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Limited Tax General Obligation Refunding Bonds - Construction of Downtown Parking Garage - 2001
Transcript of Proceedings Relating to the Authorization, Sale, Issuance and Delivery of the $19,505,000 CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Dated: November 1, 2001 Date of Issue: November 1, 2001 Bond Counsel GOTTLIEB,FISHER & ANDREWS, PLLC 1325 Fourth Avenue, Suite 1200 Seattle, Washington 98101-2531 Phone (206) 654-1999 Fax (206) 654-8725 r ' $19,505,000 CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 TABLE OF CONTENTS DOCUMENT TAB NUMBER Ordinance No. 4922 Authorizing the Saie and Issuance 1 of the Bonds Excerpts from Minutes of City Council eeting re 2 Ordinance No. 4922 Affidavit of Publication of Ordinance No. 4922 3 Bond Purchase Agreement 4 Escrow Agreement (including Verification Report) 5 Letter of Representations 6 Disclosure and Debt Limit Certificate 7 Signature and No Litigation Certificate j 8 Signature Authorization of Escrow Trustee 9 Certificate re Authentication and Registration of Bonds 10 Specimen Bond 11 Specimen Insurance Policy 12 Preliminary Official Statement (as supple Iented by the October 10, 13 2001 Supplement to Preliminary OfficialsStatement) Official Statement 14 Rating Letters 15 Certificate of Delivery and Payment 16 Underwriter's Receipt 17 Nonarbitrage and Tax Exemption Certificate 18 I Tax Certificate of Bond Insurer 19 Underwriter's Certificate 20 f:\renton\ltg o 2001 1 I , • IRS Form 8038-G 21 Bond Report Form 101 22 Approving Opinion of Gottlieb, Fisher;&Andrews, PLLC 23 Opinion of Counsel to Bond Insurer 24 Closing Memorandum 25 f:\renton\Itgo 2001 11 CERTIFICATE I,the undersigned City Clerk of the _ . City of Renton,Washington,certify that this is a true and correct copy of CITY OF RENTON,WASHINGTON o°'KAlitC'a it/A f' . Subscribed • . •d sealed thi say ofd 1 oif ,202L ORDINANCE NO. 4 9 2 2 C40 l- erk AN •1/ AN ORDINANCE RELATING TO THE INCURRENCE OF INDEBTEDNESS; PROVIDING FOR THE SALE AND ISSUANCE OF LIMITED TALX GENERAL OBLIGATION AND REFUNDING BONDS, 2001, TO PROVIDE PART OF THE COSTS OF FINANCING THE CONSTRUCTION OF A MUNICIPAL PARKING GARAGE AND TO ADVANCE REFUND AND DEFEASE- A PORTION OF THE CITY'S LIMITED TAX GENERAL OBLIGATION BONDS, 1997B; PROVIDING FOR THE DATE, DENOMINATIONS, FORM, TERMS, REGISTRATION PRIVILEGES,, MATURITY, INTEREST RATES AND COVENANTS OF THE BONDS; PROVIDING FOR THE ANNUAL LEVY OF TAXES TO PAY THE PRINCIPAL THEREOF AND THE INTEREST THEREON; ESTABLISHING A DEBT SERVICE FUND AND PROJECT FUND FOR THE BONDS; AND PROVIDING FOR THE SALE AND DELIVERY OF SUCH BONDS TO U.S.BANCORP PIPER JAFFRAY INC., SEATTLE,WASHINGTON WHEREAS,the City of Renton(the"City")has determined that there is a need for public parking in the City and it is in the best interest of the residents of the City to construct a parking garage to provide additional public parking capacity; and WHEREAS,pursuant to Ordinance No.4662,the City issued and sold its Limited Tax General Obligation Bonds, 1997B (the"1997 Bonds")in the aggregate principal amount of $16,490,000 for the purpose oproviding funds to pay a part of the cost of acquiring the Main& Grady Building, and renovating,refitting and equipping the building for use as the primary municipal administrative and law and justice center for the City and for other general City purposes and to pay the costs f issuance of the 1997 Bonds; and WHEREAS,pursuant to Ordinance No.4662,the City reserved the right to advance refund and defease all or a portion of the 1997 Bonds pursuant to a refunding or defeasance plan; and . f:kentonVtgo 2001 1 . ORDINANCE NO. 4922 . WHEREAS,the-advance refunding and defeasance of the 1997 Bonds designated as the Current interest-Bonds(the-`-`1997 CIB Bonds")in accordance with the Refunding Plan will provide a debt service savings to the City; and WHEREAS,the City Council deems it to be in the best interest of the City that the City borrow money and issue and sell obligations in the form of limited tax general obligation bonds for the purpose of providing part of the costs of the Project(hereinafter defined); and WHEREAS,the incurrence of indebtedness by the City to pay the costs of the Project will not cause the total indebtedness of the City to be incurred without the assent of the voters of the City to exceed the limitations set forth in Chapter 39.36 RCW; and WHEREAS,pursuant to Chapter 39.53 RCW,the City is authorized to sell and issue, without an election,limited tax general obligation bonds to refund the 1997 CIB Bonds; and WHEREAS,U.S. Bancorp Piper Jaffray Inc. (the"Purchaser")has offered,by way of the Bond Purchase Agreement(the"Purchase Agreement"),to purchase such limited tax general obligation bonds upon the terms and conditions hereinafter set forth;NOW,THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON,WASHINGTON,DO ORDAIN AS FOLLOWS: Section 1. Finding,Purpose and Description of Bonds. The City authorizes the sale and issuance of its"Limited Tax General Obligation and Refunding Bonds,2001"(the"Bonds") for the purpose of providing part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage (the"Parking Garage"),to advance refund and defease the 1997 CIB Bonds, and to pay certain"incidental costs and costs related to the sale and issuance" (as defined in RCW 39.46.070) of the Bonds (the"Project"). f kenton\ltgo 2001 2 1 1 , ' I I it 'I, � ORDINANCE NO. 4922 The Bonds shall be in the aggregate principal amount of$19,505,000; shall be dated November 1,2001; shall be issued in lly registered form as to both principal and interest; shall -- be in the denomination of$5,000 each or any integral multiple thereof within a single maturity; II shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington ll cated in Seattle,Washington, and New York,New York g I (collectively,the"Registrar"),may deem necessary for purpose of identification; shall bear interest at the rates; and shall mature/on December 1 in each of the years,in the principal amounts, as set forth below: • I Maturity Date Principal Interest Rate (December 1) Amount Per Annum 2001J $ 310,000 2.15% 2007 75,000 3.50 2008 85,000 3.75 2009 335,000 3.90 2010 1,350,000 4.00 2011 1,400,000 4.00 1 2012 1,455,000 5.25 2013 i 1,530,000 5.25 2014 1,610,000 5.25 2015 1,695,000 5.25 2016 1,785,000 5.25 2017 - 1,875,000 5.25 2018 � 1,385,000 5.25 2019 1,460,000 5.25 2021* , 3,155,000 5.00 . i I I * Term Bonds The Bonds shall bear interest(computed on the basis of a 360-day year of twelve 30-day _ I months)from their date or from the most recent interest payment date to which interest has been I paid or duly provided for, whichever is later,payable on December 1, 2001, and semiannually thereafter on June 1 and December 1 of each year to the maturity or earlier redemption thereof. If any Bond is not paid upon proper presentment at its maturity or redemption date,the City shall i fhenton\ltgo 2001 3 �_ I ORDINANCE NO. 4922 be obligated to pay interest at the same rate from and after such maturity or earlier redemption until such Bond,both principal and interest,is paid in full. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and RCW 62A.8-105. On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be issued in the form of a single certificate, which certificate shall be registered in the name of The Depository Trust Company or any successor thereto engaged to operate a book-entry system for recording the beneficial ownership of the Bonds, as Custodian(the"Custodian"), or its nominee, and delivered to the Custodian. The Custodian shall hold each such Bond certificate in fully immobilized form for the benefit of the beneficial owners of the Bonds (the "Beneficial Owners") pursuant to the Letter of Representations (the "Letter of Representations"), from the City and the Registrar to the Custodian pertaining to the payment of the Bonds and the book- entry system, until the earliest to occur of either(1)the date of maturity of the Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate to the Registrar for payment of the principal of and interest on such Bonds coming due on such date, and the P ym P P cancellation thereof; (2)the fifth business day following the date of receipt by the Registrar of the City's request to terminate the book-entry system of registering the beneficial ownership of the Bonds (the "Book-Entry Termination Date"); or (3)the date the City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall (provided the City is not then in default of any payment then due on the outstanding Bonds) surrender the immobilized _ certificates to the Registrar for transfer to the new Custodian and cancellation as herein provided. For so long as any outstanding Bonds are registered in the name of the Custodian or its . nominee and held by the Custodian in fully immobilized form as described in this Section 2,the flrenton\ltgo 2001 4 i ORDINANCE NO. 4922 rights of the Beneficial Owners shall b'e evidenced solely by an electronic and/or manual entry made from time to time on the records established and maintained by the Custodian in accordance with the Letter of Representations,and no certificates evidencing such Bonds shall be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's nominee. The City may terminate the book-entry' system of registering ownership of the Bonds at anytime(provided the Cityis not then in default of any payment then due on the outstanding it Bonds)by delivering to the Registrar: (a)a written request that it issue and deliver Bond certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry Termination Date; (b)a list identifying the Beneficial Owners as to both name and address;and (c)a supply of Bond certificates,if necessary for such purpose. Upon surrender to the Registrar of the immobilized certificates evidencing all of the then outstanding Bonds,the Registrar shall issue and deliver new certificates tl each Beneficial Owner or such Beneficial Owner's duly appointed agent,naming such Beneficial Owner or such Beneficial Owner's nominee as the registered owner(the"Owner")thereof. Such certificates may be in any integral multiple of � $5,000 within a single maturity. Following such issuance,the Owners of such Bonds may transfer and exchange such Bonds in accordance with Section 9 hereof. • Neither the City nor the Registrar shall have at any time any responsibility or liability to any Beneficial Owner of any Bonds or to any other person for any error, omission, action or failure to act on the part of the Custodian with respect to payment,when due,to the Beneficial Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of . Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any other matter pertaining to the Bonds. f:\rentonMtgo 2001 5 ORDINANCE NO. 4922 Section 2. Place, Manner and Medium of Payment. Both the principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Prior to the Book- Entry Termination Date, the principal and interest on the Bonds shall be paid by the Registrar to the Custodian as the Owner thereof,for the benefit of the Beneficial Owners thereof,in accordance with the Letter of Representations. From and after the Book-Entry Termination Date,interest on the Bonds shall be paid by check or draft mailed on or before the interest payment date,to the persons identified as the Owners on the fifteenth day of the month preceding the interest payment date at the addresses shown for the Owners on the registration books for the Bonds(the"Bond Register")maintained by the Registrar;provided,however,that if so requested in writing by the Owner of at least $1,000,000 principal amount of Bonds, interest will be paid by wire transfer on the interest payment date to an account with a bank located in the United States. From and after the Book- Entry Termination Date,principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the Owners at the principal corporate trust office of the Registrar. Section 3. Redemption; Open Market Purchase. The Bonds maturing on December 1, 2021 are term bonds(the"Term Bonds")and, if not previously purchased by the City in the open market or optionally redeemed as set forth below, are subject to mandatory sinking fund redemption in part and by lot(in such manner as the Registrar shall determine),at par plus accrued interest to the redemption date on December 1 in the following years and in the following mandatory sinking fund redemption amounts: f kenton\ltgo 2001 6 ,ORDINANCE NO. 4922 Mandatory Sinking Fund ' Mandatory Redemption Dates Sinking Fund (December 1) i Redemption Amounts 2020 I $1,540,000 2021* 1,615,000 *Scheduled maturity The Bonds maturing on December 1 in the years 2001 and 2007 through 2011,inclusive, � I shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2012 shall be subject to optional redemption prior to maturity beginning on December 1, 2011, in whole at any time or in part on any interest payment date(maturities to be + I I selected by the City and by lot within a maturity in such manner as the Registrar shall determine), at par plus accrued inter/est to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their actual redemption or purchase prices) shall be credited against one or mare scheduled mandatory redemption amounts for such Term Bonds (as allocated by the City)bleginning not earlier than 60 days after the date of the optional j I redemption or purchase, and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Any Bond in the principal amount of greater than$5,000 may be partially redeemed in any integral multiple of$5,000. 'Prior to the Book-Entry Termination Date,Bonds shall be partially redeemed in accordance with the Letter of Representations. From and after the Book- - Entry Termination Date, in the event of a partial redemption of a Bond,upon surrender of such Bond at the principal corporate trust office of the Registrar, a new Bond or Bonds(at the option of the Owner)of the same maturity and interest rate and in the aggregate principal amount remaining unredeemed shall be authenticated and delivered to the Owner,without charge to the f:\renton'tgo 2001 7 ORDINANCE NO. 4922 Owner for such partial redemption, in any denomination authorized by this Ordinance and selected by the Owner. Prior to the Book-Entry Termination Date,the Registrar shall give, or cause to be given, notice of a call for redemption of any Bonds to the Custodian,as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance with the Letter of Representations. From and after the Book-Entry Termination Date,notice of any such intended redemption shall be given by of on behalf of the City not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid,to the Owner of each Bond to be redeemed at the address appearing on the Bond Register on the day the notice is given. The requirements of this section shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the Owner. In addition, such redemption notice shall be mailed within the same time period,postage prepaid,to the Depositories,to each NRMSIR and to Financial Security Assurance Inc. (the"Bond Insurer")or their respective successors,but such mailings shall not be a condition precedent to the redemption of such Bonds. If such notice to the Owners shall have been given and the City shall have set aside sufficient money for the payment of all Bonds called for redemption on the date fixed for redemption,the Bonds so called shall cease to accrue interest after such redemption date,and all such Bonds shall be deemed not to be outstanding hereunder for any purpose, except that the Owners of such Bonds shall be entitled to receive payment of the redemption price and interest accrued on the principal of the Bonds to the redemption date from the money set aside for such purpose. The City reserves the right to purchase any or all of the Bonds on the open market at any time and at any price. f:\rentonUtgo 2001 8 ORDINANCE NO. 4922 All Bonds purchased or redeemed by the City shall be surrendered to the Registrar for cancellation. Section 4. Debt Limit Not ExIceeded. The City finds and covenants that the Bonds are issued within all constitutional and statutory debt limitations presently applicable to the City. Section 5. Pledge of Full Faith, Credit and Resources. The Bonds are limited tax general obligations of the City. Unless the principal of and interest on the Bonds are paid from other sources,so long as any Bonds are outstanding,the City hereby irrevocably covenants to include in its budgets and to make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property ' I within the City subject to taxation in amounts which,together with any other money legally available therefor, shall be sufficient to pay the principal and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges its full faith,credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. All of such taxes shall ble paid into the Bond Fund hereinafter created. Section 6. Form of Bonds. The Bonds shall be typewritten,printed or lithographed on good bond paper in a form consistent with this Ordinance and Washington law. Section 7. Execution of Bonds. The Bonds shall be signed on behalf of the City with the facsimile or manual signatures of the Mayor and the City Clerk, and shall have the seal of the City impressed or a facsimile thereof imprinted thereon. In case either or both of the officers who shall have executed any Bond shall cease to be such officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Registrar or issued by the City, such Bond nevertheless may be authenticated, delivered and issued and upon such authentication, delivery and issuance,shall be as binding E\renton\ltgo 2001 9 . I ORDINANCE NO. 4922 upon the City as though those who signed the same had continued to be such officers of the City. Any Bond also may be signed and attested on behalf of the City by such persons as at the actual date of execution of such Bond shall be the proper officers of the City although at the original date of such Bond such persons were not such officers of the City. Section 8. Authentication and Delivery of Bonds by Registrar. The Registrar is authorized and directed,on behalf of the City,to authenticate and deliver Bonds initially issued or transferred or exchanged in accordance with the provisions of such Bonds and this Ordinance. Only such Bonds as shall bear thereon a"Certificate of Authentication"manually executed by an authorized signatory of the Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this Ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed,authenticated and delivered hereunder and are entitled to the benefits of this Ordinance. The Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Bonds. Section 9. Registration; Transfer and Exchange. The Registrar shall keep,or cause to be kept,the Bond Register at its principal corporate trust office. The City and the Registrar, each in its discretion,may deem and treat the Owner of each Bond as the absolute owner thereof for all purposes,and neither the City nor the Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 2 hereof,but such registration may be transferred as herein provided. All such payments made as provided in Section 2 hereof shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. f:\renton\ltgo 2001 10 i 1 f ORDINANCE NO. 4922 The registered ownership of any Bond may be transferred. Prior to the Book-Entry Termination Date,the beneficial ownership of the Bonds may only be transferred on the records established and maintained by the CusI odian. On and after the Book-Entry Termination Date,no i transfer of any Bond shall be valid i unless it is surrendered at any principal corporate trust office of the Registrar,with the assignment orm appearing on such Bond duly executed by the Owner I or such Owner's duly authorized agent,in a manner satisfactory to the Registrar. Upon such surrender,the Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Owner or transferee therefor(other than governmental fees or taxes 1 payable on account of such transfer), a new Bond or Bonds (at the option of the new Owner), of I the same maturity and interest rate and for the same aggregate principal amount,in any I '', authorized denomination,naming I Owner the person or persons listed as the assignee on the assignment form appearing on the I � P urrendered Bond,in exchange for such surrendered and cancelled Bond. On and after the Book-Entryl Termination Date,any Bond may be surrendered at the principal corporate trust office of/the Registrar and exchanged,without charge,for an equal aggregate principal amount of Binds,in any authorized denomination. The Registrar shall not be obligated to transfer or exchange any Bond during the 15 days preceding any applicable interest payment,principal payment or redemption date. 1 The Registrar may becomIe the Owner of any Bond with the same rights it would have if it were not the Registrar and,to the extent permitted by law,may act as depository for and permit 1 any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners of the Bonds. 1 ; I f lrentonUtgo 2001 11 ORDINANCE NO. 4922 The City covenants that,until all Bonds shall have been surrendered and cancelled, it will maintain a system of recording the ownership of each Bond that complies with the provisions of the Internal Revenue Code of 1986, as amended(the"Code"). Section 10. Mutilated,Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost, stolen or destroyed,the Registrar may authenticate and deliver a new Bond of the 1 same maturity and interest rate and of like tenor and effect in substitution therefor, all in li accordance with law. If such mutilated,lost, stolen or destroyed Bond has matured,the City at its option,may pay the same without the surrender thereof. However, no such substitution or payment shall be made unless and until the applicant shall furnish(a) evidence satisfactory to the Registrar of the destruction or loss of the original Bond and of the ownership thereof, and (b) such additional security,indemnity or evidence as may be required by or on behalf of the City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond so furnished shall be equally and proportionately entitled to the security of this Ordinance with all other Bonds issued hereunder. Section 11. Defeasance. If money and/or"Government Obligations"(as such obligations are defined in Chapter 39.53 RCW, as now in existence or hereafter amended) maturing at such times(s) and bearing such interest to be earned thereon(without any reinvestment thereof)as will provide a series of payments which shall be sufficient,together with any money initially deposited,to provide for the payment of all of the principal of and interest on all or a portion of the Bonds,when due in accordance with their terms in accordance with a refunding plan adopted by the City, are set aside in a special fund(hereinafter called the "trust account")to effect such payment and are pledged irrevocably for the purpose of effecting f kentonMtgo 2001 12 ORDINANCE NO. 4922 such payment,then no further payments need be made into the Bond Fund for the payment of the principal of and the interest on such Bonds,the Owners thereof shall cease to be entitled to any lien,benefit or security of this Ordinance except for the right to receive the money and the principal and interest proceeds on the obligations set aside in the trust account, and such Bonds shall no longer be deemed to be outstanding hereunder. Section 12. Sale of the Bonds;Delivery. The Purchaser has presented a bond purchase agreement(the"Purchase Agreement")to the City pursuant to which the Purchaser has offered to purchase the Bonds,under the terms and conditions provided in the Purchase Agreement, which written Purchase Agreement is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that entering into the Purchase Agreement is in the City's best interest and therefore accepts the offer contained in the Purchase Agreement and authorizes the execution of the Purchase Agreement by City officials. The Bonds will be prepared at City expense and will be delivered to the Purchaser in ! I accordance with the terms of the Purchase Agreement with the approving legal opinion of Gottlieb,Fisher&Andrews,PLLC,bond counsel, Seattle,Washington,relative to the issuance 1 of the Bonds,printed on or attached to each Bond. Bond counsel has not been engaged to participate in the preparation or review of,or express any opinion concerning the completeness or accuracy of,any official statement or other disclosure documentation used in connection with the offer or sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not been retained to monitor, and shall not be responsible for monitoring,the City's compliance with any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds. fkenton\ltgo 2001 j 13 • ORDINANCE NO. 4922 Section 13. Deliveryof Bonds; TemporaryBonds. The proper City officials,including, , but not limited to,the City Finance Director,are authorized and directed to execute and/or approve,as appropriate, all documents,including but not limited to, the final Official Statement pertaining to the Bonds and the commitment from the Bond Insurer for the issuance of an insurance policy for the Bonds, and to do everything necessary for the preparation and delivery of a transcript of proceedings pertaining to the Bonds, and the printing, execution and prompt delivery of the Bonds to the Purchaser and for the proper application and use of the proceeds of the sale thereof. If defmitive Bonds are not ready for delivery by the date established for closing(the "Closing"),the CityFinance Director,upon the approval of the Purchaser,may cause to be g )� Po PP issued and delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes and additions. Any temporary Bond or Bonds shall be entitled and subject to the same benefits and provisions of this Ordinance with respect to the payment, security and obligation thereof as definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable without cost to the Owners thereof for definitive Bonds when the latter are ready for delivery. Section 14. Call of 1997 CIB Bonds for Redemption. The City hereby calls the 1997 CIB Bonds for redemption on June 1,2007, at a redemption price of par plus accrued interest. Such call for redemption shall become irrevocable upon delivery of the Bonds at Closing. Section 15. Acquisition of Escrow Obligations. The proper City officials,including,but not limited to,the City Finance Director shall, at or prior to Closing,make appropriate arrangements for:the payment for and delivery of any Escrow Obligations(defined in the Escrow Agreement hereinafter defined)which are to be purchased in the open market pursuant to the 14 flrentonUtgo 2001 � � ORDINANCE NO. 4922 Refunding Plan; and shall,prior to closing,deliver or cause to be delivered to the Federal Reserve Bank in Seattle,Washington,'subscriptions for any Escrow Obligations which are to be acquired from the United States Bureau of Public Debt pursuant to the Refunding Plan described in the Escrow Agreement(the"Escrolw Agreement"),dated as of November 1,2001,between the City and U.S.Bank Trust National Association,as escrow trustee(the"Escrow Trustee"). The maturing principal of and the interest on such Escrow Obligations,together with the Initial Cash to be provided to the Escrow Trustee pursuant to the Refunding Plan,shall be sufficient to pay all of the interest to become due on the 1997 CIB Bonds from Closing to and including June 1 2007 when due,and to redeem on said date, all of the outstanding 1997 CIB Bonds at a redemption price of par and interest accrued thereon to the date of redemption. P !._ The Escrow Trustee shall esignate in any such subscriptions that all the principal of and interest on the Escrow Obligation subscribed for with the United States Bureau of Public Debt shall be payable to the Escrow Trustee. Such subscription may be amended as permitted by � I federal law. Section 16. Verification of Sufficiency of Escrow. The proper City officials,including, but not limited to,the City Fin Ice Director are authorized and directed to obtain,prior to Closing, independent verification from a firm of independent certified public accountants that, among other things,the cash flow scheduled to be received from the Escrow Obligations, together with any uninvested iiiitial cash, shall be sufficient to make the payments described in Section 15 hereof. At Closing,'if there has been any change in Escrow Obligations or cash deposited with the Escrow Trustee under this Ordinance and the Escrow Agreement,the City Finance Director shall cause the sufficiency of the Escrow Fund(as defined in the Escrow Agreement)to be verified in such manner as she shall deem necessary. f:\renton\ltgo 2001 15 ORDINANCE NO. 4922 Section 17. Escrow Agreement. The Escrow Agreement,in substantially the same form as the draft dated October 22,2001,on file with the City Clerk,is hereby approved in order to accomplish the defeasance of the 1997 CIB Bonds. The City Finance Director is authorized and directed to(a) execute and to deliver said Escrow Agreement,on behalf of the City,to the - Escrow Trustee on or before Closing,with such changes as the City Finance Director deems to be in the best interests of the City; and such execution and delivery of the Escrow Agreement shall evidence irrevocably the approval of the executed Escrow Agreement by the City;and (b)cause the Escrow Trustee to deliver notices of defeasance and redemption of the 1997 CIB Bonds in accordance with the Escrow Agreement. Section 18. Establishment of Bond Fund and Project Fund; Application of Bond Proceeds. There is hereby created and established in the office of the City Finance Director a special fund to be designated as the"Limited Tax General Obligation and Refunding Bond Fund, 2001"(the"Bond Fund"). The accrued interest on the Bonds, if any,received by the City upon the sale of the Bonds shall be deposited into the Bond Fund and shall be applied to the payment of interest coming due on the Bonds. Proceeds of the Bonds in the amount of$13,865,363.80 shall be paid by the City to the Escrow Trustee at Closing to be applied as set forth in the Escrow Agreement. In addition,the City shall transfer to the Escrow Trustee City funds in the amount of$753,058.71 to be deposited into the Capitalized Interest Fund and applied to the payment of interest on the Bonds during the construction of the Parking Garage and six months thereafter,all pursuant to the Escrow Agreement. • f kenton\ltgo 2001 16 1 I ORDINANCE NO. 4922 The remaining proceeds'of the sale of the Bonds, less the underwriter's discount and the bond insurance premium to be paid by the Purchaser on behalf of the City and plus the net original issue premium,in the amount of$5,924,052.23 shall be deposited,upon receipt,to the "Parking Garage Fund(No. 3(21 )"(the"Project Fund"), established in the office of the City Finance Director,to pay part of the costs of the Project. Except as provided by the Code and Section 19 of this Ordinance,the interest and profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and applied as described in the preceding paragraph. Except as provided by the Code and Section 19 of this Ordinance,if any money allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the Project or !_,I after termination of the Project by the City, such money shall be transferred to the Bond Fund and applied to the payment of the principal of and interest on the Bonds. Pending application as described in this Section 18 and subject to the requirements of the Code and Section 19 of this Ordinance,money allocable to the Bond proceeds in the Project fj Fund may be temporarily deposited in such institutions or invested in such investments as may be lawful for the investment of City funds. Section 19. Tax-Exemption Covenants. The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation, and will � I -' take or require to be taken such acts as may be permitted by Washington law and as may from time to time be required under;applicable law to continue the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation. Without limiting the generality of the foregoing,the City will not invest or make or permit any use of the proceeds of farenton\ltgo 2001 17 ORDINANCE NO. 4922 the Bonds or of its other money at any time during the term of the Bonds which would cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code. The City covenants that it shall calculate or cause to be calculated, and shall rebate to the United States, all earnings from the investment of Bond proceeds that are in excess of the amount that would have been earned had the yield on such investments been equal to the yield on the Bonds,plus income derived from such excess earnings,to the extent and in the manner required by Section 148 of the Code. The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer the arbitrage certifications of which may not be relied upon. The City will take no actions and will make no use of the proceeds of the Bonds or any other funds held under this Ordinance which would cause any Bond to be treated as a"private activity bond"(as defined in Section 141(b)of the Code) subject to treatment under said Section 141(b)as an obligation not described in Section 103(a) of the Code,unless the tax exemption thereof is not affected. Section 20. Preliminary Official Statement Declaration. The City has been provided with copies of a preliminary official statement dated September 12,2001, and the October 10, 2001 Supplement to the PreliminaryOfficial Statement Dated September 12, 2001 (as PP supplemented and amended,the"Preliminary Official Statement"),prepared in connection with the sale of the Bonds. For the sole purpose of the Purchaser's compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City"deems final"the Preliminary Official Statement, as()fits date, except for the omission of information on offering prices, interest rates, f:\renton\ltgo 2001 18 j I ORDINANCE NO. 4922 selling compensation, delivery dates,ratings, other terms of the Bonds dependent on such matters. Section 21. Undertaking to Provide Continuing Disclosure. This section constitutes the City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds required by subsection(b)(5)(i)of the Rule 15c2-12 (the"Rule") of the United States Securities and Exchange Commission(the"SEC"). The City hereby agrees to provide or cause to be provided to each then existing nationally recognized municipal securities information repository designated by the SEC("NRMSIR"),to the State Information Depository("SID"),if one is created,and to the Bond Insurer the following annual financial information and operating data(collectively,the"Annual Financial Information") for each prior fiscal year, commencing with the fiscal year ending December 31, 2001,on or before the last day of the seventh month following the end of such prior fiscal year: (a) Annual financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units,as such principles may be changed from time t time and as permitted by State law;which statements will not be audited,except that if and when audited financial statements are otherwise prepared and available to the City,they will be provided(the"Annual Financial Statements"); (b) The assessed valuation of taxable propertyin the City; , (c) Ad valorem taxes due and the percentages of taxes collected; (d) Property tax levy rates per$1,000 assessed valuation; (e) A statement of authorized,issued and outstanding indebtedness of the City; and. f'rentonVtg o 2001 19 ORDINANCE NO. 4922 (f) A narrative explanation of the reasons for any amendments to this Section 21 made during the previous fiscal year and the impact of such amendments on the Annual Financial Information being provided. In its provision of such financial information and operating data,the City may cross- reference to any"final official statement"(as defined in the Rule)available from the Municipal Securities Rulemaking Board(the"MSRB")documents theretofore provided to each then existing NRMSIR or the SID,if one is created. If not submitted as part of the Annual Financial Information,then when and if available, the City shall provide its Annual Financial Statements,which shall have been audited by such • auditor as shall be then required or permitted by the State law,to each then existing NRMSIR,to the SD,if one is created,and to the Bond Insurer. The City further agrees to provide or cause to be provided, in a timely manner, to the SID,if one is created,and to either the MSRB or each then existing NRMSIR and to the Bond Insurer,notice of any of the following events with respect to the Bonds, if material: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled 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 or events affecting the tax-exempt status of the Bonds; 7. ,. Modification to rights of the Owners of the Bonds; E\rentonUtgo 2001 20 ORDINANCE NO. 4922 8. Optional redemptions of the Bonds; 9. Defeasances of the Bonds; 10. Release,substitution or sale of property securing repayment of the Bonds; and 11. Rating changes. The City also agrees to provide or cause to be provided,in a timely manner,to the SID,if one is created,and to either the MSRB or each then existing NRMSIR,notice of its failure to provide the Annual Financial Information for the prior fiscal year on or before the last day of the seventh month following the end of such prior fiscal year. After the issuance of the Bonds,so long as the interests of the Owners or Beneficial Owners of the Bonds will not be materially impaired thereby, as determined by a party unaffiliated with the City(including,without limitation,a trustee for the Owners,nationally recognized bond counsel or other counsel familiar with the federal securities law),or pursuant to a favorable"no-action letter"issued by the SEC,this Section 21 may only be amended in connection with any change in legal requirements,change in law, or change in the identity, iI nature or status of the obligated person;or type of business conducted, and only in such a manner that the undertaking of the City,as so amended,would have complied with the requirements of the Rule at the time of the riniary offering, after taking into account any amendments or p interpretations of the Rule,as well as any change in circumstances. The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without amendment upon the defeasance,prior redemption or payment in full of all of the then outstanding Bonds. This Section 21 or any provision hereof, shall be null and void if the City(i)obtains)an opinion of nationally recognized bond counsel or other counsel rf kentonUtgo 2001 21 ORDINANCE NO. 4922 familiar with the federal securities laws to the effect that those portions of the Rule which require this Section 21 or any such provision are invalid,have been repealed retroactively or otherwise do not apply to the Bonds; and(ii)notifies and provides the SID,if any,and either the MSRB or each then existing NRMSIR with copies of such opinion. The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this Section 21 shall be limited to the right to obtain specific enforcement of the City's obligations under this Section 21, and any failure by the City to comply with the provisions of this undertaking shall not be a default with respect to the Bonds under this Ordinance. The City Finance Director is authorized and directed to take such further action on behalf of the City as may be necessary, appropriate or convenient to carry out the requirements of this Section 21. Section 22. Contract; Severability. The covenants contained in this Ordinance shall contract between the Cityand the Owners of each and everyBond. The City a o unconditionally covenants that it will keep and perform all of the covenants of the Bonds and this Ordinance. If any one or more of the provisions of this Ordinance shall be declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining provisions of this Ordinance or the Bonds, and this Ordinance and the Bonds shall be construed and enforced as if such unconstitutional or invalid provision had not been contained herein. Section 23. Effective Date. This Ordinance shall take effect and be in force five days from and after its passage and publication as provided by law. PASSED,by the City Council and APPROVED by the Mayor of the city of Renton, Washington, at a regular open public meeting thereof,this 22nd day of October,2001. flrentonMtgo 2001 22 1. " I I ' f ORDINANCE NO. 4922 PASSED by the City Council and APPROVED by the Mayor of the city of Renton, j Washington, at a regular open public meeting thereof,this 22nd day of October,2001. C0141.44.4 Jesse Tanner,Mayor I AUTHENTICATED: ?),14:11: 7tiva City Cle - 'lyn J.Petersen APPROVED AS:TO FORM: • 1J dith Andrews,-Gottlieb,Fisher&Andrews,PLLC Bond Counsel Date of Publication: October 26 ,2001 (Title only) I - I 23 l • f:lrenton%go 2001 / / October 22,2001 Renton City Council Minutes Page 379 The additional funding of$50,000 to be added to the Benson Rd. S.Pedestrian Improvement project will come from NE 44th Interchange(Port Quendall . ' project). MOVED BY PERSSON,SECONDED BY BRIERE,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Utilities Committee Utilities Committee Chair Briere presented a report recommending concurrence Utility: Maplewood Water in the recommendation of the Planning/Building/Public Works Department that Treatment Improvements the vlayor and City Clerk be authorized to sign the loan agreement with the Design,PWTF Loan State of Washington Department of Community,Trade and Economic Development for Public Works Trust Fund pre-construction loan number PW- 01-691-PRE-117 for the design of the Maplewood Water Treatment Improvement Facility. The loan amount is not to exceed$567,831,with a five- year term and 1/2 percent interest per year. The Committee further recommended that the resolution regarding this matter be presented for reading and adoption. MOVED BY BRIERE,SECONDED BY KEOLKER- WHEELER,COUNCIL CONCUR IN THE COMMITTEE REPORT. • CARRIED. (See below for resolution.) ORDINANCES AND The following resolution was presented for reading and adoption: RESOLUTIONS ' Resolution#3536 A resolution was read authorizing the Mayor and City Clerk to execute an Utility:Maplewood Water interlocal cooperative agreement with the State of Washington Department of Treatment Improvements Community,Trade,and Economic Development entitled "Public Works Trust Design,PWTF Loan Fund Pre-Construction Loan Agreement Number PW-01-691-PRE-117" for design of the Maplewood Water Treatment Improvement project. MOVED BY ;; BRIERE,SECONDED BY KEOLKER-WHEELER,COUNCIL ADOPT THE _ RESOLUTION AS READ. CARRIED. The following ordinance was presented for first reading and advanced for secIond and final reading: I Finance: 2001 Bond Issuance An ordinance was read relating to the incurrence of indebtedness;providing for Garage),(DowntownParkingGara e), the sale and issuance of Limited Tax General Obligation and Refunding Bonds, 1997 Bond Refund 2001,to provide part of the costs of financing the construction of a Municipal Downtown Parking Garage and to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B;providing for the date, denominations,form,terms,registration privileges,maturity,interest rates and covenants of the bonds;providing for the annual levy of taxes to pay the principal thereof and the interest thereon; establishing a debt service fund and project fund for the bonds;and providing for the sale and delivery of such bonds to U.S.Bancorp Piper Jaffray Inc., Seattle,Washington. MOVED BY NELSON,SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRIED. I Ordinance#4922_ Following second and final reading of the above ordinance,it was MOVED BY Finance: 2001 Bond Issuance CLAWSON,SECONDED BY NELSON, COUNCIL ADOPT THE (Downtown Parking Garage), ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED. 1997 Bond Refund F ;The following ordinance was presented for second and final reading and CERTIFICATE - adoption: I,the undersigned City Clerk of the- • C y of Renton,Washington,certify t t this is a true and correct copy of 1 /WW1 eOWIQL sliN'i i Subscribed . I. sealed this_- say of Aro-ti ,20� • `fes *✓ or Clerk l —, . t ti- -' , i CITY OF RENTON NOTICE OF ORDINANCES • ADOPTED BY AFFIDAVIT OF PUBLICATIONRENTONCITYCOUNCIL Following, is. a summary of ordinances adopted by the Renton Christina Meyers, first duly sworn on oath states that he/she is the Legal Clerk of the City Council on October 22,2001. ORDINANCE NO.4922 SOUTH COUNTY JOURNAL An ordinance relating to the incurrence of indebtedness; 600 S. Washington Avenue,Kent, Washington 98032 providing for the sale and issuance'r of Limited Tax General Obligation,( and Refunding Bonds; 2001, to 1 a daily newspaper published seven (7)times a week. Said newspaper is a legal provide part of the costs of financing] • newspaper of general publication and is now and has been for more than six months prior the construction of a municipal to the date of publication, referred to, printed and published in the English language parking garage and to advance . continuallyas a dailynewspaper in Kent, KingCounty, Washington. The South Countyrefund and.defease a portion of the 9 City's Limited Tax General Obligation Journal has been approved as a legal newspaper by order of the Superior Court of the • Bonds, 1997B; providing for the State of Washington for King County. date, denominations, form, terms, The notice in the exact form attached,was published in the South County Journal registration privileges, maturity, interest rates and covenants of the (and-not in supplemental form)which was regularly distributed to the subscribers during Bonds, providing for the annual levy;' • the below stated period. The annexed notice, a of taxes to pay the principal thereof' and the interest thereon;establishing • ORD. 4922 &4923 a Debt Service Fund and Project Fund for the Bonds; and providing for the sale and delivery of such as published on: 10/26/01Bonds to U.S. Bancorp Piper Jaffray Inc.,Seattle,Washington. The full amount of the fee charged for said foregoing publication is the sum of$93.50, Effective:November 1,2001 charged to Acct. No. 8050640. An ordinance ofif theC City of Renton, Washington, amending Chapter 9- ------ __ __ The cost above includes a$6.00 fee for the printing of the affidavits. 16, Special Assessment Districts, of ' Title 9 (Public Ways) of Ordinance Legal Number 9671 — —— -- - -- -- No. 4260 entitled "Code of General Ordinances of the City or Renton, --- _ _ _ -_ / ''�i� / / Washington"o - by adding a cies section 9- by revising policies Legal C erk, South County Journal pertaining to payment and administration of special assessment charges, and renumbering Sections Subscribed and sworn before me on this /n \ y da of J r , 20019-16-8 through 9-16 5. ( 'Effective:November 25,2001 A complete text of each ordinance `01111101//' is available at the Renton Municipal `� �� \i(l'' Building, 1055 S. Grady Way; and, N�0." fF49ir�, ,� � I / posted at the Renton Public ,�b.,sx'SSILPI E4,;..ez e,� Libraries;100 Mill Avenue South and, Q:���`' qF��'o Notary Public of the State of Washington 2902 NE 12th Street. Upon request 4c: r o jn n v :N e residing in Renton to the City Clerk's office, (425) aso 6510,copies will also be mailed for a ----0— King County, Washington ' tee. r Marilyn J.Petersen - s�N a��' `� 4.• ©'- City Clerk/Cable Manager Published in the South County �'1,11:,....''' 7:. ' 'a,' Joumal October 26,2001.9671 s's•ss sae(1 i 1.z ' °°e `ea � I Cl bancorp Piper Jaffray® 1200 Fifth Avenue,Suite 1500 P.O.Box 34930 Seattle,WA 98124-1930 206 287-8700 $19,505,000 CITY OF RENTON, WASHINGTON Limited Tax General Obligation & Refunding Bonds, 2001 Bonds Dated: November 1,2001 Bonds Due: December 1,2001, 2007—2021 PURCHASE CONTRACT City of Renton,Washington October 22,2001 1055 South Grady Way Renton, Washington 98055 Ladies&Gentlemen: U.S. Bancorp Piper Jaffray, acting as the "Purchaser" is pleased to offer to purchase from the City oT Renton, Washington (the "Seller") all of its $19,505,000 Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"). This offer is based upon the terms and conditions set forth below and in the attached Exhibit A, which when accepted by the Seller shall constitute the terms and conditions of our Purchase Contract for the Bonds.Those terms and conditions are as follows: 1. Prior to date of delivery and payment for the Bonds identified in paragraph (i) of Exhibit A (the "Closing"),the Seller shall pass an Ordinance authorizing the issuance of the Bonds and accepting the Purchaser's offer to purchase the Bonds (the "Ordinance") in form and substance acceptable to the Purchaser. 2. The Seller shall sell and deliver to the Purchaser, and the Purchaser shallurchase accept deliveryof, p P and pay for the entire $19,505,000 principal amount of the Bonds for the purchase price set forth in paragraph(a)of Exhibit A. 3. The Seller consents to and ratifies the use by the Purchaser of the information contained in the Official Statement relating to the Bonds (the "Official Statement") in marketing the Bonds, and further authorizes the use of the Official Statement in connection with the public offering and sale of the Bonds. For the sole purpose of the Purchaser's compliance with Securities and Exchange Commission Rule 15c2-12 (b) (1), the Seller "deems final" the preliminary version of the Official Statement as of its Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by U.S. Bank National Association or its affiliates, and involve investment risks, including possible loss of the principal amount invested. Securities products and services are offered through U.S. Bancorp Piper Jaffray Inc.,member SIPC and NYSE, Inc.,a subsidiary of U.S. Bancorp. City of Renton, Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 2 date, except for the omission of information as to selling compensation, principal amount, interest rates, offering prices,delivery dates, and other terms of the Bonds depending on such matters. 4. The Seller represents to, and agrees with, the Purchaser, as of the date hereof and as of the date and time of Closing,that: a. The Seller has and will have at Closing full legal right, power, and authority to enter into and perform its obligations under this Purchase Contract and under the Ordinance, to approve the Ordinance and to sell and deliver the Bonds to the Purchaser; b. This Purchase Contract,the Ordinance, and the Bonds do not and will not conflict with or create a breach of or default in any material respect under any existing law, regulation,judgment, order or decree, or any agreement, lease, or instrument to which the Seller is subject or by which it is bound; c. No governmental consent, approval, or authorization other than the Ordinance is required to be obtained by the Seller for the sale of the Bonds to the Purchaser, d. This Purchase Contract, the Ordinance and the Bonds (when issued and delivered in accordance with the Ordinance and sold to the Purchaser as provided herein) will be legal, valid and binding obligations of the Seller, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against municipal corporations in the State; e. The Ordinance shall have been duly passed by the Seller, shall be in full force and effect and shall not have been amended without the Purchaser's consent at the time of Closing; f. The preliminary version of the Official Statement, except as to matters added, modified, amplified, revised, and/or corrected in the Official Statement, shall be accurate and complete in all material respects as of its date and the Official Statement shall be accurate and complete in all material respects as of its date and as of the date of Closing, with regards to which, no representation is made on the information regarding DTC and its book-entry system, Financial Security Assurance and related policy, Causey Demgen and Moore and U.S. Bank Trust, N.A.; and g. Any certificate signed by any official of the Seller and delivered to the Purchaser pursuant to or in connection with this Purchase Contract shall be deemed a representation by the Seller to the Purchaser as to the truth of the statements therein made and is delivered to the Purchaser for such purpose only. 5. As conditions to the Purchaser's obligations hereunder: City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 3 a. From the date of the Seller's acceptance of this Purchase Contract to the date of Closing, there shall not have been any: (1) Material adverse change in the financial condition or general affairs ofthe Seller; (2) Event, court decision or proposed law, rule, or regulation which may have the effect of changing the federal income tax exemption of the interest on the Bonds; (3) International or national crisis, suspension of stock exchange trading or banking moratorium materially affecting the marketability of the Bonds; (4) Material adverse event with respect to the Seller which in the reasonable judgment of the Purchaser requires or has required an amendment, modification, or supplement to the Official Statement and such amendment,modification,or supplement is not made; or (5) Downgrade, suspension or withdrawal or an announcement of the possibility of a downgrade, suspension or withdrawal of any rating of bonds, notes, or other obligations of the City(including, without limitation, the Bonds), by S&P or Fitch and such action, in the reasonable opinion of the Purchaser,will materially adversely affect the marketability or the market price of the Bonds. provide the Purchaser, within seven business days of the date hereof, b. The Seller will ycopies of the Official Statement in sufficient quantity to comply with the Purchaser's obligations under the Securities and Exchange Commission Regulation 15c2-12(b)(4). c. The Seller has agreed in the Ordinance that the Seller will provide or cause to be provided, in accordance with the requirements of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission, certain financial information and operating data, including audited financial statements for the preceding fiscal year, timely notice of the occurrence of certain material events with respect to the Bonds and timely notice of a failure by the Seller to provide the required financial information. The Purchaser's obligation to purchase the Bonds shall be conditioned upon the Seller's undertaking to provide this information to be in full force and effect at the Closing. d. Concurrently with the issuance of the Bonds, Financial Security Assurance the "Bond Insurer" will issue a municipal bond insurance policy guaranteeing the payment of principal of and interest on the Bonds (the "Bond Insurance Policy"). e. At or prior to Closing,the Purchaser shall have received the following: (1) The Bonds,duly executed and authenticated; (2) A certificate of authorized officers of the Seller, in form and substance acceptable to the Seller and Purchaser,to the effect; (i)that the Seller's execution of the Official Statement is City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 4 authorized, (ii) that the Official Statement (including the financial and statistical data contained therein) did not as of its date or as of the date of Closing contain any untrue statement of material fact or omit to state a material fact necessary to make such statements, in light of the circumstances under which they were made, not misleading, with regards to which, no such representation need be made on the information regarding DTC and its book-entry system, Financial Security Assurance and related policy, Causey Demgen and Moore and U.S. Bank Trust,N.A.; and (iii) that the representations of the Seller contained in this Purchase Contract are true and correct when made and as of Closing; (3) An approving opinion or opinions of the law firm identified in paragraph(j) of Exhibit A as bond counsel or from another nationally recognized firm of municipal bond lawyers (either or both of which shall be referred to as "Bond Counsel") satisfactory to the Purchaser and dated as of Closing, to the effect; (i) the Bonds are valid, legal and binding obligations of the Seller and payable from the sources described in the Ordinance; (ii)that interest on the Bonds is exempt from federal income taxation; and (iii) that the Bonds are not "private activity bonds"within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (4) A certificate of authorized officers of the Seller to the effect that no litigation is pending, or to the knowledge of the Seller threatened, against the Seller in any court; (i) to restrain or enjoin the sale or delivery by the Seller of the Bonds; (ii) in any manner questioning the authority of the Seller to issue, or the issuance of validity of,the Bonds; (iii)questioning the constitutionality of any, resolution or ordinance, or the validity of any proceedings authorizing the issuance of the Bonds; (iv) questioning the validity or enforceability of the Ordinance; (v) contesting in any way the completeness or accuracy of the Official Statement; (vi)questioning the titles of any officers of the Seller under the laws of the State of Washington; or (vii) which might in any material respect adversely affect the financial condition of the Seller; (5) A certificate, dated the date of Closing, to the effect that the Seller's undertaking described in Section 21 of the Ordinance is in effect and has not been amended and that the Seller has not defaulted in any material respect under any prior undertakings to provide ongoing information pursuant to the Rule; (6) A certificate signed by authorized officers of the Seller to the effect that the officers of the Seller who signed or whose facsimile signatures appear on the Bonds were on the date of execution of the Bonds the duly elected or appointed and qualified and acting officers of the Seller and that their signatures are genuine or accurate facsimiles; (7) A certified copy of the Ordinance; (8) A copy of the Official Statement, signed on behalf of the Seller by an authorized officer of the Seller; City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 5 (9) A non-arbitrage certificate signed by an authorized officer of the Seller, (10) An executed copy of this Purchase Contract; (11) Evidence satisfactory to the Purchaser of the assignment of ratings on the City's outstanding uninsured general obligation bonds of"A+" by Standard and Poor's and "A+" by Fitch and ratings on the Bonds of"AAA"by Standard and Poor's and "AAA"by Fitch, together with a confirmation from the City that there has been no adverse change in any of such ratings as of the date of the Closing; (12) A copy of the municipal bond insurance policy issued by Financial Security Assurance and an opinion dated the date of Closing and addressed to the Purchaser of the General Counsel of Financial Security Assurance in a form satisfactory to the Purchaser; and (13) Such additional legal opinions, certificates, instruments and documents as the Purchaser may reasonably request to evidence the truth, accuracy and completeness, as of the date hereof and as of the date of Closing, of the representations and warranties contained herein and of the statements and information contained in the Official Statements and the due performance by the Seller at or prior to Closing of all agreements then to be performed and all conditions then to be satisfied by the Seller. 6. The Seller shall pay or cause to be paid, from proceeds of the Bonds or other legally available money, all expenses incident to the performance of the Seller's obligations hereunder, including but not limited to, the cost of ratings and insurance on the Bonds, the cost of printing and delivering the Bonds; the cost of preparation, printing (and/or word processing and reproduction), distribution and delivery of the Official Statement, Ordinance, and all other agreements and documents contemplated hereby and any drafts thereof in reasonable quantities as requested by the Purchaser; and the fees and disbursements of Bond Counsel, Verification Agent, Escrow Trustee, the Registrar and any other experts or consultants retained in connection with the Bonds. 7. If, between the date hereof and 25 days following the date of Closing, any material adverse event affecting the Seller or the Bonds shall occur which results in the Official Statement containing any untrue statement of a material fact or omitting to state any material fact necessary to make the Official Statement, or the statements or information therein contained, in light of the circumstances under which they were made, not misleading, the Seller shall notify the Purchaser and, if in the opinion of the Seller and the Purchaser such event requires a supplement or amendment to the Official Statement, the partywhose omission, misstatement, or changed circumstance has resulted in the supplement or g p amendment will supplement or amend the Official Statement in a form and in a manner approved by the Seller and the Purchaser. 8. Any notice or other communication to be given to the Seller under this Purchase Contract shall be given by delivering the same in writing to its respective address set forth on page one of this Purchase Contract. Any notice or other communication to be given to the Purchaser under this Purchase City of Renton, Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 6 Contract shall be given by delivering the same in writing to: U.S. Bancorp Piper Jaffray, 800 Nicollet Mall,Minneapolis,Minnesota, 55402 (Attention: Municipal Research). 9. Upon acceptance, this Purchase Contract shall be binding upon the Seller and the Purchaser. This Purchase Contract is intended to benefit only the parties hereto. The Seller's representations and warranties shall survive any investigation made by or for the Purchaser, delivery and payment for the Bonds, and the termination of this Purchase Contract. Should the Seller fail to satisfy any of the foregoing conditions or covenants, or if Purchaser's obligations are terminated for any reason permitted under this Purchase Contract,then neither the Purchaser nor the Seller shall have any further obligations under this Purchase Contract, except that any expenses incurred shall be borne in accordance with Section 6. 10. This Offer expires on the date set forth in paragraph(1)of Exhibit A. Respectfully submitted, U.S. BANCORP PIPER JAFFRAY By: Fred Eoff Managing Director,Public Finance Accepted and agreed to as of the date of this Purchase Contract: CITY OF RENTON By: esse Tanner Its: Mayor EXHIBIT A DESCRIPTION OF THE BONDS (a) Purchase Price: Par Amount of Bonds: $19,505,000.00 Plus:Reoffering Premium: 547,640.75 Less:Underwriter's Discount: (165,792.50) Purchase Price: $19,886,848.25 (b) Denominations: $5,000 each or integral multiples thereof (c) Dated Date: November 1,2001 (d) Form: Fully registered Book-Entry only with privileges of exchange at the expense of the Seller. (e) Interest Payable: Interest on the Bonds from their dated date to maturity will be payable commencing on December 1, 2001 and semiannually thereafter on each June 1 and December 1 until redeemed. (f) Maturity Schedule: The principal component of the Bonds constitutes the principal payable with respect to the Bonds which mature on the dates and amounts and shall bear interest at the rates set forth below: Maturity Schedule Due Interest Due Interest Dec. 1 Amount Rate Yield Dec. 1 Amount Rate Yield 2001 $310,000 2.150% 2.150% 2013 $1,530,000 5.250% 4.360% 2014 1,610,000 5.250 4.500 2007 75,000 3.500 3.600 2015 1,695,000 5.250 4.630 2008 85,000 3.750 3.800 2016 1,785,000 5.250 4.740 2009 335,000 3.900 3.950 2017 1,875,000 5.250 4.840 2010 1,350,000 4.000 4.000 2018 1,385,000 5.250 4.930 2011 1,400,000 4.000 4.100 2019 1,460,000 5.250 5.010 2012 1,455,000 5.250 4.280 $3,155,000 5.00%Term Bonds due December 1,2021 --Yield 5.10% Mandatory Redemption Year Amount 2020 $1,540,000 2021 1,615,000 (g) True Interest Cost: 4.84805% (h) Optional Redemption Features: The Bonds maturing on December 1 in the years 2001 through 2011, inclusive, shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1,2012 shall be subject to optional redemption prior to maturity beginning on December 1,2011, in whole at any time or in part on any interest payment date (maturities to be selected by the City and by lot within a maturity in such manner as the Registrar shall determine), at par plus accrued interest to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their actual redemption or purchase prices)shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds(as allocated by the City)beginning not earlier than 60 days after the date of the optional redemption or purchase,and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. (i) Delivery Date,Time and Location: November 1,2001 at 9:00a.m.(Pacific) To be held at the offices of Gottlieb Fisher&Andrews 1325 Fourth Avenue,Suite 1200 Seattle,Washington 98101-2509 (j) BondCounsel: Gottlieb Fisher&Andrews (k) Method of Payment: Federal Funds Wire (1) Offer Expires: October 23,2001 at 7:00 PM Pacific Time ESCROW AGREEMENT This ESCROW AGREEMENT, dated as of November 1, 2001, is made by and between the CITY OF RENTON, WASHINGTON (the "City"), duly organized and existing pursuant to the laws of the State of Washington, and U.S. BANK TRUST NATIONAL ASSOCIATION, as escrow trustee hereunder(the ``Escrow Trustee"). RECITALS WHEREAS, the City how has outstanding$12,660,000 principal amount of its Limited c Tax General Obligation Bonds', 1997B designated as the Current Interest Bonds (the "1997 CD3 Bonds"); and WHEREAS, after due consideration, it appears to the City Council of the City (the "City Council") that refunding all of the outstanding 1997 CIE Bonds by the issuance of refunding bonds of the City so that substantial savings will be effected by the difference between the principal and interest cost over the life of such refunding bonds and the principal and interest requirements over the life of the 1997 CIB Bonds but for such refunding; and WHEREAS, by Ordinance No. 4922 (the "Bond Ordinance"), the City has duly and validly authorized the issuance, sale and delivery of its $19,505,000 Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"), and the delivery of a portion of the net principal proceeds of the Bonds to the Escrow Trustee, the purchase of the noncallable "Government Obligations" (asl defined in Chapter 39.53 RCW) listed in Schedule 1 hereto (the "Escrow Obligations"), and the execution and delivery of this Escrow Agreement; and WHEREAS, the Escrow Trustee has duly and validly accepted the trust created by this Escrow Agreement and the performance of its obligations hereunder; and WHEREAS, the Refunding Plan for the 1997 CM Bonds (the "Refunding Plan") will be accomplished pursuant to this Escrow Agreement (including the Schedules hereto), and shall consist of the following: (a) The payment tq the Escrow Trustee by U.S. Bancorp Piper Jaffray Inc., the Purchaser of the Bonds (the "Purchaser"), on behalf of the City, of the sum of$13,865,363.80, derived solely from the net proceeds of the Bonds: (b) The purchase by the Escrow Trustee of the Escrow Obligations listed in Schedule 1 attached hereto and made a part hereof by this reference, with a portion of the money delivered to the Escrow Trustee as described in clause (a) above; (c) The delivery of a report (the "Escrow Verification") of Causey Demgen &Moore Inc., independent certified public accountants, attached as Schedule 2 hereto and made a part hereof by this reference, verifying the mathematical accuracy of the computations (which computations shall be attached to said letter) of the yield on the Bonds and the Escrow Fund, and 1 f:\rentonUtgo01 the computations showing that the Initial Cash and the maturing principal of and interest on the Escrow Obligations will provide sufficient money (assuming that all the principal of and the interest on the Escrow Obligations is paid on the due dates thereof) to pay, when due, the interest on the 1997 CIB Bonds up to and including June 1, 2007, and the redemption price thereof due on that date equal to par plus accrued interest (collectively, the "Escrow Payments"); (d) The receipt by the Escrow Trustee of the maturing installments of principal of and interest on the Escrow Obligations; (e) The Escrow Trustee's payment from time to time to the fiscal agencies of the State of Washington (collectively, the"Fiscal Agencies") of money sufficient to make the Escrow Payments, when due; (f) The payment by the Escrow Trustee of the costs of issuing the Bonds, as described on Schedule 3 attached hereto and incorporated herein by this reference. WHEREAS, pursuant to the Bond Ordinance, the City shall transfer to the Escrow Trustee City funds in the amount of$753,058.71 to be used for the purchase by the Escrow Trustee of the noncallable "Government Obligations" (as defined in Chapter 39.53 RCW) listed in Schedule 4 hereto (the "City Escrow Obligations"), pursuant to this Escrow Agreement and applied to the payment of interest on the Bonds during the construction of the Parking Garage and six months thereafter; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, for the benefit of the registered owners of the 1997 CIB Bonds, the parties hereto covenant as follows: 1 Section 1. Definitions lin Bond Ordinance Applicable. Unless the context otherwise requires, the terms defined in the Bond Ordinance and in the recitals and the succeeding sections of this Escrow Agreement shall, for all purposes of this Escrow Agreement (including the recitals hereto), be incorporated herein and made a part hereof by this reference, and shall have the meanings specified in such places, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined. Section 2. Creation of Escrow Fund. The Escrow Trustee shall create a trust fund in escrow (the "Escrow Fund")under this Escrow Agreement into which shall be irrevocably deposited the Escrow Obligations, the Initial Cash, any Substitute Obligations and any other funds provided to the Escrow Trustee hereunder for use in the refunding of the 1997 CIB Bonds. Section 3. Delivery of Bond Proceeds to Escrow Trustee. On November 1, 2001 (the "Date of Closing"), the City shall cause the Purchaser to pay to the Escrow Trustee the sum of $13,865,363.80, derived solely from the net proceeds of the Bonds. Execution of this Escrow Agreement by the Escrow Trustee shall constitute written acknowledgment by the Escrow Trustee of its receipt of said sum. 2 f:\renton\ltgo0l Section 4. Applicationiof Net Proceeds of the Bonds. On the Date of Closing, the Escrow Trustee shall: (a) Apply the sum of$13,809,425, derived solely from the net proceeds of the Bonds, to pay the purchase price of the Escrow Obligations in the principal amounts, with the dates of maturities, at the prices and at the interest rates set forth in Schedule 1 hereto. Upon receipt of the Escrow Obligations, the Eslcrow Trustee shall deliver to the City and to Gottlieb,Fisher& Andrews, PLLC ("Bond Counsel") copies of the documents evidencing the purchase of and payment for the Escrow Obligations; provided, that the City reserves the right to substitute for a temporary period until receipt of the Escrow Obligations,prior to the Date of Closing, other noncallable direct United States obligations or cash for any of the Escrow Obligations if, in the opinion of Bond Counsel, the interest on the Bonds will remain excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended(the "Code"), and such substitution shall not impair the timely payment of the amounts required to be paid under the Refunding Plan, which opinion will be accompanied by a verification of such timely payments from a nationally recognized firm of independent certified public accountants; (b) Hold the sum of$6.25 (the"Initial Cash"), derived solely from the net proceeds of the Bonds, uninvested in the form of United States currency until application of the same to meet the Escrow Payments; and (c) Apply the sum'of$55,932.55, derived solely from the net proceeds of the Bonds, to the payment of the costs of issuing the Bonds listed on Schedule 3 hereto. Section 5. Sufficiency of Escrow Obligations. On the basis of the Escrow Verification, the City represents that the Escrow Obligations, and the maturing principal thereof and the interest thereon, if paid when due, together with the Initial Cash, shall be sufficient to make the Escrow Payments, when due. Section 6. Collection of Proceeds of Obligations and Application of Such Proceeds and Money. The Escrow Trustee shall present for payment, and shall collect and receive, on the due dates thereof, the maturing installments of principal of and the interest on the Escrow Obligations and any Substitute Obligations (hereinafter defined). From such proceeds and other money in the Escrow Fund, thIe Escrow Trustee shall, to the extent sufficient funds are in its possession, make timely payment to the Fiscal Agencies of the amounts necessary to make the Escrow Payments, when due. Said payments shall be made by check, wire transfer or such other method of transfer of funds as shall be mutually agreed from time to time by the Escrow Trustee and the Fiscal Agencies. Section 7. All Securities and Money and Proceeds Thereof Held in Trust. The City hereby irrevocably conveys, transfers and assigns to the Escrow Trustee, in trust, the Escrow Obligations and the Substitute Obligations, if any, the proceeds thereof and thereon, and the Initial Cash, and any substitutions or reinvestments thereof made pursuant to Sections 9 and 10 hereof; and the Escrow Trustee hereby irrevocably agrees to hold the same, together with any other money which the Escrow Trustee may receive pursuant to this Escrow Agreement(except 3 f:\rentonutgo01 for the funds and investments in the Capitalized Interest Fund held pursuant to Section 19 hereof), in the Escrow Fund, in trust and separate from all other funds and investments held by the Escrow Trustee, solely for the purpose of making the Escrow Payments and payments described in Sections 4, 11 and 14 hereof. The Escrow Trustee shall not sell, transfer, assign or hypothecate any portion of the:Escrow Fund except pursuant to Sections 9, 10, 11 and 14 hereof. Section 8. Reports and Notice of Insufficiency. For as long as any part of the principal of or the interest on the 1997 CIB Bonds has not been paid, within 35 business days following the date scheduled for payment of any debt service thereon, the Escrow Trustee shall render reports to the City setting forth the activity since the date of the last debt service payment concerning the Escrow Obligations or any Substitute Obligations, the maturation of such Escrow Obligations or Substitute Obligations and amounts received by the Escrow Trustee by reason of such maturity, the interest earned on such Escrow Obligations or Substitute Obligations, a list of any investments or reinvestments made by the Escrow Trustee in other such Escrow Obligations or Substitute Obligations and the interest and/or principal derived therefrom, the sums paid to the Fiscal Agencies, and any other transactions of the Escrow Trustee pertaining to its duties and obligations as set forth herein. i. In the event the maturing principal of and interest on the securities and money in the Escrow Fund shall be insufficient at any time in the future to make an Escrow Payment, the Escrow Trustee shall give the City prompt written notice of such projected insufficiency. Such notice shall be accompanied by a written request directed to the City that the City deposit with the Escrow Trustee, sums sufficient to make up the insufficiency. Any such written request need be based only on the activity reports delivered pursuant to this Section 8. The City agrees to make such deposit promptly. Section 9. Substitute Obligations. The City reserves the right, from time to time and at any time, to substitute for the Escrow Obligations initially purchased in accordance with Section 4 hereof, other noncallable Government Obligations (the "Substitute Obligations"); provided, however, that prior to effecting any such substitution, the City shall have delivered to the Escrow Trustee: (a) A letter addressed to the City and the Escrow Trustee by a nationally recognized firm of independent certified public accountants verifying the computations which indicate that the Escrow Obligations, the Substitute Obligations, and other money to be held by the Escrow Trustee after the proposed substitution for purposes of making the Escrow Payments will be adequate to make all the Escrow Payments; and (b) An opinion of Bond Counsel addressed to the City and the Escrow Trustee that such substitution is of securities which may be deposited with the Escrow Trustee to accomplish the defeasance of the 1997 CD3 Bonds in accordance with the ordinance pursuant to which they were issued, and that such substitution will not cause the interest on the 1997 CM Bonds or the Bonds to be included in gross income for purposes of federal income taxation. 