next planned update (due in 2017) is not anticipated to be available in time for application in the Feasibility Study during 2015. Therefore, the project team has coordinated' with BFCG to develop an approach for preparing a year 2040 horizon year forecast for this project. Year 2040 Travel Demand As part of the interchange feasibility project, the team will develop a focused travel demand model for the base year (2010) and multiple horizon year (2040) scenarios. The project team will disaggregate TAZs within the project limits to provide more detailed travel demand impact measurements (e.g., refined loading of trips onto the local system). Figure 2 shows the existing and proposed (disaggregated) TAZ boundaries. The following section describes how the travel demand elements (land use within the model area and traffic volumes on external gateways) will be extrapolated to year 2040 levels. This extrapolation effort will be primarily focused locally, in Pasco, since Pasco TAZ are most immediate to the project area and affect the traffic routing on local facilities. However, other regional growth considerations (such a land use outside of Pasco in the Tri -Cities, and regional gateway traffic) will also be considered and extrapolated to account for impacts to future travel demand coming into and out of Pasco. Pasco Land Use - The City of Pasco will develop 2040 land use projections for the entire city and provide disaggregated land use detail within the study area limits. Figure 2 shows the existing and disaggregated TAZ system. Year 2040 control totals for Franklin County (based on Washington s Office of Financial Management (OFM) countywide population projections for year 2040) will be used guide the Pasco land use allocations. 2 2011-2030 Regional & Metropolitan Transportation Plan, Benton -Franklin Council of Governments. Chapter 6, pg. 6-1 through 6-8. 3 Meeting with BFCG modeling staff, February 25, 2015. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Ra 98 of 224 FIGURE 2: TAZ MAP �'hF Ci 'rt !ii a N a U m aT 1-- o w o U S GQvoa 0 � ft J 4 LL [a. a � 1 m iG t� m d m 'r C m a iC e o � City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington 1a� 99 of 224 wr r h W � r !O g h r Q 1 ,N 4 N b �h �y O {y � r g Ar 6 9 0 6 f ..g. - ? a 12 $ m Z5 ❑vla 'r 4! � m ry� QV06 o w 86 L s w S' �'hF Ci 'rt !ii a N a U m aT 1-- o w o U S GQvoa 0 � ft J 4 LL [a. a � 1 m iG t� m d m 'r C m a iC e o � City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington 1a� 99 of 224 Regional (Non -Pasco) Land Use - Land use growth in the Tri -Cities (model area) outside of Pasco will be considered to account for traffic growth on regional facilities connecting to Pasco. For the model areas outside the City of Pasco, the project team will use regional population control totals for year 2040 and factor the 2020 to 2030 growth (by TAZ) to 2040. The project team will coordinate with Benton and Franklin counties to ensure that population and employment model growth are consistent with current projections of county control totals. This process will consist of the following three steps: 1. 2040 Population Control Totals: Based on initial coordination with Benton and Franklin Counties, the counties have not set year 2040 control totals. Therefore, we will use Washington's Office of Financial Management (OFM) countywide population projections for year 2040. Based on a review of recent population growth and past forecasts, we will use the "high" projection4. We will retain the existing population allocation for each city within the counties (e.g., 38% Kennewick, 28% Richland, 6% West Richland). 2. 2040 Employment Control Totals: We will retain the projected 2030 employment/population ratio included in the BFCG regional model. The 2040 Employment uses will be factored to account for population growth. 3. 2030 to 2040 Growth Areas: The 2030 land use will be scaled up to match year 2040 population and employment totals. The incremental growth will be applied proportionately to TAZs based on growth between 2020 and 2030. Model External Freeway Connections - Trips enter and exit the BFCG regional model via major regional roads. These roads act as gateways to the model and provide an estimate of the travel interaction between the Tri -Cities region and Washington State. These gateways are incorporated into the travel demand model as external stations. The estimated traffic growth at the external stations to project year 2040 demand will be estimated using the following steps: 1. Total 2040 External Trips - To estimate the 2040 external station trips the project team will apply the 2020 to 2030 BFCG model external station growth to the 2030 to 2040 time period, generating the total 2040 external trips. This extrapolation will be back -checked with historical growth rates and projected County growth (outside of the Tri -Cities) to assure reasonableness. 2. External -External (X -X) Trips - The X -X trips are those that travel through the model area without an origin or destination in the Tri -Cities. The proportion of X- X trips relative to all external trips for each external gateway will be retained from the 2030 model scenario. 4 The OFM projections are set for low, medium, and high levels for each county. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington 1?4M 100 of 224 3. External -Internal (X -I) and Internal -External (I -X) Trips - The X -I trips travel from outside the model area to a destination in the model area, while the I -X trips have an origin in the model area and a destination outside the model area. The number of X -I and I -X trips for each external gateway will be calculated by taking the total external trips and removing the X -X trips. The remaining trips will represent X -I trips (those entering the model area) and I -X trips (those leaving the model area). Regional Destinations - There are three significant uses within the study area that draw regional activity. The airport and college are both represented with employment land use in the model. Future forecasts for these areas will be considered in Pasco's land 2040 land use in the respective TAZs. The TRAC center trips are modeled as a "special generator' using fixed trip totals in the TAZ in place of land use and trip rates. This methodology creates a special generator representing the TRAC center's unique travel demand impacts. The project modeling process will preserve the special generator modeling procedures used in the BFCG model. All refined model runs will follow the BFCG model process and assumptions. The 2040 transportation network will include projects approved with committed funding within the study area. These projects will be limited to those that influence motor vehicle routing in the demand model - projects that do not influence vehicle routing (such as sidewalk infill or modernization projects) will not be included. The regional projects currently scheduled and funded are listed in Table 1, which are copied as excerpts from existing project lists (City of Pasco CIP and WSDOT STIP) and have not been modified for reference purposes. TABLE 1: COWLETED AND FUNDED TRANSPORTATION PROJECTS City of Pasco Capital Improvement Plan (CIP) Projects 2015 -2020 Dent Road Extension - New collector roadway from Road N/A X CIP.14.01.STR 116 to Broadmoor Boulevard Arterial Street X Broadmoor Boulevard Extension - New collector roadway N/A X C5.ST.3A.12.54 from Dent Road to Easy Street Traffic Impact X Road 60 Extension - New collector roadway from Sandifur N/A X Parkway to Powerline Road Powerline Road Extension - New collector street from N/A X Convention Drive to Road 56 City of Pasco Capital Improvement Plan (CIP) Projects 2015 -2020 City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Ing 101 of 224 Dual Southbound Right Turn Lanes on Road 68 - Dual right STP Grant, CIP.14.01.STR turn lanes at southbound Road 68 to westbound I-182 to Arterial Street X improve traffic flow and congestion at Road 68/Burden Area. Fund C5.ST.3A.12.54 Argent Road Widening (Road 44 to 2011, Avenue) - To Traffic Impact X improve and widen roadway to 5lanes. Add a new signal at ni- o n 1 R_ — nn.., o A __.____i Fees, STP Grant, r TT% City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Ing 101 of 224 Project Funding Year Number . Description S• 141 Wrigley Drive Extension (Clemente Lane to Convention Arterial Street Removed' Drive) - Initial project will design & construct a "core" road, Fund X 28 -ft width w/o curb & gutter, for an approximate length of 500 feet. The intersections at both ends will be designed and None6 Road 68 Triple Right - Add a triple right turn at Road 68 and Arterial Street X I-182 interchange for west bound to north bound. Fund, STP Grant Sandifur Parkway Widening (Road 68 to Convention Drive) - Arterial Street Project will widen the existing roadway to the equivalent of a Fund, Private CIP.14.10.STR 5 lane section to accommodate future growth and traffic Contributions X impacts. The timing of these improvements will be driven by development of vacant & underdeveloped parcels along the corridor. C5.ST.3A.12.53 Road 68 Widening (Argent Street to I-182) - Changes to Road Arterial Street X 68 south to improve traffic flow. Fund, STP Grant Chapel Hill Extension (Road 68 to Road 84) - The road Arterial Street section will match the existing Chapel Hill Boulevard width Fund, State of CIP.14.04.STR at Road 84. The project will include the necessary signal Washington X improvements at the intersection of Road 68 and Chapel Hill Grants (TIB) Boulevard. Sandifur Parkway (Road 52 to Road 60) - Finish Sandifur Traffic Impact CIP.14.08.STR Parkway from Road 52 to Road 60. Sandifur is a full street Frees, STP Grant X east of Road 52 and west of Road 60. Harris Road Realignment -Modify the alignment of Harris Private CIP.14.07.STR Road to tie into the intersection of Sandifur Parkway and Contributions X Broadmoor Blvd and remove offset intersection. Road 100 Widening South of Chapel Hill (Court Street to Arterial Street CIP.14.02.STR Chapel Hill) - Changes to Road 100 to improve traffic flow Fund, STP Grant X (uncertain) Road 68 & Court Street Signal - Intersection improvement at Traffic Impact CIP.14.12.STR the intersection of Road 68 and Court will consist of traffic Fees X signal. Burden & Road 60 Signal - Pedestrian crossing and possible General Fund, CIP.14.13.STR signal. Arterial Street X Fund, Street Overlay Fund 5 Project number listed as "Removed" in 2015-2020 CIP list. Project included for discussion and funding information only - 6 Project included without number not included in 2015-2020 CIP list. City of Pasco Feasibility Traffic Study for Interchanges Project Pasco, Washington BergerABAM, A15.0064.00 April 2015 1?4M 102 of 224 Project Funding Year Number Project Description Sources 2040 Argent & Road 100 Traffic Signal - New traffic signal at Arterial Street CIP.14.11.STR Argent Road and Road 100. Fund, Traffic X Impact Fees Road 44 & Burden Traffic Signal - Install a new traffic signal. Arterial Street CIP.14.18.STR Fund, Federal X Grant Road 84 and Chapel Hill Signal - Install traffic signal. Arterial Street CIP.14.14.STR Fund, Traffic X Impact Fees CIP.14.17.STR Madison Avenue & Burden Boulevard Signal - Install traffic Traffic Impact X signal at the intersection of Madison Ave and Burden Blvd. Fees Road 76 Overpass (Argent to Burden Boulevard) - Construct Arterial Street a north -south overpass I-182 connection, Burden Blvd and Fund, STP CIP.14.22.STR Chapel Hill Blvd. Grant, State of X Washington Grants LID = Local Improvement District To preserve the BFCG modeling process, the project team will match all roadway network edits and additions from the alternatives analysis to the link (segment) and node (intersection) classification and volume delay function parameters used in the BFCG model. All network additions, edits, and refinements will occur down to the collector street level of detail in the study area. Assumptions in the Travel Demand Model All travel demand modeling assumptions used in the BFCG regional travel demand model will also apply to the project modeling process. The key BFCG model assumptions include the following: • Demand is balanced to the home end of a trip • Three trip types o Home-Work/Work-Home o Home-Other/Other-Home o Non -Home Based to Non -Home Based • Trip rates remain fixed in the future • Route impedance (cost) is a factor of both time and distance • Minimal transit impacts to overall travel demand (no mode choice component) • Single class of auto travel (no separate assignment for trucks) • Traffic assignment follows the User Equilibrium method, with control and link delay components City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington 103 of 224 Post Process for Volume Adjustments The future forecasting will be conducted by adding the difference (growth) in volumes from the future planning horizon (2040) volumes to the base year (2010) volumes for each turn movement at intersections to the existing field collected turn movements. Because the base year model and existing field collected data represent two different base years, the growth from the base year model to future year model will be adjusted to compensate for the difference in base years This increment of growth will be adjusted to represent post -processed annual growth that will be added to the 2015 existing p.m. peak hour turn movement counts to establish forecasted opening year and design year volumes. Future traffic volumes will be forecasted for interstate mainline segments and ramps, as well as for turning movements at study intersections making use of existing data and the travel demand modeling process described in previous sections. Travel demand forecasts developed for operational analysis will be post -processed using the methodology outlined in the National Cooperative Highway Research Program (NCHRP) Report 255, published by the Transportation Research Board. SAFETY ISSUES Placeholder Note: This section may be addressed through the IJR process but is not being addressed during the Feasibility Study. SELECTION OF MEASURES OF EFFECTIVENESS With Future No -Build Conditions and area deficiencies and constraints identified, alternatives for improving traffic operations will be developed and evaluated through a two-level screening process. The purpose of the first level is to develop the initial set of alternatives for consideration and to apply the first level of screening to select a subset of alternatives for further refinement. These first alternatives will include options such as: • Enhancing City arterial/collector grid connectivity • Enhancing the city network with additional state highway overcrossings or undercrossings • Enhancing the network with additional or improved state highway interchanges • Enhancing the City arterial/collector grid with a combination of added interchanges and corridor widening Measures of effectiveness used in the Level 1 screening process (performed with the travel demand model) to select alternatives may include: Level 1 —Alternative Initial Screening • Total System Congestion (hours of delay) • Average Trip Length for trips accessing I-182 City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington 1?4M104 of 224 Vehicle Miles Travelled (VMT) in the study area VMT by Trip Type (through, regional, local) by Functional Class (freeway, arterial, collector, local). Trip Type defined as: o Through — no trip ends (origin or destination) within the City of Pasco o Regional — one trip end (origin or destination) within the City of Pasco o Local — both trip ends (origin and destination) within the City of Pasco Travel Time and Travel Routes between Key Origins and Destinations The second level screening process will evaluate in greater detail the top three alternatives (or alternative hybrids) that remain from the Level 1 screening process, and will include detailed intersection level traffic analysis. Measures of effectiveness used in the Level 2 screening process to select alternatives may include: Level 2 Refined Screening All measures of effectiveness used in Level 1 (travel demand model) screening, plus the following: Intersection Analysis o PM peak hour volume -to -capacity ratio, level of service (LOS), and delay o Growth in traffic volume at study intersections, including the growth of movements accessing I-182 at interchange locations Freeway Segment Analysis o PM peak hour merge, diverge, and weave capacity calculations on I-182 The results of the traffic impact analysis will be used to determine the project's traffic impacts to mainline I-182, and thus the level of analysis (ie. extents of the study area) required for an Interchange Feasibility Report, to be submitted to WSDOT and FHWA. The measures of effectiveness listed for the Level I and Level 2 analysis will be included in the final project Interchange Feasibility Report. Measures of effectiveness for intersection performance will include LOS, delay and volume/capacity ratio, while freeway performance will include LOS, density and speed. DEVIATIONS/JUSTIFICATIONS Placeholder Note: This section may be addressed through the IJR process but is not being addressed during the Feasibility Study. CONCLUSION Placeholder Note: This section may be addressed through the IJR process but is not being addressed during the Feasibility Study. City of Pasco BergerABAM, A15.0064.00 Feasibility Traffic Study for Interchanges Project April 2015 Pasco, Washington Fggv5105 of 224 APPENDICES Placeholder Note: This section may be developed through the on-going analysis associated with the Feasibility Study. City of Pasco Feasibility Traffic Study for Interchanges Project Pasco, Washington BergerABAM, A15.0064.00 April 2015 1?4M 106 of 224 CHARTERING AGREEMENT Feasibility 'raffic-6-tudy*r4nterchanges- - BergerABAM,-,!�- The4ollowingds4heTroposedctharteringcagreement@) Project Goals • ToTreparem4rafficgnodelaof@,existingmndTrojectedggrowth@tonditionsavithin4heCity�of@) Pascomndc vithin4heovicinityamfcmajordocal(mnd4egionalctorridors@) Identifymndmnalyzedocalcmnd4egional4ransportation(systemamprovementcalternativesdo@) relieve(Congestion(�anddmprovecsafety.�- Project Mission Statement To identify local and regional network solutions within the City of Pasco that efficiently move people and goods, relieve congestion, and improve safety, that meet the needs of current and projected growth, and that provide efficient access to regional destinations within or adjoining City limits; while protecting the integrity of the Interstate systema Agency Roles and Responsibilities TEAM MEMBER RESPONSIBILITIES Executive Committee Provide insight on funding and economics that would help guide the process of endorsing the preferred configuration. Technical Advisory Oversee project team progress and participate in decision process. Provide Committee meaningful information and input from a variety of agency perspectives to gain consensus on preferred solutions. Report back to member's organization/ management on project progress. Endorse the preferred solution. Participate in the decision process. Provide meaningful technical advice and input based on their defined technical expertise. Project Team Develop technical information. Summarize and present to project committees and agencies in an easy -to -understand format and in advance of meetings. Work to consider and incorporate all comments from project committees and agencies. Critical Success Factors Thegnostdmportantdhingsowegnustc4accomplishdocachieve(success@on4heTroject(gre4he@) following.@) Ensure4hat4hecieeds@ofdhectommunityoNill&egnet4wentyWears(gfter4heTroj ectas@) completede Pagedl@ofAw Page 107 of 224 • Addressccoll(§of@WSDOT's(mnd&HWA'sctoncerns@) • Address4hemeedsaof4hectommunityo) • Honestcandengagedcparticipantse • Realisticmndepractical(�solutionscbasedaon(soundarlata@) • Listaofopractical(gnd*asilydmplementedcsolutions@) • Interagencycxonsensusaoninethodsqzsed4o@developcand4inalizecsolutions@) • Consensusmn(solutionse • Improve4rafficdor(mllwehicle4ypes@) • Identify«ctost@i�ffectivecandTracticalTroject@) • Achieve(epprovaldromcregulatingcagenciescand@bbtain4unding@) • Obtainenvironmental@documentationmpprovale • Improvedivabilityo) • Obtaimtommunity(tonsensuse • ObtaindJRmpprovalgifineeded)@) • ObtaindZOWmcquisitiona • Improve(accessdorTedestriansmndcbikes@) • Considercaddedcrecommendationscandamprovements4o@Cityaofd'ascocietworko 0 Project Enablers • Createcaeplatform4hatensurescpveryonechas4heoopportunity4oTarticipateo • Activeeparticipation:eprovidecandctontributeanputanto@decisions@) • Cooperation*vithcand�betweenollcgagenciescand(stakeholders@) • TimelyTarticipatione • Openctommunications(andTarticipationcbyctommitteescandcstakeholders@) • Consensuscandmgreementcwithcreviewingcagencies@) • Recognizing4hateveryonechasca(westeddnterest@) • CommunitysupportcandTarticipatione • Earlymndmppropriateeparticipation4rom4he&xecutive,@TechnicalAdvisorymnd&roject@) AdvisorycGroupCommitteescwill�be4he&ey4o@�early(selection@) • Achievecprojectanilestonese • Haveogood@design,4raffic(andenvironmentaldnformation.@) 0 Project Hindrances • Lackamfmttendancea • No@tommunicationcandTarticipation@) • Lackamf(tommunitycsupportcandeparticipation@) • Lackaofctontinuityc�-4hecsameopeoplemremotinvolvedmll4he4ime,4herecaremewgDlayerse that@tomednto4hegDroject@andcaren'tcawareamfTreviouslygnade@decisionse • Notciaving(mllamf4hemecessary@data4ipfront@) • Notcbeing(able4odocusaon4hegDrojectcgoalsmndanissioncstatement@) Page�2mf4w Page 108 of 224 • Notcbeingdnmgreementcwith4eviewing(mgencies@) • Nohstayingammschedulea Guiding Principles The4ollowing(mredhecguiding@principles4orcalldeam(4embers'&ehaviorc vhenavorkingowith@) eachamther.^' 1. BeTrofessional4treatwach@mtheroNithorespect,@dignity)@) 2. OneTerson(speaksmtm4imee 3. Be@mutcome4ocused"tay@bffcsidedssues@) 4. Listen4or4inderstandingo 5. Make(decisions(�and4esolvedssuesdn(ga4imely(4nanner@) 6. Includemll@affectedq3artiesdn(�discussion@) 7. Shareddeas8,mllddeaschavewalue@) 8. Principles&eforeTersonalitieso 9. Remember4he4nnissione 10. Becsensitive4owurTolitical@environment@) 11. BeTroactivedncddentifyingcdssues,crommunicatingo-,xpectationscxelated4ocwhods(dnvolved,@) and4imemeeded4omddresse 12. Whenaiew4eamgnembersacomeamn&oard,dntroduce4hem4o4he(eharter@) 13. Have4un!@) Endorsement Endorsement(is4heckey4o(success@on4his@project4or(�allThasesms4heTroject@progresses.*) Signing4hisc)roject(thartercindicatesmowillingness4oavork4ogether4o&uildoconsensusamne solutions4hatoserve4he@community. .,t„ _'\ Endorsement of Charter We4he(�ExecutiveCommittee,@TechnicalAdvisoryCommittee(�and4'roject@Team@are@committed@) to4his(tharteringmgreement.o Page&ofAw Page 109 of 224 Technical Advisory Committee Ahma&Qayoumi,@Cityaofd'asco@ ScottcZeller,"SDOTU) Maria(6erra,Citycof4'asco@ Jimd4ahugh,&VSDOT@ Dan&ord,kity�ofd'ascoa MoeOavari,@WSDOTU) Liana4.iu,&HWAO 0 CarpRoe,Citywf Kennewicke DondletersenjHWAo 0 Pete4Zogalsky,QCityaof4Zichland@) Barb0e@Ste.Croix,dWSDOT( SarnCood,(Fortmf4Iasco@) LisaRene@Schilperoort,dNSDOT@ Andy@Gomez,d3enton-FranklinCOG@ TroycSuing,dNSDOT@ Tonyd<almbach,cBentondFranklin@Transit@) Paul@Gonseth,@WSDOT@ a Executive Committee CouncilmembercBobCoffmann,Cityaofd'asco@) c � Cityaofd'asco@ aommwmvWCity@ofdPasco@ PageAmf4w Page 110 of 224 AGENDA REPORT FOR: City Council November 19, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Stan Strebel, Deputy City Manager SUBJECT: Revenue Bonds for Waterworks Utility I. REFERENCE(S): Proposed Ordinance (11/15 Draft) Preliminary Official Statement Project Listing II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Estimated total bonds of approximately $15 million to be issued. Debt service requirements to be met from revenue generated by utility user fees. IV. HISTORY AND FACTS BRIEF: The proposed revenue bonds will finance the design, construction, equipment and furnishings for water and sewer system projects (approximately $3.7 million for water system projects; $7.0 million for sewer projects) per the CIP; an estimated $4 million for refunding water/sewer bonds from previous years, including 2002, 2005, 2007, and possibly 2009, 2010 (A&T) and 2013 (A&T); and an additional amount to fund the required reserve fund to assure bond repayment. Bonds are expected to be repaid over a 20 -year period. The City has retained the services of a financial advisor to assist with decisions relating to the structuring and sale of the bonds. The City has also applied for a bond rating with Standard and Poor's which is expected to be beneficial to the City in time of sale and interest on the bonds. The proposed ordinance names the City Manager as the City's Designated Page 111 of 224 V. Representative to conduct the bond sale in the manner and upon the terms deemed most advantageous to the City. The ordinance, when completed for November 30, will provide the parameters within which the Designated Representative may act (see Exhibit A, attached to the ordinance: note, at the time of writing this report, not all parameters had been proposed; recommended parameters will be provided in the proposed final ordinance.) The attachment provides some flexibility to the Designated Representative in making final sale decisions, in the event that conditions change prior to the actual date of the sale (anticipated to take place on December 8, with closing on December 22). DISCUSSION: A listing of projects included in the funding is attached. Staff anticipates being able to provide final information, including the rating for the bonds at the meeting of November 30. Page 112 of 224 DRAFT DATED 11/19/2015 CITY OF PASCO, WASHINGTON 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; specifying, adopting and ordering the carrying out of a system or plan of additions to and betterments and extensions of the waterworks utility of the City; providing for the issuance of one or more series of water and sewer revenue bonds of the City in an aggregate principal amount of not to exceed $[ ] for the purpose of providing the funds necessary (a) to pay all or a portion of the costs of carrying out the plan of additions, (b) to make a deposit to the debt service reserve account, (c) to refund and redeem outstanding water and sewer revenue bonds of the City and (d) to pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; and providing for other related matters. Passed: November 30, 2015 This document was prepared by: FOSTER PEPPER PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 51476003.2 Page 113 of 224 TABLE OF CONTENTS Page Section1. Definitions................................................................................................................1 Section 2. Findings and Determinations...................................................................................8 Section 3. Plan of Additions...................................................................................................10 Section 4. Authorization of the Bonds....................................................................................10 Section 5. Appointment of Designated Representative; Description of the Bonds ................10 Section 6. Registration and Transfer of Bonds.......................................................................10 Section 7. Form and Execution of Bonds...............................................................................11 Section8. Payment of Bonds..................................................................................................12 Section 9. Redemption Provisions and Purchase of Bonds....................................................12 Section 10. Failure to Pay Bonds..............................................................................................13 Section 11. Bond Fund; Payments into Bond Fund..................................................................14 Section 12. Pledge, Lien and Charge for Payment of the Bonds..............................................15 Section13. Flow of Funds........................................................................................................15 Section14. Covenants...............................................................................................................16 Section 15. Provisions for Future Parity Bonds........................................................................17 Section16. Tax Covenants.......................................................................................................17 Section 17. Refunding or Defeasance of Bonds.......................................................................18 Section 18. Deposit of Bond Proceeds; Creation of Construction Accounts ............................18 Section 19. Use of Refunding Proceeds; the Refunding Plan...................................................19 Section 20. Sale and Delivery of the Bonds.............................................................................21 Section 21. Official Statement; Continuing Disclosure............................................................21 Section 22. General Authorization and Ratification.................................................................22 Section23. Severability............................................................................................................22 Section 24. Effective Date of Ordinance..................................................................................22 Exhibit A Parameters for Final Terms Exhibit B Parity Conditions Exhibit C Form of Undertaking to Provide Continuing Disclosure 51476003.2 -1 Page 114 of 224 CITY OF PASCO, WASHINGTON 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, specifying, adopting and ordering the carrying out of a system or plan of additions to and betterments and extensions of the waterworks utility of the City; providing for the issuance of one or more series of water and sewer revenue bonds of the City in an aggregate principal amount of not to exceed $[ ] for the purpose of providing the funds necessary (a) to pay all or a portion of the costs of carrying out the plan of additions, (b) to make a deposit to the debt service reserve account, (c) to refund and redeem outstanding water and sewer revenue bonds of the City and (d) to pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; and providing for other related matters. THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN as follows: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: (a) "2002 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2002, of the City issued pursuant to Ordinance No. 3567. (b) "2005 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2005, of the City issued pursuant to Ordinance No. 3740. (c) "2007 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2007, of the City issued pursuant to Ordinance No. 3835. (d) "2009 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2009, of the City issued pursuant to Ordinance No. 3915. (e) "2010A Bonds" means the outstanding Water and Sewer Improvement and Refunding Revenue Bonds, 2010A, of the City issued pursuant to Ordinance No. 3962. (f) "2010T Bonds" means the outstanding Water and Sewer Refunding Revenue Bonds, 2010T (Taxable), of the City issued pursuant to Ordinance No. 3962. (g) "2013A Bonds" means the outstanding Water and Sewer Revenue Bonds, 2013A, of the City issued pursuant to Ordinance No. 4126. -1- 51476003.2 Page 115 of 224 (h) "2013T Bonds" means the outstanding Water and Sewer Revenue Bonds, 2013T (Taxable), of the City issued pursuant to Ordinance No. 4126. (i) "Acquired Obligations " means the United States Treasury Certificates of Indebtedness, Notes, and Bonds -State and Local Government Series and/or other Government Obligations, as identified in the Refunding Trust Agreement, purchased to carry out the Refunding Plan. 0) "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. (k) "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. (1) "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 ULID 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. (m) "Authorized Denomination " means $5,000.00 or any integral multiple thereof within a maturity. (n) `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. (o) `Beneficial Owner" means, with respect to a Bond, the owner of any beneficial interest in that Bond. (p) "Bond Counsel " means the firm of Foster Pepper PLLC, its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. (q) "Bond Fund" means the Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991, of the City created and established by Ordinance No. 2846 for the payment of the principal of and interest on the Parity Bonds. (r) "Bond Purchase Agreement" means an offer to purchase the Bonds, or a Series of Bonds, setting forth certain terms and conditions of the issuance, sale and delivery of that Series of the Bonds, which offer is authorized to be accepted by the Designated Representative on behalf of the City, if consistent with this ordinance. -2- 51476003.2 Page 116 of 224 (s) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of the Bonds. (t) "Bond Registrar" means the Fiscal Agent, or any successor bond registrar selected by the City. (u) "Bonds " means the bonds of the City issued pursuant to and for the purposes provided in this ordinance in one or more series and with such additional series and other designation as the Designated Representative may deem appropriate. (v) "City" means the City of Pasco, Washington, a municipal corporation duly organized and existing under the laws of the State. (w) "City Contribution" means legally available money of the City, in addition to proceeds of the Bonds, necessary or advisable to carry out the Refunding Plan, as determined by the Designated Representative. (x) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (y) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (z) "Construction Accounts" means such accounts created in the Water/Sewer Fund as the Finance Manager shall designate for the purpose of paying the costs of the Plan of Additions and the costs of issuance of the Bonds. (aa) "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. (bb) `DTC" means The Depository Trust Company, New York, New York., or its nominee. (cc) `Designated Representative" means an officer of the City appointed in Section 5 of this ordinance to serve as the City's designated representative in accordance with RCW 39.46.040(2). (dd) "Final Terms" means the terms and conditions for the sale of a Series of Bonds including, but not limited to the amount, date or dates, denominations, interest rate or rates (or mechanism for determining interest rate or rates), payment dates, final maturity, redemption rights, price, and other terms or covenants, including minimum savings for refunding bonds. (ee) "Finance Manager" means the City's Finance Manager or such other officer of the City who succeeds to substantially all of the responsibilities of that office. 