4 f:\rentonUtgo01 i Section 10. Reinvestment of Proceeds of Escrow Obligations and Substitute Obligations. (a) The proceeds (principal and interest) and reinvestment proceeds of any Substitute Obligations purchased by the Escrow Trustee in accordance with this Escrow Agreement shall be reinvested by the Escrow Trustee in other Substitute Obligations on dateof receipt, provided that: (1) The City shall have directed the Escrow Trustee in writing to make such reinvestment; (2) Such proceeds hall be reinvested in noncallable Government Obligations at a yield not to exceed 0% or such higher yield as may be directed by letter of instructions from the City to the Escrow Trustee, but if the composite yield on the directed investments made pursuant to this Escrow Agreement would exceed 4.7507849% (the yield on the Bonds), such letter of instructions shall be based upon and accompanied by the opinion of Bond Counsel approving reinvestment of such proceed at such higher yield; (3) The Substitute;Obligations in which such proceeds are reinvested shall mature in amounts not less than their respective purchase prices and on the date(s) directed by the City,but not later than the dates the principal thereof is needed to make one or more of the Escrow Payments as such date(s)maybe identified in the most recent report of a nationally recognized firm of independent certified public accountants verifying the computations which indicate that the Escrow Obligations, the Substitute Obligations„and other money to be held by the Escrow Trustee after the proposed substitution for purposes of making the Escrow Payments will be adequate to make all the Escrow Payments; and (4) The City and Escrow Trustee shall receive from a nationally recognized firm of independent certified public accountants a verification that such reinvestment satisfies the conditions of Sections 10(a)(2) and 10(a)(3) hereof. (b) If the proceeds;of the securities and other money in the Escrow Fund are insufficient to reinvest in the smallest denomination of Substitute Securities, or are required sooner than the shortest maturity available for such Substitute Securities, or cannot be reinvested under the yield limitations described in Section 10(a)(2)hereof, or for any reason cannot be reinvested in Substitute Securities, said proceeds shall be held uninvested in the Escrow Fund in the form of United States currency. (c) "Yield,” as used herein, means that yield computed in accordance with and as permitted by the Code as applicable to the Bonds and the trust under this Escrow Agreement so as to preserve the exclusion of the interest on the Bonds from gross income for purposes of federal income taxation. (d) The Escrow Trustee shall retain with respect to each Escrow Obligation and Substitute Obligation sufficient documentation to establish that each such security has been acquired and disposed of on an established market in an arm's length transaction, at a price equal to its fair market value and that no amounts have been paid to reduce the yield on such 5 f:'renton\ltgo01 obligation. The purchase and disposition prices of the Escrow Obligations and Substitute Obligations (other than SLGS) shall be based on the mean between the bid and asked prices for such investments on the date of purchase or disposition; and evidence of such prices shall be retained by the Escrow Trustee. Section 11. Surplus in Escrow. If, at any time during the term of the escrow created pursuant to this Escrow Agreement, the securities and money held in the Escrow Fund exceed the amounts required to make all of the Escrow Payments in accordance with the Escrow Verification or any subsequent verification furnished to the Escrow Trustee pursuant to Section 9(a) and/or Section 101(a) hereof, when due, considering the earnings to be realized on the investment (but not reinvestment)of such securities and the City requests in writing that such surplus securities or the proceeds thereof or such surplus money be returned by the Escrow Trustee to the City, then the Escrow Trustee shall do so at the times requested by the City. Before the application of any such surplus, the Escrow Trustee shall require the City to furnish the Escrow Trustee, in a form satisfactory to it, a verification by a nationally recognized firm of independent certified public accountants of the amount of such surplus. Section 12. Amendments of Escrow Agreement. The Escrow Trustee and the City recognize that the holders and,owners of the 1997 CIB Bonds have a beneficial interest in the obligations and money held ink the Escrow Fund. It is therefore understood and agreed that this Escrow Agreement shall not b;e subject to revocation or amendment except for the purpose of clarifying any ambiguity herein or adding additional money or noncallable direct obligations of the United States to the Escrow Fund,in either case at the request of the City or the Escrow Trustee, which request shall be accompanied by an opinion of Bond Counsel addressed to the City and the Escrow Trustee to the effect that such requested change does not detrimentally affect the registered owners of the 1997 CIB Bonds. Notice of any such intended revocation or amendment, together with a copy of the proposed amendments, if any, shall be sent at least three business days prior to the proposed effective date of any such revocation or amendment, and notice of any holding of invalidity, illegality or unenforceability shall be sent within 30 days following such decision, in either case, by registered or certified mail, postage prepaid, to: Moody's Investors Service, Inc. 99 Church Street New York, New York 10007 Attn: Public Finance Rating Desk/Refunded Bonds Standard&Poor's Ratings Service 25 Broadway ' New York, New York 10004 Section 13. Limitation of Escrow Trustee Duties. None of the provisions contained in this Escrow Agreement shall require the Escrow Trustee to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder. The Escrow Trustee shall be under no liability for the payment of interest on any funds or other 6 f:\rentonutgo01 property received by it hereunder except to the extent the Escrow Trustee is required by the express terms of this Escrow Agreement to invest such funds and it fails to do so. The Escrow Trustee's liabilities and obligations in connection with this Escrow Agreement are confined to those specifically described herein. The Escrow Trustee is authorized i_- and directed to comply with thie provisions of this Escrow Agreement and is relieved from all liability for so doing notwithstanding any demand or notice to the contrary by any party hereto. The Escrow Trustee shall not be responsible or liable for the sufficiency, correctness, genuineness or validity of the Escrow Obligations or any Substitute Obligations deposited with it; the performance of, or compliance by any party other than the Escrow Trustee with, the terms or conditions of any such instruments br the terms or conditions of this Escrow Agreement; the truth of the recitals herein; or any loss which may occur by reason of forgeries, false representations or the exercise of the Escrow Trustee's discretion in any particular manner unless such exercise is negligent or constitutes willful misconduct. If any controversy arises between the City and any third person, the Escrow Trustee shall not be required to determine the same or to take any action in the premises, but it may, in its discretion, institute an interpleader or other proceedings in connection therewith as it may deem proper, and in following either course, it shall not be liable and shall bei indemnified by the City in respect thereof to the Escrow Trustee's satisfaction. The Escrow Trustee may conclusively rely upon and shall be protected in acting upon any statement, certificate, notice, request, consent, order, opinion, report or other document believed by it to be genuine arid to have been signed or presented by the proper party. The Escrow Trustee may consult counsel (including, but not limited to,Bond Counsel)in respect of any question arising under this Escrow Agreement, and the Escrow Trustee shall not be liable for any action taken or omitted inigood faith upon advice of such counsel. Section 14. Remission of Funds. At such time as the Escrow Trustee shall have received both a certificate of the City to the effect that all of the Escrow Payments have been made and the confirmation of such certificate by the Fiscal Agencies, together with such other evidence of such payment as shall be satisfactory to the Escrow Trustee, the Escrow Trustee shall deliver forthwith or remit to the City any remaining securities and money held pursuant to this Escrow Agreement. Section 15. Compensation of Escrow Trustee. The payment arrangement heretofore made between the Escrow Trustee and the City as to compensation and expenses of the Escrow Trustee for services rendered by it pursuant to the provisions of this Escrow Agreement is satisfactory to it, to the City and no further payment to the Escrow Trustee, other than as provided by such arrangement, shall be required for such purpose. Such arrangement for compensation and expenses is intended as compensation for the ordinary services as contemplated by this Escrow Agreement, and in the event that the Escrow Trustee renders any service hereunder not expressly provided for in this Escrow Agreement, or the Escrow Trustee is made a party to or intervenes in any litigation pertaining to this Escrow Agreement or institutes interpleader proceedings relative hereto, the Escrow Trustee shall be reasonably compensated by the City for such extraordinary services and reimbursed for all fees, costs, liability and expenses (including reasonable attorneys' fees) occasioned thereby; provided, that the Escrow Trustee 7 E\renton\ltgo0l shall have no lien or right of set-off against the Escrow Fund or the money or investments therein. Section 16. Merger of Escrow Trustee; Successor Escrow Trustee. Any corporation or association into which the Escrow Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become successor Escrow Trustee hereunder and vested with all of the title to the Escrow Fund and all the trusts, powers, discretions,,immunities, privileges and all other matters as was it predecessor, without the execution or filing,of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, provided that such resulting entity shall meet the requirements of RCW 39.53.070. Further, the obligations assumed by the Escrow Trustee pursuant to this Escrow Agreement may be transferred by the Escrow Trustee to a successor if: (a)the Escrow Trustee has presented evidence satisfactory to the City and Bond Counsel that the successor meets the requirements of RCW 39.53.070, as now in effect or hereafter amended; (b)the successor has assumed all the obligations of the Escrow Trustee under this Escrow Agreement; and (c) the Escrow Fund has been duly transferred to such successor. From and after the date any successor trustee is duly established hereunder, the predecessor Escrow Trustee shall have no duty or responsibility hereUnder, and shall in no event be liable for any action or failure to act of the successor. Section 17. Notice of Call of 1997 CIB Bonds. The City hereby directs the Escrow Trustee to request the Fiscal Agencies give such notice as may be required, at the time(s) and in the manner required pursuant to Ordinance No. 4662, in order to effect the redemption of the 1997 CIB Bonds on June 1, 2007, as described therein. Section 18. Delivery of City Funds to Escrow Trustee. On the Date of Closing, the City shall transfer to the Escrow Trustee the sum of$753,058.71, derived solely from City funds not constituting proceeds of any tax-exempt debt. Execution of this Escrow Agreement by the Escrow Trustee shall constitute written acknowledgement by the Escrow Trustee of its receipt of said sum. Section 19. Creation of Capitalized Interest Fund; Application of City Funds. (a) The Escrow Trustee shall create a separate trust fund in escrow (the "Capitalized Interest Fund") under this Escrow Agreement into which shall be irrevocably deposited the City funds described in Section 18 hereof, the City Escrow Obligations to be purchased with such funds and the City Initial Cash (hereinafter defined). (b) On the Date of Closing, the Escrow Trustee shall: (i) Apply the sum of$753,058.00, derived solely from City funds described in Section 18 hereof, to pay the purchase price of the City Escrow Obligations in the principal amounts, with the dates of maturities, at the prices and at the interest rates set forth in Schedule 4 hereto. Upon receipt of the City Escrow Obligations, the Escrow 8 £\renton\ltgo01 I ' ii Trustee shall deliver to the City and to Bond Counsel copies of the documents evidencing the purchase of and payment for the City Escrow Obligations; (ii) Hold the sum of$0.71 (the "City Initial Cash"), derived solely from City Funds, uninvested in the form of United States currency until application of the same to meet payments listed on Schedule 5. (c) The Escrow Trustee shall present for payment, and shall collect and receive, on the due dates thereof, the maturing installments of principal of and the interest on the City Escrow Obligations. From such proceeds and other money in the Capitalized Interest Fund, the Escrow Trustee shall, to the extent sufficient funds are in its possession, make timely payment to the Fiscal Agencies of the amounts necessary to make the interest payments on the Bonds listed in Schedule 5, when due. Said payments shall be made by check, wire transfer or such other method of transfer of funds as shall be mutually agreed from time to time by the Escrow Trustee and the Fiscal Agencies. Section 20. Notices. All notices or requests required or permitted to be given hereunder shall, until further notice in writing, be given in writing at the following addresses: ' I To the City: 7 Finance Director City of Renton 1055 South Grady Renton, Washington 98058 (425)430-6858 (425) 430-6855 (facsimile) with a copy to:i Gottlieb,Fisher&Andrews, PLLC 1325 Fourth Avenue, Suite 1200 Seattle, Washington 98101 (206) 654-1999 (206) 654-8725 (facsimile) To the Escrow Trustee: U.S. Bank Trust National Association PD-WA-T7CT 1420 Fifth Avenue, 7th Floor Seattle, Washington 98101 (206) 344-4674 (206) 344-4632 (facsimile) 9 f:\rentonutgo0l Section 21. Miscellaneous. This Escrow Agreement is governed by the law of the State of Washington and may not be modified except in a writing signed by the parties. In the event any one or more of the provisions contained in this Escrow Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Escrow Agreement, but this Escrow Agreement shall be construed has if such invalid or illegal or unenforceable provision had never been contained herein. IN WITNESS WHEREOF, the parties have executed and delivered this Escrow Agreement pursuant to due and proper authorization, all as of November 1, 2001. CITY OF RENTON, WASHINGTON By /' � a Di J Victoria R e Finance Director U.S. BANK TRUST NATIONAL ASSOCIATION, as Escrow Trustee ' I By Authorized Signatory 10 f:\renton\ltgo01 Section 21. Miscellaneous. This Escrow Agreement is governed by the law of the State of Washington and may not be modified except in a writing signed by the parties. In the event any one or more of the provisions contained in this Escrow Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity,illegality or unenforceability shall not affect any other provisions of this Escrow Agreement,but this Escrow Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. IN WITNESS WHEREOF,the parties have executed and delivered this Escrow Agreement pursuant to due and proper authorization, all as of November 1, 2001. CITY OF RENTON,WASHINGTON By Victoria Runkle Finance Director U.S. BANK TRUST NATIONAL ASSOCIATION, as Escrow Trustee By /195(2e)* Authorized Signatory 10 f:\rentonMtgo01 SCHEDULE 1 ESCROW OBLIGATIONS Type of Maturity Par Security Date Amount Rate ESCROW SLGS-CI 12/01/2001 $317,802 3.350% SLGS-CI 6/01/2002 69,003 3.180 SLGS-NT 12/01/2002 70,279 3.260 SLGS-NT 6/01/2003 71,424 3.360 SLGS-NT 12/01/2003 72,624 3.480 SLGS-NT 6/01/2004 73,887 3.620 SLGS-NT 12/01/2004 75,225 3.770 SLGS-NT 6/01/2005 76,643 3.930 SLGS-NT 12/01/2005 78,149 4.090 SLGS-NT j 6/01/2006 79,747 4.230 SLGS-NT 0 12/01/2006 81,434 4.360 SLGS-NT 6/01/2007 12,743,208 4.460 Total 13,809,425 i II ii 11 f:\renton\ltgo01 SCHEDULE 2 ESCROW VERIFICATION • OF CASEY DEMGEN &MOORE INC. [Attached] 1 I • II , 12 f:\renton'tgo01 CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 II I 1 = I CAUSEY DEMGEN & MOORE INC. Certified Public Accountants and Consultants Suite 4650 1801 California Street Denver, Colorado 80202-2681 Telephone:(303)296-2229 Facsimile:(303)296-3731 November 1, 2001 . www.cdmcpa.com City of Renton Gottlieb, Fisher &Andrews, PLLC 1055 South Grady 1325 Fourth Avenue, Suite 1200 Renton, Washington 98058 Seattle, Washington 98101 U.S. Bancorp Piper Jaffray Ine. Financial Security Assurance Inc. 1200 Fifth Avenue, Suite 1500 350 Park Avenue Seattle, Washington 98101 New York, New York 10022 We have completed our engagement to verify the mathematical accuracy of (a) the computations relating to the adequacy of cash plus U.S. Treasury Securities to be held in escrow to pay the debt service requirements of the Limited Tax General Obligation Bonds, Series 1997B (herein referred to as the "Refunded!Bonds") (only the Current Interest Bonds as described in Exhibit B-1) issued by the City of Renton, Washington (herein referred to as the "City") and (b) the computations supporting the conclusion of Bond Counsel that the Limited Tax General Obligation and Refunding Bonds, 2001 (herein referred to as the "Refunding Bonds") to be issued by the City are not "arbitrage bonds" under Section 148 of the Internal Revenue Code of 1986, as amended. We express no opinion on the attainability of the assumptions or the tax-exempt status of the Refunding Bonds. Our verification was performed solely on the schedules of proposed transactions, provided by U.S. Bancorp Piper Jaffray Inc. (herein referred to as the "Underwriter"), and which are reflected in Exhibits A through D which were prepared by us in performing the verification of the mathematical accuracy of the computations in the schedules provided. The accompanying exhibits of proposed transactions were prepared on the basis of assumptions and in accordance with the procedures described herein. We did not independently confirm the information used with outside,parties. OUR UNDERSTANDING OF THE TRANSACTION The Refunding Bonds are to be issued on November 1, 2001 to advance refund the Refunded Bonds and to fmance certain,capital improvements. A portion of the proceeds of the Refunding Bonds will be used to purchase U.S. Treasury Securities and to provide cash which will be placed into an escrow account to advance refund the Refunded Bonds. The Escrow Agent will pay the debt service requirements of the Refunded Bonds on each scheduled payment date through and including June 1, 2007 and will redeem the Refunded Bonds at a redemption price equal to par, on June 1, 2007 which is the first optional redemption date. CDM • City of Renton, Washington November 1, 2001 Page 2 ESCROW ACCOUNT TRANSACTIONS We verified the mathematical accuracy of the accompanying calculations of the escrow account transactions proposed to advance refund the Refunded Bonds. The presently outstanding debt service requirements of the Refunded Bonds, as described above, will be satisfied by the purchase of U.S. Treasury Securities (as described in Exhibit A-1) plus $6.25 in cash. The securities and cash will be placed in an irrevocable escrow account until the Refunded Bonds are redeemed as previously described. We read a copy of the City's Ordinance No. 4662 for the Refunded Bonds insofar as such • obligations are described with respect to principal outstanding, interest rates, maturity dates, and redemption provisions. We assumed this document to be accurate, and all debt service payments 1 on the Refunded Bonds to be current as of November 1, 2001. We compared the above information set forth in such document with the related information contained in the schedules provided to us and found the information to be consistent. We compared the subscribed interest rates of the U.S. Treasury Securities (State and Local Government Series) to be purchased and placed in escrow with the maximum allowable interest rates as published in the Department of the Treasury, Bureau of the Public Debt Form PD 4262 for September 13, 2001 and found the subscribed rates to be less than or equal to the maximum P q allowable rates for each respective maturity date. Based on the procedures and,information set forth above, the computations provided to us 'and represented in Exhibits A through B, which indicate that the cash and securities proposed to be placed in escrow by the City will produce the amounts necessary to provide for the timely payment of the proposed debt payment schedule on the Refunded Bonds, are mathematically correct. YIELD ON THE REFUNDING BONDS We verified the mathematical accuracy of the accompanying computations of the yield on the Refunding Bonds as of November 1, 2001. For purposes of this calculation, yield is defined as the rate of interest which, using the assumptions and procedures set forth herein, discounts the payments to be made on the Refunding Bonds to an amount equal to the target purchase price of the Refunding Bonds. The computations were made using a 360-day year with interest compounded semi-annually and treated $547,640.75 as the net original issue premium and $97,432.21 as the bond insurance premium (which results in a target purchase price of $19,955,208.54). In conducting our verification, we assumed that the re-offering prices of the Refunding Bonds are as described in Exhibit C-1, that the Refunding Bonds stated to mature on or before December 1, 2011 are not optionally callable, and that the Refunding Bonds stated to mature on and after December 1, 2012 are optionally callable at par on and after December 1, 2011. We tested to verifica\Renton City of Renton, Washington November 1, 2001 Page 3 determine whether any combination of optional redemptions of the Refunding Bonds stated to mature on December 1, 2012 through and including December 1, 2018 (which represent the only callable maturities with reoffering prices in excess of 102.50% of par) (herein referred to as the "Callable Premium Bonds") would result in a lower yield on the Refunding Bonds than that realized by assuming that such bonds are retired on their stated maturity dates. We assumed that all other maturities of the Refunding Bonds would be retired on the dates and in the amounts set forth in Exhibit C. Based upon the procedures and information set forth above, the computations provided to us and represented in Exhibits C and C-1, which indicate that the yield on the Refunding Bonds, assuming the Callable Premium Bonds are redeemed at par on December 1, 2011, is 4.75078%, are mathematically correct. It is our opinion that computing the aforementioned yield on the Refunding Bonds by treating the Callable Premium Bonds as redeemed at par on December 1, 2011 results in the lowest yield on the Refunding Bonds of all possible payment permutations thereon. YIELD ON THE INVESTMENT IN ESCROWED OBLIGATIONS PURCHASED WITH REFUNDING BOND PROCEEDS We verified the mathematical accuracy of the accompanying computation of the yield on the investment in escrowed U.S. Treasury Securities purchased with Refunding Bond proceeds based on an assumed settlement date of November 1, 2001 and a purchase price of $13,809,425.00 For purposes of this calculation, yield is defined as the rate of interest which, using the assumptions and procedures set forth herein, discounts the cash receipts from the escrowed securities to an amount equal to the purchase price of the escrowed securities. The computations were made using a 360-day year with interest compounded semi-annually and were based on the dates the funds are to be received in the escrow account, and assume that all cash balances are not reinvested. Based upon the procedures and information set forth above, the computations provided to us and represented in Exhibit D, which indicate that the yield on the escrowed securities purchased with Refunding Bond proceeds is 4.44272% which is less than the yield on the Refunding Bonds, are mathematically correct. USE OF THIS REPORT It is understood that this report is solely for the information of and assistance to the addressees hereof in connection with the;offering of the Refunding Bonds and is not to be used, relied upon, circulated, quoted or otherwise referred to for any other purpose without our written consent, except that (i) reference may be made in the Official Statement for the Refunding Bonds in the section captioned "Verification of Mathematical Computations," (ii) reference may be made to the report in the purchase contract or in any closing documents pertaining to the offering of the Refunding Bonds covered b'y the Official Statement, including the opinion of Bond Counsel regarding the Refunding Bonds, (iii) the report may be used in its entirety as an exhibit to the verifica\Renton City of Renton, Washington November 1, 2001 Page 4 escrow agreement for the Refunded Bonds, (iv) the report may be included in the transcripts pertaining to the Refunding Bonds, (v) the report may be relied upon by any rating agency or bond insurer that shall have rated or insured or that will rate or insure the Refunded Bonds or the Refunding Bonds, and (vi) the report may be relied upon by the Escrow Agent for the Refunded Bonds. * * * * * * * * * The procedures performed represent those procedures deemed by the addressees hereto to be sufficient to assist such parties in evaluating the mathematical accuracy of the various computations cited above. The sufficiency of these procedures is solely the responsibility of the specified users of this report' and should not be taken to supplant any additional inquiries or procedures that the users would undertake in their consideration of the issuance of the bonds related to the transaction described herein. We make no representation regarding the sufficiency of the procedures summarized herein, either for the purpose for which this report has been requested or for any other purpose. This report should not be used by any party who does not agree to the procedures set forth herein and who does not take responsibility for the sufficiency and appropriateness of such procedures for their purposes. We have no obligation to update this report because of events, circumstances, or transactions occurring subsequent to the date of this report. Very truly yours, verifica\Renton EXHIBIT A CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 ESCROW ACCOUNT CASH FLOW AS OF NOVEMBER 1,2001 Total Cash Receipts From Cash U.S.Treasury Disbursements SLGS From Escrow Cash Date (Exhibit A-1) (Exhibit B) Balance Beginning Balance: $6.25 01-Dec-01 $367,382.62 $367,382.50 6.37 01-Jun-02 367,381.53 367,382.50 5.40 01-Dec-02 367,383.05 367,382.50 5.95 01-Jun-03 ; 367,382.51 367,382.50 5.96 01-Dec-03 367,382.59 367,382.50 6.05 01-Jun-04 ' 367,381.94 367,382.50 5.49 01-Dec-04 , 367,382.59 367,382.50 5.58 01-Jun-05 367,382.60 367,382.50 5.68 01-Dec-05 367,382.57 367,382.50 5.75 01-Jun-06 367,382.43 367,382.50 5.68 01-Dec-06 367,382.79 367,382.50 5.97 01-Jun-07 , 13,027,381.53 13,027,382.50 5.00 $17,068,588.75 $17,068,590.00 II EXHIBIT A-1 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 CASH RECEIPTS FROM THE ESCROWED SECURITIES AS OF NOVEMBER 1,2001 $317,802.00 $69,003.00 $70,279.00 $71,424.00 $72,624.00 $73,887.00 $75,225.00 $76,643.00 $78,149.00 $79,747.00 $81,434.00 $12,743,208.00 3.350000% 3.180000% 3.260000% 3360000% 3.480000% 3.620000% 3.770000% 3.930000% 4.090000% 4.230000% 4.360000% 4.460000% Total Payment SLGS(1) SLGS(1) SLGS(2) SLGS(2) SLGS(2) SLGS(2)- SLGS(2) SLGS(2) SLGS(2) - SLGS(2) SLGS(2) SLGS(2) Cash Date 01-Dec-01 01-Jun-02 01-Dec-02 01-Jun-03 01-Dec-03 01-Jun-04 01-Dec-04 01-Jun-05 01-Dec-05 01-Jun-06 01-Dec-06 01-Jun-07 Receipts 01-Dec-01 $318,677.04 $187.79 $196.71 $207.16 $219.24 S232.46 $246.89 S261.99 $276.50 $291.02 $46,585.82 $367,382.62 01-Jun-02 $70,277.48 1,145.54 1,199.92 1,263.65 1,337.35 1,417.99 1,506.03 1,598.14 1,686.64 1,775.26 284,173.53 367,381.53 01-Dec-02 71,424.54 1,199.92 1,263.65 1,337.35 1,417.99 1,506.03 1,598.14 1,686.64 1,775.26 284,173.53 367,383.05 01-Jun-03 72,623.92 1,263.65 1,337.35 1,417.99 1,506.03 1,598.14 1,686.64 1,775.26 284,173.53 367,382.51 01-Dec-03 73,887.65 1,337.35 1,417.99 1,506.03 1,598.14 1,686.64 1,775.26 284,173.53 367,382.59 01-Jun-04 75,224.35 1,417.99 1,506.03 1,598.14 1,686.64 1,775.26 284,173.53 367,381.94 01-Dec-04 76,642.99 1,506.03 1,598.14 1,686.64 1,775.26 284,173.53 367,382.59 01-Jun-05 78,149.03 1,598.14 1,686.64 1,775.26 284,173.53 367,382.60 01-Dec-05 79,747.14 1,686.64 1,775.26 284,173.53 367,382.57 01-Jun-06 81,433.64 1,775.26 284,173.53 367,382.43 01-Dec-06 83,209.26 284,173.53 367,382.79 01-Jun-07 13,027,381.53 13,027,381.53 $318,677.04 $70,277.48 $72,757.87 $75,220.47 $77,885.76 $80,792.99 $83,965.40 $87,432.10 $91,196.11 $95,203.26 $99,477.62 $15,915,702.65 $17,068,588.75 (1) U.S.Treasury Certificate of Indebtedness(State and Local Government Series). (2) U.S.Treasury Note or Bond(State and Local Government Series). EXHIBIT A-2 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 DESCRIPTION OF THE ESCROWED SECURITIES AS OF NOVEMBER 1,2001 Settlement Maturity Par Coupon Type Date Date Amount Rate Price Cost SLGS 01-Nov-01 01-Dec-01 $317,802.00 3.350% 100.000000% $317,802.00 SLGS 01-Nov-01 01-Jun-02 69,003.00 3.180% 100.000000% 69,003.00 SLGS 01-Nov-01 01-Dec-02 70,279.00 3.260% 100.000000% 70,279.00 SLGS 01-Nov-01 01-Jun-03 71,424.00 3.360% 100.000000% 71,424.00 24 00 3.480% 100.000000% SLGS 01-Nov-01 01-Dec-03 72,6 72,624.00 SLGS 01-Nov-01 • 01-Jun-04 73,887.00 3.620% 100.000000% 73,887.00 SLGS 01-Nov-01 01-Dec-04 75,225.00 3.770% 100.000000% 75,225.00 SLGS 01-Nov-01 01-Jun-05 76,643.00 3.930% 100.000000% 76,643.00 SLGS 01-Nov-01 01-Dec-05 78,149.00 4.090% 100.000000% 78,149.00 SLGS 01-Nov-01 01-Jun-06 79,747.00 4.230% 100.000000% 79,747.00 SLGS 01-Nov-01 01-Dec-06 81,434.00 4.360% 100.000000% 81,434.00 SLGS 01-Nov-01 014un-07 12,743,208.00 4.460% 100.000000% 12,743,208.00 $13,809,425.00 $13,809,425.00 I i ' EXHIBIT B CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 ESCROW ACCOUNT DISBURSEMENT REQUIREMENTS FOR THE REFUNDED BONDS AS OF NOVEMBER 1,2001 Payment For Payment Principal Debt Date Rate Redeemed Interest Payment 01-Dec-01 $367,382.50 $367,382.50 01-Jun-02 367,382.50 367,382.50 01-Dec-02 367;382.50 367,382.50 01-Jun-03 367,382.50 367,382.50 01-Dec-03 367,382.50 367,382.50 01-Jun-04 367,382.50 367,382.50 01-Dec-04 367,382.50 367,382.50 01-Jun-05 367,382.50 367,382.50 01-Dec-05 367,382.50 367,382.50 01-Jun-06 367,382.50 367,382.50 01-Dec-06 367,382.50 367,382.50 01-Jun-07 Various $12,660,000.00 367,382.50 13,027,382.50 $12,660,000.00 $4,408,590.00 $17,068,590.00 J EXHIBIT B-1 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 DEBT SERVICE REQUIREMENTS FOR THE REFUNDED BONDS ASSUMING NO'OPTIONAL REDEMPTIONS PRIOR TO MATURITY AS OF NOVEMBER 1,2001 (FOR INFORMATIONAL PURPOSES ONLY) 1 Payment Payment For Total Debt Date Rate Principal Interest Payment 01-Dec-01 $367,382.50 $367,382.50 01-Jun-02 367,382.50 367,382.50 01-Dec-02 367,382.50 367,382.50 01-Jun-03 367,382.50 367,382.50 01-Dec-03 367,382.50 367,382.50 01-Jun-04 367,382.50 367,382.50 01-Dec-04 367,382.50 367,382.50 01-Jun-05 ' 367,382.50 367,382.50 01-Dec-05 367,382.50 367,382.50 01-Jun-06 367,382.50 367,382.50 01-Dec-06 367,382.50 367,382.50 01-Jun-07 367,382.50 367,382.50 01-Dec-07 367,382.50 367,382.50 01-Jun-08 367,382.50 367,382.50 01-Dec-08 367,382.50 367,382.50 01-Jun-09 367,382.50 367,382.50 01-Dec-09 5.500% $250,000.00 367,382.50 617,382.50 01-Jun-10 I 360,507.50 360,507.50 01-Dec-10 6.500% 1,265,000.00 360,507.50 1,625,507.50 01-Jun-11 319,395.00 319,395.00 O1-Dec-11 5.650% 1,340,000.00 319,395.00 1,659,395.00 01-Jun-12 281,540.00 281,540.00 01-Dec-12 5.70,0% 1,415,000.00 281,540.00 1,696,540.00 01-Jun-13 241,212.50 241,212.50 01-Dec-13 5.750% 1,495,000.00 241,212.50 1,736,212.50 01-Jun-14 198,231.25 198,231.25 01-Dec-14 5.750% 1,580,000.00. 198,231.25 1,778,231.25 ' 01-Jun-15 152,806.25 152,806.25 01-Dec-15 5.750% 1,675,000.00 152,806.25 1,827,806.25 01-Jun-16 104,650.00 104,650.00 01-Dec-16 5.750% 1,770,000.00 104,650.00 1,874,650.00 01-Jun-17 53,762.50 53,762.50 01-Dec-17 5.7510% 1,870,000.00 53,762.50 1,923,762.50 • $12,660,000.00 $9,669,712.50 $22,329,712.50 EXHIBIT C CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 YIELD ON THE REFUNDING BONDS AS OF NOVEMBER 1,2001 Present Value at November 1,2001 Total Debt Using a Semi-Annually Payment Payment Adjustments For Adjusted Compounded Yield of Date (Exhibit C-1) Yield Purposes Debt Service 4.75078% 01-Dec-01 $390,419.17 $390,419.17 $388,894.56 01-Jun-02 479,182.50 479,182.50 466,236.32 01-Dec-02 479,182.50 479,182.50 455,418.35 01-Jun-03 479,182.50 479,182.50 444,851.38 01-Dec-03 479,182.50 479,182.50 434,529.60 01-Jun-04 479,182.50 479,182.50 424,447.31 01-Dec-04 479,182.50 479,182.50 414,598.96 01-Jun-05 479,182.50 479,182.50 404,979.12 01-Dec-05 479,182.50 479,182.50 395,582.48 01-Jun-06 479,182.50 479,182.50 386,403.87 01-Dec-06 479,182.50 479,182.50 377,438.23 01-Jun-07 479,182.50 479,182.50 368,680.62 01-Dec-07 554,182.50 554,182.50 416,491.93 01-Jun-08 477,870.00 477,870.00 350,806.77 01-Dec-08 562,870.00 562,870.00 403,618.18 01-Jun-09 476,276.25 476,276.25 333,599.94 01-Dec-09 811,276.25 811,276.25 555,060.38 01-Jun-10 469,743.75 469,743.75 313,932.94 01-Dec-10 1,819,743.75 1,819,743.75 1,187,929.15 01-Jun-11 442,743.75 442,743.75 • 282,317.09 01-Dec-11 1,842,743.75 $11,335,000.00 13,177,743.75 8,207,864.95 01-Jun-12 414,743.75 (297,543.75) 117,200.00 71,305.20 01-Dec-12 1,869,743.75 (1,752,543.75) 117,200.00 69,650.72 01-Jun-13 376,550.00 (259,350.00) 117,200.00 68,034.63 01-Dec-13 1,906,550.00 (1,789,350.00) 117,200.00 66,456.04 01-Jun-14 336,387.50 (219,187.50) 117,200.00 64,914.07 01-Dec-14 1,946,387.50 (1,829,187.50) 117,200.00 63,407.89 01-Jun-15 294,125.00 (176,925.00) 117,200.00 61,936.65 O1-Dec-15 1,989,125.00 (1,871,925.00) 117,200.00 60,499.55 01-Jun-16 249,631.25 (132,431.25) 117,200.00 59,095.79 01-Dec-16 2,034,631.25 (1,917,431.25) 117,200.00 57,724.60 01-Jun-17 202,775.00 (85,575.00) 117,200.00 56,385.23 01-Dec-17 2,077,775.00 (1,960,575.00) 117,200.00 55,076.94 01-Jun-18 153,556.25 (36,356.25) 117,200.00 53,799.00 01-Dec-18 1,538,556.25 (1,421,356.25) 117,200.00 52,550.72 01-Jun-19 ' 117,200.00 117,200.00 51,331.39 01-Dec-19 1,577,200.00 1,577,200.00 674,755.82 01-Jun-20 78,875.00 78,875.00 32,961.25 01-Dec-20 1,618,875.00 1,618,875.00 660,818.25 01-Jun-21 40,375.00 40,375.00 16,098.51 01-Dec-21 1,655,375.00 1,655,375.00 644,724.16 $33,597,314.17 ($2,414,737.50) $31,182,576.67 $19,955,208.54 Dated Date: 01-Nov-01 Delivery Date: 01-Nov-01 The above aggregate present value of the future payments equals the following: Par Value of the Issue $19,505,000.00 Net Original Issue Premium 547,640.75 Bond Insurance Premium (97,432.21) Proceeds on Delivery Date' $19,955,208.54 EXHIBIT C-1 ' CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 REFUNDING BOND DEBT SERVICE REQUIREMENTS AND PRODUCTION AS OF NOVEMBER 1,2001 Original Issue Payment Payment For Total Debt Reoffering Premium/ Total Date Rate Principal Interest Payment Price (Discount) Production 01-Dec-01 2.150% $310,000.00 $80,419.17 $390,419.17 $1.00 $0.00 $310,000.00 01-Jun-02 479,182.50 479,182.50 01-Dec-02 479,182.50 479,182.50 01-Jun-03 479,182.50 479,182.50 01-Dec-03 I 479,182.50 479,182.50 01-Jun-04 479,182.50 479,182.50 01-Dec-04 479,182.50 479,182.50 01-Jun-05 479,182.50 479,182.50 01-Dec-05 479,182.50 479,182.50 01-Jun-06 479,182.50 479,182.50 1 01-Dec-06 ' 479,182.50 479,182.50 01-Jun-07 479,182.50 479,182.50 01-Dec-07 3.500% 75,000.00 479,182.50 554,182.50 99.455% (408.75) 74,591.25 01-Jun-08 477,870.00 477,870.00 01-Dec-08 3.750% 85,000.09 477,870.00 562,870.00 99.689% (264.35) 84,735.65 . 01-Jun-09 476,276.25 476,276.25 01-Dec-09 3.900% 335,000.00 476,276.25 811,276.25 99.654% (1,159.10) 333,840.90 01-Jun-10 i 469,743.75 469,743.75 01-Dec-10 4.000% 1,350,000.00 469,743.75 1,819,743.75 100.000% 0.00 1,350,000.00 01-Jun-11 , 442,743.75 442,743.75 I 01-Dec-11 4.000% 1,400,000.00 442,743.75 1,842,743.75 99.178% (11,508.00) 1,388,492.00 01-Jun-12 414,743.75 414,743.75 01-Dec-12 5.250% 1,455,000.00 414,743.75 1,869,743.75 107.872% 114,537.60 1,569,537.60 01-Jun-13 376,550.00 376,550.00 01-Dec-13 5.250% 1,530,000.00 376,550.00 1,906,550.00 107.195% 110,083.50 1,640,083.50 01-Jun-14 336,387.50 336,387.50 01-Dec-14 5.250% 1,610,000.00 336,387.50 1,946,387.50 106.021% 96,938.10 1,706,938.10 01-Jun-15 294,125.00 294,125.00 01-Dec-15 5.250% 1,695,000.0;0 294,125.00 1,989,125.00 104.946% 83,834.70 1,778,834.70 01-Jun-16 249,631.25 249,631.25 01-Dec-16 5.250% 1,785,000:00 249,631.25 2,034,631.25 104.046% 72,221.10 1,857,221.10 01-Jun-17 202,775.00 202,775.00 01-Dec-17 5.250% 1,875,000.00 202,775.00 2,077,775.00 103.236% 60,675.00 1,935,675.00 01-Jun-18 153,556.25 153,556.25 01-Dec-18 5.250% 1,385,000.00 153,556.25 1,538,556.25 102.514% 34,818.90 1,419,818.90 01-Jun-19 117,200.00 117,200.00 01-Dec-19 5.250% 1,460,000.00 117,200.00 1,577,200.00 101.877% 27,404.20 1,487,404.20 - 01-Jun-20 78,875.00 78,875.00 01-Dec-20 5.000% 1,540,000.00 78,875.00 1,618,875.00 98.747% (19,296.20) 1,520,703.80 01-Jun-21 40,375.00 40,375.00 01-Dec-21 5.000% 1,615,000.00 40,375.00 1,655,375.00 98.747% (20,235.95) 1,594,764.05 $19,505,000.00 $14,092,314.17 $33,597,314.17 $547,640.75 $20,052,640.75 EXHIBIT D CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 W YIELD LD CALCULATION AS OF NOVEMBER 1,2001 Total Cash Present Value at Receipts From November 1,2001 U.S.Treasury Using a Semi-Annually SLGS Compounded Yield of Date (Exhibit A) 4.44272% 01-Dec-Oli $367,382.62 $366,039.83 01-Jun-02; 367,381.53 358,084.40 01-Dec-02 367,383.05 350,304.37 01-Jun-03' 367,382.51 342,691.46 01-Dec-03 367,382.59 335,244.56 01-Jun-04 367,381.94 327,958.83 01-Dec-04 367,382.59 320,832.57 01-Jun-05 367,382.60 313,860.62 01-Dec-05 367,382.57 307,040.14 01-Jun-06 367,382.43 300,367.78 01-Dec-06 367,382.79 293,840.82 01-Jun-07 13,027,381.53 10,193,159.30 $17,068,588.75 $13,809,424.68 Total Cost of Securities $13,809,425.00 i' ' EXHIBIT E CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS 2001 SOURCES AND USES OF FUNDS AS OF NOVEMBER 1,2001 Sources of Funds: Par Value of Bonds $19,505,000.00 Net Original Issue Premium 547,640.75 Total Sources of Funds $20,052,640.75 Uses of Funds: Beginning Escrow Account Cash Balance $6.25 Cost of the Escrowed Securities 13,809,425.00 Bond Insurance Premiums 97,432.21 Construction Fund Deposit 5,920,000.00 Underwriter's Discount 165,792.50 Issuance Costs 55,932.55 Contingency 4,052.24 Total Uses of Funds $20,052,640.75 SCHEDULE 3 ISSUANCE COSTS FOR THE BONDS Accounting Fees $ 3,500.00 Bond Counsel 17,455.00 Trustee &Counsel Fees 4,500.00 Rating Agency Fee 20,000.00 Underwriter's Expenses 6,477.55 POS/Official Statement 2,000.00 Miscellaneous 2,000.00 TOTAL $ 55,932.55 I 13 f:\renton\Itgo01 j SCHEDULE 4 CITY ESCROW OBLIGATIONS Type of Maturity Par Security Date Amount Rate SLGS-CI 12/01/2001 $ 23,872 3.350% SLGS-CI 6/01/2002 140,857 3.180 SLGS-NT 12/01/2002 143,459 3.260 SLGS-NT 6/01/2003 145,797 3.360 SLGS-NT 12/01/2003 148,247 3.480 SLGS-NT 6/01/2004 150,826 3.620 Total 753,058 14 f:\rentonutgo0l • SCHEDULE 5 Capitalized Interest Date Capitalized Interest Payment 12/01/20011 $ 25,592.71 06/01/2002 153,556.25 12/01/2002 153,556.25 06/01/2003 153,556.25 12/01/2003 • 153,556.25 06/01/2004 153,556.25 I ' 15 f:'rentonutgo0l Book-Entry-Only Municipal Bonds Letter of Representations [To be Completed by Issuer and Agent] City of Renton,Washington [Name of Issuer] Fiscal Agency of the State of Washington, currently The Bank of New York and Wells Fargo Bank,National Association [Name of Agent] November 1,2001 [Date] Attention: Underwriting Department The Depository Trust Company 55 Water Street 19th Floor New York,NY 10041-0099 Re: $19,505,000 City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 [Issue description(the"Securities")] Ladies and Gentlemen: This letter sets forth our understanding with respect to certain matters relating to the Securities. Agent shall act as trustee,paying agent,fiscal agent, or other agent of Issuer with respect to the Securities. The Securities have been issued pursuant to a trust indenture,bond resolution, or other such document authorizing the issuance of the Securities dated October 22,2001 (the"Document"). U.S.Bancorp Piper Jaffray Inc. is distributing the Securities ["Underwriter"] through The Depository Trust Company("DTC"). To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in accordance with its Rules with respect to the Securities,Issuer and Agent,if any,make the following mbnd 1319-7/99 representations to DTC: 1. Prior to closing on the Securities on November 1,2001 ,there shall be deposited with DTC one or more Security certificates registered in the name of DTC's nominee, Cede & Co., for each stated maturity of the Securities in the face amounts set forth on Schedule A hereto, the total of which represents 100% of the principal amount of such Securities. If, however, the aggregate principal amount of any maturity exceeds $400 million, one certificate shall be issued with respect to each$400 million of principal amount and an additional certificate shall be issued with respect to any remaining principal amount. Each Security certificate shall bear the following legend: Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation("DTC"), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC(and any payment is made to Cede&Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. Issuer represents: [Note:, Issuer must represent one of the following, and shall cross out the other.] [The Security certificate(s),shall remain in Agent's custody as a"Balance Certificate"subject to the provisions of the Balance Certificate Agreement between Agent and DTC currently in effect. On each day on which Agent is open for business and on which it receives an instruction • originated by a DTC participant ("Participant") through DTC's Deposit/Withdrawal at Custodian ("DWAC") system to increase the Participant's account by a specified number of Securities (a "Deposit Instruction"), Agent shall,no later than 6:30 p.m. (Eastern Time) that day, either approve or cancel the Deposit Instruction through the DWAC system. On each day on which Agent is open for business and on which it receives an instruction originated by a Participant through the DWAC system to decrease the Participant's account by a specified number of Securities (a "Withdrawal Instruction"), Agent shall, no later than 6:30 p.m. (Eastern Time) that day, either approve or cancel the Withdrawal Instruction through the DWAC system. Agent agrees that its approval of a Deposit or Withdrawal Instruction shall be deemed to be the receipt by DTC of a new reissued or reregistered certificated Security on registration of transfer to the name of Cede&Co. for the quantity of Securities evidenced by the Balance Certificate after the Deposit or Withdrawal Instruction is effected.] „ith DTC.] 2. Issuer: (a)understands that DTC has no obligation to, and will not, communicate to its Participants or to any person having an interest in the Securities any information contained in the Security certificate(s); and(b) acknowledges that neither DTC's Participants nor any person having -2- mbnd 1319-7/99 an interest in the Securities shall be deemed to have notice of the provisions of the Security certificate(s)by virtue of submission of such certificate(s) to DTC. 3. In the event of any solicitation of consents from or voting by holders of the Securities, Issuer or Agent shall establish a record date for such purposes (with no provision for revocation of consents or votes by subsequent holders) and shall send notice of such record date to DTC no fewer than 15 calendar days in advance of such record date. Notices to DTC pursuant to this Paragraph by telecopy shall be directed to DTC's Reorganization Department, Proxy Unit at(212) 855-5181 ti or(212) 855-5182. If the party sending the notice does not receive a telecopy receipt from DTC confirming that the notice has been received, such party shall telephone (212) 855-5187. Notices pursuant to this Paragraph, by mail or by any other means, shall be sent to: Supervisor, Proxy Unit Reorganization Department The Depository Trust Company 55 Water Street 50th Floor New York,NY 10041-0099 4. In the event of a full or partial redemption or an advance refunding of part of the outstanding Securities, Issuer or Agent shall send a notice to DTC specifying: (a) the amount of the redemption or refunding; (b) in the case of a refunding, the maturity date(s) established under the refunding; and (c) the date such notice is to be mailed to beneficial owners or published (the "Publication Date"). Such notice shall be sent to DTC by a secure means (e.g., legible telecopy, registered or certified mail, overnight delivery) and in a timely manner designed to assure that such notice is in DTC's possession no later than the close of business on the business day before or, if possible,two business days before the Publication Date. Issuer or Agent shall forward such notice either in a separate secure transmission for each CUSIP number or in a secure transmission for multiple CUSIP numbers(if applicable)which includes a manifest or list of each CUSIP submitted in that transmission. (The party sending such notice shall have a method to verify subsequently the use of such means and the timeliness of such notice.) The Publication Date shall be no fewer than 30 days nor more than 60 days prior to the redemption date or, in the case of an advance refunding, the date that the proceeds are deposited in escrow. Notices to DTC pursuant to this Paragraph by telecopy shall be directed to DTC's Call Notification Department at(516)227-4164 or(516) 227- 4190. If the party sending the notice does not receive a telecopy receipt from DTC confirming that the notice has been received, such party shall telephone (516)227-4070. Notices to DTC pursuant to this Paragraph,by mail or by any other means, shall be sent to: Call Notification Department The Depository Trust Company -711 Stewart Avenue Garden City,NY 11530-4719 5. In the event of an invitation to tender the Securities, notice by Issuer or Agent to Security holders specifying the terms of the tender and the Publication Date of such notice shall be sent to DTC by a secure means(e.g., legible telecopy,registered or certified mail, overnight delivery) in a timely manner designed to assure that such notice is in DTC's possession no later than the close of business on the business day before or, if possible, two business days before the Publication Date. Issuer or Agent shall forward such notice either in a separate secure transmission for each CUSIP number or in a secure transmission for multiple CUSIP numbers (if applicable) which includes a -3- mbnd 1319-7/99 1 manifest or list of each CUSIP number submitted in that transmission. (The party sending such notice shall have a method to verify subsequently the use and timeliness of such notice.)Notices to DTC pursuant to this Paragraph and notices of other actions (including mandatory tenders, exchanges, and capital changes)by telecopy shall be directed to DTC's Reorganization Department at (212) 855-5488. If the party sending the notice does not receive a telecopy receipt from DTC confirming that the notice has been received, such party shall telephone (212) 855-5135. Notices to DTC pursuant to this Paragraph, by mail or by any other means, shall be sent to: Manager, Reorganization Department Reorganization Window The Depository Trust Company 55 Water Street 50th Floor New York,NY 10041-0099 6. All notices and payment advices sent to DTC shall contain the CUSIP number of the Securities. 7. In the event of a change in the interest rate, Agent shall send notice to DTC of such change and Agent shall indicate the stated coupon rate. Such notice, which shall include Agent contact's name and telephone number,by telecopy shall be directed to DTC's Dividend Department at (212) 855-4555. If the party sending the notice does not receive a telecopy receipt from DTC confirming that the notice has been received, such party shall telephone (212) 855-4550. Notices to DTC pursuant to this Paragraph, by mail or by any other means, shall be sent to: Manager,Announcements Dividend Department The Depository Trust Company 55 Water Street 25th Floor New York,NY 10041-0099 8. Issuer or Agent shall provide a written notice of interest payment information, including stated coupon rate information, to DTC as soon as the information is available. Issuer or Agent shall provide this information directly to DTC electronically,as previously arranged by Issuer or Agent and DTC. If electronic transmission has not been arranged,absent any other arrangements between Issuer or Agent and DTC, such information shall be sent by telecopy to DTC's Dividend Department at(212) 855-4555 or(212) 855-4556. If the party sending the notice does not receive a telecopy receipt from DTC confirming that the notice has been received,such party shall telephone (212) 855-4550. Notices to DTC pursuant to this Paragraph, by mail or by any other means, shall be sent to: Manager,Announcements Dividend Department The Depository Trust Company 55 Water Street 25th Floor New York,NY 10041-0099 9. Interest payments and principal payments that are part of periodic principal-and- interest payments shall be received by Cede&Co., as nominee of DTC, or its registered assigns in same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by -4- mbnd1319-7/99 1:00 p.m. (Eastern Time)on the payment date all such interest payments due Agent,or at such earlier time as required by Agent to guarantee that DTC shall receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date. Absent any other arrangements between Issuer or Agent and DTC, such funds shall be wired to the Dividend Deposit Account number that will be stamped on the signature page hereof at the time DTC executes this Letter of Representations. 10. Agent shall provide DTC's Dividend Department, no later than 12:00 noon(Eastern Time)on the payment date, automated notification of CUSIP-level detail. If circumstances prevent the funds paid to Cede &Co., as nominee of DTC, by 2:30 p.m. (Eastern Time) from equaling the dollar amount associated with the detail payments by 12:00 noon (Eastern Time), Issuer or Agent must provide CUSIP-level reconciliation to DTC no later than 2:30 p.m. (Eastern Time). Reconciliation must be provided by either automated means or written format. Such reconciliation notice, if sent by telecopy, shall be directed to DTC's Dividend Department at(212) 855-4633,and receipt of such reconciliation notice shall be confirmed by telephoning(212) 855-4430. • 11. Maturity and redemption payments shall be received by Cede&Co.,as nominee of DTC, or its registered assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment date, all maturity and redemption payments due Agent,or at such earlier time as required by Agent to guarantee that DTC shall receive payment in same-day, funds no later than 2:30 p.m. (Eastern Time)on the payment date. Absent any other arrangements between Issuer or Agent and DTC, such funds shall be wired to the Redemption Deposit Account number that will be stamped on the signature page hereof at the time DTC executes this Letter of Representations. 12. Principal payments (plus accrued interest, if.any) as a result of optional tenders for purchase effected by means of DTC's Repayment Option Procedures shall be received by Cede& Co.,as nominee of DTC, or its registered assigns, in same-day funds no later than 2:30 p.m. (Eastern Time)on the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment date all such reorganization payments due Agent, or at such earlier time as required by Agent to guarantee that DTC shall receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date. Absent any other arrangements between Issuer or Agent and DTC, such funds shall be wired to the Reorganization Deposit Account number that will be stamped on the signature page hereof at the time DTC executes this Letter of Representations. _ 13. DTC may direct Issuer or Agent to use any other telephone number or address as the number or address to which notices or payments may be sent. 14. In the event of a redemption, acceleration, or any other similar transaction (e.g., tender made and accepted in response to Issuer's or Agent's invitation)necessitating a reduction in the aggregate principal amount of Securities outstanding or an advance refunding of part of the Securities outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue and authenticate a new Bond certificate, or(b)A.ay ���ul�c ani apY�ep�:at,,11„tatiehi Eh DwAid daL and auivunt of iA.,dud:tun.ilk Yiiut iYal except in the case of final maturity, in which case the certificate will be presented to Issuer or Agent prior to payment if required. 15. In the event that Issuer determines that beneficial owners of Securities shall be able to obtain certificated Securities, Issuer or Agent shall notify DTC of the availability of Security certificates. In such event, Issuer or Agent shall issue, transfer, and exchange Security certificates in appropriate amounts, as required by DTC and others. -5- mbnd 1319-7/99 16. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent (at which time DTC will confirm with Issuer or Agent the aggregate principal amount of Securities outstanding). Under such circumstances, at DTC's request, Issuer and Agent shall cooperate fully with DTC by taking appropriate action to make available one or more separate certificates evidencing Securities to any Participant having Securities credited to its DTC accounts. 17. Nothing herein shall be deemed to require Agent to advance funds on behalf of Issuer. 18. This Letter of Representations may be executed in any number of counterparts,each of which when so executed shall be deemed to be an original,but all such counterparts together shall constitute but one and the same instrument. 19. This Letter of Representations shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to principles of conflicts of law. 20. The sender of each'notice delivered to DTC pursuant to this Letter of Representations is responsible for confirming that such notice was properly received by DTC. 21. Issuer recognizes that DTC does not in any way undertake to, and shall not have any responsibility to, monitor or ascertain the compliance of any transactions in the Securities with the following,as amended from time to time: (a)any exemptions from registration under the Securities Act of 1933; (b) the Investment Company Act of 1940; (c) the Employee Retirement Income Security Act of 1974; (d) the Internal Revenue Code of 1986; (e) any rules of any self-regulatory organizations (as defined under the Securities Exchange Act of 1934); or(f) any other local, state, or federal laws or regulations thereunder. 22. Issuer hereby authorizes DTC to provide to Agent listings of Participants' holdings, known as Security Position Listings ("SPLs")with respect to the Securities from time to time at the request of the Agent. DTC charges a fee for such SPLs. This authorization, unless revoked by Issuer,shall continue with respect to the Securities while any Securities are on deposit at DTC,until and unless Agent shall no longer be acting. In such event, Issuer shall provide DTC with similar evidence, satisfactory to DTC, of the authorization of any successor thereto so to act. Requests for SPLs shall be sent by telecopy to the Proxy Unit of DTC's Reorganization Department at(212) 855- 5181 or (212) 855-5182. Receipt of such requests shall be confirmed by telephoning (212) 855- 5202. Requests for SPLs sent by mail or by any other means shall be directed to the address indicated in Paragraph 3. 23. Issuer and Agent shall comply with the applicable requirements stated in DTC's Operational Arrangements, as they may be amended from time to time. DTC's Operational Arrangements are posted on DTC's website at"www.DTC.org." -6- mbnd1319-7/99 24. The following riders, attached hereto, are hereby incorporated into this Letter of Representations: Rider 1. • -7- mbnd1319-7/99 RIDER 1 1. Notwithstanding the provisions of paragraph 14 to the contrary, in the event of a redemption of part of the principal amount of the Securities of a maturity represented by a Security certificate, DTC shall surrender such Security certificate to the Agent for cancellation and reissuance and authentication of a new Security certificate in the principal amount outstanding following such redemption. 2. DTC acknowledges that it holds in accordance with its Rules and Regulations the Bonds and any payments made in respect of the Bonds in custody for its Participants in accordance with their respective holdings, as shown on the records of DTC. • ' r -Rider 1 - mbnd1319-7/99 •. __ . -- . . I ! . . • Notes: A. If there is an Agent(as defined in this Letter of Representations),Agent,as well as Issuer,must sign this Letter. If there is no Agent,in signing this Letter Issuer itself undertakes to perform all of the obligations set forth herein. B. Under the Rules of the Municipal Securities Rulemaking Board relating to "good delivery", a municipal securities dealer must be able to determine the date that a notice of a partial call or of an advance refunding of a part of an issue is distributed or published (the "Publication Date"). The establishment of such a Publication Date is addressed in Paragraph 3 of the Letter. C. Schedule B contains statements that DTC believes accurately describe DTC, the method of effecting book-entry transfers of securities distributed through DTC, and certain related matters. Very truly yours, City f-R nton,Washington [Issuer By: [Authorized Officer's Signature] • Fi al Agency of the State of Washington,currently The Bank of New York and Wells Fargo Bank,National [Agent] Association By: 1 _� [Authorized Officer's Signature] Received and Accepted: • THE DEPOSITORY TRUST COMPANY • 4. . - By:(::: 1.."• Funds should be*vlred tf>r The Chase Manhattan Bank ABA#021 000 021 • For credit to a/c Cede&Co. • • do The Depository Trust Company [Select Appropriate Account.) Dividend Deposit Account#066-026776 Redemption Deposit Account#066-027306 Rearg f izatioWB4FRff'Acrkount#066-027608 Underwriter's Counsel -8- mbnd 1319-7/99 `. SCHEDULE A $19,505,000 CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Maturity Date CUSIP Principal Amount (December 1) Interest Rate 760133 NZ7 $310,000 2001 2.15% 760133 PN2 75,000 2007 3.50 760133 PAO 85,000 2008 3.75 760133 PB8 335,000 2009 3.90 760133 PC6 1,359,000 2010 4.00 760133 PD4 1,400,000 2011 4.00 760133 PE2 1,455,000 2012 5.25 760133 PF9 1,530,000 2013 5.25 760133 PG7 1,610,000 2014 5.25 760133 PH5 1,695,000 2015 5.25 760133 PJ1 1,785,000 2016 5.25 760133 PK8 1,875,000 2017 5.25 760133 PL6 1,385,000 2018 5.25 760133 PM4 1,460,000 2019 5.25 760133 PP7 3,155,000 2021* 5.00 - 9 - mbnd1319-7/99 SCHEDULE B SAMPLE OFFICIAL STATEMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC--bracketed material may be applicable only to certain issues) 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities 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 Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If,however,the aggregate principal amount of[any] issue exceeds $400 million, one certificate will be issued with respect to each $400 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue.] _ 2. DTC 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 securities that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as Transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers,Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Direct and Indirect Participants are on file with the Securities and Exchange Commission. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants,which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security("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, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued. -10- mbnd 1319-7/99 i I 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede &Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities 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. 5. 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. [Beneficial Owners of Securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the security documents. Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners, or in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.] [6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Securities. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or Agent on 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 will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividends to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. -11- mbnd1319-7/99 [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities,on DTC's records,to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities a're transferred by Direct Participants on DTC's records and followed by a book-entry credit of,tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. 12. The information in:this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable,but Issuer takes no responsibility'for the accuracy thereof. -12- mbnd 1319-7/99 I i II DISCLOSURE AND DEBT LIMIT CERTIFICATE I, VICTORIA A. RUNKLE,hereby certify that: 1. I am the duly appointed, qualified and acting Finance and Information Services Administrator of the City of Renton,Washington(the "City"). 2. This Certificate is made and delivered in connection with the authorization, sale, issuance and delivery of the $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 (the"Bonds"). 3. To the best of my knowledge and belief, the representations of the City contained in that certain Bond Purchase Agreement pertaining to the Bonds, dated October 22, 2001, between the City and U.S. Bancorp Piper Jaffray Inc.,were true and correct when made, and remain true and correct as of this date. 4. I have read the Official Statement pertaining to the Bonds, dated October 22, 2001, including any addenda, supplements or amendments thereto (collectively, the"Official Statement") and, to the best of my knowledge, the Official Statement as of its date and as of the { date hereof does not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made,not misleading in any material respect, and there has not been any material adverse change in the normal operations or financial condition of the City or in the general economy of the City since the date of the Final Official Statement. 5. Pursuant to Section 20 of Ordinance No. 4922 of the City, which authorizes the issuance, sale and delivery of the Bonds, my execution of the Official Statement is authorized. 6. The actual value of taxable property subject to taxation situated within the boundaries of the City, as ascertained by the King County Assessor in the last preceding assessment for the City, and as equalized and fixed by King County and the State of Washington Board of Equalization, is $5,062,641,752.00. The aggregate principal amount of outstanding limited tax general obligation indebtedness of the City(including the principal amount of the Bonds), less the amount legally available for payment of all such limited tax general obligation indebtedness, is less than$75,939,626.28, which is one and one-half percent of said amount(the statutory limit on indebtedness of the City which may be incurred without the consent of the voters) as of this date. IN WITNESS WHEREOF, I have hereunto subscribed my official signature this 1st day of November, 2001. r—Dt6/4ilta' VICTORIA A. R KLE Finance and Information Services Administrator City of Renton, Washington f:\rentonutgo 2001 SIGNATURE IDENTIFICATION AND NO LITIGATION CERTIFICATE I,MARILYN J. PETERSEN, hereby certify that: 1. I am the duly appointed, qualified, and acting City Clerk of the City of Renton, Washington(the "City"). ' 2. This Certificate is made and delivered in connection with the authorization, sale, issuance and delivery of the $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 (the "Bonds"). 3. Pursuant to Ordinance No. 4922 of the City(the "Bond Ordinance"), authorizing the issuance and sale of the Bonds, each of the Bonds was duly executedon behalf of the City with the manual signature of JESSE TANNER, the Mayor of the City; and with my manual signature, in my capacity as City Clerk. Each of such officers was, on the date of execution of the Bonds, the duly elected or',appointed, qualified and acting officers of the City and such signatures are their genuine signatures. 4. The seal of the City appearing on each of the Bonds is the legally adopted,proper and official seal of the City. 5. The following City Council members were incumbent on October 22, 2001, the date on which the City Council adopted the Bond Ordinance, and they remain incumbent in such positions on this date: Dan Clawson Ten-i Briere Randall Corman Kathy Keolker-Wheeler Toni Nelson King Parker Donald Persson 6. No litigation or other proceedings are pending or, to the best of my knowledge, threatened in any court or other tribunal of competent jurisdiction, state or federal, in any way: (a) Restraining or enjoining the sale or delivery by the City of the Bonds; (b) Questioning in any manner the authority of the City to issue, or the issuance or validity of the Bonds; (c) Questioning the constitutionality of any statute, ordinance or resolution,or the validity of any proceedings, authorizing the issuance of the Bonds; (d) Questioning the validity or enforceability of the Bond Ordinance; f:\renton\ltgo 2001 1 (e) Contesting in any way the completeness, accuracy or fairness of the Official Statement; (f) Questioning the titles of any officers of the City under the laws of the State of Washington; or (g) Which might in any material respect adversely affect the transactions contemplated herein and in the'Official Statement to be undertaken by the City or the financial condition of the City. IN WITNESS WHEREOF, I have hereunto subscribed by official signature as of the 1st day of November, 2001. MARILd! . J. TERSEN City Clerk City of Renton, Washington - i it f:\renton\ltgo 2001 2 IMbank. Corporate Trust Services 1420 Fifth Avenue 7th Floor WWH1022 Seattle,WA 98101 AUTHORIZED SIGNATURES I hereby certify that the following is a true and exact extract from Article VII of the Bylaws presently in effect for U.S. Bank Trust National Association, a national banking association organized and existing under the laws of the United States: Section 7.1 EXECUTION OF INSTRUMENTS All agreements, checks, drafts, orders, indentures, notes, mortgages, deeds, conveyances, transfers, endorsements, assignments, certificates, declarations, receipts, Y g P discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits,- bonds, undertakings, guarantees, proxies and other instruments or documents may be signed, countersigned, executed, acknowledged, endorsed, verified, delivered or accepted on behalf of the Association, whether in a fiduciary capacity or otherwise, by:• an officer of the Association, or such employee or agent as may be designated from time to time by the board by resolution, or by the Chairman or the President by written instrument, which resolution .or instrument shall be certified as in effect by the Secretary or an Assistant Secretary of the Association. The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws. I further certify that the following officers of U.S. Bank Trust National Association have been duly elected and qualified and now hold their respective offices, and that the signatures of such officers are authentic: R. Bruce Colwell, Jr. /./ //,-..Vice Sherrie L. Pantle � Vice President /'/� Vice President Debby R. Wight I A Carolyn Whalen Trust Officer A!�1 ,J�� • .(/ Vice President 1/0/kahAl° IN WITNESS WHEREOF, I have hereunto set my hand this /i day of /1/0/014494/4/, 2001. U.S. BANK TRUST NATIONAL ASSOCIATION By: Assistant Secretary I.T.S. BAN.N:TRUST NATIONAL ASSOCIATION T TY. &WC ARTICLE I Meetings of Shareholders Section 1.1 Annual Meeting. The annual meeting of the shareholders, for the election of directors and thettransaction of other business, shall be held at a time and place as the Chairman orPresident may designate. Notice of such meeting shall be given at least ten days prior to the date thereof, to each shareholder of the Association. If, for any reason, an election of directors is not made on the designated day, the election shall be held on some subsequentday, as soon thereafter as practicable, with prior notice thereof. Section 1.2 Special Meetings. Except as otherwise specifically provided by law, special meetings of shareholders may be called for any purpose, at any time by a majority of the board of directors, or by any shareholder or group of shareholders owning at least ten percent of the outstanding stock. Every such special meeting, unless otherwise provided by Iaw, shall be called upon not less than ten days prior notice stating the purpose of the meeting. Section 1.3 Nominations for Directors. Nominations for election to the board of directors may be made by the board of directors or by any shareholder. Section 1.4 Proxies.' Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting and any adjournments of such meeting and shall be filed with the records of the meeting. Section 1.5 Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association. ARTICLE 11 Directors Section 2.1 Board of Directors. The Board of Directors (hereinafter referred to as the"board"), shall have power to manage and administer the business and affairs of the Association. All authorized corporate powers of the Association shall be vested in and may be exercised by the board. March 30, 1998 Section 2.2 Powers. In addition to the foregoing, the board ofdirectors shall have and may exercise all of the powers granted to or conferred upon it by the Articles of Association, the Bylaws and by law. Section 2.3 Number. The Board shall consist of a number of members to be fixed and determined from time to time by resolution of the board or the shareholders at any meeting thereof; in accordance with the Articles of Association. Section 2.4 Organization Meeting. The newly elected board shall meet for the purpose of organizing the hew board and electing and appointing such the Association as may be appropriate. Such meeting shall be held on the day o electionftheficers of or as soon thereafter as practicable, and, in any event, within thirty days thereafter. If, at the time fixed for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting until a quorum is obtained. Section 2.5 Regular Meetings. The re gular meetings of the ard sh without notice, as the Chairman or President may designate and deem osu tab all be held, le. Section 2.6 Special Meetings. Special meetings of the board may be called by the Chai.4uan or the President of the Association, or at the request of two or more directors. Each member of the board shall be given notice stating the time and place of each such meeting. Section 2.7u0rurn. A majority of the directors shall constitute a quorum at any meeting, except when otherwise provided by law; but fewer may adjourn any meeting. Unless otherwise provided, once a quorum is established, any act by a majority of tho constituting the quorum shall be the act of the board. se Section 2.8 Vacancies. When any vacancy occurs among the directors the remaining members of the board may appoint a director to fill such vacancy at any regular meeting of the board, or at a special meeting called for that purpose. ARTICLE III Committees Section 3.1 Advisory Board of Directors. The board may appoint persons,who need not be directors, to serve as advisory directors on-an advisory board of directors established with respect to the business affairs of either this Association alone or business affairs of a group of affiliated organizations the of which this Association is one. Advisory directors shall have such powers and duties as may be determined by the board, provided that the board's responsibility for the business and affairs of this Associatio shall in no respect be delegated or diminished. n March 30, 1998 2 Section 3.2 Audit Committee. The board shall appoint an Audit Committee which shall consist of at least two Directors of the Association or of an affiliate of the Association. If legally permissible, the board may determine to name itself as the Audit Committee. The Audit Committee shall direct and review audits of the Association's fiduciary activities. The members of the Audit Committee shall be appointed each year and shall continue to act until their successors are named. The Audit Committee shall have power to adopt its own rules and,procedures and to do those things which in the judgment of such Committee are necessary or helpful with respect to the exercise of its functions or the satisfaction of its responsibilities. Section 3.3 Executive Committee. The board may appoint an Executive Committee, which shall consist of at least three directors and which shall have, and may exercise, all the powers ofthe board between meetings of the board or otherwise when the board is not meeting. Section 3.4 Other Committees. The board may appoint, from time to time, committees of one or more persons who need not be directors, for such purposes and with such powers as the board may determine. In addition, either the Chairman or the President may appoint, from time to time, committees of one or more officers, employees, agents or other persons, for such purposes and with such powers as either the Chairman or the President deems appropriate and proper. Whether appointed,by the board, the Chairman, or the President, any such . Committee shall at all times be subject to the direction and control of the board. Section 3.5 Meetings. Minutes and Rules. An advisory board of directors and/or committee shall meet as necessary in consideration of the purpose of the advisory board of directors or committee, and shall maintain minutes in sufficient detail to indicate actions taken or recommendations made; unless required by the members, discussions, votes, or other specific details need not be reported. An advisory board of directors or a committee may, in consideration of its purpose, adopt its own rules for the exercise of any of its functions or authority. ARTICLE IV Officers and Employees Section .1 :iiiltt[�'Ti of the��,^,LL"u The board may appoint one of its members to be Chairman of the board to serve at the pleasure of the board. The Chairman shall supervise the carrying out of the policies adopted or approved by the board; shall have general executive powers, as well as the specific powers conferred by these Bylaws; shall also have and may exercise such powers and duties as from time to time may be conferred upon Or assigned by the board. March 30, 1998 3 4 Section 4.2 President. The board may appoint one °Fits members to be President of the Association. In the absence of the Chairman, the President shall preside at any meeting of the board. The President shall have general executive powers, and shall have and may exercise any and all other powers and duties pertaining by practice, to the Office of President, or imposed by these Bylaws. The President shall also j have and may exercise such powers and duties as from tine to time assigned by the board. may be conferred or Section 4.3 Vice'President. The board may appoint one or more Vice Preside who shall have such powers and duties as may be assigned by the board fits the duties of the President on those occasions when the President is absent, including presiding at any meeting,of the board in the absence of both the Chairman and President. Section 4.4 Secretary. The board shall appoint a Secretary, or other designated officer who shall be Secretary-of the board and of the Association, and shall keep accurate minutes of all meetings. The Secretary-shall attend to the giving required by these Bylaws,to be given; shall be custodian of the corporate sealrecords, not documents and papers of the Association; shall provide for the keeping of proper of all transactions of the Association; shall have and mayexercise anyp p r records powers and duties pertaining by law, regulation or practice, to the Secretary,all otherm by these Bylaws; and shall also perform such other duties as may be assignedfr m sed to time, by the board_ time Section 4.5 OtheriOffcers. The board may appoint, and may authorize the Chairman or the President to appoint, any officer as from time to time may appear to the board, the Chairman or the President to be required or desirable to transact the business the Association. Such officers shall exercise such powers and perform suc of pertain to their several offices, or as may be conferred upon or assigned to them by tas he Bylaws, the board, the Chairman or the President. Section 4.6 Tenure of Office. The Chairman or the President and all other officers shall hold office for the current year for which the board was shall resign, become disqualified, or be removed. elected, unless they Chairman or President shall be filled promptly by the board cy occurring in the Office of, Any officer elected by the board or appointed by the Chairman or the President may be removed at any time, with or without cause, b of the board or, if such officer was a ointed.b y the al�a`Lye�0te°f a majority Chairman or the President, respectively. y the Chairnian or the President, by the • • • March 30,.1998 4 • .J ARTICLE V Stock Section 11. Shares of stock shall be transferable on the books of the Association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every- person becoming a shareholder by such transfer shall, in proportion to such person's shares, succeed to all rights of the prior holder of such shares. Each certificate of stock shall recite on its face that the stock represented thereby is transferable only upon the books and records of the Association properly endorsed. • ARTICLE VI Corporate Seal Section 6.1. The Association shall have no corporate seal;provided, however, that if the use of a seal is required by, or is otherwise convenient or advisable pursuant to, • the laws or regulations of ahy jurisdiction, the following seal may be used, and the Chairman, the President, the Secretary and any Assistant Secretary shall have authority to affix such seal: ARTICLE VII Miscellaneous Provisions Section 7.1 Execution of Instruments. All agreements, checks, drafts, orders, indentures, notes, mortgages, deeds, conveyances, transfers, endorsements, assignments, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits,bonds, undertakings, guarantees,proxies and ' other instruments or documents may be signed, countersigned, executed, acknowledged, endorsed, verified, delivered or accepted on behalf of the Association, whether in a fiducim Y capacity or otherwise, by an officer of the Association, or such employee or agent as may be designated from time to time by the board by resolution, or by the Chairman or the President by written instrument, which resolution or instrument shall be certified as in effect by the Secretary or an Assistant Secretary of the Association. The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws. March 30, 1998 5 Section 7.2 Records. The Articles of Association, the Bylaws, and the proceedings of all meetings of the shareholders, the board, and standing committees of the board, shall be recorded in appropriate minute books provided for the purpose. The minutes of each meeting shall be signed by the Secretary, or other officer appointed to act as Secretary of the meeting. Section 7.3 Trust Files. There shall be maintained in the Association files all fiduciary records necessary to assure that its fiduciary responsibilities have been properly undertaken and discharged! Section 7.4 Trust Investments. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship and according to law. Where such instrument does not specify the character and class of investments to be made and does not vest.in the Association a discretion in the matter, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries may invest under law. Section 7.5 Notice. Whenever notice is required by the Articles of Association, the Bylaws or law, such notice shall be by mail,postage prepaid, telegram, in person, or by any other means by which such notice can reasonably be expected to be received, using the address of the person to receive such notice, or such other personal data, as may appear on the records of the Association. Prior notice shall be proper if given not more than 30 days nor less than 10 days prior to the event for which notice is given. ARTICLE VIII Indemnification • Section 8.1. The Association shall indemnify to the full extent permitted by, and in the manner permissibleunder, the Articles of Association and the laws of the United States of America, as applicable and as amended from time to time, any person made, or threatened to be made, a party to any action, suit or proceeding, whether criminal,civil, administrative or investigative, by reason of the fact that such person is or was a director, advisory director, officer or employee of the Association, or any predecessor of the Association, or served any other enterprise as a director or officer at the request of the Association or any predecessor of the Association. Section 8.2 The board in its direction may, on behalf of the Association, indemnify any person, other than a director, advisory director, officer or employee, made a party to any action, suitor proceeding by reason of the fact that such person is or was an agent of the Association or any predecessor of the Association serving in such capacity at the request of the Association or any predecessor of the Association. March 30, 1998 6 ARTICLE IX Bylaws: Inte retation and Amendment Section 9.1. These Bylaws shall be interpreted in accordance with and subject to • appropriate provisions of law, and may be amended, altered or repealed, at any regular or special meeting of the board. Section 9.2. A copy of the Bylaws, with all amendments, shall at all times be kept in a convenient place at the main office of the Association, and shall be open for inspection to all shareholders during-Association hours. • • March 30, 1998 7 • 'J RESOLUTIONS OF THE BOARD OF DIRECTORS OF U.S. BANK TRUST NATIONAL ASSOCIATION (May 1, 2001) A. .ointment of Cor.orate Trust Officers RESOLVED, That the Board hereby appoints and ratifies the prior appointment Lawrence J.Bell,Vice President pp tment of: Charles Burns III,Asst.Vice President li David A.Pringle,Vice President R.Bruce Colwell,Jr.,Vice President I Nancy D.Stahl,Vice President Dennis M.Egan,Senior Vice President Carolyn Whalen,Vice President Linda E.Houston,Trust Officer i Debby Wight,Trust Officer Ryan Huhta,Vice President Diana Wilson,Vice President Diana Jacobs,Asst.Vice President Diana Woodard,Vice President Shirley Young,Asst.Vice President Deborah Kuykendall,Vice President Glendy Yuen,Asst.Vice President Sherrie Pantie,Vice President Thomas Zrust,Vice President FURTHER RESOLVED, The titles of such officers at the Association shall be as listed and each such officer shall also hold the position of Assistant SecretaryAssociation and of the above, Elizabeth Becker shall hold the title of Secretary of the Association. Revised:Apr 2001 A. •ointment of Affiliated Cor.orate Trust Officers RESOLVED, That the Board hereby appoints the below-listed individuals,each an officer affiliated U.S. Bancorp trust entity,as officers of the Association for the following limited connection with proposed or existing corporate trusteeship accounts or other co of an accounts,including,but not limited to, trusteeships for municipal, Lib • purposes in rporate trust escrow accounts and mortgage custody accounts: execution of indentures, agr agreements ancorporated financing, documents required for account closings or otherwise executed in the administration: accounts; authentication of certificates;execution of real property deeds, conveyances, transfer of such security interest filings; execution of extensions with regardsand letters of credit and taking to letters of credit, execution of draws on all other action and performing all other duties in connection with letters of credit;execution of investment purchase and sale transactions; and execution of all other instruments or documents in the administration of such accounts. The titles of such officer Association shall be as listed below, and each such officer shall also hold the position of officers at the Secretary of the Association. Assistant ARIZONA Matt Anderson,Asst.Vice President Robert L.Von Hess,Vice President Debbie M.Scherer,Trust Officer CALIFORNIA Ashraf Z.Almurdaah,Vice President John Axt,Vice President Pamelon Collins-Lloyd,Trust Officer Sheri B. Ball,Vice President Kay Cooper,Trust Officer June D. Borjon,Asst.Vice President Alicia Estrada,Asst.Vice President Jennifer Brining Trust Officer Andrew Fung,Asst.Vice President Teresa Caspary,Senior Vice President Andrea Freeman,Trust Officer Esther Cervantes,Vice President Ann P.GadsbyVice President Gloria Garriott,Vice President Fonda Hall,Asst.Vice President Loyce G. Harrison,Vice President Martin Vleza,Trust Officer Myrna Presto-Choroski,Asst.Vice President Julie Iommel,Asst.Vice President Leticia Sabiniano,Asst.Vice President Robert C.Hyman,Asst.Vice President William Jennings,Vice President Rafaat A.Sarkis,Vice President Bradley Scarbrough, Vice President Bertha Mares, Vice President Sandra Spivey,Asst.Vice President Adriana Marshall,Asst.Vice President Michael P.Susnow,Vice President Keith R.Marshall,Vice President Gonzalo Urey,Asst.Vice President Tamara M.Mawn,Vice President Linda D.Verstuyft,Vice President John P.McIntire,Trust Officer Grace H.Yang,Asst.Vice President Terry L.McRoberts,Executive Vice President COLORADO Adam Dalmy,Vice President William W.MacMillan,Vice President Seth T. Dodson,Trust Officer Patricia M.Peters,Asst.Vice President DELAWARE John D.Bowman,Vice President K.Wendy Kumar,Vice President Patrick J. Crowley,Vice President William T.Lynch,Vice President Marlene J.Fahey,Vice President David J.O'Brien,Vice President Thomas J.Kelly,Senior Vice President FLORIDA Peter H.Fowler,Vice President Scott A.Schuhle,Vice President GEORGIA Teresa L. Davis,Vice President Robert J.Middleman,Vice President Esther P. Fannin,Vice President Mary A.Willis,Asst.Vice President Betty H.Gilcrease,Trust Officer Lee Ann Willis,Trust Officer April Lipscomb,Trust Officer ILLINOIS Nancie Arvin,Vice President Melissa A.Ronal,Vice President Patricia M.Child,Vice President Peter N.Tinaglia,Trust Officer Michael Goodwin,Assistant Vice President Brian D.Weston,Trust Officer Frank Layo,Asst.Vice President MICHIGAN Lars P.Anderson,Vice President James Kowalski,Asst.Vice President Lorraine K.Grill,Vice President Susan T.Payne,Vice President MINNESOTA Jacqueline Alliegro,Vice President Steve Fouts,Vice President Denise Anderson,Assistant Vice President ' Renee J.Fritz,Vice President Kari A. Anderson,Trust Officer Deborah J.Franco,Trust Officer Elizabeth Becker,Sr.Corporate Counsel Lisa Franco,Trust Officer Michael Bengtson,Trust Officer Julaine A.Fuith,Asst.Vice President Kari A. Berg,Trust Officer Darlene A.Garsteig,Trust Officer Shana M. Bloom,Trust Officer Joel J.Geist,Vice President David H. Bluhm,Vice President Jason M.Giel,Trust Officer David S.Blume,Asst.Vice President Thomas M.Gronlund,Vice President Michelle A.Boland,Trust Officer Mary M.Grotenhuis,Assistant Vice President Barbara L.Bonham,Assistant Vice President Wendy B.Hayes,Trust Officer Steve Batt,Trust Officer Virginia K.Hinman,Vice President Delma Carlson-Emberson,Assistant Vice President Kenneth D.Hoffman,Vice President Diane M.Chalupsky,Asst.Vice President Jennifer Y.Holder,Vice President Sheryl A.Christopherson,Vice President Laurie A.Howard,Vice President Theresa L.Cramer,Assistant Vice President Helena E.Jackson,Vice President Colleen DaSilva,Trust Officer Reed A.Johnson,Vice President Nancy Duncanson,Vice President Sheryl A.Johnson,Vice President Julie A. Eddington,Assistant Vice President Eve D.Kaplan,Vice President James A.Ehrenberg,Senior Vice President Patty J.Kapsch,Trust Officer Jeffrey Emerson,Assistant Vice President Jeff Kerr,Senior Vice President Sandra B.Farrow,Vice President - Gloriann S.Kessler,Vice President Joanne Fischer,Asst.Vice President Gina M.Klein,Trust Officer Linda M. Kruse,Trust Officer Patricia Selbitschka,Vice President Matt Lehmann,Trust Officer Daniel E.Sheff,Assistant Vice President Kelly A.Liddle,Trust Officer Greg E.Skutnik,Assistant Vice President LeAnn K.Lundberg,Senior Vice President Annette Soderholm,Vice President Sheryl L. McMahon,Trust Officer Ingrid Soderholm,Trust Officer Erik M.Magnuson,Trust Officer Judy M.Spahn,Asst.Vice President Laura M.Mathias,Trust Officer Jill Stehr,Trust Officer Melissa B.Miller,Trust Officer Kristin A.Strong,Corporate Counsel Karen D. Mollner,Vice PresidentBecky L.Story,Trust Officer Gretchen A.Murphy,Assistant Vice President Scott Strodthoff,Senior Vice President Jaynes M.Paulson,Assistant Vice President Diane L.Thormodsgard,Exec.Vice President Richard H.Prokosch,Vice President Sandra J.Thorson,Vice President Barbara J.Quell,Vice President Jeffrey P.Tupper,Vice President Shannon M.Rantz,Assistant Vice President Jason VanVleet,Trust Officer Patricia Rathbun,Trust Officer Mari K.Weiss-Laukkonen,Assistant Vice President Diane L.Reynolds,Vice President - Pamela J.Wieder,Vice President Cynthia Rose,Vice President Stephanie M.Williams,Trust Officer Lori-Anne Rosenberg,Assistant Vice President Cynthia S.Woodward,Vice President Timothy J.Sandell,Vice President Judith M.Zuzek,Trust Officer Tamara Schultz-Fugh,Vice President NEBRASKA Debra A. DeGarmo,Vice President NEW YORK Adam K. Berman,Trust Officer Thomas J.Kelly,Senior Vice President John D.Bowman,Vice President K.Wendy Kumar,Vice President Cynthia W.Brown,Trust Officer William T.Lynch,Vice President Patrick J. Crowley,Vice President Patricia V.Marshall,Trust Officer Catherine M.Donohue,Trust Officer William Martinez,Trust Officer Marlene J.Fahey,Vice President Barbara A.Nastro,Assistant Vice President Rouba Fakih,Trust Officer David J.O'Brien,Vice President Daniel R.Fisher,Vice President Janet O'Hara,Trust Officer Merilyn Hess,Asst.Vice President Carlos Maria Pineyro,Vice President Joseph A.Jahn,Vice President Amy S.Roberts,Vice President James Jones,Trust Officer Ignazio Tamburello,Trust Officer Edward A.Kachinski,Vice President OREGON Corazon C.Gruenberg,Vice President Linda A.McConkey,Vice President Cheryl K.Nelson,Vice President SOUTH DAKOTA Tim Hamel,Vice President Thomas Steele,Assistant Vice President TENNESSEE Sandra J.Moyers,Trust Officer Melissa A.Ragsdale,Asst.Vice President UTAH Paul R. Buchanan,Vice President Kim Galbraith,Vice President FURTHER RESOLVED,That such persons shall each hold the respective title listed above and • the position of Assistant Secretary of the Association as long as such persons continue to be employees of U.S. Bancorp affiliates, and that any such Assistant Secretary is hereby authorized to certify a copy of these resolutions and to certify to the officership of such affiliate officers. Revised: Apr 2001 *xa • �l�lR T l TY' C T7TIt{YC/,TY'j .tC.G�H.A\A J t.L.t\t.xa x....cs.a.iv I hereby certify that I am the Secretary of U.S. Bank Trust National Association ("USBT"), located in the City of Seattle; County of King and State of Washington; and that I have been duly appointed and am presently serving in that capacity in accordance with the bylaws of USBT. I further certify that the attached Written Action of the Board of Directors is a true and correct copy of the original duly adopted by the Board of Directors of USBT on - March 30, 1998, and that said Written Action has not been rescinded or revoked and remains in full force and effect IN WITNESS WHEREOF,.I have hereunto set my hand this 30th day of March, 1998. /‘"4(41751- Kenneth D. Ho ffivand Title: Secretary • WRITTEN ACTION OF TAE 13OARI) OF DIRECTORS OF U.S. BANK TRUST NATIONAL ASSOCIATION WLIEREA.S, on August I, 1997, First Bank System, Inc. ("FBS") acquired U.S. Bancorp, Portland, Oregon, and in connection with this transaction, FBS has changed its corporate title to U.S. Bancorp, First Bank National Association has changed its corporate title to U.S. Bank National Association, and the Association changed its corporate title to U.S.Bank Trust National Association by amendment of its Articles of Association and shareholder approval thereof. NOW, THEREFORE,the undersigned, being all of the directors of the Association, hereby (i) consent to this written action in lieu of holding a meeting of the Board of Directors, (ii) adopt and approve the following resolutions and(iii) instruct the Secretary to file this written action with the minutes of the Association: RESOLVED, that, effective as of March 30, 1998, and subject to prior shareholder approval,the Amended and Restated Articles of Association, a copy of which is attached as Exhibit A hereto, are hereby approved in all respects; and FURTHN'R RESOLVED,that the Secretary and each Assistant Secretary of the Association, or any one of them, be, and each hereby is, authorized and instructed to seek the approval of U.S.Bank National Association,the sole shareholder of the Association, of the Amended and Restated Articles of Association;and FURTHER RESOLVED,that,upon approval by the shareholder of the Association,the Secretary and each Assistant Secretary of the Association, or any one of them, be, and each hereby is, authorized and instructed to file the Association's Amended and Restated Articles of Association with the Office of the Comptroller of the Currency. ( 1a I 1 H R RESOLED,that this resolution may be executed in separate counterpart's by the members of the Board of Directors which when fully executed and delivered shall together constitute one and the same instrument DI WITNESS WHEREOF,the undersigned Directors of the Association hereby execute these resolutions as of the 30th day of March, 1998. Lawrence J.Bell R.Bruce Colwell,Jr. .1:tf J� 1 ennis M.Egan ( Dyan M (->Terry L.McRoberts Peter E.Raskind • Nancy D. Stahl Diana Woodard arcresnv.doc • 'WRITTEN ACTION OF THE BOARD OF DIRECTORS OF U.S. BANK TRUST NATIONAL ASSOCIATION WHEREAS, on August 1, 1997, First Bank System, Inc. ("FBS") acquired Bancorp, Portland, Oregon, and in connection with this transaction,FBS has changed its corporate title . to U.S.Bancorp, First Bank National Association has changed its corporate title to U.S.Bank National Association,-and the Association changed its corporate title to U.S. Bank Trust National Association by arnendrient of its Articles of Association and shareholder approval thereof. NOW, THEREFORE,the undersigned, being all of the directors of the Association, hereby(1) consent to this written action in lieu of holding a meeting of the Board of Directors, (ii) adopt and approve the following resolutions and (iii) instruct the Secretary to file this written action ' with the minutes of the Association: RESOLVED,that, effective as of March 3 0T ' 1998, and subject to prior shareholder approval,the Amended and Restated Articles of Association, a copy of which is attached as Exhibit A hereto, are hereby approved in all respects; and FURTHER RESOLVED, that the Secretary and each Assistant Secretary of the Association, or any one of them, be, and each hereby is, authorized and instructed to seek the approval of U.S_Bank National Association,the sole shareholder of the Association, of the Amended and Restated Articles of Association; and FURthER RESOLVED,that,upon approval by the shareholder of the Association, the Secretary and each Assistant Secretary of the Association, or any one of them, be, and each hereby is,authorized and instructed to file the Association's Amended and Restated Articles of Association with the Office of the Comptroller of the Currency. • FURTHER RESOLVED, that this resolution may be executed in separate counterparts by the members of the Board of Directors which when fully executed and delivered shall together constitute one and the same instrument. • IN WITNESS WHEREOF,the undersigned Directors of the Association hereby execute these resolutions as of the 30th day of March, 1998. wrence J.Bell R.Bruce Colwell, Jr. nennic Po-gn Than M N„hr Terry L. McRoberts Peter E. Raskind Nancy D. Stahl Diana Woodard anrestw.doc J ' • WRITTEN ACTION OF THE BOARD 01? DIRECTORS OF U.S. BANK TRUST NATIONAL ASSOCIATION WHEREAS, on August 1, 1997, First Bank System, Inc. ("FBS") acquired U.S. Bancorp, Portland, Oregon, and in connection with this transaction, FBS has changed its corporate title to U.S_Bancorp, First Bank National Association has changed its corporate title to U.S. Bank National Association,-and the Association changed its corporate title to U.S.Bank Trust National Association by amendment of its Articles of Association and shareholder approval thereof. NOW, TIMREFORE,the undersigned, being all of the directors of the Association, hereby(i) consent to this written action in lieu of holding a meeting of the Board of Directors, (ii) adopt and approve the following resolutions and (iii) instruct the Secretary to file this written action with the minutes of the.Association: • RESOLVED, that, effective as of March 30, 1998, and subject to prior shareholder approval,the A mended and Restated Articles of Association, a cony of which is attached as Exhibit A hereto, are hereby approved in all respects; and FURTHER RESOLVED, that the Secretary and each Assistant Secretary of the Association, or any one of them,be, and each hereby is, authorized and instructed to seek the approval of U.S_Bank National Association,the sole shareholder of the Association,.of the Amended and Restated Articles of Association; and FUR'EHER RESOLVED,that,upon approval by the shareholder of the Association, the Secretary and each Assistant Secretary of the Association,or any one of them, be, and each hereby is,authorized and instructed to file the Association's Amended and Restated Articles of Association with the Office of the Comptroller of the Currency. FURTHER RESOLVED,that this resolution may be executed in separate counterparts by the members of the Board of Directors which when fully executed and delivered shall together constitute one and the same instrument. IN WITNESS WHEREOF,the undersigned Directors of the Association hereby execute these resolutions as of the 30th day of March, 1998. Lawrence J. Bell R Bruce Colwell, Jr. riei._' �.r r.,� i, sL., roan T'1 Tif U i-+jf aii A. L1u1L ht Lu ` rJ Terry L_ McRoberts Peter E. Raskind Nancy D. Stahl Diana Woodard :utregw.doc AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF FIRST TRUST NATIONAL ASSOCIATION WHEREAS, on August 1, 1997, First Bank System, Inc. ("FBS") acquired U.S. Bancorp, Portland,Oregon, and in connection with this transaction, FBS has changed its corporate title to U.S. Bancorp and First Bank National Association has changed its corporate title to U.S. Bank National Association; and WHEREAS, First Trust National Association ("First Trust") now proposes to change its . _ corporate title to "U.S. Bank Trust National Association;"and WHEREAS, the Board of Directors considers the proposed change of corporate title to be advantageous, desirable, and in the best interests of First Trust. NOW, THEREFORE,BE IT RESOLVED, that, effective as of the opening of business, March 30, 1998, and subject to prior shareholder approval, Article First of First Trust's Articles of Association shall be amended to read in its entirety as follows: FIRST. The title of the Association shall be"U.S. Bank Trust National Association." FURTHER RESOLVED, that, effective as of the opening of business, March and subject to prior shareholder approval, the first paragraph of Article Third of First Trust's Articles of Association shall be amended to read as follows: THIRD. The board of directors of the Association shall consist of not less than five nor more than.25 persons, the exact number to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special-meeting thereof. Each director shall own common or preferred stock of this Association with an aggregate par, fair market, or equity value of not less than 51,000.00, as of either(i) the date ofpurchase, (ii) the date the person became a director, whichever is more recent Any combination of common or preferred stock of this Association or U.S. Bancorp may be used. FURTHER RESOLVED, that the Secretary and each Assistant Secretary of First Trust, or any one of them,be, and each herebyis, authorized and instructed to seek the approval of U.S_ Bank National Association,the sole shareholder of First Trust, for the foregoing amendments to First Trust's Articles of Association, as required by Section 21 a of Title 12 of the United States Code and the regulations of the Office of the Comptroller of the Cun-ency ("OCC"); and FURTHER RESOLVED, that, upon approval by the shareholder of First Trust, the Secretary and each Assistant Secretary of First Trust, or any one of there, be, and each hereby is, authorized and instructed to file the amendments to First Trust's Articles of Association with the OCC_ • AMENDED AND RESTATED ARTICLES nF ASSOCIATION U.S. BANK TRUST NATIONAL ASSOCIATION FIRST. The title of this Association shall be "U.S. Bank Trust National Association . • SECOND. The main office of this Association shall be in the City of Seattle, County of King, State of Washington. The business of this Association will be limited to that of a national trust bank, and to support activities incidental thereto. This Association Will not amend these Articles of Association to expand the scope of or alter its business beyond that stated in the Article Second without the prior approval of they Comptroller of the Currency. Prior to the transfer of any stock of the Association the Association w,11 seek the prior approval of the appropriate federal depository institution regulatory agency. THIRD. The board of directors of the Association shall consist of not less than five nor more than twenty-five members, the exact number to be fixed and determined from time to, time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting thereof. Each director shall own common or preferred stock of this Association with an aggregate par, fair market, or equity value of not less than $1,000.00, as of either (i) the date of purchase, or (ii) the date the person became a director, whichever is more recent. Any combination of common or preferred stock of this Association or U.S. Bancorp may be used. .Any vacancy in the board of directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The board of directors may not increase the number of directors between meetings of shareholders to a number that (1) exceeds by more than two the number of directors last elected by shareholders where the number was fifteen or less; and (2) exceeds by more than four the number of directors last elected by shareholders where the number was sixteen or more, but in no event shall the number of directors exceed twenty-five. Terns of directors, including directors selected to fill vacancies, shall expire at the next regular meeting of shareholders at which directors are elected, unless the directors resign or are removed from office. Despite the expiration of director's term the director shall continue to - serve until his or her successor is elected and qualifies or until there is a decrease in the number of directors and his or her position is eliminated. Pare 1 of 8 J • Honorary or advisory members of the board of directors, Without voting power or power of final decision in matters concerning L� -1 Association, may be appointed by resolution of a majoritythe business a of directors, or by resolution of shareholders at any of the full board nnual or special meeting. Honorary or advisory directors shall not be counted for poses of determining the number of directors; of this Association or the presence of a connection with any board action, and shall not be required to ownquonun in shares. qqualifying FOURTH. There shall be an annual meeting of the shareholders to el directors and transact whatever other business maybe broughtect the meeting. It shall be held at the main office or any other convenient place the board of directors may designate, on the day of each year specified therefor in the bylaws, or if that dayfalls on a legal gal holiday in the State•in which this Association is Iocated, on the next following banking on the day fixed, or in event of a legal day. If no election is held holiday, an election may be held on any subsequent day within sixty days of the day fixed, to be designated by the board of directors, or, if the directors fail to fix the day, by shareholders representing • two-thirds of the shares issued and outstanding. In all cases at least ten-days advance notice of the meeting shall be given to the shareholders by first class mail. A director may resign at any time by delivering written or oral notice to the board of directors, its chairperson, or to this Association, which resignation shall be effective when the notice is delivered unless the notice specifies a later effective date. A director may be removed by shareholders at a meeting called to remove him or her, when notice of the meetingstating purposes is to remove him or her is provided, if there is purpose or one of the is a failure to fulfill one of the affirmative requirements for qualification, or for cause; proms however, that a director may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal. FIRTH. The authorized amount of capital stock of this Association shall be 10,000 shares of common stock of the par value of one-hundred dollars (5100.00) each;but said capital stock may be increased or decreased from time to time, according to the provisions of the laws of the United States. No holder of shares of the capital stock of any class of this Association shall have any preemptive or preferential right of subscription to any- shares of • any class of stock of this Association, whether now or hereafter authorized, or to Pale 2 of8 • any obligations convertible into stock of this Association, issued, or sold, nor any right of subscription to any thereof other than such, if any, as the board of directors, in its discretion may from time to time determine and at such price as the board of directors may'from time to time fix. Unless otherwise specified in these Articles of Association or required by law, (1) all matters requiring shareholder action, including amendments to the Articles of Association must be approved by shareholders owning a majority voting interest in the outstanding voting stock, and (2) each shareholder shall be entitled to one vote per share. Unless otherwise provided in the bylaws, the record date for determining shareholders entitled to notice of and to vote at any meeting_ is the close of business on the day before the first notice is mailed or otherwise sent to the shareholders, provided that in no event may a record date be more that seventy days before the meeting. SIXTH. The board of directors shall appoint one of its members-president of this Association and one of its members chairperson of the board. The board of directors shall also have the power to appoint one or more vice presidents, a secretary who shall keep minutes of the directors' and shareholders' meetings and be responsible for authenticating the records of this Association, and such other officers and employees as may be required to transact the business of this Association. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance with the bylaws. The board of directors shall have the power to: (1) Define the duties of the officers, employees, and agents of this Association.' • (2) Delegate the performance of its duties,but not the responsibility for its duties, to the officers,employees,and agents of this Association_ • (3) Fix the compensation and enter into employment contracts with its officers and'employees upon reasonable terns and conditions, consistent with applicable law. (4) Dismiss officers and employees. (5) Require bonds from officers and employees and to fix the penalty thereof_ Pa`ge3of8 • (6) Ratify tnrritten policies authorized by this Association's management or committees of the board. (7) Regulate the manner in which any increase or decrease of the _ _ capital of this Association shall be made; provided, however,that nothing herein shall restrict the power of shareholders to increase or decrease the capital of this Association in accordance with law, and nothing shall raise or lower from two-thirds the percentage required for shareholder approval to increase or reduce the capital. (8) Manage and administer the business and affairs of this Association. (9) Adopt bylaws, not inconsistent with law or these "" . Articles of Association,for managing the business and regulating g the affairs of this Association. (10) Amend or repeal bylaws, except to the extent that the Articles of Association reserve this power in whole or in part to shareholders. (11) Make contracts. (12) Generally to pertain,.all acts that are legal for a board of directors • to perform. SEVENTH. The board of directors shall have the power to change the location of the main office to any other place within the limits of the City of Seattle without the approval of the shareholders, and shall have the power to establish or change the location of any branch or branches of this Association to any other location permitted under applicable law; without the approval of the shareholders, subject to approval by the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until -terminated according to the laws of the United States. NINTH. The board of directors of this Association, or any.three (5) or more shareholders owning, in the aggregate, not less than twenty-five percent (25%) of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the bylaws or the laws of the United States, or waived by shareholders, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten, and no more than sixty, days prior to the date of the meeting to each shareholder of record at his/her addresses as P ale 4 o I-8 M shown upon the books of this Association. Unless otherwise provided by these Articles of Association or the bylaws, any action requiring approval of shareholders must be effected at a duly called annual or special meeting. • TENTH. Any action required to be taken at a meeting of the shareholders ordirectors or any action that may be taken at a meeting of shareholders or directors may be taken without a meeting if consent in writing, setting forth the action as taken shall be signed by all the shareholders or directors entitled to vote with respect to the matter thereof. Such action shall be effective on the date on •which the last signature is placed on the writing, or such earlier date as is set forth therein. ELEVENTH. Meetings of the board of directors or shareholders,regular or special, may be held by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can simultaneously hear each other, and participation in such meeting by such aforementioned 'means shall constitute presence in person at such meeting. TWELFTH_ (a) Any person who was or is a party or is threatened to be made a party to any threatened,pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than any action by or in the right of the Association) by reason of the fact that he is or was a director, officer, employee or agent of the Association, or is or was serving at the request of the Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Association, unless similar indemnification is provided by such other corporation, partnership, joint venture, trust or other enterprise (any funds received by any person as a result of the provisions of this Article being deemed an advance against his receipt of any such other indemnification from any such other corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys' fees),judgments,fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if'such person acted in good faith and in a . manner such person reasonably believed to be in or not opposed to the best interest of the Association, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its ELjuiValent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Association, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Page 5 of 8 r (b) Any person who was or is a party or is tlu•eatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Association to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Association, or is or was serving at the request of the Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other corporation, partnership, joint venture, trust or other enterprise shall be indemnified by the Association, unless similar indemnification is provided by such other corporation, partnership, joint venture, trust or other enterprise (any funds received by any person as a result of the-provisions of this Article being deemed an advance against his receipt of any such other indemnification from any such other corporation, partnership,joint venture, trust or other enterprise), against expenses (including attorneys` fees) actually and reasonably incurred by • him lim in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Association and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be Iiable to the Association unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of the Association has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b), or in defense of any claim, issue or matter therein, such person shall be indemnified by the Association against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Except as set forth in paragraph (c) of this Article, any indemnification under paragraphs (a) and (b) of this Article (unless ordered by the court), shall be made by the Association only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in -the circumstances because such person has met the applicable standard of conduct set forth in paragraphs (a) and (b) of this Article. Such determination shall be made (1) by a majority vote of the directoLs who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders. - Page6of-8 • (e) Expenses (including attorneys' fees) director in defending any civil, criminal, administrative or investigativeofficacer or tion, suit or proceeding may be paid by the Association in advance of the final disposition of such action, suit or proceeding upon receipt of any or on behalf of such director or officer to repay such amount if it haeul kms by ately be determined that he is not entitled to be indemnified by the Association expenses (including attorneys` fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any,as the Board of Directors deems appropriate. (f) The indemnification and advancement of expenses provided by this Article shall not be; deemed exclusive of any other rights to which those seeking indemnification.:or seeking advancement of expenses may be entitled under any by-Iaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. (g) By action of the Board of Directors,notwithstanding any interest of the directors in.the action, the Association may purchase and maintain insurance, in such amounts as the Board of Directors deems appropriate, on.behaLf of any person who is or was a director, officer, employee or agent of the Association, or is or was serving at the request of the Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred such capacity, by him in any p ty, or arising out of his status as such, whether or not the Association shall have the power to indemnify him against such liability under the provisions of this Article. (h) For purpose of this Article, references to "the Association" shall include, in addition to ,the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents so that any person who . director,or was a ° ' tirectot officer, employee or agent of such constituent corporation, or is.or was serving at the request of such constituent corporation as a director, oEicer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation G.^ l:e ?:c^.v^ ',:Tiff: r nc,�a`1- f . r. .n crick Cnnctit,Prat if lb= canartr` existence had continued. r (i) For purposes of this Article, references to "other enterprises" shall include employee benefit plans;reference to "fines" shall include any excise taxes Page 7 oF5 • assessed on a person with respect to an employee benefit plan; and references to ',serving at the request oEthe Association." shall include any service as a director, officer, employee or agent of the Association which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Association" as referred to in this Article. (j) The indemnification and advancement of expenses hereby provided shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. THIRTEENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by'the vote of the holders of such greater amount. This Association's board of directors may propose one or more amendments to these Articles of Association for submission to the shareholders. • • • u Pa2:e8of 8 CERTIFICATE RE AUTHENTICATION AND REGISTRATION OF BONDS THE BANK OF NEW YORK, New York, New York, hereby certifies as follows: 1. As one of the fiscal agents for the State of Washington in accordance with the terms and conditions of that certain Fiscal Agency Contract(the "Fiscal Agency Contract") effective as of February 1, 1997, by and among The Bank of New York, Wells Fargo Bank, National Association, and the State of Washington, we have duly and properly authenticated and registered CITY OF RENTON,WASHINGTON,LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 (the "Bonds") aggregating$19,505,000 in principal amount, pursuant to the instructions given to us by U.S. Bancorp Piper Jaffray Inc. as the Underwriter thereof. 2. The persons whose signatures appear on the Certificate of Authentication on each authenticated Bond are duly authorized signatories of The Bank of New York. 3. All of said Bonds authenticated by the said authorized signatories bore, in the spaces appropriate for the insertion of such information, the name of the registered owner, the principal amount, the interest rate, the maturity date, the Bond number and the CUSIP number thereof. 4. We shall be liable for the performance of our duties and obligations as specifically set forth in the Fiscal Agency Contract. We shall act in good faith, and no implied duties or obligations shall be incurred by us other than those specified in the Fiscal Agency Contract. DATED at New York, New York as of the 1st day of November, 2001. THE BANK OF NEW YORK B Y Title:4TO ,/rQrr-r:.0.23 • SPECIMEN $310,000 Number: 1 • • UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BOND, 2001 Interest Maturity CUSIP No.: Rate: 2.15% Date: December 1, 2001 760133 NZ 7 Owner: CEDE &CO. Principal Amount: THREE HUNDRED AND TEN THOUSAND DOLLARS The CITY OF RENTON,WASHINGTON (the "City"), for value received,promises to pay to the Owner set forth above the Principal Amount set forth above, on the Maturity Date set forth above; and to pay interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the date of this Bond or from the most recent interest payment date to which interest has been paid or duly provided for, whichever is later, at the Interest Rate per annum set forth above, payable on�December 1, 2001,.and semi-annually thereafter on each. June 1 and December 1 to the maturity or earlier redemption of this Bond. If this Bond is not paid upon proper presentment at its maturity or earlier redemption date,the City shall have the obligation to pay interest at the Interest Rate set forth above from and after such maturity or earlier redemption date until this Bond,both principal and interest, is paid in full. Capitalized terms defined in Ordinance No. 4922 of the City (the "Bond Ordinance") and used herein shall have the same meanings when used herein, unless the context otherwise directs. Both principal of and interest on this Bond are payable in lawful money of the United States of America. Prior to the Book-Entry Termination Date,principal of and interest on this Boric'shall be paid by the Registrar to the Custodian as the Owner hereof for the benefit of the Beneficial Owners hereof, in accordance with the Letter of Representations. From and after the Book-Entry Termination Date,principal of this Bond shall be paid to the Owner only upon . presentation and surrender of this.Bond by the Owner at either of the principal corporate trust offices of the fiscal agencies of the State of Washington (the "State") in Seattle,Washington, or New York, New York(collectively, the "Registrar"). From and after the Book-Entry Termination Date, interest on this Bond shall be paid by check or draft mailed on or before the interest payment date to the Owner at the address for such Owner appearing on the registration books maintained by the Registrar(the "Bond Register") on the fifteenth day of the month preceding the interest payment date; provided,however, that if so requested in writing by the � - 1 • • SPECIMEN Owner of at least$1,000,000 principal amount of Bonds, interest will be paid by wire transfer on the interest paymerit date to an,account with a bank located in the United States. This Bond is a limited tax general obligation of the City. Unless the principal of and interest on this Bond are paid from other sources, so long as any Bonds are outstanding, the City has irrevocably covenanted in the Bond Ordinance to include in its budgets and to make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation in amounts which, together with any other money legally available therefor, shall be sufficient to pay such principal and interest as the same shall become due. The City has irrevocably pledged its full faith, credit and resources to the annual levy and collection of such taxes for the prompt payment of such principal and interest. This Bond is one of a duly authorized issue of bonds of the City designated"City of Renton, Washington,Limited Tax General Obligation and Refunding Bonds, 2001" (the "Bonds"), aggregating $19,505,000 in principal amount, maturing annually on December 1 in the years 2001 and 2007 through 2019, inclusive, and on December 1, 2021, of like date, tenor and effect, except as to number, maturity date, interest rate and denomination. The Bonds are issued in fully registered form in the denomination of$5,000 each or any integral multiple thereof within a single maturity. The registered ownership.of this Bond may be transferred. Prior to the Book-Entry Termination Date, the beneficial 'ownership of the Bonds may only be transferred on the records established and maintained by the Custodian. On and after the Book-Entry Termination Date, this Bond may be transferred but only in the manner and subject to the limitations set forth in the Bond Ordinance, and only upon the surrender at any principal corporate trust office of the • Registrar of this Bond, with the assignment form appearing hereon duly executed by the Owner hereof or such Owner's duly authorized agent in a manner satisfactory to the Registrar. Upon such surrender, the Registrar shall,cancel the surrendered Bond and shall authenticate and deliver, without charge to the.Owner or transferee therefor(other than any governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the option of the new Owner) of the same maturity and interest rate, and for the same aggregate principal amount, in any authorized denomination, naming as Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. On and after the Book-Entry Termination Date, this Bond may be surrendered at any principal corporate trust office of the Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same maturity and interest rate, in any authorized denomination. The Registrar shall not be obligated to transfer or exchange any Bond during the fifteen days preceding any applicable interest payment, principal payment or redemption date. The Bonds maturing on December 1, 2021 are term bonds (the "Term Bonds") and, if not previously purchased by the City in the open market or optionally redeemed as set forth below, are subject to mandatory sinking fund redemption in part and by lot (in such manner as the Registrar shall determine), at par plus accrued interest to the redemption date on December 1 in the following years and in the following mandatory sinking fund redemption amounts: 2 SPECIMEN Mandatory Sinking Fund Mandatory Redemption Dates Sinking Fund (December 1) Redemption Amounts 2020 $1,540,000 2021* 1,615,000 *Scheduled maturity The Bonds maturing on December 1 in the years 2001 and 2007 through 2011, inclusive, shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2012 are subject to optional redemption prior to maturity beginning on December 1, 2011, in whole or in part on any date (maturities to be selected by the City and by lot within a maturity in such manner as the Registrar shall determine), at par plus accrued interest to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market, the par amount of the Term Bonds so redeemed or purchased (irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds (as allocated by the City) beginning not earlier than 60 days after the date of the optional redemption or purchase, and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Any Bond in the principal amount of greater than$5,000 may be partially redeemed in any integral multiple of$5,000. 'Prior to the Book-Entry Termination Date, Bonds shall be partially redeemed in accordance with the Letter of Representations. From and after the Book- Entry Termination Date, in the event of a partial redemption of a Bond, upon surrender of such Bond at the principal corporate trust office of the Registrar, a new Bond or Bonds (at the option of the Owner) of the same maturity and interest rate and in the aggregate principal amount remaining unredeemed shall be authenticated and delivered to the Owner, without charge to the Owner therefor, in any denomination authorized by the Bond Ordinance and selected by the Owner. Prior to the Book-Entry Termination Date, the Registrar shall give, or cause to be given, : . notice of a call for redemption of any Bonds to the Custodian, as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance with the Letter of Representations. From and after the Book-Entry Termination Date, notice of any such intended redemption shall be given by or on behalf of the City not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the Owner of each Bond to be redeemed at the address appearing on the Bond Register on the day the notice is mailed. The requirements of the Bond Ordinance shall be deemed to be complied with when notice is mailed as therein provided, whether or not it is actually received by the Owner. If such notice has been given and the City has set aside sufficient money for the payment of all Bonds called for redemption on the date fixed for redemption, the Bonds so called shall cease to accrue interest after such redemption date, and all such Bonds shall be deemed to be no longer outstanding under the Bond Ordinance for any purpose, except that the Owners of such Bonds shall be entitled to receive 3 = SPECIMEN payment of the redemption price and interest accrued on the principal of the Bonds to the redemption date from the money set aside for such purpose. This Bond and the other Bonds of this series are issued pursuant to and in full compliance with the constitution and statutes of the State and pursuant to proceedings duly adopted by the City,including,but not limited to,the Bond Ordinance. The Bonds are issued for the purpose of - providing the part of the funds necessary to pay part of the costs of constructing and equipping a . municipal parking garage, to advance refund and defease a portion of the City's Limited Tax • General Obligation Bonds, 1997B and to pay incidental costs thereof and costs related to the sale and issuance of the Bonds, all as provided in the Bond Ordinance. The covenants contained herein and in the Bond Ordinance may be discharged by making provision, at any time, for the payment of the principal of and interest on this Bond in the manner provided in the Bond Ordinance. Reference is made to the Bond Ordinance for other covenants and declarations of the City and other terms and conditions upon which this Bond has been issued, which terms and conditions are made a part hereof by this reference. The City unconditionally covenants that it will keep and perform all of the covenants of this Bond and the Bond Ordinance. It is certified that all acts, conditions and things required by the constitution and statutes of the State to have happened,been done and performed precedent to and in the issuance of this Bond have happened,been done and performed, and that the issuance of this Bond does not • violate any constitutional, statutory or other limitation upon the amount of indebtedness that the • City may incur. This Bond shall not be valid or become obligatory for any purpose unless and until the certificate of authentication hereon shall have been manually executed by an authorized signatory of the Registrar. • The City and the Registrar, each in its discretion, may deem and treat the Owner hereof as the absolute owner hereof for all purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Registrar for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede &Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER,PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered Owner hereof, Cede &Co., has an interest herein. •• • 4 SPECIMEN IN WITNESS WHEREOF,the City has caused this Bond to be executed with the manual . signatures of its Mayor and City Clerk, and a facsimile of the City seal to be imprinted hereon, all as of the 1st day of November, 2001. CITY OF RENTON, WASHINGTON • • By I /Mayor 7 ' [SEAL] By /fi.: .ifc..ri' - y'✓ 1 .'w ''''ver CERTIFICATE OF AUTHENTICATION DATE OF AUTHENTICATION: AU-e N.4- I Zoa This Bond is one of the City of Renton,Washington,Limited Tax General Obligation and Refunding Bonds, 2001, described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY, Registrar iktk‘ 41111By Authorized Signatory • I • 5 _ SPECIMEN . STATEMENT OF INSURANCE . • Financial Security Assurance Inc. ("Financial Security"),New York, New York, has delivered its municipal bond insurance policy with respect to the scheduled payments due of principal of and interest on this Bond to The Bank of New York,New York, New York, or its successor, as paying agent for,the Bonds (the "Paying Agent"). Said Policy is on file and - available for inspection at the principal office of the Paying Agent and a copy thereof may be _ • obtained from Financial Security or the Paying Agent. V • • . . • • • • • • • • 6 SPECIMEN ASSIGNMENT For value received, the undersigned Owner(s) sell(s), assign(s) and transfer(s) unto: (name, address and social security or other identifying number of assignee) the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) to transfer the same on the Bond Register,with full power of substitution in the premises. • • Owner(s) NOTE: The signature(s) above must correspond with the name of the Owner(s) as it appears on the front of this Bond in every particular,without alteration or enlargement or any change whatsoever. Signature(s) guaranteed: NOTE: Signature(s) must be guaranteed by an eligible guarantor. II • 7 . = GOTTLIEB, FISHER Fd ANDREWS, PLLC SPECIMEN ATTORNEYS AT LAW November 1, 2001 Mayor and City Council City of Renton Renton,Washington 98055 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Renton, Washington (the "City"), of the bonds described below (the "Bonds"): $19,505,000 CITY OF RENTON,WASHINGTON , UNIFIED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Dated: November 1, 2001 The Bonds are issued pursuant to Ordinance No.4922 of the City (the "Bond Ordinance") and other proceedings duly had and taken in conformity therewith. The Bonds'are issued to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage, to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B, and to pay incidental costs thereof and the costs related to the sale and issuance of the Bonds, all as provided in the Bond Ordinance. . The Bonds shall be issued in fully registered formas to both principal and interest; shall be in the denomination of$5,000 each or any integral multiple thereof within a single maturity; shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington.(the "State") located in Seattle,Washington, and New York, New York(collectively, the "Registrar"), deem necessary for purposes of identification. The Bonds bear interest (computed on the basis of a 360-day year of twelve 30-day months) from their date or from the most recent interest payment date to which interest has been paid or duly provided for, whichever is later, payable December 1, 2001, and semiannually thereafter on each June 1 and December 1 to the,maturity or earlier redemption thereof, at the rates set forth below, and shall mature on December 1 in each of the years'and in the principal amounts set forth below: 1325 Fourth Avenue,Suite 1200 . Seattle,WA 98101-2531 (206) 654-1999 Phone . (206) 654-8725 Fax _ City of Renton,Washington _ SPECIMEN 1, 2001 Page 2 Maturity Date Principal Interest Rate (December 1) Amount Per Annum 2001 $310,000 2.15% 2007 75,000 3.50 2008 85,000 3.75 2009 335,000 3.90 2010 1,350,000 4.00 2011 1,400,000 4.00 2012 1,455,000 . 5.25 2013 1,530,000 5.25 2014 1,610,000 5.25 2015 1,695,000 5.25 2016 1,785,000 5.25 2017 1,875,000 5.25 2018 1,385,000 5.25 2019 1,460,000 5.25 2021* 3,155,000 5.00 * Term Bonds The Bonds shall be subject to redemption prior to maturity at the times.and in the manner described in the Bond Ordinance. The City has reserved the right to purchase any or all of the Bonds in the open market at any time and at any price. In rendering this opinion letter, we have examined the following: (i) the Bond Ordinance; (ii) a copy of one executed and authenticated Bond'(we assume that all other Bonds are in the same form and have been similarly executed and authenticated); and (iii) the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us and which comprise the transcript of proceedings pertaining to the issuance of the Bonds (the "Transcript"). i As to questions of fact material to the opinions expressed herein, we have relied upon the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us as part of the Transcript, all without undertaking to verify the same by independent investigation. 1 Based only upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion letter, and subject to the limitations and qualifications expressed below, we are of the opinion that, as of this date: 1. The Bonds are lawfully authorized and issued pursuant to and in full compliance with the constitution and statutes of the State and the Bond Ordinance. i . City of Renton, Washington November 1, 2001 SPECIMEN Page 3 2. The Bonds are legal, valid and binding general obligations of the City, enforceable against the City in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, and also to the exercise of judicial discretion in accordance with general principles of equity. 3. The City has irrevocably covenanted in the Bond Ordinance that, unless the principal of and interest on the Bonds are paid from other sources, so long as the Bonds are outstanding, the City shall include in its budgets and make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation in'amounts which, together with any other money legally available therefor, shall be sufficient to pay such principal and interest on the Bonds as the same shall become due. The City has irrevocably pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. 4. The Bonds are not "private activity bonds," as defined in the Internal Revenue Code of 1986, as amended (the "Code"). • 5. Assuming compliance by the City with applicable requirements of the Code, that must be met subsequent to the issuance of the Bonds, the interest on the Bonds is excluded from gross income for federal income tax purposes under existing federal law, and such interest is not an item of tax preference for purposes of determining alternative minimum tax on individuals and corporations under existing federal law. However, under existing federal law, interest on the Bonds received by certain corporations is to be taken into account in the computation of adjusted current earnings for purposes of calculating the alternative minimum tax applicable to such corporations; such interest received by foreign corporations with United States branches may be subject to a foreign branch profits tax; and such interest received by certain S corporations may be subject to tax. 6. The difference between the principal amount of the Bonds maturing in 2007 through 2009, inclusive, and in the years 2011 and 2021 (the "Discount Bonds"), and the initial offering price to the public (excluding bond houses,brokers and similar persons or organizations acting in the capacity of underwriter or wholesaler) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount, which is excluded from gross income for federal income tax purposes to the same extent as interest on the Discount Bonds. Further, this original issue discount accrues on the basis of a constant yield to maturity over the term of each Discount Bond and the basis of each Discount Bond acquired at - such initial offering price by an initial purchaser of such Discount Bonds will be increased by the amount of such accrued original issue discount. • Except as stated in the preceding paragraphs 4, 5 and 6, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Bonds. City of Renton, Washington November 1, 2001 SPECIMEN Page 4 The Code contains certain requirements which must be satisfied subsequent to the date of issue of the Bonds in order to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes, including requirements relating to application of the proceeds of the Bonds, use of facilities financed with such proceeds, limitations on income derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury of certain investment earnings on such gross proceeds. The City has covenanted to comply with these requirements, and the opinions expressed in paragraphs 4, 5 .and 6 assume such compliance. However, we have not undertaken and do not undertake to • monitor compliance by the City with such requirements; andif the City should fail to comply with such requirements, interest on the Bonds could become includable in gross income for federal income tax purposes and could be treated as an item of tax preference for purposes of the alternative minimum tax on individuals and corporations, in each case, retroactive to the date of issue of the Bonds. We have not been engaged'to review or express any opinion concerning the completeness or accuracy of the official statement or other disclosure documentation used in connection with the offer or sale of the Bonds by any person, and thus express no opinion concerning the completeness or accuracy thereof., Copies of this opinion letter may be delivered to the Owner of the Bonds, who may rely on this opinion letter as if it were addressed to such Owner on the date hereof. Subject to the foregoing, this opinion letter may be relied upon by you only in connection with the issuance of the Bonds and may not be used or relied upon by you or any other person for any other purpose whatsoever, without in each instance our prior written consent. We expressly disclaim any-- responsibility to advise you or any Owner of any developments in areas covered by this opinion letter that occur after the date hereof. j Respectfully submitted, GOTTLIEB,FISHER &A 1V<, WS, PLLC 4440e4c,"';• By Judith L. Andrews f:\renton\ltgo 01 SPECIMEN •U•) FINANCIAL MUNICIPAL BOND mor SECURITY •r ASSURANCE® INSURANCE POLICY ISSUER: City of Renton,Washington Policy No.: 28077-N BONDS: $19,505,000 in aggregate principal amount of Effective Date: November 1,2001 Limited Tax General Obligation and Refunding Premium: $97,432.22 Bonds,2001 FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the"Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance.of and securing the Bonds) for the Bonds,for the benefit of the Owners or, at the election of Financial Security,directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Day on which Financial Security shall have received Notice of Nonpayment, Financial Security will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest,on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by Financial Security, in a form reasonably satisfactory to it, of(a) evidence of the Owner's right to receive payment of the principal or interest then Due.for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in Financial Security. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by Financial Security is incomplete, it shall be deemed not to have been received by Financial Security for purposes of the preceding sentence and Financial Security shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, Financial Security shall become the owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by Financial Security hereunder. Payment by Financial Security to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of Financial Security under this Policy. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day"means anyday other than (a) a Saturday or Sunday or(b) a day on which banking institutions in the State of New York or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless Financial Security shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b)when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond,any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the I ' SPECIMEN Page 2 of 2 Policy No.: 28077-N United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final,nonappealable order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing,or written notice by registered or certified mail,from an Owner,the Trustee or the Paying Agent to Financial Security which notice shall specify (a) the person or entity making the claim, (b)the Policy Number, (c)the claimed amount and (d)the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond,the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. Financial Security may appoint a fiscal agent(the"Insurer's Fiscal Agent")for purposes of this Policy by giving written notice to'the Trustee and the Paying Agent specifying the name and notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to Financial Security pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to Financial Security and shall not be deemed received until received by both and (b) all payments required_to be made by Financial Security under this Policy may be;made directly by Financial Security or by the Insurer's Fiscal Agent on behalf of Financial Security. The Insurer's Fiscal Agent is the agent of Financial Security only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or any failure of Financial Security to deposit or cause to be deposited sufficient funds to make payments due under this Policy. To the fullest extent permitted by applicable law, Financial Security agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights(whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to Financial Security to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy sets forth in full the undertaking of Financial Security, and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this Policy to be executed on its behalf by its Authorized Officer. FINANCIAL SECURITY ASSURANCE INC. \pAt\k'''' -pi," • By vge•?) Authorized Officer A subsidiary of Financial Security Assurance Holdings Ltd. (212)826-0100 350 Park Avenue, New York, N.Y. 10022-6022 Form 500NY(5/90) SPECIMEN NOTICE OF CLAIM AND CERTIFICATE Financial Security Assurance Inc. 350 Park Avenue New York, NY 10022 The undersigned, a duly authorized officer of [FULL NAME OF TRUSTEE or PAYING AGENT] (the "Trustee/Paying Agent"), hereby certifies to Financial Security Assurance Inc. ("Financial Security"),with reference to Municipal Bond Insurance Policy No. 28077-N dated November 1, 2001 (the"Policy") issued by Financial Security in respect of the City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 (the"Bonds"), that: (i) The Trustee/Paying Agent is the Trustee/Paying Agent under the document authorizing the issuance of they Bonds(the"Indenture")for the Holders. (ii) , The sum of all amounts on deposit(or scheduled to be on deposit)in the[RELEVANT ACCOUNTS]and available for distribution to the Holders pursuant to the Indenture will be$ (the "Shortfall") less than the aggregate amount of principal and interest Due for Payment on _("Scheduled Payments"). (iii) The Trustee/Paying Agent is making a claim under the Policy for the Shortfall to be applied to the payment of Scheduled Payments. (iv) The Trustee/Paying Agent agrees that, following receipt of funds from Financial Security, it shall (a) hold such amounts in trust and apply the same directly to the payment of Scheduled Payments on the Bonds when due; (b) not apply such funds for any other purpose; (c) not commingle such funds with other funds held by the Trustee/Paying Agent and (d) maintain an accurate record of such payments with respect to each Bond and the corresponding claim on the Policy and proceeds thereof, and, if the Bond is required to be [SURRENDERED/PRESENTED]for such payment, shall stamp on each such Bond the legend $"[insert applicable amount] paid by Financial Security and the balance hereof has been canceled and reissued" and then shall deliver such Bond to Financial Security. (v) The Trustee/Paying Agent, on behalf of the Holders, hereby assigns to Financial Security the rights of the Holders with respect to the Bonds to the extent of any payments under the Policy, including, without limitation, any amounts due to the Holders in respect of securities law violations arising from the offer and sale of the Bonds. The foregoing assignment is in addition to, and not in limitation of, right's of subrogation otherwise available to Financial Security in respect of such payments. Payments to Financial Security in respect of the foregoing assignment shall in all cases be subject to and subordinate to the rights of the Holders to receive all Scheduled Payments in respect of the Bonds. The Trustee/Paying Agent shall take such action and deliver such instruments as may be reasonably requested or required by Financial Security to effectuate the purpose or provisions of this clause(v). SPECIMEN (vi) The Trustee/Paying Agent, on its behalf and on behalf of the Holders, hereby appoints Financial Security as agent and attorney-in-fact for the Trustee/Paying Agent and each such Holder in any legal proceeding with respect to the Bonds. The Trustee/Paying Agent hereby agrees that, so long as Financial Security shall not be in default in its payment obligations under the Policy, Financial Security may at any time during the continuation of any proceeding by or against the Issuer under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law(an"Insolvency Proceeding")direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim in connection with an Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment made with respect to the Bonds (a "Preference Claim"), (B) the direction of any appeal of any order relating to any Preference Claim at the expense of Financial Security but subject to reimbursement as provided in the Indenture and (C) the posting of any surety, supersedeas or performance bond pending any such appeal. In addition,the Trustee/Paying Agent hereby agrees that Financial Security shall be subrogated to, and the Trustee/Paying'Agent on its behalf and on behalf of each Holder, hereby delegates and assigns, to the fullest extent permitted by law, the rights of the Trustee/Paying Agent and each Holder in the conduct of any Insolvency Proceeding, including,without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. (vii) Payment should be made by wire transfer directed to [SPECIFY INSURANCE ACCOUNT]. Unless the context otherwise requires, capitalized terms used in this Notice of Claim and Certificate and not defined herein shall have the meanings provided in the Policy. I IN WITNESS WHEREOF, the Trustee/Paying Agent has executed and delivered this Notice of Claim and Certificate as of the day of , By Title For Financial Security or Fiscal Agent Use Only Wire transfer sent on By Confirmation Number -2- SPECIMEN PROCEDURES FOR PREMIUM PAYMENT TO FINANCIAL SECURITY ASSURANCE INC. Financial Security's issuance of its municipal bond insurance policy at bond closing is contingent upon payment and receipt of the premium. NO POLICY MAY BE RELEASED UNTIL PAYMENT OF SUCH AMOUNT HAS BEEN CONFIRMED. Set forth below are the procedures to be followed for confirming the amount of the premium to be paid and for paying such amount: Confirmation of Upon determination of the final debt service Amount to be Paid: schedule, fax such schedule to Financial Security Attention: Scott Lord, Vice President • Phone No. (415) 995-8020 Fax No. (415) 995-8095 Confirm with the individual in our underwriting department that you are in agreement with respect to par and premium on the transaction prior to the closing date. Payment Date: Date of Delivery of the insured bonds. Method of Payment: Wire transfer of Federal Funds. Wire Transfer Bank: THE BANK OF NEW YORK Instructions: ABA#: 021 000 018 Acct. Name: Financial Security Assurance Inc. Account.No.: 8900297263 Reference: Policy No. 28077-N CONFIRMATION OF PREMIUM WIRE NUMBER AT CLOSING Financial Security will accept as confirmation of the premium payment a wire transfer number and the name of the sending bank, to be communicated on the closing date to Priscilla Lowe, Paralegal, Documentation and Closing Coordinator (415) 995-8013. OCTOBER 10,2001 SUPPLEMENT TO THE PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 12,2001 $20,105,000* ,CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION&REFUNDING BONDS, 2001 Dated: November 1,2001 Due: December 1,as shown below This Supplement amends and supplements the Preliminary Official Statement dated September 12,2001 relating to the Bonds described above and constitute an integral part of the Preliminary Official Statement. The Bonds are being issued by the City of Renton(the"City")to advance refund a portion of the City's outstanding Limited Tax General Obligation Bonds, 1997B,to finance part of the costs of constructing and equipping a municipal parking garage and to pay costs of issuing the Bonds. Following the terrorist attacks on September 11, the commercial airline industry has experienced significant reductions in passenger enplanements and forecasts'continued reduced levels through the end of the year and potentially beyond. The significant loss in revenue combined with lowered near term demand has prompted many airlines to cancel orders of Boeing commercial airplanes. On September 18, 2001, Boeing Co., a Chicago-based aerospace company with one of its commercial airline production facilities located in Renton,announced that by the end of 2002 it would reduce the workforce in its commercial airline unit by 20,000 to 30,000 employees. Boeing Co.employs approximately 17,000 workers in the City of Renton,some of whom may be effected by the workforce reduction. As of the date of this Supplement,the City has not determined the financial impact,if any,to the City of Renton nor has the City been advised as is required by federal law of any employee reductions in Boeing's Renton facility. Maturity Schedule" Due Interest Due Interest Dec. 1 Amount 'Rate Yield Dec. 1 Amount Rate Yield 2001 $315,000 2013 $1,575,000 2014 1,645,000 2005 35,000 ; 2015 1,720,000 2006 125,000 2016 1,800,000 2007 125,000 2017 1,885,000 2008 130,000 2018 1,395,000 2009 385,000 2019 1,460,000 2010 1,405,000 2020 1,535,000 2011 1,450,000 2021 1,610,000 ' ! 2012 1,510,000 The City,as authorized by law and an ordinance of its Council duly and regularly adopted,has irrevocably pledged that,unless the principal of and interest on the Bonds are paid from other sources,it will include in its budgets and make annual levies of taxes,within the constitutional and statutory limitations provided by law without a vote of the qualified voters of the City, upon all of the property in the City subject to taxation in amounts which,together with any other money legally available therefor, shall be sufficient to pay such principal and interest as the same shall become due. The Bonds do not constitute a debt or indebtedness of the State of Washington,or any political subdivision thereof other than the City. As a result of the delay in pricing the dated date on these bonds has been changed from October 1,2001 to November 1,2001. The City now expects the Bonds to be delivered through the facilities of The Depository Trust Company in New York,New York or to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer on or about November 1,2001. U.S. BANCORP PIPER JAFFRAY INC. "Prelbninary,subject to mange • = PRELIMINARY OFFICIAL STATE 1 w. STATEMENT DATED SEPTEMBER 12,2001 cl C New Issue Standard&Poor's: " " t° Book-Entry Only Fitch: " " c v In the opinion ofBond Counsel,as of the Date ofissue,and assuming the City fulfills its covenant to comply with certain requirements of fF w the Internal Revenue Code of 1986, as amended, that must be met subsequent to the issuance of the Bonds: interest on the Bonds is ° excluded Rom gross income for purposes of federal income tax purposes and is not an item of tax preference for purposes of determining 8 the alternative minimum tax on individuals and corporations. However,such interest on the Bonds is included in the computation of 45 y other taxes on corporations, including,.without limitation the alternative minimum tax, and may be subject to other collateral tax Y consequences. See"Tax Exemption"and"Other Tax Consequences"herein. - 3 $19,850,000* g. CITY OF RENTON,WASHINGTON .0 LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS,2001 v.0 §71 Dated: October 1,2001 , Due: December 1,as shown below _ ' u 0 The City of Renton,Washington,Limited Tax General Obligation and Refunding Bonds,2001 (the`Bonds"),will be issued as o °c fully registered Bonds in the name of CEDE&Co.,as nominee for The Depository Trust Company("DTC),New York,New ,,I 5.- York. DTC will act as securities depository for the Bonds. Individual purchases and sales of the Bonds initially will be made an in book-entry form only in denominations of$5,000 or any integral multiple thereof within a single maturity. Purchasers will o not receive certificates representing their ownership of the Bonds. Interest on the Bonds will be payable on December 1,2001 PZ and semiannually thereafter on June 1 and December 1 of each year until their maturity or early redemption. So long as DTC vo or its nominee is the registered owner;of the Bonds, the principal of and interest on the Bonds will be payable by the fiscal o`s1 agency of the State of Washington,currently The Bank of New York,in New York,New York(the"Bond Registrar"),directly v.� to DTC which,in turn,is obligated to remit such principal and interest to the DTC participants for subsequent disbursement „E cii to the beneficial owners of the Bonds as described herein in Appendix D`Book-Entry Only System." 1 'fl u -,G, Maturity Schedule* 0 L''I )ue Interest Due Interest 'v Dcc. 1 Amount Rate Yield Dcc.1 Amount Rate Yield �',. a 2001 5220,000 1 % % 2012 $1,760,000 % % 0 o p'u 2002 285,000 2013 1,840,000 u d'° 2003 290,000 2014 1,925,000 ° T.n ",c' a 2004 295,000 2015 2,020,000 U �..Z 2005 310,000 2016 2,110,000 v u u .:1•5 N 2006 320,000 I 2017 2,210,000 v 0 2007 330,000 I 2018 385,000 r 3 2008 345,000 2019 400,000 ' ❑ 8— 2009 610,000 2020 420,000 T 2010 1,635,000 2021 445,000 .11.a.2 u 2011 1,695,000 Gp N The Bonds are subject to redemption by'the City prior to their stated maturities as described herein in"DESCRIPTION OF cw-f, THE BONDS—Redemption." 0o-0 C o o The proceeds of the Bonds will be used to advance refund a portion of the City's outstanding Limited Tax General Obligation poo Bonds,1997B,to finance part of the costs of constructing and equipping a municipal parking garage and to pay costs of issuing ' E a Fj the Bonds. oo 11 7 The City,as authorized by law and an ordinance of its Council duly and regularly adopted,has irrevocably pledged that,unless „ " the principal of and interest on the Bonds are paid from other sources,it will include in its budgets and make annual levies of Y a taxes,within the constitutional and statutory limitations provided by law without a vote of the qualified voters of the City, c W•- °n upon all of the property in the City subject to taxation in amounts which, together with any other money legally available " °� therefor, shall be sufficient to pay such principal and interest as the same shall become due. The Bonds do not constitute a v�'? :debt or indebtedness of the State of Washington,or any political subdivision thereof other than the City. See"SECURITY— ' coo Limitations on StatutoryTaxing Authority"for a discussion of laws that limit how much a City may tax,including an initiative .�,▪ •.. that requires a vote for all tax increases. asW.� i ° °' This cover page contains certain information for quick reference only, and is not a summary of the issue. Investors must read the entire Official E▪ C 3 Statement to obtain information essential to the malting of an informed investment decision. O o a The Bonds are offered by the Underwriter,when,as and if issued, subject to the approving legal opinion Gottlieb,Fisher& cas Andrews,PLLC,Bond Counsel,Seattle,Washington. It is anticipated that the Bonds will be available for delivery in Seattle, 1 °u a Washington or at the facilities of The Depository Trust Company in New York,New York on or about October 15,2001. a „ U.S. BANCORP PIPER JAFFRAY INC. w 1 1—,./) ° *Preliminary,subject to change (THIS PAGE INTENTIONALLY LEFT BLANK) CITY OF RENTON 1055 South Grady Way Renton,Washington 98055 (425)430-6858 Elected Officials Jesse Tanner Mayor Dan''Clawson President Tern Briere Council Member Randall Corman Council Member Kathy Keolker-Wheeler Council Member Toni Nelson Council Member King'Parker Council Member Don lald Persson Council Member Appointed Officials Jay Covington Chief Administrative Officer Victoria Runkle Finance and Information Services Administrator Lawrence Warren City Attorney Marilyn Petersen City Clerk Bond Counsel Gottlieb,Fisher&Andrews,PLLC Seattle,Washington - I No dealer, broker, salesman, or other person has been authorized to give any information or to make any representation, other than the information and representations contained in this Official Statement, in connection with the offering of the Bonds and, if given or made, such information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation, or sale. The information set forth herein has been obtained from the City and other sources which are believed to be reliable. The underwriter has reviewed the information in this Official Statement in accordance with its responsibilities under the federal securities laws, but does not guarantee the accuracy or completeness of the 'information. The information herein is subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. In connection with the offering of the Bonds, the Underwriter may over-allot or effect transactions which stabilize or maintain the market price of such Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. (THIS PAGE INTENTIONALLY LEFT BLANK) J TABLE OF CONTENTS Page INTRODUCTION I 1 DESCRIPTION OF THE BONDS 1 Purpose 1 General 1 Sources and Uses of Funds! 2 Redemption 2 Transfer and Exchange 3 Bond Registrar and Paying Agent 3 Defeasance I 4 PARKING GARAGE PROJECT 4 THE REFUNDING PLAN 4 VERIFICATION OF MATHEMATICAL CALCULATIONS 5 SECURITY I 5 Property Tax Pledge 5 Statutory Taxing Authority 5 Limitations on Statutory Taxing Authority 5 Economic Base 7 INITIATIVES AND REFERENDA' 8 Initiative 695 8 Initiative 722 I 9 Future Initiative Legislation ; 10 TAX LEVY RATES AND PROCEDURES 10 . Assessed Valuation Determmation 10 Tax Collection Procedure 10 DEBT INFORMATION 11 Limits of Indebtedness 11 Debt Payment Record 11 CITY OF RENTON 17 Principal City Officers 17 General Information 17 Principal City Officials 17 Budgeting and Accounting ' 18 Pension Fund 18 Risk Management 19 Investment Policy 19 Employment 19 TAX EXEMPTION 20 OTHER TAX CONSEQUENCES I 20 Covenant Against Arbitrage 21 LEGAL MATTERS 22 Opinions of Counsel 22 Litigation 22 L_ Enorceability 22 OTHER MATTERS 22 Continuing Disclosure 22 Ratings 24 Underwriting 25 CUSIP Numbers 25 Official Statement Certificate 25 DEMOGRAPHIC AND ECONOMIC INFORMATION APPENDIX A _ FORM OF LEGAL OPINION APPENDIX B EXCERPT FROM THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX C BOOK-ENTRY ONLY SYSTEM APPENDIX D (THIS PAGE INTENTIONALLY LEFT BLANK) $19,850,000* CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 INTRODUCTION This Official Statement is furnished by the City of Renton, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington (the "City") to provide information regarding the City and $19,850,000* of the City's Limited Tax General Obligation and Refunding Bonds, 2001 (the `Bonds"). This Official Statement is qualified in its entirety by reference to Ordinance No. of the City passed by the City Council on , 2001 (the "Bond Ordinance"). j The Bonds are issued under the provisions of the constitution and laws of the State of Washington, including Chapters 39.46 and 39.53 RCW, and pursuant to the Bond Ordinance. All of the summaries of, or references to, provisions of ordinances, resolutions and other documents contained herein are made subject to the complete provisions thereof and do not purport to be complete statements of such provisions, copies of which are available for inspection at the offices of the City upon request. Certain financial information regarding the City has been taken or derived from the audited financial statements and other financial reports, and their accompanying notes, for complete information. Copies thereof are available from the City upon request. DESCRIPTION OF THE BONDS Purpose The proceeds of the Bonds will be used to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage, to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B designated as the Current Interest Bonds (the "1997 CIB Bonds"), and to pay certain "incidental costs and costs related to the sale and issuance" (as defined in RCW 39.46.070) of the Bonds (the"Project"). General The Bonds will be dated October 1, 2001 and will be issued in fully registered form in denominations of$5,000 each, or integral multiples thereof within a single maturity. The Bonds will mature on the dates and in the principal amounts and will bear interest from their date, payable on December 1, 2001 and semiannually thereafter on June 1 and December 1 of each year to their maturity or earlier redemption, at:the rates set forth on the cover of this Official Statement. The Bonds will be issued'in fully registered form and, when issued, will be registered in the name of CEDE & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Individual purchases may be made in book-entry form only. Purchasers will not receive certificates representing their beneficial ownership in the Bonds so purchased. So long as CEDE & Co. is the registered owner of the Bonds, as nominee of DTC,references herein to the holders or registered owners shall mean CEDE *Preliminary,subject to change 1 & Co. and shall not mean the "Beneficial Owners" of the Bonds. In this Official Statement, the term"Beneficial Owners" shall mean the person for which the DTC Participant acquires an interest in the Bonds. Sources and Uses of Funds Sources of Funds" Principal Amount of the Bonds $ [Original Issue Discount/Premium] Accrued Interest Total Sources: $ Uses of Funds Project Fund Deposit $ Escrow Fund Depose) Estimated Costs of Issuance(2) Bond Insurance Premium Bond Fund Deposit Total Uses: $ (1) Amount required to purchase Acquired Obligations,payable as to principal and interest in such amounts and on such dates and initial cash balance as will be sufficient to pay the principal of the Refunded Bonds and the interest accrued thereon. (2) Includes,among other things,legal,accounting,Bond Registrar and rating agency fees,printing costs,and underwriter's discount. * Preliminary,subject to change. Redemption Optional Redemption. The Bonds maturing on December 1 in the years 2001 through 2011, inclusive, shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2012 shall be subject to optional redemption prior to maturity beginning on December 1, 2011, in whole at any time or in part on any interest payment date (maturities to be selected by the City and by lot within a maturity in such manner as the Registrar shall determine),at par plus accrued interest to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market, the par amount of the Term Bonds so redeemed or purchased (irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds (as allocated by the City) beginning not earlier than 60 days after the date of the optional redemption or purchase, and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Notice ofR Notice of redemption shall be given by the Bond Registrar not less than 30 nor more than 60�prior to the date fixed for redemption by first-class mail,postage prepaid, to the registered owners of the Bonds to be redeemed at the address appearing on the bond register maintained by the Bond Registrar,provide:4 hammer,that as long as the Bonds are in book:entry form, notice of redemption will be given in accordance with the operational arrangements then in effect at DTC. The City will not provide notice of redemption to any beneficial owners of the Bonds. 2 Mandatory RThe Bonds maturing on December 1, are term bonds (the ' "Tenn Bonds") and, if not previously purchased by the City in the open market or optionally redeemed as set forth below,are subject to mandatory sinking fund redemption in part and by lot(in such manner as the Registrar shall determine), at par plus,accrued interest to the redemption date on December 1 in the following years and in the following mandatory sinking fund redemption amounts: Mandatory Sinking Fund Mandatory Redemption Dates Sinking Fund (December 1) Redemption Amounts Transfer and Exchange ( So long as the Bonds are in book-entry only form, the beneficial ownership of the Bonds may only be transferred in the(records established and maintained by DTC. Upon termination of the book-entry form, the Bonds may be transferred by registered owners upon completion of the assignment form on the Bond(s) in form and substance satisfactory to the Bond Registrar and delivery of the Bond(s) to be exchanged or transferred to the Bond Registrar for cancellation and re- issuance. Upon such surrender, the Bond Registrar will issue to the new registered owner a new Bond or Bonds of the same maturity and for the same aggregate principal amount. The Bond Registrar is not required to issue, register or exchange Bonds during the 15 days preceding any principal payment or optional reidemption date. Bond Registrar and Paying Agent The City has adopted the system of registration for the Bonds approved by the State Finance Committee of the State of Washington (the "Committee"). Pursuant to RCW Chapter 43.80, the Committee designates one or more fiscal agencies for bonds issued within the State of Washington. The fiscal agent of the State of Washington, currently the Bank of New York, New York, New York, (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal and interest evidenced and represented by the Bonds, recording the purchase and registration, exchange or transfer, and redemption or payment of Bonds and performing the other respective obligations of the paying agent and registrar. In order to meet payment requirement for interest on and principal of the Bonds as the same becomes due and payable, the City will remit money from the City's Bond Fund to the Bond Registrar. So long as Cede &Co. is the registered owner of the Bonds,the principal of and interest on the Bonds are payable by wire transfer to Cede &Co., as nominee for DTC which, in turn, is to remit such amounts to the Direct Participants for subsequent disbursement to the Beneficial Owners. See "THE BOOK-ENTRY ONLY SYSTEM" in Appendix D. In the event that Cede & Co. is no longer the registered owner of the Bonds, the Bond Registrar will mail interest payments on or before the interest payment date to the registered owners of the Bonds (the "Owners") at the addresses shown for such Owners on the registration books for the Bonds ("Bond Register") maintained by the Bond Registrar as of the 15th day of the month preceding the interest payment date;provided,however,that if so requested in writing by the Owner of at least$1,000,000 principal amount of Bonds, interest will be paid by wire transfer on the interest payment date to an account 3 Co. is no longer the registered owner of the Bonds, the Bond Registrar will mail interest payments on or before the interest payment date to the registered owners of the Bonds (the "Owners") at the addresses shown for such Owners on the registration books for the Bonds ("Bond Register") maintained by the Bond Registrar as of the 15th day of the month preceding the interest payment date;provided, however,that if so requested in writing by the Owner of at least $1,000,000 principal amount of Bonds, interest will be paid by wire transfer on the interest payment date to an account with a bank located in the United States. Principal of the Bonds will be paid to Owners upon presentation and surrender of the Bonds at maturity or upon earlier redemption at the principal corporate trust office of the Bond Registrar in New York,New York,or Seattle,Washington. Defeasance Pursuant to the requirements of the Bond Ordinance, all or any portion of the Bonds may be defeased through the deposit in escrow of cash and/or "Government Obligations" (as such obligations are defined in Chapter 39.53 RCW, as now in existence or hereafter amended) for the benefit of the Owners of such defeased Bonds. PARKING GARAGE PROJECT The City of Renton intends to build a 597 stall public parking garage in the center of the downtown. This garage will be located across from the new Performing Arts Center being completed by a public private partnership between the School District,Ikea,private donations, and a one time city contribution. The garage is also adjacent to the new downtown mass transit station. This station will accommodate all Sound Transit and Metro buses that go through the City of Renton. The garage will consist of two elevators and entrances. There will be six floors of parking. The City is contributing$4,000,000 from cash reserves to build the total$10,000,000 project. There will be two floors of free parking for downtown customers. Users for a period of over two hours will be charged a minimal fee. THE REFUNDING PLAN The 1997 CIB Bonds will be redeemed on June 1, 2007 at a price of 100% of the principal amount thereof. The City will provide for the redemption of the 1997 CIB Bonds by using proceeds of the Bonds to purchase direct and general obligations of the United States of America, or obligations that are guaranteed as to principal and interest, directly or indirectly,by the United States of America (which obligations so purchased are herein called "Escrow Obligations"), and irrevocably depositing such Escrow Obligations and any required beginning cash balance into an escrow account (the "Escrow Fund") held by U.S. Bank Trust National Association, as Escrow Trustee, pursuant to an Escrow Agreement dated as of October 1, 2001, by and between the City and the Escrow Trustee. The Escrow Obligations will bear interest at such rates and will be scheduled to mature at such times and in such amounts so that,when paid in accordance with their terms and together with any required initial cash balance, sufficient moneys will be available to make full and timely payment of the interest to become due on the 1997 CIB Bonds from Closing to and including June 1, 2007, when due, and to redeem on said date, all of the outstanding 1997 CIB Bonds at a redemption price of par and interest accrued thereon to the date of redemption. 4 - i VERIFICATION OF MATHEMATICAL CALCULATIONS The mathematical accuracy of (a) the mathematical computations of the adequacy of the maturing principal amounts of and interest on the Government Obligations to be held by the Escrow Agent to pay principal and interest on the 1997B Bonds as described above and (b) the mathematical computations supporting the conclusion of Bond Counsel that the Bonds are not "arbitrage bonds" under Section 148 of the Code will be verified by Causey Demgen & Moore, independent certified public accountants. SECURITY Property Tax Pledge The Bonds are limited tax general obligations of the City. The City,as authorized by law and the Bond Ordinance, has irrevocabl covenanted that, unless the principal of and interest on the Y P P Bonds are paid from other sources, so long as the Bonds are outstanding, it will include in its budgets and make annual levies of taxes,within the constitutional and statutory limitations provided by law without a vote of the qualified voters of the City,upon all of the property in the City subject to taxation in amounts which,together with other money legally available therefor, shall be sufficient to pay the principal and interest on the Bonds as the same shall become due. The City has pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. All of such taxes shall be paid into the Bond Fund created in the Bond Ordinance. The! Bonds do not constitute a debt or indebtedness of the State of Washington or any political subdivision thereof other than the City. I i State statutes limit the City's taxing power.but within these limits permit the City to levy certain taxes without a yote of the electors of the City. See "Limitations on Statutory Taxing Authority" below. Initiative 722 ("I-722"),`however, may limit the City's ability to increase taxes within these statutory limits. See "INITIATIVE AND REFERENDUM - Initiative 722." Statutory Taxing Authority ! Title 84 RCW authorizes the imposition of a regular tax levy for cities of $3.375. Title 41 (RCW 41.16.060) allows an additional $.450 per $1,000 in two $.225 increments, which must be allocated to the City's firemen's pension fund unless such incremental allocation is shown not to be necessary to maintain actuarial soundness of the plan, in which case the total $.450 is available for general city purposes. Limitations on Statutory Taxing Authority The 106 Percent Limitation The 106 percent limitation (chapter 84.55 RCW),is a limitation on the amount of levies by individual taxing districts. All regular property tax levies are subject to the 106 percent limitation. The law provides, in substance, that unless a higher rate is approved by a majority of the voters at an election, the regular property tax levy by a taxing district must be set so that the amount of the property'taxes which will become payable to it in a given year will not exceed 106 percent of the amount of taxes levied by the taxing district in the highest of the three most recent years, plus an adjustment for new construction. RCW 84.55.092 provides for setting the II 5 property tax levy amount at the level which would be allowed if the tax levy for taxes due in prior years, beginning in 1986, had been set at the full amount allowed under chapter 84.55 RCW. Since the 106 percent limitation applies to the dollar amount levied rather than to levy rates, increases in property values exceeding six percent per year result in decreasing tax levy rates. RCW 84.55.050 allows a taxing district to increase its regular tax levy by more than six percent after obtaining a majority vote of its electors, for a limited period or to satisfy a limited purpose. A newly created taxing district can initiate its levy at the maximum permitted statutory levy rate, unless such amount would exceed the limitations described below. • Senate Bill 5835 (the "Property Tax Act") amended RCW 84.55 in a statewide referendum on November 4, 1997, and further limits the increase in a municipality's regular property tax levy -- within the 106% limitation. Such increase is now limited to inflation (defined as the GDP Implicit Price Deflator for Personal Consumption Expenditures) or 6%, whichever is less. However, upon a di finng of substantial need, a majority plus one of the governing body of the municipality may approve an increase in the levy in excess of inflation, but no more than 6%. I-722 may further reduce the amount of levies by individual taxing,districts from 106 percent to 102 percent. See"INITIATIVE AND REFERENDA- Initiative 722." The One Percent Ag tgate Regular Levy Limitation, Article VII, Section 2 of Washington Constitution, as amended in 1973, limits aggregate regular property tax levies by the State and all taxing districts, except port districts and public utility districts, to one percent of the true and fair value of property. RCW 84.52.050 provides the same limitation by statute. $5.90/$1,000 Aggregate Regular Levy Limitation. Within the one percent limitation described above,RCW 84.52.043(2) imposes an aggregate limitation on regular tax levies by all taxing districts other than the State, of $5.90/$1,000 of assessed valuation, except levies for any port or public utility district; excess levies authorized in Article VII, Section 2 of the State Constitution; and certain levies for acquiring conservation futures, for emergency medical services or care, and to finance affordable housing. Uniformity Requirement Article VII, Section 1 of the Washington Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. It is possible because of different overlapping taxing districts in different areas of the City that the maximum permissible levy might vary within the City. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of the City would be applied to the entire City. Prioritization of Levies. RCW 84.52.010 provides that if aggregate levies certified by all taxing districts exceed the aggregate levy limitations described above, levies certified by junior taxing districts are reduced or eliminated in order to bring the aggregate levy into compliance with statutory maximum prescribed by RCW 84.52.050 and 84.52.043. RCW 84.52.043 defines "junior taxing districts" as all taxing districts other than the state, counties, road districts, cities, towns, port districts, and public utility districts. The City is not a junior taxing district. 6 Tax Levy Rates for the City of Renton ($ per$1,000) Regular Levy Excess Levy Total Levy . Year t Rate Rate(1) Rate 2001 1 $3.27 $0.10 $3.37 2000 i 3.40 0.28 3.68 1999 3.43 0.32 3.75 1998 , 3:55 0.35 3.90 1997 3.60 0.39 • 3.99 1 (1) A tax levied in addition to the City's regular property tax levy and utilized to pay debt&mice onwter app al&bonds Source King County Department ofAssessments Annual Report _. 1 Tax Collection Record Collected %Collected Collected %Collected Assessed In Year In Year as of as of Year Valuation Tax Levy of Levy of Levy 06/01/01 06/01/01 2001 $5,062,641,752 $16,998,438 $8,696,401(1) 51.16% 1 2000 4,545,321,019 116,623,999 16,346,248 98.33 $16,346,248 98.33% 1999 4,258,500,750 15,828,175 15,595,427 98.53 15,750,132 99.51 1998 3,825,109,334 14,818,478 14,511,118 97.93 14,780,772 99.75 1 1997 3,625,601,764 14,361,192 13,970,125 97.28 14,355,767 99.96 (1) Collected as of 6/1/01. Source:King County Department of Assessrnags Annual Report City of Renton's Largest Taxpayers % of Total 2001 Assessed Taxpayer 1 Type of Business Assessed Value Value The Boeing Company Aerospace&Computer Services 740,451,153 14.63% PACCAR Heavy Manufacturing 95,306,433 1.88 - Puget Sound Energy-Elec/Gas 1 Electric/Gas Utility 68,989,748 1.36 National Tax Search LLC ; Business 67,008,200 1.32 US West . Telephone Utility 34,993,899 0.69 Spieker Properties LP ! Property Management 33,931,821 0.67 University Street Properties ; Property Management 33,043,400 0.65 Washington Mutual Bank Banking Services 22,661,800 0.45 Rosche One Interests ? 