51476003.2 -� Page 117 of 224 (ft) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State from time to time. (gg) "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. (hh) "Government Obligations" has the meaning given in RCW 39.53.010, as now in effect or as may hereafter be amended. (ii) "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. 0j) "Issue Date" means, with respect to a Bond, the date of initial issuance and delivery of that Bond to the Purchaser in exchange for the purchase price of that Bond. (kk) "Letter of Representations" means the Blanket Issuer Letter of Representations between the City and DTC dated August 31, 1998. (11) `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. (mm) "MSRB" means the Municipal Securities Rulemaking Board. (nn) "Net Revenue of the Waterworks Utility" or "Net Revenue" means the Gross Revenue less Operating and Maintenance Expenses. (oo) "Official Statement" means an offering document, disclosure document, private placement memorandum or substantially similar disclosure document provided to purchasers and potential purchasers in connection with the initial offering of the Bonds in conformance with Rule 15c2 12 or other applicable regulations of the SEC. (pp) "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 -4- 51476003.2 Page 118 of 224 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. (qq) "Outstanding Parity Bonds" means the outstanding 2002 Bonds, 2005 Bonds, 2007 Bonds, 2009 Bonds, 2010A Bonds, 2010T Bonds, 2013A Bonds and 2013T Bonds. Outstanding Parity Bonds shall not include any Refunded Bonds. (rr) "Owner" means, without distinction, the Registered Owner and the Beneficial Owner. (ss) "Parity Bonds " means the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. (tt) "Parity Bond Ordinances" means Ordinance No. 3567, Ordinance No. 3740, Ordinance No. 3835, Ordinance No. 3915, Ordinance No. 3962, Ordinance No. 4126 and this ordinance. (uu) `Parity Conditions" means the conditions for issuing Future Parity Bonds set forth in Exhibit B to this ordinance, which is incorporated herein by this reference. (w) "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 this ordinance. (ww) "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. (xx) "Project Bonds " means those Bonds allocated to carrying out the Plan of Additions, including providing for the Reserve Requirement with respect to the Project Bonds. (yy) "Purchaser" means Piper Jaffray & Co. of Seattle, Washington, or such other purchaser of the Bonds whose offer is accepted by the Designated Representative in accordance with this ordinance. (zz) "Rating Agency" means any nationally recognized rating agency then maintaining a rating on the Bonds at the request of the City. (aaa) "Record Date" means the Bond Registrar's close of business on the 15th day of the month preceding an interest payment date. With respect to redemption of a Bond prior to its maturity, the Record Date shall mean the Bond Registrar's close of business on the date on which the Bond Registrar sends the notice of redemption in accordance with Section 9. (bbb) "Redemption Date" means, with respect to each series of the Refunded Bonds, a date or dates selected by the Designated Representative. (ccc) "Refunded Bonds" means the Refunding Candidates selected by the Designated Representative and identified in the Refunding Plan. 51476003.2 -5 Page 119 of 224 (ddd) "Refunding Bonds" means those Bonds allocated to carrying out the Refunding Plan, including providing for the Reserve Requirement with respect to the Refunding Bonds. (eee) "Refunding Candidates" means (1) the currently outstanding $1,160,000 principal amount of the 2002 Bonds maturing on December 1 of each of the years 2019 through 2021, (2) the currently outstanding $2,605,000 principal amount of the 2005 Bonds maturing on September 1 of each of the years 2016 through 2025, and (3) the currently outstanding $315,000 principal amount of the 2007 Bonds maturing on September 1, 2022. (fff) "Refunding Plan " means (as further described in the Refunding Trust Agreement): (1) the deposit with the Refunding Trustee of proceeds of the Bonds in an amount, together with the City Contribution (if any), sufficient to acquire the Acquired Obligations and establish a beginning cash balance; (2) the receipt by the Refunding Trustee of the maturing principal of and interest on the Acquired Obligations, and the application of such amounts (together with any other cash held by it) to pay principal of and interest on the Refunded Bonds when due up to and including the applicable Redemption Dates, and the call, payment and redemption of the Refunded Bonds on the applicable Redemption Dates at a price equal to the principal amount to be redeemed; and (3) payment of the costs of issuing the Bonds and the costs of carrying out the foregoing elements of the Refunding Plan, if payment of such costs is so specified in the Refunding Trust Agreement. (ggg) "Refunding Trust Agreement" means the refunding trust agreement between the City and the Refunding Trustee, providing for the carrying out of the Refunding Plan. (hhh) `Refunding Trustee" means the trustee, or any successor trustee, designated by the Designated Representative to serve as refunding trustee to carry out the Refunding Plan. (iii) `Registered Owner" means, with respect to a Bond, the person in whose name that Bond is registered on the Bond Register. For so long as the City utilizes the book -entry only system for the Bonds under the Letter of Representations, Registered Owner shall mean the Securities Depository. (jjj) "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. (kkk) "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. (111) "Reserve Insurer" means Ambac Assurance Corporation for the Outstanding Parity Bonds and the Bonds. -6- 514760032 Page 120 of 224 (mmm) "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 then -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 then -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. (nnn) "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. (000) "SEC" means the United States Securities and Exchange Commission. (ppp) "Series of the Bonds " or "Series " means a series of the Bonds issued pursuant to this ordinance. (qqq) "State " means the State of Washington. (rrr) "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. (sss) "Taxable Bonds" means any Series issued on a taxable basis. (ttt) "Tax -Exempt Bonds " means any Series issued on a tax-exempt basis. (uuu) "Term Bonds" means each Bond designated as a Term Bond and subject to mandatory redemption in the years and amounts set forth in the Bond Purchase Agreement. For any Outstanding Parity Bonds or Future Parity Bonds, "Term Bonds" means those bonds of any single issue or series designated as Term Bonds pursuant to the ordinance authorizing their 51476003.2 - / Page 121 of 224 issuance or sale and which are subject to mandatory prior redemption or for which mandatory sinking fund installments are provided. (vvv) "ULID" means utility local improvement district. (www) "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. (xxx) "Undertaking" means the undertaking to provide continuing disclosure entered into pursuant to Section 21(c) of this ordinance. (yyy) "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. (zzz) "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. Section 2. Findings and Determinations. The City takes note of the following facts and makes the following findings and determinations: (a) Background. The City, by Ordinance No. 531, passed March 7, 1944, provided that the system of sewerage of the City, including all additions, extensions and betterments thereto, should be operated as a part of and as belonging to the Waterworks Utility of the City pursuant to the provisions of Chapter 193 of the Laws of 1941 of the State of Washington (RCW 35.67.320 et seq.). (b) Plan of Additions. The City has determined that it is necessary and in the best interests of the City that certain improvements be made and there be adopted a system or plan of additions to and betterments and extensions of the Waterworks Utility (the "Plan of Additions"). (c) Outstanding Parity Bonds. Pursuant to Ordinance No. 2846, the City heretofore issued and sold its 1991 Bonds (all of which have been paid and retired), and reserved the right to issue additional water and sewer revenue bonds of the City which would have a lien and charge upon the Net Revenue of the Waterworks Utility and ULID Assessments on a parity with those 1991 Bonds if the Parity Conditions are met. The City currently has outstanding the following water and sewer revenue bonds issued on a parity of lien and charge on the Net Revenue of the Waterworks Utility and ULID Assessments with the 1991 Bonds: 51476003.2 -Q Page 122 of 224 (d) Parity Conditions Met. The City Council finds and declares that (1) all payments required by the Outstanding Parity Bonds are provided for in this ordinance or have been provided for or made into the Bond Fund for those outstanding bonds and that no deficiency exists in such fund; (2) provision is hereinafter made for the deposit in the Reserve Account of the Bond Fund of the Reserve Requirement for the Bonds; and (3) that all other conditions set forth in the Parity Conditions will have been met and satisfied before the Bonds are delivered to the initial purchaser. (e) Refunding Candidates. In order to realize a debt service savings to the City and its ratepayers, the City Council wishes to refund all or a portion of the Refunding Candidates. Chapter 39.53 RCW and other laws of the State authorize the City to carry out the Refunding Plan. (f) Sufficiency of Gross Revenue; Due Regard. The City Council finds and determines that the Gross Revenue of the Waterworks Utility will be more than sufficient to (1) meet all Operating and Maintenance Expenses thereof (and the cost of maintenance and operation as contemplated by RCW 35.92.100), and the debt service requirements of the Outstanding Parity Bonds, and (2) permit the setting aside into the Bond Fund out of the Net Revenue of the Waterworks Utility of the City of amounts sufficient to pay the principal of and interest on the Bonds when due. The City Council declares that in creating the Bond Fund and in fixing the amounts to be paid into that fund, it has exercised due regard for Operating and Maintenance Expenses (and the cost of maintenance and operation contemplated by RCW 35.92.100) and the debt service requirements of the Outstanding Parity Bonds, and the City has not bound and obligated itself to set aside and pay into the Bond Fund a greater amount or proportion of the Gross Revenue of the Waterworks Utility of the City than in the judgment of the City Council will be available over and above such Operating and Maintenance Expenses and debt service requirements of the Outstanding Parity Bonds, and that no portion of the Gross Revenue of the Waterworks Utility of the City has been previously pledged for any indebtedness other than the Outstanding Parity Bonds. (g) Issuance of Bonds. Based on the foregoing, the City Council finds that it is in the best interest of the City to issue and sell the Bonds to the Purchaser, pursuant to the terms set forth in the Bond Purchase Agreement as approved by the Designated Representative consistent with this ordinance. 51476003.2 _9 Page 123 of 224 Original Ordinance Principal Dated Authorizing Passage Name of Issue Amount Date Ordinance Date 2002 Bonds $ 5,945,000 10/01/2002 3567 10/07/2002 2005 Bonds 4,400,000 12/05/2005 3740 11/21/2005 2007 Bonds 845,000 7/02/2007 3835 6/18/2007 2009 Bonds 10,045,000 4/17/2009 3915 4/06/2009 2010A Bonds 9,070,000 6/03/2010 3962 5/17/2010 2010T Bonds 1,240,000 6/03/2010 3962 5/17/2010 2013A Bonds 2,520,000 12/05/2013 4126 11/18/2013 2013T Bonds 7,235,000 12/05/2013 4126 11/18/2013 (d) Parity Conditions Met. The City Council finds and declares that (1) all payments required by the Outstanding Parity Bonds are provided for in this ordinance or have been provided for or made into the Bond Fund for those outstanding bonds and that no deficiency exists in such fund; (2) provision is hereinafter made for the deposit in the Reserve Account of the Bond Fund of the Reserve Requirement for the Bonds; and (3) that all other conditions set forth in the Parity Conditions will have been met and satisfied before the Bonds are delivered to the initial purchaser. (e) Refunding Candidates. In order to realize a debt service savings to the City and its ratepayers, the City Council wishes to refund all or a portion of the Refunding Candidates. Chapter 39.53 RCW and other laws of the State authorize the City to carry out the Refunding Plan. (f) Sufficiency of Gross Revenue; Due Regard. The City Council finds and determines that the Gross Revenue of the Waterworks Utility will be more than sufficient to (1) meet all Operating and Maintenance Expenses thereof (and the cost of maintenance and operation as contemplated by RCW 35.92.100), and the debt service requirements of the Outstanding Parity Bonds, and (2) permit the setting aside into the Bond Fund out of the Net Revenue of the Waterworks Utility of the City of amounts sufficient to pay the principal of and interest on the Bonds when due. The City Council declares that in creating the Bond Fund and in fixing the amounts to be paid into that fund, it has exercised due regard for Operating and Maintenance Expenses (and the cost of maintenance and operation contemplated by RCW 35.92.100) and the debt service requirements of the Outstanding Parity Bonds, and the City has not bound and obligated itself to set aside and pay into the Bond Fund a greater amount or proportion of the Gross Revenue of the Waterworks Utility of the City than in the judgment of the City Council will be available over and above such Operating and Maintenance Expenses and debt service requirements of the Outstanding Parity Bonds, and that no portion of the Gross Revenue of the Waterworks Utility of the City has been previously pledged for any indebtedness other than the Outstanding Parity Bonds. (g) Issuance of Bonds. Based on the foregoing, the City Council finds that it is in the best interest of the City to issue and sell the Bonds to the Purchaser, pursuant to the terms set forth in the Bond Purchase Agreement as approved by the Designated Representative consistent with this ordinance. 51476003.2 _9 Page 123 of 224 Section 3. Plan of Additions. The City specifies, adopts and orders the carrying out of a system or plan of additions to and betterments and extensions of the Waterworks Utility consisting of the following (the "Plan of Additions"): [Insert list of improvements] There shall be included in the foregoing system or plan the acquisition and installation of all necessary valves, pumps, fittings, couplings, connections, equipment and appurtenances, and replacements and improvements necessary or desirable to maintain or increase the effectiveness of the service provided by such facilities, other improvements to and extensions of the Waterworks Utility, the acquisition of any easements, rights-of-way and land that may be required and the performance of such work as may be incidental and necessary. All of the foregoing shall be in accordance with the plans and specifications therefor prepared by the staff and consulting engineers of the City. The City Council may modify the details of the Plan of Additions where, in its judgment, it appears advisable if such modifications do not substantially alter the purposes of the Plan of Additions. The estimated cost of the acquisition, construction, installation and financing of the above-described improvements to be paid from the proceeds of the Bonds is declared to be approximately $[ ]. Any excess proceeds of the Project Bonds remaining following payment of the costs of the Plan of Additions shall be applied to costs of other improvements to the Waterworks Utility of the City heretofore or hereafter approved in the City's Capital Budget Section 4. Authorization of the Bonds. For the purpose of providing the funds necessary to (a) pay costs of carrying out the Plan of Additions, (b) carry out the Refunding Plan; (c) make a deposit to the Reserve Account and (d) pay the costs of issuance and sale of the Bonds, the City shall issue water and sewer revenue bonds in one or more Series in the aggregate principal amount of not to exceed $[ I. Section 5. Appointment of Designated Representative; Description of the Bonds. The Finance Manager and the Deputy City Manager are each appointed as the Designated Representative of the City, both with the individual authority to conduct the sale of the Bonds in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of the Bonds, with such additional terms and covenants as the Designated Representative deems advisable, within the parameters set forth in Exhibit A, which is attached to this ordinance and incorporated by this reference. Section 6. Registration and Transfer of Bonds. (a) Registration of Bonds; Bond Register. Each Bond shall be issued only in registered form as to both principal and interest and the ownership of each Bond shall be recorded on the Bond Register. The Bond Register shall contain the name and mailing address of each Registered Owner and the principal amount and number of each Bond held by each Registered Owner. -10- 51476003.2 Page 124 of 224 (b) Bond Registrar; Duties. The Fiscal Agent is appointed as initial Bond Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this ordinance and the System of Registration. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on each Bond. The Bond Registrar may become an Owner with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Owners. (c) Transfer or Exchange. A Bond surrendered to the Bond Registrar may be exchanged for a Bond or Bonds in any Authorized Denomination of an equal aggregate principal amount and of the same Series, interest rate and maturity. A Bond may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Any exchange or transfer shall be without cost to the Owner or transferee. The Bond Registrar shall not be obligated to exchange any Bond or transfer registered ownership during the period between the applicable Record Date and the next upcoming interest payment or redemption date. (d) Securities Depository; Book -Entry Only Form. DTC is appointed as initial Securities Depository. Each Bond initially shall be registered in the name of Cede & Co., as the nominee of DTC. Each Bond registered in the name of the Securities Depository shall be held fully immobilized in book -entry only form by the Securities Depository in accordance with the provisions of the Letter of Representations. Registered ownership of any Bond registered in the name of the Securities Depository may not be transferred except: (i) to any successor Securities Depository; (ii) to any substitute Securities Depository appointed by the City; or (iii) to any person if the Bond is no longer to be held in book -entry only form. Upon the resignation of the Securities Depository, or upon a termination of the services of the Securities Depository by the City, the City may appoint a substitute Securities Depository. If (i) the Securities Depository resigns and the City does not appoint a substitute Securities Depository, or (ii) the City terminates the services of the Securities Depository, the Bonds no longer shall be held in book - entry only form and the registered ownership of each Bond may be transferred to any person as provided in this ordinance. Neither the City nor the Bond Registrar shall have any obligation to participants of any Securities Depository or the persons for whom they act as nominees regarding accuracy of any records maintained by the Securities Depository or its participants. Neither the City nor the Bond Registrar shall be responsible for any notice that is permitted or required to be given to a Registered Owner except such notice as is required to be given by the Bond Registrar to the Securities Depository. Section 7. Form and Execution of Bonds. (a) Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. Each Bond shall be signed by the -11- 51476003.2 Page 125 of 224 Mayor and the City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. If any officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing his or her manual or facsimile signature is authenticated by the Bond Registrar, or issued or delivered by the City, that Bond nevertheless may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on its Issue Date. (b) Authentication. Only a Bond bearing a Certificate of Authentication in substantially the following form, manually signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate Of Authentication. This Bond is one of the fully registered City of Pasco, Washington, [Name of Series] described in the Bond Ordinance." The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. Section 8. Payment of Bonds. Principal of and interest on each Bond shall be payable in lawful money of the United States of America. Principal of and interest on each Bond registered in the name of the Securities Depository is payable in the manner set forth in the Letter of Representations. Interest on each Bond not registered in the name of the Securities Depository is payable by electronic transfer on the interest payment date, or by check or draft of the Bond Registrar mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register on the Record Date. However, the City is not required to make electronic transfers except pursuant to a request by a Registered Owner in writing received on or prior to the Record Date and at the sole expense of the Registered Owner. Principal of each Bond not registered in the name of the Securities Depository is payable upon presentation and surrender of the Bond by the Registered Owner to the Bond Registrar. The Bonds are not subject to acceleration under any circumstances. Section 9. Redemption Provisions and Purchase of Bonds. (a) Optional Redemption. The Bonds shall be subject to redemption at the option of the City on terms acceptable to the Designated Representative, as set forth in the Bond Purchase Agreement, consistent with the parameters set forth in Exhibit A. (b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the Bond Purchase Agreement, consistent with the parameters set forth in Exhibit A and except as set forth below, shall be called for redemption at a price equal to the stated principal amount to be redeemed, plus accrued interest, on the dates and in the amounts as set forth in the Bond Purchase Agreement. If a Term Bond is redeemed under the optional redemption provisions, defeased or purchased by the City and surrendered for cancellation, the principal amount of the Term Bond so redeemed, defeased or purchased (irrespective of its actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption installments for that Term Bond. The City shall determine the manner in which the credit is to be -12- 51476003.2 Page 126 of 224 allocated and shall notify the Bond Registrar in writing of its allocation prior to the earliest mandatory redemption date for that Term Bond for which notice of redemption has not already been given. (c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the outstanding Bonds are to be redeemed at the option of the City, the City shall select the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of the Securities Depository to be redeemed in accordance with the Letter of Representations, and the Bond Registrar shall select all other Bonds to be redeemed randomly in such manner as the Bond Registrar shall determine. All or a portion of the principal amount of any Bond that is to be redeemed may be redeemed in any Authorized Denomination. If less than all of the outstanding principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the Registered Owner, without charge, a new Bond (or Bonds, at the option of the Registered Owner) of the same Series, maturity and interest rate in any Authorized Denomination in the aggregate principal amount to remain outstanding. (d) Notice of Redemption. Notice of redemption of each Bond registered in the name of the Securities Depository shall be given in accordance with the Letter of Representations. Notice of redemption of each other Bond, unless waived by the Registered Owner, shall be given by the Bond Registrar not less than 20 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the Registered Owner at the address appearing on the Bond Register on the Record Date. The requirements of the preceding sentence shall be satisfied when notice has been mailed as so provided, whether or not it is actually received by an Owner. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB (if required under the Undertaking), to each Rating Agency, and to such other persons and with such additional information as the Finance Manager shall determine, but these additional mailings shall not be a condition precedent to the redemption of any Bond. (e) Rescission of Optional Redemption Notice. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind the redemption notice and the redemption by giving a notice of rescission to the affected Registered Owners at any time on or prior to the date fixed for redemption. Any notice of optional redemption that is so rescinded shall be of no effect, and each Bond for which a notice of redemption has been rescinded shall remain outstanding. (f) Effect of Redemption. Interest on each Bond called for redemption shall cease to accrue on the date fixed for redemption, unless either the notice of optional redemption is rescinded as set forth above, or money sufficient to effect such redemption is not on deposit in the Bond Fund or in a trust account established to refund or defease the Bond. (g) Purchase of Bonds. The City reserves the right to purchase any or all of the Bonds offered to the City at any time at any price acceptable to the City plus accrued interest to the date of purchase. Section 10. Failure to Pay Bonds. If the principal of any Bond is not paid when the Bond is properly presented at its maturity date or date fixed for redemption, the City shall be -13- 51476003.2 Page 127 of 224 obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or date fixed for redemption until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund, or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Section 11. Bond Fund; Payments into Bond Fund. The Bond Fund has been previously created and established as a special fund of the City 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 Manager 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. 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 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 -14- 51476003.2 Page 128 of 224 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 this section to set aside and pay therein, the owner of any Bond may bring suit against the City to compel it to do so. Section 12. Pledge, Lien and Charge for Payment of the Bonds. 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 a lien 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. Section 13. Flow of Funds. Funds in the Water and Sewer Revenue Fund shall be used in the following order of priority: (1) To pay Operating and Maintenance Expenses; (2) 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; (3) 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. (4) 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 a lien upon the Net Revenue of the Waterworks Utility subordinate to the lien of the Bonds; and -15- 51476003.2 Page 129 of 224 (5) 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. Section 14. Covenants. 