21,531,100 0.43 Avalon Bay Communities Inc. ; Apartment Building 21,206,000 0.42 Total Assessed Valuation-Largest Taxpayers 1,139,123,554 22.50 Total Assessed Valuation-All Others 3,923,518,198 77.50 Total Assessed Valuation 5,062,641,752 100.00 Source: King County Assessor's Office Economic Base The City has had a very aggressive and successful economic development program over the past eight years. While Boeing'Continues to be its largest employer, the City is less dependent upon 7 Boeing for its overall health. Over the past 10 years, Boeing has provided as much as 45% of the City's employment. However,while producing 346 planes at the Renton plant in 2000,the company had only 41% of the City's total employment base. During this same ten-year period, Ikea,Wizards of the Coast, Wal-Mart, Multiple Zones, and many other companies have located in the City. The City has aggressively sought out retail companies that will do well in all economies. Over the same time period,the City's total assessed valuation has increased by more than 45 percent, from$3.4 billion to $5.0 billion. In the past three years the City has issued over 900 building permits annually with the values being between $82 - 110 million each year. The City's population has grown an average of 1.8% annually, according to Census figures. This is 0.4 percentage points stronger than the King County growth rate. The City's retail sales base has significantly changed experiencing a 50% increase in the taxable sales base in the past eight years. In 1994 the base was $1.1 billion. By the end of 2000,the City's taxable sales base was $1.695 billion with a projected crease to $1.75 billion through 2001. Overall taxable sales in Renton outpaced Puget Sound sales by an average of 3 percentage points between 2000 and 2001. Renton has worked hard over the past years to change the dependency of the City's economic base to one that is less reliant on Boeing. Boeing has announced that it will continue to build 737 and 757 planes well into the future in Renton. Further, Boeing's Commercial Aerospace Division headquarters is located in its new facilities within the City's boundaries. While the City expects that Boeing will always be a big part of the City's economy, City efforts have resulted in , significant diversification in the City's economic base today. INITIATIVES AND REFERENDA 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. The State Constitution may not be amended by initiative. 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 in this manner by a majority of the voters may not be amended or repealed by the State 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 State Legislature. After two years,the law is subject to amendment or repeal by the State Legislature in the same manner as other laws. Initiative 695 Washington State Initiative Measure No. 695 ("I-695"), requiring voter approval for any increase in taxes,impact fees,permit fees, or any governmental"monetary charge," was approved by voters on November 2, 1999. Many aspects of 1-695 were subsequently challenged in court. On October 26, 2000, the Washington Supreme Court declared I-695 unconstitutional in its entirety. There were no motions filed for reconsideration. • 8 Initiative 722 General. On November 7, 2000, the state's voters approved Measure No. 722 ("1-722"). I-722 provides that any "tax" increase adopted by the state or any local government from July 2, 1999 (the date on which I-695 first qualified for the ballot)through December 31, 1999 (the last day before the effective date of 1-695) is null and void and must be refunded to the taxpayers. "Tax" is defined in I-722 to include, but is not limited to,water, sewer and other utility charges, sales and use taxes, property taxes, business and occupation taxes, fuel taxes, impact, license and permit fees, and any other excise tax, fee or monetary charge by government. The initiative does not include a date by which refunds must be made or a methodology for determining the amount and recipient of any such refund. Increases in the price of goods offered for sale are excluded. In addition, 1-722 purports to exempt from payment all annual individual property tax increases since 1999 that exceed two percent per year or the annual inflation rate (whichever is less), except for new construction. The measure also purports to reduce the limit on the total dollar amount of regular property taxes that may be levied annually by a taxing entity from the current maximum of 106 percent to 102 percent of the preceding year's levy. Litigation. A number of Washington municipalities, taxpayers and social service providers have filed lawsuits against the state and the state Department of Revenue, among other defendants, challenging various aspects of I-722, including its overall constitutionality, whether a refund of a "tax" that was properly imposed constitutes an unconstitutional gift of public funds, whether a refund unlawfully affects certain municipalities' ability to comply with their contractual obligations, and whether the tax exemption measures violate the constitutional requirement of uniformity in property taxation. The Attorney General, on behalf of the state, has the legal duty to defend I-722 in the pending litigation. On November 30, 2000,judge Christine Pomeroy of the Thurston County Superior Court issued a preliminary injunction enjoining the state of Washington, King County,the King County Assessor, and various other parties from implementing or enforcing I-722 until that court issues a summary judgment ruling on the validity or invalidity of I-722. On February 23,2001, the same court ruled that I-722 is unconstitutional in its entirety under the "single subject" requirement of the State Constitution. The court also ruled that the initiative (or parts of it) violated a number of other constitutional provisions and issued a permanent injunction prohibiting its implementation. The defendants in the I-722 litigation have appealed the court's ruling and the injunction, and oral argument was made before the Washington Supreme Court on June 12, 2001. The City cannot predict the outcome of the litigation challenging I-722. Potential Impact of Legislation. If I-722 were upheld, the City might be required to refund certain taxes already collected and otherwise comply with its provisions. However, because I-695 was ruled unconstitutional, the City now is able to enact and adjust certain taxes on a prospective basis without voter approval to the same extent as provided by law prior to voter approval of 1-695. The City has confirmed that I-722 is not expected to have an adverse impact on their ability to make required debt service payments on the Bonds. The City's short term revenue forecast uses a 2% annual increase in the base property tax levy which is allowable under current statutory limits and the limits proposed by I-722. The City cannot predict at this time what the overall impact of I-722,if upheld by the courts,will be on the City's revenues over a longer term. 9 Future Initiative Legislation To date, four initiatives to the Legislature and twenty-eight initiatives to the people have been filed in 2001 and their proponents have begun gathering signatures in order to qualify the initiatives for submission to the Legislature and/or the voters. Initiative No. 747 ("I-747"), which would require a public vote before state and local government officials increase property tax collections by more than one percent each year, has been proposed. Sufficient signatures in favor of I-747 have been submitted to the Secretary of State to ensure that I-747 will be placed on the ballot for the next general election in November 2001. The City cannot predict whether I-747 ultimately will be approved and implemented. Other tax and fee initiative measures may be filed, but it cannot be predicted whether any such initiatives might gain sufficient signatures to qualify for submission to the Legislature and/or the voters, or,if submitted,would ultimately be approved. TAX LEVY RATES AND PROCEDURES Assessed Valuation Determination In King County (the "County"), the County Assessor (the "Assessor") determines the value of all real and personal property throughout the County (including the City) which is subject to ad valorem taxation. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the Department of Revenue of the State of Washington. For tax purposes the assessed value of property is 100% of its actual value. All property in the County is subject to revaluation annually. The revaluation occurs in cycles, and the intention is that all of the property be revalued every year. The property is listed by the Assessor on a roll at its current assessed value, and the roll is filed in the Assessor's Office. The Assessor's determinations are subject to revisions by the County Board of Equalization and, for certain property, subject to further revisions by the State Board of Equalization. After all administrative procedures are completed, the City receives the Assessor's final certificate of assessed value of property within the City. i Tax Collection Procedure Property taxes in the County are levied in specific amounts and the rates for all taxes levied for all taxing cities in the County (including the City) are determined, calculated and fixed by the Assessor based upon the assessed valuation of the property within the various taxing cities. The Assessor extends the taxes to be levied within each taxing City upon a tax roll which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the County Treasurer by November 15 of each year, and an abstract of such roll, showing the total amount of taxes collectable in each of the taxing cities for the year, is delivered to the County Auditor at the same time. On or before the first Monday in January,the County Auditor issues to the County Treasurer a directive authorizing the collection of taxes listed on the tax rolls of the County,as certified by the County Assessor. The County Treasurer creates a tax account for each taxpayer by property parcel number and is responsible for the collection of taxes due for each account. All such taxes are due and payable on the 30th of April of each year, but if the amount due from a taxpayer exceeds thirty dollars, one-half may be paid then and the balance paid no later than October 31 of each year. 10 The method of giving notice of payment of taxes due, the accounting by the County Treasurer for the money collected, the distribution of taxes among the various taxing cities, notices of delinquency, and the collection procedures are all covered by state statutes. Subject to federal tax liens on personal property filed prior to the levy of taxes by the City, the lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation. By law, the County Treasurer may not commence foreclosure of a tax lien on real property until three years have passed since delinquency. By statute, the lien for property taxes is prior to all other liens or encumbrances of any kind on real and personal property subject to taxation. In Algona v. Sharp, 30 Wn. App. 837 (1982) the Washington Court of Appeals, Division One, held that all property which constitutes a homestead under Chapter 6.13 RCW (up to a total property value of$30,000) is protected from forced sale to it satisfy special assessment liens. The Court expressly.did not rule as to the effect of a declaration of homestead against a lien for general taxes. DEBT INFORMATION Limits of Indebtedness ' Pursuant to Washington State Statue (RCW 39.36.020) cities may incur general obligation bond indebtedness for capital purposes, authorized by a 60%majority vote of the city's electorate,in an amount not to exceed 2.5% of assessed valuation of the taxable property within the city for general purposes, 2.5% for utilities, and 2.5% for open space/park facilities. Non-voted (limited tax) general obligation indebtedness is limited to 1.5% of assessed valuation, subject to the further limitation that total general purpose general obligation indebtedness (voted and non-voted) may not exceed the 2.5% limitation as set forth above. The combination of unlimited tax and limited tax general obligation debt for all purposes cannot exceed 7.5% of assessed valuation. I _I Debt Payment Record There has been no default in the payment of principal of or interest on any bonds, notes, warrants or certificates of the City. The City presently has no outstanding general obligation open space/park debt or general obligation utility debt and therefore has 100% of its debt capacity remaining for these purposes. The table that follows provides the calculation of the City's general purpose debt capacity applicable to the Bonds. 11 City's Debt Capacity(as of 09/01/01) Assessed Valuation(2000 for collection in 2001) $5,062,641,752 Debt Issued for General Purposes: Statutory Debt Limit—General Purposes Without Vote (1.5%of Assessed Value) $75,939,626 Outstanding Bonded Indebtedness Without Vote(1) $6,401,907 The Bonds" 19,850,000 Outstanding Non-Voted Lease Debt 206,409 Non-Voted Debt Service Fund Assets (334,221) Net Outstanding Non-Voted Debt(Including the Bonds) 26,124,095 (26,124,095) Remaining Debt Capacity—Without Vote 49,815,531 Statutory Debt Limit—Total General Purposes Voted and Non-voted(2.5%of Assessed Value) c 126,566,044 Outstanding Indebtedness—Voted Bonds 3,375,000 Voted Debt Service Fund Assets (303,781) Net Outstanding Non-Voted Debt 26,124,095 Net Outstanding General Purpose Debt 29,195,314 (29,195,314) Remaining General Purpose Debt Capacity 97,370,730 ' Debt Issued for Parks and Open Space Purposes: Debt Limitation(2.5%of Assessed Value) 126,566,044 Outstanding Bonded Indebtedness 140,000 Debt Service Fund Assets (502,586) Net Outstanding Non-Voted Debt 0 ( 0) Remaining Park/Open Space Debt Capacity—Requires Vote 126,566,044 Debt Issued for Utility Purposes: Debt Limitation(2.5% of Assessed Value) 126,566,044 Outstanding Bonded Indebtedness - Remaining Utility Debt Capacity— Requires Vote 126,566,044 (1) Does not include 1997 CIB Bonds *Preliminary;subject to change Direct and Estimated Overlapping Debt Unlimited Tax General Obligation Debt° $3,515,000 Limited Tax General Obligation Debt Outstanding Limited Tax General Obligation Bonds° 6,401,907 The Bonds* 19,850,000 Outstanding Non-Voted Lease Debt 206,409 Total Outstanding General Purpose (Voted&Non-Voted Debt) 29,973,316 Cash and Investments in Bond Funds (1,140,588) Net Direct Debt: $28,832,728 (1) Includes debtfor parks and open space purposes. -- — - (1) Does not indudenfunded bonds. 12 Overlapping Debt Allocated to G.O.Debt City of Overlapping Outstanding Renton Debt Renton School District No.403 $164,540,000 53.980% $88,818,692 Issaquah School District No.411 244,615,000 0.370 905,076 Kent School District No.415 212,360,000 0.002 3,822 Fire District No. 10-1 5,995,000 0.017 1,001 King County Library 41,365,000 0.190 78,594 King County 1,610,215,000 2.690 43,314,784 • Port of Seattle 234,930,000 2.690 6,319,617 Total Estimated Overlapping Debt: 139,441,586 139,441,586 Total Direct&Estimated Overlapping Debt $168,274,314 Bonded Debt Ratios Assessed Valuation (2000 for 2001 Taxes $5,062,641,752 2000 Estimated City Population1as of April 1,2001 51,140 Net Direct Debt to Assessed Valuation 0.570% Net Direct&Estimated Overlapping Debt to Assessed Valuation 3.324% Per Capita Assessed Valuation i $98,996 Per Capita Net Direct Debt , $564 Per Capita Net Direct&Estimated Overlapping Debt $3,290 13 i Limited Tax General Obligation Bond Debt(1) Outstanding LTGO 2001 LTGO Installment Total Bonds Bonds* Contract LTGO Year _ Principal Interest Principal Interest Principal Interest Debt Service* 2001 $1,106,325 $483,772 $220,000 $146,272 $25,122 $9,597 $1,991,088 2002 1,203,000 52,267 285,000 872,683 26,263 8,450 2,447,663 2003 889,573 364,008 290,000 865,273 27,468 7,251 2,443,573 2004 923,856 326,335 295,000 856,979 28,722 5,997 2,436,889 2005 790,705 459,295 310,000 847,716 30,033 4,686 2,442,435 2006 738,946 515,054 ' 320,000 837,238 31,404 3,315 2,445,957 2007 693,926 551,074 330,000 825,878 32,837 1,882 2,435,597 2008 655,575 594,425 345,000 - 813,536 16,975 384 2,425,895 2009 490,000 510,000 610,000 800,012 2,410,012 2010 1,635,000 775,307 2,410,307 2011 1,695,000 707,454 2,402,454 2012 1,760,000 635,417 2,395,417 2013 1,840,000 558,153 2,398,153 2014 1,925,000 475,169 2,400,169 2015 2,020,000 386,426 2,406,426 2016 2,110,000 291,284 2,401,284 2017 2,210,000 190,215 2,400,215 2018 385,000 82,588 467,588 2019 400,000 63,608 463,608 2020 420,000 43,688 463,688 2021 445,000 22,562 467,562 Totals: $7,491,907 $3,856,229 $19,850,000 $11,097,451 $218,830 $41,562 $42,555,973 (1) Includes all debt service pard and to be paid during 2001. Totals may not add due to rounding. * imy,elect to change 1 Unlimited Tax General Obligation Bond Debe) Year Principal Interest Debt Service - 2001 $460,000 $187,025 $647,025 2002 485,000 163,495 648,495 2003 365,000 142,713 507,713 2004 385,000 124,895 509,895 2005 410,000 105,610 515,610 2006 430,000 84,815 514,815 2007 455,000 62,463 517,463 2008 480,000 38,560 518,560 2009 505,000 13,130 518,130 Totals: $3,975,000 $922,706 $4,897,706 (0) Includes all debt service pard and to be paid during 2001. 14 CITY OF RENTON - Statement of Revenues, Expenditures Changes in General Fund Balances(') Fiscal Year End December 31 2001 2000 1999 1998 1997 1996 1995 Budget Audited Audited Audited Audited Audited Audited Beginning Fund Balance(Jan 1): $12,816,002 $9,455,720 7,644,536 9,282,521 9,344,493 6,650,270 5,821,169 Revenues: Taxes 45,806,300 44,943,659 41,337,531 38,694,898 34,950,172 33,296,869 31,447,289 Licenses&Permits 1,538,800 1 2,630,315 1,745,899 2,086,727 2,145,849 1,569,007 1,236,046 Intergovernmental 2,427,600 2,890,867 3,031,246 3,335,737 3,501,474 3,391,193 3,690,869 Charges for Services 5,356,840 i 5,821,977 5,488,634 5,796,372 5,546,295 5,341,875 4,818,352 Fines and Forfeitures 817,100 1,008,098 831,327 722,054 733,561 958,082 998,553 Contributions 16,000 63,592 52,883 - - - - Interest 1,077,300 1,580,763 1,282,517 1,474,166 1,173,601 927,949 727,322 1 Miscellaneous 509,000 520,229 535,340 549,160 573,334 619,927 649,478 Total Revenues: 57,548,940 59,459,500 54,305,377 52,659,114 48,624,286 46,104,902 43,567,909 Total Resources: 70,364,942 68,915,220 61,949,913 61,941,635 57,968,779 52,755,172 49,389,078 Expenditures: General Government 11,443,931 10,648,052 9,972,040 9,915,676 8,675,215 8,420,834 7,807,624 - Security of Persons&Property 24,250,184 22,861,304 21,336,276 24,760,126 19,249,622 18,344,175 17,187,719 Physical Environment 1,947,827 ' 1,769,012 1,892,549 1,730,735 1,708,461 1,759,571 1,520,374 Transportation 5,853,876 5,118,420 5,130,703 152,661 4,896,235 4,509,833 4,312,372 Economic Environment 4,489,871 3,962,089 3,476,231 3,796,687 3,142,812 2,761,202 3,371,210 Mental&Physical Health 10,500 8,599 8,486 10,962 7,570 5,746 7,843 ' Culture&Recreation 7,390,292 6,602,437 6,159,132 5,804,099 5,592,278 5,429,238 5,130,721 { Capital Outlay 153,995 243,324 589,235 425,697 135,539 425,345 278,094 Debt Service 1,996,201 2,007,542 2,044,052 1,524,604 1,497,869 1,196,293 1,372,583 Total Expenditures: 57,536,677 53,220,779 50,608,704 48,121,247 44,905,601 42,852,237 40,988,540 Net Adjustments/Transfers (7,382,350) (2,878,439) (1,855,489) (6,175,852) (3,780,657) (558,442) (1,750,268) Fund Balance at End of Year: 5,445,915 12,816,002 9,455,720 7,644,536 9,282,521 9,344,493 6,650,270 (1) Indudes allfinds which rep>rsau general gore nrvztal actiury of the Q . Finds included Gerard Fend,Park Fund Street Fend,Library Fund - Path and Trails Find,One Pot®ufor Art Fund Cable Communications Derdopmert Fundand LTGO Bond Debt Somite Funds. 1 • I 15 CITY OF RENTON General Fund • Comparative Balance Sheet December 31, 1996 through 2000 2000 1999 1998 1997 1996 ASSETS Cash and cash equivalents(') $637,230 $747,838 $5,047,537 6,844,459 7,230,301 Investments at Fair Value 8,022,110 4,977,648 Receivables: Taxes 358,241 323,826 286,853 296,422 397,538 Accounts 3,704,822 3,498,467 4,106,268 3,587,388 3,298,418 Interest 389,986 224,574 59,035 3,511 0 Due from other funds 4,886 9,203 18,351 9,134 13,000 1 ' Due from other governmental units 144,649 0 33,346 33,345 97,210 Prepaid items 8,000 -8,000 8,000 8,000 8,000 Restricted assets: Deposits 88,617 109,080 200,098 132,975 0 Interfund loans/advances-non-current 75,000 75,000 79,000 79,000 79,000 TOTAL ASSETS 13,433,541 9,973,636 9,838,488 10,994,234 11,123,467 LIABILITIES AND FUND BALANCE Liabilities: Vouchers/contracts payable 469,445 312,186 416,918 355,334 505,254 - Due to other funds 254,263 180,716 385,527 353,867 153,497 Due to other governmental units 1,695,248 1,616,397 1,675,291 1,478,544 1,291,366 Accrued employee benefits payable 0 2,027 0 0 0 ' Accrued taxes payable 938 1,396 3,632 309 2,303 Deposits payable 0 0 0 0 34,634 Deferred revenues 2,469,428 2,173,468 2,504,779 2,237,242 2,137,847 Accrued employee leave benefits 207,214 223,224 209,628 190,825 144,003 TOTAL LIABILITIES 5,096,536 4,509,414 5,195,775 4,616,121 4,268,904 FUND EQUITY Fund balance: Reserved for future use 228,673 . 0 0 0 0 Reserved for advances/prepaids/contingency 83,000 83,000 87,000 87,000 87,000 __ Unreserved-designated: For inmate health and welfare 34,077 29,932 28,129 21,026 16,876 For investigative fund confiscations 98,452 86,691 89,570 86,022 307,561 Unreserved-undesignated 7,892,803 5,264,599 4,438,014 6,184,065 6,443,126 TOTAL FUND EQUITY 8,337,005 5,464,222 4,642,713 6,378,113 6,854,563 TOTAL LIABILITIES&FUND EQUITY 13,433,541 9,973,636 9,838,488 10,99.4,234 11,123,467 W Cash and cash equivalents includes investments at fair value for years 1996, 1997&1998 16 CITY OF RENTON Principal City Officers Current members of the City Council are: Member Position Term Expires Jesse Tanner Mayor 12/31/03 Dan Clawson President 12/31/01 Terri Briere Council Member 12/31/01 Randall Corman Council Member 12/31/01 Kathy Keolker-Wheeler Council Member 12/31/03 Toni Nelson Council Member 12/31/03 King Parker Council Member 12/31/03 Donald Persson , Council Member 12/31/03 General Information The City of Renton, which was incorporated in 1901, has a strong Mayor form of government. The Mayor is independently elected to a four-year term. The Mayor's job is to manage and implement the policies established by the seven member Council. Each Council Member serves a four-year term and is elected on a staggered two-year cycle. . The City provides services in accordance with its charter, and operates its own Police, Fire, Park and Recreation, Utility System, Municipal Airport and Library System. The City of Renton surrounds the southern end of Lake Washington, southeast of Seattle on Interstate 405. As of the 2000 Census, Renton ranked 6th in size among cities in King County. Principal City Officials Jesse Tanner, Mayor - Mr. Tanner was appointed to the Renton City council in 1989 by his fellow council members and waselected to a four year term in 1991. In November 1995 he was elected to serve as Mayor of the City,taking office in January 1996 and was elected to a second term in 1999. Mr. Tanner served in the Federal Aviation Administration (FAA) for 34 years. During his FAA tenure he was appointed to the position of Deputy Director where he served for nine years, overseeing FAA activities in the Northwest Region of the United States. In his capacity as Deputy Director, he had direct authority over a work force of 2500 personnel and an annual budget in excess of $100 million. Since his retirement from the FAA, Mr. Tanner has been involved in consulting work for several major aerospace companies. Jay Covington, Chief Administrative Officer - Mr. Covington jointed the City of Renton staff in August of 1990. Prior to joining the City, Mr. Covington served eight years at the City of Vancouver, Washington, in the roles of budget analyst, management analyst and Assistant to the City Manager. During his tenure with the City of Vancouver,Mr. Covington developed a municipal biennial budget as well as improved financial forecasting techniques. Victoria Runkle, Finance &Information Services Administrator-Ms. Runkle joined the City of Renton staff in July, 1993. Prior to her tenure with the City she worked in public finance in both the public and private sectors. She began her career as a budget analyst with the City of Redmond. 17 After three years with that organization she began working for the City of Seattle's Office of Management and Budget. During her seven years with Seattle, she was responsible for a variety of assignments including capital budgeting. She left the City as the Assistant Budget director for a position with a public finance advisory firm. During her tenure in the private sector Ms. Runkle helped various types of municipalities develop rating presentations, prepare official statements, and issue different types of debt. Budgeting and Accounting The City prepares budgets in accordance with State RCW 35.33. As background to the process, the City prepares a five-year financial forecast of general operations. Biennial calendar year budgets (in which annual allocations lapse at year end) are adopted by the City council for funds providing customary government services. Long-term project oriented budgets are adopted as required and amended as additional appropriations are needed. Special assessment and certain custodial agency funds are not budgeted. All budgets are accounted for on a line-item basis with control at the object summary total level. Estimated purchase order amounts are encumbered prior to the release of the order to the. vendor. Open encumbrances lapse at year end and must be I - reappropriated or absorbed in the next year's operating budget. Cities and counties of the State of Washington must comply with the Budgeting, Accounting, and Reporting System (BARS) prescribed by the Office of the State Auditor as authorized under RCW 43.09.230 and 43.09.230. State laws also provide for annual independent audits by the Office of the State Auditor and require timely submission of annual fmancial reports to the state for review. The financial system of the City of Renton incorporates a system of financial and administrative controls that ensure the safeguarding of assets and the reliability of financial reports and consequently are designed to provide reasonable assurance that transactions are executed in accordance with management authorization, recorded in conformity with Generally Accepted Accounting Principles (GAAP), that there exists accountability of and control over assets and obligations, and that sufficient reporting and review exists to provide adequate information for analysis and comparability of data. Internal control is an area of audit by the State Auditor, as well, and City management receives and takes action upon recommendations made by the state. The City's fmancial statements are subject to annual audit by the State Auditor. The last audit covered the year ended December 31, 1999 and the report thereon contained an unqualified opinion regarding the City's 1999 financial statements. Copies of the State Auditor's Report may be obtained by contacting the Office of State Auditor in Olympia,Washington. Pension Fund The City and its employees contribute to two mandatory municipal employee retirement systems administered by the State of Washington. The Public Employees Retirement System (PERS) is mandatory for all non-uniformed regular employees and at year end 2000 required a 4.67% of payroll contribution from the City for PERS Plan I and 4.67% for PERS Plan II. In 2000, the City contributed $833,930 to both plans. The Law Enforcement Officers and Firefighters Retirement Plan likewise is mandatory for all uniformed fire and police employees who were active or hired on or after March 1, 1970. At year end 2000, the City's contribution rates were 6.23% of payroll for Plan I and 4.30% for Plan II depending upon an employee's hire date. During 2000,the City contributed$491,615 toward the LEOFF plan. 18 Risk Management The City self-insures its risk exposure through self insurance up to specified levels of risk, and purchases stopgap insurance commercially to cover medium to large losses. The City's risk management program is administered by the Human Resources/Risk Management Administrator, with claims processed by independent claims administrators. Risk Retention Stop Gap Coverage Type (Per Occurrence) Loss Limit Property $25,000 $500,000,000 Liability 250,000 14,000,000 Auto Liability 250,000 14,000,000 Boiler&Machinery. 5,000 50,000,000 Public Officials 250,000 10,000,000 Crime 10,000 1,000,000 Airport Liability , 0 50,000,000 Underground Storage Tank 10,000 1,000,000 Worker's Compensation 225,000 2,000,000 Employee Health 120,000 N/A Investment Policy City Investments (as of 6/30/01) Carrying Amount Market Value US Government Agencies $6,000,000 $6,035,320 Certificates of Deposit 11,000,000 11,657,385 Commercial Paper 0 0 Repurchase Agreements 0 0 State&County Local GOv't Investment Pools/MIA 42,723,419 42,861,433 U.S.Treasury Strips 4,766,926 6,169,653 U.S.Treasury SLGS 0 0 Municipal Bonds 98,272 100,726 Total Investments $64,588,617 $66,824,517 Throughout 2000, the City was in compliance with all statutes pertaining to the investment of City moneys. Employment The City has five bargaining units in addition to the management team. The commissioned police officers have a Guild. They also represent,in a separate bargaining unit,the non-commissioned support staff of the Police Department. In the Fire Department,there are two bargaining units. The firefighters through captains are represented as a group. There are six battalion chiefs who also represent a bargaining unit. The greatest number of employees is represented by AFSCME 19 (American Federation of State and City Municipal Employees). The City bargains with each of the units every three years. The management group tends to receive benefits very similar to the AFSCME contract. There are no significant outstanding personnel issues at this time. The City has contracts with all the bargaining units through 2002. TAX EXEMPTION In the opinion of Gottlieb,Fisher&Andrews, PLLC,Bond Counsel, as of the date of issue of the Bonds (the "Date of Issue"), and subject to certain assumptions described in the next paragraph: the Bonds are not "private activity bonds," as defined by the Code; interest on the Bonds is excluded from gross income for federal income tax purposes under existing federal law; and such interest is not an item of tax preference for purposes of determining the alternative minimum tax on individuals and corporations under existing federal law. However, under existing federal law interest on the Bonds received by certain corporations is to be taken into account in the computation of adjusted current earnings for purposes of calculating the alternative minimum tax applicable to such corporations; such interest received by certain S corporations may be subject to tax; and such interest received by foreign corporations with United States branches may be subject to a foreign branch profits tax. Bond Counsel expresses no opinion regarding any other federal tax consequences of receipt of interest on the Bonds. Potential purchasers of the Bonds should consult with their tax advisors as to all possible tax consequences of ownership of the Bonds. See also, "OTHER TAX CONSEQUENCES," herein. The Code contains certain requirements which must be satisfied subsequent to the issuance of the Bonds in order to maintain the tax treatment described above, including requirements relating to the application of the proceeds of the Bonds, use of facilities which are financed with such proceeds, limitations on income derived from the investment of gross proceeds of the Bonds, and rebate to the United States Treasury of certain of such investment income on such gross proceeds. The City has covenanted to comply with these requirements; and the opinion of Bond Counsel described in the preceding paragraph assumes such compliance. However, Bond Counsel has not undertaken and shall not undertake to monitor compliance by the City with such requirements and failure of the City to comply with such requirements could cause the interest on the Bonds to be included in gross income for federal income tax purposes, and could be treated as an item of tax preference for purposes of the alternative minimum tax on individuals and corporations, in each case, retroactive to the Date of Issue. OTHER TAX CONSEQUENCES Under current federal law: 1. Corporate Alternative Minimum Tax. The interest on tax-exempt obligations received by a corporation is taken into account in the computation of the alternative minimum tax -- applicable to corporations (as defined for federal income tax purposes). Undercurrent federal law, the alternative minimum taxable income of such a corporation (other than an S corporation, a regulated investment company: a real estate investment trust ora REMIC) is increased by 75% of the amount by which the "adjusted current earnings" ofthe corporation exceeds the corporation's alternative minimum taxable income determined without regard to such increase and any alternative tax net operating loss deduction. Interest on tax-exempt obligations, whenever issued or acquired, including interest on the Bonds, is included in the computation of"adjusted current earnings." 20 2. Tax on Excess Passive Investment Income of S Corporations. Certain excess net passive investment income, including interest on the Bonds, received by an S corporation corporation treated as a partnership for most federal tax purposes) that has "subchapter C earnings and profits" at the close of its taxable year may be subject to federal income tax at the highest rate applicable to corporations if more than 25% of the gross receipts of such S corporation for such taxable year is passive investment income. 3. Foreign Corporation Branch Profits Tax. Interest on the Bonds received by certain foreign corporations doing business in the United States may be subject to a branch profits tax applicable to such corporations that is based on their Untied States source earnings and profits,including tax-exempt interest on obligations such as the Bonds. 4. Elimination of Interest Deduction for Financial Institutions. The Bonds are not "qualified tax-exempt obligations" for purposes of the 80 percent financial institution interest expense deduction permitted_pursuant to the Code. None of the interest expense incurred by banks and other financial institutions allocable to the purchase or carrying of the Bonds may be deducted by such institution. 5. Reduction of Loss Deduction for Property and Casualty Insurance Companies. Interest on tax-exempt obligations, including 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 such tax-exempt interest received during the taxable year. 6. Social Security and Tier 1 Railroad Retirement Benefits Subject to Tax. Interest received or accrued during the year from tax-exempt obligations, such as the Bonds, is included in the calculation of "modified adjusted gross income" of recipients of the social security or tier 1 railroad 'retirement benefits. If the sum of the "modified adjusted gross income" for the taxable year plus one-half of the social security or tier 1 railroad retirement benefits received during the taxable year exceeds a base amount provided by the Code (the "excess amount"), then the lesser of (i) one-half of the social security or tier 1 railroad retirement benefits received during the taxable year or (ii) one-half of the "excess amount", is included in the gross income of the social security or tier 1 railroad retirement benefit recipient. Covenant Against Arbitrage The City has covenanted that it will not take or permit to be taken on its behalf any action that would adversely affect the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation, and will take or require to be taken such acts as may be permitted by Washington law and as may from time to time be required under applicable law to continue the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation. Without limiting the generality of the foregoing, the City has covenanted that it _ will not invest or make or permit any use of the proceeds of the Bonds pr of its other money at any time during the term of the Bonds which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bonds to constitute "private activity bonds" under Section 141 of the Code. 21 LEGAL MATTERS Opinions 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 Gottlieb, Fisher & Andrews, Seattle, Washington, Bond Counsel. A form of the legal opinion of Bond Counsel is included herein as Appendix B. Litigation There is no controversy or litigation pending, or to the best knowledge of the City threatened, affecting the issuance and delivery of the Bonds, or the power and authority of the City to issue the Bonds. Enforceability The provisions of the Bonds and the Bond Ordinance, constitute contracts between the City and the owner or owners of the Bonds, and such provisions are enforceable by the registered owner or owners in a court of competent jurisdiction in the State of Washington by mandamus or other appropriate remedy, subject to judicial discretion and the valid exercise of sovereign police power of the State of Washington and may be limited by laws affecting the rights of creditors. OTHER MATTERS Continuing Disclosure This section describes the City's written undertaking (the "Undertaking") for the benefit of the Owners and Beneficial Owners of the Bonds required by subsection (b)(5)(i) of the Rule 15c2-12 (the "Rule") of the United States Securities and Exchange Commission (the "SEC"). The City in the Bond Ordinance, has agreed to provide or cause to be provided to each then existing nationally recognized municipal securities information repository designated by the SEC ("NRMSIR"), to the State Information Depository ("SID"), if one is created, and to the [Bond Insurer] the following annual financial information and operating data (collectively, the "Annual Financial Information") for each prior fiscal year, commencing with the fiscal year ending December 31, 2001, on or before the last day of the seventh month following the end of such prior fiscal year: (a) Annual financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units, as such principles may be changed from time to time and as permitted by State law;which statements will not be audited, except that if and when audited financial statements are otherwise prepared and available to the City,they will be provided (the "Annual Financial Statements"); (b) The assessed valuation of taxable property in the City; (c) Ad valorem taxes due and the percentages of taxes collected; (d) Property tax levy rates per$1,000 assessed valuation; 22 I i (e) A statement of authorized, issued and outstanding indebtedness of the City; and (f) A narrative explanation of the reasons for any amendments to the Undertaking made during the previous fiscal year and the impact of such amendments on the Annual Financial Information being'provided. In its provision of such financial information and operating data, the City may cross- reference to any "final official statement" (as defined in the Rule) available from the Municipal Securities Rulemaking Board (the "MSRB") documents theretofore provided to each then existing NRMSIR or the SID,if one is created. I If not submitted as part of aie Annual Financial Information,then when and if available,the City shall provide its Annual Financial Statements,which shall have been audited by such auditor as shall be then required or permitted by the State law, to each then existing NRMSIR, to the SID, if one is created, and to the Bond Insurer. The City further has agreed to provide or cause to be provided, in a timely manner, to the SID, if one is created, and to either the MSRB or each then existing NRMSIR and to the Bond Insurer,notice of any of the following events with respect to the Bonds,if material: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled 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 or events affecting the tax-exempt status of the Bonds; 7. Modification to rights of the Owners of the Bonds; 8. Optional redemptions of the Bonds; 9. Defeasances of the Bonds; 10. Release, substitution or sale of property securing repayment of the Bonds; and 11. Rating changes. The City also has agreed to provide or cause to be provided, in a timely manner,to the SID, if one is created, and to either the MSRB or each then existing NRMSIR, notice of its failure to provide the Annual Financial Information for the prior fiscal year on or before the last day of the seventh month following the end of such prior fiscal year. • 23 After the issuance of the Bonds, so long as the interests of the Owners or Beneficial Owners of the Bonds will not be materially impaired thereby, as determined by a party unaffiliated with the City(including, without limitation, a trustee for the Owners, nationally recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to a favorable "no-action letter' issued by the SEC, this undertaking may only be amended in connection with any change in legal requirements, change in law, or change in the identity, nature or status of the obligated person, or type of business conducted, and only in such a manner that the undertaking of the City, as so amended, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances. The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without amendment upon the defeasance, prior redemption or payment in full of all of the then outstanding Bonds. This undertaking or any provision hereof, shall be null and void if the City(i) obtains an opinion of nationally recognized bond counsel or other counsel familiar with the federal securities laws to the effect that those portions of the Rule which require this undertaking or any such provision are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies and provides the SID, if any, and either the MSRB or each then existing NRMSIR with copies of such opinion. The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this undertaking shall be limited to the right to obtain specific enforcement of the City's obligations under this undertaking, and any failure by the City to comply with the provisions of this undertaking shall not be a default with respect to the Bonds under the Bond Ordinance. The City Finance Director is authorized and directed to take such further action on behalf of the City as may be necessary, appropriate or convenient to carry out the requirements of this undertaking. Ratings As noted on the cover page of this Official Statement, Standard &Poor's Ratings Services, New York, New York ("S&P") and Fitch, New York, New York ("Fitch"), have assigned their municipal bond rating of " " and " ," respectively, to the Bonds [with the understanding that the [Policy]will be delivered simultaneously with the issuance of the Bonds. No application was made to any other rating agency for the purpose of obtaining an additional rating on the Bonds. S&P and Fitch have also assigned underlying ratings of and , respectively,to the City's limited tax general obligation bonds]. Each rating reflects only the view of the applicable rating organization and an interpretation of such rating may be obtained only from the rating agency furnishing the same, at the following address: Standard & Poor's Ratings Services, 25 Broadway, New York, New York 10004; Fitch, One State Street Plaza, New York, New York 10004. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn agencies, j the rating if, in judgment of such agencies, circumstances so warrant. Any byg g such revision or withdrawal of any such rating may have an adverse effect on the market price of the Bonds. 24 Underwriting The Bonds are being purchased by the Underwriter from the City at a price of % of par plus accrued interest and will be re;offered at the aggregate price of % of par, subject to the terms of a purchase contract between the City and the Underwriter (the "Purchase Contract"). The Purchase Contract provides that 'the Underwriter shall purchase all of the Bonds if any are purchased and that the obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Contract,the approval of certain legal matters by counsel and certain other conditions. The initial public offering prices set forth on the cover hereof may be changed from time to time by the Underwriter;. The Underwriter may offer and sell the Bonds into unit investment trusts or money market funds, certain of which may be sponsored or managed by the Underwriter,at prices lower than the public offering prices stated on the cover hereof. a , CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds,but neither the failure to print such numbers on any Bonds or any error with respect thereto shall constitute cause for a failure or refusal by the purchaser hereof to accept delivery of and pay for said Bonds in accordance with the terms of the purchase contract. All expenses in relation to the printing of the CUSIP numbers on said Bonds shall be paid by the City;provided,however,that the CUSIP Service Bureau charge for the assignment;of said numbers shall be the responsibility of and shall be paid for by the purchaser. Official Statement Certificate At the time of delivery of the Bonds, one or more officials of the City will furnish a Certificate stating that to the best of his knowledge this Official Statement, as of its date and as of the date of delivery of the Bond's, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained herein, in light of the circumstances in which they were made,not misleading. Statements in this Official Statement,including matters of opinion,whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City or the Underwriter and the purchaser of ' the Bonds. The preparation and distribution of this Official Statement has been duly authorized by the City. This Official Statement has been "deemed final" as of its date by the City in accordance with S.E.C.Rule 15c2-12. City of Renton,Washington By: Its: Finance and Information Services Administrator 25 (xMvrg.LiTI ATwNOLLNa NI sIH.r) • • I APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION • APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION Central Puget Sound Region Major Employers Employer Industry Employees 1. The Boeing Company ' Aerospace Manufacturing 98,440 2. Microsoft Corporation* Software 15,400 3. Safeway Grocery Store 9,851 4. Sisters of Providence Systems ' Health Care 9,423 5. Group Health Cooperative Health Care 8,800 6. Fred Meyer Retail 8,100 7. Nordstrom,Inc.' Retail 6,756 8. Alaska Air Group, Inc. Airline 6,234 9. U.S.West Communications Telecommunications 6,100 10. The Bon Marche Department Store 5,409 11. Albertson's Grocery Store 5,400 12. Quality Food Centers Grocery Store 5,200 13. Virginia Mason Medical Center Health Care 5,200 14. Multi Care Health System Health Care 4,755 15. Weyerhaeuser Company* Forestry Products 4,600 16. Swedish Health Systems Health Care 4,444 17. Safeco Corp.* Insurance 4,000 18. Washington Mutual Inc. Bank 4,000 19. Franciscan Health System Health Care 3,900 20. Costco Wholesale, Inc.* Warehouse 3,900 Headquartered in King County Sources Economic Detdopment Council of King County. • Population Historical, current and estimated population data for King County and the City of Renton are as follows: Year Renton King County 2001 51,140 1,758,300 2000 48,270 1,737,034 1999 47,620 1,677,000 1998 46,270 1,665,800 1997 45,920 1,646,200 1996 45,170 1,628,800 1995 44,890 , 1,613,600 Source: City of Renton,King County. Largest Employers The following table details the City of Renton's largest employers. 2000 %of Total Principal Employers Type of Business Employees Employment The Boeing Company Aerospace&Computer Services 16,731 45.48% Valley Medical Center Medical Services 1,477 4.01 Renton School District Public Education 1,346 3.66 PACCAR Heavy Manufacturing 1,114 3.03 Federal Aviation Administration Federal Government 645 1.75 Multiple Zones International Computer Hardware&Software Retail 642 1.75 City of Renton City Government 637 1.73 Wizards of the Coast Retail—Miscellaneous 403 1.10 HomeGrocers.Com Inc Retail—Miscellaneous 313 .85 Ikea-Seattle Retail—Miscellaneous 295 .80 Total Number of Employees—Principal Employers 27,185 59.38 Total Number of Employees—All Other Employers 18,600 40.62 Total Number of Employees Working within Renton 45,785 100.00 Number ofemployees estimate basad upon City of Renton Business License Records and individual inquiry where applicable Labor Force Data Employment Statistics (Annual Averages) The following employment figures for King County and the State of Washington are • provided to characterize the area's labor market: 1996 1997 1998 1999 2000 King County Labor Force 945,400 990,700 1,016,000 1,028,700 1,023,200 Employed 899,300 957,800 985,000 995,900 986,500 Unemployed 46,100 32,900 31,000 32,800 36,700 %Unemployed 4.9% 3.3% 3.1% 3.2% 3.6% Washington State Labor Force 2,878,800 2,981,900 3,037,800 3,074,600 3,045,200 Employed 2,691,600 2,839,900 2,893,300 2,929,200 2,887,500 Unemployed 187,100 142,000 144,500 145,300 157,700 %Unemployed '6.5% 4.8% 4.8% 4.7% 5.2% Source Washington State Employment Security Department(statistics not seasonally adjusted). Personal Income ($/000s) 1999 ; 1998 1997 1996 1995 King County 74,450,325 67,031,172 59,609,697 55,135,527 50,858,676 State of Washington 174,876,529 161,069,171 150,202,630 139,327,838 129,680,828 United States 7,784,137,000 7,383,476,000 6,928,545,000 6,538,103,000 6,192,235,000 Sources US Bureau of Economic Analysis, U.S.Department of Commerce Per Capita Income 1999 1998 1997 1996 1995 King County 44,719 40,519 34,476 34,203 31,868 State of Washington 30,380 28,579 26,802 25,287 23,878 United States 28,546 27,321 25,874 24,651 23,562 Source: US Bureau of Eccmomic Analysis, U.S.Department of Commene i ', Non-Agricultural Wage and Salary Workers Employed in King County(Annual Averages) 20000) 1999 1998 1997 1996 Total 1,191,800 1,155,400 1,119,700 1,073,300 1,018,300 Manufacturing 145,600 153,700 160,900 154,300 142,700 Construction&Mining 67,000 62,300 58,000 52,600 48,400 Transport&Public Utilities 81,400 77,400 73,900 71,100 68,300 Wholesale&Retail Trade 282,600 274,300 264,800 255,800 246,900 Finance,Insurance&Real Estate 73,400 73,500 71,100 68,300 65,800 Services 387,800 363,200 343,000 327,300 304,200 Government 154,100 151,100 147,900 144,000 142,200 (1)Preliminary. Source Washington State Employment Security Department City of Renton Building Permits(1) Residential Multifamily Commercial Construction Construction Construction Other(2) Total Year Permits Value Permits Value Permits Value Permits Value Permits Value 1999 488 $56,643 94 $33,072 345 $105,654 2,646 $42,074 3,573 $237,443 1998 321 27,792 132 22,509 311 58,780 2,362 22,797 3,126 131,878 1997 381 38,566 92 40,230 351 81,515 2,852 33,967 3,676 194,278 1996 345 38,873 84 40,896 384 120,512 3,530 38,965 4,343 239,246 1995 289 29,023 58 11,873 340 71,588 2,811 21,022 3,498 133,506 (r) ($/000s) 01 Includes ponits for other structures,fire alarm,sign,electrical,meobanica4 plumbing sprinlder,demolition,mobile homes and grading Sours City of Renton City of Renton&King County Taxable Retail Sales ($000's) Year City of Renton King County 2001(1) 407,701 8,652,300 2000 1,695,021 37,383,541 1999 1,504,764 34,517,504 1998 1,520,500 31,498,687 1997 1,350,937 29,154,617 1996 1,182,915 26,402,587 (I) 2001 Figures are for the first quarter only. - Soune City ofRenton and Washington State Department ofRevalue i I APPENDIX B FORM OF LEGAL OPINION i (THIS PAGE INTENTIONALLY LEFT BLANK) (Form of approving opinion of Gottlieb,Fisher& Andrews, PLLC, Bond Counsel) [Date of Issue] Mayor and City Council City of Renton Renton, Washington 98055 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Renton, Washington(the"City"), of,the bonds described below(the "Bonds"): CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS,2001 Dated: October 1, 2001 The Bonds are issued pursuant to Ordinance No. of the City (the"Bond Ordinance") and other proceedings duly had and taken in conformity therewith. The Bonds are issued to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage,to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B and to pay incidental costs thereof and the costs related to the sale and issuance of the Bonds, all as provided in the Bond Ordinance. The Bonds shall be issued in fully registered form as to both principal and interest; shall be in the denomination of$5,000 each or any integral multiple thereof within a single maturity; shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington(the"State" ) located in Seattle, Washington, and New York, New York(collectively,the "Registrar"), deem necessary for purposes of identification. The Bonds bear interest(computed on the basis of a 360-day year of twelve 30-day months) from their date or from the most recent interest payment date to which interest has been paid or duly provided for, whichever is later, payable December 1, 2001, and semiannually thereafter on each June 1 and December 1 to the maturity or earlier redemption thereof, at the rates set forth below, and shall mature on December 1 in each of the years and in the principal amounts set forth below: , f , City of Renton, Washington pate of Issue] Page 2 Maturity Date Principal Interest Rate (December 1) Amount Per Annum • • * . * Term Bonds The Bonds shall be subject to redemption prior to maturity at the times and in the manner described in the Bond Ordinance. The City has reserved the right to purchase any or all of the Bonds in the open market at any time and at any price. In rendering this opinion letter, we have examined the following: (i)the Bond Ordinance; (ii) a copy of one executed and authenticated Bond(we assume that all other Bonds are in the same form and have been similarly executed and authenticated); and(iii)the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us and which comprise the transcript of proceedings pertaining to the issuance of the Bonds (the "Transcript"). As to questions of fact material to the opinions expressed herein, we have relied upon the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us as part of the Transcript, all without undertaking to verify the same by independent investigation. Based only upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion letter, and subject to the limitations and qualifications expressed below, we are of the opinion that, as of this date: 1. The Bonds are lawfully authorized and issued pursuant to and in full compliance with the constitution and statutes of the State and the Bond Ordinance. City of Renton, Washington [Date of Issue] Page 3 2. The Bonds are legal,valid and binding general obligations of the City, enforceable against the City in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, and also to the exercise of judicial discretion in accordance with general principles of equity. 3. The City has irrevocably covenanted in the Bond Ordinance that, unless the principal of and interest on the Bonds are paid from other sources, so long as the Bonds are outstanding,the City shall include in its budgets and make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation in amounts which, together with any other money legally available therefor, shall be sufficient to pay such principal and interest on the Bonds as the same shall become due. The City has irrevocably pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. 4. The Bonds are not"private activity bonds," as defined in the Internal Revenue Code of 1986, as amended(the "Code"). 5. Assuming compliance by the City with applicable requirements of the Code, that must be met subsequent to the issuance of the Bonds,the interest on the Bonds is excluded from gross income for federal income tax purposes under existing federal law, and such interest is not an item of tax preference for purposes of determining alternative minimum tax on individuals and corporations under existing federal law. However,under existing federal law, interest on the Bonds received by certain corporations is to be taken into account in the computation of adjusted current earnings for purposes of calculating the alternative minimum tax applicable to such corporations; such interest received by foreign corporations with United States branches may be subject to a foreign branch profits tax; and such interest received by certain S corporations may be subject to tax. [6. The difference between the principal amount of the Bonds maturing in through , inclusive (the "Discount Bonds"), and the initial offering price to the public (excluding bond houses,brokers and similar persons or organizations acting in the capacity of underwriter or wholesaler) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount,which is excluded from gross income for federal income tax purposes to the same extent as interest on the Discount Bonds. Further, this original issue discount accrues on the basis of a constant yield to maturity over the term of each Discount Bond and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser of such Discount Bonds will be increased by the amount of such accrued original issue discount.] Except as stated in the preceding paragraphs 4, 5 and 6, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Bonds. City of Renton, Washington [Date of Issue] Page 4 The Code contains certain requirements which must be satisfied subsequent to the date of q q issue of the Bonds in order to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes, including requirements relating to application of the proceeds of the Bonds, use of facilities financed with such proceeds, limitations on income derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury of certain investment earnings on such gross proceeds. The City has covenanted to comply with these requirements, and the opinions expressed in paragraphs 4, 5 and 6 assume such compliance. However, we have not undertaken and do not undertake to monitor compliance by the City with such requirements; and if the City should fail to comply with such requirements, interest on the Bonds could become includable in gross income for - federal income tax purposes and could be treated as an item of tax preference for purposes of the alternative minimum tax on individuals and corporations, in each case, retroactive to the date of issue of the Bonds. We have not been engaged to review or express any opinion concerning the completeness or accuracy of the official statement or other disclosure documentation used in connection with the offer or sale of the Bonds by any person, and thus express no opinion concerning the completeness or accuracy thereof. Copies of this opinion letter may be delivered to the Owner of the Bonds, who may rely on this opinion letter as if it were addressed to such Owner on the date hereof. Subject to the foregoing, this opinion letter may be relied upon by you only in connection with the issuance of the Bonds and may not be used or relied upon by you or any other person for any other purpose whatsoever, without in each instance our prior written consent. We expressly disclaim any responsibility to advise you or any Owner of any developments in areas covered by this opinion letter that occur after the date hereof. Respectfully submitted, GOTTLIEB, FISHER&ANDREWS, PLLC By Judith L. Andrews t:\renton\Itgo 01 I APPENDIX C - I EXCERPT FROM THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT a ' I • (THIS PAGE INTENTIONALLY LEFT BLANK) • CITY OF RENTON,WASHINGTON i GENERAL FUND COMPARATIVE BALANCE SHEET DECEMBER 31.2000 WITH COMPARATIVE TOTALS FOR DECEMBER 31.1999 (PAGE 1 OF 1) 2000 1999 ASSETS: Cash and Cash Equivalents $ 637.230 $ 747,838 Investments at Fair Value ! 8.022,110 4,977,648 Receivables: Taxes 358.241 323,826 Accounts 3,704.822 3.498,467 Interest on Investments 389.986 224,574 Due From Other Funds 4,886 9,203 Due From Other Governmental Units 144.649 0 Prepaid Items 8.000 8400 Restricted Assets: ' Deposits 88.617 109,080 Interfund Loans/Advances-Non-Current 75.000 75.000 TOTAL ASSETS $ 13 433.541 $ 9.973 636 LIABILITIES AND FUND EQUITY: i . LIABILMES: Vouchers/Contracts Payable $ 469,445 $ 312.186 Due To Other Funds 254.263 180,716 Due To Other Governmental Units 1,695,248 1,616,397 Accrued Employee Benefits Payable 0 2.027 Accrued Taxes Payable 938 1,396 ' Deferred Revenues 2,469,428 2,173,468 Accrued Employee Leave Benefits 207,214 223.224 TOTAL LIABILITIES 5.096.536 4.509.414 FUND EQUITY: Fund Balance: Reserved for Future Use 228.673 0 Reserved for Advances/Prepaids/Contingency 83.000 83.000 Unreserved-Designated: For Inmate Health&Welfare 34.077 29.932 For Investigative Fund Confiscations 98.452 86,691 Unreserved-Undesignated 7,892.803 5.264.599 TOTAL FUND EQUITY 8.337.005 5.464.222 TOTAL LIABILITIES AND FUND EQUITY $ 13 433.541 $ 9.973.636 • I I • CITY OF RENTON,WASHINGTON GENERAL FUND STATEMENT OF REVENUES.EXPENDITURES,AND CHANGES IN FUND BALANCE YEAR ENDED DECEMBER 31.2000 WITH COMPARATIVE TOTALS FOR DECEMBER 31.1999 (PAGE 1 OF 1) 2000 1999 REVENUES Taxes $ 29.822,126 $ 27,878,475 Licenses And Permits 2.568.757 1,687,572 Intergovernmental Revenues 2.156.609 2,299,474 Charges For Services 4.129,214 3.867,738 Fines And Forfeits 974,273 797,657 Contributions 36.193 28.163 Interest 1,318.783 1.161.911 Miscellaneous Revenues 64.258 47,400 TOTAL REVENUES 41,070.213 37.768.390 EXPENDITURES • - Current: General Government 8.512.651 8.065.131 Security Of Persons And Property 22.861,304 21.336,276 Physical Environment • 1,769.012 1,892.549 Economic Environment 3,345.054 2,919,978 Mental And Physical Health 8.599 8,486 • Culture and Recreation 25,370 0 Capital Outlay 194,351 573,298 Debt Service: Principal Retirement 0 33,018 Interest&Fiscal Charges 0 2.848 TOTAL EXPENDITURES 36,716,341 34,831.584 EXCESS(DEFICIENCY)OF REVENUES OVER EXPENDITURES 4,353,872 2.936.806 OTHER FINANCING SOURCES(USES) Operating Transfers(Out) (1.560,051) (2.107,458) - Safe Of General Fixed Assets 78.962 0 TOTAL OTHER FINANCING SOURCES(USES) (1.481,089) (2.107.458) EXCESS(DEFICIENCY)OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES AND OTHER FINANCING USES 2,872,783 829,348 FUND BALANCE JANUARY 1 5.464.222 4,642.713 Residual Equity Transfers In 0 0 Residual Equity Transfers Out 0 (7.839) FUND BALANCE DECEMBER 31 $ 8 337.005 $ 5.464.722 i - I APPENDIX D BOOK-ENTRY ONLY SYSTEM (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D BOOK-ENTRY ONLY SYSTEM The following information has been provided by DTC. The City and the Underwriters make no representation regarding the accuracy or completeness thereof Beneficial Owners(as hereinafter defined)should therefore confirm the following with DTC or the Participants(as hereinafter defined). DTC will act as initial securities depository for the Bonds. The Bonds will be issued as fully- 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 in the principal amount of such maturity and will be deposited with DTC. DTC 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 securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' account , thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant either directly or indirectly ("Indirect Participants"). The rules applicaile to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of the Bonds under the DTC system, in denominations of $5,000 or any integral multiple thereof, must be made by or through Direct Participants,which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction; as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use,of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede&Co. or such other name as 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 Participants will remain responsible for keeping account of their holdings on behalf of their customers. When notices are given, thy shall be sent by the Registrar to DTC only. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be 1 governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, or in the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City of Renton 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 to on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest 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 of Renton or the Registrar on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to 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 will be the responsibility of such Participant and not of DTC, the Registrar, or The City of Renton, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of The City of Renton or the Registrar, disbursement of such payments to Direct Participants shall be the responsibility of DTC,and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to The City of Renton and the Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The City of Renton may decide to discontinue use of the system of the book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. With respect to Bonds registered on the Bond Register in the name of Cede & Co., as nominee of DTC,The City of Renton and the Registrar shall have no responsibility or obligation to any Participant or to any person on behalf of whom a Participant holds an interest in the Bonds with respect to (1)the accuracy of the records of DTC,Cede&Co. or any Participant with respect to any ownership interest in the Bonds; (2) the delivery to any Participant or any other person, other than a bondowner as shown on the Bond Register, of any notice with respect to the Bonds, including any notice of redemption; (3) the payment to any Participant or any other person, other than a bondowner as shown on the Bond Register, of any amount with respect to principal of, premium,if any, or interest on the Bonds; (4) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds; (5) any consent given action taken by I I ' DTC as registered owner; or (6) any other matter. The City of Renton and the Registrar may treat and consider Cede & Co., in'whose name each Bond is registered on the Bond Register, as the holder and absolute owner of!such Bond for the purpose of payment of principal and interest with -respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. 'For the purposes of this Official Statement, the term "Beneficial Owner" shall include the person for whom the Participant acquires an interest in the Bonds. DTC management is aware that some computer applications, systems, and the like for processing data ("Systems") that are dependent upon calendar dates, including dates before, on, and after January 1, 2000,may encounter "Year 2000 problems." DTC has informed its Participants and other members of the financial community (the "Industry") that is has developed and is implementing a program so that its Systems, as the same relate to the timely payment of distributions (including principal and interest payments)to securityholders, book-entry deliveries and settlement of trades within DTC ("DTC Services") continue to function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames. However, DTC's ability to perform properly its services is also dependent upon other parties, including but not limited to issuers and their agents, as well as third party vendors from whom DTC licenses software and hardware, and third party vendors on whom DTC relies for information or the provision of services, including telecommunication and electrical utility services providers, among others. DTC has informed the Industry that it is contacting (and will continue to contact) third party vendors from who DTC acquires services to: (1) impress upon them the importance of such services being Year 2000 compliant;and (2) determine the extent of their efforts for Year 2000 remediation (and, as appropriate,testing) of their services. In addition, DTC is in the process of developing such contingency plans as it deems appropriate. - I According to DTC, the foregoing information with respect to DTC has been provided to the Industry for informational' purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. If The City of Renton'is unable to retain a qualified successor to DTC or The City of Renton has determined that it is',in the best interest of The City of Renton not to continue the book- entry system of transfer or that interests of Beneficial Owners of the Bonds might be adversely affected if the book-entry system of transfer is continued, The City of Renton shall execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their nominees, Bonds in fully registered form, in the denomination of$5,000 or any integral multiple thereof. Thereafter, the principal of the Bonds shall be payable upon due presentment and surrender thereof at the principal office of the Registrar, interest on the Bonds will be payable by check or draft mailed to the persons in whose names such Bonds are registered, at the address appearing upon the registration books on the 15th day of the month next preceding an interest payment date, and the Bonds will be transferable as provided in the Ordinance. For purposes hereof, record date shall mean in the case of each interest payment date, the Registrar's close of business on the 15th day immediately preceding such interest payment date,and, in the case of each redemption, such record date shall be specified by the Registrar in the notice of redemption, provided that such record date shall not be less than 15 calendar days before the mailing of such notice of redemption. OFFICIAL STATEMENT DATED OCTOBER 22,2001 New Issue Standard&Poor's: "AAA" Book-Entry Only Fitch: "AAA" In the opinion of Bond Counsel,as of the Date of Issue,and assuming the City fulfills its covenant to comply with certain requirements of the Internal Revenue Code of 1986, as amended, that must be met subsequent to the issuance of the Bonds: interest on the Bonds, including any properly allocable original issue discount,is excluded from gross income for purposes of federal income tax purposes and is not an item of tax preference for purposes'of determining the alternative minimum tax on individuals and corporations. However,such interest on the Bonds is included in the computation of other taxes on corporations,including,without limitation the alternative minimum tax,and may be subject to other collateral tax consequences. See"Tax Exemption"and"Other Tax Consequences"herein. $19,505,000 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Dated: November 1,2001 Due: December 1,as shown below The City of Renton,Washington,Limited Tax General Obligation and Refunding Bonds,2001 (the"Bonds"),will be issued as fully registered Bonds in the name of CEDE&Co.,as nominee for The Depository Trust Company("DTC),New York,New York. DTC will act as securities depository for the Bonds. Individual purchases and sales of the Bonds initially will be made in book-entry form only in denominations of$5,000 or any integral multiple thereof within a single maturity. Purchasers will not receive certificates representing their ownership of the Bonds. Interest on the Bonds will be payable on December 1,2001 and semiannually thereafter on June 1 and December 1 of each year until their maturity or early redemption. So long as DTC 1 or its nominee is the registered owner of the Bonds,the principal of and interest on the Bonds will be payable by the fiscal agency of the State of Washington,currently The Bank of New York,in New York,New York(the"Bond Registrar"),directly to DTC which,in turn,is obligated to remit such principal and interest to the DTC participants for subsequent disbursement to the beneficial owners of the Bonds as described herein in Appendix D"Book-Entry Only System." The scheduled payment of principal of land interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by FINANCIAL SECURITY ASSURANCE INC 'S ...: Maturity Schedule Due Interest Due Interest Dec.1 _ Amount Rate Yield Dec.1 Amount Rate Yield 2001 $310,000 2.15% 2.15% 2013 $1,530,000 5.25% 4.36% 2014 1,610,000 5.25 4.50 2007 75,000 3.50 3.60 2015 1,695,000 5.25 4.63 2008 85,000 3.75 3.80 2016 1,785,000 5.25 4.74 2009 335,000 3.90 3.95 2017 1,875,000 5.25 4.84 2010 1,350,000 4.00 4.00 2018 1,385,000 5.25 4.93 2011 1,400,000 4.00 4.10 2019 1,460,000 5.25 5.01 2012 1,455,000 ' 5.25 4.28 $3,155,000 5.00%Term Bonds due December 1,2021–Yield 5.10% The Bonds are subject to redemption by the City prior to their stated maturities as described herein in"DESCRIPTION OF THE BONDS—Redemption." The proceeds of the Bonds will be used to advance refund a portion of the City's outstanding Limited Tax General Obligation Bonds,1997B,to finance part of the costs of constructing and equipping a municipal parking garage and to pay costs of issuing the Bonds. The City,as authorized by law and an,ordinance of its Council duly and regularly adopted,has irrevocably pledged that,unless the principal of and interest on the Bonds are paid from other sources,it will include in its budgets and make annual levies of taxes,within the constitutional and statutory limitations provided by law without a vote of the qunlified voters of the City, upon all of the property in the City;subject to taxation-in amounts which,together with any other money legally available therefor,shall be sufficient to pay such principal and interest as the same shall become due. The Bonds do not constitute a debt or indebtedness of the State of Washington,or any political subdivision thereof other than the City. See"SECURITY— Limitations on Statutory Taxing Authority"for a discussion of laws that limit how much a City may tax,including an initiative that requires a vote for all tax increases. This cuter page contains certain imforn ation for quick reference only,and is not a summary of the issue. Investors must mad the entire Official Statement to obtain information essential to the making ofan infermed intstnv2decision. The Bonds are offered by the Underwriter,when,as and if issued, subject to the approving legal opinion Gottlieb,Fisher& Andrews,PLLC,Bond Counsel,Seattle,Washington. It is anticipated that the Bonds will be available for delivery in Seattle, Washington or at the facilities of The Depository Trust Company in New York,New York on or about November 1,2001. U.S. BANCORP PIPER JAFFRAY INC. CITY OF RENTON 1055 South Grady Way Renton,Washington 98055 (425) 430-6858 Elected Officials Jesse Tanner Mayor Dan Clawson President Terri Briere Council Member Randall Corman Council Member Kathy Keolker-Wheeler Council Member Toni Nelson Council Member King Parker Council Member Donald Persson Council Member • Appointed Officials Jay Covington Chief Administrative Officer Victoria Runkle Finance and Information Services Administrator Lawrence Warren City Attorney Marilyn Petersen City Clerk Bond Counsel Gottlieb,Fisher&Andrews,PLLC Seattle,Washington No dealer, broker, salesman, or other person has been authorized to give any information or to make any representation, other than the information and representations contained in this Official Statement, in connection with the offering of the Bonds and, if given or made, such information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Bonds in any jurisdiction in which it is unlawful to make such offer,solicitation,or sale. The information set forth herein has been obtained from the City and other sources which are believed to be reliable. The underwriter has reviewed the information in this Official Statement in accordance with its • responsibilities under the federal securities laws, but does not guarantee the accuracy or completeness of the information. The information herein is subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. In connection with the offering of the Bonds, the Underwriter may over-allot or effect transactions which stabilize or maintain the market price of such Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing,if commenced,may be discontinued at any time. Other than with respect to information concerning Financial Security Assurance Inc. ("Financial Security") contained under the caption "Bond Insurance" and Appendix E specimen "Municipal Bond Insurance Policy" herein,none of the information in this Official Statement has been supplied or verified by Financial Security and Financial Security makes no representation or warranty,express orimplied, as to (i)the accuracy or completeness of such information; (ii)the validity of the Bonds; or(iii)the tax exempt status of the interest on the Bonds. TABLE OF CONTENTS Page ' INTRODUCTION 1 DESCRIPTION OF THE BONDS 1 Purpose 1 General 2 Sources and Uses of Funds 2 Redemption 2 Transfer and Exchange 1 3 Bond Registrar and Paying Agent 3 Defeasance I 4 PARKING GARAGE PROJECT 1 4 THE REFUNDING PLAN I 4 VERIFICATION OF MATHEMATICAL CALCULATIONS 5 SECURITY ' 5 Property Tax Pledge I 5 Statutory Taxing Authority 5 Limitations on Statutory Taxing Authority 6 Economic Base 8 BOND INSURANCE 1 9 Bond Insurance Policy ' 9 Financial Security Assuranlce Inc. 9 INITIATIVES AND REFERENDA 10 Initiative 695 10 Initiative 72210 Future Initiative Legislation 10 TAX LEVY RATES AND PROCEDURES 11 Assessed Valuation Determination 11 Tax Collection Procedure l 11 DEBT INFORMATION 1 12 Limits of Indebtedness 1 12 Debt Payment Record 12 CITY OF RENTON 18 Principal City Officers 18 General Information ' 18 Principal City Officials 1 18 Budgeting and Accounting 19 Pension Fund ! 19 Risk Management 20 Investment Policy 20 Employment 20 TAX EXEMPTION 21 OTHER TAX CONSEQUENCES 22 Covenant Against Arbitrage 23 LEGAL MATTERS 23 Opinions of Counsel 23 Litigation 23 Enforceability 23 OTHER MAT[ERS 24 Continuing Disclosure 24 Ratings 26 Underwriting 26 CUSIP Numbers 27 Official Statement Certificate 27 DEMOGRAPHIC AND ECONOMIC INFORMATION APPENDIX A FORM OF LEGAL OPINION APPENDIX B I EXCERPT FROM THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX C BOOK-ENTRY ONLY SYSTEM APPENDIX D MUNICIPAL BOND INSURANCE POLICY SPECIMEN APPENDIX E i I (THIS PAGE INTENTIONALLY LEFT BLANK) $19,505,000 CITY OF RENTON, WASHINGTON • LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS,2001 INTRODUCTION This Official Statement.is furnished by the City of Renton, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington (the "City") to provide information regarding the City and $19,505,000 of the City's Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"). This Official Statement is qualified in its entirety by reference to Ordinance No. 4922 of the City passed by the City Council on October 22, 2001 (the "Bond Ordinance"). The Bonds are issued under the provisions of the constitution and laws of the State of Washington, including Chapters 39.46 and 39.53 RCW, and pursuant to the Bond Ordinance. All of the summaries of, or references to, provisions of ordinances, resolutions and other documents contained herein are made subject to the complete provisions thereof and do not purport to be complete statemeits of such provisions, copies of which are available for inspection at the offices of the City upon request. Certain financial information regarding the City has been taken or derived from the audited financial statements and other financial reports, and their accompanying notes,for complete information. Copies thereof are available from the City upon request. The Events of September 11th Following the terrorist attacks on September 11, the commercial airline industry has experienced significant reductions in passenger enplanements and forecasts continued reduced levels through the end of the year and potentially beyond. The significant loss in revenue combined with lowered near term demand has prompted many airlines to cancel orders of Boeing commercial airplanes. On September 18, 2001, Boeing Co., a Chicago-based aerospace company with one of its commercial airline production facilities located in Renton, announced that by the end of 2002 it would reduce the workforce in its commercial airline unit by 20,000 to 30,000 employees. Boeing Co. employs approximately 171,000 workers in the City of Renton, some of whom may be effected by the workforce reduction. As of the date of this Supplement, the City has not determined the financial impact,if any,to the City of Renton nor has the City been advised as is required by federal law of any employee reductions in Boeing's Renton facility. DESCRIPTION OF THE BONDS Purpose The proceeds of the Bonds will be used to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage,to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B designated as the Current Interest Bonds (the "1997 CIE,. Bonds"), and to pay certain "incidental costs and costs related to the sale and issuance" (as defined in RCW 39.46.070) of the Bonds (the"Project"). 1 General The Bonds will be dated November 1, 2001 and will be issued in fully registered form in denominations of$5,000 each, or integral multiples thereof within a single maturity. The Bonds will mature on the dates and in the principal amounts and will bear interest from their date, payable on December 1, 2001 and semiannually thereafter on June 1 and December 1 of each year to their maturity or earlier redemption, at the rates set forth on the cover of this Official Statement. The Bonds will be issued in fully registered form and,when issued, will be registered in the name of CEDE & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Individual purchases may be made in book-entry form only. Purchasers will not receive certificates representing their beneficial ownership in the Bonds so purchased. So long as CEDE & Co. is the registered owner of the Bonds, as nominee of DTC,references herein to the holders or registered owners shall mean CEDE & Co. and shall not mean the "Beneficial Owners" of the Bonds. In this Official Statement, the term `Beneficial Owners" shall mean the person for which the DTC Participant acquires an interest in the Bonds. Sources and Uses of Funds Sources of Funds Principal Amount of the Bonds $ 19,505,000.00 Reoffering Premium 547,640.75 Total Sources: $ 20,052,640.75 Uses of Funds Project Fund Deposit $ 5,924,052.23 Escrow Fund Deposit° 13,809,431.25 Estimated Costs of Issuance° 319,157.27 Total Uses: $ 20,052,640.75 (1) Amount required to purchase Acquired Obligations,payable as to principal and interest in such amounts and on such dates and initial cash balance as will be sufficient to pay the principal of the 1997 CD3 Bonds and the interest accrued thereon. (2) Includes,among other things,legal,accounting,escrow trustee,Bond Registrar and rating agency fees,printing costs,insurance premium and underwriter's discount. Redemption Optional Redemption. The Bonds maturing on December 1 in the years 2001 through 2011, inclusive, shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2012 shall be subject to optional redemption prior to maturity beginning on December 1, 2011, in whole at any time or in part on any interest payment date (maturities to be selected by the City and by lot within a maturity in such manner as the Registrar shall determine), at par plus accrued interest to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market, the par amount of the Term Bonds so redeemed or 2 I i 7 I purchased (irrespective of their factual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds (as allocated by the City) beginning not earlier than 60 days after the date of the optional redemption or purchase, and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Notice of Redemption. Notice of redemption shall be given by the Bond Registrar not less than 30 nor more than 60 days prior Ito the date fixed for redemption by first-class mail,postage prepaid, to the registered owners of the Bonds to be redeemed at the address appearing on the bond register maintained by the Bond Registrar,provide hone•,that as long as the Bonds are in book-entry form, notice of redemption will be gi fen in accordance with the operational arrangements then in effect at DTC. The City will not provid notice of redemption to any beneficial owners of the Bonds. Mandatory Renption The Bonds maturing on December 1, 2021 are term bonds (the "Term Bonds") and, if not previously purchased by the City in the open market or optionally redeemed as set forth above, are subject to mandatory sinking fund redemption in part and by lot (in such manner as the Registrar shall determine), at par plus accrued interest to the redemption date on December 1 in the following years and in the following mandatory sinking fund redemption amounts: Mandatory Sinking Fund Mandatory Redemption Dates Sinking Fund (December 1) Redemption Amounts 2020 $1,540,000 2021* 1,615,000 Maturity Transfer and Exchange So long as the Bonds are in book-entry only form, the beneficial ownership of the Bonds may only be transferred in the records established and maintained by DTC. Upon termination of the book-entry form, the Bonds may be transferred by registered owners upon completion of the assignment form on the Bond(s) in form and substance satisfactory to the Bond Registrar and delivery of the Bond(s) to be exchanged or transferred to the Bond Registrar for cancellation and re- issuance. Upon such surrender, the Bond Registrar will issue to the-new registered owner a new Bond or Bonds of the same maturity and for the same aggregate principal amount. The Bond Registrar is not required to issue, register or exchange Bonds during the 15 days preceding any principal payment or optional redemption date. Bond Registrar and Paying Agent •The City has adopted the system of registration for the Bonds approved by the State Finance Committee of the State of Washington (the "Committee"). Pursuant to RCW Chapter 43.80, the Committee designates one or more fiscal agencies for bonds issued within the State of Washington. The fiscal agent of the State of Washington, currently the Bank of New York, New York, New York, (the "Bond Registrar"), will authenticate the Bonds and act as the paying agent and registrar for the purpose of paying the principal and interest evidenced and represented by the Bonds, 3 _ IA 1 recording the purchase and registration, exchange or transfer, and redemption or payment of Bonds and performing the other respective obligations of the paying agent and registrar. 1 In order to meet payment requirement for interest on and principal of the Bonds as the same becomes due and payable, the City will remit money from the City's Bond Fund to the Bond Registrar. So long as Cede&Co. is the registered owner of the Bonds,the principal of„and interest on the Bonds are payable by wire transfer to Cede&Co., as nominee for DTC which, in turn, is to remit such amounts to the Direct Participants for subsequent disbursement to the Beneficial Owners. See "THE BOOK-ENTRY ONLY SYSTEM" in Appendix D. In the event that Cede& Co. is no longer the registered owner of the Bonds, the Bond Registrar will mail interest payments on or before the interest payment date to the registered owners of the Bonds (the "Owners") at the addresses shown for such Owners on the registration books for the Bonds ("Bond Register") maintained by the Bond Registrar as of the 15th day of the month preceding the interest payment date; provided,however,that if so requested in writing by the Owner of at least $1,000,000 principal amount of Bonds, interest will be paid by wire transfer on the interest payment date to an account with a bank located in the United States. Principal of the Bonds will be paid to Owners upon presentation and surrender of the Bonds at maturity or upon earlier redemption at the principal corporate trust office of the Bond Registrar in New York,New York,or Seattle,Washington. Defeasance Pursuant to the requirements of the Bond Ordinance, all or any portion of the!Bonds may be defeased through the deposit in escrow of cash and/or "Government Obligations" (as such obligations are defined in Chapter 39.53 RCW, as now in existence or hereafter amended) for the benefit of the Owners of such defeased Bonds. PARKING GARAGE PROJECT The City of Renton intends to build a 597 stall public parking garage in the center of the downtown. This garage will be located across from the new Performing Arts Center being completed by a public private partnership between the School District,Ikea,private donations, and a one time city contribution. The garage is also adjacent to the new downtown mass transit station. This station will accommodate all Sound Transit and Metro buses that go through the City of Renton. The garage will consist of two elevators and entrances. There will be six floors;of parking. The City is contributing $4,000,000 from cash reserves to build the total$10,000,000 project. There will be two floors of free parking for downtown customers. Users for a period of over two hours will be charged a minimal fee. THE REFUNDING PLAN The 1997 CIB Bonds will be redeemed on June 1, 2007 at a price of 100% of the principal amount thereof. The City will provide for the redemption of the 1997 CIB Bonds by using proceeds of the Bonds to purchase direct and general obligations of the United States of America, or obligations that are guaranteed as to principal and interest, directly or indirectly,by the United States of America (which obligations so purchased are herein called "Escrow Obligations"), and irrevocably depositing such Escrow Obligations and any required beginning cash balance into an escrow account (the "Escrow Fund") held by U.S. Bank Trust National Association,;as Escrow 4 Trustee, pursuant to an Escrow Agreement dated as of November 1, 2001, by and between the City and the Escrow Trustee. The Escrow Obligations will bear interest at such rates and will be scheduled to mature at such tunes and in such amounts so that,whenP aid in accordance with their terms and together with any required initial cash balance, sufficient moneys will be available to make full and timely payment of the interest to become due on the 1997 CIB Bonds from Closing to and including June 1, 2007, when due, and to redeem on said date, all of the outstanding 1997 CIB Bonds at a redemption price of par and interest accrued thereon to the date of redemption. VERIFICATION OF MATHEMATICAL CALCULATIONS The mathematical accuracy of (a) the mathematical computations of the adequacy of the maturing principal amounts of and interest on the Government Obligations to be held by the Escrow Agent to pay principal and interest on the 1997B Bonds as described above and (b) the mathematical computations supporting the conclusion of Bond Counsel that the Bonds are not "arbitrage bonds" under Section 148 of the Code will be verified by Causey Demgen & Moore, independent certified public accountants. SECURITY Property Tax Pledge The Bonds are limited tax general obligations of the City. The City,as authorized by law and the Bond Ordinance, has irrevocably covenanted that, unless the principal of and interest on the Bonds are paid from other sources, so long as the Bonds are outstanding, it will include in its budgets and make annual levies of taxes,within the constitutional and statutory limitations provided by law without a vote of the qualified voters of the City,upon all of the property in the City subject to taxation in amounts which,'together with other money legally available therefor, shall be sufficient to pay the principal and interest on the Bonds as the same shall become due. The City has pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. All of such taxes shall be paid into the Bond Fund created in the Bond Ordinance. Thee Bonds do not constitute a debt or indebtedness of the State of Washington or any political subdivision thereof other than the City. State statutes limit the City's taxing power but within these limits permit the City to levy certain taxes without a vote of the electors of the City. See "Limitations on Statutory Taxing Authority" below. Initiative 747, if passed by voters in the November election, may limit the City's ability to increase taxes. See "INITIATIVE AND REFERENDUM — Initiative 747." I- I Statutory Taxing Authority Title 84 RCW authorizes the imposition of a regular tax levy for cities of $3.375. Title 41 (RCW 41.16.060) allows an additional $.450 per $1,000 in two $.225 increments, which must be - allocated to the City's firemen's pension fund unless such incremental allocation is shown not to be necessary to maintain actuarial soundness of the plan, in which case the total $.450 is available for general city purposes. 5 Limitations on Statutory Taxing Authority The 106 Percent Limitation. The 106 percent limitation (chapter 84.55 RCW),is a limitation on the amount of levies by individual taxing districts. All regular property tax levies are subject to the 106 percent limitation. The law provides, in substance, that unless a higher rate is approved by a majority of the voters at an election,the regular property tax levy by a taxing district must be set so that the amount of the property taxes which will become payable to it in a given year will not exceed 106 percent of the amount of taxes levied by the taxing district in the highest of the three most recent years, plus an adjustment for new construction. RCW 84.55.092 provides fort setting the property tax levy amount at the level which would be allowed if the tax levy for taxes due in prior years, beginning in 1986, had been set at the full amount allowed under chapter 84.55 RCW. Since the 106 percent limitation applies to the dollar amount levied rather than to levy rates, increases in property values exceeding six percent per year result in decreasing tax levy rates. RCW 84.55.050 allows a taxing district to increase its regular tax levy by more than six percent after obtaining a majority vote of its electors, for a limited period or to satisfy a limited purpose. A newly created taxing district can initiate its levy at the maximum permitted statutory levy rate, unless such amount would exceed the limitations described below. Senate Bill 5835 (the "Property Tax Act") amended RCW 84.55 in a statewide referendum on November 4, 1997, and further limits the increase in a municipality's regular prope�arty tax levy within the 106% limitation. Such increase is now limited to inflation (defined as the GDP Implicit Price Deflator for Personal Consumption Expenditures) or 6%,whichever is less. However,upon a finding of substantial need, a majority plus one of the governing body of the municipality may approve an increase in the levy in excess of inflation,but no more than 6%. • I-747, if passed by Washington voters, may further reduce the amount of levies by individual taxing districts from 106 percent to 101 percent. See "INITIATIVE AND REFERENDA-Future Initiative Legislation." The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of Washington Constitution, as amended in 1973, limits aggregate regular property tax levies by the Sate and all taxing districts, except port districts and public utility districts, to one percent ofthe true and fair value of property. RCW 84.52.050 provides the same limitation by statute. $5.90/$1,000 Agate Regular Levy Limitation. Within the one percent limitation' described above, RCW 84.52.043(2) imposes an aggregate limitation on regular tax levies by all taxing districts other than the State, of $5.90/$1,000 of assessed valuation, except levies for any port or public utility district; excess levies authorized in Article VII, Section 2 of the State Constitution;land certain levies for acquiring conservation futures, for emergency medical services or care, and to finance affordable housing. Unifonnity Requirement Article VII, Section 1 of the Washington Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. It is possible because of different overlapping taxing districts in different areas of the City that the maximum permissible levy might vary within the City. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of the City would be applied to the entire City. 6 Prioritization of Levies. RCW 84.52.010 provides that if aggregate levies certified by all taxing districts exceed the aggregate levy limitations described above, levies certified by junior taxing districts are reduced or eliminated in order to bring the aggregate levy into compliance with statutory maximum prescribed by RCW,84.52.050 and 84.52.043. RCW 84.52.043 defines "junior taxing districts" as all taxing districts; other than the state, counties, road districts, cities, towns, port districts, and public utility districts. The City is not a junior taxing district. Tax Levy Rates for the City of Renton ($ per$1,000) Regular Levy Excess Levy Total Levy Year Rate Rate(') Rate 2001 $3.27 $0.10 $3.37 2000 3.40 0.28 3.68 1999 . 3.43 0.32 3.75 1998 3.55 0.35 3.90 1997 3.60 0.39 3.99 (1) A tax leuiel in addition to the City's regular property tax levy and utilized to pay debt service onwter approval bonds Source:King County Department of Assessments Annual Report Tax Collection Record Collected %Collected Collected %Collected Assessed In Year In Year as of as of Year Valuation Tax Levy of Levy of Levy 06/01/01 06/01/01 2001 $5,062,641,752 $16,998,438 $8,696,401 51.16% 2000 4,545,321,019 16,623,999 16,346,248 98.33 16,346,248 98.33 1999 4,258,500,750 15,828,175 15,595,427 98.53 15,750,132 99.51 1998 3,825,109,334 14,818,478 14,511,118 97.93 14,780,772 99.75 1997 3,625,601,764 14,361,192 13,970,125 97.28 14,355,767 99.96 Smote:King County Departmazt ofAssessrnents Annual Report • • • • 7 i i City of Renton's Largest Taxpayers %of Total 2001 Assessed Taxpayer Type of Business Assessed Value Value The Boeing Company Aerospace&Computer Services 740,451,153 14.63% PACCAR Heavy Manufacturing 95,306,433 1.88 Puget Sound Energy-Elec/Gas Electric/Gas Utility 68,989,748 1.36 National Tax Search LLC Business 67,008,200 1.32 US West Telephone Utility 34,993,899 0.69 Spieker Properties LP Property Management 33,931,821 0.67 University Street Properties Property Management 33,043,400 0.65 Washington Mutual Bank Banking Services 22,661,800 0.45 Rosche One Interests 21,531,100 0.43 Avalon Bay Communities Inc. Apartment Building 21,206,000 0.42 Total Assessed Valuation—Largest Taxpayers 1,139,123,554 22.50 Total Assessed Valuation—All Others 3,923,518,198 77.50 Total Assessed Valuation 5,062,641,752 100.00 Sou=• King Comity Assessor's Off= Economic Base The City has had a very aggressive and successful economic development program over the past eight years. While Boeing continues to be its largest employer, the City is less dependent upon Boeing for its overall health. Over the past 10 years, Boeing has provided as much as 45% of the City's employment. However,while producing 346 planes at the Renton plant in 2000,the company had only 41% of the City's total employment base. During this same ten-year period, Ikea,Wizards of the Coast, Wal-Mart, Multiple Zones, and many other companies have located in the City. The City has aggressively sought out retail companies that will do well in all economies. Over the same time period,the City's total assessed valuation has increased by more than 45 percent, from$3.4 billion to$5.0 billion. In the past three years the City has issued over 900 building permits annually with the values being between $82 - 110 million each year. The City's population has grown an average of 1.8% annually, according to Census figures. This is 0.4 percentage points stronger than the King County growth rate. The City's retail sales base has significantly changed experiencing a 50% increase in the taxable sales base in the past eight years. In 1994 the base was $1.1 billion. By the endl of 2000,the City's taxable sales base was $1.695 billion with a projected crease to $1.75 billion through 2001. Overall taxable sales in Renton outpaced Puget Sound sales by an average of 3 percentage points between 2000 and 2001. Renton has worked hard over the past years to change the dependency 9f the City's economic base to one that is less reliant on Boeing. Boeing has announced that it will continue to build 737 and 757 planes well into the future in Renton. Further, Boeing's Commercial Aerospace Division headquarters is located in its new facilities within the City's boundaries. While the City expects that Boeing will always be a big part of the City's economy, City efforts have resulted in significant diversification in the City's economic base today. I _ 8 BOND INSURANCE Bond Insurance Policy - Concurrently with the issuance of the Bonds, Financial Security Assurance Inc. ("Financial Security") will issue its Municipal Bond Insurance Policy for the Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of andintereston the Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York,California,Connecticut for Florida insurance law. Financial Security Assurance Inc. Financial Security is ja New York domiciled insurance company and a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian corporation. Dexia, S.A., through its bank subsidiaries, is primarily engaged in the business of public finance in France, Belgium and other European countries. No shareholder of Holdings or Financial Security is liable for the obligations of Financial Security. At June 30, 2001, Financial Security's total policyholders' surplus and contingency reserves were approximately $1,481,33,000 and its total unearned premium reserve was approximately $766,018,000 in accordance with statutory accounting principles. At June 30, 2001, Financial Security's total shareholders' equity was approximately $1,589,409,000 and its total net unearned premium reserve was approximately$632,823,000 in accordance with generally accepted accounting principles. The financial statements included as exhibits to the annual and quarterly reports filed by Holdings with the Securities and Exchange Commission are hereby incorporated herein by reference. Also incorporated herein by reference are any such financial statements so filed from the date of this Official Statement until the termination of the offering of the Bonds. Copies of materials incorporated by reference will be provided upon request to Financial Security Assurance Inc.:-350 Park Avenue, Nev York, New York 10022, Attention: Communications Department (telephone (212) 826-0100). The Policy does not protect investors against changes in market value of the Bonds, which market value may be impaired as a result of changes in prevailing interest rates, changes in applicable ratings or other causes. Financial Security makes no representation regarding the Bonds or the advisability of investing in the Bonds. Financial Security makes no representation regarding the Official Statement, nor has it participated in the preparation thereof, except that Financial Security has provided to the Issuer the information presented under this caption for inclusion in the Official Statement. ' I I '. 9 INITIATIVES AND REFERENDA 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. The State Constitution may not be amended by initiative. Initiatives and referenda are submitted to the voters'1upon 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 in this manner by a majority of the voters may not be amended or repealed by the State 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 State Legislature. After two years,the law is subject to amendment or repeal by the State Legislature in the same manner as other laws. Initiative 695 1 Washington State Initiative Measure No. 695 ("I-695"), requiring voter approval for any increase in taxes,impact fees,permit fees, or any governmental "monetary charge," was approved by voters on November 2, 1999. Many aspects of 1-695 were subsequently challenged in court. On October 26, 2000, the Washington Supreme Court declared I-695 unconstitutional in its entirety. There were no motions filed for reconsideration. Initiative 722 On November 7, 2000, the state's voters approved Initiative 722 ("I-722"), which would have limited property tax growth to two percent per year and would have rolled back some tax and fee increases. I-722 was to become effective on December 7, 2000, 30 days following the November 7 election, but implementation of the measure was blocked by the Thurston County Superior Court. On September 20, 2001,the Washington State Supreme Court voided I-722 on the grounds that it violated the State Constitution's ban on more than one subject in any legislation, including an initiative. Future Initiative Legislation ' To date, four initiatives to the Legislature and twenty-eight initiatives to the people have been filed in 2001 and their proponents have begun gathering signatures in order tol qualify the ' initiatives for submission to the Legislature and/or the voters. Other tax and fee initiative measures may be filed, but it cannot be predicted whether any such initiatives might gain sufficient signatures to qualify for submission to the Legislature and/or the voters, or, if submitted, would ultimately be approved. Initiative 747. Washington State Initiative Measure No. 747 ("I-747") has been placed on f the ballot for the November,2001 election. The State Office of Financial Management describes I- 747 as follows: "Initiative 747 reduces property taxes by limiting the annual increase in the state and local regular property tax levies. Local property tax districts with a population of ten thousand or less must limit property tax levy increases to one percent per year, unless the voters of the district approve by a simple majority vote an increase greater than this limit in an election. Local property tax districts with a population greater than ten thousand must limit property tax levy increases to the 10 f I lower of one percent per year or the rate of inflation. This limit may be exceeded upon approval by a simple majority of the district's voters in an election. The state property tax levy may increase only by the lesser of one percent per;year or the rate of inflation." IF I-747 is passed by the voters and withstands a court challenge, its provisions could apply to the levy for 2002. TAX LEVY RATES AND PROCEDURES Assessed Valuation Determination In King County(the "County"), the County Assessor (the "Assessor") determines the value of all real and personal property throughout the County(including the City) which is subject to ad valorem taxation. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the Department of Revenue of the State of Washington. For tax purposes the assessed value of property is 100% of its actual value. All property in the County is subject to revaluation annually. The revaluation occurs in cycles, and the intention is that all of the property be revalued every year. The property is listed by the Assessor on a roll at its current assessed value, and thel roll is filed in the Assessor's Office. The Assessor's determinations are subject to revisions by the County Board of Equalisation and, for certain property, subject to further revisions by the State Board of Equalization. After all administrative procedures are completed, the City receives the Assessor's fmal certificate of assessed value of property within the City. Tax Collection Procedure j Property taxes in the County are levied in specific amounts and the rates for all taxes levied for all taxing cities in the County (including the City) are determined, calculated and fixed by the Assessor based upon the assessed valuation of the property within the various'taxing cities. The Assessor extends the taxes to be levied within each taxing City upon a tax roll which contains the total amount of taxes to be so levied and collected. The tax roll is delivered to the County Treasurer by November 15 of each year, and an abstract of such roll, showing the total amount of taxes collectable in each of the taxing cities for the year, is delivered to the County Auditor at the same time. On or before the first Monday in January,the County Auditor issues to the County Treasurer it a directive authorizing the collection of taxes listed on the tax rolls of the County, as certified by the County Assessor. The County Treasurer creates a tax account for each taxpayer by property parcel number and is responsible for;the collection of taxes due for each account. All such taxes are due and payable on the 30th of April of each year, but if the amount due from a taxpayer exceeds thirty dollars, one-half may be paid then and the balance paid no later than October 31 of each year. The method of giving notice of payment of taxes due, the accounting by the County Treasurer for the money collected, the distribution of taxes among the various taxing cities, notices of delinquency, and the collection procedures are all covered by state statutes. Subject to federal tax liens on personal property filed prior to the levy of taxes by the City, the lien on property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation. 11 4 By law, the County Treasurer may not commence foreclosure of a tax lien on real property until three years have passed since delinquency. By statute, the lien for property taxes is prior to all other liens or encumbrances of any kind on real and personal property subject to taxation. In Algona v. Sharp, 30 Wn. App. 837 (1982) the Washington Court of Appeals, Division One, held that all property which constitutes a homestead under Chapter 6.13 RCW (up to a total property value of$30,000) is protected from forced sale to satisfy special assessment liens. The Court expressly did not rule as to the effect of a declaration of homestead against a lien for general taxes. DEBT INFORMATION Limits of Indebtedness Pursuant to Washington State Statue (RCW 39.36.020) cities may incur general obligation bond indebtedness for capital purposes, authorized by a 60%majority vote of the city's electorate,in an amount not to exceed 2.5% of assessed valuation of the taxable property within the city for general purposes, 2.5% for utilities, and 2.5% for open space/park facilities. Non-voted (limited tax) general obligation indebtedness is limited to 1.5% of assessed valuation, subject to the further limitation that total general purpose general obligation indebtedness (voted and non-voted) may not exceed the 2.5% limitation as set forth above. The combination of unlimited tax and limited tax general obligation debt for all purposes cannot exceed 7.5% of assessed valuation. Debt Payment Record There has been no default in the payment of principal of or interest on any bonds, notes, warrants or certificates of the City. The City presently has no outstanding general obligation open space/park debt or general obligation utility debt and therefore has 100% of its debt capacity remaining for these purposes. The table that follows provides the calculation of the City's general purpose debt capacity applicable to the Bonds. 12 City's Debt Capacity(as of 09/01/01) Assessed Valuation(2000 for collection in 2001) $5,062,641,752 Debt Issued for General P urposes: Statutory Debt Limit—General Purposes Without Vote (1.5%of Assessed Value) $75,939,626 Outstanding Bonded Indebtedness Without Vote(1) $6,401,907 The Bonds 19,505,000 Outstanding Non-Voted Lease Debt 206,409 Non-Voted Debt Service Fund Assets (334,221) Net Outstanding Non-Voted Debt (Including the Bonds) 25,779,095 (25,779,095) Remaining Debt Capacity—Without Vote 50,160,531 Statutory Debt Limit—Total General Purposes Voted and Non-voted (2.5%of Assessed Value) 126,566,044 Outstanding Indebtedness—Voted Bonds 3,375,000 Voted Debt Service!Fund Assets (303,781) Net Outstanding Non-Voted Debt 25,779,095 Net Outstanding General Purpose Debt 28,850,314 (28,850,314) Remaining General Purpose Debt Capacity 97,715,730 Debt Issued for Parks and Open Space Purposes: Debt Limitation(2.5%of Assessed Value) 126,566,044 Outstanding Bonded Indebtedness 140,000 Debt Service Fund Assets (502,586) Net Outstanding Non;Voted Debt 0 ( 0) Remaining Park/Open Space Debt Capacity—Requires Vote 126,566,044 Debt Issued for Utility Purposes: Debt Limitation(2.5% of.Assessed Value) 126,566,044 Outstanding Bonded Indebtedness - Remaining Utility Debt Capacity— Requires Vote 126,566,044 (1) Does not indude 1997 CIB Bonds. Direct and Estimated Overlapping Debt Unlimited Tax General Obligation Debt(1) $3,515,000 Limited Tax General Obligation Debt Outstanding Limited Tax General Obligation Bonds(2) 6,401,907 The Bonds 19,505,000 Outstanding Non-Voted Lease Debt 206,409 Total Outstanding General Purpose (Voted&Non-Voted Debt) 29,628,316 Cash and Investments in Bond Funds (1,140,588) Net Direct Debt: $28,487,728 (7) Includes debt for parks and open spacepurPoses. _ (1) Does not indude 1997 CIB Bonds. Ir 13 Overlapping Debt Allocated to G.O.Debt City of Overlapping Outstanding Renton Debt - Renton School District No.403 $164,540,000 53.980% $88,818,692 Issaquah School District No.411 244,615,000 0.370 905,076 Kent School District No.415 212,360,000 0.002 3,822 Fire District No. 10-1 5,995,000 0.017 1,001 King County Library 41,365,000 0.190 78,594 King County 1,610,215,000 2.690 43,314,784 Port of Seattle 234,930,000 2.690 6,319,617 Total Estimated Overlapping Debt: 139,441,586 139,441,586 Total Direct&Estimated Overlapping Debt $167,929,314 Bonded Debt Ratios Assessed Valuation (2000 for 2001 Taxes) $5,062,641,752 2000 Estimated City Population as of April 1,2001 51,140 Net Direct Debt to Assessed Valuation 0.563% Net Direct&Estimated Overlapping Debt to Assessed Valuation 3.317% Per Capita Assessed Valuation $98,996 Per Capita Net Direct Debt $557 Per Capita Net Direct&Estimated Overlapping Debt $3,284 14 I - Limited Tax General Obligation Bond Debt(1) Outstanding LTGO 2001 Installment Total Bonds Bonds Contract LTGO Year Principal Interest Principal Interest Principal Interest Debt Service 2001 $1,106,325 $483,772 $310,000 $80,419 $25,122 $9,597 '$2,015,235 2002 1,203,000 52,267 - 958,365 26,263 8,450 2,248,345 2003 889,573 364,008 - 958,365 27,468 7,251 2,246,665 2004 923,856 326,335 - 958,365 28,722 5,997 2,243,275 2005 790,705 459,295 - 958,365 30,033 4,686 2,243,084 � 2006 738,946 515,054 - 958,365 31,404 3,315 2,247,084 2007 693,926 551,074 75,000 958,365 32,837 1,882 2,313,084 2008 655,575 594,425 85,000 955,740 16,975 384 2,308,099 2009 490,000 510,000 335,000 952,553 2,287,553 20101,350,000 939,488 2,289,488 . 2011 1,400,000 885,488 2,285,488 2012 1,455,000 829,488 2,284,488 2013 i 1,530,000 753,100 2,283,100 2014 1,610,000 672,775 2,282,775 2015 1,695,000 588,250 2,283,250 2016 1,785,000 499,263 2,284,263 2017 1,875,000 405,550 2,280,550 ' 2018 1,385,000 307,113 1,692,113 2019 1,460,000 234,400 1,694,400 2020 1,540,000 157,750 1,697,750 2021 1,615,000 80,750 1,695,750 - Totals: $7,491,907 $3,86,229 $19,505,000 $14,092,314 $218,830 $41,562 $45,205,836 (1) Includes all debt service paid and to be pair during 2001. Totals may not add due w roamdvag I Unlimited Tax General Obligation Bond Debt(') Year Principal Interest Debt Service 2001 $460,000 $187,025 $647,025 2002 485,000 163,495 648,495 2003 365,000 142,713 507,713 2004 385,000 124,895 509,895 2005 410,000 105,610 515,610 2006 430,000 84,815 514,815 2007 455,000 62,463 517,463 2008 480,000 38,560 518,560 2009 505,000 13,130 518,130 Totals: $3,975,000 $922,706 $4,897,706 (1) Includes all debt servicepaid and to be paid during 2001. Totals may not add due to rounding: r 15 CITY OF RENTON Statement of Revenues, Expenditures Changes in General Fund Balances(1) Fiscal Year End December 31 2001 2000 1999 1998 1997 1996 1995 Budget Audited Audited Audited Audited Audited Audited Beginning Fund Balance(Jan 1): $12,816,002 $9,455,720 7,644,536 9,282,521 9,344,493 6,650,270 5,821,169 Revenues: Taxes 45,806,300 44,943,659 41,337,531 38,694,898 34,950,172 33,296,869 31,447,289 Licenses&Permits 1,538,800 2,630,315 1,745,899 2,086,727 2,145,849 1,569,007 1,236,046 ' , Intergovernmental 2,427,600 2,890,867 3,031,246 3,335,737 3,501,474 3,391,193 3,690,869 Charges for Services 5,356,840 5,821,977 5,488,634 5,796,372 5,546,295 5,341,875 4,818,352 Fines and Forfeitures 817,100 1,008,098 831,327 722,054 733,561 958,082 998,553 Contributions 16,000 63,592 52,883 - - - - - Interest 1,077,300 1,580,763 1,282,517 1,474,166 1,173,601 927,949 727,322 Miscellaneous 509,000 520,229 535,340 549,160 573,334 619,927 649,478 Total Revenues: 57,548,940 59,459,500 54,305,377 52,659,114 48,624,286 46,104,902 43,567,909 Total Resources: 70,364,942 68,915,220 61,949,913 61,941,635 57,968,779 52,755,172 49,389,078 , Expenditures: General Government 11,443,931 10,648,052 9,972,040 9,915,676 8,675,215 8,420,834 7,807,624 Security of Persons&Property 24,250,184 22,861,304 21,336,276 24,760,126 19,249,622 18,344,175 17,187,719 Physical Environment 1,947,827 1,769,012 1,892,549 1,730,735 1,708,461 1,759,571 1,520,374 ' ' Transportation 5,853,876 5,118,420 5,130,703 152,661 4,896,235 4,509,833 4,312,372 Economic Environment 4,489,871 3,962,089 3,476,231 3,796,687 3,142,812 2,761,202 3,371,210 Mental&Physical Health 10,500 8,599 8,486 10,962 7,570 5,746 7,843 Culture&Recreation 7,390,292 6,602,437 6,159,132 5,804,099 5,592,278 5,429,238 5,130,721 Capital Outlay 153,995 243,324 589,235 425,697 135,539 425,345 278,094 Debt Service 1,996,201 2,007,542 2,044,052 1,524,604 1,497,869 1,196,293 1,372,583 • Total Expenditures: 57,536,677 53,220,779 50,608,704 48,121,247 44,905,601 42,852,237 40,988,540 Net Adjustments/Transfers (7,382,350) (2,878,439) (1,855,489) (6,175,852) (3,780,657) (558,442) (1,750,268) Fund Balance at End of Year: 5,445,915 12,816,002 9,455,720 7,644,536 9,282,521 , 9,344,493 6,650,270 (I) Incudes allfonds which represent generalgoternnental auitity ofthe Cay. Funds included.General Fwnt!Park Fwu4 Stmt lunch Library Fws4 Path and Trails Funnd,One Percent forArt Furuj Cable Carenw irations Detrloprmnt Fund and LTGO Bond Debt Semite Funds 16 CITY OF RENTON General Fund Comparative Balance Sheet December 31, 1996 through 2000 1 2000 1999 1998 1997 1996 ASSETS Cash and cash equivalents(1) 1 $637,230 $747,838 $5,047,537 6,844,459 7,230,301 Investments at Fair Value 8,022,110 4,977,648 Receivables: Taxes 358,241 323,826 286,853 296,422 397,538 Accounts I 3,704,822 ' 3,498,467 4,106,268 3,587,388 3,298,418 Interest 1 389,986 224,574 59,035 3,511 0 Due from other funds 4,886 9,203 18,351 9,134 13,000 Due from other governmental units 144,649 0 33,346 33,345 97,210 Prepaid items 8,000 8,000 8,000 8,000 8,000 Restricted assets: Deposits 88,617 109,080 200,098 132,975 0 Interfund loans/advances-non-current 75,000 75,000 79,000 79,000 79,000 TOTAL ASSETS 13,433,541 9,973,636 9,838,488 10,994,234 11,123,467 - LIABILITIES AND FUND BALANCE Liabilities: ' Vouchers/contracts payable I 469,445 312,186 416,918 355,334 505,254 Due to other funds 254,263 180,716 385,527 353,867 153,497 Due to other governmental units 1,695,248 1,616,397 1,675,291 1,478,544 1,291,366 Accrued employee benefits payable 0 2,027 0 0 0 Accrued taxes payable 938 1,396 3,632 309 2,303 Deposits payable I 0 0 0 0 34,634 Deferred revenues I 2,469,428 2,173,468 2,504,779 2,237,242 2,137,847 Accrued employee leave benefits 1 207,214 223,224 209,628 190,825 144,003 TOTAL LIABILITIES 1 5,096,536 4,509,4.14 5,195,775 4,6.16,121 4,268,904 FUND EQUITY 1 Fund balance: Reserved for future use 228,673 0 0 0 0 Reserved for advances/prepaids/contingency 83,000 83,000 87,000 87,000 87,000 Unreserved-designated: 1 For inmate health and welfare I 34,077 29,932 28,129 21,026 16,876 For investigative fund confiscations 98,452 86,691 - 89,570 86,022 307,561 Unreserved-undesignated 7,892,803 5,264,599 4,438,014 6,184,065 6,443,126 TOTAL FUND EQUITY 8,337,005 5,464,222 4,642,713 6,378,113 6,854,563 TOTAL LIABILITIES&FUND EQUITY 13,433,541 9,973,636 9,838,488 10,994,234 11,123,467 (I)Cash and cash equivalents includes investments at fair value for years 1996, 1997& 1998. ' 17 CITY OF RENTON Principal City Officers Current members of the City Council are: Member Position Term Expires Jesse Tanner Mayor 12/31/03 Dan Clawson President 12/31/01 Tern Briere Council Member 12/31/01 Randall Corman Council Member 12/31/01 Kathy Keolker-Wheeler Council Member 12/31/03 Toni Nelson Council Member 12/31/03 King Parker Council Member 12/31/03 Donald Persson Council Member 12/31/03 General Information The City of Renton, which was incorporated in 1901, has a strong Mayor form of government. The Mayor is independently elected to a four-year term. The Mayor's job is to manage and implement the policies established by the seven member Council. Each Council Member serves a four-year term and is elected on a staggered two-year cycle. . The City provides services in accordance with its charter, and operates its own Police, Fire, Park and Recreation, Utility System, Municipal Airport and Library System. The City of Renton surrounds the southern end of Lake Washington, southeast of Seattle on Interstate 405. As of the 2000 Census, Renton ranked 6th in size among cities in King County. Principal City Officials Jesse Tanner, Mayor - Mr. Tanner was appointed to the Renton City council in 1989 by his fellow council members and was elected to a four year term in 1991. In November 1995 he was elected to serve as Mayor of the City,taking office in January 1996 and was elected to a second term in 1999. Mr.Tanner served in the Federal Aviation Administration (FAA) for 34 years. During his FAA tenure he was appointed to the position of Deputy Director where he served for nine years, overseeing FAA activities in the Northwest Region of the United States. In his capacity as Deputy Director, he had direct authority over a work force of 2500 personnel and an annual budget in excess of $100 million. Since his retirement from the FAA, Mr. Tanner has been involved in consulting work for several major aerospace companies. Jay Covington, Chief Administrative Officer - Mr. Covington jointed the City of Renton staff in August of 1990. Prior to joining the City, Mr. Covington served eight years at the City of Vancouver, Washington, in the roles of budget analyst, management analyst and Assistant to the City Manager. During his tenure with the City of Vancouver,Mr. Covington developed a municipal biennial budget as well as improved financial forecasting techniques. Victoria Runkle,Finance &Information Services Administrator-Ms. Runkle joined the City of Renton staff in July, 1993. Prior to her tenure with the City she worked in public finance in both the public and private sectors. She began her career as a budget analyst with the City of Redmond. 18 After three years with that organization she began working for the City of Seattle's Office of Management and Budget. During her seven,years with Seattle, she was responsible for a variety of assignments including capital budgeting. She left the City as the Assistant Budget director for a position with a public finance advisory firm. During her tenure in the private sector Ms. Runkle helped various types of municipalities develop rating presentations, prepare official statements, and issue different types of debt. Budgeting and Accounting The City prepares budgets in accordance with State RCW 35.33. As background to the process, the City prepares a five-year financial forecast of general operations.- Biennial calendar year budgets (in which annual allocations lapse at year end) are adopted by the City council for funds providing customary government services. Long-term project oriented budgets are adopted as required and amended as additional appropriations are needed. Special assessment and certain custodial agency funds are not budgeted. All budgets are accounted for on a line-item basis with control at the object summary total level. Estimated purchase order amounts are encumbered prior to the release of the order to the vendor. Open encumbrances lapse at year end and must be reappropriated or absorbed in the next year's operating budget. Cities and. counties of the State of Washington must comply with the Budgeting, Accounting, and Reporting System (BARS) prescribed by the Office of the State Auditor as authorized under RCW 43.09.230 and 43.09.230. State laws also provide for annual independent audits by the Office of the State Auditor and require timely submission of annual financial reports to the state for review. The finacial system of the City of Renton incorporates a system of financial and administrative controls that ensure the safeguarding of assets and the reliability of financial reports and consequently are designed to provide reasonable assurance that transactions are executed in accordance withmanagement-authorization, recorded in conformity with Generally Accepted Accounting Principles (GAAP), that there exists accountability of and control over assets and obligations, and that sufficient reporting and review exists to provide adequate information for analysis and comparability of data. Internal control is an area of audit by the State Auditor, as well, and City management receives hand takes action upon recommendations made by the state. The City's financial statements are subject to annual audit by the State Auditor. The last audit covered the year ended December 31, 1999 and the report thereon contained an unqualified opinion regarding the City's 1999 financial statements. Copies of the State Auditor's Report may be obtained by contacting the Office of State Auditor in Olympia,Washington. Pension Fund The City and its employees contribute to two mandatory municipal employee retirement systems administered by the ;State of Washington. The Public Employees Retirement System (PERS) is mandatory for all non-uniformed regular employees and at year end 2000 required a 4.67% of payroll contribution from the City for PERS Plan I and 4.67% for PERS Plan II. In 2000, the City contributed $833,930 to both plans. The Law Enforcement Officers and Firefighters Retirement Plan likewise is mandatory for all uniformed fire and police employees who were active or hired on or after March 1, 1970. At year end 2000,,the City's contribution rates were 6.23% of payroll for Plan I and 4.30% for Plan II depending upon an employee's hire date. During 2000, the City contributed$491,615 toward the LEOFF plan. � I 19 Risk Management The City self-insures its risk exposure through self insurance up to specified levels of risk, -and purchases stopgap insurance commercially to cover medium to large losses. The City's risk management program is administered by the Human Resources/Risk Management Administrator, with claims processed by independent claims administrators. Risk Retention Stop Gap Coverage Type (Per Occurrence) Loss Limit Property $25,000 $500,000,000 Liability 250,000 14,000,000 Auto Liability 250,000 14,000,000 Boiler&Machinery 5,000 50,000,000 Public Officials 250,000 10,000,000 Crime • 10,000 1,000,000 Airport Liability 0 50,000,000 Underground Storage Tank 10,000 1,000,000 Worker's Compensation 225,000 2,000,000 Employee Health 120,000 N/A Investment Policy City Investments (as of 6/30/01) Carrying Amount Market Value US Government Agencies $6,000,000 $6,035,320 Certificates of Deposit 11,000,000 11,657,385 Commercial Paper 0 0 Repurchase Agreements 0 0 State&County Local Gov't Investment Pools/MIA 42,723,419 42,861,433 U.S.Treasury Strips 4,766,926 6,169,653 U.S.Treasury SLGS 0 0 Municipal Bonds 98,272 100,726 Total Investments $64,588,617 $66,824,517 Throughout 2000, the City was in compliance with all statutes pertaining to the investment of City moneys. Employment The City has five bargaining units in addition to the management team. The commissioned police officers have a Guild. They also represent,in a separate bargaining unit,the non-commissioned support staff of the Police Department. In the Fire Department,there are two bargaining units. The firefighters through captains are represented as a group. There are six battalion chiefs who also represent a bargaining unit. The greatest number of employees is represented by AFSCME 20 (American Federation of Stated and City Municipal Employees). The City bargains with each of the units every three years. The management group tends to receive benefits very similar to the AFSCME contract. There are;no significant outstanding personnel issues at this time. The City has contracts with all the bargaining units through 2002. I 1 ! TAX EXEMPTION In the opinion of Gottlieb, Fisher&Andrews, PLLC,Bond Counsel, as of the date of issue of the Bonds (the "Date of Isue"), and provided the City complies with applicable requirements of the Code which must be satisfied subsequent to the issuance thereof, the Bonds are not "private activity bonds," as defined by the Code; interest on the Bonds is excluded from gross income for federal income tax purposes under existing federal law;' and such interest is not an item of tax preference for purposes of determining the alternative minimum tax on individuals and corporations under existing federal law: However, under existing federal law interest on the Bonds received by certain corporations is to be taken into account in the computation of adjusted current earnings for purposes of calculating the alternative minimum tax applicable to such corporations; such interest received by certain S corporations may be subject to tax; and such interest received by foreign { corporations with United States branches may be subject to a foreign branch profits tax. . Original Issue Discount The Bonds maturing on December 1 in the years 2007 through 2009, inclusive, 2011, and 2021 are "Discount Bonds." In theopinion of Bond Counsel, the difference between the principal • amount of the Discount Bonds and the initial offering price to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriter or wholesalers) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount,which is excluded from gross income for federal income tax purposes to the same extent as interest on the Discount Bonds. Further, this original issue discount accrues on the basis of a constant yield to maturity over the term of each Discount Bond, and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. Original Issue Premium The Bonds maturing op December 1 in years 2012 through 2019, inclusive, are "Premium Bonds." The difference between the principal amount of Premium Bonds and the initial offering price to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Premium Bonds of the same maturity was sold constitutes amortizable bond premium, which may not be deducted for federal income tax purposes. For purposes of determining gain or loss on the sale or other disposition of a Premium Bond, the basis of each Premium Bond acquired at such initial offering price by an initial purchaser is decreased by the amount of the bond premium that has been amortized. Further,this amortizable bond premium is determined on the basis of a constant yield to maturity over the term of each Premium Bond. This amortizable bond premium may be taken into account in determining the amount of alternative minimum tax, environmental tax and branch profits tax described below. •' ers of Premium Bonds are advised to consult with their own advisors with respect to other federal and state tax consequences of owning the Premium Bonds. 21 II I - Bond Counsel expresses no opinion regarding any other federal tax consequences of receipt of interest on the Bonds. Potential purchasers of the Bonds should consult with their tax advisors as to all possible tax consequences of ownership of the Bonds. See also, "OTHER TAX CONSEQUENCES," herein. The Code contains certain requirements which must be satisfied subsequent to the issuance of the Bonds in order to maintain the tax treatment described above,including requirements relating to the application of the proceeds of the Bonds, use of facilities which are financed with such proceeds, limitations on income derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury of certain of such investment income on such gross proceeds. The City has covenanted to comply with these requirements; and the opinion of Bond Counsel described in the preceding paragraph assumes such compliance. However, Bond Counsel has not undertaken and shall not undertake to monitor compliance by the City with such requirements and failure of the City to comply with such requirements could cause the interest on the Bonds to be included in gross income for federal income tax purposes, and could be treated as an item of tax preference for purposes of the alternative minimum tax on individuals and corporations, in each case, retroactive to the Date of Issue. OTHER TAX CONSEQUENCES Under current federal law: 1. Corporate Alternative Minimum Tax. The interest on tax-exempt obligations received by a corporation is taken into account in the computation of the alternative minimum tax applicable to corporations (as defined for federal income tax purposes). Under current federal law, the alternative minimum taxable income of such a corporation (other than an S corporation, a regulated investment company? a real estate investment trust ora REMIC) is increased by 75% of the amount by which the "adjusted current earnings" of the corporation 'exceeds the corporation's alternative minimum taxable income determined without regard to such increase and any alternative tax net operating loss deduction. Interest on tax-exempt obligations,whenever issued or acquired, including interest on the Bonds, is included in the computation of"adjusted net book income" and"adjusted current earnings." 2. Tax on Excess Passive Investment Income of S Corporations. 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 earnings and profits" at the close of its taxable year may be subject to federal income tax at the highest rate applicable to corporations if more than 25% of the gross receipts of such S corporation for such taxable year is passive investment income. 3. Foreign Corporation Branch Profits Tax. Interest on the Bonds received by certain foreign corporations doing business in the United States maybe subject to a branch profits tax applicable to such corporations that is based on their Untied States source earnings and profits, including tax-exempt interest on obligations such as the Bonds. 4. Elimination of Interest Deduction for Financial Institutions. The Bonds are not "qualified tax-exempt obligations" for purposes of the 80 percent financial institution interest expense deduction permitted pursuant to the Code. None of the interest expense incurred by banks and other financial institutions allocable to the purchase or carrying of the Bonds may be deducted by such institution. 22 _ I I � I 5. Reduction of Loss 'Deduction for Property and Casualty Insurance Companies. Interest on tax-exempt obligations, including 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 such tax-exempt interest received during the taxable year. i 6. Social Security and Tier 1 Railroad Retirement Benefits Subject to Tax. Interest received or accrued during the year from tax-exempt obligations, such as the Bonds, is included in the calculation of "modified adjusted gross income" of recipients of the social security or tier 1 railroad retirement benefits. If the sum of the "modified adjusted gross income" for the taxable year plus one-half of the social security or tier 1 railroad retirement benefits received during the taxable year exceeds a base amount provided by the Code (the "excess amount"), then the lesser of (i) one-half of the social security or tier 1 railroad retirement benefits received during the taxable year or (ii) one-half of the "excess amount", is included in the gross income of the social security or tier 1 railroad retirement benefit recipient. Covenant Against Arbitrage' The City has covenanted that it will not take or permit to be taken on its behalf any action that would adversely affect the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation, and will take or require to be taken such acts as may be permitted byWashington law,and as mayfrom time to time be required under applicable law to { � q PP continue the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation. Without limiting the generality of the foregoing, the City has covenanted that it will not invest or make or permit any use of the_proceeds of the Bonds or of its other money at any time during the term of the Bonds which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bonds to constitute "private activity bonds" under Section 141 of the Code. LEGAL MATTERS Opinions of Counsel Legal matters incident to the authorization, issuance, and sale of the Bonds by the City are subject to the approving legal 11 opinion of Gottlieb, Fisher &Andrews, Seattle, Washington, Bond Counsel. A form of the legal opinion of Bond Counsel is included herein as Appendix B. Litigation There is no controversy or litigation pending, or to the best knowledge of the City threatened, affecting the issuance and delivery of the Bonds, or the power and authority of the City to issue the Bonds. Enforceability The provisions of the Bonds and the Bond Ordinance, constitute contracts between the City and the owner or owners of the Bonds, and such provisions are enforceable by the registered owner I 23 or owners in a court of competent jurisdiction in the State of Washington by mandamus or other appropriate remedy, subject to judicial discretion and the valid exercise of sovereign police power of the State of Washington and may be limited by laws affecting the rights of creditors. OTHER MATTERS Continuing Disclosure This section describes the City's written undertaking (the "Undertaking") for,the benefit of the Owners and Beneficial Owners of the Bonds required by subsection(b)(5)(i) of the Rule 15c2-12 (the "Rule") of the United States Securities and Exchange Commission (the "SEC"). The City in the Bond Ordinance, has agreed to provide or cause to be provided to each then existing nationally recognized municipal securities information repository designated by the SEC ("NRMSIR"), to the State Information Depository ("SID"), if one is created, and to the [Bond Insurer] the following annual financial information and operating data (collectively, the "Annual Financial Information") for each prior fiscal year, commencing with the fiscal year ending December 31, 2001, on or before the last day of the seventh month following the end of such prior fiscal year: (a) Annual financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units, as such principles may be changed from time to time and as permitted by State law;which statements will not be audited, except that if and when audited financial statements are otherwise prepared and available to the City,they will be provided (the "Annual Financial Statements"); (b) The assessed valuation of taxable property in the City; (c) Ad valorem taxes due and the percentages of taxes collected; (d) Property tax levy rates per$1,000 assessed valuation; (e) A statement of authorized, issued and outstanding indebtedness of the City; and (f) A narrative explanation of the reasons for any amendments to the Undertaking made during'the previous fiscal year and the impact of such amendments on the Annual Financial Information being provided. In its provision of such financial information and operating data, the City may cross- reference to any "final official statement" (as defined in the Rule) available from the Municipal Securities Rulemaking Board (the "MSRB") documents theretofore provided to each then existing NRMSIR or the SID,if one is created. If not submitted as part of the Annual Financial Information,then when and if available,the City shall provide its Annual Financial Statements,which shall have been audited by such auditor as shall be then required or permitted by the State law, to each then existing NRMSIR, to the SID, if one is created, and to the Bond Insurer. 24 I I ' The City further has agreed to provide or cause to be provided, in a timely manner, to the SID, if one is created, and to either the MSRB or each then existing NRMSIR and to the Bond Insurer,notice of any of the following events with respect to the Bonds,if material: 1. Principal and interest payment delinquencies; 2. Non-p i yment related defaults; 3. 'Unscheduled difficulties; 4. Unscheduled draws on credit enhancements reflecting fmancial difficulties; i 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modification to rights of the Owners of the Bonds; 8. Optional redemptions of the Bonds; 9. Defeasances of the Bonds; 10. Release substitution or sale of property securing repayment of the Bonds; and 11. Rating changes. The City also has agreed to provide or cause to be provided, in a timely manner,to the SID, if one is created, and to either the MSRB or each then existing NRMSIR, notice of its failure to provide the Annual Financial Information for the prior fiscal year on or before the last day of the . seventh month following the end of such prior fiscal year. After the issuance of the Bonds, so long as the interests of the Owners or Beneficial Owners of the Bonds will not be materially impaired thereby, as determined by a party unaffiliated with the City(including,without limitation, a trustee for the Owners, nationally recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to a favorable "no-action letter" issued by the SEC, this undertaking may only be amended in connection with any change in legal requirements, change in law, or change in the identity, nature or status of the obligated person, or type of business conducted, and only in such a'manner that the undertaking of the City, as so amended, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances. The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without amendment upon the defeasance, prior redemption or payment in full of all of the then outstanding Bonds' This undertaking or any provision hereof, shall be null and void if the City(i) obtains an opinion of nationally recognized bond counsel or other counsel familiar with the federal securities laws to the effect that those portions of the Rule which require this undertaking 25 I , or any such provision are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies and provides the SID, if any, and either the MSRB or each then existing NRMSIR with copies of such opinion. The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this undertaking shall be limited to the right to obtain specific enforcement of the City's obligations under this undertaking, and any failure by the City to comply with the provisions of this undertaking shall not be a default with respect to the Bonds under the Bond Ordinance. The City Finance Director is authorized and directed to take such further action on behalf of the City as may be necessary, appropriate or convenient to carry out the requirements of this undertaking. Ratings As noted on the cover page of this Official Statement, Standard& Poor's Ratings Services, New York, New York ("S&P") and Fitch, New York, New York ("Fitch"), have assigned their municipal bond rating of "AAA" and "AAA," respectively, to the Bonds with the understanding that the Policy will be delivered simultaneously with the issuance of the Bonds. No application was made to any other rating agency for the purpose of obtaining an additional rating on the Bonds. S&P and Fitch have also assigned underlying ratings of "A+" and "A+", respectively, to the City's limited tax general obligation bonds. Each rating reflects only the view of the applicable rating organization and an interpretation of such rating may be obtained only from the rating agency furnishing the same, at the following address: Standard & Poor's Ratings Services, 25 Broadway, New York, New York 10004; Fitch, One State Street Plaza, New York, New York 10004. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agencies, if, in judgment of such agencies, circumstances so warrant. Any such revision or withdrawal of any such rating may have an adverse effect on the market price of the Bonds. Underwriting The Bonds are being purchased by the Underwriter from the City at a price of 101.958% of ,I par plus accrued interest and will be re-offered at the aggregate price of 102.808% of par, subject to the terms of a purchase contract between the City and the Underwriter (the "Purchase Contract"). The Purchase Contract provides that the Underwriter shall purchase all of the Bonds if any are purchased and that the obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Contract,the approval of certain legal matters by counsel and certain other conditions. The initial public offering prices set forth on the cover hereof may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds into unit investment trusts or money market funds, certain of which may be sponsored or managed by the Underwriter,at prices lower than the public offering prices stated on the cover hereof. 26 j . CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds or any error with respect thereto shall constitute cause for a failure or refusal by the purchaser hereof to accept delivery of and pay for said Bonds in accordance with the terms of the purchase contract. All expenses in relation to the printing of the CUSIP numbers on said Bonds;shall be paid by the City;provided,however,that the CUSIP Service Bureau charge for the assignment of said numbers shall be the responsibility of and shall be paid for by the purchaser. . Official Statement Certificate At the time of delivery of the Bonds, one or more officials of the City will furnish a Certificate stating that to the best of his knowledge this Official Statement, as of its date and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained herein, in light of the circumstances in which they were made,not misleading. Statements in this Official Statement,including matters of opinion,whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City or the Underwriter and the purchaser of the Bonds. The preparation and distribution of this Official Statement has been duly authorized by the City. This Official Statemelnt has been "deemed final" as of its date by the City in accordance with S.E.C.Rule 15c2-12. City of Renton,Washington By: /s/ Victoria Runkle Its: Finance and Information Services Administrator r I I it 27 I t (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION ' I ,- j ' (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION , Central Puget Sound Region Major Employers Employer 1 Industry Employees 1. The Boeing Company Aerospace Manufacturing 98,440 2. Microsoft Corporation" Software 15,400 3. Safeway I Grocery Store 9,851 4. Sisters of Providence Systems Health Care 9,423 • 5. Group Health Cooperative Health Care 8,800 1 6. Fred Meyer Retail 8,100 7. Nordstrom,Inc. Retail 6,756 8. Alaska Air Group, Inc. Airline 6,234 9. U.S.West Communications Telecommunications 6,100 10. The Bon Marche Department Store 5,409 11. Albertson's Grocery Store 5,400 12. Quality Food Centers � Grocery Store 5,200 13. Virginia Mason Medical Center Health Care 5,200 14. Multi Care Health System Health Care 4,755 15. Weyerhaeuser Company' 1 Forestry Products 4,600 16. Swedish Health Systems 1 Health Care 4,444 117. Safeco Corp." Insurance 4,000 18. Washington Mutual Inc. Bank 4,000 19. Franciscan Health System ' Health Care 3,900 20. Costco Wholesale, Inc.' , Warehouse 3,900 "Headquartered in King County Sou Economic Decrlopne lrt Council of King County. 1 I _I Population Historical, current and estimated population data for King County and the City of Renton are as follows: Year Renton King County 2001 51,140 1,758,300 2000 48,270 1,737,034 1999 47,620 1,677,000 1998 46,270 1,665,800 1997 45,920 1,646,200 1996 45,170 1,628,800 1995 44,890 1,613,600 Source City of Rentcm,King County. Largest Employers The following table details the City of Renton's largest employers. 2000 %of Total Principal Employers Type of Business Employees Employment The Boeing Company Aerospace&Computer Services 16,731 45.48% Valley Medical Center Medical Services 1,477 4.01 Renton School District Public Education 1,346 3.66 PACCAR Heavy Manufacturing 1,114 3.03 Federal Aviation Administration Federal Government 645 1.75 Multiple Zones International Computer Hardware&Software Retail 642 1.75 City of Renton City Government 637 1.73 Wizards of the Coast Retail—Miscellaneous 403 1.10 HomeGrocers.Com Inc Retail—Miscellaneous 313 .85 Ikea-Seattle Retail—Miscellaneous 295 .80 Total Number of Employees—Principal Employers 27,185 59.38 « o Total Number of Employees—All Other Employers 18,600 40.62 Total Number of Employees Working within Renton 45,785 100.00 Monter ofonplo s estimate based upon City of Renton Business License Ramis and individual inquiry'ahem applicable Labor Force Data Employment Statistics j (Annual Averages) The following employment figures for King County and the State of Washington are provided to characterize the area's labor market: 1 1996 1997 1998 1999 ' 2000 King County 1 Labor Force 1 945,400 990,700 1,016,000 1,028,700 1,023,200 Employed 1899,300 957,800. 985,000 995,900 986,500 Unemployed 46,100 32,900 31,000 . 32,800 36,700 %Unemployed 4.9% 3.3% 3.1% 3.2% 3.6% Washington State Labor Force 2,878,800 2,981,900 3,037,800 3,074,600 3,045,200 Employed 2,691,600 2,839,900 2,893,300 2,929,200 2,887,500 Unemployed 187,100 142,000 144,500 145,300 157,700 %Unemployed 6.5% 4.8% 4.8% 4.7% 5.2% Source•Washington State Employment S 'iecurity Department(statistics not seasonally adjusted). Personal Income ($/000s) 1999 1998 1997 1996 1995 King County 74,450,325 67,031,172 59,609,697 55,135,527 50,858,676 State of Washington 174,876,529 161,069,171 - 150,202,630 139,327,838 129,680,828 United States 7,784,137,000 7,383,476,000 6,928,545,000 6,538,103,000 6,192,235,000 Source: US Bureau of Economic Analysis, U.S.Department of Commerm Per Capita Income 1999 1998 1997 1996 1995 King County 44,719 40,519 34,476 34,203 31,868 State of Washington 30,380 28,579 26,802 . 25,287 23,878 United States 28,546 27,321 25,874 24,651 23,562 Source US Bureau of Economic Analysis, U.S.Department of Co mnerm I Non-Agricultural Wage and Salary Workers Employed in King County(Annual Averages) 2000(1) 1999 1998 1997 1996 Total 1,191,800 1,155,400 1,119,700 1,073,300 1,018,300 Manufacturing 145,600 153,700 160,900 154,300 142,700 Construction&Mining 67,000 62,300 58,000 52,600 48,400 Transport&Public Utilities 81,400 77,400 73,900 71,100 68,300 Wholesale&Retail Trade 282,600 274,300 264,800 255,800 246,900 Finance,Insurance&Real Estate 73,400 73,500 71,100 68,300 65,800 Services 387,800 363,200 343,000 327,300 304,200 Government 154,100 151,100 147,900 144,000 142,200 • (1)Preliminary. Source:Washington State Employment Security Department City of Renton Building Permits(1) Residential Multifamily Commercial Construction Construction Construction Other(2) Total Year Permits Value Permits Value Permits Value Permits Value Permits Value 1999 488 $56,643 94 $33,072 345 $105,654 2,646 $42,074 3,573 $237,443 1998 321 27,792 132 22,509 311 58,780 2,362 22,797 3,126 131,878 1997 381 38,566 92 40,230 351 81,515 2,852 33,967 3,676 194,278 1996 345 38,873 84 40,896 384 120,512 3,530 38,965 4,343 239,246 1995 289 29,023 58 11,873 . 340 71,588 2,811 21,022 3,498 133,506 (1) ($/000s) (2) Inchrdes permits for other structures,fire alarm,sign,da-tricahmtrhaniad,phenbing sprinkler,denolitions,mobile homes and grading Source City of Renton City of Renton&King County Taxable Retail Sales ($000's) Year City of Renton King County 2001(1) 407,701 8,652,300 2000 1,695,021 37,383,541 1999 1,504,764 34,517,504 1998 1,520,500 31,498,687 1997 1,350,937 29,154,617 1996 1,182,915 26,402,587 (1) 2001 Figurrs are for thefirst quarter only. Source:City of Renton and Washington State Department ofRecer & ' I 1 APPENDIX B FORM OF LEGAL OPINION (THIS PAGE INTENTIONALLY LEFT BLANK) (Form of approving opinion of Gottlieb, Fisher& Andrews,PLLC, Bond Counsel) [Date of Issue] I - Mayor and City Council City of Renton Renton, Washington 98055 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Renton, Washington(the "City"), of the bonds described below(the"Bonds"): $19,505,000 CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Dated: November 1, 2001 The Bonds are issued pursuant to Ordinance No.4922 of the City (the"Bond Ordinance") and other proceedings duly had and taken in conformity therewith. The Bonds are issued to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage,to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B, and to pay incidental costs thereof and the costs related to the sale and issuance of the Bonds, all as provided in the Bond Ordinance. The Bonds shall be issued in fully registered form as to both principal and interest; shall be in the denomination of$5,000 each or any integral multiple thereof within a single maturity; shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington(the "State") located in Seattle, Washington, and New York, New York(collectively, the "Registrar"), deem necessary for purposes of identification. The Bonds bear interest (computed on the basis of a 360-day year of twelve 30-day months)from their date or from the most recent interest payment date to which interest has been paid or duly provided for, whichever is'latelr, payable December 1, 2001, and semiannually thereafter on each June 1 and December 1 to the maturity or earlier redemption thereof, at the rates set forth below, and shall mature on December 1 in each of the years and in the principal amounts set forth below: City of Renton, Washington [Date of Issue] Page 2 Maturity Date Principal Interest Rate (December 1) Amount Per Annum 2001 $310,000 2.15% 2007 75,000 3.50 2008 85,000 -3.75 2009 335,000 3.90 2010 1,350,000 4.00 2011 1,400,000 4.00 2012 1,455,000 5.25 2013 1,530,000 5.25 2014 1,610,000 5.25 2015 1,695,000 5.25 2016 1,785,000 5.25 2017 1,875,000 5.25 2018 1,385,000 5.25 2019 1,460,000 5.25 2021* 3,155,000 5.00 * Term Bonds The Bonds shall be subject to redemption prior to maturity at the times and in the manner described in the Bond Ordinance. The City has reserved the right to purchase any or all of the Bonds in the open market at any time and at any price. In rendering this opinion letter, we have examined the following: (i)the Bond Ordinance; (ii) a copy of one executed and authenticated Bond (we assume that all other Bonds are in the same form and have been similarly executed and authenticated); and(iii)the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us and which comprise the transcript of proceedings pertaining to the issuance of the Bonds (the "Transcript"). As to questions of fact material to the opinions expressed herein, we have relied upon the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us as part of the Transcript, all without undertaking to verify the same by independent investigation. Based only upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion letter, and subject to the limitations and qualifications expressed below,we are of the opinion that, as of this date: 1. The Bonds are lawfully authorized and issued pursuant to and in full compliance with the constitution and statutes of the State and the Bond Ordinance. City of Renton, Washington [Date of Issue] Page 3 2. The Bonds are legal, valid and binding general obligations of the,City, enforceable against the City inl accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, and also to the exercise of judicial discretion in accordance with general principles of equity. 3. The City has irrevocably covenanted in the Bond Ordinance that,unless the principal of and interest on the Bonds are paid from other sources, so long as the Bonds are outstanding,the City shall include in its budgets and make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation in amounts which, together with any other money legally available therefor, shall be sufficient to pay such principal and interest on the Bonds as the same shall become due. The City has irrevocably pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of,such principal and interest. 4. The Bonds are not"private activity bonds," as defined in the Internal Revenue Code of 1986, as amended (the "Code"). { 5. Assuming compliance by the City with applicable requirements of the Code,that must be met subsequent to the issuance of the Bonds, the interest on the Bonds is excluded from gross income for federal income tax purposes under existing federal law, and such interest is not an item of tax preference for purposes of determining alternative minimum tax on individuals and corporations under existing federal law. However, under existing federal law, interest on the Bonds received by certain corporations is to be taken into account in the computation of adjusted current earnings for purposes Of calculating the alternative minimum tax applicable to such corporations; such interest received by foreign corporations with United States branches may be subject to a foreign branch profits tax; and such interest received by certain.S corporations may be subject to tax. 6. The difference between the principal amount of the Bonds maturing in 2007 through 2009, inclusive, and in the years 2011 and 2021 (the "Discount Bonds"), and the initial offering price to the public (excluding bond houses,brokers and similar persons or organizations acting in the capacity of underwriter or wholesaler) at which price a substantial amount of such { Discount Bonds of the same maturity was sold constitutes original issue discount, which is excluded from gross income for federal income tax purposes to the same extent as interest on the Discount Bonds. Further,this original issue discount accrues on the basis of a constant yield to maturity over the term of each Discount Bond and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser of such Discount Bonds will be increased by the amount of such accrued original issue discount. Except as stated in the preceding paragraphs 4, 5 and 6,we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Bonds. � I I City of Renton, Washington [Date of Issue] Page 4 The Code contains certain requirements which must be satisfied subsequent to the date of issue of the Bonds in order to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes, including requirements relating to application of the proceeds of the Bonds, use of facilities financed with such proceeds, limitations on income derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury of certain investment earnings on such gross proceeds. The City has covenanted to comply.with these requirements, and the opinions expressed in paragraphs 4, 5 and 6 assume such compliance. However, we have not undertaken and do not undertake to monitor compliance by the City with such requirements; and if the City should fail to comply with such requirements, interest on the Bonds could become includable in gross income for federal income tax purposes and could be treated as an item of tax preference for purposes of the alternative minimum tax on individuals and corporations, in each case,retroactive to the date of issue of the Bonds. We have not been engaged to review or express any opinion concerning the completeness or accuracy of the official statement or other disclosure documentation used in connection with the offer or sale of the Bonds by any person, and thus express no opinion concerning the completeness or accuracy thereof. Copies of this opinion letter may be delivered to the Owner of the Bonds, who may rely on this opinion letter as if it were addressed to such Owner on the date hereof. Subject to the foregoing,this opinion letter may be relied upon by you only in connection with the issuance of the Bonds and may not be used or relied upon by you or any other person for any other purpose whatsoever, without in each instance our prior written consent. We expressly disclaim any responsibility to advise you or any Owner of any developments in areas covered by this opinion letter that occur after the date hereof Respectfully submitted, GOTTLIEB, FISHER&ANDREWS, PLLC By Judith L. Andrews f:\renton\ltgo 01 l � I APPENDIX C EXCERPT FROM THE CITY'S • COMPREHENSIVE ANNUAL FINANCIAL REPORT I '' (THIS PAGE INTENTIONALLY LEFT BLANK) CITY OF RENTON,WASHINGTON , - GENERAL FUND COMPARATIVE BALANCE SHEET DECEMBER 31.2000 WITH COMPARATIVE TOTALS FOR DECEMBER 31.1999 (PAGE 1 OF I) 2000 1999 ASSETS: Cash and Cash Equivalents $ 637.230 $ 747,838 Investments of Fair Value 8.022,110 4.977.648 Receivables: Taxes 358.241 323.826 Accounts 3.704.822 3.498.467 Interest on Investment 389.986 224.574 Due From Other' Funds 4.886 9.203 Due From Other Governmental Units 144.649 0 Prepaid Items 8.000 8.000 Restricied Assets: Deposits 88.617 109.080 Interfund Loans/Advances-Non-Current 75.000 75.000 TOTAL ASSETS I $ 13 433.541 $ 9 973 636 LIABILITIES AND FUND EQUITY: LIABILITIES: Vouchers/Contracts Payable $ 469.445 $ 312.186 Due To Other Funds 254.263 180.716 Due To Other Governmental Units 1.695.248 1.616.397 Accrued Employee Benefits Payable 0 2,027 Accrued Taxes Payable 938 1.396 Deferred Revenues 2.469.428 2.173.468 Accrued Employee Leave Benefits 207.214 223.224 TOTAL LIABILITIES 5.096.536 4.509.414 FUND EQUITY: Fund Balance: Reserved for future Use 228.673 0 Reserved for Advances/Prepaids/Contingency 83.000 83.000 Unreserved-Designated: For Inmate'Health&Welfare 34.077 29.932 For Investigative Fund Confiscations 98.452 86.691 Unreserved-Undesignated 7.892.803 5.264.599 TOTAL FUND EQUITY 1 8.337.005 5.464.222 TOTAL LIABILITIES AND FUND EQUITY $• 13 439 541 $ 9 973 636 1 • it CITY OF RENTON,WASHINGTON GENERAL FUND STATEMENT OF REVENUES.EXPENDITURES.AND CHANGES IN FUND BALANCE YEAR ENDED DECEMBER 31.2000 WITH COMPARATIVE TOTALS FOR DECEMBER 31,1999 (PAGE 1 OF 1) 2000 1999 REVENUES Taxes S 29.822.126 $ 27.878.475 licenses And Permits 2.568.757 1.687.572 Mergovemmental Revenues 2.156.609 2.299.474 Charges For Senrices 4,129.214 3.867.738 Fines And Forfeits 974,273 797,657 Contributions 36.193 28.163 Interest 1.318.783 1.161.911 Miscellaneous Revenues 64.258 47.400 TOTAL REVENUES _ 41.070.213 37.768.390 t70'ENDITURES Current: General Goverment 8.512.651 8.065.131 Security Of Persons And Property 22.861.304 21.336.276 Physical Environment 1.769.012 1.892.549 Economic Environment 3.345.054 2.919.978 Mental And Physical Health 8.599 8.486 Culture and Recreation 25.370 0 Capital Outlay 194,351 573.298 Debt Service: Principal Retirement 0 33.018 Interest 8 Fiscal Charges 0 2.848 TOTAL EXPENDITURES 36.716.341 34.831.584 EXCESS(DEFICIENCY)OF REVENUES OVER EXPENDITURES 4.353.872 2.936.806 OTHER FINANCING SOURCES(USES) Operating Transfers(Out) (1.560.051) (2107,458) Sale Of General Fixed Assets 78.962 0 TOTAL OTHER FINANCING SOURCES(USES) (1.481.0891 (2.107,458) EXCESS(DEFICIENCY)OF REVENUES -- AND OTHER FINANCING SOURCES OVER EXPENDITURES AND OTHER FINANCING USES 2.872.783 829.348 FUND BALANCE JANUARY 1 5.464.222 4,642.713 Residual Equity Transfers In 0 0 Residual Equity Transfers Out 0 (7.839) RIND BALANCE DECEMBER 31 S 8 337 005 S 5 464 729 ISI 1 i APPENDIX D BOOK-ENTRY ONLY SYSTEM (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D BOOK-ENTRY ONLY SYSTEM The following information has been provided by DTC. The City and the Underwriters make no representation regarding the accuracy or completeness thereof. Beneficial Owners(as hereinafter defined)should therefore confirm the following with DTC or the Participants(as hereinafter defined). DTC will act as initial securities depository for the Bonds. The Bonds will be issued as fully- registered in the name of Cedel�& Co. (OTC's partnership nominee) or such other name as may be • requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds in the principal amount of such maturity and will be deposited I-- with DTC. DTC 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 securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of the Bonds under the DTC system, in denominations of $5,000 or any integral multiple thereof,must be made by or through Direct Participants,which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive'written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede&Co. or such other name as 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 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 Registrar to DTC only. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, or in the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City of Renton 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 to on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest 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 of Renton or the Registrar on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to 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 will be the responsibility of such Participant and not of DTC, the Registrar, or The City of Renton, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of The City of Renton or the Registrar, disbursement of such payments to Direct Participants shall be the responsibility of DTC,and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to The City of Renton and the Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The City of Renton may decide to discontinue use of the system of the book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. With respect to Bonds registered on the Bond Register in the name of Cede & Co., as nominee of DTC,The City of Renton and the Registrar shall have no responsibility or obligation to any Participant or to any person on behalf of whom a Participant holds an interest in the Bonds with respect to (1)the accuracy of the records of DTC,Cede&Co. or any Participant with respect to any ownership interest in the Bonds; (2) the delivery to any Participant or any other person, other than a bondowner as shown on the Bond Register, of any notice with respect to the Bonds, including any notice of redemption; (3) the payment to any Participant or any other person, other than a bondowner as shown on the Bond Register, of any amount with respect to principal of, premium, if any, or interest on the Bonds; (4) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds; (5) any consent given action taken by DTC as registered owner; or (6) any other matter. The City of Renton and the Registrar may treat and consider Cede & Co., in whose name each Bond is registered on the Bond Register, as the holder and absolute owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. For the purposes of this Official Statement, the term `Beneficial Owner" shall include the personfor whom the Participant acquires an interest in the Bonds. DTC management is aware that some computer applications, systems, and the like for processing data ("Systems") that are dependent upon calendar dates, including dates before, on, and after January 1, 2000,may encounter "Year 2000 problems." DTC has informed its Participants and other members of the financial community (the "Industry") that is has developed and is implementing a program so that its Systems, as the same relate to the timely payment of distributions (including principal and interest payments)to securityholders, book-entry deliveries and settlement of trades within DTC ("DTC Services") continue to function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames. However, DTC's ability to perform properly its services is also dependent upon other parties, including but not limited to issuers and their agents, as well as third party vendors from whom DTC licenses software and hardware, and third party vendors on whom DTC relies for information or the provision of services, including telecommunication and electrical utility services providers, among others. DTC has informed the Industry that it is contacting (and will continue to contact) third party vendors from who DTC acquires services to: (1) impress upon them the importance of such services being Year 2000 compliant; and (2) determine the extent of their efforts for Year 2000 remediation (and, as appropriate,testing) of their services. In addition, DTC is in the process of developing such contingency plans as it deems appropriate. According to DTC, the foregoing information with respect to DTC has been provided to the Industry for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. If The City of Renton is unable to retain a qualified successor to DTC or The City of Renton has determined that it is in the best interest of The City of Renton not to continue the book- entry system of transfer or that interests of Beneficial Owners of the Bonds might be adversely affected if the book-entry s3item of transfer is continued, The City of Renton shall execute, authenticate and deliver at no cost to the Beneficial Owners of the Bonds or their nominees, Bonds in fully registered form, in the denomination of$5,000 or any integral multiple thereof. Thereafter, the principal of the Bonds shall be payable upon due presentment and surrender thereof at the principal office of the Registrar, interest on the Bonds will be payable by check or draft mailed to the persons in whose names such Bonds are registered, at the address appearing upon the registration books on the 15th day of the month next preceding an interest payment date, and the Bonds will be transferable as provided in the Ordinance. For purposes hereof, record date shall mean in the case of each interest payment date, the Registrar's close of business on the 15th day immediately preceding such interest payment date, and,in the case of each redemption, such record date shall be specified by the Registrar in the notice of redemption, provided that such record date shall not be less than 15 calendar days before the mailing of such notice of redemption. ' 1 APPENDIX E MUNICIPAL BOND INSURANCE POLICY SPECIMEN (THIS PAGE INTENTIONALLY LEFT BLANK) I ' i a` vv( ',eV " .4.•.‘ . . \ . 7.:,'/ �.'""'i '� Yj •� -'4, \so; / fi �\Ar1,09! •sr0/,, dAJ /, 0 : V'' 4.' :/' •...kv4• \.??6', M.4,,,, ..d\ i,",, ..w tz: •4 \ \es/ ... O'''''', ''♦eek./4/ ,'N: / !..\\ ,k\ Gi:� ry ' lt. ' '+ 41/6r`ry'l \o,,,,C ':ivoit i'74-, • iaik J3 , J`.ify � , ' / ' 4 i ' � •' : :o , +9 '�+ � � . t , ,W Cr! ' 4O �"/ `t4'4% .. �$ , y{ °.} . 5.sj4 . 4' : ��Q" . 4. ' �4 , i: i .., 1 {,• , 15. 4,,i,. k . i, /. ., ;+t i. 71 `"'v C is ��d ■UUP FINANCIAL MUNICIPAL : - ► " '� ' Kms...: .. 3 ��r SECURITY IN i `" -,v ASSURANCE, - ► e y .7, f ISSUER: ' Po • o.. -N ; h f `. Eff-• •ye Date: =.;�: ;F4Ns--- BONDS: $ in aggregate principal amount of ,,,rj;:,.4 • r; - •remium: $ t ... •- Asp 7t��_ , X04:: FINANCIAL SECURITY ASSURANCE INC. Ft : cial Se • i o c• sideration received, :r,74, tY .�.rte `� hereby UNCONDITIONALLY AND IRREVOCABLY as,ee to p: to the t • tee(t'e "Trustee") or paying -<! ,, :s agent(the Pain Agent") (as set forth in the docume at1 •rov . for th- '-suance of and securingt'' '�•"G h3 , :`'° . the Bonds) for the Bonds,for the benefit of the Owners o ,at •e = cti• of Financial Security, directly toy�,, each Owner, subject only to the terms of this Policy (whi• i lu• ea endorsement hereto), that -•.'s1;,--,,,, �� \ i #� '� " t portion of.the principal of and interest on the Bonds that sh• I -come a for Payment but shall be ,:.,p 4`t_�` unpaid by reason of Nonpayment by the Issue,. • ,,,..-, f On the later of the day on which su •• ••rin '•a - • ' terest ••-comes Due for Payment or the ,•..• . A Business Day next following the Business Day on ' ich ' ancia -- rity shall have received Notice of :44....,,,,,, ••-,,`,, Nonpayment, Financial Security, will dis•u - to or • he •-nefit of each Owner of a Bond the face �'�="9� - „' �! t ;gni,= .,„ . f amount of principal of and interest on the :•nd -t is then , e f• •-ayment but is then unpaid by reason of Nonpayment by the Issuer,) but only u•: re •t by • : cial Security, in a form reasonably ,-,I-7...i,_,,,,..- i,-({41•0') ;_;,, 4 "F satisfactory to it, of (a) evidence of the Owner's n••t to :ceive payment of the principal or interest then I ;',:..:4- - ':-.kg.,,. `O: ti ., Due for Payment and (b) evidence u• g any a • ••ria = instruments of assignment that all of the. ..,;•-•r_:>.