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 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 to 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 therein 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 herein set forth. (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 Owner 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 -16- 51476003.2 Page 130 of 224 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 shall proceed with the foreclosure of the delinquent assessment or delinquent installments thereof in the manner provided by law. Section 15. Provisions for Future Parity Bonds. The City reserves the right to issue Future Parity Bonds if the Parity Conditions set forth in Exhibit B are met and complied with at the time of the issuance of those Future Parity Bonds. Nothing herein contained 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 herein contained 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. Section 16. Tax Covenants. (a) Preservation of Tax Exemption for Interest on Tax -Exempt Bonds. The City covenants that it will take all actions necessary to prevent interest on the Tax -Exempt 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 Tax -Exempt Bonds or other funds of the City treated as proceeds of the Tax -Exempt Bonds that will cause interest on the Tax -Exempt Bonds to be included in gross income for federal income tax purposes. The City also covenants that it will, to the extent the arbitrage rebate requirements of Section 148 of the Code are applicable to the Tax -Exempt Bonds, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with the Tax -Exempt Bonds. (b) Post -Issuance Compliance. The Finance Manager is authorized and directed to review and update the City's written procedures to facilitate compliance by the City with the covenants in this ordinance and the applicable requirements of the Code that must be satisfied -17- 51476003.2 Page 131 of 224 after the Issue Date to prevent interest on the Tax -Exempt Bonds from being included in gross income for federal tax purposes. Section 17. Refunding or Defeasance of Bonds. The City may issue refunding bonds pursuant to State law or use money available from other lawful sources to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the "trust account"), money and/or Government Obligations maturing at a time or times and bearing interest in amounts sufficient to redeem, refund or defease the defeased Bonds in accordance with their terms, then all right and interest of the Owners of the defeased Bonds in the covenants of this ordinance and in the Gross Revenue of the Waterworks Utility, ULID Assessments, funds and accounts obligated to the payment of the defeased Bonds, other than the right to receive the funds so set aside and pledged, shall cease and become void. Thereafter, the Owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds solely from the trust account and the defeased Bonds shall be deemed no longer outstanding. In that event, the City may apply money remaining in any fund or account (other than the trust account) established for the payment or redemption of the defeased Bonds to any lawful purpose, subject only to the rights of the Owners of any other Parity Bonds then outstanding. If the refunding plan provides that the defeased Bonds or the refunding bonds to be issued be secured by money and/or Government Obligations pending the prior redemption of the defeased Bonds and if such refunding plan also provides that certain money and/or Government Obligations are pledged irrevocably for the prior redemption of the defeased Bonds included in that refunding plan, then only the debt service on the Bonds which are not defeased Bonds and the refunding bonds, the payment of which is not so secured by the refunding plan, shall be included in the computation of the coverage requirement for the issuance of Future Parity Bonds and the annual computation of coverage for determining compliance with the rate covenants. Section 18. Deposit of Bond Proceeds; Creation of Construction Accounts. Immediately upon the issuance and delivery of the Bonds, the City shall cause the following to occur: (a) Reserve Account. Proceeds of the Bonds shall either be deposited in the Reserve Account or used to acquire Reserve Insurance in an amount sufficient to satisfy the Reserve Requirement with respect to the Bonds. (b) Refunding Plan. The remaining proceeds of the Refunding Bonds shall be deposited with the Refunding Trustee as set forth in Section 19. (c) Construction Accounts. The Finance Manager is authorized to establish one or more special accounts within the Water/Sewer Fund, designated as the Construction Accounts. The remaining proceeds of the Project Bonds shall be paid into the Construction Accounts and used to pay the costs of the Plan of Additions and the costs of issuing the Project Bonds (if not included in the Refunding Plan). Until needed to pay those costs, the City may invest principal -18- 51476003.2 Page 132 of 224 proceeds deposited in the Construction Accounts temporarily in any legal investment, and the investment earnings may be retained in such accounts and be spent for the purposes of those accounts, except that earnings subject to a federal tax or rebate requirement may be withdrawn therefrom and used for those tax or rebate purposes. Section 19. Use of Refunding Proceeds; the Refunding Plan. (a) Appointment of the Refunding Trustee. The Designated Representative is authorized and directed to appoint a financial institution to serve as the Refunding Trustee and to perform the duties of Refunding Trustee under this ordinance. (b) Selection of Refunded Bonds. The Designated Representative is authorized and directed to select the Refunding Candidates to be refunded by the Bonds. The Designated Representative may choose to refund fewer than all of the Refunding Candidates. The Refunded Bonds, as selected by the Designated Representative, shall be identified in the Bond Purchase Contract and/or the Refunding Trust Agreement. (c) Use of Refunding Proceeds; Purchase of Acquired Obligations. On the Issue Date, sufficient proceeds of the sale of the Refunding Bonds, together with any City Contribution, shall be deposited with the Refunding Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under the applicable Parity Bond Ordinances by providing for the payment of the amounts required to be paid by the Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, if necessary, for the payment of the amount required to be paid by the Refunding Plan. The Acquired Obligations shall be listed and more particularly described in a schedule attached to the Refunding Trust Agreement, but are subject to substitution as set forth below. The Designated Representative is authorized and directed to approve the Acquired Obligations, if any, to be purchased. Any Project Bond proceeds deposited with the Refunding Trustee and not used to pay the costs of issuance of the Project Bonds shall be returned to the City for deposit in the Construction Accounts. Any Refunding Bond proceeds or other money deposited with the Refunding Trustee not needed to carry out the Refunding Plan shall be returned to the City for deposit in the Principal and Interest Account to pay interest on the Refunding Bonds on the next upcoming interest payment date. (d) Substitution of Acquired Obligations. The City reserves the right at any time to substitute cash or other direct, noncallable obligations of the United States of America ("Substitute Obligations") for any of the Acquired Obligations if the City obtains (1) an opinion of Bond Counsel to the effect that the interest on the Tax -Exempt Refunding Bonds and the Refunded Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and (2) a verification by a nationally recognized independent certified public accounting firm that such substitution will not impair the timely payment of the amounts required to be paid by the Refunding Plan. Any surplus money resulting from the sale, transfer, other disposition or redemption of the Acquired Obligations and the -19- 51476003.2 Page 133 of 224 substitutions therefor shall be released from the trust estate and transferred to the City to be used for any lawful purpose (e) Administration of Refunding Plan. The Refunding Trustee is authorized and directed to purchase the Acquired Obligations (or Substitute Obligations) and to make the payments required to be made pursuant to the Refunding Plan from the Acquired Obligations (or Substitute Obligations) and money deposited with the Refunding Trustee pursuant to this ordinance and the Refunding Trust Agreement. All Acquired Obligations (or Substitute Obligations) and money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied in accordance with the provisions of the applicable Parity Bond Ordinance authorizing the Refunded Bonds, this ordinance, chapter 39.53 RCW and other applicable laws of the State and the Refunding Trust Agreement. All necessary and proper fees, compensation and expenses of the Refunding Trustee and all other costs incidental to the setting up of the escrow to accomplish the Refunding Plan and costs related to the issuance, sale and delivery of the Bonds, including bond printing, rating agency fees, verification fees, Bond Counsel's fees and other related expenses, shall be paid out of the proceeds of the Bonds. (f) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan, the Designated Representative is authorized and directed to execute and deliver to the Refunding Trustee the Refunding Trust Agreement setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the payment, redemption and retirement of the Refunded Bonds as provided herein and stating that the provisions for payment of the fees, compensation and expenses of the Refunding Trustee set forth therein are satisfactory to it. (g) Call for Redemption of the Refunded Bonds. The Designated Representative is authorized to call the Refunded Bonds for redemption on their applicable Redemption Dates at par, plus accrued interest. Such call for redemption shall be irrevocable after the delivery of the Bonds to the Purchaser. The Refunding Trustee is authorized and directed to give or cause to be given such notices as required, at the times and in the manner required, pursuant to the ordinances authorizing the issuance of the Refunded Bonds and the Refunding Trust Agreement to carry out the Refunding Plan. (h) Additional Finding with Respect to Refunding. Prior to the execution and delivery of the Bond Purchase Agreement, the Designated Representative shall determine, on behalf of the City, that the issuance, sale and delivery of the Refunding Bonds will effect a net present value savings to the City and its ratepayers as set forth in paragraph (i)(2) of Exhibit A. The City Council finds and determines that such net present value savings is a substantial savings and that achieving such net present value savings by issuing the Bonds is in the best interest of the City and in the public interest. In making the finding and determination that the issuance, sale and delivery of the Bonds will effect such net present value savings, the Designated Representative shall give consideration to the fixed maturities of the Refunding Bonds and the Refunded Bonds, the costs related to the issuance, sale and delivery of the Refunding Bonds and the known earned income from the investment of the proceeds of the issuance and sale of the Refunding Bonds and the City Contribution, if any, used in the Refunding Plan pending payment and redemption of the Refunded Bonds. -20- 51476003.2 Page 134 of 224 The Designated Representative further shall find and determine that the money to be deposited with the Refunding Trustee to carry out the Refunding Plan will discharge and satisfy the obligations of the City under the applicable Parity Bond Ordinance, and the pledges, charges, trusts, covenants and agreements of the City therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds will no longer be deemed to be outstanding under applicable Parity Bond Ordinance immediately upon the deposit of such money with the Refunding Trustee. Section 20. Sale and Delivery of the Bonds. (a) Manner of Sale of Bonds; Delivery of Bonds. The Designated Representative is authorized to sell the Bonds by negotiated sale to the Purchaser, based on the assessment of the Designated Representative of market conditions, in consultation with appropriate City officials and staff, Bond Counsel and other advisors. In accepting the Final Terms, the Designated Representative shall take into account those factors that, in the judgment of the Designated Representative, may be expected to result in the lowest true interest cost to the City. The Bond Purchase Agreement shall set forth the Final Terms of each Series of Bonds. The Designated Representative is authorized to execute the Bond Purchase Agreement on behalf of the City, so long as the terms provided therein are consistent with the terms of this ordinance. (b) Preparation, Execution and Delivery of the Bonds. The Bonds will be prepared at City expense and will be delivered to the Purchaser in accordance with the Bond Purchase Agreement, together with the approving legal opinion of Bond Counsel regarding the Bonds. Section 21. Official Statement; Continuing Disclosure. (a) Preliminary Official Statement Deemed Final. The Designated Representative shall review and, if acceptable to him or her, approve the preliminary Official Statement prepared in connection with the sale of the Bonds to the public. For the sole purpose of the Purchaser's compliance with paragraph (b)(1) of Rule 15c2-12, the Designated Representative is authorized to deem that preliminary Official Statement final as of its date, except for the omission of information permitted to be omitted by Rule 15c2-12. The City approves the distribution to potential purchasers of the Bonds of a preliminary Official Statement that has been approved by the Designated Representative and been deemed final, if applicable, in accordance with this subsection. (b) Approval of Final Official Statement. The City approves the preparation of a final Official Statement for the Bonds to be sold to the public in the form of the preliminary Official Statement that has been approved and deemed final in accordance with subsection (a), with such modifications and amendments as the Designated Representative deems necessary or desirable, and further authorizes the Designated Representative to execute and deliver such final Official Statement to the Purchaser. The City authorizes and approves the distribution by the Purchaser of the final Official Statement so executed and delivered to purchasers and potential purchasers of the Bonds. (c) Undertaking to Provide Continuing Disclosure. If necessary to meet the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to the Purchaser acting as a -21- 51476003.2 Page 135 of 224 participating underwriter for the Bonds, the Designated Representative is authorized to execute a written undertaking to provide continuing disclosure for the benefit of holders of the Bonds in substantially the form attached as Exhibit C. Section 22. General Authorization and Ratification. The Designated Representative and other appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of the Bonds to the Purchaser and for the proper application, use and investment of the proceeds of the Bonds. All actions taken prior to the effective date of this ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. Section 23. Severability. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. Section 24. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after its passage and five days following its publication as provided by law. PASSED by the City Council and APPROVED by the Mayor of the City of Pasco, Washington, at a regular open public meeting, this 16th day of November, 2015. Matt Watkins, Mayor ATTEST: Debra L. Clark, City Clerk APPROVED AS TO FORM: Foster Pepper PLLC Bond Counsel -22- 51476003.2 Page 136 of 224 EXHIBIT A DESCRIPTION OF THE BONDS (i) Principal Amount. The Bonds may be issued in one or more Series and shall not exceed the aggregate principal amount of $[ 1. Date or Dates. Each Bond shall be dated its Issue Date, which date may not be later than December 31, 2016. (iii) Denominations, Name, etc. The Bonds shall be issued in Authorized Denominations and shall be numbered separately in the manner and shall bear any name and additional designation as deemed necessary or appropriate by the Designated Representative. (iv) Interest Rate(s). Each Bond shall bear interest at a fixed rate per annum (computed on the basis of a 360 -day year of twelve 30 -day months) from the Issue Date or from the most recent date for which interest has been paid or duly provided for, whichever is later. One or more rates of interest may be fixed for the Bonds. No rate of interest for any Tax -Exempt Bond may exceed []%, and the true interest cost to the City for the Tax -Exempt Bonds may not exceed [_]%. No rate of interest for any Taxable Bond may exceed []%, and the true interest cost to the City for the Taxable Bonds may not exceed [_]%. (v) Payment Dates. Interest shall be payable semiannually on each June 1 and December 1 (or such other semiannual dates acceptable to the Designated Representative), commencing no later than the next such semiannual date following the Issue Date. Principal payments shall commence on a date acceptable to the Designated Representative and shall be payable at maturity or in mandatory redemption installments annually thereafter, on dates acceptable to the Designated Representative. (vi) Final Maturity. The Bonds shall mature no later than the date that is [_] years after the Issue Date. (vii) Redemption Rights. The Designated Representative may approve in the Bond Purchase Agreement provisions for the optional and mandatory redemption of Bonds, subject to the following: (1) Optional Redemption. Any Bond may be designated as being (A) subject to redemption at the option of the City prior to its maturity date on the dates and at the prices set forth in the Bond Purchase Agreement; or (B) not subject to redemption prior to its maturity date. If a Bond is subject to optional redemption prior to its maturity, it must be subject to such redemption on one or more dates occurring not more than 101/2 years after the Issue Date. (2) Mandatory Redemption. Any Bond may be designated as a Term Bond, subject to mandatory redemption prior to its maturity on the dates and in the amounts set forth in the Bond Purchase Agreement. A-1 51476003.2 Page 137 of 224 (viii) Price. The purchase price for the Tax -Exempt Bonds may not be less than []% or more than [_]% of the stated principal amount of the Tax -Exempt Bonds. The purchase price for the Taxable Bonds may not be less than []% or more than []% of the stated principal amount of the Taxable Bonds. (ix) Other Terms and Conditions. (1) The Designated Representative may determine whether it is in the City's best interest to provide for bond insurance or other credit enhancement; and may accept such additional terms, conditions and covenants as he or she may determine are in the best interests of the City, consistent with this ordinance. (2) The Designated Representative must have determined that the Parity Conditions have been met and satisfied as of the Issue Date of the Bonds. (3) The Refunding Bonds shall produce a minimum net present value savings to the City and its ratepayers of []% (as a percentage of the Refunded Bonds). Net present value savings means the aggregate difference between (i) annual debt service on the Refunded Bonds, less (ii) annual debt service on the Refunding Bonds (including expenses related to costs of issuance of such Refunding Bonds) discounted to the Issue Date using the yield on the Bonds as the discount rate, plus (iii) excess cash, if any distributed to the City on the Issue Date, and less (iv) the amount of the City Contribution, if any, made on such Issue Date. A-2 51476003.2 Page 138 of 224 EXHIBIT B PARITY CONDITIONS (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 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 Services. (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: B-1 51476003.2 Page 139 of 224 (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. Prior: Ordinance No. 3567, Section 16 (2002 Bonds) Ordinance No. 3740, Section 16 (2005 Bonds) Ordinance No. 3835, Section 17 (2007 Bonds) Ordinance No. 3915, Section 18 (2009 Bonds) Ordinance No. 3962, Section 21 (2010 Bonds) Ordinance No. 4126, Section 16 (2013 Bonds) B-2 51476003.2 Page 140 of 224 EXHIBIT C [Form of] UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE City of Pasco, Washington [Name of Series] The City of Pasco, Washington (the "City"), makes the following written Undertaking for the benefit of holders of the above -referenced bonds (the "Bonds"), for the sole purpose of assisting the Purchaser in meeting the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds. Capitalized terms used but not defined below shall have the meanings given in Ordinance No. of the City (the "Bond Ordinance"). (a) Undertaking to Provide Annual Financial Information and Notice of Listed Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB: (i) Annual financial information and operating data of the type included in the final official statement for the Bonds and described in paragraph (b) ("annual financial information"); (ii) Timely notice (not in excess of 10 business days after the occurrence of the event) of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material notices or determinations with respect to the tax status of the Tax -Exempt Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such `Bankruptcy Events" are defined in Rule 15c2-12; (13) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. 51476003.2 C-1 Page 141 of 224 (iii) Timely notice of a failure by the City to provide required annual financial information on or before the date specified in paragraph (b). (b) Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in paragraph (a): (i) Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles applicable to local governmental units of the State such as the City, as such principles may be changed from time to time, which statements may be unaudited, provided, that if and when audited financial statements are prepared and available 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; (ii) Shall be provided not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending December 31, 2015; and (iii) May be provided in a single or multiple documents, and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. (c) Amendment of Undertaking. This Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, Rating Agency or the MSRB, under the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. (d) Beneficiaries. This Undertaking shall inure to the benefit of the City and the holder of each Bond, and shall not inure to the benefit of or create any rights in any other person. (e) Termination of Undertaking. The City's obligations under this Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under this Undertaking shall terminate if the provisions of Rule 15c2-12 that require the City to comply with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of Bond Counsel delivered to the City, and the City provides timely notice of such termination to the MSRB. (f) Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with this Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with this Undertaking shall constitute a default in respect of the Bonds. The 51476003.2 C-2 Page 142 of 224 sole remedy of any holder of a Bond shall be to take action to compel the City or other obligated person to comply with this Undertaking, including seeking an order of specific performance from an appropriate court. (g) Designation of Official Responsible to Administer Undertaking. The Finance Manager or his or her designee is the person designated, in accordance with the Bond Ordinance, to carry out the Undertaking in accordance with Rule 15c2-12, including, without limitation, the following actions: (i) Preparing and filing the annual financial information undertaken to be provided; (ii) Determining whether any event specified in paragraph (a) has occurred, assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any required notice of its occurrence; (iii) Determining whether any person other than the City is an "obligated person" within the meaning of Rule 15c2-12 with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of listed events for that person required under Rule 15c2-12; (iv) Selecting, engaging and compensating designated agents and consultants, including financial advisors and legal counsel, to assist and advise the City in carrying out this Undertaking; and (v) Effecting any necessary amendment of this Undertaking. 51476003.2 C-3 Page 143 of 224 CERTIFICATION I, the undersigned, City Clerk of the City of Pasco, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on November 30, 2015, as that ordinance appears on the minute book of the City. 2. The Ordinance will be in full force and effect five days after publication in the City's official newspaper, which publication date is , 2015. 3. A quorum of the members of the City Council was present throughout the meeting and a majority of the members voted in the proper manner for the passage of the Ordinance. Dated: .2015. CITY OF PASCO, WASHINGTON Debra L. Clark, City Clerk 51476003.2 Page 144 of 224 PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER , 2015 NEW ISSUE BOOK -ORDER ENTRY RATING REQUESTED (S&P) NOT BANK QUALIFIED In the opinion of Foster Pepper PLLC, Seattle, Washington (`Bond Counsel'), under existing federal lase and assuming compliance with applicable requirements of the Internal Revenue Code of 1986, as amended (the "Code'), that must be satioed subsequent to the issue date of the Bond, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals. However, while interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by corporations is taken into account in the computation of adjusted current earnings forpuiposes of the alternative minimum tax applicable to corporations, interest on Bonds received by certain S corporations may be subject to tax, and interest on the Bonds received by foreign corporations with United States branches may be subject to a foreign branch profits tax. Receipt of interest on the Bonds may have other federal tax consequences for certain taxpayers. See the captions `TAX MATTERS" herein. DATED: Date of Delivery CITY OF PASCO, WASHINGTON WATER AND SEWER IMPROVEMENT AND REFUNDING REVENUE BONDS, 2015 DUE: May 1, as shown on inside cover The City of Pasco, Washington (the "City', Water and Sewer Improvement and Refunding Revenue Bonds, 2015 (the `Bonds"), will be issued as fully registered bonds under a book -entry only system, registered in the name of Cede and Co. as bond owner and nominee for DTC. DTC will act as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in book -entry form, in the 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 semiannually on each May 1 and November 1, beginning May 1, 2016, to the maturity or earlier redemption of the Bonds. The principal of, and premium, if any, and interest on the Bonds are payable by the fiscal agent of the State of Washington (currently, U.S. Bank National Association), to DTC, which, in turn, is obligated to remit such payments to its participants for subsequent disbursement to beneficial owners of the Bonds, as described in Appendix D — `BOOK - ENTRY SYSTEM". MATURITY SCHEDULE - See Inside Cover The Net Revenue of the City's Waterworks Utility, including any Utility Local Improvement District Assessments ("ULID Assessments'D 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 charge of the Bonds, the Outstanding Parity Bonds and any Future Parity Bonds on the Net Revenue and ULID Assessments is prior and superior to any other liens and charges whatsoever. See "SECURITY FOR THE BONDS" herein. The Bonds are not general obligations of the City, and neither the full faith and credit nor the taxing power of the City, Franklin County or of the State of Washington nor any revenues of the City derived from sources other than the Waterworks Utility are pledged to the payment thereof. Certain Bonds are subject to redemption prior to their stated maturity dates. See "DESCRIPTION OF THE BONDS — Redemption Provisions." The Bonds are offered when, as and if issued, subject to the final approving legal opinion of Foster Pepper PLLC, Seattle, Washington, Bond Counsel. The form of Bond Counsel's opinion is attached as Appendix C. It is expected that the Bonds will be available for delivery in New York, New York, through the facilities of DTC by Fast Automated Securities Transfer on or about December 22, 2015. This coverpage contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Oficial Statement to obtain information essential to the making of an informed investment decision. * Preliminary, subject to change. Pipe rJaff ray Page 145 of 224 CITY OF PASCO, WASHINGTON WATER AND SEWER IMPROVEMENT AND REFUNDING REVENUE BONDS, 2015 MATURITY SCHEDULE Serial Maturities Due Interest CUSIP No. May 1 Amount* Rate Yield (Base 702571)(1) Term Bonds Due Interest CUSIP No. May 1 Amount* Rate Yield (Base 702571)(1) (1) The CUSIP data herein is provided by CUSIP Global Services, managed on behalf of the America Bankers Association by Standard & Poor's. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP service. CUSIP numbers have been assigned by an independent company not affiliated with the City and are provided solely for convenience and reference. The CUSIP numbers for a specific maturity are subject to change after the issuance. * Preliminary, subject to change. Page 146 of 224 This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy, nor shall 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. No dealer, broker, salesperson, or other person has been authorized by the City or the Underwriter to give any information or to make any representations with respect to the Bonds other than those contained in this Official Statement and, if given or made, such information or representations must not be relied upon. The City makes no representation regarding the accuracy or completeness of Bond Counsel's form of opinion, information related to the Underwriter or information provided by the Underwriter regarding the reoffering prices, or the information in Appendix D—"Book-Entry Transfer System," which has been provided by DTC. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made by use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its 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. Certain statements contained in this Official Statement do not reflect 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, words such as "estimated," "projected," "anticipate," "expect," "intend," "plan," "believe" and similar expressions are intended to identify forward-looking statements. All projections, assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. These forward-looking statements speak only as of the date they were prepared. 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 otherwise expressly provided in "CONTINUING DISCLOSURE." The presentation of certain information, including tables of revenues of the Waterworks Utility, is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeated in the future. Information relating to debt and tax limitations is based on existing statutes and constitutional provisions. Changes in State law could also alter these provisions. The order and placement of materials in this Official Statement, including the appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the appendices, must be considered in its entirety. The offering of the Bonds is made only by means of this entire Official Statement. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Bond Ordinance has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. The registration or qualification of the Bonds in accordance with applicable provisions of securities laws of the state in which the Bonds have been registered or qualified and the exemption from the registration or qualification in other states cannot be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. The connection with this offering, the Underwriter pay over -allot or effect transactions that stabilize or maintain the market price of the Bonds at levels above those which might otherwise prevail in the open market. Such stabilization, if commenced, may be discontinued at any time without prior notice to any person. This Preliminary Official Statement, as of its date, is in a form deemed final by the City for purposes of Securities and Exchange Commission Rule 15c2 -12(b)(1) but is subject to revision, amendment, and completion in a final Official Statement which will be available within seven business days after the sale date. Page 147 of 224 Members Matt Watkins Rebecca Francik Robert Hoffmann Michael Garrison Saul Martinez Tom Larsen Al Yenney * Re-elected in November, 2015 CITY OF PASCO, WASHINGTON 525 NORTH THIRD AVENUE P.O. Box 293 PASCO, WA 99301 (509) 545-3404 www.pasco-wa.gov(,) ELECTED OFFICIALS Position Mayor Mayor Pro -Tem Council Member Council Member Council Member Council Member Council Member CITY ADMINISTRATIVE STAFF Term Expires December 31, 2015 * December 31, 2015 * December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2015 Dave Zabell City Manager Stan Strebel Deputy City Manager Rick Terway Administrative and Community Services Director Eva Lindgren Administrative and Community Services Deputy Director Ahmad Qayoumi Public Works Director BOND REGISTRAR AND PAYING AGENT U.S. Bank National Association Seattle, Washington BOND COUNSEL Foster Pepper PLLC Seattle, Washington FINANCIAL ADVISOR Northwest Municipal Advisors Bellevue, Washington UNDERWRITER Piper Jaffray & Co. Portland, Oregon (9) The 00 's website is not part of this Official Statement, and investors should not rely on information which is 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 00 's website by reference. Page 148 of 224 TABLE OF CONTENTS Page 149 of 224 Page Paye INTRODUCTION 1 GENERAL AND ECONOMIC INFORMATION 28 Population.