�- rte.: Owner's rights with respect to say •-- of such princip- •r interest that is Due for Payment shall4.4-.15,,,:.::,` t+p p thereupon vest in Financial S ur . A Notice • onpayment will be deemed received on a given t << A Business Day if it is received •• 'o,to 1:00 p.m. ( =w ork time) on such Business Day; otherwise, it will -*v,., `v be deemed received on the e Business Day. f a y Notice of Nonpayment received by Financial .:,;4� 'At ±;/ Security is incomplete, it shall •e seemed not to hay: b:en received by Financial Security for purposes of i,, yr"-the preceding sentence and Fi'an'ial Security sh•II 'romptly so advise the Trustee, Paying Agent or :A% w ' Owner, as appropriate, Vo.:',*, ho ma su•• it an am= d:• Notice of Nonpayment. Upon disbursement in r� , '(ft,.t of a Bond,Fina'ci Securi'' ha •- • e •e owner of the Bond, anyappurtenant coupon to the ; .4:4 , ,1 , respect PP P �. ",-=--:_,--,:_--, Bond or right to recei• of payment of p • -••- - or interest on the Bond and shall be fully subrogated to --,,,.-4g, t. the rights of the Ow -r, ncludin• •- Owner's right to receive payments under the Bond, to the extent of Vy#,y�! t a�:,.•. - m any payment by Fi'a sal Sec ri hereunder. Payment by Financial Security to the Trustee or Paying ; ” :-- Agent for the be efi of the "w'ers shall • the extent thereof, discharge the obligation of Financial " ti �� F Security under t s •licy. i 'r:{}�.,- s Except to t - exten expres odified by an endorsement hereto, the following terms shals.l, J a b have the me- •, speci';• fo _ I • ••ses of this Policy. "Business Day" means any day other than i , =4 ti: `4 >'1,_ (a) a Satu ray or S •day or • a da, on which banking institutions in the State of New York or the �_< '. Insurer's is•al Ag= t :re authon :• or required by law or executive order to remain closed. "Due for 7 -, it k ,! Payme " 'eans(a)wh-n referring to the principal of a Bond,payable on the stated maturity date thereof s. k '`?,:•. or the •a - on whic t e same,shall have been duly called for mandatory sinking fund redemption and ? :•- r does of efer to a'y :artier date on which payment is due by reason of call for redemption(other than by A,..�.. man•- •ry '•ki • find redemption), acceleration or other advancement of maturity unless Financial -„�,, ,H Ly1.�,d-p i.. ��r\ �, - Security s -II e -ct in its sole discretion,to pay such principal due upon such acceleration. together with ;,, ; �Gt an accrued i -res • the date of acceleration and (b)�when referring to interest on a Bond, payable on i., t ; rP e sta d date fo say =•t of interest interest. Nonpayment means, in respect of a'Bond, the failure of the 4 >,:- .5'4<.. I e to have •rovide• icient funds to the Trustee or, if there.is no Trustee,to the Paying Agent for -..-::,---:,-.- 1- „, ! cf,i ! •ayment • full o --II principal and interest that is Due for Payment on such Bond. "Nonpayment” shall i T4s% '�`.'•=z.-;<,-.:2 also in•ud-, n S.-ct of a Bond, any payment of principal or interest that is Due for Payment made to _: yr,�` , ' ,4' an •` n- by or n •ehalf of the Issuer which has been recovered from such Owner pursuant to the 1:.•?;-.4;.- , t• iti:'L 1 14‘'- .,:e . '.w:t �v.,�. _,a ''�i/..��� i� • /bW ri,-.. `-��,�.' �� ,..`tet;. .��•, �a �•• �;�'„ _ .3:.�r.�`;, �`N,. ��'3,i �� U,'e... �.� � �a H.x !"r> Pr a<:4` k� :'U O!;"�`�3 �i/,/+,�,",c4� .�;,,�3:.� a,r.�� �� �•: `,,..s:�>� J���v�. .•„�,{.�.':r�4I ,, \ ��,�,`•:�'.f/•kYµ+'�$.'„'�J' ?' ÷`"4-`"''FI'';',, '..i.Ar,. ,�\,•:,/f 'Cy,4.;� �.�l•...._.�Z.:, ti_: '��:y''i \a;�;N t. .;.:•_4*+ d% v\ /!+J„pac}S��'�.F`..�y /I r' . � \P+ 1. �y�� 1J,.. 33 +• ,�.”, 't fr) .•yyy, ms',µ^\: 7 '4Vx'.e. �*�.K �e,��,y�, 1 9 :...''O "yJJf ''N v°' •^�� ` \,J. Jam'• � x/�1M� ��y��Z�y �Y "X ,J°' ''Vl.^ JJ'••V JJ c�/^ 4wor'J q.ziv,,, v a`J✓- ` , •\ '/9! i Sh\\;` .,,q'f, ,�\ /i IEilU\•\ 'q \\\� r jag, i,,,•!.. "'r/.,.,., Awl 4 ,, N •r•j,,,,, "o , vK• `.' ry „J w.. \•"fry�i/2 J + y r r.44,...,,,• r : ��,,a1•.�� r/,, r� �� r \ rJ \4 r, [✓ �� r✓4 rJ ` + \ / `�. //,,,n,•wa• +J•%�`4 pr "�` ,�/ �.^`" /ry,,��i\ ii:` J' JaG� Je4'a. J,', ieY;,” J•. J,:;:.' J;y:.� lw,'.• ..(: a. I 1 • ,• ,: ",' "'�rl ': ,,,,Z,II ,,''76iI \,N' J11,/ `^3' ry�� ','.rT/{- ,,,;, . .. 1 w:NJig4t.:/�\1;1:p?'t f�'l1'/� te � ` �" �\ //` 'e\ / iE\4•'''J/;' : !y� t " ,(A e'\��t','!,l4 rM}\N!it \mow\ 1k :iJy�t;\MRG� �$ l� � pt\4tt�\•M• : 1 .0y.t:: ♦41 a�� ,r � F k04 iSi ' J � ,t''' *:;4 :,.� y` %4Cly $. a>. � i` F ;i'',5:-'1,4,00; ?t ,, fi> � . srF ,�a* � # ��• � s.Y9 $ 1 4s ?- nyf�. gM.. ,��4.i:. .:.. ; ,MM - - .may ( § F Page - •f 2 ' &�9 r Folic N. - ,:**1,,,:..,F.v.,:lY1 "s=- United States Bankruptcy Code by a trustee in bankruptcy in accordan - wi - final,`nonappealable %;, ,.1.;# ti f order of a court having competent jurisdiction. "Notice" me• teleph•••c o telecopied notice, .,-�•s� '' _ subsequently confirmed in a signed writing, or written notice b r=•istered or -rtifie: mail from an yr .. Owner,the Trustee or the Paying Agent to Financial Security w 'ch otice s all spec'', a)t' - person or .%'''`°° F `P entity making the claim, (b) the Policy Number, (c) the claim-• • ount - d d) the date •uch claimed _ amount became Due,for Payment. "Owner" means, in respec of - Bond, e •erson o entity who, at the -1.:, ",�� "., time of Nonpayment, is entitled under the terms of such B. d o a m"nt hereof, c:•t that "Owner" � ' t PYt . ' <<< , shall not include the Issuer or any person or entity who-- di - t or •nd-ect obli•=ti• constitutes the .� ; � underlying security for the Bonds. ;; f: 1 Financial Security may appoint a fiscal age (th- "Insurer's -sca • 'en )for purposes of this s`x`' ter~ '= Policy by giving written notice to the Trustee and t•e in. • sent sp--- in• the name and notice C=='>' ��, ,4,4'f address of the Insurer's Fiscal Agent. From and after le'i - of = eipt of s••h notice by the Trustee ;., 2, - and the Paying Agent, (a) copies of all notices required t• •e •e ' -re• • Financial Security pursuant to ?,e' - this Policy shall be simultaneously delivered to the Insurer' Fi al • •-nt a • to Financial Security and -.1-.4,•,,.:4,-..„ ,, shall not be deemed received until received by both and p y requiredby z '`' ` • a a m s to be made �.;,� .4,.,,,,,,,,:, °�•_.,_ Financial Securityunder this Policymaybe :•e •- :. by Fin- ci: Security or by the Insurer's Fiscal �;.�: ,..'',/-,,z1.'"'—','' Agent on behalf of Financial Security. The . sur_ - .iscal • •-- tht agent of Financial Security only ; -.' \ I ,� and the Insurer's Fiscal Agent shall in no even •e li.. e o - - owner or any act of the Insurer's Fiscal •:�. ,,▪ y; Agent or any failure of Financial Securi to depo ' or c: se to be •eposited sufficient funds to make '�: , <r.` payments due under this Policy. t , To the fullest extent permitted by a•• ica• - law, Fin-• ial Security agrees not to assert, and ` •�% t hereby waives, only for the benefit of each 0 ••er, - rights (whether by counterclaim, setoff or t• ,rr� . . ._ otherwise) and defenses (includi••, with•ut limitatio , the •efense of fraud), whether acquired by ' ,.,: • subrogation, assignment or othe i -, • he extent that s•- rights and defenses may be available to ' 4 4 Financial Security to avoid pay e of its obligat-•n under this Policy in accordance with the express s� 4'`` ,,. provisions of this Policy. ,...1.,/,,,.:ti..:-,,,,f;•. C%1 # �.F This Policy sets fo i•t full the underta ng of Financial Security, and shall not be modified, �, altered or affected by any oth;r -•reement or i .t ment, including any modification or amendment ' thereto. Except to the - ent e •res modifi-= b an endorsement hereto, (a) any premium paid in ;Itie ,k/: respect of this Policy i no refunda• = for any rea •n whatsoever, including payment, or provision being �';• = made for payment, o th. Bonds prior to : • and (b) this Policy may not be canceled or revoked. iri 3: F THIS'POLICY IS N•T COVE'' i BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND s ^'"s ▪ I . SPECIFIED IN AR ' C E 76 O T NEW ORK INSURANCE LAW. -.... ...,,,,4‘ �, tt In wi es her-•f, ' INANCI• IECURITY ASSURANCE INC. has caused this Policy to be ;r� �'4executed on its be'-If b ' : A•thorized •ff• er. ., .' ,,• � FINANCIAL SECURITY ASSURANCE INC. { "`6 f5`re▪ ' . By •'Nt ' Authorized Officer t �i=4:i,4,44 ' subs'.is of Fin. - ial =curs Assurance Holdings Ltd. (212)826-0100 ,--.4-;,4-, =r Park lacy -• -, New • k, N.Y. 10022-6022 g 'sr�:=w%, ,:-• . _'� Form 0 (5 °•) S a��e', 4W,•'��,�Jj•.• S, ,' A ,,,.."'• .1 y4t, X14•.. ri:G. ' i.... j...o't "� ;w-.,. .t. .Z.. iw ...\ •~r,•;I w . ' .`' X4,.,5*,4> ... 6gl,. , /,..A.# :,..%4:5&,.. 1ZsZ-,.,,•„,44:44,, 444 �Q'`,'^.`n \{\,:`•i � ''!'0,t,40 _tt.'4 ,:f 4t4?" Jt i :,,The';,,,,.,G ; • '1? _ 0, ,6�'�,vhM'":; 'ynyh ♦:,y,r.',�'y�0. T''+'.-4'` \',I .,a +.`•-1, . \ti;:(sero 1`�„+,�!r' 1` a.\ '' 1�i r!' ,•.'` l 7' r :Apt*.r rr V',• ,,, ;,„x+,,,,'^Y' ,,,, ,6,'tiM`.JL ,..,N JJ•-• l.�tVr Y.i p C ry�l, M , ,,, "�1.•(,,� JJ• ;., N' ,,, rl Fe „,, yW; \� �I• 1`• ��4J�.,\\,�"�l 4t G`�4 1,l rFi�;J a�r�•�V' �Y' F�� ,��','`JW.`�v e\ y�rr��'\��G��•,94�,� �' 4•�O,4:i vy •,,,,,,,,- •,,,\\ ,,,, 1 \\\ '',E,\\ Jlj ,\\l' '. t\ �g'4:a.• %%,;::. it E' 1 JW," / P'\ 1',.m.`` "9il4rJ/N:>... • '3'1j/. ;�� v4mr;'' -.7 V 1y 1'",it,:, xy�4iri's:�\ ` I • J Jl!� /,x'. J/,rA �t lJy'y:\ /4�.,.� Jt'.'•:.• l-y:'.':� i�\ l.`YS.•.• -:.a 1-�\\ ::�� ;�\4 /-.'�.9, (THIS PAGE INTENTIONALLY LEFT BLANK) i . Kati gs Scrwitrs Vineeut Orgy+ 55 Water Strew.38th Flour Administrndat Officer Naw York NY 1004L-0003 Pub*firm=Rat g Tel X12 438-2074 Kcfcrcncr.No.:40121301 Standard & ,Poor's A Division of'IheMcGrmu•7#ill a anpanics October 30,2001 Ms. Sheelagh Flanagan i! Managing Director Financial Security Assurance Inc. 1550 Spear Tower One Market San Francisco, CA 94105 Re: $19,505,000 City of Rennin, Washington,Limited Tax General Obligation and Refunding Bonds,Series 2001, dated:November 1, 2001, due:December 1,2001, December 1, 2007- " 2019, term Bonds due:December 1,2021, (POLICY#28077-N) Dear Ms.Flanagan: This is to advise you that We have,changed the rating to 'AAA' from`A+' on the subject bonds. The rating change reflects our assessment of the li1re1Throd of repayment ofprincipal and interest based on the bond insurance policy yourcompany is providing. When using the Standard&Poor's\rating.include the definition of the rating together with a statement that this maybe changed,suspended or withdrawn as a result of changes in,or unavailability of, information. This rating is not a`market rating",because it is not a recommendation to buy,hold or sell the obligations. If you have any questions,please contact us. Very truly yob, 1-1 \J'tthL1-/ °(0° Wit/ • aw • • • • • , , , 1 , . , . , , , Firio _, PITCH IBCA,DUFF &PHELPS Mr.Robert P. Cochran Chairman&Chief Executive Officer Financial See+xtity Assurance Inc. Financial Guaranty Group 350 Park Avenue New York,NY 10022 October 30,2001 Dear Mr. Cochran: RE: City of Renton,Washington $19,505,000 in aggregate principal amo'mt of Limited.Tax General Obligation and Refunding Bonds,2001 (23077-N) Fa rating of;'AAA'to the above referenced Bonds.This reflects credit enhancement has assigneds„ policyprovided by Financial Security Assurance in the form of a bond insurance of'AAA'.Fitch defines companies with Inc. (PSA),whichhas as insnxcr financial strength-rating antes are viewed as possessing 'MA'insurer financial strength ratings as follows:"Comp exceptionally strong capacitYl to meet policyholder and contract obligations-Risk factors are minimal and the impact of any adverse business and economic factors is expected to be extremely 1_1 sem., , d b Fitch are based on information provided to us by FSA-Fitch does not audit Pr verifytings the truth y are not a recommaendation to buy, sell, or the truth or accuracy of such information.Ratings or hold airy security- Ratings do not comment on the adequacy of market price,the suitability of - any security far a particular investor,or the tax exemptnature or taxability of payment made in respect of any security. assigned to-FSA may be changed,.The insurer financial strength rating in PSA's financial withdrawn,,suspended, or placed on RatingWatch as a result of changesFitch Shalt not constitute a - condition.The assignment,publication,or dissemination of a rating by consent by Fitch to the use of its name as an.expert in connection with any registration statement filed under the Federal securities laws orr under the Financial Securities Act 1986. Sincerely, • Becky K. Christensen i. • Manager/Insured Ratings ' . The International'Raring Agency Pitch,1201 East 7th Street,'Powell,WY 82435. t.307 754 2012 f.307 754 3274 t.800 853 4824 www.atchratings.com 1 1 , -I , I CERTIFICATE OF DELIVERY AND PAYMENT I, VICTORIA A. RUNKLE, hereby certify that: 1. I am the duly appointed, qualified and acting Finance and Information Services Administrator of the jCity of Renton, Washington(the"City"). - 1 2. On the 1st day sof November, 2001, the City delivered to U.S. Bancorp Piper Jaffray Inc. (the "Underwriter") each and every one of the $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 I1(the "Bonds"). 3. On this date, the Underwriter paid, on behalf of the City, (a)to Financial Security Assurance Inc., the issuer of the municipal bond insurance policy for the Bonds (the "Insurance Policy"),by means of wire transfer the premium for the Insurance Policy in the amount of$97,432.22, and(b)to U.S. Bank Trust National Association, in its capacity as escrow trustee (the'"Escrow Trustee")under the Escrow Agreement(the "Escrow Agreement"), dated as of November 1, 2001,by and between the City and the Escrow Trustee,by means of a wire transfer the sum of$13,865,363.80, to be applied as provided in the Escrow Agreement. Also on this date, the City received the sum of $5,924,052.23 from the Underwriter, said sum being full payment of the aggregate purchase price therefor, computed as follows: Principal Amount of Blonds $19,505,000.00 Plus: Net Original Issue Premium 547,640.75 Less: Underwriter's Discount (165,792.50) Purchase Price of the Bonds $19,886,848.25 Less: Premium for the,Insurance Policy (97,432.22) Less: Transfer to the Escrow Trustee (13,865,363.80) Aggregate Purchase Price of the Bonds $ 5,924,052.23 1 IN WITNESS WHEREOF, I have hereunto subscribed my signature as of the 1st day of November, 2001. Dr014-gc"" VICTORIA A. RUNKLE Finance and Information Services• Administrator City of Renton, Washington £\renton\ltgo 2001 UNDERWRITER'S RECEIPT 1. The undersigned acknowledges receipt from the City of Renton, Washington(the "City"), of each and every one of the $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 (the "Bonds"). The Bonds are satisfactory in form. Upon receipt of the Bonds this day, the undersigned paid, on behalf of the City, (a)to Financial Security Assurance Inc.,the issuer of the municipal bond insurance policy for the Bonds (the "Insurance Policy"), by means of wire transfer the premium for the Insurance Policy in the amount of$97,432.22, and(b)to U.S. Bank Trust National Association, in its capacity as escrow trustee (the "Escrow Trustee")under the Escrow Agreement (the "Escrow Agreement"), dated as of November 1, 2001, by and between the City and the Escrow Trustee, by means of a wire transfer the sum of$13,865,363.80, to be applied as provided in the Escrow Agreement.. Also on this date,the undersigned paid to the City the aggregate purchase price of the Bonds, computed as follows: Principal Amount of Bonds $19,505,000.00 Plus: Net Original Issue Premium 547,640.75 Less: Underwriter's Discount (165,792.50) Purchase,Price of the Bonds $19,886,848.25 Less: Premium for the Insurance Policy (97,432.22) Less: Transfer to the Escrow Trustee (13,865,363.80) Aggregate Purchase Price of the Bonds $ 5,924,052.23 DATED this 1st day of November, 2001. U.S. BANCORP PIPER JAFFRAY INC. By Managing Director TAX EXEMPTION AND NONARBITRAGE CERTIFICATE This TAX EXEMPTION AND NONARBITRAGE CERTIFICATE(this "Certificate") is made and delivered by the undersigned in connection with the issuance of the $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 (the "Bonds")by the City of Renton, Washington(the "City"). This Certificate is also made and delivered by the undersigned(a) in furtherance of the covenants of the City contained in Section 19 of Ordinance No. 4922 (the "Bond Ordinance"), duly adopted on October 22, 2001; and(b)pursuant to the Code and Treasury Regulations Sections 1.141-1 through 1.141-6, inclusive, 1.141-9, 1.148-1 through 1.148-11, inclusive, 1.149(b)-1, 1.149(d)-1, 1.149(g)-1, and 1.150-1 through';1.150-2, inclusive. Section 1. Definitions. Capitalized terms used but not defined herein shall have the meanings set forth in(a) the Bond Ordinance, (b) the Escrow Agreement(the"Escrow Agreement"), dated as of November 1, 2001 (the "Date of Issue"),by and between the City and U.S. Bank National Association, as escrow trustee (the "Escrow Trustee"), or(c)where not so defined, Exhibit A hereto, which,is incorporated herein by this reference. Section 2. Representations. (a) Responsible Persons. The undersigned is the Financial and Information Services -I Administrator of the City and one of the persons charged by the City with responsibility for the issuance of the Bonds, and has made due inquiry with respect to and is fully informed as to the matters set forth in Section 3 of this Certificate. (b) Statement as to Facts, Estimates and Circumstances. The facts, estimates and circumstances set forth in Section 3 of this Certificate, on which the expectations of the City as to the Bonds are based, are made to the best of the knowledge and belief of the undersigned, and such expectations are reasonable and made in good faith. The City understands that, for the purposes of the Code, this Certificate constitutes evidence of the expectations of the City,but does not establish any conclusions of law or any presumptions regarding either the actual expectations of the City, or their reasonableness. (c) Basis of Representations and Expectations. The representations and expectations of the City set forth herein are based upon: (1) The covenants of the City contained in the Bond Ordinance; (2) The covenants of the City and the Escrow Trustee contained in the Escrow Agreement; (3) The report(the "Escrow Verification") of Causey Demgen&Moore Inc., independent certified public accountants, dated the Date of Issue,verifying the mathematical accuracy of the computations of, among other things, (1) the yield on the Bonds and the Escrow f:\Renton\ltgo&refunding 2001 1 - I Obligations (defined in the Escrow Agreement); and(2)the adequacy of the Initial Cash(defined in the Escrow Agreement) and the maturing principal of and interest on the Escrow Obligations to pay, when due, all of the prinipal, interest and redemption price of that portion designated as the"Current Interest Bonds"of the City's Limited Tax General Obligation Bonds, 1997B (the "1997 CIB Bonds") outstanding in the principal amount of$12,660,000 in accordance with the Refunding Plan(defined in the Escrow Agreement); (4) The certifications of U.S. Bancorp Piper Jaffray Inc. (the "Underwriter"), set forth in the Underwriter's Certificate (the"Underwriter's Certificate") executed by the Underwriter and delivered as of the Date of Issue; and (5) The certifications of Financial Security Assurance Inc. (the "Bond Insurer"), the issuer of the municipal bond insurance policy with respect to the Bonds (the "Insurance Policy"), set forth in its "Disclosure,No Default and Tax Certificate" (the "Bond Insurer's Certificate"), dated and delivered as of the Date of Issue. The City is not aware of any facts or circumstances that would cause it to question the accuracy,reliability or reasonableness of the certifications in the Underwriter's Certificate or the Bond Insurer's Certificate. (d) Purpose of Certificate. This Certificate is made in part for the purpose of establishing the reasonable expectations of the City as to the amount and application of proceeds of the Bonds. It is intended to be and may be relied on for the purposes of Sections 103, and 141 through 150 of the Code and as a certificate described in Treasury Regulations Section 1.148-2(b)(2). This Certificate is being executed and delivered as part of the record of proceedings prepared in connection with the issuance of the Bonds. The City understands that, despite the representations and statementslof expectation made in this Certificate, (1)the taking of any deliberate, intentional action by the City after the Date of Issue in order to earn arbitrage will cause the Bonds to be "arbitrage bonds"within the meaning of Section 148 of the Code if such action,had it been expected on the Date of Issue, would have caused the Bonds to be arbitrage bonds, and that an intent to violate the requirements of Section 148 of the Code is not necessary for an action to be considered intentional within the meaning of the Code; and(2)the taking of any deliberate action subsequent to the Date of Issue that causes the conditions of either the private loan financing test or the private business use and repayment tests under Section 141 of the Code to be met, will cause'the Bonds to be private activity bonds within the meaning of Section 141 of the Code, and that an intent to violate the requirements of Section 141 of the Code is not necessary for an action to be considered deliberate within the meaning of the Code. jl (e) Authorization and Purposes of the Bonds. The Bonds are being issued pursuant to the Bond Ordinance to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage (the "Construction Project"), to advance refund and defease the 1997 CIB Bonds pursuant to the Refunding Plan, and to pay incidental costs and costs related to the sale and issuance of the Bonds. ' I f:\Renton\ltgo&refunding 2001 2 (f) Security. The BOnds are limited tax general obligations of the City. The City has irrevocably covenanted in the Bond Ordinance,unless the principal of and interest on the Bonds are paid from other sources, so long as any Bonds are outstanding, to include in its budgets and to make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation in amounts which, together with any other money legally available therefor, shall be sufficient to pay the principal and interest on the Bonds as the same shall become due. The City has irrevocably pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. The obligations of the City under the Bonds are not"federally guaranteed"within the meaning of Section 149(b) of the Code. (g) Status of City. The City is a code city duly organized under the laws of the State of Washington. (h) Multipurpose Issue Allocations. (1) Designation of Issues for Purposes of Sections 148 and 149(d) of the Code. Pursuant to Treasury Regulations Section 1.148-9(h), the Bonds shall be treated as composed of the following two separate issues for purposes of Sections 149(d)(2), 149(d)(3)(A)(i) and(ii) of the Code, and for all purposes of Section 148 of the Code (except determining the yield on the Bonds and the yield on investments for purposes of the arbitrage yield restrictions and the arbitrage rebate requirement described herein, determining the amount of the rebate requirement under'Section 4 of this Nonarbitrage Certificate, including subsidiary matters with respect to that determination, such as the computation date credit, the due date for payments, and the $100,000 bona fide debt service fund exception, determining the minor portion of an issue under Section 148(e) of the Code and the portion of an issue eligible for investments as part of a reasonably required reserve fund under Section 148(d) of the Code): (A) that portion of the Bonds consisting of proceeds to be used to pay part of the costs of the Construction Project and the issuance costs attributable to such Bonds (the "Construction Issue"), and(B)that portion of the Bonds consisting of proceeds to be used to pay the costs of the Refunding Plan and the issuance costs attributable to such Bonds (the "Advance Refunding Issue"). The portions of the Bonds allocated to each of the two separate governmental purposes identified above shall have an issue price that bears the same ratio to the aggregate issue price of all the Bonds as the portion of the Sale Proceeds of the Bonds used for that governmental purpose bears to the aggregate Sale Proceeds of the Bonds, after reasonable adjustment of the issue price of the Bonds to account for common costs. (2) Bond Allocations. No specific allocation of Bonds is being made at the present time between the Construction Issue and the Advance Refunding Issue. The City may make such an allocation at any subsequent time, but once such an allocation is made, it will be treated as irrevocable for purposes of Sections 148 and 149(d) of the Code, and may not under any circumstances be changed subsequent to the date of such allocation. Any such allocations of individual Bonds must, in the case of each portion used to refund a separate prior issue, satisfy f:\Renton\ltgo&refunding 2001 3 the requirements of Section 2(h)(4)hereof, and in the case of multipurpose issues not used for refunding purposes,the requirements of,Section 2(h)(3)hereof (3) Bond Allocations to Construction Issue. Bonds may be allocated to the Construction Issue using any reasonable, consistently applied allocation method. Reasonable allocation methods include,but:are not limited to (A) the use of the relative amount of Sale Proceeds used for the Construction Issue to allocate each Bond by ratable numbers of substantially identical whole Bonds and(B) in the case of allocation of Bonds to a particular purpose investment, if that purpose investment has principal and interest payments that reasonably coincide in time and amount to the principal and interest payments on the Bonds allocated to that purpose investment;provided that, in either case, the City will be permitted to round each fractional Bond resulting from such allocation method up or down to the next integral multiple of a permitted denomination of Bonds not in excess of$100,000. (4) Allocations of Bonds to Advance Refunding Issue. The allocation of individual Bonds to the Advance Refunding Issue must be made using a reasonable, consistently applied allocation method that either(A)results from a pro rata allocation of all of the Bonds among all of the purposes of the Bonds, (B)reflects aggregate principal and interest payable in each Bond Year that is less than, equal to, or proportionate to the aggregate principal and interest payable on the 1997 CIB Bonds'in each Bond Year, (C)results from an allocation of all the Bonds in proportion to the remaining weighted average economic life of the capital projects financed or refinanced by the Bonds, or(D) if none of the allocation methods described above is permitted under state law restrictions applicable to the Bonds, another reasonable allocation method,provided that the City agrees not to employ such other allocation method under this Section 2(h)(4)without obtaining prior written approval from Bond Counsel. (i) Ownership and Use of Facilities Financed with Bond Proceeds. The City now owns and expects in the future to own and operate all facilities financed or refinanced with the proceeds of the Bonds. No more than 10%of the proceeds of the Bonds are to be used, directly or indirectly, for any"private business use"(as defined in Section 141 of the Code); and no more than 5%of the proceeds of the Bonds are to be used with respect to any private business use that is not related to the City's use of such proceeds for governmental purposes, or which is disproportionate to such governmental use. Further, the payment of the principal of and interest on no more than 10% of the proceeds of the Bonds are to be, directly or indirectly, (1) secured by any interest in(A)property to be used for private business use, or(B)payments in respect of such property; or(2) derived from payments in respect of property, or borrowed money,used or to be used for a private business use; and the payment of the principal and interest on no more than 5% of the proceeds of the Bonds are to be so secured by or derived from payments made in respect of private business use of the proceeds of the Bonds in a manner which is unrelated or disproportionate to the City's use for governmental purposes. The"nonqualified amount,"as defined in Section 141(b)(8) of the Code, if any,with respect to the Bonds will not exceed $15,000,000. (j) No Private Loans. None of the proceeds of the Bonds will be used, directly or indirectly,to make or finance loans to any person(including any governmental unit). £\RentonVigo&refunding 2001 4 r_I (k) Debt Service Savings From Insurance Policy. Based upon the Underwriter's Certificate, thepremium to be aid to the Bond Insurer for the Insurance Policy(1) was P negotiated at arm's length, and'is reasonable, and(2)the present value of(A) such premium, computed by using Bond Yield(described in Section 3(n) of this Certificate), including such premium, as the discount factor, is less than(B)the present value of the interest reasonably expected to be saved on the Bonds as a result of the purchase of the Insurance Policy, computed without regard to such premium. Based upon the certifications of the Bond Insurer set forth in the Bond Insurer's Certificate, (A)the Insurance Policy is an unconditional and recourse obligation of the Bond Insurer to pay scheduled payments of principal of and interest on the Bonds in the event of the failure to do so by the City; (B)I the premium to be paid for the Insurance Policy was determined in arm's-length negotiations, is required to be paid as a condition to the issuance of the Insurance Policy, and is a charge for a transfer of credit risk; (C)no portion of such premium represents an indirect payment of costs of issuance of the Bonds, including rating agency fees, other than fees paid by the Bond Insurer to maintain its ratings, which,together with all other overhead expenses of the Bond Insurer, are taken into account in the formulation of its rate structure, or for the provision of additional services by the Bond Insurer,nor the direct or indirect payment for a cost, risk or other element that is not customarily borne by insurers of tax-exempt bonds (in transactions in which the guarantor has no involvement other than as a guarantor); (D)the Bond Insurer is not providing any services in connection with the Bonds other than providing the Insurance Policy, and expect for the premium,the Bond Insurer will not use any portion of the { Bond proceeds; (E) except for payments under the Insurance Policy in the case of nonpayment by the City, there is no obligation to pay any amount of principal or interest on the Bonds by the Bond Insurer; and(F)the City ills not entitled to a refund in excess of the unearned portion of the premium for the Insurance Policy in the event a Bond is retired before the final maturity date. Section 3. Reasonable Expectations of the City as to Facts, Estimates and Circumstances. The City makes the following representations and statements of fact, estimates and expectation to establish that it is not expected that the proceeds of the Bonds will.be used in a manner that will cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code: (a) Application of Total Sale Proceeds. (1) General. The amount of Sale Proceeds received by the City from the sale of the Bonds is $20,052,640.75;(principal amount of$19,505,000.00,plus original issue premium of$600,513.10, less original issue discount of$52,872.35). (2) No Accrued Interest. The City will receive no of Pre-Issuance Accrued Interest. (3) Costs of Issuance. Sale Proceeds in the amount of$165,792.50 will be used to pay Underwriter's discount on the Date of Issue; such amount is equal to the difference between the issue price of the Bonds and the amount paid for the Bonds by the Underwriter. £\Renton\ltgo&refunding 2001 5 Another$55,932.55 of Sale Proceeds will be applied on the Date of Issue to the payment of the other costs of issuing the Bonds. `! (4) Bond Insurance Premium. Sale proceeds in the amount of$97,432.22 will be paid to the Bond Insurer on the Date of Issue as the premium for the Insurance Policy. (5) Escrow Fund. Sale Proceeds in the amount of$13,809,431.25 will be paid to the Escrow Trustee on the Date of Issue, to be deposited into the Escrow Fund, in trust, and applied or invested as provided in the Escrow Agreement for the advance refunding and defeasance of the 1997 CIB Bonds pursuant to the Refunding Plan. (6) Project Fund. The remaining Sale Proceeds, in the amount of $5,924,052.23 will be deposited into the Project Fund on the Date of Issue to be applied to pay costs of the Construction Project. (b) City Equity. Ori the Date of Issue,the City will transfer the sum of$753,058.71 (the"City Equity"), derived solely from City funds not theretofore constituting gross proceeds of any tax-exempt obligations, to the Escrow Trustee for deposit into the Capitalized Interest Fund created pursuant to the Escrow Agreement, and application as provided therein. (c) Transferred Proceeds. (1) General: On each date (a"Transfer Date"), as original, investment or transferred proceeds of the Bonds discharge principal of the 1997 CIB Bonds,proceeds of the 1997 CIB Bonds, if any, that are unexpended on such date will become proceeds of the Bonds (hereinafter referred to as the "Transferred Proceeds") and cease to be proceeds of the 1997 CIB Bonds. As among all sources of unspent proceeds of each issue of 1997 CIB Bonds, the aggregate amount subject to transfer is equal to the product of the total remaining original, investment and transferred proceeds of the 1997 CIB Bonds on the date of such discharge and a fraction,the numerator of which is principal amount of such 1997 CIB Bonds paid with proceeds on such date and the denominator of which is the total outstanding principal amount of the respective issue of 1997 CIB Bonds on the date immediately preceding the date of such discharge. For this purpose, "principal amount"means,with reference to a 1997 CIB Bond which is a Plain Par Bond, its stated principal amount, and with reference to any other sort of 1997 CIB Bond, its Present Value. Any transfer that occurs on such date from among the sources of then unspent proceeds of such 1997 CIB Bond is ratable (based on value) as between each such source. As proceeds of the 1997 CIB Bonds become Transferred Proceeds, either a ratable portion of each Purpose and Nonpurpose Investment of such proceeds shall be allocated to Transferred Proceeds, or a representative portion of the portfolio of Purpose and Nonpurpose Investments in each such source shall be allocated to Transferred Proceeds. The determination as to whether a particular allocation of investments is representative is based upon all the facts and circumstances, including,without limitation,whether current yields, maturities, and unrealized gains or losses on a particular allocated investment are reasonably comparable to those of the unallocated investments in the aggregate. If a portion of Nonpurpose Investments is otherwise representative, the City may allocate such portion from whichever source of funds it deems f:\Renton\ltgo&refunding 2001 6 appropriate, such as a reserve fund or a construction fund for a prior issue. In addition to other representative allocation methods, the City may specifically allocate particular Nonpurpose Investments to Transferred Proceeds if the investments so allocated are valued at Fair Market Value on the Transfer Date in determining the payments and receipts on that date,provided that the portion of the Nonpurpose Investments that transfers is based on the fair market value of all Nonpurpose Investments. The Value of a Nonpurpose Investment allocated to Transferred Proceeds on a Transfer Date may not exceed the Value of that investment on the Transfer Date used for purposes of the arbitrage restriction to the 1997 CIB Bonds. (2) Transfer'!Dates and Yield Reduction Payment. As of the Date of Issue,no gross proceeds of the 1997 CO Bonds exist except an allocable portion of the funds in the bond fund for the 1997 Bonds, which will be fully expended in the payment of debt service on the 1997 CIB Bonds due on December 1, 2001 (which is the first date upon which the proceeds of the Bonds will discharge principal of the 1997 CIB Bonds). Therefore,there will be no transfer of such proceeds to the Bonds. (d) Investment Earnings. Interest earned(including discount and premium) on any moneys or investments in any fund for the Bonds will be retained in such fund and used for the purposes thereof. II (e) Funds under the!Bond Ordinance and Escrow Agreement. The Bond Ordinance establishes the following funds for Gross Proceeds of the Bonds, each to be held separate and apart from each other and all other funds and accounts of the City: The Bond Fund - The Project Fund The Escrow Agreement establishes the following funds for Gross Proceeds of the Bonds, each to be held separate and apart from each other and all other funds and accounts of the City and the Escrow Trustee, in accordance with the terms of the Escrow Agreement: - The Escrow Fund - The Capitalized Interest Fund (f) No Other Funds. Other than the funds specifically described in this Certificate, no fund or account that secures or otherwise relates to the Bonds has been established,nor are any such funds or accounts expected to be established,pursuant to any instrument. (g) Sinking Funds for the Bonds. (1) Bona Fide Debt Service Fund: The Bond Fund. All payments of taxes levied in respect of debt service on the Bonds will be deposited into the Bond Fund, which is intended to achieve a proper matching of current revenue and the scheduled annual debt service on the Bonds. f:\Renton\ltgo&refunding 2001 7 All amounts in the Bond Fund will be expended to pay debt service on the Bonds within thirteen months of the date such amounts are first deposited into the Bond Fund. The amounts in the Bond Fund will be depleted at least once each year except for any carryover amounts which will not exceed the greater of(1) the earnings on the Bond Fund for the immediately preceding Bond Year or(2) one-twelfth of principal and interest payments on the Bonds for the immediately preceding Bond Year. The schedule of payment of interest on and principal of the Bonds has been established on the basis of, and is intended to achieve, a proper matching of revenues with debt service on the Bonds. i (2) Other Sinking Fund: The Capitalized Interest Fund. As described in Section 3(b) of this Certificate; on the Date of Issue, the City will transfer the City Equity to the Escrow Trustee for deposit into the Capitalized Interest Fund,which is intended to serve as a I- sinking fund for the payment of capitalized interest due on the Bonds of the Construction Issue from the Date of Issue to and including June 1 2004. As such, the funds in the Capitalized Interest Funds constitute Replacement Proceeds of the Bonds,but the Capitalized Interest Fund does not qualify as "bona fide debt service fund"under the Code. The Escrow Agreement requires the Escrow Trustee to apply$753,058.00 of the City Equity to the payment of the purchase price of the City Escrow Obligations, and to hold the remainder of the City Equity, the sum of$0.71, as the City Initial Cash. Based upon the information in the Underwriter's Certificate,the yield on the City Escrow Obligations is less than the yield on the Bonds. All interest earned on the City Escrow Obligations is required to be deposited in and credited to the Escrow Fund,upon receipt. Such interest and the maturing principal of the City Escrow Obligations are required to be used to pay capitalized interest due on the Bonds of the Construction Issue from the Date of Issue to and including June 1, 2004. (3) No Other Sinking Funds. The City has not created or established, and does not expect to create or establish, any fund in connection with the Bonds that is reasonably expected to be used to pay debt service on the Bonds other than the Bond Fund. (h) Representation's Establishing Eligibility for New Money Temporary Period. (1) Completion Date. It is reasonably expected that Net Sale Proceeds of the Construction Issue deposited in the Project Fund will be used to pay the costs of the Construction Project not later than October 31, 2004. (2) Binding Obligations. The City has spent or, within 6 months of the Date of Issue, will spend(or enter into binding obligations with third parties obligating the City to spend) an amount equal to at least 5% of the Net Sale Proceeds of the Construction Issue with respect to the Construction Project. f:\Renton\ltgo&refunding 2001 8 (3) Due Diligence. Work on the Construction Project and the allocation of the Net Sale Proceeds of the Construction Issue to expenditures with respect thereto will proceed with due diligence. (i) Representations Regarding Refunding Plan. (1) Representations Regarding 1997 CIB Bonds. A portion of the Sale Proceeds will be used to advance refund and defease the 1997 CIB Bonds. The proceeds of the 1997 CIB Bonds were used by the City, together with other available funds, to pay a part of the cost of acquiring the Main& Grady Building, and renovating,refitting and equipping the building for use as the primar i municipal administrative and law and justice center for the City and for other general City purposes (the"1997 Project") and to pay the costs of issuance of the 1997 Bonds. The 1997 Project has been completed and, as of the Date of Issue, no gross proceeds of the 1997 CIB Bonds exist except an allocable share of funds in the bond fund for the 1997 Bonds as described in Section 3(c) of this Certificate. The 1997 CIB Bonds will be called for redemption on June 1, 2007, which is the earliest date that the 1997 CIB Bonds are subject to optional redemption. (2) Application of Escrow Fund. The Escrow Agreement requires the Escrow Trustee to apply$13,809,425.60 of the Advance Refunding Issue Sale Proceeds deposited into the Escrow Fund to the payment of the purchase price of the Escrow Obligations. and to hold the remainder of such Advance Refunding Issue Sale Proceeds, the sum of$6.25, as the Initial Cash. All interest earned on the Escrow Obligations is required to be deposited in and credited to the Escrow Fund,upon receipt. Such interest and the maturing principal of the Escrow Obligations are required to be used to pay(A) the principal of and interest on the 1997 CIB Bonds up to and including June 1, 2007; and(B) the redemption price(equal to 100% of the par amount plus accrued interest) of all 1997 CIB Bonds outstanding on June 1, 2007. (3) Yield of Escrow Obligations. Based on the Escrow Verification, the yield on the Escrow Obligations is less than the yield on the Bonds. (4) Substitute Obligations. The Escrow Agreement permits the Escrow Trustee to redeem or sell the Escrow Obligations held thereunder prior to maturity and to reinvest the proceeds thereof in Substitute Obligations,provided such reinvestment does not cause the yield on funds held in the Escrow Fund to exceed the yield on the Bonds. The Escrow Agreement permits the Escrow Trustee to make such reinvestments in noncallable Government Obligations (defined in the Escrow Agreement) at a yield not to exceed 0.00% or such higher yield as may be directed by a letter of instructions from the City, which letter shall contain a verification of the yield on such Substitute Obligations. The Escrow Agreement further provides that prior to any reinvestment in which the yield on such investments would exceed the yield on the Bonds, an Opinion of Bond Counsel must be delivered to the Escrow Trustee with the letter of instructions from the City. Except for such reinvestment in Substitute Obligations, the Escrow f:\Renton\ltgo&refunding 2001 9 Trustee is not permitted to reinvest proceeds of the Escrow Obligations at a yield in excess of the yield on the Bonds. (j) No Substitute Funds. No portion of the Sale Proceeds of the Bonds will be used as a substitute for any other funds that would otherwise be used as a source of financing for any portion of the cost of the Construction Project or any portion of the cost of the Refunding Plan, and that have been or will be used to acquire, directly or indirectly, obligations producing a yield in excess of the yield on the Bonds. (k) No Negative Pledges. There are no amounts held under any agreement to maintain funds at a particular revel for the direct or indirect benefit of the Owners of the Bonds, excluding for this purpose(1) amounts in which the City may grant rights that are superior to the rights of the bondholders and(2) amounts that do not exceed the reasonable needs for which they are maintained and that may be spent without any substantial restriction other than a requirement to replenish the amount by a testing date that may occur no more frequently than every 6 months. 1 No Excess Proceeds. The Gross Proceeds of the Bonds allocable to the Advance Refunding Issue will not exceed the costs of accomplishing the Refunding Plan by an amount greater than 1%of the Advance Refunding Issue Sale Proceeds. The Bonds will not remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bonds,based on all facts and circumstances. (m) Universal Cap., Notwithstanding any restrictions on the investment of proceeds of the Bonds and other amounts set forth in Section 3(a) of this Certificate,proceeds of the Bonds and other amounts treated as proceeds of the Bonds shall be allocated and remain allocated to the Bonds, and thus be subject to the restrictions contained in this Certificate, only to the extent that the value of such the Nonpurpose Investments allocated to proceeds does not exceed the value of the outstanding Bonds (the "Universal Cap"). This section shall not apply to amounts on deposit in the Bond Fund. (n) Bond Yield. The yield on the Bonds (the "Bond Yield") generally means the discount rate that, when used in computing the present value as of the Date of Issue of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the Bonds,produces an amount equal to the present value as of the Date of Issue,using the same discount rate, of the aggregate issue price of the Bonds (defined as the initial offering price or yield to the public, excluding bond houses,brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers, at which price or yield a substantial amount of the Bonds of each maturity was sold). For this purpose the mandatory sinking fund payments required to be made with respect to the Bonds shall be taken into account. The mandatory sinking fund payments so required to be taken into account will be equal to the stated principal amount plus accrued unpaid interest except for any mandatory sinking fund payment with respect to a Bond whose stated redemption price at maturity exceeds the issue price of such Bond by more than 0.25%multiplied by the f:\Renton\ltgo&refunding 2001 10 product of the stated redemption price at maturity of the entire term Bond and the number of years to the weighted average maturity date of the entire term Bond. In such latter case, the mandatory sinking fund payment to be taken into account will be equal to the present value of the Bonds redeemed on each mandatory sinking fund redemption date. The Bonds maturing on December 1 in the years 2012 through 2019, inclusive,have been treated as redeemed at their respective stated redemption prices on the optional redemption dates that would produce the lowest yield thereon,because such Bonds were issued at an issue price that exceeds the stated redemption price at maturity by more than 0.25%multiplied by the product of the stated redemption price at maturity and the number of complete years to the first optional redemption date for the Bond, all in accordance with Treasury Regulations Section 1.148-4(b)(3). The aggregate present value on the Date of Issue of the issue price of the Bonds, as so defined, and based upon the information in the Underwriter's Certificate is $20,052,640.75, which is equal to the principal,amount of the Bonds of$19,505,000.00,plus original issue premium of$600,513.10, less original issue discount of$52,872.35. Based upon the information in the Bond Insurer's Certificate and the Underwriter's Certificate, the premium for the Insurance Policy in the sum of$97,432.22 is a payment by or on behalf of the City to the Bond Insurer for a "qualified guarantee" (as such term is defined in Section 1.148-4(f) of the Treasury Regulations), and may be treated as additional interest in the computation of yield on the Bonds in accordance with Section 1.148-4(f) of the Treasury Regulations. Based upon the Escrow Verification, the Bond Yield computed in this manner is, as of the date hereof,4.75078%. The Bond Yield is computed as of the Date of Issue and will not be affected by subsequent unexpected events unless (A)the City either enters into a hedging transaction, within the meaning of Treasury Regulations Section 1.148-4(h)(3) or(B)unless there is a subsequent transfer, waiver, modification or similar transaction affecting any right!that is part of the terms of a Bond. Prior to entering into any transaction described in the immediately preceding sentence, the City shall inform Bond Counsel of its intent and shall not enter into such transaction without receiving a prior Opinion of Bond Counsel that such transaction will not adversely affect the exclusion from gross income of interest on the Bonds. (o) Yield Restrictions. Any amounts on deposit in any fund or account established for the Bonds will not be invested at a yield that exceeds the Bond Yield, except as follows: (1) Bond Fund. Amounts deposited in the Bond Fund may be invested at an unrestricted yield for a period of 13 months from the date of deposit of such amounts in the Bond Fund. Earnings on such amounts that are retained in such fund may be invested at an unrestricted yield for a period of 13 months from the date of receipt of the amount earned. Such amounts are not subject to the Rebate Requirement. (2) Escrow Fund. Advance Refunding Issue Sale Proceeds deposited in the Escrow Fund, together with the investment earnings thereon, may not be invested at a yield in excess of the Bond Yield. f:\Renton\ltgo&refunding 2001 11 1 (3) Capitalized Interest Fund. The Gross Proceeds of the Bonds consisting of the City Equity, deposited in the Escrow Fund, together with the investment earnings thereon, may not be invested at a yield in excess of the Bond Yield. (4) Project Fund. Construction Issue Sale Proceeds of the Bonds on deposit in the Project Fund, together with the investment earnings thereon,may be invested without regard to yield restrictions for a three'year period commencing on the date hereof Thereafter, such funds may not be invested at a yield that exceeds the Bond Yield. Except as otherwise described j in Section 4 hereof, such funds may be subject to the Rebate Requirement. (5) Investment Earnings. All earnings on Gross Proceeds of the Bonds, other than earnings on amounts described in Section 3(o)(1)hereof and earnings on Replacement Proceeds that do not themselves constitute Replacement Proceeds, are subject to the Rebate Requirement. (6) Yield Reduction Payments. Notwithstanding any of the provisions of Sections 3(0)(1)through 3(o)(5)hereof that require the investment of sale proceeds of the Bonds and investment earnings thereon at a yield not in excess of the Bond Yield,the yield on certain Nonpurpose Investments acquired with proceeds of the Bonds will not be considered to be higher than the applicable yield restriction described in this Section 3(o) if the City makes or causes to be made "yield reduction payments"to the United States Treasury at the times and in the amounts described in Section 1.148-5(c) of the Treasury Regulations. The City agrees to retain and consult with Bond Counsel prior to making any"yield reduction payments"pursuant to Section 1.148-5(c) of the Treasury Regulations. (p) No Qualified Hedges. The City has not entered into, and does not expect to enter into, any hedging arrangement or transaction(as defined in Treasury Regulations Section 1.148- 4(h))with respect to the Bonds. (q) No Hedge Bonds. At least 85%of the spendable proceeds of the Bonds will be used to carry out the governmental purposes of the Bonds by October 31, 2004, and not more than 50% of the proceeds of the Bonds will be invested in Nonpurpose Investments with a substantially guaranteed yield;of 4 years or more. (r) Single Issue. No other obligations of the City(1) are reasonably expected to be paid from substantially the same source of funds as the Bonds (determined without regard to guarantees from unrelated parties), (2) are being sold at substantially the same time as the Bonds, (i.e.,within fourteen days of October 22, 2001, the sale date of the Bonds), and(3) are being sold pursuant to the same plan of financing as the Bonds. Section 4. Rebate Requirement Calculations and Payment. The City has been advised by Bond Counsel that the following provisions and procedures also apply to the proceeds of the Bonds: f:\Renton\ltgo&refunding 2001 12 1 (a) Rebate Requirement. The Rebate Requirement as of any Computation Date, subject to such modifications as may be made by Treasury Regulations or rulings, is an amount I ' equal to the excess (if any) of the future value of all Nonpurpose Receipts over the future value of all Nonpurpose Payments. All future values are computed as of the Computation Date using an interest rate equal to the Bond Yield. (b) Future Value. The future value of a Nonpurpose Receipt or Payment is calculated using the following formula: , FV= PV(1 +j i)n where FV= The future value of the Nonpurpose Receipt or Payment; PV= The amount of the Nonpurpose Receipt or Payment; i = Bond Yield divided by the number of compounding intervals in a Bond Year; and n = The number of compounding intervals from the date of the Nonpurpose Receipt,or Payment through the Computation Date. (c) Allocation and Accounting Rules. Generally, investments are allocated to the Bonds for the period that(1)begins on the date Gross Proceeds are allocated to the Bonds and to the investment, and(2) ends on the date such Gross Proceeds cease to be allocated to the Bonds or to the investment. (d) Relationship to Yield Restriction. Subject to Section 3(o)(1) and the next paragraph hereof,the requirements of this Section 4 relating to the Rebate Requirement of the Code apply to all Gross Proceeds of the Bonds, regardless of whether such amounts are subject to yield restriction or are unrestricted as to yield. Thus, an amount of Gross Proceeds of the Bonds may be"unrestricted as to yield"but will,notwithstanding that characterization,be subject to the Rebate Requirement of the Code. Similarly, an amount of Gross Proceeds of the Bonds may be "restricted as to yield"but will,notwithstanding that characterization, also be subject to the Rebate Requirement of the Code. The amounts in the Bond Fund and the earnings thereon are excluded from the calculation of the Rebate Requirement in any year in which the aggregate earnings in such Fund do not exceed $100,000. The City shall comply with the recordkeeping requirements set forth in Section 4(g) of this Certificate with respect to such earnings. (e) Computation and Rebate Payment Dates. The Rebate Requirement, net of the Computation Date Credit, must be computed by the City as of each Installment Computation Date and as of the Final Computation Date. The Code requires that the following rebate payments be made with respect to the Bonds (the "Rebate Payments"): I ' f:\Renton\ltgo&refunding 2001 13 I (1) A rebate payment of an amount which,when added to the future value of all previous rebate payments made with respect to the Bonds, equals at least 90% of the Rebate Requirement, must be made by the City no later than the date 60 days after each Installment Computation Date. (2) A final rebate payment of an amount which, when added to the future value of all previous rebate payments made with respect to the Bonds, equals 100% of the Rebate Requirement as of the Final Computation Date,must be made by the City to the United States Department of Treasury no later than 60 days after the Final Computation Date. (f) Procedure for Remittance. Each Rebate Payment to be made by the City pursuant to this Section shall be filed with the Internal Revenue Service Center, 1160 West 1200 South, Ogden, Utah 84201 (or at such other address as may be designated by the Internal Revenue Service in the future) on or before the date payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T,which shall be executed by the City. (g) Recordkeepingl Obligation. (1) In General. The Code requires that the City keep and maintain accurate and complete records of fund balances, any investments thereof and all transactions involving any fund or account held under the Bond Ordinance. (2) Retention of Records. The Code further requires that the City retain records of the determination of the Rebate Requirement and of the Rebate Payments actually made until seven years after the retirement of the last Outstanding Bond. II Section 5. Segregation of Proceeds. In order to perform the calculations required by the Code, it is necessary to separately account for all of the Gross Proceeds of the Bonds and each specific investment acquired therewith. To that end, the City may take appropriate accounting measures in order to account fully and with specificity for all Gross Proceeds of the Bonds and each investment acquired therewith. Section 6. Bond Ordinance Covenants Concerning Arbitrage, Tax Exemption and Bank Qualification. (a) Nonarbitrage Covenants of City. Section 19 of the Bond Ordinance provides as follows: The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation, and will take or require to be taken such acts as may be permitted by Washington law and as may from time to time be required under applicable law to continue the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation. Without f:\RentonVtgo&refunding 2001 14 i I � I limiting the generality of the foregoing, the City will not invest or make or permit any use of the proceeds of the Bonds or of its other money at any time during the term of the Bonds which would cause the Bonds to be "arbitrage bonds"within the meaning of Section 148 of the Code. The City covenants that it shall calculate or cause to be calculated, and shall rebate to the United States, all earnings from the investment of Bond proceeds that are in excess of the amount that would have been earned had the yield on such investments been equal to the yield on the Bonds,plus income derived from such excess earnings, to the extent and in the manner required by Section 148 of the Code. The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer the arbitrage certifications of which may not be relied upon. The City will take no actions and will make no use of the proceeds of the Bonds or any other funds held under this Ordinance which would cause any Bond to be!treated as a"private activity bond" (as defined in Section 141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described in Section 103(a) of the Code,unless the tax exemption thereof is not affected. Section 7. Amendments. Notwithstanding any other provision herein, the covenants and obligations contained herein may be and shall be deemed modified to the extent the City secures a written opinion of Bond Counsel that any action required hereunder is no longer required or that some further action is required in order to maintain the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. Section 8. Supplementation of this Certificate. The City understands the need to supplement this Certificate periodically to reflect further developments in the federal income tax laws governing the exclusion from gross income for federal income tax purposes of interest on the Bonds. The City will comply with any modifications or supplements made to this Certificate in accordance with the written advice of Bond Counsel. £\Renton\ltgo&refunding 2001 15 - I I Section 9. Reliance by,Bond Counsel. The City understands and acknowledges that the opinion of Gottlieb, Fisher&Andrews, PLLC., as Bond Counsel,regarding the exclusion of interest on the Bonds from gross income for federal income tax purposes is rendered in reliance upon the representations and statements of fact, estimates and expectation contained in this Certificate and assumes the continued compliance by the City with its covenants described above, and with the provisions',of this Certificate. IN WITNESS WHEREOF, I have hereunto subscribed my official signature as of the 1st day of November, 2001. i- I VICTORIA A. R KLE Finance and Information Services Administrator City of Renton, Washington ' I I , f:\Renton\ltgo&refunding 2001 16 EXHIBIT A Definitions Bond Counsel means Gottlieb, Fisher&Andrews, PLLC. Bond Year means each 1-year period that ends on a day selected by the City. The first and last Bond Years may be short periods. If no day is selected by the City before the earlier of the final maturity date or the date that is 5 years after the Date of Issue, Bond Years end on each anniversary of the Date of Issue and on the final maturity date. Computation Date means an Installment Computation Date or the Final Computation Date. • Computation DCr , with respect to the Bonds on an eligible Computation Date, a credit of$1,000 onate thejlastedit daymeansof each Bond Year during which there are amounts allocated to Gross Proceeds of the Bonds that are subject to the Rebate Requirement, and on the final maturity date. Date of Issue means November 1, 2001. Department of the Treasury means the Department of the Treasury of the United States. Fair Market Value, with respect to a Nonpurpose Investment,means, except where otherwise indicated in this Certificate, the following: General. Except with respect to Investment Property that is an obligation of the United States Treasury, the fair market value of an investment means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction. The fair market value of an Investment consisting of an obligation of the United States Treasury that is purchased directly from the United States Treasury shall be its purchase price. Certificates of Deposit. The market price of a certificate of deposit issued by a commercial bank that has a fixed interest rate, a fixed principal payment schedule, a fixed maturity, and a substantial penalty for early withdrawal means its purchase price if the certificate of deposit has a yield not less than (A) the yield on reasonably comparable direct obligations of the United States, and (B) the highest yield that is published or posed by the provider to be currently available from the provider on comparable certificates of deposit offered to the public. Guaranteed Investment Contracts. Except as provided in the definitions of Nonpurpose Payments and Nonpurpose Receipts, in the case of a guaranteed investment contract, the obligations acquired thereunder shall be considered acquired or disposed of f:\Renton\ltgo&refunding 2001 A-1 for an amount equal to the fair market value of such obligations if all of the following requirements are satisfied: I ' (A) The issuer makes a bona fide solicitation for the purchase of the investment. A bona fide solicitation is a solicitation that satisfies all of the following requirements: (1) The bid specifications are in writing and are timely forwarded to potential providers. (2) The bid specifications include all material terms of the bid. A term is material if it may directly or indirectly affect the yield or the cost of the investment. 6) The bid specifications include a statement notifying potential providers that!submission of a bid is a representation that the potential provider did not consult with any other potential provider about its bid, that the bid was determined without regard to any other formal agreement that the potential provider has with the issuer or any other person(whether or not in connection with the bond issue), and that the bid is not being submitted solely as a courtesy to the issuer or any other person for purposes of satisfying the requirements of paragraph(B)(1) or(B)(2) of this definition. (4) The terms of the bid specifications are commercially reasonable. A term is commercially reasonable if there is a legitimate business purpose for the term other than jto increase the purchase price or reduce the yield of the investment. (5) The terms of the solicitation take into account the issuer's reasonably expected deposit and drawdown schedule for the amounts to be invested. (6) All potential providers have an equal opportunity to bid. For example, no potential provider is given the opportunity to review other bids (i.e., at last look)before providing a bid. (7) At least three reasonably competitive providers are solicited for bids. A reasonably competitive provider is a provider that has an established industry reputation as a competitive provider of the type of investments being purchased. (B) The bids received by the issuer meet all of the following requirements: (1) The issuer receives at least three bids from the providers that the issuer solicited under a bona fide solicitation meeting the requirements of paragraph (A) of this definition and that do not have a material financial interest in the f:\Renton\ltgo&refunding 2001 A-2 issue. A lead underwriter in a negotiated underwriting transaction is deemed to have a material financial interest in the issue until 15 days after the issue date of the issue. In addition, any entity acting as a financial advisor with respect to the purchase of the investment at the time the bid specifications are forwarded to potential providers has a material financial interest in the issue. A provider that is a related party to a provider that has a material financial'interest in the issue is deemed to have a material financial interest in the issue. 1 (2) At least one of the three bids described in paragraph(B)(1) of this definition is from a reasonably competitive provider,with the meaning of the paragraph(A)(7) of this definition. 0) If the issuer uses an agent to conduct the bidding process, the agent did not bid toi provide the investment. (C) The winning bid is the highest yielding bona fide bid (determined net of any broker's feed). (D) The obligor on the guaranteed investment contract certifies the administrative costs that it pays (or expects to pay, if any) to third parties in connection with supplying the investment. (E) The issuer retains the following records with the bond documents until three years after the last outstanding bond is redeemed: (1) A copy of the contract. (2) The receipt or other record of the amount actually paid by the issuer for the investments, including records of any administrative costs paid by the issuer, and the certification under paragraph(D) of this definition. 1 (3) For each bid that is submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results. (4) The bid solicitation form and, if the terms of the guaranteed investment contract deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. For example, if the issuer purchases a portfolio of investments for a yield restricted defeasance escrow and, in order to satisfy the yield restriction requirements of Section 148 of the Code, an investment in the winning bid is replaced with an investment with a lower yield, the issuer must retain a record of the substitution and how the price of the substitute investment was determined. If the issuer replaces an investment in the winning bid portfolio with another investment, the purchase price of the new investment is not covered by the safe harbor unless the investment is bid under a bidding procedure meeting the requirements of this definition. f:\Renton\Itgo&refunding 2001 A-3 Final Computation Date means the date the last Bond is discharged. Gross.Proceeds shall have the meaning contained in Treasury Regulations Section 1.148-1(b), and shall generally include amounts which are: (a) Actually or constructively received from the sale of the Bonds, including amounts used to pay underwriters' discount or compensation and accrued interest other than Pre-Issuance Accrued Interest; (b) Investment proceeds (defined in Treasury Regulations Section 1.148-1(b) to include amounts actually or constructively received at any time by the City, such as interest and dividends, from the investment of proceeds of the Bonds); (c) Treated'as proceeds under Treasury Regulations Section 1.148-1(c) (which treats amounts in invested sinking funds and pledged funds for an issue as proceeds of an issue), including amounts in the Bond Fund and the Capitalized Interest Fund; (d) Invested in a reasonably required reserve or replacement fund (as defined in Treasury Regulations Section 1.148-2(f)); (e) Pledged by the City as security for payment of debt service on the Bonds; { (f) Used to!pay debt service on the Bonds; or (g) Treated as Transferred Proceeds of the Bonds (as described in Section 3(c) of this Certificate), if any. Such term shall not include amounts that are not otherwise Gross Proceeds but that are allocated to the Rebate Requirement. The determination of whether an amount is included within this definition shall be made without regard to whether the amount is credited to any fund or account established under the Bond Ordinance. For purposes of(e) above, an amount is pledged to pay principal of or interest on the Bonds if there is reasonable assurance that the amount will be available to be used for such purposes in the event that the City encounters financial difficulties. Installment Computation Date means the last day of the fifth Bond Year and each succeeding fifth Bond Year. Investment Property means any security or obligation(other than tax exempt obligations that are not"specified private activity bonds"within the meaning of Section 57(a)(5)(C) of the Code or a tax-exempt mutual fund that invests in tax-exempt bonds other than specified private activity bonds), any annuity contract or any other investment type property. Investment-type Property means any property, other than property described in section 148(b)(2)(A), (B), (C), or(E) of the Code, that is held principally as a passive vehicle for the f:\Renton\Itgo&refunding 2001 A-4 production of income. Except as otherwise provided, a prepayment for property or services is investment-type property if a principal purpose for prepaying is to receive an investment return from the time the prepayment is made until the time payment otherwise would be made. A prepayment is not investment-type property if-- (a) The prepayment is made for a substantial business purpose other than investment return and the plan has no commercially reasonable alternative to the prepayment, or (b) Prepayments on substantially the same terms are made by a substantial percentage of persons who are similarly situated to the City but who are not beneficiaries of tax-exempt financing. Nonpurpose Investment means any Investment Property in which Gross Proceeds are invested or to which Gross Proceeds are allocated other than purpose investments. Nonpurpose Investments shall not include: (a) United States Treasury Demand Deposit Securities -- State and Local Government Series; and (b) Tax Exempt Obligations. For purposes of this Certificat , the term"Tax-Exempt Obligations" shall include only obligations the interest on whibh is (i) excluded from gross income for federal income tax purposes, and (ii) not treated a's an item of tax preference under Section 57(a)(5) of the Code. The term "Tax-Exempt Obligation" shall, however, include an interest in a regulated investment company(within the meaning sof Section 851(a) of the Code) to the extent that at least 95% of the income to the holder is interest that is excluded from gross income by Section 103(a) of the Code. Nonpurpose Payments mean (a) amounts actually or constructively paid to acquire a Nonpurpose Investment (or treated as paid to acquire a Nonpurpose Investment in a Commingled Fund), (b) for a Nonpurpose Investment that is first allocated to the Bonds on a date after it is actually acquired (e.g., an investment that becomes allocable to Transferred Proceeds or Replacement Proceeds) or that become subject to the Rebate Requirement on a date after it is actually acquired, the Value of that investment on that date, (c) for a Nonpurpose Investment that was allocated to the Bonds at the end of the preceding computation period, the Value of that investment at the beginning of the computation period, (d) the Computation Date Credit, and (e) Yield Reduction Payments made pursuant to Section 3(o)(6). Nonpurpose Receipts mean(a) amounts actually or constructively received from a Nonpurpose Investment, (including amounts treated as received from Nonpurpose Investments held by a Commingled Fund), such as earnings and return of principal, (b) or a Nonpurpose Investment that ceases to be allocated to an issue before its disposition or redemption date (e.g., oi an investment that becomes allocable to Transferred Proceeds of another issue) or that ceases to f:\Renton\ltgo&refunding 2001 A-5 be subject to the Rebate Requirement on a date earlier than its disposition or redemption date (e.g., an Investment allocated to a fund initially subject to the Rebate Requirement but that subsequently qualifies as a bona fide debt service fund), the Value of that Nonpurpose Investment on that date, and (c) for a Nonpurpose Investment that is held at the end of a computation period, the Value of that investment at the end of that period. Treasury Regulations Section 1.148-6(e)provides special rules for any fund containing both Gross Proceeds of the Bonds in amounts in excess ofl$25,000 that are not Gross Proceeds of the Bonds if the amounts in such fund are invested and accounted for collectively,without regard to the source of funds deposited in the fund (a"Commingled Fund"). Plain Par Bond means1 a bond (a) issued with not more than a de minimis amount of original issue discount or premium, (b) issued for a price that does not include accrued interest other than Pre-Issuance Accrued Interest, (c) that bears interest from the issue date at a single, stated, fixed rate or that is a variable rate debt instrument within the meaning of Section 1275 of the Code, in each case with interest unconditionally payable at least annually, and (4) that has a lowest stated redemption price;that is not less than its outstanding stated principal amount. For this purpose, a"de minimis" amount means, with reference to original issue discount or premium, an amount that does not exceed 2% multiplied by the stated redemption price at maturity,plus any original issue premium that is attributable exclusively to reasonable underwriters' compensation. Plain Par Investment means an investment that is (a) issued with not more than a de minimis amount of original issue discount or premium or, if acquired on a date other than its issue date, acquired with no more than a de minimis amount of market discount or premium, (b) issued for a price that does not include accrued interest other than Pre-Issuance Accrued Interest, (c)bears interest from its issue date at a single stated, fixed rate or that is a variable rate debt instrument, in each case with interest unconditionally payable at least annually, and (d)has a lowest stated redemption price that is not less than its outstanding stated principal amount. For this purpose, de minimis shallimean, with reference to original issue discount or premium, an amount that does not exceed 2% multiplied by the stated redemption price at maturity plus any original issue premium that is attributable exclusively to reasonable underwriters' compensation and, in reference to market discount or market premium, an amount that does not exceed 2% multiplied by the stated redemption price at maturity. Pre-Issuance Accrued Interest means amounts representing interest that accrued on the Bonds for a period not greater than one year before the Date of Issue, but only if these amounts are paid within one year after the Date of Issue. Present Value means, with respect to an investment, an amount equal to the present value of all unconditionally payable receipts to be received from and payments to be paid for the investment after that date using the yield on the investment as the discount rate, computed under the economic accrual method, using the same compounding interval and financial conventions used to compute the Bond Yield. f:\Renton\Itgo&refunding 2001 A-6 I i Rebate Payment shall have the meaning ascribed thereto in Section 4(e) of this Certificate. Rebate Requirement shall have the meaning ascribed thereto in Section 4(a) of this Certificate. Replacement Proceeds'means amounts that have a sufficiently direct nexus to the Bonds - or to the governmental purpose;of the Bonds to conclude that the amounts would have been used for that governmental purpose if the proceeds of the Bonds were not used or to be used for that governmental purpose. For this purpose, governmental purposes include the use of amounts for the payment of debt service on a particular date. Replacement Proceeds include,but are not limited to, sinking funds,pledge funds, and certain other amounts to the extent these funds or amounts are held by or derived'from a substantial beneficiary of the Bonds. Sale Proceeds means any amounts actually or constructively received from the sale of the Bonds, excluding amounts used to pay Pre-Issuance Accrued Interest. Treasury Regulations means regulations issued by the United States Treasury pursuant to Sections 103 and 141 through 150 of the Code. Value means, with respect to an investment (including a payment or receipt on an investment) on a date, an amount determined consistently using one of the following methods with respect to such investment for all purposes of Section 148 of the Code: (a) with respect to a Plain Par Investment, its outstanding stated principal amount, plus any accrued interest unpaid on that date, (b) any fixed rate investment may be valued at its Present Value on that date, and(c) any investment may be valued'at its Fair Market Value on that date. Any yield-restricted investment must be valued at its Present Value. Except with regard to (i) yield-restricted investments, and (ii) investments allocated or de-allocated as a result of application of the Universal Cap, Transferred Proceeds or (iii) amounts in a Commingled Fund, an investment must be valued at its Fair Market Value on the date that it is first allocated to the Bonds or first ceases to be allocated to the Bonds as a consequence of a deemed acquisition or deemed disposition. The Value of Nonpurpose Investments allocated to Transferred Proceeds of the Bonds on a Transfer Date may not exceed;the Value of that Nonpurpose Investment on such Transfer Date used for purposes of applying,any of the rules under Section 148 of the Code to the 1997 C1B Bonds. ii f:\Renton\ltgo&refunding 2001 A-7 DISCLOSURE, NO DEFAULT AND TAX CERTIFICATE OF FINANCIAL SECURITY ASSURANCE INC. The undersigned hereby certifies on behalf of Financial Security Assurance Inc. ("Financial Security"), in connection with the issuance by Financial Security of its Policy No. 28077-N (the "Policy") in respect of the $19,505,000 in aggregate principal amount of City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 (the"Bonds")that: (i) the information set forth underithe caption "BOND INSURANCE- Financial Security Assurance Inc." in the official statement dated October 22, 2001 relating to the Bonds is true and correct, (ii) Financial Security is not currently in default nor has Financial Security ever been in default under any policy or obligation guaranteeing the payment of principal of or interest on an obligation, (iii) the Policy is an unconditional and recourse obligation of Financial Security (enforceable by or on behalf of the holders of the Bonds)to pay the scheduled principal of and interest on the Bonds in the event of Nonpayment by the Issuer(as set forth in the Policy), i I (iv) the insurance premium of $97,432.22 (the "Premium") is a charge for the transfer of credit risk and was determined in arm's length negotiations and is required to be paid to Financial Security as a condition to the issuance of the Policy, (v) no portion of such Premium 'represents an indirect payment of costs of issuance, including rating agency fees, other than fees!paid by Financial Security to maintain its ratings, which, together with all other overhead expenses!of Financial Security, are taken into account in the formulation of its rate structure, or for the provision of additional services by us, nor the direct or indirect payment for a cost, risk or other element that is not customarily borne by insurers of tax-exempt bonds (in transactions in which the guarantor has no involvement other than as a guarantor), I � (vi) Financial Security is not providing any services in connection with the Bonds other than providing the Policy, and except for the Premium, Financial Security will not use any portion of the Bond proceeds, (vii) except for payments under the Policyin the case of Nonpayment the Issuer, there is no obligation P P Yby to pay any amount of principal or interest on the Bonds by Financial Security, (viii) Financial Security does not expect that a claim will be made on the Policy, (ix) the Issuer is not entitled to a refund of the premium for the Policy in the event a Bond is retired before the final maturity date and (x) for Bonds which are secured'by a debt service reserve, Financial Security would not have issued the Policy unless the authorizing or security agreement for the Bonds provided for a debt service reserve account or fund funded and maintained in an amount at least equal to, as of any particular date of computation, the reserve requirement as set forth in such agreement. Financial Security makes no representation as to the nature of the interest to be paid on the Bonds or the treatment of the Policy under Section 1.148-4(f)of the Income Tax Regulations. FINANCIAL SECURITY ASSURANCE INC. By: Authorized Officer Dated: November 1, 2001 UNDERWRITER'S CERTIFICATE We, U.S. BANCORP PIPER JAFFRAY INC., as Underwriter of the $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 (the "Bonds"),hereby certify that: 1. The present value of(a)the premium for the municipal bond insurance policy issued with respect to the Bonds (the "Insurance Policy")to be paid from the proceeds of the Bonds, computed by using the Bond Yield (hereinafter defined), including such premium as the discount factor, is less than(b)the present value of the interest reasonably expected to be saved as a result of the purchase of the Insurance Policy, calculated without regard to the premium therefor. In our opinion,the premium for the Insurance Policy is comparable to those which are charged by Financial Security Assurance Inc., the issuer of the Insurance Policy, in similar transactions. In our opinion, the premium has been established in an arm's length transaction,represents a reasonable charge for the transfer of credit risk and constitutes a charge only for the transfer of credit risk. i 2. A substantial amount(i.e., at least 10% of each maturity) of the Bonds was sold to members of the public (excluding bond houses,brokers and other intermediaries) in the initial bona fide public;offering, at prices no higher than the prices for the Bonds set forth on the cover page of the Official Statement pertaining to the Bonds (the "Official Statement"), dated October 22, 2001. 3. The weighted average maturity of the Bonds is 14.288 years. 4. The yield on the City Escrow Obligations held in the Capitalized Interest Fund(each as defined in the Escrow Agreement, dated as of November 1, 2001, by and between the City and U.S. Bank Trust National Association, as escrow trustee) is 1 3.4481076%, which is less than the Bond yield of 4.75078 (the "Bond Yield"). DATED as of the 1st day of November, 2001. U.S. BANCORP PIPER JAFFRAY INC. B =_�✓ y Managing Director I Form 8038-G Information Return for Tax-Exempt Governmental Obligations ► Under Internal Revenue Code section-149(e) OMB No.1545-0720 (Rev. November 2000) 0,- See separate Instructions. Department of the Treasury Caution: If the issue price is under$100,000, use Form 8038-GC. Internal Revenue Service - Part I Reporting Authority If Amended Return, check here ► 0 1 Issuer's name 2 Issuer's employer identification number City of Renton , 91 ; 6001271 • 3 Number and street(or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 1055 South Grady Way ! 3 01 -, 5 City,town, or post office, state, and ZIP code - 6 Date of issue Renton,Washington 98058 November 1,2001 7 Name of issue CITY OF RENTON,WASHINGTON, LIMITED TAX GENERAL OBLIGATION 8 CUSIP number AND REFUNDING BONDS,2001 760133 PP7 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative Victoria A. Runkle, Director of Finance and Information Systems ( 425 ) 430-6858 Part II Type of Issue (check applicable boxes) and enter the issue price) See instructions and attach schedule 11 ❑ Education I 11 12 ❑ Health and hospital j 12 13 ❑ Transportation 13 14 0 Public safety 14 15 0 Environment (including sewage bonds) 15 16 ❑ Housing 16 17 ❑ Utilities . ' 17 18 0 Other. Describe ►construction of municip.al.parking.facilities&City administrative offices . 18 20,052,640.75 19 If obligations are TANs or RANs, check box ► CI If obligations are BANS, check box ► ❑ j 20 If obligations are in the-form of a lease or installment sale, check box ► CI Part III Description of Obligations. Complete for the entire issue for which this form is being filed. (a)Final maturity date (b)Issue price (c)Stated redemption (d)Weighted (e)Yield price at maturity average maturity 21 12/1/2021 $ 20,052,640.75 $ 19,505,000.00 14.288 years 4.7508 % Part IV Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 22 _ 23 Issue price of entire issue (enter amount from line 21, column (b)) 23 20,052,640.75 , 24 Proceeds used for bond issuance costs(including underwriters' discount) 24 221 725.05 % __I 25 Proceeds used for credit enhancement 25 97,432.22 26 Proceeds allocated to reasonably requiredreserve or replacement fund . 26 / 27 Proceeds used to currently refund prior issues 27 j 28 Proceeds used to advance refund prior issues 28 13,809,431.25 A -- 29 Total (add lines 24 through 28) 29 14,128,588.52 30 Nonrefunding proceeds of the issue(subtract line 29 from line 23 and enter amount here). . . 