------------------------------------------------------------- 28 DESCRIPTION OF THE BONDS____________________________ 1 Largest Employers ___________________________________________________ 28 General ------------------------------------------------------------------ 1 Economic Data ------------------------------------------------------- 29 Bond Registrar and Registration __________________________________ 1 Redemption Provisions and Purchase of Bonds______________ 2 TAX MATTERS _ -_ 30 Failure to Redeem Bonds .------------------------------------------ 3 Tax Exemption------------------------------------------------------- 30 Refunding or Defeasance .__________________________________________ 3 Certain Other Federal Tax Consequences ____________________ 31 Preservation of Tax Exemption _________________ ______________ 32 PURPOSE AND USE OF PROCEEDS 4 Purpose------------------------------------------------------------------ 4 RATING----------------------------------------------------------------- 32 Sources and Uses of Proceeds 4 Refunding Plan ________________________________________________________ 5 CONTINUING DISCLOSURE --------------------------------- 32 SECURITY FOR THE BONDS 6 CERTAIN INVESTMENT CONSIDERATIONS 34 Pledge of Revenue and Lien Position ___________________________ 6 Rate Covenant and Coverage Requirement ___________________ 6 INITIATIVE AND REFERENDUM ------------------------ 34 Bond Fund 7 Reserve Account------------------------------------------------------ 7 LEGAL AND UNDERWRITING-----------------------____-- 34 Flowof Funds--------------------------------------------------------- 8 Approval of Counsel ----------------------------------------------- 34 Additional Covenants of the City ________________________________ 8 Financial Advisor ____________________________________________________ 34 Future Parity Bonds -------------------------------------------------- 9 Litigation --------------------------------------------------------------- 35 Conflicts of Interest 35 WATERWORKS UTILITY UTILITY DEBT INFORMATION,-___- 11 Underwriting__________________________________________________________ 35 Debt Service Requirements ______________________________ _________ 11 Other Waterworks Utility Debt .__________________________________ 11 CONCLUDING STATEMENT.-, ----------------------------- 35 Debt Payment Record ----------------------------------------------- 12 Other Financings----------------------------------------------------- 13 APPENDIX A. CERTAIN DEFINITIONS THE WATERWORKS UTILITY 12 The Water System ____________________________________________________ 12 APPENDIX B. 2014 AUDITED FINANCIAL The Sewer System _________ _________ _________ _________ _________ 14 STATEMENTS The Process Water Reuse Facility ________________________________ 16 The Stormwater Management System __________________________ 17 APPENDIX C. OPINION OF BOND COUNSEL The Irrigation System ._______________________________________________ 18 Capital Improvement Plan 18 APPENDIX D. BOOK -ENTRY SYSTEM Endangered Species Act ____________________________________________ 18 Historic Operating Results _________________________________________ 19 Comparative Statement of Net Position _______________________ 21 CITY PROFILE 22 City Council _ 22 Key Administrative Staff ------------------------------------------- 22 Labor Relations _ 22 Pensions ----------------------------------------------------------------- 23 Other Post -Employment Benefits _______________________________ 24 Risk Management -----------------------------------------------------25 Accounting and Budgeting Process ._____________________________ 25 Auditing of City Finances __________________________________________ 25 Authorized Investments 27 Page 149 of 224 (THIS PAGE INTENTIONALLY LEFT BLAND Page 150 of 224 OFFICIAL STATEMENT CITY OF PASCO, WASHINGTON WATER AND SEWER IMPROVEMENT AND REFUNDING REVENUE BONDS, 2015 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 (the "State', to furnish information in connection with the issuance and sale by the City of its $ * Water and Sewer Improvement and Refunding Revenue Bonds, 2015 (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 November 30, 2015. 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 Bonds will be issued in the principal amount of $ * and 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 May 1 and November 1, beginning May 1, 2016, 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 ("Authorized Denomination'D. 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 - "BOOK -ENTRY SYSTEM." The Bonds are being issued on a parity with the City's outstanding 2002 Bonds, 2005 Bonds, 2007 Bonds, 2009 Bonds, 2010A Bonds, 2010T Bonds, 2013A Bonds and 2013T Bonds (the "Outstanding Parity Bonds" and, together with the Bonds and any Future Parity Bonds, the "Parity Bonds"). A portion of the Outstanding Parity Bonds may be refunded in accordance with the Refunding Plan. See "PURPOSE AND USE OF PROCEEDS — Refunding Plan." The Bonds are not general obligations 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. Bond Registrar and Registration Features Bond Registrar. The State's fiscal agent, currently U.S. Bank National Association (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal of and interest on the Bonds, recording the purchase and registration, exchange or transfer, and payment of Bonds and performing the other respective obligations of the paying agent and registrar. No resignation or removal of the Bond Registrar shall become effective until a successor has been appointed and has accepted the duties of Bond Registrar. Book Entiy System. The Bonds will be issued as fully registered bonds and, when issued, will be initially registered in the name of Cede & Co., as the nominee of DTC. DTC will act as initial securities depository for the Bonds. Individual purchases and sales of the Bonds may be made in book -entry form only in Authorized Denominations. * Pmliminag, subject to change. Page 151 of 224 So long as the Bonds are in book -entry only form, principal of and interest on the Bonds will be payable as required by the operational arrangements DTC referenced in the Blanket Issuer Letter of Representations between the City and DTC, dated August 31, 1998 (the "Letter of Representations"). The Beneficial Owners will not receive certificates representing their interest in the Bonds (see Appendix D attached hereto). The City makes no representation as to the accuracy or completeness of the information in Appendix D provided by DTC. Purchasers of the Bonds should confirm this information with DTC or its broker-dealer participants. No Book -Entry System. During any period in which the Bonds are not in book -entry only form, principal of and interest on the Bonds will be payable by the Bond Registrar. Interest on the Bonds will be payable by check mailed to the Registered Owners, at the addresses appearing on the Bond Register on the 15f day of the month preceding an interest payment date or by electronic transfer on the interest payment date. The City is not required to make electronic transfers except to a Registered Owner of the Bonds pursuant to a request in writing (and at the sole expense of that Registered Owner) received at least 15 days before an interest payment date. Principal of the Bonds will be payable upon presentation and surrender of the Bond by the Registered Owner to the Bond Registrar. Procedure in the Event of Revisions of Book -Entry System. If (i) DTC resigns as the securities depository and the City does not appoint a substitute securities depository, or (ii) the City terminates the services of DTC, the City will execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their nominees, Bonds in fully registered form, in Authorized Denominations. Transfer and Exchange of Bonds. The Bonds will be subject to transfer and exchange as provided in the Bond Ordinance. Redemption Provisions and Purchase of Bonds Optional Redemption. The Bonds maturing in the years 20_ through 20_, inclusive, are not subject to redemption prior to their stated maturity dates. The Bonds maturing on or after May 1, 20_ are subject to redemption prior to their stated maturity dates, at the option of the City, at any time on or after 1, 20_ as a whole or in part at par plus accrued interest to the date fixed for redemption. Mandatory Redemption. The Bonds maturing on May 1, 20_ are term bonds (the "Term Bonds', and, if not optionally redeemed or purchased, will be called for redemption at a price equal to the principal amount to be redeemed plus accrued interest, if any, to the date fixed for redemption on May 1 in the years and principal amount as follows: Term Bonds Redemption Date Principal (May 1) Amount 20 20 (1) Final maturity. Redemption Date Principal (May 1) Amount 20 20_(1) Selection of Bonds for Redemption. If fewer than all of the outstanding Bonds are to be redeemed at the option of the City, the City will select the maturities to be redeemed. For as long as the Bonds are in book -entry only form, if fewer than all of the Bonds of a maturity are called for redemption, the selection of Bonds within a maturity to be redeemed will be made by DTC in accordance with its operational procedures then in effect. See Appendix D attached hereto. If the Bonds are no longer held in book -entry only form, then the Bond Registrar would select Bonds for redemption randomly within a maturity in such manner as the Bond Registrar determines. Partial Redemption. All or a portion of the principal amount of any Bond that is to be redeemed may be redeemed in any Authorized Denomination. If less than all of the outstanding principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there will be issued to the person in whose name a Bond is registered (the "Registered Owner"), without charge a new Bond (or Bonds, at the option of the Registered Owner) of the same maturity and interest rate in any Authorized Denomination in the aggregate principal amount remaining unredeemed. Notice of Redemption (Book -Entry). So long as the Bonds are in book -entry only form, notice of any redemption of Bonds will be given as required by the Letter of Representations. Page 152 of 224 Notice of Redemption (No Book Entry). During any period in which the Bonds are not in book -entry only form, unless waived by any Registered Owner of the Bonds to be redeemed, official notice of any redemption of Bonds will be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail, postage prepaid, at least 20 days and not more than 60 days prior to the date fixed for redemption, to the Registered Owners of the Bonds to be redeemed at the address shown on the books or records maintained by the Bond Registrar for the purpose of identifying ownership of the Bonds (the "Bond Register") on the date the Bond Registrar sends the notice, and such requirement will be satisfied when notice has been mailed as so provided, whether or not it is actually received by the Registered Owner or Beneficial Owner. Conditional Notice of Redemption. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind the redemption notice and the redemption by giving a notice of rescission to the affected Registered Owners at any time on or prior to the date fixed for redemption. Any notice of optional redemption that is so rescinded will be of no effect, and each Bond for which a notice of redemption has been rescinded will remain outstanding. Effect of Redemption. Interest on each Bond called for redemption will cease to accrue on the date fixed for redemption, unless either the notice of optional redemption is rescinded, or money sufficient to effect such redemption is not on deposit in the City's Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991 (the "Bond Fund") or in a trust account established to refund or defease the Bond. Purchase of Bonds. The City has reserved the right to purchase any or all of the Bonds offered to the City at any time at any price acceptable to the City plus accrued interest to the date of purchase. Failure to Pay Bonds If the principal of any Bond is not paid when the Bond is properly presented at its maturity or date fixed for redemption, as applicable, the City will be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or date fixed for redemption until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund, or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Refunding or Defeasance The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any or all of the Bonds (the "defeased Bonds'; (b) redeeming the defeased Bonds prior to their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside in a special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the "trust account") money and/or "government obligations" (as defined by chapter 39.53 Revised Code of Washington ("RCW'�, as now in effect or hereafter amended) maturing at a time or times and bearing interest in amounts sufficient to redeem, refund or defease the defeased Bonds in accordance with their terms, then all right and interest of the owners of the defeased Bonds in the covenants of the Bond Ordinance and in the funds and accounts obligated to the payment of the defeased Bonds will cease and become void. Thereafter, the owners of defeased Bonds will have the right to receive payment of the principal of and interest on the defeased Bonds solely from the trust account and the defeased Bonds will be deemed no longer outstanding. In that event, the City may apply money remaining in any fund or account (other than the trust account) established for the payment or redemption of the defeased Bonds to any lawful purpose. Unless otherwise specified by the City in a refunding or defeasance plan, notice of refunding or defeasance will be given, and selection of Bonds for any partial refunding or defeasance will be conducted, in the manner prescribed in the Bond Ordinance for the redemption of Bonds. As currently defined in RCW 39.53.010(4), "government obligations" means (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America and bank certificates of deposit secured by such obligations; (b) bonds, debentures, notes, participation certificates or other obligations issued by the Banks for Cooperatives, the Federal Intermediate Credit Bank, the Federal Home Loan Bank System, the Export -Import Bank of the United States, federal land banks or the Federal National Mortgage Association; (c) public housing bonds and project notes fully secured by contracts with the United States; and (d) obligations of financial institutions insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured or guaranteed as permitted under any other provision of State law. Page 153 of 224 PURPOSE AND USE OF PROCEEDS Purpose The proceeds from the sale of the Bonds will be used (a) to pay costs of construction of additions to the City's sewage treatment facility and sewer line extensions, (b) to refund certain outstanding water and sewer revenue bonds of the City (the "Refunded Bonds' (see "Refunding Plan" below), (c) fund an increase in the required balance in the reserve account in the Bond Fund (the "Reserve Account") and (d) to pay the costs of issuance of the Bonds. Sources and Uses of Proceeds* The proceeds of the Bonds are estimated to be applied as follows: Sources Principal Amount Original Issue Premium Total Sources Uses Project Costs Deposit to Refunding Account Deposit to Reserve Account Costs of Issuance(l) Total Uses (1) Includes bond counsel fee, rating fee, underwriter's discount, financial advisor fee, rating agency fees, Refunding Trustee fees, verification agent fees, printing and mailing costs of the Preliminary Official Statement and Official Statement, and other expenses associated with the issuance of the Bonds. * Preliminary, subject to change. (REMAINDER OF PAGE INTENTIONALLY LEFT BLAND Page 154 of 224 Refunding Plan* Based on market conditions, all or a portion of the following bonds (the "Refunding Candidates' will be refunded with a portion of the proceeds of the Bonds. The Refunding Candidates refunded with proceeds of the Bonds will be the Refunded Bonds. REFUNDING CANDIDATES* (1) Partial refunding of the 2022 Term Bond. The 2018 through 2022 sinking fund maturities are being refunded. The sinking fund maturity due in 2017 in the amount of $50,000 is not callable. * Preliminary, subject to change. Upon the delivery of the Bonds, the City will enter into a Refunding Trust Agreement with U.S. Bank National Association, as Refunding Trustee, to provide for the refunding of the Refunded Bonds. The Refunding Trust Agreement creates an irrevocable trust fund to be held by the Refunding Trustee and to be applied solely to the payment of the Refunded Bonds. The proceeds of the Bonds will be deposited with the Refunding Trustee and will be invested in noncallable direct obligations of the United States of America (referred to herein as "Acquired Obligations'D that will mature and bear interest at rates sufficient, together with cash held by the Refunding Trustee, if necessary, to pay the principal of and accrued interest coming due up to and including the call date of the Refunded Bonds (the "Refunding Plan'. The money and Acquired Obligations and earnings thereon will be held solely for the benefit of the Registered Owners of the Refunded Bonds. The mathematical accuracy of the (1) computations of the adequacy of the maturing principal amounts of and interest on the Acquired Obligations and beginning cash balances, if necessary, to be held by the Refunding Trustee to pay principal of and interest on the Refunded Bonds as described above, and (2) the computations supporting the conclusion of Bond Counsel that the Bonds are not "arbitrage bonds" under Section 148 of the Code, will be verified by , independent certified public accountants. 5 Page 155 of 224 Maturity Principal Interest Call Date CUSIP No. Bond Date Amounts Rates (at 100%) (702571) 2002 Bonds Serial 12/01/19 $370,000 4.375% 01/16/16 JY7 Serial 12/01/20 385,000 4.450 01/16/16 JZ4 Serial 12/01/21 405,000 4.600 01/16/16 KA7 $1,160,000 2005 Bonds Serial 09/01/16 $215,000 4.000% 01/16/16 KN9 Serial 09/01/17 225,000 4.000 01/16/16 KP4 Serial 09/01/18 235,000 4.000 01/16/16 KQ2 Serial 09/01/19 245,000 4.000 01/16/16 KRO Serial 09/01/20 255,000 4.000 01/16/16 KS8 Serial 09/01/21 265,000 4.000 01/16/16 KT6 Serial 09/01/22 275,000 4.000 01/16/16 KU3 Serial 09/01/23 285,000 4.150 01/16/16 KV1 Serial 09/01/24 295,000 4.200 01/16/16 KW9 Serial 09/01/25 310,000 4.250 01/16/16 KX7 $2,605,000 2007 Bonds Term 09/01/22(1) $265,000 4.750% 09/01/17 LJ7 $265,000 Total $4,030,000 (1) Partial refunding of the 2022 Term Bond. The 2018 through 2022 sinking fund maturities are being refunded. The sinking fund maturity due in 2017 in the amount of $50,000 is not callable. * Preliminary, subject to change. Upon the delivery of the Bonds, the City will enter into a Refunding Trust Agreement with U.S. Bank National Association, as Refunding Trustee, to provide for the refunding of the Refunded Bonds. The Refunding Trust Agreement creates an irrevocable trust fund to be held by the Refunding Trustee and to be applied solely to the payment of the Refunded Bonds. The proceeds of the Bonds will be deposited with the Refunding Trustee and will be invested in noncallable direct obligations of the United States of America (referred to herein as "Acquired Obligations'D that will mature and bear interest at rates sufficient, together with cash held by the Refunding Trustee, if necessary, to pay the principal of and accrued interest coming due up to and including the call date of the Refunded Bonds (the "Refunding Plan'. The money and Acquired Obligations and earnings thereon will be held solely for the benefit of the Registered Owners of the Refunded Bonds. The mathematical accuracy of the (1) computations of the adequacy of the maturing principal amounts of and interest on the Acquired Obligations and beginning cash balances, if necessary, to be held by the Refunding Trustee to pay principal of and interest on the Refunded Bonds as described above, and (2) the computations supporting the conclusion of Bond Counsel that the Bonds are not "arbitrage bonds" under Section 148 of the Code, will be verified by , independent certified public accountants. 5 Page 155 of 224 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. Utility Local Improvement Districts The City currently has three utility local improvement districts ("ULIDS") with assessments currently outstanding that have been pledged to the Bond Fund for payment of Parity Bonds. The City may create ULIDs in the future and may issue Future Parity Bonds to finance improvements within a ULID, consistent with the Parity Conditions described above. The term "ULID assessments" (not capitalized) is used in this document to refer generically to any assessments in a ULID, whether or not such assessments are pledged to the Bond Fund. If capitalized ("ULID Assessments', the term refers specifically to assessments that have been pledged to the Bond Fund for payment of Parity Bonds. In General. Under State law the City may establish ULIDs and may levy special assessments to pay in whole or in part the costs of any improvements within the ULID, under a mode of annual installments on all property specially benefited by any local improvement, with the amount of the assessment based on the special benefit to each parcel within the ULID. The City must permit each property owner to pay its assessment in full within a 30 day prepayment period and to pay the remaining outstanding balance in annual installments of principal and interest. Lien of Assessments. ULID assessments constitute a lien on the property assessed from the time the City places the assessment roll in the hands of the county treasurer for collection. The interest and penalties are included in and become a part of the assessment lien. State law provides that an assessment lien is paramount to all other liens, except the lien for general property taxes and the homestead exemption. Under State law, the homestead exemption permits any head of a family to protect a certain portion of the homestead (residence) from forced sale. In 1982, the Washington State Court of Appeals held, in City of Algona P. Sharp, et al., that the filing for a homestead exemption before a scheduled foreclosure sale of residential property valued at less than the statutory homestead exemption (currently $125,000) effectively exempted that property from a forced sale to enforce delinquent special assessments in a special benefit assessment district such as a local improvement district or utility local improvement district. Foreclosure of Assessments. The manner in which delinquent ULID assessments may be foreclosed is set forth in detail in State law. Foreclosure proceedings may be initiated if on the first day of January two installments of any assessment are delinquent, or if the final installment has been delinquent for more than one year. Property foreclosed upon is sold by the county, and the laws governing appeals from general tax foreclosure judgments apply similarly to appeals from judgments obtained in a local improvement assessment lien foreclosure action. Proceeds of the sale of any property foreclosed upon in the manner required by law, up to the amount of the unpaid assessment and interest and penalties thereon, are deposited into and become a part of the Bond Fund. Rate Covenant and Coverage Requirement So long as any Parity Bonds are outstanding, the City has covenanted in the Bond Ordinance that 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. "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. Page 156 of 224 Bond Fund The Bond Fund has been previously created and established a special fund of the City 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 Deputy 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. 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. 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. 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 in the Bond Ordinance, until there is sufficient money in the Bond Fund, including the Reserve Account therein, to pay the principal of and interest to 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. Page 157 of 224 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 ("Ambac' in the amount of $2,108,930, which expires in 2019. Ambac is currently rated Caa2 by Moody's Investors Service Inc. and Standard & Poor's Ratings Services withdrew its rating in November 2010. The City also currently has $1,470,497 of cash and investments in the Reserve Account. In anticipation of the expiration of the Ambac surety bond, the City will use ten percent of the proceeds of the Bonds to increase the amount of cash and investments in the Reserve Account to approximately $ Further, the City will make additional payments into the Reserve Account, or obtain a new surety bond, as required to replace the Ambac surety bond prior to its expiration in 2019. See Appendix A — "CERTAIN DEFINITIONS" for a definition of the Reserve Requirement. 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. Additional Covenants of the City The City has further covenanted and agreed 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 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 b) 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. c) 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. 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 Owner 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 will, 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, will promptly avail itself of its utility lien rights, as set forth in applicable statutes. Page 158 of 224 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 will 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 has reserved 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 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 Services. 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: Page 159 of 224 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 the 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. In connection with the Bonds, the City will provide a certificate executed by a City representative. 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. 10 Page 160 of 224 WATERWORKS UTILITY DEBT INFORMATION Debt Service Requirements Annual debt service requirements for the Outstanding Parity Bonds and the Bonds are presented in the following table. The table does not include the Refunded Bonds. Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 WATERWORKS UTILITY DEBT SERVICE SCHEDULE (1) OUTSTANDING PARITY BONDS' THE BONDS* Assessment Bonds Principal Interest Non -Assessment Bonds Principal Interest Non -Assessment Bonds Principal Interest TOTAL (1) All Bonds are Parity Bonds. Assessment Bonds and Non -Assessment Bonds are shown separately for analysis purposes only. * Preliminary, sulyea to change Other Waterworks Utility Debt In addition to the Outstanding Parity Bonds, the City has loans outstanding in the combined total principal amount of $6,388,921, as of November 1 2015, from the State Department of Ecology ("Bcology'� State Revolving Fund Loan program ("SRF Loan'. The next payment will be due in January 2016. The lien of the SRF Loan on Net Revenue is subordinate to the lien of the Parity Bonds on Net Revenue. The City has used money obtained from the SRF Loan 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 has established a cash -funded reserve for the subordinate SRF Loan equal to one year's debt service which is $1,719,955.30. [If the City defaults in its payments on the SRF Loan, Ecology would have the option to declare the principal and interest on the loan immediately payable, in addition to other remedies specified in the SRF Loan agreement.] [Ecology has been asked to delete this acceleration provision.] The City also has two Public Works Trust Fund Loans from the State Public Works Board outstanding in the combined principal amount of $7,366,131 as of November 1, 2015. The lien of these Public Works Trust Fund Loans on Net Revenue is subordinate to the lien of the Parity Bonds on Net Revenue. [If the City defaults in its payments the Public Works Trust Fund Loan that is outstanding in the principal amount of $555,701, the Public Works Board would have the option to declare the principal and interest on the affected loan(s) immediately payable, in addition to other remedies specified in the Public Works Trust Fund Loan agreements.] [The Public Works Board has been asked to delete this acceleration provision.] 11 Page 161 of 224 Debt Payment Record The City has always promptly met principal and interest payments on outstanding bonds, notes and warrants when due. 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 18 months. 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 municipal 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's 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 two intake structures in the river. The intake facilities have multiple pumps with pumping capacity of 24 million gallons per day (mgd) at the Butterfield Plant and 6 mgd at the West Pasco Water Treatment Plant. The raw or untreated water is pumped through four lines to both treatment facilities. The Butterfield 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. The West Pasco Water Treatment Plant (the "WPWTP'� was completed in 2011 and it has been producing water for the City since April of 2011. It consists of the latest technology in water treatment. The raw water is treated through micro filtration which removes impurities to meet or exceed the Department of Health requirements. The plant currently has the capacity of producing 6 mgd; however, the plant has the capacity of 18 mgd when it is expanded in the future to meet the growth needs in West Pasco. The plant infrastructure includes automated sand filtration, two 3 mgd microfiltration racks and a one million gallon clearwell. The plant is automated and can function in automated mode more than 20 hours per day. Present water demands on the Water System can vary from a minimum winter day demand of 4.9 mgd to a peak summer day demand of 24.65 mgd. The year-round average daily flow is 12.69 mgd. The treated water from the metered plant is pumped into the transmission and distribution system which consists of 300 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 one 10 million gallon ground level reservoir, two 1 million gallon reservoirs, and a 2.5 million gallon water tower. 12 Page 162 of 224 Customers and Consumbtion. The City's Water System presently serves approximately 18,300 customers, of which approximately 88% are single-family residential customers. Historical statistics are shown in the following charts. WATER SYSTEM CUSTOMERS Customer Class 2014 2013 2012 2011 2010 Single Family Residential 15,969 15,791 15,612 15,204 14,670 Multi -Family Residential 492 489 468 463 453 Commercial 1,374 1,345 1,321 1,296 1,272 Other (1) 453 444 422 407 402 TOTAL 18,288 18,069 17,823 17,370 16,797 (1) Industrial, Irrigation, the City and schools. ANNUAL CONSUMPTION (1,000 cubic feet) Customer Class 2014 2013 2012 2011 2010 Single Family Residential 283,986 348,730 277,491 277,553 277,955 Multi -Family Residential 44,494 51,205 50,989 60,028 43,924 Commercial 49,618 55,378 57,965 65,329 56,383 Other (1) 202,086 184,057 153,319 102,909 53,853 TOTAL 580,184 639,370 539,764 505,819 432,115 (1) Industrial, Irrigation, the City and schools. LARGEST CUSTOMERS OF THE WATER SYSTEM Customer Pasco Processing Twin City Foods CRF Frozen Foods (£k.a. Bybee) Reser's Fine Foods Grimmway Enterprises Pasco Housing Authority Pasco School District Oregon Potato Company Sundance Mobile Home Park Franklin County TOTAL (1) Consumption in cubic feet, rounded to nearest hundred, based on 2014 water use. Total consumption for 2014 was 597,360,600 cubic feet. (2) Based on 2014 audited Water System total operating revenue of $7,594,091. Does not include connection fees, one-time revenue sources, and revenue raised to pay interfund City utility taxes. Source: The City of Pasco. 