30 5,924,052.23 Part V Description of Refunded Bonds (Complete this part only for refunding bonds.) 31 Enter the remaining weightedaverage maturity of the bonds to be currently refunded . . . ► years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . 1013.167 years 33 Enter the last date on which the refunded bonds will be called ► 6/1/2007 34 Enter the date(s) the refunded bonds were issued ► ' 5/1/1997 - Part VI Miscellaneous .-- 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . , . 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract(see instructions) 36a b Enter the final maturity date of the guaranteed investment contract ► r% 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer ► and the date of the issue ► 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . ► ❑ 39 If the issuer has elected to paa penalty in lieu of arbitrage rebate, check box 0 0 40 If the issuer has identified a hedge, check box I ► ❑ Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements,and to the best of my knowledge and belief,they are true,correct,and complete. SignVICTORIA A. RUNKLE, Director of Here DelitilkiLQUL-QE., November 1,2001Finance and Information Systems Signature of issuer's authorized representative Date 'Type or print name and title - For Paperwork Reduction Act Notice, see page 2 of the Instructions. Cat.No.63773S Form 8038-G (Rev. 11-2000) M 1 AFFIDAVIT OF MAILING STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) The undersigned,being first duly sworn on oath, deposes and states that on the day of November, 2001, she caused to be deposited in the U.S. mail, certified mail, return receipt requested, with postage prepaid, an envelope addressed to: Internal Revenue Service 1160 West 1200 South Ogden, Utah 84201 containing the original Form 8038-G regarding the issuance of the following bonds: $19,505,000 CITY O'F RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 111 Mary J. Tu SIGNED AND SWORN TO before me on this ' day of November, 2001,by Mary J. Turtle. (Seal or st; NA lye li, A74,0YlG�. 1 :.�s8r°N,, � Notary Signature u 44, • 4 Z % Shawna Holman Lf.a Notary Public in and for the State of '9 -vnoos ' oa Washington, residing at Seattle. f' t 'POM e' My appointment expires 1/2---O 03 f:\renton\ltgo 2001 � I BOND REPORT FORM 101 WASHINGTON STATE OFl-10E OF COMMUNITY DEVELOPMENT ATTN: Bond Users Clearinghouse`_ Office Use Only: 906 COLUMBIA STREET SW Date Received: POST OFFICE BOX 48350 OLYMPIA,WASHINGTON 98504-8350 FAX: 360.586.4162 Control Number: 360.725.3010 Chapter 39.44 RCW requires information on newly issued bonds to be supplied to the Office of Community Development within 20 days of issuance. The Underwriter should submit information on the report form provided by the Office. In cases where an issue is made without an underwriter, the issuer or its representative' should supply the information. A summary of the collected 1i information will be published ori a monthly basis. NOTE: The issuer may opt to have an agent, such as an underwriter or bond attorney, complete the form or appropriate portions thereof. For issues that the state fiscal agency registers, the state fiscal agency should submit this,form, with the issuer supplying necessary information. 1. Name and address of issuer: City of Renton, Washington 1055 S. Grady Renton, WA. 98058 2. County in which entity using bond proceeds is located: King County 3. Principal User (if different than issuer): N/A 4. Exact title of bond (or "type of debt,"if no title): Limited Tax General Obligation and Refunding Bonds, 2001 5. Was the bond issue"voter-approved"? Yes X No ij -_ 6. Par value: Premium: Discount: � $19,505,000 $547,640.75 . $ 7. (a) Dated date of bond: November 1, 2001 (b) Date of bond sale: October 18, 2001 8. Net interest cost: i 4.9196926% (See instructions for formula. If this rate is dependent on a variable factor, rather than fixed, simply indicate "variable.") 9. What is the underlying:security on which this bond issue is based (i.e., taxes or other revenue stream which support the debt)? The City,as authorized by law and an ordinance of its Council duly and regularly adopted,has irrevocably pledged that,unless the principal of and interest on the Bonds are paid from other sources,it will include in its budgets and make annual levies of taxes,within the constitutional and statutory limitations provided by law without a vote of the qualified voters of the City,upon all of the property in the City subject to taxation in amounts which,together with any other money legally available therefor,shall be sufficient to pay such principal and interest as the!same shall become due. 10. Name of financial advisor: N/A 11. Name of bond counsel:: • Gottlieb Fisher&Andrews (Seattle) 12. Name of lead underwriter(s): U.S. Bancorp Piper Jaffray Inc. 13. Name of company insuring bond: FSA ( 14. Name of registrar: The Bank of New York 15. Name of trustee: U.S. Bank Trust, National Association -2- 16. Purpose for which proceeds will be used: The proceeds of the Bonds will be used to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage,to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B designated as the Current Interest Bonds(the"1997 CIB Bonds"),and to pay certain"incidental costs and costs related to the sale and issuance"(as defined in RCW 39.46.070)of the Bonds(the"Project"). 17. Schedule of maturity (if schedule information is attached,it may be omitted here): See attached Official Statement dated October 22, 2001. 18. Method of bond sale: Competitive bids X negotiated sale' private placement 19. If it was a competitive;sale, how many bids were received? N/A 20. If the bond sale was negotiated,express the gross underwriting spread (see instructions for definition),either by: (a) dollars per thousand $ or (b) total amount for the issue $ 165,792.50 21. State the fee for bond counsel service. If this figure is an estimate or incomplete, designate with an asterisk (*) after the figure: $ 17,455.00 22. Indicate other fees and costs associated with the bond issuance included as part of the costs in questions#20 and 21). For figures which are estimates or incomplete, designate with an asterisk(*). legal counsel $ N/A escrow verification $3,500.00 feasibility study N/A financial advisor N/A rating agency 20,000.00 title insurance N/A trustee 4,500.00 advertising/printing certificates N/A Underwriter's Expenses 6,477.55 official statements 2,000 bond insurance 97,432.22 Miscellaneous 2,000 -3- 23. Was the bond rated? X Yes No If yes,state the rating given by each agency. _ Standard&Poor's AAA Moody's N/A Fitch AAA 24. IMPORTANT: RCW 39.44.210 requires a copy of the bond covenants to be submitted with this report form. Have you submitted such copy? X Yes No If not,state the reason and/or your intended submission date. Is a copy of the official statement or offering circular available? If yes, it should be included with this report X Yes No 25. This information has been submitted by (Name/title and affiliation/address): - i U.S. Bancorp Piper Jaffray, Inc. - 1200 Fifth Avenue, Suite 1500 Seattle, Washington 98124-1930 (206) 287-8824 Banker: Fred Eoff,Managing Director Date: November 1, 2001 l I -4- GOTTLIEB, FISHER 1 ANDREWS, PLLC ATTORNEYS AT LAW November 1, 2001 Mayor and City Council City of Renton Renton, Washington 98055 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Renton, Washington (the"City"), of the bonds described below (the "Bonds"): $19,505,000 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Dated: November 1, 2001 The Bonds are issued pursuant to Ordinance No. 4922 of the City (the "Bond Ordinance") and other proceedings duly had and taken in conformity therewith. The Bonds are issued to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage, to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B, and to pay incidental costs thereof and the costs related to the sale and issuance of the Bonds, all as provided in the Bond Ordinance. The Bonds shall be issued in fully registered form as to both principal and interest; shall be in the denomination of$5,000each or any integral multiple thereof within a single maturity; shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington (the "State") located in Seattle, Washington, and New York, New York (collectively, the "Registrar"), deem necessary for purposes of identification. The Bonds bear interest(computed on the basis of a 360-day year of twelve 30-day months) from their date or from the most recent interest payment date to which interest has been paid or duly provided for, whichever is later, payable December 1, 2001, and semiannually thereafter on each June 1 and December 1 to the maturity or earlier redemption thereof, at the rates set forth below, and shall mature on December 1 in each of the years and in the principal amounts set forth below: 1325 Fourth Avenue,Suite 1200 . Seattle,WA 98101-2531 (206) 654-1999 Phone . (206) 654-8725 Fax City of Renton, Washington November 1, 2001 Page 2 Maturity Date Principal Interest Rate (December 1) Amount Per Annum 2001 $310,000 2.15% 2007 75,000 3.50 2008 85,000 3.75 2009 335,000 3.90 2010 1,350,000 4.00 2011 1,400,000 4.00 2012 1,455,000 5.25 2013 ' 1,530,000 5.25 2014 1,610,000 5.25 2015 1,695,000 5.25 2016 1,785,000 5.25 2017 1,875,000 5.25 2018 1,385,000 5.25 2019 1,460,000 5.25 2021* 3,155,000 5.00 * Term Bonds The Bonds shall be subject to redemption prior to maturity at the times and in the manner described in the Bond Ordinance. The City has reserved the right to purchase any or all of the Bonds in the open market at any time and at any price. In rendering this opinion letter, we have examined the following: (i)the Bond Ordinance; (ii) a copy of one executed and authenticated Bond (we assume that all other Bonds are in the same form and have been similarly executed and authenticated); and(iii) the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us'and which comprise the transcript of proceedings pertaining to the issuance of the Bonds (the "Transcript"). JII As to questions of fact material to the opinions expressed herein, we have relied upon the certified proceedings of the City and other certificates of public officials and representatives of the City which have been furnished to us as part of the Transcript, all without undertaking to verify the same by independent investigation. Based only upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion letter, and subject to the limitations and qualifications expressed below, we are of the opinion that, as of this date: 1. The Bonds are lawfully authorized and issued pursuant to and in full compliance with the constitution and statutes of the State and the Bond Ordinance. City of Renton, Washington November 1, 2001 Page 3 2. The Bonds are legal, valid and binding general obligations of the City, enforceable against the City in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, and also to the exercise of judicial discretion,in accordance with general principles of equity. 3. The City has irrevocably covenanted in the Bond Ordinance that, unless the principal of and interest on th'e Bonds are paid from other sources, so long as the Bonds are outstanding, the City shall include in its budgets and make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation in amounts which, together with any other money legally available therefor, shall be sufficient to pay such principal and interest on the Bonds as the same shall become due. The City has irrevocably pledged its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. 4. The Bonds are not"private activity bonds," as defined in the Internal Revenue Code of 1986, as amended(the "Code"). 5. Assuming compliance by the City with applicable requirements of the Code, that must be met subsequent to the issuance of the Bonds, the interest on the Bonds is excluded from gross income for federal income tax purposes under existing federal law, and such interest is not an item of tax preference for purposes of determining alternative minimum tax on individuals and corporations under existing federal law. However, under existing federal law, interest on the Bonds received by certain corporations is to be taken into account in the computation of adjusted • current earnings for purposes,of calculating the alternative minimum tax applicable to such corporations; such interest received by foreign corporations with United States branches may be subject to a foreign branch profits tax; and such interest received by certain S corporations may be subject to tax. 6. The difference between the principal amount of the Bonds maturing in 2007 through 2009, inclusive, and in the years 2011 and 2021 (the "Discount Bonds"), and the initial offering price to the public (excluding bond houses, brokers and similar persons or organizations acting in the capacity of underwriter or wholesaler) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount, which is excluded from gross income for federal income tax purposes to the same extent as interest on the Discount Bonds. Further, this original issue discount accrues on the basis of a constant yield to maturity over the term of each Discount Bond and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser of such Discount Bonds will be increased by the amount of such accrued original issue discount. Except as stated in the preceding paragraphs 4, 5 and 6, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Bonds. City of Renton, Washington November 1, 2001 Page 4 The Code contains certain requirements which must be satisfied subsequent to the date of issue of the Bonds in order to maintain the exclusion of interest on the Bonds from gross income for federal income tax purpose's, including requirements relating to application of the proceeds of the Bonds, use of facilities financed with such proceeds, limitations on income derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury of certain investment earnings on such gross proceeds. The City has covenanted to comply with these requirements, and the opinions expressed in paragraphs 4, 5 and 6 assume such compliance; However, we have not undertaken and do not undertake to monitor compliance by the City with such requirements; and if the City should fail to comply with such requirements, interest on the Bonds could become includable in gross income for federal income tax purposes.and could be treated as an item of tax preference for purposes of the alternative minimum tax on individuals and corporations, in each case, retroactive to the date of issue of the Bonds. We have not been engaged to review or express any opinion concerning the completeness or accuracy of the official statement or other disclosure documentation used in connection with the offer or sale of the Bonds by any person, and thus express no opinion concerning the completeness or accuracy thereof. Copies of this opinion letter may be delivered to the Owner of the Bonds, who may rely on this opinion letter as if it were addressed to such Owner on the date hereof. Subject to the foregoing, this opinion letter may be relied upon by you only in connection with the issuance of the Bonds and may not be used or relied upon by you or any other person for any other purpose whatsoever, without in each instance our prior written consent. We expressly disclaim any responsibility to advise you or any Owner of any developments in areas covered by this opinion letter that occur after the date hereof. Respectfully submitted, GOTTLIEB,FISHER &ANDREWS, PLLC By 411-1614"/ Judith L. Andrews f:\renton\Itgo 01 sr FSA A Dexia Company November 1,2001 Municipal Bond Insurance Policy No.28077-N With Respect to $19,505,000 In Aggregate Principal Amount of City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Ladies and Gentlemen: I am Associate General Counsel of Financial Security Assurance Inc., a New York stock insurance company ("Financial Security"). You have requested my opinion in such capacity as to the matters set forth below in connection with the issuance by Financial Security of its above-referenced policy (the "Policy"). In that regard, and for purposes of this opinion, I have examined such corporate records,documents and proceedings as I have deemed necessary and appropriate. Based upon the foregoing, I am of the opinion that: 1. Financial Security is a stock insurance company duly organized and validly existing under the laws of the State of New York and authorized to transact financial guaranty insurance business therein. 2. The Policy has been duly authorized, executed and delivered by Financial Security. 3. The Policy constitutes the valid and binding obligation of Financial Security, enforceable in accordance with its terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity. In addition, please be advised that I have reviewed the description of the Policy under the caption "BOND INSURANCE- Bond Insurance Policy" in the official statement relating to the above-referenced Bonds dated October 22, 2001 (the "Official Statement"). There has not come to my attention any information which would cause me to • believe that the description of the Policy referred to above, as of the date of the Official Statement or as of the date of this opinion, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Please be advised that I express no opinion with respect to any information contained in, referred to or omitted from under the caption "BOND INSURANCE-Financial Security Assurance Inc." I am a member of the Bar of the State of Texas, and do not express any opinion as to the law of any other state except for the matters expressly set forth in the foregoing opinion. Very truly yours, Robert J. David Associate General Counsel City of Renton, 1055 S. Grady, Renton,Washington 98058. U.S. Bancorp Piper Jaffray Inc., 1200 Fifth Avenue,Suite 1500, Seattle,Washington 98101-3161. Financial Security Assurance One Market•1550 Spear Tower•San Francisco,California 94105•Tel:415.995.8000•Fax:415.995.8008 New York•Dallas•San Francisco•London•'Madrid•Paris•Singapore•Sydney•Tokyo CLOSING MEMORANDUM $19,505,000 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 . CLOSING DATE: November 1, 2001 , This memorandum outlines the actions taken in connection with the issuance and delivery of the above-referenced bonds (the"Bonds"). The issuance and delivery of the Bonds, in exchange for payment in full therefor(the"Closing"), was held at the offices of Gottlieb, Fisher &Andrews, PLLC ("Bond Counsel"), 1325 Fourth Avenue, Suite 1200, Seattle, Washington 98101, commencing at 9:00 a.m., on November 1, 2001. The delivery of all documents and all other actions taken at the Closing were considered to have been made and taken simultaneously, and no delivery or action was considered to have been made or taken until all deliveries and actions constituting a part of the Closing were completed. Capitalized terms defined in Ordinance No. 4922 (the "Bond Ordinance") of the City of Renton, Washington(the "City"), and used herein shall have the same meanings when used in this memorandum, unless the context otherwise directs. I. Actions Taken Prior to Closing A. Authorization of Issuance and Sale of Bonds. On October 22, 2001,pursuant to the Bond Ordinance, the City(a) authorized, inter alia, the issuance and delivery of the Bonds to provide part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage, to advance refund and defease a portion of the City's outstanding Limited Tax General Obligation Bonds, 1997B (the"1997 Bonds")pursuant to the Refunding Plan set forth in the Escrow Agreement, dated as of November 1, 2001,by and between the City and U.S. Bank Trust National Association, as escrow trustee (the"Escrow Trustee"), and to pay certain incidental costs and costs related to the sale and issuance of the Bonds; (b) fixed the date, denominations, form, terms, registration privileges, maturity, interest rates and covenants of the Bonds; (c) established a debt service fund and project fund for the Bonds; (d)provided for the annual levy of taxes to pay the principal of and the interest on the Bonds; and (e) approved the sale and provided for the sale and delivery of the Bonds to U.S. Bancorp Piper Jaffray Inc. (the"Underwriter"). B. Execution of Purchase Agreement. The Purchase Agreement was executed by the City and the Underwriter on October 22, 2001. f:\renton\ltgo 2001 1 i ', C. Insurance Commitment. Financial Security Assurance Inc. (the "Bond Insurer") issued its commitment to issue a municipal bond insurance policy for the Bonds (the"Insurance Policy"), upon the payment of a premium of$97,432.22 and satisfaction of certain conditions set forth in the commitment. A. Subscriptions for SLGS. The Underwriter prepared and delivered final subscriptions for the Government Obligations to be purchased directly from the U.S. Treasury(the"SLGS") by the Escrow Trustee, at Closing, for deposit in the Escrow Fund in accordance with the Refunding Plan. E. Preparation and Execution of Bonds. The Bonds, in form prescribed by the Bond Ordinance and approved by the Underwriter, were prepared by Bond Counsel, manually executed by the Mayor and the City Clerk and impressed with the seal of the City. F. Authentication of Bonds. The executed Bonds were authenticated by The Bank of New York, the Fiscal Agency of the State of Washington and registrar for the Bonds (the "Registrar") in New York,New York. At the direction of the Underwriter, the Registrar held the executed and authenticated Bonds in escrow, as agent for The Depository Trust Company("DTC") in New York,New York, pending the completion of Closing. ( G. Delivery of Documents to Bond Counsel. All of the other agreements, certificates, letters, opinions and documents listed on Exhibit A hereto were prepared by the persons listed under the heading"Responsibility" on Exhibit A, and were delivered by such persons to Bond Counsel to be held in escrow by Bond Counsel pending the completion of the Closing. II. Actions Taken at Closing A. Review of Documents. All of the agreements, certificates, letters, opinions and other documents listed on Exhibit A hereto were reviewed (to the extent each deemed necessary)by the City, the Underwriter and all other persons having executed or having any interest in any document listed on Exhibit A hereto, and all of said persons indicated to Bond Counsel their approval of the form and substance of such documents. B. Execution of Documents. All of the agreements, certificates, letters, opinions and other documents listed on Exhibit A hereto which required execution and had not previously been executed,were executed £\renton\Itgo 2001 2 by the appropriate persons and delivered to Bond Counsel and were held in escrow by Bond Counsel pending the completion of the Closing. C. No Litigation. The City confirmed that no.litigation or other proceedings were pending or threatened regarding the Bonds or affecting the transaction. D. Payment of Purchase Price. II The Underwriter paid the premium for the Insurance Policy to the Bond Insurer by federal funds wire transfer and paid to the City the purchase price of the Bonds, calculated as follows: Principal Amount of Bonds $19,505,000.00 Plus: Net Original Issue Premium 547,640.75 Less: Underwriter's Discount (165,792.50) Purchase Price of the Bonds $19,886,848.25 Less: Premium for the Insurance Policy (97,432.22) I Aggregate Purchase Price of the Bonds $19,789,416.03 The purchase price of the,Bonds was paid in same day funds by means of a federal funds wire transfer. E. Application of Purchase Price Proceeds. Upon receipt of the purcliase price proceeds of the Bonds, the City caused the sum of $13,865,363.80 to be transferred to the Escrow Trustee to be applied to pay the costs of the Refunding Plan pursuant to the Escrow Agreement. In addition, the City transferred to the Escrow Trustee funds in the amount of$753,058.71 for deposit in the Capitalized Interest Fund and applied to the payment of interest on the Bonds pursuant to the Escrow Agreement. The remaining purchase price proceeds of the Bonds were deposited in the Project Fund in accordance with the Bond Ordinance. F. Accomplishment of Refunding Plan; Deposit to Capitalized Interest Fund. (1) Immediately following receipt of the principal proceeds of the Bonds from the City for the Refunding Plan, the Escrow Trustee: (a) Applied the sum of$13,809,425, derived solely from the net proceeds of the Bonds, to pay the purchase price of the Escrow Obligations in the principal amounts, with the dates of maturities, at the prices and at the interest rates listed on Schedule 1 to the Escrow Agreement; it f:\renton\ltgo 2001 3 (b) Held the sum of$6.25, derived solely from the net proceeds of the Bonds, uninvested in the form of United States currency until application of the same to pay the redemption price of the 1997 Bonds coming due on June 1, 2007; and (c) Applied the sum of$55,932.55, derived solely from the remaining net proceeds of the Bonds, to the payment of the incidental costs and costs related to the sale and issuance of the Bonds listed on Schedule 3 of the Escrow Agreement. (2) Immediately following receipt of the principal proceeds of the Bonds from the City in the amount of$753,058.711, the Escrow Trustee deposited such amount in the Capitalized Interest Fund for application to the payment of interest on the Bonds pursuant to the Escrow Agreement it G. Release of Bond Documents. The City, the Underwriter,and all other persons having executed or having an interest in any document listed on Exhibit A hereto, or their authorized representatives, authorized Bond Counsel to release and deliver to the persons entitled to the same, the agreements, certificates, letters, opinions and other documents listed on Exhibit A hereto which had been held in escrow by Bond Counsel pending the completion of the Closing. H. Delivery of Bonds; Completion of Closing. Bond Counsel called the Registrar and authorized them to release the Bonds with DTC upon order from the Underwriter. Bond Counsel then declared that the Closing was completed. - III. Actions Taken After Closing A. Loose Transcripts. Three loose copies of the Transcript of Proceedings were delivered shortly after the completion of Closing, one to Bond Counsel and two to the Bond Insurer. B. Bound Transcripts. Bound Transcripts of Proceedings were distributed by Bond Counsel after Closing, as follows: City of Renton - 1 U.S. Bancorp Piper Jaffray Inc. 1 U.S. Bank Trust National Association 1 Gottlieb, Fisher&Andrews,PLLC 1 Financial Security Assurance Inc. 1 TOTAL 8 f:\renton\ltgo 2001 ! 4 EXHIBIT A $19,505,000 CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 DOCUMENT RESPONSIBILITY Ordinance No. 4922 Authorizing the City Sale and Issuance of the Bonds Excerpts of Minutes of City Council Meeting City re Ordinance No. 4922 Affidavit of Publication of Ordinance No. 4922 City Bond Purchase Agreement Underwriter Escrow Agreement(including Escrow Verification) Bond Counsel Letter of Representations Bond Counsel Disclosure and Debt Limit Certificate Bond Counsel Certificate of Insurer Bond Insurer Signature and No Litigation Certificate Bond Counsel Signature Authorization of Escrow Trustee Escrow Trustee Certificate re Authentication and Registration of Bonds Bond Counsel Specimen Bond Bond Counsel Specimen Insurance Policy Bond Insurer Preliminary Official Statement,(as supplemented by the October 10, 2001 Supplement to Preliminary Official Statement) Underwriter Official Statement Underwriter Rating Letters Bond Insurer Certificate of Delivery and Payment Bond Counsel Underwriter's Receipt Bond Counsel Nonarbitrage and Tax Exemption Certificate Bond Counsel Tax Certificate of Bond Insurer Bond Insurer f:\renton\ltgo 2001 A-1 Underwriter's Certificate Bond Counsel IRS Form 8038-G Bond Counsel Bond Report Form 101 Underwriter Approving Opinion of Bond Counsel Bond Counsel Opinion of Counsel to Bond Insurer Bond Insurer Closing Memorandum Bond Counsel { f:\renton\Itgo 2001 A-2 - March 22, 2010 Renton City Council Minutes a Page 497 RESOLUTION#4039 A resolution was read approving the Benson Trails a.k.a.Sandhu Plat Final Plat, Plat: Benson Trails a.k.a. approximately 6.27 acres located at the northeast corner of 120th Ave SE and Sandhu Plat, 120th Av&SE SE 184th St. MOVED BY BRIERE,SECONDED BY PARKER, COUNCIL ADOPT THE 184th St, FP-09-111 RESOLUTION AS READ. CARRIED. RESOLUTION#4040 A resolution was read supporting The Boeing Company's pursuit of the United CED:Supporting The Boeing States Tanker Program. MOVED BY PARKER,SECONDED BY TAYLOR,COUNCIL Company's Pursuit of the US ADOPT THE RESOLUTION AS READ. CARRIED. Tanker Program The following ordinance was presented for first reading and referred to the 4/5/2010 Council meeting for second and final reading: Finance: Bond Refinancing, An ordinance was read providing for the issuance and sale of limited tax 2001 LTGO Bonds general obligation refunding bonds of the City in the aggregate principal rg I amount of not to exceed$6.8 million to provide funds for the purpose of �1.,;Ki61- I refunding certain limited tax general obligation bonds of the City; authorizing the appointment of an escrow agent and execution of an escrow agreement; ,and delegating certain authority to approve the final terms of the bonds. MOVED BY PARKER,SECONDED BY TAYLOR,COUNCIL REFER THE ORDINANCE FOR SECOND AND FINAL READING ON 4/5/2010. CARRIED. NEW BUSINESS MayoriLaw remarked that the future of the Lindbergh Pool is in jeopardy and Community Event: Lindbergh explained that there is a$180,000 financial gap that is keeping the pool from Pool Financing opening next year. He announced that the Renton School District stated that it can cover$80,000 of the$180,000 deficit and has asked the community to raise the other$100,000. Mayor Law stated that the City has$40,000 available in the Benson Hill annexation transition fund and requested Council's approval to pledge those funds towards the fundraising efforts. He emphasized that this pledge is a one-time commitment and would not be available in subsequent years. MOVED BY PARKER,SECONDED BY BRIERE,COUNCIL AUTHORIZE THE ADMINISTRATION TO PLEDGE UP TO$40,000 FROM THE BENSON HILL ANNEXATION TRANSITION FUND FOR THE PURPOSE OF ASSISTING IN THE FUNDRAISING EFFORT TO KEEP THE LINDBERGH POOL OPEN.* Councilmember Persson emphasized that the funds would only be available if the other$60,000 was raised and it is a one-time commitment. Councilmember Taylor expressed appreciation for this solution and cautioned that a long-term solution is still needed. *MOTION CARRIED. AUDIENCE COMMENT Anne Meis(King County) expressed support for the adult entertainment Citizen Comment: Meis-Adult moratorium and remarked that statistically Portland and Seattle are ranked Entertainment Moratorium number one per capita for sex trafficking of minors in America. She urged Council to share her concern for the many young girls who disappear annually. ADJOURNMENT MOVED BY PERSSON,SECONDED BY ZWICKER,COUNCIL ADJOURN. CARRIED. Time: 8:26 p.m. 136/14144-.Nd, L(/CW d Bonnie I.Walton, CMC, City Clerk Jason Seth, Recorder March 22,2010 1 { March 22,2010 Renton City Council Minutes 1 Page 496 • CED: Membership Agreement, Community and Economic Development Department recommended adoption Cascade Agenda Cities of a resolution authorizing membership to the Cascade Agenda Cities Program Program at the Leadership City level,and authorizing an annual$5,000 commitment to the program. Refer to Planning and Development Committee. MOVED BY PERSSON,SECONDED BY BRIERE,COUNCIL APPROVE THE CONSENT AGENDA AS PRESENTED. CARRIED. UNFINISHED BUSINESS Finance Committee Chair Parker presented a report recommending financ-e-Committec concurrence-in-the-staff-recommendation-to-authorize-the-proposed-purchasing Policy: Purchasing(Bidding policy add thresholds, incorporate various related policies and procedures into and Contracting) Policy one updated policy, including the repeal of Council Policy and Procedure#800- Revisions 12,Contracting Authority. MOVED BY PARKER,SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance:Vouchers Finance Committee Chair Parker presented a report recommending approval of Claim Vouchers 291199-291541 and two wire transfers totaling$7,314,602.71; and approval of 90 Payroll Vouchers,one wire transfer,and 733 direct deposits totaling$2,561,368.65. MOVED BY PARKER,SECONDED BY TAYLOR,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance: Bond Refinancing, 'Finance Committee Chair Parker presented a report recommending 2001 LTGO Bonds concurrence in the staff recommendation to approve issuance of new bonds in I im(e- the approximate amount of$6.15 million to refinance Limited Tax General Obligation Bonds(LTGO) issued in 2001 for the development of the City Center Parking Garage,and authorize signing of all associated documents, including the associated Escrow Agreement and the redemption of the outstanding 2001 LTGO Bonds. This refinancing will generate a savings of approximately $500,000 over the next 11.5 years. The Committee further recommended that the ordinance regarding this matter be presented for first reading. MOVED.BY 1 PARKER,SECONDED BY TAYLOR,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. (See page 497 for ordinance.) Finance: Bankruptcy Claim, Finance Committee Chair Parker presented a report recommending Smurfit-Stone Container concurrence in the staff recommendation to approve the reduction of the Corporation Smurfit-Stone Container Corporation's bankruptcy claim settlement from $83,798.97 to$10,000 cash. MOVED BY PARKER,SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance:2010 Fee Schedule Finance Committee Chair Parker presented a report recommending Amendments concurrence in the staff recommendation to approve the amendment of the Fire and Emergency Services Department's portion of the 2010 Fee Schedule and other housekeeping amendments as presented. MOVED BY PARKER, SECONDED BY TAYLOR,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Utilities Committee Utilities Committee Chair Zwicker presented a report recommending Utility:Senior/Disabled Utility concurrence in the staff recommendation to not revise the current eligibility Discount Rates requirements for the low-income senior/disabled rate subsidy program including the requirement of an individual City water meter. MOVED BY ZWICKER,SECONDED BY BRIERE, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. RESOLUTIONS AND The following resolutions were presented for reading and adoption: ORDINANCES r APPROVED BY CITY COUNCIL FINANCE COMMITTEE • '. COMMITTEE REPORT Date 3-.2,1- .20i0 March 22, 2010 • Advance Refunding of 2001 LTGO Bonds March 15, 2010 • The Finance Committee recommends concurrence in the staff recommendation to approve • issuance of new bonds in the approximate amount of $6.15 million to refinance Limited Tax General Obligation Bonds (LTGO) lissued in 2001 for development of the City Center Parking Garage, and authorize signing of!all associated documents, including the associated Escrow Agreement and the redemption of the outstanding 2001 LTGO 'Bonds. . This'.refinancing will generate a savings of approximately$500,000 over the next 11.5 years. The committee further recommends that the ordinance regarding this matter be presented for - first reading: /10 King Parker, Chair • Greg Taylor,Vice Chair • Don Persson, Substitute Member • Cc: lwen Wang, FIS Administrator . JS uTTLI'EB, FISHER & ANDREWS, PLL ATTORNEYS AT LAW City of Renton F ,. , X12001 Finance&.13 kam1niStr atiOn MEMORANDUM TO: Members of the Financing Team(see attached list) FROM: Mary J. Turtle' Legal Assistant RE: $19,505,000 CITY OF RENTON, WASHINGTON, LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 DATE: February 6, 2002 Enclosed please find your bound and/or loose transcript(s) for the above- • referenced financing. If you have any questions,please give either Judy Andrews or me a call at (206) 654-1999. Enclosure 0),iV V61 1325 Fourth Avenue,Suite 1200 . Seattle,WA 98101-2531 (206) 654-1999 Phone . (206) 654-8725 Fax ir $19,505,000 CITY;OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001 Distribution List Ms. Victoria Runkle Mr. Bruce Colwell Director of Finance &Information Systems Vice President City of Renton i Corporate Trust Services, WWH1022 1055 South Grady Way U.S. Bank Trust National Association Renton, Washington 98058 1420 Fifth Avenue, 7th Floor Seattle, Washington 98101 Mr. Fred Eoff j Ms. Priscilla H. Lowe Managing Director Paralegal U.S. Bancorp Piper Jaffray Inc. Documentation and Closing Coordinator 1200 Fifth Avenue, Suite 1500 Financial Security Assurance Seattle, Washington 98101 I One Market, 1550 Spear Tower San Francisco, California 94105 • . CITY OF RENTON NOTICE OF ORDINANCES AFFIDAVIT OF PUBLICATION ' ADOPTED BY RENTON CITY COUNCIL Following is a summary of Christina Meyers, first duly sworn on oath states that he/she is the Legal Clerk of the ordinancesadopted by the Renton City Coupcil on October 22,2001. SOUTH COUNTY JOURNAL - ORDINANCE NO.4922 Anordinance relating to the 600 S.Washington Avenue,Kent,Washington 98032 incurrence of indebtedness; providing for the sale and issuance a daily newspaper published seven (7)times a week. Said newspaper is a legal newspaper of of Refu Tax Geneunding Bonds, 2001,ra, O0gati to and Refto general publication and is now and has been for more than six months prior to the date of provide part of the costs of financing publication, referred to, printed and published in the English language continually as a daily the construction of a municipal newspaper in Kent, King County,Washington. The South County Journal has been approved as a parking garage and to advance legal newspaper by order of the Superior Court of the State of Washington for King County. refuhd and defease a portion of the —_- The notice in the exact form attached,was published in the South County Journal (and City's Limited Tax General Obligation .... . not in supplemental form)which was regularly distributed to the subscribers_during the below on,d ; providingfor the da edenominominaiions, foo stated period. The annexed notice,a — — ___ , rm, terms, registration'privileges--maturity, ORD.4922&4923 interest rates and covenants of the Bonds, providing for the annual levy of taxes to pay the principal thereof as published on: 10/26/01 and the interest thereon;establishing a Debt Service Fund 'and Project The full amount of the fee charged for said foregoing publication is the sum of$93.50, charged to Fund for the Bonds; and providing Acct. No.8050640. for the sale and delivery of such' Bonds to U.S. Bancorp Piper Jaffray Inc.,Seattle,Washington. The cost above includes a$6.00 fee for the printing of the affidavits. Effective:November 1,2001 ORDINANCE NO.4923 Legal Number 9671 V • i An ordinance of the City of Renton, , , A&geh;ri, Washington, amending Chapter 9 AilegiVir 16, Special Assessment Districts, of L�� I. Title 9 (Public Ways) of Ordinance Legal Cler , South %Unournal No. 4260 entitled "Code of General Ordinances of the City or Renton, Washington" by adding a new Subscribed and sworn before me on this Z3 day of Akri*, ,2001 section 9-16-10, revising policies pertaining to payment and j `���`��ea�titat►er���°�°° ,�APIAI! :+gam , y /ilk charges,administand renation of umbering gecial sessment. (Sec ons >. •. .f °, Notary Public of the Sta - of Wash gton 9-16-8 through 9-16-12. C ;w, 4.•`k• .'1,4.. *�®a residing in Renton Effective:November 25,2001 cr:`.._ p*•. A complete text of each ordinance . . y :o, King County,Washington is available at the Renton Municipal ® _,_�_� Building, 1055 S. Grady Way; and : posted at the Renton Public• d A:a t_1" �;� o Libraries, 100 Mill Avenue South and o",A%-.� O; Zme 2902 NE 12th Street. Upon request ie'4''''`.2 6 'LO•' , •1" to the City Clerk's office, (425) 430- °°°°sn° •INASe. 'adeadsatatte�o��°°° 6e 10,copies will also be mailed for a Marilyn J.Petersen • City Clerk/Cable Manager Published in the South County Journal October 26,2001.9671 ' CITY OF RENTON, WASHINGTON ORDINANCE NO. 4 9 2 2 AN ORDINANCE RELATING TO THE INCURRENCE OF INDEBTEDNESS; PROVIDING FOR THE SALE AND ISSUANCE OF LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, 2001, TO PROVIDE PART OF THE COSTS OF FINANCING THE CONSTRUCTION OF A MUNICIPAL PARKING GARAGE AND TO ADVANCE REFUND AND DEFEASE A PORTION OF THE CITY'S LIMITED TAX GENERAL OBLIGATION BONDS, 1997B; PROVIDING FOR ITHE DATE, DENOMINATIONS, FORM, TERMS, REGISTRATION PRIVILEGES, MATURITY, INTEREST RATES AND COVENANTS OF THE BONDS; PROVIDING FOR THE ANNUAL LEVY OF TAXES TO PAY THE PRINCIPAL THEREOF AND THE INTEREST THEREON; ESTABLISHING A DEBT SERVICE FUND AND PROJECT FUND FOR THE BONDS; AND PROVIDING FOR THE SALE AND DELIVERY OF SUCH BONDS TO U.S.BANCORP PIPER JAFFRAY INC., SEATTLE,WASHINGTON WHEREAS,the City of Re nton(the"City")has determined that there is a need for public parking in the City and it is in the best interest of the residents of the City to construct a parking garage to provide additional public parking capacity; and WHEREAS,pursuant to Ordinance No.4662,the City issued and sold its Limited Tax General Obligation Bonds, 1997B (the"1997 Bonds")in the aggregate principal amount of $16,490,000 for the purpose of providing funds to pay a part of the cost of acquiring the Main& Grady Building,and renovating,refitting and equipping the building for use as the primary municipal administrative and law and justice center for the City and for other general City purposes and to pay the costs of issuance of the 1997 Bonds; and WHEREAS,pursuant to Ordinance No.4662,the City reserved the right to advance refund and defease all or a portion of the 1997 Bonds pursuant to a refunding or defeasance plan; and • fkentonlltgo 2001 1 ORDINANCE NO. 4922 WHEREAS,the advance refunding and defeasance of the 1997 Bonds designated as the Current Interest Bonds (the"1997 CIB Bonds")in accordance with the Refunding Plan will provide a debt service savings to the City; and WHEREAS,the City Council deems it to be in the best interest of the City that the City borrow money and issue and sell obligations in the form of limited tax general obligation bonds for the purpose of providing part of the costs of the Project(hereinafter defined); and WHEREAS,the incurrence of indebtedness by the City to pay the costs of the Project will not cause the total indebtedness of the City to be incurred without the assent of the voters of the City to exceed the limitations set forth in Chapter 39.36 RCW;and WHEREAS,pursuant to Chapter 39.53 RCW,the City is authorized to sell and issue, without an election,limited tax general obligation bonds to refund the 1997 CIB Bonds; and WHEREAS,U.S. Bancorp Piper Jaffray Inc. (the"Purchaser")has offered,by way of the Bond Purchase Agreement(the"Purchase Agreement"),to purchase such limited tax general obligation bonds upon the terms and conditions hereinafter set forth;NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON,WASHINGTON,DO ORDAIN AS FOLLOWS: Section 1. Finding,Purpose and Description of Bonds. The City authorizes the sale and issuance of its"Limited Tax General Obligation and Refunding Bonds,2001"(the"Bonds") for the purpose of providing part of the funds necessary to pay part of the costs of constructing and equipping a municipal parking garage (the"Parking Garage"),to advance refund and defease the 1997 CIB Bonds, and to pay certain"incidental costs and costs related to the sale and issuance" (as defined in RCW 39.46.070)of the Bonds(the"Project"). f:.renton\1tgo 2001 2 I I ORDINANCE NO. 4922 The Bonds shall be in the aggregate principal amount of$19,505,000; shall be dated November 1,2001; shall be issued in fully registered form as to both principal and interest; shall be in the denomination of$5,000 each or any integral multiple thereof within a single maturity; shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington located in Seattle,Washington,and New York,New York (collectively,the"Registrar"),may deem necessary for purpose of identification; shall bear interest at the rates; and shall mature on December 1 in each of the years,in the principal amounts, as set forth below: Maturity Date Principal Interest Rate (December 1) Amount Per Annum 2001 $ 310,000 2.15% 2007 75,000 3.50 2008 85,000 3.75 2009 335,000 3.90 2010 1,350,000 4.00 2011 1,400,000 4.00 2012 1,455,000 5.25 2013 1,530,000 5.25 2014 1,610,000 5.25 2015 1,695,000 5.25 2016 1,785,000 5.25 2017 1,875,000 5.25 2018 1,385,000 5.25 2019 1,460,000 5.25 2021* 3,155,000 5.00 * Term Bonds The Bonds shall bear interest(computed on the basis of a 360-day year of twelve 30-day months)from their date or from the most recent interest payment date to which interest has been paid or duly provided for,whichever is later,payable on December 1,2001, and semiannually thereafter on June 1 and December 1 of each year to the maturity or earlier redemption thereof. If any Bond is not paid upon proper presentment at its maturity or redemption date,the City shall f lrenton\ltgo 2001 3 ORDINANCE NO. 4922 be obligated to pay interest at the same rate from and after such maturity or earlier redemption until such Bond,both principal and interest,is paid in full. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and RCW 62A.8-105. On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be issued in the form of a single certificate, which certificate shall be registered in the name of The Depository Trust Company or any successor thereto engaged,to operate a book-entry system for ' recording the beneficial ownership of the Bonds, as Custodian (the "Custodian"), or its nominee, and delivered to the Custodian. The Custodian shall hold each such Bond certificate in fully immobilized form for the benefit of the beneficial owners of the Bonds (the `Beneficial Owners") pursuant to the Letter of Representations (the "Letter of Representations"), from the City and the Registrar to the Custodian pertaining to the payment of the Bonds and the book- entry'system, ook-entry'system, until the earliest to occur of either(1)the date of maturity of the Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate to the Registrar for payment of the principal of and interest on such Bonds coming due on such date, and the cancellation thereof; (2)the fifth business day following the date of receipt by the Registrar of the City's request to terminate the book-entry system of registering the beneficial ownership of the Bonds (the "Book-Entry Termination Date"); or (3)the date the City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall (provided the City is not then in default of any payment then due on the outstanding Bonds) surrender the immobilized certificates to the Registrar for transfer to the new Custodian and cancellation as herein provided. For so long as any outstanding Bonds are registered in the name of the Custodian or its nominee and held by the Custodian in fully immobilized form as described in this Section 2,the f\rentonVtgo 2001 4 ORDINANCE .NO. 4922 rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry made from time to time on the records established and maintained by the Custodian in accordance with the Letter of Representations,and no certificates evidencing such Bonds shall be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's nominee. The City may terminate the"book-entry"system of registering ownership of the Bonds at any time(provided the City is not then in default of any payment then due on the outstanding Bonds)by delivering to the Registrar: (a)a written request that it issue and deliver Bond certificates to each Beneficial()wrier or such Beneficial Owner's nominee on the Book-Entry Termination Date; (b)a list identifying the Beneficial Owners as to both name and address; and (c)a supply of Bond certificates,iif necessary for such purpose. Upon surrender to the Registrar of the immobilized certificates evidencing all of the then outstanding Bonds,the Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial Owner's duly appointed agent,naming such Beneficial Owner or such Beneficial Owner's nominee as the registered owner(the"Owner")thereof. Such certificates may be in any integral multiple of $5,000 within a single maturity. Following such issuance,the Owners of such Bonds may transfer and exchange such Bonds in accordance with Section 9 hereof. Neither the City nor the Registrar shall have at any time any responsibility or liability to any Beneficial Owner of any Bonds or to any other person for any error, omission, action or- failure to act on the part of the Custodian with respect to payment,when due,to the Beneficial Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any other matter pertaining to the Bonds. f lrentonMtgo 2001 5 ORDINANCE NO. 4922 Section 2. Place,Manner and Medium of Payment. Both the principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Prior to the Book- Entry Termination Date, the principal and interest on the Bonds shall be paid by the Registrar to the Custodian as the Owner thereof, for the benefit of the Beneficial Owners thereof,in accordance with the Letter of Representations. From and after the Book-Entry Termination Date,interest on the Bonds shall be paid by check or draft mailed on or before the interest payment date,to the persons identified as the Owners on the fifteenth day of the month preceding the interest payment date at the addresses shown for the Owners on the registration books for the Bonds (the"Bond Register")maintained by the Registrar;provided,however,that if so requested in writing by the Owner of at least $1,000,000 principal amount of Bonds,interest will be paid by wire transfer on the interest payment date to an account with a bank located in the United States. From and after the Book- Entry Termination Date,principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the Owners at the principal corporate trust office of the Registrar. Section 3. Redemption; Open Market Purchase. The Bonds maturing on December 1,. 2021 are term bonds(the"Term Bonds")and, if not previously purchased by the City in the open market or optionally redeemed as set forth below, are subject to mandatory sinking fund redemption in part and by lot(in such manner as the Registrar shall determine), at par plus accrued interest to the redemption date on December 1 in the following years and in the following mandatory sinking fund redemption amounts: f:\rentonUtgo 2001 6 • ORDINANCE NO. 4922 1 Mandatory Sinking Fund Mandatory Redemption Dates Sinking Fund (December 1) Redemption Amounts 2020 $1,540,000 2021* 1,615,000 *Scheduled maturity The Bonds maturing on December 1 in the years 2001 and 2007 through 2011, inclusive, shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1,2012 shall be subject to optional redemption prior to maturity beginning on December 1, 2011, in whole at anyltimeor in part on any interest payment date(maturities to be selected by the City and by lot within a maturity in such manner as the Registrar shall determine),at par plus accrued interest to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds(as allocated by the City)beginning not earlier than 60 days after the date of the optional redemption or purchase, and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Any Bond in the principal amount of greater than$5,000 may be partially redeemed in any integral multiple of$5,000. Prior to the Book-Entry Termination Date,Bonds shall be partially redeemed in accordance with the Letter of Representations. From and after the Book- Entry Termination Date,in the event of a partial redemption of a Bond,upon surrender of such Bond at the prin ipal corporate trust office of the Registrar, a new Bond or Bonds(at the option of the Owner)of the same maturity and interest rate and in the aggregate principal amount remaining unredeemed shall be authenticated and delivered to the Owner,without charge to the f:\renton\ltgo 2001 7 ORDINANCE NO. 4922 Owner for such partial redemption,in any denomination authorized by this Ordinance and selected by the Owner. Prior to the Book-Entry Termination Date,the Registrar shall give,or cause to be given, notice of a call for redemption of any Bonds to the Custodian,as the Owner thereof, for the benefit of the Beneficial Owners thereof,in accordance with the Letter of Representations. From and after the Book-Entry Termination Date,notice of any such intended redemption shall be given by or on behalf of the City not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid,to the Owner of each Bond to be redeemed at the address appearing on the Bond Register on the day the notice is given. The requirements of this section shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the Owner. In addition,such redemption notice shall be mailed within the same time period,postage prepaid,to the Depositories,to each NRMSIR and to Financial Security Assurance Inc. (the"Bond Insurer") or their respective successors,but such mailings shall not be a condition precedent to the redemption of such Bonds. If such notice to the Owners shall have been given and the City shall have set aside sufficient money for the payment of all Bonds called for redemption on the date fixed for redemption,the Bonds so called shall cease to accrue interest after such redemption date,and all such Bonds shall be deemed not to be outstanding hereunder for any purpose, except that the Owners of such Bonds shall be entitled to receive payment of the redemption price and interest accrued on the principal of the Bonds to the redemption date from the money set aside for such purpose. The City reserves the right to purchase any or all of the Bonds on the open market at any time and at any price. f:\renton%go 2001 8 , ORDINANCE NO. 4922 All Bonds purchased or redeemed by the City shall be surrendered to the Registrar for cancellation. Section 4. Debt Limit Not Exceeded. The City finds and covenants that the Bonds are issued within all constitutional and(statutory debt limitations presently applicable to the City. Section 5. Pledge of Full F lith. Credit and Resources. The Bonds are limited tax general obligations of the City. Unless the principal of and interest on the Bonds are paid from other sources,so long as any Bonds are outstanding,the City hereby irrevocably covenants to include in its budgets and to make annual levies of taxes within the constitutional and statutory tax limitations provided by law without a vote of the qualified voters of the City upon all property within the City subject to taxation lin amounts which,together with any other money legally available therefor, shall be sufficient to pay the principal and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. All of such taxes shall be paid into the Bond Fund hereinafter created. Section 6. Form of Bonds. The Bonds shall be typewritten,printed or lithographed on good bond paper in a form consistent with this Ordinance and Washington law. Section 7. Execution of Bonds. The Bonds shall be signed on behalf of the City with the facsimile or manual signatures of the Mayor and the City Clerk,and shall have the seal of the City impressed or a facsimile thereof imprinted thereon. In case either or both of the officers who shall have executed any Bond shall cease to be such officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Registrar or issued by the City, such Bond nevertheless may be authenticated, delivered and issued and upon such authentication, delivery and issuance,shall be as binding flrentonMtgo 2001 9 ORDINANCE NO. 4922 ' upon the City as though those who signed the same had continued to be such officers of the City. Any Bond also may be signed and attested on behalf of the City by such persons as at the actual date of execution of such Bond shall be the proper officers of the City although at the original date of such Bond such persons were not such officers of the City. Section 8. Authentication and Delivery of Bonds by Registrar. The Registrar is authorized and directed,on behalf of the City,to authenticate and deliver Bonds initially issued or transferred or exchanged in accordance with the provisions of such Bonds and this Ordinance. Only such Bonds as shall bear thereon a"Certificate of Authentication"manually executed by an authorized signatory of the Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this Ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed,authenticated and delivered hereunder and are entitled to the benefits of this Ordinance. The Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Bonds. Section 9. Registration: Transfer and Exchange. The Registrar shall keep,or cause to be kept,the Bond Register at its principal corporate trust office. The City and the Registrar, each in its discretion,may deem and treat the Owner of each Bond as the absolute owner thereof for all purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 2 hereof,but such registration may be transferred as herein provided. All such payments made as provided in Section 2 hereof shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. flrentonMtgo 2001 10 ORDINANCE NO. 4922 The registered ownership of any Bond may be transferred. Prior to the Book-Entry Termination Date,the beneficial ownership of the Bonds may only be transferred on the records •established and maintained by the Custodian. On and after the Book-Entry Termination Date,no transfer of any Bond shall be valid unless it is surrendered at any principal corporate trust office of the Registrar,with the assignment form appearing on such Bond duly executed by the Owner � or such Owner's duly authorized agent,in a manner satisfactory to the Registrar. Upon such surrender,the Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Owner or transferee therefor(other than governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the option of the new Owner),of the same maturity and interest rate and for the same aggregate principal amount,in any authorized denomination,naming as Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond,in exchange for such surrendered and cancelled Bond. On and after the Book-Entry Termination Date,any Bond may be surrendered at the principal corporate trust office of the Registrar and exchanged,without charge,for an equal aggregate principal amount of Bonds,in any authorized denomination. The Registrar shall not be obligated to transfer or exchange any Bond during the 15 days preceding any applicable interest payment,principal payment or redemption date. The Registrar may become the Owner of any Bond with the same rights it would have if it were not the Registrar and,to the extent permitted by law,may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners of the Bonds. f:\renton\Ugo 2001 1 1 ORDINANCE NO. 4922 The City covenants that,until all Bonds shall have been surrendered and cancelled,it will maintain a system of recording the ownership of each Bond that complies with the provisions of the Internal Revenue Code of 1986, as amended(the"Code"). Section 10. Mutilated,Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated,lost,stolen or destroyed,the Registrar may authenticate and deliver a new Bond of the same maturity and interest rate and of like tenor and effect in substitution therefor, all in accordance with law. If such mutilated,lost,stolen or destroyed Bond has matured,the City at its option,may pay the same without the surrender thereof. However,no such substitution or payment shall be made unless and until the applicant shall furnish(a)evidence satisfactory to the Registrar of the destruction or loss of the original Bond and of the ownership thereof, and (b)such additional security,indemnity or evidence as may be required by or on behalf of the City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond so furnished shall be equally and proportionately entitled to the security of this Ordinance with all other Bonds issued hereunder. Section 11. Defeasance. If money and/or"Government Obligations"(as such obligations are defined in Chapter 39.53 RCW, as now in existence or hereafter amended) maturing at such times(s)and bearing such interest to be earned thereon(without any reinvestment thereof) as will provide a series of payments which shall be sufficient,together with any money initially deposited,to provide for the payment of all of the principal of and interest on all or a portion of the Bonds,when due in accordance with their terms in accordance with a refunding plan adopted by the City, are set aside in a special fund(hereinafter called the "trust account")to effect such payment and are pledged irrevocably for the purpose of effecting f:kenton\ltgo 2001 12 ORDINANCE NO. 4922 such payment,then no further payments need be made into the Bond Fund for the payment of the principal of and the interest on such Bonds,the Owners thereof shall cease to be entitled to any lien,benefit or security of this Ordinance except for the right to receive the money and the principal and interest proceeds on the obligations set aside in the trust account,and such Bonds shall no longer be deemed to be outstanding hereunder. Section 12. Sale of the Bonds; Delivery. The Purchaser has presented a bond purchase agreement(the"Purchase Agreement")to the City pursuant to which the Purchaser has offered to purchase the Bonds,under the terms and conditions provided in the Purchase Agreement, which written Purchase Agreement is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that entering into the Purchase Agreement is in the City's best interest and therefore accepts the offer contained in the Purchase Agreementand authorizes the execution of the Purchase Agreement by City officials. The Bonds will be prepared at City expense and will be delivered to the Purchaser in accordance with the terms of the Purchase Agreement with the approving legal opinion of Gottlieb,Fisher&Andrews,PLLC,bond counsel, Seattle,Washington,relative to the issuance of the Bonds,printed on or attached to each Bond: Bond counsel has not been engaged to participate in the preparation or review of,or express any opinion concerning the completeness or accuracy of,any official statement or other disclosure documentation used in connection with the offer or sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not been retained to monitor, and shall not be responsible for monitoring,the City's compliance with any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds. • f:kenton\ltgo 2001 13 ORDINANCE NO. 4922 Section 13. Delivery of Bonds; Temporary Bonds. The proper City officials,including, but not limited to,the City Finance Director,are authorized and directed to execute and/or approve,as appropriate,all documents,including but not limited to,the final Official Statement pertaining to the Bonds and the commitment from the Bond Insurer for the issuance of an insurance policy for the Bonds,and to do everything necessary for the preparation and delivery of a transcript of proceedings pertaining to the Bonds,and the printing, execution and prompt delivery of the Bonds to the Purchaser and for the proper application and use of the proceeds of the sale thereof. If definitive Bonds are not ready for delivery by the date established for closing(the "Closing"),the City Finance Director,upon the approval of the Purchaser,may cause to be issued and delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes and additions. Any temporary Bond or Bonds shall be entitled and subject to the same benefits and provisions of this Ordinance with respect to the payment, security and obligation thereof as definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable without cost to the Owners thereof for definitive Bonds when the latter are ready for delivery. Section 14. Call of 1997 CIB Bonds for Redemption. The City hereby calls the 1997 CIB Bonds for redemption on June 1,2007,at a redemption price of par plus accrued interest. Such call for redemption shall become irrevocable upon delivery of the Bonds at Closing. Section 15. Acquisition of Escrow Obligations. The proper City officials,including,but not limited to,the City Finance Director shall, at or prior to Closing,make appropriate arrangements for,the payment for and delivery of any Escrow Obligations (defined in the Escrow Agreement hereinafter defined)which are to be purchased in the open market pursuant to the f renton\ltgo 2001 14 ORDINANCE NO. 4922 Refunding Plan; and shall,prior to closing,deliver or cause to be delivered to the Federal Reserve Bank in Seattle,Washington, subscriptions for any Escrow Obligations which are to be acquired from the United States Bureau of Public Debt pursuant to the Refunding Plan described in the Escrow Agreement(the`Escrow Agreement"), dated as of November 1,2001,between the City and U.S.Bank Trust National Association,as escrow trustee(the"Escrow Trustee"). The maturing principal of and the interest on such Escrow Obligations,together with the Initial Cash to be provided to the Escrow Trustee pursuant to the Refunding Plan,shall be sufficient to pay all of the interest to become due on the 1997 CIB Bonds from Closing to and including June 1,2007,when due, and to redeem Ion said date,all of the outstanding 1997 CIB Bonds at a redemption price of par and interest accrued thereon to the date of redemption. The Escrow Trustee shall designate in any such subscriptions that all the principal of and interest on the Escrow Obligation subscribed for with the United States Bureau of Public Debt shall be payable to the Escrow Trustee. Such subscription may be amended as pennitted by federal law. Section 16. Verification of Sufficiency of Escrow. The proper City officials,including, but not limited to,the City Finance Director are authorized and directed to obtain,prior to Closing, independent verification from a firm of independent certified public accountants that, among other things,the cash flow scheduled to be received from the Escrow.Obligations, together with any uninvested initial cash, shall be sufficient to make the payments described in Section 15 hereof. At Closing, if there has been any change iii Escrow Obligations or cash deposited with the Escrow Trustee under this Ordinance and the Escrow Agreement,the City Finance Director;shall cause the sufficiency of the Escrow Fund(as defined in the Escrow Agreement)to be verified in such manner as she shall deem necessary. f\renton\ltgo 2001 15 • ORDINANCE NO. 4922 Section 17. Escrow Agreement. The Escrow Agreement,in substantially the same form as the draft dated October 22,2001,on file with the City Clerk,is hereby approved in order to accomplish the defeasance of the 1997 CIB Bonds. The City Finance Director is authorized and directed to(a) execute and to deliver said Escrow Agreement,on behalf of the City,to the Escrow Trustee on or before Closing,with such changes as the City Finance Director deems to be in the best interests of the City; and such execution and delivery.of the Escrow Agreement shall evidence irrevocably the approval of the executed Escrow Agreement by the City;and (b)cause the Escrow Trustee to deliver notices of defeasance and redemption of the 1997 CIB Bonds in accordance with the Escrow Agreement. Section 18. Establishment of Bond Fund and Project Fund; Application of Bond Proceeds. There is hereby created and established in the office of the City Finance Director a special fund to be designated as the"Limited Tax General Obligation and Refunding Bond Fund, 2001"(the"Bond Fund"). The accrued interest on the Bonds, if any,received by the City upon the sale of the Bonds shall be deposited into the Bond Fund and shall be applied to the payment of interest coming due on the Bonds. Proceeds of the Bonds in the amount of$13,865,363.80 shall be paid by the City to the Escrow Trustee at Closing to be applied as set forth in the Escrow Agreement. In addition,the City shall transfer to the Escrow Trustee City funds in the amount of$753,058.71 to be deposited into the Capitalized Interest Fund and applied to the payment of interest on the Bonds during the construction of the Parking Garage and six months thereafter, all pursuant to the Escrow Agreement. f:\rentonUtgo 2001 16 ORDINANCE NO. 4922 The remaining proceeds of the sale of the Bonds,less the underwriter's discount and the bond insurance premium to be paid by the Purchaser on behalf of the City and plus the net original issue premium,in the amount of$5,924,05223 shall be deposited,upon receipt,to the "Parking Garage Fund(No. 301)"(the"Project Fund"), established in the office of the City Finance Director,to pay part of thel:costs of the Project. Except as provided by the Code and Section 19 of this Ordinance,the interest and profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and applied as described in the preceding paragraph. Except as provided by the Code and Section 19 of this Ordinance,if any money allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the Project or after termination of the Project byilthe City, such money shall be transferred to the Bond Fund and applied to the payment of the principal of and interest on the Bonds. Pending application as described in this Section 18 and subject to the requirements of the Code and Section 19 of this Ordinance,money allocable to the Bond proceeds in the Project Fund may be temporarily deposited in such institutions or invested in such investments as may be lawful for the investment of City funds. Section 19. Tax-Exemption Covenants. The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation,and will take or require to be taken such acts as may be permitted by Washington law and as may from time to time be required under applicable law to continue the exclusion of the interest on the Bonds from the gross income for purposes of federal income taxation. Without limiting the generality of the foregoing,the City will not invest or make or permit any use of the proceeds of f:\rentonUtgo 2001 17 ORDINANCE NO. 4922 the Bonds or of its other money at any time during the term of the Bonds which would cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code. The City covenants that it shall calculate or cause to be calculated,and shall rebate to the United States, all earnings from the investment of Bond proceeds that are in excess of the amount that would have been earned had the yield on such investments been equal to the yield on the Bonds,plus income derived from such excess earnings,to the extent and in the manner required by Section 148 of the Code. The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer the arbitrage certifications of which may not be relied upon. The City will take no actions and will make no use of the proceeds of the Bonds or any other funds held under this Ordinance which would cause any Bond to be treated as a"private activity bond"(as defined in Section 141(b)of the Code) subject to treatment under said Section 141(b)as an obligation not described in Section 103(a)of the Code,unless the tax exemption thereof is not affected. Section 20. Preliminary Official Statement Declaration. The City has been provided with copies of a preliminary official statement dated September 12,2001, and the October 10, 2001 Supplement to the Preliminary Official Statement Dated September 12, 2001 (as supplemented and amended,the"Preliminary Official Statement"),prepared in connection with the sale of the Bonds. For the sole purpose of the Purchaser's compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City"deems final"the Preliminary Official Statement, as of,its date, except for the omission of information on offering prices, interest rates, E\renton\ltgo 2001 18 ORDINANCE NO. 4922 selling compensation,delivery dates,'ratings, other terms of the Bonds dependent on such matters. Section 21. Undertaking to Provide Continuing Disclosure. This section constitutes the City's written undertaking for the b Inefit of the Owners and Beneficial Owners of the Bonds required bysubsection (5)(i)of le Rule 15c2-12(the"Rule")of the United States Securities q �) and Exchange Commission(the"SEC").C The City hereby agrees to provide or cause to be provided to each then existing nationally recognized municipal securities information repository designated by the SEC("NRMSIR"),to the State Information Depository("SID"),if one is created, and to the Bond Insurer the followingannual financial information and operating data(collectively,the"Annual Financial � Information") for each prior fiscal year, commencing with the fiscal year ending December 31, 2001,on or before the last day of the seventh month following the end of such prior fiscal year: (a) Annual financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units,as such principles may be changed from time to time and as permitted by State law;which statements will not be audited,except that if and Len audited financial statements are otherwise prepared and available to the City,they will be provided(the"Annual Financial Statements"); (b) The assessed valuation of taxable property in the City; (c) Ad valorem taxes due and the percentages of taxes collected; (d) Property tax levy rates per$1,000 assessed valuation; (e) A statement of authorized,issued and outstanding indebtedness of the City; and f lrenton\Itgo 2001 19 ORDINANCE NO. 4922 (f) A narrative explanation of the reasons for any amendments to this Section 21 made during the previous fiscal year and the impact of such amendments on the Annual Financial Information being provided. In its provision of such fmancial information and operating data,the City may cross- reference to any"fmal official statement"(as defined in the Rule)available from the Municipal Securities Rulemaking Board(the"MSRB")documents theretofore provided to each then existing NRMSIR or the SID,if one is created. If not submitted as part of the Annual Financial Information,then when and if available, the City shall provide its Annual Financial Statements,which shall have been audited by such auditor as shall be then required or permitted by the State law,to each then existing NRMSIR,to the SID,if one is created, and to the Bond Insurer. The City further agrees to provide or cause to be provided, in a timely manner,to the SID,if one is created, and to either the MSRB or each then existing NRMSIR and to the Bond Insurer,notice of any of the following events with respect to the Bonds,if material: 1. Principal and interest payment delinquencies; • 2. Non-payment related defaults; 3. Unscheduled 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 or events affecting the tax-exempt status of the Bonds; 7. Modification to rights of the Owners of the Bonds; f kentonMtgo 2001 20 ORDINANCE NO. 4922 8. Optional redemptions of the Bonds; 9. Defeasances of the Bonds; 10. Release,substitution or sale of property securing repayment of the Bonds; and 11. Rating changes. The City also agrees to provide or cause to be provided,in a timely manner,to the SID, if one is created,and to either the MSRB or each then existing NRMSIR,notice of its failure to provide the Annual Financial Information for the prior fiscal year on or before the last day of the seventh month following the end of such prior fiscal year. After the issuance of the Bonds, so long as the interests of the Owners or Beneficial Owners of the Bonds will not be ml terially impaired thereby,as determined by a party unaffiliated with the City(including,without limitation,a trustee for the Owners,nationally recognized bond counsel or other counsel familiar with the federal securities law),or pursuant to a favorable"no-action letter"issued by the SEC,this Section 21 may only be amended in connection with any change in legal requirements, change in law,or change in the identity, nature or status of the obligated person, or type of business conducted, and only in such a manner that the undertaking of the City,as so amended,would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances. The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without amendment upon the defeasance,prior redemption or payment in full of all of the then outstanding Bonds. This Section 21 or any provision hereof,shall be null and void if the City(i)obtains an opinion of nationally recognized bond counsel or other counsel fkenton\ltgo 2001 21 ORDINANCE NO. 4922 familiar with the federal securities laws to the effect that those portions of the Rule which require this Section 21 or any such provision are invalid,have been repealed retroactively or otherwise do not apply to the Bonds; and(ii)notifies and provides the SID,if any,and either the MSRB or each then existing NRMSIR with copies of such opinion. The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this Section 21 shall be limited to the right to obtain specific enforcement of the City's obligations under this Section 21,and any failure by the City to comply with the provisions of this undertaking shall not be a default with respect to the Bonds under this Ordinance. The City Finance Director is authorized and directed to take such further action on behalf of the City as may be necessary, appropriate or convenient to carry out the requirements of this Section 21. Section 22. Contract; Severability. The covenants contained in this Ordinance shall constitute a contract between the City and the Owners of each and every Bond. The City unconditionally covenants that it will keep and perform all of the covenants of the Bonds and this Ordinance. If any one or more of the provisions of this Ordinance shall be declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining provisions of this Ordinance or the Bonds,and this Ordinance and the Bonds shall be construed and enforced as if such unconstitutional or invalid provision had not been contained herein. Section 23. Effective Date. This Ordinance shall take effect and be in force five days from and after its passage and publication as provided by law. PASSED by the City Council and APPROVED by the Mayor of the city of Renton, Washington, at a regular open public meeting thereof, this 22nd day of October, 2001. f:kenton\ltgo 2001 22 ORDINANCE NO. 4922 PASSED by the City Council;and APPROVED by the Mayor of the city of Renton, Washington, at a regular open public meeting thereof,this 22nd day of October,2001. al4h0"4" Jesse Tanner,Mayor AUTHENTICATED: City Cle - lyn J.Petersen APPROVED AS.TO FORM: 1t4,tee..e.:C74 h Andrews,Gottlieb,Fisher&Andrews,PLLC Bond Counsel Date of Publication: October 26 , 2001 (Title only) • f:\renton\ltgo 2001 23 October 22,2001 Renton City Council Minutes Page 379 • The additional funding of$50,000 to be added to the Benson Rd. S. Pedestrian Improvement project will come from NE 44th Interchange(Port Quendall project). MOVED BY PERSSON, SECONDED BY BRIERE, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Utilities Committee Utilities'Committee Chair Briere presented a report recommending concurrence Utility: Maplewood Water in the recommendation of the Planning/Building/Public Works Department that Treatment Improvements the Mayor and City Clerk be authorized to sign the loan agreement with the Design,PWTF Loan State of Washington Department of Community,Trade and Economic - Development for Public Works Trust Fund pre-construction loan number PW- 01-691-PRE-117 for the design of the Maplewood Water Treatment Improvement Facility. The loan amount is not to exceed$567,831, with a five- year term and 1/2 percent interest per year. The Committee further recommended that the resolution regarding this matter be presented for reading and adoption. MOVED BY BRIERE, SECONDED BY KEOLKER- WHEELER,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. (See below for resolution.) ORDINANCES AND The following resolution was presented for reading and adoption: RESOLUTIONS Resolution#3536 A resolution was read authorizing the Mayor and City Clerk to execute an Utility: Maplewood Water interlocal cooperative agreement with the State of Washington Department of - Treatment Improvements Community,Trade, and Economic Development entitled "Public Works Trust Design,PWTF Loan Fund Pre-Construction Loan Agreement Number PW-01-691-PRE-117" for design of the Maplewood Water Treatment Improvement project. MOVED BY BRIERE,SECONDED BY KEOLKER-WHEELER, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. The following ordinance was presented for first reading and advanced for second and final reading: Finance: 2001 Bond Issuance An ordinance was read relating to the incurrence of indebtedness;providing for (Downtown Parking Garage), the sale and issuance of Limited Tax General Obligation and Refunding Bonds, 1997 Bond Refund 2001, to provide part of the costs of financing the construction of a Municipal Downtown Parking Garage and to advance refund and defease a portion of the City's Limited Tax General Obligation Bonds, 1997B; providing for the date, denominations,form,terms,registration privileges, maturity, interest rates and covenants of the bonds; providing for the annual levy of taxes to pay the principal thereof and the interest thereon; establishing a debt service fund and project fund for the bonds; and providing for the sale and delivery of such bonds to U.S. Bancorp Piper Jaffray Inc., Seattle, Washington. MOVED BY NELSON, SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRIED. Ordinance#4922 Following second and final reading of the above ordinance, it was MOVED BY Finance: 2001 Bond Issuance CLAWSON, SECONDED BY NELSON, COUNCIL ADOPT THE (Downtown Parking Garage), ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED. 1997 Bond Refund The following ordinance was presented for second and final reading and adoption: e.— - October 22,2001 Renton City Council Minutes Page 377 Council Minutes of October Approval of Council minutes of October 15, 2001. Council concur. 15,2001 City Clerk: 2001 Primary City Clerk submitted the 2001 Primary Election certification from King County Election Certification Records and Elections, as follow: Council Position No. 2—Tim E. Segura,668 votes,Rosemary Quesenberry, 1,859 votes (nominated), and Dan Clawson, 2,919 votes (nominated). Information. Utility: Oversize Request by Wastewater Utility Division requested approval of an oversizing request by Burnstead Construction,Fund Burnstead Construction in the amount of$101,470 for additional costs Transfer&Appropriation associated with the East Renton Lift Station and requested fund transfer to cover the expense. Approval is also requested for an additional$300,000 appropriation to cover costs associated with projects constructed within the Sewer Main Extension program. Refer to Utilities Committee. MOVED BY CLAWSON, SECONDED BY NELSON, COUNCIL APPROVE THE CONSENT AGENDA AS PRESENTED. CARRIED. OLD BUSINESS Community Services Committee Chair Nelson presented a report regarding the Community Services possibility of forming a Skate Park Advisory Committee. The Committee Committee recommended that staff help facilitate a meeting of Skate Park users to enable Community Services: Skate them to discuss ways to better operate and self-police the Skate Park. Park Advisory Committee Recommendations resulting from these discussions may be presented to the Board of Park Commissioners for their consideration. MOVED BY NELSON, - - SECONDED BY PERSSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance Committee Finance Committee Vice Chair Nelson presented a report regarding the sole Finance: Spatialinfo Software source acquisition of Spatialinfo software and services. The Committee Purchase recommended concurrence in staffs recommendation that the Information Services Division be authorized to purchase Spatialinfo software and application integration services from e-Terra. MOVED BY NELSON, SECONDED BY PERSSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance: Vouchers Finance Committee Vice Chair Nelson presented a report recommending approval of Claim Vouchers 197462- 197918, and two wire transfers totaling $2,594,365.23;and approval of Payroll Vouchers 34541 -34773 and 540 direct deposits and one wire transfer totaling$1,599,248.61. MOVED BY NELSON, -- SECONDED BY PERSSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance: 2001 Bond Issuance Finance Committee Vice Chair Nelson presented a report regarding the (Downtown Parking Garage), approval of an ordinance to refund 1997 debt; to issue new debt for the 1997 Bond Refund construction of the Downtown Parking Garage; and to purchase investments to meet the interest costs of the garage through 2004. The Committee recommended adoption of the ordinance that authorizes refunding of 1997 debt to take advantage of historically low interest rates. The refunding will result in savings of$431,800 over the next 17 years. The net interest rate over the life of the bonds will be 4.77 percent. In addition, the Committee recommended the ordinance also permit the City to • issue$6,000,000 of new debt at 5.15 percent interest over the life of the bonds. However, by placing in escrow$753,800 the City will be able to earn in interest the same amount that it is spending for interest costs through 2004. Thus, the October 22,2001 Renton City Council Minutes Page 378 cost of the garage through 2004 is only the forgone interest earnings. These bonds have a maturity schedule through 2021. The Committee further recommended that the ordinance regarding this matter be presented for first reading and advanced to second and final reading. MOVED BY NELSON, SECONDED BY PERSSON, COUNCIL CONCUR IN THE COMMITTEE REPORT.* Responding to Councilwoman Keolker-Wheeler's inquiry regarding the placement of$753,800 in escrow,Finance and Information Services Administrator Victoria Runkle explained that by placing that amount in escrow, the interest earned on the money will pay for the bonds issued for the garage through 2004. *MOTION CARR.LF.