13 Page 163 of 224 % of 2014 Water Utility Annual Annual Operating Industry Consumption(l) Revenue Revenue(2) Processing 44,878,000 $305,170 4.02% Processing 33,418,500 227,246 2.99 Processing 22,246,800 151,278 1.99 Processing 15,188,800 103,284 1.36 Processing 7,704,400 52,390 0.69 Government Housing 7,668,900 52,149 0.69 Education 4,397,500 29,903 0.39 Processing 3,772,700 25,654 0.34 Housing 3,604,500 24,511 0.32 Municipal Government 3,560,600 24,212 0.32 146,440,700 $995,797 13.11% (1) Consumption in cubic feet, rounded to nearest hundred, based on 2014 water use. Total consumption for 2014 was 597,360,600 cubic feet. (2) Based on 2014 audited Water System total operating revenue of $7,594,091. Does not include connection fees, one-time revenue sources, and revenue raised to pay interfund City utility taxes. Source: The City of Pasco. 13 Page 163 of 224 Eater Rates and C&Xes. 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 went into effect on July 1, 2014. The most recent rate increase by the City prior to the 2014 increase was in 2010. A 5% rate increase is being proposed in the preliminary 2016 Budget based upon recommendations from an external rate study. WATER RATES AND CHARGES Single -Family Residential Size of Service Service Charge 3/4 inch $16.25 1 inch 24.35 Multi -Family Residential & Commercial Size of Service Service Charge 3/4 inch $22.90 1 inch 33.05 1 '/2 inch 64.50 2 inch 103.45 3 inch 141.30 4 inch 203.60 6 inch 317.80 8 inch 440.40 In addition to the monthly service charge, users pay $0.68 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. 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 with moderate 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 Kennewick 19,951 3,737 21.94 48.57 11.92 City of Pasco 15,969 2,319 23.25 43.78 12.69 City of Richland 16,285 2,194 36.75 n/a 16.44 City of Walla Walla 8,803 1,702 49.90 74.85 9.52 Source. Individual utilities, City of Pasco survey of rates as of October 312015 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 of 4.09 mgd, with a peak of 4.85 mgd, and is capable of serving a population of 80,000 people. The Waste Water Treatment Plant (the "WWTP") has capacity of treating up to 7.1 to 7.8 mgd. However, the primary clarifier, which is the initial stage of wastewater treatment, has only 5 mgd capacity. In order to meet the needs of near future growth and peak demands, a second primary clarifier will be constructed with proceeds of the 2013A Bonds. The proposed primary clarifier will add 5 to 7 mgd capacity to the average flows and will meet current and future demands. The City is in the process of completing master plans for the Citywide Sanitary Sewer System. Recommended improvements for the WWTP include capacity improvements to treat wastewater up to 12 mgd in order to meet the projected City growth of 95,000 to 100,000 in the next 15 to 20 years. 14 Page 164 of 224 The sewer collection consists of 240 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 and Statistics. The City's Sewer System, which excludes what is treated at the Process Water Reuse Facility, presently serves approximately 15,700 customers, of which 90% are single-family residential customers. SEWER SYSTEM CUSTOMERS Customer Class 2014 2013 2012 2011 2010 Single Family Residential 14,132 13,936 13,746 13,373 12,841 Multi -Family Residential 517 502 454 449 442 Commercial 11079 1,066 969 949 935 TOTAL 15,728 15,504 15,169 14,771 14,218 LARGEST CUSTOMERS OF THE SEWER SYSTEM % of 2014 Sewer Utility Annual Annual Operating Customer Industry Consumption(l) Revenue Revenue(2) Reser's Fine Foods Processing 14,888,400 $37,144 0.63% Grimmway Enterprises Processing 7,704,400 99,910 1.69% Pasco School District Education 2,167,600 36,211 0.61% Franklin County Municipal Government 2,113,500 30,600 0.52% City of Pasco Municipal Government 2,070,050 34,772 0.59% Port of Pasco Industrial 1,871,900 26,488 0.45% Oxarc Manufacturing 1,522,372 21,214 0.36% RL Pasco LLC Hospitality 1,421,300 36,442 0.62% Lourdes Medical Center Health 1,342,200 19,088 0.32% Balcom & Moe Processing 1,314,300 17,445 0.29% 36,416,022 $359,314 6.07% (1) Consumption in cubic feet, rounded to nearest hundred, based on 2014 water use. Total consumption for 2014 was 72,496,000 cubic feet.. (2) Based on 2014 audited Sewer System total operating revenue of $5,914,671. Does not include connection fees, one-time revenue sources, and revenue raised to pay interfund City utility taxes. Source: The City of Pasco. Sewer Charges. The following rates and charges were approved on April 26, 2010 and went into effect on July 1, 2010. A 9% sewer rate increase is being proposed in the preliminary 2016 Budget based upon recommendations from an external rate study. SEWER RATES Monthly Customer Class Base Charge Residential dwellings or four units or less $24.80 Residential dwellings more than four units 20.00 Sr. Citizen/Low Income 8.30 Commercial 33.35 Hotel/Motel (per unit) 5.25 Source: The City of Pasco. 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. 15 Page 165 of 224 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 alien upon the property. Such alien 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 2014. Bate Coroarisons. 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/a inch meter. Single family residential charges are based on a flat rate and usage is not metered. City City of Kennewick City of Pasco City of Richland City of Walla Walla COMPARATIVE MONTHLY SINGLE FAMILY RESIDENTIAL SEWER SERVICE RATES Number of Connections Residential Commercial 16,008 2,803 14,132 1,596 17,138 1,118 8,392 1,590 Source: Individual utilities City of Pasco surrey of rates as of October 31, 2015. Source: The City of Pasco Single Family Monthly Charge Inside City Outside City $21.22 $31.83 24.80 30.88 25.60 n/a 52.10 78.15 RECENT HISTORICAL WATER AND SEWER RATE CHANGES The Process Water Reuse Facility The Process Water Reuse Facility (the "Facility' was constructed by the City and placed in operation in 1995. The Facility services four food processing plants. The food processing wastewater is pumped and sprayed onto farmland crop circles as the means of disposal. The Facility and processing plants operate year-round, with peak usage in June through September. The Facility originally consisted of two pump stations, pipelines, a 5 million gallon equalization basin and 10 irrigation circles totaling 1,600 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 1,800 acres. The winter storage pond allows food processors at the Pasco Processing Center to operate year round. 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 below. In 2011 the City completed the optimization master plan to improve the Facility to ensure the City remains compliant with the permit requirements issued by Ecology and to provide increased capacity for process water. In 2013, the City made improvements to the Facility which created 170 million gallons of additional capacity, 110,000 pounds of additional nitrogen capacity and 15,000 pounds/day of additional biological oxygen demand capacity. The expansion meets the currently requested needs of existing processors and does not provide excess capacity to allow for the addition of new customers. 16 Page 166 of 224 Percent Change for In City Service Year Water Sewer 2014 30.00% 0% 2011 0.00% 5.0% reduction 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%-4.5% The Process Water Reuse Facility The Process Water Reuse Facility (the "Facility' was constructed by the City and placed in operation in 1995. The Facility services four food processing plants. The food processing wastewater is pumped and sprayed onto farmland crop circles as the means of disposal. The Facility and processing plants operate year-round, with peak usage in June through September. The Facility originally consisted of two pump stations, pipelines, a 5 million gallon equalization basin and 10 irrigation circles totaling 1,600 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 1,800 acres. The winter storage pond allows food processors at the Pasco Processing Center to operate year round. 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 below. In 2011 the City completed the optimization master plan to improve the Facility to ensure the City remains compliant with the permit requirements issued by Ecology and to provide increased capacity for process water. In 2013, the City made improvements to the Facility which created 170 million gallons of additional capacity, 110,000 pounds of additional nitrogen capacity and 15,000 pounds/day of additional biological oxygen demand capacity. The expansion meets the currently requested needs of existing processors and does not provide excess capacity to allow for the addition of new customers. 16 Page 166 of 224 CUSTOMERS OF THE PROCESS WATER REUSE FACILITY % of 2014 Permitted Actual Total Total Customer Flows(') Flows(l) Revenues Revenues Pasco Processing 383 314 $930,168 42.61% Twin City Foods 220 167 494,707 22.66% CRF (f.k.a.Bybee) 204 157 465,084 21.30% Reser's Fine Foods 115 99 293,270 13.43% Total 923 737 $2,183,229 100.00% (1) Million gallons per year. Bates and Charges. 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. The 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. 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. The Stormwater Management System The Stormwater System was established by the City in 1999 pursuant to chapter 35.67 RCW and RCW 35A.80.010. 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. The City's Stormwater System is managed using a ground infiltration process which, after it is treated, meets Ecology's NPDES requirements. The infiltration process applies to approximately 75% of the City. The water runoff from streets for the balance of the City is discharged to the Columbia River. The City has annual program that provides for routine upgrades and catch basin additions as needed. Citywide street sweeping averages eight times per year. The City and cleans catch basins regularly, in compliance with NPDES permits. The City completes annual reports to Ecology on the Stormwater System. Stormwater Rates & Charges. The following monthly rates for the Stormwater System are currently billed to property owners throughout the City using the following general classifications. Between 2002 and 2010 rates were not adjusted. In 2012 rates increased 33.0% and then increased another 13% in 2014. Upon City Council approval, the City anticipates increasing rates upon City Council approval by approximately 12% to be effective January 1, 2015. 17 Page 167 of 224 STORMWATER RATES Customer Class Rate per Month Single Family Residential $4.40 Apartments (per unit for 5 or more) 2.20 Multi -Family Residential (per unit for 1-4 units) 4.40 Undeveloped Parcels 0.00 Vacant Buildings 4.40 Industrial/ Commercial Parking for 0-5 vehicles $4.40 Parking for 6-10 vehicles 8.80 Parking for 11-15 vehicles 13.20 Parking for 16-20 vehicles 17.60 Parking for 21 plus vehicles 22.00 Additional Charges Property runoff to City systems ($1.25 min.) $86.71 /acre State Highway right-of-way 21.71/acre The Irrigation System The Irrigation System 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 system, it now services approximately 6,511 residential customers. At the time of purchase, customers were being charged $32 per month for seven 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 was increased to $26.00 per month and that remains the current rate. Capital Improvement Plan The City annually adopts a six-year Capital Improvement Plan ("CIP', which includes a water and sewer system component. The currently adopted CIP includes the following projects. The City Council approved the CIP on September 8, 2015. (Amounts Expressed in Thousands) Project Type 2016 2017 2018 2019 2020 2021 Water Supply, Treatment, $7,860 $5,875 $2,538 $1,211 $4,650 $8,100 Distribution and Storage Sewer Treatment & Collection 10,628 5,631 5,146 10,686 2,297 10,993 Process Water Reuse Facility 8,284 485 2,000 2,000 - - Stormwater Collection 520 300 250 250 250 250 Irrigation 1,675 2,435 200 100 100 100 TOTAL $28,967 $14,726 $10,134 $14,247 $7,297 $19,443 The CIP is a plan. In the preliminary 2016 Budget, being presented to the City Council, a significant portion of the projects listed in the CIP for 2016 have been deferred. Endangered Species Act In planning future projects, the City evaluates the construction and operation of the facilities to determine if there will be any impact on endangered species through the use of site evaluations, special environmental studies, and preparation of State Environmental Policy Act ("SEPA") checklists or environmental impact statements, as appropriate. Alternatives are developed to minimize or avoid impacts on endangered species. Where federal permits or funding are involved, the City also complies with the Endangered Species Act's "consultation" requirement, which serves to evaluate and address any potential effect on endangered species. Best management practices are employed during routine operation and maintenance activities to minimize impacts on the environment. 18 Page 168 of 224 Historical Operating Results The following table presents the 2010 through 2014 audited revenues and expenditures and amended 2015 budgeted revenues and expenditures of the City's Waterworks Utility. This table has been compiled by the City based on the definitions of Gross Revenue and Operating and Maintenance Expenses contained in the Bond Ordinance and reflected in APPENDIX A - CERTAIN DEFINITIONS. These definitions are required by the Bond Ordinance to be used to calculate Debt Service Coverage, emphasize cash flows in the Waterworks Utility, and differ in certain respects from the full accrual definitions of revenue and expenses under Generally Accepted Accounting Principles that are used to report the results of operations of the Waterworks Utility in the City's Audit. WATERWORKS UTILITY HISTORICAL OPERATING RESULTS (As of December 31) Amended Actual Actual Actual Actual Actual Budget 2010 2011 2012 2013 2014 2015 Operating Revenues Water Salcs(i) $5,596,298 $6,797,470 $6,989,958 $7,087,462 $7,594,091 $7,825,921 Irrigation Sales(i) 753,251 874,036 917,076 954,204 1,105,076 1,126,478 Sewer Sales(i) 5,788,397 5,614,564 5,705,414 5,813,572 5,914,671 6,013,794 Stormwater Sales(i) 401,279 867,801 883,305 972,375 1,054,682 1,188,523 Process Water Reuse Sales(i) 1,723,291 1,492,743 1,942,683 1,453,597 1,997,655 1,995,687 Other Utility Charges(2) 3,871,057 1,907,123 1,711,031 1,935,286 2,347,236 2,313,882 Total Operating Revenues $18,133,573 $17,553,737 $18,149,467 $18,216,496 $20,013,411 $20,464,285 Operating & Maintenance Expenses Salaries & Wages $2,518,691 $2,535,882 $2,461,588 $2,599,431 $2,830,832 $3,386,306 Personnel Benefits 892,651 913,062 952,672 1,114,349 1,330,549 1,503,878 Supplies 854,667 1,092,728 855,626 1,121,916 1,492,845 2,128,811 Services(i) 4,477,102 5,193,430 5,293,094 5,749,161 5,890,538 7,156,098 Total Operating Expenses $8,743,111 $9,735,102 $9,562,980 $10,584,857 $11,544,764 $14,175,093 Operating Income $9,390,462 $7,818,635 $8,586,487 $7,631,639 $8,468,647 $6,289,192 Non -Operating Revenue Interest Income $228,784 $116,848 $39,607 $41,009 $15,685 $10,000 Net Farmland Rental(3) 375,599 498,413 0 0 0 300 Total Non-Oeprating Revenues(4) $604,383 $615,261 $39,607 $41,009 $15,685 $10,300 Net Revenues $9,994,845 $8,433,896 $8,626,094 $7,672,648 $8,484,332 $6,299,492 Other Sources of Funds Special Assessment Repayments $387,867 $283,861 $225,507 $257,366 $123,404 $154,907 Total Other Sources $387,867 $283,861 $225,507 $257,366 $123,404 $154,907 Max Annual Assessment Debt Service $289,613 $212,489 $199,582 $203,764 $202,852 $202,852 Net Revenue Available for Non -Assessment Debt Service $10,093,099 $8,505,267 $8,652,019 $7,726,250 $8,404,884 $6,096,640 Non -Assessment Bond Debt Service(5) $2,309,689 $2,852,381 $2,905,851 $2,771,990 $3,348,068 $2,828,333 Non -Assessment Bond Debt Service Coverage(6) 4.37 2.98 2.98 2.79 2.51 2.16 Note: The above table does not include debt service on junior lien bonds. (1) Excludes revenue raised and used to pay interfund City utility taxes. (2) Includes one-time sources such as connection, meter, capital facility, penalty, etc. fees. (3) Farm assets sold in 2011. (4) Excludes non-cash capital contributions, gains/losses, capital grants, etc. (5) Excludes debt for prepaid maturities. (6) Bond covenant requires coverage ratio of 1.25 times Maximum Annual Debt Service. Source: The City of Pasco 19 Page 169 of 224 Operations for 2015 have progressed primarily as planned. However, several construction projects have been deferred, resulting in a reduction of $6.4 million in the capital outlay budget. One of its largest projects this year is the Wastewater Treatment Plant Clarifier project, which involves, but is not limited to, the installation of two new primary clarifiers, a new primary sludge pumping room, and a new scum pump station. Work is expected to continue into 2016 on this project. CITY TO ADD A SECTION ON RESULTS TO DATE THROUGH 2015 AND ANY EXPECTATIONS. (REMAINDER OF PAGE INTENTIONALLY LEFT BLAND 20 Page 170 of 224 Comparative Statement of Net Position (1) Included in restricted cash and investments in CAFR. For 2014 CAFR, Local Government Investment Pool investments were treated on the face of the financials as investments rather than as cash equivalents. (2) Listed above in current asset section. Source: The City of Pasco 21 Page 171 of 224 As of December 31 ASSETS: 2010 2011 2012 2013 2014 Current assets: Cash and cash equivalents $5,025,157 $2,685,884 $5,726,048 $3,399,384 $1,511,272 Restricted cash and cash equivalents: Customer deposits 551,093 568,054 561,657 561,096 447,169(1) Unspent bond proceeds 3,000,000 2,670,000 1,005,365 5,614,545 4,184,141 (1) Revenue bond covenants 1,304,142 2,657,140 3,316;293 2,986,517 4,446,513 (1) Investments 2,000,000 2,000,000 2,000,000 2,000,000 4,525,411 Receivables (net of allowances): Customers 1,056,116 1,091,837 881,264 787,050 883,214 Grants 108,588 87,030 40,418 402,186 81,943 Special assessments - current portion - - - - 299,749 Inventory 385,205 377,455 317,348 234,694 293,801 Total current assets 13,430,301 12,137,400 13,848,393 15,985,472 16,673,213 Noncurrent assets: Restricted cash equivalents 410,000 410,000 410,000 3,188,801 1,763,032 (1) Special assessments 1,010,193 699,201 608,241 397,549 - (2) Land 6,598,676 6,598,676 2,494,425 2,520,925 2,520,925 Construction work in progress 12,871,898 13,899,412 15,512,175 7,409,247 5,738,643 Capital assets net of accumulated depreciation: Building and structures 36,513,178 34,119,516 31,975,044 37,434,680 35,963,444 Machinery and equipment 1,115,694 996,684 1,040,048 7,340,854 6,690,748 Infrastructure 107,802,974 112,295,371 114,357,869 114,456,107 117,088,203 Total noncurrent assets 166,322,613 169,018,860 166,397,802 172,748,163 169,764,995 TOTAL ASSETS 179,752,914 181,156,260 180,246,195 188,733,635 186,438,208 LIABILITIES: Current liabilities: Accounts payable 692,749 799,680 618,386 1,111,284 299,577 Due to other governments 77,025 126 3,173 - 43,077 Other liabilities 32,103 - - - 147,505 Customer deposits payable 551,093 568,054 561,657 561,096 447,169 Accrued interest payable 380,385 696,800 639,468 722,505 275,099 Compensated absences - current portion 184,790 120,149 55,378 360,641 162,830 Loans due other governments - current position 1,530,552 1,575,357 1,621,743 1,669,767 1,719,487 Revenue bonds - current portion 2,135,000 1,980,000 2,035,000 1,905,000 2,045,000 Total current liabilities 5,583,697 5,740,166 5,534;805 6,330,293 5,139,744 Noncurrent liabilities: Compensated absences 144,162 264,491 384,639 134,203 69,784 Loans due other governments 13,530,951 11,955,593 10,333;849 8,664,104 6,944,624 Revenue bonds payable 26,990,000 24,260,000 22,225,000 28,450,000 25,985,000 Total noncurrent liabilities 40,665,113 36,480,084 32,943,488 37,248,307 32,999,408 TOTAL LIABILITIES 46,248,810 42,220,250 38,478,293 43,578,600 38,139,152 NET POSITION Net investment in capital assets 123,715,917 128,138,709 129,163,969 128,472,942 135,483,147 Restricted - - - - 10,840,855 Unrestricted 9,788,187 10,797,301 12,603,933 16,682,093 1,975,054 Total Net Position 133,504,104 138,936,010 141,767,902 145,155,035 148,299,056 Adjustment to reflect the consolidation of internal service fund activity related to proprietary funds 2,666,455 2,962,296 3,271,829 3,623,894 3,904,347 TOTAL NET POSITION $136,170,559 $141,898,306 $145,039,731 $148,778,929 $152,203,403 (1) Included in restricted cash and investments in CAFR. For 2014 CAFR, Local Government Investment Pool investments were treated on the face of the financials as investments rather than as cash equivalents. (2) Listed above in current asset section. Source: The City of Pasco 21 Page 171 of 224 CITY PROFILE The City, located in southeastern Washington, encompasses approximately 33.6 square miles and has a 2015 estimated population of 68,240. 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 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 water, sewer and stormwater utility and a cemetery. The City owns and operates a golf course. City Council Following are the current members of the City Council and their term expiration dates. Members Position Matt Watkins Rebecca Francik Robert Hoffmann Michael Garrison Saul Martinez Tom Larsen Al Yenney * Re-elected in November, 2015 Key Administrative Staff Mayor Mayor Pro -Tem Council Member Council Member Council Member Council Member Council Member Term Expires December 31, 2015* December 31, 2015* December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2015* Dave Zabell, City Manager, assumed his position with the City in August 2014. Mr. Zabell has been in local government for over 33 years, and was formerly the City Manager for the City of Fife, Washington, a position he held since 2011. Prior to that he was Assistant City Manager for Yakima, Washington, from 2005-2011 and Public Works Director for the City of Bothell, Washington, from 2000-2005. Mr. Zabell also worked for the City of Marysville, Washington, from 1985 - 2000, serving in positions including Engineer, Public Works Director and City Administrator for the last seven years. Mr. Zabell has a Master of Public Administration degree from the University of Washington and a Bachelor of Science degree in Public Administration from Upper Iowa University. Stan Strebel, De iudy City Manager, assumed his current responsibilities in July 2009. Prior to then, he served as City's Director of Administrative and Community Services from 1999. Mr. Strebel has also served as City Manager of the City of Femdale, Washington for seven years and as City Manager of the City of Bisbee, Arizona for four years. He has a total of 35 years' experience in local government administration. He holds a Bachelor of Arts Degree in Urban Planning from the University of Washington and an MPA from Brigham Young University. Rick Tenvay, Administrative and Community Services Director, began serving as the Director of the City's Department of Administrative and Community Services Department in July 2009. The department consists of five service divisions: Administration, Facilities, Finance, Information Systems, and Recreation. Prior to coming to the City, Mr. Terway served as Parks, Recreation and Forestry Manager for the City of Fergus Falls, Minnesota for three years and as Public Service Director for the City of Vadnais Heights, Minnesota. His experience also includes more than 12 years working for Washington State Parks. Mr. Terway holds a Bachelor of Science in Applied Management from National American University and an Associate of Applied Science in Natural Resources from the University of Minnesota. Eva Lindgren, Deputy Director Administrative and Community Services De�iartment, served for a brief period as the City's Interim Finance Manager beginning in the fall of 2014. She was appointed to her current position in early 2015, where she has primary responsibility to oversee the finance operations of the City. Ms. Lindgren is a Certified Public Accountant, licensed in both Washington and Alaska. She has over two decades of experience auditing and working for local governments. She was a Staff Accountant for four years, the Accounting Manager for the City of Ketchikan, Alaska for nine years; the Controller for the North Slope Borough, Alaska for three years; and the Finance Manager for the City of Chehalis, Washington for six years. 22 Page 172 of 224 Labor Relations The City currently (as of October 31, 2015) employs 358 employees (316 full time equivalents, not including 52 seasonal employees) people including part-time workers. There are 201 employees represented by 5 bargaining units as follows: No. of Current Contract Bargaining Unit Employees Expiration Date International Union of Operating Engineers, Local No. 280 International Association of Firefighters Pasco Police Officers Assoc. "Uniformed" Employee Pasco Police Officers Assoc. "Non -uniformed" Employee Pasco Code Enforcement Officer's and Permit Technicians 67 December 31, 2015 58 December 31, 2015 62 December 31, 2015 8 December 31, 2016 6 December 31, 2015 201 The City considers labor relations with its bargaining units to be good. There have been no recent strikes or major labor relations problems. Negotiations are currently underway with unions with expiring contracts. It is expected that the contracts will be settled in early 2016. Pensions Substantially all of the City employees are enrolled in the State Public Employees Retirement System ("PERS' or the Law Enforcement Officers and Fire Fighters Retirement System ("LEOFF'�. PERS Plans 1 and 2 and LEOFF are defined benefit plans and PERS Plan 3 is both a defined benefit plan (employer share) and defined contribution plan (employee share). These plans are administered by the State. Contributions by both employees and employers are based on gross wages. Those PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. PERS participants who joined on or after October 1, 1977, are Plan 2 members, unless they exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002, have the irrevocable option of choosing membership in PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977, are Plan 2 members. State law requires systematic actuarial based funding to finance the retirement plans. Actuarial calculations to determine employer and employee contributions are prepared by the Office of the State Actuary ("OSA', a nonpartisan legislative agency charged with advising the Legislature and Governor on pension benefits and funding policy. To calculate employer and employee contribution rates necessary to pre -fund the plans' benefits, OSA uses actuarial cost and asset valuation methods selected by the Legislature as well as economic and demographic assumptions. The Legislature adopted the following economic assumptions for contribution rates beginning July 1, 2013: (1) 7.9% (7.8% as of July 1, 2014) rate of investment return; (7.5% for LEOFF Plan 2); (2) general salary increases of 3.75%; (3) 3.0% rate of Consumer Price Index increase; and (4) 0.95% growth in membership (1.25% for LEOFF). The long-term investment return assumption is used as the discount rate for determining the liabilities for a plan. The 10 -year (2005-2014) annualized return on the investment of the retirement funds was 8.35%. Plan Funding Contribution Rates and Amounts. All State -administered retirement plans are funded by a combination of funding sources: (1) contributions from the State for certain plans; (2) contributions from employers (including the State as employer and the City and other governmental employers); (3) contributions from employees; and (4) investment returns. Retirement funds are invested by the Washington State Investment Board, a 15 -member board created by the Legislature in 1981. The City's total contribution for the year ended December 31, 2014, was $1,546,052, representing 7.2 percent of covered payroll. The City contributed $807,853 in 2013 and $996,260 in 2014 to PERS, and $573,271 in 2013 and $549,792 in 2014 to LEOFF for all of the City's employees that are covered under PERS and LEOFF. Under State statute, contribution rates are adopted by the Pension Funding Council ("PFC") (and, for LEOFF 2, by the LEOFF 2 Board) in even -numbered years for the next ensuing State biennium. The rate -setting process begins with an actuarial valuation by the OSA, which makes non-binding recommendations to the Select Committee on Pension Policy, which then recommends contribution rates to the PFC and the LEOFF 2 Board. No later than the end of July in even -numbered years, the PFC and the LEOFF 2 Board adopts contribution rates, which are subject to revision by the Legislature. The following table outlines the current contribution rates of employers and employees under PERS and LEOFF. 23 Page 173 of 224 Contribution Rates for the 2015-17 Biennium Expressed as a Percentage of Covered Payroll Employer(') Employee PERS Plan 1 11.18% 6.00% PERS Plan 2 11.18 6.12 PERS Plan 3 11.18 Variable (Z) LEOFF Plan 1 0.18 0.00 LEOFF Plan 2 5.23 8.41(3) (1) Includes a 0.18% DRS administration expense fee. (2) Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. (3) The State also contributes 3.36% to this plan. Source: Department of Retirement Systems. While the City's prior contributions represent its full current liability under the retirement systems, any unfunded pension benefit obligations could be reflected in future years as higher contribution rates. It is expected that the contribution rates for employees and employers in the PERS Plans 2 and 3 will increase in the coming years. The OSA website (which is not incorporated into this Official Statement by reference) includes information regarding the values, funding levels and investments of these retirement plans. During the years 2001 through 2010 the rates adopted by the Legislature were lower than those that would have been required to produce actuarially required contributions to PERS Plan 1, a closed plan with a large proportion of the retirees. The State Actuary's actuarial valuation for PERS Plan 1 as of June 30, 2014 showed a 61% funded ratio (unfunded liability of $4.965 billion), compared to a 63% funded ratio as of June 30, 2013, while PERS Plans 2 and 3 and LEOFF Plans 1 and 2 had valuation assets that exceed their accrued liability by $214 million (a 101% funded ratio), $1.2 billion (a 127% funded ratio) and $1.0 billion (a 113% funded ratio), respectively. The decrease in the funded status and increase in the unfunded accrued actuarial liability primarily reflect changed demographic assumptions, including projected improvements in mortality rates, and the statutory requirement that the assumed rate of return be reduced to 7.8% from 7.9%. OSA uses the Projected Unit Credit ("PUC") cost method and the Actuarial Value of Assets ("AVA'� to report a plan's funded status. PUC is one of several acceptable measures of a plan's funded status under current GASB rules. The PUC cost method projects future benefits under the plan, using salary growth and other assumptions and applies the service that has been earned as of the valuation date to determine accrued liabilities. The AVA is calculated using a methodology which smooths the effect of short-term volatility in the Market Value of Assets by deferring a portion of annual investment gains or losses over a period of up to eight years. PERS Plans 2 and 3 are accounted for in the same pension trust fund and may legally be used to pay the defined benefits of any PERS Plan 2 or 3 members. Assets for one plan may not be used to fund benefits for another plan: however, all employers in PERS are required to make contributions at a rate (percentage of payroll) determined by the OSA every two years for the sole purpose of amortizing the PERS Plan 1 unfunded actuarial accrued liability within a rolling 10 -year period. The Legislature has established certain maximum contribution rates that began in 2009 and will continue until 2015 and certain minimum contribution rates that are to became effective in 2015 and remain in effect until the actuarial value of assets in PERS Plan 1 equals 100% of the actuarial accrued liability of PERS Plan 1. These rates are subject to change by future legislation enacted by the State Legislature to address future changes in actuarial and economic assumptions and investment performance. In 2011, the Legislature ended the future automatic annual increase, which is a fixed dollar amount multiplied by the member's total years of service, for most retirees in the PERS Plan 1 plan, which is forecast to reduce the unfunded accrued actuarial liability in PERS Plan 1. The State Supreme Court recently upheld the constitutionality of this legislation. Other Retirement Systems Firemen s Pension Fund. The City is the administrator of a single employer defined benefit pension plan, the Firemen's Pension Fund (the "Firemen's Pension Fund Plan"). The Firemen's Pension Fund Plan is limited to firefighters and beneficiaries employed before March 1, 1970, and as of March 1, 1970, was closed to new entrants. Firefighters hired before March 1, 1970, at retirement receive the greater of the pension benefit provided under the Firemen's Pension Fund Plan or under LEOFF. Any excess benefit over the LEOFF benefit is provided by the Firemen's Pension Fund Plan. As of December 31, 2014, there were a total of 11 individuals covered by the Firemen's Pension Fund Plan, and 5 of the 11 are widows. All future obligations of the Firemen's Pension Fund Plan were assumed by LEOFF. 