-D.. (See page 379 for ordinance.) Transportation(Aviation) Transportation(Aviation)Committee Chair Persson presented a report Committee regarding the Oakesdale Ave. SW Phase II—SW 27th St. to SW 31st St. project CAG: 00-061, Oakesdale Ave (CAG-00-061). At its regularly scheduled meeting on October 16, 2001, the SW Phase II, Additional Transportation Committee concurred with the recommendation of the Funding Planning/Building/Public Works Department to amend the project budget from the current$2,500,000 to a new total of$3,225,300 to cover additional anticipated costs. The anticipated costs are due to delays to the contract while obtaining the environmental permitting to proceed with the project,redesign of the wetland mitigation, and increased quantities to build the revised wetland mitigation plan. The cost of the delays,redesign, and increase in quantities are anticipated to increase the project budget by$725,300. The additional funding of$725,300 required by the Oakesdale Ave. SW Phase II project will come from the 2001 ending fund balance. MOVED BY PERSSON, SECONDED BY BRIERE, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. CAG: 00-099,East Valley Transportation(Aviation) Committee Chair Persson presented a report Road Rehabilitation, regarding the East Valley Road Rehabilitation project(CAG-00-099)budget Additional Funding amendment. At its regularly scheduled meeting on October 16, 2001,the Committee concurred with the recommendation of the Planning/Building/Public Works Department to amend the project budget from the current$1,664,000 to a new total of$1,814,000 to cover additional costs. The additional amount is needed to cover the cost of several changes in requirements and material quantities, which arose during the course of construction, due to unforeseen conditions not anticipated during design. Funds in the amount of$150,000 are need to complete payment on the contract. The additional funding of$150,000 required for the project will come from the NE 44th Street project which is currently on hold, thus creating available funding. MOVED BY PERSSON, SECONDED BY BRIERE, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. CAG: 01-093,Benson Rd S Transportation (Aviation) Committee Chair Persson presented a report Pedestrian Improvements, regarding the Benson Rd. S. Pedestrian Improvement project(CAG-01-093). Additional Funding At its regularly scheduled meeting on October 16, 2001,the Committee concurred with the recommendation of the Planning/Building/Public Works Department to amend the project budget from the current$367,695 to a new total of$417,695 to cover future anticipated costs. The contingency amount to cover future unanticipated costs is $50,000. • I APPROVED h Y 1 are COUNCIL FINANCE Date ie A P, 4.1 COMMITTEE REPORT October 22, 2001 APPROVAL OF ORDINANCE TO REFUND 1997 DEBT; TO ISSUE NEW DEBT FOR THE CONSTRUCTION OF THE 'DOWNTOWN PARKING GARAGE; AND TO PURCHASE INVESTMENTS TO MEET THE INTEREST COSTS OF THE GARAGE THROUGH 2004 (REFERRED October 15,2001) The Finance Committee recommends adaption of the ordinance that authorizes refunding of 1997 debt to take advantage of historically low interest rates. The refunding will result in savings of $431, 800 over the next 17,;;year-s.°,Th'e4net interest rate over the life of the bonds • : will be 4.77 percent. zff ,. In addition, the Finance Committee recommends the ordinance also permit the City to issue $6,000,000 of new debt at' 5f45,, percent interest over,the:_:life=of the bonds. However, by placing in escrow $753,800 the City will be..able_to. earn incinterest,the same amount that it is spending for interest costs`through 2004. Thus, the,:cost ofthe garage through 2004 is only the • forgone interest earnings These bonds--.have aMmaturit schedule through 2021. 3uS` 3• L '•...itis. x._.?; t • ICK r ri 3.,> . ,,,,::� :,... . :3 '„_ y;; `7 .,t ,vis 1, The Committee further recommends that the Ordinance regarding this matter be presented for first reading and second reading on October 22"d, 2001. ' • � �;r King Parker, Chair Toni Nel n, Vice Chair )fr>,,V;r7 Don Persson, Member cc: Victoria Runkle,Finance&Information Services Administrator Sylvia Doerschel,Finance Analyst Supervisor,Budget Jill Masunaga,Finance Analyst Gina Jarvis,Finance Analyst Supervisor,Accounting c/` bancorp Piper Jaffray® 1200 Fifth Avenue,Suite 1500 P.O.Box 34930 Seattle,WA 98124-1930 206 287-8700 $19,505,000 CITY OF RENTON, WASHINGTON Limited Tax General Obligation & Refunding Bonds, 2001 Bonds Dated: November 1,2001 Bonds Due: December 1,2001, 2007—2021 PURCHASE CONTRACT City of Renton,Washington October 22,2001 1055 South Grady Way Renton, Washington 98055 Ladies&Gentlemen: U.S. Bancorp Piper Jaffray, acting as the "Purchaser" is pleased to offer to purchase from the City of Renton, Washington (the "Seller") all of its $19,505,000 Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"). This offer is based upon the terms and conditions set forth below and in the attached Exhibit A, which when accepted by the Seller shall constitute the terms and conditions of our Purchase Contract for the Bonds.Those terms and conditions are as follows: 1. Prior to date of delivery and payment for the Bonds identified in paragraph (i) of Exhibit A (the "Closing"),the Seller shall pass an Ordinance authorizing the issuance of the Bonds and accepting the Purchaser's offer to purchase the Bonds (the "Ordinance") in form and substance acceptable to the Purchaser. 2. The Seller shall sell and deliver to the Purchaser, and the Purchaser shall purchase, accept delivery of, and pay for the entire $19,505,000 principal amount of the Bonds for the purchase price set forth in paragraph(a)of Exhibit A. 3. The Seller consents to and ratifies the use by the Purchaser of the information contained in the Official Statement relating to the Bonds (the "Official Statement") in marketing the Bonds, and further authorizes the use of the Official Statement in connection with the public offering and sale of the Bonds. For the sole purpose of the Purchaser's compliance with Securities and Exchange Commission Rule 15c2-12 (b) (1), the Seller "deems final" the preliminary version of the Official Statement as of its Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by U.S. Bank National Association or its affiliates, and involve investment risks, including possible loss of the principal amount invested. Securities products and services are offered through U.S. Bancorp Piper Jaffray Inc., member SIPC and NYSE, Inc.,a subsidiary of U.S. Bancorp. City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 2 date, except for the omission of information as to selling compensation, principal amount, interest rates,offering prices,delivery dates,and other terms of the Bonds depending on such matters. 4. The Seller represents to, and agrees with, the Purchaser, as of the date hereof and as of the date and time of Closing,that: a. The Seller has and will have at Closing full legal right, power, and authority to enter into and perform its obligations under this Purchase Contract and under the Ordinance, to approve the Ordinance and to sell and deliver the Bonds to the Purchaser; b. This Purchase Contract,the Ordinance, and the Bonds do not and will not conflict with or create a breach of or default in any material respect under any existing law, regulation,judgment, order or decree, or any agreement, lease, or instrument to which the Seller is subject or by which it is bound; c. No governmental consent, approval, or authorization other than the Ordinance is required to be obtained by the Seller for the sale of the Bonds to the Purchaser, d. This Purchase Contract, the Ordinance and the Bonds (when issued and delivered in accordance with the Ordinance and sold to the Purchaser as provided herein)will be legal, valid and binding obligations of the Seller, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against municipal corporations in the State; e. The Ordinance shall have been duly passed by the Seller, shall be in full force and effect and shall not have been amended without the Purchaser's consent at the time of Closing; f. The preliminary version of the Official Statement, except as to matters added, modified, amplified,revised,and/or corrected in the Official Statement, shall be accurate and complete in all material respects as of its date and the Official Statement shall be accurate and complete in all material respects as of its date and as of the date of Closing, with regards to which, no representation is made on the information regarding DTC and its book-entry system, Financial Security Assurance and related policy, Causey Demgen and Moore and U.S. Bank Trust, N.A.; and g. Any certificate signed by any official of the Seller and delivered to the Purchaser pursuant to or in connection with this Purchase Contract shall be deemed a representation by the Seller to the Purchaser as to the truth of the statements therein made and is delivered to the Purchaser for such purpose only. 5. As conditions to the Purchaser's obligations hereunder: City of Renton, Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 3 a. From the date of the Seller's acceptance of this Purchase Contract to the date of Closing, there shall not have been any: (1) Material adverse change in the financial condition or general affairs cf the Seller; (2) Event, court decision or proposed law, rule, or regulation which may have the effect of changing the federal income tax exemption of the interest on the Bonds; (3) International or national crisis, suspension of stock exchange trading or banking moratorium materially affecting the marketability of the Bonds; (4) Material adverse event with respect to the Seller which in the reasonable judgment of the Purchaser requires or has required an amendment, modification, or supplement to the Official Statement and such amendment,modification,or supplement is not made; or (5) Downgrade, suspension or withdrawal or an announcement of the possibility of a downgrade, suspension or withdrawal of any rating of bonds, notes, or other obligations of the City(including, without limitation, the Bonds), by S&P or Fitch and such action, in the reasonable opinion of the Purchaser,will materially adversely affect the marketability or the market price of the Bonds. b. The Seller will provide the Purchaser, within seven business days of the date hereof, copies of the Official Statement in sufficient quantity to comply with the Purchaser's obligations under the Securities and Exchange Commission Regulation 15c2-12(b)(4). c. The Seller has agreed in the Ordinance that the Seller will provide or cause to be provided, in accordance with the requirements of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission, certain financial information and operating data, including audited financial statements for the preceding fiscal year, timely notice of the occurrence of certain material events with respect to the Bonds and timely notice of a failure by the Seller to provide the required financial information. The Purchaser's obligation to purchase the Bonds shall be conditioned upon the Seller's undertaking to provide this information to be in full force and effect at the Closing. d. Concurrently with the issuance of the Bonds, Financial Security Assurance the "Bond Insurer" will issue a municipal bond insurance policy guaranteeing the payment of principal of and interest on the Bonds(the "Bond Insurance Policy"). e. At or prior to Closing,the Purchaser shall have received the following: (1) The Bonds, duly executed and authenticated; (2) A certificate of authorized officers of the Seller, in form and substance acceptable to the Seller and Purchaser,to the effect; (i)that the Seller's execution of the Official Statement is City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 4 authorized, (ii) that the Official Statement (including the financial and statistical data contained therein) did not as of its date or as of the date of Closing contain any untrue statement of material fact or omit to state a material fact necessary to make such statements, in light of the circumstances under which they were made, not misleading, with regards to which, no such representation need be made on the information regarding DTC and its book-entry system, Financial Security Assurance and related policy, Causey Demgen and Moore and U.S. Bank Trust,N.A.; and (iii) that the representations of the Seller contained in this Purchase Contract are true and correct when made and as of Closing; (3) An approving opinion or opinions of the law firm identified in paragraph(j) of Exhibit A as bond counsel or from another nationally recognized firm of municipal bond lawyers (either or both of which shall be referred to as "Bond Counsel") satisfactory to the Purchaser and dated as of Closing, to the effect; (i) the Bonds are valid, legal and binding obligations of the Seller and payable from the sources described in the Ordinance; (ii)that interest on the Bonds is exempt from federal income taxation; and (iii) that the Bonds are not "private activity bonds"within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (4) A certificate of authorized officers of the Seller to the effect that no litigation is pending, or to the knowledge of the Seller threatened, against the Seller in any court; (i) to restrain or enjoin the sale or delivery by the Seller of the Bonds; (ii) in any manner questioning the authority of the Seller to issue,or the issuance of validity of,the Bonds; (iii)questioning the constitutionality of any, resolution or ordinance, or the validity of any proceedings authorizing the issuance of the Bonds; (iv) questioning the validity or enforceability of the Ordinance; (v) contesting in any way the completeness or accuracy of the Official Statement; (vi)questioning the titles of any officers of the Seller under the laws of the State of Washington; or (vii) which might in any material respect adversely affect the financial condition of the Seller; (5) A certificate, dated the date of Closing, to the effect that the Seller's undertaking described in Section 21 of the Ordinance is in effect and has not been amended and that the Seller has not defaulted in any material respect under any prior undertakings to provide ongoing information pursuant to the Rule; (6) A certificate signed by authorized officers of the Seller to the effect that the officers of the Seller who signed or whose facsimile signatures appear on the Bonds were on the date of execution of the Bonds the duly elected or appointed and qualified and acting officers of the Seller and that their signatures are genuine or accurate facsimiles; (7) A certified copy of the Ordinance; (8) A copy of the Official Statement, signed on behalf of the Seller by an authorized officer of the Seller; City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 5 (9) A non-arbitrage certificate signed by an authorized officer of the Seller, (10) An executed copy of this Purchase Contract; (11) Evidence satisfactory to the Purchaser of the assignment of ratings on the City's outstanding uninsured general obligation bonds of"A+" by Standard and Poor's and "A+" by Fitch and ratings on the Bonds of"AAA"by Standard and Poor's and"AAA"by Fitch, together with a confirmation from the City that there has been no adverse change in any of such ratings as of the date of the Closing; (12) A copy of the municipal bond insurance policy issued by Financial Security Assurance and an opinion dated the date of Closing and addressed to the Purchaser of the General Counsel of Financial Security Assurance in a form satisfactory to the Purchaser; and (13) Such additional legal opinions, certificates, instruments and documents as the Purchaser may reasonably request to evidence the truth, accuracy and completeness, as of the date hereof and as of the date of Closing, of the representations and warranties contained herein and of the statements and information contained in the Official Statements and the due performance by the Seller at or prior to Closing of all agreements then to be performed and all conditions then to be satisfied by the Seller. 6. The Seller shall pay or cause to be paid, from proceeds of the Bonds or other legilly available money, all expenses incident to the performance of the Seller's obligations hereunder, including but not limited to, the cost of ratings and insurance on the Bonds, the cost of printing and delivering the Bonds; the cost of preparation, printing (and/or word processing and reproduction), distribution and delivery of the Official Statement, Ordinance, and all other agreements and documents contemplated hereby and any drafts thereof in reasonable quantities as requested by the Purchaser; and the fees and disbursements of Bond Counsel, Verification Agent, Escrow Trustee, the Registrar and any other experts or consultants retained in connection with the Bonds. 7. If, between the date hereof and 25 days following the date of Closing, any material adverse event affecting the Seller or the Bonds shall occur which results in the Official Statement containing any untrue statement of a material fact or omitting to state any material fact necessary to make the Official Statement, or the statements or information therein contained, in light of the circumstances under which they were made, not misleading, the Seller shall notify the Purchaser and, if in the opinion of the Seller and the Purchaser such event requires a supplement or amendment to the Official Statement, the party whose omission, misstatement, or changed circumstance has resulted in the supplement or amendment will supplement or amend the Official Statement in a form and in a manner approved by the Seller and the Purchaser. 8. Any notice or other communication to be given to the Seller under this Purchase Contract shall be given by delivering the same in writing to its respective address set forth on page one of this Purchase Contract. Any notice or other communication to be given to the Purchaser under this Purchase City of Renton, Washington Limited Tax General Obligation and Refunding Bonds,2001 Purchase Contract—October 22,2001 Page 6 Contract shall be given by delivering the same in writing to: U.S. Bancorp Piper Jaffray, 800 Nicollet Mall,Minneapolis,Minnesota, 55402 (Attention: Municipal Research). 9. Upon acceptance, this Purchase Contract shall be binding upon the Seller and the Purchaser. This Purchase Contract is intended to benefit only the parties hereto. The Seller's representations and warranties shall survive any investigation made by or for the Purchaser, delivery and payment for the Bonds, and the termination of this Purchase Contract. Should the Seller fail to satisfy any of the foregoing conditions or covenants, or if Purchaser's obligations are terminated for any reason permitted under this Purchase Contract,then neither the Purchaser nor the Seller shall have any further obligations under this Purchase Contract, except that any expenses incurred shall be borne in accordance with Section 6. 10. This Offer expires on the date set forth in paragraph(I)of Exhibit A. Respectfully submitted, U.S.BANCORP PIPER JAFFRAY By: Fred Eoff Managing Director,Public Finance Accepted and agreed to as of the date of this Purchase Contract: CITY OF RENTON esse Tanner Its: Mayor EXHIBIT A DESCRIPTION OF THE BONDS (a) Purchase Price: Par Amount of Bonds: $19,505,000.00 Plus:Reoffering Premium: 547,640.75 Less:Underwriter's Discount: (165,792.50) Purchase Price: $19,886,848.25 (b) Denominations: $5,000 each or integral multiples thereof (c) Dated Date: November 1,2001 (d) Form: Fully registered Book-Entry only with privileges of exchange at the expense of the Seller. (e) Interest Payable: Interest on the Bonds from their dated date to maturity will be payable commencing on December 1, 2001 and semiannually thereafter on each June 1 and December 1 until redeemed. (f) Maturity Schedule: The principal component of the Bonds constitutes the principal payable with respect to the Bonds which mature on the dates and amounts and shall bear interest at the rates set forth below: Maturity Schedule Due Interest Due Interest Dec. 1 Amount Rate Yield Dec. 1 Amount Rate Yield 2001 $310,000 2.150% 2.150% 2013 $1,530,000 5.250% 4.360% 2014 1,610,000 5.250 4.500 2007 75,000 3.500 3.600 2015 1,695,000 5.250 4.630 2008 85,000 3.750 3.800 2016 1,785,000 5.250 4.740 2009 335,000 3.900 3.950 2017 1,875,000 5.250 4.840 2010 1,350,000 4.000 4.000 2018 1,385,000 5.250 4.930 2011 1,400,000 4.000 4.100 2019 1,460,000 5.250 5.010 2012 1,455,000 5.250 4.280 $3,155,000 5.00%Term Bonds due December 1,2021 --Yield 5.10% Mandatory Redemption Year Amount 2020 $1,540,000 2021 1,615,000 (g) True Interest Cost: 4.84805% (h) Optional Redemption Features: The Bonds maturing on December 1 in the years 2001 through 2011, inclusive, shall not be subject to redemption prior to maturity. The Bonds maturing on or after December 1,2012 shall be subject to optional redemption prior to maturity beginning on December 1,2011, in whole at any time or in part on any interest payment date (maturities to be selected by the City and by lot within a maturity in such manner as the Registrar shall determine), at par plus accrued interest to the date of redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds(as allocated by the City)beginning not earlier than 60 days after the date of the optional redemption or purchase,and the City shall promptly notify the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. (i) Delivery Date,Time and Location: November 1,2001 at 9:00a.m.(Pacific) To be held at the offices of Gottlieb Fisher&Andrews 1325 Fourth Avenue,Suite 1200 Seattle,Washington 98101-2509 (j) BondCounsel: Gottlieb Fisher&Andrews (k) Method of Payment: Federal Funds Wire (1) Offer Expires: October 23,2001 at 7:00 PM Pacific Time CITY OF RENTON OCT 1 8 2001 4% CITY OF RENTON RECEIVED CITY CLERKS OFFICE Finance 81 Information Services Department MEMORANDUM Date: October 18,1 2001 To: Dan Clawson, Council President City Council Members Via: Mayor Jesse Tanner From: Victoria RunIkle, Finance & IS Administrator Staff Contact: Victoria Runkle, ext. 6858 Subject: FINAL FITCH REPORT Monday evening, October 1115, I provided to you a summary of a Fitch rating report. Fitch has now issued a final report and it is attached. This report has a bit more information than the first repi rt. While we battle the implications of Boeing on our city, as does the entire region, this report contains a complete'analysis of our wealth indicators. The last paragraph of the report is very positive and illustrates that we are collecting wealth from other sources. This means that people are Coming into Renton to spend money, and our residents are staying in Renton to spend their money. I have not yet received Standard & Poor's report; however, I expect it shortly. Please feel free to call me with any questions. VAR/dlf Attachment,as stated cc: Jay Covington,CAO Derek Todd,Assistant to the CAO Marilyn`Petersen,City Clerk- Paul Kusakabe,Fiscal Services Director .. Itak . Public Finance FITCH IBCA,DUFF&PHELPS Tax Supported City of Renton , Washington New Issue Rating ■ Outlook New Issue The `A+' rating reflects Renton's strong financial position, low direct Limited Tax General Obligation and debt burden, and sound economy. Recent assessed valuation (AV) Refunding Bonds,Series 2001 A+ trends and rising building permit activity also contribute to the overall Outstanding Debt credit strength. These factors are somewhat offset by Boeing Co.'s Limited Tax General Obligation significant presence in the local area economy. The city's financial Bonds A+ position is strong, demonstrated by high reserve levels and operating surpluses. Direct debt levels are low as a result of pay-as-you-go Analysts financing and limited debt issuance. Scott A.Andreson 1 415 732-5620 ■ Rating Considerations scott.andreson@fitchratings.com Renton is located in King County in proximity to downtown Seattle, Sea-Tac Airport, and the Port of Seattle and is bisected by several Mark J.Capell major traffic corridors. It covers an area of 16.9 square miles, with an 1 415 732-5622 estimated population of 51,140. In the past decade, the city has seen mark.capell@fitchratings.com sound economic, housing, employment, and AV growth. In addition, the city has exhibited sizable growth in its retail base with the addition Issuer Contact of several major new stores. Nonetheless, the area remains dominated Victoria Runkle by Boeing, although the city is less dependent on it for its overall Director of Finance economic health than in the recent past. Boeing is Renton's largest 1 425 430-6858 employer with 41% of the city's total employment base and the largest vrunkle@ci.renton.wa.us taxpayer at 14.6% of 2001 AV. New Issue Details Taxable valuation gains have been excellent, the result of significant $20,105,000 City of Renton, Limited Tax new building and rising property values. AV rose a remarkable 9.9% General Obligation and Refunding Bonds, per year on average from 1997-2001. Building permit activity remains Series 2001, are scheduled to sell on Oct. 18 strong, suggesting good gains at least for the next year. City wealth through negotiation by U.S. Bancorp Piper Jaffray.The bonds will mature serially Dec.l, indicators are above state and national averages. Renton and King 2001-2021. They are subject to optional County enjoy below-average unemployment rates. redemption beginning Dec. 1,2011. Security: The series 2001 bonds are secured The city's financial position is strong, with above-average reserve by Renton's full faith and credit,payable from levels that provide financial flexibility. In 2000,the general fund ended property taxes within existing limitations. with a high unreserved fund balance of 21.0% of spending, or $8.0 Purpose: Bond proceeds will be used to pay million, and has averaged a strong 15.8% over the past three years. part of the costs of constructing and equipping Approximately 72.6% of 2000 general fund revenue came from taxes, a municipal parking garage and to advance refund a portion of the city's series 1997B 10.1% from charges for services, and 6.3% from licenses and permits. general obligation bonds. Taxes are diverse and include property, sales, utility, gambling, and real estate excise tax, each demonstrating good annual growth. Projections for 2001 (the city's fiscal year ends Dec. 31) show another strong general fund operating surplus similar to 2000 levels. Direct debt levels are low, at $591 per capita and 0.6% of market value, including this issue. Overall debt, including King County and Renton School District, is moderate at $3,318 per capita and 3.4% of market value. October 16, 2001 www.fitchratings.com I I". Public Finance FITCH IBCA,DUFF&PHELPS ■ Strengths Debt Statistics • Strong financial position marked by healthy ($000) reserves. This Issue 20,105 • Healthy local economy with strong retail Other Outstanding Debt 10.123 presence, above-average wealth indicators, and Total Direct Debt 30,228 Overlapping Debt 139.442 low unemployment levels. Total Overall Debt 169,670 • Low direct debt burden. � Debt Ratios Direct Debt Per Capita ($)* 591 ■ Risks As % of Market Value" 0.6 • Significant Boeing dominance in the local Overall Debt Per Capita ($)* 3,318 economy. As% of Market Value** 3.4 • Rising debt service payments. *Population:51,140(2001 estimate). "Market value:$5,062,642,000(2001). -=`■ Debt Direct debt levels are a low $591 per capita and 0.6% The city's direct debt burden is low,the result of pay- of market value. Overall debt levels are moderate at as-you-go financing and, hence, low debt issuance. $3;318 per capita and 3.4% of market value. Future This new issue will be used to pay part of the costs of city debt plans are minimal and the overall debt constructing and equipping a municipal parking burden should remain manageable. garage and to advance refund a portion of the city's series 1997B general obligation bonds1 ■ Finances The new 597-stall public parking garage will be located The city's financial position is strong, marked by a across from the new Performing Arts Center in healthy general fund balance and excellent fiscal downtown Renton. The $10.0 million parking garage management policies. In 2000, the general fund ended with a total fund balance of $8.3 million, a project will be funded with $4.0 million from city cash high 21.8% of expenditures and transfers out. The reserves and $6.0 million from this) issuance. The remaining $13.9 million of this issuance will be used to ' unreserved fund balance was $8.0 million, or 21.0%. defease the outstanding 1997B general Obligation bonds. The total fund balance has averaged a sound 15.8% of expenditures and transfers out over the past three General Fund Financial Summary ($000,Years Ended Dec.31) I 1998 1999 2000 Taxes 26,438 27,878 29,822 Licenses and Permits I 2,064 1,688 2,569 Intergovernmental Revenues 2,606 2,299 2,157 Charges For Services 3,979 3,868 4,129 Other 1.944 2.035 2.394 Total Revenues 37,031 37,768 41,070 General Government 7,885 8,065 8,513 Security of Persons and Property 20,074 21,336 22,861 Physical Environment 1,731 1,893 1,769 Economic Environment 3,241 2,920 3,345 Other 400 618 228 Total Expenditures 33,330 34,832 36,716 Transfers and Other Sources/(Uses) (5,499) (2,107) (1,481) Net Income (1,799) 829 2,873 Total Fund Balance 4,643 5,464 8,337 As % of Expenditures/Transfers Out 12.0 14.8 21.8 Unreserved Fund Balance as% of Expenditures/Transfers Out 11.7 14.6 21.0 Undesignated Fund Balance as % of Expenditures/Transfers Out 11.4 14.3 20.6 Note:Numbers may not add due to rounding. City of Renton,Washington 2 .r, Public Finance FITCH IBCA,DUFF&PHELPS • years, well above the city's 8% policy for each Most manufacturing jobs come from Boeing and individual fund. In addition, the city prudently has related industries in the city. However, as established a "rainy day" fund for the sole purpose of employment in all other sectors has grown, meeting economic downturns. The fund is projected manufacturing has declined as a percentage of total to be about$5.0 million in 2001. Projections for 2001 employment and in number of jobs. Gains in all other show another strong general fund operating surplus sectors partially offset concerns associated with the similar to last year's level. county and city's dependence on Boeing. Boeing is Renton's largest employer, with 16,731 workers, General fund revenues totaled $41.0 million in 2000, which is more than 40% of the city's total job base. increasing 10.9% since 1998. Consistent rises in tax Other major employers include Valley Medical receipts continue to drive city revenue growth. Center (1,477), Renton School District (1,346), and Approximately 72.6% of 2000 general fund revenue PACCAR (1,114). came from taxes, 10.1% from charges for service, and 6.3% from licenses and permits. Taxes are AVs have performed well, averaging 9.9% annual diverse and include property, sales, utility, gambling, growth since 1997. Last year's performance was and real estate excise taxes, each demonstrating good particularly strong, rising 11.4%. The dramatic rise annual growth. resulted from both strong new construction activity and rising property values. In 2000, the city's new General fund expenditures totaled $36.7 million in building permit valuation was 70% higher than in 2000, an increase of 10.2% since 1998. Spending is 1999. Moreover, building permit activity increased dominated by public security, at 62.3%, or $22.9 21%, in strong contrast to the 6% decrease in the million. Additional general fund expenditures include Puget Sound area. general government at 23.2%, economic environment at 9.1%, and physical environment at 4.8%. The city's tax base is concentrated, with the top 10 taxpayers accounting for 25.1% of AV in 2001. The ■ Economy largest taxpayer, Boeing, totals a high 14.6%, The city is located in King County, 15 miles followed by PACCAR (2.1%), Puget Sound Energy southeast of downtown Seattle. Its strategic location, (1.5%), and National Tax Search (1.5%). Although intersected by several major traffic corridors and Boeing is still a significant part of overall AV, it is proximity to Sea-Tac Airport and the Port of Seattle, less than in previous years. has resulted in significant economic development. Despite the city's expanding economy and growing Wealth levels for the city are above average and residential area, Boeing remains a significant above both state and national levels. Per capita presence. buying income is 121.9% of the state average and 141.3% of the nation. Median household buying The city's population is estimated at 51,140 for 2001, income also is above state and national levels, at a strong rise of 18.4% since 1990. The growth level 115.9% and 133.0%, respectively. These wealth exceeds county increases. The city's employment levels, along with Renton's growth, have attracted base has grown considerably as well, rising 15.3% new retailers, creating a strong and growing sales tax since 1992. base. Per capita retail sales are well above state and national levels, at 365.3% and 385.6%, respectively. Copyright®2001 by Fitch,One State Street Plaza,NY,NY 10004 Telephone:New York,1-800-753-4824,(212)908-0500,Fax(212)480-4435;Chicago,IL,(312)368-3100,Fax(312)263-1032; London,011 44 20 7417 4222,Fax 011 44 20 7417 4242;San Francisco,CA,1-800-953-4824,(415)732-5770,Fax(415)732-5610 Printed by American Direct Mail Co.,Inc.NY,NY 10014.Reproduction in whole or in part prohibited except by permission. 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City of Renton,Washington 3 October 15,2001 Renton City Council Minutes Page 364 other than the passage of any ordinance, grant, or revocation of franchise or license, or any resolution for the payment of money." Citizen Comment: Nicoli— Sara Nicoli, 3404 Burnett Ave.N.,Renton, 98055, stating that she lives Kennydale Beach Park, adjacent to the K-ennydale Beach Park parking area,expressed concern that the Loitering Problems installation of benches and tables in the parking area of the park will aggravate -an already serious loitering problem. She claimed that the loiterers leave trash in the park and she often has to call the police to report unlawful activities. Ms. Nicoli submitted a petition signed by 19 residents who live adjacent to the • parking area which states that they do not want tables and benches at the Kennydale Beach Park parking lot because loitering is a problem the City has not recognized and is not dealing with. Planning/Building/Public Works Department Administrator Gregg Zimmerman explained that the Kennydale Homeowners Association received a grant through the City's Neighborhood Grant Program to beautify the parking area and is working with City staff to make improvements to the parking area and to landscape the bank. Expressing concern that not all of the residents surrounding the area are in support of the project,Mr. Zimmerman pointed out that City staff picks up litter at the park on a daily basis, and sweeps the parking lot once a month. •Mayor Tanner recommended that a public meeting be held with the Kennydale Homeowners Association to discuss the matter and to determine if there is sufficient neighborhood support for the park improvements. Councilman C'orman suggested that City staff investigate whether neighborhoods with similar"pocket parks" are experiencing the same types of problems. Citizen Comment: Olson— Barbara Olson, 19831 132nd Pl. SE,Renton, 98058,expressed her concern Youth Services Programs about the lack of services available for at-risk and homeless youth in the community,especially during this time of unrest in our country, and is seeking a way to provide them with safe housing. She inquired as to what is being done to provide staffing,care and shelter for young people during emergency situations. Councilman Parker suggested that Human Services Manager Karen Bergsvik contact Ms. Olson to inform her of the services that Renton provides, and Councilwoman Keolker-Wheeler offered to contact her as well to discuss the South County forum activities. CONSENT AGENDA Items on the consent agenda are adopted by one motion which follows the ( listing. Council Minutes of October 8, Approval of Council minutes of October 8, 2001. Council concur. 2001 Finance: 2001 Bond Issuance Finance and Information Services Department requested approval of an (Downtown Parking Garage), ordinance authorizing the refund of 1997 outstanding bonds and the issuance of 1997 Bond Refund a new 2001 bond issue for the construction of the Downtown Parking Garage. Refer to Finance Committee. Finance: Spatialinfo Software Finance and Information Services Department requested approval to purchase Purchase Spatialinfo software and application integration services in the amount of $85,000 from e-Terra for the maintenance and dissemination of spatially referenced data which provides the means to integrate this data with the City's enterprise information system. Refer to Finance Committee. • r CITY OF RENTON COUNCIL AGENDA BILL AI#: (p .b. SUBMITTING DEPT.: FOR AGENDA OF: October 15, 2001 Finance and Information Services Department AGENDA STATUS: Consent. X SUBJECT: Public Hearing Bond Ordinance to Refund 1997 Outstanding Bonds, and a Correspondence New 2001 Bond Issue for the Construction of the Downtown Ordinance X Parking Garage Resolution EXHIBITS: Old Business Bond Ordinance forthcoming New Business Executive Session RECOMMENDED ACTION: APPROVALS: Refer Ordinance to the Finance Committee Meeting Legal Dept X of October 22, 2001 Finance X Other:Executive X FISCAL IMPACT: Expenditure Required... $18,100,000 Transfer/Amendment.. Amount Budgeted $ Revenue Generated $18,100,000 SUMMARY OF ACTION: This agenda bill presents an Ordinance which authorizing staff to proceed with a bond issue to refund 1997 outstanding bonds, and to issue a new 2001 bond issue which will fund construction of a downtown parking garage. The ordinance will be presented to the Finance Committee on October 22nd for their review and approval. Staff requests that the Ordinance be presented for first and second reading at the regular October 22 Council meeting. STAFF RECOMMENDATION: Staff recommends Council approval of the subject Ordinance. t% CITY OF RENTONBELL RECEIVED Finance az Information Services Department OCT 15 2001 MEMORANDUM MAYORS OFFICE 611 Y OI- RENTON Date: October 15, 2001 OCT 1 5 2001 To: Dan Clawson, Council President RECEIVED City Council Members CITY CLERK'S OFFICE From: Victoria Runkle, Finance & IS Administrator Subject: Fitch Rating Agency Attached is a copy of the newest rating summary report from the Fitch rating agency. As you are aware, we are selling bonds for the garage. During this process we also will be recommending refunding some of our debt. There will be more on the deal later this week. I want to get this report in your hands as soon as possible. Given the conditions we are under at this moment, this is a very, very good rating. In fact, given the September 11th catastrophe, resulting in Boeing's announcement, I maintain this rating is exceptional. Had we not walked in with the financials we have, I doubt I would have recommende',d selling bonds at this time. I would like to point out some terrific comments they made. The emphasis is mine. • "In the last decade, the city has seen sound economic, housing, employment and assessed valuation growth." • "...the city has seen significant growth to their retail base with the addition of several major new retailers..." • "...the area remains dominated by Boeing, although the city is less dependent upon Boeing for its overall economic health than in the recent past." • 'Taxable valuation gains; have been good, the result of significant new building ... Assessed value rose a remarkable 9.9% per year on average from 1997 - 2001 ." • "City wealth indicators are above state and national averages." To: Dan Clawson October 15, 2001 Page 2 of 2 • 'The City's financial position is strong with above average reserve levels that provide financial flexibility." • "In fiscal 2000, the general fund ended with a high unreserved fund balance of 21 .0% of spending ..." The entire report is filled with positives. I spent quite a bit of time with Fitch during and after their rating. They are quite impressed with your commitment to keeping the financials very sound. I hope we see some of their verbal comments in their final report . In my conversations with them, they restated they are most impressed with the\ "sound financial management" the Mayor and Council have been practicing. You help make the story I have to tell a very good one. It is easy to be able to tell the rating agencies well are indeed meeting all our basic city needs, while remaining very financially conservative. They were awed by the fact we have spent our surplus funds on one-time investments. They were quite impressed with the $4 million contribution to the garage. Having goals and sticking to them has been quite successful. We expect to have Standard & Poor's rating by the end of the day on Monday. However, they are based in NYC, and they are still experiencing many, many issues that we cannot fathom. Their rating process is taking longer than normal. We no longer use Moody's rating service. They may elect to independently rate these bonds. However, given they are also in NYC, I would be surprised if they find the time for such a small issue. I will get you the final Fitch,' report as soon as I receive it. Please feel free to call me with any specific questions you have regarding this rating. VAR/dlf Attachment,as stated cc: Jay Covington,CAO Derek Todd,Assistant to the CAO Paul Kusakabe,Fiscal Services Director \\CENTRAL\SYS2\DEPTSIFINANCEIFINANCEIADMINSUPl5_IssuePaperslMemo re Fitch.doc , Fitch Corporate ?age I or 2 .. 1 k � : . Search by: IF for: I GO! _ i, r • t :RL:R_EI Z:,JiFy BTIM Al Ir13F.1.1)S t Home Products Sectors Media About Fitch :_ir:'•a . l Resea • Fitch Rates City of Renton, Washington $20.2MM GOs 'A+' . 12 Oct 2001 10:43 AM Fitch-NY-October 12, 2001: City of Renton,Washington's$20,105,000 limited tax general obligation and refunding bonds, series 2001, are rated'A+' by Fitch.The bonds are scheduled to sell the week of October 18 through negotiation by U 4S. Bancorp Piper Jaffray Inc. The rating reflects Renton's (the city) strong financial position, low debt burden, and good economy. Recent assessed valuation (AV)trends and rising building permit activity also contribute to the overall credit strength.These factors are somewhat offset by the Boeing Co.'s significant presence in the local area economy.The city's financial position is strong,demonstrated by high reserve levels, sound fiscal management practices and operating surpluses. Debt levels are low as a result of pay-as-you-go financing and limited debt issuance. Renton is located in King County in close proximity to downtown Seattle, Sea-Tac Airport,and the Port of Seattle and is bisected by several major traffic corridors. It covers an area of 16.9 square miles,with a population of 51,140. In the last decade,the city has seen sound economic, housing,employment, and assessed valuation growth. In addition,the city has seen significant growth to their retail base with the addition of several major new retailers. Nonetheless,the area remains dominated by Boeing, although the city is less dependent upon Boeing for its overall economic health than in the recent past. Boeing is Renton's largest employer with 41% of the city's total employment base and largest taxpayer at 14.6%of fiscal 2001 assessed valuation. Taxable valuation gains have been good,the result of significant new building,as well as rising property values.Assessed value rose a remarkable 9.9% per year on average from 1997-2001. Building.permit activity remains strong,suggesting,good gains at least for the next.year.City wealth indicators are above state and national averages'. Renton and King County enjoy below-average unemployment rates. The city's financial position is strong with above average reserve levels that provide financial flexibility. In fiscal 2000,the general fund ended with a high unreserved fund balance of 21.0% of spending, or $8.0 million, and has averaged a strong 15.8%over the past three fiscal years.Approximately 72.6%of fiscal 2000 general fund revenue came from taxes, 10.1%from charges for services,and 6.3%from licenses and permits.Taxes are diverse and include property,sales, utility,gambling,and real estate excise tax,each demonstrating good annual growth. Projections for fiscal year-end 2001 show another strong general fund operating surplus similar to fiscal 2000 levels. Direct debt levels are low. Direct debt, including this issue is a low$591 per capita and 0.6% of assessed valuation.Overall debt;including King County and Renton School District, is moderate at $3,313 per capita, or 3.4%of assessed valuation. Contact: Scott A.Andreson 1-415-732-5620,Amy S. Doppelt 1-415-732=5612 or Mark J. Capel) 1-415- 732-5622, San Francisco. Copyright©2001 by Fitch,Inc.,One State Street Plaza,New York,New York 10004. All rights reserved. 1 Myrna of I Ica rlicehln Pnn,in Ilan,,o http:/,/www.fitchibca.com/corporate/events/press_releases_detail.cfm?pr id=56195 10/12/2001 %0 CITY OF RENTON Finance & Information Services Department MEMORANDUM Date: October 15) 2001 To: King Parker, Finance Chair Toni Nelson, Vice-Chair Don Persson, Member Via: .11--"..e Mayor Jesse Tanner cc: Jay Covington, Chief Administrative Officer From: Victoria Runkle, Finance & IS Administrator Staff Contact: Victoria Runkle, 6858 Subject NEW PARKING GARAGE ISSUE AND REFUNDING 1997 DEBT Background. The Council approved the construction of a new parking garage. The City has $4,000,000 cash to put into the project. The Council directed the Finance & Information Services (FIS) Department to proceed with issuing debt for$6,000,000 for the balance of the $10 million project. Every time new debt is issued, we review our current debt to see if we can find savings, and wrap the issuance costs over a larger base. We have done that analysis and are recommending a refinancing (refunding) of our original 1997 debt for the purchase of the City Hall building. Further, given the current market rates, we also recommend an investment of cash to offset the costs of the garage for four years. This is something completely different so I hope we will have some discussion on this over the next week. Rating agencies. We havejust completed reviews with Fitch and Standard & Poor's for the rating of the bond issue that is scheduled for sell on October 18th, with first and second reading of the bond ordinance on October 22nd. We also assume we will have to purchase bond insurance for the bonds as the current economic environment is just too strange to take any risks. Both Fitch and SP asked what we knew about Boeing's plans. Of course, if you say anything that is not written down somewhere they (obviously) believe this is "rumor." Thus, it has no value. Since Boeing will say nothing on the Boeing issue, one can hardly win. That is why we are:purchasing insurance. On the other hand, SP was very encouraged by the China announcement and felt that would cancel out any significant negatives. To: King Parker,Finance CI Toni Nelson,Vice-Chair Don Persson,Member Via: Mayor Tanner October 15,2001 Page 2 of 4 S&P confirmed our current rating of A+ on Monday, October 15. Fitch provided a rating of A+ --- our current rating. I have provided a separate memo on their report. The Financial Analysis. First, we are not doing a "plain" vanilla bond issue. We are doing something a bit different. I've attached a summary (legal sheet) of the current outstanding debt, the assumptions on the refunding and new debt issue, and the investment offset. Refunding Bonds. The proposal is to refund the 1997 bonds. We recommend this as a simple economic decision! since interest rates are low. As you can see from the summary, we are eliminating the 1997 LTGO bond debt from 2002 - 2005 and 2010 - 2017. The years between 2006 - 2009 cannot be refunded. These are Capital Appreciation Bonds (these Hype of bonds are normally non-refundable). We are taking all available principal from the 1997 LTGO and will refund that principal. Attachment A outlines the specifics of the refunding. The coupon rate ranges from 2.10 percent to 4.850 percent. ' The True Interest cost is 4.60 percent over the life of the bonds. Attachment B illustrates the savings by taking that debt and refunding it. For example, in 2002 our old debt service obligation for the original 1997 LTGO debt was $734,765. By refunding the debt, we will spay only $609,965. We have savings of$124,800 annually in 2002, 2003, and 2004. The savings drop off in 2005 to nearly $90,000. Then the savings are quite small. One can select the structure of the deal. We have looked at several structures. However, this one is recommended as it provides maximum savings over four years. The savings in the out years are not nearly as "valuable" due to the value of money. All these dollars are provided In nominal terms. The $124,800 in the next three years has much more value to the City than are even savings of $35,000 annually through the life of the bonds. The 2001 Parking Garage Bonds. On the face, these are rather simple. Attachment C illustrates our recommended structure for these bonds. Because all of the City's debt is very, very short term -with the exception of the purchase of the building -all our debt is retired by 2009, we have the option of maintaining level debt service by.adding this debt. The goal in this structure is to maintain level debt service while adding $6,000,000 of debt. The recommended structure achieves that goal. We are recommending the bonds do not become due until the 'years 2018 - 2021. Of course, we have to pay interest to the bond holders until that period. However, Attachment C illustrates that we are paying an effective rate of 4.9 percent to 5.0 percent on these bonds. But, our annual cost will only be $300,000 through 2018. To: King Parker,Finance Cf Toni Nelson,Vice-Chair Don Persson,Member Via: Mayor Tanner October 15,2001 Page 3 of 4 The Investment. What makes these bonds very interesting is the proposal to take $2,000,000 and invest it in a long-term investment (State and Local Securities, SLGS) through 2009. We currently have over $65,000,000 invested on any given day. Our banker made some very astute decisions on September 12th. He recommended that we purchase SLGs that day because, given the circumstances, the market could only go down. We authorized him to order at the September 10th interest rates nearly $25,000,000. SLGS are state and local investments. They are bonds, notes, etc from other municipalities. They are very legal for us to invest in. We did not have to actually make the investment. We had to place an order. As you are aware, from September 13th forward, rates have been declining. Had we not ordered the SLGS on that day, we would not have been able to make the refunding work. The interest rates we could have gotten would not have been high enough to offset the interest rates we were paying. We "own" $25,000,000 of SLGS. Most of these will be purchased and reserved for the refunding. We have enough remaining to purchase $2,000,000 as an investment. Attachment D illustrates that we are recommending that we invest an additional $2,000,000 through 2009 in SLGs. We cannot actually make money at this. It is called arbitrage, and the IRS makes us pay any actual earnings in taxes. However, we can invest $2,000,000 in principal through 2009 and earn exactly the amount we will be paying in interest on the garage. Thus, the garage will actually cost us only foregone interest earnings for 8 years.' This was the challenging part of this deal. Piper Jaffray needs to be credited with the decision to purchase the original SLGs on September 12th. Also, I went to them and stated that I wanted to accomplish the garage deal without a great impact on our general governmental revenues for 2-4 years. They came up with the idea of investing the money as a match. The obvious question is what is the negative to this concept? First, we are tying up $2,000,000 of principal for a specified purpose for 8 years. We can get our principal, if necessary (we can sell the SLGs at any time.) There would be a penalty to us. But, it will be small in the context of the deal. However, if we ever get to the point we need the $2 million in principal, we' will have larger and more significant problems than this money will probably be able to solve. Second, our investment policies do not permit long term investments of this type. We can do the accounting in the background and have this particular investment bought and sold in several different ways, but it is making a conscious decision to make an investment for 8 years. Will this decision look good 5 years out, should the savings rate interest earnings exceed the current market? The response to that is we would look at the life of the investment not just one year. Currently, this is a great investment. If we balanced the 2002 earnings with possible earnings of the future against what we could To: King Parker,Finance CI • Toni Nelson,Vice-Chair- Don Persson,Member Via: Mayor Tanner October 15,2001 Page 4 of 4 earn in 2002, the answer will be that in net terms it will be a "wash"in terms of investment decisions. However, it is a risk. Those are the only "down" sides we can see to this deal. The SLGs themselves are easy to sell, if necessary, and it is totally legal for the City to own them. In fact, our trustee owns many of them for us, as we always use them for the refunding of old debt. Recommendations. Refunding Debt. The Finance Department recommends we refund $14.1 million of outstanding 1997 debt. This recommendation will save the City $124,800 over the course of the next three years, and additional savings through 2017 for a total cash savings of$500,740. LTGO Debt for the Parking Garage. The Finance Department further recommends the City issue $6,000,000 in addition debt to build the parking garage. The total cost of the project will be $11,569,170. This includes all costs of issuance. The annual cost through 2017 will be nearly$300,000. Investment Strategy. The Finance Department further recommends it be authorized to invest $2,000,000 in long term investments that will pay for the interest costs of the garage through 2009. Summary. The Finance Department shall bring forth a draft bond ordinance and associated papers to the Finance Committee on October 15th as a discussion point. Bonds are scheduled for selling on October 18th. The ordinance will be brought to the Finance Committee on October 227d, with the Council needing to take first and second reading at the regular meeting, if they concur with the sale. Please feel free to call me with any additional questions you may have prior to either the 15th or 22nd of October. I look forward to discussing this with you. VAR/dlf Attachments,as stated cc: Derek Todd,Assistant to the CAO aril y Petersett,Gity ierl. Paul Kusakabe, iscat ervices Director Sylvia Doerschel,Finance Analyst Supervisor Gina Jarvis,Accountant ATTACHMENT A Refunding I Debt Service Schedule Date Principal Coupon Interest Total P&I 12/1/2001 $ 315,000 2.15% $ 51,400 $ 366,400 12/1/2002 $ I - 0.00% $ 609,965 $ 609,965 12/1/2003 $ - 0.00% $ 609,965 $ 609,965 12/1/2004 $ - 0.00% $ 609,965 $ 609,965 12/1/2005 $ i 35,000 3.15% $ 609,965 $ 644,965 12/1/2006 $ i 125,000 3.35% $ 608,860 $ 733,860 12/1/2007 $ 125,000 3.55% $ 604,675 $ 729,675 12/1/2008 $ 130,000 3.75% $ 600,240 $ 730,240 12/1/2009 $ 385,000 3.90% $ 595,360 $ 980,360 12/1/2010 $ 1,405,000 4.00% $ 580,350 $ 1,985,350 12/1/2011 $ 1,450,000 4.15% $ 524,150 $ 1,974,150 12/1/2012 $ 1,510,000 4.25% $ 463,970 $ 1,973,970 12/1/2013 $ 1,575,000 4.40% $ 399,800 $ 1,974,800 12/1/2014 $ 1,645,000 4.50% $ 330,500 $ 1,975,500 12/1/2015 $ 1,720,000 4.63% $ 256,470 $ 1,976,470 12/1/2016 $ 1,800,000 4.75% $ 176,920 $ 1,976,920 12/1/2017 $ 1,885,000 4.85% $ 91,420 $ 1,976,420 $ 14,105,000 $ 7,723,975 $ 21,828,975 Net Interest Cost= 4.61% True Interest Cost= 4.63% ATTACHMENT B Debt Service Comparison &Savings Refunding Issue "New" "Old" Proposed Debt Service Current Debt Service Date Total'P&I Total P&I Savings 12/1/2001 $ 366,400 $ 367,382 $ 985 12/1/2002 $ 609,965 $ 734,765 $ 124,800 12/1/2003 $ 609,965 $ 734,765 $ 124,800 12/1/2004 $ ' 609,965 $ 734,765 $ 124,800 12/1/2005 $ 644,965 $ 734,765 $ 89,800 12/1/2006 $ 733,860 $ 734,765 $ 905 12/1/2007 $ 729,675 $ 734,765 $ 5,090 12/1/2008 $ 730,240 $ 734,765 $ 4,525 12/1/2009 $ • 980,360 $ 984,765 $ 4,405 12/1/2010 $ 1,985,350 $ 1,986,015 $ 665 12/1/2011 $ 1,974,150 $ 1,978,790 $ 4,640 12/1/2012 $ 1,973,970 $ 1,978,080 $ 4,110 12/1/2013 $ 1,974,800 $ 1,977,425 $ 2,625 12/1/2014 $ 1,975,500 $ 1,976,460 $ 960 12/1/2015 $ 1,976,470 $ 1,980,615 $ 4,145 12/1/2016 $ 1,976,920 $ 1,979,300 $ 2,380 12/1/2017 $ 1,976,420 $ 1,977,525 $ 1,105 $ 121,828,975 $ 22,329,712 $500,740 Net Present Value Cash Flow Savings @ 4.778% Bond Yield = $ 451,086 ATTACHMENT C Parking Garage j Debt Service Schedule Date Principal Coupon Interest Total P&I 12/1/2001 0 0 $ 24,885 $ 24,885 12/1/2002 0 0 $ 298,605 $ 298,605 12/1/2003 1 0 0 $ 298,605 $ 298,605 12/1/2004 1 0 0 $ 298,605 $ 298,605 12/1/2005 0 0 $ 298,605 $ 298,605 12/1/2006 0 0 $ 298,605 $ 298,605 • 12/1/2007 0 0 $ 298,605 $ 298,605 12/1/2008 j 0 0 $ 298,605 $ '298,605 12/1/2009 0 0 $ 298,605 $ 298,605 12/1/2010 0 0 $ 298,605 $ 298,605 12/1/2011 0 0 $ 298,605 $ 298,605 12/1/2012 0 0 $ 298,605 $ 298,605 12/1/2013 0 0 $ 298,605 $ 298,605 12/1/2014 0 0 $ 298,605 $ 298,605 12/1/2015 0 0 $ 298,605 $ 298,605 12/1/2016 0 0 $ 298,605 $ 298,605 12/1/2017 0 0 $ 298,605 $ 298,605 12/1/2018 $ 11,395,000 4.90% $ 298,605 $ 1,693,605 12/1/2019 $ 11,460,000 5.00% $ 230,250 $ 1,690,250 12/1/2020 $ :1,535,000 5.00% $ 157,250 $ 1,692,250 12/1/2021 $ 11,610,000 5.00% $ 80,500 $ 1,690,500 $ 6,000,000 $ 5,569,170 $ 11,569,170 Net Interest Cost= 5.09% True Interest Cost= 5.15% ATTACHMENT D NET DEBT SERVICE SCHEDULE ASSUMES $2 MILLION INVESTMENT Parking Garage Interest Net Date Principal Coupon Interest Total P&I Earnings Debt Service 12/1/2001 0 10 $ 24,885 $ 24,885 $ 24,885 $ - 12/1/2002 0 10 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2003 0 10 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2004 0 10 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2005 0 10 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2006 0 0 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2007 0 0 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2008 0 0 $ 298,605 $ 298,605 $ 298,605 $ - 12/1/2009 0 0 $ 298,605 $ 298,605 $ 273,225 $ 25,380 12/1/2010 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2011 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2012 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2013 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2014 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2015 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2016 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2017 0 0 $ 298,605 $ 298,605 $ 298,605 12/1/2018 $ 1,395,000 4.90% $ 298,605 $ 1,693,605 $ 1,693,605 12/1/2019 $ 1,460,000 5.00% $ 230,250 $ 1,690,250 $ 1,690,250 12/1/2020 $ 1,535,000 5.00% $ 157,250 $ 1,692,250 $ 1,692,250 12/1/2021 $ 1,610,000 5.00% $ 80,500 $ 1,690,500 $ 1,690,500 $ 6,000,000 $ 5,569,170 $ 11,569,170 $ 2,388,345 $ 9,180,825 Net Interest Cost= 5.09% True Interest Cost= 5.15% City of Renton Limited Tax General Obligation Debt Total Annual Debt Service as of December 31,2000 2001 2001 As of 1/1/01 Difference Combined LTGO All 1997 2001 Parking Garage $2,000,000 1998 Totals Totals in Debt Service 89/93/94/96 LTGO LTGO LTGO Investment Certificates by by Without investmen Year Refunding Bonds Bond Refunding Bonds Bonds Earnings of Participation Year Year 2001 $ 1,222,715 $ 324,215 366,395 $ 24,883 S (24,883) S 34,719 $ 1,948,044 $ 1,992,199 $ (44,155) 2002 1,255,267 - $ 609,965 298,605 (298,605) 34,719 S 2,198,556 2,024,751 $ 173,805 2003 58,581 1,195,000 609,965 298,605 (298,605) 34,719 $ 2,196,870 2,023,065 $ 173,805 2004 310,191 940,000 609,965 298,605 (298,605) 34,719 $ 2,193,480 2,019,675 $ 173,805 2005 25,000 1,225,000 644,965 298,605 (298,605) 34,719 S 2,228,289 2,019,484 $ 208,805 2006 194,000 1,060,000 733,862 298,605 (298,605) 34,719 S 2,321,186 2,023,484 $ 297 02 2007 - 1,245,000 729,675 298,605 (298,605) 34,719 $ 2,307,999 2,014,484 $ 2 2008 - 1,250,000 730,235 298,605 (298,605) 17,360 $ 2,296,200 2,002,125 $ 29 , 2009- -- - _ _ _ - - --___ - .1,000,000 980,360 298,605 (273,224) - $ 2,278,965 1,984,765 $ 294,2 2010 - - 1,985,350- --- --298;605 - -- --- S-------2,283,955 1,986,015 $ 297,940 - 2011 - - 1,974,150 298,605 - $ 2,272755 1,978,790 $ 293,965 2012 - - 1,973,975 298,605 - $ 2,272,580 1,978,080 $ 294,500 2013 - - 1,974,800 298,605 - $ 2,273,405 1,977,425 $ 295,980 2014 _ - - 1,975,500 298,605 - S 2,274,105 1,976,463 $ 297,642 2015 - - 1,976,470 298,605 - $ 2,275,075 1,980,613 $ 294,462 2016 - - 1,976,920 298,605 - $ 2,275,525 1,979,300 $ 296,225 2017 - - 1,976,420 298,605 - $ 2,275,025 1,977,525 $ 297,500 2018 - - 1,693,605 - $ 1,693,605 - $ 1,693,605 2019 - - - 1,690,250 - $ 1,690,250 - $ 1,690,250 2020 - - - 1,692,250 - $ 1,692,250 - $ 1,692,250 2021 - - - 1,690,500 - $ 1,690,500 - $ 1,690,500 Totals $ 3,065,754 $ 8,239,215 S 21,828,972 $ 11,569,168 $ 260,393 $ 44,938,619 $ 33,938,243 11,000,376.00 • 1 h:finance/acctng/debt/prelim documents/DEBTLTGO.xls 4 P City of Renton Limited Tax General Obligation Debt Total Annual Debt Service as of December 31,2000 a 2001 As of 1/1/01 Difference Combined LTGO All 1997 2001 Parking $2,000,000 1998 Totals Totals in Debt Service 89/93/94/96 LTGO LTGO LTGO Investment Certificates by by Without Investmen. Year Refunding Bonds Bond Refunding Bonds Bonds Earnings of Participation Year Year 2001 $ 1,222,715 $ 324,215 366,395 0 4!883 5 (24,883) 5 34,719 $ 1,948,044 $ 1,992,199 $ (44,155) 2002 1,255,267 - 5 609,965 298,605 (298,605) 34,719 $ 2,198,556 2,024,751 $ 173,805 2003 58,581 1,195,000 609,965 298,605 (298,605) 34,719 5 2,196,870 2,023,065 $ 173,805 2004 310,191 940,000 609,965 298,60 (298,605) 34,719 S 2,193,480 2,019,675 $ 173,805 2005 25,000 1,225,000 644,965 X9860 (298,605) 34,719 $ 2,228,289 2,019,484 $ 208,805 2006 194,000 1,060,000 733,862 298645 (298;605) 34,719 $ 2,321,186 2,023,484 $ 297,702 2007 - 1,245,000 729,675 29860 (298,605) 34,719 $ 2,307,999 2,014,484 $ 293,515 2008 - 1,250,000 730,235 29; .05 (298;605) 17,360 $ 2,296,200 2,002,125 $ 29 2009 - 1,000,000 980,360 298x605 (273,224) - $ 2,278,965 1,984,765 $ 29 ` 2010 - - - 1,985,350 2'8,605 - $ 2,283,955 1,986,015 $ 29,,-„ 2011 - - 1,974;150" 298 605 - - $-----2,272,7.55 _ _1,978,790 $ 293,965 __ 2012 - - 1,973,975 298,605 - $ 2,272,580 1,978,080 $ 294,500 2013 - - 1,974,800 298Te05 - $ 2,273,405 1,977,425 $ 295,980 2014 - - 1,975,500 988605 - 5 2,274,105 1,976,463 $ 297,642 2015 - - 1,976,470 298,°05 - $ 2,275,075 1,980,613 $ 294,462 2016 1,976,920 2y98T6�35 - 5 2,275,525 1,979,300 $ 296,225 2017 - - 1,976,420 298605 - $ 2,275,025 1,977,525 $ 297,500 2018 - - 1),693,605 - $ 1,693,605 - $ 1,693,605 2019 - - - 1,690,250 - $ 1,690,250 - $ 1,690,250 2020 - - - ,692,250 - $ 1,692,250 - $ 1,692,250 2021 - - - 1,6207- ) - $ 1,690,500 - $ 1,690,500 Totals $ 3,065,754 $ 8,239,215 $ 21,828,972 SmimicyiF55908I 1 $ 260,393 $ 44,938,619 $ 33,938,243 11,000,376.00 e 1 h:finance/acctng/debt/prelim documents/DEBTLTGO.xls • July 16,2001 Renton City Council Minutes Page 235 Webby,Human Resources Administrator;Fire Chief Lee Wheeler; and Gregg Zimmerman,Planning/Building Public Works Administrator will be placed at step D, and Police Chief Garry Anderson will be placed at step E. In addition to the proposed salary reclassification,the City will eliminate longevity for all Administrators. Education incentive,longevity and uniform allowances provided to the Police Chief and Fire Chief will also be eliminated. The cost for the proposed reclassification is outlined below and funds are not available in the current budget. Additional Salary: EDNSP; $4,581.74 Finance; $4,581.74 Community Services $4,101.74 HR&RM $5,091.74 Fire Department $2,307.74 Police Department $141.26 Public Works $4,341.74 $25,147.70 The Administration also recommended that the City Council allocate $25,147.70 from unallocated fund balance in the general fund to each of the individual department's budget to cover the additional costs of this reclassification. MOVED BY PARKER, SECONDED BY NELSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. (Coun i ilman Persson requested that his no vote be recorded.) Councilwoman Keolker-Wheeler returned to the meeting. Time: 8:45 p.m. Finance: Vouchers Finance Committee Chair Parker presented a report recommending approval of Claim;Vouchers 194473 - 194931,and two wire transfers totaling $1,186,757.02; and approval of Payroll Vouchers 32332-32677 and 548 direct deposits and one wire transfer,totaling$1,712,246.09. MOVED BY PARKER, SECONDED BY NELSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Community Services: Finance Committee Chair Parker presented a report regarding the consultant Downtown Parking Garage selection for the Downtown Parking Garage. The Committee concurred with Project,LMN Architects the staff recommendation to authorize the Mayor and City Clerk to sign a consultant agreement with LMN Architects to design,bid,and oversee construction of a parking garage located on S. 2nd St.between Burnett Ave. S. and Logan Ave. S. The fee for those basic services contained in the draft agreement is$555,340 with an option for retail design services at$41,655. MOVED BY PARKER, SECONDED BY NELSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Committee of the Whole Council President Pro Tem Nelson presented a report regarding the bond Transportation:Downtown issuance for funding of the Downtown Parking Garage. The Committee of the Parking Garage Whole recommended building a six-floor parking garage with 590 spaces at S. 2nd St.between Burnett Ave.,S. and Logan Ave. S. The recommendation includes building the first floor with a higher ceiling and conduit placement to permit retail space. This will permit the area to be built out as commercial space, in the future,if there is an interest in this. The Committee further recommended that the bond issuance process begin immediately. This will ensure the lowest cost possible for the bond costs as July 16,2001 Renton City Council Minutes Page 236 interest rates are at a historical low. The average annual debt service is estimated to be approximately$483,700 for 20 years. The Finance and Information Services Department is directed to begin the work associated with the bond issuance. This will include returning to the Council for a bond ordinanc,!e before the bonds are issued. MOVED BY NELSON, SECONDED BY CORMAN, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. ORDINANCES AND The following resolution was presented for reading and adoption: RESOLUTIONS Resolution#3514 A revised resolution was read declaring a moratorium on the approval of leases Airport:Moratorium on and subleases on the Renton Airport, establishing a public hearing date(held Approval of Leases and July 9,2001) and correcting the termination date of the moratorium to October Subleases 31,2001. MOVED BY PERSSON, SECONDED BY NELSON, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. • AUDIENCE COMMENT Diane Paholke,325 Edmonds Ave. SE,Renton, 98056,urged Council to take Citizen Comment:Paholke— the matter concerning the U.S. Customs Service facility at the Renton Airport US Customs Service Facility at seriously. Stating that the customs service is valuable to the airport Airport leaseholders, and after speaking with a representative from U.S. Customs,Ms. Paholke felt that the agency is willing to work on a resolution to the problem. She added that there has been a lot of misinformation regarding the potential use of the restaurant building property located on the airport as a customs facility. She encouraged the City to resolve the issue with U.S. Customs Service, and agreed that the City should request funding for the facility from the Federal Aviation Administration. Discussion indicated that Councilmembers were generally supportive of provisions of a customs facility,but noted that the City is currently working on developing the airport business plan. Transportation Systems Director Sandra Meyer indicated that she tried to convey to U.S. Customs Service that the City is working on a business plan and that the results of the plan would be forwarded to Customs;however,the customs official indicated that any delay was unacceptable. MOVED BY CORMAN, SECONDED BY NELSON,COUNCIL DIRECT THE ADMINISTRATION TO PREPARE A LETTER TO THE U.S. CUSTOMS SERVICE FOR THE COUNCIL PRESIDENT'S SIGNATURE EXPRESSING THE CITY'S INTENT TO PROVIDE A CUSTOMS FACILITY FOR INSPECTIONS AT THE RENTON MUNICIPAL AIRPORT.* It was noted that the administration is welcome to co-sign the letter,if desired. Councilmembers discussed the need for a customs facility at the airport; and the timing of location and construction of the facility concurrent with development of the airport business plan. It was noted that the Transportation(Aviation) Committee will be studying this issue and will make specific recommendations regarding location of the facility at a later date. *MOTION CARRIED. Citizen Comment: Paholke- On another subject,Ms.Paholke requested that the City publish information Special Population Day Camp about the Special Population day camps in the summer day camp section of the Information • What's Happening brochure distributed by the Community Services Department. • • A .' 'L'E BY (wi--t'r CITY COUNCIL COMMITTEE OF THE WHOLE Dat9 ��6 G COMMITTEE REPORT • July 16, 2001 • :BOND=ISSUANCE FOR FUNDING:.O THE DOWNTOWN PARKING GARAGE ',:= - Re erre' Jii 1fi'20.Q1- 6'96 The Committee of the Whole recommends building a six-floor parking garage with-59-7-spaces at 2nd Ave. S between Burnett andlLogan. • • The recommendation includes •luilding the first floor with a higher ceiling and conduit placement to permit retail space. /Thiswill permit the area.to be built out as commercial space, in the future, if there is an interest in this. The Committee furtherrecomme9ds4abthat the bond issuance process begin immediately. This will ensurethe lowest cost possible for the.;bond:.costs as interest rates are at a historical low. The average annual debt service is estimated torbe approximately $483,700 for 20 years. The Finance and Information Services Department is directed to4.begin the work associated with bond issuance. This will include'r+etu'rning to the Council;for""a,.bond,ordinance before the bonds are issued. r: -s e; , Q gg Y: • sit: �. fr','.v:9^•: `t 'y x"` 47/ Vit' Dan Clawson, Council President • cc: . James Shepherd,Community Services Administratorz, >•,s`-' Victoria Runkle,Finance&Information Services Administrator • ' Sue Carlson,Economic Development Administrator • • Paul Kusakabe,Fiscal Services Director Dennis Culp,Facilities Director • I:\cOMMrrrE\Reports\Committee of the Whole\DwntwnPkgGarBond.rpt.doc alptot s. RECEIVED ® p(S�'„IS CITY OF RENTON �' „u AUG 0 2 2001 00101 Finance 8Li information Services Department RENTONOnYCOUNCIL ao ; MEMORANDUM Date: August 2, 2001 To: Dan Clawson, Council President City Council Members - From: Victoria Runkle, Finance & Information Services Administrator cc: Mayor Jesse Tanner Jay Coviigton, CAO Subject: LTGO Bond Sale for the Garage and Recommendation to also Refinance the Last Bond Sale Background At the July 16th Committee of the Whole meeting the Council agreed to build a garage in the downtown core. The total cost is approximately $10 million dollars. The City has $4,000,000 cash. The Council further directed the Finance & Information Services Department to begin preparing for a bond salefor the building of the.garage. In other circumstances, we might use our cash first, and thendo the bond sale. However, as illustrated in the following paragraphs, the interest rate environment is extremely favorable to the City at this time. Calendar of Events. Attached is a calendar of milestones for the bond sale. The most important dates for the Council to note are September 17th and 24th. On September 17th we will have the first reading of the bond sale ordinance. At that meeting we will provide the estimated annual debt service and interest rates that we believe the market will support. The September 24th meeting will be the final reading of the ordinance. This ordinance will have the final actual debt service and interest rates that we must pay to issue these bonds. The bonds will be sold between Thursday and Monday of that week. It is a very tight timeline. The Current Market. Attachment A provides the Debt Service for the garage only, and the latest interest rates (if we sold the bonds this past week). The attached rates are extremely low. Of course, as you know, the market changes hourly. Thus, these reflect only a moment in time. At this point, we do not expect the market to change considerably. If this type of market maintains through September, we will be exceedingly fortunate. 1 Dan Clawson,Council Preside,,, 1 City Council Members August 2,2001 Page 2 Decision Agenda Other Outstanding Debt. With the rates this low, we reviewed the possibility of refinancing other outstanding debt. We are still in the process of looking at any revenue bonds. Because this is a LTGO debt structure, we analyzed our outstanding debt in that category. Attachment B defines the costs and savings of refinancing the major portion of our 1997B Outstanding Debt. These were issued to purchase the City Hall Building. The proposal before you is to refund the "serial bonds." We are not permitted to refinance Capital Appreciation Bonds (CABs, also known as Zero Coupon bonds). The refinancing works this way. First, we would actually borrow enough more to pay the outstanding serial principal and the uncallable interest obligations. Our total principal obligation would increase by $900,000. The new principal amount would be $13,560,000 from the current $12,660,000; but, we are paying off higher interest obligations and getting that off our books. The interest rates that we are paying on this debt ranges from 5.50 percent to 5.75 percent. The refunded debt would have interest rates ranging from 2.72 percent to 4.92 percent. If we refunded the outstanding debt, we will end up paying a total of $21,386,453 over the life of the bonds. If we do not refund the outstanding debt, we will pay a total of $22,329,712. The difference between these two numbers is $943,258. Thus, over the life of the bonds, the City, if these rates remain in effect, will save over $943,000- over$200,000 in the first year and $40,000 each subsequent year. We did look at the possibility of refunding if the rates were actually between 3 percent and 5 percent. The savings were in the $490,000 range. A savings of $500,000 is very good given that this also includes all expenses involved in issuing debt. Even at $500,000 over the life of the bonds, we would save approximately $20,000 per year. Estimated Total Debt. With the garage and refinancing the outstanding debt, our total debt service is shown on Attachment C. This includes outstanding debt not refinanced, the new garage issue and the refinancing. Obviously, if we decide not to do the refinancing, then the new debt service would be from Attachment A. Also, graphs have been included to help show the different options with and without a refinancing. A graph that illustrates total LTGO as of today, with the new debt service with just the garage, and finally it also has the option of garage and refinancing on it. Recommendation At this point, we recommend proceeding with the refunding. We have the right to stop any bond issue before the actual day of sale of the bonds. The sale is scheduled for the week of September 20th. The underwriter is in constant contact the week prior to September 17th and the week of the 20th, letting us know what is occurring with interest rates. If a major event occurs (this is usually like a war or something weird) that adversely impacts the market, we pull the issue for awhile. Obviously, we would let you Dan Clawson,Council President City Council Members August 2,2001 Page 3 know immediately. If anything like that were to occur, you will know it because it will be of a regional - if not national significance. If we are not going to save somewhere near, at least, $500,000, then we will rethink the refunding option. Summary The next major point will be the bond rating from one of the rating agencies. I will let you know what the rating is once we attain it. We plan to do this completely through phone calls and e-mail. We do not believe we need a personal one-on-one interaction on something as small as $6 million and a refunding that is very vanilla. We do not expect our rating to go down. Given their biases, I also don't expect to have any significant increase in the rating at this time. I will brief the Finance Committee about the rating as soon as we get it. We will brief the Finance Committee on September 17, as to the direction of the interest rates and the final decision on whether we are going to go through the refunding. The full Council will have the ordinance at the regular meeting the same day. We will have another Finance Committee meeting on the 24th to go over the final interest rates, etc. This will be the second and final reading of the ordinance that evening. VAR/dlf Attachments,as stated cc: Derek Todd,Assistant to the CAO Paul Kusakabe,Fiscal Services Director • CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION& REFUNDING BONDS, 2001 7/26/01 FINANCING SCHEDULE August 2001 September 2001 - October 2001 SMTWT FS SMTWTFS SMTWT FS 1 2 3 4 1 1 2 3 4 5 6 5 6 7 8 9 10 11 2 3 4 5 6 7 8 7 8 9 10 11 12 13 12 13 14 15 16 17 18 9 10 11 12 13 14 15 14 15 16 17 18 19 20 19 20 21 22 23 24 25 16 17 18 ,19 20 21 22 21 22 23 24 25 26 27 26 27 28 29 30 31 23 24 25 26 27 28 29 28 29 30 31 30 Issuer: City of Renton CITY Bond Counsel: Gottlieb,Fisher&Andrews,PLLC BC Verification Agent: Causey Demgen& Moore CPA Underwriter: U.S. Bancorp Piper Jaffray Inc. UW Date Item - Responsibility 7/23 • Discussion on structure and refunding City/UW 8/17 • Draft of Ordinance distributed BC 8/20 • Draft Official Statement distributed UW 8/23 • Document Review--conference call(2-4pm—TBA by Piper) ALL 8/27 • Second draft of documents distributed BC/DC 8/30 • Final document comments--conference call(2-4 pm TBA by Piper) ALL 9/05 • Ratings/insurance packages sent UW _ _ _ 9/06 • Distribute Sales Bulletin/Pre-Marketing Materials UW_ _ _ 9/10 • Print and distribute Preliminary Official Statements UW 9/12 • Send Bond documents to City Council for distribution BC/UW 9/17 • First reading of Bond Ordinance City 9/18 • Receive bond ratings UW 9/19 ♦ Receive insurance commitments UW • Preliminary CPA cashflow verification CPA • Pre-pricing conference call—(2 pm TBA by Piper) ALL 9/20 • Market bonds UW • Final cashflow verification CPA • Receive bids on escrow securities(if open markets are used) UW 9/24 ♦ Second reading of Bond Ordinance—Bond Ordinance Approved City • Sign Bond Purchase Agreement City/UW 9/24-10/04 • Prepare closing/final documents ALL 10/3 • Pre-closing conference call—(2 pm TBA by Piper) ALL 10/4 • Bond closing ALL 1. ATTACHMENT A GARAGE ONLY Estimated Debt Structure , (As of 7/31 /2001 ) Coupon Total Principal f Interest Rate Debt Service 2001 0 $ 44,155 $ 44,155 2002 $ 205,0001 $ 264,930 2.72% $ 469,930 2003 $ 210,0001 $ 259,350 3.03% $ . 469,350 2004 $ 215,000 $ 252,990 3.29% $ 467,990 2005 $ 220,0001 $ 245,920 3.49% $ " 465,920 2006 $ 230,000 i $ 238,240 3.67% $ 468,240 2007 $ 240,000,1 $ 229,800 3.85% $ 469,800 2008 $ 250,000 I $ 220,560 4.00% $ 470,560 2009 $ 255,000 $ 21.0,560 4.13% $ 465,560 2010 $ 270,0001 $ 200,030 4.23% $ 470,030 2011 $ 280,000 $ 189,320 4.33% $ 469,320 2012 $ 290,000! $ 176,480 4.46% $ .466,480 2013 $ 305,000; $ 163,550 4.58% $ 468,550 2014 $ 320,000, $ 149,580 4.68% $ 469,580 2015 $ 335,000 $ 134,580 4.78% $ 469,580 2016 $ 350,000 $ 118,590 4.86% $ 468,590 2017 $ 365,000 $ 101,575 4.92% $ 466,575 2018 $ 385,000 $ 83,620 4.97% $ 468,620 2019 $ 405;000 $ 64,490 5.02% $ 469,490 2020 $ 425,000 $ 44,155 5.06% $ 469,155 2021 $ 445,000 $ 22,650 5.09% $ 467,650 $ 6,000,000 $ 3,370,970 $ 9,370,970 h:finance:debt:estimated garage debt service City of Renton,Washington Limited Tax General Obligation&Refunded Bonds,2001 Refunding 1997B Current Interest Bonds GROSS DEBT SERVICE COMPARISON Date Principal Coupon Interest NEW D/S OLD D/S Savings 12/1/2001 - - 103,227.08 103,227.08 367,382.50 264,155.42 12/1/2002 75,000.00 2.72% 619,362.50 694,362.50 734,765.00 40,402.50 12/1/2003 75,000.00 3.03% 617,322.50 692,322.50 734,765.00 42,442.50 12/1/2004 75,000.00 3.29% 615,050.00 690,050.00 734,765.00 44,715.00 12/1/2005. 80,000.00 3.49% 612,582.50 692,582.50 734,765.00 42,182.50 12/1/2006 80,000.00 3.67% 609,790.50 689,790.50 734,765.00 44,974.50 12/1/2007 85,000.00 3.85% 606,854.50 691,854.50 734,765.00 42,910.50 12/1/2008 90,000.00 4.00% 603,582.00 693,582.00 734,765.00 41,183.00 12/1/2009 340,000.00 4.13% 599,982.00 939,982.00 984,765.00 44,783.00 12/1/2010 1,360,000.00 4.23% 585,940.00 1,945,940.00 1,986,015.00 40,075.00 12/1/2011 1,410,000.00 4.33% 528,412.00 1,938,412.00 1,978,790.00 40,378.00 12/1/2012 1,470,000.00 4.46% 467,359.00 1,937,359.00 1,978,080.00 40,721.00 12/1/2013 1,535,000.00 4.58% 401,797.00 1,936,797.00 1,977,425.00 40,628.00 12/1/2014 1,600,000.00 4.68% 331,494.00 1,931,494.00 1,976,462.50 44,968.50 12/1/2015 1,680,000.00 4.78% 256,614.00 1,936,614.00 1,980,612.50 43,998.50 12/1/2016 1,760,000.00 4.86% 176,310.00 1,936,310.00 1,979,300.00 42,990.00 12/1/2017 1,845,000.00 4.92% 90,774.00 1,935,774.00 1,977,525.00 41,751.00 Total 13,560,000.00 - 7,826,453.58 21,386,453.58 22,329,712.50 943,258.92 PRESENT VALUE ANALYSIS SUMMARY(GROSS TO GROSS) Gross PV Debt Service Savings 740,516.07 Transfers from Prior Issue Debt Service Fund (244,921.67) Contingency or Rounding Amount 2,350.78 NET PRESENT VALUE BENEFIT 497,945.18 NET PV BENEFIT/$12,660,000 REFUNDED PRINCIPAL 3.93% 8/1/2001 Prepared by U.S.Bancorp Piper Jaffray C' takDT-C , City of Renton Limited Tax General Obligation Debt Total Annual Debt Service as of December 31,2000 1989 1993 1994 1996 1997 1997 2001 2001 1998 Totals LTGO LTGO LTGO LTGO LTGO LTGO LTGO LTGO Certificates by Year Refunding Bonds Refunding Bonds Bonds Bonds Refunding Bonds Bonds Refunding Bonds Bonds of Participation Year 2001 $ 304,925 $ 875,193 $ 4,065 $ 38,532 $ - $ 367,383 $ 103,227 $ 44,155 $ 34,719 $ 1,772,199 2002 300,150 875,520 4,065 75,532 - 694,363 469,930 34,719 2,454,279 2003 - - 34,065 24,516 1,195,000 692,323 469,350 34,719 2,449,973 2004 - - 37,205 272,986 940,000 690,050 467,990 34,719 2,442,950 2005 25,000 1,225,000 692,582 465,920 34,719 2,443,221 2006 - - - 194,000 725,000 335,000 689,790 468,240 34,719 2,446,749 2007 - - - - 1,245,000 691,855 469,800 34,719 2,441,374 2008 - - - - - 1,250,000 693,582 470,560 17,360 2,431,502 2009 - - - - - 1,000,000 939,982 . 465,560 - 2,405,542 , 2010 - - - - - 1,945,940 470,030 - 2,415,970', t 201 T - - - 1,938,412 469,320 2,407,732 1 2012 - - - - -- -- - -- - -- ---1,937,359____ __ _466,480 _ _ - _ _ - 2,403,839 2013 1,936,797 468,550 - 2,405,347`- 2014 -- _ - - - - 1,931,494 469,580 - 2,401,074 2015 - - - - - 1,936,614 469,580 - 2,406,194 2016 - - - - - 1.936,310 468,590 - 2,404,900 2017 - - - - 1,935,774 , 466,575 - 2,402,349 2018 - - - - - 468,620 - 468,620 2019 - - - - - - 469,490 - 469,490 2020 - - - - - - 469,155 - 469,155 2021 - - - • - - - 467,650 - 467,650 Totals $ 605,075 $ 1,750,713 $ 79,400 $ 630,566 $ 4,085,000 $ 4,197,383 $ 21,386,454 $ 9,415,125 $ 260,393 $ 42,410,109 • i • • • • 1 h:finance/acctng/debt/prelim documents/DEBTLTGO.xls EXISTING LTGO DEBT - REFUNDING SAVINGS SHOWN 3,000,000 2,500,000 2,000,000 - my-- r ,f, ,4, [TA '4, WO 1,,,, AI 41 -,,,, ,„ i,t':':' rd q 114 LI V,a '' tit' '; .I., 41 02 43 1,500,000 ruutnmmnii ___ [4, .,,,f, 4/ fIIII(I '-�s� liii '"� � �, *'� �{. 100000041 r PA �~' 17l ) s flU r .„h Li;r, rd iy rs; 61 ',-e. 0:: I.;', it :i..4, :ii A L tA N g' aye'. '.6 500,000 P'.,. 71" rl ,i r; fii,;) if,„ ,,,,., t iii, 0 : P34.. 0 ki i'f P. 1 e,,,, r; rii tvi :.: .k.:,.. 'A, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 DNEW DS ❑(SAVINGS) t ' ' ` \ ^' REFUNDED LTGO WITH GARAGE ADDED � 3,000,000 • • 2.500.000 __. ___ __ __ — ___ ___ __ — ` � - ' - _ _ -- - - - 2,000,000 . -- 1.5OO.00O 1i ; 1P1f1Tt11t1 1.00O.00O -- ---� --- --- --- --- --- --- At,--- --- --- --- --- ity ';''i-, bi.`,, ;43 te,yi 7 ,,i,. 5,... v. iit:rp. q. 1,1, iq t, e'.! ,:t :211,14 , ' ��.0� — --• -- -- -- -- -- -- -vl — -- -- -- -- � — — — ' 10, 61 ,,j,., v,,,,,i. 1 v ,,,,..x vt, ,:I. . i,r.:.,,,,,,,Yi ,,344 gl gi 4 a Fi .4, * 5 tt, ,,,,,, , r..r wi itl tt,,i,„„ . „ ,„, . ,*4 I.,0 efi x, , , NI -q.-}, ,,, 4 q ,4,;!e .',,-, - m� O ` �� �� . -:t4 . =^ :� . ~� . �� . �� �� �� . �� . �� . ~a . �� . �� . =v . . ' 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTGO DEBT w/GARAGE Before and After Refunding • 3,000,000 2,500,000 — — — — — — g., i ) 1 I 1 f 2,000,000 -- — _- 14 .,- - ,- - ,— — — ,— — — — .4 . ' : i 0 : f , 1,500,000 — A — — — — —i — — — `— 0 k ' , ,- , 4 ' °'' 0 ;' ' A4 ; gr . 1 . g 6 ' 1,000,000 — � , . , ,, , -u, ,.,, :. ', . i - , , ,,,,„ d : 1 xi , 500,000 — rn - 1,,,, , - - '- ;:- 0 4 e i 4 :' . t j _ 4 / , : 0 1. 1 i ,t .? - P 6 / ) '' 1 1 2 I .i, / 0 . , i ' - '''4. , 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 ❑Existing Debt w/garage 0 Refunded Debt w/Garage GARAGE DEBT NET COST AFTER REFUNDING 600,000 - 500,000 400,000 �z✓ ' ._ _�, — t' —�f��, . _til Pkvn x Y` � 40 ii, ri,// ,0 ✓, -, �� � � ; 300,000 .: ;,,,___w____ - .- ,- - - -, p1 � " [1 ,, u 200,000 — — '— ":1 --. �- - - y - —" — z - k — ifs- 40 100,000 — — �— — ii. • 0W: .f '' e R 7 / Wx, rr". f� e ._ ' P 4 I >/s_. , 1 I 201 l 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 f -100,000 —A 0 1 -200,000 -300,000 DNet Cost of Garage Debt ❑Garage DS Without Refunding