24 Page 174 of 224 For additional information, see Appendix B—"2014 AUDITED FINANCIAL STATEMENTS—Note 8. Employee Retirement Systems and Pension Plans." The information in this section has been obtained from the City's financial statements and information on the State Actuary's and State Department of Retirement System's websites. Other Post -Employment Benefits LEOFF 1. In accordance with chapter 41.26 RCW, the City provides continuation of medical insurance coverage to employees that retire under the LEOFF retirement system, which includes all police officers and fire fighters who were hired prior to October 1, 1977. Medical coverage continues for the life of the retiree. The plan is a closed, single employer defined benefit healthcare plan administered by the City. As of December 31, 2014, there were 32 retirees and two active employees in this plan. The City's annual other postemployment benefit ("OPEB'� cost is calculated based on the annual required contribution ("ARC'D, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The tables in Note 5(F) of Appendix C show the components of the City's annual OPEB cost for 2014, the amount actually contributed to the plan and changes in the City's net OPEB obligation. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the years 2012 through 2014 were as follows: Fiscal Year Annual % of Annual Net Ended Cost OPEB Contributed OPEB Obligation 12/31/2014 $1,091,159 55% $2,523,460 12/31/2013 800,733 64 1,981,585 12/31/2012 948,878 45 1,695,149 The City currently funds post -employment healthcare benefits on a pay-as-you-go basis. The City finances the plan by purchasing medical insurance and self -funding vision and medical benefits not covered by the insurance. Firemen's Pension. As required by chapter 41.26 RCW, the City provides lifetime medical care for members of the Law Enforcement Officers and Firefighters (LEOFF) retirement system hired before October 1, 1977 under a single employer, defined benefit healthcare plan administered by the City. The members' necessary hospital, medical, and nursing care expenses not payable by worker's compensation, social security, insurance provided by another employer, or other pension plan, or any other similar source are covered. Most medical coverage for eligible retirees is provided by the City's employee medical insurance program. Under authorization of the LEOFF Disability Board, direct payment is made for other retiree medical expenses not covered by standard medical plan benefit provisions. Members of the Fire Pension plan purchase medical insurance through the City's medical insurance program. 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 for any requirements in excess of amounts previously set aside in the Fire Pension OPEB Trust Fund. The City of Pasco has a total of 6 LEOFF plan 1 members that are also members of the Old Firemen's Pension Plan and are fully funded through the Old Fire Pension Fund. All are retired. Based on the 2014 in-house evaluation, the Actuarial Accrued Liability for the Fire Pension OPEB Trust Fund is $1,988,453. As of December 31, 2014, the fund had assets of $2,326,321. The City's OPEB cost, the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for the years ending December 31 are shown on the following schedule: Fiscal Year Annual % of Annual Net Ended Cost OPEB Contributed OPEB Obligation 12/31/2014 $0 n/a $0 12/31/2013 0 n/a 0 12/31/2012 0 n/a 0 25 Page 175 of 224 For additional information, see Appendix B—"2014 AUDITED FINANCIAL STATEMENTS—Note 9. Other Post -Employment Benefits." Risk Management The City is a member of the Washington Cities Insurance Authority ("WCIA"). Nine cities originally formed WCIA in 1981 for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self- insuring, and/or jointly contracting for risk management services. WCIA currently has over 175 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self-insured layer, and $16 million per occurrence in the re -insured excess layer. The excess layer is insured by the purchase of reinsurance and insurance. Total limits are $20 million per occurrence, subject to aggregate sub limits in the excess layers. The WCIA Board of Directors determines the limits and terms of coverage annually. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. These revenues directly offset portions of the membership's annual assessment. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. Accounting and Budgeting Process Basis of Accounting: The accounting and reporting policies of the City conform to the Budgeting, Accounting and Reporting System ("BARS") as prescribed by the State Auditor. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, as appropriate. The City's resources are allocated to and accounted for in individual funds depending on their intended purpose. The Budget Process: Washington law, chapter 35A.33 RCW, prescribes the method and schedule for annual budgeting for the City. Annual appropriated budgets are adopted at the fund level. Local improvement district debt service and certain custodial agency funds, however, are not budgeted. A budget increase or decrease to a fund must be authorized by the City Council, while appropriation transfers within a fund may be authorized by the City Manager. All budgets are controlled on an organizational basis. The budgets constitute the legal authority for expenditures at that level. Annual appropriations for all funds lapse at the fiscal period end. Auditing of City Finances The City's financial statements are prepared in conformity with generally accepted accounting principles ("GAAP") as applied to governmental units, and are regulated by the Washington State Auditor's Office, division of Audit. The Government Accounting Standards Board ("GASB") is the accepted standard setting body for establishing governmental accounting and financial reporting principles. 26 Page 176 of 224 Accounting systems and budgetary controls are prescribed by the Office of the State Auditor ("SAO") in accordance with RCW 43.09.200, RCW 43.09.230 and GAAP. State statutes require audits for cities to be conducted by the SAO. The City complies with the systems and controls prescribed by the SAO and establishes procedures and records which reasonably assure safeguarding of assets and the reliability of financial reporting. The SAO is required to examine the affairs of cities. The City is audited annually. The examination must include, among other things, the financial condition and resources of the City, whether the laws and constitution of the State are being complied with, and the methods and accuracy of the accounts and reports of the City. The SAO reviewed the City's financial statements and accounting practices for fiscal year 2014, and issued an unqualified opinion on the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information. The City's audited financial statements for the year ended December 31, 2014 are attached herein as Appendix B. Authorized Investments Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess of current needs to the following authorized investments: United States bonds; United States certificates of indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or warrants of a local improvement district which are within the protection of the local improvement guaranty fund law; and any other investment authorized by law for any other taxing district or the State Treasurer. Under chapter 43.84 RCW, the State Treasurer may invest in non-negotiable certificates of deposit in designated qualified public depositories; in obligations of the U.S. government, its agencies and wholly owned corporations; in bankers' acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national mortgage association and other government corporations subject to statutory provisions and may enter into repurchase agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local improvement district are also eligible investments (RCW 35.39.030). Money available for investment may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio. All income derived from such investment may be either apportioned to and used by the various participating funds or for the benefit of the general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances, resolutions or bond covenants may lawfully prescribe. Local Government Investment Pool. The State Treasurer's Office administers the Washington State Local Government Investment Pool (the "LGIP', which invests money on behalf of more than 450 cities, counties and special taxing districts. In its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for the prudent investment of public funds. These are, in priority order, (i) the safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to meet all cash flow demands. The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants increased safety of principal and the ability to achieve a higher investment yield than would otherwise be available to them. The pool is restricted to investments with maturities of one year or less, and the average life typically is less than 90 days. Investments permitted under the pool's guidelines include U.S.. government and agency securities, bankers' acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified Washington State depositories. The City may withdraw its funds in whole or in part on less than 24 hours' notice. Authori.Zed Investments for Bond Proceed. In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less than four years; municipal securities rated in one of the four highest categories; and money market funds consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money market funds with portfolios of securities otherwise authorized by law for investment by local governments (RCW 39.59.030). 27 Page 177 of 224 City Investments. As of September 30, 2015, the City's investments at market value totaled $54,072,596. The concentration of credit risk as a percentage of total investments is as follows: Issuer U.S. Government Securities Local Govt. Investment Pool % of Total Fair Value 27.23% $14,724,314 72.77% 39,348,282 100.00% $54,072,596 GENERAL AND ECONOMIC INFORMATION The City is located in southeastern Washington in Franklin 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 2015 estimated population of 68,150, the City is the largest of four incorporated communities in Franklin County. Historical populations for the City and Franklin County are as follows: Year City of Pasco Franklin County 2015 68,240 87,150 2014 67,700 86,600 2013 65,600 84,800 2012 62,670 82,500 2011 61,000 80,500 Source: Washington State Office of Financial Management Largest Employers The table below shows a list of the top ten employers ranked by number of employees. TRI -CITIES AREA MAJOR EMPLOYERS Employer Battelle/PNNL Pasco School District Kadlec Medical Center ConAgra (Lamb Weston) Bechtel National Kennewick School District Richland School District Mission Support Alliance Washington River Protection Tyson Foods Source: City of Pasco Service/Product Employees Research and Development 4,219 Education 2,717 Health Services 2,644 Agriculture Products 2,498 Government 2,395 Education 1,922 Education 1,600 Government 1,512 Government 1,490 Agriculture Products 1,300 a:3 Page 178 of 224 Economic Data TAXABLE RETAIL SALES County City of Franklin Year Following are additional economic indicators for the City, the County and the Tri -Cities Area. County 2015(1) $258,668,004 CITY OF PASCO BUILDING PERMITS 2014 1,016,794,531 1,196,017,085 Residential0> Commercial/Industrial 1,110,256,894 Total Year Permits Value(2) Permits Value(2) Permits Value(2) 2015(3) 1,353 $61,394 317 $78,715 1,670 $140,109 2014 1,525 73,319 353 90,492 1,878 163,811 2013 1,705 73,701 408 51,035 2,113 124,736 2012 1,507 85,314 382 56,677 1,889 141,991 2011 1,817 113,320 317 20,110 2,134 133,430 (1) Includes Single Family, Two Family, Three or more families, accessory structures and alterations. (2) Expressed in thousands. (3) As of September 30, 2015. Source: City of Pasco Building Department (1) Through the first quarter of 2015. Taxable retail sales through the first quarter of 2014 for the City was $222,495,091 and $264,224,750 for Franklin County. Source: Wlashington State Department of Revenue PERSONAL AND PER CAPITA INCOME TAXABLE RETAIL SALES County City of Franklin Year Pasco County 2015(1) $258,668,004 $298,816,678 2014 1,016,794,531 1,196,017,085 2013 933,301,675 1,110,256,894 2012 861,063,279 1,037,096,265 2011 83 9,174,157 1,007,226,336 (1) Through the first quarter of 2015. Taxable retail sales through the first quarter of 2014 for the City was $222,495,091 and $264,224,750 for Franklin County. Source: Wlashington State Department of Revenue PERSONAL AND PER CAPITA INCOME (1) Most recent data available. Source: U.S. Department of Commerce, Bureau of Economic Analysis State of WashinLyton Total Personal Franklin County Personal Income Total Personal Per Capita Year Income ($000's) Personal Income 2013(1) $2,645,389 $30,534 2012 2,587,381 30,164 2011 2,569,484 30,904 2010 2,331,604 29,463 2009 2,136,678 28,689 (1) Most recent data available. Source: U.S. Department of Commerce, Bureau of Economic Analysis State of WashinLyton Total Personal Per Capita Income ($000's) Personal Income $332,654,857 $47,717 324,458,394 47,055 303,999,485 44,565 286,862,463 42,547 280,943,954 42,137 ESTIMATED MEDIAN HOUSEHOLD INCOME (1) Year Franklin County Washington State 2014(1) $58,188 $58,686 2013(2) 57,196 57,544 2012 56,221 56,444 2011 53,644 55,500 2010 53,355 54,888 (1) The Revenue Forecast Council's November 2014 forecast of the state personal income is used in the projection of 2013 median household income. (2) In addition to the state personal income data published by BEA, the payroll data compiled by the state Employment Security Department are used in the Preliminary estimates of 2010 median household income. Source: lVashington State Department of Revenue 29 Page 179 of 224 RESIDENT CIVILIAN LABOR FORCE AND EMPLOYMENT AND CIVILIAN NON -AGRICULTURE WAGE AND SALARY EMPLOYMENT(t) (1) Detail may not add to indicated 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 pay period including the 1211, of the month by place of work. (2) Preliminary report as of September 2015. (3) North American Industry Classification System. Source: Washington State Employment Security Depattment, TAX MATTERS Tax Exemption Exclusion From Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming compliance by the City with applicable requirements of the Internal Revenue Code of 1986, as amended (the "Code'), that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds will be excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals. Continuing Requirements. The City is required to comply with certain requirements of the Code after the date of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bonds in higher yielding investments in certain circumstances, and the requirement to comply with the arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Bond Counsel has not undertaken and does not undertake to monitor the City's compliance with such requirements. 30 Page 180 of 224 Annual Average 2015(2) 2014 2013 2012 2011 Kennewick -Richland -Pasco MSA Labor Force 128,645 128,280 128,415 131,192 131,470 Total Employment 121,654 118,084 116,691 118.890 120,500 Total Unemployment 6,991 10,195 11,724 12,302 10,970 Unemployment Rate 5.4% 7.9% 9.1% 9.4% 8.3% Franklin County Labor Force 39,566 38,266 38,256 38,996 38,340 Total Employment 37,460 34,997 34,623 35,216 34,880 Total Unemployment 2,106 3,269 3,633 3,780 3,460 Unemployment Rate 5.3% 8.5% 9.5% 9.7% 9.0% NAICS INDUSTRYP Kennewick -Richland -Pasco MSA Total Nonfarm 107,400 102,900 101,700 101,300 104,000 Total Private 89,200 84,300 83,400 83,100 85,900 Goods Producing 15,800 14,000 13,600 13,400 13,600 Mining, Logging & Construction 7,000 6,300 6,200 6,000 6,500 Manufacturing 8,800 7,800 7,400 7,400 7,100 Service Providing 91,600 88,800 88,100 87,900 90,300 Trade, Transportation & Utilities 19,100 18,100 17,500 17,100 16,700 Financial Activities 3,700 4,200 4,200 3,900 3,700 Professional & Business Services 20,700 20,700 20,800 21,700 24,900 Educational & Health Services 15,000 14,400 13,700 13,400 13,300 Leisure & Hospitality 10,500 9,800 9,600 9,500 9,400 Government 18,200 18,600 18,300 18,200 18,100 Workers in Labor/Management Disputes 0 0 0 0 0 (1) Detail may not add to indicated 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 pay period including the 1211, of the month by place of work. (2) Preliminary report as of September 2015. (3) North American Industry Classification System. Source: Washington State Employment Security Depattment, TAX MATTERS Tax Exemption Exclusion From Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming compliance by the City with applicable requirements of the Internal Revenue Code of 1986, as amended (the "Code'), that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds will be excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals. Continuing Requirements. The City is required to comply with certain requirements of the Code after the date of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bonds in higher yielding investments in certain circumstances, and the requirement to comply with the arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Bond Counsel has not undertaken and does not undertake to monitor the City's compliance with such requirements. 30 Page 180 of 224 Corporate Alternative Minimum Tax. While interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, under Section 55 of the Code, tax exempt interest, including interest on the Bonds, received by corporations is taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations (as defined for federal income tax purposes). Under the Code, alternative minimum taxable income of a corporation will be increased by 75% 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 Cmporations. Under Section 1375 of the Code, certain excess net passive investment income, including interest on the Bonds, received by an S corporation (a corporation treated as a partnership for most federal tax purposes) that has Subchapter C earnings and profits at the close of the taxable year may be subject to federal income taxation at the highest rate applicable to corporations if more than 25% of the gross receipts of such S corporation is passive investment income. Foreign Branch Profits Tax. Interest on the Bonds may be subject to the foreign branch profits tax imposed by Section 884 of the Code when the Bonds are owned by, and effectively connected with a trade or business of, a United States branch of a foreign corporation. Possible Consequences of Tax Compliance Audit. The Internal Revenue Service (the "IRS's has established a general audit program to determine whether issuers of tax-exempt obligations, such as the Bonds, are in compliance with requirements of the Code that must be satisfied in order for interest on those obligations to be, and continue to be, excluded from gross income for federal income tax purposes. Bond Counsel cannot predict whether the IRS would commence an audit of the Bonds. Depending on all the facts and circumstances and the type of audit involved, it is possible that commencement of an audit of the Bonds could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of its ultimate outcome. Certain Other Federal Tax Consequences Bonds Not 'Qualified Tax-Exe)Vt Obligations"for Financial Institutions. Section 265 of the Code provides that 100% of any interest expense incurred by banks and other financial institutions for interest 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 private activity bonds, are issued by a governmental unit that, together with all entities subordinate to it, does not reasonably anticipate issuing more than $10,000,000 of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) in the 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 more than $10,000,000 of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) during the current calendar year and has not designated the Bonds as "qualified tax-exempt obligations" for purposes of the 80% financial institution interest expense deduction. Therefore, no interest expense of a financial institution allocable to the Bonds is deductible for federal income tax purposes. [Original Issue Premium. The Bonds maturing in the years 20_ through and including 20_ have been sold at prices reflecting original issue premium ("Premium Bonds"). An amount equal to the excess of the purchase price of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. A purchaser of a Premium Bond must amortize any premium over such Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity. The amount of amortizable premium allocable to an interest accrual period for a Premium Bond will offset a like amount of qualified stated interest on such Premium Bond allocable to that accrual period, and may affect the calculation of alternative minimum tax liability described above. 31 Page 181 of 224 As premium is amortized, the purchaser's basis in such Premium Bond is reduced by a corresponding amount, resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser's basis is reduced, no federal income tax deduction is allowed. Purchasers of Premium Bonds, whether at the time of initial issuance or subsequent thereto, should consult with their own tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Premium Bonds.] Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies. Under Section 832 of the Code, interest on the Bonds received by property and casualty insurance companies will reduce tax deductions for loss reserves otherwise available to such companies by an amount equal to 15 percent of tax exempt interest received during the taxable year. Effect on Certain Social Security and Retirement Benefits. Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take receipts or accruals of interest on the Bonds into account in determining gross income. Otber Possible Federal Tax Consequences. Receipt of interest on the Bonds may have other federal tax consequences as to which prospective purchasers of the Bonds may wish to consult their own tax advisors. Potential Future Federal Tax Law Changes. From time to time, there are legislative proposals in Congress which, if enacted, could adversely affect the tax treatment market value or marketability of the Bonds. It cannot be predicted whether future legislation may be proposed or enacted that would affect the federal tax treatment of interest received on the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors regarding any proposed or pending legislation that would change the federal tax treatment of interest on the Bonds. Preservation of Tax Exemption The City has covenanted in the Bond Ordinance that it will take all actions necessary to prevent interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross income for federal income tax purposes. RATING Standard & Poor's Rating Services has assigned a rating of "_" to the Bonds. The rating was applied for by the City and certain information was supplied by the City to the rating agency to be considered in evaluating the Bonds. The rating reflects only the view of the rating agency and an explanation of the significance of the rating may be obtained from the rating agency. There is no assurance that the rating will be retained for any given period of time or that the rating will not be revised downward or withdrawn entirely by the rating agency if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of the rating would be likely to have an adverse effect on the market price of the Bonds. CONTINUING DISCLOSURE Basic Undertaking to Provide Annual Financial Information and Notice of Listed Events. To meet the requirements of the 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 general described below ("annual financial information's and (b) timely notice (not in excess of 10 business days after the occurrence of the event) of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material 32 Page 182 of 224 notices or determinations with respect to the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) Bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined in Rule 15c2-12; (13) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. Type of Annual Financial Information Undertaken to be Provided. 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, 2014. 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 annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. Termination of Undertaking. The City's obligations under the Undertaking will terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under the Undertaking will terminate if those provisions of the Rule which require the City to comply with the Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws delivered to the City, and the City provides timely notice of such termination to the MSRB. Remedy for Failure to CoVywith Undertaking. As soon as practicable after the City learns of any failure to comply with the Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with the Undertaking shall constitute a default in respect of the Bonds. The sole remedy of any holder of a Bond shall be to take such actions as that holder deems necessary, including seeking an order of specific performance from an appropriate court, to compel the City or other obligated person to comply with the Undertaking. Prior Compliance with Continuing Disclosure Undertakings. The City previously entered into undertakings under the Rule with respect to certain of its outstanding bonds. In October of 2013, the City discovered that it failed to (1) submit event notices with respect to downgrades to the insured ratings on its Unlimited Tax General Obligation Bonds, 1999, Unlimited Tax General Obligation Refunding Bonds, 2002, and Water and Sewer Revenue Bonds, 2009, and (2) timely file certain financial information as required by undertakings entered into in connection with certain outstanding bonds. The City filed with EMMA event notices with respect to these items on October 30, 2013. The City has otherwise complied in all material respects with the provisions of its various continuing disclosure undertakings, and has taken affirmative action to ensure full compliance with the undertakings by assigning appropriate staff to the tasks and enrolling in the MSRB's e-mail reminder system. 33 Page 183 of 224 CERTAIN INVESTMENT CONSIDERATIONS Limitations on Remedies. Any remedies available to the owners of the Bonds are in many respects dependent upon judicial actions, which are in turn often subject to discretion and delay and could be both expensive and time consuming to obtain. If the City fails to comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Bonds. In addition to the limitations on remedies contained in State law, the rights and obligations under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws relating to or affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. The legal opinion of Bond Counsel regarding the validity of the Bonds will be qualified by reference to bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and other similar laws affecting the rights of creditors generally, and by general principles of equity. Bankruptcy. A municipality, such as the City, must be specifically authorized under State law in order to seek relief under Chapter 9 of the U.S. Bankruptcy Code (the `Bankruptcy Code"). Chapter 39.64 RCW, entitled the "Taxing Relief Bankruptcy Act," appears to permit any "taxing district" (defined to include any municipality or political subdivision, including cities) to voluntarily petition for relief under the Bankruptcy Code. A creditor cannot bring an involuntarily bankruptcy proceeding against a municipality, including cities. Under Chapter 9, a federal bankruptcy court may not appoint a receiver for a municipality or order the dissolution or liquidation of the municipality. If a municipality filed for bankruptcy, the bankruptcy court would have some discretion with respect to how to treat past and future obligations of such municipality regarding priority of payment to creditors under a plan for adjustment of debt under Chapter 9 of the Bankruptcy Code. INITIATIVE AND REFERENDUM General. Under the State constitution, the voters of the State have the ability to initiate legislation and to modify existing statutes through the powers of initiative and referendum. Initiatives and referenda are submitted to the voters upon receipt of a petition signed by at least eight percent (initiatives) and four percent (referenda) of the number of voters registered and voting for the office of Governor at the preceding regular gubernatorial election. Any law approved through the power of initiative 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, but thereafter is subject to amendment or repeal by the Legislature in the same manner as other laws. Future Initiatives. Initiative petitions affecting tax collections and levy rates (not including the taxes pledged to the repayment of the Bonds) and other matters may be filed in the future. The City cannot predict whether any such initiatives will qualify to be submitted to the voters or, if submitted, will be approved. Likewise, the City cannot predict what actions the Legislature might take, if any, regarding future initiatives approved by voters. LEGAL AND UNDERWRITING Approval of Counsel Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the approving legal opinion of Bond Counsel. The form of the opinion of Bond Counsel with respect to the Bonds is attached 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 the Bonds. Financial Advisor Northwest Municipal Advisors, Bellevue, Washington, serves as financial advisor to the City in conjunction with the issuance of the Bonds (the "Financial Advisor"). The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in this Official Statement or any other related information available to 34 Page 184 of 224 the City with respect to the accuracy and completeness of disclosure of such information, and no guaranty, warranty or other representation is made by the Financial Advisor respecting the accuracy and completeness of this Official Statement or any other matter related to this Official Statement. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, marketing, trading or distributing municipal securities. Litigation There is no litigation pending or threatened questioning the validity of the Bonds nor the power and authority of the City to issue the Bonds. On February 10, 2015, after a confrontation, three Pasco Police Officers fatally shot Antonio Zambrano-Montes. An investigation of the incident was conducted by the Tri -Cities Special Investigations Unit, the results of which are under review by the Franklin County Prosecutor. The City has been threatened with at least one wrongful death lawsuit, and one administrative claim of $25 million was tendered to the City shortly after the incident but later withdrawn. The City is covered for its liability losses up to a maximum of $20 million per occurrence by the Washington Cities Insurance Authority (see "Risk Management'). The City cannot predict whether future claims may be asserted against the City arising out of this incident or the outcome of any future settlement negotiations or judicial proceedings to resolve any such claims. However, the City does not anticipate that any such proceedings would materially affect the City's ability to meet debt service requirements on the Bonds. Conflicts of Interest All or a portion of the fees of the Underwriter, Financial Advisor and Bond Counsel are contingent upon the issuance and sale of the Bonds. In addition, Bond Counsel from time to time serves as counsel to the Underwriter with respect to bonds issued by issuers other than the City. None of the Council members or other officers of the City have any conflict of interest in the issuance of the Bonds that is prohibited by applicable law. Underwriting The Bonds are being purchased by the Underwriter. The purchase contract provides that the Underwriter will purchase all of the Bonds, if any are purchased, at a price of percent of the par value of the Bonds. The Bonds will be reoffered at an average price of percent of the par value of the Bonds. After the initial public offering, the public offering prices may be varied from time to time. The Underwriter has entered into an agreement (the "Agreement") with Pershing LLC ("Pershing"), a subsidiary of the Bank of New York Mellon Corporation, for the distribution of certain municipal securities offerings allocated to Piper at the original offering prices. Under the Agreement, if applicable to the Bonds, the Underwriter will share with Pershing a portion of the fee or commission, exclusive of management fees, paid to the Underwriter. The Underwriter of the Bonds, has entered into a distribution agreement ("Distribution Agreement's with Charles Schwab & Co., Inc. ("CS&Co") for the retail distribution of certain securities offerings at the original issue prices. Pursuant to the Distribution Agreement, CS&Co. will purchase Bonds from the Underwriter at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that CS&Co. sells. CONCLUDING STATEMENT So far as any statement herein includes matters of opinion, or estimates of future expenses and income, whether or not expressly so stated, they are intended merely as such and not as representations of fact. The information contained herein should not be construed as representing all conditions affecting the City or the Bonds. Additional information may be obtained from the City. The statements relating to the Ordinance are in summarized form, and in all respects are subject to and qualified in their entirety by express reference to the provisions of such document in its complete form. The agreements of the City are set forth in such documents, and the information assembled herein is not to be construed as a contract with Owners of the Bonds. The preparation and distribution of this Official Statement have been authorized by the City. 35 Page 185 of 224 APPENDIX A CERTAIN DEFINITIONS Certain terms used in this 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: "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 Ordinance No. 3962. "2010T Bonds" means the Water and Sewer Refunding Revenue Bonds, 2010T (Taxable), issued pursuant to Ordinance No. 3962. "2013A Bonds" means the Water and Sewer Revenue Bonds, 2013A, issued pursuant to Ordinance No. 4126. "2013T Bonds" means the Water and Sewer Revenue Bonds, 2013T (Taxable), issued pursuant to Ordinance No. 4126. "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 ULID 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 Manager of the City for the payment of the principal of and interest on the Parity Bonds. "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of the Bonds. "Bond Registrar" means the Fiscal Agent, or any successor Bond Registrar selected by the City. "Bonds" means the Water and Sewer Improvement and Refunding Revenue Bonds, 2015, issued pursuant to the Bond Ordinance. "City" means the City of Pasco, Washington, a municipal corporation duly organized and existing under the laws of the State. "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. A-1 Page 186 of 224 "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, or its nominee. "Deputy Director" means the City's Deputy Director of Administrative and Community Services or such other officer of the City who succeeds to substantially all of the responsibilities of that office. "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State 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 alien 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" has the meaning given in RCW 39.53.010, as now in effect or as may hereafter be amended. "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 2002 Bonds, 2005 Bonds, 2007 Bonds, 2009 Bonds, 2010A Bonds, 2010T Bonds, 2013A Bonds and 2013T Bonds. Outstanding Parity Bonds shall not include any Refunded Bonds. "Owner" means, without distinction, the Registered Owner and the Beneficial Owner. "Parity Bond Ordinances" means Ordinance No. 3567, Ordinance No. 3740, Ordinance No. 3835, Ordinance No. 3195, Ordinance No. 3962, Ordinance No. 4126 and the Bond Ordinance. "Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. "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. A-2 Page 187 of 224 "Record Date" means the Bond Registrar's close of business on the 15th day of the month preceding an interest payment date. With respect to redemption of a Bond prior to its maturity, the Record Date shall mean the Bond Registrar's close of business on the date on which the Bond Registrar sends the notice of redemption. "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. "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. "SEC" means the United States Securities and Exchange Commission. "State" means the State of Washington. "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 pursuant to the ordinance authorizing their issuance and sale and which are subject to mandatory prior redemption or for which mandatory sinking fund installments are provided. "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 Page 188 of 224 APPENDIX B 2014 AUDITED FINANCIAL STATEMENTS Page 189 of 224 APPENDIX C FORM OF LEGAL OPINION Page 190 of 224 M FOSTER PEPPER.... [FORM OF APPROVING LEGAL OPINION] City of Pasco, Washington Re: City of Pasco, Washington, $ Water and Sewer Improvement and Refunding Revenue Bonds, 2015 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 "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 Bonds are issued by the City pursuant to Ordinance No. (the "Bond Ordinance") to provide funds (1) to pay the cost of carrying out the Plan of Additions adopted by the Bond Ordinance, (2) to refund certain outstanding water and sewer revenue bonds of the City, (3) to make a deposit to the Reserve Account and (4) to pay the costs of issuance and sale of the 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 express no opinion herein 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 Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bonds in higher yielding investments in certain circumstances and the arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. We have not undertaken and do not undertake to monitor the City's compliance with such requirements. TEL: 206.447.4400 FAx: 206.447.9700 1111 THIRD AVENUE, SUITE 3400 SEATTLE, WASHINGTON 98101-3299 WWW.FOSTER.com SEATTLE WASHINGTON SPOKANE WASHINGTON Page 191 of 224 City of Pasco, Washington [Date] Page 2 Based upon the foregoing, as of the date of initial delivery of the Bonds to the purchaser thereof and full payment therefor, it is our 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. 5. Assuming compliance by the City after the date of issuance of the Bonds with applicable requirements of the Code, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals; however, while interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by corporations is 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 Bonds received by certain S corporations may be subject to tax, and interest on the 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 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. 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, C-2 Page 192 of 224 APPENDIX D BOOK -ENTRY SYSTEM The following information has been provided by DTC. The City takes no resjionsibility for the accuracy or com-pleteness thereof, or for the absence of material changes in such information subsequent to the date hereof. Beneficial Owners should confirm the following with DTC or the ParticPants (as hereinafter defined). The Depository Trust Company ("DTC', New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount represented by such Bonds, and will be deposited with DTC. DTC, the world's largest 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 Bond certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's rating of AA+. 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 (which website is not incorporated herein by reference). Purchases of Bonds under the DTC system 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 expected, however, 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 Direct Participants with DTC are to be registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may 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. When notices are given, they shall be sent by the Fiscal Agent to DTC only. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. D-1 Page 193 of 224 Redemption notices shall be sent to DTC. If less than all of the Bonds of a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. 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 MMI 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 or 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). Payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Bond Registrar, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and are the responsibility of such Participant and not of DTC, the Bond Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to Cede & Co. (or any other nominee as may be requested by an authorized representative of DTC) are the responsibility of the City or the Bond 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 depository with respect to the Bonds at any time by giving reasonable notice to the City or the Bond Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bonds are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. The information in this appendix concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. D-2 Page 194 of 224 2015-2016 Projects for W/S Revenue Bonds Project Name 2015 2016 Description Construct a sludge drying bed between the existing Butterfield WTP- Sludge Drying Bed 100,000 104,000 backwash ponds. East side Water Booster Pump Station was built in 1983. East Side Booster Pump Station 480,000 669,400 No pump upgrades have been performed since that time, The existing telemetry system will require an upgrade. The meter is old and there is no back-up generator. Replace two old 24 inch leaking main valves at the Butterfield WTP 24 In. Valve Replacement 122,858 243,142 Butterfield water plant. Columbia Water Supply Project State Revolving Fund Loan This project will install a new water main in Oregon Avenue during the proposed corridor upgrade project Oregon Avenue Water Line (Phase I) 100,000 1,000,000 between the 1-182/US 1.2 Interchange and Ainsworth Avenue. 2015 Water line (Asbestos Cement) Replacement (various This project was started in 2015 and consists of replacing Locations) 19,000 203,000 asbestos cement water lines with ductile iron pipe and reconnecting existing water services and appurtenances. This project will install approximately 12,300 linear feet Wernett Pipeline 25,000 70,000 of 12" ductile iron water line from Road 48 to Road 84. After installation of the water line, existing water services and appurtenances will be reconnected. Annual Water Line Upsize Match Does this project qualify? $100,000 each year Butterfield - South Basin Drain Bypass 70,000 This project will reconstruct the existing access driveway Butterfield - Fluoride Rm Tank Truck Access 65,000 to allow drive -up service to the Fluoride Building from S. 13th Avenue. This project consists of the installation of air scrub Butterfield WTP- Chlorine Safety Improvements 500,000 equipment at the Butterfield WTP. 916,858 2,854,542 3,771,400 2016 Sewer Projects Project Name 2015 2016 Description Annual Sewer Line Extensions Qualify? ($90,000 2015, $100,000 2016) Annual Sewer Line Re -lining Program Qualify? ($293,000 2015, $300,000 2016) This project involves installation of two new primary clarifiers, a new primary sludge pumping room, and a new scum pump station, modifications to the existing WWTP Primary Clarifier No. 3 2,370,000 2,430,000 headworks channel, and associated mechanical, electrical, instrmentation, yard piping, and other site work. The City of Pasco (City) has partnered with the Miller Family Trust (developer) to design and construct a new sanitary sewer lift station near the intersection of Capitol Capitol Lift Station 320,000 Highway and Hillsboro Avenue. The lift station will initially serve the Genesis Business Park which is owned by the Developer. The Phase 1 lift station will have the capacity to serve the 130 -acre business park and an additional 53 acres within the larger service area. This project consists of adding a 14" sanitary sewer force Kahlotus Lift Station Force Main Pipe 200,000 main from the Kahlotus Lift Station, south along Commercial Avenue, to the existing casing located under US 395. Retrofit Secondary Digester #1 60,000 This project consists of retrofitting this digester from secondary to a primary digester. The existing Grit Classifiers have met their useful life. The units are wearing out and need replaced before complete Replace Grit Clarifiers 108,000 failure which could overload primary digesters with inorganics that can ultimately violate our biosolids permit. This project consists of changing the intake which will alleviate freezing and ice buildup on filters, extend the Turbo Compressor Inlet Suction Retrofit 25,000 100,000 life of the filters and will increase inlet suction size to correct specs. This retrofit will also accommodate future blowers. Maitland Lift Station - Purchase/Install 4th Pump 75,000 2,470,000 4,471,000 6,941,000 2015 2016 Water 916,858 2,854,542 Sewer 2,470,000 4,471,000 3,386,858 7,325,542 10,712,400 Currently we only have one DAFT to handle the City's secondary waste activated sludge. The internal components are wearing out and need replacing. This Waste Activated Thickening 975,000 project consists of replacing all the interior components of the existing DAFT. It would also add a second DAFT to meet future growth needs by 2019 as outlined in the Sewer Master Plan.. Pearl Street Lift Station needs to be upgraded or replaced Pearl Street Lift Station Replacement 170,000 to accommodate new pumps, we well, piping, electrical and telemetry. This lift station currently has smaller pumps that need to be replaced to meet the needs of future growth. The 9th & WA Lift Station 78,000 discharge piping in the building needs to be increased to allow for greater flow capacity and flexibility of operations. The upgrades will consist of purchasing a spare pump, Road 36 Lift Station Upgrades 30,000 replacing motor controls and telemetry, replacing valves and installing fiber for communications. 2,470,000 4,471,000 6,941,000 2015 2016 Water 916,858 2,854,542 Sewer 2,470,000 4,471,000 3,386,858 7,325,542 10,712,400 AGENDA REPORT FOR: City Council November 20, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Stan Strebel, Deputy City Manager SUBJECT: Furniture/Fixtures/Equipment (FFE) for Police Facility I. REFERENCE(S): Furniture Bid/Comparison Authorization for Additional Services for Architect II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Overall FFE costs are projected to be $618,000. IV. HISTORY AND FACTS BRIEF: The City's bid package for the Police Community Services Building purposefully did not include FFE as a means to save money as well as to get a superior product. It was decided at the bid phase that the City could avoid the traditional markup costs of the general contractor by purchasing some items directly, resulting in savings on the overall project costs. Additionally, based on interviews with other departments where new facilities have recently been completed, and the City's own experience, it was determined that the selection of products based on durability could save money over time. Working with at least four different furniture manufactures, the Architect was able to identify a supplier which will build basic office furniture packages at competitive pricing and with a significantly better warranty and greater product durability. Staff recommends the purchase of basic office furniture (desks, shelving, credenzas and wardrobes) from Custom Office Design for $88,169 (not including tax) vs from the most competitive pre -manufactured provider, Staks Furniture at a cost of $83,520. The Page 198 of 224 product offered by Custom Office Design, significantly exceeds the quality offered by the lower cost provider, which is the basis for staffs recommendation. Given the heavy use in police environments, due to the longer hours as well as the equipment that officers typically wear, product durability, within reasonable cost, should be a greater consideration than initial pricing. V. DISCUSSION: Because the FFE package was not included with the basic construction bid, the Architect's professional services agreement also did not include that service at the time of approval. The proposed supplement to the contract is $62,500 which represents about 10% of the total FFE package. Hansen Design will do the work under subcontract with Thornhill Architects. Hansen has been intricately involved in the project from the beginning. Staff recommends approval of the additional services component, which includes design effort for the custom furniture as well as any direct purchase furniture items, specifications and/or design of fixed equipment such as lockers and cabinets and coordination with suppliers for delivery and installation. A number of furniture items will be considered for construction by local high school shop students, although specifics are pending. Staff feels that this effort has the potential to reduce costs somewhat while providing a meaningful project for students and police outreach. Page 199 of 224 ITEMISED PROGRAM/BID "All CUSTOM OFFICE DESIGN (items in bold differ from Bid "B") Unit/Item Qty Unit Cost Unit Total Cost Comments R Desk 24 $627.00 $15,048.00 12 L Desk 23 $627.00 $14,421.00 $690.00 O. Shelf 40 $526.25 $21,050.00 $5,000.00 Credenza 1 5 $1,650.00 $8,250.00 Credenza 2 27 $700.00 $18,900.00 Pedestal/File 80 $400.00 $32,000.00 Could Re -use Existing Wardrobe 7 $1,500.00 $10,500.00 Coat Hooks 25 $20.00 $500.00 Conf. Table 2 $4,000.00 $8,000.00 Report Rm. Table 8 $700.00 $5,600.00 With Glass dividers Round Table 10 $500.00 $5,000.00 Comm. Rm. Table 40 $500.00 $20,000.00 Bistro Table 5 $500.00 $2,500.00 Break Room Break Rm. CW 1 $6,500.00 $6,500.00 Casework Copy Rm. CW 2 $4,000.00 $8,000.00 Casework Interview Table 5 $1,000.00 $5,000.00 Mail CW 1 $2,000.00 $2,000.00 Casework Evidence Intake CW 1 $8,000.00 $8,000.00 Tiffin Bid Evidence Lockers` 1 $2,000.00 $2,000.00 Tiffin Bid Warrant, Finger Print 4 $500.00 $2,000.00 Misc. Desks Gun Cleaning Station 1 $2,000.00 $2,000.00 Reception Desk 1 $4,000.00 $4,000.00 Admin. Office sub total $201,269.00 Lockers (Tiffin) Full Lockers 110 $800.00 $88,000.00 Half Lockers 30 $250.00 $7,500.00 sub total $95,500.00 Chairs (Complete Office Furniture) O. Chair 75 $300.00 $22,500.00 C. Chair 220 $150.00 $33,000.00 Community Rm., Briefing, Training 0. Chair 2 12 $234.25 $2,811.00 Office Conf. Chair 20 $690.00 $13,800.00 Bistro Chair 20 $250.00 $5,000.00 sub total $77,111.00 Storage Shelves (City of Pasco direct Purchase) S. Shelves QM' 25 $300.00 $7,500.00 S. Shelves Evid.° 60 $300.00 $18,000.00 sub total $25,500.00 Sub -Total $399,380.00 tax $38,340.48 Sub Total $437,720.48 Design/Coordination Fee $65,000.00 10% contingency: recommended $39,938.00 Delivery/Install Estimate $75,000.00 TOTAL 1 $617,658.48 Page 200 of 224 ITEMISED PROGRAM/BID "B" STAKS FURNITURE COMPANY (items in bold differ from Rid "A") Unit/Item Qty Unit Cost Unit Total Cost Comments R Desk 24 $610.00 $14,640.00 12 L Desk 23 $610.00 $14,030.00 $690.00 0. Shelf 40 $510.00 $20,400.00 $5,000.00 Credenza 1 5 $1,350.00 $6,750.00 Credenza 2 27 $650.00 $17,550.00 Pedestal/File 80 $400.00 $32,000.00 Could Re -use Existing Wardrobe 7 $1,450.00 $10,150.00 Coat Hooks 25 $20.00 $500.00 Conf. Table 2 $4,000.00 $8,000.00 Report Rm. Table 8 $700.00 $5,600.00 With Glass dividers Round Table 10 $500.00 $5,000.00 Comm, Rm. Table 40 $500.00 $20,000.00 Bistro Table 5 $500.00 $2,500.00 Break Room Break Rm. CW 1 $6,500.00 $6,500.00 Casework Copy Rm. CW 2 $4,000.00 $8,000.00 Casework Interview Table 5 $1,000.00 $5,000.00 Mail CW 1 $2,000.00 $2,000.00 Casework Evidence Intake CW 1 $8,000,00 $8,000.00 Tiffin Bid Evidence Lockers* 1 $2,000.00 $2,000.00 Tiffin Bid Warrant, Finger Print 4 $500.00 $2,000.00 Misc. Desks Gun Cleaning Station 1 $2,000.00 $2,000.00 Reception Desk 1 $4,000.00 $4,000.00 Admin. Office sub total $196,620.00 Lockers (Tiffin) Full Lockers 110 $800.00 $88,000.00 Half Lockers 30 $250.00 $7,500.00 sub total $95,500.00 Chairs (Complete Office Furniture) O. Chair 75 $300,00 $22,500.00 C. Chair 220 $150.00 $33,000.00 Community Rm., Briefing, Training O. Chair 2 12 $234.25 $2,811.00 Office Conf. Chair 20 $690.00 $13,800.00 Bistro Chair 20 $250.00 $5,000.00 subtotal $77,111.00 Storage Shelves (City of Pasco direct Purchase) S. Shelves QM* 25 $300.00 $7,500.00 S. Shelves Evid.* 60 $300.00 $18,000.00 sub total $25,500.00 Sub-Total$394,731.00 tax $37,894.18 Sub Total F $432,625.18 Design/Coordination Fee $55,000.00 10% contingency: recommended $39,473.10 Delivery/Install Estimate $75,000.00 TOTAL $602,098.28 Page 201 of 224 e,K Complete Office Date: September 24, 2015 Attn: David Hansen Company: Hansen Design QUOTATION CITY OF PASCO PD ote Valid for 60 Page: 1 of 2 From: Cheryl Thompson Phone: 206-876-5809 Unit 7—Extended FIRST OFFICE STAKS 1 MAIN DESK: Trapezoid top, 30.5"x 72", standard laminate top $3050.66 $3050.66 with 3mm PVC edgebanding, 2 metal H -Legs RETURN: 22"x 66", standard laminate top, 3mm PVC edgebanding, single metal H -Leg on one end CREDENZA. 22"x 84" top, standard laminate top, 3mm PVC edgebanding, metal H -Leg, spacers required to support top over return, locking box/box/file and file/file drawer pedestal 1 Wall mounted storage unit, 19"d x 96"w x 18.5"h, open shelves, $880.67 $880.67 two vertical dividers 1 Wall mounted screen with tackable surface, 19"h x 78"w $252.67 $252.67 FABRIC: TBD 1 Wardrobe Storage Tower, 21.875"w x 24"d x 72"h, hinge door $1401.33 $1401.33 with coat hooks, 3 open shelves and locking file/file drawer pedestal, Satin Nickel pulls FINISHES: Standard wood grain and solid laminates, standard TOTAL: $5585.33 pulls Complete Office Furniture – 11521 East Marginal Way South —Seattle, WA 98168 i Phone 206-876-5800 - Fax 206-576-5726 Page 202 of 224 LEAD TIME: Approximately 5-7 weeks to ship Upon approval of the above quotation please sign, date and note any exceptions. All special order products are final. Once manufacturers' confirmations are received no cancellations can be accepted. Approved Date P.O.# Complete Office Furniture -- 11521 East Marginal Way South —Seattle, WA 98168 Phone 206-876-5800 - Fax 206-576-5726 Page 203 of 224 CKComplete Office QUOTATION City of Pasco PD Date: September 22, 2015 Page: 1 of 1 Attn: David Hansen From: Cheryl Thompson Company: Hansen Design Phone: 206-876-5809 Qty. Description Unit Extended CUSTOM OFFICE DESIGN 1 MAIN DESK: 24"d x 96"w with metal frame, full end panel on $1033.00 $1033.00 right side held up off the floor 2", 1-1/8" thick (MDF) clear coat top edge with 1/8" x 1" strap steel exposed screws for fastens 1 ANGLED RETURN: 30" x 24" x 48" angled return with metal $628.00 $628.00 frame, tapered MDF leg held 2" off floor, 1-1/8" (MDF) clear coat top edge with 1/8" x 1" strap steel and exposed screws for fastneres 1 CREDENZA: 21"x 96" x 27"h, 20" w open storage left with 1 $1864.00 $1864.00 adjustable shelf, 36"w locking box/box/file drawer pedestal, 40"w open CPU storage with 1 adjustable shelf, %" Thick Bamboo top with 3 cut-outs in back overhang, Bamboo box/box/file faces 1-1/8" (MDF) clear coat, no steel edge 1 WALL MOUNTED CLOSE TOP BOOKCASE: 12"d x 96"w x18"h, $526.00 $526.00 %" thick (MDF), clear coat, 2 metal dividers to make 3 openings, metal valance screwed to bottom, open back with metal cleat 1 WARDROBE: 21" X 30" X 72"H, full hinge door on left with coat $1864.00 $1864.00 pole and hat shelf above, locking file/file drawer pedestal, open storage with 1 adjustable shelf above 1-1/8" (MDF) clear coat, no steel edge, sheet metal pans that cover door and faces TOTAL: $5915.00 Complete Office Furniture — 11521 l=ast Marginal Way South —Seattle, WA 98168 Phone 206-876-5800 - Fax 206-576-5726 Page 204 of 224 LEAD TIME: Approximately 2-3 weeks to ship for mock up Approved. Upon approval of the above quotation please sign, date and note any exceptions. All special order products are final. Date P.O.# Complete Office Furniture — 11521 East Marginal Way South —Seattle, WA 98168 Phone 206-876-5800 - Fax 206-576-5726 Page 205 of 224 CUSTOM OFFICE DESIGN 90 YEAR WARRANTY. Material and factory workmanship of standard Custom Office Design, Inc. products are warranted for a period of 10 years for the date of invoice from our factory (unless otherwise stated in writing), provided the products are subjected to only the usage for which they were designed and provided they are installed in accordance with Custom Office Design, Inc. recommended installation procedures and cleaning instructions. LIFETIME WARRANTY on all drawer slides and door hinges. Cleaning Tips To clean the surface, use a damp cloth or sponge and a mild soap or detergent. Difficult stains such as coffee or tea can be removed using a mild household cleaner and baking soda; mixing to achieve a paste consistency. Use a stiff nylon bristle brush, scrubbing (approx. 15-20 strokes) the affected area. Do not scrub so as to mar (damage, scratch) the surface finish. Stubborn stains that resist any of the above cleaning methods may require the use of undiluted household bleach or nail polish remover. Use a cotton ball saturated with bleach or nail polish remover (acetone), gently rub the stain for up to two minutes. Rinse thoroughly with warm water and wipe dry using a soft cloth. This step may be repeated if the stain appears to be going away and the color of the laminate has not been affected. WARMING: Prolonged exposure of the laminate surface to bleach will cause discoloration. Always rinse laminate surfaces after cleaning! Failure to rinse after cleaning can cause damage; even if a small amount of cleaning solution remains on the surface. A dry residue may be invisible; however, moisture from cups or drinks can reactivate it, and result in permanently etched scars or stains over time. Recommended Household Cleaners: Formula 4090 Dawn@ Glass PlusO Dow Bathroom Cleaner with Scrubbing Bubble$TM Fantastik® Windex® Lestoil® Lysol@ Brand Disinfectant Basin/Tub/Tile Cleaner Mr. Clean@ TOP JOB@ Clorox@* Page 206 of 224 TACK BOARDS Guilford of Maine's 100% recycled polyester panel fabrics are colorfast to both water-based and solvent -based cleaning solutions and may be cleaned with all conventional upholstery cleaning systems. Note that the following are general recommendations for the panel fabric only. Some fabric cleaning methods may cause damage to underlying materials in panel or wall panel systems. Contact the panel manufacturer for recommendations and precautions prior to attempting any of the following procedures: Vacuum the fabric periodically to remove accumulated dirt and dust. The frequency of this and any other routine maintenance is determined by end use conditions. Blot fresh spills immediately. Ensure that the fabric is adequately rinsed after cleaning, as residual cleaning agents may accelerate soiling. Have the fabric professionally cleaned whenever large stains or an overall soiled condition occurs. For most water-based stains, a clean, absorbent cloth dampened with a detergent solution (e.g. 1 teaspoon laundry detergent/1 pint warm water) should be applied to the stain. Blot the fabric with the treated cloth, working from the outer edge of the stained area, moving inward. In order to effectively draw out the stain, renew the cleaning cloth frequently. Rinse well with clear water, and dry the fabric as quickly as practical. Oil-based stains may be treated in a similar manner, substituting a volatile solvent -based cleaner for the detergent solution. Always follow the manufacturer's recommendations for using such products, and always pretest an inconspicuous area of the fabric for colorfastness to the cleaning agent. Cleaning Instructions - Guilford of Maine Fabrics Page 207 of 224 ■ T E R L N C E L T H O R N H I L L 0 A R C H I T E C T Authorization for Additional Services Terence L. Thornhill Architect, Inc. P.S. FFE for Pasco Police Community Service Building Project Name: FFE Design and Procurement PPSCB Project No: 214-019 Agreement No: ASA 3.0 Date: October 23, 2015 Additional Services The following addition items of work on the project reference above have been or will be provide by Terence L. Thornhill Architect, Inc. P.S. These Additional Services are a supplement to the scope contained in TLTA's existing Fee Proposal and Letter of Agreement for the Project, dated June 12, 2014. All other General Conditions of said Agreement remain in full force and effect. The original contract for design and documentation services for the Pasco Police Community Services Building was intended for the design of the facility. That design included scope items contained within the original contract. Since design work has been commenced, additional services (time & materials) are necessary beyond the original scope. To complete these task it is expected that additional fee of+/- 62,500.00 will be necessary. Scope Provide procurement documents for FFE tasks along with coordination with manufacturers, prototype design, material selection, and details, which include but are not limited to furniture, fixtures, equipment, lockers, desks, signage, bike racks, and other miscellaneous FFE provisions. Payment for Additional Services Unless otherwise noted below, TLTA will provide these Additional Services on a time and material basis, using TLTA's standard billing rate for a total amount of $62,500.00. Verbal Authorization Terence L. Thornhill Architect, Inc. P.S. was verbally directed to provide these Additional Services by: Stan Strebei Terence L. Thornhill Architect, Inc. P.S. Pasco Police Community Services Building Terence L. Thornhill, AIA Date Stan Strebel Date President Owners Representative 9221 SANDIEUR PARKWAY SUITE A, PASCO, WA 99301 PHONE (509)547-8854 FAX (509)547-8912 WWW.TLTARCH.COM Page 208 of 224 AGENDA REPORT FOR: City Council November 6, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Stan Strebel, Deputy City Manager SUBJECT: Regulation of Hotels and Rooming Houses I. REFERENCE(S): Proposed Ordinance II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: IV. HISTORY AND FACTS BRIEF: A recent decision by the US Supreme Court has changed the standard for unconsented inspections of hotel guest registries providing a greater degree of privacy to citizens. In light of the decision of the Court, it is prudent to amend the City's regulations on hotels and rooming houses to conform to the case law. The attached Ordinance, amending portions of PMC Chapter 5.40, has been prepared by the City Attorney to meet the standards of the Court. Guest registers are subject to inspection only with consent of the owner/manager or in response to an official order or warrant. Subjective language and other questionable terminology has also been deleted (i.e., "bootlegger"; "undesirable class") in the Ordinance. V. DISCUSSION: Staff recommends approval of the Ordinance. Page 209 of 224 ORDINANCE NO. AN ORDINANCE of the City of Pasco, Washington Amending Chapter 5.40 "Hotels and Rooming Houses"; Amending Section 5.40.040 "Register to be Kept"; Amending Section 5.40.080 "Certain Persons Prohibited on Premises"; Amending Section 5.40.090 "Purpose of Chapter"; and Amending Section 5.40.100 "Seizure of Illegal Articles - Warrant" WHEREAS, the recent decision by the United States Supreme Court case in City of Los Angeles, California v. Patel, has changed its standard for unconsented inspections of hotel guest registries requiring amendments to PMC Chapter 5.40; and WHEREAS, additional regulations contained within Chapter 5.40 are outdated, antiquated, and potentially unenforceable requiring review and modification to provide not only for the safety of the citizens of the City of Pasco, but also their rights to privacy. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. That Section 5.40.040 of the Pasco Municipal Code entitled "Register to be Kept" shall be and hereby is amended and shall read as follows: 5.40.040 REGISTER TO BE KEPT. No person to whom a license shall be issued under this chapter shall suffer or permit the hotel, rooming house, lodging house or other lodging place to be used for any iffier -al er unlawful purpose and shall at all times keep a standard hotel register in which shall be inscribed the names of all guests or persons renting, using or occupying rooms or quarters therein, which register shall be signed by the person using a room, rooms, space or quarters or by someone on his behalf and under his direction. Such registration must be made and after the name or names so inscribed or registered the owner of the place, manager of the place,—or his agent, shall write the number of the room or rooms which such guest or person is to occupy, together with the time when such room is rented, all of which shall be done before such person is permitted to occupy or use such room or rooms. Such register at all times shall be open*^ effieef of the Gi4y, E)r- of the sta4e of Washington; and sueh register- shall be pr-esetwed for- a -period ef one yeaf from the date of c -my stieh r-egistfa4ien, dufing whieh time sueh inspeetion must be alle shall be maintained and available for inspection by an officer or an official of the City with the consent of the owner, manager, or agent of such place, or in response to administrative or judicial warrant or order. (Prior code Sec. 3-7.16.) Section 2. That Section 5.40.080 of the Pasco Municipal Code entitled "Certain Persons Prohibited on Premises" shall be and hereby is amended and shall read as follows: 5.40.080 CERTAIN PERSONS PROHIBITED ON PREMISES. It is unlawful for the licensee or any person in charge of any hotel, rooming house, lodging house or place covered by such license, knowingly to receive or retain as a roomer, visitor, lodger, or guest thereat any pimp; or prostitute, beefleggef, ' and to harbor any such or to allow any such person to be or remain upon the premises as guest, visitor, lodger, employee, or any one in any other capacity who practices or takes part in any act of prostitution, ^r who e Page 210 of 224 pfesen4 a4 &iy game of ehanee of who pfaefiees of engages 1-1 aet of any disefdefly or unlawful conduct_, who , rl,,wffi ly eaffies upen hi- 4b hi of has in his T..., baggage n4oxieating liquon (Prior code Sec. 3-7.32). Section 3. That Section 5.40.090 of the Pasco Municipal Code entitled "Purpose of Chapter" shall be and hereby is amended and shall read as follows: 5.40.090 PURPOSE OF CHAPTER. The intention and purpose of this chapter is to rovide for the protection and safetv of premises' patrons and public. and to prevent unlawful actions or conditions to exist. assist the Poliee Depar#nent in apprehending violators of the laws an' ordinanees to r -id the City, if possible-, of pimps, vagr-ants, gamblers, pfostitutes, bootleggers, and als and to diseourage and penalize acts and pr-actiees W-hieh foste s and undesirable elass, shall be given tha4 liberal eonstmetion whieh will effeetuate sueh pufposes.- (Prior code Sec. 3-7.36.) Section 4. That Section 5.40.100 of the Pasco Municipal Code entitled "Seizure of Illegal Articles - Warrant" shall be and hereby is amended and shall read as follows: 5.40.100 SEIZURE OF ILLEGAL ARTICLES - WARRANT. If upon the sworn complaint of any person it shall be made to appear to the Municipal Court Judge of the City that there is probable cause to believe that any section of this chapter or any provision hereof is being violated, then the Municipal Court Judge shall forthwith issue a warrant, directed to any police officer of the City commanding him to search the premises designated in the warrant, and described in the complaint, to seize any i , implements, fitmitufe ^r fixf es used or kept in connection with any violation of this chapter, and to safely keep the same, and to make return of the warrant within three days, showing his acts and doings thereunder, and specifying the articles seized, and the name of the person or persons in whose possession, or upon whose premises the same were found; provided, further, that a copy of the warrant shall be served upon the person or persons found in possession of the mer property, or in possession of the premises so searched, and if no person or persons are found as aforesaid, then a copy of the warrant shall be posted in a conspicuous place upon the premises. (Ord. 3560 Sec. 35, 2002; Prior code Sec. 3-7.44.) Section 5. This Ordinance shall take full force and effect five (5) days after its approval, passage, and publication as required by law. PASSED by the City Council of the City of Pasco, Washington, and approved as provided by law this day of 92015. Matt Watkins, Mayor ATTEST: APPROVED AS TO FORM: Debra L. Clark, City Clerk Leland B. Kerr, City Attorney Ordinance Amending Chapter 5.40 Hotels and Rooming Houses Page 2 Page 211 of 224 AGENDA REPORT FOR: City Council November 9, 2015 TO: Dave Zabell, City Manager Workshop Meeting: 11/23/15 FROM: Stan Strebel, Deputy City Manager SUBJECT: Consent to Transfer of TV Franchise Agreement I. REFERENCE(S): Proposed Resolution Transfer Agreement II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: IV. HISTORY AND FACTS BRIEF: Charter Communications, Inc., is the ultimate parent company of Fallon Video Communications, the City's cable TV franchisee. In May of 2015, Charter and its subsidiary, CCH 1, LLC entered into a series of agreements whereby, if the transactions contemplated by the agreements are approved and consummated, Charter will merge with a subsidiary of New Charter and all shares of Charter Communications will be converted into shares of New Charter and New charter will assume the name "Charter Communications, Inc." The City believes that this proposed action constitutes a transfer for which the City's approval is required under the current franchise agreement. Under the regulations of the FCC and the Federal Cable Act, the City is required to act on the proposed transfer within 120 days of the filing of a complete transfer application. The City's time period for response expires on December 1. V. DISCUSSION: The proposed, attached transfer agreement sets forth the agreement with Charter for the City's conditional approval. In the opinion of the City's consultant and expert legal Page 212 of 224 counsel, the agreement best protects the interests of the City in the transfer process. Staff recommends approval of the Resolution by Council. Page 213 of 224 RESOLUTION NO. A RESOLUTION of the City of Pasco conditionally consenting to the transfer of Franchisee Falcon Video Communications, L.P. from Charter Communications, Inc. to CCH I, LLC and authorizing the City Manager to execute an agreement related thereto. WHEREAS, Falcon Video Communications, L.P. ("Franchisee") currently operates a cable system under the terms and conditions of a cable franchise (the "Franchise Agreement") granted by the City pursuant to Ordinance, as lawfully amended from time to time in accordance within the provisions in such documents (collectively "Franchise Documents") and applicable law; and WHEREAS, Charter Communications, Inc. ("Charter Communications") is the ultimate parent company of Franchisee; and WHEREAS, on May 23, 2015, Charter Communications, with its subsidiary CCH I, LLC ("New Charter"), entered into agreements with Advance/Newhouse Partnership ("A/N"), the ultimate parent company of Bright House Networks, LLC ("BHN"), Time Warner Cable Inc. ("TWC"), and Liberty Broadband Corporation ("Liberty") (collectively "the Agreements"), the purpose of which are to effectuate the acquisition of BHN and merger with TWC by and into New Charter ("Transaction"); and WHEREAS, if the Transaction is consummated, Charter Communications will merge with a subsidiary of New Charter, and all shares of Charter Communications will be converted into shares of New Charter, and New Charter will assume the name Charter Communications, Inc. ("Charter"); and WHEREAS, pursuant to the Agreements, A/N, TWC shareholders, and Liberty will each hold ownership interests in Charter; and WHEREAS, the City has taken the position that the Franchise Documents provide that prior approval of the City is required for the Transaction and Charter has disputed that position; and WHEREAS, on August 3, 2015, Charter Communications and New Charter sent with the City an FCC Form 394 (the "Application") pursuant to the federal Cable Act and FCC regulations, expressly reserving its position that the Franchise Documents do not require prior approval of the City; and WHEREAS, pursuant to the federal Cable Act and FCC regulations, the City is required to act on the Application within 120 days of the City's receipt of a complete and accurate Application unless the parties agree to an extension of that time period; and WHEREAS, the City responded to the Application by letter to Charter Communications requesting answers to a series of questions; and WHEREAS, Charter Communications responded to the City's letter on September 1, 2015; and WHEREAS, the 120 -day deadline for the City to act on the Application is December 1, 2015, if the Transfer Applications is deemed complete; and WHEREAS, the City has reviewed the Application and examined the financial, technical, and legal qualifications of New Charter in accordance with applicable laws and the Franchise Documents; and Page 214 of 224 WHEREAS, Charter Communications and New Charter have agreed among other things that following the completion of the Transaction, Franchisee and New Charter will continue to be bound by and comply with, and be liable for any past failure of Franchisee to comply with all of the commitments, duties, obligations, and liabilities under the Franchise Documents and all applicable federal, state and local laws, to the maximum extent required by law; and WHEREAS, the foregoing agreement is embodied in a Transfer Agreement by and between the City and Charter Communications, New Charter, and Franchisee; and WHEREAS, in reliance on the terms of the parties' Transfer Agreement and based upon the City's review and examination of the Application, and in reliance upon the representations, documents, and supplemental information provided by Charter Communications and Franchisee in connection with the Transaction, the City is willing to grant its consent to the Transaction, subject to certain conditions. NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Pasco: Section 1 The Application as described above is hereby granted and the City's consent to the transaction is hereby given as of November 30, 2015, subject to the following conditions: A. Charter Communications, New Charter, and Franchisee must execute the Transfer Agreement in substantially the form attached hereto and deliver the executed copy of the Transfer Agreement to the City Clerk no later than 5:00 p.m. PST on Wednesday, December 16, 2015. B. The Transaction must be consummated on or before November 23, 2016, and on terms that are not in any material respect different from those described in the Transfer Agreement, the Application and other related materials provided to the City by Charter Communications and the Franchisee; otherwise the City's consent provided herein shall by voidable at the option of the City. Section 2 If the foregoing conditions are satisfied, the City's grant of the Application and consent to the Transaction shall be deemed given in accordance with applicable law. If any of the aforementioned conditions is not satisfied, the City's grant of the Application and consent to the Transaction shall be deemed denied as of 5:00 p.m. PST on December 1, 2015 under applicable law. Section 3 The City Manager is authorized to sign the Transfer Agreement. PASSED by the City Council of the City of Pasco at its meeting this 30th day of November, 2015. Matt Watkins, Mayor ATTEST: APPROVED AS TO FORM: Debra L. Clark, City Clerk Leland B. Kerr, City Attorney Page 215 of 224 TRANSFER AGREEMENT This Agreement is made this _ day of 2015, by and among: 1.1.1. City of Pasco, Washington, a Municipal Corporation ("City"); 1.1.2. Falcon Video Communications, L.P. ("Franchisee"); 1.1.3. Charter Communications Operating, LLC by Charter Communications, Inc., its Manager ("Charter Communications"); and 1.1.4. CCH I, LLC ("New Charter") RECITALS WHEREAS, Falcon Video Communications, L.P. ("Franchisee") currently operates a cable system ("System") under the terms and conditions of a cable franchise (the "Franchise Agreement") granted by the City pursuant to Ordinance No. 3304, as lawfully amended from time to time in accordance within the provisions in such documents (collectively, the "Franchise Documents") and applicable law; and WHEREAS, Charter Communications, Inc. ("Charter Communications") is the ultimate parent company of Franchisee; and WHEREAS, on June 18, 2014, Franchisee, Charter Communications, and Comcast Corporation ("Comcast") filed an application seeking the City's consent to a transaction ("Comcast Transaction") whereby control of Franchisee would be transferred from Charter Communications to Comcast; and WHEREAS, or on about November 25, 2014, in the context of reviewing that application and conditionally consenting to the Comcast Transaction, the City, Franchisee, Charter Communications, COO Transfers, LLC, and Comcast entered into an agreement ("Comcast Transfer Agreement"); and WHEREAS, although the City consented to the Comcast Transaction consistent with the terms of the Comcast Transfer Agreement, the Comcast Transaction was not consummated; 1 Page 216 of 224 WHEREAS, on May 23, 2015, Charter Communications, with its subsidiary CCH I, LLC ("New Charter"), entered into agreements with Advance/Newhouse Partnership ("A/N"), the ultimate parent company of Bright House Networks, LLC ("BHN"), Time Warner Cable Inc. ("TWC"), and Liberty Broadband Corporation ("Liberty") (collectively "the Agreements"), the purpose of which are to effectuate the acquisition of BHN and merger with TWC by and into New Charter ("Transaction"); and WHEREAS, if the Transaction is consummated, Charter Communications will merge with a subsidiary of New Charter, and all shares of Charter Communications will be converted into shares of New Charter, and New Charter will assume the name Charter Communications, Inc. ("Charter"); and WHEREAS, pursuant to the Agreements, A/N, TWC shareholders, and Liberty will each hold ownership interests in Charter; and WHEREAS, the City has taken the position that the Franchise Documents provide that prior approval of the City is required for the Transaction and Charter has disputed that position; and WHEREAS, on August 3 2015, Charter Communications and New Charter sent the City an FCC Form 394 (the "Transfer Application") pursuant to the federal Cable Act and FCC regulations expressly reserving its position that the Franchise Documents do not require prior approval of the City; and WHEREAS, the City and Franchisee have been engaged in an extended franchise renewal process that is not yet complete; and WHEREAS, the City and Franchisee have agreed to extend the term of the Franchise to February 1, 2016; and WHEREAS, Charter Communications and New Charter have agreed that, following the completion of the Transaction, Franchisee and New Charter will continue to be bound by and comply with, and be liable for any past failure by Franchisee to comply with, all of the commitments, duties and obligations of the Franchisee under the Franchise Documents and all applicable federal, state and local laws, to the maximum extent allowed by law; and 2 Page 217 of 224 NOW, THEREFORE, in consideration of the City's consent to the Transaction, and subject to the terms and conditions of this Transfer Agreement and of the City's Resolution granting consent to the Transaction, THE PARTIES DO HEREBY AGREE as follows: 1. TRANSFER OF THE FRANCHISEE 1.1 The City's consent to the Transfer Application through the adoption of the Transfer Resolution in substantially the form attached hereto (the "Transfer Resolution"), is a condition precedent to this Transfer Agreement becoming effective. This Transfer Agreement will be voidable if the Transaction is not consummated by November 23, 2016, or if the City Council does not consent to the Transfer Application by adopting the Transfer Resolution. 2. AFFIRMATION OF FRANCHISE OBLIGATIONS 2.1 Charter Communications, New Charter and Franchisee (collectively, the "Companies") hereby accept, acknowledge and agree that, after consummation of the Transaction, Franchisee will continue to be bound by and responsible for all the commitments, duties, obligations, and liabilities, past, present, continuing and future, embodied in the Franchise Documents, whether those commitments, duties, obligations, or liabilities arose before or after the date of consummation of the Transaction or the date that the City Council adopts the Transfer Resolution, to the maximum extent permitted by law, and that neither consummation of the Transaction nor the City's approval of the Transfer Application will have any effect on these commitments, duties, obligations, or liabilities. 2.2 The Companies agree that neither consummation of the Transaction nor the City's approval of the Transfer Application shall in any respect relieve them of any responsibility they may have for Franchisee's past acts or omissions, known or unknown, including any liability for any and all previously accrued but unfulfilled obligations of the Franchisee to the City under the Franchise Documents and applicable law, for all purposes, including but not limited to review of past performance for purposes of determining whether the Franchise should be renewed. Neither consummation of the Transaction nor this Transfer Agreement shall modify the rights of Charter Communications, New Charter, Franchisee and/or the City under or related to the Franchise Documents as compared to the rights that could have been exercised by Franchisee and/or the City had the Transaction not occurred. This Transfer Agreement shall have no effect on the rights of the City to ensure compliance, or cure of non-compliance, by 3 Page 218 of 224 Franchisee under the Franchise Documents, and the Companies shall not raise a claim to the contrary. 2.3 The City agrees that this Transfer Agreement is without prejudice to or waiver of the Franchisee's rights to defend any claim of default or non-compliance with the Franchise Documents on the basis that such default or non-compliance has not occurred, or has been cured or, except as otherwise expressly provided herein, from raising any other defense available to Franchisee. 3. ADDITIONAL CONDITIONS 3.1 In the event the Transaction described in the Transfer Application does not close by November 23, 2016, or closes on terms that are in any material respect different from the terms disclosed to the City in the Transfer Application, then any City consent to the Transfer Application shall be voidable by the City and of no force or effect if so voided, and the Transfer Application shall be deemed to have been timely denied under 47 USC § 537 and 47 CFR § 76.502 if so voided provided that the Companies do not waive and expressly reserve their position that the Franchise Documents do not require prior approval of the City for the Transaction. 3.2 The Companies waive any and all claims that they may have that any denial of the Transfer Application that may result from Subsection 3.1 fails to satisfy the deadlines established by applicable law including, without limitation, claims based on, arising out of, or relating to the time limits set forth in 47 USC § 537, as amended, or 47 CFR § 76.502(a), and agree that they shall be deemed to have agreed to an extension of time for the City to act on the Transfer Application within the meaning of 47 CFR § 76.502(c) as required to make any denial effective, provided that the Companies do not waive and expressly reserve their position that the Franchise Documents do not require prior approval of the City for the Transaction. 4. ADDITIONAL AGREEMENTS OF THE PARTIES 4.1 The City reserves all rights not expressly waived in this Transfer Agreement. In particular and without limitation: 4.1.1 Neither this Transfer Agreement, nor any other action or omission by the City at or before the execution of this Transfer Agreement, shall be construed to grant the City's 0 Page 219 of 224 consent to any future transfer of the System or control of the Franchisee, or to mean that the City's consent to any such future transfer is not required. 4.1.2 The City's consent to the Transfer Application shall not constitute a waiver or release of any of the City's rights or claims with respect to Franchisee's compliance (or non-compliance) with the terms, conditions, requirements and obligations set forth in the Franchise Documents, whether arising before or after the date of the Transfer Resolution or consummation of the Transaction. The City's approval of the Transfer Application shall in no way be deemed or construed to be an agreement or concession by the City that Franchisee is in compliance with all of its obligations under the Franchise Documents. 4.1.3 The City, in collaboration with the City of Richland (collectively "Cities"), has been engaged in a franchise renewal process with the Franchisee pursuant to 47 USC § 546 (a) — (h). On July 31, 2013, the Cities proceeded with the Cable Act's formal renewal process and issued an RFRP. On December 30, 2013, Franchisee submitted a formal renewal proposal in response to the RFRP issued by the Cities ("Renewal Proposal"). In order to permit further time for informal renewal negotiations, the parties subsequently entered into an agreement tolling the formal renewal process, which expires on February 1, 2016. 4.1.4 The Companies acknowledge receiving letters from the City related to Ordinance Nos. 4222 and 4223. If the customer account changes related to those Ordinances are not completed prior to the closing of the Transaction, Franchisee will work with the City to complete whatever changes may be required. 4.1.5 The Companies shall not contend and hereby waive any claim that the City is barred, by reason of its consent to the Transfer Application, from considering or raising any claim based on Franchisee's past or present failure to comply with any term or condition of the Franchise Documents or applicable law, including, without limitation, any unpaid franchise fees lawfully due the City from Franchisee, any known and unresolved consumer complaints, and any construction, security or facility requirements of the Franchise Documents that are unsatisfied, and regardless whether any such claim arose before or after the date of the Transfer Resolution or consummation of the Transaction. 4.1.6 The Companies agree to assume all risks associated with any future non- renewal or non -extension of the Franchise Agreement or other potential termination of the Franchise Agreement, and further agree that they will not raise any claim or defense that they 5 Page 220 of 224 are entitled to renewal of the Franchise Agreement or protected from revocation of the Franchisee Agreement by reason of the City's approval of the Transaction. 4.1.7 Except as otherwise expressly provided for herein, this section 4 is without prejudice to Companies' rights to defend any claim of default or non-compliance with the Franchise Documents on the basis that such default or non-compliance did not occur, or has been cured, or from raising any other lawful defense. 5. RATES 5.1 New Charter and Franchisee further agree that neither the Transaction, the Transfer Application consent process, the City's Resolution granting conditional consent to the Transaction, nor this Transfer Agreement, standing on its own or collectively, provides any basis for increasing the rates paid by subscribers through cost pass-through as so-called "external costs" or as new franchise requirements, and neither the City's consent process nor the City Council resolution granting conditional consent, standing on its own or collectively, provides any basis for increasing the rates paid by subscribers in any manner. 6. REPRESENTATIONS AND WARRANTIES 6.1 The Companies acknowledge that the City's consent to the Transfer Application is made in reliance upon the representations, documents, and information provided by the Companies in connection with the Transfer Application and supplemental information thereto. 6.2 The Companies represent and warrant that the Transaction is not based on any representation by the City (other than as provided by federal and state law) that the Franchise Agreement will be renewed or extended and that New Charter and Franchisee shall assume all risks associated with any future non -renewal or non -extension of the Franchise Agreement. 6.3 The City acknowledges that the Companies retain all rights, claims, and defenses they or their predecessors may have regarding the operation of the cable system under applicable law, including under 47 USC § 546. 6.4 New Charter represents and warrants that the Transaction will not in any respect adversely affect Franchisee's ability to meet the lawful and valid requirements of the Franchise Documents. A Page 221 of 224 6.5 New Charter and Franchisee agree they will not file with the City a request under Section 625 of the Cable Act , 47 USC § 545, seeking modification of any existing requirements of the Franchise Documents as a result of any increase in debt service, debt service coverage or equity requirements incurred in connection with the Transaction. 6.6 The Companies acknowledge that the City has not undertaken a franchise compliance audit as a part of its review of the Transfer Application and that there may be issues related to Franchisee's possible non-compliance with the Franchise Documents that are not known to the City at this time. Pursuant to Section 2.1 of this Transfer Agreement, the Companies agree that Franchisee shall be bound by and liable for all the commitments, duties, obligations, and liabilities, past, present, continuing and future, of Franchisee embodied in the Franchise Documents, to the maximum extent permissible by law, and that the City's action to approve the Transfer Application shall not be interpreted as, or deemed to be, a waiver of the City's rights to enforce the Franchise Documents, regardless whether any claim by the City relating to any failure by Franchisee to comply with the Franchise Documents arose before or after the date of this Transfer Agreement. 7. INDEMNIFICATION 7.1 The Companies agree to indemnify and hold the City harmless against any loss, claim, damage liability or expense (including, without limitation, reasonable attorneys' fees) proximately caused by any representation or warranty made by Charter Communications, New Charter, or Franchisee herein which proves to be untrue or inaccurate in any material respect. 8. BREACHES 8.1 Any breach of this Transfer Agreement shall be deemed a breach of the Franchise Documents. 9. MISCELLANEOUS PROVISIONS 9.1 Effective Date: This Transfer Agreement shall be effective and binding upon the parties upon closing of the Transaction. 9.2 Entire Agreement: This Transfer Agreement constitutes the entire agreement of the parties with respect to the matters addressed herein. No statements, promises or inducements inconsistent with this Transfer Agreement made by any party shall be valid or 7 Page 222 of 224 binding, unless in writing and executed by all parties. This Transfer Agreement may only be modified by written amendments hereto signed by all parties. 9.3 Binding Acceptance: Any purported assignment of this Transfer Agreement or the rights or privileges of any party hereunder is void without the express written consent of the other parties hereto. Subject to the foregoing, this Transfer Agreement shall bind and benefit the parties hereto and their respective and permitted heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns, and the promises and obligations herein shall survive the expiration date hereof. 9.4 Voluntary Agreement: This Transfer Agreement is freely and voluntarily agreed to by each party, without any duress or coercion, and after each party has consulted with its counsel. Each party has carefully and completely read all of the terms and provisions of this Transfer Agreement. Neither Charter Communications, New Charter, nor Franchisee, nor any of their affiliates, nor the City, will take any action to challenge any provision of this Transfer Agreement; nor will any of them participate with any other person or entity in such action. 9.5 Drafting: This Transfer Agreement is a product of common negotiation among the parties and shall not be construed against any party on grounds relating to drafting, revision, review or recommendation by any agent or representative of such party. 9.6 Counterparts: This Transfer Agreement may be executed in several counterparts, each of which when so executed shall be deemed to be an original copy, and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterparts. 9.7 Governing Law: This Transfer Agreement shall be governed in all respects by the law of the State of Washington. 9.8 Captions and References: The captions and headings of sections throughout this Transfer Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Transfer Agreement. Such captions shall not affect the meaning or interpretation of this Transfer Agreement. N. Page 223 of 224 IN WITNESS WHEREOF, the parties hereto have executed this Transfer Agreement as of the day and year first above written. ATTEST: Debbie Clark City Clerk APPROVED AS TO FORM: Lee Kerr City Attorney APPROVED: City of Pasco Dave Zabell, City Manager Falcon Video Communications, L.P By: Title: Charter Communications Operating, LLC by Charter Communications, Inc., its Manager By:_ Title: CCH I, LLC. By: Title: 9 Page 224 of 224